The

mailed to prospective proposers. transmittal to the Director of Procurement shall identify the procurement plan to which the request for proposals applies. This requirement is in addition to the requirements of § 18-50.104.

(c) Late proposals and late unsolicited revisions to proposals. (1) Except with respect to procurements estimated not to exceed $2,500, written requests for proposals shall contain the following provision:

LATE PROPOSALS (JUNE 1963)

The Government reserves the right to consider proposals or modifications thereof received after the date indicated for such purpose, but before award is made, should such action be in the interest of Government.

the

(2) Proposals, or modifications thereof, received from qualified firms after the latest date specified for receipt may be considered if there is a probability of a significant reduction in cost to the Government, or technical improvements, as compared with proposals previously received. In such case, the negotiator shall investigate the circumstances surrounding the submission of the late proposal or modification and evaluate its content. He shall then submit his recommendations and findings to the contracting officer, in writing, as to whether, in his opinion:

(i) The company submitting the proposal has an excusable reason for late submission;

(ii) There is an advantage to the Government to consider the proposal;

(iii) All companies submitting proposals should be resolicited; and

(iv) Time of performance permits such resolicitation.

The contracting officer shall thereupon determine whether the proposal should be considered or rejected, or a resolicitation of proposals should be made.

(3) When the failure of a proposal to arrive on time is due solely to delay in the mails for which the offeror was not responsible or when only one proposal is received, the contracting officer may consider the proposal.

(4) Offerors submitting late proposals that will not be considered will be notified by the contracting officer that his proposal was received late and will not be considered.

(a) The selection of an appropriate type of contract and the negotiation of prices, or estimated costs and fee, are related and should be considered together. The objective is to negotiate a type of contract and a price that includes reasonable contractor risk and provides the contractor with the greatest incentive for efficient and economical performance. When negotiations indicate the need for using other than a firm fixed-price contract, there should be compatibility between the type of contract selected and the contractor's accounting system. In view of the exploratory nature of research and development, and the uncertainties inherent in its successful accomplishment, cost-reimbursement type contracts normally will be utilized in accomplishing such procurements. Exception may be made when negotiating contracts of low monetary value where audit is impracticable or in contracts where the work to be performed can be described with a reasonable degree of definiteness and sufficient cost or pricing information is available to ensure that the contract price will be fair and reasonable.

(b) In the course of a procurement program, a series of contracts, or a single contract running for a lengthy term, the circumstances which make for selection of a given type of contract at the outset will frequently change so as to make a different type more appropriate during later periods. In particular, the repetitive or unduly protracted use of a cost-plus-a-fixed-fee or time and materials contract is to be avoided where experience has provided a basis for firmer pricing which will promote more efficient performance and will place a more reasonable degree of risk on the contractor. Thus, in the case of a time and materials contract, continuing consideration should be given to converting

(b) Technical evaluation. Generally, procurement personnel are not qualified to evaluate proposals from a technical viewpoint and must rely on scientific and engineering personnel for this function. In research and development contracting, awards should usually be made to those companies that have the highest competence in the specific field of science or technology involved, although awards should not be made on the basis of research and development capabilities that exceed those needed for the successful performance of the work. It is imperative therefore that technical evaluations and recommendations be fully documented and reviewed by responsible personnel. Technical evaluation should include the following:

(1) The contractor's understanding of the scope of the work as shown by the scientific and technical approach proposed;

(2) Availability and competence of experienced engineering, scientific, or other technical personnel;

(3) Availability of necessary research, test, and production facilities;

(4) Experience or pertinent novel ideas in the specific branch of science or technology involved;

(5) The contractor's willingness to devote his resources to the proposed work with appropriate diligence; and

(6) The contractor's proposed method of achieving the reliability required.

In making this evaluation, technical personnel may be given access to portions of the business proposals upon request. After evaluation and preparation of written recommendations as to selection of source by the technical personnel, proposals shall be returned to the negotiator. The contracting officer is responsible for reviewing the justification in support of the recommendations of technical personnel to determine that the justification is adequate and that the documentation is complete.

(c) Business evaluation. (1) Price and cost analysis. Each proposal requires some form of price or cost analysis. The contracting officer must exercise judgment in determining the extent of analyIsis in each case. On high-dollar value procurements, particularly where effective competition has not been obtained, the analysis should be thorough, and the record carefully documented to disclose the extent to which the various elements of costs, fixed fee, or profit contained in the contractor's proposals were analyzed. The negotiation memorandum should also reflect the consideration given to the recommendations of the price analyst and the basis for nonacceptance or departure from the recommendations during the course of negotiations.

(2) Automatic data processing equipment. In evaluating proposals containing a significant amount of cost for Automatic Data Processing (ADP) the contracting officer should obtain from the prospective contractor a feasibility study and a lease-versus-purchase study covering the acquisition of such equipment or service. The contracting officer will obtain the recommendations of the price analyst and appropriate ADP technical personnel as to the adequacy of the studies and the prospective contractor's determinations resulting from the studies. Particular attention should be given to those proposals containing a high-dollar amount for rental of ADP

§ 18-3.804-3

Evaluation procedures

use of Source Evaluation Board.

(a) Source Evaluation Board procedures are appropriate for competitive negotiated procurements, except Architect-Engineer services and contracts for which the procedures have been specifically waived, when:

(1) The estimated cost of the contract will exceed $1,000,000;

(2) The estimated cost of the contract will not exceed $1,000,000, but it is likely that the source selected will receive other contracts for later phases of the same project which, cumulatively, would total more than $1,000,000. (Examples of this category include feasibility studies and project definition contracts under approved programs or programs for which approval will be requested); or that

(3) A Source Selection Official determines that the use of the Source Evaluation Board procedures is desirable.

(b) The detailed procedures regarding the designation and operation of Source Evaluation Boards are set forth in NPC 402. (See NASA Management Instruction 1152.2.)

[31 F.R. 603, Jan. 18, 1966]

§ 18-3.804-4 Disclosure of information prior to selection of contractor.

During the course of evaluation proceedings, whether or not a Source Evaluation Board is utilized, NASA personnel participating in any way in evaluating proposals shall not reveal any information concerning the evaluation under way to anyone who is not also participating in the same evaluation proceedings, and then only to the extent that such information is required in connection with such proceedings. When other Government or Jet Propulsion Laboratory personnel participate in evaluation proceedings, they will be instructed to observe these restrictions. Following selection of a contractor, information will be provided to unsuccessful offerors in accordance with § 18-3.106-3.

(a) After evaluation of proposals written or oral discussions shall be conducted with all responsible offerors who submit proposals within a competitive range, price and other factors considered, in accordance with § 18-3.102(a), and due attention will be given to the factors cited in § 18-3.102(b).

(b) Procurement personnel, as well as other personnel concerned with the procurement, shall ensure that contract negotiations are completed expeditiously. However, all details of the negotiation must be completed before the contract is actually placed. This includes, to the extent applicable:

(1) Arrangements regarding Government-furnished property;

(2) Determination that the prospective contractor is responsible, including completion of pre-award surveys where required;

(3) Arrangements with other Government agencies for the use of facilities under their control;

(4) Where the contract will be administered by another Government agency, any necessary arrangements with the responsible activity of that agency; and

(5) Where the contract will involve access to classified information, verification that required security clearance has been obtained.

(6) The requirement for the furnishing of data by the contractor in the performance of the contract, both for technical evaluation and for competitive reprocurement where follow-on procurement is probable, in those situations where the appropriate technical office has requested that the contracting officer obtain such data; and

(7) If the offeror's proposal contains technical data marked with a restrictive legend, whether the Government desires rights to use such data (§§ 18-3.109 and 18-9.202-6).

(c) Whenever negotiations are conducted with more than one offeror, no indication shall be made to any offeror of a price which must be met to obtain further consideration since such practice constitutes an auction technique which must be avoided. After receipt of proposals, no information regarding the number or identity of the offerors participating in the negotiations shall be made available to the public or to anyone whose official duties do not require such knowledge (see § 18-1.1050 of this chapter). Whenever negotiations are conducted with several offerors, while such negotiations may be conducted successively, all offerors selected to participate in such negotiations (see paragraph (a) of this section) shall be offered an equitable opportunity to submit such price, technical, or other revisions in their proposals as may result from the negotiations. All such offerors shall be informed of the specified date (and time if desired) of the closing of negotiations and that any revisions to their proposals must be submitted by that date. All such offerors shall be informed that any revision received after such date shall be treated as a late proposal in accordance with the "Late Proposals" provisions of the request for proposals.

(d) In selecting the contractor for a cost-reimbursement type contract, estimated costs of contract performance and proposed fees should not be considered as controlling, since in this type of contract advance estimates of cost may not provide valid indicators of final actual costs. There is no requirement that cost-reimbursement type contracts be awarded on the basis of either (1) the lowest proposed cost, (2) the lowest proposed fee, or (3) the lowest total estimated cost plus proposed fee. This is

not to say that potential contract cost is to be ignored. Potential costs should be based on what knowledge can be derived of the costliness of a particular contractor's operations and should not rely principally on the contractor's submitted cost estimate. The award of costreimbursement type contracts primarily on the basis of estimated costs may encourage the submission of unrealistically low estimates and increase the likelihood of cost overruns. The cost estimate is important to determine the prospective contractor's understanding of the project and ability to organize and perform the contract. The agreed fee must be within the limits prescribed by law and regulation and appropriate to the work to be performed (see § 18-3.808). Beyond this, however, the primary consideration in determining to whom the award shall be made is which contractor can perform the contract in a manner most advantageous to the Government.

[29 F.R. 16556, Dec. 5, 1964, as amended at 31 F.R. 603, Jan. 18, 1966]

§ 18-3.806 Cost, profit, and price relationships.

(a) Where products are sold in the open market, costs are not necessarily the controlling factor in establishing a particular seller's price. Similarly, where competition may be ineffective or lacking, estimated costs plus estimated profit are not the only pricing criteria. In some cases, the price appropriately may represent only a part of the seller's cost and include no estimate for profit or fee, as in research and development projects where the contractor is willing to share part of the costs. In other cases, price may be controlled by competition as set forth in § 18-3.805-1. The objective of the contracting officer shall be to negotiate fair and reasonable prices in which due weight is given to all relevant factors, including those in § 18-3.102.

(b) Profit or fee is only one element of price and represents a much smaller proportion of the total price than do such other estimated elements as labor and material. While the public interest requires that excessive profits be avoided, the contracting officer should not become so preoccupied with particular elements of a contractor's estimate of cost and profit that the most important consideration, the total price itself, is distorted or diminished in its significance.

Policies set forth in this § 18-3.807 may be applied in a variety of ways in the evaluation of offerors' or contractors' proposals and in the negotiation of contract prices. Section 18-3.807 describes the principal price and cost evaluation techniques and the circumstances under which each may be used. They are equally applicable to initial and subsequent price negotiations.

§ 18-3.807-2 Requirement for price or cost analysis.

(a) General. Some form of price or cost analysis should be made in connection with every negotiated procurement action. The presence of adequate price competition, however, limits considerably the degree of analysis required. Cost data need not be requested when the contracting officer anticipates that there will be adequate price competition. However, if he determines, after proposals have been submitted, that there is not, in fact, adequate price competition, cost data may then be requested, unless there are other bases (e.g., pricing data) available for evaluating the reasonableness of the quoted price. When there is not adequate price competition and cost analysis is necessary, the extent of the analysis should be limited to that necessary to establish a sound basis for negotiation, taking into consideration the amount of the proposed contract and the cost and time needed to accumulate the necessary data for analysis.

(b) Price analysis. (1) Price analysis is the process of examining and evaluating a prospective price by the use of price data, not including a contractor's or subcontractor's cost data. Price analysis may be accomplished in various ways including the following:

(i) The comparison of the price quotations submitted;

(ii) The comparison of prior quotations and contract prices with current quotations for the same or similar end items (to provide a suitable basis for

(iv) The comparison of prices set forth in published price lists issued on a competitive basis, published market prices of commodities and similar indicia, together with discount or rebate arrangements; and

(v) The comparison of proposed prices with estimates of costs independently developed by personnel within the purchasing activity.

(2) Price analysis, without resort to cost analysis, may be used to support the reasonableness of awards when there is adequate price competition or when price analysis in accordance with subparagraph (1) of this paragraph, by itself, provides a reasonable basis for award.

(c) Cost analysis. (1) Cost analysis, as distinguished from price analysis, is the process of:

(i) Obtaining a breakdown of cost from prospective contractors or subcontractors;

(ii) The appropriate verification of cost data;

(iii) The evaluation of specific elements of costs; and

(iv) The projection of this data to determine the effect on prices of such factors as

(a) The necessity for certain costs; (b) The reasonableness of amounts estimated for the necessary costs;

(c) Allowances for contingencies;

(d) The basis used for allocation of overhead costs and the reasonableness of contractor's sales forecast and the pool of indirect expenses associated with the cost of those sales; and

(e) The appropriateness of allocations of particular overhead costs to the proposed contract.

(2) Among the evaluations that should be made where the necessary data is available, are comparisons of a contractor's or offeror's current estimated costs with: