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and development and has little or no other service activities may not be in a production or other service activities favorable position to derive a moneand is, therefore, not in a favorable tary benefit from the research under position to make a cost contributior; Federal agreements. or

(iii) A fee or profit will usually not (d) Payment of the full cost of the be paid to the performing organization project is necessary in order to obtain if the organization is to contribute to the services of the particular organiza- the cost of the research effort, but the tion.

amount of cost sharing may be re(ii) The Contracting Officer shall in duced to reflect the fact that the orgaclude the substance of his determina nization is foregoing its normal fee or tion in the negotiation summary. Con profit on the research. However, if the tracts, except when cost-sharing is spe

research is expected to be of only cifically directed by the Director,

minor value to the performing organiOffice of Procurement and Contracts

zation and if cost sharing is not reor voluntarily offered by the perform quired by statute, it may be appropriing organization, for projects:

ate for the performer to make a con(a) Where a particular research ob

tribution in the form of a reduced fee jective or scope of effort is specified by

or profit, rather than sharing the HUD rather than proposed by the per

costs of the project. forming organization. This will usually

(iv) Each cost-sharing contract negoinclude any formal solicitation for a

tiated by the Department shall conspecific contractual requirement.

tain the clause included in HUDPR (6) The principal purpose of which is

24-7.5011. the production of, or design, testing or improving of products, materials, de § 24-3.408 Letter contract. vices, systems or methods. (3) Guidelines for determining the

A letter contract is a written prelimiamount of cost sharing:

nary contractual instrument which au(i) For educational institutions and

thorizes immediate commencement of other not-for-profit or non-profit orga

performance. Where this action is denizations, cost sharing normally may

termined to be necessary, the followvary from 1 percent to as much as 50

ing will be observed: percent of the costs of the project. In

(a) Application. A letter contract some cases it may be appropriate for may be entered into when (1) the ineducational institutions to provide a terests of the Department demand higher degree of cost sharing, such as that the contractor be given a binding when the cost of the research consists commitment so that work can comprimarily of the academic year salary mence immediately, and (2) negotiaof faculty members, or when the tion of a definitive contract in suffiequipment acquired by the institution cient time to meet the procurement for the project will be of significant need is not possible as, for example, value to the institution in its educa when the nature of the work involved tional activities.

prevents the timely preparation of de(ii) The amount of cost participation finitive requirements, specifications, by commercial or industrial organiza or cost data. tions may vary from as little as 1 per (b) Limitations. (1) A letter contract cent or less of the total project cost to shall be used only after a written demore than 50 percent of total project termination is made by the head of cost, depending upon the extent to the procuring activity that the factors which the research effort is likely to described in paragraph (a) of this secenhance the performing organization's tion exist and that no other type of capability, expertise or competitive po contract is suitable. sition and the value of such enhance (2) A letter contract shall not be enment to the performing organization. tered into without competition when It should be recognized that those or competition is practicable. Where a ganizations which are predominately letter contract award is based on price engaged in research and development competition, an overall price ceiling and have little or no production or representing the maximum amount of

the definitized contract shall be included in the letter contract.

Subpart 24-3.7—Negotiated (3) A letter contract shall be super

Overhead Ratos seded by a definitive contract at the earliest practicable date, but in no

§ 24-3.702 General. event beyond 90 calendar days after (a) When a contractor performs the date of the letter contract, unless work in the same period under several the head of the procuring activity au- contracts for one or more procurement thorizes extension of the date for de activities or agencies, it may be desirfinitization.

able and appropriate, when mutually (4) The maximum liability of the agreed to by the Department and the Government stated in the letter con contractor, to negotiate uniform overtract shall be limited to an amount de- head rates for application to all such termined to be essential to cover the contracts in order to: (1) Effect unicontractor's requirements for funds up formity of approach, (2) effect econoto the time the contract is definitized, my in administrative effort, and (93) but in no event shall exceed 50 percent Promote timely settlement of reimof the estimated cost of the definitive bursement claims. contract.

(b) When the Contracting Officer (c) Content. Letter contracts shall be determines that the above conditions specifically negotiated and, as a mini exist, he shall include the negotiated mum, shall include agreement as to overhead rate clause set forth in the following:

HUDPR 24-7.5008. (1) The immediate commencement (c) If the prospective cost reimburseof performance of the contract by the ment contract is the only contract to contractor, including procurement of be performed by the contractor for necessary materials;

the Government during the same (2) The extent and method of pay. period or if the Contracting Officer ments in the event of termination determines that it is not appropriate either for the convenience of the Gov. to include the clause specified in ernment or for default;

HUDPR 24-3.702(b), determination of (3) That the contractor is not au the reimbursable amount of the overthorized to expend monies or incur ob head under the contract shall be based ligations in excess of the maximum li upon final audit of the actual costs inability of the Government as stated in curred during the period of performthe letter contract;

ance and the clause set forth in (4) The type of definitive contract HUDPR 24-7.5009 shall be included. anticipated; (5) As many definitive contract pro

et pro. $24-3.707 Overhead ceilings. visions as possible;

When the Contracting Officer deter(6) The contractor's obligation to mines in accordance with 41 CFR 1provide such price and cost informa 3.707 that it is appropriate to place an tion as may reasonably be required by overhead ceiling in the contract, he the Contracting Officer; and

shall include the clause set forth in (7) The prompt entry into good faith HUDPR 24-7.5010. negotiations by the contractor and the Government to reach agreement upon Subpart 24-3.8—Price Negotiation and execute a definitive contract.

Policy and Techniques Subpart 24-3.6—Small Purchases $ 24-3.801-2 Responsibility of contracting

officer. § 24-3.601 . Non-construction contracts.

In the event a contractor insists on a The Department may use small pur price or demands a profit or fee which chase procedures in non-construction the Contracting Officer considers uncontracts when the aggregate amount reasonable and, if the Contracting Ofinvolved in any one transaction does ficer is unable to obtain a satisfactory not exceed $10,000. Procedures used solution after exhausting tne causes of shall be in accordance with 41 CFR action set forth in 41 CFR 1-3.801Subpart 1-3.6.

2(c), the matter shall be referred for

resolution to the head of the procur- sources to insure adequate competiing activity with a statement of facts tion. Sources solicited should include and the Contracting Officer's recom- those individuals and organizations (1) mendations.

on the source list provided by the pro

gram office; (2) on the procurement § 24-3.802 Preparation for negotiation. office's bidders' mailing list; and (3) re.

(a) Requests for proposals. This sec- questing RFPs as a result of publication is not applicable to solicitations tion of the requirement in the Comissued on Standard Form 33.

merce Business Daily. Each RFP shall (1) Careful drafting of the Request be made available to all prospective of. for Proposals (RFP) is essential to the ferors at the same time and no offeror success of the competitive process. shall be given the advantage of adThe program and procurement offices vance detailed information concerning shall coordinate their efforts to devel the proposed procurement. op a solicitation package which is free (c) Proposal preparation time. of ambiguities and which will allow all HUDPR 24-2.202-1 Bidding Time is offerors to propose on an equal basis. applicable to negotiated procurement

(2) The RFP shall require that a under this subpart. proposal be submitted in two parts: A Technical Proposal” and a “Business

§ 24-3.805 Selection of offerors for negoti. Proposal.” Each of the parts shall be ation and award. separate and complete in itself so that

8 24-3.805–1 Policy. evaluation of one may be accomplished independently of and concur. Those competitively negotiated prorently with evaluation of the other curements not expected to exceed The RFP shall provide that the tech- 250,000 or those procurements over nical proposal shall not contain any $250,000 which the head of the proreference to cost. Resource informa curing activity approves for less tion, such as data concerning labor formal negotiation procedures, shall hours and categories, materials, sub be processed in accordance with contracts, travel, computer time, etc., HUDPR 24-3.805-2. All other competishall be included in the technical pro tively negotiated procurements expectposal so that the offeror's understand ed to exceed $250,000 shall be procing of the scope of work may be evalu essed in accordance with HUDPR 24ated.

3.805-3. This section is not applicable (3) The instructions to the offerors to procurement of Architect-Engineer concerning the business proposal shall Services. require cost information in sufficient detail to allow a complete cost analy. § 24-3.805-2 Procurements not expected to sis. Categories and amounts of labor,

exceed $250,000. materials, travel, computer time, as On procurements where the expectwell as information with regard to con- ed dollar amount will not exceed tractor past performance, financial ca- $250,000 the following will be obpacity, certifications and representa served: tions, and other pertinent administra- (a) Forwarding proposals. After the tive and business information should deadline for receipt of offers, the Conalso be requested.

tracting Officer will forward five (5) (4) The RFP shall contain factors copies of the technical portion of each for award which are tailored to the re- proposal to the Technical Evaluation quirements of the particular procure Panel (TEP) for evaluation. The TEP ment. Each technical factor and sub will be composed of one or more techfactor shall be assigned a numerical nical personnel designated by the proweight which shall appear in the RFP. gram or initiating office prior to issuThese factors will serve as the stand ance of the solicitation. The business ard against which all proposals will be portions of each proposal will be reevaluated.

tained by the Contracting Officer for (b) Selection of prospective sources. subsequent evaluation. The ContractProposals shall be invited from a suffi. ing Officer shall inform the TEP of cient number of competent potential proposals which contain major business deficiencies, including out-of-line sonable chance of being selected for cost proposals, which discussion with award. the offeror could not reasonably be ex. (f) Conduct of discussions. The Conpected to cure.

tracting Officer, with the Technical (b) Evaluation. The TEP will evalu. Evaluation Panel, will conduct written ate each proposal in strict conformity or oral discussions of the work to be with the factors for award set forth in

performed, the cost/price of the work, the RFP, and will assign each proposal

and other relevant points, with all a score on the basis of the factors for those offerors within the competitive award. The TEP shall identify each

range. Discussions are not required if proposal as being either acceptable or

the conditions of 41 CFR 1-3.805unacceptable. A proposal shall be con

1(a)(5) are applicable. The Contractsidered unacceptable if it is so clearly

ing Officer shall point out to each of. deficient that it cannot be corrected

feror the ambiguities, uncertainties, through written or oral discussions.

and deficiencies, if any, in his proposal Predetermined cutoff scores designed

which can be corrected without major for determining the threshold level of

changes to the proposal. He shall give acceptablility of proposals shall not be

each offeror a reasonable opportunity employed.

(with a common cutoff date for all) to (c) Report. A TEP report shall be

support, clarify, correct, improve, or prepared and signed by the technical

revise his proposal. Discussions with evaluator(s), furnished to the Con

an offeror should disclose deficiencies tracting Officer, and maintained as a

in the proposal but should not identify permanent record in the official pro

approaches or ideas through which ancurement file. The report shall reflect

other offeror has achieved a higher the scoring of each proposal and the

evaluation. No information will be rerankings of the proposals, and shall

vealed by the Government which identify each proposal as acceptable or unacceptable. The report shall also in

could give one offeror an unfair comclude a narrative evaluation specifying

petitive advantage over another. Cost the strengths and weaknesses of each

estimates made by the Government proposal, and any reservations or

will not be disclosed. qualifications that may bear upon the

(g) Extent of discussions. Careful selection of sources for negotiation

judgment will be exercised in deterand award. Specific technical reasons

mining the extent of discussions. In supporting a determination of unac

some cases, good business practice may ceptablity with regard to any proposal

require more than one round of discusshall be included. Score sheets of all

sions with proposers within the companel members shall be appended to

petitive range depending upon the the report.

time constraints, the expense, adminis(d) Review of report. After submis

trative limitations, and the overall sigsion of the TEP report, the Contract nificance of the procurement. ing Officer and the TEP will evaluate

(h) Selection of contractor. (1) After the business portion of each proposal. the close of discussions and receipt of

(e) Competitive range. unless it is de- any revisions to proposals, the TEP termined pursuant to 41 CFR 1-3.805- shall perform a final evaluation and 1(a)(5) that award shall be made on prepare


selection the basis of the most favorable initial recommendation(s). The TEP shall proposal, the Contracting Officer will then forward the recommendation(s) determine which offers are within the through the appropriate officials competitive range. A determination of having a need to know, as designated the limits of the competitive range re- by the Funding Assistant Secretary, to quires a comparison of the evaluation the Contracting Officer who shall of each proposal against the evalua. select for final contract negotiation tions of other proposals and therefore the offer containing the proposal cannot be predetermined on the basis which promises the greatest value to of a given number of or percentage of the Government in terms of cost or proposals. The competitive range shall price, technical and other factors, ininclude all proposals which have a rea- cluding equal opportunity compliance. (2) Cost and price shall be consid- ty of the negotiation process and to ered in the selection of a contractor. see to it that suitable mutual underThis is particularly true where more standings between the parties have than one acceptable offer from techni been reached. After negotiation is cally qualified sources remains for completed, the Contracting Officer consideration after conduct of negotia will effect appropriate coordinations tions. If a lower priced, lower scored and execute the contract with a negooffer meets the Government's needs, tiation memorandum prepared in conacceptance of a higher priced, higher formance with 41 CFR 1-3.811 and scored offer shall be supported by a Office requirements. specific determination by the Con

8 24-3.805-3 Procurements tracting Officer, that the technical su

expected to periority of the higher priced offer exceed $250,000. warrants the additional cost involved On those procurements where the in the award of a contract to that of. expected dollar amount will exceed feror. Offers exceeding the Govern $250,000 the following will apply: ment's needs are not a basis for tech (a) Selection of the source or sources nical superiority.

for final contract negotiations shall be (i) Final negotiation and award. made by the Contracting Officer, purUnder a negotiated procurement, se- suant to his responsibilities under lection of the source or sources marks HUDPR 24-1.453, based upon the findonly the first phase of negotiating a ings and recommendations of the definitive contract. Final contract ne Source Selection Official (SSO) who is gotiation entails: (1) Reaching agree the head of the funding office or his ment with the selected source on the designee. To assist the SSO in evaluatcosting/pricing, technical, equal op ing proposals and making recommenportunity and other provisions that dations for selection, the SSO shall will condition his performance under designate a Source Evaluation Board the contract; (2) setting forth these (SEB) composed of a chairman, voting terms in a mutually acceptable con- members, and advisors. tractual document; and (3) having (b) After the deadline for receipt of sound rationale and basis for results offers, the Contracting Officer will negotiated.

forward five (5) copies of the technical (i) Pre-negotiation conference. Prior portion of each proposal to the SEB to negotiations with the selected of chairman or his designee, who shall be feror, the Contracting Officer shall responsible for their custody throughconduct a meeting with those mem- out the evaluation process. The busibers of the Government's team who ness portions of each proposal will be will participate. The purpose of this retained by the Contracting Officer meeting is to present the objectives to pending initial technical evaluation by be sought and to establish negotiating the SEB. The Contracting Officer positions.

shall inform the SEB of proposals (ii) Negotiation and award. The which contain major business deficienContracting Officer will make arrange- cies, including out of line cost proposments for negotiations with the suc. als, which discussion with the offeror cessful offeror. Negotiations may be could not reasonably be expected to held at the contractor's site, at a HUD cure. facility, or by telephone, depending (c) The SEB will evaluate each proupon the complexity and magnitude of posal in strict conformance with the the proposed contract, economic and factors for award of the RFP, and will time considerations and past experi assign each proposal a score on the ence. The Contracting Officer in co- basis of the factors for award. The ordination with assisted and supported SEB shall identify each proposal as by technical, audit, and other person being either acceptable or unacceptanel as needed, making up the Govern ble. A proposal should be considered ment's negotiation team. It is the re- unacceptable if its deficiencies cannot sponsibility of the Contracting Officer be corrected through written and oral in coordination with the Office of discussions to the point of having a General Counsel to ensure the integri- reasonable chance of being selected

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