(2) Six percent of the estimated cost, exclusive for the fee, for any other cost-plus-a-fixed-fee contract. Fixedfees within the limitations imposed by § 1-3.405-5(c)(2) of this title and in excess of those cited herein shall be submitted to the Director, Office of Grants, Procurement, and ADP Management Policy, OASAM, Washington, D.C. 20210, Attn: ABA, for approval. The request for approval shall include a detailed justification setting forth the rationale supporting the proposed fee in terms of the factors prescribed in § 1-3.808-2 of this title.

(c) Contractor's investment in workin-process. The head of each procuring activity has been delegated the authority to make the determination described in § 1-3.405-5(d)(1)(ix) of this title.

[42 FR 40202, Aug. 9, 1977]

(a) Description. The use of this type of cost reimbursement contract is relatively new and stems from the desire on the part of the Government to introduce incentives into cost reimbursement contracting situations where finite measures of performance necessary for cost-plus-incentive-fee contracts are absent. The use of this type of contract requires a willingness on the part of the contractor to accept a unilateral Government determination of a suitable level of fee for the performance of the contract. By terms of the contract, this determination by the Government of the fee is excluded from the scope of the Disputes clause. The contractor's performance itself is measured against criteria included in the contract. The contractor's performance relative to these criteria is a subject for discussion between the parties at various intervals during the period of contract. The mechanics of the fee determination are unusual in that two fee elements are involved. First, there is a fee in a fixed amount or "base" fee. Second, there is a fee that is variable, the "award" fee. Maximizing the second part of the fee is the basis of the contractor's motivation to be responsive to the results of progress discussions at the periodic reviews of the contractor's performance.

(b) Application. The cost-plusaward-fee contract shall not be used where it is clear that a cost-plus-afixed-fee or cost-plus-incentive-fee

contract is more appropriate.

(c) Limitations. The base fee shall not exceed 3 percent of the estimated cost of the contract exclusive of fee. The maximum fee (base fee plus award fee) shall not exceed the limits in §§ 1-3.405(c)(2) of this title, and 293.405-5(b).

[42 FR 40203, Aug. 9, 1977]

§ 29-3.406 Other types of contracts.

§ 29-3.406-1 Time and materials contract. Although this type of contract provides for payment of a fixed price for each unit of time supplied by the contractor, the total amount of a contractor's profit and the amount of a contractor's indirect costs absorbed under the contract are increased proportionately as the number of hours worked by the contractor is increased. In order to reduce the reverse incentive inherent in this contract form, it is desirable to limit the number of hours to which the rate including profit will be applicable and to reimburse the contractor at a rate which does not include profit (and, if possible, with reduced indirect costs) for all hours worked in excess of such limit.

[36 FR 11647, June 17, 1971, as amended at 42 FR 40203, Aug. 9, 1977]

§ 29-3.407 Additional incentives.

§ 29-3.407-2 Contracts with performance incentives.

See § 29-3.405-50.

§ 29-3.408 Letter contract.

(a) A letter contract constitutes an emergency measure and can only be justified in the absence of applicability of any other contract type authorized in Subpart 1-3.4 of this title. A letter contract cannot be justified on either the need to obligate annual funds (or other funds on whose use there is a deadline) prior to the expiration of the time in which the funds can be legally obligated or the need to contract where the parties have been unable to resolve substantive disagreements. The policy of DOL is not to

issue letter contracts. Exceptions to this policy can only be authorized by the head of the agency. Such policy exceptions will be permitted only in those cases where the parties are in agreement on nearly all matters of a substantive nature and are willing to document such agreement in the letter contract. In addition to those requirements in § 1-3.408(d) of this title, such substantive matters include:

(1) The location of where the work is to be performed;

(2) The parties' agreement that the letter contract will be superseded by a definitive contract within 3 months of the effective date of the letter contract or completion of 25 percent of the work, whichever occurs first;

(3) A statement of the work to be performed by the contractor;

(4) A performance or delivery schedule;

(5) The ceiling price of the contract to be definitized;

(6) An agreement as to the required clauses to be contained in the definitized contract;

(7) Limitation on contractor for failure of the parties to execute a definitized contract within the time specified in the contract, by a clause limiting reimbursement to the contractor of the lesser of either the Department's maximum liability under the letter contract or the costs incurred under the contract terms through the date specified for definitizing the contract.

(b) Limitations. Requests for authority to award a letter contract shall be addressed to the head of the agency. The request shall recite the circumstances of the particular procurement, explain its urgency, and why no other type of contract is suitable. The request shall also state to what extent there was agreement on the factors listed in paragraph (a) of this section and whether that agreement will be reflected in the terms of the letter contract. While every effort shall be made to make the letter contract as specific as circumstances permit, specific agreement on all of the seven factors specifically listed in paragraph (a) of this section is not a prerequisite for use of a letter contract. However, approval to enter a letter contract will be

withheld unless there is agreement on a substantial number of the factors in paragraph (a) of this section, with the minimum number of these factors varying on a case-by-case basis. In the event that the parties have not agreed on a particular factor, then the parties shall attempt to agree on a reasonable range or narrow series of alternatives for that factor. Based on adequate justification the head of the agency, upon request, may during the period covered by the letter contract authorize in writing an extension of the life of the letter contract or an increase in the Department's liability. The maximum liability of the Department stated in the letter contract shall not exceed an amount necessary to provide for the completion of that portion of the estimated cost of the work required consistent with the policy of the letter contract being superseded by a definitive contract within 3 months or completion of 25 percent of the work, whichever occurs first. In instances where a contractor is required to make extensive initial outlays or commitments for material and equipment at the contract's inception. The Department's maximum liability may be increased up to 50 percent of the total estimated cost of the procurement consistent with § 1-3.408 of this title. In the unusual case and where adequate justification is presented, this 50 percent limitation may be exceeded at the contract's inception, with prior written approval of the head of the agency. Request for such authority, if applicable, shall be included in the initial request for approval of the letter contract.

§ 29-3.409 Indefinite delivery type con

tracts.

To qualify as an indefinite delivery contract, the instrument must contain language clearly associated with that general type. Moreover, such a contract shall also contain language distinguishing between the three different kinds of commitment by the Department to procure under indefinite delivery contracts, namely, that the quantity it is agreed to procure is: A definite quantity within a stated period (§ 1-3.409(a) of this title); all requirements for the stated period (§ 1

3.409(b) of this title); or an unknown amount within a prescribed known range for a stated period (§ 1- 3.409(c) of this title). Failure to describe the quantities the Department is obligated to purchase at least as specifically as is provided above for one of the three type of contracts illustrated in § 13.409 of this title, could result in a basic ordering agreement that may not be enforceable because of a lack of mutuality of consideration.

re

(a) Definite quantity contract-(1) Description. This is sometimes ferred to as a "term-type" contract and is ideally suited for the procurement of items for which there exist recurrent needs. Without this type of contract the Department would be required to issue a series of contracts, resoliciting bids on each occasion when the predictable need arose. Subject to authority within a particular appropriation or in the case of special authority (e.g., the authority to subscribe to periodicals for periods in excess of 1 fiscal year while obligating annual funds as provided in 31 U.S.C. 530a) such term contracts may not be extended beyond a fiscal year.

(2) Application. When all of the quantities specified in a definite-quantity term contract have been delivered, the contract shall be considered complete and additional orders shall not be placed under the contract on the basis of the contractor's prior low bid for identical items. Instead, each such additional quantity shall be considered on a case-by-case basis to determine whether to advertise it or to otherwise solicit competition from available suppliers. When used, this contract obligates funds for the full quantity to be delivered over the contract period upon award and not at the time of placing individual orders designating time and place of delivery or perform

ance.

(b) Requirements contract. This is another form of term contract wherein, for the full duration of the specific contract period, all the needs for a particular item or service are placed with a contractor by a simple order. Each order incorporates the terms and conditions of the basic requirements contract under which the order is placed. Procuring activities using this

contract form shall stipulate a maximum quantity beyond which the contractor is not obligated to deliver the items that may be ordered under the contract. In addition, where possible, such contracts shall obligate the Department by guarantee or otherwise, to order some stated minimum amount of the item in question, thus converting it to an indefinite quantity contract as defined in § 1-3.409(c) of this title. This will thereby protect the Department in the event of drastic changes in the demand or supply of the item or in the event of a technological breakthrough. In the absence of an obligation on the Department to procure a minimum quantity, funds are only obligated when a particular order is placed. The order therefore becomes the obligating document and must contain appropriation symbols and dollar amounts.

(c) Indefinite

quantity contract. When used, this contract can only obligate funds covering the low (i.e., the minimum or guaranteed) end of the range of quantities the Department can purchase. Where there is no obligation on the Department to procure a minimum quantity and where payment is to be made from a central revolving fund (e.g., "Working Capital Fund") the basic contract award shall state that the appropriation data cited is not for the purpose of indicating the obligation, but rather that the money reserved for the purpose of paying invoices under the contract is being identified.

[36 FR 11647, June 17 1971, as amended at 42 FR 40203, Aug. 9, 1977]

Subpart 29-3.6-Small Purchases

§ 29-3.602 Policy.

It is essential that authority to make small purchases be at the lowest practical operating level.

§ 29-3.602-50 Purchasing authority.

(a) Definition. “Purchasing authority" is an authority by which the designated purchasing officer is authorized to issue purchase orders or requisitions which do not involve the solicitation and acceptance of bids or signing of agreements or contracts.

(a) Quotations or offers for purchases estimated not to exceed $5,000 mayu be solicited by use of written request, telegrams, telephone, or "inperson" contact, whichever is considered by the purchasing officer to be the most appropriate for the particular transaction. Quotations or offers for purchases estimated to exceed $5,000 must be in writing and in accordance with § 1-3.603-1(d) of this title and § 1-16.201 entitled "Request for Quotations."

(b) When it is desirable to request quotations from outside the local trade area and time does not permit the use of written solicitations, telegraphic solicitation may be used. Telegraphic solicitations shall not ordinarily be used to solicit prices from local suppliers nor shall they be used if written requests for quotations can be timely made.

(c) In the absence of urgency, and where the estimated dollar amount of the purchase is between $1,000 and $10,000 quotations shall be obtained from at least three sources of supply. [36 FR 11647, June 17, 1971, as amended at the 42 FR 40203, Aug. 9, 1977]

§ 29-3.603-2 Data to support small purchases.

When other than the lowest responsive quotation from a responsible supplier is used as the basis for the purchase, documentation of the reason(s) for rejecting any lower quotation and the name of the individual responsible for making the determination to reject such quotation shall be made a part of the purchase file.

§ 29-3.604 Imprest funds (petty cash) method.

§ 29-3.604-3 Agency responsibilities.

The Deputy Assistant Secretary for Administration and Management is responsible for the review and action prescribed by § 1-3.604-3 of this title

and for requesting exceptions and additions in accordance with § 1-3.604-5 of this title.

§ 29-3.604-4 Use of imprest funds.

Purchases made from imprest funds shall follow the policy of purchasing satisfactory merchandise at fair prices without favoritism to any vendor. The item to be purchased, its price, and the quantity involved generally govern the action to be taken. If a special item costing only a few dollars is required, a minimum amount of time and expense should be devoted to consummating the transaction. However, where feasible, purchases should be made from firms offering prices most advantageous to the Department. A vendor may be reimbursed by a payment from imprest funds for the cost of the supplies and the parcel post or other delivery charges which the vendor has already prepaid. Payments to common carriers for line haul transportation are allowable up to $100.00.

[42 FR 40203, Aug. 9, 1977]

§ 29-3.604-5 Limitations.

Officials responsible for small purchases should consider the use of imprest fund procedures for purchases amounting to $150 or less.

[42 FR 40203, Aug. 9, 1977]

§ 29-3.604-6 Procurement and payment.

Purchases through use of imprest funds shall be accomplished as follows:

(a) Requisitioning offices shall submit a requisition, D/L Form 1-1, to the Department's imprest fund cashier showing necessary information such as estimated cost, unit of issue, quantity, description, delivery requirements, and appropriation chargeable.

(b) The imprest fund cashier shall prepare D/L Form 1-110 showing appropriate information.

(c) If the method of purchase is cash upon delivery of merchandise, the vendor's representative will sign D/L Form 1-110 indicating receipt of cash and will be furnished a copy of the form. One copy shall be forwarded to the requisitioning office and the original and two copies shall be retained by the imprest fund cashier.

(d) If the method of purchase requires pick up of the merchandise, D/ L Form 1-110 is to be signed by the DOL representative authorized to make the actual purchase upon receipt of the cash by the individual. One copy shall be retained by the imprest fund cashier. The original and three copies shall be submitted to the vendor who shall sign the four copies upon supplying the merchandise and receiving the cash. The vendor may retain one copy. The DOL representative shall return the original and two copies to the imprest fund cashier as well as cash register receipt, sales slip, or invoice, whichever shall be furnished by the vendor. Any excess funds are returned to cashier at this time. One copy of D/L Form 1-110 shall be forwarded to the requisitioning office and the imprest fund cashier shall retain the original and two copies.

(e) A purchase for which cash is advanced must be confirmed and the receipt returned not later than the fifth working day following the date of the advance; otherwise, the cashier shall take immediate action to recover the cash advanced.

(f) The imprest fund cashier may reimburse Department employees for amounts paid by them for approved purchases. The employee being reimbursed shall furnish the cashier with a vendor's receipt, or its equivalent as described in paragraph (d) of this section, except as otherwise provided. In addition to the vendor's receipt, the appropriation, allotment, and other identifying symbols shall be furnished to the imprest fund cashier on a Form D/L 1-1. Procedures outlined in paragraph (d) of this section will apply except that the vendor's signature on the D/L Form 1-110 will not be necessary.

(g) The cost of cash purchases must be reasonable and controlled by ordinary shopping procedures involving price comparison (competition) and the purchaser shall take advantage of any discounts obtainable.

[36 FR 11647, June 17, 1971, as amended at 42 FR 40203, Aug. 9, 1977]

§ 29-3.604-50 Designation of cashiers.

(a) The Deputy Assistant Secretary for Administration and Management, designates employees as cashiers or alternate cashiers. Upon receipt of the designation and notice of assignment to a position covered by a position schedule fidelity bond, employee is authorized to perform the duties of cashier or alternate.

(b) An alternate cashier functions in the capacity of a cashier during the absence of the cashier and/or where the volume of work requires the cashier to have alternates, in which case funds will be advanced on the following basis: The cashier and the alternate cashier will count the funds advanced in each others presence and shall immediately verify it with each other. A signed receipt for all funds advanced or returned shall be exchanged between the alternate cashier and cashier.

§ 29-3.604-51 Instructions for cashiers.

Prescribed procedures for operating an imprest fund are contained in the Treasury Department "Manual of Procedures and Instructions for Cashiers Operating under Executive Order No. 6166." This manual is furnished by the Treasury Department for use by each person who is designated as a cashier. [42 FR 40204, Aug. 9, 1977]

§ 29-3.604-52 Accountability of imprest funds.

(a) Custody and safeguarding of funds. Cashiers shall at all times be able to account for the full amount of the fund, by way of cash on hand, uncashed Government checks, sales slips, invoices, unpaid reimbursement vouchers, or interim receipts for cash. Employees designated to serve as cashiers will act as agents of the disbursing officers who advance them the necessary funds. Since cashiers are personally accountable and responsible for the custody of and payments made from the fund, employees upon whom authority is conferred shall be fully informed of their responsibility. They are required to utilize, to the fullest extent available, means of safeguarding cash advanced to them, and be supplied with suitable facilities for