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erate to escalate the price, within a ceiling, upward and downward from base levels upon the occurrence of the stated contingency or contingencies; and

(2) The base price levels are lower than those obtainable on a firm fixed price basis. $ 6–3.404–5 Prospective price redeter

mination at a stated time or times

during performance. (a) Application. The use of this type of adjustable pricing would be appropriate under conditions described in subsection 3 of this section when it is not possible to devise a practical escalatory formula. An example of an appropriate use of this type of contract at a post might be one for coal from a sole source wherein a fluctuating seasonal requirement and supply precludes agreement upon either a firm, fixed price or å formula for escalation.

(b) Limitation. The necessity for repricing this type of contract at the stated time or times greatly limits its usefulness. 8 6–3.406 Other types of contracts.

(a) Description. Although the hybrid contracts provided for in subsections 1 and 50 of this section provide for reimbursement of materials or services at actual cost, they are not to be considered as cost-reimbursement type contracts as provided for in § 1-3.405 of this title.

(b) Application. The pricing of the fixed-price portions of all types of contracts provided for in this section may be either firm or adjustable. When the pricing is on a time basis the rates must be inclusive of all profit and overhead. $ 6–3.406-1 Time and materials con

tract. (a) Application. This type of contract is generally useful outside the United States only in instances where it is impractical to price on an end-product basis as described in $ 6–3.404-1(a) (1), An example of a use for this type of contract at a post would be for a rewiring job when no reasonable proposals priced on an "end-product” basis are received because of cost estimation difficulties.

(b) Limitation. The disadvantages of this type of contract make it particularly unsuitable for use outside the United States in instances where any imported, dutiable materials are involved.

$ 6-3.406–2 Labor-hour contract.

(a) Application. This type of contract is often useful outside the United States in instances wherein is necessary to specify the number and category of laborers in the contract. An example would be an annual custodial contract at a post for a specified number of guards.

(b) Limitation. The pricing of this type of contract on a time basis provides minimum contractor performance motivation. $ 6-3.406–50 Combination contract.

(a) Description. The combination contract provides for supplies or services on a fixed-price basis, to the extent feasible, with certain specified items or services reimbursable at actual cost. The fixed-price portion of the contract shall be on an end-product basis when feasible.

(b) Application. This type of contract is particularly suitable for service contracts when it is impossible to estimate the costs of certain variable items or services necessary to performance of the contract. For example, a freight forwarding contract for an inland post wherein transportation and other specified charges could be paid by the contractor on an actual cost reimbursable basis. The contractor's own services would be provided for within the fixed-price portion.

(c) Limitations. This type of contract should provide for as large a portion as feasible of the items or services within the fixed-price portion of the contract because the reimbursable portion is subject to the same limitations as the materials portion of a Time and Materials contract. $ 6-3.408

Letter contract. (a) Application. The definitive contract to replace a Letter contract may be of any of the definitive types provided for in this chapter. An example of a Letter contract might be one at a post for emergency repair of damage caused by earthquake.

(b) Limitations. (1) Prior to the execution of a Letter contract the Chief, Supply and Transportation Services Division, or, in the case of posts, the Principal Officer, shall determine in writing that no other type of contract is suitable. The determination shall establish the limit of effectiveness of the Letter contract; 1.e., the date by which the definitive contract will be entered into. This date shall not be more than 90 days from the date of the Letter contract or the completion of 25 percent of the performance of the contract, whichever occurs first.

(2) The maximum liability under a Letter contract shall not exceed 50 percent of the total estimated contract price. $ 6–3.409 Indefinite delivery type con

tracts. These contracts are useful in satisfying requirements for supplies or services which recur on an irregular or unpredictable basis. They are sometimes referred to generically as “open end" or "option" contracts. Pricing, whether firm or adjustable, should be on an endproduct basis when feasible.

(a) Definite quantity contract-(1) Application. This type of contract should be used to satisfy requirements for supplies or services in which it is feasible to establish a definite total quantity commitment. For example, a seasonal but estimable requirement at a post for the delivery, upon order, of firewood, wherein an advantageous price could not be obtained without a definite quantity commitment.

(2) Limitation. Because this type of contract constitutes an obligation for the definite quantity contracted for, the performance period of the contract cannot cross fiscal years unless the commitment to place orders in the subsequent fiscal year is made subject to fund availability of that year.

(b) Requirements contract. Application: This type of contract is useful in fulfilling requirements for supplies or services in which the establishment of either total or minimum quantity commitments is not practical because:

(1) The requirement is sporadic; or

(2) Insuficient experience exists upon which to base either minimum or total quantities. As obligations are incurred only when individual orders are placed under this type of contract, the performance period may cross fiscal years. For this reason it is recommended that the performance periods of these contracts be cycled through the year to alleviate the fiscal yearend contracting load. For example, this type of contract might be used for maintenance services at a newly opened post.

(c) Indefinite quantity contract. Application: This type of contract is useful in satisfying recurring, irregular requirements for supplies or services when definite quantities cannot be anticipated although a minimum can be safely established. The minimum is conducive to obtaining an advantageous price. As this type of contract constitutes an obligation for the specified minimum, this portion of the contract cannot cross fiscal years. For all quantities in excess of the minimum, obligations are incurred only as individual orders are placed and, consequently, this portion of the contract may cross fiscal years. An example of the use of this type of contract would be one for gasoline at a post where enough usage experience exists to safely allow the establishment of a minimum commitment. § 6-3.410 Other types of agreements. $ 6-3.410–50 Price agreement.

(a) Description. A price agreement is similar to an indefinite delivery contract except that it contains no commitment to place orders. This type of agreement is sometimes referred to as an "openend contract”. However, the agreement is not a contract; it constitutes an offer by the supplier which may be withdrawn at any time before a specific order is made. When performance occurs under an order pursuant to the agreement, & contract is consummated, with respect to that order only.

(b) Application. This type of agreement may be useful in instances when alternate sources of supply or service are desired and certainty of performance is not a factor. As obligations are incurred only as orders are placed, the performance period of this type of agreement may cross fiscal years.

(c) Limitation. The absence of any commitment to place orders under this agreement is not conducive to the obtainment of advantageous prices. 86–3.410-51 Grant agreement.

(a) Application. Although performance under grant agreements need not always be subject to the same terms and conditions as contracts, such agreements should conform to the provisions of this title, to the extent feasible.

(b) Limitation. Grant agreements shall not be executed outside the United

States except upon specific authorization. $ 6–3.450 Definite delivery type con

tracts. Either of the definite delivery type contracts described in this section may be used for procurements when the time or schedule of delivery or performance can be specified in the contract.

(a) Single delivery contract-(1) Description. This type of contract provides for the filing of an isolated requirement when creation of a continuing relationship is not warranted because recurrence of the requirement is not anticipated within the current fiscal year. This type of contract is sometimes referred to as a "lump sum" contract.

(2) Application. This type of contract is used to satisfy a nonrecurring requirement for an item or lot of supplies or services. The pricing of this type of contract, for performance outside the United States, shall be firm. It shall be on an end product basis when feasible. An example might be a contract for the preparation and administration of an exhibit for a trade fair.

(3) Limitation. This type of contract constitutes an obligation of the current fiscal year for the item contracted for. As it is for a single requirement, however, delivery may be wholly or partly accomplished during a subsequent fiscal year.

(b) Multiple delivery contract—(1) Description. This type of contract provides for the satisfying of a service or supply requirement which continues or recurs on a predictable basis. Either firm or adjustable pricing may be used, on an end product basis when feasible. This type of contract is sometimes referred to as a term, continuing, annual or periodic contract.

(2) Application. This type of contract should be used to satisfy requirements for supplies or services, the deliveries or performance of which can be scheduled. An example might be an annual contract for custodial services at a post.

(3) Limitation. Because this type of contract constitutes an obligation for the total quantity scheduled for delivery, the performance period should not, ideally, cross fiscal years. If the performance period does cross fiscal years the obligation must be limited to the quantity scheduled for delivery within the current fiscal year with the remainder

made subject to the appropriations of the following fiscal year. 8 6–3.451 Supply contracts.

Application. The pricing of this type of contract, for performance outside the United States, whether firm or adjustable, shall be on an end product basis. 8 6–3.452 Nonpersonal service contracts.

(a) Application. The pricing of this type of contract, for performance outside the United States, whether firm or adjustable, shall be on an end product basis when feasible.

(b) Limitation. This type of contract, whether with an individual or organization, and whether for services professional or nonprofessional in character, shall be for services which meet criteria provided in $ 6–1.258–1 of this chapter. § 6-3.453 Construction contracts.

(a) Contracts for capital improvements, alterations, and major repairs, as described in 6 Foreign Affairs Manual 730, are not subject to the provisions of this title.

(b) Construction contracts, other than those described in paragraph (a) of this section are subject to the provisions of this title. All such contracts shall be firm priced and on an end-product basis, when feasible.

Subpart 6–3.6—Small Purchases

SOURCE: The provisions of this Subpart 6–3.6 appear at 33 F.R. 570, Jan. 17, 1968, unless otherwise noted. § 6–3.604 Imprest funds (petty cash)

method. $ 6-3.604-3 Agency responsibilities.

Regulations regarding the establishing of and accounting for imprest funds (operating cash advances) are contained in Volume 4, Foreign Affairs Manual (FAM), Financial Management. 8 6–3.604–6 Procurement and payment.

(a) Local employees may be authorized to make small purchases utilizing imprest funds.

(b) The services of cashiers, designated in accordance with 4 FAM 300, may be used to facilitate payments utilizing imprest funds.

(c) Standard form 1165 may be used, in accordance with procedures in 4 FAM

422, to document small purchases utiliz-
ing imprest funds if itemized receipts are
not available from vendor.
$ 6–3.605 Purchase order forms.
§ 6–3.605–3 Agency order forms.

(a) Prescribed forms. Foreign Service forms 455 and 455a (Purchase Order, Receiving Report and Voucher, and Continuation Sheet) are prescribed for post use for all purposes described in this section. These forms provide, in one set, a purchase or delivery order, receiving report and public voucher with requisite space for purchase data and budgetary, accounting and voucher payment data. They may be used as:

(1) A purchase order for small purchases;

(2) A delivery order under an established contract;

(3) Documentation in connection with a blanket purchase arrangement;

(4) A voucher.

(b) Procedures. (1) Local procedures shall be established by posts for local and third country small purchases. Regulations regarding the receiving report and public voucher portions are in 4 FAM 420.

(2) Posts are authorized to purchase from both government contract sources (such as Federal Supply Schedules and the Department's supply schedules) and noncontract sources within the United States.

(1) Procedures for purchasing for surface shipment from Federal Supply Schedule contractors are in $ 6–5.5004 of this chapter. They may be followed, as applicable, in purchasing from other government contract

The small purchase limitation of $2,500 does not apply to purchases under Government contracts existing at the time of purchase.

(ij) Posts should normally follow the procedures in § 6–5.5004 of this chapter in purchasing for surface shipment from noncontract sources so that payment to the vendor may be accelerated through usage of the Despatch Agent's services. The small purchases limitation of $2,500 applies to the aggregate total of the order (including all estimated handling and freight charges) to be paid to the vendor. $ 6–3.605-50 Unpriced purchase order.

(a) An unpriced purchase order is one for which the price is not established at the time of issuance of the order.

(b) An unpriced purchase order may

be used only when all of the following conditions are present:

(1) The order is one by a post to a U.S. source.

(2) It is impractical to obtain pricing in advance of issuance of the order; and

(3) The prices are known to be competitive.

(c) A realistic monetary limitation shall be placed on the unpriced purchase order. This amount is used to establish an obligation subject to adjustment when the firm price is established.

(d) The following clause shall be included in each unpriced purchase order:

NOTICE TO SUPPLIER This order is not valid for the procurement of an item or items for a total in excess of $----- Make delivery as soon as possible and submit invoice to the ordering officer of the purchase office named herein.

If total price of this order will exceed the
above amount or if you cannot make delivery
in accordance with the description set forth
herein, notify the undersigned ordering off-
cer immediately, giving your quotation or
proposed substitution or changes, and with-
hold shipment pending reply.
8 6–3.606 Blanket purchase arrange-

ments.
$ 6–3.606-1 General.

The primary purpose of the Blanket
Purchase Arrangement is to eliminate
documentation incident to individual
petty cash or purchase order purchases.
Its use, in itself, does not imply any in-
creased amount of purchases from the
vendor involved as the same policies that
apply to selection of suppliers in utilizing
the other small purchase methods must
be applied to individual purchases under
the arrangement.
$ 6–3.606–2 Authority to use blanket

purchase arrangements. Blanket purchase arrangements may be established for periods not to exceed 6 months and individual purchases under them may not exceed $2,500. Maximum cumulative limitations may not exceed $2,500 unless authorized by the Chief, Supply and Transportation Seryices Division. Arrangements established under existing contracts, however, need only conform to the terms of the contract. $ 6–3.606—3 Establishment of account.

(a) Separate accounts should be established for each user agency and Departmental office.

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(a) Documentation should normally consist of a letter or an exchange of letters providing agreement on the following points:

(1) Authority to the supplier to furnish items or services upon order within a stipulated general class for a stipulated period.

(2) The names of persons authorized to place orders, the method of placing such orders, the maximum limitation of individual orders (which, in any case, may not exceed $2,500), and the maximum cumulative purchase limitation under the arrangement.

(3) Method of establishing a record of sale and receipt under each order, preferably through use of the supplier's standard delivery ticket.

(4) Understanding that the obligation to purchase is limited to the extent of individual orders.

(5) Method and place of delivery if relevant.

(6) Time and/or trade discount terms that might apply to any standard pricing that might exist.

(7) Frequency of invoicing, preferably monthly, itemized and accompanied by the original of individual delivery tickets.

(b) Regardless of the type of documentation used, any reference to funding included therein should be specified as constituting an availability or reservation only of funds and not an obligation to purchase.

Subpart 6-3.8-Price Negotiation Policies and Techniques

§ 6-3.814

Contract clauses.

Requests for waivers from the inclusion of the clauses in contracts with foreign governments or agencies thereof shall be submitted with complete justification to the Chief, Supply and Transportation Services Division, in accordance with FPR 1-3.814-1(c), 1-3.814-2 (d), and 1-3.814-3(c). [31 F.R. 6624, May 4, 1966]

PART 6-5-SPECIAL AND DIRECTED

SOURCES

Subpart 6-5.50-Special and Directed Sources of Supply

Sec.

6-5.5000 6-5.5001

6-5.5002 6-5.5003

6-5.5004

Scope.

Motorized transportation equip

ment.

Mandatory source items.

Procurement for other posts.

Federal Supply Schedule contracts.

General.

6-5.5004-1

6-5.5004-2 Applicability. 6-5.5004-3

Availability.

6-5.5004-4 Procedure for central supply

posts.

AUTHORITY: The provisions of this Part 6-5 issued under sec. 205 (c), 63 Stat. 390, as amended, 40 U.S.C. 486(c); sec. 4, 63 Stat. 111, 22 U.S.C. 2658.

SOURCE: The provisions of this Part 6-5 contained in Dept. Reg. 108.510, 29 F.R. 12072, Aug. 25, 1964, unless otherwise noted. Subpart 6-5.50-Special and Directed Sources of Supply

§ 6-5.5000 Scope.

This Subpart 6-5.50 prescribes certain mandatory and optional sources of supply for overseas posts.

§ 6-5.5001 Motorized transportation equipment.

Motorized transportation equipment such as, but not limited to, automobiles, trucks, jeeps, and boats shall not be procured without the prior approval of the Department. Requests for approval along with justification shall be submitted to OPR/ST. [31 F.R. 6624, May 4, 1966]

§ 6-5.5002 Mandatory source items.

Regional supply center catalogs and Departmental directives specify certain mandatory sources for such items as calendars, office machines, Foreign Service specialty items, high value items technical and complex equipment, medical supplies and items stocked by GSA regional stores depots.

§ 6-5.5003 Procurement for other posts.

Central and constituent supply posts are authorized to procure supplies and services requested by other posts. The requesting post may obtain availability and price information from the procuring post. The procurement request must be obligated and cite the appropriate obligation, appropriation and allotment

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