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major components listed in the descrip- several equally qualified construction tion required by paragraph (b) (1), contractors, the contract should be above. To the extent available, identify awarded on the basis of the lowest realabor, material, and indirect costs, and sonable fee proposal. any amount included for contingencies. (c). A completely documented record List separately materials and equipment shall be made of all steps and decisions that will be furnished by the Govern- in the selection of a contractor. ment and the total related cost. (ii) Prepare an estimated time for

8 1-18.307 Negotiations. completion with an explanation of the § 1-18.307-1 Fixed-price construction basis therefor.

contracts. (4) Maximum fized fee. Determine, in

Negotiations will be conducted with accordance with agency procedures, the the responsive offerors within a commaximum fixed fee that may be paid for

petitive price range except where an the required services.

award is made on initial proposals with(c) Conclusion of negotiations. Nego

out negotiations, all as provided in tiations relative to the contract and fee

§ 1-3.805. shall be concluded at as early a date as practicable. When mutually acceptable

§ 1-18.307–2 Cost-reimbursement type terms of contract, estimate of cost, and

contracts. estimate of time of performance have (a) Negotiations shall be conducted been agreed to, the fixed fee should be in accordance with agency procedures. negotiated. Generally, negotiations rela- (b) The factors set forth in § 1-3.808 tive to the fee shall be successfully con- should be considered in negotiating the cluded prior to making commitment on fee for a cost-reimbursement type final selection. In the event it is neces- contract. sary to use a letter contract, it should include the basis for determining the fee,

§ 1-18.308 Audit as a pricing aid. which establishes the possible range of See § 1-3.809. fees for the work. Should it be evident in

§ 1-18.309 Record of negotiations. the course of negotiations that no hope exists for a meeting of the minds within The record of negotiations shall demthe previously determined maximum onstrate conformity with the requireallowable (ceiling) fee, then considera

ments of § 1-3.101 and, to the extent tion should be given to terminating nego- applicable, include the general type of tiations and entering into a similar information indicated in the paragraphs action with the next best qualified con

below. The scope and detail of informatractor (1-18.307–2).

tion to be included generally should be

determined on the basis of the nature, § 1-18.306–3 Selection of a cost-reim.

dollar value, and complexity of the transbursement type contractor.

actions involved: (a) Construction contractors for cost- (a) Name and address of contractor; reimbursement type contracts shall be (b) Location of construction site; selected on the basis of qualifications and (c) Contract number; the ability to provide the particular serv- (d) Nature of contract action (letter ices required (see § 1-3.805-2). The eval

contract, conversion of letter contract, uation for purposes of determining etc., as well as type of contract); relative qualifications of firms under (e) Program basis for the contract; consideration should be performed in (f) Description of the project; accordance with agency procedures.

(g) Total price or estimated cost; (b) Fee proposals for construction (h) Term of contract and construction services should be secured as a part of schedules; the selection procedure if evaluation (i) Justification for use of negotiation shows that there are several available in lieu of formal advertising; contractors equally well qualified to un- (j) The request for proposals; dertake construction of a project on a (k) Number of firms invited to submit CPFF basis, and if the scope is sufficiently proposals and a list of the firms quoting defined to permit a reasonably accurate along with their respective quotations; estimate of the cost of the work. Where (1) Reasons for selection of the prothese conditions prevail and amounts of posed contractor (If a fixed-price award the fee proposals are the only significant is made to other than the low offeror, differences in the overall proposals of explain.);

(m) A summary of principal points in- to the construction site for incorporation volved in negotiation and the final results in the building or work. thereof (The record should be in suff- (c) "Component” means any article, cient detail to reflect the most significant material, or supply directly incorporated considerations controlling the establish- in construction material. ment of the initial or revised price or (d) “Domestic construction material" fee.);

means an unmanufactured construction (n) For fixed-price contracts, an ex- material which has been mined or proplanation of why cost or pricing data duced in the United States, or a manuwere, or were not, required (see § 1-3.807) factured construction material which has and, if not required in the case of any been manufactured in the United States price negotiation in excess of $100,000, if the cost of its components which are give the basis for determining that the mined, produced, or manufactured in the price resulted from adequate price com- United States exceeds 50 percent of the petition (If cost or pricing data were sub- cost of all its components. The cost of mitted and a certificate of cost and pric- components shall include transportation ing data was required (§ 1-3.807-4), show costs to the place of incorporation into the reliance ced upon the factual cost the construction material in the case or pricing data submitted and the use of components of foreign origin, duty of these data by the contracting officer (whether or not a duty-free entry cerin determining his total price objective.) ; tificate may be issued).

(0) For cost-reimbursement type con- (e) "Nondomestic construction matetracts, the fee determination in detail in- rial” means a construction material other cluding the cost breakdown used to arrive than a domestic construction material. at the estimated cost for fee computation (f) "United States” means the States, purposes;

the District of Columbia, Puerto Rico, (p) Names and locations, when avail- American Samoa, the Canal Zone, the able, of prospective subcontractors and Virgin Islands, and any other place subestimated amounts of respective subcon- ject to its jurisdiction. tracts which will exceed $100,000; (q) If the contract contains any form

§ 1-18.602 Buy American policy. of price redetermination or escalation, § 1-18.602-1 General. the reasons for such inclusion;

Only domestic construction material (r) General types and values of Gov

shall be used in the performance of conernment property to be furnished;

tracts for construction in the United (s) Funding data; and

States made by executive agencies, ex(t) The names and affiliations of all

cept for particular material as to which persons taking part in or present at the

it is determined: negotiations.

(a) By the agency head, that to make Subpart 1-18.4—[Reserved] such requirement is impracticable;

(b) In accordance with agency proSubpart 1-18.5—[Reserved]

cedures, that domestic construction maSubpart 1–18.6—Buy American Act

terial is unavailable in sufficient and

reasonably available commercial quan§ 1-18.600 Scope.

tities and of a satisfactory quality; or This subpart implements the Buy (c) In accordance with $ 1-18.603, American Act (41 U.S.C. 10a-10d) and

that to make such requirement would the policies set forth in Executive Order

unreasonably increase the cost. 10582, December 17, 1954 (3 CFR, 1954–

§ 1-18.602–2 Determining domestic 1958 Comp., p. 230), as amended by Ex

construction material. ecutive Order 11051, September 27, 1962 (3 CFR, 1959–1963 Comp., p. 635), with

In determining whether a construction

material is a domestic construction marespect to construction contracts.

terial: § 1-18.601 Definitions.

(a) Only the construction material As used in this subpart, the following and its components shall be considered; definitions apply:

and (a) “Construction" means construc- (b) A component shall be considered tion, alteration, or repair of any public

to have been mined, produced, or manubuilding or public work.

factured in the United States (regardless (b) “Construction material" means

of its source in fact) if the construction any article, material, or supply brought material in which it is incorporated is manufactured in the United States and rial shall also include any applicable the component is of a class or kind de- duty. Computations shall be based on termined by the agency concerned to be costs on the date of opening of bids or not mined, produced, or manufactured proposals. in the United States in sufficient and

8 1-18.603–3 Deviations by agency reasonably available commercial quanti

head. ties and of a satisfactory quality.

Deviations from the requirements of § 1-18.602—3 Panamanian material

$ 1–18.603–1 may be authorized by the used in Canal Zone.

agency head in accordance with $ 1-1.009 Construction material mined, pro- of this chapter, the Buy American Act, duced, or manufactured in the Republic and Executive Orders 10582 and 11051. of Panama, when purchased for use in the Canal Zone, is exempted from the

§ 1-18.603-4 Small business. provisions of the Buy American Act (un- Nothing in § 1-18.603–1 shall affect the der item 3 of the Memorandum of Un- authority or responsibility of an execuderstandings Reached Ancillary to the tive agency to place a fair proportion of Treaty of Mutual Understanding and its total contracts with small business Cooperation between the United States concerns. of America and the Republic of Panama, § 1-18.604 Invitation provision. signed January 25, 1955).

Except for contracts executed on & 1–18.602–4 Noting exceptions and Standard Form 19, invitations for bids findings.

and requests for proposals for affected Exceptions for nondomestic construc- construction work shall include the foltion material because use of particular

lowing provision: domestic construction material would be INFORMATION REGARDING BUY AMERICAN ACT impracticable or would unreasonably in- (a) The Buy American Act (41 U.S.C. 10acrease the cost or because domestic con- 10d) generally requires that only domestic struction material is unavailable shall construction material be used in the perbe noted in the contract. Findings justi

formance of this contract. (See the clause fying such exceptions shall be made a

entitled "Buy American” in Standard Form

23A, General Provisions, Construction Conmatter of public record.

tract.) This requirement does not apply to § 1-18.603 Unreasonable cost determi. the following construction material Or nation.


(List the excepted construction material § 1-18.603-1 General.

or components.] A determination shall be made that

(b) (1) Furthermore, bids or proposals the use of domestic construction mate

offering use of additional nondomestic con

struction material may be acceptable for rial would unreasonably increase the

award if the Government determines that cost where, with respect to each particu- use of comparable domestic construction malar construction material:

terial is impracticable or would unreason(a) A bid or proposal offers nondo- ably increase the cost or that domestic conmestic construction material (not listed

struction material (in suficient and reasonas excepted in the invitation for bids or

ably available commercial quantities and of request for proposals), the cost of which,

a satisfactory quality) is unavailable. Rell

able evidence shall be furnished justifying plus 6 percent thereof, is less than the

such use of additional nondomestic concost of comparable domestic construction struction material. material; and

(2) Where it is alleged that use of domes(b) That bid or proposal offers the

tic construction material would unreason. lowest price of any received, after adding

ably increase the cost:

(i) Data shall be included, based on to each bid or proposal, for evaluation

reasonable canvass of suppliers, demonstratpurposes, 6 percent of the cost of all

ing that the cost of each such domestic nondomestic construction material, construction material would exceed by more which qualifies under paragraph (a), than 6 percent the cost of comparable nonabove, offered in each bid or proposal. domestic construction material. (All costs

of delivery to the construction site shall be § 1-18.603–2 Cost computation.

included, as well as any applicable duty.) The cost of construction material shall

(ii) For evaluation purposes, 6 percent of be computed as including all cost of

the cost of all additional nondomestic con

struction material, which qualifies under delivery to the construction site. The

paragraph (1), above, will be added to the cost of nondomestic construction mate- bid or proposal.

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(3) When offering additional nondomestic tors, materialmen, or suppliers with construction material, bids or proposals may which the contractor is associated or afalso offer, at stated prices, any available

filiated, for a period of 3 years after comparable domestic construction material,

such finding is made public. (For debarso as to avoid the possibility that failure of a nondomestic construction material to be

ment procedures, see Subpart 1-1.6.) acceptable, under (1), above, will cause re

Subpart 1-18.7— [Reserved) jection of the entire bid.

Subpart 1-18.8—Termination of § 1-18.605 Contract clause.

Construction Contracts
Except for contracts executed on
Standard Form 19, contracts for affected § 1-18.800 Scope.
construction work shall include the fol-

This subpart sets forth policies and lowing clause:

procedures regarding the termination of BUY AMERICAN

contracts for the convenience of the

Government or for default which sup(a) Agreement. In accordance with the Buy American Act (41 U.S.C. 10a-10d), and

plement the policies and procedures in Executive Order 10582, December 17, 1954

Part 1-8. (3 CFR, 1954–58 Comp., p. 230), as amended

§ 1-18.801 Definitions. by Executive Order 11051, September 27, 1962 (3 CFR, 1959–63 Comp., p. 635), the Con

See $ 1–8.101. As used in this subpart, tractor agrees that only domestic construc

the following terms have the meanings tion material will be used (by the Contrac- set forth below. tor, subcontractors, materialmen, and sup- (a) “Construction equipment” means pliers) in the performance of this contract, automotive vehicles, earth

movers, except for nondomestic material listed in the

cranes, batching plants, crushers, pavers, contract. (b) Domestic construction material. "Con

mixers, generators, compressors, pumps, struction material" means any article, ma

drills, welders, forms, and other items of terial, or supply brought to the construction equipment (other than hand tools) used site for incorporation in the building or work. or capable of being used in construction An unmanufactured construction material is work. a “domestic construction material" if it has (b) "Terminated portion of the conbeen mined or produced in the United States.

tract” with respect to a contract which A manufactured construction material is a "domestic construction material” if it has

has been completely terminated for the been manufactured in the United States and

convenience of the Government means if the cost of its components which have been

the entire contract, notwithstanding the mined, produced, or manufactured in the completion of, and payment for, individUnited States exceeds 50 percent of the cost ual items of work prior to termination of all its components. “Component” means (see § 1-18.802–4). any article, material, or supply directly incorporated in a construction material.

$ 1–18.802 Termination for convenience (c) Domestic component. A component

of the Government. shall be considered to have been “mined, produced, or manufactured in the United

See Subpart 1–8.2 for general principles States" (regardless of its source in fact) if

and procedures applicable to all termithe article, material, o supply in which it

nations for the convenience of the Govis incorporated was manufactured in the ernment, Subpart 1–8.3 for general United States and the component is of a class principles and procedures applicable to or kind determined by the Government to be termination of fixed-price contracts for not mined, produced, or manufactured in the United States in sufficient and reasonably

convenience, and Subpart 1-8.4 for genavailable commercial quantities and of a

eral principles and procedures applicable satisfactory quality.

to termination of cost-reimbursement

contracts for convenience. $ 1-18.606 Violations.

§ 1-18.802–1 Use of clauses. If the head of the agency concerned finds there has been a failure to comply

Use of a clause providing for termina

tion for convenience of the Government with the Buy American provisions of the

is required in every construction contract contract, he shall make public his find

in excess of $10,000. Contracts which do ings and no other contract for the con

not exceed $10,000 may provide for terstruction, alteration, or repair of any mination for convenience. The specific public building or public work in the

requirements regarding the use of such United States or elsewhere shall be clauses are as follows: awarded, as provided in the Buy Ameri- (a) Fixed-price construction concan Act, to the contractor, subcontrac- tracts. See § 1-8.700–2(a) (5) and (6)

regarding the use of Termination for tory (§ 1-8.101(e)) generated under Convenience of the Government clauses. construction contracts. They apply to

(b) Cost-reimbursement type con- termination inventory and to any other struction contracts. (1) See $ 1--8.700–2 inventory which is: (a) (3) regarding the use of Termination (a) Excess because of a contract for Convenience of the Government modification; or clauses.

(b) Excess under a price revision type (2) See § 1-8.700–2(c) regarding the contract; and the cost thereof is inuse of an Excusable Delays clause.

cluded in the contractor's claim for an § 1-18.802–2 Submission of settlement

equitable adjustment or revision in proposals.

price. They also apply to all property

which is excess to the requirements of The settlement proposal formats pre- a cost-reimbursement type contract and scribed in $ $ 1-8.802 and 1-8.803 may be include excess Government-furnished used with such modifications as agencies

property under any type contract. consider necessary.

§ 1-18.802–7 Separate schedules. § 1-18.802–3 Bases for settlement proposals.

See § 1-8.503–2. Construction equip

ment shall be submitted on separate See § 1-8.307-2.

inventory schedules. (a) Inventory basis. The inventory basis of settlement is appropriate for use

§ 1-18.802–8 Return of materials to

stock. under the following circumstances: (1) The partial termination of a con

Materials taken from stock and shipped struction contract; and

to the construction site shall be con(2) The partial or complete termina- sidered common items (8$ 1-8.101(b) tion of supply orders under any termi- and 1-8.503-5) and shall be returned to nated construction contract.

stock unless the contractor establishes (b) Total cost basis. The total cost that such items cannot be utilized withbasis of settlement shall be used in all out loss. Contractors shall not include cases where a construction contract is in their settlement proposals the cost of completely terminated. Line 10, section any material so returned. Any costs in II of the format set forth in § 1-8.802–2,

connection with the withdrawal, reDeduct-Finished Product Invoiced or placement, or transportation of such To Be Invoiced” is not to be used. All materials may be included as "Other progress and other payments shall be Costs.” (Section II, Item 8, and Section used to reduce the gross amount of the II, Item 5, respectively, of the formats settlement.

set forth in 8$ 1-8.802-1 and 1-8.802–2.) § 1-18.802–4 Completed items.

§ 1-18.802–9 Allocability of contractor

acquired property on inventory Work in place accepted by the Govern

schedules. ment under a fixed-price construction contract is not to be considered a com

It is the responsibility of the conpleted item even though that work may

tracting officer to determine that all have been paid for at prices set forth in property listed on inventory schedules the contract.

is qualitatively and quantitatively allo

cable to the terminated contract or the § 1-18.802–5 Allowance for profit.

terminated portion thereof, taking into See § 1-8.303. In a construction con- consideration any work in place. Also, tract, for the purpose of computing prof- where applicable, the contracting officer it, that portion of settlements by the must determine that the difference beprime contractor with construction sub- tween the cost of allocable property on contractors for actual work in place at the inventory schedules and the total the job site, as distinguished from ma- cost of property included in the settleterials on hand and preparations made ment represents the cost of property to complete the work, shall be considered incorporated in the work or consumed in compensation for services delivered to the performance thereof. the prime contractor prior to the ef

§ 1-18.802–10 Contractor's certificate fective date of termination.

property incorporated in work. § 1-18.802–6 Contractor inventory.

Each contractor whose settlement proThis subpart and Subpart 1–8.5 cover posal includes the cost of property the disposition of all contractor inven- (materials, etc.) incorporated into the

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