§ 6-3.213 Technical equipment requiring standardization and interchangeability of parts.

(a) Policy. It is the Department's policy to utilize the negotiation authority contained in section 302(c) (13) of the Act (41 U.S.C. 252(c) (13)) wherever standardization of technical equipment to be purchased in the United States for use in the Foreign Service is necessary in the public interest. This policy cannot be implemented in individual cases until it has first been determined by the Department that: The public interest would be best served by standardization due to special situations or particular localities in which the equipment is to be used; the equipment is in fact technical equipment; and procurement without formal advertising is necessary. All three determinations must be based upon findings of fact by the posts or offices concerned.

(b) Application. In order to assist posts in identifying the "special situations and particular localities" where standardization might be justified there follow several examples:

(1) A "Particular locality" might be a post that is remote from available sources of supply for parts or necessary repair services.

(2) Special situations might be ones in which:

(i) For security or other reasons, it is necessary for maintenance to be performed by U.S. citizen employees.

(1) For reasons other than remoteness of locality, it is necessary for parts to be stockpiled by the Government.

(1) Costs of either parts or repair services are prohibitive in the absence of standardization.

(c) Justification. Since standardization is an exception to a general policy of formally advertised procurement within the United States, it can be justified by the Department only when failure to standardize will result in significantly increased costs or interference with a vital program.

(d) Limitations. (1) Posts, or Regional Supply Centers on a regional basis, that consider standardization justifiable on a "particular locality" basis should report findings of fact concerning the following:

(1) The distance from the nearest adequate source of supply for parts for

all known American makes of the particular type of equipment.

(ii) The distance from the nearest adequate source of service for all known American makes of the particular type of equipment.

(ii) The number of units of each make or brand of the equipment on hand. (iv) The recommended choice of make or brand to be standardized upon in accordance with post consideration of the following factors:

(a) Local service capability.

(b) Local parts availability and cost. (c) Suitability of various makes under local conditions.

(d) Availability of parts or service from U.S. Government sources.

(e) Standardization by other U.S. Government agencies at the post or in the host country.

(f) Present equipment inventory by make.

(g) Price.

(h) Probable future trends of the factors in this subdivision.

(2) Any post or Departmental office that considers standardization justifiable on a "special situation" basis should fully describe the situation in a report to the Supply and Transportation Services Division including the recommended choice of make or brands to be standardized upon in accordance with consideration of the factors in subparagraph (1) (iv) of this paragraph insofar as they apply.

and

(e) Determinations findings. Upon receipt of requests for standardization accompanied by findings of fact upon which ultimate determinations may be based, the Supply and Transportation Services Division will prepare formal determinations for approval. Submitting posts or Departmental offices will be notified of approval and, if standardization is approved, will be advised of the period for which it is effective. [32 F.R. 3936, Mar. 10, 1967]

Subpart 6-3.3-Determinations,
Findings, and Authorities

§ 6-3.301 Scope of subpart.

(a) Formal written findings and determinations (F&D) shall be made in accordance with Subpart 1-3.3 of Part 1-3 of this title and this subpart. [31 F.R. 6623, May 4, 1966]

§ 6-3.302 Determinations and findings required.

(a) Findings and determinations made under the following sections of this title are to be prepared for the signature of the Assistant Secretary for Administration and submitted for review through the Chief, Supply and Transportation Division:

(1) Experimental, developmental, or research work in excess of $25,000 under FPR 1-3.211.

(2) Purchase not to be publicly disclosed for reasons of national security under FPR 1-3.212.

(3) Technical equipment requiring standardization and interchangeability of parts under FPR 1-3.213.

(4) Omission of the Examination of Records Clause from negotiated contracts with foreign contractors and foreign subcontractors under Subpart 1-6.10 of this title.

(b) F&D made under the following sections of this title are to be prepared for the signature of the Chief, Supply and Transportation Services Division:

(1) Experimental, developmental, or research work not exceeding $25,000 under FPR 1-3.211.

(2) The use of a cost, cost-plus-afixed-fee, (or incentive-type contract outside the United States under FPR 1-3.405-1.

(c) Authority to make F&D under the following sections of this title is delegated to the contracting officers and shall be executed by such contracting officers within the contracting authority delegated to them:

(1) National emergency under FPR 1-3.201.

(2) Public exigency under FPR 13.202.

(3) Impracticable to secure competition by formal advertising under FPR 1-3.210.

(4) The rejection of all bids and negotiation after advertising under FPR 13.214.

(5) The use of a cost, cost-plus-afixed-fee, or incentive-type contract within the United States under FPR 1-3.405-1.

(6) The estimated cost and fees to be paid under a cost-plus-a-fixed-fee contract as required by FPR 1-3.302(a).

(7) The authorization and approval of advance payments under FPR 1-30.405 and unusual progress payments under 1-30.505(a).

(8) The waiving of the requirement for submission of cost and pricing data under FPR 1-3.807-3 (b) (2) and waiving the use of the clauses in FPR 1-3.814-1 through 1-3.814-3.

[31 F.R. 6623, May 4, 1966, as amended at 35 F.R. 1237, Jan. 30, 1970; 36 F.R. 20512, Oct. 23, 1971]

§ 6-3.305 Form and requirements of determinations and findings.

(a) Each F&D shall include a description of the property or services being procured and, except for class determinations, the estimated cost including, when applicable, statement of the fee. The findings shall include all facts which are relevant to the determination or determinations being made. The extent of competition and potential sources shall be shown or, if no competition is intended, the basis for the decision. The reasons for selecting a particular method of contracting must be explained.

(b) The determination or determinations must be a clear and concise statement of the decision reached and must clearly identify the specific individual purchase or contract.

(c) Class determinations may be made for a period not in excess of 6 years and shall be reviewed annually.

[31 F.R. 6624, May 4, 1966]

§ 6-3.308 Preservation of data.

(a) The original of class F&D under 6-3.302(a) (3) will be retained by the Chief, Supply and Transportation Services Division with facsimile copies to the preparing office and contracting officer.

(b) The originals of all other F&D with supporting documents shall be filed in the procurement office contract file. Overseas posts shall file one copy of the F&D with the General Accounting Office copy of the contract.

[31 F.R. 6624, May 4, 1966]

Subpart 6-3.4-Types of Contracts

SOURCE: The provisions of this Subpart 6-3.4 appear at 33 F.R. 4674, Mar. 19, 1968, unless otherwise noted.

§ 6-3.400 Scope of subpart.

This subpart provides for the types of contracts which are authorized for use outside the United States. To the extent provided for, it also applies to contracts for performance within the United States.

§ 6-3.404 Fixed-price contracts.

(a) Description. This type of contract may provide for pricing on the basis of either:

(1) Units of the items, supplies or services being procured (often referred to as "end-product" contracts); or

(2) Effort or time expended in the performance of the contract (sometimes referred to as "level-of-effort" tracts).

con

(b) Application. The fixed-price contract (without incentive provisions) provides the only type of contract pricing authorized for use outside the United States. The end-product variant, described in paragraph (a) (1) of this section, should be used when feasible because it provides maximum contractor performance motivation.

§ 6-3.404-2 Firm fixed-price contract. Application. Firm fixed pricing shall always be used for performance outside the United States unless lower base prices can be obtained by the use of fixed prices with escalation or redetermination provisions. An example of a use for this type of contract might be for equipment procured with a foreign currency in excess supply.

§ 6-3.404-3 Fixed-price contract with escalation.

(a) Application. Use of this type of adjustable pricing in contracts for performance outside the United States is usually appropriate only in supply or service contracts of either indefinite or multiple delivery types wherein existing or anticipated market instability, due to identifiable factors, inhibits the negotiation of prices or rates firm for the entire performance period of the contract. An example of the necessity for price escalation provisions is an indefinite delivery contract at a post for gasoline, priced in a currency subject to unusual inflationary pressures. An example of the use of labor escalation provisions would be an annual contract for janitorial services at a post in a country with a rapidly rising cost of living. Labor escalation provisions should be based, when possible. on specific rates or indices recognized locally.

(b) Limitations. This type of contract shall not be used unless:

(1) A simple formula or provision is included in the contract which will operate 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 redetermination 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 a formula for escalation.

(b) Limitation. The necessity for repricing this type of contract at the stated time or times greatly limits its usefulness. § 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

tract.

Time and materials con

(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 it 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; i.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) Insufficient 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, a 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. § 6-3.410-51 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. § 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. § 6-3.452 Nonpersonal service contracts.

(a) Application. The pricing of this type of contract, for performance out