Subpart 9-1.51 Considerations in Selecting Award §9-1.5100 Scope of subpart. This subpart provides guidance on the appropriate use of award instruments consistent with the Federal Grant and Cooperative Agreement Act of 1977, Pub. L. 95-224 and OMB implementation of this Act as published in the Federal Register August 18, 1978 (41 FR 36860). §9-1.5101 Applicability. This subpart applies to all program and individual transactions where the choice of award instruments is within the administrative discretion of DOE and is not otherwise proscribed or limited by law. §9-1.5102 Selection criteria. (a) A variety of award instruments is available as the means for defining the terms and conditions, and the nature of the relationship between DOE and eligible recipients. The award instruments are intended to be different in purpose, application, content, and nature. When properly employed, they create different relationships between the parties. Because of these differences, the decision to use a particular instrument to implement a particular purpose must be made deliberately. The determination of whether a program, to be implemented through individual transactions, is principally one of acquisition or assistance will be made at a DOE policy level. DOE Secretarial Officers will ensure that this determination is either made or reviewed at a policy level. (b) Procurement contracts. A procurement contract shall be used as the legal instrument to reflect a relationship between the Federal Government and a state or local government or other recipient whenever (1) the principal purpose of the instrument is the acquisition by purchase, lease, or barter, of property, or services for the direct benefit or use of the Federal Government; or (2) whenever DOE determines in a specific instance that the use of a type of procurement contract is appropriate. (c) Grants. A type of grant agreement shall be used as the legal instrument to reflect a relationship between the Federal Government and a state or local government or other recipient whenever the principal purpose of the relationship is the transfer of money, property, services, or anything of value to the state or local government or other recipient in order to accomplish a public purpose of support or stimulation authorized by Federal statute, rather than acquisition, by purchase, lease, or barter, of property or services for the direct benefit or use of the Federal Government; and no substantial involvement is anticipated between DOE, acting for the Federal Government, and the state or local government or other recipient during performance of the contemplated activity. (d) Cooperative agreements. A type of cooperative agreement shall be used as the legal instrument to reflect a relationship between the Federal Government and a state or local government or other recipient whenever the principal purpose of the relationship is the transfer of money, property, services, or anything of value to the state or local government or other recipient to accomplish a public purpose of support or stimulation authorized by Federal statute, rather than acquisition by purchase, lease, or barter, of property or services for the direct benefit or use of the Federal Government; and substantial involvement is anticipated between DOE, acting for the Federal Government, and the state or local government or other recipient during performance of the contemplated activity. (e) Any public notice, solicitation, or request for applications or proposals should indicate whether the intended relationship will be one of procurement or assistance and state that the applicable DOE procurement regulations will govern if a procurement contract is entered into §9-1.5300 Scope of subpart. Subpart 9-1.53 Options This subpart applies to contracts for supplies and services other than for: (a) The construction, alteration, or repair of buildings, bridges, roads, or other kinds of real property (for these types of procurements see §9-18); (b) Research and development; or (c) Contracts to be awarded on a cost-reimbursement basis. However, it does not preclude the use of appropriate option provisions in such contracts. §9-1.5301 Definition. As used in this subpart, an option clause is a provision in a contract under which, for a specified time, the Government may elect to purchase additional quantities of the supplies or services called for by the contract, or may elect to extend the period of performance of the contract. §9-1.5302 Applicability. (a) Option clauses may be included in contracts where increased requirements within the period of contract performance are foreseeable, or where continuing performance beyond the original period of contract performance may be in the best interest of the Government. Because options require offerors to guarantee that orders will be filled if placed, their improper use could result in prices which are unfair to either the Government or the contractor. When additional requirements are foreseeble and subsequent competition would be impracticable because of such factors as production lead time and delivery requirements, the use of options may be preferable to later negotiating a price with the contractor at a time when it is the only practical source. (b) An option normally should not be used where it can reasonably be foreseen that (1) minimum economic production quantities will be procured at some future date, and (2) start-up costs, production lead time, and probable delivery requirements would not preclude adequate future competition. (c) Option provisions and clauses shall not be included in contracts when: (1) The supplies or services being purchased are readily available on the open market. (2) The contractor would be required to incur undue risks; e.g., the price or availability of necessary materials or labor is not reasonably foreseeable. (3) An indefinite quantity contract or requirements contract is appropriate except that options for continuing performance may be used in such contracts. (4) Market prices for the supplies or services involved are likely to change substantially. (5) The option quantities represent known firm requirements for which procurement funds are available. §9-1.5303 Procedures. (a) When a contract is to contain an option quantity, the solicitation must contain an appropriate option provision and the contract file shall be documented with a justification for the inclusion of the option expressed as a percentage of the base contract quantity. If the contract is to be negotiated, the determination and findings shall set forth the approximate quantity to be awarded and the extent of the increase to be permitted by the option. The contract shall limit the additional quantitites of supplies or services which may be procured, or the duration of the period for which performance of the contract may be extended under the option and will fix the period within which the option may be exercised. Consideration shall be given to necessary lead time required to assure continuous production and the time required for additional funding and other necessary approval action. The period specified for exercising the option shall in all cases be kept to a minimum. (b) Solicitations containing option provisions should cover five basic points: (1) Quantity of additional supplies or services which may be procured. Where the exercise of the option would result in increased quantities of supplies, the option quantity should be expressed in terms of a specified number of additional units or as a percentage of the base quantity. Where exercise of the option would result in an increase in the performance of services, the option may be similarly expressed in terms of the units or percentages of the work contained in the contract (e.g., person hours). Where exercise of the option would result in an extension of the duration of the contract, the option may be expressed in terms of a specific date or dates or of an additional time period such as days, weeks, or months. Generally the quantity subject to the option should not exceed the basic quantity by more than 25%. (2) The period within which the option may be exercised. The contract shall fix the period within which the option may be exercised. The period specified shall in all cases be kept to a minimum (generally no longer than 6 months). (3) Delivery terms for the option quantities. (4) Prices for the option quantities. The clause shall provide for firm unit prices for any additional quantity that may be ordered up to the maximum quantity of the option, or for any increase in the performance of services or extension of the duration of the contract. (5) A statement on the evaluation of bids or proposals. Solicitations shall state that evaluation will be on the basis of the firm quantity set forth in the schedule and the option quantity, if any, exercised at time of award. (c) The option clause normally should not contain a price control feature on the option quantities, such as a requirement that the option quantities be offered at prices no higher than those of the basic quantity. The use of price controls to avoid unreasonable offers on option quantities can be disadvantageous to the Government because the contractor may spread the cost of bona fide risks of option quantities to the basic quantity. §9-1.5304 Exercise of options. (a) The exercise of an option by the Government requires the Contracting Officer's written notification to the contractor within the time period specified in the contract. (b) Where the contract provides for price escalation and the contractor requests revision of price pursuant to such provision, or the provision applies only to the option quantity, the effect of escalation on prices under the option must be ascertained before the option is exercised. (c) Options should be exercised only if it is determined that: (1) Funds are available; |