Subpart 9-3.3 Determinations, Findings, and Authorities

§9-3.301 General.

Except as otherwise provided in §9-3.302, the determinations and findings required by FPR Subpart 1-3.3 shall be made. Except as otherwise provided in §9-3.303, the determinations and findings required by FPR Subpart 1-3.3 may be made and executed by Contracting Officers, or by DOE Headquarters officials that have been delegated authority to select contractors.

§9-3.302 Determinations and findings required.

The determination and findings required by FPR 1-3.302(d) is not required when the contract is negotiated under the Atomic Energy Act of 1954, as amended.

§9-3.303 Determinations and findings by the Head of the Agency.

Determinations and findings supporting negotiation under the authority of the Federal Property and Administrative Services Act of 1949, section 302(c)(11) (FPR 1–3.211), with respect to contracts which will not require the expenditure of more than $25,000 may be executed by the senior procurement official, Headquarters. Determinations and findings for contracts in excess of $25,000 negotiated pursuant to section 302(c)(11), and in support of all contracts negotiated pursuant to sections 302(c)(12) and 302(c)(13) of the Federal Property and Adminstrative Services Act of 1949, as amended (FPR 1-3.212 & 1-3.213), shall be executed by the Head of the Agency.

Subpart 9-3.4 Types of Contracts

9-3.404 Fixed-Price Contracts

§9-3.404-50 Lump-sum contract for architect-engineer services with reimbursement for certain costs.

(a) Use of this type of contract will require advance approval of the Senior Procurement Official, Headquarters.

(b) Description. This type of contract normally provides for a fixed amount or lump sum for the A-E services (see §9-18.306-50(b)(1) for definition of these services) plus reimbursement of, or payment of an additional lump sum for certain costs to the extent they are incurred in connection with the work and are approved by the Contracting Officer. These costs generally are not susceptible of reasonable estimation in advance due to a wide variation in the extent the related services are required for various projects, or they are for services not normally a part of titles I, II, and III.

(c) Compensation is included in the lump sum derived from the fee schedule in the contract for: all drawings, plans, and documents prepared and reproduced under title I, except those which are reimbursable in conjunction with field surveys and subsurface investigations; all drawings, specifications, invitations for bid, and other related documents prepared and reproduced under title II, prior to approval of title II design by DOE; and, preparation of reproducible copies and furnishing the specified number of copies of such drawings and documents after approval by DOE; and for reproducible "as-built" record drawings and marked-up "as-built" specifications prepared under title III (including updated master linen tracings, or reproducible linen tracings from the master set, if so specified in the contract). The provisions of the applicable Government Printing and Binding Regulations must also be observed.

(d) Where the contractor's responsible supervising representative, or an officer, proprietor, executive, or administrative head of the contractor participates directly in the performance of any of the services, he may be compensated for the time actually so engaged. The rate of compensation, including the allocation of home office expenses, if any, shall be subject to approval by the Contracting Officer and commensurate with the cost of employing another qualified person to do such work, but the salary portion should not exceed the actual salary rate of the individual concerned.

(e) The costs listed in paragraphs (b) and (d) of this section cover services that are normal to complete titles I, II, and III services. No profit should be included in the additional compensation for those services because the architect-engineer's profit for the service is included in the lump-sum amount determined from the fee schedule. In order to ensure adequate technical services, they may be paid for on an actual cost basis. However, if it is considered to be more advantageous to the Government, an additional lump sum should be negotiated to cover the costs; in the case of personal services such as inspectors, a daily rate may be negotiated. The calculation of the additional lump sum, or daily rate, should show clearly the amount allowed for each of the services or elements of cost.

(f) Services may be furnished by DOE instead of reimbursing the contractor for the expenses. The type of services that will be furnished should be stated in the contract.

(g) If services are furnished that are beyond titles I, II, and III, such as developmental work, special engineering studies, and the preparation of special documents such as operating and maintenance manuals, additional compensation, including profit, should be paid for such services. Note that preliminary proposals and construction completion reports normally are considered as part of titles I and III.

(1) A lump-sum contract for architect-engineer services should be used wherever it is practicable to compile, in advance of the preparation of plans and specifications, adequate information specifically describing the character and extent of services required.

(2) When there is insufficient scope information available to permit contracting for complete services (titles I, II, and III) on a lump-sum basis, and when it may be to the advantage of the Government to do so, consideration should be given to contracting only for a study contract or for the preliminary engineering (title I), on either a reimbursable or lump-sum basis, in order to permit entering into a lump-sum contract for the remaining portion of architectengineer services (titles II and III), based upon information developed in the first phase.

(3) Refer to §9-3.808-2 in determining profit or fee.

§9-3.405 Cost-Reimbursement Type Contracts

§9-3.405-5 Cost-plus-a-fixed-fee contract.

(a) The authority to determine under FPR 1-3.405–5(d)(1)(ix) that the application of the policy of limiting interim payments on cost-reimbursement type contracts to 80 percent of costs incurred would impose undue hardship on the contractor or adversely affect the interests of the Government, is delegated to the Heads of Procuring Activities.

(b) Pursuant to section 602(d)(13) and (20) of the Federal Property and Administrative Services Act of 1949, as amended, the 10 and 6 per centum cost and fee restrictions on contracts for architect-engineer services are not applicable to those former AEC functions, as well as those of the Bonneville Power Administration, now being performed by DOE.

§9-3.405-50 Cost-plus-award-fee (CPAF) contract.

(a) Description.

(1) The CPAF contract is a cost-reimbursement type contract with special fee provisions. It provides a means of applying incentives in contracts which are not susceptible to finite measurements of performance essential to structured incentive contracts. The fee established in a CPAF contract consists of two parts: (i) a fixed amount (base fee) which does not vary with performance and which could be zero; and (ii) an award amount (award fee), in addition to the fixed amount, sufficient to encourage attainment of excellent contract performance in stated areas such as quality, timeliness, ingenuity, and cost effectiveness. Award fee may be earned by the contractor in whole or in part. The amount of award fee to be paid is determined after a subjective evaluation by the Government of the contractor's performance, judged against performance criteria established by the Government and furnished in writing to the

contractor.

(2) The number and kinds of performance goals and performance evaluation criteria used will differ widely from one contract to another. Therefore, when determining performance goals, criteria and rating plans, the contracting activity should select the plan which will motivate the contractor in a positive way to exceptional performance in specific areas. Evaluation reports will be prepared by the Government and results should be communicated to the contractor. Additionally, the contractor may be asked to provide an assessment of its performance in relation to each performance evaluation criterion. The decision that all or part of the award fee has been earned is a unilateral determination made by a fee determination official, not subject to the Disputes clause of the contract.

(b) Application. The CPAF contract is suitable for use when:

(1) A cost-reimbursement type contract is found necessary;

(2) The work to be performed is such that specific quantitative or objective measurement is not feasible;

(3) The achievement of procurement objectives will be enhanced by the use of a contract that effectively motivates the contractor toward exceptional performance, and permits DOE the flexibility to evaluate both actual performance levels and the conditions under which such levels were achieved; and

(4) Any additional administrative effort and cost required to monitor and evaluate performance, as well as added fees available for award, are justified by the benefits expected. (c) Consideration of concept.

(1) The opportunity to earn increased fees, the clear statement of goals, objectives and performance evaluation criteria, and the improved communication between DOE personnel and the contractor, are designed to encourage the contractor to perform the required work effectively, to control costs, and to optimize the timeliness and quality of performance. Base fees generally are negotiated commensurate with minimum acceptable performance, taking into consideration the various profit evaluation factors under §9-3.808-2. The base fee should be set at a minimum in order to provide a large award fee pool, thereby providing the contractor maximum incentive to improve performance. The award fee potential should be large enough to reward the contractor at any level of performance above minimum acceptable. In this regard, the award of additional fee for performance exceeding minimum acceptable in evaluated areas should be contingent upon the maintenance of at least minimum acceptable levels in all other areas of contract performance.

(2) Although award fee determinations are unilateral ones based upon judgmental evaluations, quantifying devices such as adjective ratings, point systems, or percentages of achievements may be used. Where used, these devices are for the sole purpose of quantifying the facts considered, and the amount of award fee earned shall not be merely the result of the application of summing, averaging, or a mathematical formula.

(3) For operating and other contracts which are subject to the fee schedules set forth in the Procurement Handbook, “Establishing and Negotiating Fee and Profit," the base fee should normally not exceed 50 percent of the computed CPFF fee. The base fee plus the award fee pool should normally not exceed the computed CPFF fee by more than 50 percent, provided that the sum does not exceed the fee limitations, provided in FPR 1-3.407-2.

(4) For contracts performed in commercial facilities, where the weighted guidelines (WGL) of §9-3.808-50 can be used to establish a reasonable fee for acceptable performance level, the base fee should normally not exceed 50 percent of the fee developed using the WGL. The base fee plus the award fee pool should normally not exceed the WGL developed fee by more than 50 percent, provided that the sum does not exceed the fee limitations provided in FPR 1-3.407-2.

(5) Prior approval of the Senior Procurement Official, Headquarters, is required for total fees (base fee plus award fee pool) exceeding the guidelines in (3) and (4).

(d) Payment of fees. Base fees may be paid periodically as provided for in the contract. Award fees will be paid only after the amount of the award fee earned has been established. Payments of award fees earned will be made promptly after the award decision has been made in each evaluation period.

(e) Limitations.

(1) The CPAF contract shall not be used (i) in procurements in which all factors to be considered in the award fee arrangement (e.g., cost, delivery, performance) can be measured objectively in terms of predetermined incentive targets, or (ii) where the contract amount, term of performance, or the benefits expected from use of the award fee arrangement are insufficient to warrant any additional administrative effort or cost that may be required.

(2) Cost-reimbursement type contracts having award fee arrangements limited to technical performance considerations are prohibited because they may increase cost disproportionately to any benefits gained. Instead, the award fee arrangement shall include both technical performance and business management considerations tailored to the needs of the particular situation. The only exception is a situation where cost estimating reliability and other factors are such that the negotiation of a separate, predetermined incentive sharing arrangement applicable to cost performance is determined both feasible and advantageous. The resulting contract would then be identified as a cost-plus-incentive-fee/award-fee combination type. The goals and evaluation criteria should be results-oriented. The award fee should be concentrated on the end product of the contract, that is, output, be it hardware, research, development, demonstration or services, together with business management considerations. However, input criteria such as equal employment opportunity, small business programs, functional management areas, such as safety, security, etc., cannot be disregarded and may be appropriate criteria upon which to base some part of the award fee. Specific goals or objectives should be established in relation to each performance evaluation criterion against which contractor performance is measured.

(f) Evaluation.

(1) The contract should provide for evaluation at stated intervals during contract performance, so that the contractor will know how its performance is rated and what areas need to be improved. Partial payment of award fee earned will correspond to the evaluation periods. This will make effective the incentive which the award fee was designed to create by inducing the contractor to improve poor performance or to continue excellent performance.

(2) The contractor shall be furnished the performance evaluation criteria to be used to arrive at the award fee before award of the contract. The goals and objectives should be clearly set forth.

(3) As a part of contract negotiation, the Government should obtain agreement and incorporate into the contract a provision that the Government unilaterally can change the performance evaluation criteria, goals and objectives, weights and rating plan after reasonable advance notice to the contractor. The specific number of days constituting reasonable notice should be agreed to in advance by the parties.

(g) Organization and administration.

(1) Individuals will be designated as performance monitors. They will be responsible for evaluating, in their assigned areas, the contractor's performance against the established criteria.

(2) A board will be established to evaluate the contractor's performance (based on monitor's reports, contractor's input and other information) and to recommend the amount of the award fee to the fee determination official.

(3) The fee determination official will be an individual who is organizationally above the persons who are directly involved in performance evaluation.

(4) The contractor should be given an opportunity to present matters to the board or the fee determination official on its own behalf.

§9-3.408 Letter contract.

(a) A letter contract may be entered into only when:

(1) The urgency of the requirement necessitates that the contractor be given a binding commitment so that work can commence immediately;

(2) Preparation of a definitive contract in sufficient time to meet agency requirements is not possible. The procurement file shall contain documentation to support the above determination; and