1

5. Upon the basis of the determinations and findings above, I hereby authorize the negotiation of a contract for this procurement pursuant to 10 U.S.C. 2304(a) (14).

(b) Two distinct but interrelated categories of information will be set forth in narrative form in the letter of transmittal requesting determinations and findings under 10 U.S.C. 2304(a) (14). The first category will contain facts conclusively demonstrating compliance with the legal requirements for negotiation. The second category will cover the general history of previous procurements of the items as known to the buyer without detailed research and the current procurement plan for the item including actions taken or planned to develop a competitive posture.

(1) Category 1-Legal Sufficiencywill contain the following data:

(i) Adequate description both in laymen's terms and by specific nomenclature of principal and supporting items or services to be procured under authority of proposed determinations and findings.

(ii) An explanation of why the basic item being procured constitutes technical and special property.

(iii) The estimated price or cost of the quantities which may be procured under the reasonably firm procurement program as defined in § 1003.306(d).

(iv) Where duplication of a substantial initial investment is relied upon as the basis for satisfying the legal requirement, the analysis of the duplication in investment will cover the following:

(a) The elements of cost included in computation of Government's and contractor's original investment, e.g., research, development, facilities, and special tools.

1 Insert one or both of the phrases in parentheses, as appropriate.

(b) How the quantum of the Government's and contractor's investment which would be duplicated was determined.

(v) Where duplication of an extended period of preparation for manufacture is relied upon as a basis or the basis for satisfying the legal requirement, it must be clearly demonstrated that the undue delay created by the use of formal advertising would be prejudicial to the AF mission. Where corrective action for the future is indicated such will be discussed under Category 2 below. In addition, the analysis for use of this reason will include the following:

(a) Description of major categories of work (e.g., development of a prototype, tooling-up for production, training of personnel) considered to constitute preparation for production.

(b) What elements of preparation would have to be duplicated by other qualified but inexperienced producers.

(c) How the total preparation time which would be duplicated at this time was generaly estimated.

(2) Category 2-History of Previous Procurements for End Items and Current and Future Procurement Plans-will contain the following data, as illustrated in subdivision (vi) of this subparagraph, to the extent readily available without detailed research:

(i) How present producer was initially selected.

(ii) Efforts to establish competitive sources and what impediments must be overcome to develop a competitive posture. (For example: There are many cases where future requirements for an item which is the subject of the request for determinations and findings can be procured competitively if it were possible to live with the procurement lead time of inexperienced but qualified producers. Generally, in this situation funding limitation is the impediment to be overcome and corrective action as shown in subdivision (v) of this subparagraph will be taken.)

(iii) Considerations given to splitting the current procurement into quantities immediately required and those which can be delayed in order to obtain competition.

(iv) Specific type of contract contem

plated.

(e) Other pertinent information:

The above information as to all known future year requirements will be obtained from the requiring activities at the time the D&F is prepared. These requirements will, in turn, be converted into the required program release dates and submitted to the programming activity for their information and action.

(vi) Digest examples:

(a) The X Corporation is presently developing the equipment under a competitively awarded contract which calls for a prototype, 19 production units, and engineering data adequate for competitive procurement. The prototype is scheduled for final acceptance, testing, and evaluation in October 1961 and the procurement data to be delivered in the future will be based on the prototype as finally approved and accepted. It is not possible to defer this procurement until said data is available for competitive procurement because of the critical delivery requirements.

(b) The quantities to be negotiated with the X Corporation at an estimated price of $473,610 are the minimum required to meet critical installations and represent only a portion of the current AF requirements. Additional requirements in the estimated amount of $426,645 will be procured competitively. This will be the third production contract for the equipment. The initial contract was awarded to the Y Corporation pursuant to two-step advertising procedures but Y has not yet been able to meet the required reliability requirements. Accordingly, X was asked to conduct the development on a product improvement contract and X was awarded the second production contract.

(c) The X Corporation developed the equipment for the Air Force in 1949 and furnished all equipments to satisfy AF requirements through 1957. There were no procurements during 1958 and 1959. In early 1959, responsibility for procurement of the equipment was transferred to the Z Air Materiel Area. This is the second production contract for the equipment to be issued by Z; the first was dated June 30, 1961. By letter dated June 2, 1961, Commander of Z directed his in-service engineering office to develop a specification and procurement package suitable for competitive procurement. The development of said procurement package is underway and it is expected that it will entail one year of effort to complete. It is planned to complete future equipment requirements, possibly as soon as July 1, 1962.

(d) The equipment will be procured according to MIL-D-1489 (USAF). This specification is considered adequate for formal advertising; however, it is not possible to place this procurement by formal advertising because it is essential that the required delivery schedule be satisfied. An inexperienced producer could not possibly comply with the schedule because he would, of necessity, have to duplicate preparation already made as set forth under category 1 (subparagraph (1) of this paragraph). To obtain the necessary lead time for future competitive procurement of this equipment, action will be taken to include this item in the December 1961 request for Pre-Buy release of the FY 63 program requirements. Also, the appropriate AMA has been requested to initiate their FY 62 requirements at the earliest practical date and to forward

advance copies of "planning" purchase requests as soon as possible.

(c) Note that there are alternative combinations of circumstances which permit negotiation under 10 U.S.C. 2304 (a) (14). All elements pertinent to such combinations, which are cited in the determinations and findings, must be substantiated in the accompanying request, otherwise they will not be included in the determinations and findings. In addition, where there has been substantial initial investment or extended period of preparation in the case of more than one supplier the above information will be furnished for each supplier. authority provided by this section is intended primarily to apply where there is only one such supplier. It will generally not be available where there are more than three suppliers.

The

[28 F.R. 3388, Apr. 6, 1963, as amended at 29 F.R. 2497, Feb. 15, 1964; 29 FR. 15121, Nov. 10, 1964; 30 F.R. 16002, Dec. 23, 1965]

§ 1003.215 Negotiation after advertising.

[27 F.R. 2405, Mar. 14, 1962]

§ 1003.215-50 Application.

The authority of 10 U.S.C. 2304 (a) (15) can be invoked for all or only a portion of a specific procurement. Requests for determinations and findings to negotiate under this authority should state: (a) The range of bid prices received and reasons why these prices (or some of them) are deemed unreasonable, or (b) evidence that the bid prices have not been independently arrived at in open competition. The letter of transmittal will set forth the estimated cost of the proposed procurement.

[27 F.R. 2405, Mar. 14, 1962]

§ 1003.215-51

Format.

Following is approved format for determinations and findings under 10 U.S.C. 2304(a) (15):

DEPARTMENT OF THE AIR FORCE
INDIVIDUAL DETERMINATIONS AND FINDINGS

Authority To Negotiate Contract

1. This procurement is for the modification of 8 B-36 Docks for KC-135 Aircraft. 2. I hereby find that the proposed procurement was solicited by advertising under Invitation for Bid 17-600-58-3, dated August 1, 1957. The only bid received offered a lump sum price of $268,660 for basic bid and $244,660 for alternate bid, which were considerably higher than the estimated project price. This difference is considered exces

66-075 067 -5

sive as it exceeds the highest project estimated price by over $100,000.

3. Based on the findings above made, I hereby determine that the lowest rejected bid prices of a reasonable bidder obtained through advertising were $268,660 for basic bid and $244,660 for alternate bid and that such prices for this modification are not reasonable.

4. Upon the basis of the determinations and findings above, I hereby authorize the negotiation of a contract for this procurement pursuant to 10 U.S.C. 2304 (a) (15), provided that prior notice of intention to negotiate, and a reasonable opportunity to negotiate, be given to each responsible bidder who submitted a bid in response to the invitation for bids, the negotiated prices be lower than the lowest rejected bids of a responsible bidder, as determined above, and the negotiated prices be the lowest negotiated prices offered by a responsible contractor.

[28 F.R. 3388, Apr. 6, 1963, as amended at 29 F.R. 2497, Feb. 15, 1964]

§ 1003.216 Purchases in the interest of national defense or industrial mobilization.

[28 F.R. 3390, Apr. 6, 1968]

§ 1003.216-50

Format.

There is no approved format for determinations and findings or of letters of transmittal, but those set forth under the other exceptions may be used as a guide. In preparing determinations and findings, the circumstances of the individual case will dictate the determinations and findings as well as the justification to be included in the letter of transmittal. The letter of transmittal will show the estimated cost of the proposed procurement. [28 F.R. 3390, Apr. 6, 1963]

§ 1003.217 Otherwise authorized by law. [27 F.R. 2405, Mar. 14, 1962] § 1003.217-2 Application.

(a) Except as indicated in paragraphs (b) through (e) of this section, contracts will be negotiated under this authority only upon approval of the Secretary. Requests for approval will contain a statement of pertinent facts and reasons therefor, and will be transmitted according to § 1003.306.

(b) Transportation services by common carriers will be negotiated under authority of section 321, Part III, Interstate Commerce Act, September 18, 1940, 49 U.S.C. 65.

(c) Procurements negotiated pursuant to section 406 of Title IV of Public Law 345 (84th Congress).

(d) Blind-made supplies purchased through National Industries for the Blind as prescribed in § 5.504-1 of this title, will be negotiated under authority of the Act of June 25, 1938, c. 697, section 3, 52 Stat. 1196 (41 U.S.C. 48).

(e) Procurements negotiated pursuant to section 15, Small Business Act, 15 U.S.C. 644 (Public Law 536, 85th Congress, as amended).

[27 F.R. 2405, Mar. 14, 1962, as amended at 27 F.R. 6269, July 3, 1962; 29 F.R. 4096, Mar. 28, 1964; 30 F.R. 16002, Dec. 23, 1965]

§ 1003.301

Nature of determinations and findings.

(a) Class determinations and findings will normally authorize negotiation of contracts during a single fiscal year. However, class determinations and findings may be signed prior to the beginning of the fiscal year for which requested and, in that event, such determinations and findings will authorize negotiation of contracts from the date of signing until the close of the fiscal year. Unless otherwise specified by the official signing a particular class determinations and findings, it is not a prerequisite that the contracts are awarded prior to the close of the fiscal year cited in the class determinations and findings. It is required that negotiations leading to the award of such contracts are instituted prior to the close of such fiscal year, i.e., that the Requests for Proposals are issued and the resulting contracts are thereafter awarded in a timely manner. In requesting class determinations and findings, the supporting information will be as detailed as the supporting information required for an individual determinations and findings under the particular section of the Act involved. In addition, the principal items of CFE, as defined and within the purview of AFR 70-9 (System Procurement) to be developed by or incorporated in the production end item by the contractor(s) will be itemized and explained. When the determinations and findings covers a weapon or support

system, the major subsystems only will be itemized. When it covers a major subsystem, the major CFE equipments and components will be itemized. CFE items which are not within the scope of the approved determinations and findings will be listed in the letter forwarding the signed determinations and findings.

(b) Determinations and findings signed by the Secretary of the Air Force do not in any instance constitute program or project approval. Authority to negotiate is limited, except for those procurements specifically exempt from provisions of DOD Directive 7200.4, to that portion of the procurement or program which is currently authorized at the time of negotiation or within the FY of the issuance of the determinations and findings, whichever is later. To the extent required by § 1003.306 (e), subsequent negotiations which result in increasing the scope of the contract will be covered by additional determinations and findings.

(c) Under current laws and regulations governing negotiated procurements in which a Secretarial Determinations and Findings is required, such Determinations and Findings must be executed before a Request for Proposal can be issued by the Air Force, or negotiations otherwise begun. At that early stage of a research and development program the technical aspects of the program often have not been determined sufficiently to permit final technical approval by SAF-RD. Consequently, in any case where a Determination and Findings under 10 U.S.C. 2304 (a) (11) (§ 3.211 of this title) is approved with only preliminary approval as to technical validity, the procuring activity must obtain specific notification of final technical approval by SAF-RD prior to obligation. Similar technical approval must be obtained for any subsequent extension of the period of contract performance beyond that previously approved, or for any substantial change in the nature or extent of the work authorized. Where doubt exists as to extent of authorization, clarification should be sought. This approval will be furnished to the contracting officer by direction/authorization from Hq USAF, which will cite approval by SAF-RD, reference the pertinent Determinations and Findings and outline any restrictions which may be imposed on the procurement.

(d) Determinations and findings will in all cases be dated at the time of signature.

[29 F.R. 2498, Feb. 15, 1964, as amended at 29 F.R. 5790, May 1, 1964; 29 F.R. 15079, Nov. 7, 1964; 30 F.R. 13632, Oct. 27, 1965]

§ 1003.303

Determinations and findings below the Secretarial level.

(a) (1) The authority to make determinations and findings under § 3.303 (a)(1) of this title is limited to Head of the Procuring Activity AFSC/AFLC.

(2) No implementation.

(3) All AFLC field procurement activities (including base procurement activities), APRE, APRFE and all procuring activities of major commands (whose procurement authority is derived from an AFLC delegation) will submit each proposed Determinations and Findings to use a Cost-Plus-Fixed-Fee contract for approval to Hq AFLC (MCP) through (MCPC).

[29 F.R. 15079, Nov. 7, 1964]

See

(a) Advance payment findings. § 163.60, Subpart D, Part 163 of this title. (b) Determinations and findings; method of contracting. Determinations and findings with respect to the use of a cost type contract, a cost-plus-a-fixedfee contract (including those providing for incentive adjustment of fee), or a fixed-price contract which includes special incentive provisions for redetermination of the fixed fee will be forwarded by letter to the appropriate authorized official (see § 1003.303) for signature. The above type determinations and findings will be prepared in substantially the following format.

DEPARTMENT OF THE AIR FORCE DETERMINATIONS AND FINDINGS 1 Authorization for Type of Contract The Department of the Air Force proposes to use for the procurement

NOTE 2. Insert the description of the supplies or services sufficiently to identify items being purchased.

NOTE 3. State the amount in round figures even hundreds or thousand of dollars. NOTE 4. Insert facts concerning reasons for use of the particular type of contract. Before preparing the findings and determinations, the buyer will decide on what ground to rest the proposed use of one of the subject type of contracts, viz: that: (1) Such a method of contracting is likely to be less costly than other methods, or (2) it is impracticable to secure supplies (or services) of the kind or quality required without the use of the proposed type of contract. The selection of a reason to be stated in the "findings" paragraph will depend on the grounds on which the use of the contract is to be based. The following examples are suggested reasons which would be considered adequate to support the specified determination and the use of the indicated type of contract:

(a) For the use of a fixed-price incentivetype contract because it is likely to be less costly and more rewarding to both Government and contractor:

The nature of the work to be performed is such that there is a possibility of achieving superior weapons, or improved production techniques leading to a reduction of estimated labor or material costs. The use of an incentive type contract will assure the contractor of being rewarded for superior performance or of participation in any savings resulting from reduction in costs and he will make every effort to increase performance and reduce costs.

(b) For use of cost-plus-incentive-fee contract featuring a performance, cost and/or delivery incentive because it is likely to be less costly and most rewarding to both Government and contractor:

The work is for (breadboard or mock-up models) (services or evaluation testing) or (first production)1 and the uncertainties involved in contract performance are so great as to preclude use of a fixed price incentive arrangement. Use of a cost-plus-incentivefee type of contract will assure the contractor of being rewarded for (improved performance), (reduction in costs), and/or (improved delivery)1 giving him the incentive to exert increased diligence in his performance.

(c) For the use of cost (as distinguished from cost-plus-a-fixed-fee) type of contract because it is likely to be less costly:

The contractor will perform the service described above at (cost) or (a predetermined portion of cost), whereas the use of a fixed price incentive, cost plus incentive fee, or cost-plus-a-fixed-fee contract will require that the Government pay, in addition, a profit or fee.

1 Upon the basis of findings set forth above, I hereby determine pursuant to 10 U.S.C. 2306(c) that and I hereby

(See Note 5)

authorize the use of said contract.