the Division of Procurement and Materiel Management, OASA-OGS. [35 FR 19752, Dec. 30, 1970]

Subpart 3-1.52-Safety and Health

SOURCE: 35 FR 16921, Nov. 3, 1970, unless otherwise noted.

§ 3-1.5200 Scope of subpart.

This subpart prescribes (a) the use of a safety and health clause in contracts involving hazardous materials or operations, and (b) procedures for developing and administering safety and health provisions.

§ 3-1.5201 General.

Various statutes and regulations (e.g., Walsh-Healey Act; Service Contract Act) require adherence to minimum safety and health standards by contractors engaged in potentially hazardous work. Positive action to reduce accidents and conditions hazardous to health under all contracts is in the Government's interest since the cost of such accident and health hazards is borne by the Government through higher prices and sometimes by direct indemnification of contractors against liability claims.

§ 3-1.5202 Definition.

Hazardous materials or operations are those which have the potential of producing adverse environmental conditions, such as, fire, heat, acoustics, toxicity, radiation, light, acids, biologicals, etc.

§ 3-1.5203 Policy.

Whenever the performance of a contract will require use of hazardous materials or operations, the procuring activity shall require the prime contractor and subcontractors to:

(a) Provide protection for the life and health of HHS employees, contractor employees, other persons involved with work on HHS programs and projects, and the public;

(b) Avoid accidental work interruptions which could delay progress of HHS programs and projects;

(c) Maintain controls for the prevention of damage and loss to property; and

(d) Accumulate and provide data necessary for analysis of risk and loss factors relating to HHS programs and projects.

§ 3-1.5204 Actions required.

(a) Procuring activities. Procuring activities shall use the example set forth in § 3-1.5205(b) as a guide in developing appropriate safety and health clauses for use in prospective contracts involving the following:

(1) Services or products;

(2) Research, development, or test projects;

(3) Transportation of hazardous materials; and

(4) Construction, including construction of facilities on contractor's premises.

(b) Safety officers. Safety officers of operating agencies shall advise and assist initiators of procurement requests and contracting officers in:

(1) Determining whether safety and health provisions should be included in a prospective contract;

(2) Selecting or developing safety and health clause provisions for incorporation in a prospective contract;

(3) Evaluating prospective contractor's safety and health programs; and (4) Conducting post award review and surveillance to the extent deemed necessary.

(c) Initiators. Initiators of procurement requests for items described in paragraph (a) of this section shall:

(1) During the preparation of a request for procurement:

(i) Ensure that hazardous materials and operations to be utilized in the performance of the contract are clearly identified, and

appropriate

(ii) Coordinate with safety officer to ensure that all hazardous materials and operations are evaluated and that adequate safety requirements are established in the request for procurement.

(2) During the period of perform

ance:

(i) Apprise the contracting officer of any noncompliance with safety and health provisions identified in the contract, and

ment and assistance.

§ 3-1.5205 Contract clause.

(a) Use of clause. All contracts which require the use of hazardous materials or operations shall include a clause to provide adherance to minimum safety and health standards. The clause set forth in § 3-7.5002 may be appropriately modified to meet the needs of the individual contract.

[35 FR 16921, Nov. 3, 1970, as amended at 44 FR 36973, June 25, 1979]

Subpart 3-1.53 Considerations in Selecting an Award Instrument

SOURCE: 45 FR 74922, Nov. 13, 1980, unless otherwise noted.

§ 3-1.5300 Scope.

This subpart provides guidance on the appropriate selection of award instruments consistent with the Federal Grant and Cooperative Agreement Act of 1977 (Public Law 95-224) and the OMB implementation of the Act as published in the FEDERAL REGISTER ON August 18, 1978 (43 FR 36860). This subpart addresses procurement relationships where the award instrument is the contract, and assistance relationships where the award instrument is either a grant or cooperative agreement.

§ 3-1.5301 Applicability.

This subpart applies to the choice of award instrument, contract, grant, or cooperative agreement, for all program and individual transactions, except where specifically prohibited by law.

§ 3-1.5302 Purpose.

This subpart provides guidance to assist in the determination of whether to use the procurement or assistance process to fulfill program needs. The distinction between, and use of, grants and cooperative agreements is not discussed in detail. Detailed guidance may be found in Chapter 1-02 of the Grants Administration Manual.

procure

(a) The Federal Grant and Cooperative Agreement Act of 1977 requires the use of contracts to acquire property or services for the direct benefit or use of the Government and grants or cooperative agreements to transfer money, property, services, or anything of value to recipients to accomplish a public purpose of support or stimulation authorized by Federal statute.

(b) A contract is to be used as the legal instrument to reflect a relationship between the Federal Government and a 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) The Department determines in a specific instance that the use of a type of contract is appropriate. That is, it is determined in a certain situation that specific needs can be satisfied best by using the procurement process. However, this authority does not permit circumventing the criteria for use of procurement or assistance instruments. Use of this authority is restricted to extraordinary circumstances and only with the prior approval of the Deputy Assistant Secretary for Grants and Procurement.

(c) A grant or cooperative agreement is to be used as the legal instrument to reflect a relationship between the Federal Government and a recipient whenever the principal purpose of the relationship is the transfer of money, property, services, or anything of value to the recipient to accomplish a public purpose of support or stimulation authorized by Federal statute.

(1) A grant is the legal instrument to be used when no substantial involvement is anticipated between the Department and the recipient during performance of the contemplated activity.

(2) A cooperative agreement is the legal instrument to be used when substantial involvement is anticipated between the Department and the recipient during performance of the contemplated activity.

(d) As a general rule, contracts are to be used for the following purposes:

(1) Evaluation (including research of an evaluative nature) of the performance of Government programs or projects or grantee activity initiated by the funding agency for its direct benefit or use.

(2) Technical assistance rendered to the Government, or on behalf of the Government, to any third party, including those receiving grants or cooperative agreements.

(3) Surveys, studies, and research which provide specific information desired by the Government for its direct activities, or for dissemination to the public.

(4) Consulting services or professional services of all kinds if provided to the Government or, on behalf of the Government, to any third party.

(5) Training projects where the Government selects the individuals or specific groups whose members are to be trained or specifies the content of the curriculum (not applicable to fellowship awards).

(6) Planning for Government use.

(7) Production of publications or audiovisual materials required primarily for the conduct of the direct operations of the Government.

(8) Design or development of items for Government use or pursuant to agency definition or specifications.

(9) Conferences conducted on behalf of the Government.

(10) Generation of management information or other data for Government use.

(e) As a general rule, grants or cooperative agreements are to be used for the following purposes:

(1) General financial assistance (stimulation or support) to eligible recipients under specific legislation authorizing the assistance.

(2) Financial assistance (stimulation or support) to a specific program activity eligible for assistance under specific legislation authorizing the assist

officials to meet with the principal official responsible for procurement and the principal grants management official, or their designees, to distinguish the relationships and determine whether award is to be made through the procurement process or assistance process. This determination should be made prior to the time when the annual procurement plan is reviewed and approved so that the plan will reflect all known proposed contract actions. The cognizant contracting officer will confirm the appropriateness of the use of the contract instrument when reviewing the request for contract, and document the rationale for the use of the contract instrument in the contract file.

(b) Shifts from one award instrument to another must be fully documented in the appropriate files to show a fundamental change in program purpose that unequivocably justifies the rationale for the shift.

(c) POCS, agencies, and regional offices must ensure that the choice of instrument is determined in accordance with the Federal Grant and Cooperative Agreement Act of 1977 and applicable Departmental policies. If, however, there are major individual transactions or programs which contain elements of both procurement and assistance in such a way that they cannot be characterized as having a principal purpose of one or the other, guidance should be obtained from the Deputy Assistant Secretary for Grants and Procurement, through normal channels, before proceeding with a determination.

(d) Any public notice, program announcement, solicitation, or request for applications or proposals must indicate whether the intended relationship will be one of procurement or assistance and specify the award instrument to be used.

Subpart 3-1.54-Options

SOURCE: 45 FR 49553, July 25, 1980, unless otherwise noted.

§ 3-1.5400 Scope of subpart.

This subpart applies to contracts for supplies and services other than for:

(a) Construction, alteration, or repair of buildings or other real property; and

(b) Contracts to be awarded on a cost-reimbursement basis.

§ 3-1.5401 Definition of options.

(a) As used in this subpart, an option is a provision in a contract under which, for a specified time, the Government may elect to purchase at an established price or at a price that can be established by reference to some specific method of calculation which will make the price certain, additional quantities of the supplies or services called for by the contract. Any option may call for delivery of the option quantity within the initial contract period or may call for delivery of the option quantity subsequent to the initial contract period.

(b) An option must:

(1) Identify the supplies or services as a discrete option quantity in addition to the basic quantity of supplies or services to be delivered under the initial contract award;

(2) Establish a price or specify a method of calculation which will make the price certain;

(3) Be agreed to and included in the initial contract award; and

(4) Permit the Government the right to exercise the option unilaterally.

(c) Contract provisions which provide the Government the right to buy additional requirements, subject to the written agreement of the contractor, do not meet the requirement of paragraph (b)(4) of this section and are not authorized. Further, any contract provision which merely extends the initial contract period without requiring delivery of additional supplies or services is not an option.

§ 3-1.5402 Applicability.

(a) Option clauses which require delivery of the option quantity within the initial contract period may be included in contracts only where requirements within the period of initial contract performance are foreseeable. Option clauses which both extend the initial contract period and require delivery of the option quantity during the extended period may be used only when it can be determined, with a

high degree of certainty prior to contract award, that there will be a need for additional requirements. Since options require offerors to guarantee prices for definite periods of time with no guarantee that orders will be placed, their improper use could result in prices which are unfair to either the Government or the contractor. Option clauses may require that option quantities be offered at prices no higher than those for the initial quantities or they may allow option quantities to be offered at prices different than the price for the initial quantity. When additional requirements are foreseeable and subsequent competition would be impracticable because of such factors as production lead time and delivery requirements, the use of options which require prices no higher than those for the initial quantities may be preferable to later negotiating a price with the contractor (in lieu of exercising such an option) at a time when the contractor is the only practical source. An option normally should not be used where it can reasonably be predicted that supplies will have to be procured at some future date in a quantity that would constitute an economic production run, and startup costs, production lead time, and probable delivery requirements would not preclude adequate future competition.

(b) Option provisions and clauses shall not be included in solicitations and contracts when:

(1) The supplies or services being purchased are readily available on the open market, except that in the case of services, option clauses may be included for foreseeable requirements if use of the option is considered to be in the best interest of the Government;

(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. Options cannot be used as a substitute for these types of 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

(i) The basic quantity is a learning or testing quantity and there is some uncertainty as to contractor or equipment performance; or

(ii) Realistic competition for the option quantity is impracticable once the initial contract is awarded;

(6) The contract is for ADPE, software, or maintenance services except as provided for in FPR 1-4.1108-4;

(7) The primary purpose for inclusion would be the achievement of administrative convenience; and

(8) The inclusion would serve as a device for incrementally funding contracts which do not meet the standards which permit the use of incremental funding (See § 3-50.6).

(c) Option provisions which provide for the option quantity to be delivered subsequent to the initial contract period shall not be used to avoid competition, to fund an overrun or excuse a delay in timely performance or delivery, to provide continuing support of a general nature to the contractor, or to provide for requirements which may be only possibly required.

(d) When options are to be evaluated pursuant to § 3-1.5403(d), the total of the basic and option periods shall not exceed five years in the case of services, and the total of the basic and option quantities shall not exceed the requirements for two years in the case of supplies.

(a) When a contract is to contain an option clause, the solicitation must contain an appropriate option provision. 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 quantities 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. This period shall be set so as to afford the contractor adequate notice of the requirement for performance under the option, but,

with respect to service contracts, may extend beyond the contract completion date when funds to pay for services called for in the option are not available in the fiscal year in which the contract would otherwise be completed. In fixing the period within which the option may be exercised, consideration shall be given to necessary lead time in order to assure continuous performance and the time required for additional funding and other necessary procurement action. The period specified for exercising the option shall in all cases be kept to a minimum. When a solicitation contains an option which requires the offering of additional quantities of supplies at unit prices no higher than those of the initial quantities, it shall provide that the option quantities shall not exceed 50 percent of the initial quantity. When unusual circumstances exist, however, the principal official responsible for procurement (not delegable) may approve a greater percentage or quantity. The quantities and the period under option and the period during which the option may be exercised shall be justified and documented in the contract file by the contracting officer.

(b) Except as provided in paragraphs (c) and (d) of this section, solicitations containing option provisions shall state that evaluation will be on the basis of the quantity to be awarded exclusive of the option quantity.

(c) When it is anticipated that the Government may exercise the option at time of award, the solicitation shall include an Evaluation of Options provision substantially as follows:

EVALUATION OF OPTIONS

If the Government elects to exercise an option simultaneously with award, bids or proposals will be evaluated for purposes of awards on the basis of the total price for the basic quantity and option quantity exercised with award.

(d) If options are to be evaluated but not exercised at the time of award, a determination must be made by the chief of the procuring activity, before the issuance of the solicitation, that:

(1) There is a known requirement which exceeds the basic quantity to be awarded, but either the basic quantity