Code of Federal Regulations: Containing a Codification of Documents of ...

(37) For construction, provisions for performance of work by contractor, see §§ 4.104-2 and 2.201 (c) (2) of this chapter; and

(38) Estimated value of construction, see § 4.101-3 of this chapter.

(39) A statement that the Nondiscrimination in Employment clause is not applicable to contracts (i) not involving the employment of persons, (ii) not exceeding $10,000, (iii) where work is to be performed entirely outside the United States and no recruitment of workers within the United States is involved, (iv) for standard commercial supplies or raw materials not exceeding $100,000, or (v) specifically exempt by the Executive Vice Chairman of the President's Committee on Equal Employment Opportunity;

Subparagraph (39)

was

CODIFICATION: added, 27 F.R. 8871, Sept. 6, 1962, and subsequently amended, 27 F.R. 11649, Nov. 27, 1962.

(40) A statement that unnecessarily elaborate brochures and other presentations beyond that sufficient to present a complete and effective proposal are not desired and may be construed as an indication of the offeror's lack of cost consciousness; and

[Subparagraph (40) added, 27 F.R. 11649, Nov. 27, 1962]

(41) If the contract is to be conditioned on the availability of funds, a clear statement of such condition (see § 1.318 of this chapter);

CODIFICATION:

Subparagraph (41) was added, 27 F.R. 11649, Nov. 27, 1962, and subsequently amended, 28 F.R. 4884, May 16, 1963.

(42) If the contract is for the Military Assistance Program, the certificate set forth in § 6.703-3 of this chapter. [Subparagraph (42) added, 28 F.R. 2578, Mar. 16, 1963]

(43) If the contract is to involve construction work (subject to the DavisBacon Act) at Cape Canaveral or Patrick Air Force Base, the Employee Compensation clause and Table of Employee Compensation (see § 12.403-5 chapter). [Subparagraph (43) added, 28 F.R. 4884, May 16, 1963]

this

(44) Such general contract provisions or conditions as are required by law or by this subchapter.

[Subparagraph (44) added, 28 F.R. 12554, Nov. 23, 1963]

Except as hereinafter provided, no purchase order shall be issued where cash payment is to be made from imprest funds. However, all such purchases shall be supported either (a) by a sales document of the vendor, such as an original bill, sales slip, cash register ticket, or invoice, or (b) by Standard Form 1165 (Receipt for Cash-Subvoucher), or equivalent authorized form, any of which shall itemize the supplies or services purchased and the amount paid, and must be signed by the vendor or his agent so as to acknowledge receipt of payment. When the purchase amount is less than $15 and it is impossible to secure a sales document of the vendor, the Government employee making the purchase shall execute a Standard Form 1165 (or equivalent authorized form). In those instances where a purchase document is required by the vendor to obtain Government discounts or tax exemption or for other purposes, any authorized appropriate form may be used and shall be endorsed "Payment to be made in cash", if the vendor is to make delivery, or "Ship c.o.d." if shipment is by parcel post or carrier.

[28 F.R. 4884, May 16, 1963] § 3.605

Order-invoice-voucher method. Standard Form 44 (Purchase OrderInvoice-Voucher) is available in books of twenty-five carbon interleaved sets. Each set consists of four copies; i.e., a seller's invoice, seller's copy of invoice, receiving report, and memorandum copy. Where five, six, or seven copies are required, Standard Form 44 is also available in manifold snapout construction, with interleaved carbon. [26 F.R. 2604, Mar. 28, 1961]

(f) The supplier shall submit an itemized invoice not less frequently than once each month, or upon expiration of the blanket purchase agreement, whichever first occurs, covering all deliveries made under the blanket purchase agreement not previously invoiced and paid for, with payment to be made on the basis of this invoice. (When the supplier's billing procedure provides for an individual invoice for each delivery, this procedure may be accepted in lieu of the consolidated invoicing procedure: Provided, That:

(1) The accumulation of the individual invoices by the Government does not materially increase the administrative costs of this purchase method;

(2) A single consolidated payment will be made for each specified period; and (3) The period of any discounts offered will commence on the final date of the billing period or on the date of receipt of invoices for all deliveries accepted during the billing period, whichever is later.)

[Paragraph (f) amended, 27 F.R. 11649, Nov. 27, 1962]

(d) The procurement is for:

(1) Repairs to equipment requiring disassembly to determine the nature and extent of such repairs,

(2) Sole source material not currently in production and on which the cost cannot be readily established, or

(3) Supplies or services not in excess of $250 where prices are known to be competitive but exact prices are not known.

[26 F.R. 2604, Mar. 28, 1961] § 3.610-2

Procurement and payment.

(a) DD Form 1155 (see § 16.303 of this chapter) shall be used to issue unpriced purchase orders.

(b) A realistic monetary limitation shall be placed on the unpriced purchase order which shall be an obligation subject to adjustment when the firm price is established.

(c) The supplier shall be notified that where the estimated monetary limitation is sufficient to cover the procurement, the supplier is expected to make delivery or perform and be reimbursed therefor.

(d) The supplier shall be notified that where the total price will exceed the estimated monetary limitation, or if material or services cannot be furnished in exact accordance with the description and delivery schedule set forth, the contracting officer shall be notified and performance shall be withheld pending advice from the contracting officer.

(e) The supplier shall be advised to submit his invoice to the contracting officer for approval as to the fairness and reasonableness of the price.

(f) The contracting officer shall, after approval, process the invoice for receipt and payment purposes in accordance with Departmental procedures.

(g) The following clause shall be included in each unpriced purchase order: NOTICE TO SUPPLIER

quotation proposed substitution or changes, and withhold performance pending reply. (Aug. 1963)

CODIFICATION: § 3.610-2 was added, 26 F.R. 2604, Mar. 28, 1961. Subsequently, paragraphs (d) and (g) were amended, 28 F.R. 12554, Nov. 23, 1963.

§ 3.610-3 Record of status.

Suitable local records and controls of outstanding unpriced purchase orders shall be maintained to insure regular followup with suppliers until the order is priced.

[26 F.R. 2605, Mar. 28, 1961]

Subpart G-Negotiated Overhead Rates

$ 3.701-1 Negotiated final overhead

rates.

The terms negotiated final overhead rate, as used in this subpart, means a percentage or dollar factor which expresses the ratio (s) mutually agreed upon by the Government and the contractor, at the close of a regularly stated period (preferably the contractor's fiscal year), of indirect expense incurred in the period to direct labor manufacturing cost, cost of sales, or other appropriate base of the same period. Ordinarily, such rates are used as a means of determining the amount of reimbursement for the applicable indirect costs for such completed period; in such cases, they are termed "postdetermined" overhead rates. In certain circumstances involving educational institutions, negotiated final overhead rates may be used as a means of determining the amount of reimbursement for the applicable indirect costs to be incurred during a future period of contract performance; in such cases, they are termed "predetermined" overhead rates (see § 3.704-2(b)). [28 F.R. 2578, Mar. 16, 1963]

rates to bases agreed upon by the parties, as specified below.

(b) The Contractor, as soon as possible but not later than ninety (90) days after the expiration of each period specified in the Schedule, shall submit to the Contracting Officer with a copy to the cognizant audit activity a proposed final overhead rate or rates for that period based on the Contractor's actual cost experience during that period, together with supporting cost data. Negotiations of final overhead rates by the Contractor and the Contracting Officer shall be undertaken as promptly as practicable after receipt of the Contractor's proposal.

(c) Allowability of costs and acceptability of cost allocation methods shall be determined in accordance with Part 2 of Section XV of the Armed Service Procurement Regulation as in effect on the date of this contract.

(d) The results of each negotiation shall be set forth in a modification to this contract, which shall specify (1) the agreed final rates (ii) the bases to which the rates apply, and (iii) the periods for which the rates apply.

(e) Pending establishment of final overhead rates for any period, the Contractor shall be reimbursed either at negotiated provisional rates as provided in the Schedule or at billing rates acceptable to the Contracting Officer, subject to appropriate adjustment when the final rates for that period are established. To prevent substantial over or under payment, the provisional or billing rates may, at the request of either party, be revised by mutual agreement, either retroactively or prospectively. Any such revision of negotiated provisional rates provided in the Schedule shall be set forth in a modification to this contract.

(f) Any failure by the parties to agree on any final rate or rates under this clause shall be considered a dispute concerning a question of fact for decision by the Contracting Officer within the meaning of the "Disputes" clause of this contract.

In the foregoing clause, substitute, in contracts for the Department of the Navy, the words "via the cognizant audit activity and the Director, Contract Audit Division, Office of the Comptroller of the Navy, Washington, D.C." for the words "with a copy to the cognizant audit activity” appearing in paragraph (b) and the words "the Director, Contract Audit Division, Office of the Comptroller of the Navy" for the words "the Contracting Officer" appearing in paragraph (e). In the case of a cost-plus-incentive-fee contract, substitute "Allowable Cost, Incentive Fee, and Payment" for "Allowable Cost, Fixed Fee, and Payment" in paragraph (a) of the foregoing clause.

(a) Notwithstanding the provisions of the clause of this contract entitled "Allowable Cost and Payment", the allowable indirect costs under this contract shall be obtained by applying negotiated overhead rates to bases agreed upon by the parties, as specified below.

(b) The Contractor, as soon as possible but not later than six (6) months after the expiration of each period specified in the Schedule shall submit to the Contracting Officer with a copy to the cognizant audit activity, a proposed final overhead rate or rates for that period based on the Contractor's actual cost experience during that period, together with supporting cost data. Negotiations of final overhead rates by the Contractor and the Contracting Officer shall be undertaken as practicable after receipt of the Contractor's proposal.

(c) Allowability of costs and acceptability of cost allocation methods shall be determined in accordance with the Armed Services Procurement Regulation, Section XV, Part 3, as in effect on the date of this contract.

(d) The results of each negotiation shall be set forth in a modification to this contract, which shall specify (i) the agreed final rates, (ii) the bases to which the rates apply, and (iii) the periods for which the rates apply.

(f) Any failure by the parties to agree on any final rate or rates under this clause shall be considered a dispute concerning a ques

tion of fact for decision by the Contracting Officer within the meaning of the "Disputes" clause of this contract.

(b) Provision may be made in cost reimbursement type research and development contracts with educational institutions for payment of reimbursable indirect costs on the basis of predetermined overhead rates, provided that this basis is used with respect to all contracts with an institution. Insert the following clause in contracts with educational institutions where such negotiated overhead rates are to be used pursuant to this subpart.

NEGOTIATED OVERHEAD RATES-PREDETERMINED (MAR. 1963)

(a) Notwithstanding the provisions of the clause of this contract entitled "Allowable Cost and Payment", the allowable indirect costs under this contract shall be obtained by applying predetermined overhead rates to bases agreed upon by the parties, as specified below.

(b) The Contractor, as soon as possible but not later than three (3) months after the expiration of his fiscal year shall submit to the Contracting Officer with a copy to the cognizant audit activity, a proposed predetermined overhead rate or rates based on the Contractor's actual cost experience during that fiscal year, together with supporting cost data. Negotiation of predetermined overhead rates by the Contractor and the Contracting Officer shall be undertaken as promptly as practicable after receipt of the Contractor's proposal.

(d) The results of each negotiation shall be set forth in a modification to this contract, which shall specify (i) the agreed predetermined overhead rates, (ii) the bases to which the rates apply, (iii) the fiscal year unless the parties agree to a different period for which the rates apply, and (iv) the specific items treated as direct costs or any changes in the items previously agreed to be direct costs.

(e) Pending establishment of predetermined overhead rates for any fiscal year or different period agreed to by the parties, the Contractor shall be reimbursed either at the rates fixed for the previous fiscal year or other period or at billing rates acceptable to the Contracting Officer subject to appropriate adjustment when the final rates for that fiscal year or other period are established.

(f) Any failure by the parties to agree on any predetermined overhead rate or rates under this clause shall not be considered a dispute concerning a question of fact for decision by the Contracting Officer within

the meaning of the "Disputes" clause of this contract. If for any fiscal year or other period specified in the Schedule of this contract the parties fail to agree to a predetermined overhead rate or rates it is agreed that the allowable indirect costs under this contract shall be obtained by applying negotiated final overhead rates in accordance with the terms of the "Negotiated Overhead Rates-Postdetermined" clause set forth in 3-704.2 of the Armed Services Procurement Regulation as in effect on the date of this contract.

(g) Allowable indirect costs for the period until the end of the Contractor's fiscal year during which performance begins shall be obtained by applying the predetermined overhead rate set forth in the Schedule to the bases set forth therein.

When predetermined overhead rates are to be used and no such rate or rates have been established for the contractor's current fiscal year, the contracting officer shall obtain from the contractor during the contract negotiations a proposal for a predetermined overhead rate or rates to be applied until the end of such fiscal year. As far as practicable

such proposal should be based on the contractor's cost experience under similar contracts together with supporting cost data. The overhead rate or rates for such initial period shall be predetermined by negotiation and set forth in the contract schedule. The schedule shall also include the bases to which the rates apply and the period for which the rates apply. Pending establishment of predetermined overhead rates for the initial period, the contractor shall be reimbursed at billing rates acceptable to the contracting officer, subject to appropriate adjustment when the final rates for that period are established.

(c) In the clauses in paragraphs (a) and (b) of this section substitute in contracts of the Department of the Navy, the words "via the cognizant audit activity and the Director, Contract Audit Division, Office of the Comptroller of the Navy, Washington, D.C." for the words "with a copy to the cognizant audit activity" appearing in paragraph (b) and the words "the Director, Contract Audit Division, Office of the Comptroller of the Navy", for the words "the Contracting Officer" appearing in paragraph (e).

CODIFICATION: § 3.704-2 was revised, 28 F.R. 2578, Mar. 16, 1963, and was subsequently amended in the following respects, 28 FR. 4884, May 16, 1963:

1. In paragraph (a), the clause heading and clause paragraphs (a), (c), and (e) were amended.

2. In paragraph (b), the clause heading and clause paragraph (d) were amended. Prior Amendments

1962: 27 F.R. 11649, Nov. 27

§ 3.704-3 Modification of contract clauses.

When a separate negotiated overhead rate agreement is used in accordance with § 3.705(f), the clauses in §§ 3.704-1 and 3.704-2 may be appropriately modified.

[28 F.R. 2579, Mar. 16, 1963] § 3.705

Procedure.

(e) At the completion of the negotiation, the contracting officer or his authorized representative shall prepare a negotiation report or summary, setting forth the rates negotiated; the reasons for variation from the audit report, if any; the period of rate applicability; the basis for the determination of such rates; the specific items treated as direct cost; and where applicable, the provisional rates agreed upon for application in the succeeding period. Such report or summary shall be the basis for amending the affected contracts; it shall become a part of the contract file; and copies shall be distributed to any interested procurement activities and the audit activity.

(f) Contract administration may be simplified by including, as appropriate, provisional and final or predetermined negotiated overhead rates in basic agreements (see § 3.410-1) when such agreements exist. When no basic agreement exists and negotiated overhead rates are applicable to a substantial number of contracts, the rates may be set forth in a separate negotiated overhead rate agreement, which may be incorporated by reference in the individual contracts affected in the same way that basic agreements are incorporated in contracts. Any agreement that sets forth negotiated overhead rates shall state the bases to which they apply and the period of rate applicability.

[Paragraphs (e) and (f) amended 28 F.R. 2579, Mar. 16, 1963]

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