Officer may prescribe. In addition, the Contractor shall submit such reports concerning his progress as may be required by the Contracting Officer. The cost reduction proposals contemplated by this clause are proposals based upon sound study by the Contractor that would result in less costly items than those specified herein without impairing any of their essential functions and characteristics, such as service life, reliability, economy of operation, ease of maintenance, and necessary standardized features.

(b) The Contracting Officer may apply, in whole or in part, any cost reduction proposal submitted pursuant to this clause, by issuing a change order to this contract which will identify the cost reduction proposal on which it is based.

(c) Cost reduction proposals submitted under the provisions of any other contract may also be submitted under this contract for consideration pursuant to the terms of this clause. Any such proposal shall indicate (1) the date of previous submission, (ii) the number of the contract under which submitted, and (iii) the previous action taken by the Government, if known.

(d) Any value engineering proposal, including supporting data, submitted pursuant to this clause shall constitute "Subject Data" under the "Data" clause of this contract, whether or not change orders or contract modifications result therefrom. Notwithstanding the provisions of the "Data" clause of this contract, the Government shall have the unrestricted right to apply any cost reduction proposal in any manner and for any purpose whatsoever unless the Contracting Officer specifically agrees otherwise in writing.

$ 1.1705-3 Value engineering program requirement with incentives.

If it is determined in accordance with § 1.1703, to include a value engineering program requirement with incentive clause in a contract, the applicable value of those set forth below shall be used.

(a) The following clause is for use in cost-plus-fixed-fee contracts: VALUE ENGINEERING PROGRAM REQUIREMENT WITH INCENTIVES (DEC. 1962)

(a) The Contractor will engage in a value engineering program as specified in the contract schedule and will submit any cost reduction proposals resulting from value engineering in such a form as the Contracting Officer may prescribe. In addition, the Contractor shall submit such reports concerning his progress as may be required by the Contracting Officer. The cost reduction proposals contemplated by this clause are proposals based upon sound study by the Contractor that would result in less costly items than those specified herein without impairing any of their essential functions and characteristics, such as service life, re-, liability, economy of operation, ease of

maintenance, and necessary standardized features.

(b) The Government shall not be liable for any delay in acting upon, or for any failure to act upon, any proposal submitted pursuant to this clause. The decision of the Contracting Officer as to the acceptance of any such proposal under this contract shall be final and shall not be subject to the clause of this contract entitled "Disputes". The submission of a proposal by the Contractor shall not in itself affect the obligations of either party under this contract. Unless and until a change order applies such a proposal to this contract, the Contractor shall remain obligated to perform in accordance with its existing terms.

(c) The Contracting Officer may accept, in whole or in part, any cost reduction proposal submitted pursuant to this clause, by issuing a change order to this contract which will identify the cost reduction proposal on which it is based.

(d) If a cost reduction proposal submitted pursuant to this clause is accepted under this contract, an equitable adjustment in any affected provision of this contract shall be made in accordance with this clause and the "Changes" clause of this contract. The equitable adjustment in the fee shall be established by determining the amount of the total estimated decrease in the Contractor's cost of performance resulting from adoption of the cost reduction proposal (taking into account the costs of implementation by the Contractor) and by increasing the fee by percent (------%) of the excess, if any, of this amount over dollars ($------)**. The resulting contract modification will state that it is made pursuant to this clause.

(e) The Contractor's identifiable direct costs of value engineering are not allowable costs under this contract to the extent that they exceed the amount specifically provided for value engineering in the contract; provided, that this limitation does not pertain to indirect costs not incurred pursuant to the Value Engineering provisions of this contract.

(f) Cost reduction proposals submitted under the provisions of any other contract may also be submitted under this contract for consideration pursuant to the terms of this clause. Any such proposal shall indicate (1) the date of previous submission, (ii) the number of the contract under which submitted, and (iii) the previous action taken by the Government, if known.

(g) Any value engineering proposal, including supporting data, submitted pursuant to this clause shall constitute "Subject Data" under the "Data" clause of this contract, whether or not change orders or contract modifications result therefrom. Notwith

The appropriate percentage shall be inserted in accordance with § 1.1703-2.

**The appropriate dollar amount shall be inserted in accordance with § 1.1703-2.

(b) For cost-plus-incentive-fee contracts, insert the clause set forth in paragraph (a) of this section, modified in paragraph (d) thereof by (1) chang-ing the term "fee" to "target fee" and (2) inserting the following after the second sentence:

If the target fee is so increased, the maximum and minimum percent limits on the fee in paragraph (1) of the "Allowable Cost, Incentive Fee, and Payment" clause of this contract shall each be increased by adding a percent equal to the quotient of the equitable adjustment in the target fee divided by the revised target cost.

(c) For fixed-price contracts other than fixed-price-incentive contracts, insert the clause set forth in paragraph (a) of this section, modified to substitute "contract price" for "fee" in the two places in paragraph (d) thereof where the latter term appears and to substitute "are not to be included in any price" for "are not allowable costs" in paragraph (e) thereof. In addition, for fixed-price contracts providing for prospective price redetermination, the following shall be added to the second sentence of paragraph (d) of the clause:

Provided, That for any redetermination of price, under the "Price Redetermination" clause of this contract, having an effective date subsequent to the effective date of any change order issued pursuant to this clause, the redetermined price shall not be reduced as a consequence of such change order by more than percent (------%) of that part of the aforesaid excess, if any, that is attributable to the pertinent price redetermination period.

*

from adoption of the cost reduction proposal (taking into account the costs of implementation by the Contractor) and by decreasing the target cost by this amount and increasing the target profit by percent (------%)* of the excess, if any, of this amount over dollars (----). The resulting modification will state that it is made pursuant to this clause.

-----

(2) Notwithstanding any provision of either subparagraph (1) above or the "Incentive Price Revision" clause of this contract, if any cost reduction proposals submitted pursuant to this clause are accepted under this contract, the total final price of any items affected by such proposals shall not be less than the sum of (i) the total final negotiated cost of such items (established under paragraph (c) of the "Incentive Price Revision" clause), or the maximum 'total final price of such items (established under paragraph (d) of the "Incentive Price Revision" clause), whichever is less, and (ii) the aggregate of any equitable adjustments in the target profit established under subparagraph (1) above. (Dec. 1962)

PART 2-PROCUREMENT BY FORMAL ADVERTISING

Subpart A-Use of Formal Advertising

Sec.
2.102-1 General. [Revised]

2.104-4

2.201

2.202-2

Indefinite delivery type contracts. [Revised]

Subpart B-Solicitation of Bids

Preparation of invitation for bids. [Amended]

Telegraphic bids. [Revised]

2.202-4 Bid samples. [Amended]

2.202-5 Description literature. [Amended] 2.203-1 Mailing or delivery to prospective bidders [Revised]

2.205-5 Release of bidders mailing lists. [Revised]

Subpart C-Submission of Bids

con

2.303-4

Telegraphic bids. [Revised]

(d) For fixed-price-incentive tracts, insert the clause set forth in paragraph (a) of this section, modified to substitute "are not to be included in any price" for "are not allowable costs" in paragraph (e) thereof and to substitute the following for paragraph (d) thereof:

(d) (1) If a cost reduction proposal submitted pursuant to this clause is accepted under this contract, an equitable adjustment in any affected provision of this contract shall be made in accordance with this clause and the "Changes" clause of this contract. The equitable adjustment in the contract price shall be established by determining the amount of the total estimated decrease in the Contractor's cost performance resulting

2.305

(a) 10 U.S.C. 2304 (a) provides that all contracts for supplies or services, with certain stated exceptions, shall be made by formal advertising. (See Subpart B, Part 3 of this chapter for discussion of the exceptions.) In accordance with this requirement, procurement shall generally be made by soliciting bids from all qualified sources of supplies and services deemed necessary by the contracting officer to assure full and free competition consistent with the procurement of the required supplies or services. Current lists of bidders shall be maintained by each purchasing office in accordance with § 2.205.

(b) 10 U.S.C. 2306(f) provides that a contractor or subcontractor shall be required to submit cost or pricing data for certain contract modifications, and shall be required to certify that, to the best of his knowledge and belief, the cost or pricing data he submitted was accurate, To insure comcomplete, and current. pliance with this requirement, contracting officers shall follow the instructions set forth in § 3.807-3 of this chapter before agreeing to a price adjustment of a formally advertised contract.

[28 F.R. 2093, Mar. 5, 1963]

§ 2.104-4 Indefinite delivery type con

(15) When considered necessary by the contracting officer, a requirement that all bids must allow a period for acceptance by the Government of not less than a minimum period stipulated in the invitation for bids, and that bids offering less than the minimum stipulated acThe ceptance period will be rejected. minimum period so stipulated should be no more than reasonably required for evaluation of bids and other pre-award processing. To accomplish the foregoing, a paragraph substantially as follows may be included in the Schedule or other appropriate place in the Invitation for Bids:

BID ACCEPTANCE PERIOD (APR. 1960) Bids offering less than days for acceptance by the Government from the date set for opening of bids will be considered nonresponsive and will be rejected. [Subparagraph (15) amended, 26 F.R. 2602, Mar. 28, 1961]

(23) When considered necessary by the contracting officer to prevent practices prejudicial to fair and open competition, such as improper kinds of multiple bidding, a requirement that each bidder submit with his bid an affidavit concerning his affiliation with other concerns. To accomplish the foregoing, a paragraph substantially as follows may be included in the Schedule or other appropriate place in the invitation for bids:

AFFILIATED BIDDERS (JAN. 1961)

(a) Business concerns are affiliates of each other when either directly or indirectly (1) one concern controls or has the power to control the other, or (ii) a third party controls or has the power to control both.

(b) Each bidder shall submit with his bid an affidavit containing information as follows:

(i) Whether the bidder has any affiliates; (ii) The names and address of all affiliates of the bidder; and

(iii) The names and addresses of all persons and concerns exercising control or ownership of the bidder and any or all of his affiliates, and whether as common officers, directors, stockholders holding controlling interest, or otherwise.

Failure to furnish such an affidavit may result in rejection of the bid.

[End of Notice.]

Failure to furnish such an affidavit shall be treated as a minor informality or irregularity (see § 2.405).

[Subparagraph (23) amended, 26 FR. 2602, Mar. 28, 1961]

*

(25) Pending revision of paragraph 4 of the Terms and Conditions of the Invitation for Bids on the back of Standard Form 30 (October 1957 edition) and Standard Form 33 (October 1957 edition) and of paragraph 7 of Standard Form 22 (January 1961 edition), the following provision shall be substituted, as to each form, for the cited paragraph:

LATE BIDS AND MODIFICATIONS OR WITHDRAWALS (Aug. 1963)

(a) Bids and modifications or withdrawals thereof received at the office designated in the invitation for bids after the exact time set for opening of bids will not be considered unless:

(i) they are received before award is made; and either

(ii) they are sent by registered mail, or by certified mail for which an official dated post office stamp (postmark) on the original Receipt for Certified Mail has been obtained, or by telegraph if authorized; and it is determined by the Government that the late receipt was due solely to delay in the mails, or delay by the telegraph company, for which the bidder was not responsible; or

(iii) if submitted by mail (or by telegram if authorized), it is determined by the Government that the late receipt was due solely to mishandling by the Government after receipt at the Government installation; provided, that timely receipt at such installation is established upon examination of an appropriate date or time stamp (if any) of such installation, or of other documentary evidence of receipt at such installation (if readily available) within the control of such installation or of the postoffice serving it.

However, a modification which makes the terms of the otherwise successful bid more favorable to the Government will be con

sidered at any time it is received and may thereafter be accepted.

(b) Bidders using certified mail are cautioned to obtain a legibly postmarked, dated Receipt for Certified Mail and retain it against the chance that the postmark thereon will be required as evidence that a late bid was timely mailed. If the postmark on such receipt, or on the registered mail wrapper, shows the hour of mailing as well as the date, the time of mailing shall be established accordingly; if it shows the date but not the hour, the time of mailing shall be deemed to be the last minute of the date shown; unless the bidder furnishes evidence from the post office of mailing which, (1) in the case of registered mail, establishes an earlier time; or (ii) in the case of certified mail, where the Receipt for Certified Mail identifies the post office station of mailing, establishes that the business day of that station ended at an earlier time, in which case, the time of mailing shall be deemed to be the last minute of the business day of that station. If any such Receipt for Certified Mail does not show the date, the bid shall not be considered. [Subparagraph (25) amended, 28 F.R. 12551, Nov. 23, 1963]

Prior Amendments

1961: 26 F.R. 9634, Oct. 12. 1962: 27 F.R. 6121, June 29.

(26) A provision covering the required source for jeweled bearings (see § 1.315 of this chapter).

CODIFICATION: Subparagraph (26) was added, 27 F.R. 1694, Feb. 22, 1962, and subsequently amended, 27 F.R. 6122, June 29, 1962.

(27) A statement substantially as follows (prominently placed in the invitation):

CAUTION TO BIDDERS-LATE BIDS

See the special provision entitled "Late Bids and Modifications or Withdrawals" which provides that late bids and modifications or withdrawals thereof sent through the mails ordinarily will be considered only if timely mailed by registered mail or by certified mail for which a postmarked receipt has been obtained as specified in such provision (Aug. 1963)

[28 F.R. 12551, Nov. 23, 1963]

Prior Amendments

1962: 27 F.R. 6122, June 29.

(28) 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) 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 (28) added, 27 F.R. 8871, Sept. 6, 1962]

(29) A provision covering parent company and employer identification number (see § 1.114 of this chapter).

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

[Subparagraphs (29) and (30) added, 27 F.R. 11649, Nov. 27, 1962]

(31) 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 this chapter). [Subparagraph (31) added, 28 F.R. 4882, May 16, 1963]

(b)

**

of

(10) If the contract is to include option provisions, a clear statement of such provisions (see Subpart O, Part 1 of this chapter).

[Subparagraph (10) amended, 26 F.R. 2602, Mar. 28, 1961]

(12) When minimum size of shipment requirements are appropriate (see § 1.1305-1(b)), a provision substantially as follows:

Minimum size of shipment. The Government desires that the minimum size of shipments be carload or truckload lots. If the bidder is unable to tender delivery in carload or truckload lots, he may set forth below the minimum size of shipments he will tender for delivery:

[Minimum size of shipments]

[To be completed by bidder]

If the bidder does not indicate otherwise, he must tender delivery in carload or truckload lots. Bids will be evaluated to take into account the transportation costs to the Government. If delivery is tendered in smaller quantities than set forth above, the contract price shall be reduced by the difference between the actual cost of transportation and the cost the Government would have incurred had the minimum size of shipment been complied with. (Apr. 1961) [Subparagraph (12) added, 26 FR. 5302, June 14, 1961]

(13) When the shipping weights (and dimensions if applicable) of an item are a factor in determining transportation costs for bid evaluation (see § 1.1305-1 (c)), a provision substantially as follows:

GUARANTEED MAXIMUM SHIPPING WEIGHTS (AND DIMENSIONS IF APPLICABLE)

Each bid will be evaluated to the destination specified by adding to the f.o.b. origin price all transportation costs to said destination. The guaranteed maximum shipping weights (and dimensions if applicable) are required for determination of transportation costs. Bidder must state the weights (and dimensions if applicable) are required for determination of transportation costs. Bidder must state the weights (and dimensions if applicable) in his bid or it will be rejected. If delivered items exceed the guaranteed maximum shipping weights (and dimensions if applicable), the bidder agrees that the contract price shall be reduced by an amount equal to the difference between the transportation costs computed for evaluation purposes based on bidder's guaranteed maximum shipping weights (and dimensions if applicable) and the transportation costs that should have been used for bid evaluation purposes based on correct shipping data. [Subparagraph (13) added, 26 F.R. 5302, June 14, 1961]

(14) Any requirement for preproduction samples or tests, including a statement that the Government reserves the right to waive the requirement as to those bidders offering a product which has been previously procured or tested by the Government, and a statement that bidders offering such products, who wish to rely on such production or test, must furnish evidence with the bid that prior Government approval is presently appropriate for the pending procurement.

[Subparagraph (14) added, 26 F.R. 9634, Oct. 12, 1961]

(15) Pending revision of paragraph 6 of the Terms and Conditions of the Invitation for Bids on the back of Standard Form 30 (October 1957 edition) and Standard Form 33 (October 1957 edition), the following provision shall be substituted as to each form, for the cited paragraph:

LABOR INFORMATION

If a contract resulting from this Invitation for Bids is subject to the Walsh-Healey Public Contracts Act, a minimum wage determination under the Act is applicable to all employees of the contractor who are engaged in the manufacture or furnishing of the supplies required under the contract. Informa