support of (identify program or project, and state the anticipated funding level).

(2) The proposed procurements are for (experimental, developmental, or research work, or for the manufacture or furnishing of property for experimentation, development, research, or test 1).

(a) (Set forth facts and circumstances which support a judgment that the work to be performed is in fact experimental, developmental or research).

(3) It is impracticable to secure competition by formal advertising for the contracts contemplated because:

(a) (Set forth reasons why the procurements contemplated cannot be formally advertised, e.g., only ultimate objectives and general scope of work can be outlined, work cannot be described by definite drawings and specifications, etc.)

I hereby determine that:

On the basis of the above findings, the proposed procurements are for (experimental, developmental, or research work, for the manufacture or furnishing of property for experimentation, development, research, or test 1) and that negotiation of contracts for such (work or property 1) is authorized pursuant to 41 U.S.C. 252(c) (11); provided the required (work or property 1) has been authorized by law.

This class determination shall remain in effect until (state terminal date (limit effective period to 1 year)).

Date

(1) The (agency title) proposes to procure (describe the work, service, or product) identify program or project).

(2) This procurement can not be publicly disclosed because (explain either the basis for classification of the contract or the other considerations which the Secretary should know in order to determine that the property or services should not be publicly disclosed).

(8) (Set forth reasons why the procurement can not be formally advertised.)

I hereby determine that:

On the basis of the above findings, procurement of the (property or services 1) should not be publicly disclosed and the negotiation of a contract for such (property or services 1) is authorized pursuant to 41 U.S.C. 252 (c)

1 Use applicable word or statement.

(12); provided, the required (property or service 1) has been authorized by law. Date:

(Signature)

(5) Section 1-3.214. Individual contract.

DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE

DETERMINATION AND FINDINGS

Authority To Negotiate an Individual Contract Under 41 U.S.C. 252(c) (14)

I hereby find that:

(1) The (agency title) proposes to procure (describe work, service or product) (identify program or project).

(2) The proposed procurement was solicited by formal advertising under IFB (No. and date). The lowest responsive bid offered a (unit or aggregate1) price of ($------) which is considered excessive in relation to the prices (8------), estimated as reasonable by (agency title).

(Note: If applicable, use the following statement: "The prices of bids received were not independently arrived at in open competition.") (Set forth facts and circumstances to support this statement.)

I hereby determine that:

On the basis of the above findings, bid prices received under IFB (No. and date) (are unreasonable; have not been independently arrived at in open competition 1) and that negotiation of a contract for (describe work, service or product) is authorized pursuant to 41 U.S.Č. 252(c) (14); provided, the required (property or service) has been authorized by law and the limitations under 1-3.214 are complied with.

Date

(Signature)

(6) Section 1-3.213. (Note sample determination and findings prescribed by § 1-3.213.)

(b) Type of contract-(1) Cost reimbursement contracts. The following format is prescribed for determinations required by § 1-3.302 (a) and (b):

DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE

DETERMINATION AND FINDINGS

Authority To Use Cost Reimbursement Type Contract

I hereby find that:

(1) The (agency title) proposes to contract with (name of proposed contractor, for (describe work, service, or product) (identify program or project). The estimated cost is (8------) (if contract is CPFF type, insert, "plus a fixed fee of ($------) which

(2) (Set forth facts and circumstances that show why it is impracticable to secure property or services of the kind or quantity required without the use of the proposed type of contract or why the proposed method of contracting is likely to be less costly than other methods.)

I hereby determine that:

On the basis of the above findings it is impracticable to secure the property or services of the kind or quality required without the use of a (cost, cost-sharing, or cost-plusa-fixed-fee3) type of contract, or the (cost, cost-sharing, cost-plus-a-fixed-fee1) method of contracting is likely to be less costly than other methods."

Date

or

(Signature)

(2) Time and materials or labor-hour contracts. The format prescribed by § 3-3.305-50 (b) (1) shall be followed except that the final paragraph shall read as follows:

I hereby determine that:

On the basis of the above findings, no other type of contract will suitably serve for the procurement of the required work or services.

(c) Section 1-3.302 (c) and (e). Operating agencies will prescribe formats for determinations required by § 1-3.302 (c) and (e).

(d) Advance payments. The prescribed format for advance payments determination and findings is set forth in § 1-30.410.

(e) Buy American Act exceptions. The prescribed format for determinations in support of exceptions to the Buy American Act is set forth in § 3-6.103.

(f) 10 U.S.C. 2353 (Reserved). (g) Fixed fee. Format for the determination required by § 3-3.302(b) will be prescribed by operating agencies.

[35 FR 9004, June 11, 1970, as amended at 41 FR 19634, May 13, 1976]

§ 3-3.306 Procedure with respect determinations and findings.

§ 3-3.306-50 sion.

to

Preparation and submis

Determinations and findings to be made by an Assistant Secretary shall be prepared in an original and four coples (including the yellow box-imprinted copy) and forwarded to the Assistant Secretary through the Office of Procurement

and Materiel Management, OASAM. The accompanying briefing let

1 Use applicable word or statement. Use applicable words.

(a) Secretarial determinations. Each determination and findings to be made by an Assistant Secretary shall be accompanied by a briefing letter signed by the head of the procuring activity. The letter will present facts and information sufficient to support a judgment that the proposed procurement action is proper, is authorized by law, and that negotiation of a contract(s) is justified. As & minimum, the letter shall include:

(1) A concise description in nontechnical language of the work or services to be performed and the products to be delivered. If a cost reimbursement type contract is contemplated, note scope of work discussion in § 1-3.405-5(e).

(2) Identification of the program or project to be supported and an explanation of why contracting is the proper method of acquiring the required work, service, or property; including a citation of contracting authority.

(3) A statement that appropriated funds are available for the proposed contract(s) and the estimated dollar value of the proposed procurement(s).

(4) A statement setting forth facts and circumstances that clearly and convincingly explain why formal advertising is not feasible or practicable for the proposed procurement. Details must be furnished to support statements such as "only ultimate objectives and general scope of work can be outlined:" "work cannot be described by definite drawings and specifications;" etc.

(5) Discussion of the extent of competition contemplated; i.e., "between five and ten of the most qualified sources will be solicited because (state reasons) :" "only a single or sole source will be solicited because (state reasons; identify source) ;" "procurement will be synopsized;" include pertinent information obtained from preliminary discussion with potential source or sources. Briefly discuss proposed source evaluation criteria. If the successful contractor will be allowed to acquire, or if the Government is to furnish facilities or equip

ment, describe the kind and amount and the basis for providing such property.

(6) Description of type(s) of contract contemplated and reasons for choice. If type of contract contemplated is not set out in Subpart 1-3.4, explain.

(7) Brief discussion of time-frame for procurement actions; i.e., estimated period for soliciting sources, evaluation of proposals, negotiation of contract, period of contract performance (renewal or extension contemplated), etc.

(b) Proposed procurements expected to exceed $1 million. In addition to the information covered in § 3-3.306-51(a), briefing letters for proposed procurements or classes of procurements expected to exceed $1 million will provide answers to the following questions:

(1) Is the proposed procurement an isolated task or is it part of a whole, balanced program?

(2) What is to be the end result of the experimental, developmental, or research work; specific use, or acquisition of general knowledge? How will the results be applied?

(3) Does the current level of technology support the feasibility of effort contemplated? How?

(4) To what degree has the effort been coordinated within and outside the Department in order to preclude duplication of effort?

(c) Determinations by heads of procuring activities. Contracting officers shall prepare and submit briefing letters providing the same information as prescribed in § 3-3.306-51(a) when determinations are to be made by the head of the procuring activity or a designee other than the contracting officer.

§ 3-3.306-52

Briefing letters for facilities construction determinations. Each determination to be signed by the Assistant Secretary for Health and Scientific Affairs pursuant to 10 U.S.C. 2353 shall be accompanied by:

(a) A briefing letter signed by the chief officer of the operating agency responsible for administration, or cognizant Regional Director. The letter shall contain:

(1) A description of the procurement which includes: (1) Contract type; (11) estimated dollar amount of contract; (iii) property and/or services to be procured; (iv) contractor; (v) approximate duration of the research effort; (vi) any urgency considerations; and (vii) any explanation necessary to apprise the ap

proving authority of unique or unusual aspects.

(2) A description of the research, development, or test facilities and equipment and specialized housing therefor which are to be provided at Government expense. This information shall include: (1) Negotiated estimated total cost, including a breakdown of (a) nonseverable, and (b) severable items; (ii) details concerning ownership of land on which they are to be affixed; (iii) a statement as to whether any of the proposed facilities have general utility; (iv) details which show that the property is of a special character useful primarily for research, development, or test purposes: and (v) any explanation of why such property is necessary for the performance of the contract.

(3) An explanation as to whether the facilities and equipment are readily removable or separable without unreasonable expense or unreasonable loss of values and a description of the provisions to be included in the contract either for:

(1) Reimbursing the Government for the fair value of the property at or near the completion or termination of the contract;

(ii) An alternative provision such as an option afforded to the Government to abandon the facilities or to dismantle and remove the facilities without obligation to restore the premises to their former condition. An explanation shall be provided as to why such alternatives are considered adequate to protect the interests of the Government.

(b) A written representation by the contractor, signed by an executive corporate official, or his equivalent in noncorporate entities, which expresses either unwillingness or financial inability to acquire the necessary resources. [37 FR 17472, Aug. 29, 1972]

§ 3-3.306-53 Briefing letter for other

determinations.

Each determination to be signed by an official designated to act as head of the agency (see § 3-3.303) or by the head of the procuring activity shall be accompanied by a briefing letter signed by the chief officer of the operating agency responsible for administration, or cognizant Regional Director. The letter shall contain as much supplemental information as is necessary to establish that each requirement or condition of the applicable law or regulation is being fully

complied with (e.g., Subpart 1-6.10, Omission of the Examination of Records Clause From Contracts With Foreign Contractors).

[37 FR 17473, Aug. 29, 1973]

§ 3-3.306-54

Briefing letters for advance payment determinations. Each determination to be signed by the Director, Office of Procurement and Materiel Management, OASAM, shall be accompanied by a briefing letter to be signed by the chief officer of the operating agency responsible for administration, or cognizant Regional Director.

The letter shall contain:

(a) A description of the procurement which includes: (1) Name of a contractor; (2) contract type; (3) property and/or services to be obtained; (4) amount of contract.

(b) A statement concerning the proposed financing and contractor's financial responsibility which includes: (1) Amount of advance payment required, including justification and rationale in support of the amount requested; (2) method of financing the advance payment; and (3) safeguards adequate to protect the interests of the Government.

(c) Factual information shall be given in sufficient detail to support a finding that the advance payment is necessary and is in the interest of the Government.

[37 FR 17473, Aug. 29, 1973]

Subpart 3-3.4-Types of Contracts § 3-3.405

tracts.

Cost-reimbursement type con

[87 FR 15860, Aug. 5, 1972]

§ 3-3.405-3 Cost-sharing contract.

(a) Purpose. This regulation prescribes policy relative to cost sharing in research contracts supported by HEW Programs in accordance with Office of Management and Budget (OMB) Circular A-100. The policy and procedures for cost sharing in research grants is set forth in Chapter 2-140 of the HEW Grants Administration Manual.

(b) Background. OMB Circular No. A-100 was issued to provide guidance for determining:

(1) The amount of cost sharing to be obtained when cost sharing is required by statute; and

(2) Whether contractors should be requested to participate in the cost of the research even though cost sharing is

not required by statute and, if so, in what amount.

(c) Policy. (1) In addition to utilizing cost-sharing type contracts when required by statute, the desirability of utilizing this type of contract should also be considered under certain circumstances when not required by statute. Contractors should be encouraged to contribute to the cost of performing research where there is a probability that the contractor will receive present or future benefits from such participation, such as, increased technical know-how, training to employees, acquisition of equipment, use of background knowledge in future contracts, etc. Cost sharing is intended to serve the mutual interest of the Government and the performing organization by helping to assure efficient utilization of the resources available for the conduct of research projects and by promoting sound planning and prudent fiscal policies by the performing organization. If cost sharing is not required by statute, encouragement should be given to organizations to contribute to the cost of performing research under research contracts unless the contracting officer determines that a request for cost sharing would not be appropriate because of the following circumstances:

(i) The particular research objective or scope of effort for the project is specified by the Government rather than proposed by the performing organization. This would usually include any formal Government requests for proposals for a specific project.

(ii) The research effort has only minor relevance to the non-Federal activities of the performing organization, and the organization is proposing to undertake the research primarily as a service to the Government.

(iii) The organization has little or no non-Federal sources or funds from which to make a cost contribution. Cost sharing should generally not be requested if cost sharing should mean that the Government would have to provide funds through some other means (such as fees) to enable the organization to cost share. It should be recognized that those organizations which are predominantly engaged in research and development and have little or no production or other service activities may not be in a favorable position to make a cost contribution.

(2) Cost sharing may be negotiated in either of two ways. When cost sharing is negotiated on a contract by con

tract basis, the responsibility of negotiating the cost-sharing arrangement is that of the Contracting Officer. In the case of institutional cost-sharing arrangements (see paragraph (f) of this section) the responsibility for negotiating cost sharing is that of the Office of the Assistant Secretary for Health. Each research contract file should show whether the contracting officer considered cost sharing appropriate for that particular contract and, except when an institutional cost-sharing agreement is applicable, in what amount. If cost sharing was not considered appropriate, the file must indicate the factual basis for that decision, e.g., "Because the contractor will derive no benefits from this award that can be applied to his commercial activities, cost sharing is not considered appropriate." The contracting officer may wish to coordinate with the project officer before documenting his decision.

(3) If the contracting officer considers cost sharing to be appropriate for a research contract and the contractor refuses to accept this type of contract, the award may be made without cost sharing except when cost sharing is required by statute, if the contracting officer concludes that payment of the full cost of the research effort is necessary in order to obtain the services of that particular contractor.

(d) Amount of cost sharing. When cost sharing is required by statute or determined to be appropriate, the following guidelines shall be utilized in determining the amount of cost participation by the contractor except where a institutional cost-sharing agreement is applicable (see paragraph (f) of this section).

(1) Cost participation by educational institutions and other not-for-profit or nonprofit organizations should normally be at least 1 percent of total project cost. In many cases cost sharing of less than 5 percent of total project cost would be appropriate in view of the organizations' nonprofit status and their normally limited ability to recover the cost of such participation from non-Federal sources. However, in some cases it may be appropriate for educational institutions to provide a higher degree of cost sharing, such as when the cost of the research consists primarily of the academic year salary of faculty members (or when the equipment acquired by the institution for the project will be of significant value to the institution in its

educational activites). These percentages listed above are not intended as a substitution for those set forth in any legislation and are not to be used in lieu of those contained in such legislation.

(2) The amount of cost participation by commercial or industrial organizations should depend to a large extent on whether the research effort or results are likely to ehance the performing organization's capability, expertise, or competitive position, and the value of such enhancement to the performing organization. It should be recognized that those organizations which are predominantly engaged in research and development and have little or no production or other service activities may not be in a favorable position to derive a monetary benefit from their research under Federal agreements. Therefore, cost participation by commercial or industrial organizations could reasonably range from as little as 1 percent or less of the total project cost, to more than 50 percent of total project cost.

(3) If the performing organization will not acquire title to or the right to use inventions, patents or technical information resulting from the research project it would generally be appropriate to obtain less cost sharing than in cases in which the performer acquires such rights.

(4) When cost sharing is required by statute, cost participation of less than 1 percent may be appropriate if consistent with the provisions of the statute and: (1) A formal request for proposal is issued; (ii) the contractor proposes to perform the research primarily as a service to the Government, or (ii) the contractor has little or no non-Federal sources of funds from which to make a cost contribution.

(5) A fee or profit will usually not be paid to the performing organization if the organization is to contribute to the cost of the research effort, but the amount of cost sharing may be reduced to reflect the fact that the organization is foregoing its normal fee or profit in the research. However, if the research is expected to be of only minor value to the performing organization and if cost sharing is not required by statute, it may be appropriate for the performer to make a contribution in the form of a reduced fee or profit rather than sharing the costs of the project.

(6) The organization's participation may be considered over the total term of