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tribute the following documents to the other Navy procuring and field activities, and other Military Departments which will be assigned responsibility for any procurement under the CDF:

(i) A reproducible copy of the RAN. (ii) A reproducible copy of the CDF. (iii) A reproducible copy of other related sigificant documents, including correspondence having the effect of placing limitations or conditions on the use of the CDF.

(g) Citation of an Approved CDF. Whenever it is necessary to cite an approved CDF, both the symbol, e.g., NAVORD-10210 and the number, e.g., CDF 57-1 assigned by the Chief of Naval Material (MAT 023), shall be used.

(h) Period of Effectiveness. The time period for which a CDF is to be effective shall not exceed one year unless evidence is presented indicating the need for a longer period. For example, (1) CDFs covering a standardized item should cover the period for which the requirements are known or have been calculated; (2) in research and development programs, anticipated progress should govern the length of the period of effectiveness. The period for programs subject to foreseeable change or for multiple contracts under an outstanding requirement should be limited to the period necessary to accomplish the stated purpose of the CDF.

(i) Extensions of D&Fs. The continuation of a CDF beyond its effective date requires a new RAN (Request for Authority to Negotiate) setting forth the basic need, the actions accomplished under preceding authorized period, a forecast of the expected activity under the CDF, and a new effective period.

(j) Reviews. The Contracting Officer should periodically review the continued necessity for use of a CDF particularly in those instances where the effective period extends one year.

[40 FR 1402, Jan. 7, 1975, as amended at 41 FR 55514, Dec. 21, 1976]

§ 737.3-306-54 Additional procedure with respect to determinations and findings under the Standardization Program (§ 3.213).

(a) Sections 5.1106-2(b) and 737.51106-2 set forth requirements for de

terminations and findings under § 3.213 in coordinated procurement.

(b) Within the Department of the Navy, where procurement involving standardization of technical equipment is required by one activity (Requiring Activity) but is to be effected by another activity (Procuring Activity) the Requiring Activity shall (1) prepare and obtain execution of the required D&F (unless a D&F applicable to the program involved has already been executed), (2) include a statement in the requisition that the applicable D&F has been executed, and (3) attach to the requisition two copies of the applicable D&F. The Requiring Activity shall preserve the original D&F and copies of all supporting documents, in accordance with § 3.308. One of the copies of the D&F shall be used by the Procuring Activity to complete its contract files and, in accordance with § 3.307, the other shall be sent to the General Accounting Office with the copy of the contract negotiated and executed thereunder. The Procuring Activity shall inform the Requiring Activity of any adverse circumstances affecting the proposed procurement.

§ 737.3-306-55 Documentation of files for negotiation under EXCEPTION (10). (See § 3.210.) In connection with D&F's citing EXCEPTION (10) as a justification for negotiation, where the lack of inadequacy of technical data represents a major or contributing reason precluding competition, the official contract file shall contain the same supporting documentation as required for RAN's under § 737.3-30652(b)(4). In all other cases where EXCEPTION (10) is cited and where competitive procurement is precluded or limited by reasons other than the lack or inadequacy of technical data, the official contract file should set forth the action being taken to develop or increase competition on future procurement of the items or services concerned, or fully explain why action toward that objective would be unavailing and is therefore not being taken. This is aimed at requiring concrete plans and evidence of progress toward removing obstacles to competi

equipment or weapon systems to be
procured on a selected or specific
source (sole source) basis through
orders placed under BOAs;

(ii) They shall be limited to the over-
haul, repair or modification of existing
equipment or systems;

(iii) They shall exclude the performance of any research and development effort;

(iv) They shall exclude the procurement of any parts, components or materials not an integral part of the work to be performed;

(v) They shall specifically list the items or equipment upon which the work will be performed, together with the proposed sources for such work;

(2) Format. The suggested format incorporating the conditions listed in paragraph (c)(1) of this section is illustrated in § 737.3-210-3.

(3) Preparation and submission. (i) A RAN and the CDF shall be prepared in the same manner as they would be for submission to the Assistant Secretary of the Navy (I&L).

(ii) Each such CDF shall be numbered consecutively by the activity.

(iii) One copy of each such CDF, together with the associated RAN, shall be forwarded to the Chief of Naval Material (MAT 023) promptly after execution.

(d) Reports of Procurements Under CDFS. (1) Certain procurements require business clearance approval by the Chief of Naval Material (see § 737.1-403-50 for business clearance requirements).

(2) For each procurement not requiring business clearance approval by the Chief of Naval Material, a report after execution shall be made. The Individual Procurement Action Report (DD Form 350) shall be prepared and a copy submitted promptly to the Chief of Naval Material (MAT 022). Item 27 of DD Form 350 shall indicate the following information:

(i) The CDF number, assigned by the Chief of Naval Material, under the authority of which the procurement was negotiated, except as provided in paragraph (c)(3)(ii) of this section;

(ii) The number of concerns initially solicited, additional number of concerns submitting proposals and their respective quotations.

Title 32-National Defense

(e) Content of Request for Authority to Negotiate (RAN) Under CDFs. (1) In addition to the information specified in § 737.3-306-52, the following shall be included in the Requests for Authority to Negotiate for CDFs:

(i) Insert the word "Class" after the particular exception cited as the negotiation authority;

(ii) State the estimated quantity and dollar value of contracts expected to be negotiated under the proposed CDF; and

(iii) When the CDF covers a proposed standardization of equipment under exception (13), include statements of action taken in conformance with § 737.5-1106-2.

(iv) An activity submitting a proposed CDF shall specifically indicate the Navy procuring activities, including field activities, and other Military Departments which will be assigned responsibility for any procurement under the proposed CDF.

(v) The RAN shall be numbered in the manner prescribed in § 737.1-403

53.

(f) Distribution of RANS and CDFs. (1) The minimum number of copies of a RAN and proposed CDF to be submitted to the Chief of Naval Material (MAT 023) shall be as follows:

Negotiation Exception 2304(a)

(12), (14), and
(16).

(11) and (13)

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(2) After CDF has been approved, the Chief of Naval Material (MAT 023) will:

(i) Assign to the CDF an idenification number preceded by the letters "CDF," except as provided in paragraph (c)(3)(ii) of this section, and

(ii) Return the original and one (1) copy of the RAN and the original and one (1) copy of the approved CDF to the originating activity. (Copies submitted in excess of requirements in paragraph (f)(1) of this section will be returned to the originating activity).

(3) Upon receipt of an approved CDF, the originating activity shall dis

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tribute the following documents to the other Navy procuring and field activities, and other Military Departments which will be assigned responsibility for any procurement under the CDF:

(i) A reproducible copy of the RAN. (ii) A reproducible copy of the CDF.

(iii) A reproducible copy of other related sigificant documents, including correspondence having the effect of placing limitations or conditions on the use of the CDF.

(g) Citation of an Approved CDF. Whenever it is necessary to cite an approved CDF, both the symbol, e.g., NAVORD-10210 and the number, e.g., CDF 57-1 assigned by the Chief of Naval Material (MAT 023), shall be used.

(h) Period of Effectiveness. The time period for which a CDF is to be effective shall not exceed one year unless evidence is presented indicating the need for a longer period. For example, (1) CDFs covering a standardized item should cover the period for which the requirements are known or have been calculated; (2) in research and development programs, anticipated progress should govern the length of the period of effectiveness. The period for programs subject to foreseeable change or for multiple contracts under an outstanding requirement should be limited to the period necessary to accomplish the stated purpose of the CDF.

(i) Extensions of D&Fs. The continuation of a CDF beyond its effective date requires a new RAN (Request for Authority to Negotiate) setting forth the basic need, the actions accomplished under preceding authorized period, a forecast of the expected activity under the CDF, and a new effective period.

(j) Reviews. The Contracting Officer should periodically review the continued necessity for use of a CDF particularly in those instances where the effective period extends one year.

[40 FR 1402, Jan. 7, 1975, as amended at 41 FR 55514, Dec. 21, 1976]

§ 737.3-306-54 Additional procedure with respect to determinations and findings under the Standardization Program (§ 3.213).

(a) Sections 5.1106-2(b) and 737.51106-2 set forth requirements for de

terminations

and

under

findings § 3.213 in coordinated procurement. (b) Within the Department of the Navy, where procurement involving standardization of technical equipment is required by one activity (Requiring Activity) but is to be effected by another activity (Procuring Activity) the Requiring Activity shall (1) prepare and obtain execution of the required D&F (unless a D&F applicable to the program involved has already been executed), (2) include a statement in the requisition that the applicable D&F has been executed, and (3) attach to the requisition two copies of the applicable D&F. The Requiring Activity shall preserve the original D&F and copies of all supporting documents, in accordance with § 3.308. One of the copies of the D&F shall be used by the Procuring Activity to complete its contract files and, in accordance with § 3.307, the other shall be sent to the General Accounting Office with the copy of the contract negotiated and executed thereunder. The Procuring Activity shall inform the Requiring Activity of any adverse circumstances affecting the proposed procurement.

§ 737.3-306-55 Documentation of files for negotiation under EXCEPTION (10).

(See § 3.210.) In connection with D&F's citing EXCEPTION (10) as a justification for negotiation, where the lack of inadequacy of technical data represents a major or contributing reason precluding competition, the official contract file shall contain the same supporting documentation as required for RAN's under § 737.3-30652(b)(4). In all other cases where EXCEPTION (10) is cited and where competitive procurement is precluded or limited by reasons other than the lack or inadequacy of technical data, the official contract file should set forth the action being taken to develop or increase competition on future procurement of the items or services concerned, or fully explain why action toward that objective would be unavailing and is therefore not being taken. This is aimed at requiring concrete plans and evidence of progress toward removing obstacles to competi

tion. Business clearance memoranda submitted to the Chief of Naval Material pursuant to § 737.1-403-51 shall be accompanied by or include therein this required information.

§ 737.3-400 Types of contracts.

§ 737.3-408 Letter contracts.

(a) Authority to contract. Where, in accordance with § 3.408, it has been determined that a letter contract is a proper contractual instrument, authority to contract shall be obtained from the Chief of Naval Material (MAT 022) in accordance with § 737.1403-51(b)(2)a(ii) prior to issuance of modification of the letter contract, as applicable.

(b) Reporting Letter Contract Status. See § 737.21-103-1.

(c) Designation of Paying Activity. Letter contracts shall name the paying activity to be designated in the definitive contract as the paying office for the letter contract. A copy of the letter contract shall be furnished promptly to the paying office named therein.

[40 FR 1402, Jan. 7, 1975, as amended at 41 FR 55514, Dec. 12, 1976]

§ 737.3-409 Indefinite delivery type contracts.

See § 737.1-350-1.

§ 737.3-410 Other types of agreements.

Ordering

§ 737.3-410-2 Basic ordering agreement. (a) General. (1) Basic Agreements (BOAs) are normally written to provide for the procurement of authorized supplies and services covering as wide a range as is practicable. However, separate BOAs may be negotiated when it is considered necessary to restrict the use of a BOA to the procurement of specific supplies or services or when it is considered necessary to authorize the Contract Administration Office (CAO) to issue orders. Such BOAS are referred to as specialized BOAs.

(2) Specialized BOAS providing for the placement of orders by the CAO shall contain a provision substantially as follows:

Each order issued hereunder shall cite (insert applicable negotiation authority and

class determination and findings (CDF) number), unless earlier suspended or cancelled by notice from the purchasing office. Orders for items not identified in the CDF and basic ordering agreement are considered unauthorized.

(3) The requirement of § 3-410.2(c) (2) (i) of this title for a determination at the time each order is placed that it is impracticable to obtain competition is satisfied when there is a selected or specified source (sole source) CDF.

(4) The Basic Ordering Agreement shall provide a time frame for the furnishing of contractor price quotations for unpriced orders issued. The period should be as short as practicable, usually 30 days, and normally should not exceed 60 days from receipt of the order. When the Contracting Officer, upon notification by the contractor that pricing cannot be established within the specified period, determines that a longer period is necessary, he shall document the contract file indicating the basis for the determination. [41 FR 55514, Dec. 21, 1976]

§ 737.3-500 Solicitations of proposals and quotations.

§ 737.3-507 Treatment of procurement information.

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tracts for which overhead rates are negotiated.

(2) Excluding a cost reimbursement type contract from the operation of a Navy-wide agreement for reimbursement of allowable costs and

(3) Entering into advance understanding of particular items of costs as authorized by § 15.107.

Such approval is not required for provisions making anticipatory costs allowable or to provisions for cost sharing by the contractor. It is recognized that special cost provisions may be desirable from time to time in connection with individual contracts. Accordingly, contracting officers should feel free to request approvals required by this paragraph.

(b) Where only one Navy procuring activity has cost-reimbursement type contracts with a particular contractor involving negotiated overhead rates, the rates shall be negotiated by that activity. If more than one Navy procuring activity is involved, or if either the Army or the Air Force is involved along with one or more Navy procuring activities, the Coordinated Negotiation Staff (MAT 02D) shall be responsible for conducting the negotiation of overhead rates, except where the negotiation is sponsored by another Department in accordance with § 3.706. See § 737.1-405-51(a) for contracting authority of the Head, Coordinated Negotiation Staff. The Head, Coordinated Negotiation Staff (MAT 02D), when responsible for conducting the negotiations, shall arrange a negotiation conference to which shall be invited representatives of the contractor and the procuring activities concerned. If more than one Department or more than one Navy procuring activity is involved, the audit report will be submitted to the Head, Coordinated Negotiation Staff (MAT 02D), with copies to the procuring activity concerned. The audit report may be supplemented, within the Navy, by information from the files of the Headquarters Naval Material Command and the cognizant contracting offices, plus any information available from individual negotiators currently dealing with the contractor and any additional information the contractor may wish or be requested to furnish.

On the basis of the audit report and all additional information, the negotiation of rates shall be accomplished as set forth in § 3.705 and this paragraph (b).

(c) Where contracts are completed and Tri-Service overhead rates have not been finalized covering that period(s), the final rates affecting such contracts may be negotiated by the ACO subject to the following:

(1) Physically completed as to performance and all other administrative and technical requirements other than financial; namely, overhead;

(2) The allocable overhead dollars are considered to be not substantial;

(3) Consultation and advice of the DCAA auditor who would then be made aware of the base(s) for settlement;

(4) Applicable period contract costs be included in the base for determining final overhead rates.

§ 737.3-750 Method of interim payment.

Paragraph (e) of the Negotiated Overhead Rates clause (§ 3.704) authorizes two alternative methods of interim payments pending negotiation of final rates: (a) Negotiated provisional rates set forth in the contract Schedule, or (b) billing rates acceptable to the contracting officer or his authorized representative. In the case of contracts with commercial concerns the billing rate method is preferred where only Navy contracts are involved. Under this method, interim payments will be made at billing rates acceptable to the Defense Contract Audit Agency but the billing rates will not be incorporated in an amendment to the contract. This procedure is more easily administered, provides greater flexibility for prompt adjustment to meet changed circumstances during the rate period, and eliminates the necessity of negotiation by procurement personnel. Where the billing rate method is adopted for Navy contracts, the contracts shall provide that interim payments for overhead will be made at billing rates acceptable to the Defense Contract Audit Agency and that, in the event of failure to agree on the specific billing rates to be used in any given period, the contracting

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