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(2) Costs. Comparison of the cost of furnishing GFP with the price offered for the contractor-furnished petroleum must be on a fair and equitable basis. Navy laid down prices do not include related services such as plane fueling and defueling, purging of fuel tanks, and use of special purpose equipment. When a contractor's unit price includes related services, these added costs, if any, must be added to the Navy laid down unit price. In addition, unit prices for Government-furnished petroleum must, in appropriate instances, include costs of administration (personnel), disposal, and the amortization of leasing facilities. In instances where there is a significant price differential in favor of GFP, this may be offset by appropriate reductions in profit allocation or other contractor costs to favor use of petroleum products on a contractor-furnished basis.

(3) Facilities. The availability and costs of storage (Government-owned, contractor-owned, leased, etc.) facilities, handling facilities or direct delivery from the fuel supplier to the plane or engine shall be ascertained and considered. Additional facilities shall not be provided or authorized unless there is a reasonable expectation that the cost of new facilities, particularly tank storage and distribution lines, will be offset by savings through Government-furnished petroleum products within five years. Short-term leases for storage and handling facilities may offer an alternative method of providing facilities if a net saving through GFP will result.

(e) Navy Fuel Supply Office. The Navy Fuel Supply Office (NFSO), Cameron Station, Alexandria, Va., is responsible for the inventory control and distribution of liquid petroleum fuels, oils and lubricants to naval activities. Subsequent to a determination to provide certain petroleum products as Government-furnished petroleum, the Contracting Officer shall submit complete information on a contractor's requirements to NFSO. Requirements shall be submitted in accordance with instructions prescribed by the Navy Fuel Supply Office. That office will determine whether requirements shall be furnished by cross-serv

icing agreements, shipments from Navy storage or by new procurement. In the event that a petroleum item cannot be made available at the time, or in the quantity desired, or at the item price stated in the requisition, NFSO will take no further action on affected items until the Contracting Officer authorizes appropriate amendment to the requisition. Unit prices for requisition purposes are published in the Standard Supplement to the Navy Stock List of Fuels, Lubricants, and Petroleum Products; except for bulk fuel prices which are published as required by Navy Fuel Supply Office Instruction 4265.4.

In

(f) Contract Modifications. making the determination prescribed in paragraph (c) of this section, consideration shall be given to all existing contracts with a particular contractor in which petroleum products are being used. Where there is a determination to utilize Government-furnished petroleum products, it will be necessary to establish a suitable change point which will not disrupt operations or affect delivery schedules. Contract modifications shall be negotiated by the office procuring the end equipment at the earliest practicable time to provide Government-furnished petroleum products on all items which met the considerations stated in paragraph (d) of this section, and requirements for the same grade and type of items shall be consolidated accordingly.

§ 737.13-600 Administration of Government production and research property.

§ 737.13-651 Research and development facilities.

(a) 10 U.S.C. 2353 provides that, subject to certain conditions set forth therein, a contract of a Military Department for research or development, or both, may provide for the acquisition or construction by, or furnishing to, the contractor of research, developmental, or test facilities and equipment that the Secretary of the Department concerned determines to be necessary for the performance of the contract. DOD Directive 4275.5 of 14 November 1966 (SUBJ: Industrial Fa

90-111 0-82--39

cility Expansion and Replacement) provides that facilities projects having an estimated cost in excess of $1,000,000 of new monies are to be submitted to the Director of Defense (Research and Development) for approval. In order to ensure uniform procedures for the review and approval of all facilities projects, research and development facilities projects shall be reviewed and approved in accordance with the procedures for industrial facilities projects as specified in NAVMAT Instruction 4860.13A (Industrial Facilities Program).

(b) Where non-severables are to be installed on property not owned by the government, appropriate clauses shall be added in accordance with the provisions of U.S.C. 2353.

(c) Facilities may be provided for either directly in the research and development contract concerned, or in a separate facilities contract which refers to the research and development contract concerned. In the former case, the facilities will, after construction or installation, be transferred to a separate facilities contract, if such separate contract is required by the provisions of § 13.402.

§ 737.13-651-1 Requirement for review by Navy Facilities Review Board of change in capacity of Governmentowned-contractor-operated research and development facilities.

See SECNAV Instruction 5420.10 (ONR: 108).

§ 737.16-652 Facilities.

(a) Policy for the Provision of Industrial Facilities. See NAVMAT Instruction 4860.13A (Industrial Facilities Program).

(b) Protection of Government's Interest in Facilities. (1) Every contracting officer in negotiating or in making a supply contract shall make sure that any payments for the purchase of, or to aid in the acquisition of, facilities which are not of the type commonly classified as expendable, are separately and clearly set forth and not buried or otherwise hidden in a lump price. No payments under any contracts shall be made on account of facilities, in excess of proper depreciation, unless the interest of the Government

in such facilities is recognized and protected by the contract.

(2) Just what constitutes such protection of the interest of the Government will vary in each individual case and will depend upon the nature of the facilities. Usually it will be necessary to assure the Government of the privilege of having the facility used in the performance of Government contracts, free of any charge for the use of the part of the facility paid for by the Government and also to have some agreement as to the disposition of the interest of the Government in the facility. Provision should be made that the Contractor:

(i) Maintain the facility in good condition;

(ii) Attach no lien nor convey to another all or any portion of the facility; (iii) Make no material alteration in the nature of the facility;

(iv) Give priority to Government orders; and

(v) Not include in any supply price any depreciation or amortization of the part of the facility paid for by the Government.

All procurement officers must be sure in making a contract, the fulfillment of which may require the use of a facility covered by an agreement to the effect that no depreciation or amortization of such facility shall be included in the price, that such agreement is unmistakably adhered to and that depreciation and amortization of such facility are definitely excluded from the price.

(c) Research and Development Facilities. See § 737.13-651.

§ 737.13-700 Contract clauses.

§ 737.13-702 Government property clause for fixed-price contracts.

§ 737.13-702-50 Deviations for fixed-price (and cost-reimbursement) contracts.

(a) In many cases the interest of the Government requires the furnishing to contractors of material, the relatively low value of which renders impracticable the administrative burden of using the clauses in § 13.701.

(b) Accordingly, Systems Commands, Bureaus and Offices having inventory

En such facilities ected by the contra (2) Just what s tion of the interes

ntrol of material may furnish such aterial, subject to the availability of aterial in the supply system, to ime contractors without using either

nt will vary in the contract clauses set forth in

will depend upo

13.701, subject to the following contions:

facilities. Usually to assure the G ege of having the (1) Title to all material furnished erformance of G all remain in the Government; free of any char (2) The maximum dollar value of part of the faterial furnished under the authorivernment and of this directive in connection with reement as to tony one transaction shall not exceed terest of the 5,000;

y. Provision shi (3) The material furnished is to be Contractor ncorporated into the end product ain the facieing procured under the contract, or

s to be consumed directly in the perno lien nor ormance of such contract. (Any mateany portiondrial furnished not so incorporated or no material consumed will be returned to the Govthe facility ernment (at the contractor's expense) riority to in the same condition as received, rea

sonable wear and tear excepted. An de in any appropriate refund or adjustment will or amor be made for any material so returned); acility paid (4) The contractor warrants that the material cannot be obtained from commercial sources in sufficient time to meet the delivery requirement of the contract; and

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(5) The contractor agrees to pay to the Government either (i) the book price of the material furnished, plus the cost of handling and packing to and (shipment to be made on Commercial zation Collect Bill of Lading); or (ii) the price at which the material would be available to the contractor, F.O.B. supplier, if obtained from commercial sources, whichever is the greater.

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Subpart N [Reserved]

Subpart O-Contract Cost Principles and Procedures

§ 737.15-100 Applicability.

§ 737.15-107 Advance understandings on particular cost items.

(a) See § 737.1-405-51 for Navy-wide advance understandings on particular cost items.

(b) See § 737.3-705(a) for prior approval required for advance understandings by contracting officers where overhead rates are negotiated. $737.15-150 Negotiated overhead rates. See § 737.3-700.

§ 737.15-200 Principles and procedures for use in cost-reimbursement type supply for research contracts with commercial organizations.

§ 737.15-201 Basic considerations.

§ 737.15-201-3 Definition of reasonable

ness.

(a) Application of "Contractor Weighted Average Share in Cost Risk" (CWAS). When an ACO is evaluating a CWAS rating between 50 and 64 points inclusive (§ 15.201-3(b)(1)(ii)), the ACO's consideration should include, but not be limited to the following:

(1) Actual CWAS rating. A CWAS rating of 64 points would receive more favorable consideration than a CWAS rating of 50 points.

(2) Analysis of contractor's "contract mix" trend. This would indicate the current trend of increased or decreased cost participation and responsibility. A review of outstanding proposals and quotas would also indicate the contractor's potential contract mix.

(3) Review current contractor performance evaluation.

(4) Status of system, reviews would indicate the extent of government review of contractor procedures, and resulting approvals/consent and confidence.

(5) That 35 points of a profit center rating result from competitive firm

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cility Expansion and Replacement)
provides that facilities projects having
an estimated cost in excess of
$1,000,000 of new monies are to be sub-
mitted to the Director of Defense (Re-
search and Development) for approv-
al. In order to ensure uniform proce-

dures for the review and approval of
all facilities projects, research and de-
velopment facilities projects shall be
reviewed and approved in accordance
with the procedures for industrial
facilities projects as
NAVMAT Instruction 4860.13A (In-
specified in
dustrial Facilities Program).

(b) Where non-severables are to be
installed on property not owned by
the government, appropriate clauses
shall be added in accordance with the
provisions of U.S.C. 2353.

(c) Facilities may be provided for
either directly in the research and de-
velopment contract concerned, or in a
separate
refers to the research and develop-
contract which
ment contract

facilities

former case, the facilities will, after concerned. In construction or installation, be transthe ferred to a separate facilities contract, if such separate contract is required by the provisions of § 13.402.

§ 737.13-651-1 Requirement for review by

Facilities

Review

Board

of

Navy
change in capacity of Government-
owned-contractor-operated

and development facilities.

research

See SECNAV Instruction 5420.10 (ONR: 108).

§ 737.16-652 Facilities.

(a) Policy for the Provision of Industrial Facilities. See NAVMAT Instruction 4860.13A (Industrial Facilities Program).

(b) Protection of Government's Interest in Facilities. (1) Every contracting officer in negotiating or in making a supply contract shall make sure that any payments for the purchase of, or to aid in the acquisition of, facilities which are not of the type commonly classified as expendable, are separately and clearly set forth and not buried or otherwise hidden in a lump price. No payments under any shall be made on account of facilities, in contracts unless the interest of the Government proper depreciation,

excess of

602

in such facilities is recogniti tected by the contract.

(2) Just what constitutes s tection of the interest of the fi ment will vary in each indivda. and will depend upon the

sary to assure the Government privilege of having the facility the performance of Governme tracts, free of any charge for thi

the facilities. Usually it will b

of the part of the facility paid the Government and also to b some agreement as to the dispo of the interest of the Governme the facility. Provision should be that the Contractor:

(i) Maintain the facility in good dition;

(ii) Attach no lien nor convey t other all or any portion of the fact

(iii) Make no material alteration the nature of the facility;

(iv) Give priority to Govern orders; and

(v) Not include in any supply any depreciation or amortization the part of the facility paid for by Government.

All procurement officers must be in making a contract, the fulfillme of which may require the use of a cility covered by an agreement to th effect that no depreciation or amort ed in the price, that such agreement zation of such facility shall be inclu

unmistakably adhered to and that preciation and amortization of suc facility are definitely excluded from

the price.

(c) Research and Development Facil

ities. See § 737.13-651.
$737.13-700 Contract clauses.

§ 737.13-702 Government property clause

for fixed-price contracts.

8737.13-702-50 Deviations for fixed-price (and cost-reimbursement) contracts. (a) In many cases the interest of the Government requires the furnishing to contractors of material, the rela tively low value of which renders impracticable the administrative burden of using the clauses in § 13.701.

(b) Accordingly, Systems Commands, Bureaus and Offices having inventory

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ront in excess subject to the availability of

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jets shall be thain in the Government; d in accordance tre maximum dollar value of for industrial dl furnished under the authorispecified in the Gris directive in connection with 46013A In some re transaction shall not exceed are to be the fahe material furnished is to be wned by that the rated into the end product

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procured under the contract, or

e consumed directly in the per(Ance of such contract. (Any mateother garnished not so incorporated or (1) Mamed will be returned to the Govthe nature dent (at the contractor's expense) (iv) Gee same condition as received, reaorders and ble wear and tear excepted. An (V) Not in opriate refund or adjustment will any depreciate ade for any material so returned); the part of the The contractor warrants that the Government. erial cannot be obtained from comcial sources in sufficient time to

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eet the delivery requirement of the making a contract; and hich may ) The contractor agrees to pay to covered by Government either (i) the book

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Subpart N [Reserved]

Subpart O-Contract Cost Principles and Procedures

§ 737.15-100 Applicability.

ce of the material furnished, plus e cost of handling and packing ably adhere ipment to be made on Commercial ollect Bill of Lading); or (ii) the price definites which the material would be availale to the contractor, F.O.B. supplier, and Dere obtained from commercial sources, hichever is the greater. 13-651

and amorti

§ 737.15-107 Advance understandings on particular cost items.

(a) See § 737.1-405-51 for Navy-wide advance understandings on particular cost items.

(c) Form NAVEXOS 3493 (Rev 9act clauses 31), properly executed, shall be submitted by the contractor to the approment propriate Systems Command, Bureau or tracts Office prior to the furnishing of any material.

ns for

nt) cont

fur

(b) See § 737.3-705(a) for prior approval required for advance understandings by contracting officers where overhead rates are negotiated. $737.15-150 Negotiated overhead rates. See § 737.3-700.

(d) The Field Contract Administrator, prior to giving his approval to the Interes request, shall make such examination as he considers necessary to confirm that the contractor would be able to obtain the material from commercial sources at the unit price(s) shown in Column 9 on the request.

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$737.15-200 Principles and procedures for use in cost-reimbursement type supply for research contracts with commercial organizations.

$737.15-201 Basic considerations.

§ 737.15-201-3 Definition of reasonable

ness.

(a) Application of "Contractor Weighted Average Share in Cost Risk” (CWAS). When an ACO is evaluating a CWAS rating between 50 and 64 points inclusive (§ 15.201-3(b)(1)(ii)), the ACO's consideration should include, but not be limited to the following:

(1) Actual CWAS rating. A CWAS rating of 64 points would receive more favorable consideration than a CWAS rating of 50 points.

(2) Analysis of contractor's "contract mix" trend. This would indicate the current trend of increased or decreased cost participation and responsibility. A review of outstanding proposals and quotas would also indicate the contractor's potential contract mix.

(3) Review current contractor performance evaluation.

(4) Status of system, reviews would indicate the extent of government review of contractor procedures, and resulting approvals/consent and confidence.

(5) That 35 points of a profit center rating result from competitive firm

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