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of such authority, the FEHBP con- the antitrust laws, the procedures in tracting officer is subject to the re- FPR 1-1.9 may be used in referring quirements in FPR 1-1.403 and any such proposals to the Attorney Generfurther requirements, consistent with al. the Federal Procurement Regulations, imposed by OPM.

Subpart 16-1.10—Publicizing & 16-1.403 Requirements to be met before

Procurement Actions entering into contracts. No contract shall be entered into 8 16-1.1001 General policy. unless all applicable requirements of FPR 1-1.10 is applicable to the adlaw, Executive Orders and regulations ministration of FEHBP contracts. In have been met. The term “regula- addition, OPM will implement the foltions” includes those issued by any lowing sections in the manner preregulatory agency whether or not in- scribed below. corporated or referenced in the Federal Procurement Regulations.

8 16-1.1003 Synopses of proposed procure

ments. 8 16–1.405 Ratification of unauthorized contract awards.

At least 60 days prior to the begin

ning of the annual negotiation process FPR 1-1.405 is applicable to the administration of the FEHBP contracts.

for new FEHBP contracts, OPM shall

publish a notice of its proposed pro8 16-1.406 Cost accounting standards. curement action in the Department of FPR 1-1.406 is applicable to the ad

Commerce Synopsis. Interested carriministration of the FEHBP contracts

ers shall be directed to OPM for infor(see OPMPR 16-3.12).

mation concerning submission of ap

plications for participation. Subpart 16-1.5—Contingent Fees

8 16-1.1004 Synopses of contract awards. § 16–1.500 Scope of subpart.

At the close of the negotiation FPR 1-1.5 is applicable to the ad. period, OPM shall publish in the Deministration of FEHBP contracts.

partment of Commerce Synopsis a list

of all carriers approved for participaSubpart 16-1.6–Debarred,

tion in the FEHBP during the next

contract year. Suspended, and Ineligible Carriers $ 16-1.600 Scope of subpart.

Subpart 16-1.12–Responsible This subpart sets forth OPM's policy

Prospective Contractors with regard to the debarment, suspension and ineligibility of carriers.

8 16–1.1200 Scope of subpart. § 16-1.601 Applicability.

This subpart prescribes the policies

concerning the responsibility of proOPM shall enforce the provisions of spective carriers. FPR 1-1.6 with respect to health insurance carriers and shall maintain a 8 16-1.1201 Applicability. consolidated list of concerns to whom contracts will not be awarded. Hearing

FPR subpart 1-1.12 is applicable to provisions shall be those set forth at 5

the administration of FEHBP conCFR 890.205.

tracts. In addition, carriers must meet

the requirements of 5 U.S.C. chapter Subpart 16-1.9-Reporting Possible

89, and 5 CFR Part 890, and this Antitrust Violations

Chapter 16.

§ 16-1.901 General policy.

Where proposals received in FEHBP procurements evidence violations of

Subpart 16-1.23—Environmental

Protection

$ 16-1.2300 Scope of subpart.

FPR Subpart 1-1.23 is applicable to the administration of the FEHBP contracts.

PART 16–3–PROCUREMENT BY

NEGOTIATION

Sec. 16-3.807-7 Unacceptable substitutes for

pricing negotiations. 16-3.807-8 Evaluation and pricing of indi

vidual contracts. 16-3.807-9 Specified contingencies. 16-3.807-10 Subcontracting considerations

in cost analysis. 16-3.807-11 Overhead rate consideration. 16-3.807-50 Certificate of community

rating. 16-3.808 Service charge. 16-3.808-50 Additional factors and consid.

erations for determining the service

charge. 16-3.809 Contract audit as a pricing aid. 16-3.810 Exchange of information. 16-3.811 Record of price negotiation. 16-3.812 Disposition of postaward audits. 16-3.813 Startup and other nonrecurring

costs. 16-3.814 Contract clauses. 16-3.814-50 Price reduction for defective

certificate of community rating.

Sec. 16-3.000 Scope of part.

Subpart 16-3.1-Use of Negotiation

16-3.100 Scope of subpart. 16-3.101 General requirements for negotia

tion. 16-3.102 Factors to be considered in negoti.

ating contracts. 16-3.104 Disclosure of mistakes after

award.

Subpart 16-3.2—Circumstances Permitting

Negotiation

Subpart 16–3.9—Subcontracting Policies and

Procedures 16-3.903-2 Review and approval of subcon

tracts. 16-3.903-50 Subcontract clause.

16-3.200 Scope of subpart. 16-3.215 Otherwise authorized by law.

Subpart 16–3.3—Determinations, Findings, and

Authorities 16-3.301 General.

Subpart 16–3.4—Types of Contracts 18-3.400 Scope of subpart. 16-3.401 Types of health benefits plan con

tracts.

Subpart 16-3.12—Cost Accounting Standards 16-3.1200 Scope of subpart. AUTHORITY: 40 U.S.C. 486(c); 5 U.S.C. 8913.

SOURCE: 46 FR 51572, Oct. 20, 1981, unless otherwise noted.

8 16–3.000 Scope of part.

This part prescribes policies and procedures which shall be observed by OPM in connection with procurement by negotiation under the Federal Employees Health Benefits Program (FEHBP).

Subpart 16-3.8—Price Negotiation Policies and

Techniques

Subpart 16-3.1-Use of Negotiation

18-3.800 Scope of subpart. 16-3.801 Basic policy. 16-3.802 Preparation for negotiation. 16-3.803 Type of contract. 16-3.804 Conduct of negotiations. 18-3.805 Selection of offerors for negotia

tion and award. 16-3.806 Cost, profit, and price relation

ship. 16-3.807 Pricing techniques. 16-3.807-1 General. 18-3.807-2 Requirements for price or cost

analysis. 16-3.807-3 Cost or pricing data. 16-3.807-4 Certificate of current cost or

pricing data.
.807-5 Defective cost or pricing data.
.807–6 Refusal to provide cost or pric-
ing data.

8 16–3.100 Scope of subpart.

This subpart deals with the nature and use of negotiation in the award of contracts under the Federal Employees Health Benefits Program (FEHBP). 8 16-3.101 General requirements for nego

tiation. No contract shall be entered into as a result of negotiation unless or until the following requirements have been satisfied:

16-3.80 16-3.80

are applicable to the administration of the FEHBP contracts. FPR 1-3.302(e) FPR 1-3.305 FPR 1-3.308 (a), (b), and (d)

Subpart 16-3.4—Types of Contracts

(a) Any necessary determinations and findings have been made (see subpart 16-3.3);

(b) Such clearances or approvals as is prescribed in applicable agency procedures have been obtained; and

(c) The prospective contractor has been determined to be responsible in accordance with Subpart 16-1.12. $ 16-3.102 Factors to be considered in ne.

gotiating contracts. FPR 1-3.102 is applicable to the administration of the FEHBP contracts. Additional factors to be considered are provided in 5 CFR 890.201 and 890.202. $ 16–3.104 Disclosure of mistakes after

award. FPR 1-3.104 is applicable to the administration of FEHBP contracts.

8 16–3.400 Scope of subpart.

This subpart (a) describes and defines the types of contracts used in the Federal Employees Health Benefits Program; (b) defines the areas of applicability in which each type of contract may be used appropriately and sets forth considerations and policies governing the choice of type of contract; and (c) imposes conditions on the use of certain of the available contract types.

Subpart 16-3.2—Circumstances

Permitting Negotiation

§ 16–3.200 Scope of subpart.

FPR 1-3.200 is applicable to the administration of the FEHBP contracts.

$ 16-3.215 Otherwise authorized by law.

(a) Pursuant to the authority of section 302(c)(15) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 252(c)(15)) purchases and contracts may be negotiated without formal advertising if "otherwise authorized by law.” This provision preserves the authority to negotiate contracts conferred by other legislation.

(b) Contracts between OPM and health benefits carriers are contracted for "without regard to section 5 of title 41 or other statute requiring competitive bidding.” (5 U.S.C. 8902) This statutory authority is construed to au. thorize negotiation pursuant to section 302(c)(15) of the Act and without regard to the advertising requirements of sections 302(c) and 303 of the Act (see FPR 1-3.215(c)).

$ 16-3.401 Type of health benefits plan

contracts. (a) The Federal Employees Health Benefits Act provides that the Office of Personnel Management may contract with qualified carriers. The Act provides that rates charged under these health benefit plans shall reasonably and equitably reflect the cost of the benefits provided. Two types of contracts are used in the FEHBP, experience rated and community rated. Definitions and explanations of these two contract types are contained in Part 4 of this Chapter 16, “Special Types and Methods of Procurement."

(b) Other contract types or combination of types which will promote the best interest of the Government, subject to the restrictions in FPR 13.401(b) or in 5 U. 3.401(b) or in 5 U.S.C. 8902(i), may be negotiated if appropriate in the circumstance. To the extent that a contract type other than experience rated or community rated is selected, the relevant subsection of FPR Subpart 13.4 would apply. However, the costplus-a-percentage-of-cost contract shall not be used.

Subpart 16-3.3-Determinations, Subpart 16-3.8—Price Negotiation Findings, and Authorities

Policies and Techniques $ 16–3.301 General.

§ 16-3.800 Scope of subpart. The following sections regarding de FPR 1-3.800 is applicable to the adterminations, findings, and authorities ministration of the FEHBP contracts.

The renegotiation of rates or benefits in an FEHBP contract constitutes a modification as that term is used in FPR 1-3.800.

$ 16–3.801 Basic policy.

FPR 1-3.801 is applicable to the administration of the FEHBP contracts and is supplemented as follows: The FEHBP contract pricing team speci fied in FPR 1-3.801-3(b)(1) may in clude an actuary.

$ 16-3.802 Preparation for negotiation.

The provisions of FPR 1-3.802(a) should be adapted to the FEHBP procedures and requirements as specified in Part 4 of this chapter 16, “Special Types and Methods of Procurement” and 5 CFR 890.203.

$ 16–3.803 Type of contract.

FPR 1-3.803 is applicable to the administration of the FEHBP contracts.

$ 16-3.804 Conduct of negotiations.

FPR 1-3.804 is applicable to the administration of the FEHBP contracts. 8 16–3.805 Selection of offerors for negoti

ation and award. Application for approval of, and proposal of amendments to, health benefits plans should be made according to the procedures set out in 5 CFR Part 890.

the cost or pricing data requirement on the FEHBP, the following supplementary information is provided:

(1) A community rated contract (see OPMPR 16-4.152-1(a)) meets the exception cited in FPR 1-3.8073(b)(1)(ii). Consequently, the contracting officer need not apply FPR 13.807-3(a) to carriers offering community rated plan contracts. The contracting officer may, however, require the carrier of a community rated plan to demonstrate that the community rate is in fact a community rate. In any event, the carrier shall be required to submit a certificate in accordance with OPMPR 16-3.807-50 certifying that the proposed rates are in fact a community rate as defined by OPMPR 16-4.151-2. Cost and pricing data may be required for any portion of the proposed rate that is not a part of the community rate if that portion is otherwise in accordance with the dollar criteria of FPR 1-3.807-3.

(2) Since cost or pricing data is not required for a community rated contract, subcontract cost and pricing data as referred to in FPR 1-3.8073(d)(1) need not be requested by the contracting officer.

(3) The contracting officer shall require carriers offering experience rated plan contracts to submit written cost or pricing data in accordance with FPR 1-3.807-3. Generally, each experience rated plan shall be required to submit, with its rate proposal, a projection of its operations for completion of the current year and for succeeding contract year(s), and to explain the derivation of each item in the projection. Data supplied by the carrier will be checked against reports filed by the carrier showing monthly paid claims incurred by quarter of each year. The data in these reports will also be verified by comparison to the carrier's annual accounting statement filed with OPM. The Office of Actuary will review the information filed by the carrier and compare the carrier's data with an independent projection developed by the actuary.

(4) A carrier offering an experience rated plan which is required to submit and certify cost or pricing data in ac

$16-3.806 Cost, profit, and price relation

ship. FPR 1-3.806 is applicable to the administration of the FEHBP contracts.

$ 16-3.807 Pricing techniques. $16-3.807-1 General.

FPR 1-3.807-1 (a) and (b)(2) are applicable to the administration of the FEHBP contracts. 8 16–3.807-2 Requirements for price or

cost analysis. FPR 1-3.807-2 is applicable to the administration of FEHBP contracts. $ 16-3.807-3 Cost or pricing data.

(a) FPR 1-3.807-3 is applicable to the administration of FEHBP contracts. To clarify implementation of

33-139 0-844-25

tracts. See OPMPR 16-4.151-13 for definition of subcontractor.

cordance with FPR 1-3.807-3 shall be required along with its own submission to submit, or arrange for the submission of, cost or pricing data from its subcontractors as stated in FPR 13.807-3(d). See OPMPR 16-4.151-13 for definition of subcontractor.

& 16-3.807-11 Overhead rate consider

ation. FPR 1-3.807-11 is applicable to the administration of the FEHBP contracts. In FEHBP, overhead (indirect) costs are components of administrative expenses in the FEHBP.

8 16-3.807-4 Certificate of current cost or

pricing data. Where a certificate of cost or pricing data is required in accordance with FPR 1-3.807-3, a certificate in the form specified in FPR 1-3.807-4 shall be submitted as soon as practicable after agreement is reached on the contract subscription rates.

$ 16-3.807-50 Certificate of community

rating. (a) Each carrier proposing a community rate shall submit the following certification with its proposal:

8 16–3.807-5 Defective costor pricing

data. FPR 1-3.807-5 is applicable to the administration of the FEHBP contracts. $ 16-3.807-6 Refusal to provide cost or

pricing data. FPR 1-3.807-6 is applicable to the administration of the FEHBP contracts.

8 16-3.807-7 Unacceptable substitutes for

pricing negotiations. FPR 1-3.807-7 is applicable to the administration of the FEHBP contracts. 8 16–3.807-8 Evaluation and pricing of in

dividual contracts. FPR 1-3.807-8 is applicable to the administration of the FEHBP con. tracts. Application of this paragraph should not be confused with the read. justment of rates on an experience rated contract. Surpluses or deficits in reserves in the preceding year on expe. rience rated contracts may be considered in the adjustment of rates upon the renewal of contracts.

CERTIFICATE OF COMMUNITY RATING This is to certify that the proposed subscription rate, subject to recognized adjustments allowed by OPMPR 16-4.152-1(a)(2), is a community rate in accordance with OPMPR 16-4.151-2.

(b) If it is determined that the subscription rate (subect to the adjustments allowed by OPMPR 16-4.1521(a)) is not a community rate as defined by OPMPR 16-4.151-2, the Government shall be entitled to an adjustment of the price so that it is a true community rate. If the price of the adjusted rate is lower than the subscription rate, the Government will be entitled to a price reduction. If the carrier cannot or refuses to determine a true community rate, the Government may require the carrier to experience rate the contract and if the price for an experience rated contract is less than the original contract price, the Govern. ment is entitled to a price reduction. The clause set forth in OPMPR 163.814-50 shall be inserted in each community rated contract.

$ 16–3.807-9 Specified contingencies.

FPR 1-3.807-9 is applicable to the administration of the FEHBP contracts.

8 16–3.808 Service charge.

FPR 1-3.808-1 is applicable in the administration of FEHBP contracts. In determining the service charge.

FEHBP carriers shall apply the principles set out in FPR Temporary Reg. ulation 61, 46 FR 27645-27649, dated May 21, 1981 in the administration of FEHBP contracts.

$ 16–3.807-10 Subcontracting consider

ations in cost analysis. FPR 1-3.807-10 is applicable to the administration of the FEHBP con

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