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§ 12-1.5505-6 Single year and/or multi

year award. When the solicitation permits bids or offers on either the first program year requirements or the multi-year requirements or both, include a provi. sion that in the event the Government determines prior to award that only the first program year quantities are actually required, the Government may evaluate bids or offers and make award solely on the basis of prices bid or offered on the first program year requirements.

8 12–1.5505-7 Cancellation ceiling.

Include a provision setting forth a separate cancellation ceiling (on a percentage basis) applicable to each program year subject to cancellation (see $ 12–1.5506).

§ 12-1.5505-8 Schedule provision.

Include a prominently placed provision directing attention to the multiyear features of the solicitation, and to:

(a) The Limitation of Price and Contractor Obligations clause (see $ 121.5514-1) which limits the payment obligation of the Government to the requirements of the first program year and to those of such succeeding program years as may be funded by the Government;

(b) The Cancellation of Items clause (see $ 12–7.151-14) which allows the Government to cancel, by a specified date or within a specified period, all remaining program years; and

(c) The cancellation ceiling set forth in the schedule.

bility of funds for contract performance for any subsequent program year, or (2) failure of the contracting officer to notify the contractor that funds have been made available for performance of the succeeding program year requirement. For each program year except the last, the contracting officer shall establish a cancellation ceiling applicable to the remaining program years which are subject to cancellation. Cancellation ceilings will be lower for each succeeding program year in that such ceilings must exclude all amounts allocable to items included in prior program years. Such ceilings shall be expressed in the schedule and shall apply to all bidders alike. The reduction in the cancellation ceilings percentage for each program year shall be in direct proportion to the reduction in the quantity remaining subject to cancellation. For example, if the total nonrecurring costs are estimated at 10 percent of the total multi-year price and program year quantities for 5 years are 30, 30, 20, 10, and 10; the cancellation percentage after deducting 3 percent for the first program year would be 7 percent, 4 percent, 2 percent, and 1 percent of the total multi-year price applicable to the 2d, 3d, 4th, and 5th program years respectively. In determining cancellation ceilings, the contracting officer must estimate reasonable preproduction, labor learning and other nonrecurring costs, to be incurred by an "average” prime or subcontractor which would be applicable to and which normally would be amortized in all items to be furnished under the multi-year requirements. They include such costs as plant rearrangement, special tooling, preproduction engineering, initial rework, initial spoilage, pilot runs, and unrealized labor learning. They shall not include any costs of labor or materials, or other expenses (except as indicated above) which might be incurred for production of the items subject to cancellation for each program year. The total estimate must then be compared with the best estimate of the procurement cost to arrive at a reasonable percentage figure. To perform this calculation, it is essential that the contracting officer obtain in-house engi

8 12–1.5505-9 Quantity obligation.

Include a statement that award will not be made on less than the quantity stated as the first program year requirements.

8 12-1.5506 Establishment and revision of

cancellation ceilings. (a) The term “cancellation" as used in multi-year procurement refers only to the cancellation of the total requirements of all remaining program years. Such cancellation results from (1) notification from the contracting officer to the contractor of nonavaila.

neering cost estimates which will identify the detailed recurring and nonrecurring costs, and indicate labor learn ing implications. Cancellation dates for each program year's requirements shall be established with due regard for production lead time and the date by which funding therefor can reasonably be accomplished.

(b) Original cancellation ceilings may be revised from information developed after issuance of a solicitation discloses that such ceilings are not realistic. In the case of formal advertising, such changes shall be by amend. ment of the invitation for bids prior to bid opening. In two-step formal advertising, discussion conducted during the first step may indicate the need for revised ceilings in step two. Negotiations with offerors in a negotiated procurement may provide information requiring a change in cancellation ceilings for all offerors, prior to final negotiation and contract award. In order to assure that all interested sources of supply are thoroughly aware of how multi-year procurement is accomplished, use of presolicitation or prebid conferences may be advisable. During such conferences the contracting officer should ascertain whether escalation provisions are appropriate (see FPR 1-2.104-3) and whether the proposed cancellation ceiling is adequate.

of the Government to a monetary amount there described as being available for contract performance. Such amount for the first program year requirements shall be inserted by the contracting officer upon award of the contract and shall be modified for successive program years upon availability of funds for such years. 8 12–1.5510 Termination for convenience.

In the event of a total termination for the convenience of the Government, including items subject to cancellation, the Government's obligation shall not exceed the amount set forth in the schedule as available for contract performance, plus the applicable amount established as the cancellation ceiling.

$12-1.5511 Limitations.

Multi-year procurement shall not be used:

(a) When funds covering the procurement are limited by statute for obligation during the fiscal year in which the contract is executed;

(b) For quantities or total costs in excess of the planned requirements for 5 years set forth in approved programs; or

(c) When any one of the criteria set forth in § 12-1.5503 is not present.

8 12-1.5507 Funds obligation-contingent

liabilities For each program year requirement. funds shall be obligated to cover the quantities to be delivered thereunder. In addition, contingent liabilities for cancellation charges shall be carried as outstanding commitments. § 12–1.5508 Payment for cancellation.

In the event of a cancellation the contractor is entitled to payment as consideration therefor in accordance with the terms of the Cancellation of Items clause in $ 12-7.151-14 in an amount not to exceed the cancellation ceiling.

8 12-1.5512 Evaluation.

(a) Evaluation of offers in a multiyear procurement involves not only the determination of the lowest overall evaluated cost to the Government for both alternatives, the multi-year procurement and the first program year procurement; it also involves the comparison of the cost of buying the total requirement under a multi-year procurement with cost of buying the total requirement in successive independent procurements. All the factors to be considered for the various evaluations involved shall be set forth in the solicitation.

(b) In the event the Government determines prior to award that only the first program year quantities are actually required, the procurement will no longer be evaluated on a multi-year basis:

§ 12-1.5509 Schedule provision limiting

payment obligation. The schedule shall contain a provision limiting the payment obligation



(1) When the solicitation permits but will not render the bid or offer bids or offers on either the first pro- nonresponsive as to any alternate gram year requirements or the multi- multi-year submission by the same year requirements or both, only bids bidder or offeror. or offers on the first program year re (h) To determine the lowest evaluatquirements will be evaluated; and

ed unit price, compare the lowest eval(2) When the solicitation does not uated bid or offer on the first program permit the submission of prices on a year alternative against the lowest single-year basis, the single-year re evaluated bid or offer on the multiquirement will be resolicited.

year alternative as follows: (c) The cancellation ceiling shall not

(1) Multiply the evaluated unit price be a factor for evaluation. Unless Gov

for each item of the lowest evaluated ernment administrative costs incident bid or offer on the first program year to annual procurement methods and

alternative times the total number of contract administration can be reason units of that item required by the ably established and supported, they multi-vear alternative and then shall not be used as a factor for eval

(2) Take the sum of these products uation. When administrative costs are

for all the items, plus the dollar to be used in evaluation, the dollar

amount of any administrative costs of amount to be used shall be stated in

the Government which are to be used the solicitation.

in the evaluation, and finally (d) Delivery destinations may be un

(3) Compare this result against the known for certain quantities due to

total evaluated price of the lowest bid the extended duration of contract per

or offer on the multi-year alternative. formance. In such cases, destinations shall be developed on the basis of best

8 12–1.5513 Award. estimates; a definite place or places shall be designated in the solicitation

(a) Except as provided in paragraphs as the point to which transportation

(b) and (c) of this section, award shall costs will be computed (but only for be made on the basis of the lowest the purpose of evaluating bids or pro

evaluated unit price determined in acposals); and the solicitation shall con

cordance with $ 12-1.5512, whether tain the notice required by FPR 1

that price is on a single-year basis or a 19.202-7.

multi-year basis. (e) When Government production

(b) If only one responsive bid or and research property is provided, the offer is received on the multi-year re. use of such property may be on a rent. quirements from a responsible bidder free basis. In this event, the solicita or offeror, then award shall be made tion shall set forth a detailed descrip- as follows: tion of the procedure to be followed (1) If the solicitation gave the bidder and the factors to be considered for or offeror the choice of submitting the elimination of competitive advan prices on a single-year basis or multitage. The amount added for evalua

year basis or both, then award shall be tion to each offeror's unit price for the made in accordance with § 12-1.5512(a) first program year requirement shall above; also be added to his unit price for the (2) If the solicitation required the multi-year requirements.

submission of prices on the first pro(f) When the solicitation requires gram year requirements in accordance the submission of prices on the first with $ 12-1.5505-3(a) award shall be program year requirements in accord made to the lowest evaluated bidder or ance with $ 12-1.5505-3(a), bids or offeror on the single-year basis, even offers which submit prices on the though the multi-year price submismulti-year requirements only shall be sion may represent the lowest evaluatrejected as nonresponsive.

ed price submission, except that if the (g) When the solicitation provides multi-year price offers distinct advanfor submission of prices only for the tages to the Government a multi-year total multi-year quantity, submission award may be made with the advance of prices for the single-year quantity approval of the head of the procuring will be disregarded for any purpose activity;

(3) If the solicitation restricted the $10,000, or when there is sufficient submission of prices to the multi-year data available to make a positive debasis only, the solicitation shall be termination of responsibility. cancelled and a new solicitation issued by whatever procedures are then ap- 812-1.5601-2 Type of survey. propriate, except that if the multi

A complete survey encompases invesyear price offers distinct advantage to

tigation of all standards concerning rethe Government a multi-year award

sponsibility and any other requiremay be made with the advance ap

ments of special inquiry as deemed proval of the head of the procuring ac

necessary by the contracting officer. A tivity.

partial survey is limited to certain (c) In no event shall award be made

standards: for example, it might cover at an unreasonable price.

only technical qualifications, produc§ 12-1.5514 Contract clauses.

tion backlog, or financial resources. The clauses in § 12-7.151-14 shall be

$ 12–1.5601-3 Conducting the survey. included in all contracts under the multi-year procurement method.

When a preaward survey is neces

sary, it shall be conducted by the conSubpart 12-1.56—Preaward Survey

tracting officer or his designated repProcedures

resentative, or by a survey team con

sisting of the contracting officer or his § 12-1.5600 Scope of subpart.

designated representative and such

other qualified specialists as are This subpart prescribes the proce

deemed necessary to evaluate all apdures for conducting preaward on-site

propriate phases of the prospective evaluations (preaward surveys) of pro

contractor's capability. The type of spective contractors. While the procedures are primarily applicable to

survey neeed (complete or partial) and supply contracts, they shall be ap

the areas of consideration shall be plied, to the extent appropriate, to

identifed by the contracting officer. other contracts.

Personnel of the field contract inspec

tion staffs within the Department may § 12-1.5601 General.

be employed, through cross-servicing,

as provided in DOT Order 4200.6c. § 12-1.5601-1 Need for survey.

(a) Before requesting or performing & 12-1.5601-4 Release of survey informaan on-site survey, the contracting offi tion. cer shall review the data available in

No indication shall be made to the the procurement office files or infor

prospective contractor that an award mation available from other sources

will or will not be made. This prohibi. (e.g., other Government procurement

tion does not preclude discussion with offices, contractor's performance

the prospective contractor of questionunder current or prior contracts, and such commercial sources as banks and

able areas which require clarification. credit rating and reporting firms).

Information obtained during the Prior preaward evaluation reports, if

survey shall be treated in strict confi

dence and divulged only to Governany, should be reviewed. (b) When available information is

ment personnel having a need to not sufficient for the contracting offi

know. The survey report is confidencer to determine the prospective con

tial business information and shall not tractor's responsibility, the contract

be released outside the Government. ing officer shall perform or have per

The completed report, however, or the formed a preaward survey to deter

facts it contains can be discussed with mine if the prospective contractor

the concern involved. meets the standards set forth in FPR Subpart 1-1.12 and any additional re

8 12-1.5601-5 Preparation for the survey. quirements set forth in the solicita The contracting officer or the indition. A survey is not ordinarily per- vidual designated by him as responsiformed on contracts of less than ble for the conduct of the survey shall:

(a) Review all requirements set forth in the solicitation or proposal.

(b) Determine composition of the team if more than one specialist is required.

(c) Make arrangements for plant visits. On-site preaward evaluations must be completed in timely fashion. Therefore it is necessary to make prompt contact and arrangements with the prospective contractor for the survey. At the time contact is made, the prospective contractor should be advised of the documenta tion that may be needed, such as financial statement, resumes of company personnel, descriptions of existing plant workload, and production loading charts.

(d) Advise team members what information is required from their respective organizational elements, the date needed, and any particular portion of the survey for which they are responsible.

(e) Brief team members on their responsibilities and conduct relative to interviews and discussions with officials of the concern.

(f) Arrange for discussion among members during and after the on-site survey to assure that evaluations by individual specialists are coordinated and complete.

the contract, shall be reviewed and analyzed for adequacy.

(c) The contracting officer or the individual designated by him as responsible for the conduct of the survey shall:

(1) Review with other team members the findings developed during the survey. Points of disagreement should be reviewed in depth.

(2) Obtain clarification from the contracting officer when questions of interpretation arise during the course of the evaluation.

(3) Write a narrative report of the team's findings.

(4) Otherwise direct the efforts of the team.

(d) Each team member shall analyze and evaluate the prospective contractor's capability to perform with respect to that part of the survey for which he is responsible. His report shall be promptly furnished to the team leader, and be in sufficient detail to substantiate his findings.

812-1.5602 Survey report.

§ 12-1.5602–1 Format.

The report shall be in narrative form. The format set forth in DOTPR 12-1.5604 shall be used to the maximum extent practicable. All pertinent documentation should be forwarded with the report.

8 12–1.5601-6 On-site survey procedures.

(a) Discussions should be held with the prospective contractor's management officials. These discussions should be in sufficient detail to obtain as much information as can be sup plied by the officials concerning the prospective contractor's ability to perform satisfactorily, and to assure that the solicitation requirements and its technical aspects (such as specifications, prototype, data, inspection and testing, packaging, delivery, instruction books and reports), are understood. If a cost-reimbursable contract is contemplated, the prospective contractor's accounting system will be reviewed to determine that it is adequate for the determination of costs applicable to the contract.

(b) The facilities and procedures the prospective contractor proposes to use, and his overall plans for performing

8 12-1.5602–2 Standards.

The report shall discuss the standards set forth in FPR 1-1.12 and the requirements of the solicitation sufficiently to substantiate the conclusion. It shall include a discussion of all pertinent topics of the “Guide for On-Site Evaluation of Prospective Contractor” (see DOTPR 12-1.5603). In any case where there is conflict of opinion between team members as to whether the prospective contractor meets a standard, this fact shall be discussed in detail, and the team leader shall determine the survey team's position on that standard. Copies of team members' reports, including those which dissent from the position recommend. ed by the team, shall be included as enclosures to the survey report. The survey report shall unequivocally state

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