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8 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 provision 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).

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8 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

§ 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.

§ 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

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.

neering cost estimates which will identify the detailed recurring and nonrecurring costs, and indicate labor learning 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 amendment 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.

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.

§ 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

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(1) When the solicitation permits bids or offers on either the first program year requirements or the multiyear requirements or both, only bids or offers on the first program year requirements will be evaluated; and

(2) When the solicitation does not permit the submission of prices on a single-year basis, the single-year requirement will be resolicited.

(c) The cancellation ceiling shall not be a factor for evaluation. Unless Government administrative costs incident to annual procurement methods and contract administration can be reasonably established and supported, they shall not be used as a factor for evaluation. When administrative costs are to be used in evaluation, the dollar amount to be used shall be stated in the solicitation.

(d) Delivery destinations may be unknown for certain quantities due to the extended duration of contract performance. In such cases, destinations shall be developed on the basis of best estimates; a definite place or places shall be designated in the solicitation as the point to which transportation costs will be computed (but only for the purpose of evaluating bids or proposals); and the solicitation shall contain the notice required by FPR 119.202-7.

(e) When Government production and research property is provided, the use of such property may be on a rentfree basis. In this event, the solicitation shall set forth a detailed description of the procedure to be followed and the factors to be considered for the elimination of competitive advantage. The amount added for evaluation to each offeror's unit price for the first program year requirement shall also be added to his unit price for the multi-year requirements.

(f) When the solicitation requires the submission of prices on the first program year requirements in accord. ance with $ 12-1.5505-3(a), bids or offers which submit prices on the multi-year requirements only shall be rejected as nonresponsive.

(g) When the solicitation provides for submission of prices only for the total multi-year quantity, submission of prices for the single-year quantity will be disregarded for any purpose

but will not render the bid or offer nonresponsive as to any alternate multi-year submission by the same bidder or offeror.

(h) To determine the lowest evaluated unit price, compare the lowest evaluated bid or offer on the first program year alternative against the lowest evaluated bid or offer on the multiyear alternative as follows:

(1) Multiply the evaluated unit price for each item of the lowest evaluated bid or offer on the first program year alternative times the total number of units of that item required by the multi-year alternative, and then

(2) Take the sum of these products for all the items, plus the dollar amount of any administrative costs of the Government which are to be used in the evaluation, and finally

(3) Compare this result against the total evaluated price of the lowest bid or offer on the multi-year alternative.

$ 12-1.5513 Award.

(a) Except as provided in paragraphs (b) and (c) of this section, award shall be made on the basis of the lowest evaluated unit price determined in accordance with $ 12-1.5512, whether that price is on a single-year basis or a multi-year basis.

(b) If only one responsive bid or offer is received on the multi-year requirements from a responsible bidder or offeror, then award shall be made as follows:

(1) If the solicitation gave the bidder or offeror the choice of submitting prices on a single-year basis or multiyear basis or both, then award shall be made in accordance with $ 12-1.5512(a) above;

(2) If the solicitation required the submission of prices on the first program year requirements in accordance with $ 12-1.5505-3(a) award shall be made to the lowest evaluated bidder or offeror on the single-year basis, even though the multi-year price submission may represent the lowest evaluated price submission, except that if the multi-year price offers distinct advantages to the Government a multi-year award may be made with the advance approval of the head of the procuring activity;

$10,000, or when there is sufficient data available to make a positive determination of responsibility.

(3) If the solicitation restricted the submission of prices to the multi-year basis only, the solicitation shall be cancelled and a new solicitation issued by whatever procedures are then appropriate, except that if the multiyear price offers distinct advantage to the Government a multi-year award may be made with the advance approval of the head of the procuring activity.

(c) In no event shall award be made at an unreasonable price.

8 12-1.5601-2 Type of survey.

A complete survey encompases investigation of all standards concerning responsibility and any other requirements of special inquiry as deemed necessary by the contracting officer. A partial survey is limited to certain standards: for example, it might cover only technical qualifications, production backlog, or financial resources.

& 12-1.5514 Contract clauses.

The clauses in § 12-7.151-14 shall be included in all contracts under the multi-year procurement method.

Subpart 12-1.56—Preaward Survey




§ 12-1.5600 Scope of subpart.

This subpart prescribes the procedures for conducting preaward on-site evaluations (preaward surveys) of prospective contractors. While the procedures are primarily applicable to supply contracts, they shall be applied, to the extent appropriate, to other contracts.

& 12–1.5601-3 Conducting the survey.

When a preaward survey is necessary, it shall be conducted by the contracting officer or his designated representative, or by a survey team consisting of the contracting officer or his designated representative and such other qualified specialists deemed necessary to evaluate all appropriate phases of the prospective contractor's capability. The type of survey neeed (complete or partial) and the areas of consideration shall be identifed by the contracting officer. Personnel of the field contract inspection staffs within the Department may be employed, through cross-servicing, as provided in DOT Order 4200.6c.

§ 12-1.5601 General.

$ 12-1.5601-1 Need for survey.

(a) Before requesting or performing an on-site survey, the contracting officer shall review the data available in the procurement office files or infor. mation available from other sources (e.g., other Government procurement offices, contractor's performance under current or prior contracts, and such commercial sources as banks and credit rating and reporting firms). Prior preaward evaluation reports, if any, should be reviewed.

(b) When available information is not sufficient for the contracting officer to determine the prospective contractor's responsibility, the contracting officer shall perform or have performed a preaward survey to determine if the prospective contractor meets the standards set forth in FPR Subpart 1-1.12 and any additional requirements set forth in the solicitation. A survey is not ordinarily performed on contracts of less than

§ 12-1.5601-4 Release of survey informa

tion. No indication shall be made to the prospective contractor that an award will or will not be made. This prohibition does not preclude discussion with the prospective contractor of questionable areas which require clarification. Information obtained during the survey shall be treated in strict confi. dence and divulged only to Government personnel having a need to know. The survey report is confidential business information and shall not be released outside the Government. The completed report, however, or the facts it contains can be discussed with the concern involved.

8 12-1.5601-5 Preparation for the survey.

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

(a) Review all requirements set forth the contract, shall be reviewed and in the solicitation or proposal.

analyzed for adequacy. (b) Determine composition of the (c) The contracting officer or the inteam if more than one specialist is re dividual designated by him as responquired.

sible for the conduct of the survey (c) Make arrangements for plant shall: visits. On-site preaward evaluations (1) Review with other team members must be completed in timely fashion. the findings developed during the Therefore it is necessary to make survey. Points of disagreement should prompt contact and arrangements be reviewed in depth. with the prospective contractor for (2) Obtain clarification from the the survey. At the time contact is contracting officer when questions of made, the prospective contractor interpretation arise during the course should be advised of the documenta of the evaluation. tion that may be needed, such as fi (3) Write a narrative report of the nancial statement, resumes of compa team's findings. ny personnel, descriptions of existing (4) Otherwise direct the efforts of plant workload, and production load the team. ing charts.

(d) Each team member shall analyze (d) Advise team members what infor and evaluate the prospective contracmation is required from their respec tor's capability to perform with retive organizational elements, the date spect to that part of the survey for needed, and any particular portion of which he is responsible. His report the survey for which they are respon shall be promptly furnished to the sible.

team leader, and be in sufficient detail (e) Brief team members on their re to substantiate his findings. sponsibilities and conduct relative to interviews and discussions with offi 8 12-1.5602 Survey report. cials of the concern. (f) Arrange for discussion among

8 12-1.5602-1 Format. members during and after the on-site The report shall be in narrative survey to assure that evaluations by form. The format set forth in DOTPR individual specialists are coordinated 12-1.5604 shall be used to the maxiand complete.

mum extent practicable. All pertinent

documentation should be forwarded & 12–1.5601-6 On-site survey procedures. with the report.

(a) Discussions should be held with the prospective contractor's manage

8 12-1.5602-2 Standards. ment officials. These discussions The report shall discuss the standshould be in sufficient detail to obtain ards set forth in FPR 1-1.12 and the as much information as can be sup requirements of the solicitation suffiplied by the officials concerning the ciently to substantiate the conclusion. prospective contractor's ability to per It shall include a discussion of all perform satisfactorily, and to assure that tinent topics of the “Guide for On-Site the solicitation requirements and its Evaluation of Prospective Contractor” technical aspects (such as specifica (see DOTPR 12-1.5603). In any case tions, prototype, data, inspection and where there is conflict of opinion betesting, packaging, delivery, instruc tween team members as to whether tion books and reports), are under the prospective contractor meets a stood. If a cost-reimbursable contract standard, this fact shall be discussed is contemplated, the prospective con in detail, and the team leader shall detractor's accounting system will be re termine the survey team's position on viewed to determine that it is ade that standard. Copies of team memquate for the determination of costs bers' reports, including those which applicable to the contract.

dissent from the position recommend(b) The facilities and procedures the ed by the team, shall be included as prospective contractor proposes to use,

enclosures to the survey report. The and his overall plans for performing survey report shall unequivocally state

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