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8 1-2.408-2 Rejection of offers under the those offerors who submitted an acTrade Agreements Act of 1979.

ceptable technical proposal in Step (a) Contracting officers shall notify One. unsuccessful offerors in writing within (c) This method of procurement re. seven working days after the award of quires that the contracting officer a contract (or contracts) that their work closely with technical personnel offers were not accepted when an and rely on their specialized knowloffer involves an eligible product from edge in determining the technical rea designated country (see $$ 1 quirements of the procurement and 6.1601(b) and 1-6.1608(a)).

the criteria to be used in evaluating (b) Additional information requested

technical proposals, and in making by an unsuccessful offeror of an eligi

such evaluation. An objective of the ble product from a designated country

two-step procedure is to permit the deshall be provided by an official above

velopment of a sufficiently descriptive the level of the contracting officer (see

statement of the Government's re§ 1-6.1608(b)).

quirements, including the develop(48 FR 14900, Apr. 6, 1983)

ment of a technical data package, so

that subsequent procurements may be § 1-2.409 Synopses of contract awards.

made by conventional formal advertisSee § 1-1.1004.


Subpart 1-2.5—Two-Step Formal

Advertising 8 1-2.501 General.

(a) Two-step formal advertising is a method of procurement designed to promote the maximum competition practicable when available specifications are not sufficiently definite to permit a formally advertised procurement in accordance with Subparts 12.2, 1-2.3, and 1-2.4. It is a flexible procedure and is especially useful, in procurement of complex and technical items, to prevent the elimination of potentially qualified producers from the competitive base.

(b) Two-step formal advertising is conducted in two phases. The first step consists of the request for, and the submission, evaluation, and, if necessary, discussion of a technical proposal, without pricing, to determine the acceptability of the supplies or services offered. As used in this context, the word “technical" has a broad connotation and, among other things, includes engineering approach, special manufacturing processes, and special testing techniques. Also, when required to clarify basic technical requirements, other related requirements such as management approach, manufacturing plan, or facilities to be utilized may be clarified in this step. The second step consists of a formally advertised procurement, confined to

§ 1-2.502 Conditions for use.

The two-step formal advertising method of procurement may be used when its use has been approved at a level higher than the contracting office and when all of the following conditions are present:

(a) Available specifications or purchase descriptions are not sufficiently definite or complete to permit full and free competition without engineering evaluation and necessary discussion of the technical aspects of the require. ment to insure mutual understanding between each source and the Government.

(b) Definite criteria exist for evaluating technical proposals, such as applicable design, manufacturing, testing, and performance requirements, and special requirements for operational suitability and ease of maintenance; however, such criteria shall not include consideration of capacity or credit as defined in § 1-1.708 of this chapter.

(c) More than one technically qualified source is expected to be available both initially and after technical evaluation.

(d) A firm fixed-price contract or a fixed-price contract with escalation (see § 1-2.201(a)(21)) will be used. (see § 1-2

§ 1-2.503 Procedures.

Multiple Technical Proposals. In the first

step of this two-step procurement, offerors § 1-2.503-1 Step One.

are authorized and encouraged to submit (a) Requests for technical proposals.

multiple technical proposals presenting dif

ferent basic approaches. Each technical proA request for technical proposals shall

posal submitted will be separately evaluated be distributed to qualified sources in

and the offeror will be notified as to its acaccordance with $ 1-1.302-1 of this

ceptability. chapter. In addition, the request shall be synopsized in accordance with Sub (b) Receipt and evaluation of technipart 1-1.10 and publicly posted in ac

cal proposals. The following actions cordance with § 1-2.203-2. The request

will be taken with respect to receipt may be in the form of a letter and and evaluation of technical proposals: shall contain, as a minimum, the fol (1) Every precaution shall be taken lowing information:

to safeguard technical proposals (1) The best practicable description against disclosure to unauthorized perof the supplies or services required. sons.

(2) Notification of the intent to con- (2) Any reference to price or cost duct the procurement in two steps and will be removed. the actions involved.

(3) Technical evaluation of the pro(3) The requirements of the techni- posals will be based upon the criteria cal proposal, i.e., the necessary details · contained in the request for technical such as drawings, data, presentation, proposals and such evaluation will not etc., to be submitted.

include consideration of capacity or (4) The criteria for evaluating the

credit as defined in § 1-1.708. technical proposal (§ 1-2.502(b)).

(4) Technical proposals will be cate(5) A statement that the technical

gorized as acceptable or unacceptable. proposals shall not include prices or

Proposals will not be categorized as pricing information.

unacceptable when a reasonable effort (6) The date by which the proposal

on the part of the Government could must be received.

bring the proposals to an acceptable (7) A statement that the Govern

status and increase competition. The ment may discuss the technical as

contracting officer shall arrange for pects of the proposal with the concern submitting the proposal.

any necessary discussions with sources (8) A statement that in the second

submitting technical proposals for the step of the procurement only bids

purpose of obtaining additional inforbased upon technical proposals deter

mation or clarification which may be mined to be acceptable, either initially

required. When, after discussion and or as a result of discussions, will be

submission of necessary information considered for award; and that each

and clarification, technical proposals bid in the second step must be based

are determined to be acceptable, they on the bidder's own technical propos

will be so categorized. If, however, it is al.

determined at any time that a techni(9) A statement that sources submit

cal proposal is not reasonably susceptiting unacceptable technical proposals

ble to being made acceptable, it should will be so notified upon completion of

be classified as unacceptable and no the technical evaluation.

discussions of it need thereafter be ini(10) A statement either that only

tiated. one technical proposal may be submit

(5) Upon final determination that a ted by each offeror or that multiple technical proposal is unacceptable, the technical proposals may be submitted.

contracting officer shall notify the When compliance with specifications source submitting the proposal of that permit utilization of essentially differ. fact. The notice shall indicate, in genent technical approaches, it is general eral terms the basis for such determily in the interest of the Government nation including a statement of to authorize the submission of multi- whether rejection was based on failure ple proposals. If multiple proposals are to furnish sufficient information or an authorized the request shall include a unacceptable engineering approach. statement substantially as follows:

(c) (Reserved]

(d) Discontinuance. If, as a result of the evaluation of technical proposals, it appears necessary to discontinue the two-step advertising method of procurement, the full facts and circumstances will be set forth in writing and submitted to the office which originally approved the method of procurement. If that office approves the discontinuance, each source will be notified in writing of the discontinuance and the reasons therefor.

the provisions of said Exhibit (or specifications).

(d) Will not be synopsized (see Subpart 1-1.10) or publicly posted (see § 12.203-2), except that the names of firms which have submitted acceptable technical proposals in step one of two-step formal advertising will be listed in the Commerce Business Daily for the benefit of prospective subcontractors in accordance with § 1-1.1003

[29 FR 10141, July 24, 1964, as amended at 30 FR 9593, Aug. 31, 1965)



§ 1-2.503-2 Step Two.

Upon completion of Step One, a formally advertised procurement in accordance with Subparts 1-2.2, 1-2.3, and 1-2.4 will be conducted, except that invitations for bids:

(a) Will be issued only to and considered only from those sources whose technical proposals have been evaluated and determined to be acceptable under Step One.

(b) Will include the following statement:

Sec. 1-3.000 Scope of part.

This invitation for bids is issued pursuant to two-step formal advertising procedures in Subpart 1-2.5 of the Federal Procurement Regulations. Bids will be considered only from those firms who have submitted acceptable technical proposals pursuant to the first step of such procedures as initiated by

---- (Identify the request for technical proposals) Any bidder who has submitted multiple technical proposals in the first step of this two-step procurement may submit a separate bid covering each technical proposal which has been determined acceptable by the Government.

(c) Will prominently state that the supplies or services to be procured will be in accordance with the specifications and the bidder's technical proposal, as finally accepted, under the request for technical proposals. This may be accomplished in the Schedule item description by a provision substantially in the form of the following example:

Radio antenna, in accordance with Exhibit No. ---- dated ----- (use other description of specifications as appropriate) and your Technical Proposal ---- (insert specific identification of the bidder's proposal including any revision thereof as fi. nally accepted), incorporated herein by reference. Nothing contained in said Technical Proposal shall constitute a waiver of any of

Subpart 1-3.1-Use of Negotiation 1-3.100 Scope of subpart. 1-3.101 General requirements for negotia

tion. 1-3.102 Factors to be considered in negoti

ating contracts. 1-3.103 Dissemination of procurement in

formation. 1-3.104 Disclosure of mistakes after award. 1-3.105 Trade Agreements Act of 1979-eli

gible products. 1-3.105-1 Time for the submission of

offers. 1-3.105-2 English language and U.S. dol

lars. 1-3.105-3 Opening offers. 1-3.105-4 Notification of nonacceptance of

offer. 1-3.106 Discounts for early payment. 1-3.107 Justification of noncompetitive

procurements. 1-3.108 Management controls designed to

maximize the use of competitive procurement.

Subpart 1-3.2-Circumstances Permitting

Negotiation 1-3.200 Scope of subpart. 1-3.201 National emergency. 1-3.202 Public exigency. 1-3.203 Purchases not in excess of $10,000. 1-3.204 Personal or professional services. 1-3.205 Services of educational institutions. 1-3.206 Purchases outside the United

States. 1-3.207 Medicines or medical supplies. 1-3.208 Property purchased for authorized

resale. 1-3.209 Subsistence supplies.

Sec. 1-3.410-2 Basic agreements with education

al institutions and nonprofit organiza

tions. 1-3.410-3 Basic ordering agreement.

Sec. 1-3.210 Impracticable to secure competi

tion by formal advertising. 1-3.211 Experimental, developmental, or

research work. 1-3.212 Purchases not to be publicly dis

closed. 1-3.213 Technical equipment requiring

standardization and interchangeability

of parts. 1-3.214 Negotiation after advertising. 1-3.215 Otherwise authorized by law.

Subpart 1-3.5—[Reserved)

Subpart 1-3.3—Determinations, Findings, and


1-3.301 General. 1-3.302 Determinations and findings re

quired. 1-3.303 Determinations and findings by

the head of the agency. 1-3.304 [Reserved) 1-3.305 Form and requirements of determi

nations and findings. 1-3.306 Procedure with respect to determi

nations and findings. 1-3.307 (Reserved] 1-3.308 Preservation of data.

Subpart 1-3.6—Small Purchases 1-3.600 Scope of subpart. 1-3.601 Purpose. 1-3.602 Policy. 1-3.603 Competition. 1-3.603-1 Solicitation. 1-3.603-2 Data to support small purchases. 1-3.603-3 Small business-small purchase

set-asides. 1-3.604 Imprest funds (petty cash) method. 1-3.604-1 General. 1-3.604-2 Definition of imprest fund. 1-3.604-3 Agency responsibilities. 1-3.604-4 Use of imprest funds. 1-3.604-5 Limitations. 1-3.604-6 Procurement and payment. 1-3.604-7 State and local taxes. 1-3.605 Purchase order forms. 1-3.605-1 Standard Form 44, Purchase

Order-Invoice-Voucher. 1-3.605-2 Standard Forms 147 and 148,

Order for Supplies or Services. 1-3.605-3 Agency order forms. 1-3.606 Blanket purchase arrangements. 1-3.606-1 General. 1-3.606-2 Authority to use blanket pur

chase arrangements. 1-3.606-3 Establishment of account. 1-3.606-4 Documentation. 1-3.606-5 Agency implementation. 1-3.607 Interagency use of local term con


Subpart 1-3.4—Types of Contracts 1-3.400 Scope of subpart. 1-3.401 Types of contracts. 1-3.402 (Reserved) 1-3.403 Selection of contract type. 1-3.404 Fixed-price contracts. 1-3.404-1 General. 1-3.404-2 Firm fixed-price contract. 1-3.404-3 Fixed-price contract with escala

tion. 1-3.404-4 Fixed-price incentive contract. 1-3.404-5 Prospective price redetermina

tion at a stated time or times during per

formance. 1-3.404-6 (Reserved] 1-3.404-7 Retroactive price redetermina

tion after completion. 1-3.405 Cost-reimbursement type con

tracts. 1-3.405-1 General. 1-3.405-2 Cost contract. 1-3.405-3 Cost-sharing contract. 1-3.405-4 Cost-plus-incentive-fee contract. 1-3.405-5 Cost-plus-a-fixed-fee contract. 1-3.406 Other types of contracts. 1-3.406-1 Time and materials contract. 1-3.406-2 Labor-hour contract. 1-3.407 Additional incentives. 1-3.407-1 General. 1-3.407-2 Contracts with performance in

centives 1-3.408 Letter contract. 1-3.409 Indefinite delivery type contracts. 1-3.410 Other types of agreements. 1-3.410-1 Basic agreement.

Subpart 1-3.7—Negotiated Overhead Rates 1-3.700 Scope of subpart. 1-3.701 Definitions. 1-3.702 General. 1-3.703 Applicability. 1-3.704 Contract clauses. 1-3.704-1 Contracts with concerns other

than educational institutions. 1-3.704-2 Contracts with educational insti

tutions. 1-3.704-3 Modification of contract clauses. 1-3.705 Procedure. 1-3.706 Coordination. 1-3.707 Cost-sharing rates and limitation

on overhead cost.

Subpart 1-3.8—Price Negotiation Policies and


1-3.800 Scope of subpart. 1-3.801 Basic policy. 1-3.801-1 General.

Sec. 1-3.902–3 Contract clause. 1-3.902-4 Administration of program. 1-3.903 Review and approval of contrac

tor's purchasing system and subcon

tracts. 1-3.903-1 (Reserved) 1-3.903-2 Review and approval of subcon


Sec. 1-3.801-2 Responsibility of contracting of

ficers. 1-3.801-3 Responsibility of other person

nel. 1-3.802 Preparation for negotiation. 1-3.802-1 Consideration of late proposals. 1-3.802-2 Alternate procedures for consid.

eration of late proposals. 1-3.803 Type of contract. 1-3.804 Conduct of negotiations. 1-3.805 Selection of offerors for negotia

tion and award. 1-3.805-1 General. 1-3.805-2 Cost-reimbursement type con

tracts. 1-3.806 Cost, profit, and price relation

ships. 1-3.807 Pricing techniques. 1-3.807-1 General. 1-3.807-2 Requirements for price or cost

analysis. 1-3.807-3 Cost or pricing data. 1-3.807-4 Certificate of current cost or

pricing data. 1-3.807-5 Defective cost or pricing data. 1-3.807-6 Refusal to provide cost or pricing

data. 1-3.807-7 Unacceptable substitutes for

pricing negotiations. 1-3.807-8 Evaluation and pricing of individ

ual contracts. 1-3.807-9 Specified contingencies. 1-3.807-10 Subcontracting considerations

in cost analysis. 1-3.807-11 Overhead rate considerations. 1-3.807-12 Sole source items. 1-3.808-1 Scope and applicability. 1-3.808-2 General. 1-3.808-3 Agency responsibilities. 1-3.808-4 Contracting officer responsibil

ities. 1-3.808-5 Solicitation notice and contract

clause. 1-3.808-6 Profit analysis factors. 1-3.809 Contract audit as a pricing aid. 1-3.810 Exchange of information. 1-3.811 Record of price negotiation. 1-3.812 Disposition of postaward audits. 1-3.813 Preproduction and startup and

od other nonrecurring costs. 1-3.814 Contract clauses. 1-3.814-1 Price reduction for defective cost

or pricing data. 1-3.814-2 Audit and records. 1-3.814-3 Subcontractor cost or pricing


Subpart 1-3.10—1-3.11—(Reserved) Subpart 1-3.12—Cost Accounting Standards 1-3.1200 Scope of subpart. 1-3.1201 Applicability. 1-3.1202 Definitions. 1-3.1202-1 Materiality. 1-3.1202–2 Cost accounting practice. 1-3.1203 Requirements. 1-3.1203-1 Prime contractor disclosure

statements. 1-3.1203-2 Applicability of cost accounting

standards. 1-3.1203-3 Solicitation notices. 1-3.1204 Contract clauses. 1-3.1204-1 National defense contract

clauses. 1-3.1204-2 Nondefense contract clauses. 1-3.1204-3 National defense subcontracts. 1-3.1205 Review of prime contractor Dis

closure Statements and changed prac

tices. 1-3.1206 Administration of CAS require

ments on subcontracts. 1-3.1207 Contract price adjustments. 1-3.1208 Contract administration for

CASB matters by agencies other than

DOD. 1-3.1209 Additional documentation. 1-3.1210 (Reserved) 1-3.1211 Waiver of cost accounting stand

ards, rules, and regulations. 1-3.1212 Administration of noncompliance

issues. 1-3.1213 Administration of equitable ad.

justments for new cost accounting

standards. 1-3.1214 Administration of voluntary

changes. 1-3.1215–1-3.1218 (Reserved) 1-3.1219 Guidance for implementation. 1-3.1220 Standards and definitions pre

scribed by the Cost Accounting Stand

ards Board. 1-3.1220-1 Consistency in estimating, accu

mulating, and reporting costs. 1-3.1220-2 Consistency in allocating costs

incurred for the same purpose. 1-3.1220-3 Allocation of home office costs

to segments. 1-3.1220-4 Capitalization of tangible assets. 1-3.1220-5 Accounting for unallowable

costs. 1-3.1220-6 Cost accounting period.

Subpart 1-3.9—Subcontracting Policies and

Procedures 1-3.900 Scope of subpart. 1-3.901 General. 1-3.902 “Make-or-buy” programs. 1-3.902-1 Review of program. 1-3.902-2 Approval of programs.

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