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SOURCE: 29 FR 10155, July 24, 1964, unless otherwise noted.

Sec. 1-3.1220-7 Use of standard costs for direct

material and direct labor. 1-3.1220-8 Accounting for costs of compen

sated personal absence. 1-3.1220-9 Depreciation of tangible capital

assets. 1-3.1220-10 Allocation of business unit

general and administrative expenses to

final cost objectives. 1-3.1220-11 Accounting for acquisition

costs of material. 1-3.1220-12 Composition and measurement

of pension cost. 1-3.1220-13 Adjustment and allocation of

pension cost. 1-3.1220-14 Cost of money as an element

of the cost of facilities capital. 1-3.1220-15 Accounting for the cost of de

ferred compensation. 1-3.1220-16 Accounting for insurance costs. 1-3.1220-17 Cost of money as an element

of the cost of capital assets under con

struction. 1-3.1220-18 Allocation of direct and indi

rect costs. 1-3.1220-19 (Reserved) 1-3.1220-20 Accounting for independent re

search and development costs and bid and proposal costs.

§ 1-3.000 Scope of part.

This part prescribes policies and procedures which shall be observed by executive agencies in connection with procurement by negotiation. As directed by statute (see § 1-2.102(c)), agencies shall not negotiate pursuant to section 3709 of the Revised Statutes, but shall comply with the negotiation requirements of Title III of the Federal Property and Administrative Seryices Act of 1949 (hereafter referred to in this Part 1-3 as "the Act”), unless otherwise authorized by law. [31 FR 348, Jan. 12, 1966)

Subpart 1-3.1-Use of Negotiation

§ 1-3.100 Scope of subpart.

This subpart deals with the nature and use of negotiation as distinguished from formal advertising (see Part 1-2), and with limitations upon that use.

Subpart 1-3.13—Cost of Money for Capital Employed on Facilities in Use and Capital

Assets Under Construction 1-3.1300 Scope and applicability. 1-3.1301 Cost of money for capital em

ployed on facilities in use. 1-3.1301-1 Policy. 1-3.1301-2 Definitions, measurement, and

allocation. 1-3.1301-3 Estimating business unit facili

ties capital and cost of money. 1-3.1301-4 Contract facilities capital esti

mates. 1-3.1301-5 Preaward facilities capital appli

cations. 1-3.1301-6 Postaward facilities capital ap

plications. 1-3.1301-7 Administrative procedures. 1-3.1301-8 Format 1301, Contract facilities

capital and cost of money. 1-3.1302 Cost of money for capital em

ployed on capital assets under construc

tion. 1-3.1302-1 Policy. 1-3.1302-2 Definitions. 1-3.1302-3 Measurement. 1-3.1302-4 Composition and allocation of

costs. 1-3.1302-5 Limitations. 1-3.1302-6 Preaward capital employed ap

plication. AUTHORITY: Sec. 205(c), 63 Stat. 390; 40 U.S.C. 486(c).

§ 1-3.101 General requirements for negoti.

ation. (a) No procurement in excess of $10,000 shall be made by negotiation if the use of formal advertising is possible and practicable under the existing conditions and circumstances even though such conditions and circumstances would otherwise satisfy the requirements of Subpart 1-3.2.

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

(1) The contemplated procurement comes within one of the circumstances permitting negotiation enumerated in Subpart 1-3.2;

(2) Any necessary determinations and findings have been made (see Subparts 1-3.2 and 1-3.3);

(3) Such clearance or approval as is prescribed by applicable agency procedures has been obtained; and

(4) The prospective contractor has been determined to be responsible in accordance with Subpart 1-1.12.

(c) Whenever property or services are to be procured by negotiation, proposals shall be solicited from the maximum number of qualified

sources, including small business con- &1-3.102 Factors to be considered in ne. cerns (see § 1-1.702(b)(3)), consistent gotiating contracts. with the nature of and requirements

During the course of negotiations, for the supplies or services to be pro

due attention shall be given to the folcured, in accordance with the basic

lowing and any other appropriate fac

lowing and any o policies set forth in this part 1-3, to

tors: the end that the procurement will be

(a) Comparison of prices quoted and made to the best advantage of the consideration of other prices for the Government, price and other factors same or similar property or services, considered. Proposals shall be support with due regard to production costs, ed by statements and analyses of esti including extra pay shift, multi-shift mated costs or other evidence of rea- and overtime costs and any other sonable prices and by such informa factor relating to the price, such as tion concerning other vital matters as profits, cost of transportation, and is deemed necessary by the contract- cash discounts. ing officer (see $ 1-3.807). Unless (b) Comparison of the business repuaward without written or oral discus tation, capacity, and responsibility of sion is permitted under § 1-3.805-1(a), the respective persons or firms who negotiation shall thereupon be con submit offers. ducted in accordance with § 1-3.805, (c) Consideration of the quality of with due attention being given to the the property or services offered, infactors in § 1-3.102 and any other ap cluding the same or similar property propriate factors.

or services previously furnished, with (d) Negotiated procurement shall be

due regard to conformance with specion a competitive basis to the maxi

fication requirements. mum practical extent. When a pro (d) Consideration of delivery reposed procurement appears to be noncompetitive, the procuring activity is (e) Discriminating use of price and responsible not only for ensuring that

hat cost analyses. competitive procurement is not feasi (f) Investigation of price aspects of ble but also for acting whenever possi. any important subcontract. ble to avoid the need for subsequent (g) Individual bargaining, by mail or noncompetitive procurements. This by conference. action shall include both examination (h) Consideration of cost sharing. of the reasons for the procurement (i) Effective utilization in general of being noncompetitive and steps to the most desirable type of contract. foster competitive conditions for sub (j) Consideration of the size of the sequent procurements, particularly as business concern. to the availability of complete and ac

(k) Consideration as to whether the curate data, reasonableness of delivery prospective supplier requires expan

uirements, and possible breakout of sion or conversion of plant facilities. components for competitive procure

(1) Consideration as to whether the ments. Except for procurement of prospective supplier is located in a surelectric power or energy, gas (natural

plus or scarce labor area. or manufactured), water, or other util.

(m) Consideration as to whether the ity services, and procurement of edu- prospective supplier will have an adecational services from nonprofit insti.

quate supply of qualified labor. tutions, contracts of more than

(n) Consideration of subcontracting, $10,000 shall not be negotiated on a

with the extensive use of small businoncompetitive basis without prior

ness subcontractors being considered a review at a level higher than the con

favorable factor. tracting officer to ensure compliance

(o) Consideration of the existing and with this $ 1-3.101(d).

potential workload of the prospective

supplier. [29 FR 10155, July 24, 1964, as amended at (p) Consideration of broadening the 36 FR 17421, Aug. 31, 1971; 40 FR 44138, industrial base by the development of Sept. 25, 1975; 43 FR 46302, Oct. 6, 1978) additional suppliers.

(q) Consideration of whether the contractor requires Government furnished property, machine tools, or facilities.

§ 1-3.103 Dissemination of procurement

information. (a) Synopses of proposed procurements and contract awards shall be prepared and publicized in the Department of Commerce “Synopsis of U.S. Government Proposed Procurement, Sales, and Contract Awards,” in accordance with the requirements of $$ 1-1.1003 and 1-1.1004.

(b) Preaward notices of proposal status shall be provided to offerors under the following specific conditions:

(1) In any procurement of more than $10,000 in which it appears that it will take longer than 30 days to make an award after: (i) A proposal has been determined to be unacceptable or (ii) a competitive range determination has been made (see § 1-3.805), the contracting officer shall provide a prompt notice to the source submitting the proposal when a determination has been made that the proposal will not be considered further for award. Such a notice need not be given where the proposed contract is to be awarded within a few days after the determination and a notice pursuant to paragraph (c) of this § 1-3.103 would suffice.

(2) Notices pertaining to unacceptable proposals normally shall: (i) Indicate in general terms the basis for the determination, (ii) advise that, since further negotiation with the offeror concerning the procurement is not contemplated, a revision of the propos. al will not be considered, and (iii) specify that no further information will be available until a later time.

(3) Notices pertaining to determinations of competitive range shall be provided to all offerors at the same time, whether or not their proposals are within the competitive range (see also $ 1-3.802-2(g)). Notices to offerors that are not within the competitive range normally shall include information as described above for unacceptable offers. Where sources that are determined to be outside the competitive range number over 15, the basis for

the determination may be omitted if the notified offerors are informed that the basis for the determination or nonselection for further discussion or negotiation will be furnished at a later time, upon inquiry. Notices to offerors that are within the competitive range need only state that fact.

(4) Notices pertaining to late proposals are addressed in $$ 1-3.802-1 and 13.802-2.

(c) Promptly after making awards in any procurement in excess of $10,000, the contracting officer normally shall give written notice to the unsuccessful offerors that their proposals were not accepted. Upon request, unsuccessful offerors whose offered prices were lower than those of the contractor which received the award shall be furnished the reasons why their proposals were not accepted; but in no event will an offeror's cost breakdown, profit, overhead rates, trade secrets, or other confidential business information be disclosed to any other offeror.

(d) Classified information shall be furnished only in accordance with agency regulations governing the handling of classified information. (29 FR 10155, July 24, 1964, as amended at 43 FR 46302, Oct. 6, 1978)

8 1-3.104 Disclosure of mistakes after

award. When a mistake in a contractor's proposal is not discovered until after award, the authority to correct mistakes contained in § 1-2.406-4 may be utilized in accordance with the limitations and procedures set forth therein.

81-3.105 Trade Agreements Act of 1979—

eligible products.

[48 FR 14901, Apr. 6, 1983) 8 1-3.105-1 Time for the submission of

offers. When solicitations involve potentially eligible products under the Trade Agreements Act of 1979 (see $ 16.1601(b)), the solicitation shall specify at least 30 days for the submission of offers (see § 1-6.1605-1(b)(4)). When solicitations will be sent outside the United States, international air mail shall be used (see § 1-6.1605-1(b)(2)).

(48 FR 14901, Apr. 6, 1983]

§ 1-3.101, there are several circum

stances under which noncompetitive § 1-3.105-2 English language and U.S. dol.

procurements may be justified. These lars.

circumstances are as follows: When a solicitation involves poten (1) The agency is authorized or retially eligible products (see § 1 quired by statute to award a contract 6.1601(b)), the solicitation shall re

to a specified source; e.g., awards to quire that offers are to be submitted

the Blind or other Severely Handiin the English language and U.S. dol

capped, Prison Industries, and the lars (see § 1-6.1605-1(b)(6)).

SBA under section 8(a) of the Small (48 FR 14901, Apr. 6, 1983)

Business Act. Contracting officers are

cautioned that 41 U.S.C. 252(c)(10) § 1-3.105-3 Opening offers.

(see § 1-3.210) does not constitute such (a) When offers involving potential- statutory authority. The latter cite ly eligible products from designated merely provides authority to use negocountries are opened, offerors or their tiation procedures instead of formal representatives or an appropriate and advertising when the agency is faced impartial witness not connected with with a sole source of supply situation. the acquisition shall be present (see (2) The Government's need for a § 1-6.1606(a)). However, there shall be product or service is so urgent that no disclosure of the offers.

there is not enough time to obtain (b) The name of the impartial wit competition; i.e., a serious emergency ness, if any, shall appear on the ab will not permit the delay inherent in stract of offers (see § 1-6.1606(b)). obtaining competition and the agency

finds that only one known source can [48 FR 14901, Apr. 6, 1983]

meet the Government's needs within § 1-3.105-4 Notification of nonacceptance the required time. However, urgency of offer.

in itself does not necessarily justify a (a) Contracting officers shall notify

noncompetitive procurement decision unsuccessful offerors in writing within

unless fully supported by the facts of seven working days after the award of

the procurement situation. A search a contract (or contracts) that their

for other sources, to the extent reaoffers were not accepted when an

sonable in the circumstances, shall be offer involves an eligible product from

conducted (see paragraph (b) of this a designated country (see $$ 1

section). 6.1601(b) and 1-6.1608(a)).

(3) The data, such as drawings or (b) Additional information requested

other specifications needed for compeby an unsuccessful offeror of an eligi tition, are not available to the Governble product from a designated country

ment and there are no alternative shall be provided by an official above ways of obtaining competition, such as the level of the contracting officer (see redescribing the requirement in terms § 1-6.1608(b)).

of function or performance required

(see paragraph (d) of $ 1-3.101 for [48 FR 14901, Apr. 6, 1983)

agencies' responsibility to foster com8 1-3.106 Discounts for early payment.

petitive conditions on subsequent pro

curements). The provisions of 1-2.407-3 are ap

(4) There is one source that, because plicable with respect to the evaluation

of unique capabilities, is the only one of competitive offers.

capable of meeting the Government's [47 FR 36164, Aug. 19, 1982)

minimum requirements. The term

"minimum requirements" is a limita8 1-3.107 Justification of noncompetitive

tion referring to only those features procurements.

that are essential to meeting the Gov(a) Circumstances permitting non ernment's need. (See paragraph (b) of competitive procurements. While com- this section for actions that must be petition must be obtained on negotiat taken before this circumstance may be ed procurements to the maximum cited as justification for a noncompetipracticable extent in accordance with tive procurement.)

(5) An award must be directed to one ceptable items, they shall be given an source because the head of the agency opportunity to compete. See parahas determined that disclosure of the graph (b) of this section for actions property or service to be obtained to that must be taken before this circummore than one source would jeopard- stance may be cited as justification for ize the national security. It should be a noncompetitive procurement. recognized, however, that § 1-3.212 au. (8) A follow-on award must be directthorizes the negotiation of purchases ed to a specified source because it is and contracts “for property or services not feasible to obtain competition for as to which the agency head deter follow-on procurements. In such a mines that the character, ingredients case, it must be demonstrated that a or components thereof are such that noncompetitive award is necessary to the purchase or contract should not be avoid (i) duplications of cost to the publicly disclosed.” Accordingly, the Government for the property or servuse of a noncompetitive procurement ice being procured (i.e. a substantial should be based on the most persua- investment of some kind would have sive reasons.

to be duplicated at Government ex(6) An award must be directed to a pense by another source entering the specified source because the agency field and the magnitude of this investhead has determined that it is in the ment is so large that it would not be public interest to procure technical possible to overcome its effect through equipment or parts that require stand the use of competition), or (ii) unacardization and interchangeability in ceptable delays in accomplishing the special situations or particular local agency's mission objectives. However, ities; and there is a reasonable basis a follow-on contract should not be for concluding that (i) only one source awarded noncompetitively merely becan provide such standardization and cause of: interchangeability and (ii) it is neither (A) The prior experience of the inpractical nor economical to establish cumbent, if the incumbent is not more than one source. This circum uniquely capable of meeting the Govstance shall not be cited for initial pro- ernment's minimum requirements; curement of equipment and spare (B) The agency's desire to avoid adparts that ultimately will be standard ministrative inconvenience, including ized or for the arbitrary selection of the costs and effort associated with the equipment of certain suppliers. using the competitive process; or (Refer to § 1-3.213 for a complete dis (C) The fact that the Government cussion of the stringent standards that will incur costs by changing contracmust be met for this circumstance, tors. (See paragraph (b) of this section which is both a circumstance permit for actions that must be taken before ting noncompetitive procurement this circumstance may be cited as juswhen standardized equipment or inter- tification for a noncompetitive prochangeable parts are available from curement. If the source as previously only one source and a circumstance selected on a noncompetitive basis, a permitting negotiation. Also see para complete justification pursuant to graph (b) of this section for actions paragraph (c) of this section shall be that must be taken before this circum included in the contract file supportstance may be cited as justification for ing the basic noncompetitive procurea noncompetitive procurement. The ment as well as the instant procureintent is that a market search be un ment.) dertaken before the standardization (b) Market search for competitive determination is made by the agency sources. (1) As used herein, the term head.)

market search refers to attempts to as(7) An award must be directed to a certain whether other qualified specified source because only one sources capable of satisfying the Govsource can satisfy the Government's ernment's requirement exist. This legitimate need for an item compatible testing of the marketplace may range with existing equipment. However, if from written or telephone contacts other sources are able to modify or with knowledgeable Federal and nonadjust their products to produce ac- Federal experts regarding similar or

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