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notify the contractor as to the Govern- et lor later addition to the "make-orshall inform the contractor as to any detracting Officer of each proposed the procuring activity and the contractory Oficer, make changes or additions will review the existing "make-or-buy" del program. However, in his discretion, program to determine whether it should betracting Oficer may ratlly in writing be agreed to when the products or serp. 13.902A Administration of
from other firms at prices no higher terms of the contract clause. This 1–Public Contracts, Property Management : Hederal Procurement Regulations ng to
dations thereon. Such review by SBA proval of the contractor's pur- specifical uctors should be concurrent with
the review by rystem shall not constitute ap- does not the procuring activity (or, in the case
did the "make-or-buy" program.
or-Buy E prop of changes, the contracting oficer).
with a w
, anal cost-reimbursement, price of the
tain and cerns the contracting officer shall include an
tination, or incentive type con clause.
explanatory statement in the contract se to which a “make-or-buy" pro-
asas 10 MAKE-OR-BUY PROGRAM rk in results in a disagreement between the
kter provided. If the Contractor de tion ! item
peal such decision to the head of the sun sky the Contracting oficer in § 1-3
procuring activity, or other appropriate to the proposed change reasonably
cordance with agency procedures. Decla Seat detal] to permit evaluation of
sions by the procuring activity shall be el change. Changes in the place § 1-
is reached, the contracting officer shall
§ 1–3.902–2 Approval of programs.
(a) Proposed "make" items shall not
ices under consideration:
or provided by the contractor, and are should
available quality, quantity, delivery. atively
and other essential factors considered-
than if the contractor makes or provides
the product or service;
(2) Are regularly manufactured or
provided by the contractor, and are
available-quality. quantity, delivery. ke-or
and other essential factors considered-
from other firms at prices lower than
if the contractor makes or provides the
product or service; or
Asetached to this contract, except as
me and shall submit justification
Limance of work on any "make" Item
& the time of negotiation of this
program, the Contractor shall notify
en at the earllest possible time, tote mith justification in suficient detall yali evaluation. The Contractor shall Nikout the written consent of the Con
thanges or additions. The "make-orprogram attached to this contract shall tened to be modified in accordance with mitten consent or ratification by the practing Oficer.
(End of Clause)
l establish a procedure with the con-
"make-or-buy" decisions for Iten reserved for deferred decisions or wi Ventiled at the time of
(b) When a "make-or-buy" progri w kateed upon with a contractor, or th de changes or additions to a "makeor" program, the consideration gi each item on such program will be de mented in the contract file. If a tract (including supplemental ax ments for new procurement) except
Chapter 1-Federal Procurement Regulations
(b) Approval of the contractor's purchasing system shall not constitute approval of the "make-or-buy" program. $ 1-3.902–3 Contract clause.
The following clause shall be incor2porated in all cost-reimbursement, price
redetermination, or Incentive type contracts as to which a "make-or-buy” program has been agreed upon:
CHANGES TO MAKE-OR-BUY PROGRAM The Contractor agrees to perform this contract in accordance with the "make-or-buy" program attached to this contract, except as
hereinafter provided. If the Contractor desi stres to change the "make-or-buy" program,
be shall notiry the Contracting Oficer in writing of the proposed change reasonably in advance and shall submit justification 10 suficient detall to permit evaluation of the proposed change. Changes in the place of performance of work on any "make" Item In the "make-or-buy" program are subject to
this requirement. With respect to Items de40 ferred at the time of negotiation of this
GE contract for later addition to the “make-or3 buy" program, the Contractor shall notify
tho Contracting Officer of each proposed addition at the earliest possible time, together with justification in suficient detall to permit evaluation. The Contractor shall
not, without the written consent of the Con. upiter tracting omcer, make changes or additions 2007" to the program. However, in his discretion,
the Contracting Oncer may ratify in writing any changes or additions. The "make-orbuy" program attached to this contract shall be deemed to be modified in accordance with the written consent or ratifcation by the Contracting Officer.
(End of Clause) 50# $ 1-3.902-4 Administration of
prograin. (a) On applicable contracts, the cognizant contract administration office will establish a procedure with the contractor to assure timely compliance with the terms of the contract clause. This procedure will include provisions for processing changes to the established "make-or-buy" program and for obtainIng "make-or-buy” decisions for items reserved for deferred decisions or unIdentified at the time of contract negotiations.
(b) When a "make-or-buy" program Is agreed upon with a contractor, or there are changes or additions to a "make-orbuy" program, the consideration given each item on such program will be documented in the contract file. If a contract (including supplemental agreements for new procurement) except one
specifically exempted by $ 1-3.902–1(b),
tractor's purchasing system and sul
contracts. § 1-3.903-1 (Reserved) § 1-3.903–2 Review and approval o
subcontracts. (a) When the prime contract is no to be placed on a firm fixed-price basi review of subcontracts prior to place ment may be desirable since the ultima cost to the Government will depend part on subcontract prices and perforn ance.
Contract provisions requirie advance notification to the contractie officer of proposed subcontracts for m terials, components, and other purchas may be appropriate both for inform tion as to sources and prices and to pr vide an opportunity for review and approval or objection by the contracti officer prior to award of the subcontrac Careful and thorough evaluation of su contracts prior to placement is partic larly necessary when:
(1) The prime contractor's purch: Ing system of performance thereunde: considered inadequate;
(2) Subcontracts are for Items which there is no competition or which the proposed prices appear unr sonable, and the amounts involved substantial (see $ 1-3.807-10(b));
(3) Close working arrangements business or ownership affiliations e between the prime and the subcontra which may preclude the free use of c petition or result in higher subcont prices than would otherwise be obtain
(4) A subcontract is being prop at a price less favorable than that w has been given by the subcontracto the Government, all other factors suc manufacturing period and qua: being comparable; or
ssing shall ceeds kely
cepted, will result in a contract sub
onal itled ating h in Cost
ACristch in 7 all It in
submitted a Disclosure Statement di:
Caution: A practice disclosed in
Check the appropriate box below:
OF DISCLOSURE STATEMENT (S
contracts of $500,000 or less can be ex-
(2) Nondefense contract. The exemp-
(i) Contracts with educational Institutions subject to Subpart 1-15.3 (41 CFR § 1-15.3);
(ii) Contracts with State and local governments subject to Subpart 1–15.7 (41 CFR § 1-15.7);
(iii) Contracts with hospitals; and
(iv) Firm fixed-price contracts to be
(3) Notice for solicitations. Insert the
PRACTICES AND CERTIFICATION
utiicted Sonsetven(B) 1-1. mall rtial 04); ed to ction
the ded. Proartand
submitted, as a part of his propos this solicitation, coples of the I Statement(s) as follows: (1) origina copy to the cognizant Contractin and (ii) one copy to the cognizant auditor.
Date of Disclosure Statement(s)
11. CERTIFICATE OF MONETARY E
uted e the pos
ards miver ee 4
applicability. Waivers of cost accounting Board does recognize that in particular standards, rules, and regulations are
standards a "materiality" statement may be treated in § 1-3.1211.
useful, and ir such cases, it will include one. [41 FR 47237, Oct. 28, 1976)
See for example the addition at § 402.50(e).
(of 4 CFR.) (37 FR 4141, February 29, 1972.) $ 1-3.1202 Definitions.
In the Cost Accounting Standards Board When used in this subpart, the words Statement of Operating Policies, Proceand terms defined in 4 CFR Part 331 et dures, and Objectives, the following seq. shall have the meanings set forth statement of the Board's objective in therein (see also § 1-3.1220(b)). In addi regard to materiality was promulgated: tion, the words and terms defined in this
Materiality. The Board believes that the paragraph shall have the meanings set administration of its rules, regulations, and forth below:
Cost Accounting Standards should be reason(a) "Net awards" means the obligated able and not seek to deal with insignificant value of negotiated national defense amounts of cost. Although this rule of comprime contracts, awarded in the report
mon sense is already practiced by the Gov
ernment, the Board recognizes that, in paring period, minus cancellations, termi
ticular standards, a specific "materiality" nations, and other credit transactions
statement may be useful; and, in such cases, relating thereto.
it will include one. (b) "Company” includes all divisions, The Board expects that in implementing its subsidiaries, and affiliates of the con promulgations, it is appropriate to contractor under common control.
sider the following criteria in determining (c) "Contractor" and "subcontractor" whether a transaction or a decision about as the words pertain to contract require
an accounting practice is material in the ments under the clause entitled Cost Ac
context of any Board Issuance:
1. The absolute dollar amount involved. counting Standards (see § 1-3.1204–1)
The larger the dollar amount, the more likely apply to business units, such as a profit It is that & decision involving it will be center, division, subsidiary, or similar material. unit of a company, which perform the 2. The amount of total contract cost comcontract, even in those cases where the pare t with the amount under consideration. contract was entered into on behalf of The larger the portion of the total contract the overall company rather than the
cost which is represented by the item or
the decision under consideration, the more business unit.
likely it is to be material. [29 FR 10155, July 24, 1964, as amended at
3. The relationship between a cost item and 41 FR 47237, Oct. 28, 1976)
a cost objective. Decisions about direct cost $ 1-3.1202-1 Materiality.
items, especially if the amounts are them
selves part of a base for distribution of inMateriality shall be considered in the direct cost, will normally be more material application of regulations and standards than like decisions about indirect costs. of the Cost Accounting Standards Board. 4. The impact on Government funding. The criteria set forth in this § 1-3.1202-1
Decisions about accounting treatment will shall be used.
be more material if they influence the dis
tribution of costs between Government and (a) In promulgating its rules and regu
non-Government cost objectives than 1f all lations, the Board made the following
cost objectives have Government financial comment:
support. Materiality. The Board notes that many 5. The relationship to price. When contract commentators urged that a concept of ma pricing is based upon estimated cost, declteriality be incorporated in the Board's regu
sions about cost accounting treatment in lations, to the end that minimal or
estimates are more material than comparable insignificant modifications of or fallures to decisions about treatment of actual costs. use disclosed cost accounting practices would
When contract pricing is based on actual not be subject to price adjustment.
costs, decisions about accounting treatment The Board agrees that the administration
for actual costs are more material than comof its rules, regulations, and Cost Accounting
parable decisions about estimates. Standards should be reasonable and not seek
6. The cumulative effect of individually to deal with insignificant amounts of cost.
immaterial items. It is appropriate to conSince this rule of common sense is already sider whether individual variances (a) tend practiced by the Government, the Board does to offset one another, or (b) tend to be in the not believe that there is any need to attempt same direction and hence to accumulate to formulate and state an acceptable concept
Into a material amount. of materiality applicable to all Board rules, These criteria should be considered toregulations and standards, although the gether; no one criterion is wholly determinaBoard might consider doing so if subsequent tive of immateriality. In particular standevents indicate the necessity therefor. The ards the Board will give consideration to
cepted, will result in a contract subjecu
contracts of $500,000 or less can be ex1m
empted and requires an additional notice ntire
to be inserted in solicitations. never
(2) Nondefense contract. The exemp
tions in § 1-3.1203(a) (1) also apply to ssing
solicitations which are likely to result shall in a negotiated nondefense contract exceeds ceeding $100,000. Additionally, the folIkely lowing nondefense procurements are ex
(i) Contracts with educational Insti
tutions subject to Subpart 1-15.3 (41 con CFR § 1-15.3);
(ii) Contracts with State and local onal governments subject to Subpart 1-15,7 itled
(41 CFR § 1-15.7); zting
(iii) Contracts with hospitals; and h in (iv) Firm fixed-price contracts to be Cost awarded after receiving offers from at
least two firms not associated with each fica other, providing that (A) the solicitation and to all competing firms is identical; (B)
AC price is the only consideration in selectrist ing the contractor from among the comch in peting firms solicited; (C) the lowest 7 all
offer received in compliance with the it in solicitation from among those solicited ,000,
is accepted: and (D) the profit center,
division, or similar organizational unit tab
of a company to which the contract is to com be awarded is not on the date of such ian
award performing a contract or subconset tract subject to the Cost Accounting
Standards clause. Under (D), performuti ance of a contract or subcontract extends cted
from the date of award of the contract to Con the date when the work required by the set contract is completed. Provided, That ven
the solicitation notice shall be inserted (B)
in all such solicitations, and the notice 1-1.
shall be withdrawn by the contracting
officer only if, on the date of contract rtial award, all of the criteria of this exemp
tion are met. d to
(3) Notice for solicitations. Insert the tion
following notice in all solicitations which the
are likely to result in a negotiated conded. tract exceeding $100,000, unless the proPro
curement is exempted under § 1-3.1203 art
(a) (1) or (a) (2): and DISCLOSURE STATEMENT-COST ACCOUNTING
PRACTICES AND CERTIFICATION uted Any contract in excess of $100,000 resulting
the from this solicitation except (1) when the pos price negotiated is based on (a) established
catalog or market prices of commercial items ards
sold in substantial quantities to the general
public, or (b) prices set by law or regulation, Liver
or (2) contracts which are otherwise exempt
(2)), shall be subject to the requirements of this the Cost Accounting Standards Board. Any hich offeror submitting a proposal, which, if ac
pricing of this proposal (see (IV) below)
Check the appropriate box below:
OY DISCLOSURE STATEMENT (S)
The offeror hereby certifies that 1