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$ 18–3.804_2 Evaluation procedures

not involving Source Evaluation

Board. The evaluation procedures set forth in paragraphs (a) through (c) of this section shall be utilized except where the procedures set forth in § 18–3.804–3 apply.

(a) Responsibility of contracting officer. (See § 18–3.801–2.)

(b) Technical evaluation. Generally, procurement personnel are not qualified to evaluate proposals from a technical viewpoint and must rely on scientific and engineering personnel for this function. In research and development contracting, awards should usually be made to those companies that have the highest competence in the specific field of science or technology involved, although awards should not be made on the basis of research and development capabilities that exceed those needed for the successful performance of the work. It is imperative therefore that technical evaluations and recommendations be fully documented and reviewed by responsible personnel. Technical evaluation should include the following:

(1) The contractor's understanding of the scope of the work as shown by the scientific and technical approach proposed;

(2) Availability and competence of experienced engineering, scientific, or other technical personnel;

(3) Availability of necessary research, test, and production facilities;

(4) Experience or pertinent novel ideas in the specific branch of science or technology involved;

(5) The contractor's willingness to devote his resources to the proposed work with appropriate diligence; and

(6) The contractor's proposed method of achieving the reliability required. In making this evaluation, technical personnel may be given access to portions of the business proposals upon request. After evaluation and preparation of written recommendations as to selection of source by the technical personnel, proposals shall be returned to the negotiator. The contracting officer is responsible for reviewing the justification in support of the recommendations of technical personnel to determine that the justification is adequate and that the documentation is complete.

(c) Business evaluation (1) Price and cost analysis. Each proposal requires some form of price or cost analysis. The contracting officer must exercise judgment in determining the extent of analysis in each case. On high-dollar value procurements, particularly where effective competition has not been obtained, the analysis should be thorough, and the record carefully documented to disclose the extent to which the various elements of costs, fixed fee, or profit contained in the contractor's proposals were analyzed. The negotiation memorandum should also reflect the consideration given to the recommendations of the price analyst and the basis for nonacceptance or departure from the recommendations during the course of negotiations.

(2) Automatic data processing equipment. In evaluating proposals containing a significant amount of cost for Automatic Data Processing Equipment (ADPE) the contracting officer should obtain from the prospective contractor à feasibility study and a lease-versuspurchase study covering the acquisition of such equipment or service. The contracting officer will obtain the recommendations of the price analyst and appropriate ADPE technical personnel as to the adequacy of the studies and the prospective contractor's determinations resulting from the studies. Particular attention should be given to those proposals containing a high dollar amount for rental of ADPE or complete systems to be used solely for performance of the contract. Current Bureau of the Budget criteria (NASA Handbook 2410.1A, “Management Procedures for Automatic Data Processing Equipment”) should be used, where applicable, as a guide in evaluating the contractor's studies (also see Subpart 18–3.11). Prospective contractors should be encouraged to:

(i) Use ADPE machine time available within a reasonable geographic distance;

(ii) Use tele-communications links to remote Government-owned or leased ADPE systems, and

(iii) Purchase ADPE in preference to leasing the equipment where the financial advantage is the sole or overriding factor.

(3) Other factors. The contracting officer must appraise the management capability of the offeror to perform the required work in a timely manner. In making this appraisal, he must consider such

factors as the company's management $ 18–3.805-1 General. organization, past performance, reputa

(a) After evaluation of proposals, tion for reliability, availability of the re

written or oral discussions shall be conquired facilities, ability to control, maintain and account for any property pro

ducted with all responsible offerors who

submit proposals within a competitive vided by the Government, and cost

range, price and other factors considcontrols.

ered, in accordance with § 18–3.102(a), [36 F.R. 21480, Nov. 10, 1971, as amended at

and due attention will be given to the 36 F.R. 25114, Dec. 29, 1971]

factors cited in § 18–3.102(b). § 18–3.804–3 Evaluation procedures- (b) Procurement personnel, as well as use of Source Evaluation Board.

other personnel concerned with the pro(a) Source Evaluation Board Proce

curement, shall insure that contract nedures are appropriate for competitive

gotiations are completed expeditiously.

However, all details of the negotiation negotiated procurements, except Architect-Engineer services and contracts for

must be completed before the contract is

actually placed. This includes, to the exwhich the procedures have been specifi

tent applicable: cally waived, then: (1) The estimated cost of the contract

(1) Arrangements regarding Govern

ment-furnished property, including the will exceed $1 million;

contractor's responsibility for con(2) The estimated cost of the contract

trolling, maintaining and accounting for will not exceed $1 million, but it is likely

such property; that the source selected will receive other

(2) Determination that the prospeccontracts for later phases of the same

tive contractor is responsible, including project which, cumulatively, would total more than $1 million. (Examples of this

completion of preaward surveys where

required; category include feasibility studies and

(3) Arrangements with other Governproject definition contracts under ap

ment agencies for the use of facilities proved programs or programs for which

under their control; approval will be requested.); or that

(4) Where the contract will be admin(3) A Source Selection Official deter

istered by another Government agency, mines that the use of the Source Evalua

any necessary arrangements with the retion Board procedures is desirable.

sponsible activity of that agency; (b) The detailed procedures regarding (5) Where the contract will involve the designation and operation of Source access to classified information, verificaEvaluation Boards are set forth in NPC tion that required security clearance has 402. (See NASA Management Instruction been obtained; 1152.2, "Source Evaluation Board

(6) The requirement for the furnishManual”.)

ing of data by the contractor in the per§ 18–3.804-4 Disclosure of informa

formance of the contract, both for techtion prior to selection of contractor.

nical evaluation and for competitive re

procurement where follow-on procureDuring the course of evaluation pro

ment is probable, in those situations ceedings, whether or not a Source Evalu

where the appropriate technical office has ation Board is utilized, NASA persolinel

requested that the contracting officer obparticipating in any way in evaluating

tain such data; and proposals shall not reveal any informa

(7) If the offeror's proposal contains tion concerning the evaluation under

technical data marked with a restrictive way to anyone who is not also partici

legend, whether the Government desires pating in the same evaluation proceed

rights to use such data (§§ 18–3.109, 18– ings, and then only to the extent that

9.202-6). such information is required in connec

(c) Whenever negotiations are contion with such proceedings. When other ducted with more than one offeror, aucGovernment or Jet Propulsion Labora

tion techniques are strictly prohibited. tory personnel participate in evaluation

An example would be indicating to an proceedings, they will be instructed to

offeror a price which must be met to observe these restrictions. Information

obtain further consideration, or informwill be provided to unsuccessful offerors

ing him that his price is not low in relain accordance with § 18–3.106–3.

tion to that of another offeror. On the $ 18-3.805 Conduct of negotiations. other hand, it is permissible to inform an

a

offeror that his price is considered by an amendment to the request for proposal the Government to be too high. After or request for quotations, and a copy receipt of proposals, no information re- shall be furnished to each prospective garding the number or identity of the contractor. See § 18–3.802-4. Oral advice offerors participating in the negotiations of change or modification may be given shall be made available to the public or if (1) the changes involved are not comto any one whose official duties do not plex in nature, (2) all prospective conrequire such knowledge (see § 18–1.1050). tractors are notified simultaneously Whenever negotiations are conducted (preferably by a meeting with the conwith several offerors, while such nego- tracting officer), and (3) a record is tiations may be conducted successively, made of the oral advice given. In such all offerors selected to participate in such instances, however, the oral advice should negotiations (see paragraph (a) of this be promptly followed by written section) shall be offered an equitable op- amendment verifying such oral advice portunity to submit such price, technical, previously given. The dissemination of or other revisions in their proposals as oral advice of changes or modifications may result from the negotiations. All separately to each prospective offeror such offerors shall be informed of the during individual negotiation sessions specified date (and time if desired) of the should be avoided unless preceded, acclosing of negotiations and that any re- companied, or immediately followed by a visions to their proposals must be sub- written amendment to the request for mitted by that date. All such offerors proposal or request for quotations emshall be informed that any revision re- bodying such changes or modifications. ceived after such date shall be treated as Each offeror whether notified orally or a late proposal in accordance with the in writing shall be required to acknowl“Late Proposals” provisions of the re- edge receipt of the amendment and to quest for proposals. All such offerors shall state that he understands the time limit also be informed that after the specified for submission of revised proposals (see date for the closing of negotiation no § 18–3.501(b) (54)). information other than notice of unac- (36 F.R. 707, Jan. 16, 1971, as amended at ceptability of proposal, if applicable (see 36 F.R. 25114, Dec. 29, 1971) § 18–3.106–3), will be furnished to any

$ 18–3.805–2 Cost-reimbursemeni type offeror until award has been made.

contracts. (d) Except where cost-reimbursement type contracts are to be used (see § 18–

In selecting the contractor for a cost3.805–2), solicitations may provide for

reimbursement type contract, estimated two-step negotiation. After receipt of

costs of contract performance and proinitial unpriced technical proposals, such

posed fees should not be considered as proposals will be evaluated to determine

controlling, since in this type of contract those which are acceptable to the Gov

advance estimates of cost may not proernment or which, after discussion, can

vide valid indicators of final actual costs. be made acceptable. After necessary dis

There is no requirement that costcussions are completed, prices will there

reimbursement type contracts be after be solicited for all acceptable pro

awarded on the basis of either (a) the posals and no award may be made until

lowest proposed cost, (b) the lowest prosuch prices have been received. Solicita

posed fee, or (c) the lowest total estitions may also include a notification of mated cost plus proposed fee. The award the possibility that award may be made

of cost-reimbursement type contracts upon submission of prices without further primarily on the basis of estimated costs discussion of proposals received and may encourage the submission of untherefore the best possible price should

realistically low estimates and increase be submitted initially. Unless such no

the likelihood of cost overruns. The cost tification is included in the solicitation,

estimate is important to determine the discussions shall be conducted as pro

prospective contractor's understanding vided in paragraph (a) of this section.

of the project and ability to organize (e) When, during negotiations, a sub

and perform the contract. The agreed stantial change occurs in the Govern

fee must be within the limits prescribed ment's requirements or a decision is

by law and appropriate to the work to be reached to relax, increase or otherwise

performed. Beyond this, however, the modify the scope of the work or state- primary consideration in determining to ment of requirements, such change or whom the award shall be made is: Which modification shall be made in writing as contractor can perform the contract in a manner most advantageous to the ance with the following general guideGovernment.

lines. § 18–3.806 Cost, profit, and price rela

(1) Adequate price competition. (1) tionships.

Price competition exists if offers are so

licited and (a) at least two responsible (a) Where products are sold in the offerors (6) who can satisfy the puropen market, costs are not necessarily chaser's (e.g., the Government's) requirethe controlling factor in establishing a ments (c) independently contend for a particular seller's price. Similarly, where contract to be awarded to the responsive competition may be ineffective or lacking, and responsible offeror submitting the estimated costs plus estimated profit are lowest evaluated price (d) by submitting not the only pricing criteria. In some priced offers responsive to the expressed cases, the price appropriately may repre- requirements of the solicitation. Whether sent only a part of the seller's cost and there is price competition for a given proinclude no estimate for profit or fee, as curement is a matter of judgment to be in research and development projects based on evaluation of whether each of where the contractor is willing to share the foregoing conditions (a) through (d) part of the costs. In other cases, price of this subparagraph (1) (1) is satisfied. may be controlled by competition as set Generally, in making this judgment, the forth in § 18–3.805-1. The objective of smaller the number of offerors, the the contracting officer shall be to nego- greater the need for close evaluation. tiate fair and reasonable prices in which (ii) If conditions (a) through (d) in due weight is given to all relevant factors, subparagraph (1) (i) are met, price comincluding those in § 18–3.102.

petition may be presumed to be "ade(b) Profit or fee is only one element of quate” unless the purchaser (e.g., the price and represents a much smaller pro- contracting officer) finds that: portion of the total price than do such (a) The solicitation was made under other estimated elements as labor and conditions that unreasonably deny to material. While the public interest re- one or more known and qualified offerors quires that excessive profits be avoided, an opportunity to compete; the contracting officer should not become (b) The low competitor has such & so preoccupied with particular elements determinative advantage over the other of a contractor's estimate of cost and

competitors that he is practically improfit that the most important considera- mune to the stimulus of competition in tion, the total price itself, is distorted or

proposing a price (e.g., a determinative diminished in its significance, Govern- advantage because substantial costs, ment procurement is concerned primarily

such as startup or other nonrecurring with the reasonableness of the price

expenses, have already been absorbed which the Government ultimately pays, in connection with previous sales, thus and only secondarily with the eventual

placing the competitor in a preferential cost and profit to the contractor.

position); or 8 18-3.807 Pricing techniques.

(c) The lowest final price is not rea

sonable and supports such finding by § 18-3.807-1 General.

an enumeration of the facts upon which (a) Policies. Policies set forth in this it is based; provided, that such finding Subpart 18–3.8 may be applied in a is approved by the Procurement Officer variety of ways in the evaluation of or his deputy. offerors' or contractors' proposals and (iii) A price is "based on” adequate in the negotiation of contract prices. The price competition if it results directly following paragraphs describe the prin- from such competition or, if price analycipal price and cost evaluation tech- sis (not cost analysis) shows clearly that niques and the circumstances under the price is reasonable in comparison which each may be used. They are equally with current or recent prices for the applicable to initial and subsequent price same or substantially the same items negotiations.

procured in comparable quantities un(b) Adequate price competition and der contracts awarded as a result of adecatalog or market prices. For the purpose quate price competition (e.g., (a) exerof this $ 18–3.807, the terms "adequate cise of an option in a contract for which price competition” and “established cata- there was adequate price competition log or market prices of commercial items if the option price has been determined sold in substantial quantities to the gen- to be reasonable in accordance with eral public" shall be construed in accord- § 18–1.1504(d) and the option price is

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not greater than the contract price; and necessary, regularly maintained, solely
(b) and item is normally procured com- or principally, for the purpose of pro-
petitively but in a particular situation viding such services,
only one offer is solicited or received, and (d) An item is sold "to the general
the price clearly is reasonable in com- public" if it is sold to other than affill-
parison with recent purchases of com- ates of the seller for end use by other
parable quantities for which there was than the Government. Items sold to af-
adequate price competition.)

filiates of the seller and sales for end
(2) Established catalog or market use by the Government are not sales to
prices of commercial items sold in sub- the general public.
stantial quantities to the general public.

A price may be considered to be “based Application of this exception also re

on" established catalog or market prices quires judgment and analysis on a case

of commercial items sold in substantial by-case basis. In making this judgment,

quantities to the general public if the the various elements of the term must be considered and a price must meet all

item being purchased is sufficiently simithese conditions in order to be considered

lar to such a commercial item to permit for exception. In other words, the price

the difference between the prices of the must be, or be based on: (i) An estab

items to be identified and justified withlished catalog or market price, (ii) of

out resort to cost analysis. The foregoing commercial items, (iii) sold in substan

criteria require positive demonstration tial quantities, (iv) to the general pub

by convincing evidence to support the lic. The following criteria should be ap

application of this exception. It is not plied in determining whether an item

enough that an item be listed in a catafalls within the scope of this exception:

log or price list, or be offered for sale (a) An “established catalog price” is

to the general public, or be intended to a price included in a catalog, price list,

become a commercial item, but tangible schedule, or other form that (1) is reg

and substantial sales activity must be ularly maintained by the manufacturer shown to result from such listing, offeror vendor, (2) is either published or

ing, or intention. The listing of an item otherwise available for inspection by

in the Federal Supply Schedules is an customers, and (3) states prices at which

offer to furnish the item to Government sales are currently, or were last, made

agencies at stipulated price and delivto a significant number of buyers con- ery terms, and does not, of itself, meet stituting the general public. An "estab- the criteria for exception. lished market price” is a current price, established in the usual and ordinary

§ 18–3.807-2 Requirement for price or

cost analysis.
course of trade between buyers and
sellers free to bargain, which can be

(a) General. Some form of price or substantiated from sources independent

cost analysis is required in connection of the manufacturer or vendor.

with every negotiated procurement ac(b) A "commercial item” is an item,

tion. The method and degree of analysis, which term included both supplies and

however, is dependent on the facts surservices, of a class or kind which (1) is

rounding the particular procurement and regularly used for other than Govern

pricing situation. Cost analysis shall be ment purposes, and (2) is sold or traded

performed in accordance with parain the course of conducting normal busi- graph (c) of this section when cost or ness operations.

pricing data is required to be submitted (c) Supplies are "sold in substantial under the conditions described in $18– quantities” when the facts or circum- 3.807–3; however, the extent of the cost stances are sufficient to support a rea- analysis should be that necessary to assonable conclusion that the quantities regularly sold are sufficient to constitute

sure reasonableness of the pricing result,

taking into consideration the amount of a real commercial market for the item. Nominal quantities, such as models, spec

the proposed contract and the cost and imens, samples, and prototype or ex

time needed to accumulate the necessary perimental units, cannot be considered

data for analysis. Price analysis shall as meeting this requirement. Services

be used in all other instances to deterare sold in substantial quantities if they

mine the reasonableness of the proposed are customarily provided by the con

contract price. Price analysis may also tractor, with personnel regularly em

be useful in corroborating the overall ployed, and with equipment, if any is

reasonableness of a proposed price where

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