contract cannot be justified on either the need to obligate annual funds (or other funds on whose use there is a deadline) prior to the expiration of the time in which the funds can be legally obligated or the need to contract where the parties have been unable to resolve substantive disagreements. The policy of DOL is not to issue letter contracts. Exceptions to this policy can only be authorized by the head of the agency. Such policy exceptions will be permitted only in those cases where the parties are in agreement on nearly all matters of a substantive nature and are willing to document such agreement in the letter contract. In addition to those requirements in § 1-3.408(d) of this title, such substantive matters include:

(1) The location of where the work is to be performed;

(2) The parties' agreement that the letter contract will be superseded by a definitive contract within 3 months of the effective date of the letter contract or completion of 25 percent of the work, whichever occurs first;

(3) A statement of the work to be performed by the contractor;

(4) A performance or delivery schedule;

(5) The ceiling price of the contract to be definitized;

(6) An agreement as to the required clauses to be contained in the definitized contract;

(7) Limitation on contractor for failure of the parties to execute a definitized contract within the time specified in the contract, by a clause limiting reimbursement to the contractor of the lesser of either

the Department's maximum liability under the letter contract or the costs incurred under the contract terms through the date specified for definitizing the contract.

(b) Limitations: Requests for authority to award a letter contract shall be addressed to the head of the agency. The request shall recite the circumstances of the particular procurement, explain its urgency, and why no other type of contract is suitable. The request shall also state to what extent there was agreement on the factors listed in paragraph (a) of this section and whether that agreement will be reflected in the terms of the letter contract. While every effort shall be made to make the letter contract as specific as circumstances permit, specific agreement on all of the seven factors specifically listed in para

graph (a) of this section is not a prerequisite for use of a letter contract. However, approval to enter a letter contract will be withheld unless there is agreement on a substantial number of the factors in paragraph (a) of this section, with the minimum number of these factors varying on a case-by-case basis. In the event that the parties have not agreed on a particular factor, then the parties shall attempt to agree on a reasonable range or narrow series of alternatives for that factor. Based on adequate justification the head of the agency, upon request, may during the period covered by the letter contract authorize in writing an extension of the life of the letter contract or an increase in the Department's liability. The maximum liability of the Department stated in the letter contract shall not exceed an amount necessary to provide for the completion of that portion of the estimated cost of the work required consistent with the policy of the letter contract being superseded by a definitive contract within 3 months or completion of 25 percent of the work, whichever occurs first. In instances where a contractor is required to make extensive initial outlays or commitments for material and equipment at the contract's inception. the Department's maximum liability may be increased up to 50 percent of the total estimated cost of the procurement consistent with § 1-3.408 of this title. In the unusual case and where adequate justification is presented, this 50 percent limitation may be exceeded at the contract's inception, with prior written approval of the head of the agency. Request for such authority, if applicable, shall be included in the initial request for approval of the letter contract. § 29-3.409

tracts.

Indefinite delivery type con

To qualify as an indefinite delivery contract, the instrument must contain language clearly associated with that general type. Moreover, such a contract shall also contain language distinguishing between the three different kinds of commitment by the Department to procure under indefinite delivery contracts, namely, that the quantity it is agreed to procure is: A definite quantity within a stated period (§ 1-3.409 (a) of this title); all requirements for the stated period (§ 1-3.409(b) of this title); or an unknown amount within a prescribed known range for a stated period (§13.409 (c) of this title). Failure to describe

the quantities the Department is obligated to purchase at least as specifically as is provided above for one of the three type of contracts illustrated in § 1-3.409 of this title, could result in a basic ordering agreement that may not be enforceable because of a lack of mutuality of consideration.

(a) Definite quantity contract—(1) Description. This is sometimes referred to as a "term-type" contract and is ideally suited for the procurement of items for which there exists recurrent needs. Without this type of contract the Department would be required to issue a series of contracts, resoliciting bids on each occasion when the predictable need arose. Subject to authority within a particular appropriation or in the case of special authority (e.g., the authority to subscribe to periodicals for periods in excess of 1 fiscal year while obligating annual funds as provided in 31 U.S.C. 530a) such term contracts may not be extended beyond a fiscal year.

(2) Application. When all of the quantities specified in a definite-quantity term contract have been delivered, the contract shall be considered complete and additional orders shall not be placed under the contract on the basis of the contractor's prior low bid for identical items. Instead, each such additional quantity shall be considered on a caseby-case basis to determine whether to advertise it or to otherwise solicit competition from available suppliers. When used, this contract obligates funds for the full quantity to be delivered over the contract period upon award and not at the time of placing individual orders designating time and place of delivery or perform

ance.

(b) Requirements contract-(1) Description. This is another form of term contract wherein, for the full duration of the specific contract period all the needs for a particular item or services are placed with a contractor by a simple order. Each order incorporates the terms and conditions of the basic requirements contract under which the order is placed. Procuring activities using this contract form shall stipulate a maximum quantity beyond which the contractor is not obligated to deliver the items that may be ordered under the contract. In addition, where possible, such contracts shall obligate the Department by guarantee or otherwise, to order some stated minimum amount of the item in question, thus converting it to an indefinite quantity con

tract as defined in § 1-3.409(c) of this title. This will thereby protect the Department in the event of drastic changes in the demand or supply of the item or in the event of a technological breakthrough. In the absence of an obligation on the Department to procure a minimum quantity, funds are only obligated when a particular order is placed. The order therefore becomes the obligating document and must contain appropriation symbols and dollar amounts.

(c) Indefinite quantity contract—(1) Application. When used, this contract can only obligate funds covering the low (1.e., the minimum or guaranteed) end of the range of quantities the Department can purchase. Where there is no obligation on the Department to procure a minimum quantity and where payment is to be made from a central revolving fund (e.g., "Working Capital Fund") the basic contract award shall state that the appropriation data cited is not for the purpose of indicating the obligation, but rather that the money reserved for the purpose of paying invoices under the contract is being identified.

Subpart 29-3.6-Small Purchases § 29-3.602 Policy.

It is essential that authority to make small purchases be at the lowest practical operating level.

§ 29-3.602-50 Purchasing authority.

(a) Definition. "Purchasing authority" is an authority by which the designated purchasing officer is authorized to issue purchase orders or requisitions which do not involve the solicitation and acceptance of bids or signing of agreements or contracts.

(b) Delegations. See §§ 29–1.401 (b) (4) and 29-1.451 of this chapter. § 29-3.603 Competition. § 29-3.603-1 Solicitation.

When other than the lowest responsive quotation from a responsible supplier is used as the basis for the purchase, documentation of the reason(s) for rejecting any lower quotation and the name of the individual responsible for making the determination to reject such quotation shall be made a part of the purchase file.

§ 29-3.604 Imprest funds (petty cash) method.

§ 29-3.604-3 Agency responsibilities.

The Deputy Assistant Secretary for Administration and Management is responsible for the review and action prescribed by § 1-3.604-3 of this title and for requesting exceptions and additions in accordance with § 1-3.604-5 of this title. § 29-3.604-4 Use of imprest funds.

Purchases made from imprest funds shall follow the policy of purchasing satisfactory merchandise at fair prices without favoritism to any vendor. The item to be purchased, its price, and the quantity involved generally govern the action to be taken. If a special item costing only a few dollars is required, a minimum amount of time and expense should be devoted to consummating the transaction. However, where feasible, purchases should be made from firms offering prices most advantageous to the Department. A vendor may be reimbursed by a payment from imprest funds for the cost of the supplies and the parcel post or other delivery charges which he has already prepaid. Payments to common carriers for line haul transportation are not authorized. § 29-3.604-6

ment.

Procurement and pay

Purchases through use of imprest funds shall be accomplished as follows:

(a) Administrations and Offices shall submit a requisition, DOL Form D/L 1-1

to the Department's imprest fund cashier showing necessary information such as estimated cost, unit of issue, quantity, description, delivery requirements and appropriation chargeable.

(b) The imprest fund cashier prepares D/L Form 1-110 showing appropriate information.

(c) If the method of purchase is cash upon delivery of merchandise, the vendor's representative shall sign D/L Form 1-110 indicating receipt of cash and will be furnished a copy of the form. One copy shall be forwarded to the requisitioning Administration or Office and the original and two copies retained by the imprest fund cashier.

(d) If the method of purchase requires pick up of the merchandise, Form D/L 1-110 is to be signed by the DOL representative authorized to make the actual purchase upon his receipt of the cash. One copy is retained by the imprest fund cashier. The original and three copies are submitted to the vendor who signs the four copies upon supplying the merchandise and receiving the cash. The vendor may retain one copy. The DOL representative shall return the original and two copies to the imprest fund cashler as well as cash register receipt, sales slip, or invoice, which ever shall be furnished by the vendor. Any excess funds are returned to cashier at this time. The requisitioning Administration or Office shall be forwarded one copy of Form D/L 1-110 and the imprest fund cashier retains the original and two copies.

(e) A purchase for which cash is advanced must be confirmed and the receipt returned not later than the fifth working day following the date of the advance, otherwise the cashier shall take immediate action to recover the cash advanced.

(f) The imprest fund cashier may reimburse Department employees for amounts paid by them for approved purchases. The employee being reimbursed shall furnish the cashier with a vendor's receipt, or its equivalent as described in paragraph (d) of this section, except as otherwise provided. In addition to the vendor's receipt, the appropriation, allotment, and other identifying symbols shall be furnished to the imprest fund cashier on a Form D/L 1-1. Procedures outlined in paragraph (d) of this section will apply except that the vendor's signature on the D/L Form 1-110 will not be necessary.

(g) The cost of cash purchases must be reasonable and controlled by ordinary shopping procedures involving price comparison (competition) and the purchaser shall take advantage of any discounts obtainable.

§ 29-3.604-50

Designation of cashiers.

(a) The Deputy Assistant Secretary for Administration and Management, designates employees as cashiers or alternate cashiers. Upon receipt of the designation and notice of assignment to a position covered by a position schedule fidelity bond, employee is authorized to perform the duties of cashier or alternate.

(b) An alternate cashier functions in the capacity of a cashier during the absence of the cashier and/or where the volume of work requires the cashier to have alternates, in which case funds will be advanced on the following basis: The cashier and the alternate cashier will count the funds advanced in each others presence and shall immediately verify it with each other. A signed receipt for all funds advanced or returned shall be exchanged between the alternate cashier and cashier.

§ 29-3.604-51

Instructions for cashiers.

Prescribed procedures for operating an imprest fund are contained in the Treasury Department "Manual of Procedures and Instructions for Cashiers operating under Executive Order No. 6166." This manual is furnished by the Treasury Department for use by each cashier upon his designation as such.

§ 29-3.604-52 Accountability of imprest funds.

(a) Custody and safeguarding of funds. Cashiers shall at all times be able to account for the full amount of the fund, by way of cash on hand, uncashed Government checks, sales slips, invoices, unpaid reimbursement vouchers, or interim receipts for cash. Employees designated to serve as cashiers will act as agents of the disbursing officers who advance them the necessary funds. Since cashiers are personally accountable and responsible for the custody of and payments made from the fund, employees upon whom authority is conferred shall be fully informed of their responsibility. They are required to utilize, to the fullest extent available, means of safeguarding cash advanced to them, and be supplied with suitable facilities for that

purpose including locked storage space. Imprest funds shall neither be deposited in any bank, regardless of in whose name or account it is established nor commingled with personal or other funds. Each imprest fund shall be maintained separately.

(b) Regular transactions. The cashier shall verify the signature of each DOL representative receiving cash with the signature on the DOL representative's DOL Identification (ID) Card. The ID Card number shall be recorded alongside the DOL representative's signature on the cashier's cash transaction record.

(c) Doubtful transactions. When the propriety of any disbursement is doubtful, the cashier may require written acceptance of responsibility from the official authorizing the disbursement. Such written acceptance of responsibility provides the cashier recourse to the official if the disbursement is later disallowed. The cashier may also request an advance written opinion with respect to a doubtful transaction.

(d) Review of transactions. Cashiers, including alternates shall periodically test vouchers submitted for payment by verifying the approving officer signature against a specimen signature maintained on file. In addition, the cashier, on selected vouchers, shall contact the approving officer and make a direct verification of the propriety of the vouchers and the amount claimed.

If the vendor reports non-receipt, loss or other inability to locate an original purchase order and requests another copy, the purchasing officer may issue to the vendor a duplicate copy as his basis of performance. This second issue should be conspicuously marked "Duplicate Copy." To avoid the possibility of a duplicate shipment, a letter of transmittal or a notation on the purchase order should read somewhat as follows:

This is a duplicate copy of the lost original purchase order, furnished in accordance with your request of The Govern

(Date)

The use of blanket purchase arrangements creates a vendor-agency relationship akin to an open account which has as its objectives the simplification of the ordering and billing in the purchase of small requirements of readily available supplies or services of the same general category. It essentially differs from other small purchase techniques in that purchase orders are not written for each purchase, billing for many items are submitted at preagreed intervals of not less than a month, and many purchases are processed with a single payment. Blanket purchase arrangements may be terminated by either party upon the delivery of written notice to the other. § 29-3.606-3 Establishment of account. Once the requirements of § 1-3.606-3 of this title have been met, the arrangement should be formalized by the issue of a purchase order or other written memorandum.

Government purchase orders which they honor even though the signer may not be known to them. This they do somewhat at their own risk. To protect the Department against criticism and the vendor against loss due to unauthorized purchases, any arrangement with the vendor for making purchases without the use of a formal purchase order must be carefully worked out. While no standard documentation of the arrangement is required, it is desirable to have a record of the vendor having been informed. (1) Who is authorized to make individual purchases;

(2) How purchases will be placed, i.e., by phone, by certain designated persons ordering and picking up supplies from the vendor, etc.;

(3) What the vendor must do to assure that only authorized purchases are made to obtain payment, i.e., prepare an itemized sales slip showing order number, if one is given, and whether it must be signed by an authorized person; send invoice with shipment; give invoice to person picking up supplies; payment to be made once a month, or quarterly, etc.;

(4) What discounts will be given (particularly on repair parts and labor); how time discounts will be handled;

(5) Limitations by class of item, time, or dollar amount.

(b) Because of the possible need for terminating the arrangement, term contracts on prescribed contract forms should be used where contractual agreement is desired and the parties are to be bound.

(c) Each blanket purchase arrangement shall be numbered or otherwise identified in an appropriate manner and shall include reference to the authority of "41 U.S.C. 252(c) (3)."

Subpart 29-3.7-Negotiated
Overhead Rates
Procedure.

§ 29-3.705

(a) If the contracting officer has not received an advisory audit report on a proposed contractor, he shall request the cognizant audit office to perform or otherwise obtain an advisory audit if the proposed contract is estimated to be $100,000 or more, and the proposed contract includes reimbursement for overhead costs. The contracting officer shall establish provisional or fixed overhead rates not to exceed the rates as set forth in the advisory audit report. The contracting officer shall also insure that