(a) Solicitations shall include appropriate option provisions and clauses when resulting contracts will provide for the exercise of options.

(b) Solicitations containing option provisions shall state the basis of evaluation, either exclusive or inclusive of the option.

(c) Solicitations shall include an Evaluation of Options provisions substantially as in § 1-1.1508-1(a) or (b) of this subpart, if it is anticipated that the Government may exercise the option at time of award.

(d) Solicitations normally should allow offerors to submit option prices without limitation. The Government shall not impose a price limitation if it intends to consider the option in the evaluation for award.

(e) Solicitations that allow the offer of options at unit prices which differ from the unit prices for the basic requirement shall state that offerors may offer varying prices for options, depending on the quantities actually ordered and the date(s) when ordered.

(f) Solicitations shall specify the price at which the Government will evaluate the option (highest option price offered or option price for specified requirements).

(g) Solicitations may, in unsual circumstances, require that options be offered at prices no higher than those for the initial requirement; e.g., when: (1) the option cannot be evaluated, or (2) future competition for the option is impracticable.

(h) Solicitations that require the offering of an option at prices no higher than those for the initial requirement shall:

(1) Specify that the Government will accept an offer containing an option price higher than the base price only if the acceptance does not prejudice any other offeror; and

(2) Limit option quantities for additional supplies to not more than 50 percent of the initial quantity of the same contract line item. In unusual circumstances, an authorized person at a level above the contracting officer may approve a greater percentage of quantity.

§ 1-1.1504 Contracts.

(a) Contracts shall specify limits on the purchase of additional supplies or services, or the overall duration of the term of the contract, including any extension.

(b) Contracts shall state an adequate but minimum notification period within which the option may be exercised:

(1) It shall provide lead time to assure continuous production.

(2) It may extend beyond the contract completion date for service contracts. (This is necessary for situations when exercise of the option would result in the obligation of funds that are not available in the fiscal year in which the contract would otherwise be completed.)

(c) Contracts shall limit the total term of the contract including option periods to 5 years for services and a 5year requirement for supplies.

(d) Contracts may express options for increased quantities of supplies or services, in terms of: (1) percentage of specific line items, (2) increase in specific line items, or (3) additional numbered line items identified as the option.

(e) Contracts may express extensions of the term of the contract as an amended completion date or as additional time for performance; e.g., days, weeks, or months.

(a) Contracting officers may consider the option in the evaluation for award of a firm fixed-price contract or a fixed-price contract with economic price adjustment. If the contracting officer determines to do so, an authorized person at a level above the contracting officer shall determine, before the solicitation is issued, that:

(1) There is a known requirement which exceeds the basic quantity to be awarded but: (i) that quantity is a learning or testing requirement, or (ii) due to the unavailability of funds, the agency cannot exercise the option at the time of award; and

(2) Competition for the option quantity is impracticable once the initial contract is awarded. (This determination shall reflect factors such as substantial startup or phase in costs, superior technical ability resulting from performance of the initial contract, and long preproduction leadtime for a new producer.)

(b) Contracting officers may consider the option in the evaluation of award for fixed-price incentive contracts if:

(1) The determination in paragraph (a) of this section was made before issuance of the solicitation; and

(2) The solicitation: (i) specifies an incentive arrangement and (ii) specifies that the agency will base the ceiling price and target profit for the basic and option quantities on stated percentages of the offeror's target cost. The solicitation shall state the percentages which apply to all proposals and shall contain the provision substantially as in § 1-1.1508-1(c) of this subpart.

§ 1-1.1507 Exercise of options.

(a) In the exercise of option provisions, contracting officers shall provide the written notice to the contractor within the time period specified in the contract.

(b) When the contract provides for economic price adjustment and the contractor requests a revision of the price, the contracting officer shall determine the effect of the adjustment

on prices under the option before the option is exercised.

(c) Contracting officers may exercise an option only after determining that: (1) Funds are available;

(2) The requirement covered by the option fulfills an existing Government need; and

(3) The exercise of the option is the most advantageous method of fulfilling the Government's need, price and factors in paragraphs (d) and (e) of this section considered.

(d) Contracting officers, after considering price and factors other than price, shall make their determinations on the basis of one of the following:

(1) A new solicitation fails to produce a better price or a more advantageous offer than that offered by the option. If it is anticipated that the best price available is the option price or that this is the more advantageous offer, the contracting officer should not use this method of testing the market.

(2) An informal analysis of prices and an examination of the market indicates the option price is better than prices available in the market or that the option is the more advantageous offer.

(3) The time between the award of the contract containing the option and the exercise of the option is so short that it indicates the option price is the lowest price obtainable or the more advantageous offer. The contracting officer shall take into consideration such factors as market stability and comparison of the time since award with the usual duration of contracts for such supplies or services.

(e) The determination of other factors under paragraph (c)(3) of this section should take into account the Government's need for continuity of operations and potential costs of disrupting operations.

(f) Contracting officers, when exercising an option, shall determine that it was exercised in accordance with the terms of the option and with the requirements of this section. (The written determination shall be included in the contract file).

(g) The contract modification or other written document which notifies the contractor of the exercise of the

80-130 0-81--9

option shall cite the option clause as authority. The negotiation authorities under 41 U.S.C. 252(c) or 10 U.S.C. 2304(a) are not applicable and shall not be cited.

§ 1-1.1508 Examples of evaluation of option solicitation provisions and option clauses.

§ 1-1.1508-1 Evaluation of option solicitation provisions.

(a) As required by § 1-1.1503(c) of this subpart, insert a provision substantially similar to the following:

EVALUATION OF OPTIONS

The Government will evaluate the total price for the basic requirement together with any option(s) exercised at the time of award.

(End of provision)

(b) As required by § 1-1.1503(c) of this subpart, insert a provision substantially similar to the following:

EVALUATION OF OPTIONS

(a) The Government will evaluate offers for award purposes by adding the total price for all options to the total price for the basic requirement. Evaluation of options will not obligate the Government to exercise the option(s).

(b) The Government may reject an offer as nonresponsive if it is materially unbalanced as to prices for the basic requirement and the option(s). An offer is unbalanced when it is based on prices significantly less than cost for some work and prices are significantly overstated for other work.

(End of provision)

(c) In accordance with § 1-1.1506(b) of this subpart, insert a provision substantially as follows:

EVALUATION OF OPTIONS

(a) The Government will evaluate offers for award puposes by adding the total price for all options to the total price for the basic requirement. The offeror's target cost for the basic requirement and the option(s) is the price of the basic requirement and the option(s) for evaluation purposes. Evaluation of options will not obligate the Government to exercise the option(s).

(b) Any offer may be rejected as nonresponsive if it is materially unbalanced as to prices for the basic requirement and the option(s). An offer is unbalanced when it is based on prices significantly less than cost

for some work and prices which are significantly overstated for other work.

(End of provision)

§ 1-1.1508-2 Option clauses.

(a) A clause substantially as follows may be used to express the option as a percentage of the basic contract quantity or as an additional quantity of a specific line item.

OPTION FOR INCREASED QUANTITY

The Government may increase the quantity of supplies called for in the Schedule at the unit price specified. The Contracting Officer may exercise the option by written notice to the Contractor within the period specified in the Schedule. Delivery of added items shall continue at the same rate that like items are called for under the contract, unless the parties otherwise agree.

(End of clause)

(b) A clause substantially as follows may be used to express the option as a separately priced line item.

OPTION FOR INCREASED QUANTITY

The Government may require the delivery of the numbered line item in the amount and at the price identified in the Schedule as an option. The Contracting Officer may exercise the option by written notice to the Contractor within the period specified in the Schedule. Delivery of added items shall continue at the same rate that like items are called for under the contract, unless the parties otherwise agree.

(End of clause)

(c) A clause substantially as follows may be used to express the option as an extension of the services described in the schedule.

OPTION TO EXTEND SERVICES

The Government may require continued performance of any services within the limits and at the rates stated in the Schedule. The Contracting Officer may exercise the option by written notice to the Contractor within the period specified in the Schedule.

(End of clause)

(d) A clause substantially as follows may be used to express the option as an extension of the services described in the schedule, to extend the option, and to establish the limits on the

number of years the option may continue.

OPTION TO EXTEND THE TERM OF THE

CONTRACT

(a) The Government may extend the term of this contract by written notice to the Contractor within the time specified in the Schedule.

(b) The Government shall give the Contractor a preliminary written notice of its intent to extend at least 60 days before the contract expires. The preliminary notice does not commit the Government to an extension.

(c) If the Government exercises the option, the extended contract includes this option provision.

(d) The total duration of this contract, including the exercise of any options under this clause, shall not exceed (months)(years).

(a) This Subpart 1-1.16, developed cooperatively with the Department of Justice, prescribes procedures for submitting reports to the Attorney General in accordance with Executive Order No. 10936 of April 24, 1961 (3 CFR, 1959-1963 Comp., pp. 466-468), when identical bids are received in connection with the procurement of personal property or nonpersonal services (including construction).

(b) The purpose of the Executive order is to discourage identical bidding; to reduce the costs of the Government; to aid in the enforcement of the antitrust laws and the maintenance of a competitive economy; and to provide the Attorney General such information as may tend to establish the presence of a conspiracy in restraint of trade and which may warrant further investigation with a view to preferring civil or criminal charges.

(c) The reports required by this subpart are in addition to and are not to be considered as satisfying the requirements of Subpart 1-1.9 for reporting cases of possible antitrust law violations to the Attorney General.

§ 1-1.1602 Definitions.

As used in this Subpart 1-1.16, the following terms shall have the meanings set forth:

(a) "Identical bids" means two or more bids for the same line item which:

(1) Are identical on their face (disregarding the application of evaluation factors such as discount and transportation cost) as to unit price or total line item amount; or

(2) Are found, in the normal process of evaluating bids for award, to be identical as to unit price or total line item amount. (Line item evaluation computations beyond those normally made to determine the low acceptable bidder are not required.)

(b) "Line item" means a procurement item (as defined in § 1-1.220) specified in an invitation for bids which, under the terms of the invitation, is susceptible to a separate contract award.

(c) "Bid value" means the dollar amount computed by multiplying the line item quantity specified in the invitation for bids by the lowest unit price bid for the line item. Where a line item quantity is not specified in the invitation, as in the case of requirements type or indefinite quantity type contracts, the bid value of the line item is the dollar amount computed by multiplying the estimated line item quantity by the lowest unit price bid for the line item.

§ 1-1.1603 Reporting requirements.

§ 1-1.1603-1 Cases to be reported.

(a) A report shall be submitted by executive agencies to the Attorney General as provided in this § 1-1.1603 whenever: (1) the total bid value of all line items covered by an invitation for bids issued under formal advertising procedures, or under small business restricted advertising procedures (see § 1-1.701-9), exceeds $10,000, and (2) identical bids have been received on at least one line item having a bid value of more than $10,000. However, a report will not be submitted where bids are received only from foreign sources in response to invitations for bids requiring delivery and perform

ance outside the United States, its possessions, and the Commonwealth of Puerto Rico.

(b) Reports are required on reportable identical bids regardless of whether an award is made on the line item, the invitation is canceled, or some other disposition is made after bid opening. Line items on which identical bids are received are not reportable if the bid value of the line item is $10,000 or less. Likewise, line items on which no identical bids are received are not reportable.

[40 FR 44138, Sept. 25, 1975]

§ 1-1.1603-2 Preparation of reports

(a) Identical bid reports shall be made on U.S. Department of Justice Form DJ-1500, Identical Bid Report for Procurement (for illustration of the

form, see § 1-16.903-DJ1500). Form DJ-1500 is available in pads of 100 at General Services Administration supply depots (Federal Stock No. 7540-823-7870). Instructions for filling out the form are printed on the cover of each pad of forms.

(b) All bids on each line item on which reportable identical bids are received shall be shown on the report whether or not the identical bids were the low bids.

§ 1-1.1603-3 Submission of reports.

(a) Identical bid reports shall be sent to the Attorney General within 20 days following the disposition of all bids received in response to the invitation for bids, whether by the awarding of one or more contracts or other

action.

(b) Two completed copies of each identical bid report, together with one copy of the invitation for bids and one copy of the completed abstract of bids, shall be sent to the Attorney General, Ref. AT-IBR, Washington, D.C. 20530. When the number of line items on an invitation exceeds 100, a copy of the abstract of bids need not be furnished. In such cases, however, the identical bid report shall be annotated to indicate the number of line items and the number of bidders on the invitation.

(c) A copy of each identical bid report shall be retained by the reporting activity.

§ 1-1.1604 Supplemental requests by Attorney General.

The Attorney General may, from time to time, request such supplemental information with respect to identical bid reports submitted to him as he may deem necessary for effective enforcement of antitrust laws.

§ 1-1.1605 Information to be obtained from bidders.

§ 1-1.1605-1 Invitation for bids provision.

A provision substantially as follows shall be inserted in all invitations for bids for the procurement of personal property or nonpersonal services (including construction) under either formal advertising procedures or small business restricted advertising procedures where it is estimated that the total bid value of all line items covered by the invitation may exceed $10,000:

PARENT COMPANY AND EMPLOYER
IDENTIFICATION NUMBER

Each bidder shall furnish the following information by filling in the appropriate blocks:

(a) Is the bidder owned or controlled by a parent company as described below? Yes [] No [ ]

(For the purpose of this bid, a parent company is defined as one which either owns or controls the activities and basic business policies of the bidder. To own another company means the parent company must own at least a majority (more than 50 percent) of the voting rights in that company. To control another company, such ownership is not required; if another company is able to formulate, determine, or veto basic business policy decisions of the bidder, such other company is considered the parent company of the bidder. This control may be exercised through the use of dominant minority voting rights, use of proxy voting, contractual arrangements, or otherwise.)

(b) If the answer to (a) above is "Yes," bidder shall insert in the space below the name and main office address of the parent company. (Name)-(Address)

(c) Bidder shall insert in the applicable space below, if he has no parent company, his own employer's identification number E.I. No.) (Federal social security number used on employer's quarterly Federal tax return, U.S. Treasury Department Form 941), or, if he has a parent company, the E.I. No. of his parent company.

Bidder's E.I. No.

Parent Company's E.I. No.