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(2) Any firm currently engaged on AEC contracts in the same field, the total of which involves construction costs of less than $10 million; or

(3) Any architect-engineer firm after it has completed title II work, exclusive of checking shop drawings, even though it still has title III inspection services to perform.

(c) Normally, only those firms which are compatible with the size and complexity of the job requirements should be invited; that is, for a small relatively simple job, firms whose resources and qualifications are far in excess of the job requirements should not be solicited, and where size and simplicity of the job permit, invitees should be limited to the geographic area of the job.

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(b) Procurement activities of AEC cost-type contractors are governed by the requirements of applicable contract provisions. Federal Procurement Regulations generally are not directly applicable to AEC cost-type contractors. There are, however, requirements of certain Federal laws, executive orders, and regulations, including Federal Procurement Regulations, which pertain to procurements by cost-type contractors. These requirements, together with implementing AEC Procurement Regulations, and certain additional AECPR's which apply to contractor procurement, are listed in § 9-59.004. In addition, AEC has established certain procurement policies for its cost-type contractors. These are found in § 9-59.003.

§ 9-59.002 Responsibility of contracting officers.

(a) Contracting officers are responsible for assuring that procurement by cost-type contractors conforms to contract requirements and provides effective and timely support to agency programs. In carrying out this responsibility, contracting officers: (1) Assure that AEC cost-type contracts include those provisions required by law or regulations, and such other provisions as are appropriate to implement AEC policies and requirements; (2) review contractor procurement systems (including policies) as required by this section and in accordance with the provisions of their contracts; (3) review individual procurement actions of certain types or above stated dollar levels established in accordance with Subpart 9-51.2; and (4) make periodic appraisals of the contractor's performance of the procurement function in accordance with criteria established by the Director, Division of Contracts.

(b) Contracting officers shall require cost-type contractors to submit written descriptions of procurement systems and methods used or proposed to be used in the contract work when:

(1) The contract is for the construction, operation, or maintenance of an AEC facility (including research and development facilities) which is segregated from the contractor's regular business;

or

(2) The contract provides for substantial procurement services incident to the construction of AEC facilities; or

(3) The contractor has set up a separate supply function under AEC contracts; or

(4) Expected procurement is considered sufficiently significant by the contracting officer to warrant such action.

(c) In reviewing cost-type contractor descriptions of procurement systems and methods, contracting officers shall assure that such statements are not inconsistent with this part.

§ 9-59.003 Policies for cost-type contractor procurement.

The following policies are established for cost-type contractor procurement. Within these policies it is expected that procurement systems and methods will vary according to the types and kinds of procurement to be made, the needs of the particular programs, and the experience, methods, and practices of the particular contractor. In the development of procurement systems and methods, contractors should be encouraged to make maximum utilization of their experience and initiative to the extent consistent with the requirements of this part.

(a) Procurement systems and methods utilized for AEC contract work should be well defined and consistently applied and should accord with good business practices for the type and amount of procurement involved.

(b) Procurement should be effected in the manner most advantageous to the Government-price, quality, and other factors considered. In order to assure this objective and the award of business on an impartial basis, procurement (from sources other than Government sources) shall be effected by methods calculated to assure such full and free competition as is consistent with securing the required supplies and services. Generally, procurement actions are carried out through one of the following methods:

(1) Competitive bids or quotations and award. The competitive bid or quotation and award method of procurement, which normally assures the greatest degree of full and free competition, generally involves the following basic steps and objectives:

(i) Preparation of invitations for bids or requests for quotations setting forth the contract terms and conditions and describing the requirement clearly, accurately, and completely, but avoiding unnecessarily restrictive specifications or requirements.

(ii) Publicizing such invitations or requests by distribution to a reasonable number of prospective bidders and by such other means as may be appropriate, in sufficient time to permit the preparation and submission of bids or quotations before the time set for opening or receipt of bids or quotations.

(iii) Handling bids or quotations in a manner which provides fair and equal treatment to all prospective contractors.

(iv) Making an award to the prospective contractor whose bid or quotation, conforming to the invitation or request, will be most advantageous to the Government, price and other factors considered. However, if upon evaluation of written bids or quotations it is determined to be in the best interests of the Government to enter into negotiations with prospective contractors before award, such negotiations should be conducted in accordance with (2) below with respect to according fair and equal treatment to prospective contractors.

(2) Negotiation. Procurement by this method normally should be conducted by competitive negotiations through the solicitation and evaluation of proposals, from an adequate number of qualified sources to assure effective competition, consistent with securing the required supplies or services. Negotiated procurement involves advance planning, description of procurement and delivery requirements, and consideration of the effect these requirements may have on prices and competition. Requests for proposals should describe the property or services required as completely as possible; allow sufficient time for the submission of proposals; and establish a closing date for receipt of proposals. Proposals should be handled in a manner which provides fair and equal treatment to all prospective offerors. Selection of offerors for negotiation and award shall be consistent with FPR 1-3.805 and § 9-3.805

(c) Price or cost analyses shall be performed in accordance with the requirements of FPR 1-3.807 and § 9-3.807, Pricing Techniques and FPR 1-3.809 and § 9-3.809, Contract audit as a pricing aid. Profits and fees paid shall be consistent with limitations established in § 9-3.80851.

(d) Supplies and services normally should be procured through the use of suitable specifications, standards, and/or purchase descriptions which clearly and

accurately describe the supplies or services to be procured. If such specifications, standards, and/or purchase descriptions are not available and it is impractical or uneconomical to prepare them, "brand name or equal" descriptions may be used, provided the particular physical, functional, or other characteristics of the brand name item which are deemed essential are clearly identified and described.

(e) A fair proportion of supplies and services shall be procured from small business concerns.

(f) The need for access authorizations to classified information shall not be a limiting factor in obtaining competition except where time will not permit securing additional access authorizations.

(g) Awards shall be made only to responsible prospective contractors. Awards shall not be made to firms or individuals on the AEC List of Disqualified Bidders and Ineligible Contractors.

(h) Selection of the type of contract to be used should be based on consideration of the nature of the supplies and services required and other circumstances surrounding the procurement. The costplus-percentage-of-cost system of contracting shall not be used in any event.

(1) Small purchases (less than $2,500) should be made by methods designed to (1) obtain fair and reasonable prices, (2) reduce administrative costs of making such purchases to the minimum required to establish the propriety of placing the order at the price paid with the supplier concerned, and (3) improve opportunities for small business concerns within the local trade area to obtain a fair proportion of purchases.

(j) (1) First-tier subcontracts and purchase orders for supplies and services for the AEC work normally should include provisions for resolving disputes to the same extent and in the same manner as in similar AEC direct contracts.

(2) The disputes provision referred to in paragraph (j) (1) of this section may 'be applied to lower-tier subcontracts and purchase orders provided all subcontracts and purchase orders of a higher tier are cost type.

(3) A Disputes clause which can be used to carry out the policy in paragraph (j) (1) and (2) of this section is set forth in § 9-7.5004-3(b).

[34 FR 15236, Sept. 27, 1969, as amended at 38 FR 1276, Jan. 11, 1973]

§ 9-59.004 AECPR-FPR provisions pertaining to cost-type contractor procurement.

The AECPR-FPR provisions referenced below pertain to cost-type contractor procurements and are listed in this part to facilitate administration. Some of these provisions are implementations of statutory or other requirements and AEC-wide policies, which provide little or no basis for the exercise of judgment. However, to the extent such provisions permit or provide for the exercise of judgment, contracting officers should be guided by good business practice and the best interests of the Government.

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[37 FR 17832, Sept. 1, 1972]

§ 9-59.005 Procedures for handling mistakes under cost-type contractor procurement.

(a) Managers of Field Offices may authorize the withdrawal of bids or the correction of mistakes in bids submitted to, and contracts awarded by, cost-type contractors in accordance with this section.

(1) Contractors may permit the withdrawal of bids upon a showing of clear and convincing evidence of the alleged mistake.

(2) Contractors may correct obvious clerical errors in bids disclosed prior to award, regardless of amount.

(3) Except as provided in paragraph (4) of this section, contractors may correct other mistakes in bids and contracts as provided in this section.

(4) Managers' of Field Offices approval shall be required for:

(i) Any corrections of mistakes which would cause the bid or contract price (a) to exceed that of the second low bid, or (b) to displace one or more lower acceptable bids;

(ii) Any corrections of mistakes in bids, other than obvious clerical errors, in procurement actions which require AEC approval;

(iii) Any correction of mistakes in contracts disclosed after award which exceed $1,000; and

(iv) Any rescission of a contract.

(b) Corrections of mistakes are authorized under paragraph (a) (3) and (4) of this section when:

(1) There is clear and convincing evidence to support both the assertion of a mistake and the amount thereof;

(2) The mistake was made in good faith;

(3) The mistake is of such a nature that correction thereof is justified by considerations of fair dealing; and

(4) The mistake is of the type that would be corrected under the contractor's private procurement practices, or with respect to mistakes in bids in excess of $1,000, or which otherwise require approval of Managers of Field Offices, a determination is made that relief would be granted under applicable Federal law.

(c) The authority of this section may not be used to make a bid responsive.

(d) Where rescission is an appropriate remedy, the Manager may authorize a modification in a specific amount, or approve revisions in other terms and conditions, in lieu of rescission.

(e) Where a contract is executed or work is continued after assertion of a mistake, the alleged mistake may be considered on its merits as of the time it was asserted, provided the contract was executed or the work continued pursuant to an understanding that such action did not constitute a waiver of any rights.

(f) Corrections of mistakes or other remedial actions taken pursuant to this section shall be documented by a written statement setting forth the circumstances and basis for such action and shall be made a part of the procurement file.

(g) When correction of mistakes or other relief cannot be granted under the criteria of this section, Managers of Field Offices may deny the request or forward the file to the Director, Division of Contracts, with their recommendation for action.

§ 9-59.006 Procurement from contractor-controlled sources.

(a) When & cost-type contractor maintains a separate procurement function for performance of work in AEC facilities on AEC sites, procurement from. contractor-controlled sources (any division, subsidiary, or affiliate of the contractor under a common control) may be treated in the same manner as procurement from other sources provided:

(1) The procurement is made under the same terms and conditions as would apply if the purchase was from a third party;

(2) The procurement is made in accordance with policies and procedures particularly designed to permit fair and open competition which have been approved by the contracting officer; and

(3) The procurement is made in a manner which results in legally enforceable terms and conditions.

When any of the conditions above cannot be met, procurements involving contractor-controlled sources should be made directly by, or with the prior approval of, AEC.

(b) Guidance with respect to reimbursement for procurements or transfers from contractor-controlled sources by cost-type contractors other than those identified in paragraph (a) of this section is set forth in § 9-15.5010-19. In these cases adequate provisions should be made to give the Government the benefit of customary warranties and protec

tion against patent infringement applicable under the circumstances.

(c) Subcontracts for performance of contract work itself (as distinguished from procurement of supplies and services needed in connection with the performance of work) require AEC authorization which may involve an adjustment of the contractor's fixed fee (see, for example, § 9-7.5006-56, Note (a)). If the cost-type contractor seeks authorization to have some part of the contract work performed by a contractor-controlled source, and the contractor's performance of that work was a factor in the negotiated fixed fee, AEC approval would normally require (1) that the contractor-controlled source perform such work on a cost basis without profit or (2) an equitable downward adjustment to the contractor's (i.e., the contracting component's) fixed fee.

20-128-74-37

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