(c) Reporting requirement. (1) Reports required by section 2304(e), of 10 U.S.C. to be made to the Congress on May 19 and November 19 of each year shall be made by Chief, Procurement Division (Commandant (FSP)), to the Department of Transportation, Office of Installations and Logistics, TAD-60, by May 1 and November 1 of each year of the purchases and contracts made under this § 12-3.211 since the date of last report.

(2) Reports shall contain the following information:

(i) Name of contractor;

(ii) Dollar amount of contract (including amendments); and

(iii) Brief description of the work required to be performed under the contract (when necessary, because of the national security, the word "Classified" may be used in lieu of the description.)

§ 12-3.212 Purchases not to be publicly disclosed.

(a) Authority. Section 2304(a)(12) of 10 U.S.C. shall be cited as the authority for Coast Guard procurement under this section.

(b) Limitations. Determinations and findings for negotiation under this section shall be made by the Commandant.

§ 12-3.213 Technical equipment requiring standardization and interchangeability of parts.

(a) Authority. Section 2304(a)(13) of 10 U.S.C. shall be cited as authority for Coast Guard procurement under this section.

(b) Limitations. Determinations and findings for negotiation under this section shall be made by the Commandant.

§12-3.214 Negotiation after advertising.

(a) Authority. Section 2304(a)(15) of 10 U.S.C. shall be cited as authority for Coast Guard procurement under this section. Determinations and findings for negotiation under this section shall be made by the Commandant.

(b) Limitations. In addition to the limitations imposed in FPR 1-3.214(b), the negotiated price must be less than the lowest rejected bid of any respon

sible bidder, as determined by the Commandant.

§ 12-3.215 Otherwise authorized by law.

(a) Authority. Section 2304(a)(17) of 10 U.S.C. shall be cited as authority for Coast Guard procurement under this section.

(b) Application. The contract shall cite as authority to negotiate, in addition to 10 U.S.C. 2304(a)(17), the applicable statute or United States Code reference.

§ 12-3.250 Technical or specialized supplies requiring substantial initial investment or extended period of preparation for manufacture.

(a) Authority. Pursuant to 10 U.S.C. 2304(a)(14), purchases and contracts may be negotiated if "for technical or special property that he [the Commandant] determines to require a substantial initial investment or an extended period of preparation for manufacture and for which he determines that formal advertising would be likely to result in additional cost to the Government by reason of duplication of investment or would result in duplication of necessary preparation which would unduly delay the procurement of the property."

(b) Application. The authority of this section may be used for the procurement of technical or specialized supplies; for example, aircraft, radar, guided missiles, rockets, and similar items of equipment; major components of any of the foregoing, and any supplies of a technical or specialized nature which may be necessary for the use or operation of any of the foregoing. Such procurement generally involves:

(1) High starting costs which have already been paid for by the Government or by the supplier;

(2) Preliminary engineering and development work that would not be useful to or usable by any other supplier;

(3) Elaborate special tooling already acquired;

(4) Substantial time and effort already expended in developing a prototype or initial production model; and

(5) Important design changes which will continue to be developed by the supplier.

The authority cited in this section will, in general, be used in situations where it is preferable to place a production contract with the supplier who had developed the equipment, and thereby either assure to the Government the benefit of the techniques, tooling, and equipment already acquired by that supplier or avoid undue delay arising from a new supplier's having to acquire such techniques, tooling, and equipment. This exception should not be used to avoid duplication of private investment unless this duplication would be likely to result in additional cost to the Government.

(c) Limitations. The authority of this section requires a determination and findings by the Commandant which states:

(1) The supplies are of a technical or special nature requiring a substantial investment or an extended period of preparation for manufacture; and

(2) Procurement by formal advertising either

(i) Would be likely to result in additional cost to the Government by reason of duplication of investment; or (ii) Would result in duplication of necessary preparation which would unduly delay the procurement.

§ 12-3.251 Purchases in the interest of national defense or industrial mobilization.

(a) Authority. Pursuant to 10 U.S.C. 2304(a)(16), purchases and contracts may be negotiated if "he (the Commandant) determines that (1) it is in the interest of national defense to have a plant, mine, or other facility, or a producer, manufacturer or other supplier, available for furnishing property or services in case of a national emergency; or (2) the interests of industrial mobilization, in the case of such an emergency, or the interests of national defense in maintaining active engineering, research, and development, would otherwise be subserved."

(b) Application. The authority cited in this section may be used to effectuate such plans and programs as may

be evolved under the direction of the Commandant to provide incentives to manufacturers to maintain and keep active, engineering and design staffs and manufacturing facilities available for maximum production. The following are illustrative of circumstances with respect to which this authority may be used:

(1) When procurement by negotiation is necessary to keep vital facilities or suppliers in business or to make them available in the event of national emergency.

(2) When procurement by negotiation with selected suppliers is necessary in order to train them in the furnishing of critical supplies to prevent the loss of their ability and employee skills, or to maintain active engineering, research, and development work.

(3) When procurement by negotiation is necessary to maintain properly balanced sources of supply for meeting the requirements of procurement programs in the interest of industrial mobilization. (When the quanity required is substantially larger than the quantity which must be awarded in order to meet the objectives of this authority, that portion not required to meet such objectives will ordinarily be procured by formal advertising or by negotiation under another appropriate negotiation exception.)

(c) Limitations. The authority cited in this section shall not be used unless and until the Commandant has determined that

(1) It is in the interest of national defense to have a particular plant, mine, or other facility or a particular producer, manufacturer, or other supplier available for furnishing supplies or services in case of national emergency and negotiation is necessary to that end; or

(2) The interests of industrial mobilization in the case of a national emergency would be subserved by negotiation with a particular supplier; or

(3) The interest of national defense in maintaining active engineering, research and development would be subserved by negotiation with a particular supplier.

(d) Reporting requirements. Reports required by section 2304(e) of 10 U.S.C. to be made to the Congress on

May 19 and November 19 of each year will be made by the Chief, Procurement Division (Commandant (FSP)), by May 1 and November 1 of each year to the Department of Transportation, Director of Installations and Logistics, TAD-60, of the purchases and contracts made under 10 U.S.C. 2304(a)(16) since the date of last reporting.

(1) Reports shall contain the following information:

(i) Name of contractor.

(ii) Dollar amount of contract (including amendments).

(iii) Brief description of the work required to be performed under the contract. (When necessary, because of the national security, the word "classified" may be used in lieu of description.) (2) Negative reports are not required.

§ 12-3.252 Negotiation of

construction contracts. See DOTPR 12-18.301-50.

Subpart 12-3.3-Determinations,
Findings and Authorities

§ 12-3.301 General.

The determinations and findings required to be made under FPR Part 1-3 by the Coast Guard shall cite the appropriate section of chapter 137 of title 10 of the United States Code. Determinations and findings of all other Administrations shall cite the appropriate section of title 41 of the United States Code.

§ 12-3.305 Format for determinations and findings.

§ 12-3.305-50 Format for D&F for authority to negotiate a contract.

DEPARTMENT OF TRANSPORTATION

(Name of administration)

DETERMINATION AND FINDINGS

Authority to negotiate a contract under (insert authority)

FINDINGS

1. The proposed contract provides for the procurement of (describe here the nature and scope of the work to be performed, including estimated cost).

2. (In this and any subsequent paragraphs, set forth the facts and circum

exceed 5 percent of the estimated cost of the contract, exclusive of fee, unless approved in writing by the Director, Office of Installations and Logistics, OST.

§ 12-3.408 Letter Contract.

(a) Request for approval. The use of letter contracts must be approved in advance on a case-by-case basis by the head of the procuring activity, and variations from the limitations set forth in paragraph(b) of this section must be approved by the head of the procuring activity. The request for approval must state: The necessity and advantage to the Government in issuing the letter contract; why no other type of contract is suitable; name and address of the proposed contractor; duration of proposed letter contract in number of days from date of execution; amount of letter contract and estimated amount of definitive contract showing source and citation of funds with statement that funds are available; the estimated delivery date or dates and the proposed type of definitive contract.

(b) Limitations. In addition to the limitations prescribed in FPR 13.408(c), the following apply to, and shall be expressly stated in, each letter contract:

(1) The period of effectiveness for the letter contract, including a specific date when definitization will be completed. This date shall not be later than the first to occur of the following:

(i) The expiration of 120 days from the date of the letter contract; or

(ii) The date by which 40 percent of the performance of the work will be completed.

(2) The maximum liability of the Government stated in the letter contract shall not exceed 50 percent of the total estimated cost of the procurement.

Amendments to letter contracts to accomplish new procurement are subject to the same limitations as new letter contracts.

(c) Content. In addition to the requirements in FPR 1-3.408(d), the letter contract shall also:

(1) Incorporate, by reference or otherwise, all clauses required by statute, FPR, DOTPR, and optional standard and special clauses determined to be applicable.

(2) State that the definitive contract shall contain all provisions under paragraph (c)(1) of this section.

(3) Contain an overall price ceiling or a maximum ceiling on fee, where a quoted price has been received and it is considered appropriate to limit the Government's ultimate liability.

§ 12-3.450 Letters of intent.

Letters of intent shall not be used.

Subpart 12-3.6-Small Purchases

§ 12-3.603 Competition.

§ 12-3.603-1 Solicitation.

(a) Purchases not in excess of $250. Small purchases not exceeding $250 may be accomplished without securing competitive quotations whenever there exists a basis for determining that the price to be paid is reasonable. However, such purchases shall be distributed equitably among qualified suppliers.

(b) Purchases in excess of $250 but not in excess of $2,500. Where the estimated dollar amount of the procurement exceeds $250, the solicitation shall normally be made of at least three sources of supply. Where there are more than three names on the list of vendors for an item, the mailing list for a particular solicitation should include the vendor who received the award on the previous solicitation, if he performed satisfactorily and two other vendors (on a rotated basis) from the list of vendors. While there may be instances where quotations should be solicited from additional sources, soliciting quotations from at least three suppliers ordinarily is sufficient. Care should be taken to prevent administrative costs from being disproportionate to the amount of the purchase. The number of quotations obtained and considered or the number of sources of supply utilized when making small purchases will depend to a large extent on what knowledge the purchasing officer has of the current

availability and price of the desired item in commercial markets.

§ 12-3.603-2 Data to support small purchases.

Small purchase transactions over $250 with commercial sources shall be documented to show (a) the basis for determining that the price is reasonable, (b) names of firms contacted and prices quoted, and (c) the reason why competition was not obtained when only one source of supply was solicited. DOT Form F 4230.1 titled "Small Purchase Summary" may be used to satisfy the foregoing documentation requirements.

§ 12-3.650 Purchase orders.

§ 12-3.650-1 "Minimum billing" quotations.

Occasionally an item can be obtained only from a supplier who quotes a minimum order price or a minimum order quantity, which either unreasonably

exceeds the agency's needs or results in an unreasonable price for the quantity required. If practicable before placing the order the requiring activity should be informed in such cases of all facts regarding the quotation and consideration should be given to increasing the quantity, consolidation of orders, or other appropriate action. The file shall be documented to show the final action taken in such cases.

§ 12-3.650-2 Unpriced purchase orders.

(a) General. An unpriced purchase order is an order for supplies or services the price of which is not firmly established at the time of issuance of the order. Such orders shall contain a "Not To Exceed" provision. The contracting officer shall assure that suppliers receiving unpriced purchase orders are carefully selected.

(b) Conditions for use. An unpriced purchase order may be used only when all of the following conditions are present:

(1) The purchase will not exceed $2,500, and

(2) It is impractical to obtain pricing in advance of issuance of the purchase order, and

(3) The procurement is for (i) repairs to equipment requiring disassembly to determine the nature and extent of such repairs, (ii) sole source material for which cost cannot be readily established, or (iii) supplies or services where prices are known to be competitive but exact prices are not known.

(c) Procedures. A realistic "Not To Exceed" limitation shall be placed on the order which shall be stated in the notice to supplier provision in the blank space provided. This amount shall be obligated subject to adjustment when the firm price is established. Each unpriced purchase order shall contain the following provision:

Notice to supplier: This is a firm order if the total price does not exceed the amount of $———. If the amount to be invoiced will exceed the amount stated below, or if you cannot furnish the work described in exact accordance with the description and delivery schedule set forth herein, Withhold Performance and immediately notify the Contracting Officer giving your quotation or proposed substitution or changes. In no event will the total amount paid under this order exceed the amount stated unless and until the order has been amended in writing and signed by the Contracting Officer.

The contracting officer or his designated representative shall certify that the invoiced price is fair and reasonable and process the invoice for payment. Suitable local records and controls of outstanding unpriced purchase orders shall be maintained to assure regular followup with suppliers until the order is firmly priced. These records should include any information available to support the fairness and reasonableness of the proposed monetary limitation. If the firm price exceeds the "not to exceed" price and the contracting officer determines, nevertheless, that such purchase be made from the supplier, the order shall be amended accordingly: Provided, That in no event may the amount of the order exceed $2,500. If the firm price does not exceed the "not to exceed" price, the order should not be amended for the sole purpose of changing the estimated price to a firm price.