51224 Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations

DEPARTMENT OF DEFENSE

GENERAL SERVICES

ADMINISTRATION

NATIONAL AERONAUTICS AND

SPACE ADMINISTRATION

48 CFR Parts 1, 2, 3, 4, 5, 6, 7, 9, 11,

12, 13, 14, 15, 16, 17, 19, 24, 25, 27, 28,

31, 32, 33, 34, 35, 36, 42, 43, 44, 45, 49,

50, 52, and 53

[FAC 97–02; FAR Case 95–029]

RIN 9000–AH21

Federal Acquisition Regulation; Part 15

Rewrite; Contracting by Negotiation

and Competitive Range Determination

AGENCIES: Department of Defense (DOD),

General Services Administration (GSA),

and National Aeronautics and Space

Administration (NASA).

ACTION: Final rule.

SUMMARY: The Civilian Agency

Acquisition Council and the Defense

Acquisition Regulations Council have

agreed to issue Federal Acquisition

Circular 97–02, a final rule which

revises Part 15 of the Federal

Acquisition Regulation (FAR) and

makes conforming changes to other

parts of the FAR. This regulatory action

was subject to Office of Management

and Budget review under Executive

Order 12866, dated September 30, 1993.

This is not a major rule under 5 U.S.C.

804.

DATES: Effective Date: October 10, 1997.

Applicability Date: The policies,

provisions, and clauses of this final rule

are effective for all solicitations issued

on or after October 10, 1997. However,

agencies may delay implementation of

this final rule until January 1, 1998, at

which time it becomes mandatory for all

solicitations issued on or after that date.

Agencies using the new policies,

provisions, and clauses before January

1, 1998, shall ensure that the cover page

of the solicitation for each acquisition

subject to this rule, and issued before

January 1, 1998, contains a notice that

this rule applies to that acquisition. Any

solicitation issued before January 1,

1998, that does not contain such a

solicitation notice or the new provisions

and clauses is automatically conducted

in accordance with the FAR excluding

changes made by this final rule.

FOR FURTHER INFORMATION CONTACT: The

FAR Secretariat, Room 4035, GS

Building, Washington, DC 20405 (202)

501–4755 for information pertaining to

status or publication schedules; For

clarification of content, Ralph DeStefano

at (202) 501–1758 or Melissa Rider at

(703) 602–0131; For contract pricing

issues Jerry Olson at (202) 501–3221 or

Melissa Rider at (703) 602–0131. Please

cite FAC 97–02, FAR case 95–029.

SUPPLEMENTARY INFORMATION:

A. Background

On January 29, 1996, the FAR Council

tasked an ad hoc interagency committee

to rewrite FAR Part 15, Contracting by

Negotiation. The rewrite originally was

to be accomplished in two phases.

Phase I, consisting of the rewrite of FAR

15.000, 15.1, 15.2, 15.3, 15.4, 15.6, and

15.10, covering acquisition techniques

and source selection, was published for

public comment in the Federal Register

at 61 FR 48380 on September 12, 1996.

In the interest of increasing outreach to

small entities, two public meetings were

held to discuss the proposed rule: in

Washington, DC, on November 8, 1996,

and in Kansas City, MO, on November

18, 1996. The public comment period

closed on November 26, 1996. The

Government received 1541 comments

from 100 respondents and considered

all comments in drafting revisions to the

rule. Due to the significant changes

made as a result of public comments,

the FAR Council decided to publish a

revised proposed rule, that included

previously unpublished, Phase II,

proposed changes covering Subparts

15.5, 15.7, 15.8, and 15.9, and that

incorporated changes made as a result of

public comments submitted in response

to FAR Case 96–303, Competitive Range

Determinations. The revised proposed

rule was published in the Federal

Register on May 14, 1997 (62 FR 26639).

The public comment period closed on

July 14, 1997. The Government received

841 comments from 80 respondents and

considered all the comments in drafting

the final rule.

Case Summary

This final rule modifies concepts and

processes in the current FAR Part 15,

introduces new policies, and

incorporates changes in pricing and

unsolicited proposal policy. In addition,

the sequence in which the information

is presented has been revised to

facilitate use of the regulation. The final

rule does not alter the full and open

competition provisions of FAR Part 6.

The goals of this rewrite are to infuse

innovative techniques into the source

selection process, simplify the process,

and facilitate the acquisition of best

value. The rewrite emphasizes the need

for contracting officers to use effective

and efficient acquisition methods, and

eliminates regulations that impose

unnecessary burdens on industry and

on Government contracting officers.

The following were considered in

drafting this final rule: information

received in connection with public

meetings held on January 25, 1996,

November 8, 1996, and November 18,

1996; public comments received in

response to three advance notices of

proposed rulemaking (60 FR 63023,

December 8, 1995; 60 FR 65360,

December 19, 1995; and 60 FR 67113,

December 28, 1995); public comments

received in response to publication of

the Phase I proposed rule in the Federal

Register (61 FR 48380, September 12,

1996); public comments received in

response to publication of the revised

proposed rule in the Federal Register

(62 FR 26639, May 14, 1997); public

comments received in response to

publication of the Competitive Range

Determinations proposed rule in the

Federal Register (61 FR 40116, July 31,

1996); inputs received over the

Acquisition Reform Network (an

Internet forum); inputs received from

members of Congress and Congressional

staff, Government agencies, the Defense

Acquisition Regulations Council, the

Civilian Agency Acquisition Council,

and the Office of Federal Procurement

Policy (OFPP); inputs received in

response to other notices of the rewrite

in various print media and conferences;

and inputs received from Government

fora such as the Front-Line

Professional’s Forum and the Federal

Procurement Executive Association.

Summary of Changes

This final rule reengineers the

processes used to contract by

negotiation, with the intent of reducing

the resources necessary for source

selection and reducing time to contract

award. The goals of the FAR Part 15

Rewrite are to ensure that the

Government, when contracting by

negotiation, receives the best value,

while ensuring the fair treatment of

offerors. The final rule reengineers the

acquisition process in the current FAR

and incorporates changes to the

proposed rule by:

• Supporting more open exchanges

between the Government and industry,

allowing industry to better understand

the requirement and the Government to

better understand industry proposals;

• Reestablishing the ‘‘late is late’’ rule

for receipt of proposals, responses to

requests for information, and

modifications;

• Emphasizing that no offeror,

otherwise eligible to submit a proposal

in response to a Government

solicitation, will be excluded from the

competitive range without its proposal

being initially reviewed and evaluated

solely against all the evaluation factors
Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations 51225

and significant subfactors in the

solicitation;

• Reiterating that all proposals

received will be evaluated based upon

the criteria in the solicitation;

• Reducing the bid and proposal costs

for industry by providing early feedback

as to whether a proposal is truly

competitive;

• Eliminating mandatory forms

currently used as cover sheets for

submitting cost or pricing data (SF

1411) and information other than cost or

pricing data (SF 1448);

• Simplifying the exception to

obtaining cost or pricing data for

modifications to contracts for

commercial items;

• Revising guidance pertaining to

field pricing to reflect the need for

greater flexibility and teamwork in

today’s acquisition environment;

• Simplifying guidance pertaining to

unbalanced pricing to reflect its use as

a proposal analysis technique designed

to assess risk and protect the

Government’s economic interest;

• Eliminating the requirement for a

separate determination and findings

supporting cost-plus-fixed-fee contracts;

• Realigning fee limitations with

statute, and permitting the contracting

officer’s signature on the price

negotiation memorandum or other

documentation of the negotiated price to

serve as a determination that fee limits

have not been exceeded;

• Increasing the scope of discussions;

• Requiring that adverse past

performance to which an offeror has not

had an opportunity to respond be

brought to the offeror’s attention before

it can be the determining factor for

exclusion from the competitive range;

• Requiring that all adverse past

performance information be brought to

the offeror’s attention during

discussions, if the offeror is placed in

the competitive range;

• Changing the standard for

admission into the competitive range (to

all proposals most highly rated) and

implementing Section 4103 of the

Clinger-Cohen Act of 1996 (Pub. L. 104–

106); and

• Streamlining the post-competitive

range process by enhancing the ability

of the parties to communicate and

document understandings reached

during discussions.

B. Regulatory Flexibility Act

A Final Regulatory Flexibility

Analysis (FRFA) has been performed

and will be provided to the Chief

Counsel for Advocacy of the Small

Business Administration. Because of the

broad range of acquisitions impacted by

this rule and the extensive public

response to both of the proposed rules,

the Final Regulatory Flexibility Analysis

is published in its entirety:

Final Regulatory Flexibility Analysis

[FAR Case 95–029, FAR Part 15 Rewrite]

This final regulatory flexibility analysis has

been prepared consistent with the criteria of

5 U.S.C. 604.

1. Succinct statement of the need for, and

the objectives of, the rule.

Historically, the executive branch has

undertaken a continuous improvement

approach to the acquisition process,

particularly since the end of World War II.

In 1947, the National Security Act

established an acquisition process for the

Department of Defense. Since that time, at

least six major executive branch commissions

have separately examined the problems of

effectively managing Federal acquisition. In

1972, the Commission on Government

Procurement recommended that a

consolidated Federal Acquisition Regulation

(FAR) be established. Later, the Packard

Commission called for a simpler and clearer

acquisition framework. In addition, the FAR

System, composed of the Defense Acquisition

Regulations Council, the Civilian Agency

Acquisition Council, and the Federal

Acquisition Regulatory Council, has been

active in the maintenance and continuous

improvement of the FAR for many years now.

Congress has also participated

substantially in the reform of Federal

acquisition practices. Section 800 of Public

Law 101–510 (the National Defense

Authorization Act for Fiscal Year 1991)

directed the Department of Defense to

establish the ‘‘DoD Advisory Panel on

Streamlining and Codifying Acquisition

Laws.’’ The panel recommended changes to

acquisition statutes in order to improve the

efficiency and effectiveness of the acquisition

process, while keeping in mind the need to

provide a fair and open acquisition system.

The panel’s recommendations, published in

January 1993, formed the basis of the reforms

contained in the Federal Acquisition

Streamlining Act of 1994 and the ClingerCohen Act of 1996.

The Part 15 rewrite is a normal product of

the continuous improvement process

employed for maintenance of the FAR. It is

worth noting that in the past few years

several other parts of the FAR have also been

rewritten, including Part 13, Simplified

Acquisition Procedures; Part 37, Service

Contracting; and Part 45, Government

Property. The Part 15 rewrite, like the rewrite

of these other FAR parts, conforms with the

general reform philosophy espoused by the

Clinton-Gore Administration. Vice President

Gore, in the Report of the National

Performance Review: Creating a Government

that Works Better & Costs Less recognized the

need for deregulation in the acquisition

process. The report, published in 1993,

emphasized that acquisition regulations

should be rewritten to provide for

empowerment and flexibility. According to

the report, the acquisition regulations should:

shift from rigid rules to guiding principles;

promote decision making at the lowest

possible level; end unnecessary regulatory

requirements; foster competitiveness and

commercial practices; and shift to a new

emphasis on choosing ‘‘best value’’ products.

We decided to revise Part 15 for several

reasons. In 1995, DoD conducted a survey of

the defense industry, military departments,

and defense agencies to ascertain which parts

of the FAR were most in need of revision.

The responses indicated a general consensus

that Part 15 was one of the parts that would

most benefit from such an effort. Secondly,

within the Government, the preponderance

of contracting expenditures are accomplished

using Part 15 procedures. Finally, the results

of a 1991 FAR Improvement Study

conducted by the General Services

Administration indicated that Subparts 15.6,

Source Selection, and 15.8, Price Negotiation,

were the most difficult parts of the FAR to

use.

On January 29, 1996, the FAR Council

tasked an ad hoc interagency committee to

rewrite FAR Part 15, Contracting by

Negotiation. The rewrite was to be

accomplished in two phases. Phase I,

consisting of the rewrite of FAR Subparts

15.000, 15.1, 5.2, 15.3, 15.4, 15.6, and 15.10

covering acquisition techniques and source

selection, was published for public comment

in the Federal Register at 61 FR 48380 on

September 12, 1996. In the interest of

increasing outreach to small entities, two

public meetings were held to discuss the

proposed rule: in Washington, DC, on

November 8, 1996, and in Kansas City, MO,

on November 18, 996. In addition, the

opportunity for an evening public meeting

was publicized in the September 12, 1996,

Federal Register notice to accommodate

schedule constraints that may prevent small

entities from being represented at the public

meetings. The public comment period closed

on November 26, 1996. We received 1541

comments from 100 respondents. Due to the

significant changes made as a result of

analyzing and resolving public comments,

we decided to publish a second proposed

rule. All of the comments received were

considered in drafting the second proposed

rule. The rule was expanded to include the

Phase II proposed changes, covering Subparts

15.5, 15.7, 15.8, and 15.9. The revised rule

also subsumed FAR Case 96–303,

Competitive Range Determinations, and

addressed the related public comments. The

second proposed rule was published in the

Federal Register on May 14, 1997 (62 FR

26639). We received 841 comments from 80

respondents and considered all the

comments in drafting the final rule.

The goal of the rewrite is to infuse

innovative techniques into the source

selection process, simplify the acquisition

process, incorporate changes in pricing and

unsolicited proposal policy, and facilitate the

acquisition of best value products and

services. The rewrite emphasizes the use of

effective and efficient acquisition methods

and eliminates unnecessary burdens imposed

on industry and Government. Elimination of

burdens and creation of a simplified,

efficient, and impartial acquisition process

benefits all participants in Government

contracting, especially small businesses. In

addition, the rule revises the sequence in

which Part 15 information is presented to

facilitate use of the regulation.
51226 Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations

2. Summary of the significant issues raised

by the public comments in response to the

initial regulatory flexibility analysis, a

summary of the assessment of the agency of

such issues, and a statement of any changes

made in the proposed rule as a result of such

comments.

Several significant issues were raised by

the public comments. We have addressed

these issues as follows:

• Competitive range determinations. Some

respondents expressed concern that the shift

in competitive range policy to encourage

retaining only those offerors rated most

highly rather than all those with a reasonable

chance of award may inhibit awards to small

entities. This revision is consistent with the

philosophy of Section 4103 of the ClingerCohen Act of 1996. The competitive range

guidance in the final rule indicates that

contracting officers shall establish a

competitive range comprised of only those

proposals most highly rated. In contrast, the

current FAR advises contracting officers

‘‘when there is doubt as to whether a

proposal is in the competitive range, the

proposal should be included.’’ We

considered retaining the existing FAR

standard for inclusion in the competitive

range, but ultimately rejected it because there

are readily discernible benefits from

including only the most highly rated offers in

the competitive range. First, those included

will know that they have a good chance of

winning the competition—making it in their

best interests to compete aggressively.

Second, those eliminated from the range are

spared the cost of pursuing an award they

have little or no chance of winning. Retaining

marginal offers in the range imposes

additional, and largely futile, effort and cost

on both the Government and industry. We

also note that comments received from

Government agencies indicate that award is

nearly always made to one of the three most

highly rated offerors in the competitive

range. Therefore, including an offeror that is

not most highly rated in the competitive

range would not likely impact the final

award decision. This final rule ensures that

offerors with little probability of success, are

advised early on that their competitive

position does not merit additional expense in

a largely futile attempt to secure the contract.

This knowledge will benefit both large and

small entities, but will be especially

beneficial to small entities that have

constrained budgets. These entities will be

able to conserve scarce bid and proposal

funds and employ their resources on more

productive business opportunities. In

addition, the new standard has the derivative

benefit of encouraging offerors to submit

better, more robust initial proposals in

recognition of the fact that only the most

highly rated proposals will be included in

the competitive range.

• Limiting the competitive range in the

interest of efficiency. Some respondents

expressed concern that allowing the

contracting officer to limit the competitive

range in the interest of efficiency would

provide a level of discretion to contracting

officers that could lead to abuses. The

comments expressed a concern that offerors

might be excluded from the competitive

range for arbitrary reasons unrelated to the

actual procurement. In addition, one small

business submitted a public comment in

support of the efficient competitive range.

This language implements the

requirements of Section 4103 of the ClingerCohen Act of 1996 to permit contracting

officers, in certain circumstances, to reduce

the number of proposals in the competitive

range to the ‘‘greatest number that will

permit an efficient competition among the

offerors rated most highly.’’ Under this final

rule, source selection officials will continue

to establish evaluation factors and identify

them in the solicitation, including any

preferences for small entities. The

contracting officer may further reduce the

number of proposals that would otherwise be

in the competitive range to the greatest

number that will permit an efficient

competition among the most highly rated

offerors only if offerors have been advised of

this possibility in the solicitation, and only

after evaluating all proposals received in

accordance with the criteria specified in the

solicitation.

• Expanded exchanges throughout the

acquisition process. Some respondents

expressed concerns that the increased

exchanges between the Government and

industry throughout the acquisition process

increased the risk of unfair practices. The

final rule encourages earlier and more

meaningful exchanges of information

between the Government and potential

contractors to achieve a better understanding

of the Government’s requirements and the

offerors’ proposals. This rule contains limits

on exchanges that preclude favoring one

offeror over another, revealing offerors’

technical solutions, revealing prices without

the offerors’ permission, and knowingly

furnishing source selection information. In

addition, the guidance in the final rule has

been revised to alert contracting officers of

the safeguards contained at 3.104,

Procurement Integrity, and 24.2, Freedom of

Information Act.

• Use of neutral past performance

evaluations. Some respondents expressed

concerns that neutral past performance

evaluations are not adequately defined, and

that the rule does not contain sufficient

implementing guidance. One respondent

suggested that, to avoid abuses of neutral

rating, offerors granted such ratings should

be required to submit a record of their lack

of opportunity to acquire a record of relevant

past performance. The second proposed rule

contained a definition of neutral rating, and

asked respondents to provide suggestions for

a better definition. We received only one

such suggestion, and, upon analysis, we

found that the suggestion did not actually

provide a definition of neutral rating but,

rather, provided a way to limit the

application of neutral ratings. Instead, the

final rule includes language based on 41

U.S.C. 405(j)(2) providing offerors, without a

previous performance history, a rating that

neither rewards nor penalizes the offeror. We

selected this alternative to allow the facts of

the instant acquisition to be used in

determining what rating scheme would

satisfy requirements of the statute.

• Ability of offerors to address adverse

past performance information before it can be

used in a source selection. Respondents,

especially the small business community,

expressed concerns that offerors might be

excluded from a competition on the basis of

incorrect past performance information that

they have not had the opportunity to address.

In response to this concern, the final rule

provides that, when conducting

communications prior to establishing the

competitive range, offerors, including small

entities, shall be granted the opportunity to

explain situations that contributed to an

adverse past performance rating to which

they have not had a previous opportunity to

respond, before such ratings can be the

determining factor for exclusion from the

competitive range.

• Impact of oral presentations on small

entities. Respondents expressed concerns

that the use of oral presentations may present

barriers to the participation of small entities

in Government procurement because they

may be costly and require skills that small

entities may not easily attain. The final rule

requires contracting officers to consider,

among other factors, the impact on small

businesses, including cost, before using oral

presentations. In fact, based on a

recommendation from the Small Business

Administration, the final rule also contains

guidance on selecting alternatives to inperson presentations (e.g., teleconferencing).

Generally, oral presentations are expected to

be less costly to prepare than formal written

proposals. Experience accumulated by

agencies that have already used oral

presentations indicates that use of this

technique has either improved participation

by small entities, or has had no adverse

impact on their level of participation.

• The Nuclear Regulatory Commission

(NRC) and the Departments of the Army,

Energy, HHS, and Treasury submitted

comments describing their experiences in

using oral presentations. The Department of

Energy (DoE) indicated that small businesses

that had not previously participated in DoE

procurements, competed on procurements

using oral presentations. Ft. Sam Houston in

San Antonio indicated that by using oral

presentations, the lead time on a recent

procurement for outpatient clinics was five

months, compared to a lead-time of 13–15

months on previous procurements that did

not use oral presentations. They further

indicated that proposals that previously

required ‘‘at least two trips with a two-wheel

dolly’’ were reduced to one envelope as a

result of using oral presentations. The

Centers for Disease Control (CDC) stated that

in using oral presentations they have always

been able to award the contract ahead of their

180-day lead-time target and have been able

to save the Government thousands of dollars.

The CDC has used oral presentations almost

exclusively on small business set-asides, and

comments from the offerors have been very

positive. The NRC reports that in no case did

a large business receive an award for work

that was previously performed by a small

business.

• Estimate of the number of small entities

affected by the rule. Several respondents

representing small entities expressed

concerns regarding the estimate in the initial

regulatory flexibility analysis of small
Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations 51227

entities impacted by the proposed rule. We

have researched the statistics available in the

Federal Procurement Data System, and have

revised our estimate. Our discussion of the

revised estimate is included in paragraph 3.

• Whether or not this is a major rule,

subject to OMB review and analysis under

Executive Order 12866. Respondents

expressed concern as to whether this rule

should be deemed a major rule. The

Administrator, Office of Information and

Regulatory Affairs, Office of Management and

Budget, has determined that this is a

significant rule, under Executive Order

12866, subject to OMB review and analysis.

However, this is not a major rule, as defined

in the Small Business Regulatory

Enforcement Fairness Act (SBREFA), 5 U.S.C.

804, because it does not meet the criteria

identified at 5 U.S.C. 804(2). In accordance

with the requirements of 5 U.S.C. 801 (as

added by Subtitle E of Public Law 104–121),

a copy of the rule will be provided to

Congress and GAO.

3. Description of and an estimate of the

number of small entities to which the rule

will apply or an explanation of why no such

estimate is available.

This rule will apply to all entities, large

and small, (including educational and

nonprofit), that offer supplies or services to

the Government in acquisitions using the

Part 15 procedures. As a result of comments

received in response to the proposed rule and

the initial regulatory flexibility analyses, we

have revised our estimate of the number of

small entities that will be impacted by the

rule.

• Upon further review and analysis, we

have identified an error in the supporting

data for the initial regulatory flexibility

analyses. The figure of 602,000 was described

as ‘‘Estimated number of entities impacted by

rule’’ while in fact that figure is actually the

product of the estimated number of actions

impacted by the rule multiplied by the

average number of participants in each

action. This figure is not the estimated

number of entities impacted by the rule, as

it does not take into account the average

number of actions in which each entity

participated, and therefore is significantly

larger than the actual number of entities

impacted by the rule. In the next step in the

supporting data calculation, this amount was

properly divided by 25, the estimated

number of actions in which each entity

participates. The result, 24,080, was properly

identified as the ‘‘Estimated total number of

entities affected by the rule.’’

• Based on Federal Procurement Data

System (FPDS) statistics for fiscal year 1996,

we estimate that 17,717 small businesses

received awards valued at $100,000 or more.

This statistic includes small businesses

receiving awards in response to Part 15

procedures as well as sealed bids. This

statistic does not include small entities other

than small businesses, e.g., small nonprofit

organizations and small local governments.

Current data collection categories do not

provide this information. Information

quantifying the number of unsuccessful

offerors that are small entities is not collected

at this time. Therefore, although we

recognize that the number of small entities

impacted by this rule is greater than the

number of small entities receiving awards

under Part 15 procedures, we do not have

data that quantifies this difference.

• One respondent to the proposed rule

indicated that approximately 28,000 to

30,000 small businesses participate in DoD

acquisitions, and estimated that 200,000 to

500,000 participate Governmentwide. We

cannot confirm either estimate, however,

available data seems to contradict the

Governmentwide estimate. According to the

1994 Report on Small Business and

Competition, submitted to the President by

the Administrator and the Chief Counsel for

Advocacy of the Small Business

Administration for inclusion in The State of

Small Business: A Report of the President

1994, estimates of the number of individual

companies competing for Federal contract

awards vary between 42,000 and 50,000

(Atch 1). This includes large as well as small

entities. The 1995 Report (the most recent

version available at the time this final

regulatory flexibility analysis was prepared)

does not update this estimate. However, the

1995 Report does indicate that the overall

number of small businesses in the U.S.

economy has increased.

• FPDS statistics for fiscal year 1996 (the

most recent FPDS statistics available at the

time this analysis was prepared) indicate that

there were 17,717 small businesses that

received government contract awards over

$100,000 (Atch 2). FPDS advises that, of the

approximately 17,717 Governmentwide small

business awardees, 10,696 received contract

awards from DoD (Atch 3). Application of the

resulting ratio to the upper limit of the

respondent’s estimated range (28,000 to

30,000 small businesses participating in DoD

procurement) provides an estimate of about

49,692 small businesses participating in

Governmentwide acquisitions. This estimate

is probably higher than the actual number of

such small businesses, as it is close to the

estimates referenced in the President’s report

cited above that include both large and small

entities.

• Based on this analysis, we estimate that

the number of small entities affected by this

rule is no more than 49,692, or

approximately 50,000.

4. Description of the projected reporting,

recordkeeping and other compliance

requirements of the rule, including an

estimate of the classes of small entities that

will be subject to the requirement and the

type of professional skills necessary for

preparation of the report or record.

This rule will impose no new reporting or

recordkeeping requirements on large or small

entities. The rule removes the requirement

for the use of certain Government forms and

formats in responding to requests for

proposal. Offerors may extend the proposal

acceptance period as part of proposal

revisions instead of having to submit a

separate, formal confirmation of the

extension. Offerors may identify their

authorized negotiators without using a

Government-required format. The Standard

Form 1417, Presolicitation Notice and

Response, is no longer required for

negotiated acquisitions using Part 15

procedures.

5. Description of the steps the agency has

taken to minimize the significant economic

impact on small entities consistent with the

stated objectives of applicable statutes,

including a statement of the factual, policy,

and legal reasons for selecting the alternative

adopted in the final rule and why each one

of the other significant alternatives to the rule

considered by the agency which affect the

impact on small entities was rejected.

In developing the policies and procedures

contained in the final rule, we considered the

available alternative approaches, and the

impacts, adverse and beneficial, of each of

the alternatives to large offerors, small

offerors, and the Government. Some of the

options were bounded by statutory

requirements and a preference for an

impartial, efficient, and accessible

acquisition system in which appropriate

information is readily available to all

participants. The final rule does not provide

for flexible compliance by small entities

because source selection officials will

continue to establish evaluation factors as

provided in FAR 15.3, Source selection,

including any applicable preferences for

small entities.

There are five significant areas in which

we were able to minimize the impact on

small entities:

• Competitive range policy. We considered

alternatives in the following areas in order to

minimize the impact on small entities—

(a) Total bid and proposal costs borne by

offerors, including small entities. As an

alternative to the language contained in the

final rule, we considered whether the

potential payoff of receiving an award

outweighed the additional cost to an offeror

of staying in a competition without having a

realistic chance of winning, i.e., whether the

long shots came in often enough to make it

worth the extra cost of taking the chance. We

also note that information provided by

agencies in public comments responding to

the proposed rule indicates that award is

nearly always made to one of the three most

highly rated offerors. We have received no

comments that contradict this understanding.

The benefits to offerors of including only the

most highly rated offers in the competitive

range are that those included will know that

they have a good chance of winning the

competition, making it in their best interests

to compete aggressively, and those

eliminated from the range are spared the cost

of pursuing an award when they have little,

if any, chance of winning.

(b) Impacts on resources and cash flow. A

smaller competitive range enables faster

progress toward contract award. Therefore,

all offerors excluded from the competitive

range expend less resources on a competition

they have little or no chance of winning. The

resources of these offerors can then be

applied to the pursuit of other more

promising business opportunities. Successful

offerors receive contract awards faster,

thereby improving their cash flow. Therefore,

we decided not to retain the current FAR

standard of including all proposals with a

reasonable chance of being selected for

award, and including any proposals for

which there is doubt, i.e., ‘‘when in doubt,

leave them in,’’ because this standard
51228 Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations

prolongs the award process and increases the

costs to offerors with little or no chance of

winning.

(c) Perception of barriers to submitting a

proposal. The initial proposed rule contained

a solicitation provision that identified a

target number of offerors to be included in

the competitive range. Public comments

indicated that this created a perception that

proposals would not be properly evaluated

against the evaluation criteria in the

solicitation prior to establishment of the

competitive range. Respondents indicated

that they would view this as a barrier to

submitting proposals and competing on

Government contracting opportunities.

Therefore, we have revised the final rule to

eliminate this solicitation provision, and to

emphasize that all proposals received are

evaluated against all the evaluation factors

and significant subfactors in the solicitation

before the competitive range is established.

(d) Limiting the competitive range in the

interest of efficiency. The language in the

final rule implements Section 4103 of the

Clinger-Cohen Act of 1996, that allows

contracting officers, in certain circumstances,

to reduce the number of proposals in the

competitive range to the greatest number that

will permit an efficient competition among

the most highly rated offerors. We considered

three alternatives to the language contained

in the final rule—

(1) Include at least one small business

proposal in the competitive range. At the

suggestion of the Small Business

Administration Office of Advocacy, we

considered imposing a requirement to have at

least one small business in the competitive

range whenever any small businesses submit

proposals. We did not adopt this alternative

for two reasons. First, as noted above, public

comments from agencies indicate that awards

are nearly always made to the one of the

three most highly rated proposals going into

the competitive range. This is true even when

small businesses win full and open

competitions. The incidence of award to an

offeror other than one of the three such

proposals is so small that it does not support

keeping any business, particularly a small

business with limited bid and proposal

resources, in a competition that the business

has virtually no chance of winning. Second,

this recommendation could conflict with the

requirements of Section 4103 of the ClingerCohen Act to include the most highly rated

proposals in the competitive range, if the

small business proposal is not among the

most highly rated.

(2) Provide examples of the factors to be

considered in limiting the competitive range.

The proposed rule contained a list of factors

for the contracting officer to consider in

establishing the competitive range. As a

result of public comments raising concerns

about the list, we revised the final rule to

delete the list of factors. This permits the

facts of the instant acquisition to guide the

judgment of the contracting officer in

exercising this authority, instead of

attempting to impose a static list on all

circumstances. Both small and large offerors

should benefit from this flexibility. The goal

of our final rule language is to allow all

participants in the process, both industry and

Government, to optimize their resources.

(3) Provide a definition of efficiency. The

proposed rule did not define an efficient

competition. We received several public

comments suggesting that such a definition

be provided. Our assessment is that the

definition of an efficient competition

depends on the facts of the instant

acquisition. Instead of imposing a definition

that may not be appropriate in certain

circumstances, we chose to describe the

process for limiting the competitive range for

the purpose of efficiency. This enables the

contracting officer to exercise this authority

appropriately in varying circumstances—all

offerors should benefit from this approach.

(e) Responding to adverse past

performance information. We considered

alternatives relating to two issues in this area.

(1) Prohibition on the use of certain types

of past performance information. The

proposed rule did not prohibit the use of

adverse past performance information.

Several public comments suggested that past

performance information on contracts in

litigation or dispute should not be used until

the litigation or dispute is resolved. The rule

requires the contracting officer to evaluate

the currency, relevance, source, context, and

general trend of the past performance

information. We did not adopt this

alternative because the requirement to

evaluate the context of the information

already addresses this concern. In addition,

we were concerned that the suggested

alternative may encourage litigation for the

purpose of avoiding the inclusion of adverse

past performance information in future

acquisitions.

(2) Responding to adverse past

performance information. The proposed rule

did not require contracting officers to allow

offerors to respond to adverse past

performance information prior to

discussions. Some public comments

recommended that contracting officers

identify any adverse past performance

information to the offeror immediately upon

receiving the information. They further

suggested that the offeror be allowed to

respond to such information regardless of the

stage of the acquisition. Other public

comments recommended that offerors be

afforded an opportunity to respond to

adverse past performance information on

which they had not previously had an

opportunity to respond. We revised the final

rule to accommodate these

recommendations. The initial proposed rule

authorized communication regarding adverse

past performance information. In the second

proposed rule, we revised this guidance to

state that contracting officers, when

conducting communications with offerors

before establishment of the competitive

range, shall address adverse past

performance information on which the

offeror has not previously had the

opportunity to comment. We revised the final

rule to require that offerors, including small

entities, shall be granted the opportunity to

explain situations that contributed to an

adverse past performance rating to which

they have not had a previous opportunity to

respond before such ratings can be the

determining factor for exclusion from the

competitive range. These revisions, together

with the requirement to discuss all

deficiencies and significant weaknesses with

those offerors in the competitive range,

ensure that adverse past performance to

which an offeror has not had the opportunity

to respond will be addressed any time it can

affect the outcome of the acquisition. We did

not revise the rule to permit offerors to

address past performance information to

which they have already had an opportunity

to respond because the solicitation provides

offerors with the opportunity to address

problems encountered on previous contracts

and related corrective actions. In addition,

FAR Subpart 42.15, Contractor performance

information, already contains formal rebuttal

procedures. We did not revise the rule to

permit all offerors to address past

performance information to which they have

not had a previous opportunity to comment

because it would prolong the evaluation

process by allowing such exchanges when

they will not make a difference in the source

selection decision.

(f) Neutral past performance evaluations.

We considered alternatives relating to two

aspects of neutral past performance ratings—

(1) Definition of neutral past performance

evaluations. The proposed rules provided a

definition of neutral past performance

evaluations. Public comments recommended

that we revise the definition and provide

detailed instructions on how to apply neutral

past performance ratings in any source

selection. 41 U.S.C. 405(j)(2) requires offerors

without a previous performance history, to be

given a rating that neither rewards nor

penalizes the offeror. We did not adopt the

public comment recommendations, opting

instead to revise the final rule to reflect the

statutory language, so that the facts of the

instant acquisition would be used in

determining what rating scheme is

appropriate. This alternative provides for

flexible compliance to satisfy requirements of

the statute.

(2) Limiting the instances of neutral

evaluations. The proposed rule listed

examples of information that may be

considered to avoid assigning neutral past

performance ratings. One public comment

recommended that, in the interest of fairness

to all businesses, as well as the minority

contractors represented by the respondent,

the Government should assign neutral past

performance ratings only where the

preponderance of the evidence demonstrates

that the offeror lacked an opportunity to

acquire a record on relevant past

performance. In order to minimize the use of

neutral past performance ratings, we revised

the final rule to indicate that contracting

officers ‘‘should’’ (rather than ‘‘may’’) take

into account a broad range of information

related to past performance when performing

past performance evaluations.

(g) Providing for increased exchanges

between the Government and industry

throughout the acquisition process.

(1) Clarifications. We drafted the rule to

allow as much free exchange of information

between offerors and the Government as

possible, while still permitting award

without discussions and complying with

applicable statutes. The proposed rule did

not differentiate between exchanges of
Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations 51229

information when award without discussions

was contemplated versus when a competitive

range would be established. Public comment

pointed out that the proposed rule language

may allow exchanges beyond what is

permitted by applicable statute when making

award without discussions. In drafting the

second proposed rule, we limited these

exchanges. The resulting language still

permits more exchange of information

between offerors and the Government than

the current FAR. This policy is expected to

help offerors, especially small entities that

may not be familiar with proposal

preparation, by permitting easy clarification

of limited aspects of their proposals.

(2) Communications. Public comments

indicated that the second proposed rule did

not establish a ‘‘bright line’’ distinction

between when communications conducted in

order to establish a competitive range end,

and when discussions begin. Small

businesses were concerned that the

Government may conduct inappropriate

communications with selected offerors prior

to the establishment of the competitive range

to the detriment of small businesses. We

revised the final rule to accommodate this

concern by clearly defining when discussions

begin. We adopted this alternative to

preclude the occurrence of the inappropriate

communications that concerned small

businesses.

(3) Discussions. The initial proposed rule

contained the existing FAR guidance

regarding the type and amount of information

that should be exchanged during discussions.

In response to public comments, the

second proposed rule requires a more robust

exchange of information during discussions.

The language requires the Government to

identify, in addition to significant

weaknesses and deficiencies, other aspects of

an offeror’s proposal that could be enhanced

materially to improve the offeror’s potential

for award. This change should benefit all

offerors, including small businesses, because

it permits offerors to develop a better

understanding of the Government’s

evaluation of their proposal, and permits

them to optimize their potential for award.

(h) Oral presentations. The existing FAR

does not address oral presentations. The

proposed rule included general guidelines for

the use of oral presentations to provide

consistent and impartial Governmentwide

application of this technique. We considered

alternatives in two aspects of oral

presentations.

(1) Methods for recording oral

presentations. Some public comments in

response to the second proposed rule

recommended that the rule should require

the Government to prepare a formal,

verifiable record of each oral presentation, to

place the record in the source selection files,

and to provide copies of their own records

to offerors. We revised the final rule to allow

contracting officers to provide each offeror a

copy of that offeror’s record, but did not

require the Government to make a verifiable

record. A requirement for the Government to

make a verifiable record of each presentation

is not consistent with the objective of this

rule to streamline the acquisition process.

(2) Oral presentations and award without

discussions. The second proposed rule text

on oral presentations did not refer users to

the limits on communications set forth

elsewhere in the rule. Public comments

expressed concerns that the oral

presentations might be detrimental to small

businesses because, depending on the stage

of the acquisition, the atmosphere of oral

presentations could be conducive to

inappropriate exchanges of information

between selected offerors and the

Government. We revised the final rule to

help users of this technique understand the

limits on exchanges of information during

the conduct of oral presentations.

C. Paperwork Reduction Act

The following information collection

requirements have been approved by the

Office of Management and Budget

(OMB) and apply to FAR Part 15: 9000–

0037, Standard Form 1417,

Presolicitation Notice and Response;

9000–0044, Bid/Offer Acceptance

Period; and 9000–0048, Authorized

Negotiators. While the Paperwork

Reduction Act applies because the rule

revises existing information collection

requirements, resulting in a slight

decrease in the estimated burden, it has

been determined that this rule does not

materially affect the burden already

approved by OMB. Optional forms 307,

308, and 309 do not require

independent clearance under the

Paperwork Reduction Act because they

do not request information beyond

identity, date, address, and contact.

Therefore, no adjustments to these

information collection requirements are

sought at this time.

List of Subjects in 48 CFR Parts 1, 2, 3,

4, 5, 6, 7, 9, 11, 12, 13, 14, 15, 16, 17,

19, 24, 25, 27, 28, 31, 32, 33, 34, 35, 36,

42, 43, 44, 45, 49, 50, 52, and 53

Government procurement.

Dated: September 22, 1997

Edward C. Loeb,

Director, Federal Acquisition Policy Division.

Federal Acquisition Circular—FAC 97–

02

Federal Acquisition Circular (FAC)

97–02 is issued under the authority of

the Secretary of Defense, the

Administrator of General Services, and

the Administrtator for the National

Aeronatics and Space Administration.

The policies, provisions, and clauses

of this final rule are effective for all

solicitations issued on or after October

10, 1997. However, agencies may delay

implementation of this final rule until

January 1, 1998, at which time it

becomes mandatory for all solicitations

issued on or after that date. Agencies

using the new policies, provisions, and

clauses before January 1, 1998, shall

ensure that the cover page of the

solicitation for each acquisition subject

to this rule, and issued before January

1, 1998, contains a notice that this rule

applies to that acquisition. Any

solicitation issued before January 1,

1998, that does not contain such a

solicitation notice or the new provisions

and clauses is automatically conducted

in accordance with the FAR excluding

changes made by this final rule.

Dated: September 19, 1997.

Eleanor R. Spector,

Director, Defense Procurement, Department

of Defense.

Dated: September 10, 1997.

Ida M. Ustad,

Deputy Associate Administrator, Office of

Acquisition Policy, General Services

Administration.

Dated: September 10, 1997.

Tom Luedtke,

Deputy Associate Administrator for

Procurement National Aeronautics and Space

Administration.

Therefore, 48 CFR Parts 1, 2, 3, 4, 5,

6, 7, 9, 11, 12, 13, 14, 15, 16, 17, 19, 24,

25, 27, 28, 31, 32, 33, 34, 35, 36, 42, 43,

44, 45, 49, 50, 52, and 53 are amended

as set forth below:

1. The authority citation for 48 CFR

Parts 1, , 3, 4, 5, 6, 7, 9, 11, 12, 13, 14,

15, 16, 17, 19, 24, 25, 27, 28, 31, 32, 33,

34, 35, 36, 42, 43, 44, 45, 49, 50, 52, and

53 continues to read as follows:

Authority: 40 U.S.C. 486(c); 10 U.S.C.

chapter 137; and 42 U.S.C. 2473(c).

PART 1—FEDERAL ACQUISITION

REGULATIONS SYSTEM

2. Section 1.102–2 is amended by

adding paragraph (c)(3) to read as

follows:

1.102–2 Performance standards.

* * * * *

(c) * * *

(3) The Government shall exercise

discretion, use sound business

judgment, and comply with applicable

laws and regulations in dealing with

contractors and prospective contractors.

All contractors and prospective

contractors shall be treated fairly and

impartially but need not be treated the

same.

* * * * *

3. Section 1.106 is amended in the

table following the introductory

paragraph by removing the following

entries:

1.106 OMB Approval under the Paperwork

Reduction Act.

FAR segment OMB control No.

* * * *

SF 1411 .................................... 9000–0013
51230 Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations

FAR segment OMB control No.

* * * *

SF 1448 .................................... 9000–0013

* * * *

PART 2—DEFINITIONS OF WORDS

AND TERMS

4. Section 2.101 is amended by

inserting, in alphabetical order, the

definition ‘‘Best value’’ to read as

follows:

2.101 Definitions.

* * * * *

Best value means the expected

outcome of an acquisition that, in the

Government’s estimation, provides the

greatest overall benefit in response to

the requirement.

* * * * *

PART 4—ADMINISTRATIVE MATTERS

5. Subpart 4.10 is added to read as

follows:

Subpart 4.10—Contract Line Items

4.1001 Policy.

Contracts may identify the items or

services to be acquired as separately

identified line items. Contract line items

should provide unit prices or lump sum

prices for separately identifiable

contract deliverables, and associated

delivery schedules or performance

periods. Line items may be further

subdivided or stratified for

administrative purposes (e.g., to provide

for traceable accounting classification

citations).

PART 5—PUBLICIZING CONTRACT

ACTIONS

6. Section 5.102 is amended by

adding paragraph (a)(7) to read as

follows:

5.102 Availability of solicitations.

(a) * * *

(7) If electronic commerce is

employed in the solicitation process,

availability of the RFP may be limited

to the electronic medium.

* * * * *

PART 6—COMPETITION

REQUIREMENTS

7. Section 6.101 is amended by

revising paragraph (b) to read as follows:

6.101 Policy.

* * * * *

(b) Contracting officers shall provide

for full and open competition through

use of the competitive procedure(s)

contained in this subpart that are best

suited to the circumstances of the

contract action and consistent with the

need to fulfill the Government’s

requirements efficiently (10 U.S.C. 2304

and 41 U.S.C. 253).

PART 7—ACQUISITION PLANNING

8. Section 7.105 is amended by

revising paragraph (b)(5) to read as

follows:

7.105 Contents of written acquisition

plans.

* * * * *

(b) * * *

(5) Budgeting and funding. Include

budget estimates, explain how they

were derived, and discuss the schedule

for obtaining adequate funds at the time

they are required (see subpart 32.7).

* * * * *

PART 11—DESCRIBING AGENCY

NEEDS

9. Section 11.002 is amended at the

end of paragraph (d) by adding the

following sentence:

11.002 Policy.

* * * * *

(d) * * * Environmental objectives,

such as pollution prevention (e.g.,

promoting waste reduction, source

reduction, energy efficiency and

maximum practicable recovered

material content) (see part 23) shall be

considered when describing

Government requirements for supplies

and services, and when developing

source selection factors for competitive

negotiated acquisitions (see 15.304),

when appropriate.

* * * * *

10. Subpart 11.8 is added to read as

follows:

Subpart 11.8—Testing

11.801 Preaward in-use evaluation.

Supplies may be evaluated under

comparable in-use conditions without a

further test plan, provided offerors are

so advised in the solicitation. The

results of such tests or demonstrations

may be used to rate the proposal, to

determine technical acceptability, or

otherwise to evaluate the proposal (see

15.305).

PART 14—SEALED BIDDING

14.201–6 [Amended]

11. Section 14.201–6 is amended by

removing and reserving paragraph (n).

12. Section 14.404–1 is amended in

paragraph (e)(1) by removing the

reference ‘‘15.103’’ and inserting

‘‘paragraph (f) of this subsection’’; and

by adding paragraph (f) to read as

follows:

14.404–1 Cancellation of invitations after

opening.

* * * * *

(f) When the agency head has

determined, in accordance with

paragraph (e)(1) of this subsection, that

an invitation for bids should be

canceled and that use of negotiation is

in the Government’s interest, the

contracting officer may negotiate (in

accordance with part 15, as appropriate)

and make award without issuing a new

solicitation provided—

(1) Each responsible bidder in the

sealed bid acquisition has been given

notice that negotiations will be

conducted and has been given an

opportunity to participate in

negotiations; and

(2) The award is made to the

responsible bidder offering the lowest

negotiated price.

13. Part 15 is revised to read as

follows:

PART 15—CONTRACTING BY

NEGOTIATION

Sec.

15.000 Scope of part.

15.001 Definitions.

15.002 Types of negotiated acquisition.

Subpart 15.1—Source Selection Processes

and Techniques

15.100 Scope of subpart.

15.101 Best value continuum.

15.101–1 Tradeoff process.

15.101–2 Lowest price technically

acceptable source selection process.

15.102 Oral presentations.

Subpart 15.2—Solicitation and Receipt of

Proposals and Information

15.200 Scope of subpart.

15.201 Exchanges with industry before

receipt of proposals.

15.202 Advisory multi-step process.

15.203 Requests for proposals.

15.204 Contract format.

15.204–1 Uniform contract format.

Table 15–1—Uniform Contract Format

15.204–2 Part I—The Schedule.

15.204–3 Part II—Contract Clauses.

15.204–4 Part III—List of Documents,

Exhibits, and Other Attachments.

15.204–5 Part IV—Representations and

Instructions.

15.205 Issuing solicitations.

15.206 Amending the solicitation.

15.207 Handling proposals and

information.

15.208 Submission, modification, revision,

and withdrawal of proposals.

15.209 Solicitation provisions and contract

clauses.

15.210 Forms.
Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations 51231

Subpart 15.3—Source Selection

15.300 Scope of subpart.

15.301 Definitions.

15.302 Source selection objective.

15.303 Responsibilities.

15.304 Evaluation factors and significant

subfactors.

15.305 Proposal evaluation.

15.306 Exchanges with offerors after receipt

of proposals.

15.307 Proposal revisions.

15.308 Source selection decision.

Subpart 15.4—Contract Pricing

15.400 Scope of subpart.

15.401 Definitions.

15.402 Pricing policy.

15.403 Obtaining cost or pricing data.

15.403–1 Prohibition on obtaining cost or

pricing data (10 U.S.C. 2306a and 41

U.S.C. 254b).

15.403–2 Other circumstances where cost

or pricing data are not required.

15.403–3 Requiring information other than

cost or pricing data.

15.403–4 Requiring cost or pricing data (10

U.S.C. 2306a and 41 U.S.C. 254b).

15.403–5 Instructions for submission of cost

or pricing data or information other than

cost or pricing data.

15.404 Proposal analysis.

15.404–1 Proposal analysis techniques.

15.404–2 Information to support proposal

analysis.

15.404–3 Subcontract pricing

considerations.

15.404–4 Profit.

15.405 Price negotiation.

15.406 Documentation.

15.406–1 Prenegotiation objectives.

15.406–2 Certificate of Current Cost or

Pricing Data.

15.406–3 Documenting the negotiation.

15.407 Special cost or pricing areas.

15.407–1 Defective cost or pricing data.

15.407–2 Make-or-buy programs.

15.407–3 Forward pricing rate agreements.

15.407–4 Should-cost review.

15.407–5 Estimating systems.

15.408 Solicitation provisions and contract

clauses.

Table 15–2—Instructions for Submitting Cost

or Pricing Data Are Required

Subpart 15.5—Preaward, Award, and

Postaward Notifications, Protests, and

Mistakes

15.501 Definition.

15.502 Applicability.

15.503 Notifications to unsuccessful

offerors.

15.504 Award to successful offeror.

15.505 Preaward debriefing of offerors.

15.506 Postaward debriefing of offerors.

15.507 Protests against award.

15.508 Discovery of mistakes.

15.509 Forms.

Subpart 15.6—Unsolicited Proposals

15.600 Scope of subpart.

15.601 Definitions.

15.602 Policy.

15.603 General.

15.604 Agency points of contact.

15.605 Content of unsolicited proposals.

15.606 Agency procedures.

15.606–1 Receipt and initial review.

15.606–2 Evaluation.

15.607 Criteria for acceptance and

negotiation of an unsolicited proposal.

15.608 Prohibitions.

15.609 Limited use of data.

Authority: 40 U.S.C. 486(c); 10 U.S.C.

chapter 137; and 42 U.S.C. 2473(c).

15.000 Scope of part.

This part prescribes policies and

procedures governing competitive and

noncompetitive negotiated acquisitions.

A contract awarded using other than

sealed bidding procedures is a

negotiated contract (see 14.101).

15.001 Definitions.

As used in this part—

Proposal modification is a change

made to a proposal before the

solicitation closing date and time, or

made in response to an amendment, or

made to correct a mistake at any time

before award.

Proposal revision is a change to a

proposal made after the solicitation

closing date, at the request of or as

allowed by a contracting officer, as the

result of negotiations.

15.002 Types of negotiated acquisition.

(a) Sole source acquisitions. When

contracting in a sole source

environment, the request for proposals

(RFP) should be tailored to remove

unnecessary information and

requirements; e.g., evaluation criteria

and voluminous proposal preparation

instructions.

(b) Competitive acquisitions. When

contracting in a competitive

environment, the procedures of this part

are intended to minimize the

complexity of the solicitation, the

evaluation, and the source selection

decision, while maintaining a process

designed to foster an impartial and

comprehensive evaluation of offerors’

proposals, leading to selection of the

proposal representing the best value to

the Government (see 2.101).

Subpart 15.1—Source Selection

Processes and Techniques

15.100 Scope of subpart.

This subpart describes some of the

acquisition processes and techniques

that may be used to design competitive

acquisition strategies suitable for the

specific circumstances of the

acquisition.

15.101 Best value continuum.

An agency can obtain best value in

negotiated acquisitions by using any one

or a combination of source selection

approaches. In different types of

acquisitions, the relative importance of

cost or price may vary. For example, in

acquisitions where the requirement is

clearly definable and the risk of

unsuccessful contract performance is

minimal, cost or price may play a

dominant role in source selection. The

less definitive the requirement, the more

development work required, or the

greater the performance risk, the more

technical or past performance

considerations may play a dominant

role in source selection.

15.101–1 Tradeoff process.

(a) A tradeoff process is appropriate

when it may be in the best interest of

the Government to consider award to

other than the lowest priced offeror or

other than the highest technically rated

offeror.

(b) When using a tradeoff process, the

following apply:

(1) All evaluation factors and

significant subfactors that will affect

contract award and their relative

importance shall be clearly stated in the

solicitation; and

(2) The solicitation shall state whether

all evaluation factors other than cost or

price, when combined, are significantly

more important than, approximately

equal to, or significantly less important

than cost or price.

(c) This process permits tradeoffs

among cost or price and non-cost factors

and allows the Government to accept

other than the lowest priced proposal.

The perceived benefits of the higher

priced proposal shall merit the

additional cost, and the rationale for

tradeoffs must be documented in the file

in accordance with 15.406.

15.101–2 Lowest price technically

acceptable source selection process.

(a) The lowest price technically

acceptable source selection process is

appropriate when best value is expected

to result from selection of the

technically acceptable proposal with the

lowest evaluated price.

(b) When using the lowest price

technically acceptable process, the

following apply:

(1) The evaluation factors and

significant subfactors that establish the

requirements of acceptability shall be

set forth in the solicitation. Solicitations

shall specify that award will be made on

the basis of the lowest evaluated price

of proposals meeting or exceeding the

acceptability standards for non-cost

factors. If the contracting officer

documents the file pursuant to

15.304(c)(3)(iii), past performance need

not be an evaluation factor in lowest

price technically acceptable source

selections. If the contracting officer

elects to consider past performance as
51232 Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations

an evaluation factor, it shall be

evaluated in accordance with 15.305.

However, the comparative assessment in

15.305(a)(2)(i) does not apply. If the

contracting officer determines that a

small business’ past performance is not

acceptable, the matter shall be referred

to the Small Business Administration

for a Certificate of Competency

determination, in accordance with the

procedures contained in subpart 19.6

and 15 U.S.C. 637(b)(7)).

(2) Tradeoffs are not permitted.

(3) Proposals are evaluated for

acceptability but not ranked using the

non-cost/price factors.

(4) Exchanges may occur (see 15.306).

15.102 Oral presentations.

(a) Oral presentations by offerors as

requested by the Government may

substitute for, or augment, written

information. Use of oral presentations as

a substitute for portions of a proposal

can be effective in streamlining the

source selection process. Oral

presentations may occur at any time in

the acquisition process, and are subject

to the same restrictions as written

information, regarding timing (see

15.208) and content (see 15.306). Oral

presentations provide an opportunity

for dialogue among the parties. Prerecorded videotaped presentations that

lack real-time interactive dialogue are

not considered oral presentations for the

purposes of this section, although they

may be included in offeror submissions,

when appropriate.

(b) The solicitation may require each

offeror to submit part of its proposal

through oral presentations. However,

certifications, representations, and a

signed offer sheet (including any

exceptions to the Government’s terms

and conditions) shall be submitted in

writing.

(c) Information pertaining to areas

such as an offeror’s capability, past

performance, work plans or approaches,

staffing resources, transition plans, or

sample tasks (or other types of tests)

may be suitable for oral presentations.

In deciding what information to obtain

through an oral presentation, consider

the following:

(1) The Government’s ability to

adequately evaluate the information;

(2) The need to incorporate any

information into the resultant contract;

(3) The impact on the efficiency of the

acquisition; and

(4) The impact (including cost) on

small businesses. In considering the

costs of oral presentations, contracting

officers should also consider

alternatives to on-site oral presentations

(e.g., teleconferencing, video

teleconferencing).

(d) When oral presentations are

required, the solicitation shall provide

offerors with sufficient information to

prepare them. Accordingly, the

solicitation may describe—

(1) The types of information to be

presented orally and the associated

evaluation factors that will be used;

(2) The qualifications for personnel

that will be required to provide the oral

presentation(s);

(3) The requirements for, and any

limitations and/or prohibitions on, the

use of written material or other media

to supplement the oral presentations;

(4) The location, date, and time for the

oral presentations;

(5) The restrictions governing the time

permitted for each oral presentation;

and

(6) The scope and content of

exchanges that may occur between the

Government’s participants and the

offeror’s representatives as part of the

oral presentations, including whether or

not discussions (see 15.306(d)) will be

permitted during oral presentations.

(e) The contracting officer shall

maintain a record of oral presentations

to document what the Government

relied upon in making the source

selection decision. The method and

level of detail of the record (e.g.,

videotaping, audio tape recording,

written record, Government notes,

copies of offeror briefing slides or

presentation notes) shall be at the

discretion of the source selection

authority. A copy of the record placed

in the file may be provided to the

offeror.

(f) When an oral presentation includes

information that the parties intend to

include in the contract as material terms

or conditions, the information shall be

put in writing. Incorporation by

reference of oral statements is not

permitted.

(g) If, during an oral presentation, the

Government conducts discussions (see

15.306(d)), the Government must

comply with 15.306 and 15.307.

Subpart 15.2—Solicitation and Receipt

of Proposals and Information

15.200 Scope of subpart.

This subpart prescribes policies and

procedures for—

(a) Exchanging information with

industry prior to receipt of proposals;

(b) Preparing and issuing requests for

proposals (RFPs) and requests for

information (RFIs); and

(c) Receiving proposals and

information.

15.201 Exchanges with industry before

receipt of proposals.

(a) Exchanges of information among

all interested parties, from the earliest

identification of a requirement through

receipt of proposals, are encouraged.

Any exchange of information must be

consistent with procurement integrity

requirements (see 3.104). Interested

parties include potential offerors, end

users, Government acquisition and

supporting personnel, and others

involved in the conduct or outcome of

the acquisition.

(b) The purpose of exchanging

information is to improve the

understanding of Government

requirements and industry capabilities,

thereby allowing potential offerors to

judge whether or how they can satisfy

the Government’s requirements, and

enhancing the Government’s ability to

obtain quality supplies and services,

including construction, at reasonable

prices, and increase efficiency in

proposal preparation, proposal

evaluation, negotiation, and contract

award.

(c) Agencies are encouraged to

promote early exchanges of information

about future acquisitions. An early

exchange of information among industry

and the program manager, contracting

officer, and other participants in the

acquisition process can identify and

resolve concerns regarding the

acquisition strategy, including proposed

contract type, terms and conditions, and

acquisition planning schedules; the

feasibility of the requirement, including

performance requirements, statements

of work, and data requirements; the

suitability of the proposal instructions

and evaluation criteria, including the

approach for assessing past performance

information; the availability of reference

documents; and any other industry

concerns or questions. Some techniques

to promote early exchanges of

information are—

(1) Industry or small business

conferences;

(2) Public hearings;

(3) Market research, as described in

part 10;

(4) One-on-one meetings with

potential offerors (any that are

substantially involved with potential

contract terms and conditions should

include the contracting officer; also see

paragraph (f) of this section regarding

restrictions on disclosure of

information);

(5) Presolicitation notices;

(6) Draft RFPs;

(7) RFIs;

(8) Presolicitation or preproposal

conferences; and

(9) Site visits.
Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations 51233

(d) The special notices of

procurement matters at 5.205(c), or

electronic notices, may be used to

publicize the Government’s requirement

or solicit information from industry.

(e) RFIs may be used when the

Government does not presently intend

to award a contract, but wants to obtain

price, delivery, other market

information, or capabilities for planning

purposes. Responses to these notices are

not offers and cannot be accepted by the

Government to form a binding contract.

There is no required format for RFIs.

(f) General information about agency

mission needs and future requirements

may be disclosed at any time.

After release of the solicitation, the

contracting officer shall be the focal

point of any exchange with potential

offerors. When specific information

about a proposed acquisition that would

be necessary for the preparation of

proposals is disclosed to one or more

potential offerors, that information shall

be made available to the public as soon

as practicable, but no later than the next

general release of information, in order

to avoid creating an unfair competitive

advantage. Information provided to a

particular offeror in response to that

offeror’s request shall not be disclosed

if doing so would reveal the potential

offeror’s confidential business strategy,

and would be protected under 3.104 or

subpart 24.2. When a presolicitation or

preproposal conference is conducted,

materials distributed at the conference

should be made available to all potential

offerors, upon request.

15.202 Advisory multi-step process.

(a) The agency may publish a

presolicitation notice (see 5.204) that

provides a general description of the

scope or purpose of the acquisition and

invites potential offerors to submit

information that allows the Government

to advise the offerors about their

potential to be viable competitors. The

presolicitation notice should identify

the information that must be submitted

and the criteria that will be used in

making the initial evaluation.

Information sought may be limited to a

statement of qualifications and other

appropriate information (e.g., proposed

technical concept, past performance,

and limited pricing information). At a

minimum, the notice shall contain

sufficient information to permit a

potential offeror to make an informed

decision about whether to participate in

the acquisition. This process should not

be used for multi-step acquisitions

where it would result in offerors being

required to submit identical information

in response to the notice and in

response to the initial step of the

acquisition.

(b) The agency shall evaluate all

responses in accordance with the

criteria stated in the notice, and shall

advise each respondent in writing either

that it will be invited to participate in

the resultant acquisition or, based on

the information submitted, that it is

unlikely to be a viable competitor. The

agency shall advise respondents

considered not to be viable competitors

of the general basis for that opinion. The

agency shall inform all respondents

that, notwithstanding the advice

provided by the Government in

response to their submissions, they may

participate in the resultant acquisition.

15.203 Requests for proposals.

(a) Requests for proposals (RFPs) are

used in negotiated acquisitions to

communicate Government requirements

to prospective contractors and to solicit

proposals. RFPs for competitive

acquisitions shall, at a minimum,

describe the—

(1) Government’s requirement;

(2) Anticipated terms and conditions

that will apply to the contract:

(i) The solicitation may authorize

offerors to propose alternative terms and

conditions, including the contract line

item number (CLIN) structure; and

(ii) When alternative CLIN structures

are permitted, the evaluation approach

should consider the potential impact on

other terms and conditions or the

requirement (e.g., place of performance

or payment and funding requirements)

(see 15.206);

(3) Information required to be in the

offeror’s proposal; and

(4) Factors and significant subfactors

that will be used to evaluate the

proposal and their relative importance.

(b) An RFP may be issued for OMB

Circular A–76 studies. See subpart 7.3

for additional information regarding

cost comparisons between Government

and contractor performance.

(c) Electronic commerce may be used

to issue RFPs and to receive proposals,

modifications, and revisions. In this

case, the RFP shall specify the

electronic commerce method(s) that

offerors may use (see subpart 4.5).

(d) Contracting officers may issue

RFPs and/or authorize receipt of

proposals, modifications, or revisions by

facsimile.

(1) In deciding whether or not to use

facsimiles, the contracting officer

should consider factors such as—

(i) Anticipated proposal size and

volume;

(ii) Urgency of the requirement;

(iii) Availability and suitability of

electronic commerce methods; and

(iv) Adequacy of administrative

procedures and controls for receiving,

identifying, recording, and safeguarding

facsimile proposals, and ensuring their

timely delivery to the designated

proposal delivery location.

(2) If facsimile proposals are

authorized, contracting officers may

request offeror(s) to provide the

complete, original signed proposal at a

later date.

(e) Letter RFPs may be used in sole

source acquisitions and other

appropriate circumstances. Use of a

letter RFP does not relieve the

contracting officer from complying with

other FAR requirements. Letter RFPs

should be as complete as possible and,

at a minimum, should contain the

following:

(1) RFP number and date;

(2) Name, address (including

electronic address and facsimile

address, if appropriate), and telephone

number of the contracting officer;

(3) Type of contract contemplated;

(4) Quantity, description, and

required delivery dates for the item;

(5) Applicable certifications and

representations;

(6) Anticipated contract terms and

conditions;

(7) Instructions to offerors and

evaluation criteria for other than sole

source actions;

(8) Proposal due date and time; and

(9) Other relevant information; e.g.,

incentives, variations in delivery

schedule, cost proposal support, and

data requirements.

(f) Oral RFPs are authorized when

processing a written solicitation would

delay the acquisition of supplies or

services to the detriment of the

Government and a notice is not required

under 5.202 (e.g., perishable items and

support of contingency operations or

other emergency situations). Use of an

oral RFP does not relieve the contracting

officer from complying with other FAR

requirements.

(1) The contract files supporting oral

solicitations should include—

(i) A description of the requirement;

(ii) Rationale for use of an oral

solicitation;

(iii) Sources solicited, including the

date, time, name of individuals

contacted, and prices offered; and

(iv) The solicitation number provided

to the prospective offerors.

(2) The information furnished to

potential offerors under oral

solicitations should include appropriate

items from paragraph (e) of this section.

15.204 Contract format.

The use of a uniform contract format

facilitates preparation of the solicitation
51234 Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations

and contract as well as reference to, and

use of, those documents by offerors,

contractors, and contract administrators.

The uniform contract format need not be

used for the following:

(a) Construction and architectengineer contracts (see part 36).

(b) Subsistence contracts.

(c) Supplies or services contracts

requiring special contract formats

prescribed elsewhere in this part that

are inconsistent with the uniform

format.

(d) Letter requests for proposals (see

15.203(e)).

(e) Contracts exempted by the agency

head or designee.

15.204–1 Uniform contract format.

(a) Contracting officers shall prepare

solicitations and resulting contracts

using the uniform contract format

outlined in Table 15–1 of this

subsection.

(b) Solicitations using the uniform

contract format shall include Parts I, II,

III, and IV (see 15.204–2 through

15.204–5). Upon award, contracting

officers shall not physically include Part

IV in the resulting contract, but shall

retain it in the contract file. Section K

shall be incorporated by reference in the

contract.

TABLE 15–1.—UNIFORM CONTRACT

FORMAT

Section Title

Part I—The Schedule

A ..... Solicitation/contract form.

B ..... Supplies or services and prices/costs.

C ..... Description/specifications/statement of

work.

D ..... Packaging and marking.

E ..... Inspection and acceptance.

F ..... Deliveries or performance.

G ..... Contract administration data.

H ..... Special contract requirements.

Part II—Contract Clauses

I ...... Contract clauses.

Part III—List of Documents, Exhibits, and

Other Attachments

J ...... List of attachments.

Part IV—Representations and Instructions.

K ..... Representations, certifications, and

other statements of offerors or respondents.

L ..... Instructions, conditions, and notices to

offerors or respondents.

M .... Evaluation factors for award.

15.204–2 Part I—The Schedule.

The contracting officer shall prepare

the contract Schedule as follows:

(a) Section A, Solicitation/contract

form. (1) Optional Form (OF) 308,

Solicitation and Offer-Negotiated

Acquisition, or Standard Form (SF) 33,

Solicitation, Offer and Award, may be

used to prepare RFPs.

(2) When other than OF 308 or SF 33

is used, include the following

information on the first page of the

solicitation:

(i) Name, address, and location of

issuing activity, including room and

building where proposals or information

must be submitted.

(ii) Solicitation number.

(iii) Date of issuance.

(iv) Closing date and time.

(v) Number of pages.

(vi) Requisition or other purchase

authority.

(vii) Brief description of item or

service.

(viii) Requirement for the offeror to

provide its name and complete address,

including street, city, county, state, and

zip code, and electronic address

(including facsimile address), if

appropriate.

(ix) Offer expiration date.

(b) Section B, Supplies or services and

prices/costs. Include a brief description

of the supplies or services; e.g., item

number, national stock number/part

number if applicable, nouns,

nomenclature, and quantities. (This

includes incidental deliverables such as

manuals and reports.)

(c) Section C, Description/

specifications/statement of work.

Include any description or

specifications needed in addition to

Section B (see part 11, Describing

Agency Needs).

(d) Section D, Packaging and marking.

Provide packaging, packing,

preservation, and marking requirements,

if any.

(e) Section E, Inspection and

acceptance. Include inspection,

acceptance, quality assurance, and

reliability requirements (see part 46,

Quality Assurance).

(f) Section F, Deliveries or

performance. Specify the requirements

for time, place, and method of delivery

or performance (see subpart 11.4,

Delivery or Performance Schedules, and

47.301–1).

(g) Section G, Contract administration

data. Include any required accounting

and appropriation data and any required

contract administration information or

instructions other than those on the

solicitation form. Include a statement

that the offeror should include the

payment address in the proposal, if it is

different from that shown for the offeror.

(h) Section H, Special contract

requirements. Include a clear statement

of any special contract requirements

that are not included in Section I,

Contract clauses, or in other sections of

the uniform contract format.

15.204–3 Part II—Contract Clauses.

Section I, Contract clauses. The

contracting officer shall include in this

section the clauses required by law or

by this part and any additional clauses

expected to be included in any resulting

contract, if these clauses are not

required in any other section of the

uniform contract format. An index may

be inserted if this section’s format is

particularly complex.

15.204–4 Part III—List of Documents,

Exhibits, and Other Attachments.

Section J, List of attachments. The

contracting officer shall list the title,

date, and number of pages for each

attached document, exhibit, and other

attachment. Cross-references to material

in other sections may be inserted, as

appropriate.

15.204–5 Part IV—Representations and

Instructions.

The contracting officer shall prepare

the representations and instructions as

follows:

(a) Section K, Representations,

certifications, and other statements of

offerors. Include in this section those

solicitation provisions that require

representations, certifications, or the

submission of other information by

offerors.

(b) Section L, Instructions, conditions,

and notices to offerors or respondents.

Insert in this section solicitation

provisions and other information and

instructions not required elsewhere to

guide offerors or respondents in

preparing proposals or responses to

requests for information. Prospective

offerors or respondents may be

instructed to submit proposals or

information in a specific format or

severable parts to facilitate evaluation.

The instructions may specify further

organization of proposal or response

parts, such as—

(1) Administrative;

(2) Management;

(3) Technical;

(4) Past performance; and

(5) Cost or pricing data (see Table 15–

2 of 15.408) or information other than

cost or pricing data.

(c) Section M, Evaluation factors for

award. Identify all significant factors

and any significant subfactors that will

be considered in awarding the contract

and their relative importance (see

15.304(d)). The contracting officer shall

insert one of the phrases in 15.304(e).
Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations 51235

15.205 Issuing solicitations.

(a) The contracting officer shall issue

solicitations to potential sources in

accordance with the policies and

procedures in 5.102, 19.202–4, and part

6.

(b) A master solicitation, as described

in 14.203–3, may also be used for

negotiated acquisitions.

15.206 Amending the solicitation.

(a) When, either before or after receipt

of proposals, the Government changes

its requirements or terms and

conditions, the contracting officer shall

amend the solicitation.

(b) Amendments issued before the

established time and date for receipt of

proposals shall be issued to all parties

receiving the solicitation.

(c) Amendments issued after the

established time and date for receipt of

proposals shall be issued to all offerors

that have not been eliminated from the

competition.

(d) If a proposal of interest to the

Government involves a departure from

the stated requirements, the contracting

officer shall amend the solicitation,

provided this can be done without

revealing to the other offerors the

alternate solution proposed or any other

information that is entitled to protection

(see 15.207(b) and 15.306(e)).

(e) If, in the judgment of the

contracting officer, based on market

research or otherwise, an amendment

proposed for issuance after offers have

been received is so substantial as to

exceed what prospective offerors

reasonably could have anticipated, so

that additional sources likely would

have submitted offers had the substance

of the amendment been known to them,

the contracting officer shall cancel the

original solicitation and issue a new

one, regardless of the stage of the

acquisition.

(f) Oral notices may be used when

time is of the essence. The contracting

officer shall document the contract file

and formalize the notice with an

amendment (see subpart 4.5, Electronic

Commerce in Contracting).

(g) At a minimum, the following

information should be included in each

amendment:

(1) Name and address of issuing

activity.

(2) Solicitation number and date.

(3) Amendment number and date.

(4) Number of pages.

(5) Description of the change being

made.

(6) Government point of contact and

phone number (and electronic or

facsimile address, if appropriate).

(7) Revision to solicitation closing

date, if applicable.

15.207 Handling proposals and

information.

(a) Upon receipt at the location

specified in the solicitation, proposals

and information received in response to

a request for information (RFI) shall be

marked with the date and time of

receipt and shall be transmitted to the

designated officials.

(b) Proposals shall be safeguarded

from unauthorized disclosure

throughout the source selection process.

(See 3.104 regarding the disclosure of

source selection information (41 U.S.C.

423)). Information received in response

to an RFI shall be safeguarded

adequately from unauthorized

disclosure.

(c) If any portion of a proposal

received by the contracting officer

electronically or by facsimile is

unreadable, the contracting officer

immediately shall notify the offeror and

permit the offeror to resubmit the

unreadable portion of the proposal. The

method and time for resubmission shall

be prescribed by the contracting officer

after consultation with the offeror, and

documented in the file. The

resubmission shall be considered as if it

were received at the date and time of the

original unreadable submission for the

purpose of determining timeliness

under 15.208(a), provided the offeror

complies with the time and format

requirements for resubmission

prescribed by the contracting officer.

15.208 Submission, modification, revision,

and withdrawal of proposals.

(a) Offerors are responsible for

submitting offers, and any revisions and

modifications to them, so as to reach the

Government office designated in the

solicitation on time. If an emergency or

unanticipated event interrupts normal

Government processes so that proposals

cannot be received at the office

designated for receipt of proposals by

the exact time specified in the

solicitation, and urgent Government

requirements preclude amendment of

the solicitation closing date, the time

specified for receipt of proposals will be

deemed to be extended to the same time

of day specified in the solicitation on

the first work day on which normal

Government processes resume. If no

time is specified in the solicitation, the

time for receipt is 4:30 p.m., local time,

for the designated Government office on

the date that proposals are due.

(b) Proposals, and modifications to

them, that are received in the designated

Government office after the exact time

specified are ‘‘late and shall be

considered only if—

(1) They are received before award is

made; and

(2) The circumstances meet the

specific requirements of 52.215–

1(c)(3)(i).

(c) The contracting officer shall

promptly notify any offeror if its

proposal, modification, or revision was

received late, and shall inform the

offeror whether or not it will be

considered, unless contract award is

imminent and the notice prescribed in

15.503(b) would suffice.

(d) When a late proposal or

modification is transmitted to a

contracting office in the United States or

Canada by registered or certified mail or

by U.S. Postal Service Express Mail

Next Day Service-Post Office to

Addressee and is received before award,

the offeror shall be promptly notified

substantially in accordance with the

notice in 14.304–2, appropriately

modified to relate to proposals.

(e) Late proposals and modifications

that are not considered shall be held

unopened, unless opened for

identification, until after award and

then retained with other unsuccessful

proposals.

(f) The following shall, if available, be

included in the contracting office files

for each late proposal, response to

request for information, or modification:

(1) The date of mailing, filing, or

delivery.

(2) The date and hour of receipt.

(3) Whether or not considered for

award.

(4) The envelope, wrapper, or other

evidence of date of submission.

(g) Proposals may be withdrawn at

any time before award. Written

proposals are withdrawn upon receipt

by the contracting officer of a written

notice of withdrawal. Oral proposals in

response to oral solicitations may be

withdrawn orally. The contracting

officer shall document the contract file

when such oral withdrawals are made.

One copy of withdrawn proposals

should be retained in the contract file

(see 4.803(a)(10)). Extra copies of the

withdrawn proposals may be destroyed

or returned to the offeror at the offeror’s

request. Extremely bulky proposals shall

only be returned at the offeror’s request

and expense.

(h) Upon withdrawal of an

electronically transmitted proposal, the

data received shall not be viewed and

shall be purged from primary and

backup data storage systems.

15.209 Solicitation provisions and

contract clauses.

When contracting by negotiation—

(a) The contracting officer shall insert

the provision at 52.215–1, Instructions

to Offerors—Competitive Acquisition, in

all competitive solicitations where the
51236 Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations

Government intends to award a contract

without discussions.

(1) If the Government intends to make

award after discussions with offerors

within the competitive range, the

contracting officer shall use the basic

provision with its Alternate I.

(2) If the Government would be

willing to accept alternate proposals, the

contracting officer shall alter the basic

clause to add a paragraph (c)(9)

substantially the same as Alternate II.

(b)(1) The contracting officer shall

insert the clause at 52.215–2, Audit and

Records-Negotiation (10 U.S.C. 2313, 41

U.S.C. 254d, and OMB Circular No. A–

133), in solicitations and contracts

except those for—

(i) Acquisitions not exceeding the

simplified acquisition threshold;

(ii) The acquisition of utility services

at rates not exceeding those established

to apply uniformly to the general public,

plus any applicable reasonable

connection charge; or

(iii) The acquisition of commercial

items exempted under 15.403–1.

(2) For facilities acquisitions, the

contracting officer shall use the clause

with its Alternate I.

(3) For cost-reimbursement contracts

with educational institutions and other

nonprofit organizations, the contracting

officer shall use the clause with its

Alternate II.

(4) When the examination of records

by the Comptroller General is waived in

accordance with 25.901, the contracting

officer shall use the clause with its

Alternate III.

(c) When issuing a solicitation for

information or planning purposes, the

contracting officer shall insert the

provision at 52.215–3, Request for

Information or Solicitation for Planning

Purposes, and clearly mark on the face

of the solicitation that it is for

information or planning purposes.

(d) The contracting officer shall insert

the provision at 52.215–4, Type of

Business Organization, in all

solicitations.

(e) The contracting officer shall insert

the provision at 52.215–5, Facsimile

Proposals, in solicitations if facsimile

proposals are authorized (see 15.203(d)).

(f) The contracting officer shall insert

the provision at 52.215–6, Place of

Performance, in solicitations unless the

place of performance is specified by the

Government.

(g) The contracting officer shall insert

the provision at 52.215–7, Annual

Representations and Certifications—

Negotiation, in solicitations if annual

representations and certifications are

used (see 14.213).

(h) The contracting officer shall insert

the clause at 52.215–8, Order of

Precedence—Uniform Contract Format,

in solicitations and contracts using the

format at 15.204.

15.210 Forms.

Prescribed forms are not required to

prepare solicitations described in this

part. The following forms may be used

at the discretion of the contracting

officer:

(a) Standard Form 33, Solicitation,

Offer, and Award, and Optional Form

308, Solicitation and Offer— Negotiated

Acquisition, may be used to issue RFPs

and RFIs.

(b) Standard Form 30, Amendment of

Solicitation/Modification of Contract,

and Optional Form 309, Amendment of

Solicitation, may be used to amend

solicitations of negotiated contracts.

(c) Optional Form 17, Offer Label,

may be furnished with each request for

proposal.

Subpart 15.3—Source Selection

15.300 Scope of subpart.

This subpart prescribes policies and

procedures for selection of a source or

sources in competitive negotiated

acquisitions.

15.301 Definitions.

Deficiency, as used in this subpart, is

a material failure of a proposal to meet

a Government requirement or a

combination of significant weaknesses

in a proposal that increases the risk of

unsuccessful contract performance to an

unacceptable level.

Weakness, as used in this subpart, is

a flaw in the proposal that increases the

risk of unsuccessful contract

performance. A ‘‘significant weakness’’

in the proposal is a flaw that

appreciably increases the risk of

unsuccessful contract performance.

15.302 Source selection objective.

The objective of source selection is to

select the proposal that represents the

best value.

15.303 Responsibilities.

(a) Agency heads are responsible for

source selection. The contracting officer

is designated as the source selection

authority, unless the agency head

appoints another individual for a

particular acquisition or group of

acquisitions.

(b) The source selection authority

shall—

(1) Establish an evaluation team,

tailored for the particular acquisition,

that includes appropriate contracting,

legal, logistics, technical, and other

expertise to ensure a comprehensive

evaluation of offers;

(2) Approve the source selection

strategy or acquisition plan, if

applicable, before solicitation release;

(3) Ensure consistency among the

solicitation requirements, notices to

offerors, proposal preparation

instructions, evaluation factors and

subfactors, solicitation provisions or

contract clauses, and data requirements;

(4) Ensure that proposals are

evaluated based solely on the factors

and subfactors contained in the

solicitation (10 U.S.C. 2305(b)(1) and 41

U.S.C. 253b(d)(3));

(5) Consider the recommendations of

advisory boards or panels (if any); and

(6) Select the source or sources whose

proposal is the best value to the

Government (10 U.S.C. 2305(b)(4)(B)

and 41 U.S.C. 253b(d)(3)).

(c) The contracting officer shall—

(1) After release of a solicitation, serve

as the focal point for inquiries from

actual or prospective offerors;

(2) After receipt of proposals, control

exchanges with offerors in accordance

with 15.306; and

(3) Award the contract(s).

15.304 Evaluation factors and significant

subfactors.

(a) The award decision is based on

evaluation factors and significant

subfactors that are tailored to the

acquisition.

(b) Evaluation factors and significant

subfactors must—

(1) Represent the key areas of

importance and emphasis to be

considered in the source selection

decision; and

(2) Support meaningful comparison

and discrimination between and among

competing proposals.

(c) The evaluation factors and

significant subfactors that apply to an

acquisition and their relative

importance are within the broad

discretion of agency acquisition

officials, subject to the following

requirements:

(1) Price or cost to the Government

shall be evaluated in every source

selection (10 U.S.C. 2305(a)(3)(A) (ii)

and 41 U.S.C. 253a(c)(1)(B)) (also see

part 36 for architect-engineer contracts);

(2) The quality of the product or

service shall be addressed in every

source selection through consideration

of one or more non-cost evaluation

factors such as past performance,

compliance with solicitation

requirements, technical excellence,

management capability, personnel

qualifications, and prior experience (10

U.S.C. 2305(a)(3) (A)(i) and 41 U.S.C.

253a(c)(1)(A)); and (3)(i) Except as set

forth in paragraph (c)(3)(iii) of this

section, past performance shall be
Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations 51237

evaluated in all source selections for

negotiated competitive acquisitions

expected to exceed $1,000,000.

(ii) Except as set forth in paragraph

(c)(3)(iii) of this section, past

performance shall be evaluated in all

source selections for negotiated

competitive acquisitions issued on or

after January 1, 1999, for acquisitions

expected to exceed $100,000. Agencies

should develop phase-in schedules that

meet or exceed this schedule.

(iii) Past performance need not be

evaluated if the contracting officer

documents the reason past performance

is not an appropriate evaluation factor

for the acquisition (OFPP Policy Letter

92–5).

(d) All factors and significant

subfactors that will affect contract

award and their relative importance

shall be stated clearly in the solicitation

(10 U.S.C. 2305(a)(2)(A)(i) and 41 U.S.C.

253a(b)(1)(A)) (see 15.204-5(c)). The

rating method need not be disclosed in

the solicitation. The general approach

for evaluating past performance

information shall be described.

(e) The solicitation shall also state, at

a minimum, whether all evaluation

factors other than cost or price, when

combined, are—

(1) Significantly more important than

cost or price;

(2) Approximately equal to cost or

price; or

(3) Significantly less important than

cost or price (10 U.S.C. 2305(a)(3)(A)(iii)

and 41 U.S.C. 253a(c)(1)(C)).

15.305 Proposal evaluation.

(a) Proposal evaluation is an

assessment of the proposal and the

offeror’s ability to perform the

prospective contract successfully. An

agency shall evaluate competitive

proposals and then assess their relative

qualities solely on the factors and

subfactors specified in the solicitation.

Evaluations may be conducted using

any rating method or combination of

methods, including color or adjectival

ratings, numerical weights, and ordinal

rankings. The relative strengths,

deficiencies, significant weaknesses,

and risks supporting proposal

evaluation shall be documented in the

contract file.

(1) Cost or price evaluation. Normally,

competition establishes price

reasonableness. Therefore, when

contracting on a firm-fixed-price or

fixed-price with economic price

adjustment basis, comparison of the

proposed prices will usually satisfy the

requirement to perform a price analysis,

and a cost analysis need not be

performed. In limited situations, a cost

analysis (see 15.403–1(c)(1)(i)(B)) may

be appropriate to establish

reasonableness of the otherwise

successful offeror’s price. When

contracting on a cost-reimbursement

basis, evaluations shall include a cost

realism analysis to determine what the

Government should realistically expect

to pay for the proposed effort, the

offeror’s understanding of the work, and

the offeror’s ability to perform the

contract. Cost realism analyses may also

be used on fixed-price incentive

contracts or, in exceptional cases, on

other competitive fixed-price-type

contracts (see 15.404-1(d)(3)). The

contracting officer shall document the

cost or price evaluation.

(2) Past performance evaluation. (i)

Past performance information is one

indicator of an offeror’s ability to

perform the contract successfully. The

currency and relevance of the

information, source of the information,

context of the data, and general trends

in contractor’s performance shall be

considered (41 U.S.C. 401). This

comparative assessment of past

performance information is separate

from the responsibility determination

required under subpart 9.1.

(ii) The solicitation shall describe the

approach for evaluating past

performance, including evaluating

offerors with no relevant performance

history, and shall provide offerors an

opportunity to identify past or current

contracts (including Federal, State, and

local government and private) for efforts

similar to the Government requirement.

The solicitation shall also authorize

offerors to provide information on

problems encountered on the identified

contracts and the offeror corrective

actions. The Government shall consider

this information, as well as information

obtained from any other sources, when

evaluating the offeror past performance.

The source selection authority shall

determine the relevance of similar past

performance information.

(iii) The evaluation should take into

account past performance information

regarding predecessor companies, key

personnel who have relevant

experience, or subcontractors that will

perform major or critical aspects of the

requirement when such information is

relevant to the instant acquisition.

(iv) In the case of an offeror without

a record of relevant past performance or

for whom information on past

performance is not available, the offeror

may not be evaluated favorably or

unfavorably on past performance.

(3) Technical evaluation. When

tradeoffs are performed (see 15.101–1),

the source selection records shall

include—

(i) An assessment of each offeror’s

ability to accomplish the technical

requirements; and

(ii) A summary, matrix, or

quantitative ranking, along with

appropriate supporting narrative, of

each technical proposal using the

evaluation factors.

(4) Cost information. Cost information

may be provided to members of the

technical evaluation team in accordance

with agency procedures.

(b) The source selection authority may

reject all proposals received in response

to a solicitation, if doing so is in the best

interest of the Government.

(c) For restrictions on the use of

support contractor personnel in

proposal evaluation, see 37.203(d).

15.306 Exchanges with offerors after

receipt of proposals.

(a) Clarifications and award without

discussions. (1) Clarifications are

limited exchanges, between the

Government and offerors, that may

occur when award without discussions

is contemplated.

(2) If award will be made without

conducting discussions, offerors may be

given the opportunity to clarify certain

aspects of proposals (e.g., the relevance

of an offeror’s past performance

information and adverse past

performance information to which the

offeror has not previously had an

opportunity to respond) or to resolve

minor or clerical errors.

(3) Award may be made without

discussions if the solicitation states that

the Government intends to evaluate

proposals and make award without

discussions. If the solicitation contains

such a notice and the Government

determines it is necessary to conduct

discussions, the rationale for doing so

shall be documented in the contract file

(see the provision at 52.215–1) (10

U.S.C. 2305(b)(4)(A)(ii) and 41 U.S.C.

253b(d)(1)(B)).

(b) Communications with offerors

before establishment of the competitive

range. Communications are exchanges,

between the Government and offerors,

after receipt of proposals, leading to

establishment of the competitive range.

If a competitive range is to be

established, these communications—

(1) Shall be limited to the offerors

described in paragraphs (b)(1)(i) and

(b)(1)(ii) of this section and—

(i) Shall be held with offerors whose

past performance information is the

determining factor preventing them

from being placed within the

competitive range. Such

communications shall address adverse

past performance information to which
51238 Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations

an offeror has not had a prior

opportunity to respond; and

(ii) May only be held with those

offerors (other than offerors under

paragraph (b)(1)(i) of this section) whose

exclusion from, or inclusion in, the

competitive range is uncertain;

(2) May be conducted to enhance

Government understanding of

proposals; allow reasonable

interpretation of the proposal; or

facilitate the Government’s evaluation

process. Such communications shall not

be used to cure proposal deficiencies or

material omissions, materially alter the

technical or cost elements of the

proposal, and/or otherwise revise the

proposal. Such communications may be

considered in rating proposals for the

purpose of establishing the competitive

range;

(3) Are for the purpose of addressing

issues that must be explored to

determine whether a proposal should be

placed in the competitive range. Such

communications shall not provide an

opportunity for the offeror to revise its

proposal, but may address—

(i) Ambiguities in the proposal or

other concerns (e.g., perceived

deficiencies, weaknesses, errors,

omissions, or mistakes (see 14.407));

and

(ii) Information relating to relevant

past performance; and

(4) Shall address adverse past

performance information to which the

offeror has not previously had an

opportunity to comment.

(c) Competitive range. (1) Agencies

shall evaluate all proposals in

accordance with 15.305(a), and, if

discussions are to be conducted,

establish the competitive range. Based

on the ratings of each proposal against

all evaluation criteria, the contracting

officer shall establish a competitive

range comprised of all of the most

highly rated proposals, unless the range

is further reduced for purposes of

efficiency pursuant to paragraph (c)(2)

of this section.

(2) After evaluating all proposals in

accordance with 15.305(a) and

paragraph (c)(1) of this section, the

contracting officer may determine that

the number of most highly rated

proposals that might otherwise be

included in the competitive range

exceeds the number at which an

efficient competition can be conducted.

Provided the solicitation notifies

offerors that the competitive range can

be limited for purposes of efficiency (see

52.215–1(f)(4)), the contracting officer

may limit the number of proposals in

the competitive range to the greatest

number that will permit an efficient

competition among the most highly

rated proposals (10 U.S.C. 2305(b)(4)

and 41 U.S.C. 253b(d)).

(3) If the contracting officer, after

complying with paragraph (d)(3) of this

section, decides that an offeror’s

proposal should no longer be included

in the competitive range, the proposal

shall be eliminated from consideration

for award. Written notice of this

decision shall be provided to

unsuccessful offerors in accordance

with 15.503.

(4) Offerors excluded or otherwise

eliminated from the competitive range

may request a debriefing (see 15.505 and

15.506).

(d) Exchanges with offerors after

establishment of the competitive range.

Negotiations are exchanges, in either a

competitive or sole source environment,

between the Government and offerors,

that are undertaken with the intent of

allowing the offeror to revise its

proposal. These negotiations may

include bargaining. Bargaining includes

persuasion, alteration of assumptions

and positions, give-and-take, and may

apply to price, schedule, technical

requirements, type of contract, or other

terms of a proposed contract. When

negotiations are conducted in a

competitive acquisition, they take place

after establishment of the competitive

range and are called discussions.

(1) Discussions are tailored to each

offeror’s proposal, and shall be

conducted by the contracting officer

with each offeror within the competitive

range.

(2) The primary objective of

discussions is to maximize the

Government’s ability to obtain best

value, based on the requirement and the

evaluation factors set forth in the

solicitation.

(3) The contracting officer shall,

subject to paragraphs (d)(4) and (e) of

this section and 15.307(a), indicate to,

or discuss with, each offeror still being

considered for award, significant

weaknesses, deficiencies, and other

aspects of its proposal (such as cost,

price, technical approach, past

performance, and terms and conditions)

that could, in the opinion of the

contracting officer, be altered or

explained to enhance materially the

proposal’s potential for award. The

scope and extent of discussions are a

matter of contracting officer judgment.

In discussing other aspects of the

proposal, the Government may, in

situations where the solicitation stated

that evaluation credit would be given

for technical solutions exceeding any

mandatory minimums, negotiate with

offerors for increased performance

beyond any mandatory minimums, and

the Government may suggest to offerors

that have exceeded any mandatory

minimums (in ways that are not integral

to the design), that their proposals

would be more competitive if the

excesses were removed and the offered

price decreased.

(4) If, after discussions have begun, an

offeror originally in the competitive

range is no longer considered to be

among the most highly rated offerors

being considered for award, that offeror

may be eliminated from the competitive

range whether or not all material aspects

of the proposal have been discussed, or

whether or not the offeror has been

afforded an opportunity to submit a

proposal revision (see 15.307(a) and

15.503(a)(1)).

(e) Limits on exchanges. Government

personnel involved in the acquisition

shall not engage in conduct that—

(1) Favors one offeror over another;

(2) Reveals an offeror’s technical

solution, including unique technology,

innovative and unique uses of

commercial items, or any information

that would compromise an offeror’s

intellectual property to another offeror;

(3) Reveals an offerors price without

that offeror’s permission. However, the

contracting officer may inform an

offeror that its price is considered by the

Government to be too high, or too low,

and reveal the results of the analysis

supporting that conclusion. It is also

permissible, at the Government’s

discretion, to indicate to all offerors the

cost or price that the Government’s

price analysis, market research, and

other reviews have identified as

reasonable (41 U.S.C. 423(h)(1)(2));

(4) Reveals the names of individuals

providing reference information about

an offeror’s past performance; or

(5) Knowingly furnishes source

selection information in violation of

3.104 and 41 U.S.C. 423(h)(1)(2).

15.307 Proposal revisions.

(a) If an offerors proposal is

eliminated or otherwise removed from

the competitive range, no further

revisions to that offeror’s proposal shall

be accepted or considered.

(b) The contracting officer may

request or allow proposal revisions to

clarify and document understandings

reached during negotiations. At the

conclusion of discussions, each offeror

still in the competitive range shall be

given an opportunity to submit a final

proposal revision. The contracting

officer is required to establish a

common cut-off date only for receipt of

final proposal revisions. Requests for

final proposal revisions shall advise

offerors that the final proposal revisions

shall be in writing and that the
Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations 51239

Government intends to make award

without obtaining further revisions.

15.308 Source selection decision.

The source selection authority’s (SSA)

decision shall be based on a

comparative assessment of proposals

against all source selection criteria in

the solicitation. While the SSA may use

reports and analyses prepared by others,

the source selection decision shall

represent the SSA’s independent

judgment. The source selection decision

shall be documented, and the

documentation shall include the

rationale for any business judgments

and tradeoffs made or relied on by the

SSA, including benefits associated with

additional costs. Although the rationale

for the selection decision must be

documented, that documentation need

not quantify the tradeoffs that led to the

decision.

Subpart 15.4—Contract Pricing

15.400 Scope of subpart.

This subpart prescribes the cost and

price negotiation policies and

procedures for pricing negotiated prime

contracts (including subcontracts) and

contract modifications, including

modifications to contracts awarded by

sealed bidding.

15.401 Definitions.

Cost or pricing data (10 U.S.C.

2306a(h)(1) and 41 U.S.C. 254b) means

all facts that, as of the date of price

agreement or, if applicable, an earlier

date agreed upon between the parties

that is as close as practicable to the date

of agreement on price, prudent buyers

and sellers would reasonably expect to

affect price negotiations significantly.

Cost or pricing data are data requiring

certification in accordance with 15.406–

2. Cost or pricing data are factual, not

judgmental; and are verifiable. While

they do not indicate the accuracy of the

prospective contractor’s judgment about

estimated future costs or projections,

they do include the data forming the

basis for that judgment. Cost or pricing

data are more than historical accounting

data; they are all the facts that can be

reasonably expected to contribute to the

soundness of estimates of future costs

and to the validity of determinations of

costs already incurred. They also

include such factors as: vendor

quotations; nonrecurring costs;

information on changes in production

methods and in production or

purchasing volume; data supporting

projections of business prospects and

objectives and related operations costs;

unit-cost trends such as those associated

with labor efficiency; make-or-buy

decisions; estimated resources to attain

business goals; and information on

management decisions that could have

a significant bearing on costs.

Cost realism means that the costs in

an offeror’s proposal are realistic for the

work to be performed; reflect a clear

understanding of the requirements; and

are consistent with the various elements

of the offeror’s technical proposal.

Forward pricing rate agreement

means a written agreement negotiated

between a contractor and the

Government to make certain rates

available during a specified period for

use in pricing contracts or

modifications. Such rates represent

reasonable projections of specific costs

that are not easily estimated for,

identified with, or generated by a

specific contract, contract end item, or

task. These projections may include

rates for such things as labor, indirect

costs, material obsolescence and usage,

spare parts provisioning, and material

handling.

Forward pricing rate recommendation

means a rate set unilaterally by the

administrative contracting officer for

use by the Government in negotiations

or other contract actions when forward

pricing rate agreement negotiations have

not been completed or when the

contractor will not agree to a forward

pricing rate agreement.

Information other than cost or pricing

data means any type of information that

is not required to be certified in

accordance with 15.406–2 and is

necessary to determine price

reasonableness or cost realism. For

example, such information may include

pricing, sales, or cost information, and

includes cost or pricing data for which

certification is determined inapplicable

after submission.

Price, as used in this subpart, means

cost plus any fee or profit applicable to

the contract type.

Subcontract, as used in this subpart,

also includes a transfer of commercial

items between divisions, subsidiaries, or

affiliates of a contractor or a

subcontractor (10 U.S.C. 2306a(h)(2) and

41 U.S.C. 254b(h)(2)).

15.402 Pricing policy.

Contracting officers shall—

(a) Purchase supplies and services

from responsible sources at fair and

reasonable prices. In establishing the

reasonableness of the offered prices, the

contracting officer shall not obtain more

information than is necessary. To the

extent that cost or pricing data are not

required by 15.403–4, the contracting

officer shall generally use the following

order of preference in determining the

type of information required:

(1) No additional information from

the offeror, if the price is based on

adequate price competition, except as

provided by 15.403–3(b).

(2) Information other than cost or

pricing data:

(i) Information related to prices (e.g.,

established catalog or market prices or

previous contract prices), relying first

on information available within the

Government; second, on information

obtained from sources other than the

offeror; and, if necessary, on

information obtained from the offeror.

When obtaining information from the

offeror is necessary, unless an exception

under 15.403–1(b) (1) or (2) applies,

such information submitted by the

offeror shall include, at a minimum,

appropriate information on the prices at

which the same or similar items have

been sold previously, adequate for

evaluating the reasonableness of the

price.

(ii) Cost information, that does not

meet the definition of cost or pricing

data at 15.401.

(3) Cost or pricing data. The

contracting officer should use every

means available to ascertain whether a

fair and reasonable price can be

determined before requesting cost or

pricing data. Contracting officers shall

not require unnecessarily the

submission of cost or pricing data,

because it leads to increased proposal

preparation costs, generally extends

acquisition lead time, and consumes

additional contractor and Government

resources.

(b) Price each contract separately and

independently and not—

(1) Use proposed price reductions

under other contracts as an evaluation

factor; or

(2) Consider losses or profits realized

or anticipated under other contracts.

(c) Not include in a contract price any

amount for a specified contingency to

the extent that the contract provides for

a price adjustment based upon the

occurrence of that contingency.

15.403 Obtaining cost or pricing data.

15.403–1 Prohibition on obtaining cost or

pricing data (10 U.S.C. 2306a and 41 U.S.C.

254b).

(a) Cost or pricing data shall not be

obtained for acquisitions at or below the

simplified acquisition threshold.

(b) Exceptions to cost or pricing data

requirements. The contracting officer

shall not require submission of cost or

pricing data to support any action

(contracts, subcontracts, or

modifications) (but may require

information other than cost or pricing

data to support a determination of price

reasonableness or cost realism)—
51240 Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations

(1) When the contracting officer

determines that prices agreed upon are

based on adequate price competition

(see standards in paragraph (c)(1) of this

subsection);

(2) When the contracting officer

determines that prices agreed upon are

based on prices set by law or regulation

(see standards in paragraph (c)(2) of this

subsection);

(3) When a commercial item is being

acquired (see standards in paragraph

(c)(3) of this subsection);

(4) When a waiver has been granted

(see standards in paragraph (c)(4) of this

subsection); or

(5) When modifying a contract or

subcontract for commercial items (see

standards in paragraph (c)(3) of this

subsection).

(c) Standards for exceptions from cost

or pricing data requirements—(1)

Adequate price competition. A price is

based on adequate price competition

if—

(i) Two or more responsible offerors,

competing independently, submit

priced offers that satisfy the

Government’s expressed requirement

and if—

(A) Award will be made to the offeror

whose proposal represents the best

value (see 2.101) where price is a

substantial factor in source selection;

and

(B) There is no finding that the price

of the otherwise successful offeror is

unreasonable. Any finding that the price

is unreasonable must be supported by a

statement of the facts and approved at

a level above the contracting officer;

(ii) There was a reasonable

expectation, based on market research

or other assessment, that two or more

responsible offerors, competing

independently, would submit priced

offers in response to the solicitation’s

expressed requirement, even though

only one offer is received from a

responsible offeror and if—

(A) Based on the offer received, the

contracting officer can reasonably

conclude that the offer was submitted

with the expectation of competition,

e.g., circumstances indicate that—

(1) The offeror believed that at least

one other offeror was capable of

submitting a meaningful offer; and

(2) The offeror had no reason to

believe that other potential offerors did

not intend to submit an offer; and

(B) The determination that the

proposed price is based on adequate

price competition, is reasonable, and is

approved at a level above the

contracting officer; or

(iii) Price analysis clearly

demonstrates that the proposed price is

reasonable in comparison with current

or recent prices for the same or similar

items, adjusted to reflect changes in

market conditions, economic

conditions, quantities, or terms and

conditions under contracts that resulted

from adequate price competition.

(2) Prices set by law or regulation.

Pronouncements in the form of periodic

rulings, reviews, or similar actions of a

governmental body, or embodied in the

laws, are sufficient to set a price.

(3) Commercial items. Any

acquisition for an item that meets the

commercial item definition in 2.101, or

any modification, as defined in

paragraph (c)(1) or (2) of that definition,

that does not change the item from a

commercial item to a noncommercial

item, is exempt from the requirement for

cost or pricing data.

(4) Waivers. The head of the

contracting activity (HCA) may, without

power of delegation, waive the

requirement for submission of cost or

pricing data in exceptional cases. The

authorization for the waiver and the

supporting rationale shall be in writing.

The HCA may consider waiving the

requirement if the price can be

determined to be fair and reasonable

without submission of cost or pricing

data. For example, if cost or pricing data

were furnished on previous production

buys and the contracting officer

determines such data are sufficient,

when combined with updated

information, a waiver may be granted. If

the HCA has waived the requirement for

submission of cost or pricing data, the

contractor or higher-tier subcontractor

to whom the waiver relates shall be

considered as having been required to

provide cost or pricing data.

Consequently, award of any lower-tier

subcontract expected to exceed the cost

or pricing data threshold requires the

submission of cost or pricing data

unless an exception otherwise applies to

the subcontract or the waiver

specifically includes that subcontract.

15.403–2 Other circumstances where cost

or pricing data are not required.

(a) The exercise of an option at the

price established at contract award or

initial negotiation does not require

submission of cost or pricing data.

(b) Cost or pricing data are not

required for proposals used solely for

overrun funding or interim billing price

adjustments.

15.403–3 Requiring information other than

cost or pricing data.

(a) General. (1) The contracting officer

is responsible for obtaining information

that is adequate for evaluating the

reasonableness of the price or

determining cost realism. However, the

contracting officer should not obtain

more information than is necessary for

determining the reasonableness of the

price or evaluating cost realism. To the

extent necessary to determine the

reasonableness of the price, the

contracting officer shall require

submission of information from the

offeror. Unless an exception under

15.403–1(b)(1) or (2) applies, such

information submitted by the offeror

shall include, at a minimum,

appropriate information on the prices at

which the same item or similar items

have previously been sold, adequate for

determining the reasonableness of the

price (10 U.S.C. 2306a(d)(1) and 41

U.S.C. 254b(d)(1)).

(2) The contractor’s format for

submitting such information should be

used (see 15.403–5(b)(2)).

(3) The contracting officer shall

ensure that information used to support

price negotiations is sufficiently current

to permit negotiation of a fair and

reasonable price. Requests for updated

offeror information should be limited to

information that affects the adequacy of

the proposal for negotiations, such as

changes in price lists. Such data shall

not be certified in accordance with

15.406–2.

(b) Adequate price competition. When

adequate price competition exists (see

15.403–1(c)(1)), generally no additional

information is necessary to determine

the reasonableness of price. However, if

there are unusual circumstances where

it is concluded that additional

information is necessary to determine

the reasonableness of price, the

contracting officer shall, to the

maximum extent practicable, obtain the

additional information from sources

other than the offeror. In addition, the

contracting officer may request

information to determine the cost

realism of competing offers or to

evaluate competing approaches.

(c) Limitations relating to commercial

items (10 U.S.C. 2306a(d)(2) and 41

U.S.C. 254b(d)). (1) Requests for sales

data relating to commercial items shall

be limited to data for the same or similar

items during a relevant time period.

(2) The contracting officer shall, to the

maximum extent practicable, limit the

scope of the request for information

relating to commercial items to include

only information that is in the form

regularly maintained by the offeror as

part of its commercial operations.

(3) Information obtained relating to

commercial items that is exempt from

disclosure under 24.202(a) or the

Freedom of Information Act (5 U.S.C.

552(b)) shall not be disclosed outside

the Government.
Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations 51241

15.403–4 Requiring cost or pricing data

(10 U.S.C. 2306a and 41 U.S.C. 254b).

(a)(1) Cost or pricing data shall be

obtained only if the contracting officer

concludes that none of the exceptions in

15.403–1(b) applies. However, if the

contracting officer has sufficient

information available to determine price

reasonableness, then a waiver under the

exception at 15.403–1(b)(4) should be

considered. The threshold for obtaining

cost or pricing data is $500,000. Unless

an exception applies, cost or pricing

data are required before accomplishing

any of the following actions expected to

exceed the current threshold or, in the

case of existing contracts, the threshold

specified in the contract:

(i) The award of any negotiated

contract (except for undefinitized

actions such as letter contracts).

(ii) The award of a subcontract at any

tier, if the contractor and each highertier subcontractor have been required to

furnish cost or pricing data (but see

waivers at 15.403–1(c)(4)).

(iii) The modification of any sealed

bid or negotiated contract (whether or

not cost or pricing data were initially

required) or any subcontract covered by

paragraph (a)(1)(ii) of this subsection.

Price adjustment amounts shall consider

both increases and decreases (e.g., a

$150,000 modification resulting from a

reduction of $350,000 and an increase of

$200,000 is a pricing adjustment

exceeding $500,000). This requirement

does not apply when unrelated and

separately priced changes for which cost

or pricing data would not otherwise be

required are included for administrative

convenience in the same modification.

Negotiated final pricing actions (such as

termination settlements and total final

price agreements for fixed-price

incentive and redeterminable contracts)

are contract modifications requiring cost

or pricing data if the total final price

agreement for such settlements or

agreements exceeds the pertinent

threshold set forth at paragraph (a)(1) of

this subsection, or the partial

termination settlement plus the estimate

to complete the continued portion of the

contract exceeds the pertinent threshold

set forth at paragraph (a)(1) of this

subsection (see 49.105(c)(15)).

(2) Unless prohibited because an

exception at 15.403–1(b) applies, the

head of the contracting activity, without

power of delegation, may authorize the

contracting officer to obtain cost or

pricing data for pricing actions below

the pertinent threshold in paragraph

(a)(1) of this subsection, provided the

action exceeds the simplified

acquisition threshold. The head of the

contracting activity shall justify the

requirement for cost or pricing data. The

documentation shall include a written

finding that cost or pricing data are

necessary to determine whether the

price is fair and reasonable and the facts

supporting that finding.

(b) When cost or pricing data are

required, the contracting officer shall

require the contractor or prospective

contractor to submit to the contracting

officer (and to have any subcontractor or

prospective subcontractor submit to the

prime contractor or appropriate

subcontractor tier) the following in

support of any proposal:

(1) The cost or pricing data.

(2) A certificate of current cost or

pricing data, in the format specified in

15.406–2, certifying that to the best of

its knowledge and belief, the cost or

pricing data were accurate, complete,

and current as of the date of agreement

on price or, if applicable, an earlier date

agreed upon between the parties that is

as close as practicable to the date of

agreement on price.

(c) If cost or pricing data are requested

and submitted by an offeror, but an

exception is later found to apply, the

data shall not be considered cost or

pricing data as defined in 15.401 and

shall not be certified in accordance with

15.406–2.

(d) The requirements of this

subsection also apply to contracts

entered into by an agency on behalf of

a foreign government.

15.403–5 Instructions for submission of

cost or pricing data or information other

than cost or pricing data.

(a) Taking into consideration the

policy at 15.402, the contracting officer

shall specify in the solicitation (see

15.408 (l) and (m))—

(1) Whether cost or pricing data are

required;

(2) That, in lieu of submitting cost or

pricing data, the offeror may submit a

request for exception from the

requirement to submit cost or pricing

data;

(3) Any information other than cost or

pricing data that is required; and

(4) Necessary preaward or postaward

access to offeror’s records.

(b)(1) Unless required to be submitted

on one of the termination forms

specified in Subpart 49.6, the

contracting officer may require

submission of cost or pricing data in the

format indicated in Table 15–2 of

15.408, specify an alternative format, or

permit submission in the contractor’s

format.

(2) Information other than cost or

pricing data may be submitted in the

offeror’s own format unless the

contracting officer decides that use of a

specific format is essential and the

format has been described in the

solicitation.

(3) Data supporting forward pricing

rate agreements or final indirect cost

proposals shall be submitted in a form

acceptable to the contracting officer.

15.404 Proposal analysis.

15.404–1 Proposal analysis techniques.

(a) General. The objective of proposal

analysis is to ensure that the final

agreed-to price is fair and reasonable.

(1) The contracting officer is

responsible for evaluating the

reasonableness of the offered prices. The

analytical techniques and procedures

described in this section may be used,

singly or in combination with others, to

ensure that the final price is fair and

reasonable. The complexity and

circumstances of each acquisition

should determine the level of detail of

the analysis required.

(2) Price analysis shall be used when

cost or pricing data are not required (see

paragraph (b) of this subsection and

15.404–3).

(3) Cost analysis shall be used to

evaluate the reasonableness of

individual cost elements when cost or

pricing data are required. Price analysis

should be used to verify that the overall

price offered is fair and reasonable.

(4) Cost analysis may also be used to

evaluate information other than cost or

pricing data to determine cost

reasonableness or cost realism.

(5) The contracting officer may

request the advice and assistance of

other experts to ensure that an

appropriate analysis is performed.

(6) Recommendations or conclusions

regarding the Government’s review or

analysis of an offeror’s or contractor’s

proposal shall not be disclosed to the

offeror or contractor without the

concurrence of the contracting officer.

Any discrepancy or mistake of fact

(such as duplications, omissions, and

errors in computation) contained in the

cost or pricing data or information other

than cost or pricing data submitted in

support of a proposal shall be brought

to the contracting officer’s attention for

appropriate action.

(7) The Air Force Institute of

Technology (AFIT) and the Federal

Acquisition Institute (FAI) jointly

prepared a five-volume set of Contract

Pricing Resource Guides to guide

pricing and negotiation personnel. The

five guides are: I Price Analysis, II

Quantitative Techniques for Contract

Pricing, III Cost Analysis, IV Advanced

Issues in Contract Pricing, and V

Federal Contract Negotiation

Techniques. These references provide

detailed discussion and examples
51242 Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations

applying pricing policies to pricing

problems. They are to be used for

instruction and professional guidance.

However, they are not directive and

should be considered informational

only. Free copies of the references are

available on the World Wide Web,

Internet address http://www.gsa.gov/fai.

(b) Price analysis. (1) Price analysis is

the process of examining and evaluating

a proposed price without evaluating its

separate cost elements and proposed

profit.

(2) The Government may use various

price analysis techniques and

procedures to ensure a fair and

reasonable price, given the

circumstances surrounding the

acquisition. Examples of such

techniques include, but are not limited

to the following:

(i) Comparison of proposed prices

received in response to the solicitation.

(ii) Comparison of previously

proposed prices and contract prices

with current proposed prices for the

same or similar end items, if both the

validity of the comparison and the

reasonableness of the previous price(s)

can be established.

(iii) Use of parametric estimating

methods/application of rough yardsticks

(such as dollars per pound or per

horsepower, or other units) to highlight

significant inconsistencies that warrant

additional pricing inquiry.

(iv) Comparison with competitive

published price lists, published market

prices of commodities, similar indexes,

and discount or rebate arrangements.

(v) Comparison of proposed prices

with independent Government cost

estimates.

(vi) Comparison of proposed prices

with prices obtained through market

research for the same or similar items.

(c) Cost analysis. (1) Cost analysis is

the review and evaluation of the

separate cost elements and profit in an

offeror’s or contractor’s proposal

(including cost or pricing data or

information other than cost or pricing

data), and the application of judgment

to determine how well the proposed

costs represent what the cost of the

contract should be, assuming reasonable

economy and efficiency.

(2) The Government may use various

cost analysis techniques and procedures

to ensure a fair and reasonable price,

given the circumstances of the

acquisition. Such techniques and

procedures include the following:

(i) Verification of cost or pricing data

and evaluation of cost elements,

including—

(A) The necessity for, and

reasonableness of, proposed costs,

including allowances for contingencies;

(B) Projection of the offeror’s cost

trends, on the basis of current and

historical cost or pricing data;

(C) Reasonableness of estimates

generated by appropriately calibrated

and validated parametric models or

cost-estimating relationships; and

(D) The application of audited or

negotiated indirect cost rates, labor

rates, and cost of money or other factors.

(ii) Evaluating the effect of the

offeror’s current practices on future

costs. In conducting this evaluation, the

contracting officer shall ensure that the

effects of inefficient or uneconomical

past practices are not projected into the

future. In pricing production of recently

developed complex equipment, the

contracting officer should perform a

trend analysis of basic labor and

materials, even in periods of relative

price stability.

(iii) Comparison of costs proposed by

the offeror for individual cost elements

with—

(A) Actual costs previously incurred

by the same offeror;

(B) Previous cost estimates from the

offeror or from other offerors for the

same or similar items;

(C) Other cost estimates received in

response to the Government’s request;

(D) Independent Government cost

estimates by technical personnel; and

(E) Forecasts of planned expenditures.

(iv) Verification that the offeror’s cost

submissions are in accordance with the

contract cost principles and procedures

in part 31 and, when applicable, the

requirements and procedures in 48 CFR

Chapter 99 (Appendix to the FAR

looseleaf edition), Cost Accounting

Standards.

(v) Review to determine whether any

cost or pricing data necessary to make

the contractor’s proposal accurate,

complete, and current have not been

either submitted or identified in writing

by the contractor. If there are such data,

the contracting officer shall attempt to

obtain them and negotiate, using them

or making satisfactory allowance for the

incomplete data.

(vi) Analysis of the results of any

make-or-buy program reviews, in

evaluating subcontract costs (see

15.407–2).

(d) Cost realism analysis. (1) Cost

realism analysis is the process of

independently reviewing and evaluating

specific elements of each offeror’s

proposed cost estimate to determine

whether the estimated proposed cost

elements are realistic for the work to be

performed; reflect a clear understanding

of the requirements; and are consistent

with the unique methods of

performance and materials described in

the offeror’s technical proposal.

(2) Cost realism analyses shall be

performed on cost-reimbursement

contracts to determine the probable cost

of performance for each offeror.

(i) The probable cost may differ from

the proposed cost and should reflect the

Government’s best estimate of the cost

of any contract that is most likely to

result from the offeror’s proposal. The

probable cost shall be used for purposes

of evaluation to determine the best

value.

(ii) The probable cost is determined

by adjusting each offeror’s proposed

cost, and fee when appropriate, to

reflect any additions or reductions in

cost elements to realistic levels based on

the results of the cost realism analysis.

(3) Cost realism analyses may also be

used on competitive fixed-price

incentive contracts or, in exceptional

cases, on other competitive fixed-pricetype contracts when new requirements

may not be fully understood by

competing offerors, there are quality

concerns, or past experience indicates

that contractors proposed costs have

resulted in quality or service shortfalls.

Results of the analysis may be used in

performance risk assessments and

responsibility determinations. However,

proposals shall be evaluated using the

criteria in the solicitation, and the

offered prices shall not be adjusted as a

result of the analysis.

(e) Technical analysis. (1) The

contracting officer may request that

personnel having specialized

knowledge, skills, experience, or

capability in engineering, science, or

management perform a technical

analysis of the proposed types and

quantities of materials, labor, processes,

special tooling, facilities, the

reasonableness of scrap and spoilage,

and other associated factors set forth in

the proposal(s) in order to determine the

need for and reasonableness of the

proposed resources, assuming

reasonable economy and efficiency.

(2) At a minimum, the technical

analysis should examine the types and

quantities of material proposed and the

need for the types and quantities of

labor hours and the labor mix. Any

other data that may be pertinent to an

assessment of the offeror’s ability to

accomplish the technical requirements

or to the cost or price analysis of the

service or product being proposed

should also be included in the analysis.

(f) Unit prices. (1) Except when

pricing an item on the basis of adequate

price competition or catalog or market

price, unit prices shall reflect the

intrinsic value of an item or service and

shall be in proportion to an item’s base

cost (e.g., manufacturing or acquisition

costs). Any method of distributing costs
Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations 51243

to line items that distorts the unit prices

shall not be used. For example,

distributing costs equally among line

items is not acceptable except when

there is little or no variation in base

cost.

(2) Except for the acquisition of

commercial items, contracting officers

shall require that offerors identify in

their proposals those items of supply

that they will not manufacture or to

which they will not contribute

significant value, unless adequate price

competition is expected (10 U.S.C. 2304

and 41 U.S.C. 254(d)(5)(A)(i)). Such

information shall be used to determine

whether the intrinsic value of an item

has been distorted through application

of overhead and whether such items

should be considered for breakout. The

contracting officer may require such

information in all other negotiated

contracts when appropriate.

(g) Unbalanced pricing. (1)

Unbalanced pricing may increase

performance risk and could result in

payment of unreasonably high prices.

Unbalanced pricing exists when, despite

an acceptable total evaluated price, the

price of one or more contract line items

is significantly over or understated as

indicated by the application of cost or

price analysis techniques. The greatest

risks associated with unbalanced

pricing occur when—

(i) Startup work, mobilization, first

articles, or first article testing are

separate line items;

(ii) Base quantities and option

quantities are separate line items; or

(iii) The evaluated price is the

aggregate of estimated quantities to be

ordered under separate line items of an

indefinite-delivery contract.

(2) All offers with separately priced

line items or subline items shall be

analyzed to determine if the prices are

unbalanced. If cost or price analysis

techniques indicate that an offer is

unbalanced, the contracting officer

shall—

(i) Consider the risks to the

Government associated with the

unbalanced pricing in determining the

competitive range and in making the

source selection decision; and

(ii) Consider whether award of the

contract will result in paying

unreasonably high prices for contract

performance.

(3) An offer may be rejected if the

contracting officer determines that the

lack of balance poses an unacceptable

risk to the Government.

15.404–2 Information to support proposal

analysis.

(a) Field pricing assistance. (1) The

contracting officer should request field

pricing assistance when the information

available at the buying activity is

inadequate to determine a fair and

reasonable price. Such requests shall be

tailored to reflect the minimum

essential supplementary information

needed to conduct a technical or cost or

pricing analysis.

(2) Field pricing assistance generally

is directed at obtaining technical, audit,

and special reports associated with the

cost elements of a proposal, including

subcontracts. Information on related

pricing practices and history may also

be obtained. Field pricing assistance

may also include information relative to

the business, technical, production, or

other capabilities and practices of an

offeror. The type of information and

level of detail requested will vary in

accordance with the specialized

resources available at the buying

activity and the magnitude and

complexity of the required analysis.

(3) When field pricing assistance is

requested, contracting officers are

encouraged to team with appropriate

field experts throughout the acquisition

process, including negotiations. Early

communication with these experts will

assist in determining the extent of

assistance required, the specific areas

for which assistance is needed, a

realistic review schedule, and the

information necessary to perform the

review.

(4) When requesting field pricing

assistance on a contractor’s request for

equitable adjustment, the contracting

officer shall provide the information

listed in 43.204(b)(5).

(5) Field pricing information and

other reports may include proprietary or

source selection information (see 3.104–

4 (j) and (k)). Such information shall be

appropriately identified and protected

accordingly.

(b) Reporting field pricing

information. (1) Depending upon the

extent and complexity of the field

pricing review, results, including

supporting rationale, may be reported

directly to the contracting officer orally,

in writing, or by any other method

acceptable to the contracting officer.

(i) Whenever circumstances permit,

the contracting officer and field pricing

experts are encouraged to use

telephonic and/or electronic means to

request and transmit pricing

information.

(ii) When it is necessary to have

written technical and audit reports, the

contracting officer shall request that the

audit agency concurrently forward the

audit report to the requesting

contracting officer and the

administrative contracting officer

(ACO). The completed field pricing

assistance results may reference audit

information, but need not reconcile the

audit recommendations and technical

recommendations. A copy of the

information submitted to the contracting

officer by field pricing personnel shall

be provided to the audit agency.

(2) Audit and field pricing

information, whether written or

reported telephonically or

electronically, shall be made a part of

the official contract file (see 4.807(f)).

(c) Audit assistance for prime

contracts or subcontracts. (1) The

contracting officer may contact the

cognizant audit office directly,

particularly when an audit is the only

field pricing support required. The audit

office shall send the audit report, or

otherwise transmit the audit

recommendations, directly to the

contracting officer.

(i) The auditor shall not reveal the

audit conclusions or recommendations

to the offeror/contractor without

obtaining the concurrence of the

contracting officer. However, the auditor

may discuss statements of facts with the

contractor.

(ii) The contracting officer should be

notified immediately of any information

disclosed to the auditor after submission

of a report that may significantly affect

the audit findings and, if necessary, a

supplemental audit report shall be

issued.

(2) The contracting officer shall not

request a separate preaward audit of

indirect costs unless the information

already available from an existing audit,

completed within the preceding 12

months, is considered inadequate for

determining the reasonableness of the

proposed indirect costs (41 U.S.C. 254d

and 10 U.S.C. 2313).

(3) The auditor is responsible for the

scope and depth of the audit. Copies of

updated information that will

significantly affect the audit should be

provided to the auditor by the

contracting officer.

(4) General access to the offeror’s

books and financial records is limited to

the auditor. This limitation does not

preclude the contracting officer or the

ACO, or their representatives, from

requesting that the offeror provide or

make available any data or records

necessary to analyze the offeror’s

proposal.

(d) Deficient proposals. The ACO or

the auditor, as appropriate, shall notify

the contracting officer immediately if

the data provided for review is so

deficient as to preclude review or audit,

or if the contractor or offeror has denied

access to any records considered

essential to conduct a satisfactory

review or audit. Oral notifications shall
51244 Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations

be confirmed promptly in writing,

including a description of deficient or

denied data or records. The contracting

officer immediately shall take

appropriate action to obtain the required

data. Should the offeror/contractor again

refuse to provide adequate data, or

provide access to necessary data, the

contracting officer shall withhold the

award or price adjustment and refer the

contract action to a higher authority,

providing details of the attempts made

to resolve the matter and a statement of

the practicability of obtaining the

supplies or services from another

source.

15.404–3 Subcontract pricing

considerations.

(a) The contracting officer is

responsible for the determination of

price reasonableness for the prime

contract, including subcontracting costs.

The contracting officer should consider

whether a contractor or subcontractor

has an approved purchasing system, has

performed cost or price analysis of

proposed subcontractor prices, or has

negotiated the subcontract prices before

negotiation of the prime contract, in

determining the reasonableness of the

prime contract price. This does not

relieve the contracting officer from the

responsibility to analyze the contractor’s

submission, including subcontractor’s

cost or pricing data.

(b) The prime contractor or

subcontractor shall—

(1) Conduct appropriate cost or price

analyses to establish the reasonableness

of proposed subcontract prices;

(2) Include the results of these

analyses in the price proposal; and

(3) When required by paragraph (c) of

this subsection, submit subcontractor

cost or pricing data to the Government

as part of its own cost or pricing data.

(c) Any contractor or subcontractor

that is required to submit cost or pricing

data also shall obtain and analyze cost

or pricing data before awarding any

subcontract, purchase order, or

modification expected to exceed the

cost or pricing data threshold, unless an

exception in 15.403–1(b) applies to that

action.

(1) The contractor shall submit, or

cause to be submitted by the

subcontractor(s), cost or pricing data to

the Government for subcontracts that

are the lower of either—

(i) $10,000,000 or more; or

(ii) Both more than the pertinent cost

or pricing data threshold and more than

10 percent of the prime contractor’s

proposed price, unless the contracting

officer believes such submission is

unnecessary.

(2) The contracting officer may

require the contractor or subcontractor

to submit to the Government (or cause

submission of) subcontractor cost or

pricing data below the thresholds in

paragraph (c)(1) of this subsection that

the contracting officer considers

necessary for adequately pricing the

prime contract.

(3) Subcontractor cost or pricing data

shall be submitted in the format

provided in Table 15–2 of 15.408 or the

alternate format specified in the

solicitation.

(4) Subcontractor cost or pricing data

shall be current, accurate, and complete

as of the date of price agreement, or, if

applicable, an earlier date agreed upon

by the parties and specified on the

contractor’s Certificate of Current Cost

or Pricing Data. The contractor shall

update subcontractor’s data, as

appropriate, during source selection and

negotiations.

(5) If there is more than one

prospective subcontractor for any given

work, the contractor need only submit

to the Government cost or pricing data

for the prospective subcontractor most

likely to receive the award.

15.404–4 Profit.

(a) General. This subsection

prescribes policies for establishing the

profit or fee portion of the Government

prenegotiation objective in price

negotiations based on cost analysis.

(1) Profit or fee prenegotiation

objectives do not necessarily represent

net income to contractors. Rather, they

represent that element of the potential

total remuneration that contractors may

receive for contract performance over

and above allowable costs. This

potential remuneration element and the

Government’s estimate of allowable

costs to be incurred in contract

performance together equal the

Government’s total prenegotiation

objective. Just as actual costs may vary

from estimated costs, the contractor’s

actual realized profit or fee may vary

from negotiated profit or fee, because of

such factors as efficiency of

performance, incurrence of costs the

Government does not recognize as

allowable, and the contract type.

(2) It is in the Government’s interest

to offer contractors opportunities for

financial rewards sufficient to stimulate

efficient contract performance, attract

the best capabilities of qualified large

and small business concerns to

Government contracts, and maintain a

viable industrial base.

(3) Both the Government and

contractors should be concerned with

profit as a motivator of efficient and

effective contract performance.

Negotiations aimed merely at reducing

prices by reducing profit, without

proper recognition of the function of

profit, are not in the Government’s

interest. Negotiation of extremely low

profits, use of historical averages, or

automatic application of predetermined

percentages to total estimated costs do

not provide proper motivation for

optimum contract performance.

(b) Policy. (1) Structured approaches

(see paragraph (d) of this subsection) for

determining profit or fee prenegotiation

objectives provide a discipline for

ensuring that all relevant factors are

considered. Subject to the authorities in

1.301(c), agencies making

noncompetitive contract awards over

$100,000 totaling $50 million or more a

year—

(i) Shall use a structured approach for

determining the profit or fee objective in

those acquisitions that require cost

analysis; and

(ii) May prescribe specific exemptions

for situations in which mandatory use of

a structured approach would be clearly

inappropriate.

(2) Agencies may use another agency’s

structured approach.

(c) Contracting officer responsibilities.

(1) When the price negotiation is not

based on cost analysis, contracting

officers are not required to analyze

profit.

(2) When the price negotiation is

based on cost analysis, contracting

officers in agencies that have a

structured approach shall use it to

analyze profit. When not using a

structured approach, contracting officers

shall comply with paragraph (d)(1) of

this subsection in developing profit or

fee prenegotiation objectives.

(3) Contracting officers shall use the

Government prenegotiation cost

objective amounts as the basis for

calculating the profit or fee

prenegotiation objective. Before

applying profit or fee factors, the

contracting officer shall exclude any

facilities capital cost of money included

in the cost objective amounts. If the

prospective contractor fails to identify

or propose facilities capital cost of

money in a proposal for a contract that

will be subject to the cost principles for

contracts with commercial organizations

(see subpart 31.2), facilities capital cost

of money will not be an allowable cost

in any resulting contract (see 15.408(i)).

(4)(i) The contracting officer shall not

negotiate a price or fee that exceeds the

following statutory limitations, imposed

by 10 U.S.C. 2306(e) and 41 U.S.C.

254(b):

(A) For experimental, developmental,

or research work performed under a

cost-plus-fixed-fee contract, the fee shall
Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations 51245

not exceed 15 percent of the contract’s

estimated cost, excluding fee.

(B) For architect-engineer services for

public works or utilities, the contract

price or the estimated cost and fee for

production and delivery of designs,

plans, drawings, and specifications shall

not exceed 6 percent of the estimated

cost of construction of the public work

or utility, excluding fees.

(C) For other cost-plus-fixed-fee

contracts, the fee shall not exceed 10

percent of the contract’s estimated cost,

excluding fee.

(ii) The contracting officer’s signature

on the price negotiation memorandum

or other documentation supporting

determination of fair and reasonable

price documents the contracting

officer’s determination that the statutory

price or fee limitations have not been

exceeded.

(5) The contracting officer shall not

require any prospective contractor to

submit breakouts or supporting

rationale for its profit or fee objective

but may consider it, if it is submitted

voluntarily.

(6) If a change or modification calls

for essentially the same type and mix of

work as the basic contract and is of

relatively small dollar value compared

to the total contract value, the

contracting officer may use the basic

contract’s profit or fee rate as the

prenegotiation objective for that change

or modification.

(d) Profit-analysis factors—(1)

Common factors. Unless it is clearly

inappropriate or not applicable, each

factor outlined in paragraphs (d)(1)(i)

through (vi) of this subsection shall be

considered by agencies in developing

their structured approaches and by

contracting officers in analyzing profit,

whether or not using a structured

approach.

(i) Contractor effort. This factor

measures the complexity of the work

and the resources required of the

prospective contractor for contract

performance. Greater profit opportunity

should be provided under contracts

requiring a high degree of professional

and managerial skill and to prospective

contractors whose skills, facilities, and

technical assets can be expected to lead

to efficient and economical contract

performance. The subfactors in

paragraphs (d)(1)(i)(A) through (D) of

this subsection shall be considered in

determining contractor effort, but they

may be modified in specific situations

to accommodate differences in the

categories used by prospective

contractors for listing costs—

(A) Material acquisition. This

subfactor measures the managerial and

technical effort needed to obtain the

required purchased parts and material,

subcontracted items, and special

tooling. Considerations include the

complexity of the items required, the

number of purchase orders and

subcontracts to be awarded and

administered, whether established

sources are available or new or second

sources must be developed, and

whether material will be obtained

through routine purchase orders or

through complex subcontracts requiring

detailed specifications. Profit

consideration should correspond to the

managerial and technical effort

involved.

(B) Conversion direct labor. This

subfactor measures the contribution of

direct engineering, manufacturing, and

other labor to converting the raw

materials, data, and subcontracted items

into the contract items. Considerations

include the diversity of engineering,

scientific, and manufacturing labor

skills required and the amount and

quality of supervision and coordination

needed to perform the contract task.

(C) Conversion-related indirect costs.

This subfactor measures how much the

indirect costs contribute to contract

performance. The labor elements in the

allocable indirect costs should be given

the profit consideration they would

receive if treated as direct labor. The

other elements of indirect costs should

be evaluated to determine whether they

merit only limited profit consideration

because of their routine nature, or are

elements that contribute significantly to

the proposed contract.

(D) General management. This

subfactor measures the prospective

contractor’s other indirect costs and

general and administrative (G&A)

expense, their composition, and how

much they contribute to contract

performance. Considerations include

how labor in the overhead pools would

be treated if it were direct labor,

whether elements within the pools are

routine expenses or instead are elements

that contribute significantly to the

proposed contract, and whether the

elements require routine as opposed to

unusual managerial effort and attention.

(ii) Contract cost risk. (A) This factor

measures the degree of cost

responsibility and associated risk that

the prospective contractor will assume

as a result of the contract type

contemplated and considering the

reliability of the cost estimate in relation

to the complexity and duration of the

contract task. Determination of contract

type should be closely related to the

risks involved in timely, cost-effective,

and efficient performance. This factor

should compensate contractors

proportionately for assuming greater

cost risks.

(B) The contractor assumes the

greatest cost risk in a closely priced

firm-fixed-price contract under which it

agrees to perform a complex

undertaking on time and at a

predetermined price. Some firm-fixedprice contracts may entail substantially

less cost risk than others because, for

example, the contract task is less

complex or many of the contractor’s

costs are known at the time of price

agreement, in which case the risk factor

should be reduced accordingly. The

contractor assumes the least cost risk in

a cost-plus-fixed-fee level-of-effort

contract, under which it is reimbursed

those costs determined to be allocable

and allowable, plus the fixed fee.

(C) In evaluating assumption of cost

risk, contracting officers shall, except in

unusual circumstances, treat time-andmaterials, labor-hour, and firm-fixedprice, level-of-effort term contracts as

cost-plus-fixed-fee contracts.

(iii) Federal socioeconomic programs.

This factor measures the degree of

support given by the prospective

contractor to Federal socioeconomic

programs, such as those involving small

business concerns, small business

concerns owned and controlled by

socially and economically

disadvantaged individuals, womenowned small business concerns,

handicapped sheltered workshops, and

energy conservation. Greater profit

opportunity should be provided

contractors that have displayed unusual

initiative in these programs.

(iv) Capital investments. This factor

takes into account the contribution of

contractor investments to efficient and

economical contract performance.

(v) Cost-control and other past

accomplishments. This factor allows

additional profit opportunities to a

prospective contractor that has

previously demonstrated its ability to

perform similar tasks effectively and

economically. In addition, consideration

should be given to measures taken by

the prospective contractor that result in

productivity improvements, and other

cost-reduction accomplishments that

will benefit the Government in followon contracts.

(vi) Independent development. Under

this factor, the contractor may be

provided additional profit opportunities

in recognition of independent

development efforts relevant to the

contract end item without Government

assistance. The contracting officer

should consider whether the

development cost was recovered

directly or indirectly from Government

sources.
51246 Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations

(2) Additional factors. In order to

foster achievement of program

objectives, each agency may include

additional factors in its structured

approach or take them into account in

the profit analysis of individual contract

actions.

15.405 Price negotiation.

(a) The purpose of performing cost or

price analysis is to develop a

negotiation position that permits the

contracting officer and the offeror an

opportunity to reach agreement on a fair

and reasonable price. A fair and

reasonable price does not require that

agreement be reached on every element

of cost, nor is it mandatory that the

agreed price be within the contracting

officer’s initial negotiation position.

Taking into consideration the advisory

recommendations, reports of

contributing specialists, and the current

status of the contractor’s purchasing

system, the contracting officer is

responsible for exercising the requisite

judgment needed to reach a negotiated

settlement with the offeror and is solely

responsible for the final price

agreement. However, when significant

audit or other specialist

recommendations are not adopted, the

contracting officer should provide

rationale that supports the negotiation

result in the price negotiation

documentation.

(b) The contracting officer’s primary

concern is the overall price the

Government will actually pay. The

contracting officer’s objective is to

negotiate a contract of a type and with

a price providing the contractor the

greatest incentive for efficient and

economical performance. The

negotiation of a contract type and a

price are related and should be

considered together with the issues of

risk and uncertainty to the contractor

and the Government. Therefore, the

contracting officer should not become

preoccupied with any single element

and should balance the contract type,

cost, and profit or fee negotiated to

achieve a total result—a price that is fair

and reasonable to both the Government

and the contractor.

(c) The Government’s cost objective

and proposed pricing arrangement

directly affect the profit or fee objective.

Because profit or fee is only one of

several interrelated variables, the

contracting officer shall not agree on

profit or fee without concurrent

agreement on cost and type of contract.

(d) If, however, the contractor insists

on a price or demands a profit or fee

that the contracting officer considers

unreasonable, and the contracting

officer has taken all authorized actions

(including determining the feasibility of

developing an alternative source)

without success, the contracting officer

shall refer the contract action to a level

above the contracting officer.

Disposition of the action should be

documented.

15.406 Documentation.

15.406–1 Prenegotiation objectives.

(a) The prenegotiation objectives

establish the Government’s initial

negotiation position. They assist in the

contracting officer’s determination of

fair and reasonable price. They should

be based on the results of the

contracting officer’s analysis of the

offeror’s proposal, taking into

consideration all pertinent information

including field pricing assistance, audit

reports and technical analysis, factfinding results, independent

Government cost estimates and price

histories.

(b) The contracting officer shall

establish prenegotiation objectives

before the negotiation of any pricing

action. The scope and depth of the

analysis supporting the objectives

should be directly related to the dollar

value, importance, and complexity of

the pricing action. When cost analysis is

required, the contracting officer shall

document the pertinent issues to be

negotiated, the cost objectives, and a

profit or fee objective.

15.406–2 Certificate of Current Cost or

Pricing Data.

(a) When cost or pricing data are

required, the contracting officer shall

require the contractor to execute a

Certificate of Current Cost or Pricing

Data, using the format in this paragraph,

and shall include the executed

certificate in the contract file.

CERTIFICATE OF CURRENT COST OR

PRICING DATA

This is to certify that, to the best of my

knowledge and belief, the cost or pricing data

(as defined in section 15.401 of the Federal

Acquisition Regulation (FAR) and required

under FAR subsection 15.403–4) submitted,

either actually or by specific identification in

writing, to the Contracting Officer or to the

Contracting Officer’s representative in

support of ll* are accurate, complete, and

current as of ll**. This certification

includes the cost or pricing data supporting

any advance agreements and forward pricing

rate agreements between the offeror and the

Government that are part of the proposal.

Firm llllllllllllllllll

Signature llllllllllllllll

Name llllllllllllllllll

Title llllllllllllllllll

Date of execution*** lllllllllll

* Identify the proposal, request for price

adjustment, or other submission involved,

giving the appropriate identifying number

(e.g., RFP No.).

** Insert the day, month, and year when

price negotiations were concluded and price

agreement was reached or, if applicable, an

earlier date agreed upon between the parties

that is as close as practicable to the date of

agreement on price.

*** Insert the day, month, and year of

signing, which should be as close as

practicable to the date when the price

negotiations were concluded and the contract

price was agreed to. (End of certificate)

(b) The certificate does not constitute

a representation as to the accuracy of

the contractor’s judgment on the

estimate of future costs or projections. It

applies to the data upon which the

judgment or estimate was based. This

distinction between fact and judgment

should be clearly understood. If the

contractor had information reasonably

available at the time of agreement

showing that the negotiated price was

not based on accurate, complete, and

current data, the contractor’s

responsibility is not limited by any lack

of personal knowledge of the

information on the part of its

negotiators.

(c) The contracting officer and

contractor are encouraged to reach a

prior agreement on criteria for

establishing closing or cutoff dates

when appropriate in order to minimize

delays associated with proposal

updates. Closing or cutoff dates should

be included as part of the data

submitted with the proposal and, before

agreement on price, data should be

updated by the contractor to the latest

closing or cutoff dates for which the

data are available. Use of cutoff dates

coinciding with reports is acceptable, as

certain data may not be reasonably

available before normal periodic closing

dates (e.g., actual indirect costs). Data

within the contractor’s or a

subcontractor’s organization on matters

significant to contractor management

and to the Government will be treated

as reasonably available. What is

significant depends upon the

circumstances of each acquisition.

(d) Possession of a Certificate of

Current Cost or Pricing Data is not a

substitute for examining and analyzing

the contractor’s proposal.

(e) If cost or pricing data are requested

by the Government and submitted by an

offeror, but an exception is later found

to apply, the data shall not be

considered cost or pricing data and shall

not be certified in accordance with this

subsection.

15.406–3 Documenting the negotiation.

(a) The contracting officer shall

document in the contract file the

principal elements of the negotiated
Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations 51247

agreement. The documentation (e.g.,

price negotiation memorandum (PNM))

shall include the following:

(1) The purpose of the negotiation.

(2) A description of the acquisition,

including appropriate identifying

numbers (e.g., RFP No.).

(3) The name, position, and

organization of each person representing

the contractor and the Government in

the negotiation.

(4) The current status of any

contractor systems (e.g., purchasing,

estimating, accounting, and

compensation) to the extent they

affected and were considered in the

negotiation.

(5) If cost or pricing data were not

required in the case of any price

negotiation exceeding the cost or pricing

data threshold, the exception used and

the basis for it.

(6) If cost or pricing data were

required, the extent to which the

contracting officer—

(i) Relied on the cost or pricing data

submitted and used them in negotiating

the price;

(ii) Recognized as inaccurate,

incomplete, or noncurrent any cost or

pricing data submitted; the action taken

by the contracting officer and the

contractor as a result; and the effect of

the defective data on the price

negotiated; or

(iii) Determined that an exception

applied after the data were submitted

and, therefore, considered not to be cost

or pricing data.

(7) A summary of the contractor’s

proposal, any field pricing assistance

recommendations, including the reasons

for any pertinent variances from them,

the Government’s negotiation objective,

and the negotiated position. Where the

determination of price reasonableness is

based on cost analysis, the summary

shall address each major cost element.

When determination of price

reasonableness is based on price

analysis, the summary shall include the

source and type of data used to support

the determination.

(8) The most significant facts or

considerations controlling the

establishment of the prenegotiation

objectives and the negotiated agreement

including an explanation of any

significant differences between the two

positions.

(9) To the extent such direction has a

significant effect on the action, a

discussion and quantification of the

impact of direction given by Congress,

other agencies, and higher-level officials

(i.e., officials who would not normally

exercise authority during the award and

review process for the instant contract

action).

(10) The basis for the profit or fee

prenegotiation objective and the profit

or fee negotiated.

(11) Documentation of fair and

reasonable pricing.

(b) Whenever field pricing assistance

has been obtained, the contracting

officer shall forward a copy of the

negotiation documentation to the

office(s) providing assistance. When

appropriate, information on how

advisory field support can be made

more effective should be provided

separately.

15.407 Special cost or pricing areas.

15.407–1 Defective cost or pricing data.

(a) If, before agreement on price, the

contracting officer learns that any cost

or pricing data submitted are inaccurate,

incomplete, or noncurrent, the

contracting officer shall immediately

bring the matter to the attention of the

prospective contractor, whether the

defective data increase or decrease the

contract price. The contracting officer

shall consider any new data submitted

to correct the deficiency, or consider the

inaccuracy, incompleteness, or

noncurrency of the data when

negotiating the contract price. The price

negotiation memorandum shall reflect

the adjustments made to the data or the

corrected data used to negotiate the

contract price.

(b)(1) If, after award, cost or pricing

data are found to be inaccurate,

incomplete, or noncurrent as of the date

of final agreement on price or an earlier

date agreed upon by the parties given on

the contractor’s or subcontractor’s

Certificate of Current Cost or Pricing

Data, the Government is entitled to a

price adjustment, including profit or fee,

of any significant amount by which the

price was increased because of the

defective data. This entitlement is

ensured by including in the contract one

of the clauses prescribed in 15.408 (b)

and (c) and is set forth in the clauses at

52.215–10, Price Reduction for

Defective Cost or Pricing Data, and

52.215–11, Price Reduction for

Defective Cost or Pricing Data—

Modifications. The clauses give the

Government the right to a price

adjustment for defects in cost or pricing

data submitted by the contractor, a

prospective subcontractor, or an actual

subcontractor.

(2) In arriving at a price adjustment,

the contracting officer shall consider the

time by which the cost or pricing data

became reasonably available to the

contractor, and the extent to which the

Government relied upon the defective

data.

(3) The clauses referred to in

paragraph (b)(1) of this subsection

recognize that the Government’s right to

a price adjustment is not affected by any

of the following circumstances:

(i) The contractor or subcontractor

was a sole source supplier or otherwise

was in a superior bargaining position;

(ii) The contracting officer should

have known that the cost or pricing data

in issue were defective even though the

contractor or subcontractor took no

affirmative action to bring the character

of the data to the attention of the

contracting officer;

(iii) The contract was based on an

agreement about the total cost of the

contract and there was no agreement

about the cost of each item procured

under such contract; or

(iv) Cost or pricing data were

required; however, the contractor or

subcontractor did not submit a

Certificate of Current Cost or Pricing

Data relating to the contract.

(4) Subject to paragraphs (b)(5) and (6)

of this subsection, the contracting

officer shall allow an offset for any

understated cost or pricing data

submitted in support of price

negotiations, up to the amount of the

Government’s claim for overstated

pricing data arising out of the same

pricing action (e.g., the initial pricing of

the same contract or the pricing of the

same change order).

(5) An offset shall be allowed only in

an amount supported by the facts and if

the contractor—

(i) Certifies to the contracting officer

that, to the best of the contractor’s

knowledge and belief, the contractor is

entitled to the offset in the amount

requested; and

(ii) Proves that the cost or pricing data

were available before the ‘‘as of’’ date

specified on the Certificate of Current

Cost or Pricing Data but were not

submitted. Such offsets need not be in

the same cost groupings (e.g., material,

direct labor, or indirect costs).

(6) An offset shall not be allowed if—

(i) The understated data were known

by the contractor to be understated

before the ‘‘as of’’ date specified on the

Certificate of Current Cost or Pricing

Data; or

(ii) The Government proves that the

facts demonstrate that the price would

not have increased in the amount to be

offset even if the available data had been

submitted before the ‘‘as of’’ date

specified on the Certificate of Current

Cost or Pricing Data.

(7)(i) In addition to the price

adjustment, the Government is entitled

to recovery of any overpayment plus

interest on the overpayments. The

Government is also entitled to penalty
51248 Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations

amounts on certain of these

overpayments. Overpayment occurs

only when payment is made for

supplies or services accepted by the

Government. Overpayments do not

result from amounts paid for contract

financing, as defined in 32.902.

(ii) In calculating the interest amount

due, the contracting officer shall—

(A) Determine the defective pricing

amounts that have been overpaid to the

contractor;

(B) Consider the date of each

overpayment (the date of overpayment

for this interest calculation shall be the

date payment was made for the related

completed and accepted contract items;

or for subcontract defective pricing, the

date payment was made to the prime

contractor, based on prime contract

progress billings or deliveries, which

included payments for a completed and

accepted subcontract item); and

(C) Apply the underpayment interest

rate(s) in effect for each quarter from the

time of overpayment to the time of

repayment, utilizing rate(s) prescribed

by the Secretary of the Treasury under

26 U.S.C. 6621(a)(2).

(iii) In arriving at the amount due for

penalties on contracts where the

submission of defective cost or pricing

data was a knowing submission, the

contracting officer shall obtain an

amount equal to the amount of

overpayment made. Before taking any

contractual actions concerning

penalties, the contracting officer shall

obtain the advice of counsel.

(iv) In the demand letter, the

contracting officer shall separately

include—

(A) The repayment amount;

(B) The penalty amount (if any);

(C) The interest amount through a

specified date; and

(D) A statement that interest will

continue to accrue until repayment is

made.

(c) If, after award, the contracting

officer learns or suspects that the data

furnished were not accurate, complete,

and current, or were not adequately

verified by the contractor as of the time

of negotiation, the contracting officer

shall request an audit to evaluate the

accuracy, completeness, and currency of

the data. The Government may evaluate

the profit-cost relationships only if the

audit reveals that the data certified by

the contractor were defective. The

contracting officer shall not reprice the

contract solely because the profit was

greater than forecast or because a

contingency specified in the submission

failed to materialize.

(d) For each advisory audit received

based on a postaward review that

indicates defective pricing, the

contracting officer shall make a

determination as to whether or not the

data submitted were defective and

relied upon. Before making such a

determination, the contracting officer

should give the contractor an

opportunity to support the accuracy,

completeness, and currency of the data

in question. The contracting officer shall

prepare a memorandum documenting

both the determination and any

corrective action taken as a result. The

contracting officer shall send one copy

of this memorandum to the auditor and,

if the contract has been assigned for

administration, one copy to the

administrative contracting officer

(ACO). A copy of the memorandum or

other notice of the contracting officer’s

determination shall be provided to the

contractor.

(e) If both the contractor and

subcontractor submitted, and the

contractor certified, or should have

certified, cost or pricing data, the

Government has the right, under the

clauses at 52.215–10, Price Reduction

for Defective Cost or Pricing Data, and

52.215–11, Price Reduction for

Defective Cost or Pricing Data—

Modifications, to reduce the prime

contract price if it was significantly

increased because a subcontractor

submitted defective data. This right

applies whether these data supported

subcontract cost estimates or supported

firm agreements between subcontractor

and contractor.

(f) If Government audit discloses

defective subcontractor cost or pricing

data, the information necessary to

support a reduction in prime contract

and subcontract prices may be available

only from the Government. To the

extent necessary to secure a prime

contract price reduction, the contracting

officer should make this information

available to the prime contractor or

appropriate subcontractors, upon

request. If release of the information

would compromise Government

security or disclose trade secrets or

confidential business information, the

contracting officer shall release it only

under conditions that will protect it

from improper disclosure. Information

made available under this paragraph

shall be limited to that used as the basis

for the prime contract price reduction.

In order to afford an opportunity for

corrective action, the contracting officer

should give the prime contractor

reasonable advance notice before

determining to reduce the prime

contract price.

(1) When a prime contractor includes

defective subcontract data in arriving at

the price but later awards the

subcontract to a lower priced

subcontractor (or does not subcontract

for the work), any adjustment in the

prime contract price due to defective

subcontract data is limited to the

difference (plus applicable indirect cost

and profit markups) between the

subcontract price used for pricing the

prime contract, and either the actual

subcontract price or the actual cost to

the contractor, if not subcontracted,

provided the data on which the actual

subcontract price is based are not

themselves defective.

(2) Under cost-reimbursement

contracts and under all fixed-price

contracts except firm-fixed-price

contracts and fixed-price contracts with

economic price adjustment, payments to

subcontractors that are higher than they

would be had there been no defective

subcontractor cost or pricing data shall

be the basis for disallowance or

nonrecognition of costs under the

clauses prescribed in 15.408 (b) and (c).

The Government has a continuing and

direct financial interest in such

payments that is unaffected by the

initial agreement on prime contract

price.

15.407–2 Make-or-buy programs.

(a) General. The prime contractor is

responsible for managing contract

performance, including planning,

placing, and administering subcontracts

as necessary to ensure the lowest overall

cost and technical risk to the

Government. When make-or-buy

programs are required, the Government

may reserve the right to review and

agree on the contractor’s make-or-buy

program when necessary to ensure

negotiation of reasonable contract

prices, satisfactory performance, or

implementation of socioeconomic

policies. Consent to subcontracts and

review of contractors’ purchasing

systems are separate actions covered in

part 44.

(b) Definitions. As used in this

subsection—

Buy item means an item or work effort

to be produced or performed by a

subcontractor.

Make item means an item or work

effort to be produced or performed by

the prime contractor or its affiliates,

subsidiaries, or divisions.

Make-or-buy program means that part

of a contractor’s written plan for a

contract identifying those major items to

be produced or work efforts to be

performed in the prime contractor’s

facilities and those to be subcontracted.

(c) Acquisitions requiring make-orbuy programs. (1) Contracting officers

may require prospective contractors to

submit make-or-buy program plans for

negotiated acquisitions requiring cost or
Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations 51249

pricing data whose estimated value is

$10 million or more, except when the

proposed contract is for research or

development and, if prototypes or

hardware are involved, no significant

follow-on production is anticipated.

(2) Contracting officers may require

prospective contractors to submit makeor-buy programs for negotiated

acquisitions whose estimated value is

under $10 million only if the

contracting officer—

(i) Determines that the information is

necessary; and

(ii) Documents the reasons in the

contract file.

(d) Solicitation requirements. When

prospective contractors are required to

submit proposed make-or-buy programs,

the solicitation shall include—

(1) A statement that the program and

required supporting information must

accompany the offer; and

(2) A description of factors to be used

in evaluating the proposed program,

such as capability, capacity, availability

of small, small disadvantaged, and

women-owned small business concerns

for subcontracting, establishment of new

facilities in or near labor surplus areas,

delivery or performance schedules,

control of technical and schedule

interfaces, proprietary processes,

technical superiority or exclusiveness,

and technical risks involved.

(e) Program requirements. To support

a make-or-buy program, the following

information shall be supplied by the

contractor in its proposal:

(1) Items and work included. The

information required from a contractor

in a make-or-buy program shall be

confined to those major items or work

efforts that normally would require

company management review of the

make-or-buy decision because they are

complex, costly, needed in large

quantities, or require additional

facilities to produce. Raw materials,

commercial items (see 2.101), and offthe-shelf items (see 46.101) shall not be

included, unless their potential impact

on contract cost or schedule is critical.

Normally, make-or-buy programs should

not include items or work efforts

estimated to cost less than 1 percent of

the total estimated contract price or any

minimum dollar amount set by the

agency.

(2) The offeror’s program should

include or be supported by the

following information:

(i) A description of each major item or

work effort.

(ii) Categorization of each major item

or work effort as ‘‘must make,’’ ‘‘must

buy, or ‘‘can either make or buy.’’

(iii) For each item or work effort

categorized as ‘‘can either make or buy,’’

a proposal either to ‘‘make’’ or to ‘‘buy.’’

(iv) Reasons for categorizing items

and work efforts as ‘‘must make’’ or

‘‘must buy,’’ and proposing to ‘‘make’’

or to ‘‘buy’’ those categorized as ‘‘can

either make or buy.’’ The reasons must

include the consideration given to the

evaluation factors described in the

solicitation and must be in sufficient

detail to permit the contracting officer to

evaluate the categorization or proposal.

(v) Designation of the plant or

division proposed to make each item or

perform each work effort, and a

statement as to whether the existing or

proposed new facility is in or near a

labor surplus area.

(vi) Identification of proposed

subcontractors, if known, and their

location and size status (also see

Subpart 19.7 for subcontracting plan

requirements).

(vii) Any recommendations to defer

make-or-buy decisions when

categorization of some items or work

efforts is impracticable at the time of

submission.

(viii) Any other information the

contracting officer requires in order to

evaluate the program.

(f) Evaluation, negotiation, and

agreement. Contracting officers shall

evaluate and negotiate proposed makeor-buy programs as soon as practicable

after their receipt and before contract

award.

(1) When the program is to be

incorporated in the contract and the

design status of the product being

acquired does not permit accurate

precontract identification of major items

or work efforts, the contracting officer

shall notify the prospective contractor

in writing that these items or efforts,

when identifiable, shall be added under

the clause at 52.215–9, Changes or

Additions to Make-or-Buy Program.

(2) Contracting officers normally shall

not agree to proposed ‘‘make items’’

when the products or services are not

regularly manufactured or provided by

the contractor

and are available—quality, quantity,

delivery, and other essential factors

considered—from another firm at equal

or lower prices, or when they are

regularly manufactured or provided by

the contractor, but are available—

quality, quantity, delivery, and other

essential factors considered— from

another firm at lower prices. However,

the contracting officer may agree to

these as ‘‘make items’’ if an overall

lower Governmentwide cost would

result or it is otherwise in the best

interest of the Government. If this

situation occurs in any fixed-price

incentive or cost-plus-incentive-fee

contract, the contracting officer shall

specify these items in the contract and

state that they are subject to paragraph

(d) of the clause at 52.215–9, Changes or

Additions to Make-or-Buy Program (see

15.408(a)). If the contractor proposes to

reverse the categorization of such items

during contract performance, the

contract price shall be subject to

equitable reduction.

(g) Incorporating make-or-buy

programs in contracts. The contracting

officer may incorporate the make-or-buy

program in negotiated contracts for—

(1) Major systems (see part 34) or their

subsystems or components, regardless of

contract type; or

(2) Other supplies and services if—

(i) The contract is a cost-reimbursable

contract, or a cost-sharing contract in

which the contractor’s share of the cost

is less than 25 percent; and

(ii) The contracting officer determines

that technical or cost risks justify

Government review and approval of

changes or additions to the make-or-buy

program.

15.407–3 Forward pricing rate agreements.

(a) When cost or pricing data are

required, offerors are required to

describe any forward pricing rate

agreements (FPRA’s) in each specific

pricing proposal to which the rates

apply and to identify the latest cost or

pricing data already submitted in

accordance with the agreement. All data

submitted in connection with the

agreement, updated as necessary, form a

part of the total data that the offeror

certifies to be accurate, complete, and

current at the time of agreement on

price for an initial contract or for a

contract modification.

(b) Contracting officers will use FPRA

rates as bases for pricing all contracts,

modifications, and other contractual

actions to be performed during the

period covered by the agreement.

Conditions that may affect the

agreement’s validity shall be reported

promptly to the ACO. If the ACO

determines that a changed condition

invalidates the agreement, the ACO

shall notify all interested parties of the

extent of its effect and status of efforts

to establish a revised FPRA.

(c) Contracting officers shall not

require certification at the time of

agreement for data supplied in support

of FPRA’s or other advance agreements.

When a forward pricing rate agreement

or other advance agreement is used to

price a contract action that requires a

certificate, the certificate supporting

that contract action shall cover the data

supplied to support the FPRA or other
51250 Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations

advance agreement, and all other data

supporting the action.

15.407–4 Should-cost review.

(a) General. (1) Should-cost reviews

are a specialized form of cost analysis.

Should-cost reviews differ from

traditional evaluation methods because

they do not assume that a contractor’s

historical costs reflect efficient and

economical operation. Instead, these

reviews evaluate the economy and

efficiency of the contractor’s existing

work force, methods, materials,

facilities, operating systems, and

management. These reviews are

accomplished by a multi-functional

team of Government contracting,

contract administration, pricing, audit,

and engineering representatives. The

objective of should-cost reviews is to

promote both short and long-range

improvements in the contractor’s

economy and efficiency in order to

reduce the cost of performance of

Government contracts. In addition, by

providing rationale for any

recommendations and quantifying their

impact on cost, the Government will be

better able to develop realistic objectives

for negotiation.

(2) There are two types of should-cost

reviews—program should-cost review

(see paragraph (b) of this subsection)

and overhead should-cost review (see

paragraph (c) of this subsection). These

should-cost reviews may be performed

together or independently. The scope of

a should-cost review can range from a

large-scale review examining the

contractor’s entire operation (including

plant-wide overhead and selected major

subcontractors) to a small-scale tailored

review examining specific portions of a

contractor’s operation.

(b) Program should-cost review. (1) A

program should-cost review is used to

evaluate significant elements of direct

costs, such as material and labor, and

associated indirect costs, usually

associated with the production of major

systems. When a program should-cost

review is conducted relative to a

contractor proposal, a separate audit

report on the proposal is required.

(2) A program should-cost review

should be considered, particularly in

the case of a major system acquisition

(see part 34), when—

(i) Some initial production has

already taken place;

(ii) The contract will be awarded on

a sole source basis;

(iii) There are future year production

requirements for substantial quantities

of like items;

(iv) The items being acquired have a

history of increasing costs;

(v) The work is sufficiently defined to

permit an effective analysis and major

changes are unlikely;

(vi) Sufficient time is available to plan

and adequately conduct the should-cost

review; and

(vii) Personnel with the required

skills are available or can be assigned

for the duration of the should-cost

review.

(3) The contracting officer should

decide which elements of the

contractor’s operation have the greatest

potential for cost savings and assign the

available personnel resources

accordingly. The expertise of on-site

Government personnel should be used,

when appropriate. While the particular

elements to be analyzed are a function

of the contract work task, elements such

as manufacturing, pricing and

accounting, management and

organization, and subcontract and

vendor management are normally

reviewed in a should-cost review.

(4) In acquisitions for which a

program should-cost review is

conducted, a separate program shouldcost review team report, prepared in

accordance with agency procedures, is

required. The contracting officer shall

consider the findings and

recommendations contained in the

program should-cost review team report

when negotiating the contract price.

After completing the negotiation, the

contracting officer shall provide the

ACO a report of any identified

uneconomical or inefficient practices,

together with a report of correction or

disposition agreements reached with the

contractor. The contracting officer shall

establish a follow-up plan to monitor

the correction of the uneconomical or

inefficient practices.

(5) When a program should-cost

review is planned, the contracting

officer should state this fact in the

acquisition plan or acquisition plan

updates (see subpart 7.1) and in the

solicitation.

(c) Overhead should-cost review. (1)

An overhead should-cost review is used

to evaluate indirect costs, such as fringe

benefits, shipping and receiving,

facilities and equipment, depreciation,

plant maintenance and security, taxes,

and general and administrative

activities.

It is normally used to evaluate and

negotiate an FPRA with the contractor.

When an overhead should-cost review is

conducted, a separate audit report is

required.

(2) The following factors should be

considered when selecting contractor

sites for overhead should-cost reviews:

(i) Dollar amount of Government

business.

(ii) Level of Government

participation.

(iii) Level of noncompetitive

Government contracts.

(iv) Volume of proposal activity.

(v) Major system or program.

(vi) Corporate reorganizations,

mergers, acquisitions, or takeovers.

(vii) Other conditions (e.g., changes in

accounting systems, management, or

business activity).

(3) The objective of the overhead

should-cost review is to evaluate

significant indirect cost elements indepth, and identify and recommend

corrective actions regarding inefficient

and uneconomical practices. If it is

conducted in conjunction with a

program should-cost review, a separate

overhead should-cost review report is

not required. However, the findings and

recommendations of the overhead

should-cost team, or any separate

overhead should-cost review report,

shall be provided to the ACO. The ACO

should use this information to form the

basis for the Government position in

negotiating an FPRA with the

contractor. The ACO shall establish a

follow-up plan to monitor the correction

of the uneconomical or inefficient

practices.

15.407–5 Estimating systems.

(a) Using an acceptable estimating

system for proposal preparation benefits

both the Government and the contractor

by increasing the accuracy and

reliability of individual proposals.

Cognizant audit activities, when it is

appropriate to do so, shall establish and

manage regular programs for reviewing

selected contractors’ estimating systems

or methods, in order to reduce the scope

of reviews to be performed on

individual proposals, expedite the

negotiation process, and increase the

reliability of proposals. The results of

estimating system reviews shall be

documented in survey reports.

(b) The auditor shall send a copy of

the estimating system survey report and

a copy of the official notice of corrective

action required to each contracting

office and contract administration office

having substantial business with that

contractor. Significant deficiencies not

corrected by the contractor shall be a

consideration in subsequent proposal

analyses and negotiations.

15.408 Solicitation provisions and

contract clauses.

(a) Changes or Additions to Make-orBuy Program. The contracting officer

shall insert the clause at 52.215–9,

Changes or Additions to Make-or-Buy

Program, in solicitations and contracts

when it is contemplated that a make-or-
Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations 51251

buy program will be incorporated in the

contract. If a less economical ‘‘make’’ or

‘‘buy’’ categorization is selected for one

or more items of significant value, the

contracting officer shall use the clause

with—

(1) Its Alternate I, if a fixed-price

incentive contract is contemplated; or

(2) Its Alternate II, if a cost-plusincentive-fee contract is contemplated.

(b) Price Reduction for Defective Cost

or Pricing Data. The contracting officer

shall, when contracting by negotiation,

insert the clause at 52.215–10, Price

Reduction for Defective Cost or Pricing

Data, in solicitations and contracts

when it is contemplated that cost or

pricing data will be required from the

contractor or any subcontractor (see

15.403–4).

(c) Price Reduction for Defective Cost

or Pricing Data—Modifications. The

contracting officer shall, when

contracting by negotiation, insert the

clause at 52.215–11, Price Reduction for

Defective Cost or Pricing Data—

Modifications, in solicitations and

contracts when it is contemplated that

cost or pricing data will be required

from the contractor or any subcontractor

(see 15.403–4) for the pricing of contract

modifications, and the clause prescribed

in paragraph (b) of this section has not

been included.

(d) Subcontractor Cost or Pricing

Data. The contracting officer shall insert

the clause at 52.215–12, Subcontractor

Cost or Pricing Data, in solicitations and

contracts when the clause prescribed in

paragraph (b) of this section is included.

(e) Subcontractor Cost or Pricing

Data— Modifications. The contracting

officer shall insert the clause at 52.215–

13, Subcontractor Cost or Pricing Data—

Modifications, in solicitations and

contracts when the clause prescribed in

paragraph (c) of this section is included.

(f) Integrity of Unit Prices. (1) The

contracting officer shall insert the clause

at 52.215–14, Integrity of Unit Prices, in

solicitations and contracts except for—

(i) Acquisitions at or below the

simplified acquisition threshold;

(ii) Construction or architect-engineer

services under part 36;

(iii) Utility services under part 41;

(iv) Service contracts where supplies

are not required;

(v) Acquisitions of commercial items;

and

(vi) Contracts for petroleum products.

(2) The contracting officer shall insert

the clause with its Alternate I when

contracting without adequate price

competition or when prescribed by

agency regulations.

(g) Termination of Defined Benefit

Pension Plans. The contracting officer

shall insert the clause at 52.215–15,

Termination of Defined Benefit Pension

Plans, in solicitations and contracts for

which it is anticipated that cost or

pricing data will be required or for

which any preaward or postaward cost

determinations will be subject to part

31.

(h) Facilities Capital Cost of Money.

The contracting officer shall insert the

provision at 52.215–16, Facilities

Capital Cost of Money, in solicitations

expected to result in contracts that are

subject to the cost principles for

contracts with commercial organizations

(see subpart 31.2).

(i) Waiver of Facilities Capital Cost of

Money. If the prospective contractor

does not propose facilities capital cost

of money in its offer, the contracting

officer shall insert the clause at 52.215–

17, Waiver of Facilities Capital Cost of

Money, in the resulting contract.

(j) Reversion or Adjustment of Plans

for Postretirement Benefits (PRB) Other

Than Pensions. The contracting officer

shall insert the clause at 52.215–18,

Reversion or Adjustment of Plans for

Postretirement Benefits (PRB) Other

Than Pensions, in solicitations and

contracts for which it is anticipated that

cost or pricing data will be required or

for which any preaward or postaward

cost determinations will be subject to

part 31.

(k) Notification of Ownership

Changes. The contracting officer shall

insert the clause at 52.215–19,

Notification of Ownership Changes, in

solicitations and contracts for which it

is contemplated that cost or pricing data

will be required or for which any

preaward or postaward cost

determination will be subject to subpart

31.2.

(l) Requirements for Cost or Pricing

Data or Information Other Than Cost or

Pricing Data. Considering the hierarchy

at 15.402, the contracting officer may

insert the provision at 52.215–20,

Requirements for Cost or Pricing Data or

Information Other Than Cost or Pricing

Data, in solicitations if it is reasonably

certain that cost or pricing data or

information other than cost or pricing

data will be required. This provision

also provides instructions to offerors on

how to request an exception. The

contracting officer shall—

(1) Use the provision with its

Alternate I to specify a format for cost

or pricing data other than the format

required by Table 15–2 of this section;

(2) Use the provision with its

Alternate II if copies of the proposal are

to be sent to the ACO and contract

auditor;

(3) Use the provision with its

Alternate III if submission via electronic

media is required; and

(4) Replace the basic provision with

its Alternate IV if cost or pricing data

are not expected to be required because

an exception may apply, but

information other than cost or pricing

data is required as described in

15.403–3.

(m) Requirements for Cost or Pricing

Data or Information Other Than Cost or

Pricing Data—Modifications.

Considering the hierarchy at 15.402, the

contracting officer may insert the clause

at 52.215–21, Requirements for Cost or

Pricing Data or Information Other Than

Cost or Pricing Data—Modifications, in

solicitations and contracts if it is

reasonably certain that cost or pricing

data or information other than cost or

pricing data will be required for

modifications. This clause also provides

instructions to contractors on how to

request an exception. The contracting

officer shall—

(1) Use the clause with its Alternate

I to specify a format for cost or pricing

data other than the format required by

Table 15–2 of this section;

(2) Use the clause with its Alternate

II if copies of the proposal are to be sent

to the ACO and contract auditor;

(3) Use the clause with its Alternate

III if submission via electronic media is

required; and

(4) Replace the basic clause with its

Alternate IV if cost or pricing data are

not expected to be required because an

exception may apply, but information

other than cost or pricing data is

required as described in 15.403–3.

Table 15–2—Instructions for Submitting

Cost/Price Proposals When Cost or Pricing

Data Are Required

This document provides instructions for

preparing a contract pricing proposal when

cost or pricing data are required.

Note 1: There is a clear distinction between

submitting cost or pricing data and merely

making available books, records, and other

documents without identification. The

requirement for submission of cost or pricing

data is met when all accurate cost or pricing

data reasonably available to the offeror have

been submitted, either actually or by specific

identification, to the Contracting Officer or

an authorized representative. As later

information comes into your possession, it

should be submitted promptly to the

Contracting Officer in a manner that clearly

shows how the information relates to the

offeror’s price proposal. The requirement for

submission of cost or pricing data continues

up to the time of agreement on price, or an

earlier date agreed upon between the parties

if applicable.

Note 2: By submitting your proposal, you

grant the Contracting Officer or an authorized

representative the right to examine records

that formed the basis for the pricing proposal.

That examination can take place at any time

before award. It may include those books,

records, documents, and other types of
51252 Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations

factual information (regardless of form or

whether the information is specifically

referenced or included in the proposal as the

basis for pricing) that will permit an adequate

evaluation of the proposed price.

I. General Instructions

A. You must provide the following

information on the first page of your pricing

proposal:

(1) Solicitation, contract, and/or

modification number;

(2) Name and address of offeror;

(3) Name and telephone number of point

of contact;

(4) Name of contract administration office

(if available);

(5) Type of contract action (that is, new

contract, change order, price revision/

redetermination, letter contract, unpriced

order, or other);

(6) Proposed cost; profit or fee; and total;

(7) Whether you will require the use of

Government property in the performance of

the contract, and, if so, what property;

(8) Whether your organization is subject to

cost accounting standards; whether your

organization has submitted a CASB

Disclosure Statement, and if it has been

determined adequate; whether you have been

notified that you are or may be in

noncompliance with your Disclosure

Statement or CAS, and, if yes, an

explanation; whether any aspect of this

proposal is inconsistent with your disclosed

practices or applicable CAS, and, if so, an

explanation; and whether the proposal is

consistent with your established estimating

and accounting principles and procedures

and FAR Part 31, Cost Principles, and, if not,

an explanation;

(9) The following statement: This proposal

reflects our estimates and/or actual costs as

of this date and conforms with the

instructions in FAR 15.403–5(b)(1) and Table

15–2. By submitting this proposal, we grant

the Contracting Officer and authorized

representative(s) the right to examine, at any

time before award, those records, which

include books, documents, accounting

procedures and practices, and other data,

regardless of type and form or whether such

supporting information is specifically

referenced or included in the proposal as the

basis for pricing, that will permit an adequate

evaluation of the proposed price.

(10) Date of submission; and

(11) Name, title and signature of authorized

representative.

B. In submitting your proposal, you must

include an index, appropriately referenced,

of all the cost or pricing data and information

accompanying or identified in the proposal.

In addition, you must annotate any future

additions and/or revisions, up to the date of

agreement on price, or an earlier date agreed

upon by the parties, on a supplemental

index.

C. As part of the specific information

required, you must submit, with your

proposal, cost or pricing data (that is, data

that are verifiable and factual and otherwise

as defined at FAR 15.401). You must clearly

identify on your cover sheet that cost or

pricing data are included as part of the

proposal. In addition, you must submit with

your proposal any information reasonably

required to explain your estimating process,

including—

(1) The judgmental factors applied and the

mathematical or other methods used in the

estimate, including those used in projecting

from known data; and

(2) The nature and amount of any

contingencies included in the proposed

price.

D. You must show the relationship

between contract line item prices and the

total contract price. You must attach costelement breakdowns for each proposed line

item, using the appropriate format prescribed

in the ‘‘Formats for Submission of Line Item

Summaries’’ section of this table. You must

furnish supporting breakdowns for each cost

element, consistent with your cost

accounting system.

E. When more than one contract line item

is proposed, you must also provide summary

total amounts covering all line items for each

element of cost.

F. Whenever you have incurred costs for

work performed before submission of a

proposal, you must identify those costs in

your cost/price proposal.

G. If you have reached an agreement with

Government representatives on use of

forward pricing rates/factors, identify the

agreement, include a copy, and describe its

nature.

H. As soon as practicable after final

agreement on price or an earlier date agreed

to by the parties, but before the award

resulting from the proposal, you must, under

the conditions stated in FAR 15.406–2,

submit a Certificate of Current Cost or Pricing

Data.

II. Cost Elements

Depending on your system, you must

provide breakdowns for the following basic

cost elements, as applicable:

A. Materials and services. Provide a

consolidated priced summary of individual

material quantities included in the various

tasks, orders, or contract line items being

proposed and the basis for pricing (vendor

quotes, invoice prices, etc.). Include raw

materials, parts, components, assemblies, and

services to be produced or performed by

others. For all items proposed, identify the

item and show the source, quantity, and

price. Conduct price analyses of all

subcontractor proposals. Conduct cost

analyses for all subcontracts when cost or

pricing data are submitted by the

subcontractor. Include these analyses as part

of your own cost or pricing data submissions

for subcontracts expected to exceed the

appropriate threshold in FAR 15.403–4.

Submit the subcontractor cost or pricing data

as part of your own cost or pricing data as

required in paragraph IIA(2) of this table.

These requirements also apply to all

subcontractors if required to submit cost or

pricing data.

(1) Adequate Price Competition. Provide

data showing the degree of competition and

the basis for establishing the source and

reasonableness of price for those acquisitions

(such as subcontracts, purchase orders,

material order, etc.) exceeding, or expected to

exceed, the appropriate threshold set forth at

FAR 15.403–4 priced on the basis of adequate

price competition. For interorganizational

transfers priced at other than the cost of

comparable competitive commercial work of

the division, subsidiary, or affiliate of the

contractor, explain the pricing method (see

FAR 31.205–26(e)).

(2) All Other. Obtain cost or pricing data

from prospective sources for those

acquisitions (such as subcontracts, purchase

orders, material order, etc.) exceeding the

threshold set forth in FAR 15.403–4 and not

otherwise exempt, in accordance with FAR

15.403–1(b) (i.e., adequate price competition,

commercial items, prices set by law or

regulation or waiver). Also provide data

showing the basis for establishing source and

reasonableness of price. In addition, provide

a summary of your cost analysis and a copy

of cost or pricing data submitted by the

prospective source in support of each

subcontract, or purchase order that is the

lower of either $10,000,000 or more, or both

more than the pertinent cost or pricing data

threshold and more than 10 percent of the

prime contractor’s proposed price. The

Contracting Officer may require you to

submit cost or pricing data in support of

proposals in lower amounts. Subcontractor

cost or pricing data must be accurate,

complete and current as of the date of final

price agreement, or an earlier date agreed

upon by the parties, given on the prime

contractor’s Certificate of Current Cost or

Pricing Data. The prime contractor is

responsible for updating a prospective

subcontractor’s data. For standard

commercial items fabricated by the offeror

that are generally stocked in inventory,

provide a separate cost breakdown, if priced

based on cost. For interorganizational

transfers priced at cost, provide a separate

breakdown of cost elements. Analyze the cost

or pricing data and submit the results of your

analysis of the prospective source’s proposal.

When submission of a prospective source’s

cost or pricing data is required as described

in this paragraph, it must be included along

with your own cost or pricing data

submission, as part of your own cost or

pricing data. You must also submit any other

cost or pricing data obtained from a

subcontractor, either actually or by specific

identification, along with the results of any

analysis performed on that data.

B. Direct Labor. Provide a time-phased

(e.g., monthly, quarterly, etc.) breakdown of

labor hours, rates, and cost by appropriate

category, and furnish bases for estimates.

C. Indirect Costs. Indicate how you have

computed and applied your indirect costs,

including cost breakdowns. Show trends and

budgetary data to provide a basis for

evaluating the reasonableness of proposed

rates. Indicate the rates used and provide an

appropriate explanation.

D. Other Costs. List all other costs not

otherwise included in the categories

described above (e.g., special tooling, travel,

computer and consultant services,

preservation, packaging and packing,

spoilage and rework, and Federal excise tax

on finished articles) and provide bases for

pricing.

E. Royalties. If royalties exceed $1,500, you

must provide the following information on a
Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations 51253

separate page for each separate royalty or

license fee:

(1) Name and address of licensor.

(2) Date of license agreement.

(3) Patent numbers.

(4) Patent application serial numbers, or

other basis on which the royalty is payable.

(5) Brief description (including any part or

model numbers of each contract item or

component on which the royalty is payable).

(6) Percentage or dollar rate of royalty per

unit.

(7) Unit price of contract item.

(8) Number of units.

(9) Total dollar amount of royalties.

(10) If specifically requested by the

Contracting Officer, a copy of the current

license agreement and identification of

applicable claims of specific patents (see

FAR 27.204 and 31.205–37).

F. Facilities Capital Cost of Money. When

you elect to claim facilities capital cost of

money as an allowable cost, you must submit

Form CASB-CMF and show the calculation of

the proposed amount (see FAR 31.205–10).

III. Formats for Submission of Line Item Summaries

A. New Contracts (Including Letter Contracts)

Cost

elements

Proposed contract

estimate—total cost

Proposed contract

estimate—unit cost Reference

(1) (2) (3) (4)

Column and Instruction

(1) Enter appropriate cost elements.

(2) Enter those necessary and reasonable costs that, in your judgment, will properly be incurred in efficient contract performance.

When any of the costs in this column have already been incurred (e.g., under a letter contract), describe them on an attached supporting

page. When preproduction or startup costs are significant, or when specifically requested to do so by the Contracting Officer, provide

a full identification and explanation of them. (3) Optional, unless required by the Contracting Officer.

(4) Identify the attachment in which the information supporting the specific cost element may be found. (Attach separate pages

as necessary.)

B. Change Orders, Modifications, and Claims

Cost

elements

Estimated cost of

all work deleted

Cost of deleted

work already

performed

Net cost to be

deleted

Cost of work

added

Net cost of

change Reference

(1) (2) (3) (4) (5) (6) (7)

Column and Instruction

(1) Enter appropriate cost elements.

(2) Include the current estimates of what the cost would have been to complete the deleted work not yet performed (not the

original proposal estimates), and the cost of deleted work already performed. (3) Include the incurred cost of deleted work already performed, using actuals incurred if possible, or, if actuals are not available,

estimates from your accounting records. Attach a detailed inventory of work, materials, parts, components, and hardware already

purchased, manufactured, or performed and deleted by the change, indicating the cost and proposed disposition of each line item.

Also, if you desire to retain these items or any portion of them, indicate the amount offered for them. (4) Enter the net cost to be deleted, which is the estimated cost of all deleted work less the cost of deleted work already performed.

Column (2) minus Column (3) equals Column (4). (5) Enter your estimate for cost of work added by the change. When nonrecurring costs are significant, or when specifically

requested to do so by the Contracting Officer, provide a full identification and explanation of them. When any of the costs in this

column have already been incurred, describe them on an attached supporting schedule. (6) Enter the net cost of change, which is the cost of work added, less the net cost to be deleted. Column (5) minus Column

(4) equals Column (6). When this result is negative, place the amount in parentheses. (7) Identify the attachment in which the information supporting the specific cost element may be found. (Attach separate pages

as necessary.)

C. Price Revision/Redetermination

Cutoff

date

Number

of units

completed

Number

of units to

be completed

Contract

amount

Redetermination

proposal

amount

Difference Cost elements

Incurred cost—

preproduction

Incurred

cost—

completed

units

Incurred

cost—

work in

process

Total incurred

cost

Estimated

cost to

complete

Estimated

total cost Reference

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14)

(Use as applicable).

Column and Instruction

(1) Enter the cutoff date required by the contract, if applicable.

(2) Enter the number of units completed during the period for which experienced costs of production are being submitted.

(3) Enter the number of units remaining to be completed under the contract.

(4) Enter the cumulative contract amount.

(5) Enter your redetermination proposal amount.

(6) Enter the difference between the contract amount and the redetermination proposal amount. When this result is negative,

place the amount in parentheses. Column (4) minus Column (5) equals Column (6).
51254 Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations

(7) Enter appropriate cost elements. When residual inventory exists, the final costs established under fixed-price-incentive and

fixed-price-redeterminable arrangements should be net of the fair market value of such inventory. In support of subcontract costs,

submit a listing of all subcontracts subject to repricing action, annotated as to their status.

(8) Enter all costs incurred under the contract before starting production and other nonrecurring costs (usually referred to as

startup costs) from your books and records as of the cutoff date. These include such costs as preproduction engineering, special

plant rearrangement, training program, and any identifiable nonrecurring costs such as initial rework, spoilage, pilot runs, etc. In

the event the amounts are not segregated in or otherwise available from your records, enter in this column your best estimates.

Explain the basis for each estimate and how the costs are charged on your accounting records (e.g., included in production costs

as direct engineering labor, charged to manufacturing overhead). Also show how the costs would be allocated to the units at their

various stages of contract completion.

(9) Enter in Column (9) the production costs from your books and records (exclusive of preproduction costs reported in Column

(8)) of the units completed as of the cutoff date.

(10) Enter in Column (10) the costs of work in process as determined from your records or inventories at the cutoff date. When

the amounts for work in process are not available in your records but reliable estimates for them can be made, enter the estimated

amounts in Column (10) and enter in Column (9) the differences between the total incurred costs (exclusive of preproduction costs)

as of the cutoff date and these estimates. Explain the basis for the estimates, including identification of any provision for experienced

or anticipated allowances, such as shrinkage, rework, design changes, etc. Furnish experienced unit or lot costs (or labor hours)

from inception of contract to the cutoff date, improvement curves, and any other available production cost history pertaining to

the item(s) to which your proposal relates.

(11) Enter total incurred costs (Total of Columns (8), (9), and (10)).

(12) Enter those necessary and reasonable costs that in your judgment will properly be incurred in completing the remaining

work to be performed under the contract with respect to the item(s) to which your proposal relates.

(13) Enter total estimated cost (Total of Columns (11) and (12)).

(14) Identify the attachment in which the information supporting the specific cost element may be found. (Attach separate pages

as necessary.)

Subpart 15.5—Preaward, Award, and

Postaward Notifications, Protests, and

Mistakes

15.501 Definition.

Day, as used in this subpart, has the

meaning set forth at 33.101.

15.502 Applicability.

This subpart applies to competitive

proposals, as described in 6.102(b), and

a combination of competitive

procedures, as described in 6.102(c).

The procedures in 15.504, 15.506,

15.507, 15.508, and 15.509, with

reasonable modification, should be

followed for sole source acquisitions

and acquisitions described in

6.102(d)(1) and (2).

15.503 Notifications to unsuccessful

offerors.

(a) Preaward notices—(1) Preaward

notices of exclusion from competitive

range. The contracting officer shall

notify offerors promptly in writing

when their proposals are excluded from

the competitive range or otherwise

eliminated from the competition. The

notice shall state the basis for the

determination and that a proposal

revision will not be considered.

(2) Preaward notices for small

business set-asides. In addition to the

notice in paragraph (a)(1) of this section,

when using a small business set-aside

(see subpart 19.5), upon completion of

negotiations and determinations of

responsibility, but prior to award, the

contracting officer shall notify each

offeror in writing of the name and

location of the apparent successful

offeror. The notice shall also state that

(i) The Government will not consider

subsequent revisions of the offeror’s

proposal; and

(ii) No response is required unless a

basis exists to challenge the small

business size status of the apparent

successful offeror. The notice is not

required when the contracting officer

determines in writing that the urgency

of the requirement necessitates award

without delay or when the contract is

entered into under the 8(a) program (see

19.805–2).

(b) Postaward notices. (1) Within 3

days after the date of contract award, the

contracting officer shall provide written

notification to each offeror whose

proposal was in the competitive range

but was not selected for award (10

U.S.C. 2305(b)(5) and 41 U.S.C. 253b(c))

or had not been previously notified

under paragraph (a) of this section. The

notice shall include—

(i) The number of offerors solicited;

(ii) The number of proposals received;

(iii) The name and address of each

offeror receiving an award;

(iv) The items, quantities, and any

stated unit prices of each award. If the

number of items or other factors makes

listing any stated unit prices

impracticable at that time, only the total

contract price need be furnished in the

notice. However, the items, quantities,

and any stated unit prices of each award

shall be made publicly available, upon

request; and

(v) In general terms, the reason(s) the

offeror’s proposal was not accepted,

unless the price information in

paragraph (b)(1)(iv) of this section

readily reveals the reason. In no event

shall an offeror’s cost breakdown, profit,

overhead rates, trade secrets,

manufacturing processes and

techniques, or other confidential

business information be disclosed to

any other offeror.

(2) Upon request, the contracting

officer shall furnish the information

described in paragraph (b)(1) of this

section to unsuccessful offerors in

solicitations using simplified

acquisition procedures in part 13.

(3) Upon request, the contracting

officer shall provide the information in

paragraph (b)(1) of this section to

unsuccessful offerors that received a

preaward notice of exclusion from the

competitive range.

15.504 Award to successful offeror.

The contracting officer shall award a

contract to the successful offeror by

furnishing the executed contract or

other notice of the award to that offeror.

(a) If the award document includes

information that is different than the

latest signed proposal, as amended by

the offeror’s written correspondence,

both the offeror and the contracting

officer shall sign the contract award.

(b) When an award is made to an

offeror for less than all of the items that

may be awarded and additional items

are being withheld for subsequent

award, each notice shall state that the

Government may make subsequent

awards on those additional items within

the proposal acceptance period.

(c) If the Optional Form (OF) 307,

Contract Award, Standard Form (SF) 26,

Award/Contract, or SF 33, Solicitation,

Offer and Award, is not used to award

the contract, the first page of the award

document shall contain the

Government’s acceptance statement

from Block 15 of that form, exclusive of

the Item 3 reference language, and shall

contain the contracting officer’s name,

signature, and date. In addition, if the

award document includes information
Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations 51255

that is different than the signed

proposal, as amended by the offeror’s

written correspondence, the first page

shall include the contractor’s agreement

statement from Block 14 of the OF 307

and the signature of the contractor’s

authorized representative.

15.505 Preaward debriefing of offerors.

Offerors excluded from the

competitive range or otherwise

excluded from the competition before

award may request a debriefing before

award (10 U.S.C. 2305(b)(6)(A) and 41

U.S.C. 253b(f)–(h)).

(a)(1) The offeror may request a

preaward debriefing by submitting a

written request for debriefing to the

contracting officer within 3 days after

receipt of the notice of exclusion from

the competition.

(2) At the offeror’s request, this

debriefing may be delayed until after

award. If the debriefing is delayed until

after award, it shall include all

information normally provided in a

postaward debriefing (see 15.506(d)).

Debriefings delayed pursuant to this

paragraph could affect the timeliness of

any protest filed subsequent to the

debriefing.

(3) If the offeror does not submit a

timely request, the offeror need not be

given either a preaward or a postaward

debriefing. Offerors are entitled to no

more than one debriefing for each

proposal.

(b) The contracting officer shall make

every effort to debrief the unsuccessful

offeror as soon as practicable, but may

refuse the request for a debriefing if, for

compelling reasons, it is not in the best

interests of the Government to conduct

a debriefing at that time. The rationale

for delaying the debriefing shall be

documented in the contract file. If the

contracting officer delays the debriefing,

it shall be provided no later than the

time postaward debriefings are provided

under 15.506. In that event, the

contracting officer shall include the

information at 15.506(d) in the

debriefing.

(c) Debriefings may be done orally, in

writing, or by any other method

acceptable to the contracting officer.

(d) The contracting officer should

normally chair any debriefing session

held. Individuals who conducted the

evaluations shall provide support.

(e) At a minimum, preaward

debriefings shall include—

(1) The agency’s evaluation of

significant elements in the offeror’s

proposal;

(2) A summary of the rationale for

eliminating the offeror from the

competition; and

(3) Reasonable responses to relevant

questions about whether source

selection procedures contained in the

solicitation, applicable regulations, and

other applicable authorities were

followed in the process of eliminating

the offeror from the competition.

(f) Preaward debriefings shall not

disclose—

(1) The number of offerors;

(2) The identity of other offerors;

(3) The content of other offerors

proposals;

(4) The ranking of other offerors;

(5) The evaluation of other offerors; or

(6) Any of the information prohibited

in 15.506(e).

(g) An official summary of the

debriefing shall be included in the

contract file.

15.506 Postaward debriefing of offerors.

(a)(1) An offeror, upon its written

request received by the agency within 3

days after the date on which that offeror

has received notification of contract

award in accordance with 15.503(b),

shall be debriefed and furnished the

basis for the selection decision and

contract award.

(2) To the maximum extent

practicable, the debriefing should occur

within 5 days after receipt of the written

request. Offerors that requested a

postaward debriefing in lieu of a

preaward debriefing, or whose

debriefing was delayed for compelling

reasons beyond contract award, also

should be debriefed within this time

period.

(3) An offeror that was notified of

exclusion from the competition (see

15.505(a)), but failed to submit a timely

request, is not entitled to a debriefing.

(4)(i) Untimely debriefing requests

may be accommodated.

(ii) Government accommodation of a

request for delayed debriefing pursuant

to 15.505(a)(2), or any untimely

debriefing request, does not

automatically extend the deadlines for

filing protests. Debriefings delayed

pursuant to 15.505(a)(2) could affect the

timeliness of any protest filed

subsequent to the debriefing.

(b) Debriefings of successful and

unsuccessful offerors may be done

orally, in writing, or by any other

method acceptable to the contracting

officer.

(c) The contracting officer should

normally chair any debriefing session

held. Individuals who conducted the

evaluations shall provide support.

(d) At a minimum, the debriefing

information shall include—

(1) The Government’s evaluation of

the significant weaknesses or

deficiencies in the offeror’s proposal, if

applicable;

(2) The overall evaluated cost or price

(including unit prices), and technical

rating, if applicable, of the successful

offeror and the debriefed offeror, and

past performance information on the

debriefed offeror;

(3) The overall ranking of all offerors,

when any ranking was developed by the

agency during the source selection;

(4) A summary of the rationale for

award;

(5) For acquisitions of commercial

items, the make and model of the item

to be delivered by the successful offeror;

and

(6) Reasonable responses to relevant

questions about whether source

selection procedures contained in the

solicitation, applicable regulations, and

other applicable authorities were

followed.

(e) The debriefing shall not include

point-by-point comparisons of the

debriefed offeror’s proposal with those

of other offerors. Moreover, the

debriefing shall not reveal any

information prohibited from disclosure

by 24.202 or exempt from release under

the Freedom of Information Act (5

U.S.C. 552) including—

(1) Trade secrets;

(2) Privileged or confidential

manufacturing processes and

techniques;

(3) Commercial and financial

information that is privileged or

confidential, including cost

breakdowns, profit, indirect cost rates,

and similar information; and

(4) The names of individuals

providing reference information about

an offeror’s past performance.

(f) An official summary of the

debriefing shall be included in the

contract file.

15.507 Protests against award.

(a) Protests against award in

negotiated acquisitions shall be handled

in accordance with part 33. Use of

agency protest procedures that

incorporate the alternative dispute

resolution provisions of Executive Order

12979 is encouraged for both preaward

and postaward protests.

(b) If a protest causes the agency,

within 1 year of contract award, to—

(1) Issue a new solicitation on the

protested contract award, the

contracting officer shall provide the

information in paragraph (c) of this

section to all prospective offerors for the

new solicitation; or

(2) Issue a new request for revised

proposals on the protested contract

award, the contracting officer shall

provide the information in paragraph (c)

of this section to offerors that were in

the competitive range and are requested

to submit revised proposals.
51256 Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations

(c) The following information will be

provided to appropriate parties:

(1) Information provided to

unsuccessful offerors in any debriefings

conducted on the original award

regarding the successful offeror’s

proposal; and

(2) Other nonproprietary information

that would have been provided to the

original offerors.

15.508 Discovery of mistakes.

Mistakes in a contractor’s proposal

that are disclosed after award shall be

processed substantially in accordance

with the procedures for mistakes in bids

at 14.407–4.

15.509 Forms.

Optional Form 307, Contract Award,

Standard Form (SF) 26, Award/Contract,

or SF 33, Solicitation, Offer and Award,

may be used to award negotiated

contracts in which the signature of both

parties on a single document is

appropriate. If these forms are not used,

the award document shall incorporate

the agreement and award language from

the OF 307.

Subpart 15.6—Unsolicited Proposals

15.600 Scope of subpart.

This subpart sets forth policies and

procedures concerning the submission,

receipt, evaluation, and acceptance or

rejection of unsolicited proposals.

15.601 Definitions.

As used in this subpart—

Advertising material means material

designed to acquaint the Government

with a prospective contractor’s present

products, services, or potential

capabilities, or designed to stimulate the

Government’s interest in buying such

products or services.

Commercial item offer means an offer

of a commercial item that the vendor

wishes to see introduced in the

Government’s supply system as an

alternate or a replacement for an

existing supply item. This term does not

include innovative or unique

configurations or uses of commercial

items that are being offered for further

development and that may be submitted

as an unsolicited proposal.

Contribution means a concept,

suggestion, or idea presented to the

Government for its use with no

indication that the source intends to

devote any further effort to it on the

Government’s behalf.

Unsolicited proposal means a written

proposal for a new or innovative idea

that is submitted to an agency on the

initiative of the offeror for the purpose

of obtaining a contract with the

Government, and that is not in response

to a request for proposals, Broad Agency

Announcement, Small Business

Innovation Research topic, Small

Business Technology Transfer Research

topic, Program Research and

Development Announcement, or any

other Government-initiated solicitation

or program.

15.602 Policy.

It is the policy of the Government to

encourage the submission of new and

innovative ideas in response to Broad

Agency Announcements, Small

Business Innovation Research topics,

Small Business Technology Transfer

Research topics, Program Research and

Development Announcements, or any

other Government-initiated solicitation

or program. When the new and

innovative ideas do not fall under topic

areas publicized under those programs

or techniques, the ideas may be

submitted as unsolicited proposals.

15.603 General.

(a) Unsolicited proposals allow

unique and innovative ideas or

approaches that have been developed

outside the Government to be made

available to Government agencies for

use in accomplishment of their

missions. Unsolicited proposals are

offered with the intent that the

Government will enter into a contract

with the offeror for research and

development or other efforts supporting

the Government mission, and often

represent a substantial investment of

time and effort by the offeror.

(b) Advertising material, commercial

item offers, or contributions, as defined

in 15.601, or routine correspondence on

technical issues, are not unsolicited

proposals.

(c) A valid unsolicited proposal

must—

(1) Be innovative and unique;

(2) Be independently originated and

developed by the offeror;

(3) Be prepared without Government

supervision, endorsement, direction, or

direct Government involvement;

(4) Include sufficient detail to permit

a determination that Government

support could be worthwhile and the

proposed work could benefit the

agency’s research and development or

other mission responsibilities; and

(5) Not be an advance proposal for a

known agency requirement that can be

acquired by competitive methods.

(d) Unsolicited proposals in response

to a publicized general statement of

agency needs are considered to be

independently originated.

15.604 Agency points of contact.

(a) Preliminary contact with agency

technical or other appropriate personnel

before preparing a detailed unsolicited

proposal or submitting proprietary

information to the Government may

save considerable time and effort for

both parties (see 15.201). Agencies shall

make available to potential offerors of

unsolicited proposals at least the

following information:

(1) Definition (see 15.601) and content

(see 15.605) of an unsolicited proposal

acceptable for formal evaluation.

(2) Requirements concerning

responsible prospective contractors (see

subpart 9.1), and organizational

conflicts of interest (see subpart 9.5).

(3) Guidance on preferred methods for

submitting ideas/concepts to the

Government, such as any agency:

upcoming solicitations; Broad Agency

Announcements; Small Business

Innovation Research programs; Small

Business Technology Transfer Research

programs; Program Research and

Development Announcements; or grant

programs.

(4) Agency points of contact for

information regarding advertising,

contributions, and other types of

transactions similar to unsolicited

proposals.

(5) Information sources on agency

objectives and areas of potential

interest.

(6) Procedures for submission and

evaluation of unsolicited proposals.

(7) Instructions for identifying and

marking proprietary information so that

it is protected and restrictive legends

conform to 15.609.

(b) Only the cognizant contracting

officer has the authority to bind the

Government regarding unsolicited

proposals.

15.605 Content of unsolicited proposals.

Unsolicited proposals should contain

the following information to permit

consideration in an objective and timely

manner:

(a) Basic information including—

(1) Offeror’s name and address and

type of organization; e.g., profit,

nonprofit, educational, small business;

(2) Names and telephone numbers of

technical and business personnel to be

contacted for evaluation or negotiation

purposes;

(3) Identification of proprietary data

to be used only for evaluation purposes;

(4) Names of other Federal, State, or

local agencies or parties receiving the

proposal or funding the proposed effort;

(5) Date of submission; and

(6) Signature of a person authorized to

represent and contractually obligate the

offeror.

(b) Technical information including—

(1) Concise title and abstract

(approximately 200 words) of the

proposed effort;
Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations 51257

(2) A reasonably complete discussion

stating the objectives of the effort or

activity, the method of approach and

extent of effort to be employed, the

nature and extent of the anticipated

results, and the manner in which the

work will help to support

accomplishment of the agency’s

mission;

(3) Names and biographical

information on the offeror’s key

personnel who would be involved,

including alternates; and

(4) Type of support needed from the

agency; e.g., facilities, equipment,

materials, or personnel resources.

(c) Supporting information

including—

(1) Proposed price or total estimated

cost for the effort in sufficient detail for

meaningful evaluation;

(2) Period of time for which the

proposal is valid (a 6-month minimum

is suggested);

(3) Type of contract preferred;

(4) Proposed duration of effort;

(5) Brief description of the

organization, previous experience,

relevant past performance, and facilities

to be used;

(6) Other statements, if applicable,

about organizational conflicts of

interest, security clearances, and

environmental impacts; and

(7) The names and telephone numbers

of agency technical or other agency

points of contact already contacted

regarding the proposal.

15.606 Agency procedures.

(a) Agencies shall establish

procedures for controlling the receipt,

evaluation, and timely disposition of

unsolicited proposals consistent with

the requirements of this subpart. The

procedures shall include controls on the

reproduction and disposition of

proposal material, particularly data

identified by the offeror as subject to

duplication, use, or disclosure

restrictions.

(b) Agencies shall establish agency

points of contact (see 15.604) to

coordinate the receipt and handling of

unsolicited proposals.

15.606–1 Receipt and initial review.

(a) Before initiating a comprehensive

evaluation, the agency contact point

shall determine if the proposal—

(1) Is a valid unsolicited proposal,

meeting the requirements of 15.603(c);

(2) Is suitable for submission in

response to an existing agency

requirement (see 15.602);

(3) Is related to the agency mission;

(4) Contains sufficient technical and

cost information for evaluation;

(5) Has been approved by a

responsible official or other

representative authorized to obligate the

offeror contractually; and

(6) Complies with the marking

requirements of 15.609.

(b) If the proposal meets these

requirements, the contact point shall

promptly acknowledge receipt and

process the proposal.

(c) If a proposal is rejected because

the proposal does not meet the

requirements of paragraph (a) of this

subsection, the agency contact point

shall promptly inform the offeror of the

reasons for rejection in writing and of

the proposed disposition of the

unsolicited proposal.

15.606–2 Evaluation.

(a) Comprehensive evaluations shall

be coordinated by the agency contact

point, who shall attach or imprint on

each unsolicited proposal, circulated for

evaluation, the legend required by

15.609(d). When performing a

comprehensive evaluation of an

unsolicited proposal, evaluators shall

consider the following factors, in

addition to any others appropriate for

the particular proposal:

(1) Unique, innovative and

meritorious methods, approaches, or

concepts demonstrated by the proposal;

(2) Overall scientific, technical, or

socioeconomic merits of the proposal;

(3) Potential contribution of the effort

to the agency’s specific mission;

(4) The offeror’s capabilities, related

experience, facilities, techniques, or

unique combinations of these that are

integral factors for achieving the

proposal objectives;

(5) The qualifications, capabilities,

and experience of the proposed

principal investigator, team leader, or

key personnel critical to achieving the

proposal objectives; and

(6) The realism of the proposed cost.

(b) The evaluators shall notify the

agency point of contact of their

recommendations when the evaluation

is completed.

15.607 Criteria for acceptance and

negotiation of an unsolicited proposal.

(a) A favorable comprehensive

evaluation of an unsolicited proposal

does not, in itself, justify awarding a

contract without providing for full and

open competition. The agency point of

contact shall return an unsolicited

proposal to the offeror, citing reasons,

when its substance—

(1) Is available to the Government

without restriction from another source;

(2) Closely resembles a pending

competitive acquisition requirement;

(3) Does not relate to the activity’s

mission; or

(4) Does not demonstrate an

innovative and unique method,

approach, or concept, or is otherwise

not deemed a meritorious proposal.

(b) The contracting officer may

commence negotiations on a sole source

basis only when—

(1) An unsolicited proposal has

received a favorable comprehensive

evaluation;

(2) A justification and approval has

been obtained (see 6.302–1(a)(2)(i) for

research proposals or other appropriate

provisions of subpart 6.3, and 6.303–

2(b));

(3) The agency technical office

sponsoring the contract furnishes the

necessary funds; and

(4) The contracting officer has

complied with the synopsis

requirements of subpart 5.2.

15.608 Prohibitions.

(a) Government personnel shall not

use any data, concept, idea, or other part

of an unsolicited proposal as the basis,

or part of the basis, for a solicitation or

in negotiations with any other firm

unless the offeror is notified of and

agrees to the intended use. However,

this prohibition does not preclude using

any data, concept, or idea in the

proposal that also is available from

another source without restriction.

(b) Government personnel shall not

disclose restrictively marked

information (see 3.104 and 15.609)

included in an unsolicited proposal.

The disclosure of such information

concerning trade secrets, processes,

operations, style of work, apparatus, and

other matters, except as authorized by

law, may result in criminal penalties

under 18 U.S.C. 1905.

15.609 Limited use of data.

(a) An unsolicited proposal may

include data that the offeror does not

want disclosed to the public for any

purpose or used by the Government

except for evaluation purposes. If the

offeror wishes to restrict the data, the

title page must be marked with the

following legend:

Use and Disclosure of Data

This proposal includes data that shall not

be disclosed outside the Government and

shall not be duplicated, used, or disclosed—

in whole or in part—for any purpose other

than to evaluate this proposal. However, if a

contract is awarded to this offeror as a result

of—or in connection with—the submission of

these data, the Government shall have the

right to duplicate, use, or disclose the data

to the extent provided in the resulting

contract. This restriction does not limit the

Government’s right to use information

contained in these data if they are obtained

from another source without restriction. The

data subject to this restriction are contained

in Sheets [insert numbers or other

identification of sheets].
51258 Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations

(b) The offeror shall also mark each

sheet of data it wishes to restrict with

the following legend: Use or disclosure

of data contained on this sheet is subject

to the restriction on the title page of this

proposal.

(c) The agency point of contact shall

return to the offeror any unsolicited

proposal marked with a legend different

from that provided in paragraph (a) of

this section. The return letter will state

that the proposal cannot be considered

because it is impracticable for the

Government to comply with the legend

and that the agency will consider the

proposal if it is resubmitted with the

proper legend.

(d) The agency point of contact shall

place a cover sheet on the proposal or

clearly mark it as follows, unless the

offeror clearly states in writing that no

restrictions are imposed on the

disclosure or use of the data contained

in the proposal:

Unsolicited Proposal—Use of Data Limited

All Government personnel must exercise

extreme care to ensure that the information

in this proposal is not disclosed to an

individual who has not been authorized

access to such data in accordance with FAR

3.104, and is not duplicated, used, or

disclosed in whole or in part for any purpose

other than evaluation of the proposal,

without the written permission of the offeror.

If a contract is awarded on the basis of this

proposal, the terms of the contract shall

control disclosure and use. This notice does

not limit the Government’s right to use

information contained in the proposal if it is

obtainable from another source without

restriction. This is a Government notice, and

shall not by itself be construed to impose any

liability upon the Government or

Government personnel for disclosure or use

of data contained in this proposal.

(e) The notice in paragraph (d) of this

section is used solely as a manner of

handling unsolicited proposals that will

be compatible with this subpart.

However, the use of this notice shall not

be used to justify the withholding of a

record, nor to improperly deny the

public access to a record, where an

obligation is imposed on an agency by

the Freedom of Information Act, 5

U.S.C. 552, as amended. A prospective

offeror should identify trade secrets,

commercial or financial information,

and privileged or confidential

information to the Government (see

paragraph (a) of this section).

(f) When an agency receives an

unsolicited proposal without any

restrictive legend from an educational or

nonprofit organization or institution,

and an evaluation outside the

Government is necessary, the agency

point of contact shall—

(1) Attach a cover sheet clearly

marked with the legend in paragraph (d)

of this section;

(2) Change the beginning of this

legend to read ‘‘All Government and

non-Government personnel * * * ’’;

and

(3) Require any non-Government

evaluator to agree in writing that data in

the proposal will not be disclosed to

others outside the Government.

(g) If the proposal is received with the

restrictive legend (see paragraph (a) of

this section), the modified cover sheet

shall also be used and permission shall

be obtained from the offeror before

release of the proposal for evaluation by

non-Government personnel.

(h) When an agency receives an

unsolicited proposal with or without a

restrictive legend from other than an

educational or nonprofit organization or

institution, and evaluation by

Government personnel outside the

agency or by experts outside of the

Government is necessary, written

permission must be obtained from the

offeror before release of the proposal for

evaluation. The agency point of contact

shall—

(1) Clearly mark the cover sheet with

the legend in paragraph (d) or as

modified in paragraph (f) of this section;

and

(2) Obtain a written agreement from

any non-Government evaluator stating

that data in the proposal will not be

disclosed to persons outside the

Government.

PART 16—TYPES OF CONTRACTS

14. Section 16.306 is amended by

revising paragraph (c) to read as follows:

16.306 Cost-plus-fixed-fee contracts.

* * * * *

(c) Limitations. No cost-plus-fixed-fee

contract shall be awarded unless the

contracting officer complies with all

limitations in 16.301–3.

* * * * *

PART 36—CONSTRUCTION AND

ARCHITECT-ENGINEER CONTRACTS

15. Section 36.520 is added to read as

follows:

36.520 Contracting by negotiation.

The contracting officer shall insert in

solicitations for construction the

provision at 52.236–28, Preparation of

Offers—Construction, when contracting

by negotiation.

PART 42—CONTRACT

ADMINISTRATION

16. Section 42.705–1 is amended by

revising paragraph (b)(2) to read as

follows:

42.705–1 Contracting officer determination

procedure.

* * * * *

(b) * * *

(2) The auditor shall submit to the

contracting officer an advisory audit

report identifying any relevant advance

agreements or restrictive terms of

specific contracts.

* * * * *

42.705–2 [Amended]

17. Section 42.705–2 is amended by

removing paragraph (b)(2)(iii) and

redesignating paragraphs (b)(2)(iv) and

(b)(2)(v) as (b)(2)(iii) and (b)(2)(iv).

18. Section 42.1502 is amended by

revising the first sentence of paragraph

(a) to read as follows:

42.1502 Policy.

(a) Except as provided in paragraph

(b) of this section, agencies shall prepare

an evaluation of contractor performance

for each contract in excess of $1,000,000

(regardless of the date of contract award)

and for each contract in excess of

$100,000 beginning not later than

January 1, 1998 (regardless of the date

of contract award), at the time the work

under the contract is completed. * * *

* * * * *

19. Section 42.1503 is amended in

paragraph (b) by adding a sentence to

the end of the paragraph to read as

follows:

42.1503 Procedures.

* * * * *

(b) * * * A copy of the annual or final

past performance evaluation shall be

provided to the contractor as soon as it

is finalized.

* * * * *

20. Subpart 42.17 is added to read as

follows:

Subpart 42.17—Forward Pricing Rate

Agreements

42.1701 Procedures.

(a) Negotiation of forward pricing rate

agreements (FPRA’s) may be requested

by the contracting officer or the

contractor or initiated by the

administrative contracting officer

(ACO). In determining whether or not to

establish such an agreement, the ACO

should consider whether the benefits to

be derived from the agreement are

commensurate with the effort of

establishing and monitoring it.

Normally, FPRA’s should be negotiated
Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations 51259

only with contractors having a

significant volume of Government

contract proposals. The cognizant

contract administration agency shall

determine whether an FPRA will be

established.

(b) The ACO shall obtain the

contractor’s proposal and require that it

include cost or pricing data that are

accurate, complete, and current as of the

date of submission. The ACO shall

invite the cognizant contract auditor

and contracting offices having a

significant interest to participate in

developing a Government objective and

in the negotiations. Upon completing

negotiations, the ACO shall prepare a

price negotiation memorandum (PNM)

(see 15.406–3) and forward copies of the

PNM and FPRA to the cognizant auditor

and to all contracting offices that are

known to be affected by the FPRA. A

Certificate of Current Cost or Pricing

Data shall not be required at this time

(see 15.407–3(c)).

(c) The FPRA shall provide specific

terms and conditions covering

expiration, application, and data

requirements for systematic monitoring

to ensure the validity of the rates. The

agreement shall provide for cancellation

at the option of either party and shall

require the contractor to submit to the

ACO and to the cognizant contract

auditor any significant change in cost or

pricing data.

(d) When an FPRA is invalid, the

contractor should submit and negotiate

a new proposal to reflect the changed

conditions. If an FPRA has not been

established or has been invalidated, the

ACO will issue a forward pricing rate

recommendation (FPRR) to buying

activities with documentation to assist

negotiators. In the absence of an FPRA

or FPRR, the ACO shall include support

for rates utilized.

(e) The ACO may negotiate

continuous updates to the FPRA. The

FPRA will provide specific terms and

conditions covering notification,

application, and data requirements for

systematic monitoring to ensure the

validity of the rates.

PART 43—CONTRACT

MODIFICATIONS

21. Section 43.301 is amended by

revising the introductory text of

paragraph (a)(1) to read as follows:

43.301 Use of forms.

(a)(1) The Standard Form 30 (SF 30),

Amendment of Solicitation/

Modification of Contract, exclusive of

actions processed under part 15, shall

(except for the options stated in

43.301(a)(2) or actions processed under

part 15) be used for—

* * * * *

PART 49—TERMINATION OF

CONTRACTS

22. Section 49.208 is amended by

revising the third sentence of the

introductory paragraph to read as

follows:

49.208 Equitable adjustment after partial

termination.

* * * The contractor shall submit the

proposal in the format of Table 15–2 of

15.408.

PART 52—SOLICITATION PROVISIONS

AND CONTRACT CLAUSES

23. Section 52.215–1 is added to read

as follows:

52.215–1 Instructions to Offerors—

Competitive Acquisition.

As prescribed in 15.209(a), insert the

following provision:

Instructions to Offerors—Competitive

Acquisition (Oct 1997)

(a) Definitions. As used in this provision—

Discussions are negotiations that occur

after establishment of the competitive range

that may, at the Contracting Officer’s

discretion, result in the offeror being allowed

to revise its proposal.

In writing or written means any worded or

numbered expression which can be read,

reproduced, and later communicated, and

includes electronically transmitted and

stored information.

Proposal modification is a change made to

a proposal before the solicitation’s closing

date and time, or made in response to an

amendment, or made to correct a mistake at

any time before award.

Proposal revision is a change to a proposal

made after the solicitation closing date, at the

request of or as allowed by a Contracting

Officer as the result of negotiations.

Time, if stated as a number of days, is

calculated using calendar days, unless

otherwise specified, and will include

Saturdays, Sundays, and legal holidays.

However, if the last day falls on a Saturday,

Sunday, or legal holiday, then the period

shall include the next working day.

(b) Amendments to solicitations. If this

solicitation is amended, all terms and

conditions that are not amended remain

unchanged. Offerors shall acknowledge

receipt of any amendment to this solicitation

by the date and time specified in the

amendment(s).

(c) Submission, modification, revision, and

withdrawal of proposals. (1) Unless other

methods (e.g., electronic commerce or

facsimile) are permitted in the solicitation,

proposals and modifications to proposals

shall be submitted in paper media in sealed

envelopes or packages (i) addressed to the

office specified in the solicitation, and (ii)

showing the time and date specified for

receipt, the solicitation number, and the

name and address of the offeror. Offerors

using commercial carriers should ensure that

the proposal is marked on the outermost

wrapper with the information in paragraphs

(c)(1)(i) and (c)(1)(ii) of this provision.

(2) The first page of the proposal must

show—

(i) The solicitation number;

(ii) The name, address, and telephone and

facsimile numbers of the offeror (and

electronic address if available);

(iii) A statement specifying the extent of

agreement with all terms, conditions, and

provisions included in the solicitation and

agreement to furnish any or all items upon

which prices are offered at the price set

opposite each item;

(iv) Names, titles, and telephone and

facsimile numbers (and electronic addresses

if available) of persons authorized to

negotiate on the offeror’s behalf with the

Government in connection with this

solicitation; and

(v) Name, title, and signature of person

authorized to sign the proposal. Proposals

signed by an agent shall be accompanied by

evidence of that agent’s authority, unless that

evidence has been previously furnished to

the issuing office.

(3) Late proposals and revisions. (i) Any

proposal received at the office designated in

the solicitation after the exact time specified

for receipt of offers will not be considered

unless it is received before award is made

and—

(A) It was sent by registered or certified

mail not later than the fifth calendar day

before the date specified for receipt of offers

(e.g., an offer submitted in response to a

solicitation requiring receipt of offers by the

20th of the month must have been mailed by

the 15th);

(B) It was sent by mail (or telegram or

facsimile, if authorized) or hand-carried

(including delivery by a commercial carrier)

if it is determined by the Government that

the late receipt was due primarily to

Government mishandling after receipt at the

Government installation;

(C) It was sent by U.S. Postal Service

Express Mail Next Day Service-Post Office

to Addressee, not later than 5:00 p.m. at the

place of mailing two working days prior to

the date specified for receipt of proposals.

The term ‘‘working days’’ excludes weekends

and U.S. Federal holidays;

(D) It was transmitted through an

electronic commerce method authorized by

the solicitation and was received at the initial

point of entry to the Government

infrastructure not later than 5:00 p.m. one

working day prior to the date specified for

receipt of proposals; or

(E) There is acceptable evidence to

establish that it was received at the activity

designated for receipt of offers and was under

the Government’s control prior to the time set

for receipt of offers, and the Contracting

Officer determines that accepting the late

offer would not unduly delay the

procurement; or

(F) It is the only proposal received.

(ii) Any modification or revision of a

proposal or response to request for

information, including any final proposal

revision, is subject to the same conditions as
51260 Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations

in subparagraphs (c)(3)(i)(A) through

(c)(3)(i)(E) of this provision.

(iii) The only acceptable evidence to

establish the date of mailing of a late

proposal or modification or revision sent

either by registered or certified mail is the

U.S. or Canadian Postal Service postmark

both on the envelope or wrapper and on the

original receipt from the U.S. or Canadian

Postal Service. Both postmarks must show a

legible date or the proposal, response to a

request for information, or modification or

revision shall be processed as if mailed late.

‘‘Postmark’’ means a printed, stamped, or

otherwise placed impression (exclusive of a

postage meter machine impression) that is

readily identifiable without further action as

having been supplied and affixed by

employees of the U.S. or Canadian Postal

Service on the date of mailing. Therefore,

offerors or respondents should request the

postal clerk to place a legible hand

cancellation bull’s eye postmark on both the

receipt and the envelope or wrapper.

(iv) Acceptable evidence to establish the

time of receipt at the Government installation

includes the time/date stamp of that

installation on the proposal wrapper, other

documentary evidence of receipt maintained

by the installation, or oral testimony or

statements of Government personnel.

(v) The only acceptable evidence to

establish the date of mailing of a late offer,

modification or revision, or withdrawal sent

by Express Mail Next Day Service-Post Office

to Addressee is the date entered by the post

office receiving clerk on the ‘‘Express Mail

Next Day Service-Post Office to Addressee’’

label and the postmark on both the envelope

or wrapper and on the original receipt from

the U.S. Postal Service. ‘‘Postmark’’ has the

same meaning as defined in paragraph

(c)(3)(iii) of this provision, excluding

postmarks of the Canadian Postal Service.

Therefore, offerors or respondents should

request the postal clerk to place a legible

hand cancellation bull’s eye postmark on

both the receipt and the envelope or wrapper.

(vi) Notwithstanding paragraph (c)(3)(i) of

this provision, a late modification or revision

of an otherwise successful proposal that

makes its terms more favorable to the

Government will be considered at any time

it is received and may be accepted.

(vii) Proposals may be withdrawn by

written notice or telegram (including

mailgram) received at any time before award.

If the solicitation authorizes facsimile

proposals, proposals may be withdrawn via

facsimile received at any time before award,

subject to the conditions specified in the

provision entitled ‘‘Facsimile Proposals.’’

Proposals may be withdrawn in person by an

offeror or an authorized representative, if the

representative’s identity is made known and

the representative signs a receipt for the

proposal before award.

(viii) If an emergency or unanticipated

event interrupts normal Government

processes so that proposals cannot be

received at the office designated for receipt

of proposals by the exact time specified in

the solicitation, and urgent Government

requirements preclude amendment of the

solicitation or other notice of an extension of

the closing date, the time specified for receipt

of proposals will be deemed to be extended

to the same time of day specified in the

solicitation on the first work day on which

normal Government processes resume. If no

time is specified in the solicitation, the time

for receipt is 4:30 p.m., local time, for the

designated Government office.

(4) Unless otherwise specified in the

solicitation, the offeror may propose to

provide any item or combination of items.

(5) Proposals submitted in response to this

solicitation shall be in English and in U.S.

dollars, unless otherwise permitted by the

solicitation.

(6) Offerors may submit modifications to

their proposals at any time before the

solicitation closing date and time, and may

submit modifications in response to an

amendment, or to correct a mistake at any

time before award.

(7) Offerors may submit revised proposals

only if requested or allowed by the

Contracting Officer.

(8) Proposals may be withdrawn at any

time before award. Withdrawals are effective

upon receipt of notice by the Contracting

Officer.

(d) Offer expiration date. Proposals in

response to this solicitation will be valid for

the number of days specified on the

solicitation cover sheet (unless a different

period is proposed by the offeror).

(e) Restriction on disclosure and use of

data. Offerors that include in their proposals

data that they do not want disclosed to the

public for any purpose, or used by the

Government except for evaluation purposes,

shall—

(1) Mark the title page with the following

legend: This proposal includes data that shall

not be disclosed outside the Government and

shall not be duplicated, used, or disclosed—

in whole or in part—for any purpose other

than to evaluate this proposal. If, however, a

contract is awarded to this offeror as a result

of—or in connection with— the submission

of this data, the Government shall have the

right to duplicate, use, or disclose the data

to the extent provided in the resulting

contract. This restriction does not limit the

Government’s right to use information

contained in this data if it is obtained from

another source without restriction. The data

subject to this restriction are contained in

sheets [insert numbers or other identification

of sheets]; and

(2) Mark each sheet of data it wishes to

restrict with the following legend: Use or

disclosure of data contained on this sheet is

subject to the restriction on the title page of

this proposal.

(f) Contract award. (1) The Government

intends to award a contract or contracts

resulting from this solicitation to the

responsible offeror(s) whose proposal(s)

represents the best value after evaluation in

accordance with the factors and subfactors in

the solicitation.

(2) The Government may reject any or all

proposals if such action is in the

Government’s interest.

(3) The Government may waive

informalities and minor irregularities in

proposals received.

(4) The Government intends to evaluate

proposals and award a contract without

discussions with offerors (except

clarifications as described in FAR 15.306(a)).

Therefore, the offeror’s initial proposal

should contain the offeror’s best terms from

a cost or price and technical standpoint. The

Government reserves the right to conduct

discussions if the Contracting Officer later

determines them to be necessary. If the

Contracting Officer determines that the

number of proposals that would otherwise be

in the competitive range exceeds the number

at which an efficient competition can be

conducted, the Contracting Officer may limit

the number of proposals in the competitive

range to the greatest number that will permit

an efficient competition among the most

highly rated proposals.

(5) The Government reserves the right to

make an award on any item for a quantity

less than the quantity offered, at the unit cost

or prices offered, unless the offeror specifies

otherwise in the proposal.

(6) The Government reserves the right to

make multiple awards if, after considering

the additional administrative costs, it is in

the Government’s best interest to do so.

(7) Exchanges with offerors after receipt of

a proposal do not constitute a rejection or

counteroffer by the Government.

(8) The Government may determine that a

proposal is unacceptable if the prices

proposed are materially unbalanced between

line items or subline items. Unbalanced

pricing exists when, despite an acceptable

total evaluated price, the price of one or more

contract line items is significantly overstated

or understated as indicated by the

application of cost or price analysis

techniques. A proposal may be rejected if the

Contracting Officer determines that the lack

of balance poses an unacceptable risk to the

Government.

(9) If a cost realism analysis is performed,

cost realism may be considered by the source

selection authority in evaluating performance

or schedule risk.

(10) A written award or acceptance of

proposal mailed or otherwise furnished to

the successful offeror within the time

specified in the proposal shall result in a

binding contract without further action by

either party.

(11) The Government may disclose the

following information in postaward

debriefings to other offerors:

(i) The overall evaluated cost or price and

technical rating of the successful offeror;

(ii) The overall ranking of all offerors,

when any ranking was developed by the

agency during source selection;

(iii) A summary of the rationale for award;

and

(iv) For acquisitions of commercial items,

the make and model of the item to be

delivered by the successful offeror. (End of

provision)

Alternate I (Oct 1997). As prescribed in

15.209(a)(1), substitute the following

paragraph (f)(4) for paragraph (f)(4) of the

basic provision:

(f)(4) The Government intends to evaluate

proposals and award a contract after

conducting discussions with offerors whose

proposals have been determined to be within

the competitive range. If the Contracting

Officer determines that the number of
Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations 51261

proposals that would otherwise be in the

competitive range exceeds the number at

which an efficient competition can be

conducted, the Contracting Officer may limit

the number of proposals in the competitive

range to the greatest number that will permit

an efficient competition among the most

highly rated proposals. Therefore, the

offeror’s initial proposal should contain the

offeror’s best terms from a price and

technical standpoint.

Alternate II (Oct 1997). As prescribed in

15.209(a)(2), add a paragraph (c)(9)

substantially the same as the following to the

basic clause:

(9) Offerors may submit proposals that

depart from stated requirements. Such

proposals shall clearly identify why the

acceptance of the proposal would be

advantageous to the Government. Any

deviations from the terms and conditions of

the solicitation, as well as the comparative

advantage to the Government, shall be clearly

identified and explicitly defined. The

Government reserves the right to amend the

solicitation to allow all offerors an

opportunity to submit revised proposals

based on the revised requirements.

24. Sections 52.215–3 through

52.215–15 are revised to read as follows:

52.215–3 Request for Information or

Solicitation for Planning Purposes.

As prescribed in 15.209(c), insert the

following provision:

Request for Information or Solicitation for

Planning Purposes (Oct 1997)

(a) The Government does not intend to

award a contract on the basis of this

solicitation or to otherwise pay for the

information solicited except as an allowable

cost under other contracts as provided in

subsection 31.205–18, Bid and proposal

costs, of the Federal Acquisition Regulation.

(b) Although ‘‘proposal’’ and ‘‘offeror’’ are

used in this Request for Information, your

response will be treated as information only.

It shall not be used as a proposal.

(c) This solicitation is issued for the

purpose of: [state purpose]. (End of

provision)

52.215–4 Type of Business Organization.

As prescribed in 15.209(d), insert the

following provision:

Type of Business Organization (Oct 1997)

The offeror or respondent, by checking the

applicable box, represents that—

(a) It operates as b an individual, b a

partnership, b a nonprofit organization, b a

joint venture, or b a corporation

incorporated under the laws of the State of

llll.

(b) If the offeror or respondent is a foreign

entity, it operates as b an individual, b a

partnership, b a nonprofit organization, b a

joint venture, or b a corporation, registered

for business in (country) llll.

(End of provision)

52.215–5 Facsimile Proposals.

As prescribed in 15.209(e), insert the

following provision:

Facsimile Proposals (Oct 1997)

(a) Definition. Facsimile proposal, as used

in this provision, means a proposal, revision

or modification of a proposal, or withdrawal

of a proposal that is transmitted to and

received by the Government via facsimile

machine.

(b) Offerors may submit facsimile

proposals as responses to this solicitation.

Facsimile proposals are subject to the same

rules as paper proposals.

(c) The telephone number of receiving

facsimile equipment is: [insert telephone

number].

(d) If any portion of a facsimile proposal

received by the Contracting Officer is

unreadable to the degree that conformance to

the essential requirements of the solicitation

cannot be ascertained from the document—

(1) The Contracting Officer immediately

shall notify the offeror and permit the offeror

to resubmit the proposal;

(2) The method and time for resubmission

shall be prescribed by the Contracting Officer

after consultation with the offeror; and

(3) The resubmission shall be considered

as if it were received at the date and time of

the original unreadable submission for the

purpose of determining timeliness, provided

the offeror complies with the time and format

requirements for resubmission prescribed by

the Contracting Officer.

(e) The Government reserves the right to

make award solely on the facsimile proposal.

However, if requested to do so by the

Contracting Officer, the apparently successful

offeror promptly shall submit the complete

original signed proposal. (End of provision)

52.215–6 Place of Performance.

As prescribed in 15.209(f), insert the

following provision:

Place of Performance (Oct 1997)

(a) The offeror or respondent, in the

performance of any contract resulting from

this solicitation, b intends, b does not

intend [check applicable block] to use one or

more plants or facilities located at a different

address from the address of the offeror or

respondent as indicated in this proposal or

response to request for information.

(b) If the offeror or respondent checks

‘‘intends’’ in paragraph (a) of this provision,

it shall insert in the following spaces the

required information:

Place of performance

(street address, city,

state, county, zip

code)

Name and address of

owner and operator of

the plant or facility if

other than offeror or

respondent

lllllllll lllllllll

lllllllll lllllllll

(End of provision)

52.215–7 Annual Representations and

Certifications—Negotiation.

As prescribed in 15.209(g), insert the

following provision:

Annual Representations and Certifications—

Negotiation (Oct 1997)

The offeror has [check the appropriate

block]:

b (a) Submitted to the contracting office

issuing this solicitation, annual

representations and certifications dated

llll [insert date of signature on

submission] that are incorporated herein by

reference, and are current, accurate, and

complete as of the date of this proposal,

except as follows [insert changes that affect

only this proposal; if ‘‘none,’’ so state]:

b (b) Enclosed its annual representations

and certifications. (End of provision)

52.215–8 Order of Precedence—Uniform

Contract Format.

As prescribed in 15.209(h), insert the

following clause:

Order of Precedence—Uniform Contract

Format (Oct 1997)

Any inconsistency in this solicitation or

contract shall be resolved by giving

precedence in the following order:

(a) The Schedule (excluding the

specifications).

(b) Representations and other instructions.

(c) Contract clauses.

(d) Other documents, exhibits, and

attachments.

(e) The specifications. (End of clause)

52.215–9 Changes or Additions to Makeor-Buy Program.

As prescribed in 15.408(a), insert the

following clause:

Changes or Additions to Make-or-Buy

Program (Oct 1997)

(a) The Contractor shall perform in

accordance with the make-or-buy program

incorporated in this contract. If the

Contractor proposes to change the program,

the Contractor shall, reasonably in advance of

the proposed change, (1) notify the

Contracting Officer in writing, and (2) submit

justification in sufficient detail to permit

evaluation. Changes in the place of

performance of any ‘‘make’’ items in the

program are subject to this requirement.

(b) For items deferred at the time of

negotiation of this contract for later addition

to the program, the Contractor shall, at the

earliest possible time—

(1) Notify the Contracting Officer of each

proposed addition; and

(2) Provide justification in sufficient detail

to permit evaluation.

(c) Modification of the make-or-buy

program to incorporate proposed changes or

additions shall be effective upon the

Contractor’s receipt of the Contracting

Officer’s written approval. (End of clause)

Alternate I (Oct 1997). As prescribed in

15.408(a)(1) add the following paragraph (d)

to the basic clause:

(d) If the Contractor desires to reverse the

categorization of ‘‘make’’ or ‘‘buy’’ for any

item or items designated in the contract as

subject to this paragraph, it shall—

(1) Support its proposal with cost or

pricing data when permitted and necessary to

support evaluation; and

(2) After approval is granted, promptly

negotiate with the Contracting Officer an

equitable reduction in the contract price in

accordance with paragraph (k) of the

Incentive Price Revision—Firm Target clause
51262 Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations

or paragraph (m) of the Incentive Price

Revision—Successive Targets clause of this

contract.

Alternate II (Oct 1997). As prescribed in

15.408(a)(2), add the following paragraph (d)

to the basic clause:

(d) If the Contractor desires to reverse the

categorization of ‘‘make’’ or ‘‘buy’’ for any

item or items designated in the contract as

subject to this paragraph, it shall—

(1) Support its proposal with cost or

pricing data to permit evaluation; and

(2) After approval is granted, promptly

negotiate with the Contracting Officer an

equitable reduction in the contract’s total

estimated cost and fee in accordance with

paragraph (e) of the Incentive Fee clause of

this contract.

52.215–10 Price Reduction for Defective

Cost or Pricing Data.

As prescribed in 15.408(b), insert the

following clause:

Price Reduction for Defective Cost or Pricing

Data (Oct 1997)

(a) If any price, including profit or fee,

negotiated in connection with this contract,

or any cost reimbursable under this contract,

was increased by any significant amount

because—

(1) The Contractor or a subcontractor

furnished cost or pricing data that were not

complete, accurate, and current as certified

in its Certificate of Current Cost or Pricing

Data;

(2) A subcontractor or prospective

subcontractor furnished the Contractor cost

or pricing data that were not complete,

accurate, and current as certified in the

Contractor’s Certificate of Current Cost or

Pricing Data; or

(3) Any of these parties furnished data of

any description that were not accurate, the

price or cost shall be reduced accordingly

and the contract shall be modified to reflect

the reduction.

(b) Any reduction in the contract price

under paragraph (a) of this clause due to

defective data from a prospective

subcontractor that was not subsequently

awarded the subcontract shall be limited to

the amount, plus applicable overhead and

profit markup, by which—

(1) The actual subcontract; or

(2) The actual cost to the Contractor, if

there was no subcontract, was less than the

prospective subcontract cost estimate

submitted by the Contractor; provided, that

the actual subcontract price was not itself

affected by defective cost or pricing data.

(c)(1) If the Contracting Officer determines

under paragraph (a) of this clause that a price

or cost reduction should be made, the

Contractor agrees not to raise the following

matters as a defense:

(i) The Contractor or subcontractor was a

sole source supplier or otherwise was in a

superior bargaining position and thus the

price of the contract would not have been

modified even if accurate, complete, and

current cost or pricing data had been

submitted.

(ii) The Contracting Officer should have

known that the cost or pricing data in issue

were defective even though the Contractor or

subcontractor took no affirmative action to

bring the character of the data to the attention

of the Contracting Officer.

(iii) The contract was based on an

agreement about the total cost of the contract

and there was no agreement about the cost

of each item procured under the contract.

(iv) The Contractor or subcontractor did

not submit a Certificate of Current Cost or

Pricing Data.

(2)(i) Except as prohibited by subdivision

(c)(2)(ii) of this clause, an offset in an amount

determined appropriate by the Contracting

Officer based upon the facts shall be allowed

against the amount of a contract price

reduction if—

(A) The Contractor certifies to the

Contracting Officer that, to the best of the

Contractor’s knowledge and belief, the

Contractor is entitled to the offset in the

amount requested; and

(B) The Contractor proves that the cost or

pricing data were available before the ‘‘as of’’

date specified on its Certificate of Current

Cost or Pricing Data, and that the data were

not submitted before such date.

(ii) An offset shall not be allowed if—

(A) The understated data were known by

the Contractor to be understated before the

‘‘as of’’ date specified on its Certificate of

Current Cost or Pricing Data; or

(B) The Government proves that the facts

demonstrate that the contract price would

not have increased in the amount to be offset

even if the available data had been submitted

before the ‘‘as of’’ date specified on its

Certificate of Current Cost or Pricing Data.

(d) If any reduction in the contract price

under this clause reduces the price of items

for which payment was made prior to the

date of the modification reflecting the price

reduction, the Contractor shall be liable to

and shall pay the United States at the time

such overpayment is repaid—

(1) Simple interest on the amount of such

overpayment to be computed from the date(s)

of overpayment to the Contractor to the date

the Government is repaid by the Contractor

at the applicable underpayment rate effective

for each quarter prescribed by the Secretary

of the Treasury under 26 U.S.C. 6621(a)(2);

and

(2) A penalty equal to the amount of the

overpayment, if the Contractor or

subcontractor knowingly submitted cost or

pricing data that were incomplete,

inaccurate, or noncurrent. (End of clause)

52.215–11 Price Reduction for Defective

Cost or Pricing Data—Modifications.

As prescribed in 15.408(c), insert the

following clause:

Price Reduction for Defective Cost or Pricing

Data—Modifications (Oct 1997)

(a) This clause shall become operative only

for any modification to this contract

involving a pricing adjustment expected to

exceed the threshold for submission of cost

or pricing data at FAR 15.403–4, except that

this clause does not apply to any

modification if an exception under FAR

15.403–1 applies.

(b) If any price, including profit or fee,

negotiated in connection with any

modification under this clause, or any cost

reimbursable under this contract, was

increased by any significant amount because

(1) the Contractor or a subcontractor

furnished cost or pricing data that were not

complete, accurate, and current as certified

in its Certificate of Current Cost or Pricing

Data, (2) a subcontractor or prospective

subcontractor furnished the Contractor cost

or pricing data that were not complete,

accurate, and current as certified in the

Contractor’s Certificate of Current Cost or

Pricing Data, or (3) any of these parties

furnished data of any description that were

not accurate, the price or cost shall be

reduced accordingly and the contract shall be

modified to reflect the reduction. This right

to a price reduction is limited to that

resulting from defects in data relating to

modifications for which this clause becomes

operative under paragraph (a) of this clause.

(c) Any reduction in the contract price

under paragraph (b) of this clause due to

defective data from a prospective

subcontractor that was not subsequently

awarded the subcontract shall be limited to

the amount, plus applicable overhead and

profit markup, by which—

(1) The actual subcontract; or

(2) The actual cost to the Contractor, if

there was no subcontract, was less than the

prospective subcontract cost estimate

submitted by the Contractor; provided, that

the actual subcontract price was not itself

affected by defective cost or pricing data.

(d)(1) If the Contracting Officer determines

under paragraph (b) of this clause that a price

or cost reduction should be made, the

Contractor agrees not to raise the following

matters as a defense:

(i) The Contractor or subcontractor was a

sole source supplier or otherwise was in a

superior bargaining position and thus the

price of the contract would not have been

modified even if accurate, complete, and

current cost or pricing data had been

submitted.

(ii) The Contracting Officer should have

known that the cost or pricing data in issue

were defective even though the Contractor or

subcontractor took no affirmative action to

bring the character of the data to the attention

of the Contracting Officer.

(iii) The contract was based on an

agreement about the total cost of the contract

and there was no agreement about the cost

of each item procured under the contract.

(iv) The Contractor or subcontractor did

not submit a Certificate of Current Cost or

Pricing Data.

(2)(i) Except as prohibited by subdivision

(d)(2)(ii) of this clause, an offset in an amount

determined appropriate by the Contracting

Officer based upon the facts shall be allowed

against the amount of a contract price

reduction if—

(A) The Contractor certifies to the

Contracting Officer that, to the best of the

Contractor’s knowledge and belief, the

Contractor is entitled to the offset in the

amount requested; and

(B) The Contractor proves that the cost or

pricing data were available before the ‘‘as of’’

date specified on its Certificate of Current

Cost or Pricing Data, and that the data were

not submitted before such date.

(ii) An offset shall not be allowed if—
Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations 51263

(A) The understated data were known by

the Contractor to be understated before the

‘‘as of’’ date specified on its Certificate of

Current Cost or Pricing Data; or

(B) The Government proves that the facts

demonstrate that the contract price would

not have increased in the amount to be offset

even if the available data had been submitted

before the ‘‘as of’’ date specified on its

Certificate of Current Cost or Pricing Data.

(e) If any reduction in the contract price

under this clause reduces the price of items

for which payment was made prior to the

date of the modification reflecting the price

reduction, the Contractor shall be liable to

and shall pay the United States at the time

such overpayment is repaid—

(1) Simple interest on the amount of such

overpayment to be computed from the date(s)

of overpayment to the Contractor to the date

the Government is repaid by the Contractor

at the applicable underpayment rate effective

for each quarter prescribed by the Secretary

of the Treasury under 26 U.S.C. 6621(a)(2);

and

(2) A penalty equal to the amount of the

overpayment, if the Contractor or

subcontractor knowingly submitted cost or

pricing data that were incomplete,

inaccurate, or noncurrent. (End of clause)

52.215–12 Subcontractor Cost or Pricing

Data.

As prescribed in 15.408(d), insert the

following clause:

Subcontractor Cost or Pricing Data (Oct 1997)

(a) Before awarding any subcontract

expected to exceed the threshold for

submission of cost or pricing data at FAR

15.403–4, on the date of agreement on price

or the date of award, whichever is later; or

before pricing any subcontract modification

involving a pricing adjustment expected to

exceed the threshold for submission of cost

or pricing data at FAR 15.403–4, the

Contractor shall require the subcontractor to

submit cost or pricing data (actually or by

specific identification in writing), unless an

exception under FAR 15.403–1 applies.

(b) The Contractor shall require the

subcontractor to certify in substantially the

form prescribed in FAR 15.406–2 that, to the

best of its knowledge and belief, the data

submitted under paragraph (a) of this clause

were accurate, complete, and current as of

the date of agreement on the negotiated price

of the subcontract or subcontract

modification.

(c) In each subcontract that exceeds the

threshold for submission of cost or pricing

data at FAR 15.403–4, when entered into, the

Contractor shall insert either—

(1) The substance of this clause, including

this paragraph (c), if paragraph (a) of this

clause requires submission of cost or pricing

data for the subcontract; or

(2) The substance of the clause at FAR

52.215–13, Subcontractor Cost or Pricing

Data—Modifications. (End of clause)

52.215–13 Subcontractor Cost or Pricing

Data—Modifications.

As prescribed in 15.408(e), insert the

following clause:

Subcontractor Cost or Pricing Data—

Modifications (Oct 1997)

(a) The requirements of paragraphs (b) and

(c) of this clause shall—

(1) Become operative only for any

modification to this contract involving a

pricing adjustment expected to exceed the

threshold for submission of cost or pricing

data at FAR 15.403–4; and

(2) Be limited to such modifications.

(b) Before awarding any subcontract

expected to exceed the threshold for

submission of cost or pricing data at FAR

15.403–4, on the date of agreement on price

or the date of award, whichever is later; or

before pricing any subcontract modification

involving a pricing adjustment expected to

exceed the threshold for submission of cost

or pricing data at FAR 15.403–4, the

Contractor shall require the subcontractor to

submit cost or pricing data (actually or by

specific identification in writing), unless an

exception under FAR 15.403–1 applies.

(c) The Contractor shall require the

subcontractor to certify in substantially the

form prescribed in FAR 15.406–2 that, to the

best of its knowledge and belief, the data

submitted under paragraph (b) of this clause

were accurate, complete, and current as of

the date of agreement on the negotiated price

of the subcontract or subcontract

modification.

(d) The Contractor shall insert the

substance of this clause, including this

paragraph (d), in each subcontract that

exceeds the threshold for submission of cost

or pricing data at FAR 15.403–4 on the date

of agreement on price or the date of award,

whichever is later. (End of clause)

52.215–14 Integrity of Unit Prices.

As prescribed in 15.408(f)(1), insert

the following clause:

Integrity of Unit Prices (Oct 1997)

(a) Any proposal submitted for the

negotiation of prices for items of supplies

shall distribute costs within contracts on a

basis that ensures that unit prices are in

proportion to the items’ base cost (e.g.,

manufacturing or acquisition costs). Any

method of distributing costs to line items that

distorts unit prices shall not be used. For

example, distributing costs equally among

line items is not acceptable except when

there is little or no variation in base cost.

Nothing in this paragraph requires

submission of cost or pricing data not

otherwise required by law or regulation.

(b) When requested by the Contracting

Officer, the Offeror/Contractor shall also

identify those supplies that it will not

manufacture or to which it will not

contribute significant value.

(c) The Contractor shall insert the

substance of this clause, less paragraph (b),

in all subcontracts for other than:

acquisitions at or below the simplified

acquisition threshold in FAR Part 2;

construction or architect-engineer services

under FAR Part 36; utility services under

FAR Part 41; services where supplies are not

required; commercial items; and petroleum

products. (End of clause)

Alternate I (Oct 1997). As prescribed in

15.408(f)(2), substitute the following

paragraph (b) for paragraph (b) of the basic

clause:

(b) The Offeror/Contractor shall also

identify those supplies that it will not

manufacture or to which it will not

contribute significant value.

52.215–15 Termination of Defined Benefit

Pension Plans.

As prescribed in 15.408(g), insert the

following clause:

Termination of Defined Benefit Pension

Plans (Oct 1997)

The Contractor shall promptly notify the

Contracting Officer in writing when it

determines that it will terminate a defined

benefit pension plan or otherwise recapture

such pension fund assets. If pension fund

assets revert to the Contractor or are

constructively received by it under a

termination or otherwise, the Contractor shall

make a refund or give a credit to the

Government for its equitable share as

required by FAR 31.205–6(j)(4). The

Contractor shall include the substance of this

clause in all subcontracts under this contract

that meet the applicability requirement of

FAR 15.408(g). (End of clause)

52.215–16 [Removed]

25. Section 52.215–16 is removed.

52.215–30 [Redesignated as 52.215–16

and Amended]

26. Section 52.215–30 is redesignated

as 52.215–16, amended in the

introductory text by removing the

reference ‘‘15.904(a)’’ and inserting

‘‘15.408(h),’’ and revising the clause

date to read ‘‘(OCT 1997)’’.

15.215–17 [Removed]

27. Section 52.215–17 is removed.

52.215–31 [Redesignated as 52.215–17

and Amended]

28. Section 52.215–31 is redesignated

as 52.215–17, amended in the

introductory text by removing the

reference ‘‘15.904(b)’’ and inserting

‘‘15.408(i),’’ and revising the clause date

to read ‘‘(OCT 1997)’’.

29. Sections 52.215–18 through

52.215–21 are revised to read as follows:

52.215–18 Reversion or Adjustment of

Plans for Postretirement Benefits (PRB)

Other Than Pensions.

As prescribed in 15.408(j), insert the

following clause:

Reversion or Adjustment of Plans for

Postretirement Benefits (PRB) Other Than

Pensions (Oct 1997)

The Contractor shall promptly notify the

Contracting Officer in writing when it

determines that it will terminate or reduce a

PRB plan. If PRB fund assets revert, or inure,

to the Contractor or are constructively

received by it under a plan termination or

otherwise, the Contractor shall make a refund

or give a credit to the Government for its

equitable share as required by FAR 31.205–

6(o)(6). The Contractor shall include the
51264 Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations

substance of this clause in all subcontracts

under this contract that meet the

applicability requirements of FAR 15.408(j).

(End of clause)

52.215–19 Notification of Ownership

Changes.

As prescribed in 15.408(k), insert the

following clause:

Notification of Ownership Changes (Oct

1997)

(a) The Contractor shall make the following

notifications in writing:

(1) When the Contractor becomes aware

that a change in its ownership has occurred,

or is certain to occur, that could result in

changes in the valuation of its capitalized

assets in the accounting records, the

Contractor shall notify the Administrative

Contracting Officer (ACO) within 30 days.

(2) The Contractor shall also notify the

ACO within 30 days whenever changes to

asset valuations or any other cost changes

have occurred or are certain to occur as a

result of a change in ownership.

(b) The Contractor shall—

(1) Maintain current, accurate, and

complete inventory records of assets and

their costs;

(2) Provide the ACO or designated

representative ready access to the records

upon request;

(3) Ensure that all individual and grouped

assets, their capitalized values, accumulated

depreciation or amortization, and remaining

useful lives are identified accurately before

and after each of the Contractor’s ownership

changes; and

(4) Retain and continue to maintain

depreciation and amortization schedules

based on the asset records maintained before

each Contractor ownership change.

(c) The Contractor shall include the

substance of this clause in all subcontracts

under this contract that meet the

applicability requirement of FAR 15.408(k).

(End of clause)

52.215–20 Requirements for Cost or

Pricing Data or Information Other Than Cost

or Pricing Data.

As prescribed in 15.408(l), insert the

following provision:

Requirements for Cost or Pricing Data or

Information Other Than Cost or Pricing Data

(Oct 1997)

(a) Exceptions from cost or pricing data. (1)

In lieu of submitting cost or pricing data,

offerors may submit a written request for

exception by submitting the information

described in the following subparagraphs.

The Contracting Officer may require

additional supporting information, but only

to the extent necessary to determine whether

an exception should be granted, and whether

the price is fair and reasonable.

(i) Identification of the law or regulation

establishing the price offered. If the price is

controlled under law by periodic rulings,

reviews, or similar actions of a governmental

body, attach a copy of the controlling

document, unless it was previously

submitted to the contracting office.

(ii) Commercial item exception. For a

commercial item exception, the offeror shall

submit, at a minimum, information on prices

at which the same item or similar items have

previously been sold in the commercial

market that is adequate for evaluating the

reasonableness of the price for this

acquisition. Such information may include--

(A) For catalog items, a copy of or

identification of the catalog and its date, or

the appropriate pages for the offered items,

or a statement that the catalog is on file in

the buying office to which the proposal is

being submitted. Provide a copy or describe

current discount policies and price lists

(published or unpublished), e.g., wholesale,

original equipment manufacturer, or reseller.

Also explain the basis of each offered price

and its relationship to the established catalog

price, including how the proposed price

relates to the price of recent sales in

quantities similar to the proposed quantities;

(B) For market-priced items, the source and

date or period of the market quotation or

other basis for market price, the base amount,

and applicable discounts. In addition,

describe the nature of the market;

(C) For items included on an active Federal

Supply Service Multiple Award Schedule

contract, proof that an exception has been

granted for the schedule item.

(2) The offeror grants the Contracting

Officer or an authorized representative the

right to examine, at any time before award,

books, records, documents, or other directly

pertinent records to verify any request for an

exception under this provision, and the

reasonableness of price. For items priced

using catalog or market prices, or law or

regulation, access does not extend to cost or

profit information or other data relevant

solely to the offeror’s determination of the

prices to be offered in the catalog or

marketplace.

(b) Requirements for cost or pricing data.

If the offeror is not granted an exception from

the requirement to submit cost or pricing

data, the following applies:

(1) The offeror shall prepare and submit

cost or pricing data and supporting

attachments in accordance with Table 15–2

of FAR 15.408.

(2) As soon as practicable after agreement

on price, but before contract award (except

for unpriced actions such as letter contracts),

the offeror shall submit a Certificate of

Current Cost or Pricing Data, as prescribed by

FAR 15.406–2. (End of provision)

Alternate I (Oct 1997). As prescribed in

15.408(l), substitute the following paragraph

(b)(1) for paragraph (b)(1) of the basic

provision:

(b)(1) The offeror shall submit cost or

pricing data and supporting attachments in

the following format:

Alternate II (Oct 1997). As prescribed in

15.408(l), add the following paragraph (c) to

the basic provision:

(c) When the proposal is submitted, also

submit one copy each to: (1) the

Administrative Contracting Officer, and (2)

the Contract Auditor.

Alternate III (Oct 1997). As prescribed in

15.408(l), add the following paragraph (c) to

the basic provision (if Alternate II is also

used, redesignate the following paragraph as

paragraph (d)).

(c) Submit the cost portion of the proposal

via the following electronic media: [Insert

media format, e.g., electronic spreadsheet

format, electronic mail, etc.]

Alternate IV (Oct 1997). As prescribed in

15.408(l), replace the text of the basic

provision with the following:

(a) Submission of cost or pricing data is not

required.

(b) Provide information described below:

[Insert description of the information and the

format that are required, including access to

records necessary to permit an adequate

evaluation of the proposed price in

accordance with 15.403–3.]

52.215–21 Requirements for Cost or

Pricing Data or Information Other Than Cost

or Pricing Data—Modifications.

As prescribed in 15.408(m), insert the

following clause:

Requirements for Cost or Pricing Data or

Information Other Than Cost or Pricing

Data—Modifications (Oct 1997)

(a) Exceptions from cost or pricing data. (1)

In lieu of submitting cost or pricing data for

modifications under this contract, for price

adjustments expected to exceed the threshold

set forth at FAR 15.403–4 on the date of the

agreement on price or the date of the award,

whichever is later, the Contractor may submit

a written request for exception by submitting

the information described in the following

subparagraphs. The Contracting Officer may

require additional supporting information,

but only to the extent necessary to determine

whether an exception should be granted, and

whether the price is fair and reasonable—

(i) Identification of the law or regulation

establishing the price offered. If the price is

controlled under law by periodic rulings,

reviews, or similar actions of a governmental

body, attach a copy of the controlling

document, unless it was previously

submitted to the contracting office.

(ii) Information on modifications of

contracts or subcontracts for commercial

items. (A) If—

(1) The original contract or subcontract was

granted an exception from cost or pricing

data requirements because the price agreed

upon was based on adequate price

competition or prices set by law or

regulation, or was a contract or subcontract

for the acquisition of a commercial item; and

(2) The modification (to the contract or

subcontract) is not exempted based on one of

these exceptions, then the Contractor may

provide information to establish that the

modification would not change the contract

or subcontract from a contract or subcontract

for the acquisition of a commercial item to

a contract or subcontract for the acquisition

of an item other than a commercial item.

(B) For a commercial item exception, the

Contractor shall provide, at a minimum,

information on prices at which the same item

or similar items have previously been sold

that is adequate for evaluating the

reasonableness of the price of the

modification. Such information may

include—

(1) For catalog items, a copy of or

identification of the catalog and its date, or

the appropriate pages for the offered items,

or a statement that the catalog is on file in

the buying office to which the proposal is
Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations 51265

being submitted. Provide a copy or describe

current discount policies and price lists

(published or unpublished), e.g., wholesale,

original equipment manufacturer, or reseller.

Also explain the basis of each offered price

and its relationship to the established catalog

price, including how the proposed price

relates to the price of recent sales in

quantities similar to the proposed quantities.

(2) For market-priced items, the source and

date or period of the market quotation or

other basis for market price, the base amount,

and applicable discounts. In addition,

describe the nature of the market.

(3) For items included on an active Federal

Supply Service Multiple Award Schedule

contract, proof that an exception has been

granted for the schedule item.

(2) The Contractor grants the Contracting

Officer or an authorized representative the

right to examine, at any time before award,

books, records, documents, or other directly

pertinent records to verify any request for an

exception under this clause, and the

reasonableness of price. For items priced

using catalog or market prices, or law or

regulation, access does not extend to cost or

profit information or other data relevant

solely to the Contractor’s determination of

the prices to be offered in the catalog or

marketplace.

(b) Requirements for cost or pricing data.

If the Contractor is not granted an exception

from the requirement to submit cost or

pricing data, the following applies:

(1) The Contractor shall submit cost or

pricing data and supporting attachments in

accordance with Table 15–2 of FAR 15.408.

(2) As soon as practicable after agreement

on price, but before award (except for

unpriced actions), the Contractor shall

submit a Certificate of Current Cost or Pricing

Data, as prescribed by FAR 15.406–2. (End of

clause)

Alternate I (Oct 1997). As prescribed in

15.408(m), substitute the following paragraph

(b)(1) for paragraph (b)(1) of the basic clause.

(1) The Contractor shall submit cost or

pricing data and supporting attachments

prepared in the following format:

Alternate II (Oct 1997). As prescribed in

15.408(m), add the following paragraph (c) to

the basic clause:

(c) When the proposal is submitted, also

submit one copy each to: (1) the

Administrative Contracting Officer, and (2)

the Contract Auditor.

Alternate III (Oct 1997). As prescribed in

15.408(m), add the following paragraph (c) to

the basic clause (if Alternate II is also used,

redesignate the following paragraph as

paragraph (d)):

(c) Submit the cost portion of the proposal

via the following electronic media: [Insert

media format]

Alternate IV (Oct 1997). As prescribed in

15.408(m), replace the text of the basic clause

with the following:

(a) Submission of cost or pricing data is not

required.

(b) Provide information described below:

[Insert description of the information and the

format that are required, including access to

records necessary to permit an adequate

evaluation of the proposed price in

accordance with 15.403–3.]

52.215–22 through 52.215–42 [Removed]

30. Sections 52.215–22 through

52.215–42 are removed.

31. Section 52.216–5 is amended by

revising the clause date to read ‘‘(OCT

1997)’’, paragraph (d)(1)(i)(A), and the

introductory text of (d)(1)(ii) to read as

follows:

52.216–5 Price Redetermination—

Prospective.

* * * * *

(d) * * *

(1) * * *

(i) * * *

(A) An estimate and breakdown of the

costs of these supplies or services in the

format of Table 15–2, FAR 15.408, or in

any other form on which the parties

may agree;

* * * * *

(ii) A statement of all costs incurred

in performing this contract through the

end of the lll month (see Note (3))

before the submission of proposed

prices in the format of Table 15–2, FAR

15.408 (or in any other form on which

the parties may agree), with sufficient

supporting data to disclose unit costs

and cost trends for—

* * * * *

32. Section 52.216–6 is amended by

revising the clause date to read ‘‘(OCT

1997)’’, and paragraph (c)(1)(ii) to read

as follows:

52.216–6 Price Redetermination—

Retroactive.

* * * * *

(c) * * *

(1) * * *

(ii) A statement in the format of Table 15–

2, FAR 15.408, or in any other form on which

the parties may agree, of all costs incurred in

performing the contract; and

* * * * *

33. Section 52.216–16 is amended by

revising the clause date to read (OCT

1997), and paragraph (c)(1) introductory

text to read as follows:

52.216–16 Incentive Price Revision—Firm

Target.

* * * * *

(c) Data submission. (1) Within lll

[Contracting Officer insert number of days]

days after the end of the month in which the

Contractor has delivered the last unit of

supplies and completed the services

specified by item number in paragraph (a) of

this clause, the Contractor shall sumbit in the

format of Table 15–2, FAR 15.408, or in any

other form on which the parties agree—

* * * * *

34. Section 52.216–17 is amended by

revising the date of the clause to read

‘‘(OCT 1997)’’, the introductory text of

paragraphs (c)(1)(ii) and (iii), and the

introductory text of paragraph (e) to

read as follows:

52.216–17 Incentive Price Revision—

Successive Targets.

* * * * *

(c)(1) * * *

(ii) A detailed statement of all costs

incurred in the performance of this contract

through the end of the month specified

above, in the format of Table 15–2, FAR

15.408 (or in any other form on which the

parties may agree), with sufficient supporting

data to disclose unit costs and cost trends

for—

* * * * *

(iii) An estimate of costs of all supplies

delivered and to be delivered and all services

performed and to be performed under this

contract, using the statement of costs

incurred plus an estimate of costs to

complete performance, in the format of Table

15–2, FAR 15.408 (or in any other form on

which the parties may agree), together with—

* * * * *

(e) Submitting data for final price revision.

Unless a firm fixed price has been

established in accordance with paragraph (d)

of this section within lll [Contracting

Officer insert number of days] days after the

end of the month in which the Contractor has

delivered the last unit of supplies and

completed the services specified by item

number in paragraph (a) of this section, the

Contractor shall submit in the format of Table

15–2, FAR 15.408 (or in any other form on

which the parties agree)—

* * * * *

35. Section 52.236–28 is added to

read as follows:

52.236–28 Preparation of Proposals—

Construction.

As prescribed in 36.520, insert the

following provision:

Preparation of Proposals—Construction (Oct

1997)

(a) Proposals must be (1) submitted on the

forms furnished by the Government or on

copies of those forms, and (2) manually

signed. The person signing a proposal must

initial each erasure or change appearing on

any proposal form.

(b) The proposal form may require offerors

to submit proposed prices for one or more

items on various bases, including—

(1) Lump sum price;

(2) Alternate prices;

(3) Units of construction; or

(4) Any combination of paragraphs (b)(1)

through (b)(3) of this provision.

(c) If the solicitation requires submission of

a proposal on all items, failure to do so may

result in the proposal being rejected without

further consideration. If a proposal on all

items is not required, offerors should insert

the words ‘‘no proposal’’ in the space

provided for any item on which no price is

submitted.

(d) Alternate proposals will not be

considered unless this solicitation authorizes

their submission.

(End of provision)
51266 Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations

PART 53—FORMS

36. Section 53.213 is amended by

revising the section heading and

paragraph (a) to read as follows:

53.213 Simplified acquisition procedures

(SF’s 18, 30, 44, 1165, and 1449, and OF’s

336, 347, and 348).

* * * * *

(a) SF 18 (Rev. 6/95), Request for

Quotations, or SF 1449 (10/95 Ed.),

olicitation/Contract/Order for

Commercial Items. SF 18 is prescribed

for use in obtaining price, cost, delivery,

and related information from suppliers

as specified in 13.107. SF 1449, as

prescribed in 53.212, or other agency

forms/automated formats, may also be

used to obtain price, cost, delivery, and

related information from suppliers as

specified in 13.107.

* * * * *

37. Section 53.214 is amended by

revising the first sentence of paragraph

(a), paragraph (c); and the first sentence

of paragraph (d) to read as follows:

53.214 Sealed bidding.

* * * * *

(a) SF 26 (4/85), Award/Contract. SF

26 is prescribed for use in awarding

sealed bid contracts for supplies or

services in which bids were obtained on

SF 33, Solicitation, Offer and Award, as

specified in 14.408–1(d)(1). * * *

* * * * *

(c) SF 33 (Rev. 4/85), Solicitation,

Offer and Award. SF 33 is prescribed for

use in soliciting bids for supplies or

services and for awarding the contracts

that result from the bids, as specified in

14.201–2(a)(1), unless award is

accomplished by SF 26. Pending

issuance of a new edition of the form,

the reference in block 1 should be

amended to read 15 CFR 700 and in the

Caution statement of ‘‘block 9’’ revise

52.215–10 to read 52.215–1.

(d) SF 1447 (5/88), Solicitation/

Contract. SF 1447 is prescribed for use

in soliciting supplies or services and for

awarding contracts that result from the

bids. * * *

* * * * *

38. Section 53.215–1 is revised to read

as follows:

53.215–1 Solicitation and receipt of

proposals.

The following forms are prescribed, as

stated in the following paragraphs, for

use in contracting by negotiation (except

for construction, architect-engineer

services, or acquisitions made using

simplified acquisition procedures):

(a) SF 26 (Rev. 4/85), Award/Contract.

SF 26, prescribed in 53.214(a), may be

used in entering into negotiated

contracts in which the signature of both

parties on a single document is

appropriate, as specified in 15.509(b).

(b) SF 30 (Rev. 10/83), Amendment of

Solicitation/Modification of Contract.

SF 30, prescribed in 53.243, may be

used for amending requests for

proposals and for amending requests for

information, as specified in 15.210(b).

(c) SF 33 (Rev. 4/85), Solicitation,

Offer and Award. SF 33, prescribed in

53.214(c), may be used in connection

with the solicitation and award of

negotiated contracts. Award of such

contracts may be made by either OF

307, SF 33, or SF 26, as specified in

53.214(c) and 15.509. Pending issuance

of a new edition of the form, the

reference in ‘‘block 1’’ should be

amended to read ‘‘15 CFR 700’’ and in

the Caution statement of ‘‘block 9’’

revise 52.215–10 to read 52.215–1.

(d) OF 17 (Rev. 12/93), Offer Label. OF

17 may be furnished with each request

for proposals to facilitate identification

and handling of proposals, as specified

in 15.210(c).

(e) OF 307 (9/97), Contract Award. OF

307 may be used to award negotiated

contracts as specified in 15.509(a).

(f) OF 308 (9/97), Solicitation and

Offer-Negotiated Acquisition. OF 308

may be used to support solicitation of

negotiated contracts as specified in

15.210(a). Award of such contracts may

be made by OF 307, as specified in

15.509(a).

(g) OF 309 (9/97), Amendment of

Solicitation. OF 309 may be used to

amend solicitations of negotiated

contracts, as specified in 15.210(b).

53.215–2 [Removed]

39. Section 53.215–2 is removed.

40. Section 53.243 is amended by

revising the introductory paragraph to

read as follows:

53.243 Contract modifications (SF 30).

SF 30 (Rev. 10/83), Amendment of

Solicitation/Modification of Contract.

SF 30 is prescribed for use in amending

invitation for bids, as specified in

14.208; modifying purchase and

delivery orders, as specified in

13.503(b); and modifying contracts, as

specified in 42.1203(f), 43.301, 49.602–

5, and elsewhere in this chapter. The

form may also be used to amend

solicitations for negotiated contracts, as

specified in 15.210(b). Pending the

publication of a new edition of the form,

Instruction (b), Item 3 (effective date), is

revised in paragraphs (3) and (5) as

follows:

* * * * *

41. Section 53.249 is amended by

adding a sentence to the end of

paragraphs (a)(2), (a)(3), and (a)(4) to

read as follows:

53.249 Termination of contracts.

(a) * * *

(2) * * * Pending issuance of a new

edition of the form, in the ‘‘Note’’ of the

Certification on page 4, revise the

references 15.804–2, 15.804–2(a), and

15.804–6 to read 15.403, 15.406–2, and

15.408, Table 15–2, respectively.

(3) * * * Pending issuance of a new

edition of the form, in the ‘‘Note’’ of the

Certification on page 4, revise the

references ‘‘15.804–2, 15.804–2(a), and

15.804–6’’ to read ‘‘15.403, 15.406–2,

and 15.408, Table 15–2,’’ respectively.

(4) * * * Pending issuance of a new

edition of the form, in the ‘‘Note’’ of the

Certification, revise the references

‘‘15.804–2, 15.804–2(a), and 15.804–6’’

to read ‘‘15.403, 15.406–2, and 15.408,

Table 15–2,’’ respectively.

* * * * *

53.301–1411 [Removed]

42. Section 53.301–1411 is removed.

53.301–1448 [Removed]

43. Section 53.301–1448 is removed.

44. Sections 53.302–307 through

53.302–309 are added to read as follows:

53.302–307 Optional Form 307, Contract

Award.

BILLING CODE 6820–EP–P
Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations 51267
51268 Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations

53.302–308 Optional Form 308, Solicitation

and Offer—Negotiated Acquisition.
Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations 51269

53.302–309 Optional Form 309, Amendment of Solicitation.

BILLING CODE 6820–EP–C
51270 Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations

45. Amend the internal references

throughout Chapter 1 as indicated in the

following table:

Location Remove Insert

1.106 ................................................................. 15.106 ............................................................... 15.209

1.106 ................................................................. 15.404 ............................................................... 15.2

1.106 ................................................................. 15.7 ................................................................... 15.407–2

1.106 ................................................................. 15.8 ................................................................... 15.4

1.106 ................................................................. 15.804–8 ........................................................... 15.408

1.106 ................................................................. 15.812–1(b) ...................................................... 15.404–1(f)

1.106 ................................................................. 15.813–1

1.106 ................................................................. 15.813–2

1.106 ................................................................. 15.813–3

1.106 ................................................................. 15.813–6

1.106 ................................................................. 52.215–6 ........................................................... 52.215–4

1.106 ................................................................. 52.215–11 ......................................................... 52.215–1(c)(2)(iv)

1.106 ................................................................. 52.215–19 ......................................................... 52.215–1(d)

1.106 ................................................................. 52.215–20 ......................................................... 52.215–6

1.106 ................................................................. 52.215–21 ......................................................... 52.215–9

1.106 ................................................................. 52.215–24 ......................................................... 52.215–12

1.106 ................................................................. 52.215–25 ......................................................... 52.215–13

1.106 ................................................................. 52.215–26 ......................................................... 52.215–14

1.106 ................................................................. 52.215–40 ......................................................... 52.215–19

1.106 ................................................................. 52.215–41 ......................................................... 52.215–20

1.106 ................................................................. 52.215–42 ......................................................... 52.215–21

2.101 (definition of ‘‘offer’’) ............................... 15.5 ................................................................... 15.6

3.104–3 (paragraph (5) of definition ‘‘Contractor bid or proposal information’’).52.215–12 ......................................................... 52.215–1(e)

3.104–5(b) ......................................................... 15.411 and 15.413 ........................................... 15.207

3.104–5(d)(3) introductory text ......................... 52.215–12 ......................................................... 52.215–1(e)

3.501–2(c) ......................................................... 15.804–6(f) ....................................................... 15.408, Table 15–2, paragraph A., column (2)

under ‘‘Formats for Submission of Line Item

Summaries’’.

3.501–2(c) ......................................................... 15.803(d) .......................................................... 15.405

5.204 ................................................................. 15.404 ............................................................... 15.201

5.303(b)(2) ........................................................ 15.1003(b) ........................................................ 15.503(b)

6.302–1(d)(2) .................................................... (See 15.402(h))

7.105(a)(3)(iii) .................................................... 15.810 ............................................................... 15.407–4

7.105(b)(3) ........................................................ 15.6 ................................................................... 15.3

7.105(b)(11) ...................................................... 15.7 ................................................................... 15.407–2

7.306(b) ............................................................. 15.6 ................................................................... 15.3

9.306(j) .............................................................. 15.814 ............................................................... 15.404–1(g)

12.206 ............................................................... 15.6 ................................................................... 15.3

12.209 ............................................................... 15.8 ................................................................... 15.4

12.301(c)(2) ....................................................... 15.6 ................................................................... 15.3

12.503(c)(2) ....................................................... 15.804 ............................................................... 15.403

12.504(a)(9) ...................................................... (see Subpart 15.1) ............................................ 15.209(b)

12.504(c)(2) ....................................................... 15.8 ................................................................... 15.4

12.602(b) ........................................................... 15.6 ................................................................... 15.3

13.106–2(c)(3) ................................................... 15.1003(b)(2) .................................................... 15.503(b)(2)

13.108(a) ........................................................... (See 15.402(e))

14.103–1(d) ....................................................... 15.804–2 ........................................................... 15.403–4(a)(1)(iii)

14.105 ............................................................... 15.405 ............................................................... 15.201(e)

14.201–7(a) ....................................................... 15.804–2(a)(1) .................................................. 15.403–4(a)(1)

14.201–7(b)(1) .................................................. 15.804–2(a)(1) .................................................. 15.403–4(a)(1)

14.201–7(c)(1) ................................................... 15.804–2(a)(1) .................................................. 15.403–4(a)(1)

14.207 ............................................................... 15.409 ............................................................... 15.201

14.404–2(g) ....................................................... 15.814 ............................................................... 15.404–1(g)

14.408–2(a) ....................................................... 15.805–2 ........................................................... 15.404–1(b)

14.408–2(b) ....................................................... 15.814 ............................................................... 15.404–1(g)

14.503–1(c)(2) ................................................... 15.413 ............................................................... 15.609

14.503–1(g) ....................................................... 15.1005 and 15.1006 ....................................... 15.505 and 15.506

14.503–1(h) ....................................................... 15.412 ............................................................... 15.208(b) and (c)

16.104(b) ........................................................... 15.808–2 ........................................................... 15.404–1(b)

16.301–3(a)(3) .................................................. 15.903(d) .......................................................... 15.404–4(c)(4)(i)

16.505(b)(3) ...................................................... 15.804–1(b)(1) .................................................. 15.403–1(c)(1)

16.603–2(c)(3) ................................................... 15.8 ................................................................... 15.4

16.603–4(b)(3) .................................................. 15.804–1 ........................................................... 15.403–1

17.106–1(c)(1) ................................................... 15.804–6 ........................................................... 15.408, Table 15–2, Formats for Submission

of Line Items Summaries C(8).

19.202–6(a) ....................................................... 15.805–2 ........................................................... 15.405

19.302(d)(1) ...................................................... 15.1003(a)(2) .................................................... 15.503(a)(2)

19.806(a) ........................................................... 15.8 both times it appears ................................ 15.4

24.202(b) ........................................................... 15.804–5(b) ...................................................... 15.403–3(b)
Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations 51271

Location Remove Insert

25.405(e) ........................................................... 15.1003 ............................................................. 15.503

25.901(b) ........................................................... 15.106(b) .......................................................... 15.209(b)

27.204–1(b) ....................................................... FAR 15.804 ...................................................... 15.403

27.204–2 ........................................................... 15.804 ............................................................... 15.403

27.407(a)(1) ...................................................... 15.4 or 15.5 ...................................................... 15.2 or 15.6

27.407(b) ........................................................... 15.4 or 15.5 ...................................................... 15.2 or 15.6

28.101–4(b) ....................................................... 15.610(a) .......................................................... 15.306(a)(2)

31.000 ............................................................... 15.805–3 ........................................................... 15.404–1(c)

31.103(a) ........................................................... 15.805–3 ........................................................... 15.404–1(c)

31.105(b) ........................................................... 15.805–3 ........................................................... 15.404–1(c)

31.106–1 introductory paragraph ...................... 15.805–3 ........................................................... 15.404–1(c)

31.109(g) ........................................................... 15.808, Price negotiation memorandum .......... 15.406–3

31.204(b) ........................................................... 15.805–3 ........................................................... 15.404–1(c)

31.205–6(j)(4) .................................................... certified (see 15.804) ........................................ (see 15.403–4)

31.205–18(c)(1)(i)(A) ......................................... 15.804 ............................................................... 15.403–4

31.205–18(c)(1)(i)(B) ......................................... 15.804 ............................................................... 15.403–4

31.205–33(c)(1) ................................................. 52.215–12 ......................................................... 52.215–1(e)

31.205–26(e) ..................................................... 15.804–1 ........................................................... 15.403–1(b)

31.205–42(c) introductory paragraph ............... (See 15.804–6(f))

32.204 ............................................................... 15.606 ............................................................... 15.206

33.103(f)(3) ....................................................... 15.1006 ............................................................. 15.505 or 15.506

33.104(c)(1) ....................................................... 15.1006 ............................................................. 15.505 or 15.506

33.207(d) ........................................................... 15.804–2(a)(1)(iii) ............................................. 15.403–4(a)(1)(iii)

34.005–2(a)(2) .................................................. 15.404 ............................................................... 15.201

35.007(d) ........................................................... 15.406–5(b) ...................................................... 15.204–5(b)

35.007(e) introductory paragraph ..................... 15.605(e) .......................................................... 15.304

35.007(g) ........................................................... 15.409 ............................................................... 15.201

35.007(i) ............................................................ 15.5 ................................................................... 15.6

35.008(d) ........................................................... 15.10 ................................................................. 15.5

35.008(e) ........................................................... 15.805 ............................................................... 15.404–1(c)

36.214(b)(1) ...................................................... 15.804–1 and 15.804–2 ................................... 15.403–1 and 15.403–2

36.215 ............................................................... 15.903(d)(1)(iii) ................................................. 15.404–4(c)(4)(i)

36.303–2(a) ....................................................... 15.605 ............................................................... 15.304

36.606(a) ........................................................... 15.903(d)(1)(ii) .................................................. 15.404–4(c)(4)(i)

36.607(b) ........................................................... 15.1004, 15.006(b) through (f), 15.1007(c);

15.1006(d)(2) through (d)(5).

15.503, 15.506(b) through (f), 15.507(c),

15.506(d)(2) through (d)(5)

42.302(a)(4) ...................................................... 15.8 ................................................................... 15.4

42.302(a)(5) ...................................................... 15.809 ............................................................... 15.407–3

43.204(b)(4) ...................................................... 15.805 ............................................................... 15.404–1(c)

44.202–2(a)(1) .................................................. Subpart 15.7 ..................................................... 15.407–2

44.305–3(a)(1) .................................................. 15.804 ............................................................... 15.403

45.103(b)(1) ...................................................... 15.804–1 ........................................................... 15.403–1

45.106(b)(2)(i) ................................................... 15.804–1 ........................................................... 15.403–1

45.302–2(c) ....................................................... Subpart 15.9 ..................................................... 15.404–4

48.102(e) ........................................................... 15.903(d) .......................................................... 15.404–4(c)(4)(i)

49.105(c)(15) ..................................................... 15.804–4(h) and 15.804 ................................... 15.403–4(a)(1) and 15.403–4

49.110(a) ........................................................... 15.808(a) and 15.808(b) ................................... 15.406–3 (twice).

50.203(c) ........................................................... 15.103 ............................................................... 14.404–1(f)

52.212–2 provision date ................................... (Oct 1995) ......................................................... (Oct 1997).

52.212–2(a) ....................................................... 15.605 ............................................................... 15.304

52.214–26 clause date ..................................... (Oct 1995) ......................................................... (Oct 1997).

52.214–26(e) ..................................................... 15.804–2(a)(1) .................................................. 15.403–4(a)(1)

52.214–27 clause date ..................................... (Oct 1995) ......................................................... (Oct 1997).

52.214–27(a) ..................................................... 15.804–2(a)(1) and 15.804–1 ........................... 15.403–4(a)(1) and 15.403–1(b)

52.214–28 clause date ..................................... (Oct 1995) ......................................................... (Oct 1997).

52.214–28(a)(1) ................................................ 15.804–2(a)(1) .................................................. 15.403–4(a)(1)

52.214–28(b) ..................................................... 15.804–2(a)(1) both times it appears ............... 15.403–4 (a)(1)

15.804–1 ........................................................... 15.403–1(b)

52.214–28(c) ..................................................... 15.804–4 ........................................................... 15.406–2

52.214–28(d) ..................................................... 15.804–2(a)(1) .................................................. 15.403–4(a)(1)

52.214–34 introductory text .............................. 15.407(l)

52.214–35 introductory text .............................. 15.407(m)

52.215–2 introductory text ................................ 15.106(b) .......................................................... 15.209(b)

Alternate I .................................................. 15.106(c) ........................................................... 15.209(b)(2)

Alternate II ................................................. 15.106(c) ........................................................... 15.209(b)(3)

Alternate III ................................................ 15.106(c) ........................................................... 15.209(b)(4)

52.216–25 clause date ..................................... (Apr 1984) ......................................................... (Oct 1997).

52.216–25(c) ..................................................... 15.8 ................................................................... 15.4

52.217–2 clause date ....................................... (Jul 1996) .......................................................... (Oct 1997).

52.217–2(f)(1) ................................................... 15.8 ................................................................... 15.4

52.219–10 clause date ..................................... (Oct 1995) ......................................................... (Oct 1997).

52.219–10(c) ..................................................... Subpart 15.9 ..................................................... 15.404–4

52.244–1 clause date ....................................... (Feb 1995) ........................................................ (Oct 1997).

52.244–1(g) ....................................................... 15.903(d) .......................................................... 15.404–4(c)(4)(i)
51272 Federal Register / Vol. 62, No. 189 / Tuesday / September 30, 1997 / Rules and Regulations

Location Remove Insert

52.244–2 clause date ....................................... (Feb 1997) ........................................................ (Oct 1997).

52.244–2(g) ....................................................... 15.903(d) .......................................................... 15.404–4(c)(4)(i)

52.244–3 clause date ....................................... (Apr 1985) ......................................................... (Oct 1997).

52.244–3(b) ....................................................... 15.903(d) .......................................................... 15.404–4(c)(4)(i)

[FR Doc. 97–25666 Filed 9–29–97; 8:45 am]

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DEPARTMENT OF DEFENSE

GENERAL SERVICES

ADMINISTRATION

NATIONAL AERONAUTICS AND

SPACE ADMINISTRATION

48 CFR Chapter 1

Federal Acquisition Regulation; Small

Entity Compliance Guide

AGENCIES: Department of Defense (DOD),

General Services Administration (GSA),

and National Aeronautics and Space

Administration (NASA).

ACTION: Small Entity Compliance Guide.

SUMMARY: This document is issued

under the joint authority of the

Secretary of Defense, the Administrator

of General Services and the

Administrator for the National

Aeronautics and Space Administration

as the Federal Acquisition Regulation

(FAR) Council. This Small Entity

Compliance Guide has been prepared in

accordance with Section 212 of the

Small Business Regulatory Enforcement

Fairness Act of 1996 (Pub. L. 104–121).

It consists of a summary of the rule

appearing in Federal Acquisition

Circular (FAC) 97–02 which amends the

FAR. Further information regarding this

rule may be obtained by referring to

FAC 97–02 which precedes this notice.

This document may be obtained from

the Internet at http://www.arnet.gov/far.

FOR FURTHER INFORMATION CONTACT:

Beverly Fayson, FAR Secretariat, (202)

501–4755.

SUPPLEMENTARY INFORMATION:

Part 15 Rewrite; Contracting by

Negotiation and Competitive Range

Determination [FAC 97–02, FAR Case

95–029]

The final rule revises Part 15,

Contracting by Negotiation. The final

rule infuses innovative techniques into

the source selection process, simplifies

the acquisition process, incorporates

changes in pricing and unsolicited

proposal policy, and facilitates the

acquisition of best value products and

services. The final rule emphasizes the

use of effective and efficient acquisition

methods and eliminates unnecessary

burdens imposed on industry and

Government. In addition, the rule

revises the sequence in which Part 15

information is presented to facilitate use

of the regulation.

Dated: September 22, 1997.

Edward C. Loeb,

Director, Federal Acquisition Policy Division.

[FR Doc. 97–25683 Filed 9–29–97; 8:45 am]

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