§ 5-3.101 General requirements for negotiation.

Except as otherwise provided in § 13.201, purchases exceeding $2,500 in amount should generally be effected by advertising for bids and thereafter awarding a contract to the lowest responsible bidder. However, purchases may and should be made by negotiation in accordance with the procedures set forth in Parts 1-3 and 5-3 whenever circumstances justify. Authority to negotiate does not excuse compliance with the basic policy of obtaining maximum competition consistent with the needs of the occasion to the end that purchases will be made to the best advantage of the Government, price and other factors considered. Purchases by negotiation enable the contracting officer to obtain the benefits of competition on an informal basis and, where adequate competition is not available, to use cost and price analyses to the extent necessary to obtain fair prices. Purchases by negotiation must conform to other established policies such as those relating to awards to small business concerns and concerns located in labor surplus areas.

§ 5-3.102 Factors to be considered in negotiated contracts.

Among those factors to be considered in the preparation of requests for proposals is the need for auditing of contractors' records. (See Subparts 5-53.3, 1-3.8, and 5-3.8.)

§ 5-3.103

Dissemination of procurement information.

(a) Information regarding proposed procurements. As provided in § 1-3.802 (c), each request for proposals or price solicitation shall be released to all prospective offerors at the same time and no offeror shall be given the advantage of advance knowledge that proposals are to be requested. However, this shall not preclude the providing of information to suppliers, upon inquiry, that GSA recurrently procures through negotiation particular commodities or categories thereof. Upon issuance, a copy of each written request for proposals for a procurement estimated to exceed $2,500 shall be furnished to the Business Service Center. In addition, copies of Standard Form 18, Request for Quotations, covering purchases that will not exceed $2,500 may be furnished to the Business Service Center upon joint determination between the Business Service Center and the contracting activity that such action is necessary or desirable in connection with informing local supply sources as to small purchase opportunities. Written inquiries received from offerors, or prospective offerors, and inquiries from other whether oral or written, requesting information as to the status of any offer, proposal, or solicitation, normally shall be directed to the appropriate Business Service Center for reply.

sources,

(b) Information regarding award of negotiated contracts.

(1) In connection with negotiated contracts, only the names of successful offerors and the prices at which the awards were made shall ordinarily be publicly disclosed. (See (d), below.)

(2) Proposed procurements and awards of negotiated contracts which may be publicly disclosed shall be reported to the Department of Commerce in accordance with §§ 5-1.5004 and 5-1.5005.

(3) Except for classified procurements negotiated under § 1-3.212 which should not be publicly disclosed, procurement activities shall notify Business Service Centers of all completed procurements made by negotiation, including, whenever practicable, small purchases

(under $2,500). Notifications on small purchases shall be accomplished by furnishing the Business Service Centers with copies of procurement documents or by such other forms of notification as will provide the Business Service Centers with the significant details of the completed purchase actions.

(c) Advance notices of award. The provisions of § 5-1.350 shall apply to the use of advance notices of award in connection with all negotiated contracts.

(d) Information of competitive products. Information to an unsuccessful offeror concerning the merits or quality of a competitor's products shall be limited solely to the statement, if applicable, that adequate inspection of testing has shown that the successful offeror's products have met the requirements of the contract or purchase order. This shall not be construed as prohibiting purchasing officers from informing a supplier concerning the results of tests on the supplier's own products, or prohibiting purchasing officers in connection with their individual duties and responIsibilities as members of technical committees from making necessary contacts with testing laboratories.

Subpart 5-3.2-Circumstances

Permitting Negotiation

SOURCE: The provisions of this Subpart 5-3.2 appear at 27 F.R. 8112, Aug. 15, 1962. § 5-3.201 National emergency.

(a) Findings. In accordance with the requirements of sections 302(c) (1) and 307 of the Federal Property and Administrative Services Act of 1949 (hereinafter referred to in this section as "the Act") and FPR 1-3.201, the Administrator of General Services has made the following findings: For the purpose of reducing dollar expenditures abroad and improving the Government's current balance of payments position, (1) the President, in his message of February 6, 1961, to the Congress on this subject, declared that the policy inaugurated in November 1960 of emphasizing United States procurement for United States military forces abroad, wherever practicable, would be continued, even though some budgetary costs might be incurred, and (2) the Director of the Bureau of the

Budget, in his March 3, 1964, letter to the Administrator of General Services, stated that the "Cabinet Committee on Balance of Payments" had recommended that, with the exception of AID, all Federal agencies procuring for use abroad should, in general, procure domestic materials unless the delivered cost of domestic materials is estimated to be 50 percent greater than the cost of like materials of foreign origin.

(b) Determinations. Based upon the findings in (a), above, the Administrator of General Services has determined, within the purview of section 302(c) (1) of the Act, that it is necessary in the public interest, during the period of the national emergency, proclaimed by the President (see FPR 1-3.201), to negotiate purchases and contracts without advertising in the following situations and in accordance with regulations and procedures applicable to such negotiations: When procuring supplies for use aboard, except for AID, procurement shall be restricted to supplies of United States origin, where available, unless the delivered cost of domestic supplies is estimated to be 50 percent greater than the cost of like supplies of foreign origin. [31 F.R. 2689, Feb. 12, 1966]

shown on a requisition will not, in themselves, justify use of the exigency authority. Examples of circumstances when use of the authority may be justified include the following:

(a) Essential equipment or repair services for a ship are required at once to meet the sailing schedule.

(b) Developments in connection with any essential Government activity require immediate purchase of supplies or services to permit accomplishment of such activities within the time required. § 5-3.203 Purchases not in excess of $2,500.

When determining whether the amount involved in any one transaction does not exceed $2,500, the full purchase price is controlling. Any prompt payment discount or trade-in value of any article to be offered in exchange is not to be deducted when making this determination.

§ 5-3.210 Impracticable to secure competition by formal advertising.

This authority shall not be used where negotiation is authorized under § 1-3.211, § 1-3.212, § 1-3.213, or § 1-3.214.

§ 5-3.212 Purchases not to be publicly disclosed.

This authority shall be applicable to purchases or contracts security-classified to prevent general disclosure, unless otherwise determined.

(b) Experimental, developmental, or research work. The fixed fee shall not exceed 15 percent of the estimated cost of the contract, exclusive of the fee, as determined by the head of the service conducting the procurement, at the time of entering into a cost-plus-a-fixed-fee contract for experimental, developmental, or research work.

(c) Architectural or engineering services. The fixed fee shall not exceed 6 percent of the estimated cost of the project to which the fee is applicable, exclusive of fees, as determined by the head of the service conducting the procurement, at the time of entering into a cost-plus-a-fixed-fee contract for architectural or engineering services relating to any public works or utility project.

§ 5-3.405-3 Letter contract.

(a) Limitation of use. Letter contracts shall be used only when the contracting officer has obtained prior approval of the head of the service conducting the specific procurement.

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(b) Limitation of effectiveness. letter contract shall be superseded by a definitive contract not more than 90 days from the date of its execution unless prior approval is obtained from the head of the service conducting the procurement to extend the duration of the letter contract beyond 90 days.

(c) Limitation of liability. The maximum liability of the Government stated in a letter contract shall not exceed 50 percent of the total estimated cost of the procurement, except in cases where the cost of specialized equipment or ma

terials (such as mechanical or electrical) to be acquired by the contractor as a part of the contract exceeds 50 percent of the total estimated cost thereof. The cost of the specialized equipment and material shall be the limitation in those cases where it exceeds the 50 percent limitation.

The author(d) Conditions for use. ity to issue letter contracts is contingent on compliance with the following:

(1) Each letter contract shall contain all mandatory clauses and further shall contain a provision that the definitive contract will contain all mandatory clauses, and such other clauses, as are necessary to protect fully the interest of the Government.

(2) Each letter contract shall contain the estimated total cost of the procurement and a provision for further negotiation of the cost.

(3) The fixed fee in a cost-reimbursement type of letter contract shall not exceed the limitations set forth in § 53.404-3. In establishing the fixed fee, consideration shall be given to the following:

(i) The degree of risk to the contractor.

(ii) The estimated cost of the following as compared with the total estimated definitive contract price: material, subcontracting, purchased parts, and "offthe-shelf" items.

(iii) The size of the proposed contract. (4) The profit to be paid shall be consistent with the protection afforded to the contractor in the minimizing or removal of risk to him, with due consideration given to the estimated cost of the following as compared to the total estimated definitive contract price: material, subcontracting, purchased parts, and "off-the-shelf" items.