The maximum aggregate amount, if any, of all requests to be issued against one blanket purchase agreement shall be prescribed by the Head of a procuring activity. The maximum period of time to be covered by a blanket purchase agreement shall not exceed twelve months. While § 3.606 of this title permits the issuance of individual requests in amounts up to and including $2,500, competition in accordance with the requirements of § 3.603 of this title shall be obtained when an individual request exceeds $250. Since a blanket purchase agreement in itself is not an obligating document, authority to negotiate need not be cited therein. However, the schedule in each blanket purchase agreement shall contain a statement to the effect that the issuance of individual requests against the blanket purchase agreement will be made under the authority of 10 U.S.C. 2304(a) (3).

Subpart G-Negotiated Overhead 'Rates

Subpart H-Price Negotiation Policies and Techniques

§ 1203.804 Conduct of negotiations. § 1203.804-2 Late proposals.

The contracting officer shall prepare a written recommendation, as prescribed in § 3-804.2(b)(1) of this title, which shall be sent for decision to the head of the procuring activity.

§ 1203.809 Audit as a pricing aid.

(a) General. Contract audit advisory services shall be used to the maximum extent practicable incident to the negotiation of contract prices. Such services are available in two forms, namely, the submission of auditors' advisory audit reports on such matters as contractors' pricing proposals, procurement practices, accounting systems and financial condition, and provision of procurement liaison auditors for personal consultation with procurement personnel on any matters that might be helpful.

(b) Advisory audit reports. (1) As a general rule, pricing actions which involve $100,000 or more justify the submission of advisory audit reports. However, this general statement should be regarded as flexible in application. Accordingly, an advisory audit report may be justified in a case where the sum involved is less than $100,000 and it is felt that such a report is necessary or will be particularly helpful. Likewise advisory reports may not be needed in all cases where the amount exceeds $100,000. Discussion with the cognizant procurement liaison auditor will usually result in satisfactory resolution of any question in this area. Advisory audit reports should be obtained on contractors' proposals submitted for:

(i) Initial contract pricing where the negotiations involve the submission of cost data by the contractors and reliance thereon is a major pricing factor;

(ii) Additional requirements or scope to be included in an existing contract and reliance on cost data submitted by the contractor is a major pricing factor; (iii) Conversion of letter contracts; (iv) Redetermination of contract

prices;

(v) Establishment of target prices in fixed-price or cost-type incentive contracts;

(vi) Final pricing of incentive contracts;

(vii) Determination of fixed overhead rates under cost-reimbursement contracts;

(viii) Price adjustments (increase or decrease) under the contract changes clause; and

(ix) Other price adjustments, including request for relief under Public Law 85-804.

(2) With respect to subparagraph (1) (i) and (ii) of this paragraph in those instances where it is known with reasonable certainty that negotiations will be conducted with a specific source, or sources, the request for proposal or quotation shall include a statement substantially as set forth below:

On or before submission of Offeror's proposal or quotation to the (insert the appropriate supply center), Offeror is requested to transmit one (1) copy thereof to the cognizant Government auditor to be used in his evaluation thereof.

In such cases and for each source solicited one (1) copy of the request for proposal shall be sent to the cognizant Government auditor which shall represent a formal request for preparation and submission of an advisory audit report. In those instances where it is not known in advance of receipt and evaluation of proposals, the source or sources, with whom negotiations will be conducted, evaluation of the proposals will be made as soon as possible after opening. When it has been determined which of the proposals require an audit report, a request for the report will be prepared and sent to the cognizant audit office. A copy of the contractor's proposal shall accompany the request.

(3) Arrangements have been made with the Office of the Comptroller for the automatic submission to the DSA Supply Centers of advisory audit reports in those cases listed in subparagraph (1) (iii) through (vii) of this paragraph. However, in any instance where a decision has been made not to obtain an advisory audit report, a notice to such effect will be prepared as soon as possible after such decision is made and forwarded to the cognizant audit office to forestall any unnecessary work on its part.

(4) Upon receipt and examination of the contractor's proposal of the type listed in subparagraph (1) (viii) and (ix) of this paragraph, the negotiator or

other person responsible for the particular type of claim shall determine whether an advisory audit report is required. If so, a request will be prepared and forwarded to the cognizant audit office for preparation and submission of the report. A copy of the contractor's proposal shall accompany the request.

(5) In preparing requests for the preparation and submission of advisory audit reports, the requestor may determine the location and mailing address of the cognizant audit office from the appendices to DSA Regulation Nr. 7600.2.

(c) Liaison auditors. The Office of the Comptroller (Contract Audit Branch) will, upon request by purchasing activities, arrange for the provision of the full or part-time personal services of professionally trained liaison auditors, so that negotiators can obtain the benefit of personal discussion and advice in connection with the analysis of contractors' cost representations and related matters. Listed below are some of the services that the liaison auditor can furnish to the negotiator:

(1) Analysis of cost data submitted by contractors;

(2) Interpretation and explanation of findings, comments and recommendations set forth in advisory audit reports; (3) Obtaining from the cognizant Government auditor additional cost information or further elaboration and explanations regarding particular cost elements;

(4) Information, explanations and advice concerning the contractor's accounting and costing practices;

(5) Obtaining from the cognizant Government auditor on short notice cost data such as labor rates, overhead rates, and information on other loading factors;

(6) Advice as to cost treatment which should be accorded controversial items of cost where the particular circumstances create an unusual problem;

(7) Assistance in computing contract cost negotiation targets based on evaluations made prior to negotiation, and the computation of contract price(s) based on the various agreements (as to treatment of individual items of cost) reached in negotiation;

(8) Active participation and advice regarding general contract cost matters in contract negotiations;

(9) Assistance in developing cost analysis for preparation of contract ap

proval requests or negotiation memoranda; and

(10) Participation in discussions with regarding reviewing authorities the treatment accorded costs in negotiations in which the liaison auditor participated.

assistance.

The

(d) Negotiating "team concept" in negotiated procurement shall be utilized to the maximum extent practicable. As may be evident from the foregoing, this includes, in appropriate cases, participation of the liaison auditor or field auditor in both prenegotiation and negotiation meetings internally and with the contractor whenever (1) substantial amounts of costs are questioned, (2) cost considerations are influenced by method of accounting, or (3) any other cost or accounting matter of substance requires professional accounting assistance in its disposition. Operation under the team concept, however, does not relieve the contracting officer of the sole responsibility of controlling and conducting negotiations and making final determinations with respect to prices, nor does such participation change the auditor's position to other than advisory.

(e) Special audit services available. In addition to the advisory audit reports enumerated in paragraph (b) of this section the cognizant audit offices will furnish upon request, special reports on aspects of the contractor's general operations or on matters pertaining to specific contracts such as:

(1) Accounting practices and internal controls, especially the adequacy with respect to the administration of various types of flexible price contracts;

Subpart E-Procurement of Blind-Made Supplies 1205.505 Clearances.

1205.505-50 Statement of nonavailability. Subpart F-Procurement of Printing and Related Supplies

1205.601 Printing and related supplies. Subpart G-Procurement Under the Economy Act From or Through Another Federal Agency 1205.750 Procurement of items from Commodity Stabilization Service (CSS), U.S. Department of Agriculture. Subpart H-Procurement of Certain Utility Services by Use of General Services Administration Area Contracts [Reserved]

Subpart 1-Use of General Services Administration Supply Sources by Prime Contractors in Performing Cost-Reimbursement Type Contracts 1205.907 Contract Clause.

Subpart J-Procurement for the National Aeronautics and Space Administration [Reserved]

Subpart K-Coordinated Procurement [Reserved] Subpart L-Commodity Assignments [Reserved]

AUTHORITY: The provisions of this Part 1205 issued under R.S. 161, sec. 2(a), 72 Stat. 514, secs. 2202, 2301, 2314, 70A Stat. 120, 127, sec. 1, 76 Stat. 528; 5 U.S.C. 22, 171a(c); 10 U.S.C. 2202, 2301-2314; DoD Directive 5105.22, November 6, 1961.

SOURCE: The provisions of this Part 1205 appear at 28 F.R. 2639, Mar. 19, 1963, unless otherwise noted.

Subpart A-Procurement Under Federal Supply Schedule Contracts § 1205.101 Federal Supply Schedule

Contracts.

§ 1205.101-50 Performance and default under Federal Supply Schedule con

tracts.

(a) Responsibilities. While the General Services Administration (GSA) awards Federal Supply Schedule contracts and exercises general supervision over such contracts, ordering officers who are authorized to place orders under mandatory contracts are responsible for issuing delivery orders, determining that performance meets contract terms, and processing payments. Ordering officers have the same responsibilities for delivery orders issued under optional type contracts when the orders are accepted by the suppliers. Subject to the provisions of the contracts and the conditions stated in this section ordering officers shall deal directly with contractors for the following:

(1) Arranging for inspection of supplies or services. (See §§ 14.101(b) and 14.106 of this title for type and extent of inspection required);

(2) Accepting or rejecting supplies or services tendered. (Nonconforming supplies or services tendered may be accepted as provided in § 14.205 of this title);

(3) Terminating the contract for default in accordance with provisions of § 8.602-3 of this title and § 1208.602-3.

(4) Purchasing replacement supplies or services and charging excess costs against the defaulting contractor. (See paragraphs (b) and (c) of this section concerning liaison with GSA on excess costs); and

(5) Processing payments to contractor for supplies or services accepted.

(b) Alleged excusable failure by contractor. Should the contractor allege that the failure in performance was due to an excusable cause precluding assess

ment costs under the provisions of the contract, the GSA office executing the schedule contract shall be notified promptly. In the absence of a decision on the contractors appeal, by the contracting officer executing the contract, or by the GSA Administrator or his duly authorized representative the ordering officer is free to charge against the contractor any excess cost resulting from the default. When the ordering officer is aware that the defaulting contractor has alleged the failure to be excusable, he may elect to postpone the assessment of excess costs until a decision is made in order to avoid unnecessary accounting actions.

(c) Failure to collect excess costs. The ordering officer shall report to the GSA office executing the Federal Supply Schedule Contract involved, those instances where they have been unsuccessful in collecting excess costs which have accrued against a defaulting contractor. Reports shall be made within 45 days from date of final payment to the new contractor from whom the replacement purchase was made and may be in letter form. Such reports shall provide complete information so as to identify properly the transaction and furnish necessary data, such as the name of the defaulting contractor, contract number, item number and description, schedule price, and the amount of excess costs to be collected. In addition, complete information shall be reported concerning the supplier from whom substitute purchase was made, such as the name and address of the supplier, purchase price, order number or numbers on which payment was made, and contract number, if any.

(d) Disputes. All disputes concerning questions of fact arising under the contract which cannot be settled satisfactorily between the ordering officer and the contractor shall be decided by the GSA contracting officer executing the contract, or on appeal, by the GSA Administrator or his duly authorized representative.

§ 1205.102 Mandatory Federal Supply Schedules.

§ 1205.102-2 Exceptions to mandatory

use.

When an emergency purchase is made on the open market of supplies or services, listed in Federal Supply Schedules as mandatory on the Depart

ment of Defense, finding will be made by the contracting officer that "the purchase was justified because such supplies or services could not be furnished under Federal Supply Schedule contracts at the time they were required". The determination that the supplier could not furnish such supplies or services by the time required can be made only if the suppliers in the applicable schedules have been given the opportunity to so state. In each instance, the finding will set forth the specific reasons why the time element made the emergency purchase necessary and a copy of the finding will be retained in the contract file.

(a) Upon issuance of a delivery order to a mandatory Federal Supply Schedule contractor, the ordering office will record the obligation for the order and support the fiscal recording of obligation with a price extended copy of the order.

(b) Upon issuance of a delivery order to a non-mandatory Federal Supply Schedule contractor, the ordering office will record the obligation upon issuance of the order if it is not a small purchase. Either recording action will be supported by a price extended copy of the order.

(c) When the order is less than the minimum limitation of the Federal Supply Schedule, the ordering office will determine its source of supply and place the order accordingly.

Subpart B-Procurement From General Services Administration Stores Depots [Reserved]

Subpart C-Procurement Through Federal Supply Service Consolidated Purchasing Program § 1205.303

ices.

Order for supplies or serv

An order required to be placed with the National Buying Program of the General Services Administration will be recorded as an obligation at the time the order is placed: Provided, That it has been determined that the delivery requirements can be met, as required by § 5.301 of this title. The obligation will be supported by a price extended copy of the order.

Subpart D-Procurement of PrisonMade Supplies

§ 1205.404 Mandatory procurement of prison-made supplies.

(a) Purchasing Offices will obtain directly from Federal Prison Industries, Inc. (FPI), information concerning the extent of participation desired by FPI in a procurement or applicable clearance from FPI for all or part of the procurement.

(b) Where feasible and practicable, available procurement program forecasts should be jointly reviewed through the media of arranged conferences to assure orderly programming and scheduling of mandatory items in proper increments throughout the fiscal year. Such procedure will permit the use of longer term contracts, thus reducing the number of contracts to be administered, or the issuance of general clearances on mandatory items where total FPI capacity has been utilized, thereby eliminating delays in procurement actions to be initiated from other sources.

(c) Heads of procuring activities will assure that action is taken to advise the FPI of requirements to be procured as soon as possible after receipt of the purchase request, so that maximum lead time may be available to FPI where they desire to participate.

§ 1205.405 Nonmandatory procurements of prison-made supplies.

Contracting officers will obtain information from Federal Prison Industries, Inc. (FPI), concerning the extent of participation desired by FPI. (For exceptions, see § 5.407 of this title.) § 1205.406 Procurement procedure. § 1205.406-50 Pricing policies for awards to Federal Prison Industries, Inc.

(a) Awards to FPI. (1) Prices in awards to FPI for partial or entire quantity of a procurement will not exceed current market prices.

(2) On procurement involving multiple awards to both commercial contractors and to FPI of a mandatory item, the current market price will be a price considered by the contracting officer to reflect current market levels but in no event a unit price higher than the highest award price made on the unrestricted portion adjusted for the applicable cost