(b) Solicitations shall include: (1) A statement of the requirements, separately identified by bid or proposal item in the schedule, for—

(1) The first program year; and

(ii) The multiyear procurement including the quantities for each program year thereunder;

(2) When previous production procurements of the item have been made with competition—

(i) A provision that a price may be submitted for the total requirements of the first program year, or for the total multi-year requirements, or both, or

(ii) When competition in future procurements of the items would be impracticable after award of a contract covering the first program year quantity alone and the Head of a Procuring Activity determines that, in order to eliminate the possibility of a first program year "buy-in," these provisions will be in the best interests of the Government-provisions that a price may be submitted only for the total multiyear quantity and that prices on a single-year basis will not be considered for any purpose;

(3) When there has been no previous competition for the production of the item

(i) (a) Provisions that a price must be submitted for the total requirements of the first program year, that a price may be submitted for the total multiyear quantity, and that a bid or offer on the multiyear quantity only will be considered nonresponsive, and

(b) A provision that if only one responsive bid or offer on the multiyear requirements is received from a responsible bidder or offeror, the Government reserves the right to disregard the bid or offer on the multiyear quantity and to make an award only for the first program year requirements; or

(ii) When competition in future procurements of the items would be impractical after award of a contract covering the first program year quantity alone and the Head of a Procuring Activity determines that, in order to eliminate the possibility of a first program year "buy-in," these provisions will be in the best interests of the Government

(a) Provisions that a price may be submitted only for the total multiyear quantity and that prices on a single-year basis will not be considered for any purpose, and

(b) A provision that if only one responsive bid or offer on the multiyear

requirements is received from a responsible bidder or offeror, the Government reserves the right to cancel the solicitation and resolicit on a single-year basis by whatever procedures are then appropriate;

(4) A provision that the unit price of each item in the multiyear requirement shall be the same for all program years included therein;

(5) Criteria for comparing the lowest evaluated submission on the first program year's requirement against the lowest evaluated submission on the multiyear requirements (see § 1.322-3(b));

(6) A provision setting forth a separate cancellation ceiling (on a percentage basis) applicable to each program year subject to cancellation (see paragraph (c) of this section); and

(7) A prominently placed provision directing attention to the multiyear features of the solicitation, and to

(i) The Limitation of Price and Contractor Obligations clause (see § 1.322-5 (a)) which limits the payment obligation of the Government to the requirements of the first program year and to those of such succeeding program years as may be funded by the Government (see § 1.322-5(b));

(ii) The Cancellation of Items clause (see § 1.322-5(b)) which allows the Government to cancel, by a specified date or within a specified period, all remaining program years; and

(iii) The cancellation ceiling set forth in the schedule.

(c) The term "cancellation" as used in multiyear procurement refers only to the cancellation of the total requirements of all remaining program years. Such cancellation results from (1) notification from the contracting officer to the contractor of nonavailability of funds for contract performance for any subsequent program year, or (2) failure of the contracting officer to notify the contractor that funds have been made available for performance of the program year requirement for the succeeding program year. For each program year except the last, the contracting officer shall establish a cancellation ceiling applicable to the remaining program years which are subject to cancellation. Cancellation ceilings will be lower for each succeeding program year in that such ceilings must exclude all amounts allocable to items included in the prior program year requirements. Such ceilings shall be expressed in the Schedule in percentages

nated in the solicitation as the point to which transportation costs will be computed (but only for the purpose of evaluating bids or proposals); and the solicitation shall contain the notice required under §2.201(b) (30) of this chapter.

(d) When Government production and research property is provided pursuant to Subpart C, Part 13 of this chapter, the use of such property may be on a rent-free basis under the policies contained in Subpart E, Part 13 of this chapter. In this event, the solicitation shall set forth a detailed description of the procedure to be followed and the factors to be considered in accordance with Subpart E, Part 13 of this chapter, for the elimination of competitive advantage. The amount added for evaluation to each offeror's unit price for the first program year requirement shall also be added to his unit price for the multiyear requirements.

(e) When the solicitation requires the submission of prices on the first program year requirements in accordance with § 1.322-2(b) (3) (i), bids or offers which submit prices on the multiyear requirements only shall be rejected as nonresponsive.

(f) When the solicitation provides for submission of prices only for the total multiyear quantity in accordance with § 1.322-2(b) (3) (ii), submission of prices for the single-year quantity will be disregarded for any purpose but will not render the bid or offer nonresponsive as to any alternate multiyear submission by the same bidder or offeror.

(g) To determine the lowest evaluated unit price, compare the lowest evaluated bid or offer on the first program year alternative against the lowest evaluated bid or offer on the multiyear alternative as follows:

(1) Multiply the evaluated unit price for each item of the lowest evaluated bid or offer on the first program year alternative times the total number of units of that item required by the multiyear alternative, and then

(2) Take the sum of these products for all the items, plus the dollar amount of any administrative costs of the Government which are to be used in the evaluation, and finally

(3) Compare this result against the total evaluated price of the lowest bid or offer on the multiyear alternative.

[29 F.R. 2810, Feb. 29, 1964, as amended at 30 F.R. 1729, Feb. 9, 1965; 32 F.R. 500, Jan. 18, 1967; 33 F.R. 15380, Oct. 17, 1968]

(a) Except as provided in paragraphs (b) and (c) of this section award shall be made on the basis of the lowest evaluated unit price determined in accordance with § 1.322-3, whether that price is on a single-year basis or a multiyear basis.

(b) If only one responsive bid or offer is received on the multiyear requirements from a responsible bidder or offeror, then award shall be made as follows:

(1) If the solicitation gave the bidder or offeror the choice of submitting prices on a single-year basis or multiyear basis or both, then award shall be made in accordance with paragraph (a) of this section;

(2) If the solicitation required the submission of prices on the first program year requirements in accordance with § 1.322-2(b) (3) (i), award shall be made to the lowest evaluated bidder or offeror on the single-year basis, even though the multiyear price submission, except that if the multiyear price offers distinct advantages to the Government a multiyear award may be made with the advance approval of the Head of a Procuring Activity;

(3) If the solicitation restricted the submission of prices to the multiyear basis only, the solicitation shall be canceled and a new solicitation issued by whatever procedures are then appropriate, except that if the multiyear price offers distinct advantages to the Government a multiyear award may be made with the advance approval of the Head of a Procuring Activity.

(c) In no event shall award be made at an unreasonable price (see §§ 2.404–1 and 3.801).

[32 F.R. 501, Jan. 18, 1967]

The following clauses shall be included in all contracts under the multiyear procurement method.

(a) Limitation of price and contractor obligations.

LIMITATION OF PRICE AND CONTRACTOR OBLIGATIONS (OCTOBER 1966)

(a) This clause applies only in the event this contract is awarded on the alternative basis for award described in the Schedule as "Multiyear Procurement".

(b) Funds are available for performance of this contract in the amount specifically described in the Schedule, as available for contract performance. The amount of funds so described at the time of award is not

considered sufficient for the contract performance required by and described in the Schedule for any Program Year other than the First Program Year. Upon availability to the Contracting Officer of additional funds sufficient for performance of the full requirements for the next succeeding Program Year, the Contracting Officer shall, not later than the date specified in the Schedule, unless a later date is agreed to by the parties, so notify the Contractor in writing and the amount of funds described in the Schedule as available for contract performance shall be modified accordingly. This procedure shall apply for each successive Program Year.

(c) The Government is not obligated to the Contractor for contract performance in any monetary amount in excess of that described in the Schedule or modifications thereto, as available for contract performance.

(d) The Contractor is not obligated to incur costs for the performance required for any Program Year after the first unless and until he has been notified in writing by the Contracting Officer of an increase in availability of funds in accordance with paragraph (b) of this clause. If so notified, the Contractor's obligation shall be increased only to the extent contract performance is required for the additional Program Year for which funds have been made available.

(e) In the event of termination pursuant to the "Termination for Convenience of the Government" clause of this contract, the terms "total contract price" as used in that clause refers to the amount available for performance of this contract, as provided for in this clause, plus the applicable amount established as the cancellation ceiling, and the term "work under the contract" as used in that clause refers to the work under Program Year requirements for which funds have been made available. In the event of termination for default, the Government's rights under this contract shall apply to the entire multiyear requirements.

(f) Notification to the Contractor of an increase or decrease in the funds available for performance of this contract as a result of a clause other than this clause (e.g., exercise of an option for increased quantities or the "Changes" clause) shall not constitute the notification contemplated by paragraph (b) of this clause.

(b) Cancellation of Items.

CANCELLATION OF ITEMS (OCTOBER 1966)

(a) This clause applies only in the event this contract is awarded on the alternative basis for award described in the Schedule as "Multiyear Procurement".

(b) As used herein, the term "cancellation" means that the Government is canceling, pursuant to this clause, its Program Year requirements for items as set forth in the Schedule for all Program Years subsequent to that in which notice of cancellation is provided. Such cancellation shall

occur only if, by the date or within the time period specified in the Schedule, or such further time as may be agreed to, the Contracting Officer (1) notifies the Contractor that funds will not be available for contract performance for any subsequent Program Year; or (ii) fails to notify the Contractor that funds have been made available for performance of the Program Year requirement for the succeeding Program Year.

(c) Except for cancellation pursuant to this clause or for termination pursuant to the "Default" clause, any reduction by the Contracting Officer in the quantities called for under this contract shall be considered a termination in accordance with the "Termination for Convenience of the Government" clause of this contract.

(d) In the event of cancellation pursuant to this clause, the Contractor will be paid, as consideration therefor, a cancellation charge not to exceed the cancellation ceiling described and separately set forth in the Schedule as being applicable at the time of cancellation.

(e) The cancellation charge is intended to cover only expenses reasonably necessary for production which would have been equitably amortized in the unit prices for the entire quantity of the Multiyear Procurement, but which, because of the cancellation, are therefore not so amortized. The cancellation charge shall be computed and claim therefor made as would be applicable under the "Termination for Convenience of the Government" clause of this contract. The claim may include reasonable preproduction and other nonrecurring costs, applicable to and which normally would be amortized in all items to be furnished under the multiyear requirements, such as plant rearrangement, special tooling, preproduction engineering, initial rework, initial spoilage, and pilot runs. The claim shall not include any amount;

(i) For labor, materials, or other expenses incurred for production of the canceled items;

(ii) For any item or cost for which payment has already been made to the Contractor; or

(iii) For anticipated profit on the canceled items, or on the costs included in the cancellation charge.

Where options are otherwise authorized, multiyear contracts may include an appropriate "Option to Increase Quantities" clause in which the period for exercise of the option is limited to the date set forth in the contract schedule for notifying the contractor that funds are available for the requirements of the next succeeding program year. If such an option is included, the following paragraph (f) should be added to the clause set forth above.

(f) Any quantities added to the original contract quantities through exercise of the Government option in the "Option to In

crease Quantities" clause of this contract shall be subtracted from what would otherwise be considered the quantity canceled for the purpose of computing allowable cancellation charges.

[32 F.R. 501, Jan. 18, 1967]

§ 1.323 Procurement of natural rubber for tires, tubes, tire recapping, and recapping materials.

(a) It is national policy to require contractors to purchase natural rubber from the National Stockpile in connection with:

(1) Defense contracts for aircraft tires, tubes, recapping materials and tire recapping (unless the recapping materials are Government furnished); and defense contracts for aircraft under which the contractor is to furnish tires or tubes;

(2) Army contracts for tires, tubes, recapping materials and tire recapping (unless the recapping materials are Government furnished), produced to military specifications for use on military trucks, trailers and buses; and Army contracts for such vehicles under which the contractor is to furnish tires or tubes.

The Office of Emergency Planning Executive Office of the President, has authorized the General Services Administration to dispose of natural rubber for that purpose.

(b) The following clause shall be inserted in all such contracts.

PURCHASE OF NATURAL RUBBER (JULY 1967)

(a) Except as provided in paragraph (b) below, the Contractor shall purchase from the General Services Administration, either directly or through a dealer or otherwise cause to be purchased, during the life of this contract 1 pounds of crude natural rubber. Each order for rubber placed with the General Services Administration pursuant to this clause shall state that it has been placed in accordance with the provisions of this clause, shall identify this contract by number and the name of the issuing activity and shall be sent to:

Manager, Rubber Project, General Services Administration, Room 6042, GSA Building, 18th and F Streets NW., Washington, D.C. 20025.

Rubber purchased pursuant to this clause may be used in any manner the Contractor

1 Contracting officer shall insert the approximate quantity of natural and synthetic rubber, other than Government furnished rubber, contained in the tires, tubes, tire recapping, or recapping materials to be delivered under this contract.

desires and need not be earmarked in any way after delivery to the Contractor, nor physically incorporated in the items to be delivered, provided the specifications are met.

(b) To the extent the Contractor places subcontracts for tires, tubes, tire recapping, or recapping materials under this contract, he is not required to purchase rubber from the General Services Administration. However, he agrees to incorporate in any such subcontract the same terms and conditions set forth in this clause including this paragraph (b), specifying approximate quantity of rubber (natural and synthetic) contained in the tires, tubes, tire recapping, or recapping materials to be delivered under the subcontract. The Contractor shall forward one copy of each such subcontract, referencing the prime contract number and the issuing activity, to the General Services Administration at the above address.

(c) Copies or pertinent abstracts of all contracts and contract modifications affecting rubber quantities will be forwarded by the purchasing activity to the General Services Administration at the address specified in the contract clause. [33 F.R. 264, Jan. 9, 1968] § 1.324 Warranties.

[29 F.R. 14816, Oct. 31, 1964] § 1.324-1 General.

A warranty clause gives the Government a contractual right to assert claims regarding the deficiency of supplies or services furnished, notwithstanding any other contractual provisions pertaining to acceptance by the Government. Such a clause allows the Government additional time after acceptance in which to assert a right to correction of the deficiencies or defects, reperformance, an equitable adjustment in the contract price, or other remedies. This additional period of time may begin at the time of delivery or at the occurrence of a specified event, and may run for a given number of days or months or until occurrence of another specified event. The value of a warranty clause depends upon the circumstances, and its use, terms, and conditions are influenced by many factors (see § 1.324-3(b)). A warranty clause may therefore be tailored to fit the individual procurement or class of procurements.

[33 F.R. 265, Jan. 9, 1968]

§ 1.324-2 Policy.

(a) A warranty clause shall be used when it is found to be in the best interests of the Government, after an analysis of the factors listed in § 1.324-3(b).