(a) No procurement in excess of $2,500 shall be made by negotiation if the use of formal advertising is feasible and practicable under the existing conditions and circumstances even though such conditions and circumstances would otherwise satisfy the requirements of Subpart 1-3.2.

(b) No contract shall be entered into as a result of negotiation unless or until the following requirements have been satisfied:

(1) The contemplated procurement comes within one of the circumstances permitting negotiation enumerated in Subpart 1-3.2;

(2) Any necessary determinations and findings have been made (see Subparts 1-3.2 and 1-3.3);

(3) Such clearance or approval as is prescribed by applicable agency procedures has been obtained; and

(4) The prospective contractor has been determined to be responsible in accordance with Subpart 1-1.12.

(c) Whenever property or services are to be procured by negotiation, proposals shall be solicited from the maximum number of qualified sources, including small business concerns (see § 1-1.702(b) (3)), consistent with the nature of and requirements for the supplies or services to be procured, in accordance with the basic policies set forth in this Part 1-3, to the end that the procurement will be made to the best advantage of the Government, price and other factors considered. Proposals shall be supported by statements and analyses of estimated costs or other evidence of reasonable prices and by such information concerning other vital matters as is deemed necessary by the contracting officer (see § 13.807). Unless award without written or oral discussion is permitted under § 13.805-1(a), negotiation shall thereupon

be conducted in accordance with § 13.805, with due attention being given to the factors in § 1-3.102 and any other appropriate factors.

(d) Negotiated procurement shall be on a competitive basis to the maximum practical extent. When a proposed procurement appears to be noncompetitive, the procuring activity is responsbile not only for assuring that competitive procurement is not feasible, but also for acting whenever possible to avoid the need for subsequent noncompetitive procurements. This action shall include both examination of the reasons for the procurement being noncompetitive and steps to foster competitive conditions for subsequent procurements, particularly as to the availability of complete and accurate data, reasonableness of delivery requirements, and possible breakout of components for competitive procurements.

[29 F.R. 10155, July 24, 1964, as amended at 36 F.R. 17421, Aug. 31, 1971]

§ 1-3.102 Factors to be considered in negotiating contracts.

During the course of negotiations, due attention shall be given to the following and any other appropriate factors:

(a) Comparison of prices quoted and consideration of other prices for the same or similar property or services, with due regard to production costs, including extra pay shift, multi-shift and overtime costs and any other factor relating to the price, such as profits, cost of transportation, and cash discounts.

(b) Comparison of the business reputation, capacity, and responsibility of the respective persons or firms who submit offers.

(c) Consideration of the quality of the property or services offered, including the same or similar property or services previously furnished, with due regard to conformance with specification requirements.

(d) Consideration of delivery requirements. (e) Discriminating use of price and cost analyses.

(f) Investigation of price aspects of any important subcontract.

(g) Individual bargaining, by mail or by conference.

(h) Consideration of cost sharing. (i) Effective utilization in general of the most desirable type of contract.

(j) Consideration of the size of the business concern.

(k) Consideration as to whether the prospective supplier requires expansion or conversion of plant facilities.

(1) Consideration as to whether the prospective supplier is located in a surplus or scarce labor area.

(m) Consideration as to whether the prospective supplier will have an adequate supply of qualified labor.

(n) Consideration of subcontracting, with the extensive use of small business subcontractors being considered a favorable factor.

(0) Consideration of the existing and potential workload of the prospective supplier.

(p) Consideration of broadening the industrial base by the development of additional suppliers.

(q) Consideration of whether the contractor requires Government furnished property, machine tools, or facilities. § 1-3.103

Dissemination of procurement information.

(a) Synopses of proposed procurements and contract awards shall be prepared and publicized in the Department of Commerce "Synopsis of U.S. Government Proposed Procurement, Sales, and Contract Awards," in accordance with the requirements of §§ 1-1.1003 and 1-1.1004.

(b) Promptly after making awards in any procurement in excess of $10,000, the contracting officer normally shall give written notice to the unsuccessful offerors that their proposals were not accepted. Upon request, unsuccessful offerors whose offered prices were lower than those of the contractor which received the award shall be furnished the reasons why their proposals were not accepted; but in no event will an offeror's cost breakdown, profit, overhead rates, trade secrets, or other confidential business information be disclosed to any other offeror.

(c) Classified information shall be furnished only in accordance with agency regulations governing the handling of classified information.

66-089-72- -9

Subpart 1-3.2-Circumstances
Permitting Negotiation

§ 1-3.200 Scope of subpart.

Subject to the requirements and limitations prescribed in Subparts 1-3.1 and 1-3.3 and in this Subpart 1-3.2, or as otherwise provided by law, procurement may be effected by negotiation under any one of the exceptions contained in sections 302(c) (1) through 302(c) (15) of the Act (see §§ 1-3.201 through 1-3.215). Each negotiated contract shall contain a reference to the authority under which it was negotiated.

§ 1-3.201 National emergency.

(a) Authority. Section 302(c)(1) of the Act (41 U.S.C. 252(c)(1)) provides that purchases and contracts may be negotiated if "determined to be necessary in the public interest during the period of a national emergency declared by the President or by the Congress." At present, a state of national emergency exists by reason of Presidential Proclamation No. 2914 of December 16, 1950 (3 CFR).

(b) Determination. The Administrator of General Services has determined, pursuant to section 302(c) (1) of the Act, that it is necessary in the public interest during this period of national emergency that contracts be negotiated by executive agencies to assist labor surplus areas and small business concerns and to further the Balance of Payments Program.

(c) Application. (1) The authority of this section of the Act, shall be used, in accordance with the foregoing determination, to negotiate contracts in furtherance of the policies for assistance to labor surplus areas as are stated in the Office of Civil and Defense Mobilization Defense Manpower Policy No. 4 (Revised). (See Subpart 1-1.8.)

(2) The authority of this section of the Act shall also be used, in accordance with the foregoing determination, to negotiate unilateral set-aside contracts with small business concerns, where small business joint set-aside determinations pursuant to Subpart 1-1.7 are not feasible, when it is determined by the contracting officer to be in the interest of (1) maintaining or mobilizing the Nation's full productive capacity, (ii) war or national defense programs, or (iii) assuring that a fair proportion of the total purchases and contracts for property and services for the Government are placed with small business concerns.

Pursuant to the authority of section 302(c) (2) of the Act (41 U.S.C. 252(c) (2)), purchases and contracts may be negotiated without formal advertising if "the public exigency will not admit of the delay incident to advertising."

(a) Application. In order for this authority to be used, the need must be compelling and of unusual urgency, as when the Government would be seriously injured, financially or otherwise, if the property or services to be purchased or contracted for were not furnished by a certain time, and when they could not be procured by that time by means of formal advertising. This applies irrespective of whether that urgency could or should have been foreseen. For example, this authority may be used when property or services are needed at once because of a fire, flood, explosion, or other disaster.

(b) Limitations. (1) Every contract negotiated under this authority shall be supported by a determination and findings justifying use of the authority. The determination and findings shall be prepared in accordance with Subpart 1-3.3 and signed by the contracting officer.

(2) When purchase action under this authority is based on telephone or other oral offers, a written confirmation of the accepted offer shall be obtained and made a part of the purchase case file. In addition, a record shall be established in such cases which shall contain, as a minimum, the following information with respect to each offer: name and address of each offeror quoting, description of item, unit price, delivery time, and discount terms offered. If quotations lower than the accepted quotation are received, the reasons for their rejection shall be recorded and made a part of the purchase file. § 1-3.203

$2,500.

Purchases not in excess of

Pursuant to the authority of section 302(c)(3) of the Act (41 U.S.C. 252(c) (3)), purchases and contracts may be negotiated without formal advertising if

"the aggregate amount involved does not exceed $2,500."

(a) Application. Contracts or purchases aggregating $2,500 or less shall be made under the authority of this § 13.203 rather than under any of the other sections in this Subpart 1-3.2. In arriving at the "aggregate amount involved," there must be included all property and services which would properly be grouped together in a single transaction and which would be included in a single advertisement for bids if the procurement were being effected by formal advertising. Procurements aggregating more than $2,500 shall not be broken down into separate procurements of less than $2,500.

(b) Procedure. Purchases and contracts aggregating not more than $2,500 shall be made in accordance with Subpart 1-3.6.

§ 1-3.204 Personal or professional services.

Pursuant to the authority of section 302(c) (4) of the Act (41 U.S.C. 252(c) (4), purchases and contracts may be negotiated without formal advertising if "for personal or professional services."

(a) Application. This authority shall be used only when all of the following conditions have been satisfied:

(1) If personal services, they are required to be performed by an individual contractor in person (not by a concern); if professional services, they may be performed either by an individual contractor in person or a concern;

(2) The services are of a professional nature, or are to be performed under Government supervision and paid for on a time basis; and

(3) Procurement of the services is authorized by law and is effected in accordance with the requirements of applicable law.

(b) Limitations. This authority shall not apply to the procurement by negotiation of any types of services authorized under any other provisions of this subpart. (For instructions regarding contracts for professional engineering, architectural, and landscape architectural services and delegations of authority under section 15 of the Public Buildings Act of 1959 (40 U.S.C. 614), see Federal Property Management Regulations (§§ 101-17.402 (c) and 101-17.501 of this title).)

[29 F.R. 10155, July 24, 1964, as amended at 31 F.R. 8116, June 9, 1966]

§ 1-3.205 Services of educational institutions.

Pursuant to the authority of section 302(c) (5) of the Act (41 U.S.C. 242(c) (5)), purchases and contracts may be negotiated without formal advertising if "for any service to be rendered by any university, college, or other educational institution."

(a) Application. The following are illustrative of circumstances with respect to which this authority may be used:

(1) Educational or vocational training services to be rendered by any university, college, or other educational institution in connection with the training and education of personnel, and for necessary material, services, and supplies furnished by any such institution in connection therewith.

(2) Experimental, development, or research work (including services, tests and reports necessary or incidental thereto) to be conducted by any university, college, or other educational institution; and reports furnished in connection therewith.

(3) Analyses, studies, or reports (statistical or otherwise) to be conducted or prepared by any university, college, or other educational institution. § 1-3.206

States.

Purchases outside the United

Pursuant to the authority of section 302 (c) (6) of the Act (41 U.S.C. 252(c) (6)), purchases and contracts may be negotiated without formal advertising if "the supplies or services are to be procured and used outside the limits of the United States and its possessions." This authority shall be used only for the procurement of property or services which are actually purchased from sources outside and used outside the limits of the United States and its possessions, such as property or services (including construction) for overseas installations or for the use of overseas personnel.

§ 1-3.207 Medicines or medical supplies.

Pursuant to the authority of section 302(c) (7) of the Act (41 U.S.C. 252(c) (7)), purchases and contracts may be negotiated without formal advertising if "for medicines or medical property."

(a) Application. This authority shall be used only for such supplies as are peculiar to the field of medicine, including technical equipment, such as surgi

cal instruments, surgical and orthopedic appliances, X-ray supplies and equipment, and the like.

(b) Limitations. (1) Every contract negotiated under this authority shall be supported by a determination and findings prepared in accordance with Subpart 1–3.3 and signed by the contracting officer.

(2) Whenever the probable cost of property to be purchased by negotiation under this authority will exceed $10,000, suitable advance publicity of the proposed purchase shall be given for a period of at least 15 days wherever practicable. The requirement of "suitable advance publicity" shall be deemed to be complied with if circulation of notice of intent to negotiate is made to business concerns engaged in the manufacture and/or sale of the products involved, including qualified concerns known to have current interest in selling such products to the Government. When desirable, publication of the intention to negotiate through newspapers or other similar media may be used to supplement circularization.

§ 1-3.208 Property purchased for authorized resale.

Pursuant to the authority of section 302(c) (8) of the Act (41 U.S.C. 252(c) (8)), purchases and contracts may be negotiated without formal advertising if “for property purchased for authorized resale."

(a) Application. This authority shall be used only for purchases for resale through commissaries or other similar facilities, and ordinarily only for purchases of articles with brand names or of a proprietary nature as required by patrons of the selling activities.

(b) Limitations. (1) Every contract negotiated under this authority shall be supported by a determination and findings prepared in accordance with Subpart 1-3.3 and signed by the contracting officer.

(2) Whenever the probable cost of property to be purchased by negotiation under this authority will exceed $10,000, suitable advance publicity (see § 1-3.207 (b) (2)) of the proposed purchase shall be given for a period of at least 15 days, whenever practicable. When exercising this authority, regardless of the probable cost, competitive proposals shall be solicited from all such qualified sources of supply as the contracting officer deems necessary to assure full and

free competition, consistent with the type and character of the procurement. § 1-3.209 Subsistence supplies.

Pursuant to the authority of section 302(c) (9) of the Act (41 U.S.C. 252(c) (9)), purchases and contracts may be negotiated without formal advertising if "for perishable or nonperishable subsistence supplies."

(a) Application This authority may be used for the purchase of any and all kinds of subsistence supplies.

(b) Limitation. When exercising this authority, competitive proposals shall be solicited from all such qualified sources of supply as the contracting officer deems necessary to assure full and free competition, consistent with the type and character of the procurement.

§ 1-3.210 Impracticable to secure competition by formal advertising.

Pursuant to the authority of section 302(c) (10) of the Act (41 U.S.C. 252(c) 10)), purchases and contracts may be negotiated without formal advertising if "for property or services for which it is impracticable to secure competition."

(a) Application. The following are illustrative of circumstances with respect to which this authority may be used: (1) When property or services can be obtained from only one person or firm (sole source of supply).

(2) When competition is precluded because of the existence of patent rights, copyrights, secret processes, control of basic raw material, or similar circumstances (however, the mere existence of such rights or circumstances does not in and of itself justify the use of this authority).

(3) When bids have been solicited pursuant to the requirements of Part 1-2, and no responsive bid has been received from a responsible bidder.

(4) When bids have been solicited pursuant to the requirements of Part 1-2 and the responsive bid or bids do not cover the quantitative requirements of the invitation for bids, in which case, negotiation is permitted for the remaining requirements.

(5) When the contemplated procurement is for electric power or energy, gas (natural or manufactured), water, or other utility services or when the contemplated procurement is for construction of a part of a utility system and it would not be practicable to allow a contractor other than the utility company itself to work upon the system.

(6) When the contemplated procurement is for training film, motion picture productions, or manuscripts.

(7) When the contemplated procurement is for technical nonpersonal services in connection with the assembly, installation, or servicing (or the instruction of personnel therein) of equipment of a highly technical or specialized nature.

(8) When the contemplated procurement is for studies or surveys other than those which may be negotiated under the authority cited in §§ 1-3.205 or 1-3.211.

(9) When the contemplated procurement involves maintenance, repair, alteration, or inspection and the exact nature or amount of the work to be done is not known.

(10) When the contemplated procurement is for stevedoring, terminal, warehousing, or switching services, and when either the rates are established by law or regulation, or the rates are so numerous or complex that it is impracticable to set them forth in the specifications of a formal invitation for bids.

(11) When the contemplated procurement is for commercial transportation, including time, space, trip, and voyage charters, except for such transportation services as are furnished by common carriers (for which negotiation is authorized under § 1-3.215 and section 321 of the Transportation Act of 1940, 49 U.S.C. 65, and including services for the operation of Government-owned vehicles, vessels, or aircraft.

(12) When the contemplated contract is for services related to the procurement of perishable subsistence, such as protective storage, icing, processing, packaging, handling, and transportation, and it is impracticable to advertise for such services a sufficient time in advance of the delivery of the perishable subsistence.

(13) When it is impossible to draft for an invitation for bids adequate specifications or any other adequately detailed description of the required property or services.

(14) When the contemplated procurement is for parts or components being procured as replacement parts in support of equipment specially designed by the manufacturer, where data available is not adequate to assure that the part or component will perform the same function in the equipment as the part of component it is to replace.