# Federal Acquisition Regulation; Part 15 Rewrite; Contracting by Negotiation and Competitive Range Determination

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/fr%3A97-25666

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** September 30, 1997
- **Citation:** 62 FR 51224

## Text

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

[[Page 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 Clinger-Cohen 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.

[[Page 51226]]

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 Clinger-Cohen 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
Clinger-Cohen 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 in-person 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

[[Page 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

[[Page 51228]]

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 Clinger-Cohen 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

[[Page 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.

------------------------------------------------------------------------
OMB control
FAR segment No.
------------------------------------------------------------------------

* * * *
SF 1411.................................................... 9000-0013

[[Page 51230]]

* * * *
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.

[[Page 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

[[Page 51232]]

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. Pre-recorded
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.

[[Page 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

[[Page 51234]]

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 architect-engineer 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).

[[Page 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

[[Page 51236]]

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

[[Page 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

[[Page 51238]]

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

[[Page 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 t

[Text truncated at 120,000 characters. The full text is on the page linked above.]

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A97-25666. Public record. Not legal advice.