Acquisition Regulation: Contracting by Negotiation

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Federal Register › Vol. 63 › 63 FR 71415

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ENVIRONMENTAL PROTECTION AGENCY

48 CFR Parts 1503, 1515, and 1552

[FRL-6205-6]

Acquisition Regulation: Contracting by Negotiation

AGENCY: Environmental Protection Agency.

ACTION: Proposed rule.

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SUMMARY: The Environmental Protection Agency (EPA) is issuing this

proposed rule to amend the EPA Acquisition Regulation (EPAAR) (48 CFR

Chapter 15) so that it will conform to the Federal Acquisition

Regulation (FAR 48 CFR Chapter 1), as revised by Federal Acquisition

Circular (FAC) 97-02.

DATES: Comments are requested no later than January 27, 1999.

ADDRESSES: Written comments should be submitted to the contact listed

below at the following address: U.S. Environmental Protection Agency,

Office of Acquisition Management (3802R), 401 M Street, SW, Washington,

D.C. 20460. Comments and data may also be submitted electronically by

sending electronic mail (e-mail) to: Senzel.L[email protected].

Electronic comments must be submitted as an ASCII file avoiding the use

of special characters and any form of encryption. Comments and data

will also be accepted on 3.5'' high density IBM-compatible formatted

disks in WordPerfect in 6.1 format or ASCII file format. No

Confidential Business Information (CBI) should be submitted through e-

mail. Electronic comments on this rule may be filed on-line at many

Federal Depository Libraries.

FOR FURTHER INFORMATION CONTACT: Louise Senzel, U.S. EPA, Office of

Acquisition Management, (3802R), 401 M Street, SW, Washington, D.C.

20460, Telephone: (202) 564-4367.

SUPPLEMENTARY INFORMATION:

A. Background

le format. No

Confidential Business Information (CBI) should be submitted through e-

mail. Electronic comments on this rule may be filed on-line at many

Federal Depository Libraries.

FOR FURTHER INFORMATION CONTACT: Louise Senzel, U.S. EPA, Office of

Acquisition Management, (3802R), 401 M Street, SW, Washington, D.C.

20460, Telephone: (202) 564-4367.

SUPPLEMENTARY INFORMATION:

A. Background

FAC 97-02, published in the Federal Register (62 FR 51224) on

September 30, 1997, completely revised FAR Part 15, Contracting by

Negotiation. The final rule allowed agencies to delay implementation

until January 1, 1998. EPA began implementation of the revised Part 15

as of December 19, 1997. The EPAAR is in substantive compliance with

the revised FAR, but extensive redesignation of EPAAR subparts and

sections is required for structural conformance. Accordingly, EPAAR

Part 1515, Contracting by Negotiation, is revised in its entirety, and

parts 1503, Improper Business Practices and Personal Conflicts of

Interest, and 1552, Solicitation Provisions and Contract Clauses, are

amended.

B. Executive Order 12866

The proposed rule is not a significant regulatory action for the

purposes of Executive Order 12866; therefore, no review is required by

the Office of Information and Regulatory Affairs within the Office of

Management and Budget (OMB).

C. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because this proposed

rule does not contain information collection requirements that require

the approval of OMB under the Paperwork Reduction Act of 1980 (44

U.S.C. 3501 et seq.)

D. Regulatory Flexibility Act

The EPA certifies that this proposed rule does not exert a

significant economic impact on a substantial number of small entities.

The requirements to contractors under the rule impose no reporting,

record-keeping, or any compliance costs.

E. Unfunded Mandates

s that require

the approval of OMB under the Paperwork Reduction Act of 1980 (44

U.S.C. 3501 et seq.)

D. Regulatory Flexibility Act

The EPA certifies that this proposed rule does not exert a

significant economic impact on a substantial number of small entities.

The requirements to contractors under the rule impose no reporting,

record-keeping, or any compliance costs.

E. Unfunded Mandates

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public

Law 104-4, establishes requirements for Federal agencies to assess

their regulatory actions on State, local, and tribal governments, and

the private sector. This proposed rule does not contain a Federal

mandate that may result in expenditures of $100 million or more for

State, local, and tribal governments, in the aggregate, or the private

sector in one year. Any private sector costs for this action relate to

paperwork requirements and associated expenditures that are far below

the level established for UMRA applicability.

Thus, the rule is not subject to the requirements of sections 202 and

205 of the UMRA.

F. Executive Order 13045

Protection of Children from Environmental Health Risks and Safety

Risks (6 FR 19885, April 23, 1997), applies to any rule that: (1) is

determined to be economically significant as defined under Executive

Order 12866, and (2) concerns an environmental health or safety risk

that EPA has reason to believe may have a disproportionate effect on

children. If the regulatory action meets both criteria, the Agency must

evaluate the environmental health or safety effects of the planned rule

on children, and explain why the planned regulation is preferable to

other potentially effective and reasonably feasible alternatives

considered by the Agency.

EPA interprets Executive Order 13045 as applying only to those

regulatory actions that are based on health or safety risks, such that

the analysis required under section 5-501 of the Order has the

potential to influence the regultion

on children, and explain why the planned regulation is preferable to

other potentially effective and reasonably feasible alternatives

considered by the Agency.

EPA interprets Executive Order 13045 as applying only to those

regulatory actions that are based on health or safety risks, such that

the analysis required under section 5-501 of the Order has the

potential to influence the regultion. This rule is not subject to

Executive Order 13045 because it does not establish an environmental

standard intended to mitigate health or safety risks.

G. Executive Order 12875

Under Executive Order 12875, EPA may not issue a regulation that is

not required by statute and creates a mandate upon a State, local or

tribal government, unless the Federal government provides the funds

necessary to pay the direct compliance costs incurred by those

governments. If the mandate is unfunded, EPA must provide OMB a

description of the extent of EPA's prior consultation with

representatives of affected State, local and tribal governments, the

nature of their concerns, copies of any written communications from the

governments, and a statement supporting the need to issue the

regulation. In addition, Executive Order 12875 requires EPA to develop

an effective process permitting elected officials and other

representatives of State, local and tribal governments ``to provide

meaningful and timely input in the development of regulatory proposals

containing significant unfunded mandates.''

This proposed rule does not create a mandate on State, local or

tribal governments. The rule does not impose any enforceable duties on

these entities. Accordingly, the requirements of section 1(a) of

Executive Order 12875 do not apply to this rule.

H. Executive Order 13084

vide

meaningful and timely input in the development of regulatory proposals

containing significant unfunded mandates.''

This proposed rule does not create a mandate on State, local or

tribal governments. The rule does not impose any enforceable duties on

these entities. Accordingly, the requirements of section 1(a) of

Executive Order 12875 do not apply to this rule.

H. Executive Order 13084

Under Executive Order 13084, EPA may not issue a regulation that is

not required by statute, that significantly or uniquely affects the

communities of Indian tribal governments, and that imposes substantial

direct compliance costs on those communities, unless the Federal

government provides the funds necessary to pay the direct compliance

costs incurred by the tribal governments. If the mandate is unfunded,

EPA must provide to the OMB, in a separately identified section of the

preamble to the rule, a description of the extent of EPA's prior

consultation with representatives of affected tribal governments, a

summary of the nature of their concerns, and a statement supporting the

need to issue the regulation. In addition, Executive Order 13084

requires EPA to develop an effective process permitting elected and

other representatives of Indian tribal governments ``to provide

meaningful and timely input in the development of regulatory policies

on matters that significantly or uniquely affect their communities.''

The proposed rule does not significantly or uniquely affect the

communities of Indian tribal governments. Accordingly, the requirements

of section 3(b) of Executive Order 13084 do not apply to this rule.

Authority: The provisions of this regulation are issued under 5

U.S.C. 301; Sec. 205(c),63 Stat. 390, as amended, 40 U.S.C. 486(c).

List of Subjects in 48 CFR Parts 1503, 1515, and 1552

Government procurement.

Therefore, 48 CFR Chapter 15 is amended as set forth below:

1. The authority citation for Parts 1503, 1515, and 1552 continues

to read as follows:

13084 do not apply to this rule.

Authority: The provisions of this regulation are issued under 5

U.S.C. 301; Sec. 205(c),63 Stat. 390, as amended, 40 U.S.C. 486(c).

List of Subjects in 48 CFR Parts 1503, 1515, and 1552

Government procurement.

Therefore, 48 CFR Chapter 15 is amended as set forth below:

1. The authority citation for Parts 1503, 1515, and 1552 continues

to read as follows:

Authority: Sec. 205(c), 63 Stat. 390, as amended, 40 U.S.C.

486(c).

PART 1503--[AMENDED]

2. Part 1503 is amended by revising subpart 1503.1 to read as

follows:

Subpart 1503.1--Safeguards

Sec.

1503.101-370 Personal conflicts of interest.

1503.104-5 Disclosure, protection, and marking of contractor bid or

proposal information and source selection information.

Subpart 1503.1--Safeguards

1503.101-370 Personal conflicts of interest.

(a) Each EPA employee (including special employees) engaged in

source evaluation and selection is required to be familiar with the

provisions of 40 CFR Part 3 regarding personal conflicts of interest.

The employee shall inform the Source Selection Authority (SSA) in

writing if his/her participation in the source evaluation and selection

process could be interpreted as a possible or apparent conflict of

interest. The SSA will consult with appropriate Agency officials prior

to the SSA's determination. The SSA shall relieve any EPA employee who

has a conflict of interest of further duties in connection with the

evaluation and selection process.

(b) Each EPA employee (including special employees, as defined by

1503.600-71 (b)) involved in source evaluation and selection is

required to comply with the Office of Government Ethics ethics

provisions at 5 CFR Part 2635.

1503.104-5 Disclosure, protection, and marking of contractor bid or

proposal information and source selection information.

ion with the

evaluation and selection process.

(b) Each EPA employee (including special employees, as defined by

1503.600-71 (b)) involved in source evaluation and selection is

required to comply with the Office of Government Ethics ethics

provisions at 5 CFR Part 2635.

1503.104-5 Disclosure, protection, and marking of contractor bid or

proposal information and source selection information.

(a)(1) The Chief of the Contracting Office (CCO) is the designated

official to make the decision whether support contractors are used in

proposal evaluation (as authorized at FAR 15.305(c) and as restricted

at FAR 37.203(d)).

(2) The following written certification and agreement shall be

obtained from the non-Government evaluator prior to the release of any

proposal to that evaluator:

``Certification on the Use and Disclosure of Proposals''

RFP #: ---------------------------------------------------------------

Offeror: -------------------------------------------------------------

1. I hereby certify that to the best of my knowledge and belief,

no conflict of interest exists that may diminish my capacity to

perform an impartial, technically sound, objective review of this

proposal(s) or otherwise result in a biased opinion or unfair

competitive advantage.

2. I agree to use any proposal information only for evaluation

purposes. I agree not to copy any information from the proposal(s),

to use my best effort to safeguard such information physically, and

not to disclose the contents of nor release any information relating

to the proposal(s) to anyone outside of the evaluation team

assembled for this acquisition or individuals designated by the

Contracting Officer.

3. I agree to return to the Government all copies of proposals,

as well as any abstracts, upon completion of the evaluation.

----------------------------------------------------------------------

(Name and Organization)

----------------------------------------------------------------------

(Date of Execution)

(End of Certificate)

sition or individuals designated by the

Contracting Officer.

3. I agree to return to the Government all copies of proposals,

as well as any abstracts, upon completion of the evaluation.

----------------------------------------------------------------------

(Name and Organization)

----------------------------------------------------------------------

(Date of Execution)

(End of Certificate)

(b) Information contained in proposals will be protected and

disclosed to the extent permitted by law, and in accordance with FAR

3.104-5, 15.207, and Agency procedures at 40 CFR Part 2.

3. Part 1515 is revised as follows.

PART 1515--CONTRACTING BY NEGOTIATION

Sec.

1515.000 Scope of part.

Subpart 1515.2--Solicitation and Receipt of Proposals and Information

1515.209 Solicitation provisions and contract clauses.

Subpart 1515.3--Source Selection

1515.302 Applicability.

1515.303 Responsibilities.

1515.305 Proposal evaluation.

1515.305-70 Scoring plans.

1515.305-71 Documentation of proposal evaluation.

1515.305-72 Release of cost information.

1515.308-71 Documentation of source selection.

Subpart 1515.4--Contract Pricing

1515.404-4 Profit.

1515.404-470 Policy.

1515.404-471 EPA structured approach for developing profit or fee

objectives.

1515.404-472 Other methods.

1515.404-473 Limitations.

1515.404-474 Waivers.

1515.404-475 Cost realism.

1515.408 Solicitation provisions and contract clauses.

Subpart 1515.6--Unsolicited Proposals

1515.604 Agency points of contact.

1515.606-70 Contracting methods.

PART 1515--CONTRACTING BY NEGOTIATION

1515.000 Scope of part.

This part implements and supplements FAR part 15. It prescribes the

Environmental Protection Agency policies and procedures for contracting

for supplies and services by negotiation.

Subpart 1515.2--Solicitation and Receipt of Proposals and

Information

1515.209 Solicitation provisions and contract clauses.

70 Contracting methods.

PART 1515--CONTRACTING BY NEGOTIATION

1515.000 Scope of part.

This part implements and supplements FAR part 15. It prescribes the

Environmental Protection Agency policies and procedures for contracting

for supplies and services by negotiation.

Subpart 1515.2--Solicitation and Receipt of Proposals and

Information

1515.209 Solicitation provisions and contract clauses.

In addition to those provisions prescribed at FAR 15.209 and in

accordance with FAR 15.203(a)(4), the contracting officer shall

identify and include the evaluation factors that will be considered in

making the source selection and their relative importance in each

solicitation.

(a) The contracting officer shall insert the provisions at

1552.215-70, ``EPA Source Evaluation and Selection Procedures--

Negotiated Procurement'' and either: the provision at 1552.215-71,

``Evaluation Factors for Award,'' where all evaluation factors other

than cost or price when combined are significantly more important than

cost or price; or the provision in Alternate I to 1552.215-71, where

all evaluation factors other than cost or price when combined are

significantly less important than cost or price; or the provision in

Alternate II to 1552.215-71, where all evaluation factors other than

cost or price when combined are approximately equal to cost or price;

or Alternate III to 1552.215-71 where award will be made to the offeror

with the lowest-evaluated cost or price whose proposal meets or exceeds

the acceptability standards for non-cost factors.

icantly less important than cost or price; or the provision in

Alternate II to 1552.215-71, where all evaluation factors other than

cost or price when combined are approximately equal to cost or price;

or Alternate III to 1552.215-71 where award will be made to the offeror

with the lowest-evaluated cost or price whose proposal meets or exceeds

the acceptability standards for non-cost factors.

(b) Evaluation factors and significant subfactors should be

prepared in accordance with FAR 15.305 and inserted into paragraph (b)

of the provision at 1552.215-71, Alternate I, Alternate II, and if

used, in Alternate III.

Subpart 1515.3--Source Selection

1515.302 Applicability.

FAR subpart 15.3 and this subpart apply to the selection of source

or sources in competitive negotiation acquisitions in excess of the

simplified acquisition threshold, except architect-engineering services

which are covered in 1536.6.

1515.303 Responsibilities.

The Source Selection Authority (SSA) shall be established at the

levels specified below.

(1) Acquisitions having a potential value exceeding $25,000,000:

CCO.

(2) Acquisitions having a potential value exceeding $10,000,000 to

$25,000,000: To be determined by the CCO, unless otherwise restricted

in his/her delegation of procurement authority.

(3) Acquisitions having a potential value of $10,000,000 or less:

The contracting officer.

1515.305 Proposal evaluation.

1515.305-70 Scoring plans.

When trade-offs are performed (in accordance with FAR 15.101-1),

the evaluation of technical and past performance shall be accomplished

using the following scoring plan or one specifically developed for the

solicitation, e.g., other numeric, adjectival, color rating systems,

etc.

alue of $10,000,000 or less:

The contracting officer.

1515.305 Proposal evaluation.

1515.305-70 Scoring plans.

When trade-offs are performed (in accordance with FAR 15.101-1),

the evaluation of technical and past performance shall be accomplished

using the following scoring plan or one specifically developed for the

solicitation, e.g., other numeric, adjectival, color rating systems,

etc.

Scoring Plan

------------------------------------------------------------------------

Value Descriptive statement

------------------------------------------------------------------------

0............................... The factor is not addressed, or is

totally deficient and without merit.

1............................... The factor is addressed, but contains

deficiencies and/or weaknesses that

can be corrected only by major or

significant changes to relevant

portions of the proposal, or the

factor is addressed so minimally or

vaguely that there are widespread

information gaps. In addition,

because of the deficiencies,

weaknesses, and/or information gaps,

serious concerns exist on the part of

the technical evaluation team about

the offeror's ability to perform the

required work.

2............................... Information related to the factor is

incomplete, unclear, or indicates an

inadequate approach to, or

understanding of the factor. The

technical evaluation team believes

there is question as to whether the

offeror would be able to perform

satisfactorily.

3............................... The response to the factor is

adequate. Overall, it meets the

specifications and requirements, such

that the technical evaluation team

believes that the offeror could

perform to meet the Government's

minimum requirements.

4............................... The response to the factor is good

with some superior features

would be able to perform

satisfactorily.

3............................... The response to the factor is

adequate. Overall, it meets the

specifications and requirements, such

that the technical evaluation team

believes that the offeror could

perform to meet the Government's

minimum requirements.

4............................... The response to the factor is good

with some superior features.

Information provided is generally

clear, and the demonstrated ability

to accomplish the technical

requirements is acceptable with the

possibility of more than adequate

performance.

5............................... The response to the factor is superior

in most features.

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1515.305-71 Documentation of proposal evaluation.

In addition to the information required by FAR 15.305(a)(3), the

technical evaluation documentation shall include:

(a) Score sheets prepared by each individual team member must be

made available upon the contracting officer's request. For contracts

valued at $10,000,000 or less, the technical evaluation may be recorded

on the short form technical evaluation format (EPA Form 1900-61) or

another form specifically developed for the solicitation; and

(b) A statement that the respective team members are free from

actual or potential personal conflicts of interest, and are in

compliance with the Office of Government Ethics ethics provisions at 5

CFR part 2635.

actual or

potential organizational conflict of interest.

(d) Any documentation related to exchanges with individual

offerors.

1515.305-72 Release of cost information.

(a) In accordance with FAR 15.305(a)(4), the contracting officer

may release the cost/price proposals to those members of the evaluation

team who are evaluating proposals at his/her discretion.

reveal that an offeror has an

actual or

potential organizational conflict of interest.

(d) Any documentation related to exchanges with individual

offerors.

1515.305-72 Release of cost information.

(a) In accordance with FAR 15.305(a)(4), the contracting officer

may release the cost/price proposals to those members of the evaluation

team who are evaluating proposals at his/her discretion.

(b) These individuals would then use this information to perform a

cost realism analysis as described in FAR 15.404-1(d). Any

inconsistencies between the proposals and the solicitation requirements

and/or any inconsistencies between the cost/price and other than cost/

price proposals should be identified.

1515.308-71 Documentation of source selection.

In addition to the information required by FAR 15.308, the source

selection decision shall include:

(a) When there is only one proposal received or only one proposal

in the competitive range, the contracting officer shall examine the

solicitation to determine if it was unduly restrictive or flawed. As

part of the source selection decision, the contracting officer shall

address at a minimum, the following five factors: whether the

requirement could have been broken up into smaller components; whether

the solicitation provided adequate response time; whether the

requirement could have been satisfied with reduced staffing levels

(discussion may be combined with the first factor); if applicable,

whether the work required on-site could otherwise be performed at a

contractor's facility, avoiding the cost and logistical implications of

relocating employees; and whether the geographical area of

consideration was either too narrow or too broad, so as to adversely

impact competition

n satisfied with reduced staffing levels

(discussion may be combined with the first factor); if applicable,

whether the work required on-site could otherwise be performed at a

contractor's facility, avoiding the cost and logistical implications of

relocating employees; and whether the geographical area of

consideration was either too narrow or too broad, so as to adversely

impact competition. If the contracting officer determines that the

solicitation requirements unduly restrict competition, the contracting

officer shall consider making appropriate changes to the solicitation,

canceling the solicitation, and reissuing the solicitation

incorporating the appropriate changes. For 8(a) competitive or small

business competitive set-asides, if the contracting officer in

consultation with the Office of Small and Disadvantaged Business

Utilization determines that the solicitation requirements unduly

restrict competition, the contracting officer shall consider making

appropriate changes to the solicitation, canceling the solicitation,

and reissuing the solicitation incorporating the appropriate changes.

(b) The contracting officer shall provide a copy of any source

selection decision that includes an analysis of the five factors

described in paragraph (a) of this section to the Competition Advocate

after approval of the decision by the designated Source Selection

Authority.

Subpart 1515.4--Contract Pricing

Sec. 1515.404-4 Profit.

This section implements FAR 15.404-4 and prescribes the EPA

structured approach for establishing profit or fee prenegotiation

objectives.

1515.404-470 Policy.

alysis of the five factors

described in paragraph (a) of this section to the Competition Advocate

after approval of the decision by the designated Source Selection

Authority.

Subpart 1515.4--Contract Pricing

Sec. 1515.404-4 Profit.

This section implements FAR 15.404-4 and prescribes the EPA

structured approach for establishing profit or fee prenegotiation

objectives.

1515.404-470 Policy.

(a) The Agency's policy is to utilize profit to attract contractors

who possess talents and skills necessary to the accomplishment of the

objectives of the Agency, and to stimulate efficient contract

performance. In negotiating profit/fee, it is necessary that all

relevant factors be considered, and that fair and reasonable amounts be

negotiated which give the contractor a profit objective commensurate

with the nature of the work to be performed, the contractor's input to

the total performance, and the risks assumed by the contractor.

(b) The purpose of EPA's structured approach is:

(1) To provide a standard method of evaluation;

(2) To ensure consideration of all relevant factors;

(3) To provide a basis for documentation and explanation of the

profit or fee negotiation objective; and

(4) To allow contractors to earn profits commensurate with the

assumption of risk.

approach for analyzing profit or fee include those prescribed by FAR

15.404(d)(1), and additional factors authorized by FAR 15.404(d)(2) to

foster achievement of program objectives. These profit or fee factors

are prescribed in 1515.404-471.

1515.404-471 EPA structured approach for developing profit or fee

objectives.

of risk.

approach for analyzing profit or fee include those prescribed by FAR

15.404(d)(1), and additional factors authorized by FAR 15.404(d)(2) to

foster achievement of program objectives. These profit or fee factors

are prescribed in 1515.404-471.

1515.404-471 EPA structured approach for developing profit or fee

objectives.

(a) General. To properly reflect differences among contracts, and

to select an appropriate relative profit/fee in consideration of these

differences, weightings have been developed for application by the

contracting officer to standard measurement bases representative of the

prescribed profit factors cited in FAR 15.404(d) and EPAAR 1515.404-

471(b)(1). Each profit factor or subfactor, or its components, has been

assigned weights relative to their value to the contract's overall

effort, and the range of weights to be applied to each profit factor.

(b)(1) Profit/fee factors. The factors set forth below, and the

weighted ranges listed after each factor, shall be used in all

instances where the profit/fee is negotiated.

Contractor's Input to Total Performance

------------------------------------------------------------------------

Weight

range

(percent)

------------------------------------------------------------------------

Direct material............................................. 1 to 4

Professional/technical labor................................ 8 to 15

Professional/technical overhead............................. 6 to 9

General labor............................................... 5 to 9

General overhead............................................ 4 to 7

Subcontractors.............................................. 1 to 4

Other direct costs.......................................... 1 to 3

General and administrative expenses......................... 5 to 8

Contractor's assumption of contract cost risk............... 0 to 6

------------------------------------------------------------------------

head............................................ 4 to 7

Subcontractors.............................................. 1 to 4

Other direct costs.......................................... 1 to 3

General and administrative expenses......................... 5 to 8

Contractor's assumption of contract cost risk............... 0 to 6

------------------------------------------------------------------------

(2) The contracting officer shall first measure the ``Contractor's

Input to Total Performance'' by the assignment of a profit percentage

within the designated weight ranges to each element of contract cost.

Such costs are multiplied by the specific percentages to arrive at a

specific dollar profit or fee.

(3) The amount calculated for facilities capital cost of money

(FCCM) shall not be included as part of the cost base for computation

of profit or fee. The profit or fee objective shall be reduced by an

amount equal to the amount of facilities capital cost of money allowed.

A complete discussion of the determination of facilities capital cost

of money and its application and administration is set forth in FAR

31.205-10, and the Appendix to the FAR (see 48 CFR 9904.414).

(4) After computing a total dollar profit or fee for the

Contractor's Input to Total Performance, the contracting officer shall

calculate the specific profit dollars assigned for cost risk and

performance. This is accomplished by multiplying the total Government

cost objective, exclusive of any FCCM, by the specific weight assigned

to cost risk and performance. The contracting officer shall then

determine the profit or fee objective by adding the total profit

dollars for the Contractor's Input to Total Performance to the specific

dollar profits assigned to cost risk and performance. The contracting

officer shall use EPA Form 1900-2 in hardcopy or electronic copy

equivalent to facilitate the calculation of the profit or fee

objective.

d performance. The contracting officer shall then

determine the profit or fee objective by adding the total profit

dollars for the Contractor's Input to Total Performance to the specific

dollar profits assigned to cost risk and performance. The contracting

officer shall use EPA Form 1900-2 in hardcopy or electronic copy

equivalent to facilitate the calculation of the profit or fee

objective.

(5) The weight factors discussed above are designed for arriving at

profit or fee objectives for other than nonprofit and not-for-profit

organizations. Nonprofit and not-for-profit organizations are addressed

as follows:

(i) Nonprofit and not-for-profit organizations are defined as those

business entities organized and operated:

(A) Exclusively for charitable, scientific, or or educational

purposes;

(B) Where no part of the net earnings inure to the benefit of any

private shareholder or individual;

or otherwise attempting to influence legislation or participating in

any political campaign on behalf of any candidate for public office;

and

(D) Which are exempt from Federal income taxation under Section 51

of the Internal Revenue Code.

(ii) For contracts with nonprofit and not-for-profit organizations

where fees are involved, special factor of -3 percent shall be assigned

in all cases.

(1) General. In making a judgment on the value of each factor, the

contracting officer should be governed by the definition, description,

and purpose of the factors, together with considerations for evaluation

set forth in this paragraph.

-profit organizations

where fees are involved, special factor of -3 percent shall be assigned

in all cases.

(1) General. In making a judgment on the value of each factor, the

contracting officer should be governed by the definition, description,

and purpose of the factors, together with considerations for evaluation

set forth in this paragraph.

(2) Contractor's input to total performance. This factor is a

measure of how much the contractor is expected to contribute to the

overall effort necessary to meet the contract performance requirements

in an efficient manner. This factor, which is separate from the

contractor's responsibility for contract performance, takes into

account what resources are necessary, and the creativity and ingenuity

needed for the contractor to perform the statement of work

successfully. This is a recognition that within a given performance

output, or within a given sales dollar figure, necessary efforts on the

part of individual contractors can vary widely in both value, quantity,

and quality, and that the profit or fee objective should reflect the

extent and nature of the contractor's contribution to total

performance.

Greater profit opportunity should be provided under contracts

requiring a high degree of professional and managerial skill and to

prospective contractors whose skills, facilities, and technical assets

can be expected to lead to efficient and economical contract

performance. The evaluation of this factor requires an analysis of the

cost content of the proposed contract as follows:

erformance.

Greater profit opportunity should be provided under contracts

requiring a high degree of professional and managerial skill and to

prospective contractors whose skills, facilities, and technical assets

can be expected to lead to efficient and economical contract

performance. The evaluation of this factor requires an analysis of the

cost content of the proposed contract as follows:

(i) Direct material (purchased parts and other material). (A)

Analysis of these cost items shall include an evaluation of the

managerial and technical effort necessary to obtain the required

material. This evaluation shall include consideration of the number of

orders and suppliers, and whether established sources are available or

new sources must be developed. The contracting officer shall also

determine whether the contractor will, for example, obtain the

materials by routine orders or readily available supplies (particularly

those of substantial value in relation to the total contract costs), or

by detailed subcontracts for which the prime contractor will be

required to develop complex specifications involving creative design.

(B) Consideration should be given to the managerial and technical

efforts necessary for the prime contractor to administer subcontracts,

and to select subcontractors, including efforts to break out

subcontracts from sole sources, through the introduction of

competition.

scrap charges shall be treated as material for profit evaluation.

(D) If intracompany transfers are accepted at price, in accordance

with FAR 31.205-26(e), they should be excluded from the profit or fee

computation. Other intracompany transfers shall be evaluated by

individual components of cost, i.e., material, labor, and overhead.

) Recognized costs proposed as direct material costs such as

scrap charges shall be treated as material for profit evaluation.

(D) If intracompany transfers are accepted at price, in accordance

with FAR 31.205-26(e), they should be excluded from the profit or fee

computation. Other intracompany transfers shall be evaluated by

individual components of cost, i.e., material, labor, and overhead.

(ii) Professional/Technical and General Labor. Analysis of labor

should include evaluation of the comparative quality and level of the

talents and experience to be employed. In evaluating labor for the

purpose of assigning profit dollars, consideration should be given to

the amount of notable scientific talent or unusual or scarce talent

needed, in contrast to journeyman effort or supporting personnel. The

diversity, or lack thereof, of scientific and engineering specialties

required for contract performance, and the corresponding need for

supervision and coordination, should also be evaluated.

(iii) Overhead and general and administrative expenses. (A) Where

practicable, analysis of these overhead items of cost should include

the evaluation of the individual elements of these expenses, and how

much they contribute to contract performance. This analysis should

include a determination of the amount of labor within these overhead

pools, and how this labor would be treated if it were considered as

direct labor under the contract. The allocable labor elements should be

given the same profit consideration as if they were direct labor. The

other elements of indirect cost pools should be evaluated to determine

whether they are routine expenses such as utilities, depreciation, and

maintenance, and therefore given less profit consideration.

(B) The contractor's accounting system need not break down its

overhead expenses within the classification of professional/technical

overhead, general overhead and general and administrative expenses.

lements of indirect cost pools should be evaluated to determine

whether they are routine expenses such as utilities, depreciation, and

maintenance, and therefore given less profit consideration.

(B) The contractor's accounting system need not break down its

overhead expenses within the classification of professional/technical

overhead, general overhead and general and administrative expenses.

(iv) Subcontractors. (A) Subcontract costs should be analyzed from

the standpoint of the talents and skills of the subcontractors. The

analysis should consider if the prime contractor normally should be

expected to have people with comparable expertise employed as full-time

staff, or if the contract requires skills not normally available in an

employer-employee relationship. Where the prime contractor is using

subcontractors to perform labor which would normally be expected to be

done in-house, the rating factor should generally be at or near 1

percent. Where exceptional expertise is retained, or the prime

contractor is participating in the mentor-protege program, the assigned

weight should be nearer to the high end of the range.

(v) Other direct costs. The analysis of these costs should be

similar to the analysis of direct material.

(3) Contractor's assumption of contract cost risk. (i) The risk of

contract costs should be shifted to the fullest extent practicable to

contractors, and the Government should assign a rating that reflects

the degree of risk assumption. Evaluation of this risk requires a

determination of the degree of cost responsibility the contractor

assumes, the reliability of the cost estimates in relation to the task

assumed, and the chance of the contractor's success or failure. This

factor is specifically limited to the risk of contract costs. Thus,

such risks of losing potential profits in other fields are not within

the scope of this factor.

of this risk requires a

determination of the degree of cost responsibility the contractor

assumes, the reliability of the cost estimates in relation to the task

assumed, and the chance of the contractor's success or failure. This

factor is specifically limited to the risk of contract costs. Thus,

such risks of losing potential profits in other fields are not within

the scope of this factor.

(ii) The first determination of the degree of cost responsibility

assumed by the contractor is related to the sharing of total risk of

contract cost by the Government and the contractor, depending on

selection of contract type. The extremes are a cost-plus-fixed-fee

contract requiring only that the contractor use its best efforts to

perform a task, and a firm-fixed-price contract for a complex item. A

cost-plus-fixed-fee contract would reflect a minimum assumption of cost

responsibility by the

contractor, whereas a firm-fixed-price contract would reflect a

complete assumption of cost responsibility by the contractor.

Therefore, in the first step of determining the value given for the

contractor's assumption of contract cost risk, a lower rating would be

assigned to a proposed cost-plus-fixed-fee best efforts contract, and a

higher rating would be assigned to a firm-fixed-price contract.

(iii) The second determination is that of the reliability of the

cost estimates. Sound price negotiation requires well-defined contract

objectives and reliable cost estimates. An excessive cost estimate

reduces the possibility that the cost of performance will exceed the

contract price, thereby reducing the contractor's assumption of

contract cost risk.

(iv) The third determination is that of the difficulty of the

contractor's task. The contractor's task may be difficult or easy,

regardless of the type of contract.

contract

objectives and reliable cost estimates. An excessive cost estimate

reduces the possibility that the cost of performance will exceed the

contract price, thereby reducing the contractor's assumption of

contract cost risk.

(iv) The third determination is that of the difficulty of the

contractor's task. The contractor's task may be difficult or easy,

regardless of the type of contract.

(v) Contractors are likely to assume greater cost risks only if the

contracting officer objectively analyzes the risk incident to the

proposed contract, and is willing to compensate contractors for it.

Generally, a cost-plus-fixed-fee contract would not justify a reward

for risk in excess of 1 percent, nor would a firm-fixed-price contract

normally justify a reward of less than 4 percent. Where proper contract

type selection has been made, the reward for risk by contract type

would usually fall into the following percentage ranges:

------------------------------------------------------------------------

Percentage

Type of contract ranges

------------------------------------------------------------------------

Cost-plus-fixed-fee........................................ 0 to 1

Prospective price determination............................ 4 to 5

Firm-fixed-price........................................... 4 to 6

------------------------------------------------------------------------

(A) These ranges may not be appropriate for all acquisitions. The

contracting officer might determine that a basis exists for high

confidence in the reasonableness of the estimate, and that little

opportunity exists for cost reduction without extraordinary efforts.

The contractor's willingness to accept ceilings on their burden rates

should be considered as a risk factor for cost-plus-fixed-fee

contracts

ges may not be appropriate for all acquisitions. The

contracting officer might determine that a basis exists for high

confidence in the reasonableness of the estimate, and that little

opportunity exists for cost reduction without extraordinary efforts.

The contractor's willingness to accept ceilings on their burden rates

should be considered as a risk factor for cost-plus-fixed-fee

contracts.

(B) In making a contract cost risk evaluation in an acquisition

that involves definitization of a letter contract, consideration should

be given to the effect on total contract cost risk as a result of

partial performance under a letter contract. Under some circumstances,

the total amount of cost risk may have been effectively reduced by the

existence of a letter contract. Under other circumstances, it may be

apparent that the contractor's cost risk remained substantially as

great as though a letter contract had not been used. Where a contractor

has begun work under an anticipatory cost letter, the risk assumed is

greater than normal. To be equitable, the determination of a profit

weight for application to the total of all recognized costs, both those

incurred and those yet to be expended, must be made with consideration

to all relevant circumstances, not just to the portion of costs

incurred or percentage of work completed prior to definitization.

1515.404-472 Other methods.

(a) Contracting officers may use methods other than those

prescribed in 1515.404-470 for establishing profit or fee objectives

under the following types of contracts and circumstances:

(1) Architect-engineering contracts;

(2) Personal service contracts;

(3) Management contracts, e.g., for maintenance or operation of

Government facilities;

(4) Termination settlements;

(5) Services under labor-hour and time and material contracts which

provide for payment on an hourly, daily, or monthly basis, and where

the contractor's contribution constitutes the furnishing of personnel.

(6) Construction contracts; and

cts;

(2) Personal service contracts;

(3) Management contracts, e.g., for maintenance or operation of

Government facilities;

(4) Termination settlements;

(5) Services under labor-hour and time and material contracts which

provide for payment on an hourly, daily, or monthly basis, and where

the contractor's contribution constitutes the furnishing of personnel.

(6) Construction contracts; and

(7) Cost-plus-award-fee contracts.

(b) Generally, it is expected that such methods will:

(1) Provide the contracting officer with a technique that will

ensure consideration of the relative value of the appropriate profit

factors described under ``Profit Factors,'' in FAR 15.404-4(d) and

(2) Serve as a basis for documentation of the profit or fee

objective.

1515.404-473 Limitations.

(a) In addition to the limitations established by statute (see FAR

15.404-4(b)(4)(i)), no administrative ceilings on profits or fees shall

be established, except those identified in EPAAR (48 CFR) 1516.404-

273(b).

(b) The contracting officer shall not consider any known

subcontractor profit/fee as part of the basis for determining the

contractor profit/fee.

1515.404-474 Waivers.

Under unusual circumstances, the CCO may specifically waive the

requirement for the use of the guidelines. Such exceptions shall be

justified in writing, and authorized only in situations where the

guidelines method is unsuitable.

1515.404-475 Cost realism.

The EPA structured approach is not required when the contracting

officer is evaluating cost realism in a competitive acquisition.

1515.408 Solicitation provisions and contract clauses.

lly waive the

requirement for the use of the guidelines. Such exceptions shall be

justified in writing, and authorized only in situations where the

guidelines method is unsuitable.

1515.404-475 Cost realism.

The EPA structured approach is not required when the contracting

officer is evaluating cost realism in a competitive acquisition.

1515.408 Solicitation provisions and contract clauses.

(a) In addition to those provisions and clauses prescribed in FAR

15.408, when an exception to FAR 15.403-1 does not apply and no other

means available can be used to ascertain whether a fair and reasonable

price can be determined, the contracting officer may insert in

negotiated solicitations the provisions at--

(1) 1552.215-72 when requesting information other than cost or

pricing data, for cost-reimbursable, level-of-effort-contracts. Use

Alternate I for cost-reimbursable, level-of-effort contracts when the

Government's requirement is for fully dedicated staff for a twelve

month period(s) of performance and performance is on a Government

facility; Alternate II for acquisitions for cost-reimbursable, level-

of-effort contracts when the Government's requirement is for fully

dedicated staff for a twelve month period(s) of performance and

performance is not on a Government facility; and Alternate III if the

Government's requirement is for the acquisition of supplies or

equipment. The contracting officer may make revisions, deletions, or

additions to 1552.215-72 and its Alternates I-III as needed to fit an

individual acquisition, and

(2) 1552.215-73, General Financial and Organizational Information.

eriod(s) of performance and

performance is not on a Government facility; and Alternate III if the

Government's requirement is for the acquisition of supplies or

equipment. The contracting officer may make revisions, deletions, or

additions to 1552.215-72 and its Alternates I-III as needed to fit an

individual acquisition, and

(2) 1552.215-73, General Financial and Organizational Information.

(b) If uncompensated overtime is proposed, the resultant contract

shall include the provisions at FAR 52.237-10 and include the provision

at 1552.215-74. The contracting officer may use provisions

substantially the same as 1552.215-74 without requesting a deviation to

the EPAAR.

Subpart 1515.6--Unsolicited Proposals

1515.604 Agency points of contact.

The Director, Grants Administration Division (3903R), EPA, 401 M

Street, SW, Washington, D.C. 20460, is the Agency contact point

established to coordinate the receipt and handling of unsolicited

proposals.

1515.606-70 Contracting methods.

The Department of Housing and Urban Development-Independent

Agencies Appropriation Act contains a requirement that none of the

funds provided in the Act may be used for payment through grants or

contracts to recipients that do not share in the cost

of conducting research resulting from proposals that are not

specifically solicited by the Government. Accordingly, contracts for

research which result from unsolicited proposals shall provide for the

contractor to bear a portion of the cost of performance for work

subject to the Act. The extent of the cost sharing shall reflect the

mutuality of interest of the contractor and the Government. Therefore,

where there is no measurable gain to the performing organization, cost

sharing is not required.

4. In 1552.215-70, the section heading, the introductory text, and

the provision heading are revised to read as follows:

1552.215-70 EPA Source Evaluation and Selection Procedures--Negotiated

Procurements

As prescribed in 1515.209(a), insert the following provision:

nd the Government. Therefore,

where there is no measurable gain to the performing organization, cost

sharing is not required.

4. In 1552.215-70, the section heading, the introductory text, and

the provision heading are revised to read as follows:

1552.215-70 EPA Source Evaluation and Selection Procedures--Negotiated

Procurements

As prescribed in 1515.209(a), insert the following provision:

1552.215-70 EPA SOURCE EVALUATION AND SELECTION PROCEDURES--

NEGOTIATED PROCUREMENTS (month and year of publication in the

Federal Register)

* * * * *

5. In 1552.215-71 is revised to read as follows:

1552.215-71 Evaluation Factors for Award.

As prescribed in 1515.209(a), insert one of the following

provisions.

EVALUATION FACTORS FOR AWARD (Month and Year of Publication in the

Federal Register)

(a) The Government will make award to the responsible offeror(s)

whose offer conforms to the solicitation and is most advantageous to

the Government cost or other factors considered. For this

solicitation, all evaluation factors other than cost or price when

combined are significantly more important than cost or price.

(b) Evaluation factors and significant subfactors to determine

quality of product or service:

----------------------------------------------------------------------

[End of provision]

EVALUATION FACTORS FOR AWARD (Month and Year of Publication in the

Federal Register)

ALTERNATE I (Month and Year of Publication in the Federal Register)

(a) The Government will make award to the responsible offeror(s)

whose offer conforms to the solicitation and is most advantageous to

the Government cost or other factors considered. For this

solicitation, all evaluation factors other than cost or price when

combined are significantly less important than cost or price.

ter)

ALTERNATE I (Month and Year of Publication in the Federal Register)

(a) The Government will make award to the responsible offeror(s)

whose offer conforms to the solicitation and is most advantageous to

the Government cost or other factors considered. For this

solicitation, all evaluation factors other than cost or price when

combined are significantly less important than cost or price.

(b) Evaluation factors and significant subfactors to determine

quality of product or service:

----------------------------------------------------------------------

[End of provision]

EVALUATION FACTORS FOR AWARD (Month and Year of Publication in the

Federal Register)

ALTERNATE II (Month and Year of Publication in the Federal Register)

(a) The Government will make award to the responsible offeror(s)

whose offer conforms to the solicitation and is most advantageous to

the Government cost or other factors considered. For this

solicitation, all evaluation factors other than cost or price when

combined are approximately equal to cost or price.

(b) Evaluation factors and significant subfactors to determine

the quality of product or service:

----------------------------------------------------------------------

[End of provision]

EVALUATION FACTORS FOR AWARD (Month and Year of Publication in the

Federal Register)

ALTERNATE III (Month and Year of Publication in the Federal Register)

s and significant subfactors to determine

the quality of product or service:

----------------------------------------------------------------------

[End of provision]

EVALUATION FACTORS FOR AWARD (Month and Year of Publication in the

Federal Register)

ALTERNATE III (Month and Year of Publication in the Federal Register)

(a) The Government will make award to the offeror with the

lowest-evaluated cost or price, whose proposal meets or exceeds the

acceptability standards for non-cost factors. In the event that

there are two or more technically acceptable, equal price (cost)

offers, the Government will consider socioeconomic, environmental

and other similar factors, as listed below in descending order of

importance:

----------------------------------------------------------------------

(b) Factors and significant subfactors for technical

acceptability evaluation:

----------------------------------------------------------------------

[End of provision]

6. 1552.215-73 is redesignated as 1552.215-72 and revised to read

as follows:

1552.215-72 Instructions for the preparation of proposals.

As prescribed in 1515.408(a)(1) insert the following provision:

INSTRUCTIONS FOR THE PREPARATION OF PROPOSALS (Month and Year of

Publication in the Federal Register)

----------------------------------------------------------------------

[End of provision]

6. 1552.215-73 is redesignated as 1552.215-72 and revised to read

as follows:

1552.215-72 Instructions for the preparation of proposals.

As prescribed in 1515.408(a)(1) insert the following provision:

INSTRUCTIONS FOR THE PREPARATION OF PROPOSALS (Month and Year of

Publication in the Federal Register)

(a) Other than cost proposal instructions.

(1) Submit proposal for than cost factors as a separate part of

the total proposal package. Omit all cost or pricing details from

this proposal.

(2) Special proposal instructions:

----------------------------------------------------------------------

(b) Cost or pricing proposal instructions. The offeror shall

prepare and submit cost or pricing information data and supporting

attachments in accordance with Table 15-2 of FAR 15.408. In addition

to a hard copy of the information, to expedite review of the

proposal, submit a 3.5 high density IBM-compatible

formatted computer disk containing the financial data required, if

this information is available using a commercial spreadsheet program

on a personal computer. Submit this information using LOTUS 1-2-3,

if available. Identify which version of LOTUS used. If the offeror

used another spreadsheet program, indicate the software program used

to create this information. Offerors should include the formulas and

factors used in calculating the financial data. Although submission

of a computer disk will expedite review, failure to submit a disk

will not affect consideration of the proposal.

(1) General--Submit cost or pricing information prepared in

accordance with FAR Table 15-2, Instructions for Submitting Cost/

Price Proposals When Cost or Pricing Information Are Required and

the following:

as and

factors used in calculating the financial data. Although submission

of a computer disk will expedite review, failure to submit a disk

will not affect consideration of the proposal.

(1) General--Submit cost or pricing information prepared in

accordance with FAR Table 15-2, Instructions for Submitting Cost/

Price Proposals When Cost or Pricing Information Are Required and

the following:

(i) Clearly identify separate cost or pricing information

associated with any:

(A) Options to extend the term of the contract;

(B) Options for the Government to order incremental quantities;

and/or

(ii) If the contract schedule includes a ``Fixed Rate for

Services'' clause, please provide in the cost proposal a schedule

duplicating the format in the clause and include proposed fixed

hourly rates per labor category for the base and any optional

contract periods.

(iii) If the contract includes the clause at EPAAR 1552.232-73

``Payments--Fixed-Rate Services Contract,'' or the clause at FAR

52.232-7, ``Payments Under Time and Materials and Labor-Hour

Contracts,'' include in the cost proposal the estimated costs and

burden rate to be applied to materials, other direct costs, or

subcontracts. The Government will include these costs as part of its

cost proposal evaluation.

(iv) If other divisions, subsidiaries, a parent or affiliated

companies will perform work, provide the name and location of such

affiliate and offeror's intercompany pricing policy. Separately

identify costs and supporting data for each entity proposed.

applied to materials, other direct costs, or

subcontracts. The Government will include these costs as part of its

cost proposal evaluation.

(iv) If other divisions, subsidiaries, a parent or affiliated

companies will perform work, provide the name and location of such

affiliate and offeror's intercompany pricing policy. Separately

identify costs and supporting data for each entity proposed.

(v) The realism of costs, including personnel compensation rates

(including effective hourly rates due to uncompensated overtime)

will be part of the proposal evaluation. Any reductions to proposed

costs or differences between proposed and known EPA/DCAA recommended

rates must be fully explained. If an offeror makes a reduction which

makes its offer or portions of its offer below anticipated costs,

the offeror shall identify where (i.e., which elements of costs) the

proposed reductions will be made. Unsubstantiated rates may result

in an upward or downward adjustment of the cost proposals to reflect

more realistic costs. Based on this analysis, a projected cost for

the offeror will be calculated to reflect the Government's estimate

of the offeror's probable costs. Any inconsistency, whether real or

apparent, between the promised performance and cost or price should

be explained. The burden of proof for cost credibility rests with

the offeror.

(2) Direct Labor.

(i) The direct technical labor hours (level-of-effort) appearing

in the solicitation are for professional and technical labor only.

These hours do not include management at a level higher than project

management, e.g., corporate and day-to-day management, nor do they

include clerical and support staff at a level lower than technician.

If it is the offeror's normal practice to charge these types of

costs as direct costs, include these costs along with an estimate of

the directly chargeable labor-hours for these personnel. These

direct charges are to be shown separately from the technical (level-

of-effort) effort

rate and day-to-day management, nor do they

include clerical and support staff at a level lower than technician.

If it is the offeror's normal practice to charge these types of

costs as direct costs, include these costs along with an estimate of

the directly chargeable labor-hours for these personnel. These

direct charges are to be shown separately from the technical (level-

of-effort) effort. If this type of effort is normally included in

the offeror's indirect cost allocations, no estimate is required.

However, direct charging of these on any resulting contract will not

be allowed. Additionally the direct technical labor hours are the

workable hours required by the Government and do not include release

time (i.e., holidays, vacation, etc.) Submit the proposal utilizing

the labor categories and distribution of the level-of-effort

specified in the solicitation. These are approximate distribution

levels and do not necessarily represent the actual levels which may

be experienced during contract performance.

(ii) Explain the basis of the proposed labor rates, including a

complete justification for all judgmental factors used to develop

weights applied to company's category or individual rates that

comprise the rates for labor categories specified in the

solicitation. This explanation should describe how technical

approach coincides with the proposed costs. If the proposed direct

labor rates are based on an average of the individuals proposed to

work on the contract, provide a list of the individuals proposed and

the hours associated with each individual in deriving the rates. If

the proposed direct labor rates are based on an average of company

category rates, identify and describe the labor categories and the

percentages associated with each category in deriving the rates,

explaining in detail the basis for the percentages assigned.

ork on the contract, provide a list of the individuals proposed and

the hours associated with each individual in deriving the rates. If

the proposed direct labor rates are based on an average of company

category rates, identify and describe the labor categories and the

percentages associated with each category in deriving the rates,

explaining in detail the basis for the percentages assigned.

(iii) Describe for each labor category proposed, the company's

qualifications and experience requirements. If individual rates are

used, provide the employee's name. If specific individuals are

identified in the technical proposal, correlate these individuals

with the labor categories specified in the solicitation.

(iv) Provide a matrix summarizing the effort proposed, including

the subcontracts, by professional and technical level specified in

the solicitation.

(v) Indicate whether current rates or escalated rates are used.

If escalation is included, state the degree (percent) and

methodology. The methodology shall include the effective date of the

base rates and the policy on salary reviews (e.g. anniversary date

of employee or salary reviews for all employees on a specific date).

(vi) State whether any additional direct labor (new hire or

temporary hires) will be required during the performance period of

this acquisition. If so, state the number required, the professional

or technical level and the methodology used to estimate proposed

labor rates.

mpensated labor hours and the percentage

of compensated labor. Uncompensated labor hours are defined as hours

for exempt personnel in excess of regular hours for a pay period

which are actually worked and recorded in accordance with company

policy. Provide a copy of the company policy on uncompensated

overtime. Provide historical percentages of uncompensated overtime

for the past three years. If proposed for subcontractors, provide

separately with subcontractor information.

(ix) For labor rate contracts, for each fixed labor rate,

offerors shall identify the basis for for the loaded fixed hourly

rate for each contract period for example, the rate might consist of

the following cost elements:

raw wage or salary rate, plus

fringe benefits (if applicable), plus

overhead rate (if applicable), plus

G&A expense rate (if applicable), plus profit.

When determining the composite raw wage for a labor category,

the offeror shall:

(A) provide in narrative form the basis for the raw wage for

each labor category. If actual wages of current employees are used,

the basis for the projections should be explained.

(B) If employees are subject to the Service Contract Act or

Davis Bacon Act, they must be compensated at least at the minimum

wage rate required by the applicable Wage Determination.

(3) Indirect costs (fringe, overhead, general, and

administrative expenses).

(i) If the rates have been recently approved, include a copy of

the rate agreement. If the agreement does not cover the projected

performance period of the proposed effort, provide the rationale and

any estimated rate calculations for the proposed performance period.

(ii) Submit supporting documentation for rates which have not

been approved or audited. Indicate whether computations are based

upon historical or projected data.

approved, include a copy of

the rate agreement. If the agreement does not cover the projected

performance period of the proposed effort, provide the rationale and

any estimated rate calculations for the proposed performance period.

(ii) Submit supporting documentation for rates which have not

been approved or audited. Indicate whether computations are based

upon historical or projected data.

(iii) Provide actual pool expenses, base dollars, or hours (as

applicable for the past five years). Include the actual indirect

rates for the past five years including the indirect rates proposed,

the actual indirect rates experienced and, if available, the final

negotiated rate. Indicate the amount of unallowable costs included

in the historical data.

(iv) Offerors who propose indirect rates for new or

substantially reorganized cost centers should consider offering to

accept ceilings on the indirect rates at the proposed rates.

Similarly, offerors whose subcontractors propose indirect rates for

new or substantially reorganized cost centers should likewise

consider offering to accept ceilings on the subcontractors' indirect

rates at the proposed rates.

Note to paragraph (b)(3)(iv): The Government reserves the right

to adjust an offeror's or its subcontractor's estimated indirect

costs for evaluation purposes based on the Agency's judgment of the

most probable costs up the amount of any stated ceiling.

(v) If the employees are subject to the Service Contract Act or

Davis Bacon Act, employees must receive the minimum level of

benefits stated in the applicable Wage Determination.

(4) Travel expense.

ght

to adjust an offeror's or its subcontractor's estimated indirect

costs for evaluation purposes based on the Agency's judgment of the

most probable costs up the amount of any stated ceiling.

(v) If the employees are subject to the Service Contract Act or

Davis Bacon Act, employees must receive the minimum level of

benefits stated in the applicable Wage Determination.

(4) Travel expense.

(i) If the solicitation specifies the amount of travel costs,

this amount is exclusive of any applicable indirect costs and fee.

(ii) If the solicitation does not specify the amount of travel

costs, attach a schedule illustrating how travel was computed.

Include a breakdown indicating number of trips, number of travelers,

destinations from and to, purpose and cost, e.g., mileage,

transportation costs, subsistence rates.

(5) Equipment, facilities and special equipment, including

tooling.

(i) If direct charges for use of existing contractor equipment

are proposed, provide a description of these items, including

estimated usage hours, rates, and total costs.

(ii) If equipment purchases are proposed, provide a description

of these items, and a justification as to why the Government should

furnish the equipment or allow its purchase with contract funds.

(Unless specified elsewhere in this solicitation, FAR 45.302-1

requires contractors to furnish all facilities in performance of

contracts with certain limited exceptions.)

(iii) Identify Government-owned property in the possession of

the offeror or proposed to be used in the performance of the

contract, and the Government agency which has cognizance over the

property.

(iv) Submit proposed rates or use charges for equipment, along

with documentation to support those rates.

to furnish all facilities in performance of

contracts with certain limited exceptions.)

(iii) Identify Government-owned property in the possession of

the offeror or proposed to be used in the performance of the

contract, and the Government agency which has cognizance over the

property.

(iv) Submit proposed rates or use charges for equipment, along

with documentation to support those rates.

(v) If special purposes facilities or equipment are being

proposed, provide a description of these items, details for the

proposed costs including competitive prices, and justification as to

why the Government should furnish the equipment or allow its

purchase with contract funds.

(vi) If fabrication by the prime contractor is contemplated,

include details of material, labor, and overhead.

(6) Other Direct Costs (ODC).

(i) If the solicitation specifies the amount of other direct

costs, this amount is exclusive of any applicable indirect cost and

fee.

(ii) If the amount is not specified in the solicitation, attach

a schedule detailing how other direct costs were computed. Identify

the major ODC items that under the accounting system would be a

direct charge on any resulting contract.

(iii) If any of the cost elements identified as part of the

specified other direct costs are recovered as an indirect cost, in

accordance with the offeror's accounting system, those costs should

not be included as a direct cost. Complete explanation of this

adjustment and the contractor's practice should be provided.

(iv) Provide historical other direct costs dollars per level of

effort hour on similar contracts or work assignments.

(7) Team Subcontracts. When the cost of a subcontract is

substantial (5 percent of the total estimated contract dollar value

or $100,000, whichever is less), the offeror shall include the

following subcontractor information:

t and the contractor's practice should be provided.

(iv) Provide historical other direct costs dollars per level of

effort hour on similar contracts or work assignments.

(7) Team Subcontracts. When the cost of a subcontract is

substantial (5 percent of the total estimated contract dollar value

or $100,000, whichever is less), the offeror shall include the

following subcontractor information:

(i) Provide details of subcontract costs in the same format as

the prime contractor's costs. This detailed information may be

provided separately to the EPA if the subcontractor does not wish to

provide this data to the prime contractor. Cost data provided

separately by a contractor must be received by the time, date and at

the location specified for the receipt of proposals. The

subcontractor's package should be clearly marked with the RFP

number, the name of the prime offeror, and a statement that the

package is subcontractor data relevant to the proposal from the

prime offeror. If submitted with the prime contractor's proposal,

identify the subcontractors. State the amount of service estimated

to be required and the quoted daily or hourly rate. Offerors are

encouraged to provide letters of intent, signed by subcontractors,

agreeing to a specified rate for life of the contract. Include a

cost or price analysis of the subcontractor cost showing the reasons

why the costs are considered reasonable;

(ii) Describe how the prospective team subcontractors were

chosen as part of the offeror's proposed team; and rationale for

selection;

(iii) Describe the necessity for the subcontractor's effort as

either a supplement or complement to the offeror's in-house

expertise;

(iv) Identify the areas of the scope of work and the level of

effort the subcontractors are anticipated to perform. Provide a

reconciliation summary of the proposed hours and ODCs for the prime

contractor and proposed subcontractor(s).

tionale for

selection;

(iii) Describe the necessity for the subcontractor's effort as

either a supplement or complement to the offeror's in-house

expertise;

(iv) Identify the areas of the scope of work and the level of

effort the subcontractors are anticipated to perform. Provide a

reconciliation summary of the proposed hours and ODCs for the prime

contractor and proposed subcontractor(s).

(v) Describe the prime contractor's management structure and

internal controls to ensure efficient and quality performance of

team subcontractors.

(8) Facilities Capital Cost of Money (FCCM). When an offeror

elects to claim FCCM as an allowable cost, the offeror must submit

Form CASB-CNF and show calculation of the proposed amount. FCCM will

be an allowable cost under the contemplated contract, if the

criteria for allowability at FAR 31.205-10(a)(2) are met.

[End of Provision]

Alternate I (month and year of publication in the Federal

staff person for a twelve month period(s) for each specified

position and performance is on a Government facility, add the

following paragraph (b)(2)(x) to the basic provision:

(x) The level of effort for each position is to be proposed in

work years. A work year is considered to consist of 2080 hours

inclusive of direct and indirect time (40 hours per week x 52

weeks per year = 2080 hours). The proposal must identify proposed

work years and clearly identify how many hours in each work year are

direct (i.e., productive working hours) and how many are indirect

(i.e., paid absences). If the company policy includes a different

base work week, the total available hours would be different. For

example, if the company's policy calls for a 37.5 hour work week,

offeror would deduct paid absences from 1950 hour (37.5 hours/week x

52 weeks/year = 1950 hours). Offeror should clearly identify the

paid absences as to how many hours are for holiday and how many

hours are for vacation and sick leave

olicy includes a different

base work week, the total available hours would be different. For

example, if the company's policy calls for a 37.5 hour work week,

offeror would deduct paid absences from 1950 hour (37.5 hours/week x

52 weeks/year = 1950 hours). Offeror should clearly identify the

paid absences as to how many hours are for holiday and how many

hours are for vacation and sick leave. The amount of indirect time

(paid absences) identified in the proposal must be consistent with

company policy and must allow for the ten Federal Government

holidays.

Alternate II (month and year of publication in the Federal

staff person for a twelve month period(s) for each specified

position and performance is not on a Government facility; add the