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Defense Federal Acquisition Regulation Supplement

{Part 216}--Types of Contracts

TABLE OF CONTENTS

SUBPART 216.1--SELECTING CONTRACT TYPES

216.104 Factors in selecting contract types.

216.104-70 Research and development.

SUBPART 216.2--FIXED-PRICE CONTRACTS

216.203 Fixed-price contracts with economic price adjustment.

216.203-4 Contract clauses.

216.203-4-70 Additional clauses.

SUBPART 216.3--COST-REIMBURSEMENT CONTRACTS

216.301 General.

216.301-3 Limitations.

216.306 Cost-plus-fixed-fee contracts.

216.307 Contract Clauses

SUBPART 216.4--INCENTIVE CONTRACTS

216.402 Application of predetermined, formula-type incentives.

216.402-2 Technical performance incentives.

216.403 Fixed-price incentive contracts.

216.403-2 Fixed-price incentive (successive targets) contracts.

216.403-70 Fixed-price contracts with award fees.

216.404 Cost-reimbursement incentive contracts.

216.404-1 Cost-plus-incentive-fee contracts.

216.404-2 Cost-plus-award-fee contracts.

216.470 Other applications of award fees.

SUBPART 216.5--INDEFINITE-DELIVERY CONTRACTS

216.501 General.

216.505 Contract clauses.

216.506 Ordering.

SUBPART 216.6--TIME-AND-MATERIALS, LABOR-HOUR, AND LETTER CONTRACTS

216.603 Letter contracts.

216.603-3 Limitations.

216.603-4 Contract clauses.

SUBPART 216.7--AGREEMENTS

216.703 Basic ordering agreements.

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PART 16 TYPES OF CONTRACTS

SUBPART 216.1--SELECTING CONTRACT TYPES

{216.104} Factors in selecting contract types.

(d)Design stability should also be considered.

{216.104-70} Research and development.

(a) General.

There are several categories of research and development (R&D) contracts: research, exploratory development, advanced development, engineering development, and operational systems development (see 235.001 for definitions). Each category has a primary technical or functional objective. Different parts of a project may fit several categories. The contract type must fit the work required, not just the classification of the overall program.

(b)Research and exploratory development.

(1)Price is not necessarily the primary factor in determining the contract type.

(2)The nature of the work to be performed will usually result in a cost-plus award fee, cost-plus fixed fee term, cost-no-fee, or cost-sharing contract.

(3)If the Government and the contractor can identify and agree upon the level of contractor effort required, the contracting officer may select a firm fixed-price level-of-effort contract, except see 235.006.

(4)If the Government and the contractor agree that an incentive arrangement is desirable and capable of being evaluated after completion of the work, the contracting officer may use an incentive type contract.

(c)Advanced development.

(1)The nature of the work to be performed often results in a cost-plus fixed fee completion type contract.

(2)Contracting officers may select incentive contracts if--

(i)Realistic and measurable targets are identified; and

(ii)Achievement of those targets is predictable with a reasonable degree of accuracy.

(3)Contracting officers should not use contracts with only cost incentives where--

(i)There will be a large number of major technical changes; or

(ii)Actions beyond the control of the contractor may influence the contractor's achievement of cost targets.

1991 EDITION 216.1-1

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Part 216--Types of Contracts

(d)Engineering development and operational systems development.

(1)When selecting contract types, also consider--

(i)The degree to which the project is clearly defined, which in turn affects the contractor's ability to provide accurate cost estimates;

(ii)The need for effort that will overlap that of earlier stages;

(iii)The need for firm technical direction by the Government; and

(iv)The degree of configuration control the Government will exercise.

(2)For development efforts, particularly for major defense systems, the preferred contract type is cost reimbursement.

(3)Contracting officers should use fixed-price type contracts when risk has been reduced to the extent that realistic pricing can occur; e.g., when a program has reached the final stages of development and technical risks are minimal, except see 235.006.

216.1-2 1991 EDITION

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Part 216--Types of Contracts

SUBPART 216.2--FIXED-PRICE CONTRACTS

{216.203} Fixed-price contracts with economic price adjustment.

{216.203-4} Contract clauses.

(a)Adjustment based on established prices-standard supplies.

Generally, use the clause at FAR 52.216-2, Economic Price Adjustment-Standard Supplies only when--

(i)The total contract price is over the small purchase threshold in FAR 13.000; and

(ii)Delivery will not be completed within 6 months after the contract date.

(b)Adjustment based on established prices-semistandard supplies.

Generally, use the clause at FAR 52.216-3, Economic Price Adjustment-Semistandard Supplies, only when--

(i)The total contract price is over the small purchase threshold in FAR 13.000; and

(ii)Delivery will not be completed within 6 months after the contract date.

(c)Adjustments based on actual cost of labor or material.

(2)Limit use of the clause at FAR 52.216-4, Economic Price Adjustment-Labor and Material, to contracts in which the price exceeds $50,000 and the period of performance exceeds 6 months, unless otherwise approved by the chief of the contracting office. Use an appropriate modification of the clause in sealed bidding.

(4)Apply the full amount of the decrease in the labor rates and fringe benefits or unit prices for materials.

(d)Adjustments based on cost indexes of labor or material.

Use the following guidelines--

(i)Do not make the clause unnecessarily complex.

(ii)Normally, the clause should not provide either a ceiling or a floor for adjustment unless adjustment is based on indices below the four digit level of the Bureau of Labor Statistics--

(A)Producer Price Index;

(B)Employment Cost Index for wages and salaries, benefits, and compensation costs for aerospace industries; or

(C)Wage and Income Series by Standard Industrial Classification (Labor).

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Part 216--Types of Contracts

(iii)Normally, the clause should cover all potential economic fluctuations within the original contract period of performance.

(iv)The clause must accurately identify the index(es) upon which adjustments will be based.

(A)It must provide for a means to adjust for appropriate economic fluctuation in the event publication of the movement of the designated index is discontinued. This might include the substitution of another index if the time remaining would justify doing so and an appropriate index is reasonably available, or some other method for repricing the remaining portion of work to be performed.

(B)Normally, there should be no need to make an adjustment if computation of the identified index is altered. However, it may be appropriate to provide for adjustment of the economic fluctuation computations in the event there is such a substantial alteration in the method of computing the index that the original intent of the parties is negated.

(C)When an index to be used is subject to revision (e.g., the Bureau of Labor Statistics Producer Price Indexes), the economic price adjustment clause must specify that any economic price adjustment will be based on a revised index and must identify which revision to the index will be used.

(v)Construct the index to encompass a large sample of relevant items while still bearing a logical relationship to the type of contract costs being measured. The basis of the index should not be so large and diverse that it is significantly affected by fluctuations not relevant to contract performance, but it must be broad enough to minimize the effect of any single company, including the anticipated contractor(s).

(vi)Construction of an index is largely dependent upon three general series published by the U.S. Department of Labor, Bureau of Labor Statistics (BLS). These are the--

(A)Industrial Commodities portion of the Producer Price Index;

(B)Employment Cost Index for wages and salaries, benefits, and compensation costs for aerospace industries; and

(C)Wage and Income Series by Standard Industrial Classification (Labor).

Since there is no BLS published series currently available that relates directly to total prices of delivered DoD aircraft, ships, missiles, electronics, etc., it will be necessary to construct composite indices from major portions of the three series identified.

(vii)Normally, do not use more than two indices, i.e., one for labor (direct and indirect) and one for material (direct and indirect).

(viii)The clause must establish and properly identify a base

period comparable to the contract periods for which adjustments are to be made as a reference point for application of an index.

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(ix)The clause should not provide for an adjustment beyond the original contract performance period, including options. The start date for the adjustment may be the beginning of the contract or a later time, as appropriate, based on the projected rate of expenditures.

(x)The expenditure profile for both labor and material should be based on a predetermined rate of expenditure (expressed as the percentage of material or labor usage as it relates to the total contract price) in lieu of actual cost incurred.

(A)If the clause is to be used in a competitive acquisition, determine the labor and material allocations, with regard to both mix of labor and material and rate of expenditure by percentage, in a manner which will, as nearly as possible, approximate the average expenditure profile of all companies to be solicited so that all companies may compete on an equal basis.

(B)If the clause is to be used in a noncompetitive acquisition, the labor and material allocations may be subject to negotiation and agreement.

(C)For multiyear contracts, establish predetermined expenditure profile tables for each of the annual increments in the multiyear buy. Each of the second and subsequent year tables must be cumulative to reflect the total expenditures for all increments funded through the latest multiyear funding.

(xi)The clause should state the percentage of the contract price subject to price adjustment.

(A)Normally, do not apply adjustments to the profit portion of the contract.

(B)Examine the labor and material portions of the contract to exclude any areas that do not require adjustment. For example, it may be possible to exclude--

(1)Subcontracting for short periods of time during the early life of the contract which could be covered by firm-fixed-priced subcontracting;

(2)Certain areas of overhead, e.g., depreciation charges, prepaid insurance costs, rental costs, leases, certain taxes, and utility charges;

(3)Labor costs for which a definitive union agreement exists; and

(4)Those costs not likely to be affected by fluctuation in the economy.

(C)Allocate that part of the contract price subject to adjustment to specific periods of time (e.g., quarterly, semiannually, etc.) based on the most probable expenditure or commitment basis (expenditure profile).

(xii)The clause should provide for definite times or events that trigger price adjustments. Adjustments should be frequent enough to afford the contractor appropriate economic protection without creating a burdensome administrative effort. The adjustment period should normally range from quarterly to annually.

(xiii)When the contract contains cost incentives, any sums paid to

the contractor on account of economic price adjustment provisions must be subtracted from the total of the

1991 EDITION 216.2-3

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contractor's allowable costs for the purpose of establishing the total costs to which the cost incentive provisions apply. If the incentive arrangement is cited in percentage ranges, rather than dollar ranges, above and below target costs, structure the economic price adjustment clause to maintain the original contract incentive range in dollars.

(xiv)The economic price adjustment clause should provide that once the labor and material allocations and the portion of the contract price subject to price adjustment have been established, they remain fixed through the life of the contract and shall not be modified except in the event of significant changes in the scope of the contract. The clause should state that pricing actions pursuant to the Changes clause or other provisions of the contract will be priced as though there were no provisions for economic price adjustment. However, subsequent modifications may include a change to the delivery schedule or significantly change the amount of, or mix of, labor or material for the contract. In such cases, it may be appropriate to prospectively apply economic price adjustment coverage. This may be accomplished by--

(A)Using an economic price adjustment (EPA) clause that applies only to the effort covered by the modification;

(B)Revising the baseline data or period in the EPA clause for the basic contract to include the new work; or

(C)Using an entirely new EPA clause for the entire contract, including the new work.

(xv)Consistent with the factors in paragraph (d)(i) through (xiv) of this subsection, it may also be appropriate to provide in the prime contract for similar economic price adjustment arrangements between the prime contractor and affected subcontractors to allocate risks properly and ensure that those subcontractors are provided similar economic protection.

(xvi)When economic price adjustment clauses are included in contracts that do not require submission of cost or pricing data as provided for in FAR 15.804-3, the contracting officer must obtain adequate information to establish the baseline from which adjustments will be made. The contracting officer may require verification of the data submitted to the extent necessary to permit reliance upon the data as a reasonable baseline.

{216.203-4-70} Additional clauses.

(a)Price adjustment for basic steel, aluminum, brass, bronze, or copper mill products.

(1)The price adjustment clause at 252.216-7000, Economic Price Adjustment--Basic Steel, Aluminum, Brass, Bronze, or Copper Mill Products, may be used in fixed-price supply contracts for basic steel, aluminum, brass, bronze, or copper mill products, such as sheets, plates, and bars, when an established catalog or market price--

(i)Exists for the particular product being acquired; and

(ii)Has been verified in accordance with the criteria at FAR 15.804-3(c).

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Part 216--Types of Contracts

(2)Do not make an adjustment under this clause until the adjustment has been verified in accordance with the criteria set forth in FAR 15.804-3.

(3)The ten percent figure in paragraph (d)(1) of the clause shall not be exceeded unless approval is obtained at a level above the contracting officer.

(b)Price adjustment for nonstandard steel items.

(1)The price adjustment clause at 252.216-7001, Economic Price Adjustment--Nonstandard Steel Items, may be used in fixed-price supply contracts when--

(i)The contractor is a steel producer and actually manufacturers the standard steel mill item referred to in the "base steel index" definition of the clause; and

(ii)The items being acquired are nonstandard steel items made wholly or in part of standard steel mill items.

(2)When this clause is included in invitations for bids, omit Note 6 of the clause and all references to Note 6.

(3)Solicitations shall instruct offerors to complete all blanks in accordance with the applicable notes.

(4)When the clause is to provide for adjustment based on the contractor's "established price" (see paragraphs (a) and (f) and Note 6 of the clause), verify the established price before contract award in accordance with FAR 15.804-3.

(5)When the clause is to provide for adjustment on a basis other than "established price" (see Note 6 of the clause), that price must be verified.

(6)Make no adjustment in contract price under this clause until the requested adjustment has been verified in accordance with the criteria in FAR 15.804-3 (but see Note 6 of the clause) and as required by paragraph (f) of the clause.

(7)The ten percent figure in paragraph (e)(4) of the clause shall not be exceeded unless approval is obtained at a level above the contracting officer.

1991 EDITION 216.2-5

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SUBPART 216.3--COST-REIMBURSEMENT CONTRACTS

{216.301} General.

{216.301-3} Limitations.

(c)The contracting officer executes the determination and findings.

{216.306} Cost-plus-fixed-fee contracts.

(c)Limitations.

(i)Annual military construction appropriations acts restrict the use of cost-plus-fixed-fee contracts that--

(A) Are funded by a military construction appropriations act:

(B) Are estimated to exceed $25,000; and

(C)Will be performed within the United States, except Alaska.

(ii)The Secretaries of the military departments are authorized to approve contracts described in paragraph (c)(i) of this section that are for environmental work only, provided the environmental work is not classified as construction, as defined by 10 U.S.C 2801.

(iii)The Secretary of Defense or designee must specifically approve contracts described in paragraph (c)(i) of this section that are not environmental work only.

{216.307} Contract clauses.

(i) Use the clause at FAR 52.216-15, Predetermined Indirect Cost Rates, with 252.216-7002, Alternate A, in solicitations and contracts when a cost-reimbursement research and development contract with an educational institution (see FAR 42.705-3(b)) is contemplated and predetermined indirect cost rates are to be used.

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SUBPART 216.4--INCENTIVE CONTRACTS

{216.402} Application of predetermined, formula-type incentives.

{216.402-2} Technical performance incentives.

Contractor performance incentives should relate to specific performance areas of milestones, such as delivery or test schedules, quality controls, maintenance requirements, and reliability standards.

{216.403} Fixed-price incentive contracts.

(b)Application.

(3)Individual line items may have separate incentive provisions; e.g., when dissimilar work calls for separate formulas.

{216.403-2} Fixed-price incentive (successive targets) contracts.

(a)Description.

(1)(iii)The formula does not apply for the life of the contract. It is used to fix the firm target profit for the contract. To provide an incentive consistent with the circumstances, the formula should reflect the relative risk involved in establishing an incentive arrangement where cost and pricing information were not sufficient to permit the negotiation of firm targets at the outset.

{216.403-70} Fixed-price contracts with award fees.

Award fee provisions may be used in fixed price contracts as provided in 216.470.

{216.404} Cost-reimbursement incentive contracts.

{216.404-1} Cost-plus-incentive-fee contracts.

(b)Application.

(3)Give appropriate weight to basic acquisition objectives in negotiating the range of fee and the fee adjustment formula. For example--

(A)In an initial product development contract, it may be appropriate to provide for relatively small adjustments in fee tied to the cost incentive feature, but provide for significant adjustments if the contractor meets or surpasses performance targets.

(B)In subsequent development and test contracts, it may be appropriate to negotiate an incentive formula tied primarily to the contractor's success in controlling costs.

1991 EDITION 216.4-1

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{216.404-2} Cost-plus-award-fee contracts.

(a)Description.

(i)Normally, award fee is not earned when the fee-determining official has determined that contractor performance has been submarginal or unsatisfactory.

(ii)The basis for all award fee determinations shall be documented in the contract file.

(b)Application.

(1)The cost-plus-award-fee (CPAF) contract is also suitable for level of effort contracts where mission feasibility is established but measurement of achievement must be by subjective evaluation rather than objective measurement. See Table 16-1, Performance Evaluation Criteria, for sample performance evaluation criteria and Table 16-2, Contractor Performance Evaluation Report, for a sample evaluation report.

(2)The contracting activity may--

(A)Establish a board to--

(1)Evaluate the contractor's performance; and

(2)Determine the amount of the award or recommend an amount to the contracting officer.

(B)Afford the contractor an opportunity to present information on its own behalf.

(c)Limitations.

The CPAF contract shall not be used--

(i)To avoid--

(A)Establishing CPFF contracts when the criteria for CPFF contracts apply, or

(B)Developing objective targets so a CPIF contract can be used.

(ii)For either engineering development or operational system development acquisitions which have specifications suitable for simultaneous research and development and production, except a CPAF contract may be used for individual engineering development or operational system development acquisitions ancillary to the development of a major weapon system or equipment, where--

(A)It is more advantageous; and

(B)The purpose of the acquisition is clearly to determine or solve specific problems associated with the major weapon system or equipment.

216.4-2 1991 EDITION

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Part 216--Types of Contracts

(2)(A)Do not apply the weighted guidelines method to CPAF contracts for either the base (fixed) fee or the award fee.

(B)The base fee shall not exceed three percent of the estimated cost of the contract exclusive of the fee.

{216.470} Other applications of award fees.

The "award amount" portion of the fee may be used in other types of contracts under the following conditions--

(1)The Government wishes to motivate and reward a contractor for management performance in areas which cannot be measured objectively and where normal incentive provisions cannot be used. For example, logistics support, quality, timeliness, ingenuity, and cost effectiveness are areas under the control of management which may be susceptible only to subjective measurement and evaluation.

(2)The "base fee" (fixed amount portion) is not used.

(3)The chief of the contracting office approves the use of the "award amount."

(4)An award review board and procedures are established for conduct of the evaluation.

(5)The administrative costs of evaluation do not exceed the expected benefits.

1991 EDITION 216.4-3

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TABLE 16-1, PERFORMANCE EVALUATION CRITERIA

Submarginal Marginal Good Very Good Excellent

A (A-1) Consistently Late on 10% Occasional Meets plan Delivers all

Time Adherence late on 20% plans w/o plan late schedule. plans on

of to plan of plans. prior w/o schedule &

De- schedule. agreement. justifica- meets prod.

liv- tion. change re-

ery quirements

on schedule.

(A-2) Does not ex- Exposes Antici- Keeps Yard Anticipates

Action on pose changes changes but pates posted on in good

Antici- or resolve is dilatory changes, delays, time, ad-

pated them as soon in resolu- advise resolves vises Ship-

delays. as recog- tion on Shipyard indepen- yard, re-

nized. plans. but misses dently on solves in-

complet- plans. dependently

tion of and meets

design production

plans 10%. schedule.

(A-3) Does not System stu- Major work Design Design

Plan Main- complete in- dies com- plans co- changes changes,

tenance terrelated pleted but ordinated from stu- studies re-

systems stu- constr. plan in time to dies and solved and

dies con- changes de- meet pro- interre- test data

currently. layed. duction lated issued

schedules. plans is- ahead of

sued in production

time to requirements.

meet pro-

duct sche-

dules.

B (B-1) 25% dwgs. not 20% not com- 10% not 0% dwgs. 0% dwgs.

Qual- Work Ap- compatible patible with compatible prepared presented

ity pearance with Shipyard Shipyard re- with Ship- by Des. incl. Des.

of repro. pro- pro. pro- yard re- agent not agent, ven-

Work cesses and cesses and pro. pro- compatible dors, sub-

use. use. cesses and with Ship- contr. not

use. yard re- compatible

pro. pro- with Ship-

cesses and yard repro.

use. processes and

use.

(B-2) Is brief on Has followed Has fol- Work Com- Work of

Thorough- plans tending guidance, lowed gui- plete with highest cal-

ness and to leave ques- type and dance, notes and iber incor-

Accuracy tionable situ- standard type and thorough porating all

of Work. ations for dwgs. standard explana- pertintent

Shipyard to dwgs. tions for data re-

resolve. question- antici- lated acti-

ing and pated vities.

resolving question-

doubtful able areas.

areas.

(B-3) Tendency to Adequate Engineered Displays Exceptional

Engineer- follow past engrg. to use to satisfy excellent knowledge

ing Com- practice with & adapt ex- specs., knowledge of Naval

petence no variation isting de- guidance of constr. shipwork &

to meet reqmts. signs to suit plans and reqmts. adaptability

job in hand. job on hand material considering to work

for routine provided. systems process in-

work. aspect, corporating

cost, shop knowledge

capabili- of future

ties and planning in

procurement Design.

problems.

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TABLE 16-1 (Continued)

Submarginal Marginal Good Very Good Excellent

B (B-4) Indifferent Satisfactory Maintains Maintains Maintains

Qual- Liaison to require- but dependent normal independent expert con-

ity Effective- ments of as- on Shipyard to contact contact tact, keep-

of ness sociated ac- force resolu- with as- with all ing Yard Work tivities, re- tion of prob- sociated associated informed,

(Cont'd) lated sys- lems without activi- activities, obtaining

tems, and constructive ties de- keeping info from

Shipyard ad- recommenda- pending them in- equip., sup-

vice. tions to sub- on Ship- formed to plies w/o

contr. or ven- yard for produce prompting by

dors. problems compatible Shipyard.

requiring design with

military little as-

resolu- sistance for

tion. Yard.

(B-5) Constant sur- Requires oc- Normal Complete & Develops

Indepen- veillance req'd casional interest accurate complete

dence and to keep job prodding to and de- job. Free and ac-

Iniative from slipping-- stay on sire to of incompat- curate

assign to low schedule & provide ibilities plans, seeks

priority to expects Ship- workable with little out problem

satisfy needs. yard resolu- plans or no direc- areas and

tion of most with av- tion by resolves

problems. erage as- Shipyard. with assoc.

sistance act. ahead

& direc- of schedule.

tion by

Shipyard.

C (C-1) Planning of Supervision System Design Mods. to

Ef- Utiliza- work left to sets & re- planning parameters design plans

fec- tion of designers on views goals by super- established limited to

tive- Personnel drafting for design- visory, by system less than

nss boards. ers. personnel, engineers 5% as re-

in studies & held in sult lack

Con- checked design engrg. sy-

trol- by plans. stem cor-

ling engineers. relation.

and/

or (C-2) Expenditures Expenditures Direct Provides No cost

Re- Control not controlled reviewed oc- charges services overruns on

duc- Direct for services. casionally set & ac- as part of original

ing Charges by supervi- counted normal estimates

Costs (Except sion. for on design absorbs

Labor) each work function service de-

package. w/o extra mands by

charges. Shipyard.

(C-3) Does not meet Does not meet Exceeds Exceeds Never

Perform- cost estimate cost estimate original original exceeds

ance to for original for original est. on est. on estimates

Cost Es- work or work or change change or- of original

timate changes 30% changes 20% orders ders 5% package or

time. time. 10% time time. change

and meets orders.

original

design

costs.

1991 EDITION 216.4-5

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TABLE 16-2, CONTRACTOR PERFORMANCE EVALUATION REPORT

Ratings Period of 19

Excellent Contract Number

Very good Contractor

Good Date of Report

Marginal PNS Technical Monitor/s

Submarginal

ITEM EVALUATION CATEGORY EFFICIENCY

CATEGORY CRITERIA RATING FACTOR RATING FACTOR RATING

A TIME OF DELIVERY

A-1 Adherence to

Plan Schedule x .40 =

A-2 Action on An-

ticipated Delays x .30 =

A-3 Plan Maintenance x .30 =

Total Item Weighed Rating x .30 =

B QUALITY OF WORK

B-1 Work Appearance x .15 =

B-2 Thoroughness and

Accuracy of Work x .30 =

B-3 Engineering

Competence x .20 =

B-4 Liaison Effec-

tiveness x .15 =

B-5 Independence and

Initiative x .20 =

Total Item Weighed Rating x .40 =

C EFFECTIVENESS IN CONTROLLING

AND/OR REDUCING COSTS

C-1 Utilization of

Personnel x .30 =

C-2 Control of all

Direct Charges Other

than Labor x .30 =

C-3 Performance to

Cost Estimate x .40 =

Total Item Weighed Rating x .30 =

TOTAL WEIGHED RATING

Rated by:

Signature(s)

NOTE: Provide supporting data and/or justification for below average or

outstanding item ratings.

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SUBPART 216.5--INDEFINITE-DELIVERY CONTRACTS

{216.501} General.

(a)(i)For items with a shelf-life of less than six months, consider the use of indefinite delivery type contracts with orders to be placed either--

(A)Directly by the users; or

(B)By central purchasing offices with deliveries direct to users.

(ii)Whenever an indefinite delivery contract is issued, the issuing office must furnish all ordering offices sufficient information for the ordering office to complete its contract reporting responsibilities under 204.670-2. This data must be furnished to the ordering activity in sufficient time for the activity to prepare its report for the action within three working days of the order.

{216.505} Contract clauses.

(d)If the contract is for the preparation of personal property for shipment or storage (see 247.271-4), substitute paragraph (f) at 252.247-7015, Requirements, (SIC) for paragraph (f) of the clause at FAR 52.216-21, Requirements.

{216.506} Ordering.

Orders placed under indefinite delivery contracts may be issued on DD Form 1155, Order for Supplies or Services.

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SUBPART 216.6--TIME-AND-MATERIALS, LABOR-HOUR, AND LETTER CONTRACTS

{216.603} Letter contracts.

{216.603-3} Limitations.

See Subpart 217.74 for additional limitations on the use of letter contracts.

{216.603-4} Contract clauses.

(b)(2)See 217.7406(a) for additional guidance regarding use of the clause at FAR 52.216-24, Limitation of Government Liability.

(3)Use the clause at 252.217-7027, Contract Definitization, in accordance with its prescription at 217.7406(b), instead of the clause at FAR 52.216-25, Contract Definitization.

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SUBPART 216.7--AGREEMENTS

{216.703} Basic ordering agreements.

(c)Limitations.

The period during which orders may be placed against a basic ordering agreement may not exceed three years. The contracting officer, with the approval of the chief of the contracting office, may grant extensions for up to two years. No single extension shall exceed one year. See Subpart 217.74 for additional limitations on the use of undefinitized orders under basic ordering agreements.

(d)Orders.

(i)The contracting officer issuing an order under a basic ordering agreement shall be responsible for ensuring compliance with the provisions and limitations of this section.

(ii)Individual orders under a basic ordering agreement shall be individually closed following completion of the orders (see FAR 4.804).

(1)(iii)The office issuing the agreement shall furnish all authorized ordering offices sufficient information for the ordering office to complete its contract reporting responsibilities under 204.670-2 or, in the case of civilian agencies, the Federal Procurement Data System reporting requirement. Data furnished to civilian agencies must contain uncoded information about the data elements and the meanings of the codes to permit these users to translate the data into the federal format. This data must be furnished to the ordering activity in sufficient time for the activity to prepare its report for the action within 3 working days of the order.

(2)(i)Any activity listed in the agreement may issue orders on DD Form 1155, Order for Supplies or Services, or Standard Form 26, Award/Contract.

(3)Incentive provisions consistent with this part are permitted.

DAC 91-10 216.7-1

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