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
216.306 Cost-plus-fixed-fee- contracts.
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.
216.404 Fixed-price contracts with award fees.
216.405 Cost-reimbursement incentive contracts.
216.405-1 Cost-plus-incentive-fee contracts.
216.405-2 Cost-plus-award-fee contracts.
216.470 Other applications of award fees.
SUBPART 216.5--INDEFINITE-DELIVERY CONTRACTS
216.501 General.
216.505 Ordering.
216.506 Solicitation provisions and contract clauses.
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.
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.
(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.
SUBPART 216.2--FIXED-PRICE CONTRACTS
216.203 Fixed-price contracts with economic price adjustment.
(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).
(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.
(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 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 15.403-1, 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 exists for the particular product being acquired.
(2) The 10 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 on a basis other than "established price" (see Note 6 of the clause), that price must be verified.
(5) The 10 percent figure in paragraph (e)(4) of the clause shall not be exceeded unless approval is obtained at a level above the contracting officer.
(c) Price adjustment for wage rates or material prices controlled by a foreign government.
(1) The price adjustment clause at 252.216-7003, Economic Price Adjustment--Wage Rates or Material Prices Controlled by a Foreign Government, may be used in fixed-price supply and service contracts when-
(i) The contract is to be performed wholly or in part in a foreign country; and
(ii) A foreign government controls wage rates or material prices and may, during contract performance, impose a mandatory change in wages or prices of material.
(2) Verify the base wage rates and material prices prior to contract award and prior to making any adjustment in the contract price.
SUBPART 216.3--COST-REIMBURSEMENT CONTRACTS
216.306 Cost-plus-fixed-fee contracts.
(c) Limitations.
(i) Except as provided in paragraph (c)(ii) of this section, annual military construction appropriations acts prohibit 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 prohibition in paragraph (c)(i) of this section does not apply-
(A) To contracts for environmental restoration at an installation that is being closed or realigned where payments are made from a Base Realignment and Closure Account; or
(B) To contracts specifically approved in writing, setting forth the reasons therefor, in accordance with the following:
(1) The Secretaries of the military departments are authorized to approve such contracts that are for environmental work only, provided the environmental work is not classified as construction, as defined by 10 U.S.C. 2801.
(2) The Secretary of Defense or designee must approve such contracts that are not for environmental work only or are for environmental work classified as construction.
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.
216.404 Fixed-price contracts with award fees.
Award-fee provisions may be used in fixed-price contracts as provided in 216.470.
216.405 Cost-reimbursement incentive contracts.
216.405-1 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.
216.405-2 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.
(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.
TABLE 16-1, PERFORMANCE EVALUATION CRITERIA | ||||||
Submarginal |
Marginal |
Good |
Very Good |
Excellent | ||
A Time of Delivery. |
(A-1) Adherence to plan schedule. |
Consistently late on 20% plans |
Late on 10% plans w/o prior agreement |
Occasional plan late w/o justification. |
Meets plan schedule. |
Delivers all plans on schedule & meets prod. Change requirements on schedule |
(A-2) Action on Anticipated delays. |
Does not expose changes or resolve them as soon as recognized. |
Exposes changes but is dilatory in resolution on plans. |
Anticipates changes, advise Shipyard but misses completion of design plans 10%. |
Keeps Yard posted on delays, resolves independently on plans. |
Anticipates in good time, advises Ship- yard, resolves independently and meets production requirements. | |
(A-3) Plan Main- tenance. |
Does not com- plete interre- lated systems studies concurrently. |
System studies completed but constr. Plan changes delayed. |
Major work plans coordinated in time to meet production schedules. |
Design changes from studies and interrelated plant issued in time to meet product schedules. |
Design changes, studies resolved and test data issued ahead of production requirements. | |
B Quality of Work. |
(B-1) Work Appearance. |
25% dwgs. Not compatible with Shipyard repro. processes and use. |
20% not compatible with Shipyard repro. processes and use. |
10% not compatible with Shipyard repro. processes and use. |
0% dwgs prepared by Des. Agent not compatible with Shipyard repro. processes and use. |
0% dwgs. Presented incl. Des. Agent, vendors, subcontr. Not compatible with Shipyard repro processes and use. |
(B-2) Thoroughness and Accuracy of Work. |
Is brief on plans tending to leave questionable situations for Shipyard to resolve. |
Has followed guidance, type and standard dwgs. |
Has followed guidance, type and standard dwgs. Questioning and resolving doubtful areas. |
Work complete with notes and thorough explanations for anticipated questionable areas. |
Work of highest caliber incorporating all pertinent data required including related activities. | |
(B-3) Engineering Competence. |
Tendency to follow past practice with no variation to meet reqmts. job in hand. |
Adequate engrg. To use & adapt existing designs to suit job on hand for routine work. |
Engineered to satisfy specs., guidance plans and material provided. |
Displays excellent knowledge of constr. Reqmts. considering systems aspect, cost, shop capabilities and procurement problems. |
Exceptional knowledge of Naval shipwork & adaptability to work process incorporating knowledge of future planning in Design. | |
B Quality of Work (Cont'd) |
(B-4) Liaison Effectiveness |
Indifferent to requirements of associated activities, related systems, and Shipyard advice. |
Satisfactory but dependent on Shipyard of force resolution of problems without constructive recommen--dations to subcontr. or vendors. |
Maintains normal contract with associated activities depending on Shipyard for problems requiring military resolution. |
Maintains independent contact with all associated activities, keeping them informed to produce compatible design with little assistance for Yard. |
Maintains expert contact, keeping Yard informed, obtaining info from equip, supplies w/o prompting of Shipyard. |
(B-5) |
Constant surveillance required to keep job from slipping-assign to low priority to satisfy needs. |
Requires occasional prodding to stay on schedule & expects Shipyard resolution of most problems. |
Normal interest and desire to provide workable plans with average assistance & direction by Shipyard. |
Complete & accurate job. Free of incom- patibilities with little or no direction by Shipyard. |
Develops complete and accurate plans, seeks out problem areas and resolves with assoc. act. ahead of schedule. | |
C Effective-ness in Control- ling and/or Reducing Costs |
(C-1) Utilization of Personnel |
Planning of work left to designers on drafting boards. |
Supervision sets & reviews goals for designers. |
System planning by supervisory, personnel, studies checked by engineers. |
Design parameters established by system engineers & held in design plans. |
Mods. to design plans limited to less than 5% as result lack engrg. System correlation. |
(C-2) Control Direct Charges (Except Labor) |
Expenditures not controlled for services. |
Expenditures reviewed occasionally by supervision. |
Direct charges set & accounted for on each work package. |
Provides services as part of normal design function w/o extra charges. |
No cost overruns on original estimates absorbs service demands by Shipyard. | |
(C-3) Performance to Cost Estimate |
Does not meet cost estimate for original work or changes 30% time. |
Does not meet cost estimate for original work or changes 20% time. |
Exceeds original est. on change orders 10% time and meets original design costs. |
Exceeds original est. on changing orders 5% time. |
Never exceeds estimates of original package or change orders. |
TABLE 16-2, CONTRACTOR PERFORMANCE EVALAUTION REPORT | ||||||||||||
Ratings |
Period of ________________________________ 19___ | |||||||||||
Excellent |
Contract Number ______________________________ | |||||||||||
Very Good |
Contractor ____________________________________ | |||||||||||
Marginal |
Date of Report _________________________________ | |||||||||||
Submarginal |
PNS Technical Monitor/s________________________ | |||||||||||
_______________________________________________ | ||||||||||||
CATEGORY |
CRITERIA |
RATING |
ITEM FACTOR |
EVALUATION RATING |
CATEGORY FACTOR |
EFFICIENCY RATING | ||||||
A |
TIME OF DELIVERY |
|||||||||||
A-1 Adher-ence to Plan Schedule |
________ |
x |
.40 |
= |
___________ |
|||||||
A-2 Action on Anticipated 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 Thorough-ness and Accuracy of Work |
________ |
x |
.30 |
= |
___________ |
|||||||
B-3 Engineering Competence |
________ |
x |
.20 |
= |
___________ |
|||||||
B-4 Liaison Effectiveness |
________ |
x |
.15 |
= |
___________ |
|||||||
B-5 Indepen-dence and Initiative |
________ |
x |
.15 |
= |
___________ |
|||||||
Total Item Weighed Rating |
___________ |
x |
.40 |
= |
___________ |
C |
EFFECTIVE-NESS IN CONTROL-LING 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 WEIGHT RATING _________________________________ | |||||||||||
Rated by: _________________________________________________ | |||||||||||
Signature(s) _______________________________________________ | |||||||||||
NOTE: Provide supporting data and/or justification for below average or outstanding item ratings. |
SUBPART 216.5--INDEFINITE-DELIVERY CONTRACTS
(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.
Orders placed under indefinite-delivery contracts may be issued on DD Form 1155, Order for Supplies or Services.
216.506 Solicitation provisions and 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, for paragraph (f) of the clause at FAR 52.216-21, Requirements.
SUBPART 216.6--TIME-AND-MATERIALS, LABOR-HOUR, AND LETTER CONTRACTS
See Subpart 217.74 for additional limitations on the use of letter contracts.
(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.
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.