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Project Officers'
  Handbook

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               U.S. ENVIRONMENTAL PROTECTION  AGENCY

                       PROJECT OFFICER'S COURSE

                       Course Description & Objectives


A.  GENERAL DESCRIPTION

    The Project  Officer's course  is  a comprehensive,  survey-style, three  and
one-half day course which provides  the attendee  with a thorough  understanding of
the Project Officer's responsibilities within the pre-award phase of the acquisition
cycle.  The course commences with  a description of a contract and a comparison of
its  use  to grants and cooperative  agreements; discusses authority of individuals
involved in the acquisition process; what  is  required  of the  Project Officer in
planning and developing the requirement; and  delves into  contract types and their
relationship to preparation of the Statement of Work.  Considerable time is devoted
to:   the  development  of a  Statement  of  Work;  exploration of  specialized
sources—e.g.,  8(a), LSA, and  small  business contracting;  focusing on preparing an
independent Government  cost estimate; developing technical  evaluation criteria;
evaluating technical proposals; and the process  of  negotiating  and selecting  a
source.  Althought not included in  the course discussions, the text includes coverage
of the Project Officer's responsibilities in the post-award phase.

    Course presentation  is made through  a combination of lecture  and student
participation.  It  includes  a pre- and post-course  exam, both of which contain 50
objective test questions. The  text for the course  is the  Project  Officer's Handbook
(Second Edition - April 1984).


B.  COURSE  OBJECTIVES

    The general objectives of  this course are to:

    •   provide an understanding of the acquisition cycle;

    •   ensure that the student comprehends the  Project  Officer's responsibilities,
        duties, and authority during the acquisition cycle;

    •   foster  knowledge,  understanding,  and   appreciation  of  the roles  and
        authorities of other persons in the acquisition process; and

    •   equip  the student  with specific  information on how to perform the duties of
        a Project Officer.


                                                           Second Edition-4/84
                                                           Rev. No. 2 - 9/30/85
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          PURPOSE, STRUCTURE, AND USE OF THE HANDBOOK
    This Handbook has been developed for use by  Project Officers as a reference
tool.  It meets the needs of both the newly initiated and most experienced Project
Officers  for information on the acquisition cycle and their responsibilities therein.
The Handbook incorporates all relevant regulatory  and policy guidance at the time
of publication.
    Chapter 1;    Provides   basic    information    such   as   definitions,
                  responsibilities of  the  key  players  in  the acquisition
                  process,  and an overview of  the  acquisition cycle.  It  is
                  recommended reading for newly-appointed Project Officers.

    Chapter 2;    Covers the Budget, Planning, and the Acquisition Planning
                  Process.

    Chapter 3;    Examines steps involved in  individual  acquisition  planning
                  and scheduling.

    Chapter 4;    Provides coverage on the preparation  of the procurement
                  request.

    Chapter 5;    Delineates step-by-step the evaluation and award processes.

    Chapter 6;    Provides comprehensive coverage of Project Officer duties
                  in contract monitoring.

    Chapter 7;    Outlines the rights and responsibilities  of the parties under
                  all Government contracts.

    Appendices;   Include:  A - Glossary of Terms; B - Acronyms; C - Work
                  Words; D - Extramural Activity  Report; E - Front Page of
                  Commerce Business Daily; F - PEB Report Dated 12/14/83;
                  G - Sample  Award Fee Plan Dated 12/14/83; H - Contract
                  Administration Case Study.

                                                         Second Edition
                                                         April 1984

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          EPA  PROJECT OFFICERS' QUALIFICATION COURSE

                          COURSE  SCHEDULE

                                First Day

 8:30-9:30    Opening Remarks; Pre-Course Test; Course  Overview; Purpose &
             Objectives of the Course; and Class Introductions.

 9:30-11:45   Legal and Regulatory Framework for Contracting, Business Ethics
             and Conflicts of  Interest, Contractor Fraud and the  Role of the
             IG's Office, Budgeting and Planning and Contracting Out.

11:45-12:00   EPA Organization for Procurement and Functional Responsibility

             -  Overview of the EPA Procurement and Contracts Management
                 Division Organization Functions and Responsibilities

             -  Relationship between EPA Contracting Officers and  Project
                 Officers

12:00-1:00    LUNCH

 1:00-2:00    An Overview of the Acquisition Cycle; Roles and Responsibilities
             of  Project   Officers/Contracting  Officers;   and  Methods  of
             Procurement.

 2:00-4:30    Acquisition Planning & Scheduling

             -  Purpose & Types of Planning
             -  The Project Officer's Responsibilities
             -  The Procurement Cycle, and Lead Times
             -  Developing the Procurement Request
             -  Content of a Procurement Request (PR)
             -  Routing of the PR
             -  Role and Responsibilities of the Initiator of the Requirement
             -  Pre-Procurement Request Considerations
             -  Justifications for Other Than Full and Open Competition
             -  Options
             -  Incremental Funding/Bona Fide Need
             -  Determining Potential Sources
             -  Socially/Economically Disadvantaged Business Considerations
             -  Other Socioeconomic Programs
             -  Personal vs. Non-Personal Services
             -  Conflicts of Interest
             -  Management Consultants
             -  OMB Circular A-76
             -  Federal Reports Act
             -  Evaluation Criteria
             -  Project Clearances and Approvals
             -  Estimating Project Costs
             -  Specification
             -  Commercial Products
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                              Second Day

 8:30-9:30    Contract Types

             -   Firm-Fixed-Price
             -   Time and Materials
             -   Indefinite Quantity
             -   Cost-Plus-Fixed-Fee
                 —Completion
                 —Term
             -   Cost-Plus-Award-Fee
             -   Additional Contract Types

 9:30-12:00   Organizing, Composing and Preparing a Work Statement

             -   Purpose
             -   Importance and Implication for Contract Type Selection
             -   Types of Work Statements
             -   Pre-Planning
             -   Phasing and Work Breakdown Structure
             -   Planning the Work Statement
             -   Preparing the Work Statement

12:00-1:00    LUNCH

 1:00-2:00    Organizing, Composing and Preparing a Work Statement (Con't)

             -   Writing the Work Statement
             -   Language of Work Statement
             -   Critical Evaluation of Work Statements—
                 Implications/Cost Estimating
                 Work Statement, Analysis, Critiques

 2:00-3:30    Preparation of Statement of Work

 3:30-4:30    Team  Presentation of Work Statement, Analysis,  and  Critiques
             Thereof

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                               Third Day

8:30-9:00     Summarization by Instructor of Preparation of Statement of Work

9:00-11:00    How to Develop Technical Evaluation Criteria

             -  When and Why Prepared
             -  Prerequisites for Preparing
             -  Content of Technical Evaluation Criteria
             -  Considerations in Writing
             -  Qualifications of the Offeror
             -  Characteristics of the Requirement
             -  Need to Tailor Criteria
             -  Weighting of Criteria
             -  Go-No-Go Evaluation Criteria

11:00-12:00  Class Exercise

             -  Development of Evaluation Criteria
             -  Presentation and Critique
             -  Instructor Summarization of Exercise

12:00-1:00    LUNCH

 1:00-3:00   Proposal Evaluation

             -  Dollar  Value of the  Proposal  and Role of Technical  Evaluation,
                Source Evaluation, and Business/Cost Evaluation Officials
             -  The Project  Officer's Responsibilities
             -  The Purpose of Evaluation
             -  What's To Be Evaluated and Criteria To Be Used
             -  When Is a Proposal  Acceptable, Unacceptable, or  Capable  of
                Being Made Acceptable
             -  Predetermined Cut-Offs and Why They Should Not Be Used
             -  Communications During the Evaluation Process
             -  Protection of Data
             -  The Criticality of Narrative Comments
             -  Content and Use of Technical and Source Evaluation Reports
             -  Cost Proposals and  the  Project Officer's  Role  in  Evaluating
                Them
             -  Site Visits

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                         Third Day (Continued)

3:00-3:30     Technical Analysis

3:30-4:30     Selection of Offerers for Negotiation and Award

             -  The Competitive Range
             -  How To Develop and  Structure Technical Questions
             -  Technical Transfusion and Technical Leveling
             -  Project  Officer's Role During Negotiations
             -  Evaluating Written Confirmations
             -  Source  Evaluation and Selection Procedures
             -  Technical Aspects of the Contracting  Officer's  Determination
                of Responsibility
             -  Debrief ings and Project Officer's Role
             -  Freedom of Information Act
             -  Protests

                              Fourth Day

 8:30-9:30   Selection of Offerers for Negotiation and Award
             (Continued)

 9:30-10:00   Course Summary and Evaluation

10:00-12:00   Final Examination

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             U.S. ENVIRONMENTAL PROTECTION AGENCY

                    PROJECT OFFICER'S COURSE

                       TABLE OF CONTENTS
CHAPTER 1   MEANING  AND OVERVIEW OF ACQUISITION
CHAPTER 2   ORIGIN  OF REQUIREMENTS AND ADVANCE
             ACQUISITION  PLANNING
CHAPTER 3   INDIVIDUAL  ACQUISITION PLANNING
             AND SCHEDULING
 Page
 1-1
 2-1
 3-1
CHAPTER 4   DEVELOPMENT OF  THE PROCUREMENT REQUEST     4-1
             AND OTHER RELATED ACTIONS
CHAPTER 5   PROPOSAL  EVALUATION, NEGOTIATION, CONTRACT   5-1
             AWARD AND PROTESTS
CHAPTER 6    CONTRACT ADMINISTRATION
 6-1
CHAPTER 7    RIGHTS AND  RESPONSIBILITIES UNDER
              GOVERNMENT CONTRACTS
 7-1
APPENDIX  A  GLOSSARY  OF TERMS

           B  ACRONYMS

           C  WORK WORDS

           D  EXTRAMURAL ACTIVITY  REPORT

           E  FRONT  PAGE OF  COMMERCE BUSINESS DAILY

           F  PEB REPORT DATED 12/14/83

           G  SAMPLE AWARD FEE PLAN  DATED  12/14/83

           H  CONTRACT ADMINISTRATION CASE STUDY
A-l

B-l

C-l

D-l

E-l

F-l

G-l

H-l
                                                Second Edition - 4/84
                                                Rev. No. 2 - 9/30/85

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                              TABLE  OF  CONTENTS
                                   CHAPTER 1
M-1.000    MEANING AND OVERVIEW  OF  ACQUISITION

M-1.100    Introduction
M-1.101    Acquisition (Contracting) vis-a-vis Assistance
M-l.101-1    Differences
M-l.101-2    Relationships and Definitions
M-l.102    Legal and Regulatory Framework for Contracting
M-l.103    Key Participants in the Process
M-l. 103-1    Contracting Officer
M-l.103-2    The Contract Specialist
M-l.103-3    The Project Officer
M-l. 103-4    Limits on the Authority of the Project Officer
M-l.103-5    Competition Advocate
M-l. 104    Ratification
M-l. 104-1    Introduction
M-l. 104-2    Procedures
M-l. 105    Business Ethics and Conflicts of Interest
M-l. 105-1    Introduction
M-1.105-2    Business Ethics
M-l. 105-3    Personal Conflicts of Interest
M-l.106    The EPA Organization
M-l. 106-1    Introduction
M-l. 106-2    Organizational Structure for Contracting Operations
M-l. 107    The Acquisition Cycle
M-l. 107-1    Introduction
M-l. 107-2    Major Activities and Project Officer Responsibility
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EXHIBITS

        1-1
        1-2
        1-3
        1-4
        1-5
Flow of Contracting Authority
EPA Organization Chart
Organizational Structure for Procurement
The Acquisition Cycle
Major Acquisition Cycle Activities and
Project Officer Responsibilities
1-11
1-13
1-15
1-17

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                                                     Second Edition-4/84
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                            CHAPTER  M-1.000

              MEANING  AND OVERVIEW OF ACQUISITION
M-1.100  Introduction

    To the potential Project Officer, the idea of being involved in an unknown
process that is  critical  to the success of his  or her project or program is
unnerving. For this reason, Chapter 1 has been written to provide some basic
information such as definitions, responsibilities, and an overview or "road map"
of what is involved in the process.
M-1.101  Acquisition (Contracting) vis-a-vis Assistance

    M-l.101-1 Differences

    There  are  basic  differences  between   acquisition  and   assistance.
Acquisition  is  the  process  of acquiring  property  or services  for  the direct
benefit of the Government  by purchase,  lease, or barter.  Assistance is the
process of transferring money, property, services, or anything  of  value  to  a
recipient  in order  to  accomplish a public purpose of support  or stimulation
authorized by  Federal statute.

    M-l.101-2 Relationships and Definitions

    (a)  Acquisition and assistance  instruments create different relationships
between the  Government and recipients.  Because  of  these  differences in
Government/recipient   relationships,   the  decision   to  use   a  particular
instrument must be made deliberately and in  accordance with the rules for
using   that  instrument.   Acquisition/assistance instruments are  defined  as
follows:

    (1)  Contract.  A  mutually binding legal  relationship obligating the seller
         to furnish  supplies or services and the buyer to pay for them.

    (2)  Interagency   Agreement.   A  legal  agreement   between   Federal
         agencies where goods or services are provided.
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                                                     April 1984

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    (3)  Cooperative  Agreement.  A  legal  instrument  which  defines  the
        relationship between the Government and a recipient for the transfer
        of money, property, services, or anything of value to the recipient for
        the  accomplishment of  a  public purpose of support or  stimulation
        authorized by law.  A  cooperative agreement presumes a significant
        amount of involvement  by the  Agency  in the  performance  by the
        recipient.

    (4)  Grant.  A legal instrument  which defines  the relationship between the
        Government  and a recipient  for  the  transfer  of  money,  property,
        services or anything of value to the recipient for the accomplishment
        of a public purpose of support or stimulation authorized by law.  A
        grant presumes a limited amount of involvement  by  the Agency in the
        performance by the recipient.

    (b)  The  legal and  regulatory  framework for   implementation  of  the
acquisition process is set forth in M-1.102.


M-1.102 Legal and Regulatory Framework for Contracting

    (a)  The  Federal Acquisition Regulation (FAR)  established  (1) a  single
regulation for use by all executive agencies in their acquisition of supplies and
services with appropriated funds, and (2) the Federal  Acquisition Regulations
System  consisting  of  the  FAR  and   agency  acquisition  regulations that
implement or supplement the   FAR.  The FAR System  was  developed  in
accordance with the requirements  of the Office  of Federal  Procurement
Policy Act of 1974, as  amended  by  Public Law 96-83.   The FAR was  issued
within applicable laws  under the joint authorities of the  Administrator  of
General Services,  the Secretary  of Defense, and the Administrator for the
National Aeronautics and Space  Administration  and  under the broad  policy
guidance of the Administrator  for Federal Procurement  Policy.  The FAR is
codified as Chapter 1 of Title 48 of the Code of  Federal Regulations with  an
effective date of April 1, 1984.

    (b)  The   Environmental   Protection  Agency    Acquisition  Regulation
(EPAAR) implements the FAR  where  further implementation is needed and
supplements the FAR when coverage is needed for subject matter not covered
in the FAR.  The  EPAAR is codified  as  Chapter 15  within Title  48 of the
Federal  Acquisition  Regulations  System.  In  addition,  EPA  establishes
acquisition policies and  procedures  that are disseminated  through  the EPA
Contracts Management  Manual and the  Acquisition  Handbook.  The EPAAR
generally is reserved for those items implementing and supplementing the FAR
and  for  items of  significant  general  interest which  are   pertinent  to
Government contractual relationships.  The Acquisition Handbook generally is
used for subjects of primary interest  to acquisition  personnel  in  addition  to
those items  already  contained  in  the  FAR  and  EPAAR.  The  Contracts
Management  Manual generally is reserved for subjects  of  particular interest to
Project Officers and management personnel involved in the acquisition process
as well as acquisition personnel.  It generally does  not address  contractual
relationships.  Contracting authority is part of  the authorities granted  in the
legislation which established the Agency.
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    (c)  The effectiveness of the EPA acquisition system depends on project
and contract personnel working together in a fully coordinated environment.
Each personnel group has an interdependent  role in the selection, award, and
administration of contracts, and each must know and understand its respective
roles.
M-1.103   Key Participants in the Process

    There are several key players in the contracting process:  the Contracting
Officer,  the Contract Specialist, the  Project Officer and  the Competition
Advocate.   There  are,  of  course,  other  members  of the  team  whose
participation may  be  required,  such as the  Quality  Assurance Officer in
projects  involving environmentally  related  measurements.  An  understanding
of the roles of these key individuals is crucial.

    M-l. 103-1   Contracting Officer

    (a)   The Contracting Officer (CO) is a person with the authority to enter
into, administer, and/or terminate contracts and  make related determinations
and  findings.  Contracting authority  must flow down  through the Agency
organization until it reaches the Contracting Officer. Exhibit 1-1 depicts this
flow  within EPA.  Contracting Officers  are  appointed  in  writing on  a
"Certificate  of Appointment," SF 1402, which states any limitation on the
scope of  authority that may be exercised.

    (b)   Only Contracting  Officers  can  enter into contracts  or otherwise
commit the Government to pay for products or services, and then only to the
extent of their actual authority.  Therefore, any  unauthorized commitment by
a  Government  employee,  or  commitment  made by a Contracting Officer
beyond the extent of legitimate actual authority,  may  be  declared invalid
despite any apparent  authority or position  of  responsibility.  This holds true
despite   the  "apparent authority"  of  the Government  employee—i.e.,  an
employee whose position  is such that  one  would believe he or she has the
authority to bind the Government.  Actions of individuals in  the commercial
sector who have apparent  authority usually  result in binding  their firm,  a
concept of agency which does not hold true within the Federal Government.

    M-l. 103-2  The Contract Specialist

    Some Contracting Officers have several people working for them.  Most
of these people will have the title of "contract specialist."  They have the
responsibility   of   assembling   the   solicitation  package,  publicizing  the
requirements, soliciting and evaluating bids, and negotiating with offerers.
Often, the  only difference between a Contracting  Officer  and  a contract
specialist is the authority to enter into a contract.  While contract specialists
have  authority  to  process  contracts, the  CO  will  have to sign the contract
agreement,   having  the   final determination   and responsibility  for  the
contracting process and performance.

    M-l. 103-3  The Project Officer

    (a)   The Project Officer (PO) is  the official in  the agency  who oversees
on-going programs and organizes resources and personnel for the achievement

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of a program goal.  The Assistant, Associate,  and Regional Administrators,
General  Counsel and the  Inspector General  are responsible for designating
individuals who  have completed the certification program to serve as Project
Officers.   The  Director,  PCMD,  appoints  these individuals to  administer
contracts.  The Contracting Officer acts as the representative of the Director,
PCMD, by  naming the designated individual as the Project Officer in the terms
and conditions of the contracts.

    (b)   The Project Officer and staff are expected to do the  planning and
program control. The duties involved include:

     (1)   Establishing program objectives

     (2)   Developing requirements

     (3)   Scheduling

     (4)   Estimating

     (5)   Budgeting

     (6)   Developing controls

     (7)   Developing purchase requests, including specifications and work statements

     (8)   Developing specific project plans, including financial status

     (9)   Coordinating project planning with the procurement and contracting office

    (10)   Evaluation of proposals (technical evaluation and realism of cost proposals)

    (11)   Participation in the source selection process

    (12)   Monitoring work progress; identifying delays, determining needed changes,
          and suspensions; and providing assistance wherever it is necessary for the
          completion and acceptance of the product or service.

    M-l. 103-4  Limits on the Authority of the  Project Officer (PO)

    (a)   A certified Project Officer (PO) with less than eighteen (18) months
of experience  as a Government  PO  on Federal contracts is permitted  to
perform as a PO only on contracts (including options)  with a potential value of
less than $1 million.

    (b)   A certified PO must have  three (3) years of experience to be the PO
on contracts exceeding $5 million.

    (c)   Project Officers designated to administer contracts do  not have the
authority to:

    (1)   Award, agree to, or execute any contract or contract modification;

    (2)   Obligate, in any way, the payment of  money by the Government;
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    (3)   Make the final decision on any matter that would be subject to appeal
         under the Disputes clause; and

    (4)   Terminate, for any cause, the contractor's right to proceed.

    (d)   Limitations on the PO's authority are in accordance with the concept
that contract administration is limited to the monitoring of the contract terms
and to ensuring that the contract is carried out.  Contract administration does
not deal with changing agreed terms or halting performance of the contract.

    M-l. 103-5  Competition Advocate

    (a)   The Competition in Contracting Act (Title VH of Public Law 98-369)
requires  that heads  of  executive  agencies  shall designate a competition
advocate. The responsibilities of the agency competition advocate are, among
others, to:

    (1)   Be responsible for challenging barriers to and promoting full and open
         competition in the acquisition of supplies and services by the agency;

    (2)   Review the contracting operations of  the agency  and identify  and
         report to the agency senior procurement executive -

    (i)   Opportunities and actions taken to achieve full and open competition
         in the contracting operations of the agency; and

    (ii)   Any condition  or  action  that  has  the  effect  of  unnecessarily
         restricting competition in the contract actions of the agency.

    (3)   Prepare  and submit  an   annual  report  to  the  agency  senior
         procurement  executive,  in accordance  with  agency procedures,
         describing -

    (i)   Such advocate's activities under this subpart;

    (ii)   New initiatives required to increase competition;

    (iii)  Any barriers  to full and open competition that remain; and

    (iv)  Other ways in which the agency has emphasized competition in areas
         such as acquisition training and research.

    (4)   Recommend to the  senior procurement  executive of the agency goals
         and plans for increasing competition on a fiscal year basis; and

    (5)   Recommend  to  the senior  procurement executive of  the  agency  a
         system of personal  and organizational accountability for competition,
         which  may include the  use of recognition and awards to  motivate
         program managers, contracting officers and  others  in authority to
         promote competition in acquisition.
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    (b)  The  Competition  Advocate   is   the  approving  authority  for
Justifications  for  Other  Than  Full  and  Open Competition  on  proposed
contracts  with a potential contract value  over $100,000 but not exceeding
$1,000,000.  The Competitive Advocate is an official in the Policy and Quality
Assurance Branch of the Procurement and Contracts Management Division at
Headquarters.
M-1.104  Ratification

    M-l.104-1  Introduction

    (a)   As previously discussed, only Contracting Officers who are formally
designated as such may obligate the Government for acquisition of personal
property  and  nonpersonal  services  (including  construction).   Periodically,
actions   are  taken  by  personnel  without  formally  delegated  contracting
authority.  When such an action occurs, it does not obligate the Government
for the  expenditure  of  funds.   However, under certain circumstances,
unauthorized actions  may be ratified.  Ratification of an unauthorized action
can only occur when the acquisition would have been valid had the action been
authorized by a formally designated Contracting Officer.  If an unauthorized
action is otherwise improper, a Contracting Officer cannot  ratify it and the
Agency  must deny legal liability, in which case, the  person committing the
unauthorized action may be personally liable.

    (b)   Proposed  ratification of unauthorized actions must be  approved at
designated management levels. The Chief of the Contracting Office (CCO) is
the ratifying official provided he/she has redelegable contracting authority.  In
regional offices or laboratory sites, the Chief of the Contracting Office to
whom the  activity reports is the ratifying official, provided that he/she has
redelegable contracting authority.  The Head  of  the  Contracting Agency
(HCA) is the ratifying official for actions which arise in regional or laboratory
sites  which do  not  functionally report to a contracting office.  The  HCA
reviews all ratification actions of $250,000 or more.  It should be noted that
unauthorized paid advertisements cannot be ratified.

    M-l. 104-2  Procedures

    When an unauthorized action has been revealed, the following procedures
apply:

    (a)   The program office will notify the cognizant contracting office by
memorandum of the circumstances surrounding the action.  The memorandum
will include:

    (1)   All relevant documents and records;

    (2)   Documentation why the work was necessary to and for the benefit of
         the Government;
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    (3)  A statement of steps  taken or  proposed  to prevent  reoccurrence of
        the unauthorized action;

    (4)  Approval of the division director (or equivalent) of the  responsible
        office;

    (5)  If expenditure of funds are involved, the notification will also include
        a Procurement  Request/Order  (EPA  Form  1900-8) with sufficient
        funds to cover the supply or service involved;

    (6)  If the  service  or supply  was beyond the scope  of  the existing
        contract,   the   notification   will  include  a   justification   for
        noncompetitive procurement (JNCP).

    (b)  After receipt of the notification, the Contracting Officer shall:

    (1)  Make  a determination  and  finding  regarding  ratification of  the
        unauthorized act.   Additional information may be required  from the
        contractor and an opinion from the General Counsel.

    (2)  Inform (at the Contracting Officer's discretion) the Inspector General
        through the HCA.

    (3)  Prepare  memorandum   from  the   Assistant   Administrator  for
        Administration  and   Resources  Management  to  the   Assistant,
        Associate   or   Regional  Administrator   advising   of   the  person
        committing the unauthorized action.

    (4)  Accomplishment of (3) above  for actions that  would entail small
        purchase procedures  is  at  the  discretion  of  the Chief of  the
        Contracting Office or a Management Division  Director  or equivalent
        at a regional or field activity.
M-1.105  Business Ethics and Conflicts of Interest

    M-l.105-1  Introduction

    The  Code of Federal Regulations (see 40 CFR Chapter 1 Part 3) sets forth
personal  behavioral requirements for individuals, whether program  managers,
Project Officers, Contracting Officers, contract specialists, or others involved
in the acquisition  process.  These  include  business  ethics  and conflict of
interest  matters that must be  observed by all Agency  personnel.  Personal
behavior must  be  impeccable, and  the  requirements of EPA, which  reflect
those of the Government as a  whole,  must  be thoroughly understood  and
observed.

    M-l.105-2  Business Ethics

    (a)  Government business must be conducted in a  manner above reproach,
and with complete impartiality.  The official conduct of Government personnel
must  be such that they would  have no  reluctance  in  making  a full public
disclosure of their actions. It is important that all  EPA personnel  observe
proper standards of conduct in the discharge of their official duties, especially
those duties involved in acquisition programs.

                                   1-6
                                                    Second Edition
                                                    April 1984

-------
    (b)  Because of their importance in  acquisition  programs, you should be
familiar with the following summary of selected standards.

    (1)  No employee shall receive any salary or compensation for services as
         a Federal employee from any source other than the Government of
         the United States, except as may be contributed out of the  treasury
         of a State, county, or municipality.

    (2)  Employees are not permitted to  engage in any outside employment or
         other outside activity in conflict with the full and proper discharge of
         the duties and responsibilities of  their Government employment.

    (3)  Acceptance of gifts,  entertainment,  or  favors,   no  matter  how
         innocently  tendered  and  received, from those  who have  or seek
         business with EPA, may be a source of embarassment to the Agency
         and to  the employee involved.  It may affect the objective judgment
         of the  recipient and impair public confidence  in the  integrity of the
         business relations between EPA and industry.  Therefore, employees
         shall not knowingly  solicit  or accept any  gifts, entertainment, or
         favors (including complimentary  meals  and beverages), either directly
         or indirectly, from any  interested party.  For the  purpose of  this
         standard,  gifts,  entertainment,  and  favors  include any  benefits,
         gratuities,   loans,   discounts,   tickets,   passes,   transportation,
         accommodations,  or hospitality given or extended to or on behalf of
         the recipient.

    (4)  All employees are subject to the basic political activity restrictions
         outlined in  the Hatch Act.  Employees  are individually responsible for
         refraining from prohibited political activity.

    (5)  An employee must not use, directly or indirectly, or allow the use of,
         Government property of any kind for  other than officially approved
         activities.  An employee has a positive duty to protect and  conserve
         public  property,  including equipment, supplies,  and other  property
         entrusted or issued to the employee.

    (6)  Employees must  not directly or indirectly use official  information
         obtained through  the  employee's  Government employment if the
         information has not been made available to the general public.

    (7)  Employees should  pay  their financial  obligations in  a  proper  and a
         timely manner.

    (8)  Employees are prohibited from  endorsing in an official capacity the
         proprietary products or processes of manufacturers or the services of
         commercial firms for advertising, publicity  or sales purposes. Use of
         material products or  services by  the Agency does not constitute
         official endorsement.

    (9)  Credentials and other  EPA identification  devices are for use only in
         establishing  identity  or  authority   in  connection  with  official
                                    1-7
                                                     Second Edition
                                                     April 1984

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        business.   Such   credentials  and  identification   devices,  or   an
        employee's official position, status, or designation, are not to be used
        by employees to  exert  influence  or obtain, either  directly  or
        indirectly, privileges or rewards for themselves or others.

   (10)  An employee  shall not  engage  in  criminal,  infamous, dishonest,
        immoral,   notorious,   or  disgraceful  conduct,  or  other  conduct
        prejudicial to the Government.

    (c)  The maintenance of  public  confidence  in  EPA  employees clearly
demands that each employee take no action which would constitute the use of
official position to advance personal or private interests.

    M-l.105-3  Personal Conflicts of Interest

    (a)  It  is  most  essential  and  equally  important that  technical  and
contracting personnel observe  standards  of conduct  and  avoid conflicts of
interest with suppliers  or potential suppliers of the  Government, to obviate
any possible inference that the  Agency may be compromised  to any degree by
an employee's actions.

    (b)  As in the  case of standards of conduct, the matter of  conflicts of
interest is thoroughly covered  in EPA regulations. A few of  the key points
covered in these regulations relating to acquisition matters are:

    (1)  Employees are not permitted to have  a direct or indirect  financial
        interest  that  conflicts  substantially,   or  appears  to  conflict
        substantially,  with   the  employee's  Government   duties   and
        responsibilities.

    (2)  Employees are not permitted to engage, directly or indirectly, in a
        financial   transaction   as  a  result  of,  or  primarily  relying  on,
        information obtained through Government employment  which has not
        been made available to the general public.

    (3)  Unless  authorized to  do  so,  no  employee  shall participate as  a
        Government   employee in  any  matter  in  which  the  employee
        knowingly has a financial interest.

    (4)  After Government employment has ceased, no Government employee
        may knowingly act as an agent or attorney for anyone other than the
        United  States  in connection with any  judicial  proceedings  or other
        matter, involving a specific  party  or parties,  in which the  United
        States is  a  party and in  which  the  former employee participated
        personally and substantially  for  the  Government through  decision,
        approval,   disapproval, recommendation,  rendering of  advice,  or
        investigation.

    (5)  No employee may represent  anyone before  a court or Government
        agency in a  matter in which the United  States is a party  or has an
        interest.
                                   1-8
                                                    Second Edition
                                                    April 1984

-------
    (c)  The published  regulations (see  40 CFR  Chapter 1 Part  3) on  the
conduct of employees detail reporting procedures for income and other special
matters with which all personnel should be familiar. The regulations included
here were selected because of their potential  impact on relationships with
organizations or  persons  that  may be involved in doing business  under  the
acquisition programs of EPA.
M-1.106  The EPA Organization

    M-l.106-1  Introduction

    Exhibit 1-2 depicts the overall organization of the Agency and sets forth
the various environmental program areas in which EPA is involved.

    M-l. 106-2  Organizational Structure for Contracting Operations

    The   Assistant   Administrator   for   Administration   and   Resources
Management  is  responsible   for  procurement.    Within   the   Office   of
Administration and Resources  Management is located  the  Procurement and
Contracts Management  Division.  That Division (see  Exhibit 1-3) is comprised
of five elements:  (i) Policy and Quality Assurance Branch; (ii) Contract and
Management  Support   Branch;  (iii)  Planning  and  Cost  Advisory  Branch;
(iv) Procurement Branch A; and (v) Procurement Branch B.

    (a)   The Policy  and  Quality  Assurance  Branch is responsible  for the
establishment of EPA-wide  acquisition policy and  the  review  of  Agency
contracting practices.

    (b)   The Contract and Management Support Branch provides management
and control support services to Procurement Branches A and B; handles small
purchases;  handles  terminations,  claims, and  appeals  under contracts, and
handles contract closeouts.

    (c)   Procurement Branch A is responsible for procurements for the Office
of Solid Waste and Emergency Response.

    (d)   Procurement   Branch  B  is  responsible   for  ADP  Procurements,
procurements  for   Office  of  the  Administrator  and   the   Office   of
Administration.

    (e)   The Planning and Cost Advisory Branch performs several functions.
It  reviews  the reasonableness of offerers' cost proposals; establishes contract
policy regarding the  handling of contract costs;  negotiates indirect cost rates
with organizations conducting business with EPA; and is  responsible for the
Agency's advance planning and Contract Information System.

    (f)   In  addition to the  structure of the  Procurement and  Contracts
Management Division,   Exhibit  1-3 sets forth  other organizational elements
which provide procurement support.  These elements are shown by dotted line
to be reporting to the Director of the Procurement and Contracts Management
Division  for policy guidance and review purposes only.
                                  1-9
                                                   Second Edition-4/84
                                                   Rev. No. 2- 9/30/85

-------
    (g)  The Durham Contract Operations is responsible for procurements for
the Office of Research and Development, the Office of Pesticides and Toxic
Substances, the Office of Air Quality Planning and Standards,  and the ten
regional offices.

    (h)  The Cincinnati Contract Operations is responsible for procurements
for the ORD Laboratories in Cincinnati, the Office of Water, and  various ORD
field laboratories.

M-1.107  The Acquisition Cycle

    M-l. 107-1  Introduction

    The   acquisition  cycle  is  recognized   as  having  three  phases:  the
pre-solicitation  phase; the  solicitation/award phase;  and  the  post-award
administration  phase.  The  first  of these phases  primarily  involves the
development of the Procurement Request; the second involves you in working
with the  contracting office in soliciting and awarding the contract; and finally,
in post-award administration you, a representative of the Contracting Officer,
monitor the contract.

    M-l. 107-2  Major Activities and Project Officer Responsibility

    Exhibits 1-4 and 1-5 sequentially  set  forth  the  key activities in the
acquisition cycle by phase.  Exhibit 1-4 lays out the  major steps  in the  Cycle
and references chapter coverage within the manual.  Exhibit 1-5 delineates
responsibility  of the  Project  and Contracting Officer by activity.  In the
columns  to the right side of the  Exhibit, each activity has been annotated as
either a  total responsibility (TR)  or participatory activity (PA) of the Project
Officer.  Responsibilities of the Contracting Officer have been so indicated in
the "CO Resp." column.  The  "Text Ref."  column contains   a  paragraph
reference in this manual where additional coverage may be found.
                                  1-10
                                                    Second Edition-4/84
                                                    Rev. No. 2- 9/30/85

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                              EXHIBIT 1-1

                     FLOW  OF  CONTRACTING AUTHORITY




                              Legislation
                                   I
                          Administrator, EPA
                                   I
           Assistant  Administrator, Office  of  Administration
                       and. Resources Management
                    (Agency Procurement Executive)
                                   I
                  Director, Office of Administration
                                   I
       Director,  Procurement and Contracts Management Division
                  (Head of the Contracting Activity)
                I                                      I
                I                                      I
           Chiefs of the                     Contracting Officers
        Contracting Offices
(Redelegable Procurement Authority)
                I
       Contracting Officers
                            1-11
                                             Second Edition
                                             April 1984

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                                                   US. ENVIRONMENTAL PROTECTION AGENCY
>JiP
•
H- Q.


oo W
^ Q.
   O




STAFF OFFICES
ADMINISTRATIVE LAW MIX
CIVIL RIGHTS
SMALL & DISAOVANTAGEO
BUSINESS UTILIZATION
SCIENCE ADVISORY BOARD
|
ASSISTANT 1
ADMINISTRATOR FOR 1
ADMINISTRATION AND 1
RESOURCES MANAGEMENT |
H OFFICE OF THE 1
COMPTROLLER |
H OFFICE OF 1
ADMINISTRATION J
H OFFICE OF j
INFO RESOURCES I
MANAGEMENT ]
^ OFFICE OF \
ADMINISTRATION 1
CINCINNATI OH J
H OFF ICE OF \
ADMINISTRATION 1
RTP NC 1


1

ASSISTANT
ADMINISTRATOR
ENFORCEMENT /
COMPLIANCE
MONITORING


ASSISTANT
ADMINISTRATOR FOR
WATER
••
••


OFFICE OF WATER
ENFORCEMENT
AND PERMITS
OFFICE OF WATER
REGULATIONS
AND STANDARDS

OFFICE OF WATER
PROGRAM
OPERATIONS
OFFICE OF
DRINKING WATER

1 1
(REGION 1 1 1 REGION II 1
BOSTON | | NEW YORK |
1
REGION III 1
PHILADELPHIA |


4ISTRATOR
DEPUTY
ADMINISTRATOR
1
___ GENERAL
™* COUNSEL


1
ASSISTANT
ADMINISTRATOR FOR
SOLID WASTE AND
EMERGENCY RESPONSE

OFFICE OF
SOLID WASTE
OFFICE OF
- EMERGENCY AND
REMEDIAL RESPONSE

4 OFF ICE OF
WASTE PROGRAMS
ENFORCEMENT






1
1


1 ASSOCIATE ADMINISTRATOR 1
JFOR INTERNATIONAL ACTIVITIES I
1 ASSOCIATE ADMINISTRATOR ]
1 FOR REGIONAL OPERATIONS |

ASSISTANT
ADMINISTRATOR FOR
POLICY. PLANNING
AND EVALUATION
_ OFFICE OF
POLICY ANALYSIS
OFFICE OF
_ STANDARDS
AND REGULATIONS
OFFICE OF
SYSTEMS AND




EVALUATION
1


1 1
ASSISTANT
ADMINISTRATOR FOR
EXTERNAL AFFAIRS
-
i
-
L

ASSISTANT
ADMINISTRATOR FOR
AIR AND RADIATION

^ OFFICE OF AIR
QUALITY PLANNING
AND STANDARDS
^ OFFICE OF
MOBILE SOURCES

^ OFFICE OF
RADIATION
PROGRAMS





1 OFFICE OF INTER-
GOVERNMENTAL
LIAISON
1 OFFICE OF
CONGRESSIONAL
LIAISON
1 OFFICE OF
PUBLIC AFFAIRS
1 OFFICE OF
FEDERAL
ACTIVITIES






INSPECTOR
GENERAL
_ OFFICE OF
AUDIT
OFFICE OF
INVESTIGATIONS
OFFICE OF
MANAGEMENT AND
TECHNICAL
ASSESSMENT

1 1
ASSISTANT
ADMINISTRATOR FOR
PESTICIDES AND
TOXIC SUBSTANCES
•
•
1
REGION IV 1 I REGION V 1 REGION VI
ATLANTA | | CHICAGO | DALLAS

OFFICE OF
PESTICIDE
PROGRAMS
OFFICE OF
TOXIC SUBSTANCES




ASSISTANT
ADMINISTRATOR FOR
RESEARCH AND
DEVELOPMENT

^ OFFICE OF MONITOR-
ING SYSTEMS AND
QUALITY ASSURANCF
1 OFFICE OF
-J ENV. ENGINEERING
1 AND TECHNOLOGY

^ OFFICE OF
ENV PROCESSES ft
EFFECTS RESEARCH
4 OFF ICE OF
HEALTH RESEARCH






EXHIBIT 1-2


1 1 1 1
1 REGION VII 1 1 REGION VIII
KANSAS CITY | | DENVER
1 REGION IX 1
SAN FRANCISCO]
REGION X 1
SEATTLE |
                OC1   4 1983
                     Date
                                                                                                                      William D Kuckelthaut

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                                                       EXHIBIT  1-3

                                        ORGANIZATIONAL STRUCTURE FOR PROCUREMENT
                                                Assistant  Administrator
                                                           For
                                                   Administration and
                                                  Resources Management
                                                Office of Administration
                                                        Director
                                                Procurement fi Contracts
                                                  Management Division
 Deputy
Director
Policy and
Quality Assurance
Branch

Contract and
Management
Support Branch

Procurement
Branch A
Procurement
Branch B

Planning and
Cost Advisory
Branch
oo
               Regional
               Offices
          Laboratories
               Note;  Dotted line shows  these  elements  reporting  for  Policy  &  Review purposes  only.

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                                   EXHIBIT  1-4
                           The Acquisition Cycle
                                           See Chapter
Pre-Solicitation Phase
•  Development of the Requirement

•  Advance Acquisition Planning

•  Individual Acquisition  Planning
    and Scheduling

•  Development of the Procurement
    Request/Order
2

2
Solicitation and
 Award Phase
   Development and Issuance of
   the Solicitation IFB/RFP

   Evaluation of Bids/Proposals

   Negotiations

   Source Selection

   Award
                                                                        5

                                                                        5

                                                                        5

                                                                        5

                                                                        5
Post-Award
  Administration Phase
   Contract Administration

   Termination for Convenience
    or Default

   Contract Closeout
6/7


7

7
                                  1-17
                                                    Second Edition
                                                    April 1984

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                                EXHIBIT 1-5
                      Major Acquisition Cycle Activities
                                    and
                        Project Officer Responsibilities
No.  Activity
 1    Budgeting and Planning:
     Pre-Solicitation Phase;
 2    Decision to Solicit Proposals
 3    Acquisition Planning
 4    Establishing the Source
      Selection Team
 5    Preparing the Procurement
      Request/Order
         - Support Documentation
         - Proposed Budget/In-House
           Cost Estimate
         - Recommended Project Officer
         - Funding
         - Justification for Other Than
           Full and Open Competition
         - Technical Evaluation
           Criteria and Weights
         - Clearance and Approvals
         - Statement of  Work
         - Delivery Schedule/Period
           of Performance
         - Reporting Schedules
         - Government-Furnished Property
         - Determination of QA/QC
           Requirements
P.O.
TR* PA*
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
C.O. Text
Resp. Ref.
M-2.102
X M-2.202
X M-2.300
X M-4.101
M-3.102
M-4.103
M-3. 106-12
M-3.106-1
M-3. 106-13
M-3. 106-8
M-3. 106-5
M-3. 106-20
M-3. 106-3
M-4. 104-2
M-3. 106-18
M-3. 106-16
X**
* TR = Total Responsibility of Project Officer
  PA = Participatory Activity of the Project Officer
** Subject to the approval of the Quality Assurance Officer
M-3.106-17
                                  1-19
                                                   Second Edition-4/84
                                                   Rev. No. 2- 9/30/85

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EXHIBIT 1-5 (Continued)
                                              P.O.
                                           TR
     Solicitation/Award Phase:

 6   Review of the Procurement
      Request/Order

 7   Determination of Method of
      Contracting and Contract Type

 8   Synopsis in the Commerce
      Business Daily

 9   Preparation and Issuance of
      the Solicitation

10   Pre-Proposal Conference

11   Receipt of Offers

12   Distribution of Proposals
      to Evaluation Panels

13   Evaluation Reports to
      Contracting Office

14   Determination of the
      Competitive Range

15   Conduct of Written or Oral
      Discussions

16   Request, Receipt, and Evaluation
      of Revised Proposals

17   Selection of Source

18   Award of Contract

19   Debrief ing of Unsuccessful
      Offerers
?A




X



X
X
X
X

C.O.
Resp.
X
X
X
X
X
X
X

X
X
X
X
X
Text
Ref.
M-3. 106-20
M-3.106-19
M-3.106-8
M-3. 106-8
M-3.106-9
M-5.001
M-5.201-2
M-5.501
M-5.501
M-5.502
M -5.6 01
M-5.602
M-5.701
X
X
M-5.702
                                  1-20
                                                    Second Edition
                                                    April 1984

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EXHIBIT 1-5 (Continued)
                                             P.O.        C.O.       Text
                                          TR      PA    Resp.      Ref.
     Post-Award Administration Phase:
20   Managing Contracts After Award                X       X        M-6.100

21   Monitoring Activities of the Contractor          X       X        M-6.200

22   Contract Termination                          X       X        M-7.400
                                  1-21
                                                  Second Edition
                                                  April 1984

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                             TABLE OF  CONTENTS

                                   CHAPTER 2
                                                                    Page
M-2.000     ORIGIN  OF  REQUIREMENTS AND  ADVANCE
            ACQUISITION PLANNING

M-2.101     Introduction                                             2-1
M-2.102     Budgeting and Planning                                   2-1
M-2.102-1     The Budget Year (Outyear Budget)                       2-1
M-2.102-2     The Operating Year                                    2-3
M-2.10 2-3     The Current Year                                      2-3

M-2.200     THE  DECISION  TO CONTRACT OUT                    2-5

M-2.201     Introduction                                             2-5
M-2.202     Impact of OMB Circular A-76                             2-5
M-2.202-1     Policy                                                2-5
M-2.202-2     Governmental Functions                                2-5
M-2.202-3     Commercial Activity                                   2-6
M-2.202-4     Government Performance of a Commercial Activity       2-6
M-2.202-5     Inventory of Activities                                 2-6
M-2.2 02-6     A-76 Acquisition Process                               2-7
M-2.202-7     Project Officer Responsibilities                         2-8

M-2.300     ADVANCE ACQUISITION PLANNING                     2-9

M-2.3 01     Definition and Purpose                                   2-9
M-2.3 02     Requirements                                           2-9
M-2.303     Procedures                                              2-10
M-2.303-1     Preliminary Meetings                                   2-10
M-2.303-2     Preparation, Submission and Review of                   2-11
              Contract Plans
M-2.303-3     Quarterly/Monthly Meetings                            2-12
M-2.304     Planning Purpose PRs                                    2-13
M-2.305     Submission Goals and Tracking                            2-13
M-2.305-1     Submission Goals                                       2-13
M-2.305-2     Tracking of Actual Submissions                          2-13
M-2.306     Cut-Off Dates                                           2-13
M-2.306-1     Submission of Procurement Requests                     2-13
M-2.306-2     Unobligated Procurements                              2-14
M-2.307     Review of Commitments and/or Obligations                2-14
M-2.307-1     Comptroller Review                                   2-14
M-2.3 07-2     Status of Transactions                                 2-14
M-2.307-3     End of Fiscal Year Commitment/Obligation Reconciliation 2-15
EXHIBIT

    2-1
    2-2
Contract Planning Submission (FY  ) Annual Plan
Contract Planning Submission (FY  ) Quarterly Plan
2-17
2-19
                                                         Second Edition
                                                         April 1984

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                           CHAPTER M-2.000

                   ORIGIN OF  REQUIREMENTS  AND
                  ADVANCE ACQUISITION  PLANNING
M-2.101  Introduction

    It may appear that EPA's programmatic needs are determined within the
year that they are met.  This is far from an accurate perception.  Whether it
be funds for salaries or an appropriation to contract for programmatic needs,
the budget evolves through a long process of scrutiny and analysis.
M-2.102  Budgeting and Planning

    Within the course of one year, EPA, along with all other Federal agencies,
is working on its budget for three fiscal years:  the current year, one year into
the future (operating year), and two years into the future (budget year).

    The Agency starts developing each year's budget almost two years prior
to the  fiscal year for  which it will  be in effect.  The following outline
describes one complete  budget cycle from initial conceptualization to final
execution.  The FY 1986 budget will be used as an example so that chronology
can be followed easily.

    M-2.102-1  The Budget Year (Outyear Budget)

    (a)  During the spring of FY 1984, the Administrator issues the "FY 1986
Budget Guidance"  which  outlines in  broad  terms  for National  Program
Managers (primarily Assistant and Associate Administrators), the priorities,
strategies, and direction in which the Administrator intends EPA's  programs to
progress, two fiscal years hence.

    (b)  Simultaneously or  shortly thereafter,  the Office of the  Comptroller
issues  resource targets and technical  guidance  to the National  Program
Managers for the  creation  of their "FY  1986  Budget Requests."  Within  the
parameters  of the guidance and resource target limitations,  these Budget
Requests are a more detailed assessment on the part of the National Program
Managers of what programs will be achieving  in two years and what funding
levels  they  require.  Deputy  Regional  Administrators  are  consulted in their
area of expertise.
                                   2-1
                                                          Second Edition
                                                          April 1984

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    (c)  In  addition to  the narrative justifications, the  Budget  Requests
include funding levels for "intramural" costs (the costs of supporting staff such
as  salaries,   travel,  supplies,  equipment,  and  A DP  support  costs)  and
"extramural" costs (acquisition and assistance).

    (d)  During the summer  of FY 1984, the  Administrator  holds budget
hearings  with each of the National Program Managers, querying them on issues
raised  in their budget requests. In attendance are the lead  Deputy Regional
Administrators, representing the coordinated regional view.  As a result of the
hearings  and reviews of manager's  requests,  the Administrator makes final
decisions on the shape and funding levels of the FY 1986 budget.

    (e)  The Office of  the Comptroller  coordinates the preparation of the
final FY  1986 Budget  Request with  the National Program  Managers  and
transmits it  to OMB  by  September  15. This  budget  request includes  a
justification of resources for various levels of  programs,  and  an  "object class"
distribution of the intramural  and  extramural  costs in each program element
(Le., specific amounts for contracts  and grants for each  program element are
now identifiable).

    (f)  During October/November of FY  1985, OMB marks the budget request
with comments and gives  EPA  their "passback."   The  Agency  is  usually
permitted 3-5  days to  appeal  OMB's  decisions.  The passback  and appeal
process may occur once or several times, until  both agencies are satisfied with
the results.

    (g)  During December/January of FY  1985, the Office of the Comptroller,
in conjunction with the  National Program  Managers, prepares EPA's "FY 1986
President's  Budget."  It is  the same OMB-approved budget,  rewritten for
presentation  to Congress  with  additional schedules and  special  analyses
required  by Congressional Appropriation Committees.

    (h)  The Administrator  reveals the EPA portion of the President's Budget
in a press conference in January,  at the  same time  the President sends the
entire  FY 1986 budget request to Congress.

    (i)  During February/March of FY  1985, the Congressional  Appropriation
and  Authorization  Subcommittees  hold  their   budget   hearings.   The
Administrator testifies before  these committees to justify the programs in the
budget request.

    (j)  During the spring of FY 1985, the regional portion of the President's
Budget, which has  been created in  aggregate, is distributed throughout the ten
Regions  through a process known  as "Workload  Analysis."  The  Office of the
Comptroller coordinates this process with  the National Program  Managers who
define  and price out the activities which should occur in each program in each
region. After distribution of workyear and contract resources are negotiated
and finally approved by  all regions, the Office of the Comptroller distributes
the "intramural" resources available to the regions in the President's Budget.
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    M-2.102-2  The Operating Year

    (a)   While Congress continues to deliberate on the President's Budget, the
Office of the Comptroller coordinates the preparation of the Agency's FY 1986
Operating Plan.  Using  the President's Budget  for Headquarters Offices  and
the Workload Analysis distribution of the President's Budget for the Regions,
the Office  of  the Comptroller issues  resource  targets and  directions  for
preparation of the Operating Plans by regional and headquarters budget offices
in three stages:

    (1)   Phase  I provides for the distribution of the headquarters budgets to
         an "allowance holder" level  of detail. "Allowance holders" are usually
         Office Directors within an Assistant Administrator's Office, who
         have the authority to obligate funds.  In  the Regions, each Regional
         Administrator is an Allowance Holder.

    (2)   Phase   II   provides  all   offices   the   opportunity  to   propose
         "reprogrammings" of resources  between programs and object classes
         as defined in the  President's  Budget. Since  the Operating  Plan is
         created  almost  one full year  after  initial conceptualization of  the
         President's Budget, some  priorities and  resource needs may have
         changed.  This is the stage  during which  those adjustments can first
         be proposed.

    (3)   Phase  III provides for  the  distribution of operating plan resources
         through the four quarters of the fiscal year; offices develop contract
         plans by informing the Contracts  Management Division  with whom
         and when they plan to obligate  their contract resources; and, offices
         develop plans indicating how they plan to use their ADP resources.

    (b)   The Office  of  the Comptroller analyzes the  Operation Plans  for
pricing  accuracy  and reprogrammings which may violate the intent of  the
Administrator's priorities or Congressional intent.

    (c)   During the  late  summer  of  FY  1985,   the  President's  Budget is
"marked up" by the Appropriations  Committees of both Houses of Congress;
after further negotiation,  the Committees  issue a "Conference Report"—the
result of their compromise on EPA's  budget.

    (d)   By October  1 of each fiscal year, either an  Appropriations Bill is
approved by both  Houses  of  Congress  and  signed  by  the President, or  a
"continuing  resolution"  is passed which  allows  EPA to operate and  obligate
funds after the first of the fiscal year at a level determined by Congress and
OMB.

    M-2.102-3  The Current Year

    (a)   On October  1 of the new fiscal year, the Office of the Comptroller
issues  "Advices of  Allowance" to  EPA Allowance  Holders  based  on  the
Operating  Plan (or  some other level  of  funding  if  under  a continuing
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resolution).  The Advice of Allowance allows each office to incur obligations
against  the  amount set in the allowance, usually derived from  the  operating
plans.

    (b)  Funds may now be committed and then obligated against the amounts
included in the operating plan and the contract plans.

    (c)  EPA  currently has  several appropriations  against  which  contracts
may be charged:

    (1)  Funds appropriated  under the  Salaries and Expenses  Appropriation
        currently last for only one year; funds not obligated during  the fiscal
        year  revert back to the  Treasury  Department.  Contracts typically
        charged to this appropriation  are administrative in nature,  i.e.,
        janitorial services, landscaping services, economic consultants.

    (2)  Funds appropriated  under the  Abatement,  Control and Compliance
        Appropriation are available for two years; funds  not  obligated  the
        first  year are "carried over" into the second year.  The Office of  the
        Comptroller  issues  "carryover"   allowances   the  second   year.
        Carryover funds may  also be reprogrammed, subject to  the  same
        restrictions  as  new   authority.   Contracts   funded under   this
        appropriation   are   generally  program-related,  i.e.,  contracts   to
        perform laboratory  analyses of water  or hazardous waste materials,
        or contracts to perform environmental impact studies.

    (3)  Research and Development Appropriation funds are also available for
        two years.  The Office of Research and Development  manages most
        of  this  appropriation  and issues  a variety of research grants  and
        contracts under its aegis.

    (4)  The Superfund Appropriation is a "no-year" appropriation;  the  funds
        are available  until obligated and do not lapse back to Treasury. The
        majority of the Superfund appropriation is managed by the Office of
        Solid Waste and Emergency Response.  Contracts  are issued  for  a
        variety  of purposes,  including  laboratory  analyses, cleanup   of
        hazardous waste, and construction of containment facilities.

    (5)  There are a number of other appropriations which  are smaller than
        those mentioned above, are specified for  much narrower purposes,
        and are usually managed by a single office.

    (d)  Allowance  Holders  may  change  their  Operating  Plans  only   by
submitting change requests to the Office of the Comptroller. When reviewed
and if approved, the Office of the Comptroller issues a revised  Advice of
Allowance reflecting the revised Operating Plan.
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                                M-2.200

                  THE DECISION  TO  CONTRACT OUT
M-2.201  Introduction

    It is clear that  EPA's programmatic needs are set  forth considerably  in
advance.  Whether a  need is met through  in-house  resources  or through
contracting is in  part  dependent  upon legislative mandate,  availability  of
in-house resources, time, and other considerations.  One major determining
factor is the Office of Management and Budget Circular A-76.


M-2.202 Impact of OMB Circular A-76

    M-2.202-1  Policy

    OMB Circular A-76, "Performance of Commercial Activities," states that
it is not the Government's business or intent to be in competition with private
business.  Further, it states that if a commercial or industrial activity can  be
obtained from the private sector for less than it would cost the Government  to
perform the same  activity,  it should be  obtained from the private source.  If
the Government can perform the service for less money than industry  can,
then  the  service will  be  performed  "in-house."  The  policy  statements
contained in Circular A-76 do not impact what are considered to be inherently
Governmental functions.

    M-2.202-2 Governmental Functions

    An inherently Governmental  function  is one  which must be performed
in-house  due  to   a  special  relationship  in  executing  Governmental
responsibilities.  Such  Governmental   functions  can   fall  into  several
categories.  The first is the discretionary function of Governmental  authority,
including:   investigations,   prosecutions,  and   other   judicial   functions;
management of Governmental programs requiring  value judgments; directing
the national  defense;  management of  armed services; conduct of  foreign
relations; selection  of  program priorities; direction  of Federal employees;
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regulation of the use of space, oceans, navigational rivers and other natural
resources; direction  of  intelligence and counter-intelligence operations; and,
regulation of industry and commerce. The second Governmental function is
monetary transactions  and  enticements,   including:   Government  benefits
programs;  tax  collection  and  revenue  disbursements  as  part  of   the
Government;  and,   control  of  the   public  treasury,  accounts,  and   the
administration of public trust.  The August 16, 1983 version of OMB Circular
A-76 exempts research and development (R&D) entirely from the requirements
of the Circular.  However, severable commercial activities in support of R&D
are subject to the provisions of the Circular.

    M-2.20 2-3  Commercial Activity

    A  commercial activity  is one which  can  be obtained from a  private
commercial source.  OMB Circular A-76 also defines a commercial activity as
one which  is operated by a  Federal  executive agency  and which provides a
product or  service which could be obtained from a commercial source. Some
examples of commercial and industrial  type activities are:   transportation,
health   services,   manufacturing,  data  processing,  agriculture  and  food,
janitorial and security services.  A commercial activity is not considered a
Government  function.  Commercial activities must be  separable  from other
functions so as to be suitable for performance by contract and be  a type of
employment that is regularly  needed,  not a one-time activity of short duration
associated with support of a particular project.

    M-2.202-4  Government Performance of a Commercial Activity

    Government performance of a commercial activity  is authorized under
any of the following conditions:

    (a)   No satisfactory commercial source is capable of providing the needed
service  or product or use of such a source  would cause  unacceptable delay or
disruption of an essential program.

    (b)   Government performance  of a  commercial activity is required  for
national defense reasons  in  accordance  with criteria  established  by  the
Secretary of Defense.

    (c)   Commercial activities  performed  at  hospitals operated  by   the
Government  if the  agency head determines that in-house performance would
be in the best interest of direct patient care.

    (d)   Government performance of  a commercial activity is authorized if a
cost comparison demonstrates  that  the  Government  is operating  or  can
operate an activity  on an on-going basis at an estimated lower cost than a
qualified commercial source.

    M-2.202-5  Inventory of Activities

    (a)   EPA is required to ensure that initial reviews of all existing in-house
commercial activities are completed in accordance  with  the  supplement to
OMB Circular A-76.
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    (b)  No later than March  15 of each year, EPA, along with other Federal
agencies, is required to submit to the Office of Federal Procurement Policy a
report on the implementation of OMB Circular A-76.

    M-2.202-6 A-76 Acquisition Process

    (a)  Part II of OMB Circular A-76 provides information on the preparation
of Statements of Work.  It sets forth the steps needed to develop, write, and
administer a performance work statement  and a quality assurance plan for
both in-house or contractor  operation of a commercial activity.  Part II is
particularly helpful in developing Statements of Work for facility maintenance
or operation type activities. Once a Statement of Work has been completed, it
becomes the  basis  for  conducting  an in-house cost study by Government
personnel to determine the estimated cost  of providing the service required.
The cost study is performed  in accordance with the OMB Cost  Comparison
Handbook.  Part  IV of OMB Circular A-76.   The Handbook was developed to
ensure that all agencies use a consistent methodology for conducting in-house
cost comparisons. It sets forth definitive guidelines for determining which is
the most economical mode of performance; that is, in-house or contract.

    (b)  The August  16, 1983 revision of OMB Circular A-76  eliminated the
dollar thresholds and established a  full-time equivalent (FTE) threshold for
determining whether cost comparisons are required.  Activities of 10 FTEs or
less may be contracted out without  a cost comparison study.  Activities over
10 FTEs must undergo a cost study unless a waiver is granted.

    (c)  The contracting process  in many  cases takes place  simultaneously
with the cost  study phase. It requires the Statement of Work  to become the
foundation for the issuing of solicitations for bids by the Contracting officer
and synopsizing the solicitations.

    (d)  Solicitations and synopses of solicitations issued to obtain offers for
comparison purposes are required  to state that they will not  result in  a
contract if Government performance is determined to be more advantageous.

    (e)  In making cost  comparisons, in-house personnel prepare an estimate
of the cost of Government performance based on the same work statement and
level  of performance as  applies to offerers  and the total cost of Government
performance is compared to the  total cost of contracting  with  the potentially
successful offerer.  Within the OMB A-76 guidelines, the lowest estimate wins,
except  that  an in-house activity   is not  to  be  converted  to contract
performance unless the projected cost advantage to the Government is at least
10 percent of the in-house personnel-related  cost for the performance period.

    (f)  If the contractor appears to win, the Government normally conducts
a preaward survey to evaluate the  Contractor's ability to perform.  A time
period  is set aside for  review  and appeal by the  affected  parties.  Upon
satisfactory completion of the preaward survey, the contract  is awarded.  If
the Government's cost study proves to be lower, then a series of similar steps
takes place—i.e., a period of  time is set aside for review and appeal, followed
by a possible cancellation of the solicitation.
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    (g)   Each cost comparison should be reviewed by an activity independent
of the activity which prepared the cost analysis to ensure conformance with
the instruction to the supplement to OMB Circular A-76.

    M-2.202-7 Project Office Responsibilities

    Where the provisions of A-76 are  being applied,  your responsibilities may
be varied.  In addition to the possible participation in the review process (see
M-2.202-5 above), you may participate in:  (i) the inventory; (ii) Statement of
Work  development; (iii)  the quality assurance plan which will be utilized to
ensure   acceptable  performance   by  the   organization  that   wins  the
contract—i.e., Government or industry, and (iv) the evaluation of the bids or
proposals received in response to the  solicitation.  If you have prepared or
participated in the development of the Government's  cost estimate to perform
the work—i.e., the Government's bid—you cannot be involved in the evaluation
of bids or proposals of commercial organizations.
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                                 M-2.300

                  ADVANCE ACQUISITION  PLANNING
M-2.301  Definition and Purpose

    (a)  Advance  Acquisition  Planning  is  accomplished by  using the EPA
Acquisition Planning System.

    (b)  The Acquisition Planning System has three primary purposes.   (1)  As
an  integral part of the  Operating Plan, it is used  by program  offices  to
prioritize contracting needs for the upcoming fiscal year and allocate contract
funds.  (2)  It  is  also  one of the means by which  the contracting offices
(Procurement and Contracts Management Division (PCMD) and the Cincinnati
and  RTP Contracts  Management  Divisions) estimate annual  workload and
staffing  requirements. The contracting  offices also use the plans  to identify
potential socioeconomic set-asides and high priority awards.  (See Exhibits 2-1
and 2-2  at the end  of this chapter.)  (3)  Finally, it is used to promote and
provide  for full and open  competition  and to ensure that the Government
meets its needs in the most effective, economical and timely manner.

    (c)  The  system  places  major  emphasis   on  increased  interaction/
communication between program offices and contracting offices. The level  of
interaction  necessary  will  be  dependent  upon  the  volume  of  contracting
activity  anticipated for  each  program  office.   While  this system  applies
primarily to  assistant administrator organizations, similar procedures will  be
followed for regions, associate administrator organizations, and headquarters
staff offices, as necessary, based on anticipated activity.


M-2.302  Requirements

    (a)  With the exception of small purchases, or orders under GSA or other
agencies' contracts,  acquisition planning must be performed for each contract
procurement transaction (new contract,  renewal, or  modification)  to  be
obligated during a fiscal year.
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    (b)  In  addition to  (a)  above,  FAR  Subpart 7.1 requires agencies  to
establish criteria and thresholds at which increasingly greater detail and more
formal planning is required as acquisitions become more  complex and costly.
Within EPA, written individual acquisition plans shall be developed to meet the
requirements of FAR Subpart 7.1 and the EPA Acquisition Planning System for
acquisitions of $5,000,000 or more.  Chapter 1 of the Contracts Management
Manual covers the EPA Acquisition Planning System.
M-2.303  Procedures

    M-2.303-1  Preliminary Meetings

    (a)  Preliminary  meetings will  take  place  between  program  office  and
PCMD personnel prior to preparing initial acquisition plans in preparation for
the forthcoming fiscal year.  Meetings should take place in  the July/August
time frame (or as mutually agreed  upon  by PCMD and the program office),
with the initial plans due  in September.  PCMD will schedule these  meetings
with the planning contact (a senior level planning official) for each Assistant
Administrator and with such other organizations as appropriate.  The purpose
of  these  preliminary meetings  will  be  to discuss   the program  office's
contracting activity for the upcoming year. The agenda for the first  meeting
should include at least the following:

    (1)  Program office's contracting priorities;

    (2)  Program office's  volume of contracting activity for the upcoming
         year;

    (3)  Unresolved   problems between  the  contract  offices  and  program
         office, along with proposed solutions;

    (4)  Contract resources level assigned to the program office—whether it
         is sufficient  to process expected workload;

    (5)  Ways to maximize competitive  contract  awards and socioeconomic
         set-asides;

    (6)  How to prepare annual and first quarter plans;

    (7)  How to coordinate the submission and processing of actions to assure
         maximum responsiveness and minimum leadtimes; and,

    (8)  Arrangements for discussions between PCMD and program offices to
         discuss on-going contracting activity and problems.

    (b)  The initial  meetings should  include  the following  attendees  (if
available):  Senior official(s)  in  charge of  planning for the organization  and
similar officials from individual offices  within  the organization  as  deemed
necessary;  the   PCMD   Director   and  the   PCMD   Branch  Chief/Section
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Head/contracting  officers who will  be handling the specific program  area
(including representatives from the ADP Procurement Section if  the program
office has  significant  ADP  contract dollars); and  other  PCMD  staff  as
appropriate.   The  Contract   Management  Division  offices  at  RTP  and
Cincinnati will participate in  the meetings with programs which they service.
Both  program office and contract office personnel should come out of these
preliminary meetings with  a  good understanding of what to expect  on the
contract plans and for  submissions during the  first quarter of the upcoming
fiscal year.

    M-2.303-2  Preparation, Submission and Review of Contract Plans

    (a)  After  the  preliminary  meetings   are   held,   allowance  holder
representatives will prepare   the initial  plans and  submit  them  to  their
Assistant Administrator, Regional  Administrator,  Associate Administrator,
Inspector General,  or General Counsel, or executive  officer  for  review and
approval. The plans will then be sent to PCMD (with a courtesy copy to the
Comptroller).  PCMD representatives (Planning and Analysis staff plus the
appropriate contracting officers)  will acknowledge receipt of the plans, review
them  and notify the program office if there are questions. Such questions will
be discussed with the program representative, who will then contact individual
allowance holders for any necessary changes/revisions.

    (b)  As indicated above, initial plans should be submitted in September for
the upcoming fiscal year (starting October 1). There  will  be  two planning
forms to complete: an annual summary plan and a detailed quarterly  plan.
These forms including instructions are attached as Exhibits 2-1 and 2-2.  Below
are brief descriptions of each  planning form.

    (1)  Annual Plan -  This plan provides a quarter-by-quarter summary of all
         planned contract actions and dollars (excluding small purchases) for
         the  entire year,  broken  down  by   transaction  category  and  by
         contracting office.  In addition, new contract  awards must  be shown
         by dollar ranges.  Separate annual plan forms should be prepared for
         funded actions, nonfunded actions (planning purpose PRs),  and ADP
         actions (funded and  nonfunded).  The  sum of these three plans will
         represent  the entire  contracting workload for the program office for
         the year.  See  Exhibit 2-1 attached for  more details.

         The plan should be prepared and submitted concurrently with the  1st
         quarter detailed plan (see (2) below).  It should  be updated only when
         significant changes occur to the program's contract  funds leveL  For
         example, if an allowance holder who originally planned $10 million in
         contract  actions receives another $2 million in contract funds from
         Agency reserves during the  3rd  quarter,  the  annual plan should be
         updated to reflect the  additional funds.  Likewise,  if  an allowance
         holder reprograms  funds to significantly impact the planned contract
         total, the annual plan should be updated.  Any  anticipated update to
         the annual plan should be discussed by  the program office and PCMD
         at  the quarterly/monthly  meetings  to assure  PCMD's  ability  to
         provide satisfactory   service in response  to  changing requirements.
         (See M-2.303-3 Quarterly/Monthly Meetings below.)
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    (2)  Quarterly  Plan -  This  form provides  for  detailed  data on  every
         contract action (excluding small purchases) to be submitted to the
         contracting offices during the subject fiscal quarter.  A separate plan
         must be prepared and submitted to PCMD during the month preceding
         the  next fiscal quarter (the  1st quarter  plans should be submitted
         with the annual plan in September, the 2nd quarter plan in December,
         and   so on).  See  Exhibit 2-2  for  specific  instructions and  data
         elements.

         Although PCMD  prefers  that all plans  be prepared on the standard
         EPA planning forms,  alternate  forms using a different  format are
         acceptable, provided that all of the required data elements are shown.

    M-2.303-3 Quarterly/Monthly Meetings

    (a)  Once the initial plans  are  submitted and agreed upon, PCMD and the
program offices should decide  where,  when and  how often they will  meet to
discuss contracting  activity and who will  attend.  At  the very least, quarterly
meetings should  be held to discuss  the upcoming  quarterly  plan and  any
problems either party is experiencing.  The agenda for these meetings should
include discussions on:

    (1)  Upcoming  actions to be submitted and submission goals;

    (2)  Problems with actions in-process;

    (3)  Identifying delays/slippages in submissions of planned actions;

    (4)  New workload which would cause an adjustment to the annual  plan;

    (5)  The present actual level of submissions;

    (6)  Preparation of the next quarterly plan; and,

    (7)  Other items of concern to the program or contracting personnel.

    (b)  PCMD and  the designated  planning   contact  for  each Assistant
Administrator  will   be  jointly   responsible   for   scheduling   these
quarterly/monthly  meetings.   PCMD  will hold joint meetings  with  other
organizations as needed based on their expected  contracting volume.  In cases
where the program  office and  the  contracting staff are in different locations
(for example, the Assitant Administrator office for the Office of Research and
Development  is in Washington, but the contracting activity is handled by the
RTP and Cincinnati contracting offices),  the meetings will probably only take
place once a quarter.  The RTP  and  Cincinnati contracting officers will be
able  to  meet the  local individual lab representative/project officers  on a
monthly basis (if not more frequently).

    (c)  In other cases, the meetings should be held  at least quarterly, while
the staff members who  use  the  plans on a day-to-day basis should  meet
monthly or as often as  necessary.  The frequency of  these meetings  will
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depend  upon the contracting activity level and availability of the involved
parties, and will  be  a mutually  reached decision.   Regular and  frequent
communication and  interaction is  necessary  to the success of the planning
process.


M-2.304 Planning Purpose PRs

    Non-funded actions (Planning  Purpose Procurement Requests - PPPRs)
should be shown on both the annual and quarterly planning forms.  A separate
annual planning form summary should be completed for PPPRs, based on the
quarters in which the actions will be submitted. Details on the actions should
be shown on the quarterly planning  form.  Program  offices should include only
those non-funded requirements for  which they are highly certain that funding
will be  provided. Actions where funding is less certain should not be planned
or submitted.
M-2.305  Submission Goals and Tracking

    M-2.305-1  Submission Goals

    PCMD will analyze the mix of planned  actions reflected on the annual
plan (see Exhibit 2-1) for each program  office and agree on submission goals
for each fiscal quarter.  The objective will be to provide an even contracting
workload throughout the fiscal year.  This may result in different percentage
goals  for each program office (or even each allowance holder), which will be
based on the  program office/allowance holder's individual plan and the PCMD
staff's workload.  The individual goal levels  will be negotiated between the
planning contact  and the PCMD at one of the meetings held after the initial
plans  have been submitted and reviewed.

    M-2.305-2  Tracking of Actual Submissions

    Actual submissions will be tracked  on the Contracts Information System
(CIS).   The  actual  submission  level   data,  will  be  discussed   at   the
monthly/quarterly meetings following the end of each fiscal quarter.  Program
offices will be able to obtain this information from PCMD on request.
M-2.306  Cut-Off Dates

    PCMD  establishes  deadline  dates  for  submission  of  specific classes of
actions that must be awarded before year end. These dates take into account
the leadtime  PCMD  will need  to  award actions by September 30.  Cut-off
dates apply  to all actions and all program offices, and  should not be confused
with  submission  goals  (see  M-2.305-1  above),  which  may vary  by program
office.

    M-2.306-1 Submission of Procurement  Requests

    (a)  The cut-off date for receipt  of  procurement requests (EPA Form
1900-8) (see Chapter 4) by  the  contracting offices for obligation before the
end of the fiscal year are as follows:
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                  Type of Procurement                Cut-Off Date

    (1)  All contracts except extensions                    April 30
        as noted below

    (2)  Extension of existing service                       June 30
        contracts which expire on September 30

    Note;  Cut-off  dates  for  small purchases  transactions  (procurements
    under $25,000) or  delivery  orders under GSA Federal Supply Schedule is
    September 1, except for renewal of leases or maintenance agreements on
    equipment for which the cut-off date is June 30.

    (b)  Contracting offices make every effort to complete obligation of all
procurements  received by the cut-off date before the end of the fiscal year.
However, PCMD cannot guarantee that  those actions received by the cut-off
dates will  be obligated   by  year-end.  Processing  times  depend  on  the
contractor,  program office,  audit office,  as well  as  on contracting office
action.

    M-2.306-2 Unobligated Procurements

    Unobligated procurements  that  were received  by the  cut-off date  are
given first priority for obligation in the ensuing fiscal year under the following
conditions:

    (a)  Transactions have been properly  recorded as commitments in  the
Financial Management System year-end report;

    (b)  Documents are properly executed procurement requests received by a
contracting office; and,

    (c)  The Office of the Comptroller has recertified funds availability  and
issued allowances.
M-2.307  Review of Commitments and/or Obligations

    M-2.307-1  Comptroller Review

    Using information supplied from the Financial Management System (FMS)
and the Contract Information System, the Office of the Comptroller reviews
the current commitments/obligations for contracts as of April 30 of each
fiscal year.  The comptroller's office determines, for the Responsible Planning
and Implementation Officer  (RPIO), the uncommitted/unobligated balances
which  are  available.  The Office of the Comptroller  completes its  review
during May, or as soon as possible thereafter.

    M-2.307-2  Status of Transactions

    RPIOs  determine  that   commitments   reflected  in  the   Financial
Management System are accurate and that  the contracting offices have the
necessary  documents to  process.  Monthly  Contract  Information  System
reports are provided to show the status of all transactions.
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    M-2.307-3  End of Fiscal Year Commitment/Obligation Reconciliation

    (a)  As a  final step  in  the contract planning process, the  Financial
Management Division provides Allowance Holders with  special reports listing
all committed items received by September 30 in finance offices for entry into
the  FMS.   PCMD  provides  allowance  holders  with   a  status  report  on
unobligated procurements received for processing during  the fiscal year.

    (b)  The allowance holder must compare these reports to  his/her  own
records identifying all contracts  which were committed as of September 30.
Any  missing items or corrections must  be transmitted to  the  appropriate
Accounting  Operations Office within  five  (5) work days of receipt of the
special report.  In addition, the RPIO sends  an updated  commitment listing to
the Financial Management Division, Financial Reports and Analysis Branch.

    (c)  The Financial Management Division compares  the RPIO  listing with
its own commitment listing, and  in conjunction with the Responsible Planning
and Implementation Officers, prepares  a consolidated listing of all outstanding
commitments which  it certifies  for carryover to  the Office of Comptroller.
The Office of the Comptroller reviews the commitment  listing with the RPIO,
prepares a consolidated listing of the status of all outstanding actions of each
RPIO, negotiates reductions in commitments if insufficient funds are available
to the RPIOs, and issues carryover Advices of Allowance.
                                  2-15
                                                          Second Edition
                                                          April 1984

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                            um.» iimum cuiiipiaimu luim.
CONTRACT PLANNING SUBMISSION (FY ) ANNUAL PLAN
PREPARED BY
APPROVED BY (AA ordtltgnet)
TRANSACTION CATEGORY
NEW AWARDS
S10K - $SOOK
C50O.OO1 - $1 M
(1.000.001 >
inciamanial Funding/
Exarclu ol Option Action!
Other Contract Modification!
TOTAL
ALLOCATION BY CONTRACTING
LOCATION
Hoadquartart
HTP
Cincinnati
Rogloni
TELEPHONE NUMBER

REVIEWED BY (PACMD)
3ATE

ACTIONS ARE: fCliccft ont )
CH Funded ONonlundod QAOP Funded CD A DP Nonlundod
ACTIONS BY FISCAL QUARTER OF SUBMISSION
1
NO OF
AC-
TIONS










DOLLAR
AMOUNT
10001










2
NO. OF
AC-
TIONS










DOLLAR
AMOUNT
lOOOt










3
NO. OF
AC-
TIONS










DOLLAR
AMOUNT
(000)











A
NO. OF
AC-
TIONS











DOLLAR
AMOUNT
tooot











TOTAL
NO. OF
AC-
TIONS











DOLLAR
AMOUNT
(000;











                                                                                                                                                                                                n
                                                                                                                                                                                                x
                                                                                                                                                                                                x
                                                                                                                                                                                                53
to

-------
                                                                  INSTRUCTIONS - ANNUAL PLAN
        GENERAL: Please fill in the fiscal year at the top of the form. A separate Annual
        Plan form should be completed for —

          1) All Funded Actions — contract actions to be submitted to  the Procurement
             and Contracts Management Division  (P&CMD)  with funds. DCNs. and
             ACCOUNT numbers that can be obligated (excluding ADP actions).

          2) Non-Funded Actions  -  (Planning Purpose PRs) to be submitted to P&CMD
             before accounting data/funds are available (excluding ADP actions),

          3) ADP Funded Actions, and

          4) ADP Non-Funded Actions.

        Small purchases should be excluded from the plans.

        Please include only those Non-Funded (Planning Purpose PR) Actions for which
        there is a high certainty of eventually providing funds to be obligated. If a planning
        purpose PR  is to be submitted in the 1st quarter, to receive funding in the 3d quar-
        ter, the action should be included in both the annual Funded plan (as a 3d quarter
to
i—•
09
action) and the annual Non-Funded plan (in the 1st quarter). Planning purpose PRs
submitted in the prior year, which are being funded in the current year, should be
included under the quarter in which funding will be provided.

Each procurement action should be counted separately on the summary. One PH
could result in multiple actions  throughout the year. If so. please estimate  the
number of anticipated actions and count each one separately in the appropriate
fiscal quarter. The dollars to ba shown should represent the estimate to be obligated
under the specific action.

TYPES OF ACTIONS: Summarize the quarterly totals of actions and dollars by
New Awards (by  S ranges, based on the estimated obligation for the solicitation).
Incremental  Funding/Opt an  Actions  (on  which the contract has already been
awarded), and other contract modifications If a new contract action will be sub-
mitted for award  early in the year, and funding/mods on the same contract will be
submitted later in the year, only include the initial RFP under New Awards.  The
additional funding/mods  should  be  shown in the Incremental  Funding/Option
Actions or Other Contract Modifications, as appropriate.

BY CONTRACT  LOCATION: Summarize quarterly totals  by  the contracting
office/location which will be processing and awarding the action.
        EPA Form 2410 9A (6-831 HSVMM

-------
              instruc110n> on pack Polote coinpiaung inn l
CONTRACT PLANNING SUdlvllSSION (FY ) QUARTERLY PLAN
PREPARED BY JTELEPHONE NUMBER
APPROVED BY tAA ordttiincel
ID Numpar












Tltio/Deicripilon












ALLOWANCE HOLDER NO

Project Officer/
Telephone Number












Quarter
Di Dz Da Da
Date I
ORGANIZATION 1
i
REVIEWED BY (P&CMDt \
UQOUJ
r-C
-------
                                                              INSTRUCTIONS - QUARTERLY PLAN
to
GENERAL: Please fill in the Fiscal Year and check the Quarter of the plan at the
lop of  the form. To the extent possible, please group all actions by the contracting
office that will process them. For example, list all Washington (HOQ) actions first,
followed by  RTF actions. Cincinnati actions, and Regional actions, with approp-
nate identification for the contracting office.

This plan should include all contract actions to be submitted to P&CMO during the
subject  quarter,  whether funding is  provided or not (see Funding Status code
instructions below).

ID NUMBER: Provide a unique sequential number format using up to eight charac-
ters ID numbers must be shown on PRs submitted, and should be traceable back to
the plan

TITLE/DESCRIPTION: Provide a concise descriptive title unique to  this procure-
ment action Pleose specify if this is an AOP action.

PROJECT OFFICER/TELEPHONE  NUMBER: 'Give the EPA  project officer for
ihis action, along with Kis or her telephone number.

TRANSACTION CODE: Describe the type of transaction, using one of the follow-
ing codes

   C   New Competitive Contract
   S   New Sole Source Contract
   B   Basic Ordering* Agreement
   MA Modification — added work scope
   MO Modification — exercise of an option
   Ml  Modification - incremental funding action
   O   Some other class of action — identify in Project Description column
FUNDING STATUS CODE: Used to identify a Funded (F) or a Planning Purpose
(P) PR and year of expected obligalion.

  Examples —

      P/84 = Planning Purpose PR for obligation in FY84
      F/83 = Funded action for obligation in FY83

CONTRACT NUMBER: Only  fill out  if known - for mod*, options, funding
actions.

SET-ASIDE STATUS: Used to identify -

  S  = Small business award
  SS = Small business set-aside
  8  » 8(A) award

POTENTIAL  CONTRACT VALUE: Show estimated potential contract value of
this procurement. If  transaction is a modification, show the estimated increase in
contract value (only  for transactions where additional work is being added). This
amount may include money to be obligated over several years if the action will
result in award of a new contract.

MULTIFUNDED: Show if other allowance holder(s) are providing funding on this
action; if  so. list other allowance holder numbers in the Title/Description column.

ESTIMATED  DOLLAR AMOUNT: Expected amount of the obligation to be made
for this transaction (RFP). If this transaction represents the initial award of anew
contract,  this column should only show the initial RFP's anticipated obligation.
The potential value of the entire contract should be shown under Potential Con-
tract Value (see above).
       EPA Foim 2410-SB (6-B3I Havana

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                             TABLE  OF  CONTENTS

                                  CHAPTER 3
                                                                             Page
M-3.000

M-3.101
M-3.102
M-3.103

M-3.104
M-3.105
M-3.106
M-3.106-1
M-3.106-2
M-3.106-2(a)
M-3.106-2(b)
M-3.106-2(c)
M-3.106-3
M-3.106-3(a)
M-3.106-3(b)
M-3.106-3(c)
M-3.106-3 (d)

M-3.106-3(e)
M-3.106-3(f)
M-3.106-4
M-3.106-4(a)
M-3.106-4(b)
M-3.106-4(c)
M-3.106-4(d)
M-3.106-4(e)
M-3.106-4(f)
M-3.106-4(g)
M-3.106-4(h)
M-3.106-4(1)
M-3.106-5
M-3.106-5(a)
M-3.106-5(b)
M-3.106-5(c)
M-3.106-5(d)
M-3.106-5(e)

M-3.106-5(f)
M-3.106-6
M-3.106-7
M-3.106-8
M-3.106-8(a)
M-3.106-8(b)
M-3.106-8(c)
INDIVIDUAL ACQUISITION PLANNING AND  SCHEDULING

Introduction                                                   3-1
Definition                                                     3-1
Sequences of Advance and Individual Acquisition
   Planning and Scheduling                                     3-2
Policy for Individual Acquisition Planning and Scheduling          3-2
Procedure for Individual Acquisition Planning                     3-2
Acquisition Planning Considerations                             3-3
   Project Officer Qualifications                               3-3
   Conflicts of Interest: Personal/Organizational                3-3
      Requirements                                            3-3
      Organizational Conflicts of Interest (OCI) Defined          3-3
      Personal Conflicts of Interest                             3-5
   Statement of Work (Specification)                            3-6
      Definition of Specification                               3-6
      Classification of Specifications                           3-6
      How the Requirement May Be Expressed                   3-7
      Considerations in Determining How to                     3-7
         Delineate the Requirement
      Guidance on Preparation of the Statement of Work          3-8
      Writing Specifications for Commercial Products            3-10
   Contract Types                                             3-11
      Firm-Fixed-Price Contract                               3-11
      Cost-Reimbursement Type Contract                       3-12
      Cost-Plus-Fixed-Fee Contract                            3-12
      Cost-Plus-Award-Fee Contract                           3-14
      Time and Materials Contract                             3-15
      Labor-Hour Contract                                    3-16
      Indefinite Delivery Type Contract                         3-16
      Indefinite Quantity Contract                             3-17
      Matrix of Contract Types                                 3-18
   Technical Evaluation Criteria                                3-18
      Purpose and Basic Requirements                          3-18
      Types of Evaluation Criteria                             3-18
      What Is To Be Evaluated                                 3-19
      Developing and Weighting Evaluation Criteria              3-19
      Relationship of Price/Cost to Technical                    3-20
      Evaluation Criteria
      Sample  Evaluation Criteria                               3-20
   Technical Proposal Instructions (TPIs)                        3-21
   Classified Information                                      3-21
   Source Considerations                                      3-22
      Availability of Work Resulting from Other Sources          3-22
      Small Business Set-Asides                                3-22
      Socially and Economically Disadvantaged Business          3-23
         Enterprise Program—8(a) Contracts
                                                    Second Edition-4/84
                                                     Rev. No. 2- 9/30/85

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TABLE  OF  CONTENTS (Continued)
CHAPTER  3 (Continued)
M-3.106-8(d)
M-3.106-8(e)
M-3.106-8(f)

M-3.106-8(g)
M-3.106-9
M-3.106-10
M-3.106-11
M-3.106-12
M-3.106-13
M-3.106-13(a)
M-3.106-13(b)

M-3.106-13(c)
M-3.106-13(d)
M-3.106-13(e)
M-3.106-14
M-3.106-15
M-3.106-16
M-3.106-16(a)
M-3.106-16(b)
M-3.106-16(c)

M-3.106-16(d)

M-3.106-16(e)
M-3.106-16(f)
M-3.106-16(g)
M-3.106-16(h)
M-3.106-160)
M-3.106-16(j)
M-3.106-16(k)

M-3.106-16(1)
M-3.106-16(m)
M-3.106-17
M-3.106-17(a)
M-3.106-17(b)
M-3.106-17(c)
M-3.106-18
M-3.106-18(a)
M-3.106-18(b)
M-3.106-18(c)
M-3.106-18(d)
M-3.106-19
M-3.106-19(a)
M-3.106-19(b)
M-3.106-19(c)
   Labor Surplus Area Set-Asides                            3-25
   Sources-Sought Synopsis                                 3-25
   Justifications for Other Than Full                         3-27
     and Open Competition (JOFOC)
   Unsolicited Proposals                                    3-31.1
Pre-Proposal Conferences                                   3-31.2
Site Visits                                                 3-32
Reference Materials                                       3-32
Cost Estimate                                             3-32
Funding                                                   3-33
   Basic Concept                                          3-33
   Cost-Reimbursement Term Form Contract (Level          3-33
     of Effort)
   Availability of Funds                                    3-37
   Commitments                                          3-38
   Funding Cost-Type Contracts                             3-38
Planning Purpose PRs (Unfunded Procurement Requests)       3-39
Options                                                   3-39
Government Property                                       3-40
   Introduction                                            3-40
   Definitions                                             3-40
   Property To Be Furnished and/or Acquired                 3-42
     Before Contract Award
   Considerations for Purchase Versus                       3-43
     Rent/Lease Determinations
   Required Sources of Supplies and Services                 3-43
   Acquisition of Excess Property                            3-44
   Procedure                                              3-45
   Content of Needs Justification                            3-45
   Vesting Title to Educational Institutions                   3-46
   Joint Use of Property by Contractor and EPA              3-46
   Use of Property Purchased with Funds of                  3-47
     Another Agency
   Contractor Use of Government  Vehicles                   3-47
   Contractor Use of GSA Self-Service Stores and Depots     3-47
Quality Assurance                                          3-47
   Quality Assurance Program Plans                         3-47.1
   Quality Assurance Project Plans                          3-47.1
   Pre-Award Audits                                       3-47.2
Reports                                                   3-48
   Introduction                                            3-48
   Types of Reports                                       3-48
   Considerations in Use of Reports                         3-48.1
   Specifying Reports                                      3-49
Acquisition of Non-Severable Facilities                      3-49
   Definition                                              3-49
   Background                                             3-49
   Types of Improvements                                  3-49
                                                    Second Edition-4/84
                                                    Rev. No. 2- 9/30/85

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TABLE  OF  CONTENTS  (Continued)
CHAPTER  3 (Continued)
M-3.106-19(d)
M-3.106-19(e)

M-3.106-19(f)
M-3.106-20
M-3.106-20(a)
M-3.106-20(b)
M-3.106-20(c)
M-3.106-20(d)
M-3.106-20(e)
M-3.106-20(f)
M-3.106-20(g)
M-3.106-20(h)
M-3.106-20(0
M-3.106-20(j)
M-3.106-20(k)
M-3.106-20(1)
M-3.106-21
M-3.106-2 l(a)
M-3.106-2 Kb)
M-3.106-2 l(c)
M-3.106-21(d)
M-3.106—21(e)

M-3.106-21(0
M-3.106-22
M-3.107
M-3.108
M-3.108-1
M-3.108-2
M-3.108-3
          Policy                                                3-49
          Determinations and Findings (D&F)/Approval             3-50
            Requirements
          Project Officer Informational Input to D
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                           CHAPTER  M-3.000

                 INDIVIDUAL  ACQUISITION PLANNING
                           AND SCHEDULING
M-3.101    Introduction

    Chapter 2 of this manual sets out the process by which an Agency need is
identified, budgeted, method of acquisition determined, and  how the advance
procurement planning process takes place at the beginning of each fiscal year.
This Chapter delves into  the process of individual acquisition  planning and
scheduling.
M-3.102   Definition

    (a) Advance acquisition  planning, also called contract planning,  is  the
formal  function of  establishing a  plan  that  schedules  certain  types  of
anticipated contractual expenditures during a fiscal year. It is an activity that
takes place  before the beginning of  a  fiscal year and  involves allowance
holders, the  Office of  the  Comptroller,  and the Procurement and Contracts
Management Division. The  primary purpose of advance acquisition planning is
to enable  PCMD to establish a plan for meeting the demands for its services.

    (b) Individual acquisition  planning  and scheduling is a two-step function.
The  first  step,  individual  acquisition  planning,  takes place  prior  to  the
development of  the  Procurement Request (PR) (see  Chapter 4) and  is  an
activity that involves the initiator of the requirement (usually later appointed
as the Project Officer)  and  the  Contracting Officer. During this activity,  the
Project and Contracting Officers discuss all of the  Project Officer's duties  and
responsibilities  related to  the new requirement.   After  this  meeting,  the
Project Officer  will, with the assistance of the Contracting Officer as needed,
develop the PR package, taking into account these discussions.

    The second  step of  this function is  individual procurement scheduling.
Again, both the initiator and Contracting Officer are involved. In this step the
parties agree to specific  milestone  dates for activities that take place after
receipt of the procurement  request package in the procurement office.
                                     3-1
                                                           Second Edition
                                                           April 1984

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M-3.103 Sequence  of  Advance  and  Individual  Acquisition  Planning  and
        Scheduling

    Exhibit 3-1 sets forth the sequencing of these activities, participants, and
reference to manual coverage.


M-3.104 Policy for Individual Acquisition Planning and Scheduling

    (a)  Individual acquisition planning should  take place for all procurements
in excess of $25,000 (including money bearing change orders and modifications)
with the exception of orders to be placed under GSA requirements or schedule
contracts  and contracts with other agencies.  Exhibit  3-2 contains a suggested
individual acquisition planning form.  In addition, the form contains references
to paragraphs within the Handbook where information may be obtained on the
subjects set forth on the form.

    (b)  In planning an individual acquisition,  the  Project Officer should take
into account  Government  policy that  acquisition  planners specify  needs,
develop specifications and  solicit offers in  such a  manner  to promote and
provide for full and open competition with due  regard to  the  nature of the
supplies and services to be acquired  and  to ensure that no contract is entered
into without full  and  open competition on the  basis of lack of acquisition
planning.
M-3.105  Procedure for Individual Acquisition Planning

    (a)  The Project Officer's knowledge of  his/her responsibilities  in  the
pre-solicitation phase of the acquisition cycle and the level of expertise with
which  duties are performed  impact heavily on the  acquisition.  It  is at this
stage that the quality and timeliness of the acquisition is determined. A poor
Statement of Work,  inadequate reporting requirements, or missing approvals
will individually cause the Contracting Officer to reject the Purchase Request,
thus extending the acquisition lead time.  Consequently, it is imperative that
the Project  and Contracting Officers  meet at  the  time the Project Officer
commences the development of the requirement.

    (b)  Prior  to  development   of   any  aspect   of  the   Procurement
Request/Order (EPA Form 1900-8), the Project Officer  must consider all  the
items contained in Exhibit 3-2.  As an aid, this Exhibit  contains responses to
those parts of this Chapter that must, as applicable,  be considered prior to  the
actual development of a Procurement Request (see Chapter 4). Subsequent to
a review of  these considerations,  a  meeting should be established  with  the
Contracting  Officer  or designee  to  cover  the  Project  Officer's  plan  for
development   of   the  requirement  and  to  ensure   all  required  steps   are
understood and will be taken.

NOTE:  The  contents of Exhibit  3-2 and this  chapter expand upon  the EPA
"Procurement Request Rationale  Checklist."   Exhibit 3-2 contains more than
the  checklist  requires and  will  result  in  the  complete  assembly  of  all
information needed to prepare the PR and supporting rationale. See Chapter 4
for guidance on the execution of the PR—EPA Form 1900-8.
                                       3-2
                                                         Second Edition-4/84
                                                         Rev. No. 2- 9/30/85

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M-3.106 Acquisition Planning Considerations

    Each of the following  topics must be considered and discussed with the
Contracting Officer in planning the  development  of  the requirement.  Topics
sequentially follow the considerations listed under  "Planning Considerations"  in
Exhibit 3-2.

    M-3.106-1  Project Officer Qualifications

    A Project Officer must be identified who is qualified to serve as a Project
Officer on  the contract.  Preferably it should be an individual who has previous
experience as a Federal Government Project Officer and has  been certified
under the Project Officer certification program.

    M-3.106-2  Conflicts of Interest; Personal/Organizational

    M-3.106-2(a)  Requirements

    In planning the acquisition, consideration should be given to the following
potential conflicts of interest:

    (1)    The  Project  Officer  should  explore  the  possibility  that  an
           organizational conflict of interest problem could exist.

    (2)    For  individual  conflicts  of  interest,  the  Project Officer should
           identify  any  regular and   special  EPA   employees  (i.e.,  those
           appointed to serve not more  than 130 days in a 365-day period)  who
           are or are planned to be involved in: establishing  the  need for the
           proposed contract; preparing the Statement of Work; preparing the
           evaluation criteria;  participating  in the proposal  evaluation
           process; or otherwise participating in the Agency's management of
           the  contract.  This list  of personnel should  be brought  to  the
           attention of the Contracting Officer.

    M-3.106-2(b)  Organizational Conflicts of Interest (OCI) Defined

    (1)  Organizational conflict of interest exists  when the nature of the work
         to be  performed under  a proposed  Government  contract  and  a
         prospective  contractor's organizational,  financial,  contractual, or
         other  interests  (including  the  interests of its  chief executives,
         directors, consultants,  or subcontractors)  are such that:

           (i) award of the  contract   may result in  an  unfair competitive
              advantage; or

          (ii) the  contractor's objectivity  in  performing  the  contract work
              may be impaired.

    (2)  The  determination  as to  whether  an  organizational conflict of
         interest exists should be made through the exercise of  common sense
         and good  business judgment.  The  Contracting Officer is responsible
         for identifying  OCI early  in  the acquisition  process and taking
         appropriate steps to avoid, neutralize, or  mitigate it.
                                     3-3
                                                            Second Edition
                                                            April 1984

-------
In doing so, the CO is expected to seek the advice of legal counsel, as
well as technical assistance, from appropriate program specialists in
the application of the general rules set forth below.  If the  CO
initially decides that a particular  acquisition involves a significant
OCI, the CO must, prior to issuing the solicitation, submit  a written
analysis, a draft  solicitation provision,  and, where  appropriate,  a
proposed contract clause to the HCA for review and approval.

General  rules  to  be  applied in  determining  actual or  potential
existence of OCI are as follows:

   (0  A contractor  that provides systems engineering and  technical
       direction for a system, but does not have overall  contractual
       responsibility for  its  development, integration, assembly,  or
       production,  shall  not be awarded a  contract  to supply  the
       system or any of its  major components or be a subcontractor
       or consultant to a supplier of the  system or any of  its major
       components.

  (id  If a contractor prepares and furnishes complete specifications
       covering nondevelopmental  items for use in  a  competitive
       procurement, that contractor shall not be allowed to furnish
       these  items either as a prime  contractor or a subcontractor
       for  a reasonable period  of time, including,  at least,  the
       duration   of   the    contract   containing   the   furnished
       specification. This rule does not apply to:

       —  Contractors    that  furnish   at   Government    request
          specifications or  data  regarding a product  they  regularly
          provide, even though the specifications or data  may have
          been paid for separately or in the price of the product; or

       —  Situations  in   which  contractors,   acting  as   industry
          representatives,  help  the Government prepare,  refine,  or
          coordinate specifications,  regardless  of source,  provided
          this assistance is supervised and controlled by  Government
          representatives.

  (iii)  If  a  contractor  prepares  or  assists in  preparing a  work
       statement to  be used in competitively acquiring services or a
       system,  or if the contractor provides material leading directly,
       predictably, and without delay to such a work statement, then
       that contractor shall not supply the services, system, or major
       components of the system unless:

       —  The contractor is the sole source; or

       —  More than one contractor has been significantly involved in
          preparing the work statement.
                            3-4
                                                  Second Edition
                                                  April 1984

-------
      (iv)  Contracts involving technical evaluations of other contractors'
           products  or consulting  services  shall not be awarded to a
           contractor  that  would  evaluate or  advise  the Government
           concerning   its  own  products   or  activities,   those  of  a
           competitor, or those of other organizations in which it has a
           substantial interest.

       (v)  A  contractor that  gains access  to  confidential  business
           information   of  other  companies  in   performing  advisory
           services for the Agency must protect  the information from
           unauthorized  use or  disclosure,  must refrain from  using the
           information for any purpose other than that  for which it was
           furnished,  and  must  otherwise  comply  with the  special
           requirements of 40  CFR  Part  2 and  the provisions  of its
           contract  relating  to  the  treatment of  confidential business
           information.  This  rule does not apply to information available
           to  the Government  or the  contractor from  other  sources
           without restriction.

M-3.106-2(c)  Personal Conflicts of Interest

(1)  All employees are subject to two types of requirements in connection
    with  apparent  or actual conflicts of financial interests.  One  is a
    criminal statute, 18 U.S.C.  208, which prohibits participation by any
    employee in official activities where he or  she has a conflicting
    personal  financial  interest.  The  other  requirement  is of  an
    administrative nature that has been established by  the Administrator.

(2)  The statutes generally  referred to as "conflict of interest" statutes
    apply to all regular  Government employees (defined as those who are
    appointed or employed to serve  more  than 130 days in 365).  They
    provide that such an employee may not:

        (i)  Except in the discharge of official duties represent anyone
           else before  a Court  or Government agency in a matter  in
           which the United  States is a party or has an  interest.  This
           prohibition  applies both to paid and unpaid representation of
           another.

       (ii)  Participate in his or her governmental capacity  in any matter
           in  which a spouse, minor  child,  outside business associate, or
           person with whom  he or she is negotiating for employment, has
           a financial interest.

      (iii)  Receive  any salary  or supplementation of  his Government
           salary from a private source as compensation  of services  to
           the Government.

(3)  Failure  to   comply  with  these laws is  punishable by  fine or
    imprisonment or both.
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M-3.106-3  Statement of Work (Specification)

M-3.106-3(a)  Definition of Specification

(1)  The Federal Acquisition Regulation (FAR) defines a specification as
    "the technical requirements for a material,  product, or service that
    includes the criteria  for determining  whether these  requirements
    have been met."

(2)  FAR Part 10 sets forth policy with  respect to specifications  on
    Federal purchases.  It stipulates that with certain  exceptions, use of
    specifications  and  standards  listed   in   the  Index   of  Federal
    Specifications and Standards is mandatory.

(3)  The regulations recognize that a standing specification can  not  be
    established,  nor  would  it  be  appropriate  to   establish  such  a
    specification for all conceivable requirements.   Consequently,  the
    regulations  provide  an  Agency  the   right  to  develop  its  own
    specifications given the  lack of  an existing  Federal specification.
    The requirement being expressed may  be called various names—i.e.
    specification,  Statement  of  Work (SOW), work statement, etc. The
    terms are used virtually interchangeably. If any differentiation is to
    be  made, one could say that a specification generally refers to a
    tangible  item  whereas  a  Statement  of  Work  describes  (is  the
    specification  for)  a  service.  The  information   in  this Chapter
    referring to  a  Statement  of  Work  is equally  applicable  to  a
    "specification."

M-3.106-3(b)  Classification of Specifications

(1)  Specifications  may be  divided  into  two  distinct  classifications:
    performance/functional  and  design.  It is  possible that a  given
    specification may contain elements of both of these classifications.

      (i)  A  performance   (sometimes  referred  to   as a  functional)
          specification  is   one   that  tells  the  contractor  "what"  the
          Government wants but not "how" to do  the work.  When a
          performance  specification  is  used,  the  contractor  will  be
          required to either perform a service or construct  an item that
          meets a  specified  level  of  performance.   An example of a
          performance specification would be to  provide services to study
          and report on the mineral content  of rain water that fell during
          the month  of May  in  Washington, D.C.  A  hardware example
          would be  a requirement  to build a  heavier  than  air  flying
          machine.  Successful  completion  of  the work  in  the  first
          example would be judged  on whether  the report substantiated
          the quality of work required to be performed.  In the  case of
          the aircraft, success or failure would hinge  on whether  it flew
          and  was  heavier  than  air.   In  both  cases,  the  "how"  of
          performance  is  left   to  the  contractor's  discretion.  In  a
          performance/functional specification,  the Government allows
          the contractor to use its creative  and  innovative skills  to their
          maximum.
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     (ii)  A design specification tells  the  contractor  both "what"  the
          Government  wants and "how"  to do  it.  Thus in the rain water
          study in (b) above the Government would, if it chose to express
          the  requirement  from  a design standpoint,  have told  the
          contractor where  to take the  samples, how many, the protocol
          used to evaluate them, etc.

(2)  Most Statements of Work contain  elements  of both classifications.
    However, in  drafting a specification one  must be careful to ensure
    that  the  design elements  do not conflict  with  the  performance
    requirements.

M-3.106-3(c)  How the  Requirement May Be Expressed

(1)  One may express a Statement  of Work in one of two forms—i.e. term
    or completion.  They are two separate methods of  expression and
    both  may  include  the incorporation  of  design  or  performance
    specifications.

(2)  A  term form expresses the requirement  from the  standpoint of a
    level-of-effort during a period of time. For example, a requirement
    to provide two senior analysts, one hydrologist, etc. during the month
    of May for purposes of studying rain water would reflect a term form
    requirement. This form focuses in on  the expenditure of effort by
    given types of labor for a period of time  with no requirement that a
    "job" be completed.

(3)  A  completion form is one that describes the  requirement from  the
    standpoint  of the contractor  taking  on  the  job and providing  the
    completed  product/service that has been described.  Using the rain
    water study  as  an example, the  contractor  would  be given a SOW
    (either performance  or design in  nature)  that  would  require  the
    performance of  all work needed to  provide the Government with  the
    needed study.

M-3.106-3(d)   Considerations  in  Determining How  to  Delineate  the
             Requirement

(1)  Whether you develop  the  Statement of  Work  on  a design  or
    performance basis and  express the  requirement  from  a  term or
    completion viewpoint is dependent  upon such factors as: knowledge
    of the field  of expertise; understanding the Government's need;  the
    nature of the requirement; contemplated  contract type; and  interest
    in providing  the contractor an opportunity  to be creative. These
    factors are  all  interrelated and  should be pondered prior  to SOW
    development.

(2)  When the initiator of the requirement has  limited knowledge or  is not
    up-to-date in the field  of expertise in  which the requirement exists,
    it would be advisable to either: (i)  obtain in-house  assistance and/or
    (ii) express  the requirement  in  terms of  performance. Tell  the
    potential offerers what you want and  what will comprise successful
    performance.
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(3)  Sometimes it is not clear to the SOW initiator what the problem is
    that management has perceived to exist (and thus budgeted funds for)
    or the area to  be investigated is not clear.  In this case it may  be
    advisable to issue a performance-based term form SOW. Use of this
    type of SOW would enable the relatively easy  termination  of the
    requirement if needed.  However, expressing your requirement in this
    format is discouraged in that resultant Level-of-Effort contracts are
    costly to administer and provide no cost incentive to the contractor.

(4)  The nature of the requirement is a critical factor in determining how
    to  express  the  requirement.   For  example,  a  research  and
    development SOW  would not  be written as a design Statement  of
    Work; it should be written on a completion basis.  A requirement for
    a waste water  treatment plant, however, would be expressed  on a
    design basis. In an instance where there is a  need  for  a  high-level
    subject  matter expert to review  a  critical scientific protocol, the
    requirement would be written on a performance basis; and due to a
    genuine inability of the Government to know  what is involved in doing
    the work and the  fact that it is a short-term service, the  requirement
    would most likely be expessed on a term basis.

(5)  If the intent of the drafter of  the Statement of Work is to maximize
    the  contractor's  opportunity  to  creatively solve the  problem  or
    otherwise perform the work, then a performance-based Statement of
    Work should be  utilized.  It should be remembered at  this point that a
    definitive, well written SOW  may  well  be suited  for  use  with a
    fixed-price contract (see 3.106-4 Contract Types).

M-3.106-3(e)  Guidance on Preparation of the Statement of Work

(1)  An adequately stated requirement or description of the scope of work
    is the most important attachment to the  Procurement Request. The
    Statement of Work tells the prospective contractor what  work will be
    required,  the conditions under which  the work must  be conducted,
    how achievements will be assessed, what the obligations will be, and
    enables  the contractor  to assess its  capabilities  in  light  of the
    contract requirements.  The wording in the  Statement of Work as it
    appears in the  Request for Proposals should be precise  and suitable
    for use in the  resulting contract.  An inadequate or poorly written
    Statement of Work may result in:  (i) unreasonable prices; (id failure
    to obtain competition that might  otherwise be achieved; (iii) failure
    to obtain the desired effort from the contractor; (iv) a lengthening of
    the  procurement  process; and (v) poor  technical   proposals  and
    divergent cost proposals.  In addition, the work statement affects the
    number of sources willing to submit  proposals, the evaluation  of
    proposals, the   type of  contract  that will   be written,  and the
    administration of the contract.
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(2)  General guidance for developing the Statement of Work is as follows:

       (i) -Describe the scope of work to  be done  as  a clearly-defined
           task,  or tasks,  with  a  definite  goal,  objective,  or  target
           expressed.  You may also establish a minimum goal, objective,
           or  target  and a  desired  goal  or  objective  for which  the
           prospective contractor should strive.

       (ii)  Establish meaningful parameters of measure.  The parameters
           will serve  three  purposes:  to  prevent the contractor from
          'expending  effort  not pertinent  to  the goal,  objective,  or
           target; to measure the results of  the completed work; and to
           assist  in defining whether subsequent changes or redirection of
           effort fall within the original scope of work.

      (iii)  For commercial activities subject to OMB Circular A-76 (refer
           to  2.202 in Chapter 2) the guidance contained in Part n of the
           Circular Supplement should be  followed.

      (iv)  For basic  or  applied  research  projects,  allow  sufficient
           flexibility  to  permit  proposers some  degree of latitude in
           structuring a technical approach to solve the problem.

       (v)  For advanced development, hardware requirements, testing, or
           survey services, the  Statement  of Work should describe  the
           work as a clearly  defined task or job with a definite goal or
           target expressed and with an end-product specified.

      (vi)  For basic or applied research and exploratory development,
           there  will be some instances in which it will not be possible to
           define the scope of work with  any  degree of precision, and the
           Statement  of Work can  only be written in general  terms.  In
           such cases, the resultant  contract  may be a type that obligates
           the contractor to  devote a  specified  level-of-effort for a
           stated   period  of   time,   and   is  the   term   form  of a
           cost-reimbursement   type  contract  (see  3.106-4  Contract
           Types).

           In  accordance with  the  Federal Acquisition  Regulation, this
           form of contract should  not be used unless  the contractor is
           obligated by the contract to provide a specific level of effort
           within a definite period of time. Renewals for further periods
           of  performance are  new acquisitions and  involve new  fee (if
           with  a  profit-making organization) and cost  arrangements.
           This form of contract is one  of the least desirable types for
           the reason  that there is no assurance that a definite target or
           goal can be  reached by  the level of effort  specified in  the
           contract.  Therefore, this form of contract should be avoided
           when  possible, but  when  used  should  be confined to  only
           research  and  exploratory  development   work.   When  a
           level-of-effort contract  is contemplated  by  the initiator,  the
           hours  to  be specified will be cited in  conjunction with period
           of performance, and not in the Statement*of Work.
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     (vii) Originators of Statements of Work  are  encouraged to solicit
          assistance in  the preparation of the Statement of Work from
          their appropriate procurement activity.

(3)  Appendix  C includes a listing of key words that may be utilized in
    preparing Statements of Work.

M-3.106-3(f)   Writing Specifications for Commercial Products

(1)  A commercial product is an item of supply  that is sold to the general
    public in the course  of normal business operations at prices based on
    catalog or  market  prices.  Since most commercial products  are
    produced  in  significant  quantities  and   generally  under  highly
    competitive environments,  the price of such products are lower than
    items  produced  to  meet   a specific  specification  and  in  small
    quantities.   Commercial  products  are  distributed  through  the
    commercial  marketing/distribution  systems  and  are  generally
    available  from local  wholesale and  retail outlets.  For these reasons,
    Government  agencies are  required to use  commercial products  and
    the  commercial  distribution  system  whenever  such  products
    adequately satisfy the Governments needs.

(2)  Acquisition of commercial  products begins  with a description of the
    Government's needs stated  in functional terms (see  3.106-3(b)(l)(i)) so
    that a  market  research can be  conducted to determine whether
    commercial products are available  to  meet Government needs.  The
    function description of the  required product must be in sufficient
    detail so that commercial firms can determine  whether their product
    meets the Government requirement.

(3)  A  market research  involves obtaining  and analyzing the following
    type information:

       (i) The  availability  of  products  and  an  analysis  of  their
          specifications;

      (ii) Catalog identification;

      (iii) The volume of sales and the number of years  the products have
          been sold to determine their stability in the market place and
          product reliability;

      (iv) The  distribution   and  support  (maintenance  and   parts)
          capabilities of potential suppliers;

       (v) Product warranty;

      (vi) Any laws or regulations relating to the control and use of the
          product.
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    (4)   Generally  market  surveys  are made  by publishing  a request for
         product  information  in the  Commerce  Business  Daily.   However,
         other methods of other product information include:

           (0  Catalogs published by manufacturer, distributors, and dealers;

           (ii)  Source list  for items of  a similar  nature  maintained  at
               contracting activities;

          (iii)  GSA Federal Supply Schedules;

          (iv)  Informational requests for quotations;

           (v)  Other Federal agencies.

    M-3.106-4  Contract Types

    Although the determination of contract type is the responsibility of the
Contracting  Officer,  it  is  important  that  the  drafter of  the requirement
understand  the  basic  differences  between  the  two  contract  families
(fixed-price and cost-reimbursement) and their relationships to the Statement
of Work.  The primary difference  between these two families  of contracts is
that in the fixed-price arrangement the contractor is assuming the cost risk of
performance, whereas in the  cost-reimbursement contract  the Government
assumes  the risk.  Another important  observation is  that  the fixed-price
contract is utilized only when a definitive design or performance specification
exists.   However, cost-reimbursement contracts are  to  be  utilized  when
definitive requirements do not exist, as in R&D, and the cost uncertainties of
performance are high. Thus,  if the drafter of the SOW desires to ensure
performance within available dollars through the use of a fixed-price contract,
a  definitive  Statement  of  Work  would have to be  developed.  Remaining
paragraphs deeribe contract types frequently utilized within EPA.

    M-3.106-4(a)  Firm Fixed-Price Contract

    (1)   The firm  fixed-price contract provides for a price which is not
         subject to any adjustment  by reason of the  cost experience of the
         contractor  in the performance   of  the contract.  This  type  of
         contract, when appropriately  utilized, places the maximum risk upon
         the contractor.  Because the contractor assumes full responsibility, in
         the  form of profits or losses,  for all the costs under or over the firm
         fixed  price,  it  has a  maximum profit incentive  for  effective cost
         control  in contract  performance.  Use of  the firm fixed-price
         contract   imposes  a  minimum   administrative  burden  on  the
         contracting parties.

    (2)   The firm  fixed-price  contract is  suitable  for  use  in procurements
         when  reasonably definite design or performance specifications are
         available and whenever fair and reasonable prices can be established
         at the outset.
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M-3.106-4(b)  Cost-Reimbursement Type Contract

(1)  The cost-reimbursement type of contract provides for payment to the
    contractor of allowable costs incurred in the performance of  the
    contract, to the extent prescribed  in the  contract.  This type of
    contract  establishes an estimate of total cost for the purpose of
    obligation of funds which represents a ceiling which  the contractor
    may not exceed (except at its own risk) without prior approval of the
    Contracting Officer.

(2)  The cost-reimbursement type contract is suitable for use only when
    the uncertainties involved in  contract  performance are  of such
    magnitude that the  cost of performance  cannot  be estimated  with
    sufficient reasonableness  to permit  use of  any type of fixed-price
    contract. In addition,  it is essential that (i) the contractor's  cost
    accounting system is adequate for determination  of costs applicable
    to  the  contract,  and  (ii) appropriate  surveillance by  Government
    personnel during performance will  give  reasonable assurance  that
    inefficient or wasteful methods are not being used.

M-3.106-4(c)  Cost-Plus-Fixed-Fee Contract

(1)  The cost-pliis-fixed-fee contract is  a cost-reimbursement  type of
    contract  which provides  for the payment  of a fixed  fee to  the
    contractor.  The fixed  fee once  negotiated does not vary with actual
    cost, but may be adjusted as a result of any subsequent changes in the
    work  or services to  be performed under  the contract.  Because  the
    fixed  fee does not  vary  in  relation to the contractor's ability to
    control   costs,   the  cost-plus-fixed-fee   contract  provides   the
    contractor with only a minimum incentive for effective management
    control of costs.

(2)  Application.  The  cost-plus-fixed-fee contract is  suitable  for  use
    when:

       (i)  the parties agree that the contract should be fee-bearing;

       (ii)  the contract  is  for  the  performance   of   research,   or
           preliminary exploration or study,  where  the level of effort
           required is unknown; and where measuring  achievements in
           contract performance does  not lend  itself to  the subjective
           evaluation  required  in  cost-plus-award-fee contracts  (see
           M-3.106-4(d)); or

      (iii)  the contract  is for development and  test where the  use of a
           cost-plus-incentive-fee contract is  not practical (see Exhibit
           3-3).

(3)  This type of  contract  normally  should not be  used  once  prerequisite
    preliminary exploration, studies, and risk reduction  have indicated a
    high degree of  probability that the development is achievable and the
    Agency generally has determined its desired performance objectives
    and schedule of completion.
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(4)  10 U.S.C. 2306(d) provides that in  the case of a cost-plus-fixed-fee
    contract the fee shall not exceed ten  percent (10%) of the estimated
    cost of the contract. A fee not in  excess of fifteen percent (15%) of
    such  estimated  cost  is  authorized  in  a   CPFF  contract  for
    experimental, developmental, or research work.  A  fee inclusive of
    the contractor's cost and  not in excess of six percent (6%) of the
    estimated cost of construction, exclusive of fees, as determined by
    the  Administrator  at the  time of entering  into  the contract,  is
    authorized in  contracts for  architectural or engineering  services
    relating to any public works or utility projects.

(5)  The cost-plus-fixed-fee contract can  be drawn in one of two  basic
    forms:  completion or term.

       (i)  The completion form is one  which describes the scope of work
           to be done as a clearly defined  task or job with a definite goal
           or target expressed and with a specific  end-product required.
           This  form of contract normally requires the  contractor to
           complete and deliver  the  specified end-product  (in  certain
           instances, a final report of research  accomplishing the goal or
           target)  as a  condition for  payment of  the entire fixed fee
           established for the  work and  within  the  estimated  cost  if
           possible; however, in the event the work cannot be completed
           within the estimated  cost, the Government  can elect to
           continue the work without increase in fee provided it increases
           the estimated cost.

       (ii)  The term form is one which  describes the scope of work  to be
           done in general terms  and  which obligates the contractor to
           devote a specified level of effort for a stated period of  time.
           Under this form, the fixed fee is payable at the termination of
           the agreed period of time upon  certification by the contractor
           that it has exerted the  level  of  effort specified in the contract
           in performing the  work  called for,  and such  performance  is
           considered  satisfactory  by  the  Government.  Renewals for
           further periods of performance are  new procurement and
           involve new fee and cost arrangements.

      (iii)  The completion form of contract,  because of differences  in
           obligation assumed  by the  contractor,  is  preferred over the
           term form whenever the work itself  or specific milestones can
           be defined with sufficient precision to permit  the development
           of  estimates  within   which  prospective  contractors  can
           reasonably be expected to complete  the work, as is usually the
           case in advanced development and  engineering development.
           A milestone  is a definable  point in a  program when certain
           objectives can be said to have been accomplished.

(6)  In  no  event should the term form of  contract  be  used unless the
    contractor is obligated by  the contract  to provide a specific level of
    effort within a definite period of time.
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M-3.106-4(d) Cost-Plus-Award-Fee Contract

(1)  The CPAF contract is a  cost-reimbursement type of contract with
    special  fee provisions. It  provides a means of applying incentives in
    contracts which  are not susceptible  to finite  measurements   of
    performance  necessary for structuring incentive contracts.  The  fee
    established in a CPAF  contract consists of two  parts: (1) a  fixed
    amount which does not  vary with  performance,  and  (2) an  award
    amount, in  addition  to   the  fixed  amount,  sufficient to provide
    motivation for excellence in contract performance in areas such as
    quality, timeliness,  ingenuity, and cost effectiveness.  Award fee may
    be  earned by the  contractor in whole or in part.  The amount  of
    award fee to be paid is based upon a subjective evaluation by EPA of
    the quality of the contractor's performance, judged in the light of  the
    established   criteria.  The  number  of  criteria  used  and   the
    requirements which are  represented  will differ  widely from  one
    contract to another. Therefore, when establishing criteria and rating
    plans, you should be flexible and select a plan which will motivate  the
    contractor in a positive way to improve performance.  A copy of  the
    proposed award fee plan is required to be included in each solicitation.

(2)  The contract provides  for  evaluation  at  stated  intervals  during
    contract performance, so that  the contractor  will periodically  be
    made aware of the  quality of its performance and will know in which
    areas improvement  is expected.  EPA currently encourages the use of
    four-month  evaluation periods  in  lieu of  the  three-month  period
    commonly used in  the past.   Partial payment of  fee will generally
    correspond to the evaluation periods. This makes the incentive which
    the  award fee  creates  effective  by  inducing  the  contractor  to
    improve poor performance or to continue good performance.

(3)  Evaluations   are  furnished  to   the contractor  to  afford  it   an
    opportunity to comment on the evaluation findings.  The decision that
    award fee has been earned is based on the  reports  of performance
    made by an  EPA evaluation team whose members  are knowledgeable
    with  respect to the contract  requirements.  This  decision is  a
    unilateral determination made by the Government not subject to the
    Disputes clause of the contract.

(4)  The award fee decision referred  to in (3) above is made by the Award
    Fee Determination  Official, i.e.,  the Chief of the Contracting Office
    at the contracting  activity.  The EPA  evaluation  team is known as
    the Performance Evaluation Board  and  is chaired  by the Laboratory
    or Division Director of the program initiating the  requirement.   All
    appointments of participants in the award  fee process are to be
    approved by  the Head of  the Contracting Activity (HCA) (Director,
    Procurement and Contracts Management Division).

(5)  The CPAF contract is suitable for:

      (i) level-of-effort  contracts  for  performance of services where
          mission  feasibility   is  established   but  measurement   of
          achievement  must  be  by  subjective  evaluation  rather  than
          objective measurement;
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      (ii)  work  which would  have  been placed  under another type  of
          contract if the performance objectives could  be expressed in
          advance by definite milestones, targets or goals susceptible of
          measuring actual performance; and

(6)  The CPAF contract will not be used:

      (0  as an administrative technique to avoid CPFF contracts when
          the criteria  for  CPFF contracts  apply,  nor  will a  CPAF
          contract be used  to avoid the effort of establishing objective
          targets so as to make feasible the use of a Cost-Pius-Incentive-
          Fee (CPIF) type contract.

      (ii)  where  the contract amount, period of performance,  or  the
          benefits  expected  are  insufficient  to  warrant  the additional
          administrative effort or cost.

M-3.106-4(e) Time and Materials Contract

(1)  The  time  and  materials  type  of  contract  provides for   the
    procurement of supplies  or  services on the basis of (i) direct labor
    hours at specified fixed  hourly rates (rates include wages, overhead,
    general and administrative expense, and  profit), and (ii) material at
    cost,  and, in addition, where appropriate,  material handling costs as a
    part  of material cost.  Material  handling  costs  may include all
    indirect  costs,  including   general  and  administrative expense,
    allocated to  direct materials in accordance with the contractor's
    usual accounting practices.  Material handling  cost  includes  only
    costs clearly  excluded  from the  labor  hour rate.  This  type  of
    contract does not afford  the contractor any positive profit incentive
    to  control  the  cost of  materials  or  to manage  its labor  force
    effectively.

(2)  The time and materials contract is used only where it  is not possible
    at the time of placing the contract to estimate the extent  or duration
    of  the  work  or  to  anticipate costs with any reasonable degree of
    accuracy.  Particular care should be exercised in the use of this type
    of  contract   since  its  nature  does   not  encourage  effective
    management  control.  Thus  it is  essential that  a T&M contract be
    used  only  where provision is made for adequate controls, including
    appropriate surveillance  by EPA  personnel  during  performance to
    give  reasonable  assurance that inefficient or wasteful methods are
    not being  used.  This  type  of   contract  may  be  used  in  the
    procurement  of  (i) engineering  and  design  services,  (ii)  repair,
    maintenance, or overhaul work; and (iii) work  to be  performed in
    emergency situations.

(3)  A  time and materials  contract does not encourage  effective  cost
    control and requires almost  constant Government surveillance; it
    should be used only after the Contracting  Officer determines that no
    other type of  contract will suitably serve.
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    M-3.106-4(f) Labor-Hour Contract

    The labor-hour type of contract is a variant of  the  time and materials
type  contract,  differing  only in  that  materials  are  not supplied  by  the
contractor.

    M-3.106-4(g) Indefinite Delivery Type Contract

    One of the following indefinite delivery type contracts may be used for
procurement where  the exact  time of  delivery is  not  known at time of
contracting.

    (1)   Definite Quantity  Contracts.  This type of contract provides for a
         definite quantity  of specified  supplies or for the  performance of
         specified services for a fixed period with deliveries or performance
         at designated locations upon order.

         This  type of contract is particularly  suitable for  use where  it  is
         known in advance that a definite quantity of supplies or services will
         be required during a specified period and are regularly available or
         will be available after a short lead time.

    (2)   Requirements  Contracts.  This type of contract  provides  for filling
         all actual  purchases requirements  of  specific supplies or services
         during  a contract period  with  deliveries  to  be scheduled by  the
         placement of orders to the contractor.  A realistic estimate  of total
         quantity is stated for the information of prospective  contractors.
         The  estimate may  be  obtained  from  the  records  of previous
         requirements and consumption,  or by  other  means.  The contract
         states the maximum limit of  the contractor's obligation  to deliver
         and appropriate  provisions limiting the Government's  obligation to
         order.  It may also specify the  maximum  quantities which  may be
         ordered under each  individual order  during  a specified  period of
         time.  Similarly, when small orders are anticipated, the  contract may
         specify the minimum  quantities to be  ordered.  Funds  are obligated
         by each order and not by the contract itself.

         A requirements contract  may  be used for procurement when  it  is
         impossible to  determine in advance  the  precise quantities  of  the
         supplies or  services that  will be needed  by EPA during  a  definite
         period of time. Advantages of this type of contract are:

           (i)  flexibility  with  respect  to  both   quantities  and delivery
              scheduling; and

          (ii)  supplies or services need be ordered only after actual need has
              materialized.

         Generally, the requirements contract is appropriate for use when the
         item  or service is commercial or modified commercial in type and
         when a recurring need is anticipated.
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M-3.106-4(h)  Indefinite Quantity Contract

(1)  This type of  contract  provides for the  furnishing of an indefinite
    quantity of specified  supplies  or services,  with  deliveries  to be
    scheduled  by  the  placement of  orders to  the   contractor.  The
    contract provides that  the Government will order a stated minimum
    quantity of the  supplies or services and that  the contractor will
    furnish the  minimum and  any additional quantities not exceeding a
    stated maximum. The maximum quantity (or amount  expressed in
    dollars) should represent the Government's best estimate of potential
    usage.  The  evaluation  of  proposals   to  select  the  source is
    accomplished   at  this  leveL   During  contract performance, the
    contractor is not required to accept orders  above  the  maximum.
    Pertinent contract clauses provide for  a number  of days for the
    contractor to  accept orders above  the maximum.  In  appropriate
    cases the maximum may be raised during the contract period using
    noncompetitive procedures.  The minimum  must  be  more  than  a
    nominal quantity; yet it should not exceed the amount which is fairly
    certain to be ordered. The  contract may also stipulate minimum and
    maximum quantities  applicable to  each order.  The  recommended
    practice is for the first order for the minimum quantity to be  placed
    simultaneously with contract award.  EPA Form 1900-8 or OF 347
    may be used in placing orders.

(2)  An indefinite quantity contract may be used where it is impossible to
    determine  in  advance the  precise  quantities  of the  supplies or
    services that will be  needed by  EPA during a definite period of time
    and it is not advisable for the Agency to commit itself for more than
    a minimum quantity.  Advantages of this type of contract are:

        (i)  discrete funding  with each order;

       (ii)  flexibility with  respect  to  both  quantities  and  delivery
           scheduling;

      (iii)  placing orders  only as the need arises;

      (iv)  flexibility in the types of  pricing arrangements selected for
           use;

       (v)  Government's  legal  obligation is limited to contract minimums
           and delivery orders as issued.

(3)  Traditionally, fixed-price arrangements  have  been used in indefinite
    quantity contracts.  In  such cases the solicitation  provides for fixed
    prices per item  specified,  and  evaluation of proposals for award  is
    based on respective offerers' bid prices per item times the maximum
    quantity.   Other forms of  pricing  arrangements  may  be  used;
    however,  they must  be clearly  spelled  out in  the solicitation and
    contract  to  form  the basis for contract  award and  subsequent
    placement of orders.  These methods include:  (i)  fixed loaded labor
    rates  in  the  time and material  (T&M) or  labor-hour (LH)  mode
    and  (ii)  cost-reimbursement.   The  contract  arrangements  and
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        funding  principles  used  may  be either job  (completion)  or term
        (continuing type service), depending on the nature of the requirement.

    M-3.106-4(0  Matrix of Contract Types

    In addition to the most frequently used contract types described  above,
Exhibit 3-3 contains a description of additional  contract types available for
use by the Contracting Officer.

    M-3.106-5  Technical Evaluation Criteria

    M-3.106-5(a) Purpose and Basic Requirements

    (1) The basic  function  of  technical  evaluation criteria  is  to  help
        determine  in a most objective and fair method  which  one  of  the
        technical proposals is most advantageous to the Government.

    (2) Although  the  initiator  of   EPA  Form    1900-8,  Procurement
        Request/Order, is responsible  for the development of the technical
        evaluation  criteria,  the  Technical  Evaluation   Panel  (TEP)   and
        Business Evaluation  Panel (BEP)  are  additionally  responsible  for
        ensuring that  the  evaluation criteria  are  adequately  stated  and
        applicable to the procurement action (see M-5.103-3 and -4).

    (3) Evaluation criteria must be developed on a  case-by-case basis after
        taking into consideration  each of the salient features of the specific
        procurement action.  The number  of evaluation criteria developed
        should be that needed to  properly discriminate between the relative
        technical merit of proposals.  It should be kept  in mind, however, that
        a  large number  of  criteria  will  make   the evaluation  process
        extremely difficult, especially where  numerous proposals have been
        received.

    (4) All offerers  must be able to readily determine from an examination
        of the criteria included in the solicitation the  basis upon which their
        offers will be evaluated.  In order to accomplish this, the evaluation
        criteria must be published in the solicitation  package in elements and
        sub-elements.  The  importance of each element  and sub-element
        must also be published in  the solicitation package.  You must assign a
        numeric weight to each major element and sub-element which shows
        the relative importance of the criterion.

    (5) In addition to the technical evaluation criteria, the solicitation should
        describe the importance of price or cost in the selection decision as
        well as any other factors which may influence the selection decision
        which are foreseen at the time the solicitation is  issued.  Both price
        or  cost and other factors are elements for  the  Source  Selection
        Official (SSO) to consider (see M-5.103-2).

    M-3.106-5(b) Types of Evaluation Criteria

    There  are  basically two  types  of  evaluation  criteria:  go-no-go  and
variable criteria.
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    (1)  A go-no-go criterion is a mandatory criterion which when compared
        to  what the  offerer is proposing  will clearly  show whether the
        requirement has or  has not been  met. This type of criterion will,
        when applied, always result in a "yes" or "no"; there are no "maybes."
        An example of the  use of this  type  of criterion  would be  where
        contractors  are required  to either have at their  facility  or have
        immediate access to  a given type of equipment.

    (2)  Variable (sometimes referred  to as scorable)  criteria are  used to
        determine the  degree of acceptability of a  proposal.  When using
        variable criteria, the evaluator is asking such questions as "To what
        degree?"  "How much?**  "How well"  has the  offerer proposed and
        assigns a score.

    M-3.106-5(c) What Is To Be Evaluated

    What  is to be evaluated breaks  down into two areas: What is offered and
the offerer. The drafter of the criteria for  what is offered should be able to
isolate and describe those items  which will best determine how  well the
product/service will meet EPA's needs.  In establishing criteria to evaluate the
offerer, the types of questions to ask are:  What attributes must offerers have
to perform well? What does an offerer need to perform successfully?

    In some cases,  the  proposed scope  of work will involve  environmentally
related   measurements   and,  consequently,   Agency   Quality  Assurance
requirements will be applicable.  For such projects, the offerer's capabilities
to implement and perform a QA program successfully should be assessed.  The
EPAAR has solicitation  provisions requiring offerers to submit a QA Program
Plan or a  QA Project  Plan as part of the offerer1? proposal. The Project
Officer may request the  appropriate  provision for inclusion in the solicitation.

    M-3.106-5(d) Developing and Weighting Evaluation Criteria

    (a)  Developing evaluation criteria is primarily a matter of determining
what  aspects  of the requirement  are important and establishing  criteria
weights which reflect  relative importance.  The following  points should be
kept in mind in developing the evaluation criteria.

    (1)  Offerers must  be  given  clear  notice  of what factors are  actually
        going to make a difference in selection.

    (2)  Does the criterion articulate what you have in mind?

    (3)  Has the criterion been narratively expressed  in  action words  that are
        clear?

    (b)  The numeric  weights assigned must  coincide  with  the  relative
importance  of each technical evaluation criterion element and sub-element.
Weighting evaluation criteria and  the  sub-elements  of the  criteria, if they
have been established, involves nothing more than the following:
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    (1)   Determining the  total weight  that all  criteria combined are  to
         represent (e.g., 100,150, 200 points, etc.);

    (2)   Identifying what is considered as the  most important criterion;

    (3)   Allocating points in light of the total remaining criteria; and

    (4)   Allocating points establishing importance of sub-elements if such are
         used.

    (c)   For work  involving environmentally  related   measurements, the
QA/QC   capabilities of  the offerer should  be included  in  the evaluation
criteria.  The numeric weights assigned  to each QA element  should reflect
consideration of the  importance of  the measurements activities to the overall
project goals. At least 5 percent of the  total numeric weight for all criteria
should be assigned to Quality Assurance.  There is  no specific  maximum, but
30 percent would appear to be the upper limit.
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     M-3.106-5(e)  Relationship of Price/Cost to Technical Evaluation Criteria

     In addition  to being provided an indication of the importance of technical
criteria, offerers should be  told the  relative  importance of price/cost to
technical considerations. Stated another way, is EPA more interested in the
technical excellence  of  the offerer's proposal than cost (within reason)?  The
relationships between these elements depends upon the  type of contract to be
utilized. Actual weighting of importance is arrived at by the Project Officer
and concurred in by the Contracting Officer.

     M-3.106-5(f)  Sample Evaluation Criteria

     (1)  Exhibit  3-4  sets  forth  a sample  of  well-constructed  technical
         evaluation criteria. You will note in examining Exhibit 3-4 that  this
         set of  criteria  clearly  explains to the potential offerer the types of
         factors that will be addressed  in making the evaluation and what is
         meant   by   each  criterion.   These  criteria   will clearly  enable
         evaluation to delve into relative value of proposals. In addition, each
         criterion does not overlap other criteria.

     (2)  Characteristics  of  the good  evaluation criteria  to be considered
         include:

             (i)  Categories  to  be  evaluated should be identified with  an
                overall  statement such as "Technical Review Categories" to
                make   it  abundantly   clear that  these   are  the  precise
                categories  to be  technically reviewed in evaluating proposals
                received.   Headings   such  as  "Demonstrated   Level   of
                Experience"  would  also  be  beneficial to assure a  better
                understanding of  the purpose of the criteria.

            (ii)  The  format  should be  designed to   provide  independent
                weighting for each category to be rated. For example, where
                performance of the  company and its personnel are to be rated
                based  on similar previous  experience, separate weight  and
                ratings  should be provided.

            (iii)  Criteria for  evaluation should  be  clear and meaningful,  not
                imprecise and  indefinite.  This must be done  to assure  fair
                and impartial proposal evaluation.

            (iv)  Choice   of  words  should  be  such  that   they  reflect  the
                evaluative  action that will be taken by the technical proposal
                evaluation  team—e.g.,  demonstrated depth of experience in
                .  .   ., etc.

            (v)  Questions used to formulate evaluation criteria should not be
                redundant  and overlapping.  When they  are redundant  and
                overlapping,  the  effect  is to  make  the  result  of  the
                evaluation   uncertain  and  ineffective.   The   dictum  for
                preparing appropriate evaluation criteria should be  to state it
                in clear, concise, and positive terms.


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            (vi)  Issues relative to  the  responsibility of the  contractor—i.e.,
                 past   performance,   financial   capability,   etc.   are  not
                 weightable criteria; rather, they are go-no-go decisions which
                 are the Contracting Officer's responsibility to determine.

           (vii)  Use a  numbering  system  for criteria  that is  logical  and
                 orderly.  Avoid use of the same numeric designator for the
                 paragraph   and    subparagraph,   followed   by  an  alpha
                 designator.  For  example, a system  which used A.4.4a  is
                 confusing and should be avoided.

           (viii)  The number of criteria to be used should not be excessive.
                 Criteria should be well thought out, properly  worded, and
                 should  include only  those criteria  needed  to differentiate
                 between proposals.

     M-3.106-6   Technical Proposal Instructions (TPIs)

     (a)  Solicitations   contain  both   general   and  specific  instructions
concerning the preparation and submission of business and  technical offers.
General  solicitation  instructions  and  business  proposal   instructions  are
developed,  for  the   most  part,   independently  by  contracting personnel.
However, technical proposal  instructions (where submission of technical  input
is required from the contracting community) should be developed  and  included
within the text of the requisition by the program official.

     (b)  Technical proposal instructions inform offerers of the  type,  quantity,
and  format of the data that should constitute their technical proposal.  The
proposal  in  turn  is  evaluated  against  the  technical  evaluation  criteria
contained  in  the  solicitation.   The  Project  Officer   must give   careful
consideration to the development  of technical proposal  instructions  that tie
into the technical evaluation criteria and provide  clear instructions on the
type  of data  needed  for  evaluation.  TPIs  not contained  in the  standard
solicitation package but considered desirable should be provided to the CO for
inclusion in the RFP.

     M-3.106-7   Classified Information

     (a)  The  Project  Officer should  consider whether  the  requirement  will
involve  access  to  classified national  security  information  by contractor
employees.  In such cases,  the following information must be set forth in the
PR rationale checklist.

     (1)  Level of access to classified  information required—i.e., Top Secret,
         Secret, or Confidential, and statement as to whether or not access to
         Atomic Energy Act of 1954 Restricted Data will be required; and

     (2)  A statement as to whether or not the facility  is to receive and store
         classified  information in connection with the proposed contract.
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    (b)  Periodically the Agency  has requirements that call for a contractor
to review or analyze proprietary data  that  has been submitted  to EPA by
another firm.  Where a requirement of this  nature exists,  complete details
regarding  the nature of the data, the extent of review,  and other  pertinent
information must be included in the PR rationale.

    M-3.106-8  Source Considerations

    In developing  your PR, you may list those sources that you  consider
qualified to perform the effort described in the Statement of Work. Sources
may  be obtained  from  lists of  qualified  sources,  personal  experience,
recommendations  of  other  Project  Officers,  the  Contracting   Officer,
directories, Small and Disadvantaged Business Specialist,  etc.  If a number of
the sources listed are small businesses, a recommendation for a small business
set-aside is  encouraged.  It must be recognized  that other  sources may be
added by the Contracting Officer as a result  of publicizing in the Commerce
Business Daily, or from the Procurement  Automated Source System (PASS)
maintained  by  the. Small  Business  Administration.  If  a  noncompetitive
procurement  is recommended, it  will be necessary to prepare a Justification
for Noncompetitive Procurement and submit  it as a separate attachment to
the  procurement  request.  If the  requirement  is less than $10,000, the
justification shall be in the form of a brief  statement attached  to the EPA
Form 1900-8, Procurement Request/Order.

    It is important to have a  meaningful participatory  role by the Program
Offices in supporting  EPA's  efforts  to  increase acquisitions  through its
socioeconomic utilization programs. Each  program has the responsibility for
establishing   its  own  goals  for   socioeconomic  business utilization  in
collaboration with  appropriate procurement operations and the Office of Small
and Disadvantaged Business Utilization (OSDBU).

     M-3.106-8U)  Availability of Work Resulting From Other Sources

    The Project Officer should consider whether, after adequate research, the
results of the work being procured  are or are not  available from any current
source. This type of information  can be obtained from other Project Officers,
the Contracting Officer,  and clearinghouses  such as the National  Technical
Information Service (Department of Commerce), Springfield, Virginia.

     M-3.106-8(b)  Small Business Set-Asides

     (1)  Introduction

         It is the policy of the Government to aid, counsel, assist,  and protect,
         insofar as possible, the interests of  small business concerns in order
         to  preserve free competitive  enterprise; and  to  place with small
         business a  fair  proportion of  the total  Government contracts for
         property and services.

         In accordance with the  Small  Business Act (15 U.S.C. 637),  EPA  is
         required to establish and conduct programs to increase small business
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    enterprise participation  in  Government  procurement.   A  major
    program  used to  accomplish  these goals  is  the  small business
    set-aside program.

(2)  Set-Asides for Small Business

    A set-aside  for  small business  is the  act  of reserving  the entire
    amount  (total set-aside)  or  a  portion (partial  set-aside)  of a
    procurement  for  the exclusive  participation   of  small business
    concerns.  The Project Officer may  recommend  that a requirement
    be  met through  a set-aside.   Determinations  to set aside  EPA
    acquisition actions may be initiated  unilaterally  by the Contracting
    Officer, or they may be made jointly  by a representative of the Small
    Business  Administration  and  the Contracting   Officer.   Where a
    set-aside is contemplated,  the Project Officer will be requested to
    advise and assist procurement personnel in identifying small business
    sources and evaluating the  technical  capabilities  of small  business in
    connection  with  acquisition of  property  and  services, including
    research and development.

M-3.10fr-8(c)  Socially   and    Economically  Disadvantaged   Business
              Enterprise Program—8(a) Contracts

(1)  Policy

    It is the policy of the  Environmental  Protection Agency to  enter into
    contracts with the SBA so as to assist in the growth of small minority
    business concerns as designated by the SBA.  The  Office of Small and
    Disadvantaged Business Utilization is  responsible for implementing
    this policy and  stands  ready  to assist all Agency  personnel in
    furtherance  of  the  small  and disadvantaged  business  utilization
    program. Due to the Agency's obligation to all small businesses, EPA
    activities do not seek  8(a) contracts  where one or  more  of  the
    following circumstances exist:

       (i)  The   percentage  of   procurements   considered   for   8(a)
           contracting  is excessive  in relation to  the total purchases of
           like or similar  products or services procured  by the  Federal
           Government.

       (ii)  The procurement has been synopsized or publicized or if public
           solicitation  has already been issued under  a small business
           set-aside for the specific procurement in question.

      (iii)  The procurement is of such magnitude or complexity as to be
           incapable  of performance by 8(a) concerns or is otherwise
           inappropriate for performance by 8(a) concerns.

      (iv)  The  contracting  office  can  make a  noncompetitive award
           directly to a small  minority  business concern, or  there is a
           reasonable probability that an award  can be  won  by  such a
           small minority  business  concern through  normal competitive
           procedures.
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       (v)  It is determined by the SBA that a small business concern may
           suffer a major hardship if the procurement  is removed from
           competition,   thereby  denying  the   concern,   otherwise
           historically dependent  on  such recurring  procurement(s),  the
           opportunity to compete.

(2)  Responsibilities

      (i)  The Agency's Project Officers have the primary responsibility
          for  identifying suitable procurements  for  8(a) awards.   In
          fulfilling  this  responsibility, Project  Officers are to identify
          procurements for potential 8(a) awards during the planning
          stages of the procurement.

     (ii)  The Small  and Disadvantaged Business Utilization  Specialist
          (SDBUS), at each  procurement operation,  is responsible  for
          providing guidance  and  assistance  to  EPA  contracting  and
          program  offices  concerning  Section  8(a)  contracting.  The
          SDBUS screens purchase requests for the purpose of identifying
          those   requirements  which   may  be  considered   for  8(a)
          contracting.

(3)  Recommending 8(a) Contractors

       (i)  Project Officers are to screen procurement plans and existing
           requirements  for  potential  awards  under the  Section 8(a)
           negotiated  contracting  approach.   The  resultant list   of
           selected 8(a) procurement  requirements are then forwarded to
           the Chief  of the Contracting  Office at  the  contracting
           activity on a quarterly basis.  The contracting activity then
           matches  the  procurement actions with  the  capabilities  of
           eligible,  approved  8(a)  firms  and  will  then  forward   its
           recommendation to the SBA for further  processing.  Project
           Officers  request  the  assistance  of  the  Minority  Business
           Enterprise  Representative  (MBER)  in carrying   out  their
           responsibilities.

       (ii)  The recommendation of an 8(a) contractor for  contract award
           may be made either by the Contracting Officer or the Project
           Officer  after  appropriate consultation with  the  Small  and
           Disadvantaged  Business   Utilization   Specialist.   Upon  the
           request  of the Contracting Officer and the SDBUS, the SBA
           determines and advises as  to  whether  the proposed firm is 8(a)
           approved.

      (iii)  Sole-source offerings are  acceptable for  8(a)  contracts  for
           personal   property  and   nonpersonal  services,   including
           professional services and  Certified Public Accountant (CPA)
           audit services. Sole-source offerings for architect-engineering
           (A-E)  services are unacceptable.  When only one 8(a) firm is
           approved for consideration by SBA,  the  Contracting Officer
           will issue the solicitation to the 8(a) firm requesting it to
           submit a cost proposal for  the proposed 8(a) procurement.
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     M-3.106-8(d)  Labor Surplus Area Set-Asides

     It is the policy of the Government to promote equitable opportunities for
labor surplus area  concerns  to  compete for  contracts  and  to encourage
placement of contracts  with concerns  which  will perform such  contracts
substantially in labor surplus areas.  The Department of Labor determines and
publishes a listing of the geographical areas which are considered to contain a
surplus of labor.  The Contracting Officer has knowledge  of these  areas.  In
the acquisition planning process, consideration must be given to  determining
whether capable firms reside within labor surplus areas and thus a set-aside
would be appropriate.

     M-3.106-8(e)  Sources-Sought Synopsis

     (1)  Used as an Advance Notice

            (i) To support  the  future contracting needs  of  research and
               development programs, the Commerce Business Daily is used
               to publish an "advance notice" of the Government's interest in
               specific fields.  These notices are not a synopsis of a Request
               for  Proposals—rather,  are notices  of future  requirements.
               Through this  mechanism, potential  sources   learn  of the
               Government's requirements and are given an  opportunity  to
               submit information  demonstrating  their  capabilities  in   a
               specific field.

           (ii) In using the sources-sought synopsis as an advance  notice, it is
               necessary   to  develop   general   criteria   for  potential
               sources—criteria that will set forth the capabilities  needed.
               Such  qualification  criteria  consist  of special  experience,
               capability, facilities, or other factors that are critical to the
               program performance aspects of the procurement.  However,
               care  must be  exercised  to  restrict qualification criteria  to
               those   that  are   absolutely  essential   to  the  successful
               completion of the contract work.

          (iii) The  Project  Officer should develop an outline of the  major
               tasks to be accomplished  under the contemplated acquisition
               and  the qualification  criteria to  be  utilized  in evaluating
               prospective source capabilities.  The Contracting  Officer will
               forward the  synopsis  to the   Commerce  Business  Daily.
               Information received in response to  the advance notice will  be
               transmitted to the Project Officer for evaluation and rating of
               each respondent's technical capabilities. The Project  Officer
               will be requested to prepare an evaluation memorandum  which
               recommends  technically  qualified  sources  for  subsequent
               solicitation  by the  Contracting  Officer.   When  additional
               sources are known to program personnel, they should  also  be
               furnished  to  the   Contracting  Officer  along  with  those
               responding to the synopsis. All sources deemed  fully qualified
               will   be invited  to submit   proposals  when   Requests  for
               Proposals are issued.
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(2)  Used to Perform Market Surveys

       (i)  The Federal  Acquisition Regulation (FAR) and  the EPAAR
           require that  market surveys be conducted in justifying  sole
           source acquisitions and acquisitions using  other than full and
           open competition  that  exceed $25,000.  The publication of
           either a synopsis of a proposed noncompetitive procurement,
           or a  sources-sought synopsis  as described  above, that  is
           detailed enough  to permit submission of meaningful responses
           and  subsequent   evaluation  by  the   EPA,  constitutes  an
           acceptable  market survey.  Further discussion is contained in
           M-3.106-(f) below.

       (ii)  The synopsis  must contain  the  following (see (l)(ii) and  (iii)
           above):

           (A)  A  clear  description of  the supplies  or services being
               procured;

           (B)  Required  Contractor capabilities,  experience, and  any
               other factors salient to the  requirement; and

           (C)  Criteria and weighting of the criteria to indicate relative
               order  of  importance to be used  in  the evaluation of
               responses.

      (iii)  It should be noted for planning purposes that:

           (A)  The  market survey should  be  conducted  as soon as
               practicable after the requirement is known.

           (B)  Synopsis  for making  market surveys are not required  for
               acquisitions  resulting from  unsolicited  research proposals
               if to do  so  would disclose the  originality of  thought or
               innovativeness of the proposal.

(3)  Synopsis of Proposed Contracts

       (i)  Agencies are required to  furnish  for publication  in   the
           Commerce  Business Daily (CBD) notices of proposed contract
           actions of  $10,000  and above.  Exceptions are  set forth in
           paragraph (iii) below.

       (ii)  The synopsis of a proposed contract  must be published in the
           CBD  at  least  15  days in  advance  of issuance of   the
           solicitation.  Thirty (30) days response  time is to  be allowed
           for receipt of bids or proposals from the date of issuance of
           the solicitation.

      (iii)  A proposed contract  need not be synopsized if the Contracting
           Officer  determines  that  (1)   the  contract   action is of a
           classified  nature,  (2)  the  requirement is  urgent,  (3)   the
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           requirement is for utility services  available from  only  one
           source,  (4)  the   contract   action  is  an  order  under  a
           requirements   contract,  (5)   the action  results   from   an
           unsolicited  proposal and publication  of  any notice  would
           improperly    disclose   the    originality   of   thought   or
           innovativeness of  the  proposal,  (6)  purchases of perishable
           subsistence, (7) purchase of brand name commercial  items for
           resale, (8) the contract is for a foreign government and that
           government directs the source and funds the requirement, or
           (9) the contract is authorized or required by statute to be
           made  through  another  Government  agency  such  as  8(a)
           acquisitions from SBA under the Small Business Act.

M-3.106-8(f)   Justifications for Other Than Full and  Open Competition
              (JOFOC)

(1)  Introduction

    This section covers the procedure for justifying a noncompetitive or a
    limited competition acquisition.

(2)  Policy

       (i)  In the fulfillment of national policy, acquisitions by EPA shall
           be conducted  utilizing full  and open  competition  with  all
           responsible  sources.  However, it is recognized that  one or
           more of the circumstances which permit other than full  and
           open competition may  apply where it is in  the interest of the
           Government and EPA  to solicit limited sources or  only  one
           source.  (See  Exhibit 3-5.)  In such  instances, the  initiating
           program office may  recommend that the supplies or services
           be obtained from a limited number of sources or only from  one
           source.  This  recommendation  is  subject  to review  and
           approval as provided in  (5) below.

       (ii)  A  written justification  for  other  than  full  and open
           competition that  documents the facts  and  circumstances
           substantiating  the  infeasibility of full and open competition
           must be prepared  by  the initiating  office for each limited
           source or sole source acquisition except for those few types of
           acquisitions specifically excepted by   regulation.   (See  the
           Contracting Officer to ascertain the  applicability  of these
           exceptions to your particular requirement.)

      (iii)  The justification  for  sole source acquisition  of  any small
         1  purchase  ($1,000   to  $25,000)  must  be   submitted by  the
           Program Office  submitting  the procurement request  in  the
           form of a  brief written statement attached to the EPA Form
           1900-8, Procurement Request/Order.  The statement must cite
           one or more  of  the circumstances which  permit sole source
           acquisition  and  the   necessary  facts   to   support  each
           circumstance.  Although Program Offices  may not  cite  the
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          authority in FAR 6.302-7, the public interest may be used as a
          basis to support  a  sole source acquisition. If the acquisition
          has been synopsized, the statement must include the results of
          the evaluation of responses to the synopsis. Justifications are
          not  required for:  (1) acquisitions under  mandatory  Federal
          Supply Schedules or mandatory  ADP or TSP schedules; or (2)
          acquisitions required by statute  to be obtained from a specific
          source, such as the National Industries for the Blind or Other
          Severely  Handicapped  or  Federal  Prison  Industries.   The
          Contracting  Officer  is  the  approving  official  for  all sole
          source acquisitions using small purchase procedures.

      (iv) For acquisitions over $25,000, the recommendation for limited
          or sole source  acquisition must be entitled "Justification for
          Other Than Full and Open Competition" and must  be signed by
          the programmatic Division Director or comparable office level
          prior to submission with the Procurement Request/Order (EPA
          Form 1900-8).  The JOFOC must contain a full and complete
          justification  in accordance  with the instructions  prescribed in
          (3) and (4) below.

(3)  Conduct of Market Surveys To Determine Availability of  Capable
    Sources

       (i) The  Project  Officer should notify the Contracting Officer as
          soon  as requirements become known to  maximize the time
          available  to conduct  the  market survey.  The  Contracting
          Officer determines the  extent of  the  market survey.  In
          making this  decision, the Contracting Officer may  consider
          such factors  as the type and size of the acquisition, the results
          of  recent competitive  acquisitions  for  similar supplies or
          services, or other recent market  surveys.

      (ii) The Contracting Officer, with input from the Project  Officer,
          will  determine the market survey strategy and decide who is
          responsible  for accomplishing various aspects of the survey.
          For  example, the  Contracting  Officer  may  choose  to have
          discussions with offerers who had proposed on previous similar
          requirements. For market surveys involving discussions with,
          or inquiries from, commercial firms, the Contracting Officer
          must conduct or participate in such discussions or inquiries.

      (iii) As stated in 3.106-8(e)(2)  above, Commerce  Business Daily
          (CBD)  synopses  of  proposed  sole   source  acquisitions  or
          acquisitions  using  other  than full and  open  competition or
          sources-sought  synopses .that are detailed enough  to permit
          submission of meaningful responses and  subsequent evaluation
          of the  responses by EPA  constitute an  acceptable market
          survey.  If  the  FAR requires a synopsis, other methods of
          conducting market surveys may not be substituted.
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      (iv) Under  those  circumstances   when   market  surveys   are
          conducted  to  assist   in   determining  the  existence  of
          competition  for  purchases over  $10,000,  the  Contracting
          Officer,  with  the assistance  of the  Project  Officer,  must
          evaluate  responses  to  such surveys in accordance  with the
          general criteria  included in the synopses.  If the evaluation
          indicates  that full and  open competition can be provided for,
          the  Contracting  Officer must issue  a  new synopsis and  a
          competitive   solicitation.   If   the    Contracting   Officer
          determines, after evaluation of responses, that a sole source
          acquisition or  limited  competition  should be conducted, the
          evaluation document must  be  incorporated  into the JOFOC.
          This documentation must include:

          (A)  A copy of the CBD  synopsis;

          (B)  A listing of respondees to the synopsis;

          (C)  A written evaluation of the responses; and

          (D)  The  basis  for the  Contracting Officer's conclusion that
               competitive procurement is impractical.

(4)  Preparation of  the  Justification   for Other  Than Full and Open
    Competition (JOFOC)

       (i) The Project Officer will prepare a draft of the JOFOC  for the
          Contracting   Officer's   review   and   comment   prior  to
          finalization using  the format in Exhibit 3-6.  The JOFOC shall
          fully explain  the circumstances  which  make  full  and  open
          competition infeasible.  The JOFOC shall:

          (A)  Identify the project and describe the supplies or services
               required to meet EPA's needs;

          (B)  Identify the statutory authority permitting other than full
               and  open  competition.  (See  Exhibit 3-5  for applicable
               statutory authorities.)

          (C)  Provide the facts supporting the citation of the statutory
               authority  that  permits  other   than   full  and  open
               competition.  Demonstrate that the proposed contractor's
               unique  qualifications or  the  nature of the  acquisition
               require  use  of the authority cited.  Provide  specific
               support for each statutory authority used.  Provide other
               facts which support the justification (see ii below);

          (D)  Describe  the efforts made  to ensure  that offers  were
               solicited from as many potential sources as practicable.
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    (E)  Describe the market survey that was conducted, including
        whether  a  sources-sought synopsis was published in the
        Commerce Business Daily, and the results of the survey.

    (F)  If applicable, describe the reasons why a  market survey
        was not conducted.

    (G)  Any other facts supporting the  use of other than full and
        open competition, e.g.,

            (I) Explanation of why technical  data  packages,
               specifications,      engineering     descriptions,
               statements  of  work,  or   purchase  descriptions
               suitable for full and open competition  have not
               been developed or are not available.

           (II) If follow-on acquisitions are cited as the basis of
               the JOFOC, give an estimate of the costs that
               would be duplicated if the award were to be made
               to other than  the original source, and give the
               basis for your estimate.

          (Ill) If unusual and compelling urgency is cited as the
               basis  for the  JOFOC, explain the circumstances
               that led to the  need for an urgent  contractual
               action and explain why  the requirement  could not
               have been processed  in sufficient  time to permit
               full  and  open  competition.   The  existence  of
               legislation,  court-order, or Presidential  mandate
               is not,  of itself, a sufficient basis for a JOFOC.
               However,   the   circumstances    necessitating
               legislation,  court  order, or Presidential  mandate
               may justify contractual action on an other than
               full and open competition basis.

    (H)  A listing of the sources, if any,  that expressed, in writing,
        an interest in the acquisition.

    (I)  A statement  of the actions, if any, EPA  may take  to
        remove or  overcome  any barriers to competition before
        any subsequent acquisition.

(ii)  Each JOFOC  must reflect the degree of consideration that has
    been given to other sources in the particular  field and the
    reasons  they lack the  capability evidenced by the proposed
    contractor.  The  following  questions  represent factors that
    should be considered, and when appropriate,  discussed in the
    JOFOC:

    (A)  What unique capability applicable to the specific effort
        does the proposed  contractor have which  is essential to
        satisfaction of the Government's minimum requirements?
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    (B)  Is the effort a continuation of a previous effort performed
         by the proposed contractor;  and to what degree  is such
         previous  effort critical to the.current  acquisition?  Such
         questions  as the  following  should  be considered  and
         addressed if pertinent:

            (I) Is  the  added effort  a   minor  supplement to  a
               completed   project   requirement?    Of    what
               significance is this fact?

           (ID Is  the  added effort  a   major  supplement to  a
               completed   project   requirement?    Of    what
               significance is this fact?

          (HI) Is  the added effort  essential  to  the continuing
               project requirement?   Of what significance is this
               fact?

    (C)  Does the proposed contractor  have exclusive access to
         personnel who are considered preeminent experts in the
         particular fields necessary to perform the  work? If so,
         identify the  expert(s)  and the  basis  for the  person's or
         persons' expertise.

    (D)  What  facilities,  equipment,  or  data does  the  proposed
         contractor have  which  are specialized, vital to the effort,
         and  which   no  other  company  can  provide?  Can  the
         Government      furnish     such     resources      as
         Government-furnished equipment or data?

    (E)  Is urgency the basis for the JOFOC?  Urgency means  that
         the need is  so compelling that  the Government  would be
         injured financially or otherwise  if the property or services
         to  be  acquired  were  not  furnished  by a  certain time.
         There may be valid reasons for obtaining required goods
         or  services on an urgent basis, and although there  may be
         other firms capable of delivering the  required goods or
         services,  no other firm could deliver within the required
         performance  period,  even  if  expedited  competitive
         procedures   were employed.  Explain  the  circumstances
         that led to the need for an urgent contractual action.

    (F)  If  the  basis  for the JOFOC is an unsolicited proposal,
         M-3.106-8(g)  provides guidance   for justification  of
         noncompetitive procurement.

(iii) The  following   factors,   according   to  decisions   of  the
    Comptroller General, cannot be used to justify noncompetitive
    procurements:
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           (A)  The   proposed  organization  is   either   a   nonprofit
               organization, a tax exempt entity, or a volunteer citizens
               group; or

           (B)  The proposed organization has a large price advantage and
               it is believed that there is little or no willingness in the
               market to supply competitive offers (Comptroller General
               Decision B-l87369,  2/28/77).

    (5) JOFOC Certification Requirements

     (i) The  Contracting  Officer  is  required   to  certify  that   the
        justification is  accurate  and  complete  to  the  best  of  the
        Contracting Officer's knowledge and belief.

    (ii) The justification must include evidence that any supporting data
        that is the responsibility of technical or requirements personnel
        such as verifying EPA's minimum needs, schedule requirements,
        or other rationale for other than full and  open competition have
        been  certified as  complete  and accurate by the  technical  or
        requirements personnel.

(6)  Review and Approval of the JOFOC

    The  review and approval of JOFOCs  is  conducted  by contracting
    officials at the  levels  specified  in Exhibit  3-7.  The  review must
    assess the quality of consideration  given  those factors discussed in
    (4)(ii) above and the approval must be based upon the  validity-of the
    justification  offered  in support of the proposal  to contract on  an
    other than full and open competition basis.

M-3.106-8(g)  Unsolicited Proposals

(1)  An unsolicited  proposal  is a  voluntary  offer submitted   by  an
    individual  or an organization that has a scientific or technological
    idea  which the offerer believes  has a value  to the agency.  EPA
    encourages the submission of unsolicited proposals  as part  of its
    efforts to utilize all sources of scientific and technical  expertise.

(2)  Control and Processing

       (i)  A centralized control point  has been established in the Grants
           Administration Division, Office of Administration, to  process
           unsolicited proposals regardless of where they are received in
           the  Agency.   After  acknowledging   receipt,  the  Grants
           Administration  Division assigns  to  each proposal  a  control
           number  and transmits the  proposal to a program office for
           purposes of evaluating its relative technical merit.
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           (ii)  If the program office decides to fund the proposal as a grant
               or cooperative agreement, the proposal will be returned to the
               Grants Administration Division  for further processing.  Where
               a contract  is  the  appropriate  instrument,  a procurement
               request must be prepared and forwarded to the Procurement
               and Contracts Management Division, Office of Administration.

          (iii)  Some important points to remember are:

               (A)  An unsolicited  proposal  is exactly that:  "unsolicited."
                   Project   Officers   should  not  involve  themselves  in
                   suggesting   or   requesting   that   a  firm  submit   an
                   "unsolicited proposal."

               (B)  Ethical/legal considerations  impose restrictions on  the
                   disclosure and use of data submitted with a proposal.

               (C)  Unless  precluded   by (B),  a  market   search  will  be
                   conducted to assist in determining whether the substance
                   of the proposal is  available  to  the Government without
                   restriction from another source.

               (D)  Only the Grants Administration Division is authorized to
                   copy,  photograph,  or  reproduce  any parts of unsolicited
                   proposals.

               (E)  Approval of an unsolicited proposal does  not  in and of
                   itself    justify    noncompetitive    procurement.    A
                   Justification for Other Than Full  and Open  Competition
                   (JOFOC) must be prepared and submitted with the PR for
                   the unsolicited proposal.

               (F)  EPAAR provides for mandatory cost  sharing for most
                   unsolicited proposals, except in cases where there is no
                   measurable gain to the performing organization.

    M-3.106-9   Pre-Proposal Conferences

    (a)  A  pre-proposal conference is a collective meeting  of all prospective
offerers  that is held by  the Government  for  purposes of  clarifying  any
questions offerers  may have regarding  the  work required in the solicitation.
Pre-proposal conferences  may  form an  important  part of the solicitation
process.   Although  the  final  determination   to  conduct  a  pre-proposal
conference is normally made by the Contracting Officer, you may suggest in
your PR  Rationale  Checklist that  one  be held.  Considerations to address in
making your recommendations are as follows.
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     (b)  A pre-proposal conference would be advantageous to the Government
and prospective offerers in order to:

     (1)  Clarify or explain complex specifications, Statement of  Work, or
         proposed  contractual  provisions—e.g.,  patent  rights   and  data
         requirements;

     (2)  Discuss  or  emphasize  the   importance   of  any  qualification
         requirements  that  ha-. •;  been  set  forth  in the   synopsis  and
         solicitation—e.g.,  offerers'  capabilities,  experience,  facilities,  and
         resources that are  required to perform the Statement of Work;

     (3)  Disclose any ambiguities, inconsistencies,  and gaps within or between
         the solicitation  schedule,  Statement  ~f  Work, specifications,  and
         evaluation criteria; and

     (4)  Provide additional background material to prospective offerers—e.g.,
         reports or other documents that are too  voluminous to include with
         the solicitation, a site tour, or visits to the place of performance.

     M-3.106-10  Site Visits

     Most  large  support  services  contracts,  such  as Government-owned
contractor-operated (GOCO) facilities contracts and other complex projects,
include a Government-conducted tour of  the work site.  Prospective bidders
have  full  opportunity  to  inspect the  work  site and  observe  the  unique
conditions which  may hinder  or  facilitate their performance if awarded  the
contract.  The  tour is most  often conducted  by  the  Project  Officer or  a
desigr.ee.  During the  tour, the PO identifies sections or  language  in  the
specifications peculiar  to the work site and responds  to specific questions.
However, no additional information of a suostantive nature is provided  by  any
EPA  representative during the  inspection tour.  If substantive issues arise
during a  site visit, answers  are deferred until a formal addendum  to  the
solicitation can be issued.  The  Project Officer should promptly  bring such
matters to the CO's attention.

     M-3.106-11  Reference Materials

     Many requirements procured by EPA tie into previous contracts or pertain
to a body of research or data.  Consideration should be given  to  identifying
reference materials that directly relate  to the work to be performed that will
provide prospective offerers both a better understanding of the requirement
and  will  define  EPA's needs.  Typical  reference  materials  are:  General
Accounting Office reports, previous contract findings, standards, etc.

     M-3.106-12  Cost Estimate

    (a)  The estimated amount of the proposed contract must  be  established
along with  (i) an estimate of the labor  hours  required by  category  (senior
engineer, technician, etc.); (ii) an  estimate of  travel costs (number of trips,
destinations, and duration};  and (iii) listing of other anticipated direct charges,
such as equipment, consultants,  and  computer time.  When a solicitation  will
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be developed on a term basis (level of effort), it is important that the estimate
be made utilizing the same labor categories that will  be set forth in  the
solicitation.

    (b) The estimate  must be  an  independent  in-house  estimate and  not
obtained  from  private  firms  or  other   outside  sources.   Independent
Government estimates are to be handled as privileged information and may not
be released or otherwise disclosed to persons outside the Government or to any
person without a  compelling need  to  know.  However, in solicitations  for
construction contracts an estimated price range is furnished.

    M-3.106-13 Funding

    M-3.106-13(a)  Basic Concept

    (1) The basic rule on  availability  of  appropriations made for  a specific
        fiscal  year is that they lapse at the end of the year unless otherwise
        provided  by  law. The obligation of funds against such appropriations
        is valid only if it relates to an actual need existing  within such fiscal
        year.  This criterion is commonly referred to as the  bona fide need
        principle.

    (2) With respect to the proper  obligation and expenditure (payments to
        contractors) of fiscal year funds, each requirement must  be viewed
        from the  standpoint of when the need arose or when the  requirement
        is needed.  In some situations, such as  requirements  for supplies or
        "job type" (completion  form)  services,  a  need may arise and be
        contracted for in one fiscal year, but deliveries made the following
        fiscal  year because of lead  time.  The bona fide need principle  may
        be violated  here,  however,  if, for example, too long  a period exists
        between contract award and delivery, especially for items which are
        available on the market at the  time needed for use.

    (3) The question of meeting  the bona fide need principle becomes more
        acute  in  the purchase of services.  Services of a  continuing nature
        which are severable can only be contractually obligated and funds
        expended against the  appropriation  in effect at  the time  the service
        was performed.

    M-3.106-13(b)   Cost-Reimbursement  Term  Form  Contracts  (Level of
                   Effort)

    (1) Where cost-reimbursement term form contracts are used in EPA, the
        following policies apply with respect to funding. This policy applies
        to new contracts  awarded after  February 10,  1984,  and  options of
        previously awarded contracts.

            (i)  All hours within a given contract  period  of performance must
               be completed within that period.  Work assignments which  task
               specific  directions  and/or order  hours of effort must be
               ordered and completed  within  the same  contract period to be
               valid charges to the appropriation of that  period.
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 (ii)  Work  assignments  which  contemplate  or  actually  extend
     beyond the contract period in which the order is placed must
     be ended concurrently with the  expiration  of  the contract
     period in which the order is placed. A  new work assignment to
     conclude such efforts must be issued  so that funds and hours
     available  in  the  new  period  are  charged for  the  work
     accomplished during that subsequent period.

(iii)  Performance  beyond  the contract  base   period  may  be
     accomplished by  the use of options or extended by appropriate
     noncompetitive procedures. The exercise of options originally
     priced  in solicitations is  not  new procurement.  As such,
     follow-on work  assignments for work begun in the previous
     contract period may begin with the issuance of  a  new  work
     assignment  concurrent with the effective date of  the option
     period.  Cost-reimbursement  term contracts may  include  a
     provision stating that, when an  option to extend the contract
     term is exercised, work  assignments  initiated  in a previous
     period are extended into the option period. The provision must
     clearly state  that  hours  performed  and  associated costs
     incurred during  the option period are charged to that option
     period. Work assignments must  have a specific completion
     date and if  this date extends into the  option  period, the work
     assignment  must refer to the provision discussed above. An
     administrative  modification  may  be   issued   to  existing
     contracts to incorporate the provision.

(iv)  Any extensions to the term of the contract, i.e., to the base or
     any of the  option periods of  performance,  is by  regulation
     defined as new procurement.  As such, extensions can only be
     accomplished competitively  or  justified   through  current,
     appropriate  noncompetitive  procedures.   Each   period  of
     performance (base and each option) is  separate and distinct
     and these procedures apply separately for extensions to each
     period. Work assignments for follow-on or new work may only
     be issued upon approval and execution of the term extension.
     These  work  assignments  may be issued  concurrent with the
     effective date of any such contract modification.

 (v)  To  ensure   that  obligations  in  each  contract  period  of
     performance (base  and each option) are proper, such periods of
     performance shall  be established consistent with  the  known
     period of the appropriation(s) to be encumbered.  For example,
     the base period of  the contract  could  extend  from the date of
     award  to the expiration date of a two-year appropriation.  For
     a contract awarded October 1, 1983,  or thereafter against a
     two-year  appropriation,   the   base   period  could  be  until
     September 30,  1985.  Option periods  beyond this base period
     may also be established consistent with  anticipated periods of
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     future   appropriations.    However,   considering   pricing
     uncertainties beyond three years in the future, good contract
     management would strongly suggest that option periods beyond
     the base period be written for one year at a time.

 (vi) The contract base and each option period of performance are
     separate  and distinct.   Hours  not  ordered and  unexpended
     funds from expiring appropriations remaining  at  the  end of
     each period are  not available for  use  in  the   subsequent
     contract period.  Funds from expiring appropriations should be
     deobligated  to  the  extent  they  exceed  the  Government's
     liability.   To  definitively  ascertain  all   actual  allowable,
     allocable,  and   reasonable  costs  requires  a final  audit.
     Contracting Officers could order audits and close each year
     separately. It is generally more efficient  to only  order final
     audits  after  the   conclusion  of  the  last   option  period.
     Normally, funds should be deobligated only  after settlement of
     the final contract audit.

(vii) Funds properly obligated by a  Contracting Officer generally
     can  only  be   deobligated   by   a   Contracting  Officer.
     Deobligation occurs when all actual costs, determined to be
     allowable, allocable, and reasonable, are known and then only
     to  the  extent  beyond these valid Government liabilities.  In
     appropriate situations, excesses in any contract period  may be
     deobligated by a Contracting Officer  in other  ways  prior to
     final contract audit:

     (A)  Mutual  agreement   between  the  Government and  the
          contractor  to   reduce the  obvious funding in excess of
          anticipated  approved final costs executed by bilateral
          contract modifications.

     (B)  Settlement  of  an  interim  final  audit on a particular
          contract period. Settlements of these and any final audit
          are executed by a bilateral (mutual agreement) contract
          modification.   However,  should a mutual agreement not
          be obtainable,  settlement may  be effected  by  a final
          decision of the  Contracting Officer.

     (C)  Termination for convenience (total or  partial) where the
          remaining  hours   are   no  longer  needed.   However,
          settlement  procedures require  a final audit to determine
          the  Government's   actual  liability.    Settlements  are
          executed  by   a  bilateral   contract  modification  or
          Contracting Officer's final decision.

(viii)  Contract  performance  periods involving appropriations with
      indefinite obligation terms, commonly referred to as  no-year
      funds or x-year appropriations,  should be consistent with sound
      program  and contract management needs.  Contract periods
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           (base and  options) may be established  for  terms as long as
           these needs dictate.  Generally contract periods of up to two
           years  approach  the  limit of  sound contract  management.
           Periods  for more than two years must be approved by the
           Chief  of the Contracting  Officer  prior  to issuance of the
           solicitation.

(2)  Suggested alternate contract methods, in lieu of cost-reimbursement
    term form contracts, are as follows:

       (i)  Smaller  contracts with definitive  SOWs  that can be priced as
           either cost-reimbursement  completion  type  or fixed-price
           completion contracts.  These types of  contracts constitute
           nonseverable services and may cross fiscal  years, charged to
           the year in which the contract was executed.

       (ii)  Indefinite  delivery-indefinite quantity  type contracts under
           which severable  or  nonseverable  delivery  orders can  be
           written.   These  contracts can  provide  for  various pricing
           arrangements including fixed rates,  cost-reimbursement with
           completion or term forms. If the delivery orders are written
           as  either  fixed-rate  completion   or  cost-reimbursement
           completion, they are considered nonseverable, and may cross
           fiscal years.  Term  or  LOE orders can  also be  written as
           necessary, but these would be subject to the same restrictions
           as the current LOE work  assignment  contracts.   Creative use
           of indefinite  quantity contracts  could  be  the  most  flexible
           contractual  vehicle  for  quick  response  actions against   a
           general  SOW—similar to  current  work  assignment  LOEs.
           However, the only way funds with expiring  appropriations can
           be obligated in  one  fiscal  year and  cross  validly  to   a
           succeeding year is by completion (nonseverable) type delivery
           orders.  The obligation occurs, and  the  Government's legal
           commitment arises (beyond the contract minimum guarantee),
           at the time the delivery order is issued. This is  in contrast to
           the LOE (term form) contract in which the obligation occurs,
           and the  entire estimated cost and fixed fee of the contract is
           recorded as an obligation, at  the time of contract award.  The
           issuance of work assignments then "draw  down on" this initial
           contract obligation.  No obligation of contract funds occurs by
           issuing a work assignment. The servicing Contracting Officer
           can  provide  further  details  as  applied   to   individual
           requirements.

       (Hi)  In those circumstances in which a cost-reimbursement term
           (LOE) contract with  work  assignments  is necessary, the best
           way to  mitigate the effect of severable  services  is to write
           the  base contract period  for the longest period possible.  In
           those instances where two-year funds are available, the base
           period should be established  from the time of award through
           the  available period of the  appropriations).  Option periods
           beyond  this base period  may  also be  established  consistent
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          with  anticipated periods of future appropriations.   However,
          considering pricing  uncertainties beyond  three years in the
          future, good contract management would strongly suggest that
          option periods beyond the base period be written for one year
          at a time.  Contracts with no-year appropriations should be set
          up  consistent with sound program and  contract management
          principles and needs.

      (iv) By far the best way to minimize the effect of compliance with
          the bona fide needs principle is planning requirements with as
          definitive  SOWs as possible.  With a little more planning and
          effort,  SOWs  may   be  written  as   cost-reimbursement
          completion contracts.   The  test of  which  appropriation(s)
          period  or  contract  period  that  may  be validly charged  is
          whether the contract requirement is a nonseverable need of
          that  period.  Usually,  completion  efforts  have SOWs  that
          require delivery of an end item, e.g., delivery of a report, by a
          specific date.  This  date  could  validly  be  in   a future
          appropriation period if the need is clearly established and
          apparent  during the contract period  in  which  the work  is
          ordered. The differences between a completion and  term form
          contract  are basically  that the  term  form  contract  only
          provides for the contractor's best efforts at  a specific number
          of  hours for a definite period of time.  Extensions to the  term
          for further work  is always  considered  new procurement and
          involves cost and  fee.  A completion form requires a specific
          end product at a required  delivery date.  If  more  time  is
          necessary  to provide the end product, extensions are only at
          cost with  no fee paid.  In many  instances where planning and
          circumstances can  establish  such  definitve  requirements,
          completion form  cost-reimbursement contracts may, in  fact,
          be better contract instruments than the LOEs.

M-3.106-13(c) Availability of Funds

(1)  Fiscal Year  Contracts.  To effect procurements promptly upon the
    beginning of  a new fiscal year, it may at  times be  necessary  to
    initiate a procurement properly chargeable  to funds of  the new fiscal
    year  prior  to the  availability of  such funds.  In such  cases  an
    Availability of Funds  clause  is included  in  the solicitation and/or
    contract.  This  procedure  generally is  used only  for  operation and
    maintenance and continuing services (such as  rentals, utilities, etc.)
    which are necessary for  normal operation and for which the Congress
    consistently appropriates funds.

(2)  Contracts  Crossing  Fiscal  Years.   A one-year  requirement   or
    indefinite-quantity  contract   for   services   funded by  annual
    appropriations may extend beyond the end of the fiscal year in which
    it was  awarded  provided a minimum amount  is established for the
    indefinite quantity portion of the  contract.  The  minimum must  be
    ordered during the  period in  which the appropriation is  available.
    However,  if severable  delivery  orders  are  issued against the
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        minimum, the minimum must be consumed during the period of the
        appropriation's availability.  Also, a contract for expert or consultant
        services calling  for an  end  product  which  cannot  feasibly  be
        subdivided for  separate performance in  each  fiscal year may cross
        fiscal years.

    M-3.106-13(d) Commitments

    Commitment  of  funds will  be  made  by  the  Commitment  Clerk.
Commitments will be made on the  Procurement Request/Order, EPA Form
1900-8, unless a moratorium has been placed on the allowance holder.  If such a
moratorium  has been established,  the PR will be returned  to the initiator
without a commitment.

    M-3.106-13(e) Funding Cost-Type Contracts

    When a cost-reimbursement term contract is funded by  more  than one
appropriation, the following procedures apply:

    (1)  The Project Officer must  document the rationale for use of multiple
        appropriations and include in the rationale an estimate of the costs to
        be  charged each  appropriation.  All  program  offices  contributing
        funds  to the  procurement   must indicate  on  the  rationale  their
        concurrence   with   this  estimate.   The   Director,   Headquarters
        Financial Management Division,  or  designee,  must  approve  the
        rationale. The Project Officer must include a copy of the  approved
        rationale with the procurement request submitted to the Contracting
        Officer.

    (2)  In general, a work assignment should benefit a single appropriation.

    (3)  The Project Officer  shall   indicate on  the  cover  of each  work
        assignment  the account  number against which  payments are to be
        made and the basis for the finance office to charge vouchered  costs
        to each account number if more than one account number appears on
        the work assignment.

    (4)  The Project Officer must assure that:

          (i)  The account numbeKs) on the  work assignment is the same as
              that cited on the contract, and

          (ii)  The aggregate of funds on work assignments does not exceed
              amounts  obligated on  the contract for a particular account
              number.

    (5)  It may be possible that a  contract includes sufficient funding for the
        total  contract value, yet  inadequate funds  to cover costs billed
        against  work  assignments   associated  with  a  particular  account
        number.  In these  cases,  the  Project  Officer should inform the
        finance office  in  writing   which  account  number  to charge the
        excessive billed costs.  The Project  Officer  should assure that the
        program office funding the  excess  agrees that its account  number
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         will be used.  The finance office will make the adjustment internally
         so there  is  no  need  for the  Contracting  Officer to  issue  an
         administrative contract  modification.  The  Project Officer  should
         notify the Contracting Officer in writing of the adjusted amounts per
         account number.

    (6)   The  Project  Officer  should notify the  Contracting Officer  when
         increases in the total contract value are expected.

    (7)   Prior to  the  end of each fiscal year  covered by the contract, the
         Project Officer  should review  the contract's funding to determine
         whether  the  ratio of  obligated  funds,  including any   previous
         adjustments,  coincides with the value  of the work  benefiting each
         appropriation. The  Project Officer should inform the finance office
         in writing of  any adjustments that should be  made to the established
         ratios.  The procedures in subparagraph (5) above apply when making
         these adjustments, as well as when, at any time  during performance,
         the Project Officer anticipates the need for an adjustment.  These
         adjustments must be made no later than the end of the fiscal year in
         accordance with the actual or  best estimate of  the  benefit to each
         appropriation.

    M-3.106-14 Planning Purpose PRs (Unfunded Procurement Requests)

    (a)   When the Agency enters into a contract subject to the availability of
funds, the supplies or  services will not be ordered or  accepted by the Agency
until funds are available  to the Contracting Officer for the procurement and
until the Contracting Officer  has  given notice to  the  contractor  of such
availability.

    M-3.106-15 Options

    (a)   Introduction

    The acquisition regulations allow the Contracting  Officer to use two types
of options:  extension of period and increase in quantity.  EPA's general policy
is to make use of  contract options only when their use is  advantageous to the
acquisition.

    (b)   Use of options

         (1) The use of options for increased quantities of supplies or services
            which exceed 50  percent of  the base quantity specified  in the
            contract for  a particular period require advance  approval  by the
            Head  of  the Contracting Activity (HCA).  For supply contracts,
            the 50 percent limit applies only to contracts  with a base quantity
            of more than one.

         (2) The use of  option  periods which, when combined with  the base
            contract period, results in a total contract period of performance
            exceeding thirty-six (36) months require advance  approval by  the
            Chief of the  Contracting Office. In no event, can the total of  the
            base and option periods exceed sixty (60) months in duration.
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    (c)  Exercise of options

        (1) Unless  otherwise  approved  by  the  Chief  of the  Contracting
            Office, all service contracts employing option periods require that
            a preliminary written notice of the Government's  intention  to
            exercise the option be furnished to the Contractor a minimum  of
            sixty (60) calendar days prior to the date for the  exercise of the
            option.  Failure  to provide such  preliminary notice within the
            timeframe  established in the contract  waives the Government's
            right  to  unilaterally exercise  the  option  and  requires the
            negotiation of a bilateral contract modification in order to extend
            the period of performance, where such an extension is authorized.

        (2) When  the term of the service contract coincides with the  fiscal
            year and delays in receipt of authority to obligate funds for the
            new fiscal year are anticipated,  the  Contracting Officer, if the
            contract so provides, may,  within  60 days after  the end of the
            fiscal year, unilaterally exercise an option to extend the term  of
            the contract. The option may be exercised only if funds become
            available within the 60-day period. In the event that sufficient
            funding  is not available within the 60-day period, the Government
            waives  the  right  to  unilaterally  exercise  the option,  thereby
            rendering   any  additional   requirements   subject   to   normal
            competitive procurement procedures.

        (3) The Contracting Officer, if the contract so provides,  may, subject
            to the  conditions  in  FAR  17.204(d),  32.703-2,  and  32.705-l(a),
            exercise an option contingent upon the availability of funds. To
            exercise such an option,  the contract must contain the  clause  in
            FAR 52.232-18,  Availability of Funds.  Under  no circumstances
            shall any action be taken which could be construed as creating a
            legal liability on the part of the Government until a formal notice
            of availability of funds in the form  of a contract modification has
            been issued by the Contracting Officer.

    M-3.106-16 Government Property

    M-3.106-16(a)  Introduction

    This section provides specific guidance on:  (1) determining whether  to
include in the procurement request rationale a request that the contractor  be
allowed to either:  (i)  be provided  with Government  property under the
contract;  (ii) obtain Government  property under  the  contract;  or  (iii) use
Government  property  in  its possession  and  (2)  other considerations  to  be
addressed when the contractor will have use of Government property. Further
discussions on administration of Government property are discussed in M-6.300.

    M-3.106-16(b)  Definitions

    Government property is classified into two main categories: real property
and personal property.   Real property pertains to buildings and land.   Personal
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property  relates to  all other  types of  property  including such  items as
equipment,  desks,  etc.  Personal  property is further  subdivided  into  two
categories:   expendable and nonexpendable.   Expendable is  the  type of
property that is consumed  in use—e.g., paper, pencils, etc. Nonexpendable
property has a  continuing value and is usually considered a capital asset.
Whether the Agency has acquired property  and furnished it to a contractor or
the  contractor  acquired   property  through  purchase  made   under  a
cost-reimbursement  contract,  EPA  is concerned that  funds  are properly
expended,  unnecessary  duplication  of acquisitions  is  avoided,   and  that
Government  assets  are  controlled  and  accounted  for.   Consequently,
procedures  have  been  established  to  control  both   the  acquisition of
nonexpendable personal property by  cost-reimbursement  contractors and the
furnishing of such property by EPA.

    (1)   Accessory Items: Items which facilitate the operation of capitalized
         nonexpendable equipment,  but  which are  not  essential  for  its
         operation. (Example: remote control devices)

    (2)   Accountable    Property:     All    Government-furnished    or
         contractor-acquired property which  must be accounted for  by the
         contractor.  Contractor records of Government property established
         and  maintained under  the contract are the  Government's  official
         property records.

    (3)   Auxiliary Items:  Items without which the basic unit of capitalized
         nonexpendable equipment cannot operate. (Example:  motors)

    (4)   Condition  Codes:  An appraisal of current condition of accountable
         property.

    (5)   Contaminated    Property:    Equipment/supplies   that    become
         contaminated with  toxics or other chemicals  which render them
         unsafe.

    (6)   Expendable Property (Supplies):  Property that  may be  consumed or
         expended in the performance of a contract. It includes such items
         as:  raw  and processed materials, supplies, parts, small  tools and
         components that generally cost less than $100. Expendable property
         remaining at the end of the contract must be accounted for  and listed
         on the final inventory.

    (7)   Government Property:  All real and/or personal  property  owned by
         the Government or acquired for the Government under the terms of a
         contract.   It  includes both  Government-furnished  property  and
         contractor-acquired property as defined below:

          (i)  Government-furnished  property:  property in the possession of,
              or acquired  directly  by the  Government and  subsequently
              delivered or otherwise made available to the contractor; and

          (ii)  Contractor-acquired  property: property purchased or otherwise
              provided by the contractor using contract funds.
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 (8)  Nonexpendable Property:  CAPITALIZED:  Property  which has a unit
     cost of $500 or more including accessories; is complete in itself; does
     not lose its identity or become  a component  part  of another item
     when placed in use; is of a durable nature with an expected life of  1
     year  or  more; and must be accounted for by  the contractor and
     reflected in  EPA property records.   NONCAPITALIZED:  Property
     which has a unit cost of less than $500, is of a durable nature  with an
     expected life  of  1 year or more and must be accounted for by the
     contractor at the conclusion of the contract.

 (9)  Property  Administrator:   An  EPA  employee  designated   by the
     Contracting Officer to administer property for contracts under which
     Government  property  is  involved.  The Property  Administrator  is
     responsible for evaluating the adequacy  of the Contractors' property
     policy and procedures concerning receiving and inspecting accounting
     and control, obligation, maintenance, scrap and salvage, and disposal.

(10)  Real  Property:    Includes   land  and  rights   therein,   ground
     improvements, utility distribution systems, buildings and structures.

(11)  Sensitive Items:  Supplies and equipment which cost less than  $500,
     and   because  of  their  nature   and  portability   are  particularly
     susceptible to misappropriation.  These  items  are accounted for by
     the contractor and reflected in EPA records.  (Examples:  cameras,
     binoculars, portable typewriters, tape recorders and calculators.)

 M-3.106-16(c)  Property  To  Be  Furnished and/or Acquired  Before
                Contract Award

 (1)  Before  preparation of  the contract  package,  the  Project  Officer
     should review equipment requirements.  If equipment will be  needed,
     whether  furnished by  the  Government  and/or acquired   by the
     contractor with contract funds,  the Contract Negotiator should be
     advised so that property can be discussed during  negotiations and
     subsequently incorporated into the official contract.

 (2)  If title to the property is to be vested with an organization other than
     EPA, the Contracting Officer  should  be advised so that it  can be
     stated in the contract property article.

 (3)  If the property  being furnished and/or  acquired is  to be physically
     installed at the contractor's facility which may  result in subsequent
     restoration and/or problems in  removal after performance  of the
     contract, a determination  regarding  disposal should be  made and
     incorporated into the official contract  at the same time the property
     is authorized in the contract. Various  factors concerning restoration
     should be considered.  For example, will  the contractor's premises be
     restored at Government expense?  Or will the property be abandoned?
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M-3.106-16(d)  Considerations   for   Purchase    Versus   Rent/Lease
               Determinations

(1)   Consideration  should  be  given  whether  to  lease  or  purchase
     equipment based on a caseyby-case evaluation of  comparative costs
     and other factors.  Evaluation will indicate which of the acquisition
     methods  will  provide  greater  savings  to the  Government  while
     satisfying user requirements.

(2)   The  following  factors,  as  a  minimum,  should  be  considered.
     Estimated length of the period the equipment is to  be used and the
     extent of use within  that period; financial and operating advantages
     of  alternate  types  and makes  of equipment;  cumulative rental
     payments for  the estimated period  of use, net  purchase price,
     transportation  and installation  costs; and  potential obsolescense of
     the equipment because of imminent technological improvements.

(3)   The following additional factors should be considered, as appropriate,
     depending on the type, cost, complexity and estimated period of use
     of  the equipment:  availability of purchase options, potential for use
     by  other agencies after its use by  the  acquiring agency is ended,
     trade-in or salvage  value, imputed interest, and availability of  a
     servicing capability especially for highly complex equipment.

(4)   Acquisition  methods

      (i)  Generally the purchase  method is appropriate if  the equipment
          will be used beyond the point in time when  cumulative leasing
          costs exceed the purchase price.

      (ii)  The lease method is appropriate if it is to the Government's
          advantage under  such  circumstances. The lease method  may
          also serve as  an interim measure  when  the  circumstances
          require immediate use of equipment to meet  program or system
          goals, but do not currently support acquisition by purchase.  If a
          lease  is  justified, at least with option  to  purchase  may  be
          prefereable.  Generally, a long-term lease should be avoided.

M-3.106-16(e) Required Sources of Supplies and Services

(1)   Federal  agencies shall satisfy requirements for supplies and  services
     from  or through  the  sources  and  publications listed  below  in
     descending order of priority unless specified otherwise.  Contractors
     holding cost-reimbursement contracts may use the Federal sources of
     supply and  services when authorized to  do so by the terms of the
     contract.

        (i)  Supplies

           (A)  Agency inventories

           (B)  Excess from other agencies

           (C)  Federal Prison Industries, Inc.
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          (D)  Procurement lists available from the  Committee  for
               Purchase from the Blind and Other Severely Handicapped

          (E)  Wholesale supply  sources, such  as  stock  programs of  the
               General Services Administration,  the  Defense  Logistics
               Agency,   the   Veterans   Administration  and   military
               inventory control points

          (F)  Mandatory Federal Supply Schedules

          (G)  Optional Use Federal Supply Schedules

          (H)  Commercial sources, including  educational and  nonprofit
               institutions

       (ii) Services

          (A)  Procurement  lists  of  services   available  from   the
               Committee  for  Purchase from  the  Blind  and  Other
               Severely Handicapped

          (B)  Mandatory Federal Supply Schedules and mandatory GSA
               term contracts for personal property rehabilitation

          (C)  Optional Use Federal Supply Schedules and optional GSA
               term contracts for personal property rehabilitation

          (D)  Federal Prison Industries or other commercial sources,
               including educational and nonprofit institutions

M-3.106-16(f) Acquisition of Excess Property

(1)  If GFP is needed for contract performance, in-house property sources
    within the Project Officer's sponsoring program  should  be checked
    first for availability.  If the item is available, both the  Contracting
    Officer and  Property Administrator should be notified so that  the
    contract and property records  can be  modified.  The  Accountable
    Officer  should  also  be  notified  to  arrange  with the   Property
    Administrator a detailed description of  the item.  Those Project
    Officers at locations other than the Property Administrator's station
    should first contact their Accountable Officer for a review and then
    forward   it  to   the  Property   Administrator.    The   Property
    Administrator  will  first  review  the EPA  excess  catalog  for
    availability within EPA.  If  the items are  not available within EPA,
    the Property Administrator will coordinate with GSA regional offices
    in an attempt to locate and transfer the items to EPA. GSA Form
    1539, "Request for Excess  Personal Property,"  is  prepared by  the
    Property Administrator in locating excess from GSA.  This  method is
    more satisfactory than reviewing  GSA excess property catalogs as it
    enables property transfer before it appears  in the  excess catalogs. If
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         the item is available through GSA, a Procurement Request/Order will
         then be required with accounting  information  and approvals.  This
         requisition will then be used as an authorization to prepare SF-122,
         "Transfer   Order  Excess   Personal  Property."   The  accounting
         information is required in  the event  any  packing,  crating,  and
         shipping charges arise from the physical transfer of this property.

    (2)  Occasionally, EPA may be  responsible for an overseas return charge
         if  the  materiel  was  located  in  a  foreign  country.  If so,  a
         Miscellaneous  Obligation Document is also required.  This document
         should  be  forwarded to  the  appropriate  Financial   Management
         Office.  Notification of any such charge  will be given to EPA before
         transfer by GSA.

    M-3.106-16(g)  Procedure

    If  in   developing  the  requirement it  becomes  evident  that  it  is
advantageous  to either provide the contractor  with  property  or allow the
contractor to acquire it under the  contract,  then the  Project  Officer  must
include a Needs Justification in the procurement  rationale which justifies the
proposed action. The same procedure  is applicable when a contract is to be
modified to either allow for the provision of Government-furnished property or
acquisition of property under a prime or subcontract.

    M-3.106-16(h)  Content of Needs Justification

    (1)  The Contracting Officer will not authorize a contractor to (i) acquire
         property  at Government expense,  (ii) obtain  Government-furnished
         property,  or (Hi)  use Government-owned property in its possession
         until the Chief Officer, at Division  level or above, responsible for
         management  of  the program/project  involved,  submits  to  the
         Contracting Officer a written justification  of need to provide the
         property.

    (2)  As a minimum, the justification of need must:

            (i) Identify the  specific  program  and project  for which  the
               property is required.

           (ii) Identify the  type, quantity and estimated cost (including any
               transportation  or installation costs) of each item of  property
               required.

           (iii) Explain why the property  is essential for contract performance.

           (iv) Explain why it is in the interest of the Government to provide
               the property rather  than  to require the  Contractor to provide
               the property at no direct cost to the contract.

            (v) Identify the location, if known, of the Contractor's facility  at
               which  the property  will  be used,  and  the   Contractor's
               personnel responsible for acquisition and management of the
               property.
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          (vi)  For property to be acquired by the Contractor at Government
               expense,  include  a certification  that  no  in-house  excess
               property is available and include the concurrence of  the local
               property office.

          (vii)  For  equipment   to  be  acquired  by  the   Contractor  at
               Government expensey include a lease vs. purchase analysis (see
               Federal Acquisition Regulation Subpart 7.4).

    (3)  A justification of need is required regardless of whether the need for
        the property is determined:

           (i)  at development of the requirement;

          (ii)  at proposal evaluation or contract negotiations; or

          (iii)  after contract award.

    M-3.106-16(i) Vesting Title to Educational Institutions

    EPA is authorized pursuant to Public Law  95-224 to  transfer title of
equipment purchased with research contract funds to educational institutions
or nonprofit organizations whose primary purpose  is the conduct of scientific
research.  (This situation does not apply  to Government-furnished property.)
EPA may  vest title of property in an educational  institution for items with an
acquisition cost of less than $1,000 if the appropriate  Government property
clause is incorporated into  the contract. During the contract, EPA will retain
title  to items  with an acquisition cost  greater  than  $1,000.  Shortly after
contract expiration, the  Project Officer will be  requested to advise  the
Property  Administrator  whether equipment should  be transferred  to  the
contractor or  retained by the  Government.  The appropriate  Government
property  clause  permits  the  Contracting  Officer  to  transfer  title  of
contractor-acquired equipment to the  contractor at any time during the term
of  the   contract   or  upon  its completion/termination.   The   Property
Administrator  will request  the  Contracting   Officer's  recommendation/
concurrence for the transfer of title of the item(s).  Written notification  will
be provided to  the contractor by the Contracting Officer.  If  the appropriate
Government property clause is not incorporated  into the original contract to
allow for this  type of transaction, normal disposal  regulations will govern
disposal procedures.

    M-3.106-16(j) Joint Use of  Property by Contractor and EPA

    Property  furnished  to on-site contractors   should be  itemized in  the
"Government-Furnished Property" clause  of the contract.  As  a result of this
clause,  the contractor becomes  responsible  for the items listed  and for any
other items that  are acquired. Government property is only to be used for the
contract that authorizes its use, and then only  as required for satisfactory
completion of the contract scope of work. Property itemized in a contract as
Government-furnished  should  be  used  by contractor  personnel  only.   If
property  is  to  be  used  by  both  contractor  and  EPA  personnel,  the
"Government-Furnished Property" clause within the contract should stipulate
the percentage of time the property is to be used by the contractor.
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    M-3.106-16(k)  Use of Property Purchased with Funds of Another Agency

    The Project Officer must assure that the  Government  property  clause
within the contract stipulates ownership of property purchased with funds
from  another Agency that are being used on an EPA contract. The Project
Officer must also advise the Property  Administrator  just  before  contract
award of any special conditions  that may exist concerning the use  of  the
property (i.e., who will hold title to the property, who will be accountable for
the property, whether EPA will be responsible for custodialship, disposal of the
property, etc.).

    M-3.106-16Q)  Contractor Use of Government Vehicles

    Contractors can be authorized to use Government vehicles  from the GSA
Interagency Motor Pool when a special clause  is included in the contract. The
Project Officer  must submit to the Contracting Officer, with a copy  to  the
Property Administrator,  a determination and findings and a justification of
need  for the  use of  such vehicle.   The  Property Administrator or  the
appropriate Accountable Officer will arrange with the GSA  Interagency Motor
Pool for assignment of  the vehicle. The  Project Officer must assure that all
contract employees using the vehicle obtain Government driver's licenses. A
list of those employees should be forwarded to the Contracting Officer and the
Property Administrator.

    M-3.106-16(m) Contractor Use of GSA Self-Service Stores and Depots

    Contractors   who  have  cost-reimbursement  type  contracts  can  be
authorized  to  acquire  materiel  from GSA,  Federal Supply  Service,  (see
M-3.106-16(e)) when a special clause is included in the contract. The Federal
Supply Service is  responsible for the procurement and supply  of a wide range
of common-use items that are available to customer agencies from a network
of  supply  depots and  self-service stores.   Upon  notification  from   the
Contracting  Officer, the Property  Administrator will obtain the necessary
codes, and GSA  will supply the  contractor with  catalogs and instructions for
use.

    M-3.106-17   Quality Assurance

    A review of all extramural project procurements  must be conducted in
order  to  determine  the  applicability  of  Agency  Quality  Assurance
requirements for all contracts in excess of $25,000 which have the following
object classification codes in the accounting and appropriation data:

         25.32  Research and Development Contracts
         25.35  Program Contracts
         25.47  Occupational Health Monitoring
         25.49  Occupational Health and Safety Sciences
         25.70  Other Interagency Agreements
         26.01  Laboratory Supplies
         31.01  Scientific and Technical Equipment
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The  determination of  QA  applicability  shall  be certified  on  a Quality
Assurance Review (QAR)  Form  as shown  in Exhibit 3-8 or equivalent. The
QAR Form shall contain the signatures of the Quality Assurance Officer (or
designee) and the Project  Officer, and the completed  Form  must accompany
the  Procurement  Request.   The  Contracting Office  will  not  process  a
Procurement Request unless the signed QAR Form is included.

    The QAR Form will tell the Contracting Officer if a QA Program or QA
Project Plan is required as part  of the offerer's proposal and if a pre-award
audit  is to be part of the evaluation process.  Based upon the information
provided,  the  Contracting  Officer  will  include  the  appropriate  EPAAR
provisions on Quality Assurance in the solicitation.

    M-3.106-17(a)   Quality Assurance Program Plans

    The  Quality Assurance Program Plan is  a qualitative  statement of the
offerer's capability to conduct a viable QA program and should be submitted
as a separate and identifiable part of the technical proposal.  It should address
the following:

    (a) A statement of policy concerning the organization's commitment to
        implement a Quality  Control/Quality Assurance program to assure
        generation of measurement data of  adequate quality to meet the
        requirements of the Statement of Work.

    (b) An  organizational chart showing  the  position of a QA function or
        person within the organization.  It  is highly  desirable that the QA
        function or person  be  independent of the functional  groups  which
        generate measurement data.

    (c) A delineation of the authority and responsibilities of the QA function
        or  person and the  related  data  quality  responsibilities  of  other
        functional groups  of the  organization.

    (d) The type and degree of experience in developing and applying Quality
        Control/Quality Assurance procedures to the  proposed sampling and
        measurement methods needed for performance of  the Statement of
        Work.

    (e) The background and experience of the proposed personnel relevant to
        accomplish the  QA specifications in the Statement of Work.

    (f) The  offerer's  general approach   for  accomplishing   the   QA
        specifications in the Statement of Work.

    M-3.106-17(b)   Quality Assurance Project Plans

    The  Quality  Assurance  Project  Plan (QAPP) defines  the data quality
objectives for a project, identifies the critical measurements to be performed,
and  discusses the  various QA/QC   activities to  be  conducted  during the
measurement portion of the work. The QAPP is quantitative in content and
should be a  specific delineation of the offerer's approach  for accomplishing
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the QA specifications in a Statement  of Work.  As in the case of the QA
Program Plan, the QA Project Plan may  be required as part of the technical
proposal.  Alternatively,  the QAPP may be required as a deliverable under the
contract.  The form and content of the QAPP (unless specified otherwise) is as
follows:

    (a)  Title page with provision for approval signatures.
    (b)  Table of contents.
    (c)  Project description.
    (d)  Project organizations) and responsibilities.
    (e)  Quality  Assurance objectives  for measurement  data in terms  of
        precision, accuracy, completeness, representatives and comparability.
    (f)  Sampling procedures.
    (g)  Sample custody.
    (h)  Calibration procedures, references, and frequency.
    (i)  Analytical procedures.
    (j)  Data reduction,  validation, and reporting.
    (k)  Internal quality control checks and frequency.
    (1)  Quality Assurance performance audits, system audits, and frequency.
    (m) Quality Assurance reports to management.
    (n)  Preventive maintenance procedures and schedules.
    (o)  Specific procedures to  be used in routinely  assessing data precision
        and accuracy, representativeness, comparability, and completeness of
        the specific measurement parameters involved.
    (p)  Corrective action.

    If the QA Project Plan is required as a contract deliverable, the contract
must  specify how many  copies and when  the QAPP must  be submitted. The
contract must also specify how  many days the  Government has to review the
QAPP.  When the  QAPP  has been approved, the Contracting Officer will
incorporate  the  QAPP by  issuance of a  change  order to the  contract. The
contractor will submit a  request for an equitable adjustment to the contract in
response to the change  order.  Depending on the nature of the change, the
equitable  adjustment  may increase, decrease, or not change at all, the cost of
the contract, or impact the delivery schedule.

    M-3.106-17(c)  Pre-A ward Audits

    Offerers determined to be in the  competitive  range  based on the  initial
evaluation may  be required  to  submit to a  qualitative  Technical  Systems
Audit, if required in the  solicitation. The  purpose of the systems audit will be
to assess  the adequacy of  the offerer's quality control program as related to
the scope of work for the  contract. The systems audit will be performed by
the EPA QA Officer or his designee.

    Some or all of  the following areas of  concern  will be  addressed,  as
appropriate, to  the contract  scope and goals:  (1) facilities, (2)  equipment,
(3)  methods, (4)  Quality  Control Systems,  (5)   recordkeeping,  (6)  data
validation,  (7)  maintenance   and  calibration  procedures,   (8)   reporting,
(9)  adherence to  documented procedures, (10)  procurement  and  inventory
procedures,  (11)  personnel training, and (12) feedback and corrective action.
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    M-3.106-18 Reports

    M-3.106-18U)  Introduction

    Reports are critical to the monitoring of a contract.  They provide the
raw data for decision making.  Failure to include a reporting requirement can
later prove to be a costly mistake.

    M-3.106-18(b)  Types of Reports

    (1)   The two most commonly utilized reports are  progress  and financial
         management reports.  Collectively, these reports inform the Project
         Officer of the expenditure rate under a cost-reimbursement contract
         and the  progress  being  made  towards contract performance.  They
         are what may be referred to as the "universal tools" in the Project
         Officer's contract monitoring tool box.

    (2)   The Project  Officer  must  be aware that  virtually any reporting
         requirement may  be  requested  of the contractor.  Where there is a
         need  for  unique  content  or frequency of  reporting,  it  should  be
         indicated  in  the procurement  request.   Reports  by  task/work
         assignments as well as charts, graphs, and other written displays may
         be obtained. The  requirement for a work plan  may also be specified.
         The overriding concern that should be addressed in deciding what
         reports  and report  content should  be obtained  is: what are  the
         minimum informational  needs  I must have to  maximize the chances
         of successful contract completion?

    M-3.106-18(c)  Considerations in  Use of Reports

    (1)   There are  many considerations to address in determining the type and
         content of reports. However, there are a couple of simple principles
         that should be kept in mind.  The first is: the greater the percentage
         of cost  risk assumed by the Government [e.g., cost-reimbursement
         contracts  (see M-3.106-4)],  the greater the need for  reports.  The
         second  is:   financial  management  reports  are  not utilized  in
         fixed-price contracts; however, progress reports may be used.

    (2)   Considerations in determining the use, type, and frequency of reports
         are as follows:

            (i)  contract type;

           (ii)  dollar value;

           (iii)  criticality of the project;

           (iv)  complexity of  the work;

            (v)  performance records of firms within the industry; and

           (vi)  internal reporting requirements.
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    Plan may then be utilized to track the contractor's quality progress
    in the tasks assigned.  The QA Project Plan contains an element that
    may  be used  to  require  quality  control reports to the  Project
    Officer. Periodic  review  of quality  control will  be helpful  to the
    Project Officer in assessing the work progress.

M-3.106-18(c)  Considerations in Use of Reports

(1)  There are many considerations to address in determining the type and
    content of reports.  However, there are a couple of simple principles
    that should be kept in  mind.  The first is:  the greater the percentage
    of cost  risk assumed  by the Government  [e.g., cost-reimbursement
    contracts (see M-3.106-4)],  the  greater the  need for reports.  The
    second   is:  financial  management  reports  are  not  utilized  in
    fixed-price contracts; however, progress reports may be used.

(2)  Considerations in determining the use, type, and frequency  of reports
    are as follows:

     (i) contract type;

     (ii) dollar value;

     (iii) criticality of the project;

     (iv) complexity of the  work;

     (v)performance records of firms within the industry; and

     (vi) internal reporting requirements.
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    One should keep in mind that reports are a part of the cost or price the
contractor proposes.  Indiscriminate requirements are a waste of both  time
and money.

    M-3.106-18(d) Specifying Reports

    Specify what types of reports—monthly or quarterly progress, or financial
or other  certification  of  satisfactory progress—will be  required  and  the
number of copies of each that are necessary.  Be sure to specify the number of
days needed for  review of reports submitted and  period  for  re-submittal.
Specify the  quantity  of draft and  final reports to be  delivered  by  the
contractor.  However, remember the printing requirements of the Government
Printing and  Binding  Regulations,  published  by the Joint  Committee  on
Printing, Congress of the United States, limit printing (see FAR Subpart 8.8).

    M-3.106-19  Acquisition of Nonseverable Facilities

    M-3.106-19(a) Definition

    For the purpose of this section, nonseverable or  permanent improvements
are considered to be improvements  made  to non-Government-owned real
property.

    M-3.106-19(b) Background

    Comptroller General Decisions (42 Com p. Gen. 480 and 46 Com p. Gen. 24)
have established the rule that  appropriated funds ordinarily may not be used
for permanent improvements to land not owned by the Government unless
specifically authorized by law or unless certain conditions are present.  Apart
from the principles established by 42 Comp. Gen. 480, above, EPA possesses
specific statutory authority, with respect to certain research activities, to use
appropriated funds for permanent improvements to non-Government realty
within the limitations set forth in 10 U.S.C. 2353. (See 42  U.S.C. 241—Public
Health  Service Act;  42 U.S.C.  3253(b)—Solid Waste Disposal Act; and  42
U.S.C. 1857b-l—Clean Air Act.)

    M-3.106-19(c) Types of Improvements

    Improvements to non-Government realty may be required for a number of
reasons, including, but not limited to:

    (1)  Construction of a facility required to accomplish the objective of the
         contract;

    (2)  Construction of a  concrete  pad for use  as a  temporary storage
         facility.

    M-3.106-19(d)  Policy

    Environmental Protection Agency cost-reimbursement contracts  under
which permanent improvements will be affixed to non-Government realty, and
all contracts under  which  Government  property will  be  furnished  to or
acquired by the  contractor  and affixed  to  non-Government  realty  must be
consistent  with  the  standards  of either 10 U.S.C. 2353 (if applicable) or 42
Comp. Gen. 480.
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    M-3.106-19(e)   Determination and Findings (D&F)/Approval Requirements

    (1)  Prior to award of a contract of the nature described in M-3.106-19(d)
        above, a determination and findings document must  be prepared by
        the Contracting Officer and forwarded to the  Director, Procurement
        and Contracts Management Division.

    (2)  D&F and approval requirements do not apply to improvements which
        are incidental to or essential  for  the effective  accomplishment of
        removal or remedial "superfund" actions (P.L.  96-510).  For all other
        P.L. 96-510 actions, D&F and approval requirements apply.

    M-3.106-19(f)   Project Officer Informational Input to D&F

   xThe following information  must be provided by the Project Officer for
inclusion into the CO's Determination and Findings:

    (1)  A description of the  procurement, including  identification of the
        funds to be used, contract  type, property or services  being procured,
        name  of  Contractor,  and  any  urgency  considerations  or special
        circumstances.

    (2)  A description of the  research, development,  or test  facilities or
        equipment, or other improvement to be provided to  or acquired by
        the  Contractor  at Government  expense.   This  description  shall
        include  the estimated  cost  of  the  improvement; information
        regarding ownership of the realty to  which  the improvement will be
        affixed;  whether  the  improvement  is severable  from  the  realty
        without unreasonable expense or loss  of value; whether the proposed
        improvement has general  utility apart from performance of the
        instant  contract;  and  an   explanation  of  why  the   proposed
        improvement is necessary for performance of the contract.

    M-3.106-20 Procurement Request Approvals

    (a)  EPA management has  established internal controls whereby certain
goods and  services require clearances and approvals prior to their acquisition.

    (b)  It must be kept  in mind that from time to time the Chief Executive
and other  responsible Executive  Agencies place temporary moratoriums on
specific supplies or  equipment. Consequently there may at  times be  other
constraints placed on the acquisition of  supplies or equipment.  It is advisable
to check  with  your  Contracting  Officer at the time of PR development to
determine if any moratoriums are in existence.

    (c)  Exhibit 3-9 contains a listing of all current approvals and clearances.

    M-3.106-20(a)   Printing and Binding

    (1)  The  Government Printing and Binding Regulations, published by the
        Congressional Joint Committe on Printing, place  certain restrictions
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        on sources that may be considered for obtaining printing and binding
        services  outside  the  Government   Printing  Office  (GPO).   The
        regulations establish precise definitions for "printing,  composition,
        microfilm, duplicating, and  copying"  and provide  certain numerical
        thresholds beyond which the approval  of  the Joint  Committee on
        Printing is required, should the Government or Agency desire to  use
        other than the GPO.  An example of provisions for duplicating and
        copying  that require these services to  be provided  by  GPO, unless
        there are exceptional circumstances, is as follows:

           (i)  Work  exceeding 5,000 production  units  of any  one page, and
              work exceeding 25,000 production units in  the  aggregate of
              multiple pages, shall not be done without prior authority of: (a)
              the central printing and publications management organization
              as  provided  in the regulation; or  (b) the Joint  Committee on
              Printing.

          (ii)  Duplication of documents reproduced in color.

    (2)  Provisions also are  made  for quarterly  reporting to  the  Joint
        Committee on Printing,  describing  all  work  that  exceeds  the
        applicable thresholds. In EPA,  the central printing and publications
        management organization is the General Services Branch, PM-215, in
        the Facilities and Support Services Division.

    M-3.106-2(Xb)  Questionnaires - Forms

    As a result of P.L.  90-620, no Federal agency may  conduct or sponsor  the
collection  of information  on  identical  items  from  10  or  more  public
respondents without the prior approval  and clearance  of the  Office of
Management  and  Budget (OMB).  If it is known that a survey will be required
under a  proposed  contract,  the  initiating  project office must undertake
clearance  action  either  before  or  at  the  same time  the  Procurement
Request/Requisition is  forwarded   to  the  Procurement  and  Contracts
Management Division. If an unanticipated survey  develops during the period of
contract performance,  the  contractor is prohibited from beginning the survey
without OMB approval  All such clearance records must be routed from  the
initiating office to the EPA Regulation and Information Management  Division.
A copy of the clearance must be forwarded to the Contracting Officer.

    M-3.106-20(c)  Automatic Data Processing (ADP)

    (1)  ADP Equipment Definition

        ADP Equipment  (ADPE)  means  general  purpose,  commercially
        available  automatic  data   processing.   These   devices   are  the
        components  and  the  equipment  systems configured   from  them
        together  with  software, regardless  of use,  size, capacity, or  price,
        that are  designed to be applied to the solution or  processing of a
        variety of problems or applications.

        Included are:

           (i)  Digital, analog, or hybrid computers
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      (ii) Auxiliary  equipment,  such  as  plotters,   data  conversion
          equipment, source data automation equipment, magnetic tape,
          card   or  cartridge  typewriters,   computer  input/output
          microfilm,  or   memory,  either  cable  connected,   wire
          connected, or stand alone,  and whether selected or acquired
          with a computer or separately

      (iii) Punched card machines

      (iv) Data  transmission  or communications,  including  front-end
          processors,  computer terminals,  sensors, and other similar
          devices, designed primarily  for use  with a configuration of
          ADPE.

(2)  Software Definition

    Software    means:  (i) pre-packaged,   commercially    available,
    proprietary  computer  programs; and (ii) data  products specifically
    designed to make use of and extend the capabilities  of ADPE.  This
    encompasses   commercially   available   operating   systems   or
    applications  programs,  computer  readable data  collections,  and
    directly  related technical  assistance  for  installation,  training,
    conversion, documentation, and maintenance of the programs or data
    products.   This  definition  also  includes  commercially   available
    programs and data products for word processing equipment  as well as
    office automation or general purpose ADPE.

(3)  ADP Services and ADP-Support Services Definition

      (0  ADP services means the computation or manipulation of data in
          support    of   administrative,   financial,   communications,
          scientific, or other  similar Federal  Agency  data  processing
          applications.  It  includes  teleprocessing  (including  remote
          batch) and local batch processing.

      (ii)  ADP-support  services  means  source  data entry, conversion,
          training,  studies,  facility management (other than for central
          facilities  managed  by  MIDSD,  RTP),  systems  analysis  and
          design,  programming,  and  equipment   operations  that  are
          ancillary and essential to agency ADP activities.

(4)  ADP Equipment Maintenance Service Definition

    ADPE maintenance service means those  examination, testing, repair,
    or part replacement functions performed  to:

       (i) Reduce  the probability of  ADPE  malfunction  (commonly
           referred to as "preventive maintenance")

       (ii) Restore to its proper operating status a component of  ADPE
           that  is  not  functioning  properly (commonly  referred  to as
           "remedial maintenance")
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          (iii)  Modify the  ADPE in a minor way (commonly referred to as
               "field engineering change" or "field modification").

    M-3.106-20(d)  Foreign Research Contracts

    All proposed contracts involving  research projects to be conducted in a
foreign country  by  a  foreign contractor  must  have  clearance  from  the
Department of State in order to  determine the consistency of  such projects
with U.S. foreign policy objectives.  This clearance should be requested by the
initiating project  office  prior to  negotiations.   All  such  requests to  the
Department of State will be processed by  the  EPA Office of International
Activities.

    M-3.106-20(e)  Management Consulting Services

    (1)  As defined by FAR 37.202, "consulting services" means services of a
         purely advisory  nature relating  to the  Governmental functions of
         agency  administration  and  management  and   agency  program
         management. These services are  normally provided by persons and/or
         organizations considered  to have  knowledge and special abilities that
         are not  generally  available within the  agency.  The services  of
         consultants may  be used  to obtain outside points of view in order to
         avoid  too  limited  judgment  on critical issues or to obtain  advice
         regarding  developments  in  industry,  university,  or  foundation
         research.  Consultants provide  only analysis or  advice  regarding
         agency or program policy,  strategy, performance, or  organization.
         Consultants  do  not  perform  operating  functions  or supervise  the
         performance of  operating functions.  Operating  functions  involve
         work that contributes directly to the achievement of the fundamental
         goals  of the  organization,  whereas  staff or  advisory  functions
         contribute indirectly to the achievement of these goals.  For those
         procurements  in which  several different types  of  services  are
         required and the primary purpose  of the  procurement  is to obtain
         services  of a consulting nature, as  opposed  to operationally oriented
         technical support services, the procurement shall be considered as a
         management consulting service procurement.

    (2)  Examples of management consulting services, as distinguished from
         other types of services, are set  forth in Exhibit 3-10. These examples
         are provided in order to assist in the identification of a management
         consulting service procurement.

    M-3.106-20(f)  Protective Services

    (1)  Protective  services include  those  services or kinds of equipment
         required for the physical security  of a facility or installation:  for
         example, guard protection, security alarms, security filing cabinets
         (safes), security  fences or barriers,  monitoring and detection devices,
         etc.

    (2)  Physical  security  includes  those  measures  employed to  provide
         protection   against  security  hazards  for   personnel,  property,
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         Government funds and  negotiable  instruments,  classified national
         security  information  and  material,  proprietary  information,  and
         facilities.

    (3)   Security hazards are conditions which may result in personal injury or
         loss of  life; loss,  damage,  or  destruction  of  property; loss  of
         Government funds or negotiable instruments; loss or  compromise of
         classified  national  security  information  and   material,   or  of
         proprietary  or  Governmental  information,  or  disruption  of  the
         activities of the Agency or facility.

    M-3.106-20(g)  Capital Equipment and Fixtures

    Capital equipment and  fixtures  are considered  to be  nonexpendable
equipment which:  is complete in itself; does not lose its identity or become a
component of another item when placed in use; and is of a durable nature with
an expected life of one year or more.  Such property is reflected in official
Government property records.

    M-3.106-2(Xh)  Protection of Human Subjects

    Human subjects are to be protected when a  study, grant, contract, Public
Law 480 Project, or other  agreements or extensions  thereto or modifications
thereof,  wholly or partially sponsored or funded  by EPA, or in  which EPA has
an active interest,  involves exposing human subjects to the possibility of
injury,  including  physical or  psychological  injury,  as a  consequence  of
participation of  a subject in a  testing activity  in  which  the subject is
purposefully exposed to chemicals, physical conditions, or other environmental
conditions  being  tested.   These  provisions do not  apply  to  (0  opinions,
questionnaires or the solicitation of information about past events, or (ii) the
taking of blood, urine, mother's milk, nonviable  fetus tissues or human  tissue
samples for the conduct of any  medical observations where such testing is not
preceded by and/or is not to be followed by purposeful exposure  of the subject.

    M-3.106-20(i)  Word Processing Equipment

    Although   GSA  Bulletin  FPMR   A-79  reclassified  word  processing
equipment from FSC Group 70 (General  Purpose  Automatic Data Processing
Equipment)  to  FSC Group 74,  Class  7435  (Office Information  System
Equipment),  the   procurement   approvals  and  clearances  requirements
established  for  ADP  equipment  and  services  remain in effect  for  word
processing equipment.

    M-3.106-20(j)  Personal Vis-A-Vis Non-Personal Services

    (1)   Definition of Service Contract

          (i)  A service contract is one which calls directly for a  contractor's
              time and effort  rather  than for  a concrete end product. An
              incidental report is not considered a concrete end product if the
              primary purpose of the contract  is  to obtain the  contractor's
              time and  effort and the  report  is merely incidental to  this
              purpose.
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     (ii)  Service  contracts  are  generally  found in areas involving the
          following:

          • maintenance,  overhaul,  repair,   servicing,   rehabilitation,
            salvage,  and  modernization  or  modification  of  supplies,
            systems and equipment;
          • maintenance, repair, rehabilitation, and modification  of real
            property;
            architect-engineering;
            expert and consultant services;
            installation of equipment obtained under separate contracts;
            operation  of Government-owned  equipment, facilities,  and
            systems;
            engineering and technical services;
            housekeeping services;
            transportation and related services;
            training and education;
            medical services;
            photographic, printing, and publication services;
            communications services;
            test services;
            data processing;
            warehousing;
            auctioneering;
            arbitration;
            stevedoring; and
            research and development.

(2)   Personal Services and Nonpersonal Services

      (i)  The Civil Service laws and regulations and the Classification
          Act  lay  down  requirements  which  must  be  met  by  the
          Government in hiring its employees, and establish the incidents
          of employment.   In  addition, personnel ceilings  have  been
          established for the Agency. These laws and regulations shall
          not be circumvented through the  medium of "personal services"
          contracting, which is the procuring of services by  contract in
          such a manner that the  contractor or  employees are in effect
          employees of the  Government.   The  Contracting  Officer is
          responsible  for assuring  implementation  of this   policy  by
          considering the criteria  set forth below, before  entering into
          any service contract.

     (ii)  On the other hand, contracts for nonpersonal services, properly
          issued and administered,  represent an approved resource for the
          Agency  in the accomplishment of its programs.

(3)   Criteria for Recognizing Personal Services

     There are  no definite rules  for  characterizing particular  services as
     "personal" or "nonpersonal." There are many factors involved, all of
     which are not of equal importance. The characterization of services
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in a particular case cannot be  made by simply counting factors, but
can only be the result of a balancing of all the factors in accordance
with  their  relative  importance.   The  Contracting Officer  will
consider the  following  factors  as  well as  any others  which  are
relevant  (some  of   the following  factors  include  parenthetical
explanations or  qualifications  which  indicate the  type of judgment
that the Contracting Officer will exercise):

   (i)  the nature of the work:

       — to what extent the Government can  obtain civil servants to
         do the  job,  or whether the  contractor  has  specialized
         knowledge  or  equipment  which  is  unavailable  to  the
         Government (this is a  factor which might  be  useful  in  a
         doubtful case, but should not in  itself  create doubt  about
         services which are otherwise clearly nonpersonal);

       —to what extent  the services represent the  discharge of  a
         Governmental  function which  calls for  the exercise  of
         personal  judgment   and  discretion  on  behalf   of   the
         Government (this factor, if  present  in  a sufficient degree,
         may alone render the services personal in nature); and

       — to what extent the requirement for services to be performed
         under the contract is continuing rather than short-term  or
         intermittent (this is a  factor which might  be  useful  in  a
         doubtful case, but should not in  itself  create doubt  about
         services which are otherwise clearly nonpersonal);

   (ii)  contractual provisions concerning the  contractor's employees
       (in  considering  the  following,  it  should  be  noted  that
       supervision and  control of the  contractor  or  employees,  if
       present in a sufficient degree, may alone render the services
       personal in nature)

       — to what extent the  Government specifies the qualifications
         of, or reserves the  right to approve, individual contractor
         employees (but granting or  denying  security clearance and
         providing for  necessary health qualifications  are  always
         permissible controls over contractor employees; also,  it is
         permissible to some extent  to  specify  in  the contract  the
         technical  and  experience   qualifications   of   contractor
         employees,   if  this  is necessary  to  assure  satisfactory
         performance);

       —to what extent the Government reserves the right to assign
         tasks  to  and  prepare work  schedules  for   contractor
         employees during performance of the contract (this does not
         preclude inclusion in the contract, at its inception,  of work
         schedules for the contractor, or the establishment of a time
         of performance  for orders issued  under a requirements  or
         other indefinite delivery-type contract):
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     — to what extent the Government retains the right (whether
       actually exercised  or  not)  to supervise the work  of the
       contractor employees, either directly or indirectly;

     —to what  extent  the  Government  reserves  the  right  to
       supervise  or  control the  method in  which the contractor
       performs the service,  the number of people employed, the
       specific duties of individual employees, and similar details
       (however,  it is always permissible to provide in the contract
       that   the  contractor's   employees   must  comply  with
       regulations for the protection of life and property; also, it is
       permissible to specify a recommended,  or occasionally even
       a minimum, number of people the contractor must employ,
       if this is necessary to assure performance—but in that event
       it should be made clear in the contract  that this does not  in
       any way minimize the contractor's obligation to use as many
       employees  as  are   necessary  for  property  contract
       performance);

     — to what extent the  Government will review performance by
       each  individual  contractor  employee,  as  opposed  to
       reviewing   a  final  product  on  an  overall  basis  after
       completion of the work;

     —to what extent the Government  retains the right  to have
       contractor employees  removed from  the job for  reasons
       other than misconduct or security;

(iii)  other provisions of the contract:

     — whether the  services  can properly  be defined as  an end
       product;

     — whether the contractor undertakes a specific task or project
       that  is definable either at the inception of the  contract or
       at some point during performance,  or whether the  work  is
       defined on  a day-to-day basis  (however,  this does not
       preclude  use  of  a  requirements  or  other  indefinite
       delivery-type contract, provided the nature of the  work  is
       specifically  described   in the contract,  and  orders are
       formally issued to the  contractor rather than to individual
       employees);

     — whether payment will be  for results accomplished or solely
       according  to time worked (this is a factor  which might be
       useful  in  a  doubtful case, but should  not  in itself  create
       doubt   about  services  which  are   otherwise   clearly
       nonpersonal); and

     —to what extent the Government is  to  furnish the office or
       working space, facilities,  equipment, and supplies necessary
       for contract  performance (this is a factor  which might be
       useful  in  a  doubtful case, but should  not  in itself  create
       doubt   about  services  which   are   otherwise   clearly
       nonpersonal); and
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          (iv)  Administration of the contract:

               — to  what  extent  the  contractor's  employees  are   used
                 interchangeably  with  Government personnel to perform the
                 same functions;

               — to what extent the contractor employees are integrated into
                 the Government's organization structure; and

               — to what extent  any of the elements in (i) and (ii) above are
                 present  in the administration of the contract, regardless of
                 whether they are provided for by the terms of the contract.

    M-3.106-20(k)  Other Specific Approvals

    Approvals  and clearances are  dynamic  areas  which  change regularly.
Consequently, it is advisable to query the Contracting Officer as to recent and
yet-to-be-documented requirements.

    M-3.106-20(1)  Management Approvals

    Exhibit 3-9, at the end of this chapter, contains the routing of PRs for
specific goods or services and those of particular dollar value that require EPA
management consent.

    M-3.106-21  Rights in Data and Copyrights

    M-3.106-2l(a)  Introduction

    It is necessary for EPA, in order to carry out  its missions and programs, to
acquire  or obtain access to many  kinds of data produced during or used in the
performance of  its contracts  to   meet  programmatic   and  statutory
requirements,  including   regulatory  activities.  At  the same  time,   EPA
recognizes  that its contractors may  have a proprietary  right or other valid
economic interest  in certain data  resulting from  private investment,  and that
protection  from unauthorized  use and disclosure  of this data is necessary in
order to prevent the compromise  of such  property right or economic  interest,
avoid jeopardizing the contractor's commercial position, and maintain EPA's
ability to obtain access to or use of such data. The protection of this data by
EPA is  necessary  to encourage qualified contractors  to participate in  EPA
programs and apply innovative  concepts  to such programs.

    3.106-2 Kb)  Policies and Procedures

    Subpart  1527.70 of  the  Environmental  Protection  Agency  Acquisition
Regulations (EPAAR) set  forth  specific  policies,  procedures,  solicitation
provisions,  and  contract clauses  relating to the  acquisition of data and the
rights in data or copyrights relative thereto.

    3.106-2 l(c) Acquisition of Data

    It is important for Project Officers to recognize that acquisition of data
involves not only the identification and definition of  the data to be  acquired
and the  circumstances of its use, but also the rights of the Government to the
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use of such data.  In fact, in many cases, the Government is acquiring the right
to use of the data rather than title to the data itself.  It is EPA's practice to
identify  and  define  its  data  requirements  to  the extent  possible  and
appropriate in time to be included in  the statement of  work (SOW)  which
becomes the heart of both the solicitation and the contract. Recognizing that
this may not always be feasible, EPA has made provisions for the acquisition
of  data subsequent  to award  of the  contract.  In  either  event,   since
preparation,  maintenance,  and  storage  of  data generally  represents  a
substantial  expense to both  the Government and  the  Contractor,  data
requirements shall be kept to a minimum consistent with program needs.

    3.106-21(d)  Definitions

    Following are definitions of various terms as they are used in the EPAAR:

    (1)   "Computer  software" means  computer programs,  computer  data
         bases, and their documentation.

    (2)   "Data" means recorded information, regardless of form or media and
         includes computer  software.   It  does  not  include  information
         incidental to contract administration  such as financial, business, or
         management information.

    (3)   "Form, fit, and function data"  means data relating to, and sufficient
         to enable,  physical and functional interchangeability; as well as data
         identifying  source,   size, configuration,   mating and attachment
         characteristics,   functional   characteristics,    and    performance
         requirements.

    (4)   "Limited rights" means the rights of the Government in limited-rights
         data, as set forth in a Limited Rights Notice if included in the data
         rights clause of the contract.

    (5)   "Limited-rights data"  means data that embodies  trade secrets  or  is
         commercial or financial  and confidential or privileged to  the extent
         that such data pertains to items, components, or processes developed
         at  private   expense,   including  minor  modifications  thereof.
         [Contracting Officers may, with  the concurrence  of  the Project
         Officer, use the following alternate definition: "Limited-rights data"
         means data developed at private expense that embodies trade secrets
         or is commercial or financial and confidential or privileged.]

    (6)   "Restricted computer software" means computer software developed
         at private expense and that is  a trade secret, or is commercial or
         financial and confidential or privileged, or is published copyrighted
         software.

    (7)   "Restricted rights" means the right of the Government  in restricted
         computer software  as set forth  in a Restricted Rights Notice  if
         included in a data rights clause of the contract or as otherwise may
         be included or incorporated in the contract.
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    (8)  "Unlimited  rights" means the  right  of the  Government,  without
        additional  cost to the  Government, to  use,  disclose, reproduce,
        prepare derivative works, distribute copies to the public and peform
        publicly and display publicly, in any  manner and for any purpose, and
        to have or permit others to do so.

    3.106-2 l(e)  Delineating the Government's and the Contractor's Rights

    All contracts which involve the acquisition of data discussed and defined
above must contain  clauses which define the respective  rights of  both the
Government and the Contractor regarding such matters as the use, duplication
and disclosure. The type of contract, the particular subject matter of the
contract, or the intended use of the data, must be considered in selecting the
appropriate contract clause. It is therefore essential that all Project  Officers
whose acquisition includes  data be familiar with the various clauses so that
they may assist the Contracting Officer in  selecting the clause which best
serves both the Government and the program being supported. Following is a
brief general discussion of  the various clauses. Their full text is contained in
EPAAR Temporary Regulation  1 (effective date:  July  15,  1984) and may be
obtained  by  contacting   your  supporting  Contracting  Officer.   Specific
questions  regarding the selection  of  clauses, appropriate  to  program needs,
should  be addressed  to the Contracting Office early in the pre-solicitation
phase of the acquisition process.

    (1)  Rights in Data - General (EPAAR 1552.227-71)


          (0   This clause balances EPA's program  and mission needs with
               the Contractor's right to protect  property and valid economic
               interests stemming from  private investment.  The Contractor
               is protected from  unauthorized use or disclosure of limited
               rights  data  or  restricted  computer   software  either  by
               withholding delivery  or  by  placing  a  "Restricted Rights
               Notice" authorized by the clause on the data to be restricted.
               Further, the categories or types of data which  the Government
               is to acquire with limited rights are specifically identified
               along  with an enumeration and definition  of the use  or
               disclosure rights of EPA.  Although the Contracting Officer
               may  revise these  purposes consistent with EPA's needs,
               appropriate purposes  include:   use  by  support  service
               contractors, evaluation by non-Governmental  evaluators, and
               use where  required by other contractors participating in the
               same program.

          (ii)   Pursuant to this clause, contractors may establish or  maintain
               copyright protection for  data first  produced and/or delivered
               under the contract.  However, the  Government will  normally
               be granted  a nonexclusive, irrevocable license, which  includes
               the   rights   to  reproduce,  prepare  derivative  works,  and
               distribute to the  public.  The  Contractor is  permitted  to
               establish claim of copyright to scientific and technical articles
               based on, or derived from, the contract work  and published in
               academic, professional, or technical journals.  Such permission
               may also be granted in other cases.
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     (iii)  As regards  restricted  computer  software,  the  means  of
          protection afforded the contractor are the same as those for
          limited  rights  data.  However,  the  Contractor  may  also
          substitute form, fit and function data or deliver the software
          with  restricted rights relative  to its use, disclosure, and
          reproduction.  It is important  in  circumstances when  such
          software is needed for use in more than one computer that the
          number  be specified  in  the contract schedule.  When  EPA
          acquires software with restricted rights, it may use (or  copy
          for use) in or with the computer or computers for which it was
          acquired (or  with a backup computer in case of inoperability)
          reproduce for archival or backup purposes, modify, adapt,  or
          combine with other software (the resultant software is subject
          to the same restriction  in rights), and may be disclosed  or
          reproduced  by  support contractors or  their  subcontractors,
          subject to the same restrictions in rights.

     (iv)  In the event  EPA questions the Contractor's authority to  limit
          the use of data or restrict the use of software, procedures are
          provided by the clause.

      (v)  Generally, then, under this clause,  EPA  acquires  unlimited
          rights to data first produced under the contract (however, see
          above discussion on copyright data, form,  fit,  and function
          data,  data constituting  manuals or  instructional or training
          materials  (such  data  accompanying  restricted  computer
          software may be excluded), and all other data delivered under
          the contract unless  it  is  limited rights  data or restricted
          computer software.

(2)    Rights in Data - Special Works (EPAAR 1552.227-72)

      (i)  Generally, this clause  is used in contracts  which are primarily
          for the production or  compilation of data  (other than limited
          rights data   or restricted  computer software) for  EPA's
          internal  use, or when there is a need to limit the distribution
          or use of the data or to obtain indemnity for liability that may
          arise from the  content, performance, or use of the data.  It
          would also be used where "existing works" are being modified.

      (ii)  The following are circumstances  under which use of the clause
          is required:

          (A)   Production of audio-visual works;
          (B)   Agency histories;
          (C)   Recruiting, morale, training, or career guidance works;
          (D)   Works  involving  instruction or  guidance of Government
                officers and employees;
          (E)   Works   intended  for  use -in  connection   wtih  EPA
                regulatory or   enforcement  activities  not  involving
                research, developmental or experimental work;
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           (F)   Collection  of  data  containing  personally  identifiable
                information, the disclosure of which would violate rights
                of privacy or publicity;
           (G)   Investigatory reports; and
           (H)   Works,  the early  release  of which could  jeopardize
                follow-on acquisitions or EPA regulatory or enforcement
                activities.

     (iii)   Under  this  clause,  EPA has  unlimited  rights in  all  data
           delivered and in  all  data first produced,  the right to limit the
           Contractor's claim to copyright, and the  right to limit the use
           and release of data except for purposes specifically provided
           for in the contract.

     (iv)   The contractor indemnifies the Government and its officers,
           agents, and employees against liability  resulting from violation
           of trade secrets, copyrights, a right of  privacy or publicity,
           provided the Government gives timely notice of its  intent to
           make such a claim.

(3)    Rights in Data - Existing Works (EPAAR 1552.227-73)

      (i)   The clause is  used  in  contracts  for the acquisition (without
           modification) of such  works  as motion  pictures, videotapes,
           sound recordings, literary, pictorial or  other similar  works.
           The contract may limit the use of such  work in terms of means
           of exhibition or  transmission, time, audience, or geographical
           locations.

     (ii)   In the case of existing computer software,  no special clause is
           required although the contract must contain terms sufficient
           to permit  EPA to fulfill  the need for which the software is
           being acquired.  Care should  be exercised to  ensure that any
           vendor's standard commercial  lease, license,  or  purchase
           agreement be consistent  with EPA's purpose for acquisition.
           As with the acquisition of other computer software, Project
           Officers should consult early  on with the Contracting Officer
           regarding EPA's intended use  and the  establishment  of the
           contract language necessary  to  protect  the rights of EPA in
           that use.

     (iii)   Contracts   for   other   existing   works,   being   acquired
           off-the-shelf with no intent of reproduction or use which may
           be prohibited by the author's or publisher's rights,  need not
           contain any of the clauses discussed above.

     (iv)   Modification  of  existing  works is  considered  to be "special
           works" for rights in data purposes.
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    (4)     Additional Data Requirements (EPAAR 1552.227-74)

    In recognition of the fact that in some contracting situations, it may not
    be possible or appropriate to ascertain all data requirements at the time
    of contracting, this clause permits the Government to order data any time
    during contract performance or within three years of acceptance  of all
    contract deliverables any data which  was first produced or specifically
    used in the contract. It provides for compensation to the Contractor for
    formatting, reproduction, and delivery.

    3.106-2 l(f)  Special Contracting Circumstances

    For contracts to be performed outside the United States, its possessions,
or  Puerto  Rico,  contracts for  construction  work  or  architect-engineer
services,  or  contracts  involving Government-owned   contractor-operated
facilities   performing research,  development   or  production   work,  the
Contracting Officer, in conjunction with the  patent attorney and the Project
Officer,   must  develop  a  suitable  clause.   Project   Officers  for  such
requirements should,  therefore,  initiate action to begin the development of
such clauses as soon as possible after the requirement becomes known.

    M-3.106-22  Pertinent  Special Instructions

    On any given requirement there may be  special instructions that are not
contained  in the  Handbook, yet should  be discussed  in  the procurement
planning process.
M-3.107  Preparing for the Development of the Procurement Request

    After completion of the individual procurement planning session, during
which all Project Officer responsibilities with respect to the development of
the requirement were identified, the Project Officer, with the assistance of
the Contracting Officer, must prepare the procurement request package. The
considerations  and guidance  outlined  in  this  Chapter,  plus  the planning
discussions,  will more than adequately prepare the  Project Officer for the
preparation  of  the procurement request package.  Guidance on  the use and
preparation  of  the  Procurement  Request/Order,  EPA  Form  1900-8,  is
contained in Chapter 4 of this manual.
M-3.108  Procedure for Procurement Scheduling

    M-3.108-1  Introduction

    After completion of individual procurement planning, the Project Officer
develops  the  procurement  request  package and  again  meets  with  the
Contracting  Officer (or contract  specialist) to  schedule  the procurement
action.
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    M-3.108-2  Procedure

    The  contract  specialist responsible  for  procurement action prepares a
procurement  schedule as soon as  possible after receiving the  Procurement
Request. The FAR requires this only for  procurements of $5 million or more.
He or she will  coordinate with the Project Officer to obtain program office
and  Procurement  and  Contracts  Management Division  approval  of  the
projected contract award date.  The specialist  maintains the plans  so  that
occurrences are recorded and subsequently reviewed by management.

    M-3.108-3  Standard Procurement Leadtimes

    Standard leadtimes expressed in days estimated to complete  scheduled
events in a procurement cycle are listed in Exhibit 3-10  for the purpose of
assisting acquisition personnel and Project Officers in planning.
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                             EXHIBIT 3-1
         SEQUENCE OF ACQUISITION PLANNING  ACTIVITIES,
                  PARTICIPANTS,  AND REFERENCES
                      ADVANCE ACQUISITION PLANNING


            Participants                                        Coverage

           Allowance Holders
        Office of the Comptroller                                Chapter 2
Procurement & Contracts Management Division
        plus others as necessary
                     INDIVIDUAL  ACQUISITION  PLANNING

          Participants Coverage

Initiator of the Procurement Request (PO)                         Chapter 3
       Contracting Officer
    plus others as necessary
                     INDIVIDUAL  ACQUISITION SCHEDULE

          Participants Coverage

Initiator of the Procurement Request (PO)                         Chapter 3
       Contracting Officer
    plus others as necessary
                                  3-61
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                                                        April 1984

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                                  EXHIBIT 3-2

         SUGGESTED  INDIVIDUAL ACQUISITION  PLANNING  CHECKLIST
I. REQUIREMENT

    A.  Title & Brief Description:
    B. Period of Performance^

    C. Estimated Value:
    D.  Type of Action:
          New Contract
          Modification
Unsolicited Proposal
Other
fl. PLANNING CONSIDERATIONS

    Each of the following items should be discussed.

Manual Ref.
M-3.106-1

M-3.106-2

M-3.106-3
Project Officer Qualifications

Conflicts of Interest—Personal/Organizational

   Statement of Work (Specification)

   	  Design
   	  Performance
   	  Construction
   ____  Completion
       Term
       Multi-Year
       Phased
M-3.106-4      	  Contract Types
M-3.106-5
M-3.106-6
M-3.106-7
M-3.106-8
M-3.106-8(a)
M-3.106-8(b)
M-3.106-8(c)

M-3.106-8(d)
M-3.106-8(e)
M-3.106-8(f)

M-3.108-8(g)
M-3.106-9
Technical Evaluation Criteria
Technical Proposal Instructions (TPIs)
Classified Information
   Source Considerations
   	 Availability of Work Resulting from Other Sources
   	 Small Business Set-Asides
   	 Socially and Economically Disadvantaged Business
         Enterprise Programs— 8(a) Contracts
   	 Labor Surplus Area Set Asides
   	 Sources-Sought Synopsis
   	 Justifications for Other Than Full and Open
         Competition (JOFOC)
   	 Unsolicited Proposals
Pre-Proposal Conferences
                    3-63
                                                         Second Edition-4/84
                                                         Rev. No. 2- 9/30/85

-------
EXHIBIT 3-2 (Continued)
    SUGGESTED INDIVIDUAL ACQUISITION PLANNING CHECKLIST
M-3.106-10
M-3.106-11
M-3.106-12
M-3.106-13
M-3.106-14
M-3.106-15
M-3.106-16
M-3.106-17
M-3.106-18
M-3.106-18(a)
M-3.106-18(b)
M-3.106-18(c)
M-3.106-18(d)
M-3.106-19
M-3.106-20
M-3.106-20(a)
M-3.106-20(b)
M-3.106-20(c)
M-3.106-20(d)
M-3.106-20(e)
M-3.106-20(f)
M-3.106-210(g)
M-3.106-20(h)
M-3.106-20(1)
M-3.106-20(j)
M-3.106-20(k)
M-3.10 6-2 0(1)
M-3.106-21
M-3.106-21(a)
M-3.106-2 Kb)
M-3.106-2 l(c)
M-3.106-2 l(d)
M-3.106-2 l(e)

M-3.106-2 l(f)
M-3.106-22
	 Site Visits
	 Reference Materials
	 Cost Estimate
	 Funding
	 Planning Purpose PRs
	 Options
	 Government Property
	 Quality Assurance
Reports
      	 Introduction
      	 Types of Reports
      	 Considerations in Use of Reports
      	 Specifying Reports
	 Acquisition of Non-severable Facilities
Procurement Request Approvals
      	 Printing and Binding
      	 Questionnaires - Forms
      	 ADP
      	 Foreign Research Contracts
      	 Management Consulting Services
      	 Protective Services
      	 Capital Equipment and Fixtures
      	. Protection of Human Subjects
      	 Word Processing Equipment
      	 Personal Vis-A-Vis Non-Personal Services
      	 Other Specific Approvals
      	 Management Approvals (Specify)
	Rights in Data and Copyrights
      	 Introduction
      	 Policies and Procedures
      	 Acquisition of Data
      	 Definitions
      	 Delineating the Government's and the Contractor's
          Rights
      	 Special Contracting Circumstances
	  Pertinent Special Instructions
                                   3-64
                                                         Second Edition-4/84
                                                         Rev. No. 1-10/17/84

-------
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1

1 ELEMENTS 1 DESCRIPTION 1
1 APPLICATION
1 LIMITATIONS
FIXED-PRICE FAMILY

PIRM PIXBO-
PRICB
(PPPI
prico uriucli It ool
MMocI n on* ooiml
OMOJyogordtoioOl
Conor ottoricdU 01
porlonco
on contractor
Conorocrar Itoo
control CMII
on partial
Prolorrod canlrocl
Lom ol girarl Pay
moni n onad on al
ton oiaonood rather
DMA roMrin ocluovod
Canlroclar prondM
ipoculod ollon ooor a
llolod porud tar Iliad
prlci
Prico
wnon lair and
roaaanoOM prical con
bo ouoMlmod ai
aulMI
Particularly wiloMo
tor uandaraar
mookllod cammorcioi
•Mot or mllllorit
llpjnl tor woicn lauod
BTKnconbo
daiilaoao
tom M f Itorl RIO
loyal at «itari inaa
amv whoa war* can
nal bo claarly aalinad
bul alrorl doiirad con
bo ogroodupan
FIXED-PRICE
WITH ECONOMIC
PRICB
ADJUSTMENT
(FP-EPAI
Ibopr unpaid Of no
govornmonl mar bo
rovlMd upward or
downward mar lain
coMlngonclM occur
ProwidM tar prMO oo
ruuminl to proton
ponm MMMI
MuctuatMn or cuongai
«i coMraclori
alloMlinadprlcol
• PA Pf OWIMOnl COH
bo bowd on oiiob
pricot. OCIMOI COM*.
or CMI laoao
rMlrttJod to mautlrf
ondo conllnBonclal
labor or malarial
CMII llmilad lo con
nnotncitl boyond
comrMMr t control
EPA CIOOM
WMn connnaanciot
roMilling Irom
unttaoia mor Ml or
uoor condition* con
bo idanMiod ond
covtrta by o loporoio
prico aaiutlrnom

pixEo-pRica
INCENTIVB
IPPII
Pk-ot Toraaf i Co»om
la mm of Ibul
noooilolod CMI and
Itaolprafn final
profit oalormlino H
nogotlolod cool to
largal cou and ad
lulling urgotpraM
lAUt larnwla linoro-
railol Final prica
CUMOI IKOO. Calling
prica
•acciiuvt Toriotit
Al pradorormlnM pro
ducM*. own. firm
•argil aralil u dolor
atonl tarmula. Inan
oilnor anf'Par
PPIIFICinbO
FlrM Torgoli
largal Prolil
Caning Prico
luring Formula
loccnuva targili
Imhal f argal Piotil
Caihng Prico
I argal prolil Adtull
o oogrM of CMI
troctorl win orovido
mcoMIra tor ollachM
coil control
Con cambino wiln In
conJlvM on parlorm
anco ond KDoauM
Aaoauoto CMI or pric
Ing data mull M
largali. MtopurpoM
carmal bo n unit cou
rawanilbHlly M
gavariuiionl. roauiroi
lunullanooui agtM
moni on Ml minimi
ol pricing lirucluro
Adagualo Confroctor C
| COS
NTRACTOR COST RCSPONSIBIL
PRICE
RCDCTER-
MINATION
PreipocUvOi Covtro
oieM peyt llMd price
tor goods or Mrvtcet
tar a gi-en perkaa. but
price u iiiblKi to
tevltton at tlaied
limat during partarm
ance ol coniraci
fliadl payt prica. tub
|acltocaUlng.niaili
neootiaied alter con
tract partormence
Retroactive
Ctilmg Prica
Freipecliva. Ouaniilv
production or ter-ictt
wntn a lair and
reetonaoio price can
M negolialed tor 01
ihOJ ptriod but not en
lire coniraci period
•otreaciivoi VHMM
lair ond rtatonaoie
FFPcamotoe
Mgotiaie.* and tow
*aluaor tnonpartod
el pofftorfnanca
rejodof « otlwr typat
•mpreciicabie
POftpeciive FFPnot
Mnodt coniorm u
contractor t account
«U%»* *n» ihol price
redtiorminailan writ
bo leaaa promptly
•otrooMlivai
Reaaonaola atiuranca
lhalpfica r«doter
mmailOA will bo ia»an
promptly oMtdfB
quI/M MCA Approval
vremonit Ort MA Mformwad
1 argil CMI
Snaring Formula
Mimmum Fee
DflveiopmMi ana latt
wioora a prolil lAcon
live n hoioiy to pro
wide moitvoiiMn tor
more ailecnve
maAagameni
Fee iim.it Mme at
Mfjyollaitd Pr«
Adoouaia Contrarter C
T-Rw ^URSEMENT FAMILY

COST-PLUS-
AWARD-FEG
ICPAFI
Covit nment payt
auowaola coal. oaM
IM. ana award lie
Contractor aarnt o
not vary win per
lormance ano au if
evaluaikM by gwrniA
moni ol comrictar't
partormanca
AitoOunf al Iha award
IM it uMiaterally
daiermiiwd br IM
government «A*J it not
twaiKl M Oiipuiet
ClauM
C (roiuaiion el pet
tponding partial pay
mm ol IM made at
Haled Inttrwalt
E.t.maltd C«t
Bate FM
A«v.wd Frt
Level of eiiori con
tree II lor Mrvictt
wnere acnievtnwMi
mvt.1 oa awaivaivd (
twoltciiveiy
vMMjre llmie pirlorm
ance oo|ecliv«t can
net M atllMiUted m
advance lo rntau.1*
Award lee may be
uied »n CMiunction
wilA other lytMt ot
con tr aclft
•ato Fae won not 9*
caod IH el fltilmaud
ceti
Maaimum FM nmut
tameMCPFti
llor dolliminlAg prol
•I oojoctivtl Iftou not
M.ppl.M
Snail nal bo HMO In
tun 01 CPFF or CPIP
MMO OblMIIM
Ml
:iHonionti Only
oil Accounling Sillim
COST-PLUS-
PIXBD-PEB
(CPFPI
GownmiM Mr!
hiod IM
Fiaod IN don no)
viry mm ocluol
CMN
Flood IM mar M ad
lutioa Mr changn m
•010 la oo porlarmod
tor comrKlon M con
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Cantplonon Pormi ro
dall>or ond product
lorolarrod lorml
Tarm Porm foqinroa
ipociliod lovrt of ol
lorl ovir Itoltd
pirwd M Ml*
Clllmaltd CMI
Find Foi
Raiaorcn
Picnminorv oiploro
lion or tluov
DlvoMtfjrnonf ond Mil
Minari CPIP not prac
tical
Pao wail not lacood
I1H •* nilmMad CMI
lor RlOor tiro, ol
atlimilad CMI lor
production contract!
Priro ol A/I coniraci
•Hall nal oicaod |H ol
akllmalM cou ol IM
puMIc worn or utility
proiacl
NogoNaiad Proc
Adagualo Conlrotlor C«
COST ANO COST
SHAMING
Coin Govarnmtnl
payi ollowoblo CMI.
no loo
Coil loorugi Oonrn
moni porl only o por
tun al alnMoMo cou
ai muwoUy ogroog to
by tnoporllM Coo
troctor oboorba par
Ban ol Iho CMI win
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llilutionvarganiii
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coniracu
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•fioriiwiinoiirior
Of olil w nonprolit
conlrocrari
can wanogi HOI aa-
Pbcaola tar oltarl
wocillaa by ODvarn
moni or vjoicn mi
only minor rilavonco
to commarciol ac
tinillai of Iho cantrac
lor
uramonlB Cmly
ill Accounting Svllam
OTHER TYPE.
SPECIAL USES
TIMB ANO
MATERIALS
LABOR HOURS
Govornmanl payl
Iliad imriy riia tor
tupplM or lorvlcM
oilrt contractor lor
luihod OMnrlM pro
•Mod ol CMI
Laoor-Hauni dHlarl
onry In tool no
nulorlol II HlopUoa
by contractor
Hourly libar rota
Coiling Prica
Enginaoring and
oalign Mrvkoi.
or ovomaul.
fmorgoncv muolloni
OolirmMilloil lliol no
elftar typo ol coniraci
Ii luilabU
Hoaenalod Pra
LETTER
CONTRACT
Prilinilnorv control
Mai bnlrumonl unxb
aulborlfai immoalala
canuntncomool of al
tort
Atalhod ol parmanl
carrowondi ta lypo ol
canlrocl can
lofnpluog unoo

whan wuorim ol na
lianal dolomo do
aiand mil work com
0 dofuullvo canlrocl
wrmon MMrminoilan
mal no olnor lypo
Hnlaolo
prico coiling rtqvirod
il award bawo on
prlcocompalitton
Mini bo dMMilllrd
moni llablulv camol
•Mood »nt ai
MIUTUIOd CMI
Euromonti Only
INDEFINITE
DELIVERY

Provide* lor dollmto
Quantity of tpecitied
tupputt or tervKet
lor a t»aa parted will.
dat*gn«i«d tocoiioftt
upon or dor
daojvueoMoni Pro
vxMf. lor furnitAlng
all actual re
Ojuirffmtnit of
•paciiitd ivppnet or
MTWKM during a
UMCiltoTd Mriod at
oroareo by dttignaled
aciiwitiit
Providrt tor lur
•suoMtiity ol fpeciiiod
oMiBpiiuTtor wrvtcet
ourmg j loecilitd
IMII owl govirnmeni
mull order a Haled

Firm i«iMOd Price
•PA er Prka
O.ad*iermMiaiion
T*H
•WaotM Coat mt ffoo
vWiero Mllniia OJUMIII
IF at tupptiet or terw
ctt rMhiirad during a
tpKilied par tod are
i aadiiy avariawe
mpotuoio to deier
mute .A advance IAO
precite oju.wtl.tm
dtf milt period Ot
time
lame a* re
OjuirffmuHi but
tommilled to




1
•^
3
M

-------
                              EXHIBIT  3-4

      WELL-CONSTRUCTED  TECHNICAL  EVALUATION  CRITERIA
Technical Review Categories
Demonstrated level of experience
in the following areas:

1.  A. Industrial plant design,
       manufacturing processes
       operation;

    B. Developing sampling plans
       including sample collection
       methods for industrial chemical
       processes and safety plans;

    C. Performing the tests for
       ignitability, corrosivity,
       reactivity and EP toxicity;

    D. Implementing quality control
       and quality assurance programs

    E. Conducting non-routine organic
       and inorganic characterizations
       of complicated chemical mixtures
       by  Atomic Absorption (AA) and
       Spectrometry (GC/MS).

       (1)   Experience of company
            with AA

       (2)   Experience of company
            with GC/MS

    F. Performing tests for detecting
       mutagens and carcinogens (Ames
       Test, bioassays); biodegradation
       and bioaccumulation tests;
       phytotoxicity and aquatic toxicity
       bioassays;

    G. Reviewing scientific data
       relative to potential health
       and environmental effects;
        Weights

Company     Personnel
 25




 25



  5


 50
     100
     150
     50
     70
25




75



20


25
   75
   70
                                    3-67
                                                          Second Edition
                                                          April 1984

-------
EXHIBIT 3-4 (Continued)

      WELL-CONSTRUCTED TECHNICAL EVALUATION CRITERIA
                                              Company  Personnel    Total
    H. Preparing descriptions and
       technical material on bioassay
       and chemical testing protocols
       appropriate to waste testing
       including monitoring, instrumental
       procedures and statistical tests)

    L  Gathering and evaluating
       technical data for use in
       preparing hazardous waste
       background documents and health
       and environmental effects
       profiles.

    J. Experience of staff in the use
       of the equipment listed in the
       special instructions.

SUBTOTAL  Section 1

2.  Availability and quality of necessary
    equipment (including optional equipment)
    for conducting characterizations and
    method evaluations

SUBTOTAL  Section 2

3.  Offerer's Demonstrated Technical
    Approach to the Statement of Work
    areas as follows:

    A. Development of  Sampling Plan
       and Sample Collection System

    B. Methodology evaluation

    C. Rulemaking petition review

    D. Manual preparation

    E. Hazardous waste background
       document preparation

SUBTOTAL  Section 3
 50
 25
550




200

200
 50

 50

 15

 10


 10

135
 75
 50




100

515
1065
            200
           135
TOTAL
            515
                                   3-68
                                                         Second Edition
                                                         April 1984

-------
                      EXHIBIT  3-5

         CIRCUMSTANCES WHICH MAY  PERMIT
     OTHER  THAN  FULL AND  OPEN  COMPETITION
The product or services  required are available from  only one source
and no other type of property or services will satisfy EPA's minimum
requirements [41 U.S.C.  25 3 [c ][!]].  This  includes such circumstances
as-

-  When only one responsible source can supply EPA's requirements.

-  Follow-on contracts  for continued development or production of
   major systems or highly specialized equipment.

-  Follow-on contracts for services that represent a continuation of a
   previous effort performed by the proposed source as a result of a
   competitive acquisition when it is likely that an award to another
   source would result in substantial duplication of cost to EPA that is
   not expected to be recovered through  competition or unacceptable
   delays in fulfilling EPA's requirements.

-  Acceptance of an unsolicited research proposal.

-  Data  needed  are  not  available to  the  Government  and  no
   alternative exists.

-  Utility services supplied by only one source.

-  When the Administrator has determined that only specified makes
   and  models  of technical  equipment  and  parts will  meet EPA's
   requirements for standardization and interchangeability.

EPA's need for a product or services is of such unusual and compelling
urgency that delay in  the award of a contract  would result in serious
financial or other injury to the Government [41 U.S.C. 253[c][2]].

It is necessary   for  EPA  to establish  or  maintain  an  essential
engineering, research,  or development capability to be provided by an
educational or  other  non-profit  institution or  a Federally Funded
Research and Development Center [41 U.S.C. 253[c][3]].

When the terms  of an international agreement  or treaty specify or
limit the sources to be solicited [41 U.S.C. 253 [c][4]].

EPA is  authorized or required by statute to award a contract to a
specified source  [41 U.S.C.  253[c][5]].

When, in order  not to  compromise  national security,  disclosure of
EPA's needs must  be  limited to one or a limited number of sources
[41 U.S.C. 253[c][6]].
                               3-69
                                                  Second Edition-4/84
                                                  Rev. No. 2- 9/30/85

-------
EXHIBIT 3-5 (Continued)
       The Administrator has determined it is not in the public interest to use
       competition  and has notified  the Congress  30 days  prior to award
       [41 U.S.C. 253[c][7lJ.
Note:  With the exception of purchases from  Industries for the  Blind  and
       Severly Handicapped, under 41 U.S.C. 253[c][5], all acquisitions require
       justifications and approvals.
                                       3-70
                                                          Second Edition-4/84
                                                          Rev. No. 2- 9/30/85

-------
                             EXHIBIT 3-6


                          SAMPLE FORMAT

            U.S. ENVIRONMENTAL PROTECTION AGENCY

   JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

                        PART I- BACKGROUND


1.   Date:

2.   Program Office:

3.   Project Officer (Name, Mail Code, Telephone Number):

4.   Project Identification (Title, Contract Number, etc.):

5.   Description of the project (describe the supplies and services required to
    meet the Agency's needs):

6.   Period of performance or delivery date:  (List separately  the base period
    and each proposed option periods):

7.   Estimated contract value  (List separately the base  contract value and
    value of each proposed option period):

8.   Proposed Contractor (Name and Address):


                       PART n - JUSTIFICATION

    I recommend that this procurement be negotiated. without full and open
competition  with  (name of  proposed  contractor).  The   basis for  this
recommendation is discussed below:

    (Address the  elements  in  FAR 6.303-2 and  each  of  the  applicable
statutory authorities listed in FAR 6.302 permitting other than full and open
competition and provide specific support for each authority used.   Provide
other facts which support the justification, e.g.,

    If FAR 6.302-1 is cited, give estimate of costs that  would be duplicated
    and the basis for your estimate.

    If FAR 6.302-2 is cited, describe the nature and extent  of harm to the
    Government.

    List actions that can be taken by the Government  to remove or overcome
barriers  to competition  for  subsequent  acquisitions  of the  supplies or
services.) See also EPAAR 1506.3.
                                      3-71
                                                        Second Edition-4/84
                                                        Rev. No. 2- 5/30/85

-------
EXHIBIT 3-6 (Continued)


  PART ffl - PROGRAM OFFICE DIVISION DIRECTOR'S CERTIFICATION

  I certify that the above information is accurate and complete.
Signature of Division Director                              Date


         PART IV - CONTRACTING OFFICER'S DETERMINATION

1. Description of efforts to obtain competition: (Describe the efforts made to
  ensure offers were solicited from as many sources as practicable, e.g., how
  was  the procurement publicized?  What were  results of CBD  synopsis?
  Identify firms responding to the synopsis and results of the evaluation of the
  responses.  If a market survey was not conducted, provide a statement of
  the reasons survey was not concluded.

2. Cost Determination:  (Provide a statement that the anticipated cost to the
  Government will be fair and reasonable).

          PART V - CONTRACTING OFFICER'S CERTIFICATION

  I certify that the above justification is accurate and complete to the best of
my knowledge and belief.
Signature of Contracting Officer                            Date

                         PART VI - APPROVAL
Signature of Approving Official                             Date
                                     3-72
                                                       Second Edition-4/84
                                                       Rev. No. 2- 9/30/85

-------
                           EXHIBIT  3-7

      LEVELS OF  AUTHORITY  FOR  APPROVALS OF  JOFOCs
  Potential Contract Value                Approving Official
• $1,001 - $25,000                   Contracting Officer

• Over $25,000-$100,000            One  level  above  the  Contracting
                                   Officer

• Over $100,000 - $1,000,000 (FY 84)  Competition Advocate*

• Over $1,000,000 - $10,000,000      HCA or  deputy  on a nondelegable
                                   basis*

• Over $10,000,000                  Senior Procurement Executive on  a
                                   nondelegable basis*
* The Contracting Officer shall submit JOFOCs directly to  the approving
  official.
                                   3-73
                                                     Second Edition-4/84
                                                     Rev. No. 2- 9/30/85

-------
                                     EXHIBIT 3-8

                                     (Example*)
              QUALITY ASSURANCE  REVIEW  FOR  EXTERNAL PROJECTS
                                 (CONTRACTS)
Z.   GENERAL INFORMATION

     Descriptive Title:

     Sponsoring Program Office:

     Approximate Dollar Amount:

     Duration:
IX.  THIS CONTRACT REQUIRES ENVIRONMENTAL MEASUREMENTS      	     	
     (If yes, complete form; if no, sign form and            Yes       No
     submit with procurement request.)

III. QUALITY ASSURANCE REQUIREMENTS                          Yes       No
     (Projects involving environmental measurements)        ______     _____

     a.  Submission of a written quality assurance
         (QA) program plan (commitment of the
         offerer's management to meet the QA
         requirements of the scope of work) is to
         be included in the contract proposal.              ______     _____

     b.  Submission of a written QA project plan is
         to be included in the contract proposal.           _____     _____

     c.  A written QA project plan is required as
         a part of the contract.                            ______     _____

     d.  Performance on available audit samples or
         devices shall be required as part of the
         evaluation criteria (see list on reverse
         side).                                             	     	

     e.  An on-site evaluation of proposer's facili-
         ties will be made to ensure that a QA system
         is operational and exhibits the capability
         for successful completion of this project
         (see schedule on reverse side).   '                 _______     _____

     f.  QA reports will be required (see schedule
         on reverse side).                                  _____     	
    *This form may vary in context depending upon tne application ana tne originating oiuce.
                                       3-75
                                                        Second Edition-4/84
                                                        Rev. No. 2- 9/30/85

-------
      EXHIBIT 3-8 (Continued)
ZV.  DETERMINATION (Projects involving environmental measurements)

     Percentage of technical evaluation points assigned
     to QA                                                  	
     Project Officer estimate of percentage of cost-
     allocated to environmental measurements
               QC Safe re nee      Split Samples
Parameter   Sampling or Device        for
Measured        Available       Cro ss -Campari son
               (Yes or No)        (Yes or No)
                                                   Required
                                                     for
                                                   Pre award
                                                  (Yes or No)
                                                                 FREQUENCY

                                                               During Contract
QA System Audits are required:  Pre award
QA Reports are required:  with Progress Reports
                                                  ; daring contract:
                                                     ; with Final Report
The signatures below verify that* the QA requirements have been established.

QA Officer:                                  Project Officer:
Signature
                              Date
                                                 Signature
                                                                       Date
After signatures, a copy of this form must be included with the procurement
request and sent to the Contracts Office and a copy placed on file with the
QA Officer.
                                      3-76
                                                          Second Edition-4/84
                                                          Rev. No. 2- 9/30/85

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                            EXHIBIT  3-9

                        PROCUREMENT  REQUEST  APPROVALS


A.  Designated Office Approvals - Note that this matrix in Part A does not
    restate any approvals from Part B.  Offices designated in Part A should be
    consulted prior to submission of requests for approval since authority may
    have been redelegated.  The Agency objective is to limit Procurement
    Request approvals strictly to those that are clearly required by proper
    delegations and official policies.

Item           Item                  Required               Required
 No.        Description             Local Approvals     Headquarters Approvals

  1   All purchases, regardless   - Program Office
      of value, for equipment,      Approvals (POA)
      supplies or services.       - Facilities
      (Includes all items           Support Services              None
      listed in the rest of         Division (FSSD)
      Part A.)                      or Equivalent
                                    Field Office (EFO)
                                    to confirm compli-
                                    ance with property
                                    regulations and to
                                    screen for excess
                                    property.  (Dele-
                                    gations Manual f 1-4)


  2   Printing; duplication;      Offices designated in           None
      composition                 Delegation f 1-5 in
                                  Delegations Manual.


  3   - Real property or any          None                        FSSD
        interest therein                                  (Delegations Manual
      - Advertisements for                                        * 1-4)
        acquisition of real
        property


  4   Commercial U-drive             None                         FSSD
      credit cards                                        (Delegations Manual
                                                                  * 1-4)
      Facsimile equipment            None                         FSSD
                                                           (Delegations Manual
                                                                  * 1-4)
                                    3-77
                                                      Second Edition-4/84
                                                      Rev.  No.  2-  9/30/85

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EXHIBIT 3-9 (Continued)
Item
 NO.
   Item
Description
PROCUREMENT  REQUEST  APPROVALS

              Required
   	Local Approvals
      Required
Headquarters Approvals
      Communications equipment
      utilizing the radio
      frequency spectrum
                          None
                                           PSSD
                                   (Delegations  Manual
                                           *  1-4)
      Watercraft over 25 feet
      or $15,000 or aircraft
      of any value
                          None
                                           PSSD
                                   (Delegations  Manual
                                           f  1-4)
      Purchase or lease/hire
      for 60 or more consecu-
      tive days of passenger
      vehicles and light duty
      trucks
                          None
                                           PSSD
                                   (Delegations  Manual
                                           f  1-4)
      Purchase or rental
      of copying machines
      and printing equipment
                          None
                                           PSSD
                                   (Delegations  Manual
                                           #  1-5)
 10   Repair and improve-
      ment construction
                       PSSD or EFO
                       (See Delegations
                       Manual f 1-4)
                                           PSSD
                                   (For  use of Building
                                   and Facilities funds)
 11   Equipment, services for
      creation, organization,
      maintenance and disposition
      of Agency records and files
      including micrographic
      services and systems
                       Limited offices as
                       designated in the
                       Delegations Manual
                       (see Delegation * 1-1)
                       See also Records
                       Management Manual.
                                           None
 12   ADP equipment, software
      maintenance and services,
      including those related
      to computer-related
      micrographic systems,
      word processing, time-
      sharing, feasibility
      studies and require-
      ments analyses
                          None
                                  Office  of  Information
                                  Resources  Management
                                  (Delegations  Manual
                                           *  1-10)
                                    3-78
                                                      Second Edition-4/84
                                                      Rev. No. 2- 9/30/85

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EXHIBIT 3-9 (Continued)
Item
 No.
   Item
Description
PROCUREMENT  REQUEST  APPROVALS

               Required
   	Local Approvals
      Required
Headquarters Approvals
 13   Paid advertising for
      recruitment of personnel
      in newspapers and trade
      journals of national or
      inter-regional circulation
                       Local personnel
                       office (Delega-
                       tions Manual
                       * 1-2}
                                          None
 14   Collecting identical
      information or statis-
      tical data from ten
      or more persons
                          None
                               Assistant Administrator
                               for Policy, Planning
                               and Evaluation.  (See
                               Delegations Manual
                               f 1-22)
 15   Protective services and
      equipment including guard
      protection security alarms,
      safes, and monitoring and
      detection devices
                          None
                                          PSSD
                               (See Delegations Manual
                                          f 1-6)
                                    3-79
                                                      Second Edition-4/84
                                                      Rev. No. 2- 9/30/85

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EXHIBIT 3-9 (Continued)
                       PROCUREMENT   REQUEST  APPROVALS
    Management Approvals

    The following approvals  apply to all  procurement  requests  (PRs).
    (Incremental fundings are excluded.)  These approvals  are  in  addition to
    those listed in A above.
                   Item

    1.  Procurement Requests  for
        management consulting services:

        (a) Small purchases
        (b) Other than small  purchases
         Approval
Program official at least one
organizational level above
initiating office and, when
award is to be made during
the fourth fiscal quarter, to
program official at least two
organizational levels above
initiating office.

Program official not below
level of Associate, Assistant
or Regional Administrator,
Inspector General, or General
Counsel.
    2.  Requirements not' listed above
        which exceed the small  purchase
        threshold.
Program Official designated by
the Associate, Assistant or
Regional Administrator,
Inspector General, or General
Counsel.
                                    3-80
                                                      Second Edition-4/84
                                                      Rev. No.  2- 9/30/85

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                             EXHIBIT 3-10

                EXAMPLES OF CONSULTING SERVICES
                  AND OTHER TYPES  OF  SERVICES
A.  Examples of services that are considered consulting services are provided
below:

    L   Advice on the  feasibility of instituting a transfer pricing system in
        the Procurement and Contracts Management Division and advice on
        how such  a system  could  improve  management of contracts by
        procurement personnel.

    2.  Analysis of EPA's management and agency services support functions
        and  advice on  how to improve the performance of these functions,
        such as through reorganization of the Office of Administration.

    3.  Analysis of alternative strategies for implementing the requirements
        of Hazardous Substance Response Program regulations and advice on
        resource needs associated with each alternative strategy.

    4.  Analysis of  EPA  procedures for drafting and  issuing  permits to
        municipal and nonmunicipal dischargers and advice on how to simplify
        these procedures.

    5.  Advice on how to coordinate and integrate toxic substance  policies
        and activities with those of other EPA programs.

    6.  Advice on the different  strategies for  implementing merit pay at
        EPA, and conduct of training courses on one of these strategies.

    7.  External peer review  of programs,  projects, and publications for the
        Office of  Research and Development (ORD) Laboratories to assure
        conceptual soundness of scientific  methods, and validity of results.
        The objective  of the procurement is  to obtain highly competent
        technical  examinations  and analyses of  the research  planned or
        performed by ORD laboratories in order to obtain the benefit of
        additional  viewpoints and perspectives and  to advise the ORD staff
        on  the state of the  art in areas that  impact laboratory research
        programs.  Three separate types of reviews are required:

        a.   Program  reviews  and  analyses which  include critiques of
             laboratory  research  programs  and  advice  on upgrading  the
             program direction or management.

        b.   Project   reviews   and   analyses    which   focus  on    the
             scientific/technical details of a single project,  with an in-depth
             examination of the project plan  and  the progress being made in
             pursuing  the  plan,  a   review  of  the  data analyses  and an
             interpretation of the data analyses.
                                      3-81
                                                         Second Edition-4/84
                                                         Rev. No. 2- 9/30/85

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EXHIBIT 3-10 (Continued)
      c. Review and analysis of research results for publication clearance in
         accordance with the "ORD Technical Information Policy and Guide."

   B. Examples of services which are not considered consulting services are
provided below:

      L Regulatory impact analyses, including economic impact analyses of
         effluent guidelines  on specific  industries,  such as  the organic
         chemicals industry.

      2. Analyses   required   by  the   Clean  Water   Act   to  determine
         economically achievable standards.

      3. Design  and   implementation   of  a   computerized   management
         information system for the Office of Administration.

      4. Development of sampling and  analytical techniques to identify and
         measure pollutants in the ambient air.

      5. Conduct of a training course  for Project  Officers with particular
         emphasis on the Project Officer's role in the source evaluation and
         selection process.

      6. Development  of  a  manual on security  procedures for  handling
         confidential business information.

      7. Conduct of a study to assess the consequences of pollutant loadings
         in the Chesapeake Bay.

      8. Evaluation of the strategy proposed by  the Personnel Management
         Division for  implementing  merit pay  at EPA  with  the primary
         purpose  being the  conduct  of  fifteen  separate  8-hour training
         sessions on how  to draft  critical job  elements and  performance
         standards.
                                     3-82
                                                        Second Edition-4/84
                                                        Rev. No. 2- 9/30/85

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                                  EXHIBIT  3-11

                    STANDARD PROCUREMENT  LEADTIMES


    Category                                                      Leadtime in
                                                                  Calendar Days

1.  Contracts:

    A. New Competitive

       •  Competitive - Research and Development Under $500K             185
       •  Competitive - non R&D under $500K                              170
       •  Competitive - Research and Development $500 K or more           240
       •  Competitive - non R&D $500K or more                            225

    B. New Sole Source

       •  New Sole Source - under $500K                                   120
       •  New Sole Source - $500K or more                                 171

2.  Small Purchases:

    A. Competitive Order

       •  Oral $1,000 to $10,000                                             5
       •  Written $1,000 to $10,000                                         19
       •  Written $10,001 to $25,000                                        60

    B. Sole Source Order

       •  Oral $10,000 or less                                               4
       •  Written   $10,000 or less                                         17
       •  Written $10,001 to $25,000                                        60

    C. Blanket Purchase Agreements                                        17

    Federal Supply Schedule orders are included in  these categories based on the same
criteria as other orders.

NOTE: In EPA Notice 84-3, dated 7/30/84:

The Procurement and Contracts Management Division has developed standard procure-
ment  leadtimes for processing small purchase and contract awards. Leadtime is defined
as the elapsed time between receipt of an acceptable Purchase Request/Order (EPA Form
1900-8) in the appropriate Procurement Branch and  the date of the award.  These lead-
times reflect changes in award procedures as directed by  the Federal Acquisition Regula-
tion.  Some actions may require extraordinary processing steps; others may require delay-
ed award dates to meet special needs of the program offices.  In such cases, special lead-
times will be negotiated with the initiators of the actions. Program offices are encourag-
ed to submit advance contract actions, as unfunded  "planning purpose procurements," as
early as possible to ensure that the award will be made by the desired contract date.
                                     3-83
                                                       Second Edition-4/84
                                                       Rev. No. 2- 9/30/85

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                            TABLE  OF  CONTENTS

                                 CHAPTER 4
M-4.000       DEVELOPMENT OF  THE PROCUREMENT REQUEST
                 AND  OTHER  RELATED ACTIONS

M-4.100       Introduction
M-4.101       Functional Assignments for Evaluation and Selection
M-4.101-1        Introduction
M-4.101-2        Assignments
M-4.102       Use and Exceptions to the Use of EPA Form 1900-8
M-4.102-1        Use of EPA -Form  1900-8
M-4.10 2-2        Exceptions to the  Use of Form
M-4.103       Supporting Documentation
M-4.103-1        Justification
M-4.103-2        Exceptions to the  Need for a Procurement
                   Request Rationale Checklist
M-4.104       Basic Items To Be Included in the Procurement Request
                Rationale Checklist
M-4.104-1        Project Title
M-4.104-2        Performance Period
M-4.104-3        Procurement Abstract
M-4.105       Coordination of the Procurement Request/Order
                                                            4-1
                                                            4-1
                                                            4-1
                                                            4-2
                                                            4-3
                                                            4-3
                                                            4-3
                                                            4-4
                                                            4-4
                                                            4-4

                                                            4-4

                                                            4-4
                                                            4-4
                                                            4-5
                                                            4-5
M-4.200       OTHER CONSIDERATIONS  RELATIVE TO                   4-7
                PROCUREMENT REQUESTS

M-4.201       Procurement Requests for Amending a Solicitation or
                Contract                                                 4-7
M-4.202       Priority Procurement Requests                               4-7
M-4.202-1        Definition                                               4-7
M-4.202-2        Procedure                                               4-7
M-4.20 3       Socially and Economically Disadvantaged                      4-8
                Businesses/8(a) Contracts
M-4.204       Return and Cancellation of the Procurement Request/Order      4-8
EXHIBITS

     4-1
     4-2
EPA Form 1900-8
Procurement Request Rationale Checklist
4-9
4-11
                                                        Second Edition
                                                        April 1984

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                          CHAPTER M-4.000

          DEVELOPMENT OF THE PROCUREMENT REQUEST
                   AND  OTHER  RELATED ACTIONS
M-4.100  Introduction

    Once the decision to contract has been made and procurement planning
accomplished, the next  step in the acquisition process is the initiation of a
procurement  request  (PR).  Procurement  requests must  be utilized for the
acquisition of personal  property  and nonpersonal services from  commercial
(i.e., non-Federal) sources of supply.  The authorized forms to be used are EPA
Forms 1900-8, Procurement Request/Order, and 1900-8A, Continuation Sheet.
This Chapter will provide detailed discussion on the content of and format  to
be  used  both  in  the  Procurement  Request  Forms  and  other  required
documentation, such as the Procurement Request Rationale Checklist.  As the
Project Officer, it is  your responsibility to determine whether initiation of a
procurement  request is appropriate; if so, to properly complete the necessary
documentation; obtain the required approvals; and forward all documentation
to the Contracting Officer for review and appropriate action.
M-4.101  Functional Assignments For Evaluation and Selection

    M-4.101-1  Introduction

    Concurrent with preparation of the Procurement Request or, even more
beneficially,  prior  to  its preparation,  the  Project Officer and  Contracting
Officer should collaborate  for the purpose  of  establishing  the  functional
assignments for evaluation of proposals and source selection.  It is important
that this  be  done in that the  effectiveness of the  source  selection process
depends to a large extent on the content and quality of all elements of  the
solicitation.  Through  early  appointment  of  the Source  Selection  Official
(SSO),  Source Evaluation Board (SEB),  Technical  Evaluation Panel (TEP),  and
Business Evaluation Panel (BEP) members,  they can become actively involved
in the development of the requirements.
                                  4-1
                                                          Second Edition
                                                          April 1984

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    M-4.101-2  Assignments
    The following conditions are applicable to the appointment or designation
of the SSO, SEB, TEP, and BEP and  their functional duties with respect  to
procurement  actions  of  the  dollar  values indicated.  For  the purpose  of
establishing a SEB, the term "dollar value" means the full estimated cost/price
of the total planned requirements (including options) of any resulting contract
(or contracts when more than one award is planned from a single solicitation).
    (a) In Excess of $5.000.000;
    (1)  SSO - Head of the Contracting Activity (HCA)
    (2) SEB Chairperson  -  Head  of the  Contracting  Activity (HCA)  or
        designee (must be a contracting official)
    (3) SEB Membership - Chief of the Contracting Office, TEP Chairperson,
        BEP Chairperson, and other specialists as assigned by the SSO
    (4) TEP Chairperson - Project Officer
    (5) TEP Membership - At least two members in addition to the PO*
    (6) BEP Chairperson - Contracting Officer
    (7) BEP Membership - Contract specialist and cost/price analyst
    (b) In Excess of $500,000 But Not Exceeding $5.000.000;
    (1)  SSO - Determined by the Chief of the Contracting Office
    (2) SEB - Established only when requested by  the program  office  or
        determined  necessary  by the SSO.  If established,  the SSO shall
        determine the membership.
    (3) TEP Chairperson - Project Officer
    (4) TEP Membership - At least two members in addition to the PO*
    (5) BEP Chairperson - Contracting Officer
    (6) BEP Membership - Contract specialist and cost/price analyst
    (c) Less than $500,000
    For procurements under $500,000, the PO may  be  the only member of the
TEP,  and the CO or contract specialist may be the only member of the BEP.
   *  If desired by the Program Office, a QA Officer may be a member of the
      TEP.
                                  4-2
                                                         Second Edition
                                                         April 1984

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M-4.102   Use and Exceptions to the Use of EPA Form 1900-8

    M-4.102-1   Use of EPA Form 1900-8

    EPA  Form  1900-8  (see  Exhibit  4-1) should  be  used for  initiating
procurements of personal property and  nonpersonal services  requiring the
commitment  and obligation of appropriated funds, including the  following
types of actions. It  should also be kept in mind that any change in the dollar
amount of a contract requires the use of a Procurement Request/Order.

    (a) Imprest Funds

        The  imprest fund transactions  may be used  for procurement of $250
        or less ($500 for emergencies);  however,  a  lower limit  may be
        established  by local procedures.

    (b) Small Purchases

        Small  purchases  are those purchases where the aggregate amount
        involved  in  any  one  transaction  does  not  exceed  $25,000.
        Procurement  procedures are simplified for these size procurements.
        Requirements aggregating more  than  $25,000  may not be  broken
        down into several purchases  which are less  than $25,000 merely for
        the  purpose  of  utilizing  small purchase   procedures  (Federal
        Acquisition Regulation Subpart  13.203).  For sole source acquisitions
        in excess of $1,000, the Project Officer must submit, as a separate
        attachment  to  the  Purchase  Request/Order,  a  brief statement
        supporting  a sole source acquisition  (see  M-3.106-8(f)(2)(iii)  and
        Exhibit 3-5).

    (c) Purchases Over $25,000

        Purchases  over  $25,000 require  more detailed documentation  and
        certain specific  information  to be contained in  a document entitled
        "Procurement Request Rationale  Checklist," (see Exhibit 4-2).  You
        should  submit this document  as  an attachment to  the  purchase
        request unless directed otherwise by the CO.  The PO should obtain
        all  required  approvals of the final procurement  request package
        before  submitting it to the CO, (see M-3.106-20(j) and (k) and Exhibit
        3-9).

    M-4.102-2   Exceptions to Use of Form

    The EPA Form 1900-8 is not utilized in the following instances:

    (a) Requests for Printing

        EPA Form 2340-1 should be used for duplicating and printing services
        and  EPA Form 2340-6, Requisition for Local  Duplicating, should be
        used for local duplicating and printing;
                                   4-3
                                                     Second Edition-4/84
                                                     Rev. No. 2- 9/30/85

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    (b)   Employee Training

         Optional   Form   170,   Request,   Authorization,   Agreement  and
         Certification of Training, should be used for employee training.

    (c)   Local travel

    (d)   Authorized mail other than U.S. Postal Service


M-4.103  Supporting Documentation

    M-4.103-1  Justification

    Each procurement  request  should  contain a  justification or  supporting
documentation as required.  The extent of  documentation will vary depending
on dollar amount  and kinds of  services or property to  be procured.  For
instance, procurement action cannot be  initiated on requirements over $10,000
until the "Procurement Request Rationale Checklist" (PRRC) is approved from
a technical standpoint by authorized program officials.

    M-4.103-2   Exceptions to the Need for a Procurement Request Rationale
                Checklist

    The PO shall complete a Procurement  Request Rationale Checklist for all
procurements  over  $10,000  unless directed  otherwise  by  the  Contracting
Officer.
M-4.104  Basic  Items to be Included in  the Procurement  Request  Rationale
         Checklist

    Chapter 3 listed all possible  items  to  be considered  in a  PR. For your
convenience, the checklist is set  forth as in Exhibit 4-2  at the  end of this
section.  The following are some of the basic items that are to be included in
every procurement request rationale checklist.

    M-4.104-1   Project Title

    This title should correspond to the  title used in EPA Form  1900-8,  but
need not be limited to the 60 positions as required according to the instruction
on  the  reverse  side  of EPA  Form  1900-8.  Titles should always  accurately
reflect the work which will be performed under the contract.

    M-4.104-2  Performance Period

    The period of  performance to be stated is the  contemplated  period  of
contract performance expressed in months, excluding any  options.  Whenever
contractual options are  desired, the estimated period of performance for each
option should be specified.
                                   4-4
                                                          Second Edition
                                                          April 1984

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    M-4.104-3  Procurement Abstract

    Describe  briefly for  public dissemination both program background  and
scope of work. This abstract will be used to synopsize the procurement in the
Commerce Business Daily and may be transmitted internally for information
purposes.   Each  abstract  for  competitive  procurement   should,  when
appropriate,  contain remarks about  desired qualifications  of prospective
contractors so that unqualified firms will not become involved.  An abstract is
not required when an 8(a) contract is to be entered into [see M-3.106-8(c)].


M-4.105 Coordination of  Purchase Request/Order

    Purchase  requests for management consulting services are routed through
the local personnel office to assure the propriety of contracting-out in lieu of
using  in-house capabilities and. contracting-out rather than appointment of  a
person  to  perform  the  service  and  also  assuring  that the  services  are
nonpersonal in nature.
                                   4-5
                                                           Second Edition
                                                           April 1984

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                                M-4.200

 OTHER CONSIDERATIONS RELATIVE TO PROCUREMENT  REQUESTS
M-4.201  Procurement Requests for Amending a Solicitation or Contract

    When a  purchase request  is  prepared  for  the purpose of amending a
solicitation or contract (no PR is required  for  administrative  change orders
which do not effect dollar value), the purchase request should reference  the
solicitation  number or contract  number  as  appropriate.   In  addition,  all
considerations  normally  addressed  in preparing  a  PR—i.e.,  approvals,
clearances, etc. must be considered.
M-4.202  Priority Procurement Requests

    M-4.202-1  Definition

    A Priority Procurement Request is  one which contains a  requirement
which is of such priority that award of the  Procurement Request must be made
in less than normal procurement leadtime.

    M-4.202-2  Procedure

    (a) For procurements  over $10,000, the Procurement Request  should
include a written justification specifying the necessity for priority processing
as it  relates to a program.  The justification is attached  to the EPA Form
1900-8.

    (b) The request shall  be forwarded to the appropriate Chief  of  the
Contracting Office at the Washington, Research Triangle Park, or Cincinnati
contracting activity, who will approve the priority justification and determine
priority assignment.

    (c) The appropriate  contract  operations office will  keep  the program
officer advised of the status of the request for priority procurement
                                  4-7
                                                          Second Edition
                                                          April 1984

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    (d)  Should  an action not previously  designated  as priority become  a
priority at a later date, a justification shall be submitted through the same
channels and approvals as if it had initially been designated priority.


M-4.203 Socially and Economically Disadvantaged Businesses/8(a) Contracts

    When it is known, prior to the preparation of the purchase request/order,
that  the   purchase  is  planned  to  be  made  from  the  Small  Business
Administration  (SBA) under Section 8(a)  of the  Small Business Act,  the
procurement package  need  not   include   a   Procurement   Abstract  or
Recommended Source List.


M-4.204 Return  and Cancellation of the Procurement Request/Order

    (a)  It is the responsibility  of the contract  specialist  to review  the
procurement request and  attachments,  if any, to determine if the  purchase
descriptions, or  specifications,   are   adequate  for   procurement   action;
accurately reflect the needs of the Government; that all  necessary approvals
have  been obtained; and  such  other documents that  may  be attached  and
required are complete and accurate.  The term "procurement package"  is used
to describe the procurement request, attachments, and required approvals.

    (b)  If the contract specialist determines that the procurement package is
marginal or unacceptable to initiate procurement action, he or she may return
the procurement package to the initiating activity.  The procurement package
will normally be returned by a memorandum explaining the reason,  together
with a statement that it is cancelled from the procurement activity's list of
active procurements.  The  package  will be  returned through the procurement
activity's  record-keeping function.

    (c)  A procurement package will not be returned if the deficiencies in the
package are such that they can be corrected by an informal discussion with the
initiator.
                                  4-8
                                                          Second Edition
                                                          April 1984

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                                               EXHIBIT  4-1
  US ENVIRONMENTAL PROTECTION AGENCY
         WASHINGTON OC 20460
         PROCUREMENT
        REQUEST/ORDER
                                       1 NAME OP ORIGINATOR
               3 MAIL CODE
                               4 TELEPHONE NUMBER
                                                                                   2. DATE OF REQUISITION
                                                           8 DATE ITEM REQUIRED
 8 SIGNATURE OF ORIGINATOR
                                                       7 RECOMMENDED PROCUREMENT METHOD
 8 DELIVER TO r*enKrMaf
                                                                     10 MAIL CODE
                                                                                   11 TELEPHONE NUMBER
  12 FINANCIAL DATA

   111 APPROPRIATION
                                NOTE: ITEM 12 (O DOCUMENT TYPE-CONTRACT" 'C.' PURCHASE
                                     ORDER • "P." IGA = 'A." OTHER (Mac.1 m "X"
             FMObSE
                                    DOCUMENT
                                  CONTROL NUMBER
                                                    ACCOUNT NUMBER
                                                                         OBJECT
                                                                            ~-
                                                                                           AMOUNT (0)
 13. SUGGESTED SOURCE fMm». AUdnu. Of Coda. Phem/Camta,
                                                     14 AMOUNT OF MONEY
                                                      COMMITTED IS
                                                      Q ORIGINAL
                                                      Q INCREASE
                                                      O DECREASE
                                               18 CONTRACTING OFFICE Q IS Q IS NOT AUTHOR-
                                                 IZED TO EXCEED AMOUNT SHOWN BY 10%
                                               18 SERVICING Ff4ANCE OFFICE NUMBER
                                                 17 APPROVALS
 a BRANCH/OFFICE
                                          DATE
                                                        d PROPERTY MANAGEMENT OFFICER/DESIGNEE
                                                                                                 DATE
 b DIVISION/OFFICE
                                          DATE
                                                        a OTHER (Sffofyl
                                                                                                 DATE
 e FUNDS LISTED ABOVE ARE AVAILABLE AND
   RESERVED
                                          DATE
                                                                                                 DATE •
  18 DATE OF ORDER
                      19 ORDER NUMBER
                                                        20 CONTRACT NUMBER III fan
                                                                                    21 DISCOUNT TERMS
 22 FOB POINT
                                    23 DELIVERY TO FOB POINT BY OnvMtmOMW 24 PERSON TAKING ORDER/QUOTE AND PHONE NO
 28 CONTRACTOR (Nun*, mddrm. OP CodW
                                                        28 TYPE OF ORDER
                                                        Da PURCHASE
                                                                             REFERENCE YOUR QUOTE ISm Bloc* 341
                                                        PLEASE FURNISH THE ABOVE ON THE TERMS SPECIFIED ON BOTH SIDES
                                                        OF THIS ORDER AND ON THE ATTACHED SHEETS IF ANY INCLUDING
                                                        DELIVERY  AS INDICATED THE  PUHCHASE  IS  NEGOTIATED UNDER
                                                        AUTHORITY OP 41 USC Mild I    I	
                                                        Db
                                                            D ORAL   D WRITTEN   G CONFIRMING
                                                 27 SCHEDULE
  ITEM
 IUMBER
   111	
SUPPLIES OR SERVICES
       IN	
                                (QUANTITY
                                ORDERED
UNIT
 Idl
ESTIMATED
UWT°»CE
  HI
UNIT
PRICE
 It)
AMOUNT
  Ig)
                                       QUANTTV
                                       MXETCO
                                                                                  TOTAL*
  28 UNITED STATES OF AMERICA
   BY tSignnml
                                                        29 TYPED NAME AND TITLE OF CONTRACTING OFFICER
EPA Form 19OO-8 (ftav 4-84)  Replace* previous adinona.
                       and EPA Form 19CO-8T. which ara obaolata
                                                 4-9
                                                                                    Second  Edition
                                                                                    April 1984

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                                 EXHIBIT 4-2

                   PROCUREMENT REQUEST RATIONALE CHECKLIST
             (to be submitted with EPA Forms 1900-8 and 1900-8A)
Item 1;  The title of this procurement is
Item 2; This procurement request package contains the following documents:
        (Check all applicable boxes and attach documents as appropriate.)

See Attachment I   Check                      Description

    N/A             /~7       EPA Forms 1900-8

    ____             / /       Procurement Abstract

    ____             / /       Statement or Scope of Work

    	             / /       Concise Technical Proposal Instructions

    	             / /       Competitive Technical Evaluation Criteria

    	             / /       Justification for Other Than Full and Open
                              Competition (JOFOC)

    ____             / /       Justification for Management Consulting Services

    	             / /       Justification of Need (Government-Furnished
                              Property (GFP)/Eguipment)

    ____             / /       Quality Assurance (QA) Review Form

    _____             ____/       Recommended Sources List

    	             / /       Reports Description

    ____             / /       Government-Furnished Property Description
Item 3; This procurement / / requires / / does not require management
consulting services.  (If management consulting services are required, attach
a justification as prescribed in EPA Acquisition Regulation 1537.205.)

Item 4; This procurement / / involves / / does not involve legal analysis.  I
/ / have / / have not discussed this procuremejnt, with the Office of Legal and
Enforcement Counsel (OLEC) which / / concurs / / does not concur with
proceeding with this procurement.
                                4-11
                                                  Second Edition-4/84
                                                  Rev.  No.  2-  9/30/85

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EXHIBIT 4-2 (Continued)

                   PROCUREMENT REQUEST RATIONALE  CHECKLIST

Item 5; I / / anticipate or have knowledge of / / do not anticipate or have
any knowledge of organizational conflict of interests issues related to this
procurement.  (If affirmative, describe conflict  in an attachment.)

Item 6; Listed below are special EPA employee(s)  who are or will be
participating in EPA's processing or managing of  this procurement/ together
with a list of their non-Government employers.  Check here if none / /.

    EPA Special Employees                        Non-Government Employer
Item 7; This procurement / / is / / is not based  on an Onsolicitated Proposal.

Item 8: To the_best of_my knowledge the work  results of this proposed
procurement / / are / / are not available from any other source.   (If the
results are available frojn_another source, describe in an attachment.)  The
Project Officer / / has / / has not reviewed  the  Off ice_ of Pesticides and
Toxic Substance extramural activity report.  The  PO / / has / / has not
consulted the EPA Headquarters Library for relevant reports by previous
Contractors.

Item 9; The proposed Project Officer is	.
He/she / / has / / has not been certified as  an EPA Project Officer.

Item 10;  I / / recommend / / do not recommend prospective sources for this
procurement.  (If sources are recommended, list in an attachment.)

Item 11;  This procurement anticipates / / a  new  contract award / / an
additional work modification to existing contract_np. 	.  It
also anticipates that it will be processed as a / / competitive procurement
/ / noncompetitive procurement.  (If noncompetitive procurement is recom-
mended, attach appropriate justification as described in Part 1506 of the EPA
Acquisition Regulation.)

Item 12;  This proposed procurement is appropriate for / / total small
business/labor_ surplus area (SB/LSA) seb-aside; or / / partial SB/LSA
set-ajside; / / partial SB set-aside; / / 8(a)  set-aside; / / LSA set-aside;
or / / none of the above (check only one). (Consult the Office of Small and
Oisadvantaged Business Utilization for advice.)

Item 13a;  The estimated period of performance's 	 months after the
effective date of the contract / / inclusive  / /  exclusive of submission of
any final report which may be required.
                                4-12
                                                  Second Bdition-4/84
                                                  Rev. No. 2- 9/30/85

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EXHIBIT 4-2  (Continued)

                   PROCUREMENT REQUEST RATIONALE CHECKLIST

Item 13b;  The schedule of deliverable items  (excluding  reports) is as
follows.  Check here if no deliverable items  are required /_/.

                                                            Delivery
    Item No.             Description           Quantity       Date
Item 14;  This procurement anticipates that the following options will be
needed.  Check here if no options are anticipated / /.

                     Description of Option                    Term of Option
    (Description may be indicated in a separate attachment)
Item 15;  The following reports are required (describe in an attachment).
Check here if no reports are required / /.  For each separate report
required, describe the following:

    (a) Type of report (e.g., draft, final, interim, special, etc.)
    (b) Descriptive title (e.g., monthly progress report)
    (c) Minimum content requirements
    (d) Number of copies required
    (e) Distribution (with complete addresses of all recipients)
    (f) Delivery schedule
    (g) Number of days the Government will have to review, comment, approve
        (disapprove) and return (as appropriate)

Where specific report formats, containing the information above, are used
repetitively, "standard" formats are established or may be established with
the servicing CO.  Maximum use of such standard formats is encouraged.
Examples include monthly or other periodic progress reports, financial and
final reports.

Item 16;  Peer review of Contractor-generated documents /~7 will be /~7 will
not be required.

Item 17;  Government property, data, or services / / will be furnished / /
will not be furnished under this procurementI  (If furnished, describe in an
attachment including quantity and date available.)
                                4-13
                                                       Second Edition
                                                       April 1984

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EXHIBIT 4-2 (Continued)

                   PROCUREMENT REQUEST RATIONALE CHECKLIST

Item 18;  Budget.  (An attachment may be used.)

    (a) The total estimated budget for the basic effort and all options is
        $	.

    (b) The estimated funding for the current fiscal  year is $	

    (c) The estimated total cost of Other Direct Costs is $	.
        (If possible, indicate estimate of  significant subiterns such as
        travel, computer time, consultants, equipment and material.)

    (d) For level of effort actions and other  actions where hours,  rather
        than an end product, are to be purchased,  indicate for  the  basic and
        all option periods the number of hours required,  by category, with
        definitions for each category.

Item 19;  This procurement / / is / / is not subject  to the requirements of
OMB Circular A-76.  (If A-76 applies, required documentation must be provided
with the PR.)

Item 20;  This procurement / / requires / / does not  require priority
processing (a brief priority justification  may be  attached).

(To be completed by procurement office:)

    / / Approved       / / Disapproved
Date                   Chief,  Contracting  Office

Item 21;  This procurement / / will / / will not  involve the testing of human
subjects in accordance with EPA Order 1000.17.

Item 22;  This procurement / / does / / does not  include acquisition of
membership in an association.   (If membership in  an association is included,
attach a certification indicating that the primary purpose of membership is
to obtain direct benefits for  EPA necessary to the accomplishment of its
functions or activities.)

Item 23;  This procurement / / is / / is not for  leasing of motor vehicles.
(If affirmative, attach certification per  FAR 8.1102.)

Item 24;  This procurement / / is / / is not to be funded from more than one
appropriation.
                                4-14
                                                  Second Edition-4/84
                                                  Rev.  No.  1-10/17/84

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                             TABLE OF CONTENTS

                                  CHAPTER  5
M-5.000       PROPOSAL EVALUATION, NEGOTIATION,  AND AWARD

M-5.001       Introduction
M-5.002       ApplicabUity
M-5.003       Policy
5-1
5-1
5-1
M-5.100       SOURCE  EVALUATION BOARD STRUCTURE AND           5-3
                RESPONSIBILITIES AND  DUTIES  OF  PARTIES INVOLVED

M-5.101       Introduction                                                 5-3
M-5.102       Source Evaluation Board Structure                             5-3
M-5.103       Duties and Responsibilities of Parties Involved                  5-3
M-5.103-1       Head of the Contracting Activity                            5-3
M-5.103-2       Source Selection Official                                   5-4
M-5.103-3       Source Evaluation Board                                    5-4
M-5.103-4       Technical Evaluation Panel                                 5-4
M-5.103-5       Business Evaluation Panel                                   5-4
M-5.103-6       Project Officer                                            5-4
M-5.103-7       Contracting Officer                                       5-4
M-5.103-8       Contract Specialist                                        5-5
M-5.103-9       Cost/Price Analyst                                        5-5
M-5.103-10      Director or Chief of the Contracting Office                  5-5
M-5.103-11      Quality Assurance  Officer                                  5-5
M-5.103-12      Other Personnel                                           5-5

M-5.200       PREPARING FOR THE EVALUATION                        5-7

M-5.201       Introduction                                                 5-7
M-5.201-1       Conflicts of Interest                                       5-7
M-5.201-2       Distribution and Proposal Control                            5-8
M-5.201-3       Disclosure of Information                                   5-9
M-5.201-4       Review of the Solicitation                                  5-9

M-5.300       PROPOSAL EVALUATION  PROCEDURES                     5-11

M-5.301       Introduction                                                 5-11
M-5.301-1       Scoring Plan                                              5-11
M-5.301-2       Scoring Formats                                           5-12
M-5.301-3       Scoring Illustration                                        5-13
M-5.301-4       Evaluation Guidelines                                      5-14
M-5.301-5       Ranking                                                  5-14
M-5.302       Optional Scoring Procedure                                   5-15
M-5.303       Evaluation Considerations                                    5-15
                                                    Second Edition-4/84
                                                    Rev. No. 2- 9/30/85

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TABLE  OF  CONTENTS (Continued)
Page
CHAPTER  5 (Continued)

M-5.400     EVALUATION REPORTS

M-5.401     Introduction
M-5.401-1    Source Evaluation Board Report
M-5.401-2    Evaluation Panel Reports

M-5.500     DETERMINATION  OF  THE  COMPETITIVE RANGE
             AND  DISCUSSIONS

M-5.501     Determination of the Competitive Range
M-5.501-1    Technical Evaluation
M-5.501-2    Business Evaluation
M-5.S01-3    Determination and Documentation
M-5.501-4    Competitive Range Example
M-5.502     Written or Oral Discussions
M-5.502-1    Background
M-5.502-2    Purpose
M-5.S02-3    Limitations
M-5.502-4   Limited Discussions vs. Full Negotiations

M-S.600     PROPOSAL  REVISION AND SOURCE  SELECTION

M-5.601     Proposal Revisions
M-5.601-1    Notifications
M-5.601-2    Receipt
M-5.S01-3    Evaluation
M-5.602     Source Selection
M-5.602-1    General
M-5.602-2    Source Selection Decision
M-5.602-3    SSO Approval
M-5.603      Negotiations with the Source Selected

M-5.7QO     AWARD NOTIFICATIONS AND  DEBRIEFINGS

M-5.701     Award Notifications
M-5.701-1    Preaward Notifications
M-5.701-2    Postaward Notices
M-5.702     Debriefings

M-5.800     PROTESTS

M-5.801     Introduction
M-5.802     Protests to EPA Only
M-5.802-1    Pre-Award Protests
M-5.802-2    Post-Award Protests
M-5.803     Protests to the GAO
M-5.803-1    Time for Filing
5-17

5-17
5-17
5-17

5-21
5-21
5-21
5-22
5-22
5-22
5-23
5-23
5-23
5-23
5-24

5-25

5-25
5-25
5-25
5-25
5-26
5-26
5-26
5-26
5-26

5-27

5-27
5-27
5-27
5-27

5-28.1

5-28.1
5-28.1
5-28.1
5-28.2
5-28.2
5-28.3
                                                   Second Edition-4/84
                                                   Rev. No. 2- 9/30/85

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TABLE  OF CONTENTS (Continued)
CHAPTER 5 (Continued)
 M-5.803-2    EPA Actions Required
M-5.803-3    GAO Decision Time
M-5.803-4    GAO Authority
M-5.804    Protests to the GSBCA
M-5.804-1    Time for Filing
M-5.804-2    EPA Actions Required
M-5.804-3    GSBCA Authority to Suspend Award
M-5.804-4    GSBCA Hearings and Decision Authority
                                                            5-28.3
                                                            5-28.4
                                                            5-28.4
                                                            5-28.5
                                                            5-28.5
                                                            5-28.5
                                                            5-28.6
                                                            5-28.6
EXHIBITS

     5-1
     5-2
     5-3
     5-4
     5-5
Source Evaluation Structure                                    5-29
Technical Evaluation Scoring Format                            5-31
Alternate Scoring Format - Proposal Technical Evaluation         5-33
Optional Scoring Procedure - Proposal Technical Evaluation        5-39
EPA Form 1900-26                                            5-41
                                                   Second Edition-4/84
                                                   Rev. No. 2- 9/30/85

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                           CHAPTER  M-5.000

  PROPOSAL EVALUATION, NEGOTIATION,  AWARD, AND  PROTESTS
M-5.001   Introduction

    The  area of source evaluation is extremely  critical to  the  successful
accomplishment of the acquisition process.  Here, you, as the Project Officer,
and other key members are involved in the review of proposals that have cost
thousands of dollars to prepare and will result in the obligation of substantial
amounts  of Government funds.  This  Chapter sets forth both the rules and
responsibilities of the participants and sequentially sets forth the steps of the
evaluation process.


M-5.002   Applicability

    The  provisions  of this Chapter apply  to  all competitive  negotiated
procurements in excess of $25,000 except architect-engineering services.
M-5.003
    EPA  personnel  shall  conduct   source  evaluation  and  selection  in
accordance  with consistent standards  and procedures that ensure fair and
impartial treatment of all offerers.
                                   5-1
                                                      Second Edition-4/84
                                                      Rev. No. 2-9/30/85

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                                 M-5.100

           SOURCE  EVALUATION  BOARD STRUCTURE AND
        RESPONSIBILITIES  AND  DUTIES OF  PARTIES  INVOLVED
M-5.101  Introduction

    The Contracting Officer is responsible for performing all  administrative
actions leading to  the award of a contract and  occupies  a key role in the
source  selection  process.   The  need  for management  oversight  of  the
administrative actions leading to contract award increases for larger dollar
procurements since such procurements usually have a significant impact on the
Agency's  ability  to accomplish  its mission.  This  management  oversight is
accomplished by  the monitoring of the evaluation and selection process by
senior procurement officials  and their  review and approval of major pre-award
decisions.
M-5.102  Source Evaluation Board Structure

    Exhibit 5-1 at the end of this section sets forth the structure of EPA's
source evaluation process. Respective duties of the personnel are set  forth in
M-5.103.
M-5.103 Duties and Responsibilities of Parties Involved

    Your responsibilities as the  Project Officer and other participants in the
Source Evaluation Board are set forth below.

    M-5.103-1  Head of the Contracting Activity

    The Director, Procurement and Contracts Management Division (PM-214),
is the Head of the Contracting Activity (HCA). The functions of the Head of
the  Contracting  Activity  include  monitoring  the  source evaluation  and
selection process,  providing  guidance  and direction  when  appropriate,
participating  in the selection  process in  specified  instances,  and  ruling on
requests  for  deviations and  exceptions  to the  Agency's  policy  and/or
procedures regarding source evaluation and selection. The HCA will serve as
the Source Selection Official for acquisitions in excess of $5 million.
                                   5-3
                                                           Second Edition
                                                           April 1984

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    M-5.103-2  Source Selection Official

    The Source Selection Official (SSO) is the official responsible for overall
management of the source  selection process.   Duties of the  SSO  include
appointing the members and chairpersons of the Source Evaluation Board, the
Technical Evaluation Panel, the Business Evaluation Panel, and approving the
solicitation  document  including  any amendments.   The SSO  approves the
competitive range and and makes the source selection decision.

    M-5.103-3  Source Evaluation Board

    The Source Evaluation Board  (SEB)  consists of  a chairperson,  who  is
responsible for all of the procedural and  administrative aspects of the SEB,
and other specialists—e.g., technical, procurement, and  financial—as  may be
deemed appropriate  by the SSO.  An attorney  from the Office of General
Counsel should  serve  in an  advisory  role  to  the  SEB.  The  SEB  makes
recommendations to the SSO on selection of a contractor for award.

    M-5.103-4  Technical Evaluation Panel

    The Technical Evaluation Panel (TEP) develops the evaluation criteria and
the Statement of Work  for  the  solicitation  and performs the  technical
evaluation  of offers.  All members  of the TEP  must  review  all  proposals
initially submitted in response to a solicitation.  Unless approved in advance by
the SSO, only individuals who evaluated initial proposals  may evaluate revised
proposals submitted after determination of the competitive range.

    M-5.103-5  Business Evaluation Panel

    The Business Evaluation Panel (BEP) reviews the solicitation evaluation
criteria and Statement of Work from a business perspective; evaluates the
business and contractual aspects of  the  offerers'  business proposals; and
considers other factors such as responsibility of the offerers.

    M-5.103-6  Project Officer

    The Project Officer is the  Chairperson  of the  TEP  and as  such  is
responsible for recommending the TEP membership for the approval of the
SSO.  The  Project  Officer is designated  by the  EPA program official at
division, office or laboratory director level, with the concurrence of the SSO,
as the technical representative for the procurement action.

    M-5.103-7  Contracting Officer

    The Contracting Officer serves  as Chairperson of  the BEP and  as such
coordinates  the activities of the BEP membership.  He/she makes competitive
range decisions and prepares  the  source selection  decision for  the SSO's
subsequent approval.
                                  5-4
                                                          Second Edition
                                                          April 1984

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    M-5.103-8  Contract Specialist

    This  Government  employee  is  assigned  the  responsibility  for  the
procurement action and for the accomplishment of the administrative duties
necessary for and  leading  to a contract.  Responsibilities of  the  contract
specialist include, but are not limited  to, preparing the solicitation document,
arranging and conducting pre-proposal conferences, conducting negotiations,
ensuring complete and  accurate  documentation of the official contract file,
preparing  the  competitive  range   determination  and  source  selection
memorandum  at  the direction of the  Contracting Officer, and preparing the
contractual  instrument.  The contract  specialist  is  also  responsible  for
receiving, safeguarding, and  distributing offers to  the  TEP  and BEP.  The
contract specialist is always a member of the BEP.

    M-5.103-9  Cost/Price Analyst

    The cost/price analyst is responsible for evaluating the financial aspects
of the proposals,  which  includes performing preliminary evaluations of the cost
proposals  and detailed cost  and price  analyses.  The  cost/price analyst is
always  a  member of the BEP when the value of the  procurement exceeds
$500,000.

    M-5.103-10   Director or Chief of the Contracting Office

    The Director or  Chief of  the  Contracting  Office  is the  senior  EPA
individual classified in  the GS-1102  series having assigned responsibilities for
the management and operations of the contracting activities at a specific
location, i.e.,  Washington, D.C.;  Research Triangle Park, North  Carolina; or
Cincinnati,  Ohio.  These individuals  are also "Chiefs  of the  Contracting
Offices."  The Director or  Chief  of the  Contracting Office monitors  the
solicitation preparation, the source evaluation and selection process, serves as
SSO in specified instances, and provides advice or guidance when required.

    M-5.103-11   Quality Assurance Officer

    For   Procurement   Requests   involving   environmentally    related
measurements and requiring QA/QC documentation in the offerers1 proposals,
the Quality  Assurance Officer may be a member  of the Technical Evaluation
Panel (TEP) for the purpose of evaluating the  adequacy of the offerers1
QA/QC  documentation.

    M-5.103-12   Other Personnel
    Only regular or special employees of EPA or employees of other Federal
Government agencies may  participate in the evaluation and selection process.
Employees  of contractors do not participate either formally or informally in
the evaluation/selection process.
                                   5-5
                                                      Second Edition-4/84
                                                      Rev. No. 2-9/30/85

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                                M-5.200

                  PREPARING  FOR THE  EVALUATION
M-5.201  Introduction

    As a participant in the selection process, you must know the concerns and
responsibilities that must be addressed prior to initiation of the evaluation.
They are as follows:

    M-5.201-1 Conflicts of Interest

    (a) The  Code  of Federal  Regulations (40  CFR  Chapter 1  Part  3)
prescribes  the high ethical standards  of conduct  required  of each  EPA
employee in carrying out his or her duties and  responsibilities.   You must be
familiar  with the  provisions  of  Part 3  regarding conflicts  of interest and
inform the source  selection official in writing if your  participation  in the
source evaluation and  selection process could be interpreted as a possible or
apparent conflict of interest.  If  the source selection official determines that
you have  a conflict of interest, you will be  relieved of further  duties in
connection with the evaluation and selection process  and a successor will be
designated.

    (b)  Members  of  the  Source Evaluation Board,  including  the  Business
Evaluation Panel and the Technical Evaluation Panel, will  be told to determine
that:

    (1)  All members are regular or special employees;

    (2)  No member's spouse or  minor child holds  a financial interest  in any
        contract or firm from whom a proposal  is received;

    (3)  No member is an officer, director, employee, partner, nor consultant
         to an offerer from whom a proposal was received;

    (4) No member is negotiating for nor has any  arrangement concerning
         future employment with  any offeror.
                                   5-7
                                                          Second Edition
                                                          April 1984

-------
    (5)  No member's family has a relationship with  an offerer which could
        present the appearance of a conflict of interest or impropriety.

    (c)  In addition to being concerned with any personal conflict  of interest
problem, you, as a member of the evaluation  panel,  must  be aware  of  the
conflict of interest regulations stated in 48 CFR Part 1503 regarding current
or former EPA employees. These regulations deal with  conflicts  of interest
and improper influence  or favoritism in  connection with contracts involving
current or former employees.  They state:

    (1)  No  contract may be  awarded  without competition  to  a  current
        regular or special EPA employee or to a former regular or special
        EPA employee  whose employment terminated within 365 days before
        submission of  a  proposal to EPA.   Likewise, no contract  is  to  be
        awarded without  competition to a firm which employs, or proposes to
        employ, a current regular or special EPA employee or a former EPA
        regular or special employee whose employment terminated within  365
        calendar  days  before  submission  of a proposal  to EPA.   These
        restrictions apply if either of the following conditions exists:

          (0  The current or former EPA  regular or special  employee is or
              was involved in developing or negotiating  the proposal for  the
              prospective contractor.

          (ii)  The current or former EPA regular or special employee will be
              involved   directly   or  indirectly   in    the   management,
              administration, or performance of the contract.

        The foregoing restriction may be waived in writing by the Assistant
        Administrator for Administration and  Resources Management  if  the
        award  would   not involve  a violation  of  the  U.S.C.  code, EPA
        regulations at 40 CFR Part 3, or the Federal Acquisition  Regulation
        at 48 CFR 3.602 and if the award would be in the best interests of
        the Government.

    (2)  The above  prohibition does not  apply to  competitively  awarded
        contracts. However, such awards must not involve violation  of  18
        U.S.C. 205, 18  U.S.C. 207, 18 U.S.C. 208, or  48  CFR 3.601 and must
        not  be  based on  improper influence or favoritism arising out  of  an
        EPA employee's current or former EPA employment.

    If a conflict is perceived  of this nature, inform the Contracting Officer in
writing.

    M-5.201-2   Distribution and Proposal Control

    (a)  Offerers' identities,  offer contents, and prices  shall be treated with
the utmost discretion to avoid  compromising the evaluation results or giving
any offerer an  unfair  competitive advantage.   Any questions regarding  the
receipt  and distribution of offers, status of the proceedings, or other matters
shall be referred to the CO or designated contract specialist.
                                  5-8
                                                          Second Edition
                                                          April 1984

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    (b)  After receipt  of  proposals,  the  contract  specialist will serially
number  all  proposal  copies  received, distribute  the  required  number of
proposal copies to the TEP and BEP, and be responsible for the collection and
final disposal of proposal copies.  The panel chairpersons must  maintain a log
of proposal distribution within the TEP and BEP. The contract specialist will
destroy all excess copies of proposals in a timely manner. The original copy of
each unsuccessful proposal should be retained by the contract  specialist  as a
reference  in conducting debrief ings.  A  minimum  of two  copies  of   the
successful proposal should be  retained (contract file copy/Project Officer file
copy) for reference in administering the contract.  Final disposition of the file
shall  be  accomplished in accordance  with  the EPA  Records Management
Manual.

    M-5.201-3 Disclosure of Information

    During the course of evaluation and selection, you must  not  reveal any
information concerning the evaluation (except as may be required for internal
clearance or technical assistance) to anyone  who is  not participating in  the
same evaluation proceeding.  The  right to information during  the  evaluation
process does not  extend  to  your supervisor.  However, this does not preclude
reasonable status  reports of activities  on a "need to  know" basis  to persons
having procurement responsibility, provided that no information relating to the
status or content of a specific  proposal is disclosed. Of particular concern
here is that  you realize  that no  discussion  should be held with  either offerers
or  other  organizations   which  have   requested information  regarding   the
evaluation. Such inquiries should be referred to the Contracting Officer.

     M-5.201-4 Review of the Solicitation

    Each member of  the TEP, in preparing for proposal evaluation, must be
familiar with the technical proposal instructions, the  technical  evaluation
criteria  and  weights, and  the  scoring plan.   Familiarity  and understanding
between  panel   members  will  ensure  consistent,   timely,  and  accurate
evaluation.
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                                 M-5.300

                PROPOSAL EVALUATION  PROCEDURES
M-5.301  Introduction

    Evaluation of technical proposals involves  the  evaluation and scoring of
each offerer's proposal, and  reporting the Technical Evaluation Panel findings
to the Contracting  Officer. The considerations and steps involved in the
evaluation and scoring of proposals are addressed in this section with  reporting
requirements set forth in M-5.400.

    M-5.301-1  Scoring Plan

    (a)   The scoring of offers is accomplished through the use of the Scoring
Plan as  shown on the  next page.  The Scoring Plan consists of  narrative
descriptive  statements and  numerical  values  for  each  statement.   These
predetermined numeric  values are on a scale of zero through 5.  The scoring
plan must be used in conjunction with the numeric weights set forth  in the
technical evaluation criteria to arrive at offerer's scores for each element and
subelement of their proposals.

    (b)   Values  assigned to technical evaluation elements in proposal reviews
must be  limited to values shown in the Scoring Plan. The use of fractional
values other than 3.5 and 4.5 (e.g., 2.5) is prohibited.

    (c)   Further discussion of the Scoring Plan values is as follows:

    (1)   Value  of "0" or  "1" - The  element  or subelement of this  technical
         evaluation criterion is clearly deficient.  The "0" or "1" score is used
         solely for scoring, ranking, and determination of competitive  range.
         If,  however, the  offer attains an overall score, due  to high  scores in
         other technical evaluation criteria,  which  places it in a sufficiently
         high position to  be selected for negotiations,  the offerer shall be
         afforded the opportunity  to correct those deficiencies during written
         or oral discussions or during final negotiations.
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    (2)  Value of "2" - The element or subelement of the technical evaluation
        criterion  contains  deficiencies   which  must   be   clarified   or
        substantiated before the offer is fully understood.  These deficiencies
        should be resolved during written  or oral discussions, often called
        interrogatories, if conducted, and  the offer is to be given a final
        score in any  supplemental TEP Reports (see M-5.400, Evaluation
        Reports) based on the offerer's revised proposal.

    (3)  Values of "3", "3.5", "4", "4.5", or "5" - The element or subelement of
        the technical evaluation criterion is fully understood and there is no
        need for clarification by the offerer.  However, discussions involving
        any such elements or  subelements  are not precluded.  An assigned
        value of  3  or higher does not,  however, preclude  comments  on
        perceived weakness or areas that could be improved.
                            SCORING PLAN

                            Descriptive Statement

           The element is not addressed or is totally deficient  and without
           merit.

      1    The element is addressed  but  contains deficiencies  that can be
           corrected  only by  major  or  significant  changes  to relevant
           portions of the proposal.

      2    Clarification is required.  Final  scoring of  the  element will be
           made  following  limited  discussions  or  full   negotiations,   if
           discussions or negotiations are held with the offerer.

      3    The  proposal  element  is   adequate.   Overall,   it  meets
           specifications.   However,  comments should be made  on  any
           perceived  weaknesses or  on  areas  in  which an  offerer  could
           improve.

      3.5  None.  (Indicates  intermediate merit.  If used, you must provide a
           narrative to explain the distinction between values 3 and 4.)

      4    The proposal element is good with some superior features.

      4.5  None.  (Indicates  intermediate merit.  If used, you must provide a
           narrative to explain the distinction between values 4 and 5.)

      5    The proposal is superior in most features.
    M-5.301-2  Scoring Formats

    (a)  The technical  evaluation  criteria and  numerical weights  used in
evaluating offerers1 proposals are developed prior to the issuance of an RFP,
and once  adopted,  must  be  applied  without change  throughout the entire
evaluation.
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    (b)   Using  the  criteria  and  weights  mentioned  in  (a)  above,  the
Chairperson of the TEP is responsible for the development of the scoring
format (see Exhibits 5-2 and 5-3 for examples).  The format must be designed
and reviewed by  the  Contracting  Officer prior to the issuance of the RFP.
The Scoring Plan shown under M-5.301-1 will be used with Exhibit 5-2. Failure
to promptly  develop the  format  may  adversely impact  the procurement
leadtime.  For purchases valued at $500,000 or less,  the  PO  shall  use EPA
Form  1900-61, Proposal Technical Evalution, shown in Exhibit 5-4.

    M-5.301-3  Scoring  Illustration

    (a)   When reviewing a subelement of an offerer's proposal,  it is evaluated
in light  of the descriptive statements in the Scoring Plan and  assigned  a
numeric  value corresponding to the appropriate statement.  The numeric value
is converted  to a percentage factor  which is  then  applied to  the numerical
weight assigned to the subelement in  the Evaluation Criteria to determine an
offerer's score.  Since the  numeric values are  0 to  5,  the  "5"  represents 100
percent.   Therefore,  each whole  number represents  20  percent;  "0" is  0
percent,  "1" is 20  percent, "2" is 40 percent, "3" is 60 percent, etc.

    (b)   Exhibit 5-2 reflects a typical scoring example  showing  the assignment
of numerical weights, the  application of  the scoring  plan, the derivation of
individual scores for each technical evaluation criterion, and the overall score
to be  used in ranking the offers.

    (c)   The  final decision for assigning a numeric score to individual offers,
when  two  or  more evaluators materially differ,  must  be resolved through
discussion  among the panel membership and arrival at a  consensus opinion.
Arriving  at  a  consensus  opinion  is mandatory.   Averaging   of  individual
member's scores to arrive at an overall panel score  is prohibited.

    (d)   Applying the scoring plan  principles discussed  in   M-5.301-l(c)(l)
through (3) to Exhibit  5-2 will result in the following:

    (1)   Items H.a, II.d, and Ill.b, "Previous experience the  project manager
         has had  in this type  of effort", "Project  management organization,"
         and  "Educational qualifications related to the project performance"
         must be  discussed with the offerer and the element appropriately
         rescored.  The clarification offered will  be   rescored  with  an
         appropriate value.

    (2)   Items I.b and ILc, "Proposed sources of information",  and "Proposed
         plan  for  use  of  personnel resources  in  connection  with  work
         performance" should  be discussed with any  offeror determined to be
         in the competitive  range and normally  would be  corrected  to an
         acceptable  condition prior  to  award to  an offeror who has  an
         evaluated element rated as "0" or "1."
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    M-5.301-4  Evaluation Guidelines

    The evaluation of offers requires the exercise of careful judgment on the
part of each evaluator.  Offers must be carefully read and analyzed before the
scoring  plan  is applied to  any  technical evaluation  criterion  element or
subelement.  There  are many  factors you should  consider when analyzing
offers, a sampling of which follows.

    (a)   Avoid "reading into" or "reading out of any portion of  the offer a
meaning other than the  exact language appearing in the offer.

    (b)   Avoid the tendency to interpret the meaning of the offerer's proposal
when the writing is ambiguous.

    (c)   Avoid any infusion of personal knowledge of an offerer's capabilities
not described in the offer.

    (d)   Recognize  that  the assignment  of  a score  to  an  element  or
subelement is  subjective and based upon your best reasoned judgment.

    (e)   Recognize that no  two evaluators may assign the same numerical
score to an element or subelement of the evaluation criteria.

    (f)   Recognize    ambiguities,    inconsistencies,    errors,    omissions,
irregularities,  and deficiencies that can affect scoring.

    (g)   Recognize that offerers often use "catch phrases,"  "buzz words," and
semi-legalistic  phraseology  which  may   indicate  a lack   of  thorough
understanding  of the solicitation.

    (h)   Recognize the substantive quality of the proposal and do  not be
influenced by form, format, or method of presentation.

    (i)   Recognize flattery on the part of the offerer.

    (j)   Avoid forming "first impressions"  of  an offer that might  tend to
influence the score to be assigned.

    M-5.301-5  Ranking

    The total of  assigned numerical scores to an offer when compared to
other offers determines the  relative rank of  that offer.   While the  use of
predetermined scores as a cut-off (e.g., no offerer receiving a score  of less
than 60  will be considered) for competitive range consideration is prohibited,
the scoring and relative rank of offerers  does influence  this determination
materially.  This is particularly true when  an offer, or group of offers, falls
significantly below the lowest  score  attained  by the higher ranking  offers.
Each member  of the TEP shall independently evaluate and score each offer for
procurements  in excess of  $500,000.  The average of individual  TEP members'
scores to arrive at an overall panel score is prohibited.  However, discussions
between evaluators to  understand conflicting views is acceptable. The final
overall  ranking is the responsibility of the TEP Chairperson.
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M-5.302  Optional Scoring Procedure

    A combined checklist-scoring system is to be utilized where procurement
actions   not  in  excess   of   $500,000   are   involved.   The   combined
checklist-scoring system appears in Exhibit  5-4 at the end of this section. The
evaluatoKs) use a separate page 2 for each evaluation criterion.


M-5.303  Evaluation Considerations

    In addition to the relative technical ranking of technical offers and  the
evaluation  of price  or cost, consideration must be  given to other factors
contained  in the solicitation which  may  influence  the  selection  decision.
These other factors may be used as the discriminating element for determining
the selection of a source between two otherwise substantially equal offerers.
The factors include, but are not necessarily limited to,  the following:

    (a)   Prior Performance.  Often  evaluators confuse prior performance with
past experience  of  an organization.  An  organization's prior performance
concerns such items as: timeliness of work performed, whether the contractor
has been terminated  for default, the acceptability of work performed, etc.
Evaluating  prior performance is the responsibility of  the Contracting Officer
and is not  given a  relative rating as is  the  case  in evaluating technical
proposals   An  offerer's  record  of prior  performance  may significantly
influence  the selection decision.  Examples of  recent or  current  seriously
deficient performance may even cause the Contracting Officer to determine
the offerer  to  be  nonresponsible.   Therefore,  as  an evaluator you  should
provide (see paragraph (1) below) all information that  you  may have regarding
any offerers' prior performance record.

    (1)   In the TEP Supplemental Report,  (see M-5.400,  Evaluation Reports),
        you must include a summary evaluation of the technical aspects of
         the offerer's prior  performance  under contracts requiring similar
         work.   The  summary shall provide an analysis  of the  offerer's
        previous record  in providing work of a high  quality in a  timely  and
        cost efficient manner.

    (2)   You may obtain  information relating  to prior performance  from
        several sources. For example copies of applicable EPA Form 1900-26
        (see Exhibit 5-5) may be obtained from the Quality Assurance Branch
         of the  Procurement and  Contracts Management  Division.  To gain
         information on contracts which  may not be included  in the 1900-26,
        file a request to the Contracting Officer to provide you with a list of
         current contracts.  The listing will  contain Project Officer's names
         whom  you may contact. Information provided on prior performance
         may be evaluated.  Current and  prior contracts listed in the offerer's
        proposal may be  reviewed and considered in addition to personal
         knowledge of the TEP.

    (b)  Past Experience.  Past  experience, on the other hand,  relates to  the
"content"  of  work  the  contractor  has  performed—e.g.,  the offerer  has
conducted  water quality studies, emission analyses, etc.  Past experience, if it
has been established as an evaluation criterion, will be evaluated by the TEP.
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    (c)  Conflicts of Interest. Part 9.500 of the FAR and Part 1509.5 of the
EPAAR  impose restrictions on contracting with  a  firm or  individual when
organizational and individual conflicts of interest  would occur.  The  TEP  and
BEP Chairpersons must poll the  membership of their panels for any personal
knowledge concerning conflict of interest that  a member may have about the
firms that have submitted proposals.   The results of  the poll,  including  any
information obtained, will be included in the panel report.

    Solicitation provisions require  offerers to certify  that it is not aware of
any information  bearing on  the existence of any  potential organizational
conflict of interest.  If the offerer cannot so certify, it is required to provide a
disclosure statement in its proposal describing relevant information  concerning
any past, present, or planned interests that may be  a potential conflict of
interest. The Contracting Officer is required to evaluate such information and
take appropriate  action.  It is EPA's policy to  avoid,, neutralize, or mitigate
organizational  conflicts  of  interest.   If  this cannot be  done,  then  the
prospective contractor will be disqualified.  When potential or actual  conflicts
are identified after award, the contract may be  terminated.

    An organizational conflict of interest exists when the nature of  the work
to be performed  under  a prospective contract  and a  prospective contractor's
organizational,  financial,   contractual,  or  other interests  (including  the
interests of its chief  executives,  directors,  consultants, or subcontractors) are
such  that  (a) award  of the  contract  may result in an unfair competitive
advantage, or (b) the contractor's objectivity in performing the contract work
may be impaired.
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                                M-5.400

                        EVALUATION REPORTS
M-5.401  Introduction

    The  TEP  and BEP  evaluation  of  proposals is a  continuing  activity
throughout the negotiation process.  The findings of the panels provide the SEB
with information  required  to  make proper  competitive  range and source
selection decisions.  When a formal  SEB is formed, three separate written
reports are  prepared.   These  reports  are   described  in   the   following
subparagraphs.

    M-5.401-1  Source Evaluation Board Report

    In procurements where an SEB is convened, the SEB provides the SSO with
a  report  on its findings.   The report is  submitted after   completion  of
discussions or  full negotiations,  depending on  the  source  selection method
employed, and should include: a description of the acquisition; a summary of
the significant strengths, weaknesses,  and risks associated with each offer still
in the  competitive range.   This summary shall generally be  an independent
assessment of the facts and findings appearing  in the TEP  and BEP reports.
The SEB report contains recommendations for selection; and a statement that
the SEB  members  are  free from  actual or  potential personal conflicts of
interest.

    M-5.401-2  Evaluation Panel Reports

    (a) These  are formal narrative reports  prepared  by the TEP and BEP for
submission to the CO.  The reports form the basis of negotiation and are the
basis for a major portion of the SEB report, competitive range determination,
and source selection determination.  The reports  must  be in sufficient detail to
be used to debrief offerers as to why they did not receive an award.  Each
report  shall identify  the  individuals  participating  in  the  evaluation  of
proposals.  M-5.302 should  be  consulted   regarding  the  use  of  simplified
procedures when actions are not in excess of $500,000.
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    (b)  The CO will advise the TEP Chairperson when the  results of the
technical evaluation are to be submitted.  Normally,  evaluators are given a
period of 14 to 30 calendar days (depending  upon  the complexity of the
requirement, the number of proposals received, etc.) to  evaluate proposals.

    (c)   Preparation and Submission of the Technical Evaluation Panel Report.

    (1)   The TEP  Report is delivered to the  Contracting  Officer upon the
         completion of the initial technical evaluation  of  offers received.
         This includes a detailed scoring of each  offer received and  a summary
         of facts and findings of significant strengths and weaknesses and risks
         associated with each offer. The report  must be in sufficient  detail to
         support a determination of offers meeting the minimum requirements
         of the Government, to justify the  relative ranking of offers, and  to
         support the establishment of the competitive range.

    (2)   The report must include any  interrogatories the CO should submit to
         offerers to clarify their technical proposals. The CO may  add to the
         TEP's list any additional interrogations deemed appropriate.

    (3)   The PO must deliver a supplemental TEP report to the CO upon the
         completion of evaluation of revised  proposals and  prior  to final
         selection. The supplemental  report must include, for each offerer in
         the competitive range:

           (0  A  discussion of whether  or not the offerers'  cost proposals
               adequately   reflect   their  technical   proposals   and  the
               requirements of the solicitation;

           (ii)  A  summary  evaluation  of  the  technical  aspects  of  each
               offerer's record  of  recent or current performance.   The
               evaluation of  past performance includes an analysis of the
               offerers' previous efforts to  provide work of a high quality in a
               timely,  cost-efficient  manner.  However,  past performance is
               not a criterion to be  scored.  Where the  offerer is known  to
               have performed contracts for EPA and for other Government
               agencies for  comparable  work,  those   agencies  should   be
               contacted for  a record  of past performance and  the CO
               contacted for a record of  past performance on EPA contracts;
               and

          (iii)  Any changes to the initial  technical evaluation scores and a
               narrative evaluation based on  discussions or negotiations and
               the revised proposal.  All revised score sheets by  each  panel
               member must be included.

    (d)   Preparation and Submission of the  Business Evaluation Panel Report.
Concurrent with your preparation of the TEP  Report,  the Chairperson of  the
Business Evaluation Panel must prepare a Business Evaluation Panel  Report.
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(1)  The BEP Report delivered to  the Contracting  Officer upon  the
    completion  of initial evaluation of the business portion of offers
    received includes:  a discussion of any factors which  might prevent
    award to a proposer (i.e., appearance  on a suspended/debarred list)
    and a preliminary analytical cost evaluation report.  The  report may
    include worksheets  or a  formal narrative to  identify  cost  elements
    which appear unreasonable or  questionable.  For  level  of effort
    contracts, the report  will compare proposed costs  with  the  cost
    standards specified  in  the solicitation,  e.g.  man-hours  per labor
    category.

(2)  A supplemental BEP Report is delivered to the Contracting Officer
    after completing the evaluation of revised proposals and prior to final
    selection.  The BEP Report narrative is in sufficient detail to permit
    the selection of source  for final contract award.  It includes  the
    appropriate  consideration, analysis,  and  findings  concerning  the
    following elements  of the  business proposal of each  offerer in  the
    competitive range:

        (0  A detailed cost analysis on the business proposals;

       (ii)  Evaluation of proposed management  structure  to  be utilized
           for performance;

      (iiO  Evaluation of offerer's subcontracting program as it relates to
           small business, labor surplus area concerns, and socially  and
           economically disadvantaged business enterprises;

      (iv)  Evaluation of those business elements submitted with each
           proposal  which   could   lead   to    a  determination   of
           nonresponsibility by the Contracting Officer.

       (v)  Evaluation of the offerer's record of performance  under prior
           EPA contracts as it relates to timely performance, history of
           cost  control,  requests  for changes,  and quality of the  end
           product.  The BEP should obtain this information from  the
           Contractor   Performance  Evaluation  System.  Where  the
           offerer is known  to have performed contracts  with other
           Government  agencies for  comparable  work,  the BEP should
           contact those agencies for a record of past performance; and

    Both the TEP and BEP reports must also include:

(1)  A statement that the respective panel members are free from actual
    or potential personal conflicts of interest; and

(2)  Any information  which might reveal that an offerer has an actual or
    potential organizational conflict of interest.
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                                M-5.500

 DETERMINATION OF THE  COMPETITIVE  RANGE AND  DISCUSSIONS
M-5.501  Determination of the Competitive Range

    (a)   Determination of the competitive range  is a  responsibility of the
Contracting Officer, subject to  the approval of the SSO, and involves his or
her consideration of the  ranking of the technical  proposal, price,  cost, and
other factors. The  competitive  range is comprised of those proposals (taking
into consideration the factors mentioned  above) that through a  reasonable
amount of written or oral discussions may be considered acceptable to receive
the contract award.

    (b)   Almost all EPA  procurement actions to which this Chapter applies
involve technical factors  which  are of greater importance  than the price or
estimated cost proposed.  Accordingly, determination of the  competitive range
is made only after evaluation of all offers received and  careful consideration
of any possible trade-offs.

    (c)   When the  procurement action is expected  to exceed  $5,000,000,
complete documentation  supporting  the  competitive  range decision  is
presented to  the HCA for review and approval. The HCA may call for an oral
briefing  by  the SEB  prior to granting approval  of  the competitive range
decision.

    (d)   When only one offer is determined to be in the competitive range, the
CO must review  the  solicitation document to assure that  it did not unduly
restrict competition.  The competitive range determination must  include the
CO's determination that the solicitation is not restrictive.  The  determination
will also include a discussion of the  relevant aspects of the solicitation.

    M-5.501-1 Technical Evaluation

    The  attainment of a particularly  high technical  score would  seem to
indicate  that an  offer should be  considered within the competitive  range.
However, upon consideration of  the price offered,  it  may not be practical to
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trade the superior technical aspects of the offer for a significantly  higher
price.  Generally, the attainment of a high technical evaluation score in itself
is not  a sufficient basis for a Contracting Officer's determination  that  the
offer is within the  competitive  range.   Conversely, an  offer  with a  lower
technical evaluation  may meet the minimum requirements of the solicitation
and offer a price that should be given further consideration.

     M-5.501-2  Business Evaluation

     The business evaluation of offers is an essential element in determining
the competitive range,  and is of particular significance where several offers
have received technical scores that  are  close  in numerical value.  In such
cases, the business evaluation may be  the determining factor in arriving at  the
competitive range. Similarly, the factors  set forth in M-5.303 may  be of such
importance that the  offer  cannot  be  reasonably determined  to  be  within  the
competitive range.

     M-5.501-3  Determination and Documentation

     The Contracting Officer makes the  determination  of  the competitive
range  for  the  subsequent approval  by  the  SSO.  As with  the  preceding
discussions regarding evaluations, no stringent rules can, or should,  be applied
in determining the competitive range, nor can a mathematical formula be
devised.  Where  there  is reasonable  doubt  regarding  the inclusion  of a
particular offer within the competitive range, that doubt is  resolved in favor
of inclusion.  Because the determination of the competitive range is based on
informed judgment and  is complex in nature, all such determinations must be
completely documented  to set forth rationale supporting the determination.

     M-5.501-4  Competitive Range Example

     The following   example  highlights  the  principle  of  determining  the
competitive range based on the technical  and  business evaluations  of a  group
of offers.
                   COMPETITIVE RANGE  EXAMPLE
Offerer

A Co.
B Inc.
K Co.
D Co.
C Co.
G Co.
Technical Evaluation Score

            330
            325
            275
            245
            150
            125
Cost/Price

 $250,000
   175,000
   145,000
   150,000
   115,000
    92,000
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    (a)  G Co., while offering the lowest price/cost, has submitted an  offer
that is seriously lacking in essential  technical qualities.  A  review of the
scoring would show several technical elements  to have  been scored as "0" or
"1".  Therefore, G will not be included in the competitive range.

    (b)  A Co., while attaining  the  highest technical ranking, has offered a
price/cost that is unreasonable for the effort  required.  If an analysis of the
business proposal shows that several elements of price/cost are unusually high,
but may be  susceptible to  downward revision, the offer should be included in
the competitive range; however,  if those circumstances do not exist, the offer
may be considered to be outside the competitive range because of price/cost.

    (c)  C Co. has attained a score showing that portions of the  proposal do
not meet the minimum  requirements.  This is also reflected in  the  business
proposal.  The offer should  not be considered within the competitive range.

    (d)  The offers of B Inc., D Co., and K Co. are close with respect  to both
the technical evaluation  and price/cost offered.  Therefore, these three offers
should  be  included  within the competitive  range.  Depending upon the
circumstances, A Co.'s offer may also be included.
M-5.502 Written or Oral Discussions

    M-5.502-1 Background

    The Federal Acquisition Regulation (FAR) requires that,  except under
specified circumstances, the  Contracting  Officer conduct oral or  written
discussion  with all responsible offerers who submit  proposals within the
competitive range.

    M-5.502-2 Purpose

    The purpose of oral and written discussions is to:

    (a)  Advise the offerer  of  deficiencies in its  proposals so the offerer  is
given an opportunity to satisfy the Government's requirement;

    (b)  Attempt  to resolve any uncertainties  concerning  the  technical,  or
other terms and conditions of the proposal;

    (c)  Resolve any suspected  mistakes; and

    (d)  Provide  the   offeror  an  opportunity  to  submit any cost/price,
technical, or other revisions to its proposal.

    M-5.502-3 Limitations

    The Contracting Officer will chair the Government  negotiation team and
all  members  must use  careful judgment  in  determining  the  extent  of
discussions.  They must not engage in technical leveling,  technical transfusion,
or auction techniques.   Any discussions should scrupulously avoid  disclosure  of
technical  information, ideas,  or  cost   data from  any  other   offeror.   No
                                   5-23
                                                           Second Edition
                                                           April 1984

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indications should be given  to any offerer of a price which must be met or
bettered to obtain further  consideration since such practice constitutes an
auction technique. On the other hand, this does not prohibit pointing out price
or cost elements that do not appear to be justified, or encouraging offerers to
put forward  their most favorable  price proposals.  In so  doing,  the  price
elements of any other offerer must not be discussed, disclosed, or compared.

    M-5.502-4  Limited Discussions vs. Full Negotiations

    (a) To  satisfy  the  varying   nature   of  different  acquisitions,   the
Contracting Officer  may suit the negotiation strategy to the circumstances of
the procurement.  Factors which influence this decision include the  number of
proposals and relative closeness of technical scores and costs.

    (b) After  determination  of the  competitive  range,  the  Contracting
Officer may proceed with limited cost/full technical discussions with the firms
in the  competitive range, generally  through  interrogatories, and final in-depth
negotiations with one or more firm(s) still within the competitive range after
evaluation of  revised proposals; complete/full cost and technical  negotiations
with all firms comprising the  competitive range; or  a variation of these  two
approaches as the circumstances of the procurement dictate.  Regardless of
which  approach is used, the  Contracting Officer should raise cost  questions as
early  as  possible and  not  defer them  to  final negotiations.   Discussions/
negotiations with contractors in the competitive range shall include questions
on past performance (Government  and  non-Government)  that was less  than
satisfactory.   Information on past performance may be obtained  from program
personnel who have  served  as Project Officers on  relevant contracts,  and/or
from the contractor performance evaluations maintained by the Procurement
and Contracts Management Division.
                                  5-24
                                                           Second Edition
                                                           April 1984

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                                 M-5.600

            PROPOSAL REVISION  AND SOURCE SELECTION
M-5.601  Proposal Revisions

     M-5.601-1  Notifications

     All  offerers  included  in the  competitive  range are  notified  by  the
Contracting  Officer  at  the  conclusion  of  limited  discussions  or   full
negotiations of the opportunity to submit a revised proposal. A final common
cut-off  date  for   receipt  of  revised  proposal  and/or  confirmation  of
negotiations  (best  and final offer)  is  established.  The  notification includes
information to the effect that  discussions are concluded; offerers  are  being
provided the  opportunity  to submit  a revised  proposal  (which  can  be  a
confirmation of a prior offer); and the confirmation or  revised final offer must
be received by  the cut-off date specified.  Offerers are cautioned  to submit
information in  support  of  changes to  their  initial offeKs).  Where  limited
negotiations were held, the notice may indicate  that further negotiations may
be conducted with the source selected.

     M-5.601-2  Receipt

     Any revised proposal received after the established final common cut-off
is handled as  a "late proposal."  In  these instances, the prior proposal is
considered as being the offerer's complete submission.

     M-5.601-3  Evaluation

     Revised  proposals  are  subject to  a  final  evaluation (price or  cost,
technical,  and  other  salient factors  considered) to  the extent deemed
necessary  by   the  Contracting  Officer.   Evaluations  are  performed  in
accordance with the procedures previously prescribed for use in the evaluation
of initial offers in order to determine  the relative  ranking of the  revised
offers.   Any changes to scores  resulting from  revised proposals must  be
substantiated  with a  complete  rationale—Le.,  written  explanation  of  what
elements of  the proposal were changed and how it affected the rating (see
M-5.401-2(c)).
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M-5.602  Source Selection

     M-5.602-1  General

     The  selection of a source is made following receipt and evaluation of all
proposal  revisions.  The selection  of  a  source or  sources  is based  upon
consideration  of  the  TEP  and  BEP   findings  of  significant  strengths,
weaknesses, and  risks associated with each offer, business and  management
ratings,  price or  cost,  and other factors which  may influence the  award
decision. With regard to technical scores, EPA normally uses technical point
ratings of offers in.establishing the relative ranking of offers.  Technical point
ratings  are useful  guides  in  the evaluation  of  offers,  but they  are  not
conclusive  as to the actual merit of offers.  The final merit  of  the offers is
determined by  review of technical evaluation narratives,  descriptive ratings,
and  other  relevant information in addition to  point scores.   After  technical
merit is  determined, consideration is given to the price or cost proposed and
other business aspects.  Also other factors  (record of  prior  performance,
subcontracting plans, etc.)  may properly influence the decision  to select one
offer in preference to  other  offers  received as  unscored discriminating
elements to determine the  winner between two otherwise substantially equal
offers.

     M-5.602-2  Source Selection Decision

     The  Contracting Officer prepares the source selection  decision, including:

     (a)   The source selected;

     (b)   Comprehensive rationale for the decision including the consideration
given to price or cost, technical merit, and other factors contained in the
solicitation;

     (c)   A statement of approval of the  decision prepared for  the signature of
the SSO.

     M-5.602-3  SSO Approval

     A copy of the source selection decision and supporting materials prepared
by the CO is  presented to the SSO  for approval of the  decision.  When the
value of  the  procurement action  is  greater than  $5  million,  complete
documentation supporting the selection is submitted to the  HCA.


M-5.603  Negotiations with the Source Selected

     Where the Contracting Officer  followed  some form of limited discussion
with the selected source, further negotiations may be necessary on areas that
had  not yet been covered.  Such negotiations do not involve material changes
which would alter the basis of the source selection decision.
                                   5-26
                                                           Second Edition
                                                           April 1984

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                                 M-5.700

              AWARD  NOTIFICATIONS  AND DEBRIEFINGS
M-5.701  Award Notifications

    M-5.701-1   Preaward Notifications

    When the proposal evaluation  period is expected to exceed 30 days,  or
when  a limited  number  of offerers have been selected  as being within  the
competitive range, the Contracting Officer  notifies those offerers outside  the
competitive range that  their proposals are unacceptable.   This  requirement
applies to purchases over $10,000.

    M-5.701-2   Postaward Notices

    Promptly after contract award,  the  Contracting  Officer  notifies  the
unsuccessful offerers, in writing, of the source selected for award,  unless  the
offerer had been given a preaward  notification.  This requirement  applies to
purchases over $10,000.


M-5.7 02  Debrief ings

    (a) When a contract is awarded on a basis other than price,  unsuccessful
offers may request a debriefing concerning the basis for the selection decision
and contract award.
    (b)  Debrief ings are individually conducted only after contract award for
those unsuccessful offerers who submit a written request that has been signed
by a corporate official, senior partner, or other comparable executive of the
organization.  Debriefings are conducted by the SSO or his/her designee with
participation  by the PO and  other specialists  the  SSO  or  designee deems
necessary.  Debriefings must  be  absolutely factual and in conformance with
the documentation supporting the approved  source selection decision.  The
release of information relating to proposals other than the organization being
debriefed is limited in accordance with FAR 15.1001(b).
                                   5-27
                                                           Second Edition
                                                           April 1984

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    (c)  Debriefing information  will include  the Government's evaluation of
the  significant  weak  or  deficient  factors  in  the  proposal;   however,
point-by-point comparisons with  other offerers' proposals may not be made.
Debriefing  must not  reveal the  relative  merits or  technical  standing  of
competitors or the evaluation scoring. Moreover, debriefing must not reveal
any information that is not releasable under the Freedom of Information Act;
for example:

    (1)  Trade secrets;

    (2)  Privileged  or confidential manufacturing  processes and techniques;
        and

    (3)  Commercial  and  financial  information   that   is  privileged  or
        confidential,  including cost breakdowns,  profit, indirect cost rates,
        and similar information.

    (d)  The Contracting  Officer will include a summary of the debriefing in
the contract file.
                                  5-28
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                                                          April 1984

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                                M-5.800

                              PROTESTS
M-5.801  Introduction

    Interested parties may object to a solicitation, a proposed contract award,
or the award of a contract by filing a protest, in writing, to the Contracting
Officer, the General Accounting Office (GAO), or in the case of acquisition of
ADP equipment or services to the Contracting Officer, to the GAO, or to the
General Services Board of Contract Appeals (GSBCA). Interested parties are
defined as  "an actual or prospective offerer whose direct economic interest
would be affected by the award of or failure to award a particular contract."
Protests are categorized either pre- or post-award and are concerned with the
propriety of the solicitation and award process, not with contractual disputes.
M-5.802  Protests to EPA Only

    Pre- and post-award protest made to EPA only are handled in accordance
with the rules established in the FAR, Subpart  33.1 and  EPA  Acquisition
Handbook, Unit 7.

    M-5.802-1   Pre-A ward Protests

    (a)   When  a written protest against making award is filed only with  the
EPA, the Contracting Officer must not proceed with award until the matter is
resolved unless  it can be determined that:

    (1)  The items being solicited are urgently  required;

    (2)  Performance or delivery  will be severely delayed if award  is not
        made promptly; or

    (3)  It is advantageous to the Government to make prompt award.
                                 5-28.1
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                                                     Rev. No. 2-9/30/85

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    (b)   If the  Contracting  Officer determines  that  award should be  made
because of one of these factors, he or she must prepare a written justification
and obtain concurrence for award from the Office of General Counsel and the
Head of the Contracting Activity.

    (c)   If the  Contracting  Officer or  a higher official in  EPA sustains a
pre-award protest the following are actions which may be taken:

    (1)   If the sustained protest is in  regard  to a defective solicitation, the
         solicitation will either be modified or withdrawn;

    (2)   If the sustained protest is in regard to award to another offerer, the
         apparently successful offerer's proposal will be rejected; or

    (3)   If the  sustained protest does not  affect  the validity  of  the
         solicitation,  and  if the protester's proposal is  low,  he or she may
         receive award, provided the Government still requires the supplies or
         services being acquired.

    M-5.802-2  Post-Award Protests

    (a)   When a written protest against an awarded contract is filed with EPA
only,  the  Contracting  Officer need  not suspend  contract performance  or
terminate the awarded contract unless it  appears likely that the award will be
invalidated and delayed delivery of supplies or services is not "prejudicial to
the Government's  interest."   In this  event,  the  Contracting Officer will
consider  making  a  mutual  agreement   with the  contractor to  "suspend
performance on a no-cost basis."

    (b)   If the  Contracting  Officer or  a higher official in  EPA sustains a
post-award protest, the following are actions  which may  be taken, according
to the circumstances of the contract:

    (1)   Cancel  the award as being void;

    (2)   Terminate for convenience; or

    (3)   Allow the improper award to stand.

    (c)   Note that the decision to let an  improper award stand should be based
on several factors including (1) the degree of performance, (2)  the need to
prevent performance  delays,  and (3) the  incumbent contractor's good faith in
entering into  the contract.
M-5.803   Protests to the GAP

    The  Competition in Contracting Act of 1984 (CICA) amended the Budget
and Accounting Act, Chapter  35,  of Title  31,  U.S.  Code, to provide that
protests  concerning  alleged violation of a procurement statute or regulation
shall  be decided  by the  Comptroller General  if  filed with the  GAO  in
accordance with the statute and implementing  GAO procedures published in
                                 5-28.2
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                                                      Rev. No. 2-9/30/85

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Title  4, Part 21  of the Code of Federal Regulations (CFR) entitled "Bid
Protest Procedures."

    M-5.803-1   Time for Filing

    Protests based  on  alleged  improprieties  in  a  solicitation  which are
apparent prior to bid opening or the closing date for receipt of initial proposals
must  be filed prior  to bid opening or the closing date for receipt of initial
proposals, or, in the  case of amendments to the solicitation, not later than the
next closing date for receipt of proposals. In other cases, protests must be
filed not later than  10 days after the basis of the protest is known or should
have  been known.  Under the prescribed procedures,  if an offerer initially
submits a protest to the Contracting Officer, any subsequent protest  to the
Comptroller General must  be filed  within 10 days  after receipt of formal
notification of, or actual or constructive knowledge  of initial adverse  action
taken by the Agency.

    M-5.803-2   EPA Actions Required

    (a)  The GAO  will  notify the  Contracting Officer  within  one day  by
telephone of the receipt of a protest. If the award has already been made, the
contractor must  be  notified of the  protest; protests filed  before award will
require that the Contracting Officer notify all offerers "who appear to have a
substantial and  reasonable prospect  of  receiving an award  if  the protest  is
denied."

    (b)  Upon  notification  of receipt  of  the protest  by  the GAO, the
Contracting Officer  has 25 work days to prepare a report for submission to the
GAO or 10 work days after receipt of a GAO determination to use the express
option. Copies of the submitted report must also be furnished to all interested
parties. The following should be included in the Agency report:

    (1)  Copy of the protest;

    (2)  Copy of the protesting offerer's proposal;

    (3)  Copy of the proposal being  considered for award or proposal which is
         being protested;

    (4)  Copy of the solicitation, including specifications or portions relevant
         to the protest;

    (5)  The abstract of bids or offers or relevant portions;

    (6)  Any other documents relevant to the protest;

    (7)  A statement which explains the Contracting Officer's actions and the
         reasons behind them; and

    (8)  Findings, actions, recommendations, and other information necessary
         for determining the validity of the protest.
                                  5-28.3
                                                      Second Edition-4/84
                                                      Rev. No. 2-9/30/85

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    (c)   When EPA has received notice from the GAO of a pre-award protest
filed directly with the  GAO, the Contracting Officer cannot award a contract
unless the Head of the Contracting Activity determines in writing that:

    (1)   Urgent and compelling circumstances which significantly affect  the
         interest of the United States will not permit waiting  the decision of
         the GAO; and

    (2)   Award is likely to occur  within 30  calendar days of  the  written
         finding.

    (d)   If the agency receives a notice from the GAO, within 10 calendar
days after award  of a contract, that a  protest has been filed  against  the
award, the Contracting  Officer must  immediately suspend performance  or
terminate the contract.  An exception to this requirement is that  the Head of
the Contracting Activity may authorize performance upon a  written finding
that, (i) contract performance  will be in the  best interest of the United States;
or (ii) urgent and  compelling circumstances that  significantly affect  the
interest of the U.S. will  not permit  waiting for the GAO's decision. Contract
performance  may not be authorized until the agency has notified  GAO of  the
above finding.

    When it  is decided  to suspend performance or terminate the awarded
contract, the Contracting Officer  should  attempt to  negotiate  a mutual
agreement on a no-cost basis.

    M-5.803-3  GAO Decision Time

    The  GAO is required to issue its recommendation on a protest within 90
work days, or within  45 calendar days under the  express option, unless  the
GAO establishes a longer period of time.

    M-5.803-4  GAO Authority

    (a)   When a protest is filed with the GAO,  the Comptroller  General  will
determine whether the solicitation,  proposed award, or award complies with
statute   or  regulation.  If the  Comptroller  General  determines  that  the
solicitation, proposed  award,  or award does  not comply with a statute  or
regulation, the Comptroller General may recommend that the Federal agency:

    (1)   Refrain from exercising any of its options under the contract;

    (2)   Recompete the contract immediately;

    (3)   Issue a new solicitation;

    (4)   Terminate the contract;

    (5)   Award a contract  consistent with the requirements of such statute
         and  regulation;
                                 5-28.4
                                                     Second Edition-4/84
                                                     Rev. No. 2-9/30/85

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    (6)  Implement any combination of the above recommendations; or

    (7)  Implement such other recommendations as the Comptroller General
        determines to be necessary in order  to  promote compliance with
        procurement statutes and regulations.

    (b)  The  Comptroller General will make  recommendations  on protests
without regard to any  cost or disruption from  terminating, recompeting, or
reawarding the contract.

    If a protest is sustained, the GAO may declare that the protestor is
entitled to the cost of filing and pursuing the protest, including attorney fees
and bid and proposal costs. Cost awarded by the GAO must be paid promptly
by the agency from agency funds.

M-5.804   Protests of the GSBCA

    An interested party may  file a written protest concerning  a solicitation
for bids or proposals to a proposed contract for the procurement of ADP or
ADP services, or a proposed  award or the award of such contract conducted
under the  authority of Section 111 of the Federal Property and Administrative
Services Act to  the GSBCA.  The GSBCA Bid Protest Rules of Procedure are
contained  in 48 CFR Chapter 61.

    M-5.804-1  Time for Filing

    (a)  The GSBCA rules provide that protests based on alleged improprieties
of the solicitation which  are apparent before bid opening or the closing date
for receipt of proposals shall be  filed before bid opening or the closing date for
receipt of initial proposals. Otherwise, the protest  shall be filed no later than
10 days after the basis for the protest is known.

    (b)  GSBCA  procedures  require that  a protester  furnish a  copy of its
complete  protest to the  agency official,  or the location  designated in the
solicitation, or to the Contracting Officer, the same day as the protest is filed
with the Board.

    M-5.804-2  EPA Actions Required

    (a)  The  GSBCA  procedures state  that within one  working day  after
receipt  of a copy of the  protest, the agency shall  give either oral or  written
notice of the protest to all parties who were solicited or, if the solicitation has
closed,  only to those  who  submitted a  sealed  bid or offer;  and  written
confirmation of notice and a listing  of all persons and  agencies receiving
notice should  be given to the  Board within five  working days after receipt of
the protest.

    (b)   Within  10  work  days after the  filing  of  the protest,  the agency is
required to file with the GSBCA a protest file.  Except  where the  agency
determines  under appropriate authority to withhold classified  or privileged
information or  information that  would give a competitive  advantage, the
protest file must include the following:
    (1)  A Contracting Officer's decision, if any.

                                 5-28.5
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    (2) The contract, if any.

    (3) All relevant correspondence.

    (4) Affidavits or statements of witnesses on the matter under protest.

    (5) All documents relied upon by the Contracting Officer in  taking the
        action protested.

    (6) A copy of the solicitation, the protester's bid or proposal  and, if bid
        opening has occurred and no contract has been awarded, a copy of
        any relevant bids and the bid abstract.

    (c) No later than  IS work  days after the  filing  of the protest, the
Contracting Officer must file its answer to the Board setting forth its defense
of the protest.

    M-5.804-3  GSBCA Authority to Suspend Award

    If  a protest contains a timely request for a suspension of procurement
authority, the Board will hold a hearing no later than 10 calendar days after
the filing  of the protest. The Board will suspend the procurement authority
(DPA) unless the agency establishes that:

    (1) Absent suspension, the contract  award is likely within 30 calendar
        days; and

    (2) Urgent and  compelling circumstances  which  significantly  affect
        interests of the United States will not permit waiting for the decision.

    M-5.804-4  GSBCA Hearings and Decision Authority

    (a) The Board will hold a hearing on the merits of a protest no later than
25 work days after the protest filing and a decision on the merits of a protest
will be issued  within 45  work  days  after the filing of a protest,  unless the
Board's Chairman  determines that  the unique  circumstances of the protest
require a longer period.

    (b) The Board is required to  conduct such proceedings and  allow  such
discovery  as  may be  required  for the  expeditious,  fair, and  reasonable
resolution of  the  protest. In  making a decision on the merits of protests
brought under this authority, the Board is  required to give due  weight to the
policies of  the protest  authority section of the CICA, and  the goals of
economic  and  efficient procurement.  The Board may take one or more of the
following actions:

    (1) The Board may dismiss a protest the Board determines is frivolous or
        which, on its face, does not state a valid basis for protest.
                                 5-28.6
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                                                     Rev. No. 2-9/30/85

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(2)  If the Board determines that a challenged agency action violates a
    statute  or  regulation  or  the  conditions of  any  delegation of
    procurement authority, the Board may suspend, revoke, or revise the
    procurement authority of the Administrator or the Administrator's
    delegation of procurement  authority applicable to the challenged
    procurement.

(3)  In addition  when the Board  determines  that  the agency  action
    violates a statute or regulation or the conditions of a DPA, the Board
    may also declare an interested party to be entitled to the  costs of
    filing and pursuing  the protest, including reasonable attorney's fees,
    and bid and proposal preparation costs.

(4)  The Board may also  order any additional relief which it is authorized
    to provide  under any statute or regulation in addition to actions
    authorized under the CICA, Section 2713.
                             5-28.7
                                                  Second Edition-4/84
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           EXHIBIT 5-1
SOURCE  EVALUATION STRUCTURE

sso
SEB
TEP
BEP
Over $5M

Head of the
Contracting Activity
Chairperson1
Chief of the Contracting
Office
TEP Chairperson
BEP Chairperson
Other Specialists
as assigned by SSO
Chairperson (PO)
At least two
other members
Chairperson (CO)
Contract Specialist
and Cost/Price
Analyst
Not Exceeding $5M

As determined by the Chief
of the Contracting Office
Established only when
requested by the Program
Office or SSO. The SSO
will determine the
organizational levels
of individuals to
serve if convened.
Chairperson (PO)*
At least two
other members
Chairperson (CO)*
Contract Specialist
and Cost/Price
Analyst
1 Head of the Contracting Activity or Designee
NOTES:
SSO~Source Selection Official * For procurements valued at $500,000
SEB— Source Evaluation Board or less, the PO may be the only member
TEP— -Technical Evaluation Panel of TEP, and the CO or contract specialist
BEP — Business Evaluation Panel the only member of the BEP.
             5-29
                                   Second Edition
                                   April 1984

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                              EXHIBIT  5-2
             TECHNICAL EVALUATION  SCORING FORMAT
                                (Example)
         Evaluation Criteria

I.       Adequacy of Technical Proposal

        a.   Literature search and
            investigation methodology

        b.   Proposed sources of
            information

        c.   Plan for assessing the
            value of each publication

        d.   Correlation of literature to
            economic aspects

        e.   Presentation of findings

II.      Project Management

        a.   Previous experience the
            project manager has had
            in this type of effort

        b.   Company resources
            available to  the project
            manager

        c.   Proposed plan  for use of
            personnel resources in
            connection with  work
            performance

        d.   Project  management
            organization

III.     Personnel Qualifications

        a.   Technical experience of
            principal project staff
            related to the  project
            performance

        b.   Educational  qualifications
            related to the  project
            performance

        c.   Relevant publications
            of proposed  personnel

            Total Score

                                  5-31
Numerical   Scoring
 Weight       Plan

   200


    40          3


    40          1
    40


    40

    40

   100



    25



    25




    25


    25

   100




    35



    30


    35
3.5


3

2
4.5
     Individual
       Scores
           24
28


24

16
           10
22.5
           10
           21



           12


           21

          196.50
                                                           Second Edition
                                                           April 1984

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                              EXHIBIT  5-3

                   ALTERNATE SCORING FORMAT

                 PROPOSAL  TECHNICAL  EVALUATION
RFP NUMBER AND  TITLE:

OFFEROR:
EVALUATED                              BY:
DATE:
MAXIMUM SCORE ATTAINABLE:          EVALUATION  SCORE:
         EVALUATION  CRITERIA -  SCORING  PLAN  -  SCORE
    Value                            Descriptive Statement

      0                 The element is not addressed or is totally deficient
                        and without merit.

      1                 The element is  addressed but contains deficiencies
                        that can be corrected only by major or significant
                        changes to relevant portions of the proposal.

      2                 Clarification  is  required.  Final  scoring of  the
                        element  will be made following limited discussions
                        or full negotiations if discussions or negotiations are
                        held with the offeror.

      3                 The proposal element is adequate.  Overall, it  meets
                        specifications.  However, comments should be made
                        on any perceived weaknesses or on areas in which an
                        offeror could improve.

      3.5               Indicates intermediate merit.  If  used, you  must
                        provide  a  narrative  to  explain  the  distinction
                        between values 3 and 4.

      4                 The  proposal element is good with  some superior
                        features.

      4.5               Indicates intermediate merit.  If  used, you  must
                        provide  a  narrative  to  explain  the  distinction
                        between values 4 and 5.

      5                 The proposal is superior in most features.
                                  5-33
                                                          Second Edition
                                                          April 1984

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                        EXHIBIT  5-3 (continued)

INSTRUCTIONS:  This form is furnished for your use in evaluating  proposals
received in response to the above-cited RFP.  Fill in all pages and  return to
the Chairperson of  the TEP.  Be as thorough and explicit as possible in your
responses.  Your professional evaluation of the proposal's responses as required
by  the  Statement  of Work,  technical proposal instructions,  and  technical
evaluation  criteria.  Specify  strengths  and weaknesses  for  each evaluation
criterion. If you have questions concerning any proposal, please contact the
Chairperson. For each of the criterion listed below, indicate in what ways the
proposal does or does not meet acceptable standards,  and assign a value from
the scoring plan.


I.    ADEQUACY OF TECHNICAL PROPOSAL - Maximum of 200 Points

     a.  Literature search and investigation methodology - 40 points.
         Comment on strengths and weaknesses:
         Scoring Plan Value:  	  Score:  	
                                                          Page NumbeKs)
     b.   Proposed sources of information - 40 points.
          Comments on strengths and weaknesses:
          Scoring Plan Value:  	  Score: 	
                                                          Page NumbeKs)
     c.   Plan for assessing the value of each publication - 40 points.
          Comments on strengths and weaknesses:
          Scoring Plan Value:  	  Score: 	
                                                          Page NumbeKs)
                                  5-34
                                                          Second Edition
                                                          April 1984

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                        EXHIBIT 5-3 (continued)
     d.  Correlation of literature to economic aspects - 40 points.
         Comments on strengths and weaknesses:
         Scoring Plan Value:  	 Score: 	
                                                         Page NumbeKs)
     e.  Presentation of findings - 40 points.
         Comments on strengths and weaknesses:
         Scoring Plan Value:  	  Score: __
                                                         Page NumbeKs)
II.   PROJECT  MANAGEMENT - Maximum of 100 points.

     a.  Previous relevant experience of the project manager - 25 points.
         Comments on strengths and weaknesses:
         Scoring Plan Value: 	 Score: 	
                                                         Page NumbeKs)
                                 5-35
                                                         Second Edition
                                                         April 1984

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                   EXHIBIT  5-3 (continued)
b.   Company resources available to project manager - 25 points.
    Comments on strengths and weaknesses:
    Scoring Plan Value:  	 Score:  	
                                                   Page NumbeKs)
c.  Proposed plan for use of personnel resources - 25 points.
    Comments on strengths and weaknesses:
    Scoring Plan Value:  	  Score:  	
                                                   Page NumbeKs)
d.  Project management organization - 25 points.
    Comments on strengths and weaknesses:
    Scoring Plan Value:  	  Score:  	
                                                   Page NumbeKs)
                            5-36
                                                   Second Edition
                                                   April 1984

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                        EXHIBIT 5-3 (continued)
lU.   PERSONNEL QUALIFICATIONS - Maximum of 100 Points

     a.  Staff technical experience in relation to project - 35 points.
         Comment on strengths and weaknesses:
         Scoring Plan Value: 	 Score:  	
                                                         Page NumbeKs)
     b.   Educational qualifications of personnel - 30 points.
          Comments on strengths and weaknesses:
          Scoring Plan Value: 	  Score:  	
                                                         Page NumbeKs)
     c.   Relevant publications of proposed personnel - 35 points.
          Comments on strengths and weaknesses:
          Scoring Plan Value:  	  Score:  	
                                                         Page NumbeKs)
                                  5-37
                                                         Second Edition
                                                         April 1984

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                         EXHIBIT 5-3 (continued)
                          SUMMARY  RATINGS
I.    Adequacy of Technical Proposal

     a.   Literature Search
     b.   Information Sources
     c.   Assessment Plan
     d.   Literature Correlation
     e.   Presentation of Findings

II.   Project Management

     a.   Experience of Project Manager
     b.   Available Resources
     c.   Personnel Resources
     d.   Management and Organization

III.  Personnel Qualifications

     a.   Staff Technical Experience
     b.   Educational Qualifications
     c.   Publications
Points Possible

      200

      40
      40
      40
      40
      40

      100

      25
      25
      25
      25

      100

      35
      30
      35

TOTAL SCORE
                                                            Value    Score
                           RECOMMENDATION


        Technically Acceptable  	 Technically Unacceptable

                    	  Conditionally Acceptable
Signature
     Date
                                  5-38
                                                           Second Edition
                                                           April 1984

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                          EXHIBIT 5-4

                OPTIONAL SCORING  PROCEDURE

               PROPOSAL TECHNICAL EVALUATION
RFP  NUMBER AND TITLE:

OFFEROR:
EVALUATED                          BY:
DATE:
MAXIMUM      SCORE      ATTAINABLE:  	  EVALUATION
SCORE:  	

GENERAL COMMENTS:
                              5-39
                                                   Second Edition
                                                   April 1984

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                         EXHIBIT  5-4 (continued)
TITLE OF CRITERION:
                            (ASSIGNED WEIGHT (in points)
       %      Value

        0        0
      20
      40
      60
1
70
80
90
100
3.5
4
4.5
5
          Descriptive Statement

The  element  is not  addressed,  or is totally
deficient and without merit.

The   element   is   addressed   but   contains
deficiencies  that  can be corrected  only by
major  or  significant  changes  to   relevant
portions of the proposal.

Clarification is required.  Final scoring of the
element   will  be   made  following  limited
discussions or full  negotiations if discussions
or negotiations are held with the offerer.

The proposal element  is adequate.  Overall  it
meets specifications.

None.

The  proposal element  is  good   with   some
superior features.

None.

The proposal is superior in most features.
                              (Score:  % of Assigned Weight
Comments:
                                  5-40
                                                          Second Edition
                                                          April 1984

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                                EXHIBIT  5-5

                             EPA FORM 1900-26
             CONTRACTING OFFICER'S EVALUATION Of CONTRACTOR PSRMUMANCI
                                            4. C3NTBACT HO.
                                                                  V ACTIVITY
                 *NO «oon«u
                                                                  I 10. VIMAI. CON-»«CT CC»T
                    III n«OOTt»TION iCh**H Mi
                               ie>.s
4. CVAIUAT
                                                          1CHC9UI.C
           V6
     V6
               CT3W1 IUSIMCU UMAOIMCNT l»»'CI«NCT ,-ClnM. o.» •/ f
                AMD AOVICC TO •(•sonnet. csNiiacwa TM.
                                                          «o» *uni«c SOUCITATIOXI
  C3MT»ACTi»o ormciin SIOHATUKC
                                             110. OAT«
                                                                   it. ovCMbb
                                                                    I  vo  *
               . IO-7M
                                                            Second Edition
                                                            April 1984

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EXHIBIT  5-5   (Continued)
                                                         INSTRUCTIONS

            Prepare .n .i-.pucite and distribute as follows:

                 Orgvul to be forwarded to Headquarters. Contractor Relations Section (PM-214). Washington. D.C. 3)-*<30.
                 Second »opy :o be retained by Contracting Officer for Contract File.

            The 'oilowing jibdetines are :o b« used by the cannacwij Orftc«n responsible in the preparation of 'tie fora at the
               r. ot the 'ethnical eruM and.'or acceptance of the final end product of the contract. The uuormicion is to be
           aH. a :i ui!l .TjMili 10 program >tat'f personnel or anyone else in the igency an orderly jnd uniform  •nettled of
                 and recording the effectiveness of contractors ji meeting their Contractual commitmenu for future cunsiJ«ra(ion
      a MMtiKi jwjijj   fiie .ntornuilon will be riletl in chr contract (lie. and with the contra:tor'j bidden ^pplicaiion :i!e  The
      Contracting Otfuer's b«sine»s rating of the tomnctor and (he Project Officer's tecnnical -attng •*!!! be entered on :he
      ajionuted biJJers list b> :he Contractor  Relations Section. .All lurm have been numbered to identnv >pe\.Ul<. trutniLtioni
      at :hey pertain to iiiJiviJiul items.

            Rate Contractor in area* luted below  by circling one of the 'ollowmg:

                 £ lEtcallumi.  VC I Very Goodi.  A (Avftafai  P 'Psori. ar U (Cnaauaiactnryj

      PronJe a detailed narrative or background material the rating u based on. Attach additional times. •!' i«».issary. *.o pronae
      detailed narrative.

       irmtsi

               PCLkOWIKIG ITEMS TO 81 PILLBO IN 3V TH6 CCNTNACT AOMINISTRATOR RBSPOKSlSLs PCM 'XE  CONTRACT

       I thru 4   Setf-ciptaiutoiy.

          5      Activity responsible for  the project wen as. Washington. D.C.. RTF. Cincinnati; Region No. or  Laboratory.

          o      Self-explanatory

                 •4t^O
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                            TABLE  OF  CONTENTS

                                 CHAPTER 6
M-6.000

M-6.100
M-6.101
M-6.102
M-6.102-1
M-6.102-2
M-6.102-3
M-6.102-4
M-6.102-5

M-6.102-6
M-6.102-7
M-6.103
M-6.103-1
M-6.103-2
M-6.103-3
M-6.103-4
M-6.103-5
M-6.103-6
M-6.103-7
M-6.103-8
M-6.103-9

M-6.200

M-6.201
M-6.202

M-6.202-1
M-6.202-2
M-6.20 3
M-6.203-1

M-6.203-2
M-6.203-3
M-6.203-4
M-6.204

M-6.204-1
M-6.204-2

M-6.204-2(a)
M-6.204-2(b)
CONTRACT ADMINISTRATION

INITIAL STEPS IN  MANAGING  CONTRACTS                  6-1
  AFTER AWARD

Reviewing the Contract                                       6-1
Preparing a Contract Administration Checklist                   6-2
  Required  Work                                             6-2
  Deadlines or Timeframes                                    6-2
  Deli ve rabies                                               6-3
  Administrative Duties and Persons Responsible                 6-3
  Testing, Inspection, and Quality Assurance                    6-3
  Requirements
  Government Obligations                                     6-4
  Payment  Provisions                                         6-4
Post-Award Orientation Conference                            6-4.1
  Determining the Need for a Conference                       6-5
  Preparatory Steps                                          6-5
  Agenda                                                    6-6
  Conducting the Conference                                  6-6
  Establishing Administrative Authority                         6-7
  Assuring  Project Quality                                    6-7
  Contractor Responsibilities                                  6-8
  Conference Report                                         6-8
  Orientation of Subcontractors                                6-8

MONITORING THE  CONTRACT WORK                       6-9

Introduction                                                 6-9
Relationship between Contract Type and Contract                6-9
Administration and Monitoring
  Cost Responsibility:  Fixed-Price vs. Cost-Reimbursement       6-10
  Cost Responsibility:  Risk and  Administrative Oversight        6-10
Socioeconomic Programs Affecting Contracting                  6-10
  Considerations in Monitoring Contracts Awarded               6-11
    Under Section 8(a) of the Small Business Act
  Payment                                                   6-11
  Termination                                                6-12
  Role of the Project Officer                                  6-12
Role of the  PO in Assuring Performance of                      6-12
  Required  Work
  Step One: Determining  Contractor Obligations                 6-13
  Step Two: Learning and Monitoring What  the
    Contractor Is Doing                                      8-13
    Post-Award Orientation Conference                        6-13
    Reviewing the Contractor's Work Plan                      6-13
                                                   Second Edition-4/84
                                                   Rev. No. 2- 9/30/85

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TABLE  OF  CONTENTS (Continued)
CHAPTER 6 (Continued)
M-6.204-2(c)
M-6.204-2(d)
M-6.204-3

M-6.205
.M-6.205-1
M-6.205-2
M-6.205-2(a)
M-6.205-2(b)
M-6.206
M-6.206-1
M-6.206-2
M-6.206-2(a)
M-6.206-2(b)
M-6.206-3
M-6.207
M-6.207-1
M-6.207-l(a)
M-6.207-l(b)
M-6.207-2
M-6.207-3
M-6.207-4
M-6.207-5
M-6.207-6
M-6.207-7
M-6.207-8
M-6.208
M-6.208-1
M-6.208-2
M-6.208-3
M-6.208-3(a)
M-6.208-3(b)
M-6.208-3(c)
M-6.208-4
M-6.209
M-6.209-1
M-6.209-2
M-6.209-3
M-6.209-4
M-6.209-5
M-6.209-6
M-6.209-7
M-6.209-7(a)
M-6.209-7(b)
M-6.209-7(c)
M-6.209-7(d)
M-6.209-7(e)
M-6.209-7(f)
M-6.209-8
M-6.209-9
    Monitoring by Inspection                                   6-13
    Monitoring through Progress Reports                        6-14
  Step Three:  Taking Appropriate Action to Enforce             6-15
    Any Contract Requirement Not Being Met
Role of the PO in Assuring Most Beneficial Performance          6-15
  Monitoring Performance                                     6-15
  Provisions of the Technical Direction Clause                   6-16
    Contracts Having a Technical Direction Clause              6-16
    Contracts Without a Technical Direction Clause              6-16
Role of the PO in Assuring Quality                              6-16
  Monitoring Contractor's Work                                6-17
  Monitoring Contractor's Personnel Assignments                6-17
    Key Personnel Clause                                     6-17
    Monitoring Assignment of Non-Key Personnel                6-18
  Monitoring Assignment of Work to Outside Subcontractors      6-18
Role of the PO in Assuring Timeliness of Performance            6-18
  Completion or Delivery Dates                                6-19
    Completion Contracts                                     6-19
    Term Form (Level-of-Effort) Contracts                     6-19
  Relation of Work-Plan to Timeliness                          6-19
  Obtaining Progress Reports                                   6-20
  Reading Progress Reports                                    6-20
  Analyzing Billings                                           6-20
  Dealing with Delinquencies                                   6-20
  Taking Remedial Action if Necessary                          6-20
  Summary                                                   6-21
Role of the PO in Monitoring Expenditures                       6-21
  Monitoring and Controlling to Avoid Waste                     6-21
  Exercising the Right to Suspend or Disallow Costs              6-22
  Monitoring Cost-Reimbursement Contracts                    6-23
    Limitation of Cost Clause                                  6-23
    Monitoring Status of Contract Funds                        6-23
    Overruns                                                 6-24
  Monitoring Labor-Hour Contracts                             6-25
Documentation of Contract Administration Actions              6-25
  Records,  Logs, and Reports                                   6-26
  Evaluation of Construction Contracts                          6-27
  Evaluation of Architect-Engineer Contracts                   6-27
  Verifying Invoices/Vouchers                                  6-27
  Payments                                                  6-30.1
  Payments Clause                                            6-30.1
  Determining Allowable Costs                                 6-31
    Reasonable Costs                                         6-31
    AUocable Costs                                           6-31
    Accounting Principles for Determining Allocability           6-32
    Costs Specifically Limited or Excluded                      6-32
    Processing Payments                                      6-32
    Paying a Fixed Fee                                        6-34
  Limitation of Cost Clause                                    6-34
  Conclusion                                                 6~34
                                                    Second Edition-4/84
                                                    Rev. No. 2- 9/30/85

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TABLE  OF  CONTENTS (Continued)
CHAPTER  6 (Continued)

M-6.300        ADMINISTRATION OF GOVERNMENT PROPERTY
                IN  CONTRACTOR'S POSSESSION

M-6.301        Introduction
M-6.302        Project Officer Duties and Responsibilities
M-6.303        Procedure
M-6.304        Actions Involving Other Property Accountable
                 Area Offices
M-6.305        Written Property Control Procedures by Contractors
M-6.306        Property To Be Furnished and/or Acquired After
                 Inception of the Contract
M-6.306-1        Needed Information
M-6.306-2        Disclosure of Unauthorized Property
M-6.306-3        Subcontractors
M-6.306-4        Accessory  Item
M-6.307        Monitoring Activities
M-6.307-1        Review of  Reimbursement Vouchers
M-6.307-2        Inventories
M-6.307-3        Inspections
M-6.307-4        Preventive Maintenance
M-6.307-5        Changes, Modifications, or Alterations to Property
                   by Contractors
M-6.307-6        Return/Transfer of Property
M-6.308        Transportation Considerations
M-6.309        Packing and Crating
M-6.310        Declaration Concerning Contamination  of Equipment
M-6.311        Trade-In of Property
M-6.312        Lost, Stolen, or Damaged Property
M-6.313        Disposal of Installed Personal Property
M-6.314        Sale of Property
M-6.315        Suspension of Payment
M-6.316        Short-Term Loan of Property
M-6.317        Revocable License Agreements
M-6.318        On-Site Transfer of Equipment to  a New Contractor
6-35

6-35
6-35
6-36
6-36

6-36
6-37

6-37
6-37
6-37
6-37
6-38
6-38
6-38
6-39
6-39
6-39

6-40
6-40
6-40
6-41
6-42
6-42
6-42
6-43
6-43
6-43
6-43
6-44
EXHIBITS
              6-1  Sample Contract Administration File Plan
              6-2  EPA Form 1900-27 - Project Officer's Evaluation of
                    Contractor's Performance
6-45
6-47
                                                         Second Edition
                                                         April 1984

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                           CHAPTER M-6.000

                     CONTRACT ADMINISTRATION
M-6.100  Initial Steps in Managing Contracts After Award
M-6.101  Reviewing the Contract

    (a)  The  first  step  of  contract  administration   is  to  review  the
requirements and specific obligations set forth in the contract.  The Statement
of Work (SOW) or the contract specifications contain  the  details of these
requirements and obligations.  It is important to note that although the Project
Officer may have written the SOW  or specifications it is imperative  that the
Project  Officer  review   the  entire contract package  in  order to  properly
discharge his/her responsibilities as a Project Officer.

    (b)  It is  a fundamental rule  of contract law that  the obligations of the
parties (in  this case, the  contractor and the Government) are established and
governed by_ the language of the contract.   During negotiations,  the parties
may have  made various proposals  and counterproposals,  but what  actually
governs is precisely what was agreed to by both parties in the contract.  The
final written contract is assumed to be exactly  what the parties  agreed to.
The words of the contract are taken to mean exactly what they say. If one of
the parties  has intentions contrary  to what is contained in the words of the
contract, that intention has no  legal  effect.   What  governs is what the
contract actually says, not what was meant to be said.

    (c)  The PO is concerned with determining what are to be the final results
and should review the contract along these lines.  The Contracting Officer or
the PO must  require the contractor to do that which is provided for in the
contract, within the level of quality  provided for in the contract.

    (d)  Contracts for equipment or supplies are  usually straightforward with
regard*to quality levels.  The contractor delivers the items called for,  they are
inspected, and either accepted or rejected. In cases where the contract is for
services or research, the  determination of results  is much more complex.  The
                                   6-1
                                                           Second Edition
                                                           April 1984

-------
Government is acquiring the effort of the contractor; there is a need to know
what kind of effort has been purchased, what the required result should be, and
what quality standards have been incorporated into the contract.


M-6.102  Preparing a Contract Administration Checklist

    (a)   A checklist should be made by the PO  for each  of the  major tasks
included  in the  contract.  The tasks should be outlined in the SOW  or in a
schedule of major tasks. If the SOW is of general nature, it will be necessary
to do some analysis  to determine what specific tasks will  be  required for
contract completion.

    (b)   This checklist serves  three purposes:

    (1)   As a baseline for project management;

    (2)   As a simple reminder sheet for monitoring contract completion; and

    (3)   As an aid in post-award orientation.

    (c)   The PO should list  the  important administrative  requirements for
each  task  required  by  the  contract.   They  include  administrative  duties,
Government obligations, deliverables, inspection requirements, deadlines, and
payment provisions.  The list should be simple and easy to use, yet it must be
complete and provide  a basis  for efficient  contract  administration.   The
step-by-step preparation of the checklist is discussed in detail below.

    M-6.102-1   Required Work

    (a)   In identifying the work the contractor is legally obligated to perform
under the contract, certain documents  describing the  contractor's job may
have been made a part of the  contract by the device of "incorporation by
reference."  This is  necessarily  done where selection of the contractor  was
based (in part, at least) on the merit of the  technical approach the contractor
proposed. In many cases, these documents are not actually attached to the
contract but may be obtained from the Contracting Officer.  Such materials
might be:

    (1)   Detailed specifications  that describe characteristics of what  the
         contractor is to provide.

    (2)   Contractor's proposal that describes features of what was proposed.
         It would include what was  to be provided by the contractor  and its
         approach or method.

    M-6.102-2   Deadlines or Timeframes

    The deadline or timeframe in which  each task is to be accomplished
should be established. Where  continuing services are required, the frequency
of delivery and  beginning and  ending dates  should be noted.  Tasks that  must
be  accomplished before  others can  go  forward must  be  highlighted.   Any
                                   6-2
                                                           Second Edition
                                                           April 1984

-------
"slack"  in the  timeframes and  absolute deadlines should be specially  noted.
When the contract specifies a number of days, weeks, months, etc., from date
of award the Project Officer should convert to specific calendar dates.

     M-6.102-3   Deliverables

     Identify and examine  the deliverables called for in  the  contract.  These
may not be the same  as  the  tasks.  For example,  the contractor may be
required to  investigate the effect of  extreme heat on a metaL  That would be
the task.  However, the deliverable might be samples of the metal or a  report
on the testing, or both.

     M-6.102-4   Administrative  Duties and Persons Responsible

     (a)   Identify and list  the Government's  major  administrative duties and
determine the person or persons responsible for  each.  This step is important
when the contract has any of the following features:

     (1)   The contract requires Government action for quality assurance.

     (2)   The  contract  requires  extensive   inspection  or   testing  before
         acceptance or approval by the Government.

     (3)   The contract requires  the Government to furnish certain property or
         information to the contractor.

     (4)   The contractor is required to perform work or  deliver at more than
         one location or at more than one time.

     (5)   The contractor is providing  services or  products that benefit several
         offices, divisions, or agencies.

     (6)   The  Contractor  must  coordinate activities with  several offices,
         divisions, or agencies.

     (b)   Where administrative  responsibility  is not  clearly spelled out  in the
contract, program personnel should coordinate with the Contracting Officer to
assure that their roles  are clearly defined and  understood, that Government
obligations  will be carried out properly, and that the contractor's efforts will
be fully monitored.

     M-6.102-5  Testing, Inspection, and Quality Assurance Requirements

     Special requirements  for testing,  inspection, and  quality assurance in a
contract almost always impact costs  because the Government is  in  effect
buying the  extra effort from the contractor that is needed to perform these
functions.   Since  it  is  the  responsibility of the   PO  to ensure  that  the
Government gets what has been purchased, enforcement of these requirements
is important.  The  PO  should  examine  the contract and note  any  special
testing, inspection, or quality assurance requirements to the appropriate task.
                                   6-3
                                                           Second Edition
                                                           April 1984

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    In particular, the Project Officer should  pay careful attention  to  the
quality  assurance requirements as  documented in  the  Quality Assurance
Project  Plan. The QA Project Plan will be incorporated in the contract at the
time  of award  if the  plan has been submitted as part  of  the technical
proposal.  If the  QA Project Plan is a contract deliverable, the  Contracting
Officer  may  incorporate the plan in the contract by issuance of a change
order.  Any  substantive revisions  or additions to  the  QA  Project  after
incorporation in  the contract must be  accomplished by a  change order.  It is
the PO's responsibility to ensure that the contractor  maintains a current QA
Project  Plan. All substantive changes require the approval of the PO and the
QA Officer in the same manner as the review and approval of the QA Project
Plan when submitted originally.

    M-6.102-6   Government Obligations

    (a)  It is important to  determine the obligations  of the Government
because just  as  the Government pays more for  special requirements, it pays
less  when it  undertakes certain responsibilities. For example, the  contract
may  state   that  the   Government   will   furnish   certain   property
(Government-furnished property, or GFP) or information to the contractor. If
such GFP or information is not provided within the timeframe stated  in  the
contract,  the contractor may have  an excuse for a delay in performance or
may have a basis for a monetary claim against the Government.

    (b)  Each obligation of the Government  should  be  listed  next to  the
associated  task   of  the contractor.  The  Government  person  or persons
responsible for respective obligations should be listed as well.

    M-6.102-7   Payment Provisions

    The last  step is to examine any contract provisions  relating to payments.
If progress  payments  are  authorized,  determine   when  and under  what
conditions the progress payments may  be made.  Where partial payments are
authorized, they  should be noted and the conditions for such progress payments
indicated.  Partial payments are usually associated with accomplishment of
major tasks.  For example, in the case of a contract for a study,  payments may
be authorized after various required interim reports are delivered.  It must be
kept  in mind that there is a  danger in the use of this technique.  (The
Contracting Officer will give the procurement extensive consideration  before
it is used.) The  danger is that each report delivered is a priced item  in the
contract.  When inspected, accepted,  and paid for, there is no recovery.  Often
Project  Officers view the payment as interim or of a progress payment  nature
and if the contractor does not  perform, the funds will be recovered. This is
not true! The technique discussed above is no different from a contractor who
has partial payment provisions  in a  contract to  purchase  100 desks.  If 5 are
shipped, inspected, accepted, and paid  for,  there is no recovery, barring fraud
or latent defects.
                                  6-4
                                                    Second Edition-4/84
                                                    Rev. No. 2-9/30/85

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M-6.103   Post-Award Orientation Conference

    (a)   Once the contract administration checklist has been prepared and the
contract  has  been  reviewed,  it  is  often of  value  to hold a  post-award
orientation conference. A conference will help ensure that  all portions of the
contract are clearly understood and  that  all parties are certain  as to  their
obligations.

    (b)   The fundamental task of the Government contract administators is to
ensure that  the contractor performs the contractual obligations.  Post-award
orientation can be a useful device for enhancing good contractor performance
by:

    (1)   Increasing assurance  that  the  contractor  understands  what  the
         contract requires;
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    (2)  Clarifying  the   roles  of  Government   personnel  who   will  be
         administering the contract;

    (3)  Clarifying the contract administration procedures to be used.

    M-6.103-1  Determining the Need for a Conference

    (a)  When it  is determined that the contractor  may  not have a  clear
understanding of the scope of the contract, its technical details, or the rights
and obligations of the parties, an orientation conference may be held.  If the
potential problem  areas do not warrant a full conference (for example, if the
procurement is relatively simple), the same effect may be achieved by simpler
means such as a letter to the contractor.

    (b)  Factors used in determining  the need for a conference include:

    (1)  The relation of the contract  to other programs or needs;

    (2)  Technical complexity;

    (3)  Urgency of the delivery schedule;

    (4)  The contractor's record of past performance;

    (5)  The nature and extent of any pre-award survey  that  may have been
         conducted; and

    (6)  The contract type and its dollar value.

    M-6.10 3-2  Preparatory  Steps

    (a)  After  the  need  for  a  conference  has  been   established,  the
Contracting Officer or designated representative (usually the  PO) must take
certain preparatory steps. These are (i)  conducting a  preliminary meeting of
Government  personnel, (ii) setting a time and place for  the conference, (iii)
notifying the participants, (iv) preparing an agenda,  and (v) appointing a person
to chair the conference.

    (b)  At  the preliminary meeting  of Government  personnel,  a detailed
page-by-page review of the contract  and  the SOW should be held to determine
all of  the Government required actions, assure  that all Government personnel
fully  understand  their respective responsibilities  in  administration of the
contract, and establish a  full understanding and common position with respect
to both the  contractual delivery requirements and  contractor  responsibilities.
At this time, all delivery dates that  have been specified  in the contract as  a
period of time "after date of contract award" should be converted to calendar
dates for purposes of discussions with the  contractor.

    (c)  The  contract administration checklist  should be utilized as a  basic
guide to this review.
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    (d)  Everyone participating in the preliminary meeting should know  that
all aspects of contract administration depend upon a complete understanding
of  the  SOW  and/or  specifications.   While  the  contractor is  primarily
responsible for understanding the work requirements, it is encumbent upon the
Government  to make correct interpretations of the technical documents in
that they  are required  for  evaluating  performance  and  determining  the
responsibility for any variation from  what is intended.  The assumption  that
the  Government understands  its own  requirements is  not   always valid.
Specifications sometimes are ambiguous and that is not always uncovered until
after work has started. Requirements for placing a square  peg  in a round  hole
are not  unheard of in Government  contracting.  Many  times,  neither  the
Government  nor the contractor is aware of the  practical  impact  of  the
requirements until after the work has begun.

    M-6.103-3 Agenda

    An agenda for the conference should be created  that covers all items that
need clarification or discussion with the contractor to avoid  misunderstanding
and to facilitate contract administration. These items might include:

    (1)  Special contract provisions;

    (2)  Reporting requirements;

    (3)  Specifications or other work requirements;

    (4)  Quality control and testing/inspection requirements;

    (5)  Monitoring and measuring contract progress;

    (6)  Billing and payment procedures; and

    (7)  Oeliverables and delivery dates.

    M-6.103-4 Conducting the Conference

    (a)  The Contracting Officer, or  assigned representative, and technical
personnel  should  attend  the  conference  for   the  Government.   Similar
contractor personnel should also attend.  It must  be pointed out at the start
that the  conference purpose is  to explain and clarify contract requirements
and not to make any changes to the  contract.  If a change  is necessary, the
nature of the proposed change and its extent should be clearly identified  and
made by  the Contracting Officer. The other Government  personnel are there
to generally provide information, and  not to direct the contractor. The limits
of their authority should be made clear to the contractor.

    (b)  It is recommended  that a  checklist  be  used  to ensure  that all
essential  items are  covered  during  the  conference.   Each item should be
discussed to  the  extent necessary  to  be  sure  that  everyone  has  a   full
understanding of the rights and responsibilities of the parties.
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    M-6.103-5   Establishing Administrative Authority

    (a)  The contractor should be  informed of the authority  of  the  Project
Officer and the Project Officer's contract monitors, if any, who are assigned
to the administration of the contract. This can  best  be done by jiving the
contractor a copy of the letter from the Contracting Officer to the PO which
defines  the authority  of the  Project  Officer.  The  Government should be
advised of the authority of the contractor's personnel.

    (b)  The contractor must be  made aware  that the Government is not
bound to make  contract adjustments as a  result  of actions taken by either the
PO or his monitors, unless such action has been'specifically authorized in the
letter of designation or by  the contract.  Such a statement may be viewed by
some  as undercutting the authority of the PO.  However, it is not the  case.
The statement  is made to protect  the PO from potential personal liability in
the event the contractor takes actions or  incurs  costs outside the scope of the
contract based upon what seemed to be the authority of the PO.

    (c)  As  part  of  the  discussion  of  authority, contractors  should  be
instructed  on the proper routing of correspondence. They must be informed
that technical  matters  should  be addressed  directly  to the PO,  whereas
matters pertaining  to  questions of fact on the terms and conditions of the
contract must  be  sent directly  to  the Contracting  Officer.  Unless the
contract states otherwise,  the contractor should be requested to identify all
correspondence  with  the applicable  contract  number and  to identify the
appropriate paragraph numbeKs) of the contract to which reference is made.

    M-6.103-6   Assuring Project Quality

    (a)   A  very  important  aspect of  work to be  performed  is the quality
assurance/quality control (QA/QC)  program the contractor intends to  utilize.
The contractor's reports, submittal requirements, and  the Quality Assurance
Project  Plan (QAPP)  form  the  baseline  upon which the contractor's results
may be  compared for acceptability with respect to technical and data quality
objectives.  The QAPP should provide for efficient and systematic inspection
of all work to be performed, and for effective corrective actions when needed.

    (b)   The Government's inspection plan is somewhat more limited than that
of the contractor.  Accordingly, the  Government must be satisfied that the
contractor's QAPP and other  appropriate reports to the PO will result in the
required level of data quality.  The Project Officer should routinely  receive
copies of all contractor inspections, internal audits, guidelines,  checklists, and
instructions  to  contractor  personnel.   The contractor's QAPP  must  be
acceptable  to  the  Government;   after  suitable  review  and  analysis, the
Government should  advise the contractor in writing of its acceptability.  The
QAPP review shall be done  by the  Project Officer and the Quality Assurance
Officer (or his or her designee). The approved QA Project Plan must be  made
a part of the official contract in order to be binding on the contractor. Any
revisions to the QA Project Plan will  require the  approval of the PO and the
QA Officer.
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    (c)   The Statement of Work should also provide that one or more on-site
EPA quality assurance technical systems (qualitative) audits may be performed
during the project duration. These external quality assurance procedures will
be  performed  by the  EPA Quality  Assurance Officer  or by  his  or her
independent third party deisgnee.  Selection of the specific areas of focus for
systems audits will be commensurate with the scope and needs of the program.

    (d)   In addition  to the above, the Statement of Work should provide that
contractor participation in one or more EPA (quantitative) performance audits
may  be required  during  the project  duration.  The  purpose  of  these
performance  audits will be  to  assure  and document that data quality meets
project  objectives.  Performance  audit techniques could involve the use of
reference materials  of known composition or value and/or split samples for
independent  analyses,  independent calibration checks  on individual  system
components,  and/or  the  use of colocated samplers. A complete record of
testing  information  (including  printouts graphs, calibration  charts, and  all
other pertinent  information used  to arrive at the  reported  results) shall be
submitted with test results.

    M-6.103-7   Contractor Responsibilities

    It is important that contractor personnel leave the conference with a full
understanding as to their  responsibilities with respect to the contract. These
include  responsibilities in  managing  the  work effort,  safeguarding  GFP,
meeting the provisions of  the contract, and any other specific items contained
in the contract.

    M-6.103-8   Conference Report

    A report of the  conference should be written and sent to all persons who
attended. It  should cover factually all items discussed at the conference and
identify any actions to be accomplished and timeframes, if any.

    M-6.103-9   Orientation of Subcontractors

    Any subcontractors must be oriented by the prime contractor. It is the
responsibility of the prime contractor to see that all subcontractors have all
required instructions, interpretations,  and understanding of the prime contract
to properly perform their  work.  If  necessary,  the Government may  have
representation  at any subcontractor orientation  conference,   but  should
coordinate this with the prime contractor.
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                                M-6.200

                 MONITORING  THE CONTRACT  WORK
M-6.201  Introduction

    Whenever the Government  contracts for goods and  services it  is most
interested  in  obtaining  the  following  performance  elements from  the
contractor:

    (a)  Delivery of the specific items called for in the contract;

    (b)  Avoidance of waste of time and/or money;

    (c)  Performance that increases the benefit of the contract;

    (d)  Good quality;

    (e)  Performance in a timely fashion; and

    (f)  Performance within the budget

    The following sections of this  Chapter discuss what  measures a Project
Officer can take to ensure that the  Government obtains these performance
elements.
M-6.202  Relationship Between Contract  Type and  Contract Administration
         and Monitoring

    There are over a dozen types of contracts noted in the FAR.  Each type of
contract establishes a different relationship between the parties and requires a
different approach to contract administration.
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    M-6.202-1  Cost Responsibility;  Fixed-Price vs. Cost-Reimbursement

    (a)   Contracts vary   as  to  the  degree  and   timing   of   contractor
responsibility for the cost of performance and the amount and type of profit
incentive contained in  the contract.   Contract  types  may  be  listed  in
decreasing order  of  contractor responsibility for  cost performance.  The
contract  type  with the  least contractor  responsibility  for the  cost  of
performance is the cost-reimbursement  type contract where the fee is fixed.
At the  other end  of the spectrum is the firm fixed-price type  of contract,
where the price to the  Government is fixed, and the contractor has maximum
responsibility for cost of performance.

    (b)   All  fixed-price completion contracts  require  the  contractor  to
guarantee  performance   of  the   work  for  a   fixed   price,   while  the
cost-reimbursement completion contract only requires  the  contractor  to use
its best efforts to perform  the work, while being paid all allowable, allocable,
and reasonable costs up to a ceiling, plus a fee, if provided for.  There are
various  types of contracts that combine features of these types of contracts.

    (c)   Some  interesting  comparisons  can  be  made between the payment
provisions used in these two contract types.  In a fixed-price contract, a fixed
amount  will  be  paid for  all  the work  to  be  performed,  whereas  a
cost-reimbursement contract provides for an open amount of funds up to a
ceiling which may not  be exceeded except at the contractor's risk.  If  work is
performed for less  than what the cost estimate is the contractor will  be paid
the lesser amount. Where the  work cannot be performed at the estimated
cost, the Government has several options [see M-6.208-3(c)].

    M-6.202-2  Cost Responsibility:  Risk and Administrative Oversight

    (a)   Cost responsibility  is considered in terms of risk and  uncertainty.
Where there are many  uncertainties and a high degree of risk, it is  reasonable
that the Government assume some portion of these risks and uncertainties.  If
predictable risks and few uncertainties  exist, then  it is reasonable to  expect
the contractor to bear  the major brunt of the risks.

    (b)   The degree of  contract  oversight by the  Government is directly
related to the assumption of risk by the Government. The greater the risk, the
greater   should  be   the   Government's   oversight   of   the  contractor's
performance.   This is the basis for the different  administrative  levels  of
activity with respect to different types of contracts.


M-6.203  Socioeconomic Programs Affecting Contracting

    (a)   The volume of Government contracting  in economic  terms provides
an  opportunity  to  achieve  certain  national  social   policies.   This  is
accomplished by  including  clauses in contracts for advancing certain social
objectives, including:
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    (1)  Establishing fair wages and working conditions;

    (2)  Establishing fair employment practices;

    (3)  Promoting small and small disadvantaged business firms;

    (4)  Protecting the environment;

    (5)  Encouraging humane treatment of animals;

    (6)  Promoting domestic business and the economy;

    (7)  Reducing unemployment and providing training and job opportunities;

    (8)  Promoting effective use of resources;

    (9)  Rehabilitating the handicapped and/or prisoners.

    (b)  Many complicating factors are introduced to the procurement process
by  these  socioeconomic  objectives  [see  M-3.106-8(e)].   Agencies   must
determine which  regulations apply to a proposed contract, compliance  status
of  the  successful bidder,  and  wage determinations in  bid  solicitations.
Consideration of  these  factors requires the  allocation of personnel  and
resources to conduct investigations,  make reports, and keep records. From a
contract administration  perspective, the socioeconomic  program  which has
significant  contract monitoring  implications is the Socially and Economically
Disadvantaged   Business   Program   operated  by  the   Small  Business
Administration, commonly referred to as the "8(a) Program."

    M-6.203-1  Considerations   in   Monitoring  Contracts   Awarded   Under
               Section 8(a) of the  Small Business Act

    (a)  Under Section 8(a) of the Small  Business Act,  the SBA is  authorized
to contract with Federal  agencies and then to  subcontract the work to socially
and economically disadvantaged  small businesses. Any type of service may be
contracted for under the  8(a) program.

    (b)  SBA  delegates   the administration   of  8(a)  subcontracts to  the
procuring agency, which  gives  rise  to  certain  differences  in contract
administration  of these  8(a)  subcontracts.  For  example,  supplemental
agreements or other changes must be accomplished by  two changes: one with
the  SBA  prime  contract, and  the  other  between   the  SBA  and  the
subcontractor.   POs   must  take  care  in  "suggesting"  changes  to  8(a)
subcontractors;  8(a)  firms  are often  inexperienced  and  may  incorrectly
interpret  suggestions, which in  turn  could lead to  claims  against  the
Government for constructive changes.

    M-6.203-2  Payment

    8(a) contracts may call for advance payments since these small businesses
often do not have the cash flow to finance their contracts  to completion or
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until  receipt of progress payment.   Most other types of  contracts  do not
provide for advance  payments.  POs should  always remember to expedite
payment requests for small  business  contractors  to avoid  disruptions  in
contractor performance caused by cash flow problems.

    M-6.203-3  Termination

    The 8(a) subcontractor is  subject to the termination clauses contained  in
the prime  contract  with  SBA.   However,  independent  exercise  of  the
termination right by the  agency is restricted. Normally, the SBA will try  to
reach an agreement  to  modify the  requirements of  the  contract to avoid
termination.  If this fails, the agency  may actually terminate the contract
with SBA, who cannot be  held liable for any excess costs or repurchase.  If this
occurs, SBA in turn will terminate the subcontract.

    M-6.203-4  Role of the Project Officer

    (a)  Assisting  the subcontractor to become a viable business  firm  is a
special  responsibility  in  the administration  of  an  8(a) contract.   This
responsibility may, at times, be in conflict with the responsibility  to assure
performance on the contract.

    (b)  While  assuring   successful   performance under  the  contract  may
require  a special effort by the PO, this special  effort may  result in a better
product or service than might otherwise have been obtained. In addition, the
legality of "sole sourcing" to an 8(a) firm allows the PO to gain  the benefits  of
their special efforts on follow-on or succeeding contracts.


M-6.204 Role of the PO  in Assuring  Performance of Required Work

    (a)  Performance assurance is key to the contract administration function
and agencies rely on the PO to carry this out.  POs can make a  contribution  of
the highest  value  by  reviewing and  carefully considering the  information on
the  contractor's  work   in process  and by  taking  intelligent   steps  as
appropriate.  Project Officers  cannot assume that all contractor personnel are
familiar with the  terms  of the contract. While some personnel may  become
familiar with the SOW through involvement in the proposal preparation,  they
may not always be the people who are assigned to work under the contract.
When they are  actually working on the contract, they may  have subordinates
who are not as familiar with the contract  terms.  On long jobs,  personnel
turnover may make this problem worse.

    (b)  In cases where  all contractor personnel are familiar  with  the SOW,
there is sometimes a temptation to cut a corner  or provide what appears to be
just as good as  what was called for in the contract. Under the  stress of time,
items may "fall between the cracks." Specific characteristics or elements
may be overlooked in both the  work effort and  progress reports.

    (c)  Accordingly, it  cannot be assumed that the contract effort  will be
performed  exactly as required.  Government  personnel must actively  oversee
the work effort and monitor the contractor's  performance  with the objective
of assuring that such performance meets the requirements of the contract.
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    (d)  History  has shown  that  when  the PO does not  or cannot  devote
adequate time to determine  what is actually being done under the contract,
the results can be disastrous.  The Project Officer is the eyes and ears of the
Contracting  Officer  and as  such must  be aware of  the responsibility  of
assuring that the work performed  is exactly in accordance  with the minimum
terms of the contract.

    M-6.204-1 Step One; Determining Contractor Obligations

    (a)  The contract should  be reviewed to determine the exact obligations
of the  contractor. The SOW states these obligations.  In some contracts, task
orders are  used to initiate contract performance.  The  PO must examine the
description of work in each task order so that the contractor's obligations can
be listed and monitored.

    (b)  The Project Officer  must keep track of any change orders issued by
the Contracting Officer under the Changes clause of the contract.  These are
legally effective in changing  the  description of  work  to be  done  and,
accordingly, the obligations of the  contractor.

    M-6.204-2 Step Two;  Learning  and Monitoring What the Contractor Is
               Doing

    The Project  Officer must  take action to  know  what  tne contractor is
actually  doing and plans to do.  Contractor's  plans must be reviewed  with
respect to the SOW to assure that misdirected efforts are avoided.

    M-6.204-2(a)    Post-Award Orientation Conference

    This conference is very useful for review of the terms of the contract,
determining what the contractor plans to do, avoiding any misunderstanding of
contractor  obligations,  and  establishing a full  understanding  of what is
expected of the Government.

    M-6.204-2(b)    Reviewing the Contractor's Work Plan

    The contractor's plan of work may be part of the proposal or  may become
available after the  contract has  been awarded.  The  PO should review the
contract to see if such a plan is required, and if so, see  that it is submitted as
required. If such a  provision is not in the contract, and the PO believes it is
important, then the Contracting Officer should be consulted with regard to a
change to the contract requiring submission of such a plan.  Work plans are key
tools in monitoring a contractor's performance.

     M-6.204-2(c)   Monitoring by Inspection

    (1)  Inspection clauses in the contract give the Government the right to
         inspect  and test the work performed under the  contract.  This right is
         standard under Government contracts; it is derived from the concept
         that  the Government  has  the  right to  determine if the goods or
         services offered are  what was ordered.  This right can be exercised at
         any stage and place of work performance.
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(2)  Inspection of the contractor's work involves the use of spot  checks,
    scheduled inspections, random sampling, user reports, and periodic
    review of the contractor's quality assurance and control programs.

(3)  The need for inspection will vary from case to case and is dependent
    upon the nature of the work being performed, the contractor's  past
    performance history, and the criticality of the work performance. If,
    for  example,  a  contractor  has an  outstanding quality  assurance
    program and performance  levels, the amount of monitoring  may be
    reduced.

(4)  The decision of whether or not to use inspections as the main  tool for
    monitoring performance is dependent upon many factors,  including:
    type of work, type of contract, place of performance, and feasibility
    of  performing  inspections.  Production  of standard,  "off-the-shelf"
    items under fixed-price  contracts  may require  lower  levels of
    monitoring, whereas  cost-reimbursement  type  contracts  frequently
    require  a  high  level  of  monitoring.   Careful  attention  to  the
    monitoring and inspection  levels required is a key  responsibility of
    the PO.

M-6.204-2(d)   Monitoring through Progress Reports

(1)  The use of contractor's written progress reports can be of significant
    help in providing  a picture  of work progress under the contract.  The
    PO  is responsible for ensuring that the contractor  complies  with
    reporting provisions.  When reports are part of a contract,  they have
    been included in the contract price or cost. Accordingly, the  Project
    Officer should ensure that  the Government gets exactly those reports
    required, in the time frames provided for, and in the detail required.
    Care should be taken not to require extra reports above contract
    requirements, as  they could lead to a claim against the Government
    for increased costs.

(2)  Information  required  by  the  Project  Officer  is   important  in
    evaluating progress and for making management decisions relating to
    the  contract.  However, although the  information flow provided must
    be adequate to the requirements of the Government, it should not be
    so detailed and involved as to create unnecessary administrative and
    financial burdens on  the contractor.  Additionally, the Government
    personnel assigned to review the contractor's reports must be  capable
    of assessing the included information.

(3)  Often the  contractor  is  reluctant  to  make  certain  information
    available.  This is caused  by a  tendency to withhold "bad news" or
    information  that  may  indicate  that   the  contractor  is   having
    problems.  Contractors  generally believe that things can  be  worked
    out  given  a little time.  Both  the  contractor and  the  PO must
    remember  that the reason  for progress reports  is  to enable the
    Government to determine  whether the contract is being performed
    properly. Accordingly, it  is  vital that  the  PO  ensure the  timely
    submission of progress  reports from  the contractor and review the
    reports with great care.
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    (4)  The Project Officer  must be aware of his or her responsibility  to
        verify what is said in  the reports, especially if they appear to  be
        written in general terms. The PO can accomplish this by requesting
        copies  of designs,  results,  drafts,  or other data  that should  be
        available, if the reports are accurate. There is always the possibility
        that  lower level employees  of  the  contractor may have  misled,
        intentionally or  not, their supervisors  who  then approve a  report
        indicating greater progress than that which has actually been made.

    M-6.204-3 Step  Three;   Taking  Appropriate   Action to  Enforce  Any
               Contract Requirement Not Being Met

    (a)  When  a   Project  Officer  discovers  that  a  specific  contract
requirement is not being met by  the contractor, he or she should call attention
to the discrepancy and seek a voluntary commitment by the contractor to take
remedial action.  In such a  case,  the PO must take appropriate  follow-up
action to ensure that remedial action is taken.

    (b)  In  cases  where  the  contractor disputes  the  existence  of  the
discrepancy, claiming the requirements of the contract are, in fact, being met,
the PO should determine the grounds for the contractor's claim.  At the same
time, the  Contracting Officer must be kept informed of  the situation. If the
contractor's position is  clearly not  reasonable, the  Project  Officer should
inform the Contracting Officer in writing.

    (c)  The PO's primary job is to ensure that the contractor performs  what
the contract calls for. The  Project Officer must not direct the contractor to
do anything beyond or at variance with what  is in  the contract. If so, such
direction would violate the limit placed on the PO's authority which is:

        The  Project Officer  is  not  authorized  to make  any
        changes under the  contract  which alter, in any way, the
        requirements  of  this  contract,  the  contract  price,
        contract terms, or conditions.

    (d)  If the contractor refuses to comply with the direction of the PO, or
asserts that the direction is without authority, the matter must be referred to
the Contracting Officer.


M-6.205   Role of the PO in Assuring Most Beneficial Performance

     In many  types  of contracts,  the  description of work is  of  a  broad and
general nature.  The contractor can satisfy the requirements of the contract in
a number of ways.  It is  important for the PO to recognize that he or she will
be concerned with directing the  effort so that maximum results are achieved.

     M-6.205-1  Monitoring Performance

     The most important thing the PO can do is know what the contractor is
doing and where the contractor is heading. This is the best way to assure that
performance can be directed to  proceed  along lines that are beneficial.
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    M-6.205-2   Provisions of the Technical Direction Clause

    Contracts that deal with  new lines of inquiry or cover areas where new
directions    may   present    themselves   as   work   unfolds   (usually
cost-reimbursement type contracts) often contain a provision for Government
guidance of the contractor's  effort: the Technical Direction clause.   When
several approaches are available,  but some appear more useful  than others,
and all fall  within the  requirements of  the  contract, the PO may provide
technical direction as  to which area or line of approach is to be undertaken.
Such direction may be provided only if it is within the agreed description of
work and changes neither the description of work nor the contract.

    M-6.205-2(a)  Contracts Having a Technical Direction Clause

    Technical direction should be  coordinated in advance with the contractor
and reduced to writing,  with a  copy  to the Contracting  Officer.  If the
contractor thinks the technical direction requires work that is above or beyond
that which is required by the contract,  the matter must be referred to the
Contracting Officer.

    M-6.205-2(b)  Contracts Without a Technical Direction Clause

    Even though a fixed-price contract is without a technical direction clause,
such direction may, under unusual circumstances and with the consent of the
Contracting  Officer be given. Usually, contracts for  research are  of  a
cost-reimbursement  type  (contractor  is compensated  for  all allowable,
allocable,  and reasonable costs for work within the contract task or  work
description), and consequently, the contractor is willing to undertake a line of
effort at the direction  of the Government. However, because of the nature of
a fixed-price contract  (the contractor assumes all cost  risk of performance)  it
is not  advisable to provide technical direction without a contact provision.
Technical direction in  fixed-price contracts  often  lead  to  constructive
changes. In addition, the fixed-price contractor may not be willing to follow
such direction, if the  contractor  believes it  will increase costs and reduce
profits.


M-6.206   Role of the PO in Assuring Quality

    (a) It is the responsibility of the  Project  Officer to define  the data
quality objectives (DQOs) for the  work to be performed consistent with the
Statement of Work in the  contract.  The quality of  the contractor's  work
should  reflect the DQOs established. This is critical if the defensibility of the
results is to be documented and known.

    (b) Contracts for supplies can usually specify the physical attributes that
will result in an acceptable product. Contracts for services, particularly those
involving creative work  or  investigations, typically  cannot describe  specific
attributes of the final result.  Quality control in services contracts can best be
monitored by monitoring both the personnel assigned  to the  work  and the
methods used by the contractor as the work progresses.
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    M-6.206-1   Monitoring Contractor's Work

    (a)  The quality of a study  or analysis depends to a great extent on the
methods used.  The  validity  of the  conclusions may be suspect if the
contractor failed to take into account all data or relevant factors.  Interim
conclusions  that  are suspect may  seriously undermine all  follow-on efforts
resulting in a total waste and possible requirement for a new start.

    (b)  Generally,  in R&D type  contracts,  the  PO is  responsible  for
continuous monitoring of the contractor's efforts, as they progress, in order to
assure satisfactory quality of work performed. This  does not  mean taking
charge of the contractor's work effort. It does mean:

    (1)  Clearly  defining  the technical and  data  quality expectations  or
        objectives to be achieved;

    (2)  Using  technical expertise to  identify contractor actions or lack  of
        action that affect the quality of the work;

    (3)  Identifying and calling the contractor's attention to deficiencies;

    (4)  Keeping well-informed of what the contractor is doing;

    (5)  Working out appropriate action to remedy deficiencies.

    M-6.206-2   Monitoring Contractor's Personnel Assignments

    Quality of the contractor's output is dependent upon the competence  of
its personnel.  In many cases, the best way to assure quality  of work performed
is to assure  that personnel with the  necessary capabilities,  qualifications, and
experience are assigned to  the work  effort.   This  is true in  contracts  for
services calling for creative  or conceptual development or analysis.  However,
POs should  never appear  to act  as the contractor's  personnel department.
These  functions  are  the contractor's,  not the Government's.  The  Project
Officer's role is one of review and working with the contractor to remedy any
inadequacies.  The PO  should review the contract to see what has been agreed
by the contractor along these lines.

    M-6.206-2(a)  Key Personnel Clause

    (1)  A Key Personnel clause may be included in a contract to assure that
        the  work is  performed or managed  by personnel with the proper
        qualifications. In this clause, the contractor:

          (i)  Promises to assign to the contract work certain named indivi-
              duals (sometimes indicating the capacity in which each will act);

          (ii)  Promises not to remove or divert any of the named "key person-
              nel" from the contract unless the Contracting Officer consents.

    (2)  Through monitoring, the PO can assure that key personnel have not
        been removed or diverted from the contract work and that their level
        of effort is as required for satisfactory contract performance.  Key
        personnel should be working in those  capacities that were indicated
         by the contractor.
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    M-6.206-2(b)  Monitoring Assignment of Non-Key Personnel

    (1)   The competence of non-key personnel is also important  in assuring
         the quality of the work performed. If contractor personnel  do not
         appear satisfactory with  regard  to training, experience, or other
         factors, the PO should direct this to  the attention of the contractor.

    (2)   Under cost-reimbursement contracts, the Project Officer may  learn a
         great  deal about  the  number and types  of  contractor personnel by
         reviewing invoices.  Also,  the Project Officer is normally permitted
         to  ask  for   and  receive  information  (e.g.   resumes,  position
         descriptions, etc.) that  is reasonably required to determine  if the
         personnel  are  qualified  to receive  their  rates  of  pay.   Such
         information  would shed  light  on  personnel   qualifications   and
         functions. Additionally,  the  Project Officer may ask for and receive
         this information even if pay is not an issue.

    M-6.206-3  Monitoring Assignment of Work to Outside Subcontractors

    (a)   Under  the provisions  of  the  subcontracts clause  contained in
cost-reimbursement  contracts, the contractor  must notify the  Contracting
Officer  before  entering into any fixed-price subcontract that exceeds $25,000,
any cost-reimbursement contract, or any contract that involves fabrication or
acquisition of property with a value that exceeds $10,000.

    (b)   The Project Officer  is involved in evaluating  the  need for the
subcontract, the reasonableness of  the  subcontractor's estimate, and, in the
case of  a request to acquire or fabricate an  item, the  Project Officer should
determine its availability from the  EPA  property  excess listing. The PO  may
seek from the contractor  information  about the  qualifications  of  parties
proposed as subcontractors and is entitled to  inspect the subcontractor's plant
and work in process.
M-6.207  Role of the PO in Assuring Timeliness of Performance

    (a)  The PO must understand from  the  onset  that contract  type has an
impact both on the amount of monitoring needed and the probability of timely
performance by the contractor.

    (b)  In  fixed-price contracts,  the  threat  of default  under  the  Default
clause can be used to motivate the contractor to  complete on time. In the
case of cost-reimbursement  contracts,  which are  best efforts contracts and
the default provisions are virtually meaningless, possible  motivators include
withholding of payment and the fact that the firm  will gain a bad reputation.
Accordingly, in this type of contract the assurance of timely completion of the
work effort is highly dependent on the efforts of the PO.

    (c)  Failure to deliver on time almost always is the result of a build-up of
factors during performance.  If the PO keeps in close touch  with  the  progress
of the work effort, such interim delays can be identified and corrective action
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initiated.  The  agency depends on the Project Officer  to  obtain and  analyze
progress information  and to develop a recommended course of action.  The
following  techniques are of use in assuring timely performance of the work
effort.

    M-6.207-1  Completion or Delivery Dates

    All contracts contain a period of performance or  delivery schedule—the
importance of which varies—as shown below.

    M-6.207-l(a)  Completion Contracts

    Completion contracts call for a finite job, such as writing a handbook or
collecting specific data and delivering it in a certain format.  These contracts
specify  a  time  for completion of the work and delivery of the results.  The
date must be met for the contractor to fulfill its obligation. But often, other
matters are at stake.  For example, the completed work  may be required
before other work can begin.  Untimely delivery can result in program delays
with a cumulative effect beyond the initial work effort,  impacting program
effort, personnel, and costs.

    M-6.207-l(b)  Term Form (Level-of-Effort) Contracts

    In these types of contracts, what is being purchased is an obligation by the
contractor to apply a specified level of effort towards  a specific objective or
kind of work over a certain period of time. In these cases, the completion or
end date in the contract relates more to the contractor's obligation to work
than the completion of the  effort.  Once the  end date  comes, the contractor
has no further  obligation to continue work,  regardless of the status of job
completion or hours remaining in the contract.  Depending upon the terms of
the contract  the contractor may or may not stop work on tasks let under a
task order contract.  However,  work will not stop if  a task or work order
ordered during  the fiscal year in which the contract was let extends into the
next fiscal year.  In many cases, there  is no assurance that the work will be
completed and, therefore, there is potential waste.

    M-6.207-2  Relation of Work-Plan to Timeliness

    (a)   In administration of contracts with completion dates, it is not enough
to know how the work is progressing. It is vital to have an overall scheme or
work plan against which actual progress can be compared. Work, plans help the
PO identify delays in  completion, note where the contractor has fallen behind,
and whether corrective action is required.

    (b)   The work plan should contain  a schedule that identifies  each  step
required for contract completion and the period of time needed to  accomplish
that step. The  schedule is usually expressed in calendar days or weeks.  A plan
may  be required by  the   contract terms;  but whether  the  contractor is
obligated to  deliver  such  a plan you  may expect  the contractor to  have
developed a  plan for  internal  management  purposes. The plan  should  be
updated as required to reflect changes  in estimates for completion of work
elements and the total work effort.
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    M-6.207-3  Obtaining Progress Reports

    The Project Officer should assure that contract requirements for progress
reports are  met by  the  contractor in  a  timely  fashion.  If  contract
requirements omit data  you  believe  to  be important,  seek  a  contract
modification from the Contracting Officer.  If the contractor fails to report
on time, or the  report is deficient, inform  the Contracting Officer and request
that the contractor promptly remedy the situation.

    M-6.207-4  Reading Progress Reports

    (a) The  PO must promptly read progress  reports and  have sufficient
understanding of  them to be able to deal  with any problems that have arisen.
Failure to read and understand progress reports renders them virtually useless.

    (b) Progress reports  that are vague  or  too general are of no value and
may be an effort on the part of the contractor to obscure problem areas.  The
PO should get  whatever clarification is required to render progress reports
meaningful and seek whatever assistance is required to fully understand them.
Verification of  the  information  contained  in  progress  reports  should be
accomplished at the minimum on a spot-check basis.

    M-6.207-5  Analyzing Billings

    The Project  Officer can spot evidence  of problems in the contractor's
vouchers.   Variances in  spending  rates  may be indicative  of  contractor
performance problems.  Where problems  are suspected, the  Project  Officer
should request  an explanation of the deviation  and,  if  necessary,  request
monthly back-up  documentation—e.g., copies of vendor  invoices,  written
explanation of the deviation, etc.  Where it is evident the contractor has a
serious problem, inform the Contracting Officer.

    M-6.207-6  Dealing with Delinquencies

    If the Project Officer becomes  aware  of potential delinquencies from
progress reports, or from  any source, prompt notification  should be  made to
the Contracting Officer.  The longer problems drift along, the  worse they  tend
to get and the greater the potential of the Government losing its contractual
rights.  The PO  and the Contracting Officer should discuss the  matter with the
contractor, seeking a plan for remedial action.

    M-6.207-7  Taking Remedial Action if Necessary

    (a) After  the existence and cause of a delay are  known, the PO should
inform program management  and the  Contracting Officer of the facts of the
case so that alternative plans can be formulated and decisions made.
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    (b)  There  may  be  several  alternatives  available.   Work   may  be
accelerated  by applying  greater  resources,  e.g.  personnel,  overtime, or
equipment.  (The availability of resources and money must be determined by
the program  office.)  At times, a new technical  approach or system must be
used to solve the problem.  It is possible that the  program office may find the
delay to be  acceptable.  However,  the  PO  is not  authorized  to waive the
requirements of the delivery schedule. It must also be understood that if the
contract to be accelerated is of a cost-reimbursement type, the  accelerated
effort  will most probably  increase  the  cost  to  the Government. If it  is a
fixed-price completion contract and acceleration is needed  to avoid default,
the cost of acceleration will be borne by the contractor.

    M-6.207-8  Summary

    The Project Officer has the goal of assuring timely performance and to
avoid any surprises to the program office concerning delays.  Proper action by
the PO gives the program management time and the chance to make decisions
and adjustments over the widest number of options  and to revise  plans at an
early stage.


M-6.208  Role of the PO in Monitoring Expenditures

    (a)  A firm fixed-price contract gives  the  contractor a great deal of
incentive to  perform the contract in  the  most economical  way,  since every
penny saved  is a penny of  profit to the  contractor.  Therefore  monitoring of
expenditures under firm fixed-price contracts is not needed.  However, such is
not the  case under cost-reimbursement  type contracts.  The  contractor  is
generally entitled  to  compensation  for  costs incurred  in  doing the work,
provided costs are allowable, allocable, and reasonable.  Additionally, the work
description may, out of necessity, be a performance type Statement of  Work
because  of  the  difficulty  in describing just  what  needs  to  be  done.
Accordingly, the contractor has broad contract authorization to perform work
and charge for it, yet  the  work may not be exactly  what the Project Officer
envisioned.  Under such circumstances it is obvious  that close monitoring is
essential.

    (b)  Administration of a cost-reimbursement contract requires the  PO to
monitor and guide the contractor's efforts to avoid  waste of public  funds and
obtain  the  contracted  services  within budget.   Inefficient  or misguided
performance may  result in other contracts being robbed to  provide additional
funding, or in failure of the program to obtain needed services.

    (c)  Monitoring cost-reimbursement  contracts  is  perhaps  the  most
challenging task faced by Project Officers. The  following sections  break the
overall monitoring function into manageable sub-functions for the purpose of
providing- clearer guidance.

     M-6.208-1  Monitoring and Controlling to Avoid Waste

    (a)  The PO is the primary resource of the agency in tracking and guiding
contractor performance to  avoid waste.
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    (b)  Under cost-reimbursement and  labor-hour type  contracts,  a  very
effective means of identifying waste is Project Officer review of contractor
invoices.  These two types of  contracts provide that the agency may  ask the
contractor for  information  to determine if the  charges  are  reasonable,
allowable and allocable (the basic tests the contractor's costs must meet to be
reimbursed by the Government)'

    (c)  If the PO believes the contractor is spending more  than is reasonably
required to accomplish certain portions of the work, the PO should  ask for
additional explanation or  back-up  of  those costs.  If information furnished
substantiates  the expenditure yet it  is  believed  there is  a better,  more
efficient  method to accomplish the  work, the PO should consult with the
contractor.

    (d)  Managing the contract work is basically the contractor's job.  The PO
should keep this in mind and not attempt to take over management of the  work
effort.  However, the PO should inquire as to what the contractor  is doing and
attempt to persuade the contractor to adopt  a more  effective and efficient
method of working.

    M-6.208-2 Exercising the Right to Suspend or Disallow Costs

    (a)  Under  the  provisions  of  a   cost-reimbursement  contract,   the
contractor is paid all  allowable,  allocable,  and reasonable  costs up  to  a
pre-determined contractual maximum in return for its  best efforts to perform
the work.  The costs incurred  by the contractor in performing the work  must
be allowable,  allocable, and reasonable as defined in  the Federal Acquisition
Regulation (48 CFR 31.2). In addition, cost  expenditure must be  in accord
with any special provisions of the contract.

    (b)  The  Project  Officer, in  reviewing numbers submitted under  a
cost-reimbursement contract,  must examine  them  from the perspective of
whether the expenditure  is  attributable  to  the contract; what a  prudent
businessperson would pay  under like or similar circumstances.  When a cost(s)
does  not meet the  above criteria,  the Project  Officer  may  recommend
suspension of the cost(s)  and  recommend payment of the  vouchers less the
suspended cost.  Prior  to recommending suspension  of  costs, every effort
should be made  by the Project Officer  to obtain from the  contractor the
rationale and back-up supporting the expenditure.  Lacking either  the  back-up
or an acceptable rationale, the suspension should be recommended.

    (c)  The contractor knows that while it has the right to manage the  work
effort,  the agency  has  the right to "disallow" costs that are unreasonable in
nature or amount. This can be a powerful means of persuading a contractor to
manage  efficiently. This right, which is  different from a suspension, can be
exercised by the Contracting Officer.  A disallowed  cost  is one where the
Contracting Officer has made a final determination that the Government will
not pay the cost. When a contractor is aware  that a PO is  keeping  an eye on
costs and may raise questions,  there is a greater incentive to manage the  work
effort economically.
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    (d)  Labor-hour contracts contain already agreed-to costs per labor hour.
However, even though the Government is generally obligated to pay  for all
hours incurred in good  faith for  contract  performance, the  PO  still  may
question the contractor where it appears that excessive labor hours are being
used, or higher than required levels of personnel are on the job.

    M-6.208-3 Monitoring Cost-Reimbursement Contracts

    M-6.208-3(a)  Limitation of Cost Clause

    (1)  The Limitation of Cost clause is in all cost-reimbursement contracts,
         unless incrementally funded (which contains a similar clause entitled
         Limitation   of   Funds).   The  clause   specifically   limits   the
         Government's obligation to the amount stated in the contract as the
         total estimated cost of  the contract.

    (2)  Occasionally the cost  to  complete  contract  work will exceed  the
         estimated cost  of the contract.   The  Limitation  of Cost  clause
         provides  that the  contractor has no obligation  to continue work
         whether or not  the work  is  completed when the performance  cost
         reaches the total estimated cost. The contractor is entitled to stop
         work unless the contract  is  revised by  the Contracting Officer to
         increase the total estimated cost.

    (3)  The Limitation  of Cost clause  requires the contractor  to notify the
         Contracting Officer in writing and to provide revised  estimates of
         total cost whenever the contractor has reason to believe:

          (i)  That expected costs  incurred in the next  sixty (60)  days plus
              costs already incurred will exceed  75 percent (75%) of the total
              estimated cost of the contract; and/or

          (ii)  The total  cost of performance (less any  fee) will  exceed or be
              substantially less  than the total estimated cost of the contract.

    (4)  These requirements do  not provide a continuing update  of the status
         of contract funds but are designed to avoid crises.  However, since
         the  PO always  sees the vouchers submitted  by  the contractor for
         reimbursement  a running  total of incurred cost can  be maintained.
         Contractors are often required to submit interim  financial status
         reports.  For maximum utility, these reports  should address various
         line items and  portions of the budget for  the entire effort.  Thus,
         actually  incurred costs can  be compared  with budget item costs,
         problems can be noted, and management decisions made concerning
         the need for additional  funding.

    M-6.208-3(b)  Monitoring Status of Contract Funds

    (1)  The  points noted  below  stress the importance  of  monitoring  the
         contractor's performance cost and informing the program office well
         in  advance about  a need for  funds in addition  to current total
         estimated costs:
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       (i) The Government cannot extend the contractor's obligation to
          work once the total estimated cost is reached, unless and until
          the  program office can provide additional funds.  This  may
          prove impossible or take a long period of time.

      (ii) The contractor cannot be expected to maintain a readiness to
          work for an indefinite period of time.

      (iii) The risk of the contractor's staff dispersing and the costs of
          resuming work increasing becomes greater the longer the time
          period between the  contractor's reaching total estimated cost
          and receipt of additional funding.

      (iv) Gaps in performance create problems and pressures in the
          program office that lead to crisis conditions and emergency
          decision making,  rather than orderly exploration of options.
          The program office will have to deal with the crisis of whether
          to terminate the contract or where to get additional funds.

(2)  If the PO can keep the program office well informed  on the status of
    the contractor's incurred costs, the office will be better able to make
    sound decisions concerning available options (see M-6.208-3(c)).

M-6.208-3(c) Overruns

(1)  If the contractor's performance costs reach the total estimated costs
    before  work  is  completed  an  overrun  has  occurred  and  the
    contractor's obligation to  proceed is suspended. It is vital that the
    Project Officer and  program  personnel refrain from,  in  any way,
    requesting or encouraging the contractor to  continue  work.  It has
    been held by Boards of Contract Appeals that such actions may have
    legally  obligated the Government to  reimburse the contractor for
    continuing  the  work  effort.   This  would   constitute  improper
    obligation  of appropriated  funds.   It is possible that the PO could be
    held to be personally responsible for the over-obligation.

(2)  It is not fair for the Government to keep the contractor dangling with
    respect to the decision to fund an  overrun. The PO should assist in a
    prompt determination of which action the agency will take and so
    inform the contractor.

(3)  When a contractor has reached or has made notification that it will
    be  reaching the total estimated  cost  under the  contract  prior to
    completion of the work, the Government,  upon the recommendation
    of the  Project Officer,  has the  following potential options it  may
    take:

       (0  the contract may be modified by the  Contracting Officer to
          add additional cost,  however no additional fee may be added;

      (ii) the Contracting Officer may modify  the contract to reduce
          the statement  of  work so as to  enable completion  with
           remaining funds;
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          (iii) a decision may be  made to let the contractor perform up to
               the extent of cost  in the contract.  After contract expiration
               the Government may either complete the work effort itself or
               recentract; or

          (iv) the existing contract may be terminated for convenience.

    (4)  What option the  Project  and  Contracting  Officers settle  on  is
         dependent upon  such factors as available funds,  importance of the
         project, performance  of   the  contractor,  availability  of  in-house
         resources to complete the  work, and urgency of the project.

    M-6.208-4 Monitoring Labor-Hour Contracts

    (a)  Project Officer  responsibilities and considerations in the monitoring
of labor-hour  contracts are similar to those required for cost-reimbursement
type contracts. Labor-hour contracts generally have  a  provision which  sets
forth the agreed hourly compensation rate for the various  categories of labor.

    (b)  Normally, the stated ceiling represents a limit on the  contractor's
obligation.  Thus,  raising the ceiling increases the  contractor's obligation
which affects the scope of the contract and requires the  contractor's consent.
To raise  the ceiling, the Project Officer would  have to  furnish the Contracting
Officer  with   a  complete  procurement  request,  including an  acceptable
justification  for noncompetitive procurement.  This  is  in  contrast to the
Contracting   Officer's  authority  to unilaterally  revive  the  contractor's
obligation, under the Limitation of  Cost clause in cost-reimbursement type
contracts, by providing the contractor with an increase  in  estimated cost.

    (c)  The PO should keep a running record of both estimated -and expended
labor hours, by labor category, to avoid issuing orders that  would require labor
hours exceeding the ceiling.  This  is vital  because the  project may still be
incomplete when the ceiling is used up, and the agency  may not  realize any
value from the incomplete work.
M-6.209 Documentation of Contract Administration Actions

    (a)  POs are directly responsible to Contracting Officers for all matters
pertaining  to  administration of  the  contract.  As the  primary  interface
between the Government and the contractor, POs have  the following primary
responsibilities:

    (1)  Establishment of a  contract surveillance  program that will  verify
         contractor performance;

    (2)  Maintenance of records,  logs, and reports  that document the actions
         taken  by the  Government  and  the   contractor  during  contract
         performance; and
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    (3)  Verification of  the billings by the contractor to ensure payment is
         made for services rendered.

    (b)  The Project  Officer  may find it necessary  to appoint  contract
monitors (in a large contract with many activities at different sites), and to
call on Government  specialists in order to caw out the. contract surveillance
function.  Where the Project Officer  has  utilized monitors or specialists to
assist in monitoring the contractor's work, he or she must be careful to avoid
the poor communications  pitfall.   All activities  of monitors and specialists
must be within the purview of authority delegated and must be documented.
The Project Officer is held responsible by the Contracting Officer for the
actions of these personnel.  Consequently,  it behooves the Project Officer to
keep in close communications with such agents.

    M-6.209-1  Records, Logs,  and Reports

    (a)  The need  to maintain proper records, logs,  and reports cannot  be
emphasized  enough.  The  PC's records are considered part  of  the official
contract documentation. In event  of a contract dispute, these records may be
subjected to examination by the Board of Contract Appeals or by the Federal
Courts. The Project Officer should immediately,  upon his or her designation,
set up  a contract  administration  and suspense   file  for the contract.  All
documents,  including internal  memos,  concerning  the  contract  must  be
contained in the  PO's official files. Exhibit 6-1  is a  sample  file  plan  which
may be used for this purpose.

    (b)  The sample plan may  be  changed to meet the specific  requirements
of the  contract. For example, it may be wise to set up a special file section if
Government-furnished property  or special equipment  is  involved in  the
contract. If the contract provides for award fee payments, a section that
specifically relates to this area may be set up in the files.

    (c)  EPA  Form  1900-27,  Project Officer's   Evaluation  of  Contractor's
Performance (see Exhibit 6-2), must be executed at  contract completion for
all of the following types of contracts:

    (1)  All contracts for research and development  and for services other
         than management and consulting services when the contract amount
         is $25,000 and above;

    (2)  All  contracts for management consulting  services,  regardless  of
         dollar value.

Use of the form  provides an orderly and uniform method of determining and
recording the  effectiveness  of contractors  in  meeting  their contractual
commitments.

    (d)  Project  Officers  should prepare  their technical evaluation  on EPA
Form  1900-27  and  forward the  original  of the form  to  the  QA Section,
Procurement and Contracts Management Division,  Washington, O.C., 20460. A
copy should be sent to the Contracting Officer for  the contract file.
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    M-6.209-2Evaluation of Construction Contracts

    (a)  With  regard  to  construction contracts,  the FAR  requires  the
contracting activity  to  evaluate contractor  performance  and  prepare  a
performance report for each construction  contract of $500,000 or  more;
$100,000 or more, if any element of performance was either unsatisfactory or
outstanding; more than $10,000, if the contract was terminated for default; or
$100,000 or more, if the  contract was terminated for convenience  of  the
Government.

    (b)  The Contracting Officer will obtain input from the Project Officer on
the contractor's performance.  The  Contracting Officer is to prepare  the
contractor performance report as prescribed  in  FAR  36.201  and  EPAAR
1536.201 within two weeks after final acceptance of the work  or contract
termination.

    M-6.209-3Evaluation of Architect-Engineer Contracts

    (a)  The FAR requires that an agency  provide for one or more permanent
or ad hoc architect-engineer evaluation boards to review current data files on
eligible firms and responses to public notice on a particular project; evaluate
firms; hold discussions with at least three  of the most highly qualified firms;
and prepare  a selection report recommending at  least three of the most
qualified firms in descending order of preference.  The selection report should
include a description of the discussions and evaluation conducted to allow the
selection  authority   to  review   the   considerations  upon   which   the
recommendations are made.

    (b)  An Environmental Protection  Agency Architect-Engineer Evaluation
Board has  been established as provided in  EPAAR  1536.602-2.  Among  the
membership   is   the   program  official   originating  a  requirement  for
architect-engineer services or his designated representative.

    (c)  Evaluations  of  architect-engineer  contracts are conducted  in
accordance with  the  procedures  applicable  to  construction contracts  as
prescribed in FAR 36.604 and EPAAR 1536.201.  The Contracting Officer  will
obtain input from the Project Officer on the contractor's performance.

    M-6.209-4  Verifying In voices/Vouchers

    (a)  It is the PO's  responsibility to verify contractor invoices/vouchers.  It
should be noted that all Government personnel have a responsibility to process
invoices/vouchers for  payment in  a timely fashion.   Timely processing  is
considered to be no more than five calendar days from  receipt.  Undue delay
can   cause  financial  hardship for  the   contractor  and  can turn  a good
contractual relationship into  an impossible situation.  Project Officers must
keep  in mind that under the provisions of the Prompt  Payment Act (PL 97-177)
late payment of an invoice will cause the  Government to pay interest to the
contractor. The interest cost  will be assessed against the program.

    (b)  There are several methods of payment  that are frequently utilized by
the Agency.  In fixed-price contracts, partial progress and lump sum payments
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are made.  Partial payments refer to those made when a part of a fixed-price
contract is delivered, accepted, and paid.  Progress payments are payments
made under fixed-price  contracts that are based on the progression of work.
This type of payment should not be confused with* provisional payments, which
are made only under cost-reimbursement type contracts.  Lump sum payments
refer to the  type  of  contract where one  payment  is made  at  contract
completion.

    (c)   The  Project Officer's involvement in the processing of vouchers and
invoices is  dependent upon the type of contract  and what is being purchased.
The following is an explanation of this involvement.

    (1)   Provisional Payments Under Cost-Reimbursement Contracts

         Provisional payments are made  subject to final audit  to determine
         the allowability, allocability,  and reasonableness of  the costs  paid.
         The  following are Project Officer responsibilities for the processing
         of provisional invoices/vouchers under cost-reimbursement contracts.

           (i) Immediately upon receipt of the Contract Status Notification
              Form (EPA Form 2550-19) from the servicing finance office,
              the  Project Officer determines whether the payment request
              is commensurate with the items delivered and/or  services
              performed  by the  contractor.  Project  Officer response  is
              required within one (1) week.

           (ii) When no exception is taken, the  Project Officer shall approve
              and  sign the Form 2550-19  and return  it  to the  servicing
              finance   office   for  further   processing.   A  copy  of  the
              invoice/voucher should  be retained by the Project Officer for
              the file.

          (Hi) If, during the review, the Project Officer takes exception to
              any  of  the  services or items being invoiced, he/she  must
              prepare  a memorandum setting forth (a) the  reasons for the
              recommended disallowance or suspension,  and  (b) the amount
              recommended for payment, and  submit  it, together with the
              invoice/voucher,  to   the   servicing  finance  office  for
              appropriate action.

    (2)   Completion Invoice/Voucher,  Cumulative  Claim and  Reconciliation
         Under Cost-Reimbursement Contracts

         The   Project   Officer  shall  process  completion   invoice/voucher
         materials in accordance with the following:

           (0 Immediately upon receipt of the Contract Status Notification
              Form (EPA Form 2550-19) from  servicing finance office, the
              Project  Officer determines whether the payment request  is
              commensurate  with  the  items delivered  and/or  services
              performed  by the  contractor.  Project  Officer response  is
              required within one (1) week.
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       (ii)  When no exception is taken, the Project Officer shall approve
           and  sign the  Form  2250-19 and  return it  to the servicing
           finance   office  for   further  processing.   A  copy of  the
           invoice/voucher should be retained by the Project Officer for
           the file.

      (iii)  If, during the  review, the Project Officer takes  exception to
           any  of  the services or items  being  invoiced,  he/she must
           prepare  a memorandum setting forth (a) the reasons for  the
           recommended  disallowance or suspension, and (b) the amount
           recommended  for payment, and submit  it, together with  the
           invoice/voucher,  to  the  servicing   finance   office   for
           appropriate action.

(3)   Progress and Partial Payments for Service, Supply, and Equipment
     Contracts Under Fixed-Price Contracts

       (0  The Project Officer  reviews the invoice/voucher to ascertain
           that  all  services and/or items  billed  have been satisfactorily
           performed  and/or  received, inspected,   and  accepted  by  the
           Agency.

       (ii)  When no exceptions  are taken,  the Project  Officer approves
           and  signs  the  Contract  Status  Notification  (EPA   Form
           2550-19) and  returns  it  to  the  servicing  finance  office,
           retaining a copy of the invoice for the file.

      (iii)  If, during the  review, the Project Officer takes  exception to
           any of  the  services or items  being invoiced,  he/she must
           prepare  a memorandum setting forth (a) the reasons for  the
           recommended  disallowance or suspension, and (b) the amount
           recommended  for payment, and submit  it, together with  the
           invoice,  to the servicing finance office for appropriate action.

(4)   Lump  Sum  Payments for Service,  Supply, and  Equipment Contracts
     Under Fixed-Price Contracts

       (i)  The Project Officer  reviews the invoice and ascertains that
           the contractor has  performed  and/or delivered all services
           and/or materials contracted for; and that the Government  has
           conducted final inspection of, and has accepted, all contract
           services and/or materials.

       (ii)  When no exceptions  are taken, the Project Officer signs  the
           Contract Status Notification, EPA Form 2550-19, and returns
           it to  the servicing finance  office, retaining  the copy of  the
           invoice for the file.

      (iii)  If, during the  review, the Project Officer takes  exception to
           any of  the  services or items  being invoiced,  he/she  must
           prepare  a memorandum setting forth (a) the reasons for  the
           recommended  disallowance or suspension, and (b) the amount
           recommended  for payment, and submit  it, together with  the
           invoice,  to the Accounting Office for appropriate action.
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(5)  Progress Payments Under Fixed-Price Contracts for Construction

       (i) The Project Officer reviews the invoice and ascertains that all
          services  and/or items  invoiced  have  been  satisfactorily
          performed and/or delivered by the contractor and  accepted by
          the Agency.

      (ii) If no exceptions are taken to the amount invoiced, the Project
          Officer shall  (a) sign  the Contract Status Notification (EPA
          Form  2550-19)  form signifying  agreement with  the amount
          invoiced,  and  (b) forward the approved Notification form and
          the original and three copies of the contractor's invoice to the
          Contracting  Officer  for  further  processing,  retaining  the
          fourth copy of the invoice for the file.

      (iii) If, during the review, the Project Officer takes exception to
          any  of the work being  billed,  he  or she should prepare  a
          memorandum   setting   forth  (a)   the    reasons   for   the
          recommended disallowance  or suspension,  and (b)  the amount
          recommended for payment, and  submit it, together  with  the
          invoice, to the Contracting Officer for appropriate  action.

(6)  Final Payments Under Fixed-Price Contracts for Construction

    The  Project  Officer approves the  final invoice  when the following
    conditions have been satisfied:

      (i) Final inspection has been made.

      (ii) All work, including the correction  of punch list items,  has been
         accepted   by  the  Government.  The Project  Officer then
         certifies and  dispatches  invoice copies in accordance with
         M-6.209-4(c)(5) above.

(7)  Charging Costs Under Contracts  Funded  From Multiple Accounts

    EPA  may  fund  contracts  from   more  than   one  appropriation,
    depending on the nature of the goods or services acquired. FMOs are
    legally responsible for assuring  that payments on each contract  are
    made from  the  proper  appropriation  and charged  to  the  proper
    account.

      (i) Voucher Payment.  Project Officers, in certifying contractor
         invoices,  must provide  sufficient  information  to  FMOs  to
         charge  contract  costs  correctly.  Whenever  a  contract  has
         multiple account funding,  the  Project Officer shall provide  on
         every certification of an invoice for payment the accounts and
         amounts against  which invoiced costs are to be charged.  (See
         M-3.106-13(e).)
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          (ii)  Approval of  Allocation  for Multiple Appropriation  Funded
              Contracts.  The Director,  Financial Managment Division, must
              approve Project Officers'  rationale for allocating costs among
              appropriations when:

              a.  any specific  work  assignment or delivery order  will be
                 funded from more than one appropriation, or,

              b.  any proposed  contract  will be funded from more than one
                 appropriation  and will have neither delivery orders nor work
                 assignments.

                 This rationale must  be submitted to the Director, FMD, and
                 approved before these work assignments/delivery orders are
                 issued or before such proposed contracts are awarded.

    M-6.209-5   Payments

    The  Government's principal  obligation is to  pay the  contractor for
supplies delivered or work performed. A  fixed-price contract states the exact
amount to be  paid  in the contract, while a cost-reimbursement contract
requires  the  Government to  pay  the  contractor  the  costs incurred in
performing the contract work, plus a  fee, if any. The FAR contains contract
clauses that  spell out the precise  obligations  of the Government  regarding
payment.

    M-6.209-6   Payments Clause

    (a) The standard Payments  clause spells out the Government's obligation
to pay under fixed-price contracts.  The clause provides for payment of the
prices  stated in the contract for items delivered and accepted, or for services
rendered and accepted, upon submission of proper invoices.  Partial payments
for partial deliveries  in excess  of  $1,000 or 50 percent  of the contract price
are also provided for in a typical fixed-price contract.
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    (b)  Under cost-reimbursement type contracts,  the Allowable Cost  and
Payment clause and  the Fixed-Fee clause are  the  primary clauses.  These
clauses provide for Government payment of:

    (1)  The cost of performance determined by the Contracting Officer to be
         allowable

    (2)  A fee, as provided in the contract.

    (c)  Payment  under fixed-price  contracts  is  much simpler than under
cost-reimbursement type contracts.  To make  payment under a fixed-price
contract, the Government representative need only know that the contractor
has   timely   provided   acceptable   goods   or   services.   Under   the
cost-reimbursement type contract, the process  is more involved. In addition
to knowing whether the service or product has been provided, the Government
must determine whether the cost  being  charged is allowable, reasonable,  and
allocable.

    M-6.209-7  Determining Allowable Costs

    FAR 31.201 provides principles for use in determining whether the costs a
contractor claims for reimbursement are allowable. The Government will  pay
costs  incurred  by  the contractor  only if they  are reasonable  and  allocable.
Costs excluded or limited by FAR provisions or by provisions of the contract
are not allowable.

    M-6.209-7(a)  Reasonable Costs

    Reasonable costs are those costs in amount  and type that would ordinarily
be incurred by a  prudent  person  in  a competitive  business.   Cost must  be
recognized as necessary  for the operation of the organization.  They must be
incurred  utilizing  sound  business practices  and must be consistent with  the
normal practices of the firm.

    M-6.209-7(b)  Allocable Costs

    Allocable costs include:

    (1)  Direct costs or  expenses incurred specifically  for performance.
         Examples are (0 salaries of personnel performing a  specific  portion of
         the contract work,  (id costs of materials  or  supplies used  for  the
         contract, and  (iii)  costs of subcontracts  entered into   solely  for
         performance of the contract.

    (2)  Indirect costs that benefit both the contract and  other work of  the
         contractor and  that can be distributed  between the contract and the
         other  work  based on  relative  benefit or  another equitable basis
         Examples  are  (i)  depreciation on  buildings  and equipment  used
         partially  for the  contract and partially for other work,  (ii) fringe
         benefits for employees charged directly  to the  contract, and  (iii)
         supervisory salaries, if time is not charged directly  to the contract.

    (3)  Indirect costs that are  necessary to  the overall operation  of  the
         contractor but  that cannot be  distributed to projects in accordance
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    with relative  benefit.  Examples are (0 office supplies, (ii)  bid and
    proposal costs, and (iii) salary of an accountant.

M-6.209-7(c)   Accounting Principles for Determining Allocability

(1)  The  Contractor  must  compile   costs  which  are   claimed  for
    reimbursement in accordance with generally  accepted  accounting
    principles and practices or, if applicable,  with the  Cost Accounting
    Standards.

(2)  Even though a contractor uses an accounting system that is not  the
    same as systems used by other contractors, costs may be found to  be
    in accordance with generally  accepted accounting principles. If  the
    contract is over $100,000, the  Cost  Accounting Standards may require
    uniformity  of accounting  treatment   of  certain  aspects  of cost
    compilation. Whenever there is any question about the  contractor's
    accounting system, personnel  with  expertise  in that area will usually
    have to make the determination.

M-6.209-7(d) Costs Specifically Limited or Excluded

(1)  Certain costs are specifically limited or excluded by FAR Part 31:

      (i) Entertainment costs are  not allowable

     (ii) Interest  expenses are not allowable

     (iii) Advertising expenses are limited to certain purposes

     (iii) Depreciation on Government-owned property is not allowable.

(2)  Costs may also be limited or  excluded  by  provisions in the contract.
    The Contracting Officer cannot agree in the  contract to allow a cost
    that is specifically disallowed by the FAR.  The  CO  may, however,
    agree with  the contractor to  limit or exclude costs allowable  under
    the FAR. For example, a contract could  exclude all travel  costs in
    that the Government is  to provide transportation.

M-6.209-7(e)  Processing Payments

(1)  Submission of  invoices or vouchers with documentation supporting  the
    contractor's cost claims starts the payment  process.  See M-6.209-2
    for verification and  processing of provisional and other invoices and
    vouchers.

(2)  The Contracting  Officer reviews all invoices/vouchers  to determine
    whether the costs should be allowed or the invoice should be paid.
    Where the contract  provides for reimbursement of  indirect costs at
    negotiated rates, costs  must be examined  to assure that there is  no
    duplication  of costs  between direct and indirect cost items.  Degree
    of   the  Contracting   Officer's   examination   depends   on   the
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    circumstances. Payment for questionable items can be suspended by
    the CO  pending  resolution,  and over-  and under-pay men t can  be
    subsequently adjusted.  Especially  under the Prompt Payment Act
    Provisions, it is important to promptly advise the CO of any concerns
    you may  have with an  invoice  given  to you  for  review prior  to
    payment. The CO has the authority to toll the Prompt Payment Act
    while problems are being resolved.  (It should be noted  that  the
    interest  penalty  provisions do  not apply to progress, advance  or
    provisional payments made to the contractor,  but  do apply  to  the
    final  payment.)   The potential  adverse impact  of  the Contracting
    Officer's  failure  to exercise  this important right  on behalf  of  the
    Government was  illustrated in a recent case where a contractor was
    allowed  to recover over $34,000  (plus  interest)  in  holiday pay
    expenses as a fringe labor cost on the basis of its proof that holiday
    pay was  contractually excluded from overhead rates  as an indirect
    cost.  In  part, the contractor's proof  was based  on the fact that  the
    Project Officer responsible for approval and certification of invoices
    routinely approved such requests during  more than half the contract's
    duration.   This case illustrates  the  need  for  clear  expression  of
    contract  provisions regarding costs, complete understanding of such
    provisions by person's authorized to approve and certify invoices, and
    immediate communication between the  Contracting Officer and his
    or her authorized representative in the event of any question.

(3)  A detailed audit  is conducted, in most cases, prior to final payment
    of cost-reimbursable contracts.  The Contracting Officer should seek
    clarification and  justification of any items of cost questioned by  the
    audit. The Contracting Officer should make the final decision, under
    the Disputes  clause, to  resolve the matter  if agreement  cannot
    otherwise  be  reached.  Acceptance  of  final payment  releases  the
    Government from any claims against it by the contractor.

(4)  EPA  has  now begun using  the  Treasury Financial  Communications
    System (TFCS) for disbursing contractor payments of $25,000 or more.

    The TFCS is a computer-to-computer link that  provides the Federal
    Government   with  on-line  access   to  the  Federal  Reserve
    Communications  System (FRCS), a nationwide  telecommunications
    network.  Through this system of electronic funds transfer, payment
    can be made  directly  or  indirectly through correspondent financial
    institutions to virtually any financial institution in the country.

    The TFCS is a highly  reliable,  responsive payment mechanism that
    eliminates both the mail time and  processing associated with  check
    payments. Under the TFCS, payments of $25,000 will be made  to the
    account designated at the contractor's financial  institution on, or as
    close as  possible to,  the actual  payment  due date.  Information
    identifying the particular  invoice(s)  for which  payment is made is
    included  on the TFCS payment message to the financial institution.
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    M-6.209-7(f)  Paying a Fixed Fee

    Payment of the fixed fee under a cost-plus-fixed-fee contract is governed
by the provisions of the contract.  After paying 85 percent of  the  fee, the
Contracting Officer is authorized to withhold the final 15 percent of the fee,
or $100,000, whichever is less, until contract completion or final payment.

    M-6.209-8  Limitation of Cost Clause

    (a)   While  the Government is obligated to pay a contractor's allowable,
allocable, and  reasonable costs under the appropriate payment  clause, the
Limitation of Cost (or  if incrementally  funded, Limitation of Funds) clause
provides  that the  Government is not obligated  to pay any  more than the
estimated cost of performance set forth in the contract.

    (b)   The clause provides for the  Contracting Officer to formally modify
the contract whenever the estimated cost is to be increased. The cost stated
in the modification becomes  the  new  estimated  cost  of performing the
contract, and the  contractor's obligation to continue work is  reinstated or
expanded. Costs incurred up to the  new estimated cost are reimbursable even
though they are in excess of the original estimated cost.

    (c)   If the  Contracting Officer  issues a change order under the provisions
of the Changes clause and the cost of performing the  work as changed will
exceed the cost contained in the contract, the contractor may not (except at
its own  risk) incur costs in excess of the cost set forth in the contract.
(Changes are discussed at M-7.305).

    (d)   Gaps  in  contract  performance caused  by the  operation of the
Limitation of Cost (or  Funds)  clause should be avoided  or minimized.  The
longer the gap  period, the greater the risk that the contractor will be legally
excused  from its obligation to proceed,  after  receipt of notice of increase.
Periodically an on-going  contract will sustain an  overrun  and the  press of
business  is  such that  a complete  analysis and  negotiation of  the overrun
proposal  cannot be accomplished prior  to  the contractor's work stoppage.
When this occurs, the Contracting Officer may interim fund the contract so as
to avoid work stoppage.  It is not fair to put the contract at risk, and the costs
of standing by are wasteful.

    (e)   Contract  administration personnel  must keep constantly  advised of
total costs incurred relative to progress of the work so that  needed actions to
obtain additional funds for the  project can  be taken in a timely fashion.
Government personnel must not cause or encourage the  contractor  to  incur
costs  beyond the estimated costs of  the contract. The Government may be
liable for costs  exceeding the contract limit if this rule is not observed.

    M-6.209-9  Conclusion

    The  core of the PO's responsibility is to monitor the performance of the
contract.  The various  functions  involved are based  upon  good  business
practices, legal doctrines, common sense, and contractual authority.
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                                 M-6.300

            ADMINISTRATION OF  GOVERNMENT PROPERTY
                    IN CONTRACTOR'S  POSSESSION
M-6.301  Introduction

    (a)  Property administration functions begin  with  the  letting of  the
contract and involves the Property Administrator, the Project Officer,  the
Contracting Officer, and other personnel as needed.  This section  sets forth
requirements  to  be  followed  by  Project   Officers  in  establishing  and
maintaining control of Government  property acquired by or furnished to  the
contractor pursuant to the terms and conditions of contracts.  Project Officer
responsibilities  are   outlined   for  all  aspects   of   Government  property
management.

    Normally, the Property Administrator performs his duties by virtue of a
"Designation of  Property Administrator" article in  the contract. A Property
Administrator is an EPA employee designated by the Contracting Officer to
act as his representative in matters concerning the management and control of
Government property under a contract.


M-6.302  Project Officer Duties and Responsibilities

    (a)  A Project Officer must communicate the  need to authorize the use of
existing  Government-owned property  or the furnishing  or  acquisition  of
property immediately to  the  Contracting  Officer or Contract Specialist.
Items  of property to  be furnished  by the Government or acquired by  the
contractor  must be  identified  as  specifically as possible  in  the  original
contract schedule or  in a change  order or  supplemental agreement.   The
Project Officer  must ensure that:  (1)  providing property  is justified, (2)  the
Government  receives  adequate consideration,  and  (3)  one  contractor  or
prospective contractor does not receive a competitive advantage over others.

    (b)  Project Officers should assure that both  the Contracting Officer  and
Property Administrator  are  always fully informed on all matters  affecting
contract property administration, regardless of the classification of property
(Le.,   nonexpendable,  noncapitalized,   or  supplies.   See   M-3.106-16(b)  for
definitions).  Providing such information is vital  due  to the great  variety of
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rules and regulations that affect the administration of Government property in
the possession of contractors.
M-6.303  Procedure

    Copies  of   all  cost-type  contracts   are  provided  to  a   Property
Administrator, who immediately forwards a "Guide for Control of Government
Property by Contractors" to each contractor.  When a review of a contract
reveals authorization for the acquisition of property, decals  and a reporting
form  (EPA  1730-1,  "Report  of  Nonexpendable   Property  Acquired   by
Contractor"), are provided to the contractor to identify EPA property. A copy
of this form must also be forwarded by the contractor to support  its claim for
reimbursement.   Government-furnished  property  is  transferred   from   a
program's accountability to the  contractor's  accountability using  a  form
forwarded by the Property  Administrator for verification of receipt by  the
Contractor.  Annual inventories are requested of all  nonexpendable property.
A  final  inventory  must  contain all  residual  property,  expendable  and
nonexpendable.


M-6.304  Actions Involving Other Property Accountable Area Offices

    Property accountable areas are  established throughout  EPA  to control
Government-owned property. Each program is an area  within an accountable
area,  and all of  that program's equipment is charged to that  particular area.
Therefore,  when a determination is made and authorized by  the Contracting
Officer to provide Government property to a contractor, the Project Officer
must notify both the Property Administrator and the person within its program
who is responsible for the  control of  that  property, so  that a transfer  of
responsibility may be processed.  No movement of  equipment,  either to  or
from  a  contract shall  be made   without  involvement  of the   Property
Administrator.
M-6.305  Written Property Control Procedures by Contractors

     Normal contract property administration practice provides for the control
of  property  by  means  of  written  procedures   that  communicate  the
organization's standards, techniques, and instructions to operational personnel
for uniform application. Immediately after the award  of  an initial contract,
the  Property  Administrator will  request  the   name,  title,  address,  and
telephone number of the  contractor's representative  for contract  property
administration.  Contractors dealing with large inventories  or high dollar value
equipment  that  is  Government-furnished or  contractor-acquired  will  be
requested to provide their property control system policies and procedures to
the  Property Administrator for approval regardless  of  the  categories of
property involved (i.e., nonexpendable, noncapitalized and/or supplies).  In
cases where  a contractor has only  a few employees,  the  need  for written
procedures  for effective management  of   Government   property  will  be
evaluated by  the Property Administrator based on  the contractor's explanation
of his controls and observation of his performance during  the early stages of
the contract.  If the  control system is found to be inadequate by the  Property
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Administrator,  necessary  corrective  actions  will   be  referred  to  the
Contracting Officer.  The Project Officer does not normally see or review the
contractor's  accounting  procedures, as  this is the  responsibility  of the
Property Administrator and, occasionally, the Contracting Officer.
M-6.306  Property  To Be  Furnished and/or Acquired After  Inception of the
         Contract

    M-6.306-1  Needed Information

    If a need  for  property  arises after a contract award, the Contracting
Officer should be  notified  in  writing  and  requested  to issue  a  contract
modification reflecting the addition.  The same information required in the
Purchase Request for the initial contract is required (see M-3.106-16).

    M-6.306-2  Disclosure of Unauthorized Property

    When Government  property has been provided to a  contractor but not
provided according  to  any  contract  provision,  the Project Officer should
promptly send the Contracting Officer (with a courtesy copy to the  Property
Administrator) notification of all known circumstances and facts pertaining to
the contractor's receipt of the property and the required statement to support
the issuance of a contract modification (see M-3.106-16).

    M-6.3 06-3 Subcontractors

    (a)  Project Officers  who want to authorize the furnishing of Government
property or  the acquisition of contractor-acquired property to subcontractors
must  follow  the same procedures used for dealing  with  a prime contractor.
The prime  contractor  is  responsible for  acquiring any information  about
Government property from the subcontractor and for reporting to the Property
Administrator.   The  same  procedures   regarding  property   acquisition,
utilization, disposal, etc. apply to the subcontractor as welL

    (b)  If property is furnished and/or acquired by  a subcontractor, it is the
responsibility of the Project  Officer and prime contractor to assure that the
subcontractor operates according to all EPA regulations,  that the property is
used only as authorized by the contract, and that it is adequately cared for and
maintained.  Procedures  necessary to assure  the  accomplishment of  this
responsibility should be included  in any contractor's property control system.

    M-6.306-4 Accessory Item

    During  the performance  of a contract,  it may be necessary to acquire an
item of property that will be used as an accessory to equipment owned by the
contractor.   Where such equipment  is provided and  is attached to contractor
equipment,   EPA  is responsible  for  bearing  all  costs  for  disassembly,
disconnection, etc.  to allow for physical disposal of the property.  This process
can be quite costly.  Even  though  the  accessory item  may not exceed the
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capitalization criteria, it is accountable for the life of the contract, and title
always  remains with  the Government.  The only  exception  occurs  with
educational and nonprofit organizations.


M-6.307  Monitoring Activities

    M-6.307-1  Review of Reimbursement Vouchers

    Reimbursement   vouchers   submitted   by   the   contractor   under
cost-reimbursement contracts are forwarded  to the  Project  Officer  by the
Financial Management Office for review and approval of contractor-acquired
Government  property.   All  charges  to the  contract for  acquisition  of
equipment  and materiel must  have  been previously  authorized  within the
contract.  Such acquisitions  must  be  individually itemized  on  EPA Form
1730-1, "Report  of  Nonexpendable   Government  Property  Acquired  By
Contractor,"  to show the required personal property management information.
Those items acquired but not authorized under the contract should be brought
to the attention of the Financial Management Office, the Contracting Officer,
and the Property Administrator. If the Project Officer determines that an
acquisition was not required for the performance of a contract, he should
recommend to the Contracting Officer and Financial Management  Office that
the contractor not be reimbursed for the purchase (see M-6.315 Suspension of
Payment).

    M-6.307-2  Inventories

    (a) The Property Administrator acquires annual, final or at times special
inventories from contractors having contracts under which property has been
furnished  or  acquired.  The  inventory  is performed  by the  contractor and
includes property associated with particular contracts. The  process includes
reconciling the inventory with  the property  administrator's  records.  Annual
inventories include all  nonexpendable and  noncapitalized  items  acquired,
furnished, and/or rented/leased.  Final inventories  also include nonexpendable
and noncapitalized items, as well as expendable items not consumed during the
performance  of the contract,  regardless of their value.   The  amount of
accrued lease credits for leased property are included  on the  final inventory.
The final  inventory is furnished  to  the  Project Officer  for  disposition
recommendation. Annual and special inventories are available to  the  Project
Officer on request.  The Project Officer may elect to:

    (1) reassign the inventory or a part thereof to another contract;

    (2) reassign inventory to a licensee by  means of a Revocable License
        Agreement for a loan;

    (3) have the inventory returned to the sponsoring program; or

    (4) report  the inventory as unrequired to the needs of the sponsoring
        program.

    (b) If the property is  installed so as  to necessitate   removal and/or
restoration,  the Project Officer should provide the  Property Administrator
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with estimated costs of  removal and restoration  and with a list of actions
required  (e.g., disconnection of  utilities,  use  of crane, special handling
equipment,  etc.).  The  Project  Officer should  also  advise the  Property
Administrator  of any and all unusual circumstances related to the inventory.
For example, is the property contaminated or unsafe for further use? Do any
odors exist that could prohibit  further  use?  How  is the property installed
(underground, in a body of water)?

    M-6.307-3  Inspections

    (a)  During site visits,  the Project Officer should ascertain or verify the
status of both contractor-acquired and/or Government-furnished property that
is in the possession of the contractor.   During his site visits,  the Project
Officer should also assure  himself that the contractor has  affixed Agency
property decals to all equipment in the contractor's possession. In addition, a
positive  determination should  be  made that  the property is  being  used
according to the contract  performance  requirements  listed in the scope of
work and/or any special property article. [Note: Equipment not required for
performance is to be reported by the contractor to the Property Administrator
for coordination with the Project Officer as to future  needs.  However,  this
may not always occur.] If equipment is not required, the Project Officer may
want to:  (1) assign the property to  another EPA  contractor, (2) assign to a
licensee through a Revocable License Agreement; (3) return  the property to
the sponsoring program; (4)  make the  property  available to  another EPA
program; or (5) consider the property as excess to his needs.

    (b)  The Property  Administrator will coordinate all disposal transactions
with the contractor after receiving written advice from the Project Officer.

    M-6.307-4  Preventive  Maintenance

    Project Officers should assure that preventive maintenance is performed
on a regularly  scheduled  basis by the contractor to prevent malfunctions and
to correct  minor defects  before  they  result  in serious  consequences.   An
effective preventive   maintenance  program   shall  be  performed  by  the
contractor,  and  records shall be maintained  to  disclose  the  maintenance
actions performed and deficiencies discovered as a result of inspections.

    M-6.307-5 Changes,  Modifications,   or  Alterations   to  Property   by
               Contractors

    (a)  A  Project Officer desirous of advising a contractor to modify, alter,
or cannibalize property in  their possession should request authorization from
the  Property  Administrator  before the actual transaction.  The Property
Administrator   will  present  the  determination   and  findings   of  the
contractor/Project Officer to a  three-member Board  of  Survey  for  their
approval.

    (b)  Contractors shall not modify, alter, or cannibalize any property until
written approval is received from the  Property Administrator.  Contractors
are liable when Government property is damaged or destroyed, or when there
is evidence  of unreasonable use or consumption.
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    M-6.307-6  Return/Transfer of Property

    (a)  If property is to be returned to the Government before completion of
the contract, the Property  Administrator must be advised promptly in writing
so that an adjustment in accountability is made to the contract.

    (b)  If the  need  arises to transfer an item of property from one  contract
to another, the Contracting Officer  and the Property  Administrator  for both
contracts must be advised in writing  so that all records (both contract and
property) can be  modified.  Detailed property information should  be  included
in the correspondence to assure that the proper item is transferred.
M-6.308  Transportation Considerations

    Once approval and/or modification  has  been given to furnish  property,
transportation may be required to ship it to the contractor.  EPA Form  1700-4,
"Request  for  Shipping Services,"  must  be prepared  and  forwarded  to the
appropriate  Shipping  Officer,  who  will  make  such  arrangements.  If the
required packing, crating or rigging services cannot be accomplished in-house,
EPA  Form  1900-8,  "Procurement Request/Order,"  must  be prepared and
forwarded  to  the appropriate  Procurement  Office.  If an  item  is  to be
transported  from the contractor's site, the Property Administrator must be
advised as to when and where it is to be shipped.  Advice will then be given to
the contractor by the Property Administrator as to how, when, and  where to
ship the property.


M-6.309  Packing and Crating

    (a)  Property  can be prepared  for transit  to or from  a  contractor's
facility in two ways.  One method is to arrange for a household goods carrier
that will pick  up the property from within the facility, wrap it in a blanket,
place it in a household goods van, and transport it to the exact location.  This
service is not considered as dock-to-dock, and at  times it is less expensive
than the normal  method of packing, crating, and transporting by common truck
carriers. This type of service is definitely less costly than the use of  wooden
crates for packing and crating the  materiel. If cardboard containers  are to be
used, the cost savings are questionable.  Normally it is best to use a common
truck carrier.  EPA Form 1700-4,  "Request for Shipping Services," should be
executed by the Project Officer and sent to the appropriate  Shipping  Officer
with a copy of the form to the Property Administrator.

    (b) The common truck carrier  method  requires the Project Officer to
complete  EPA Form  1900-8, "Procurement Request/Order,"  for packing and
crating if the  contractor does not have facilities to perform such a service or
does  not  have funds within the contract for packing  and  crating.   If the
contractor has the capability and can  be authorized to perform the services,
this method is  preferred.  The Project Officer should execute  EPA  Form
1700-4, "Request for Shipping Services," to  have the common truck  carrier
transport  the  property  to its destination.  After a carrier is selected by
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the Property Administrator, contractor, or local Shipping Officer, the item is
either shipped by Government bill of lading or the carrier is requested to ship
the item by the least expensive means available.  Common truck carriers are
the most economical means of transportation.  However,  in special situations
that require expediting the  shipment,  air transportation can be used  even
though it  is more expensive.  The Project Officer must justify the need for
expediting the shipment.  For those facilities with a  Shipping Officer, the
Project Officer should arrange for outbound shipments going to the contractor
and furnish the Property Administrator with a copy of the Government bill of
lading or memorandum of advice.


M-6.310  Declaration Concerning Contamination of Equipment

    (a)  When Government property is no longer  required at the contractor's
facility and removal is desired, the contractor must issue a certification that
the property  is free  of  biological, radioactive,  chemical  or any other
contamination hazardous to  health and that the property is safe for shipment
or acquisition by others.  The following  certification shall  be signed by  an
authorized official of the contractor for  each excess declaration transaction
or for the final inventory and forwarded to the Property Administrator with a
courtesy copy to the Project Officer:

        I  certify that the listed property is free  of  biological,
        radioactive,   chemical,  or  any  other   contamination
        hazardous to health and that  the property is  safe  for
        disposal.
        Signature
       Title
        Date
    (b)  When  the  contractor  is unable to decontaminate the property for
shipment, the items shall be identified on the final inventory or special letter
of request to the Property  Administrator. A copy of such information will be
sent to the Project Officer  so as to enable the Property Officer recommending
further procedure to process the property.

    (c)  Once the  Property Administrator receives disposal instructions, the
contractor is advised  as to  how  to  dispose of the property.  The Property
Administrator will determine  whether  the property is needed  within the
Agency or whether it is excess to EPA's needs.
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M-6.311  Trade-in of Property

    The  contractor should first discuss the need or reason for a trade-in of
property  with the Project Officer.  If the Project Officer has no alternatives,
such as  reassignment  of a  similar item  from in-house  inventories to  the
contractor,  he  should  advise the  contractor  to acquire quotes for puchase
prices with and without trade-in. Once the quotes are acquired, they should be
submitted  to  the   Contracting  Officer  for  review  and  approval.   The
Contracting  Officer  will   review  the  transactions  with  the   Property
Administrator  to determine  whether  outright purchase  or  purchase  with
trade-in  option  is  the   most  beneficial to  the  Government.  Once  the
Contracting  Officer  determines  the  appropriate   method,  a   contract
modification will be issued to authorize the contractor to acquire the property.


M-6.312  Lost,  Stolen,  or Damaged Property

    When   equipment  is  lost,  stolen,  or   damaged,  a  comprehensive
determination and findings must be filed with the Property  Administrator by
the contractor within  three  days  after determining the actual status of the
property.  All   the  circumstances  surrounding the  transaction  should  be
outlined, including  names of individuals involved in the investigation,  their
title, and organization. The  local  police and the FBI must be advised of any
EPA materiel suspected  of  having been stolen. Damaged  property  should be
retained  by the contractor  until  written notification is  received  from  the
Property Administrator  relieving   him  of accountability.  Attached to  the
determination and findings for stolen property should be copies of police and
FBI reports.  A determination and findings for lost property should include a
statement indicating what search  was made and which responsible individuals
were contacted in attempts to locate  the materiel.  The determination  and
findings  will be used  to  process  a Report or  Survey.  Board  members  will
review all  circumstances surrounding the  event and render  a decision  as to
contractor  liability, if  any.  Any given case involving lost,  stolen, or damaged
property will  be considered open  until the contractor receives  a written
response from  the Property  Administrator. The Project Officer must either
endorse the determination and findings or require additional information.


M-6.313  Disposal of Installed Personal Property

    Installed  personal property  falls  into  three  categories.   The first is
materiel that  can  be readily removed from  the contractor's  facility  with
simple labor services (i.e., it is not installed  into any utilities, and it requires
no  restoration).  The  second category is materiel  that is installed in  the
contractor's facility and  that requires  restoration to the  satisfaction of the
contractor.  The third  category  is materiel  installed into (i) contractor's
equipment  and/or equipment in the possession of the contractor but owned by
another  Federal agency; or (ii) EPA equipment  authorized  for  use  under
another  contract for  which  the period of performance has not expired.  A
determination regarding  restoration of  the contractor's facility or equipment
should be made and  incorporated  into the  official contract at the same time
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the  property  is  authorized in  the contract.  Various factors  should  be
considered in  this determination including, for example, whether it is in the
best interest  of  the  Government to abandon the property,  what would  be
involved in restoring the contractor's site, etc.
M-6.314  Sale of Property

    Specialized equipment needed for a contract which cannot be used by EPA
because of its specialization may sometimes be authorized by the Contracting
Officer and involve a "buy-back" article.  A contractor may  be authorized to
secure at his expense the services of an independent appraiser,  acceptable to
the Government,  to evaluate and determine  the current on-site, fair market
value of the equipment.  The contractor will then  credit the  contract for the
appraiser's estimate, thereby  transferring title  to  the contractor.   These
transactions take  place at the end of the contract.
M-6.315  Suspension of Payment

    Whenever the Property Administrator has problems with the contractor in
acquiring final inventories, information to confirm shipment, or transactions
relating to lost items of Government property, a memorandum will be provided
to the Financial  Management Office recommending that: (i) the current or
next voucher be suspended in total, (ii) a given amount be suspended in total
from  the next  voucher; or (iii)  the  amount of the item in question be denied
until the problem can be resolved. The Property Administrator will furnish  the
Contracting Officer and Project Officer copies of all correspondence. He will
also notify the Financial Management Office  when the problem is resolved and
advise them of the final action taken.
M-6.316 Short-Term Loan of Property

     Loans on a short-term basis should not be made to a contractor without a
contract  modification.  If  the  need exists  for  providing  material  to  a
contractor, the  Project Officer  should  immediately advise the Contracting
Officer in writing with a copy to the Property Administrator.  Included in this
memorandum should be a comprehensive determination and  findings to be
considered in issuing a modification to the contract (see M-3.106-16).
M-6.317  Revocable License Agreements

     A Revocable License Agreement is used to "loan" Government property to
a non-Federal institution. The EPA must derive a benefit from the loan.  The
use  of  a revocable license is not applicable  for equipment furnished to a
contractor but may be used with a cooperative agreement or a grant.
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M-6.318  On-Site Transfer of Equipment to a New Contractor

    The  on-site  use of  existing  Government-owned  facilities/materiel  by
contractors located  at installations owned and operated by the  Government
requires  extremely  close coordination  by  both  the   Project  Officer  and
Property  Administrator  whenever  contractors  change.  Both   the  present
contractor and the new contractor must conduct their own physical inventories
independently of  each other  and  submit their  findings to  the  Property
Administrator for  reconciliation  and resolution.  The inventory  from  the
present contractor is used  as  the final inventory and if completed  to  the
satisfaction of the Property Administrator, authorization of contract property
administration closeout  is  granted.  The inventory provided  by  the new
contractor  is used  to  ensure  that the  Government-furnished  property is
accurately stated in the  contract and any problems are resolved  with  the
previous   contractor  before  contract   property  administration   release.
Normally, on-site type contracts involve significant  inventories,  and it is to
EPA's advantage to ensure that the new  GFP  listing in  the contract's
Government-furnished property  article  is  totally  correct.   Discrepancies
between  the  old and new  contracts require  the  issuance  of a  contract
modification to the new contract to reflect the differences.  Project Officers
are requested to physically assist in resolving any overages  and/or shortages
reported  by  either contractor  and, if  necessary,  in  the  preparation  of
supporting documents to a Report of Survey action.
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                              EXHIBIT 6-1
                     Sample Contract Administration
                                File  Plan

Basic Contract File
    Copy of contract and all modifications thereto
    Copy  of  specifications,  drawings,  or  manuals  incorporated  into the
    contract by  reference
    Listing of contractor submittal requirements
    Listing of Government-furnished property or services
    Listing of all information or documents furnished to the contractor
    Copy of the pre-award survey, if conducted
    Schedule of  compliance reviews
File on PO and Contract Monitor Designation
    Copy of PO  designation
    Letters of contract  monitor assignments with copy of  transmittal letter
    furnished to the contractor
    Listing of specialized contract administration  functions delegated to the
    PO or contract monitor
Internal Correspondence File
    Record of communications between PO and other support activities
    In-house p re-performance checklist
    Copies of all correspondence between the PO and the Contracting Officer
    Copies of correspondence between the PO and  contract monitors and
    sponsoring activities
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EXHIBIT 6-1 (Continued)

Contractor Correspondence File
    Copy of all general correspondence related to the contract
    Original of all contractor submittals of data and reports
    Copy of notice to proceed, stop work, or correct deficiencies
    Copy of all letters of approval pertaining to, for example:  materials; the
    contractor's   quality  control  program;  prospective  employees;   work
    schedules, etc.
Payment File
    Information relative to discount provisions for prompt payment
    Copy of contractor invoices
    Copies of inspection reports
    Letters pertaining to contract deductions or fee adjustments
    Back-up  documentation  for  recommendation of  contractor payment or
    progress payment.
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                                             EXHIBIT   6-2
                     PROJECT OFFICER'S EVALUATION OF CONTRACTOR PERFORMANCE
                                    R-ii  ••-- nn.iit>n: i»' •.  fie : «?'••>'" c oc." i  -;g  -i—•.
  1  FROM
 3. ='CR«ARO COriima/ only) TO
    CONTRACTOR RELATIONS SECTION  PM-2141
    .tASH-NCTON  OC  SJ4AO
                                                            4. CONTRACT NO.
                                                                                          s. ACTIVITY
 S. CONTRACTOR'S NAME AND ADDRESS
                                                            7. PROJ. OFFICER'S NAME
                                                                                          8. TECHNICAL PROGRAM
                                                            9. BASIC CONTRACT COST
                                                                                         10. FINAL CONTRACT COST
                                                           I1  CONTRACTOR PROJECT OFFICER'S NAME
 12. PROJECT TITLE
 13. EVALUATED CONTRACTOR'S TECHNICAL ADHERENCE TO SCO°S OF WORK AND COMMITMENT OF PERSONNEL (Circle ona ol fhe
    .'o/fotvfria and g/va narrative ol raimt) B    VC    A    P    U
 14. EVALUATE CONTRACTOR'S TECHNICAL PERFORMANCE AND TECHNICAL APPROACH TO THE PROJECT (Clreia ona of rfia
    and «fva nairailn ol ratlnO  E   V6    A   P    U
 IS. EVALUATE CONTRACTOR'S SUBMISSION/DELIVERY OF PROGRESS REPORT, FINANCIAL REPORT. =1NAL REPORT. EQUIPMENT
    fCirela ona ol Iho lotto jrlnf and diva narraffva ol rating)   E   VC   A    P    U
 14. EVALUATE CONTRACTOR'S DELIVERED END PRODUCT (Report. Equipment, otc.J (Clrelm ona ol the lollowlni and Jlv» narrallv* ol
    mint)   E    VC    A    P   U
 17. HAS CONTRACTOR I  I  OVERRUN, OR ~*  UNOERRUN THE CONTRACT (Explain reason lor eirher)
 18. RECOMMENDATIONS AND ADVICE TO PERSONNEL CONSIDERING THIS CONTRACTOR FOR FUTURE SOLICITATIONS.
 '9. PROJECT OFFICER'S SIGNATURE
                                                            20. DATE
                                                                                         21. OVERALL BATING ,'Oiecf-


                                                                                           E    VC    A    P    U
EPA Form 1900-27 !Ro» 10-73)
                                        = PEV'OU3 COITION IS O3SO1.STE
                                                        6-47
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April 1984

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                                            EXHIBIT  6-2
                                              (Cont'd)


                                                     INSTRUCTIONS

     Prepare in duplicate and distribute as follows:

           Original to be forwarded to Headquarters, Contractor Relations Section (PM-214), Washington,  D.C. 20460
           Second copy to be forwarded to Contract Administrator for contract file

     The following guide lines are to be used by the Project Officer responsible for the project in the preparation of the form
at the completion of the technical phase and/or acceptance of the final end product of the contract. The information is to be
accurate, as it will provide other program staff personnel or anyone else in the agency an orderly  and uniform method of deter-
mining and recording  the effectiveness of contractors in meeting their contractual  commitments for  future consideration in
contract awards. The information will be filed in the contract file, and with the contractor's bidders  application file. The Project
Officer's technical rating of the contractor and the contracting officer's business rating will be  entered on the automatecbidders*
list by the Contractor Relations Section. All items have been numbered  to identify specific instructions as they pertain to indi-
vidual items.

     Rate Contractor in areas listed below by circling  one of the following:

          E  (Excellent);  VG (Very Good); A (Average);  P (Poor); or U (Unsatisfactory)

Provide  a  detailed narrative of background material the rating is based on. Attach additional sheets, if necessary, to provide
detailed narrative.

ITEM(S)
         FOLLOWING  ITEMS TO BE FILLED IN 8Y THE CONTRACT ADMINISTRATOR RESPONSIBLE FOR THE CONTRACT.

1 thru 4   Self-explanatory

    5      Activity responsible for the  project such as Washington,  D.C., RTF, Cincinnati. Region No. or Laboratory.

6 and 7    Self-explanatory. To be filled in by the Contractor Relations Section, or the Small  Business Specialist at the NERCS.

    8      Name of Section or Division within the Program responsible  for the project.

9 and 10   Self-explanatory.

   11      Self-explanatory.

   12      Self-explanatory.

           FOLLOWING  ITEMS TO BE FILLED IN BY THE COGNIZANT  PROJECT OFFICER

   13      Has contractor fulfilled the requirements  of the scope of work is specified in  the contract? Did the Contractor
           adhere to his proposal, including his proposed commitment of personnel?

   14      Indicate degree ot  creative contribution (level of technology) made by the contractor in response to their understand-
           ing of EPA's mission. If engaged in study contract or consulting contract, contractor's understanding of Fedenl Laws
           affecting the work (e.g., for a consultant  on impact statements, understanding of NEPA and all related  guidelines and
           significant court decisions).

   IS      Information  desired  is:  did  the contractor submit the report or equipment as per contract schedule? If not, give reason.

   16      Information  desired  is:  is the report or equipment delivered of high value and/or good quality? Did the report require
           many corrections,  and did the contractor balk at making the corrections without additional cost9

   17      Information  desired  is:  give number of overruns and reasons for this (do  not consider scope changes where ccntrjc.o:
           had to submit a proposal for the additional work); ratio  of addit'onal funding under limitation or  cost provision to
           original estimated  costs. Was underrun achieved by reducing the scope of work or through the development of new
           methods?
                                                      6-48                           Second  Edition
18 thru 21  Self-explanatory.                                                            April 1984

EPA Form 1900-27 [R.v. 10-73)(R.v«rt«)

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                             TABLE OF CONTENTS

                                  CHAPTER 7
M-7.000      RIGHTS AND RESPONSIBILITIES UNDER
               GOVERNMENT  CONTRACTS

M-7.100      Fundamental Duties of the Parties

M-7.101      The Government
M-7.101-1      Contractor Redress
M-7.101-2      Actions to Protect the Government's Rights and Interests
M-7.102      The Contractor
M-7.102-1      End of Basic Duty to Proceed
M-7.102-2      Situations in Which the Basic Duty Is Not Ended
M-7.102-3      Circumstances in Which Performance May be
                 Suspended or Stopped

M-7.200      CONTRACT QUALITY  REQUIREMENTS

M-7.201      Types of Contract Quality Requirements
M-7.202      Inspection
M-7.203      Notification of Rejection
M-7.204      Revocation of Acceptance
M-7.204-1      Latent vs. Patent Defects
M-7.204-2      Fraud
M-7.204-3      Gross Mistakes
M-7.204-4      Guarantees or Warranties
M-7.204-5      Remedies When Acceptance Is Revoked
M-7.205      Peer and Administrative Review

M-7.300      CONTRACT MODIFICATIONS

M-7.301      Introduction
M-7.302      Administrative vs. Substantive Changes
M-7.303      Unilateral Modifications
M-7.304      Bilateral Modifications
M-7.305      The Changes Clause
M-7.305-1      Constructive Changes
M-7.305-2      General Scope of the  Contract
M-7.305-3      Coordinating Change  Orders
M-7.305-4      Concluding Comments
M-7.306      Equitable Adjustments
M-7.306-1      Computation and Negotiation of Adjustments
M-7.306-2      Analysis of Cost of Changes
M-7.307      Role of the Project Officer Regarding Modifications

M-7.400      CONTRACT TERMINATION

M-7.401      Remedies for Deficient Performance Short of Termination
M-7.401-1      Payment Stoppage
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TABLE  OF  CONTENTS (Continued)
CHAPTER  7 (Continued)
M-7.401-2
M-7.401-3
M-7.401-3(a)
M-7.401-3(b)
M-7.401-3(c)
M-7.402
M-7.402-1
M-7.402-2
M-7.402-3
M-7.403
M-7.403-1
M-7.403-2
M-7.403-3
M-7.403-4
M-7.403-4(a)
M-7.403-4(b)
M-7.403-4(c)
M-7.403-4(d)
M-7.403-4(e)
M-7.403-5
M-7.404
M-7.404-1
  Reductions in Price
  Liquidated Damages
    Rate of Damages
    Liquidated Damages Clause
    Administration of Liquidated Damages
Termination for Convenience (T for C)
  Steps Employed
  Settlement
  Involvement of the Project Officer
Termination for Default
  Government's Right to Terminate for Default
  Consequences of Termination for Default
  Alternatives to Termination for Default
  Procedures for Termination for Default
    Preliminary Notice
    Cure Notice
    Notice of Termination for Default
    Excusable Default
    Termination Despite an Excusable Delay
  Waiver of Default
Closeout Procedures
  Project Officer Responsibilities for Closeout
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EXHIBITS
      7-1    EPA Form 1320-6, Project Officer Certification
      7-2    Draft Letter Requesting Project Officer's Evaluation
               of Contractor Performance
                                                             7-29
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                                                         April 1984

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                           CHAPTER  M-7.000

 RIGHTS  AND RESPONSIBILITIES UNDER  GOVERNMENT CONTRACTS
M-7.100  Fundamental Duties of the Parties

    The parties to any Government contract are the United States of America
(the Government)  and the contractor.  Each party  has different rights  and
obligations which should be clearly expressed in the contract document itself.
M-7.101  The Government

    The  Government has  the  obligation  to  refrain  from  unreasonable
interference or delaying the  contractor in its contract performance. Examples
of violations of this obligation are:

    (a)  Issuing defective specifications that result in delaying the contractor
(a square peg to go in a round hole)

    (b)  Failing to  provide in a  timely  fashion and  in usable condition
Government-furnished property or  materials or failing to provide access to
Government premises or data

    (c)  Delaying  unreasonably  Government required  approvals or consents.
These  might  include  approval of drawings or consent to subcontracts.  How
much delay is unreasonable depends on the facts of each case.

    M-7.101-1  Contractor Redress

    (a)  Violations such as  those listed above are conditions for  which the
contractor is legally entitled to recover the amount of any damage caused by
the  breach.    Some  contracts  have  clauses  that  provide  for  contract
adjustments to avoid  forcing the contractor to go to court.  For example, the
Government-Furnished Property clause provides  for equitable adjustment of
delivery time  and for  compensation if Government-furnished property is
delivered late or in unusable condition.
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    (b)  The contractor is entitled to an extension of time for performance if
there is an unreasonable Government delay or interference which hinders the
contractor's performance.

    (c)  If the Contracting Officer determines that any  failure to perform
was due to causes beyond the contractor's control and without its  fault, the
delivery schedule may be revised as provided by the Excusable Delay clause in
cost-reimbursement contracts.  Such causes include acts of God or the public
enemy, fires, floods, strikes, and severe weather.

    (d)  The Default clause in  fixed-price contracts does not provide for a
specific adjustment for delivery  dates. It does, however, provide for an
extension  of  time to perform where failure to perform  on time is beyond the
contractor's control and  not due to negligence or the  contractor's fault. Such
causes for failure are the same as mentioned above for cost-reimbursement
contracts. Government-caused  delays would also entitle  the contractor  to
such relief.

    M-7.101-2 Actions to Protect the Government's Rights and Interests

    (a)  All Government employees are servants of the  citizens and  taxpayers
of the United States and have  a duty to act in  ways  that best serve their
interests.  All contract administration personnel (including the PO) have a duty
to take   actions required  to  meet  the  Government's   obligations  to  the
contractor and to protect the  Government's rights and interests.  When the
Government buys something, it  should get what it pays for—nothing more  or
nothing less.

    (b)  This concept forms the basis for  written  instructions  for contract
administration and is the basic  guideline where such instructions are absent.
The  requirement  in  Part  46   of  the  FAR involving inspection   prior  to
acceptance of contract supplies derives from the concept  that the taxpayers'
funds should not be paid out  prior to determining  that what is delivered.is what
was ordered.

    (c)  Government personnel do not have the  authority  to accept less than
what was contracted for or to waive the right of the Government  without
obtaining  a  suitable  reduction in  the Government's  obligations  to  the
contractor.  In some cases, it might be in the best interest of the Government
to give up a legal right, but this would require extraordinary authority.

    (d) The Government's  basic interest is  to obtain timely performance  or
delivery   as  provided for  in   the  contract.   To safeguard  that  interest,
Government  personnel must keep  informed  of the contractor's  progress and
deal with delays and  problems as  they develop  and,  if  required, exercise the
Government's rights under the contract through the Contracting Officer.
 M-7.102 The Contractor

     The basic  duty of  a  contractor  is to  proceed  diligently  with  the
 performance of the contract. Specific details of the  contractor's obligations
 can be found in a reading of all of the contract provisions.
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    M-7.102-1  End of Basic Duty to Proceed

    This basic duty to proceed comes to an end:

    (a)   When the contract is completed.

    (b)   Upon complete termination  of the contract under provisions  that
permit the Government to terminate performance. (If the termination is only
partial,  the contractor must diligently proceed with  performance of the part
of the work that is not terminated.)

    (c)   If the  obligation to  continue  performance is excused  by  (1) a
sufficiently gross  and  material breach by the Government of its duties and
obligations under the contract, or (2)  impossibility of performance.  However,
where performance is temporarily  impossible, as in the case  of temporary
unavailability  of  materials essential  for  making  the contract supplies,  the
contractor's duty  to proceed will remain effective  and  the contractor must
continue once the obstacle to performance has been removed.

    M-7.102-2  Situations in Which the Basic Duty Is Not Ended

    (a)   Acts  of  God or  the  Government, or  others  which  result in  the
impossibility  of further performance, do not end the  contractor's duty to
perform.  An extension of time may  be applied  for, but the contractor still has
the duty to proceed.  For example, a contractor gathering data on air currents
might be  granted  an extension of time due to severe storms but would still
have to  complete the work within the rescheduled date.

    (b)   Disputes  or disagreements  do not suspend the duty to  proceed.  The
Disputes clause allows  the contractor to appeal a question of fact  from a final
decision  of  a  Contracting  Officer.  However, the  clause  requires  the
contractor to proceed during  the  appeal process  in accordance with  the
decision of the Contracting Officer.

    M-7.102-3 Circumstances  in Which Performance May Be  Suspended or
              Stopped

    The parties may agree to permit or require the contractor to stop or
suspend performance in certain circumstances:

    (a)   When  unexpected  technical  problems  arise,   it  may  be  to  the
Government's advantage to have the work suspended  pending investigation and
testing  to discover the cause  of the problems and determination of the best
way to proceed.

    (b)   The  Limitation  of  Cost  and  Limitation of Funds   clauses  in
cost-reimbursement contracts permit the contractor to  stop work once the
contract funds are exhausted.
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                                M-7.200

                 CONTRACT QUALITY  REQUIREMENTS
M-7.201  Types of Contract Quality Requirements

    (a)  Contract quality  requirements fall  into  three  general categories,
depending on the extent of quality assurance needed by the Government  for
the acquisition involved.   These categories are  (1) Government  reliance on
inspection  by  the contractor,  (2) standard inspection  requirements, and  (3)
high-level  contract   quality requirements.   Category  (1)  usually  involves
common commercial items. Category (3) involves complex items with critical
application and generally  entail the use of  military-Federal  specifications.
Most  Government purchases are such that standard inspection requirements
are used.

    (b)  It is the responsibility  of the contractor to "control" the quality of
supplies or services and tender to the Government only those that conform to
contract  requirements.  It  is the responsibility of the Government to "assure"
that the contractor complies with the  contract terms and specifications.

    (c)  Any one responsible for inspection and acceptance must know:

    (1)  The description, specifications, and standards of the items or services
        required by the contract.

    (2)  The details of the  Inspection  clause.

    (3)  The  contractual  Quality  Assurance/Quality   Control   Program
        elements  (Quality  Assurance  Project  Plan,  Inspection  (Audit)
        Procedures, and related facilities and equipment).

    (4)  The contractor's production  on work process if such  is pertinent to
        accomplishing Government inspection.
M-7.202   Inspection Requirements

    (a)  Every contract has some form of inspection clause which sets  forth
the  rights and responsibilities of  the contracting parties  concerning the
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delivery or performance of acceptable supplies or services.  The working of
the clauses vary somewhat depending on whether its  for use in supply versus
services contracts and  also the type contract involved,  i.e., fixed-price or
cost-reimbursement type.  Some  of these rights and responsibilities  are as
follows:

    (1)  The  contractor is  required to provide and  maintain  an inspection
        system acceptable to the Government and maintain complete records
        of such inspections.

    (2)  The  Government has the right to inspect supplies or services before
        acceptance.   With  this  right  goes  the  responsibility  to  make
        inspection in a timely manner that will not unduly delay the work.

    (3)  The  Government has the right to reject supplies that do  not conform
        to  contract   specifications.  In  cost-reimbursement  type  supply
        contracts, the  Government, may up to six months after acceptance,
        require  the   contractor   replace  or  correct  supplies  that  are
        nonconforming at time of delivery.

    (4)  In fixed-price supply contracts, acceptance by the Government is not
        conclusive  with regard  to  latent defects,  fraud,  or such gross
        mistakes as to amount to fraud.

    (5)  In service contracts, if   services performed do  not  conform  to
        contract requirement, the  Government has  the right to require the
        contractor to  perform the  services again at  no increase in contract
        price or  fee.   When defective  services cannot be  corrected  by
        reperformance,  the Government may reduce  the price to reflect the
        reduced value of the services performed.

    (6)  For  work involving environmentally related measurements for which
        the  Agency Quality Assurance requirements apply,  the  Government
        may  conduct   one  or  more  on-site  technical  systems  audits
        (qualitative audits) during  the course of the project.  The Statement
        of Work must  provide for  the  right of the  Government to perform
        qualitative audits.  These external quality assurance procedures  will
        be performed by the EPA Quality Assurance  Officer or by his or her
        independent third  party designee.  Selection of the specific areas of
        focus for systems audits will be commensurate with the scope  and
        needs of the program.

        Areas of effort which can be considered in systems audits include:

        (1) Facilities
        (2) Equipment
        (3) Methods
        (4) Quality Control Systems
        (5) Recordkeeping
        (6) Data Validation
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        (7) Maintenance and Calibration Procedures
        (8) Reporting
        (d) Adherence to Documented Procedures
        (10) Procurement and Inventory Procedures
        (11) Personnel Training
        (12) Feedback and Corrective Action

        In  addition to   the  above,  the  Government  may  require  the
        contractor's participation   in  one  or   more  EPA  (quantitative)
        performance audits during  the project duration if stipulated  in the
        statement of work.  The purpose of these  performance audits will be
        to  assure and document that data quality meets project objectives.
        Performance audit  techniques could  involve the use of reference
        materials of known composition  or  value and/or split samples for
        independent analyses, independent calibration  checks on individual
        system  components,  and/or  the use  of  colocated samples.   A
        complete record of testing  information (including printouts, graphs,
        cai brat ion charts, and all other pertinent  information used to arrive
        to the reported results) shall be submitted with test results.
M-7.203   Notification of Rejection

    (a)  To exercise its rights of rejection,  the Government  must notify the
contractor of the rejection.  The notice should be prepared by  the  Project
Officer and signed by the Contracting Officer. It should:

    (1)  Be in writing

    (2)  Specifically identify what is rejected

    (3)  Identify the basis for  rejection;  that  is,  the  specific  failure to
        conform to contract requirements

    (4)  State what corrective action is required

    (5)  State whether correction should be made at the Government facility.

    (b)  Unless the contract says otherwise, acceptance or rejection must be
made as promptly as is practical after delivery, since a delay in such notice
may, in some circumstances, imply acceptance.  Inspection of partial products
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or work  in process does not relieve the contractor of the responsibility for
correcting defects discovered prior to acceptance of the final product or the
completed work.  Furthermore, Government  failure  to  inspect, and to accept
or reject, does not relieve the contractor from responsibility for a defect.


M-7.204  Revocation of Acceptance

    The  Government has the right  to require  correction after an  item has
been accepted where latent defects,  fraud, or gross mistakes amounting to
fraud are involved.

    M-7.204-1 Latent Vs. Patent Defects

    (a)  A patent defect is one that could reasonably be discovered by normal
methods.  A latent defect is one that could not be reasonably discovered using
normal inspection techniques.  It does not have to be impossible to discover. A
defect discoverable by special tests (X-ray) is a latent defect if such special
tests are not normally used to inspect that kind of item.

    (b)  The fact that  the  contractor could have very easily discovered the
defect does not make it patent. Government contracts personnel or full-time
quality assurance/quality  control specialists are qualified  to  determine if a
defect discovered after inspection is patent or latent.

    M-7.204-2 Fraud

    The  Government has the right  to revoke  acceptance if it was deceived
into an  acceptance  by  fraud.   Fraud  involves  an  intentional deceit  or
falsehood. Acceptance due to fraud may be revoked even if  the  defect was
patent.

    M-7.204-3 Gross Mistakes

    If the contractor's conduct with respect to  a defect involves a mistake so
gross as  to  amount to fraud, the Government  has the same rights to revoke
acceptance as if there was fraud.

    M-7.204-4 Guarantees or Warranties

    A warranty or guarantee is a promise or affirmation given by a seller to
EPA  regarding  the  nature, usefulness,  or condition  of the  supplies  or
performance  of  services  to be  furnished.  The  principal  purposes  of  a
warranty/guarantee  are  to delineate  the  rights   and obligations  of  the
contractor and EPA for defective  items  and  services and to foster quality
performance.  Generally, warranties survive  acceptance of the contract items
for a stated period of time or use, or until the occurrence of a specified event,
notwithstanding other contractual provisions pertaining to  acceptance by the
Government.  Thus, they allow EPA  additional time  after acceptance in which
to assert a right consistent with the warranty or guarantee.
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    M-7.204-5  Remedies When Aceeptanee Is Revoked

    When acceptance is properly  revoked,  the Government has  the  same
remedies available  as when defects are discovered prior to  acceptance (see
Inspection requirements above).


M-7.205  Peer and Administrative Review

    (a)  The Administrator has implemented an internal review  process for
EPA scientific, informational,  and  educational  materials designed for public
distribution.  Any such materials attributable to  EPA, whether produced  by an
EPA employee, consultant, contractor, or grantee,  must be reviewed  through
the control system  established in the EPA Order prior to public distribution.
The  intent of  the  Order is to ensure  the  high quality, completeness,  and
accuracy of materials attributable to EPA.

    (b)  A new contract clause restricts the contractor from  independently
publishing or printing material generated under contract until after completion
of the EPA review process.  The Project  Officer is to notify the contractor of
review completion with the number of calendar days specified in the contract
clause after the contractor's  transmittal to  the Project Officer  of material
developed under the  contract.  If  the  contractor  does not  receive  Project
Officer  notification  within  this  period,  the  contractor  is to notify  the
Contracting Officer in writing.

    (c)  The contract clause  will  establish  statements the contractor must
include  in  any public distribution  of  the contract-generated  material,  and
requires the contractor to send the PO and CO a  copy of such material  30 days
prior to publication.

    (d)  The procedures for existing contracts lacking the new clause are:

    (1)  Products of  existing  contracts  should be  accepted before initiating
        any review as described in  EPA Order 2200.4.

    (2)  Each  Associate,  Assistant,  or  Regional  Administrator and  Staff
        Office Director in the  Office of  the  Administrator,  or  his/her
        designee,  will peer  and  administratively  review  his/her  own
        documents prior to release to the public. The Project Officer will be
        held accountable for compliance with the objectives of Order 2200.4.

    (3)  The Project Officer is responsible for incorporating the  results of this
        review and for final  disposition of  the material in accordance with
        applicable requirements.
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                                 M-7.300

                      CONTRACT  MODIFICATIONS
M-7.301  Introduction

    (a)  Contract modifications fall into two  major classes:  unilateral and
trilateral.  Unilateral  modifications are  those which the provisions of the
contract allow the Contracting Officer to make and which do not require the
consent of  the contractor. A bilateral modification requires the contractor to
consent to  the contract change.  Listed below are some typical areas in which
modifications are made to contracts.  Each has been  classified  as being a
unilateral or bilateral modification.
       Purpose of Modification                      Unilateral    Bilateral


Changes in:
   specifications, designs, drawings,                     X
   place of delivery, inspection, acceptance
   method of shipping or packing.

Exercise of option                                      X

Termination                                            X

Administrative changes                                 X

Novation agreements                                                 X

New procurement:  increase in                                        X
scope or quantity of work
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       Purpose of Modification                      Unilateral     Bilateral
Equitable adjustments:
   Differing site conditions                                          X
   Suspension of work                                               X
   Government property (fixed-price and R&D)                        X
   Inspection (fixed-price supply and R&D)                            X

Infection and correction of defects                                   X
   (cost-reimbursement supply and R&D)


    (b)   This section discusses contract.modifications per se with the intent
of providing insight both into their use and the Project Officer's involvement
in the modification process.
M-7.302  Administrative Vs. Substantive Changes

    An awarded contract should contain  all the  necessary provisions for
completion of the work and discharge of the obligations of the parties. Other
than exceptions such as fixed-price  redeterminable contracts, modifications
are not contemplated at the time a contract is signed. As a practical matter,
however, few contracts are completed  without some sort  of modification.
Many modifications are simply administrative changes that do not affect the
substance  of the  contract   Examples  would  be  changes  in Government
appropriation data,  paying  office,  or  name  of  Project   Officer.  Other
modifications do involve substantial changes  to  details of  price,  quantity,
quality, or delivery.


M-7.303  Unilateral Modifications

    Unilateral modifications may be either administrative or substantive in
nature (see the section on  the Changes clause, below).  Change orders involve
the Contracting Officer in unilaterally directing  the contractor to perform
work  other than that  which  was originally called for in the contract.  In
addition, the Contracting Officer may make decisions involving disputes that
are reflected in unilateral modifications.  Terminations and exercise of options
are issued unilaterally. These rights  to unilaterally direct the contractor are
provided for in the general  provisions of the contract.


M-7.304  Bilateral Modifications

    (a) Substantive  changes  to the contract  that the  contract  does not
provide the  Contracting Officer the unilateral right to make  require the
agreement of  the  contractor on a  bilateral modification  or supplemental
agreement.   Both parties may enter  into supplemental agreements  affecting
many parts of the contract (see section on Equitable  Adjustments clause).
These are reached by mutual consent and must include all the elements of a
legal contract.
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    (b)  Mutual agreement is not always enough to allow a modification to a
contract. For example, the parties  may want to add work which is outside the
scope of the contract.  However, this is new procurement and requires either a
Justification for Noncompetitive Procurement or a competitive procurement.
In addition, no clause in a contract required by law can be eliminated or
changed, nor can the Contracting Officer consent to waive any substantative
right of  the Government without consideration.  However, many changes can
be made.  Delivery schedules can be moved up or delayed, advance agreements
can be reached concerning allowability of  costs, or any other number of
actions may be taken.

    (c)  Many  bilateral actions will require negotiation concerning  what
constitutes proper  consideration under  the  supplemental agreement.  Such
consideration is subject to the same principles as apply to a new procurement
or equitable adjustments under the Changes clause (see below).


M-7.305  The Changes  Clause

    (a)  Generally, Government contracts contain a "Changes"  clause.  The
clause may differ slightly depending on the type of contract, but the provisions
are essentially the  same. They generally  provide that the Government may
unilaterally make changes, within the general scope of the contract, in any one
or more of the following:

    (1)  Drawings,  designs,  or specifications (in  the case of supplies, only
         where the supplies  are  to be  specifically manufactured  for the
         Government)

    (2)  Method of  shipment or packing

    (3)  Place of inspection, delivery, or acceptance.

    (b)  Special Changes clauses for construction and transportation contracts
permit the Government  to  make  unilateral changes  in the  work  to  be
performed in  ways tailored to the specific industry for which  these special
clauses are designed  (e.g.,  a change  in amount  of Government-furnished
property).

    (c)  The contractor is obligated to proceed  with the work as  changed
when a change order is issued.  If there is an  impact on schedule, cost, or any
other contractual aspects, the contractor may submit a claim for an equitable
adjustment within thirty (30)  days of  receipt  of the change order. If  the cost
of work is decreased,  the Government has a right  to a downward equitable
adjustment in the contract price.

    (d)  Changes are limited  to those that  fall within the general scope of the
contract and must be made by the Contracting Officer in written form.


    (e)  A change requires the execution of a procurement  request (EPA Form
1900-8) plus associated procurement  request  rationale.  For guidance in this
area, refer to Chapter  4.
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    (f)  Revisions of approved  Quality Assurance Project Plans which  have
been incorporated in the statement of work require the issuance of a change
order by the Contracting Officer.

    M-7.305-1   Constructive Changes

    (a)  A constructive change results from  action or  inaction by the  Con-
tracting Officer or any other authorized individual—e.g.,  the Project Officer—
which are of a nature that they can be construed or inferred to have the same
effect as  if the Contracting Officer had issued a written change  order  pur-
suant to the Changes clause of the contract.  In that the contract has "effec-
tively" been changed, the contractor is entitled  to an equitable adjustment.
An example of  a  constructive change would  be  a  failure on the part of a
Project Officer to review a report within the  time frame provided  within the
contract.  Another example  would be where a  Project Officer during contract
monitoring directs a contractor to perform differently  than  provided  in the
contract.  The  contractor  may  later claim that  a  constructive change  was
made and  seek an equitable adjustment.  A PO's authority should be set forth
in writing and should specifically preclude any actions  that  may  affect the
cost or price of the work.

    (b)  There is a fine line between a change and technical  direction. What
might not have seemed  important at the time  may end up having a substantial
effect on  final costs or performance.  In  such cases, it can be expected  that
the contractor will file a claim.

    M-7.305-2   General Scope of the Contract

    (a)  It is not  always clear exactly what comprises the "general scope of
the contract.11  For example, the Changes clause allows for unilateral orders
changing the place of delivery, but the U.S. Court of Claims has found that a
substantial difference in the point of delivery in a  transportation contract was
actually beyond  the  scope  of the contract since, in that  case, the place of
delivery was the subject of the contract.  In supply contracts,  the right of the
Government to make changes in specifications is  limited to goods specifically
made for the Government and not off-the-shelf items.

    (b)  Changes affecting  the quantity  of the work are outside the scope of
the contract and not subject to the Changes clause.  Additional work (not an
exercised  option provision)  is a new procurement.  Substantial reductions in
quantity may actually be terminations rather than changes. Even if the reduc-
tion or deletion  is stated in terms of alteration of drawings or specifications,
it may not be covered by the Changes clause. Minor modifications in design
are covered by  the clause,  even if they  change  the quantity of work to be
performed.

    (c)  Determining whether  a proposed change is a  new  procurement, a
termination, or a change must be done by the  Contracting Officer in the light
of the  facts of the case.  Often disputes  arise in this area and may result in
litigation.
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    (d)  If defective specifications or drawings  are later  clarified by the
Government, it  may  be considered a change even though no formal change
order was  issued.  A change order is the proper method  for changing any
specifications or drawings.

    M-7.305-3   Coordinating Change Orders

    The  Contracting Officer issues change orders even though the  Project
Officer has technical control over the contract; however, he or she discusses
the effects of a change with the Project  Officer  prior to issuing change
orders.  Project Officers are most often performance-oriented people  who
nevertheless must always consider the impact of changes on costs and delivery
schedules.  Consequently, the PO should consult with the Contracting Officer
to understand the impact a change may have to the overall integrity of the
work effort while pursuing technical excellence.  It should also be kept in mind
that excessive changes are a major cause of "cost growth."

    M-7.305-4   Concluding Comments

    Adjustments related to change orders are usually agreed to  by both
parties, but the Contracting Officer has the authority to issue a unilateral
decision if  agreement cannot be reached.  A CO's unilateral decision is subject
to the Disputes  procedures.  The possibility of not being able to agree to the
equitable  adjustment should act  to discourage  the issuance of unilateral
change orders.  It is better to first work things out regarding money and time
rather than invoke the unilateral right to issue a change order. Paperwork is
reduced, as is the possibility of excessive charges by the contractor.
M-7.306   Equitable Adjustments

    (a)  Under the Changes clause, equitable adjustments to price, estimated
cost,  delivery  schedules, or other areas  impacted by  the  change must be
reflected  in a supplemental agreement. In addition to Changes, several other
clauses  call for equitable adjustments under certain circumstances.  Among
these clauses are:

    (1)  Differing Site Conditions (construction);
    (2)  Suspension of Work (construction);
    (3)  Government Property;
    (4)  Inspection (fixed-price supply and fixed-price R&D); and
    (5)  Inspection and Correction of Defects (cost-reimbursement supply and
        cost-reimbursement R&D).

    (b)  The most common adjustments arise under the Changes clause. Basic
principles apply to all equitable adjustments.  Both parties should be made
whole as a result of the adjustment.  Neither party should gain an advantage or
suffer a  loss.  Profitable  contracts  should  remain equally  profitable  and
existing losses should not be borne by the Government.  That is the essence of
the term  "equitable." The following discussion  is based on the most common
problems of adjustments under the Changes clause.
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    M-7.306-1   Computation and Negotiation of Adjustments

    (a)   Most adjustments are based on costs, although they may be priced by
reference to catalogs or market value of supplies or services. If based on
costs, adjustments  must consider the effects of the change on  the  entire
contract, not just the portion of the  work affected by the change.

    (b)   Changes in costs may also require a change in profit or fee to reflect
the circumstances of  the new situation. In some cases an adjustment may be
negotiated only with respect to the fee—for example, in the event of delivery
of nonconforming supplies in a cost-reimbursement contract.

    (c)   Computations and  negotiation of adjustments is  complicated  when
the change both adds and deletes items of work. In effect, one change order
has made two changes. The net result of these additions and deletions may be
very small or exactly equal; however, the concept of equity requires that both
aspects of the change  be properly considered.

    (d)  If the contractor's claim is for a  few dollars, it is not safe to assume
that little examination is required. For example,  the deleted  work may be
labor intensive, with costs comprised primarily of direct labor and, therefore,
subject to overhead charges.  The added  work may be capital intensive, and
the costs not subject  to  the same extent  of  overhead.  Unless care is taken,
the contractor could honestly compare only the direct  costs of the deleted and
added work  and  end  up collecting overhead  expenses not  incurred in  work
performance.

    M-7.306-2   Analysis of Cost of Changes

    (a)  Often,  estimating  the  cost  of a  change is difficult  and out  of
necessity requires a particularly thorough and careful price analysis by the
Contracting  Officer before a supplemental agreement can be negotiated.

    (b)  Difficulty  may  still be encountered  even  though  cost  data  are
available. The estimates of costs  of  work deleted can be  based  on either
(1)  the cost  estimated at the time the contract was negotiated,  or (2) the
costs at the time the change was made.  If the original estimate is used and
costs have risen,  then the contractor will suffer a smaller loss or more profit.
If the reverse is true,  then the contractor  will have a greater loss or less
profit.  Contractor-suggested changes should be thoroughly reviewed to assure
that the contractor is not suggesting changes to enhance its profit position.

    (c)  Pricing  adjustments  after the  work is done is  much easier  than
estimating costs  in advance. The  contractor's  data may  clearly  show the
actual costs of the change to  which a customary profit may be added.  This  is
an  appealing rationale, but  it has  its dangers.   If a change  order has  been
Issued  and  the   work is completed  prior  to  pricing  the adjustment,  the
contractor  has had absolutely no  incentive  toward  controlling costs.  If  a
customary profit is to be added, then the more that is spent  on the  added
work, the larger  the contractor's profit will be.  Even  if the contractor can be
trusted to control costs in such a situation, the Government will not have had
an opportunity to review  the contractor's proposed costs and possibly point out
more efficient production methods or management controls. Forward pricing,
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that is, issuance of a single supplemental agreement  instead of a unilateral
order  followed  by  an adjustment,  allows for a  complete  negotiation  on
technical as well as price aspects of a change. It may not be practical to do
this  for all changes, especially if there are many small ones  to be made. In
that case, a  single negotiation session resulting  in  a  single  supplemental
agreement may be preferred.


M-7.307   Role of the Project Officer Regarding Modifications

     (a) The Project Officer  should  avoid taking any action that results in
directing the contractor in such  a way that it has the effect of changing the
contract's description of the tasks to be performed, the products provided, or
the  time or  place for performance  or  delivery.  The  Project Officer is
authorized only to direct the contractor to carry out the terms of the contract
as written.  Changing the contract's  provisions is outside the authority of the
Project Officer.

     (b)  At  times a contractor  may  suggest  modifications to the contract.
Often  the change will  technically improve the contract services or  supplies
and the Project Officer should realize this. However, it should be kept in mind
that contractors,  especially  those  who  are experiencing  a loss under  a
contract, will suggest changes so as to provide a chance to better  their  profit
position.   The Project Officer  must beware of leading  the contractor  to
believe that  the  Project  Officer's  opinion  authorizes  the contractor  to
proceed.   Such  improper  authorization would be  in  effect a constructive
change.  If the contractor  makes the change and later  claims  extra costs, the
Government will  find it very difficult to deny these  claims for  costs since they
were incurred in good faith (especially if the end result is a better product and
the  agency  benefits).   The Project  Officer's  action would be improper  and
unauthorized  since  only  Government personnel designated  as  Contracting
Officers have  the authority to obligate the  Government.

     (c)  The Project Officer has considerable responsibility for change orders,
even though only the Contracting Officer  has  the power to issue such orders.
Since the Project Officer  monitors the contract performance, he or  she will
often be in an excellent position to  know when a change will serve the best
interests of the Government and help to formulate  that change.  The Project
Officer can  also be of significant  assistance  in  determining  both what  a
reasonable price/cost of the change should be and the effects of the change on
the  contract.  It is  important  that  all potential  effects of a  change are
examined, so  if  additional funding  is required it  can be obtained prior  to
issuing the change order.

     (d)  After a change  order   has  been issued, the  Project  Officer  is
responsible for assuring that the contractor is implementing it.

     (e)  In the case of a revision to an approved  Quality Assurance Project
Plan previously incorporated  in  the  contract, the Project  Officer  and the
Quality Assurance Officer  must approve  the revision.  Once approved, the
Contracting Officer will issue  a  change order to the  contract to  include any
revisions, assuming the revisions are within the scope of the contract.
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                                 M-7.400

                       CONTRACT  TERMINATION
M-7.401  Remedies for Deficient Performance Short of Termination

    (a)  There are a range of actions short of  termination available  to  the
Government when performance is deficient.  These actions may only be taken
by procurement personnel, and are listed below in order of priority:

    (1)  Verbally  bringing  the deficiency to the attention of  the contractor
         and asking for written notice of corrective action

    (2)  Initiating  a letter  (from  the Contracting  Officer)  directing  the
         attention of the contractor to a deficiency and asking for a response
         that includes plans for corrective action

    (3)  Requesting, orally or by letter  from  the Contracting  Officer,  a
         meeting with the contractor's management to focus attention  on  the
         problem and to obtain a commitment to corrective action

    (4)  Accepting deficient performance in exchange for a reduction in price
         or other considerations.

    (b)  Before  resorting  to  termination  of the  contract, the  Contracting
Officer may take one or several  of the actions listed above, or may resort to
payment stoppage,  price  reduction, or assessment of  liquidated damages.
These options are discussed below.

    M-7.401-1  Payment Stoppage

    The Government may withhold authorized  progress or partial payments
until satisfactory progress is shown. This is a powerful right.  Payment should
not be authorized unless the Project Officer is satisfied with the contractor's
progress.
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    M-7.401-2  Reductions in Price

    The  Government has  the option,  under a fixed-price contract, to reduce
the price in return for acceptance of less than contractually required goods or
services. Only the Contracting Officer has the authority to reduce the price.
The Project Officer, however, should not hesitate to suggest a price reduction
if he or she believes it is the proper course of action.  It must be remembered
that any  reduction  in  price should  be based  upon  an actual loss  to  the
Government.

    M-7.401-3  Liquidated Damages

    (a)  Liquidated  damages are  adjustments  for deficiencies in contract
performance. The solicitation resulting in the contract provided that damages
would  be assessed contingent upon late  delivery or some other failure of the
contractor.  Damages are usually  a defined dollar amount.  The FAR states
that liquidated damages should only  be used  in  contracts  for supplies  and
services only if both of the following circumstances are present:

    (1)  Time of delivery or performance is such an important factor in award
         that the  Government  may  reasonably expect to  suffer damage if
         delivery  or performance is late.

    (2)  The extent or amount of such damage would be difficult or impossible
         to determine or prove.

    (b)  In  deciding  whether to  include a liquidated damage clause  in  a
contract, consideration  should be given to their impact on  pricing,  amount of
competition, and the costs and difficulties of contract administration.

    M-7.401-3(a)   Rate of Damages

    The rate of liquidated damages must be reasonable and based on probable
actual costs.  Unreasonable amounts are considered  to  be  punitive  and are
unenforceable.  The  minimum amount of liquidated damages should be based
upon the Government's inspection and administrative costs for each day of
delay.   If  the  Government  will  suffer  other specific  losses  due  to  the
contractor's failure to complete the work on time, these losses should also be
included.

    M-7.401-3(b)  Liquidated Damages Clause

    (1)  The  Liquidated   Damages  clause—Supply,   Service   and   R&D
         contracts—covers three points:  (i) If  the contractor fails to deliver
         the supplies or services within the time specified,  the contractor will
         pay the  Government a fixed amount  for each  day of delay; (ii)  if
         delivery is so delayed, the Government may  terminate the contract;
         and (iiu  the contractor will not be charged liquidated damages  when
         the delay is beyond the contractor's control.
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    (2)  When there are different items or stages of the work, with different
         completion periods provided  for  in the  contract,  the liquidated
         damages for each  item or stage of work should  be provided for in
         separate clauses.

    M-7.401-3(c) Administration of Liquidated Damages

    Personnel involved in contract administration should know the following
points concerning liquidated damages:

    (1)  If the  Government does  not terminate the  contractor's  right  to
         proceed, liquidated damages  will continue  to be assessed until  the
         work is completed and accepted.  The amount  the  Government
         recovers will be limited to the amount of liquidated damages assessed.

    (2)  Liquidated  damages provisions  are  strictly construed against  the
         Government.  This  means that the contractor will  not be  held liable
         unless all  formal procedures  relating to damages are followed  and
         unless the Government is "obviously" in the right.

    (3)  Liquidated  damages are disallowed unless the work  is eventually
         completed by someone,  based on the theory that liquidated  damages
         are for delay in delivery or completion and thus cannot be assessed
         when there is no delivery or completion.

    (4)  Liquidated   damages    are    not    assessed   upon    substantial
         completion—i.e., completion with only minor deficiencies.


M-7.402  Termination for Convenience (T for C)

    (a)  Under the Termination for Convenience clause, the Government has a
right to cancel work under a contract  whenever it determines that it is in its
best interest.  Such  a decision is a unilateral right of the Government. It is
not, however,  a  decision that can be made lightly.  Cancellation of the work
under contract is an expensive and  undesirable course of  action.  Generally,
such terminations occur because of changes  in Government requirements or
because contract funding is not available.

    (b)  The Termination for Convenience clause outlines the actions of  the
contracting parties taken  in consumating   the  termination of  work   and
settlement. In terminating a contract, there may be extensive administrative
effort involved  on  the  part  of  the  Government  with respect  to the various
actions necessary to complete the settlement.

    M-7.402-1  Steps Employed

    (a)  The first step in a termination for convenience is written notification
to  the contractor by the Contracting Officer.  The notice clearly indicates
that the contract is being terminated for the convenience of the Government.
It also gives: (1) an  effective date for  the termination (usually the date of the
notice);  (2) the  extent  of  the termination  identifying what portion, if  any,
should be continued; and (3)  any special instructions.
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    (b)  Upon receipt of the notice,  the contractor is  obligated  to  comply
with the Termination clause and the terms of the notice,  which generally
include:

    (1)  Stopping work on the terminated portion of the contract.

    (2)  Terminating related subcontracts.

    (3)  Continuing  with the unterminated  portion  and  promptly  requesting
         any equitable adjustment in price on the continued portion.

    (4)  Taking  action to protect and preserve any Government property or to
         return it as directed by the Contracting Officer.

    (5)  Settling claims and liabilities arising from terminated subcontracts.

    (6)  Promptly submitting its own claim for settlement.

    M-7.402-2  Settlement

    (a)  The  Contracting Officer  directs  the  actions of  the  contractor,
reviews  the settlement  proposal, and promptly negotiates a settlement.  A
number of  people, including the Project Officer, may be involved in fulfilling
these multi-faceted  duties.  One of the duties of the Contracting  Officer in
which the Project Officer participates  is in the settlement conference.  At the
conference, the  Contracting Officer will:

    (1)  Explain the  general  principles governing  settlements  under  the
         relevant clause, including the contractor's obligations with respect to
         subcontracts.

    (2)  Determine  the status of the work,  and,  if  necessary,  clarify  the
         extent  of the termination.

    (3)  Determine  the subcontracts  being  terminated  and  who  is handling
         them for the contractor.

    (4)  Make  all  arrangements  for proper handling and  disposition of
         Government property.

    (5)  Discuss the form  of the settlement proposal and the accounting data
         required.

    (6)  Establish a tentative schedule for negotiation of  the settlement.

    (b)  Settlement proposals submitted by contractors are subject  to the cost
principles  of FAR Part  31 and will involve  the  Project  Officer in evaluating
their merit.
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    M-7.402-3 Involvement of the Project Officer

    Aside  from  possibly  making  the  recommendation to  terminate  for
convenience, the Project Officer  will be involved in settlement conferences,
advising the Contracting Officer on the disposition of property and evaluating
the  reasonableness  (quantitatively and qualitatively)  of  the contractor's
settlement proposal.


M-7.403  Termination for Default

    (a) Termination for default  is based upon the  contractual right  of  the
Government  to  terminate, in whole  or in part, the contractor's  right  to
proceed  with the  work when the contractor  has  failed  to perform  its
contractual obligations.

    (b) If, after termination for default, it is determined that the contractor
was not in default, or that the default was "excusable," the termination  will be
considered to be for the convenience  of the  Government.  The rights  of  the
parties are then to be governed by  the Termination for Convenience clause.

    (c) The  contract  may  be  reinstated  by  mutual  agreement  if it is
determined by the Contracting Officer to be  in the best interests  of  the
Government.

    M-7.403-1 Government's Right to Terminate  for Default

    This right is based on the contractor's failure to:

    (a) Perform on time, as provided in the contract

    (b) Perform any other provision of the contract

    (c) Make progress, to  the  extent that  the delay  endangers  contract
performance.  Although not expressly  provided for in the Default clause,  the
Government   may  immediately   terminate  for  default  if  the  contractor
definitely exhibits an intention not to perform within the time fixed in  the
contract.   This  manifest  intention is  termed  as  anticipatory  breach  or
repudiation.

    M-7.403-2 Consequences of Termination  for Default

    Depending upon contract type, the  following consequences result  from a
termination for default.

    (a)  On fixed-price  type contracts,  the Government does not have to  pay
the costs of uncompleted work, but only the costs of products delivered to  and
accepted by  the Government.  In  the case of a cost-reimbursement contract,
the Government is liable for costs incurred up to the date of termination, plus
a proportional part of any fee. The Government is not liable for settlement
expenses, nor for any profit on costs of preparation for work in progress.

    (b)  The contractor must return any progress or advance payments.
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    (c)  The Government  has  the  right  to take  over  the  contractor's
inventory, subject to a negotiated compensation.

    (d)  The contractor is liable for any excess costs  the  Government may
have  to  pay  in   repurchasing  the  supplies  or  services.   (However,  a
cost-reimbursement contract does not contain any provision for recovery of
excess repurchase costs.)

    (e)  The contractor may also be liable for breach of contract damages.

    M-7.403-3  Alternatives to Termination for Default

    (a)  Prior to  taking any default action,  the Contracting Officer  will
normally take action on one  of the following  remedies  short  of termination.
At this time, the Contracting Officer should also determine:

     (1) Whether it would be effective to withhold payment until satisfactory
        performance is demonstrated;

     (2) Whether,  if default action is taken, there is an alternative source of
        supply;

     (3) Whether the contractor's  financial condition is such that  it would be
        able to reimburse the Government for the excess costs of repurchase;

     (4) What would be the impact of default  upon the contractor's ability to
        liquidate  progress payments  or continue to  perform under other
        Government contracts;

     (5) Whether continued performance under a revised  delivery schedule
        would be more in the Government's interest;

     (6) Whether  the Government's  interest would  be  better  served  by
        offering  advance  payments  or  some   other  special financing
        agreement;

     (7) Whether,   if  the  contractor  cannot  continue   to  perform,  an
        arrangement  to  have  the  contract  performed  by  a  capable
        subcontractor might be an appropriate solution;

     (8) Whether,  where a  capable organization  declines  to perform  as a
        subcontractor, a novation agreement  can be arranged whereby the
        desired performance can  be obtained from that organization while
        the original contractor still remains legally liable for the contract;

     (9) Whether there is  a surety or trustee in bankruptcy  who would be
        willing to take over the responsibility  for performing the contract;

    (10) Whether, where the requirement for the supplies or  services no longer
        exists and  the contractor is  not  liable  to  the  Government for
        damages,  a no-cost termination agreement should be executed.
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    (b)  The Contracting Officer, with the assistance of the Project Officer,
has a reasonable time to determine if  it is in the Agency's best  interest to
exercise its  right to terminate a contract in default.   The definition  of  a
reasonable period of time depends upon  the facts of each case and varies  from
case to case. The contract file is fully documented to explain the reason(s) for
default and the Agency's rationale for evoking the Default provision.

    M-7.403-4  Procedures for Termination for Default

    In order to effect a proper termination, the Government must follow the
procedural requirements of the Default clause.

    M-7.403-4(a)  Preliminary Notice

    The Government is not required to either give notice of failure or notice
of the possibility of default prior to issuing a  termination  for  default if the
basis for default is failure to deliver or to perform on time.  If, however, the
Government fails to enforce the provisions related to timely delivery, or takes
any action that might be construed as a waiver of the delivery or performance
date, then the  Contracting Officer must send a preliminary  notice  to the
contractor proposing or  setting  a new date.   It is important  that  Project
Officers do not take actions that could possibly be construed as a waiver of
the Government's contractual rights.

    M-7.403-4(b)  Cure Notice

    (1)  In cases where the failure to perform involves provisions other than
         those concerned with  timely  delivery, or  failure  to make  such
         progress  as to  endanger performance  altogether, the  Contracting
         Officer must give the contractor notice of such failure and allow at
         least ten (10) days for cure (remedy)  of the failure before issuing a
         termination notice.

    (2)  This "ten-day cure notice":

            (i) States that  a termination for default  may arise unless the
               failure to perform and make adequate progress is cured within
               ten (10) days (or longer);

           (ii) Calls the  contractor's attention to its contractual liabilities in
               the event of default;

           (iii) Requests  an explanation of the  failure to perform and plan for
               corrective action;

           (iv) States that failure to present an explanation may be taken as
               an admission that there is no valid explanation;

           (v)  Where  appropriate,  invites  the  contractor to  discuss the
                matter at a conference.
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M-7.403-4(c)  Notice of Termination for Default

(1)  Once  the  Contracting Officer  determines  that  termination  for
    default is in order, then the Contracting Officer issues an official
    written notice of termination that:

       (i)  Sets forth the contract number and date and describes the acts
           or omissions that constitute the default;

       (ii)  States that the contractor's right to proceed with performance
           of the contract (or a portion of the contract) is terminated;

      (iii)  States, if the Contracting Officer has not determined whether
           the failure to perform is excusable,  that it is possible that the
           contractor will be   held  liable  for  any  excess  costs  the
           Government must  pay in repurchasing terminated supplies or
           services;

      (iv)  States, if the  Contracting Officer has  determined  that  the
           failure to perform   is  inexcusable,  that (1) the  notice  of
           termination constitutes  such a determination and is a final
           decision  under  the Disputes clause, (2) the contractor will be
           held liable for  any  excess  costs  of  repurchase, and (3) the
           contractor has the right to appeal under the Disputes clause;

       (v)  States  that the Government reserves all rights and remedies
           provided  by law or under the contract;

      (vi)  States  that  the  notice  represents  a  decision  that  the
           contractor is in default  as specified and that the contractor
           has the right to appeal under the Disputes clause.

M-7.403-4
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          (ii)  A  contractor's  default  is   inexcusable  if  caused  by  the
              contractor's own fault or negligence,  by that of something or
              someone within  its  control,  or by  that  of  one  of  the
              subcontractors.

    (4)  There are several excusable  causes  listed in  the excusable delay
        section of the Default clause, some of which are:

           (i)  Acts of God or the public enemy

           (ii)  Acts of the Government in either its sovereign or contractual
               capacity

          (iii)  Fires, floods, epidemics, and quarantine restrictions

          (iv)  Strikes, freight embargoes, and unusually severe weather.

    (5)  In every such case, the failure  to perform must be beyond the control
        and  without fault or  negligence of  the  contractor.   Also,  the
        excusable cause must be the direct cause of the failure to perform.

    (6)  If actions by both the Government and the contractor contribute to
        the default, and the specific causes and effects of the responsibilities
        of each are  so  intertwined as to defy disentanglement,  then the
        contractor's default will not be excused.

    M-7.403-4(e)  Termination Despite  an Excusable Delay

    (1)  If, prior to issuance  of a notice  of termination,  the Contracting
        Officer determines that the contractor's failure is excusable but the
        termination   is  in the  best   interests of  the   Government,  the
        Contracting Officer can take either of these actions:

           (0  Terminate for convenience  where  the  contract  contains a
               Termination for Convenience clause

           (ii)  Terminate at no cost to either party, where the contract does
               not contain a Termination for Convenience clause.

    (2)  If the Contracting Officer was not able to determine whether the
        contractor's  failure  is  excusable prior  to  the  issuance  of  the
        termination, the Contracting Officer  will make a written decision as
        soon as possible. The  written decision will be  delivered to the
        contractor promptly, with advice on the contractor's right  to  appeal
        under the Disputes clause.

    M-7.403-5 Waiver of Default

    (a)  After the contractor is found to  be in default,  the  Government's
rights will be  waived if  (1) the  Government acts or fails  to act and  thus
encourages the contractor to  continue performance, and (2) the  contractor,
relying  on  that  encouragement,  continues  to  work  and  incurs   costs in
performance of the contract.
                                   7-25
                                                           Second Edition
                                                           April 1984

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    (b)   If, after default, a contractor continues to perform and incurs costs,
the  Board  of  Contracts  Appeals  will  carefully  examine  the  contract
administration personnel to see if they said or did anything, or failed to say or
do anything,  that may have encouraged the contractor to continue.   If  the
Board finds such evidence, it will hold that a waiver is the result.

    (c)   If, after default, the contractor does nothing  to continue work or
incur costs, then there will normally  be no waiver, in spite of anything  the
contract administration personnel may have or have not said or done.  The
Government's right to terminate for default will remain intact.

    (d)   The following kinds of acts on  the part of Government personnel have
been held to waive a default:

    (1)   Accepting late delivery

    (2)   Ordering and accepting corrective action after default

    (3)   Encouraging continued performance

    (4)   Negotiating a revised delivery schedule

    (5)   Revising other contract terms

    (e)   The following kinds of acts on  the part of Government personnel have
been held to not waive a default:

    (1)   Conducting negotiations concerning  revisions of delivery times

    (2)   Attempting, unsuccessfully, to revise other contract terms.

    (f)   The best way to avoid waiver of default is to have good rapport and
communication between the Contracting Officer and  the Program or  Project
Officer so that all personnel who  are involved with the  contractor will know
the  contract status, the Government's position,  and  what  each party is
supposed to do and not do.

    (g)   When it is concluded that the Government's action or failure to act is
grounds  for  a waiver  of  the  contractor's default, the Contracting  Officer
should take immediate steps to establish a new delivery schedule. These steps
will revive the Government's right to terminate for default so that the  right is
available in the event of a new default.


M-7.404  Closeout Procedures

     A contract  is complete when all deliverables have been delivered and
accepted or  all required services have  been  performed  and accepted or
formally  waived.    Contracts  that   are  physically   complete  must  be
administratively  closed out.  That means  that all  outstanding  contractual
issues must be settled and the contract documented. The Contracting  Officer
is responsible for closing out the contract with the assistance of  the  Project
Officer.
                                   7-26
                                                           Second Edition
                                                           April 1984

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    M-7.404-1  Project Officer Responsibilities for Closeout

    (a)  At the  completion of  either  a fixed-price  or cost-reimbursement
contract, the  Contracting Officer will request the Project Officer to certify
as to whether:

    (1)  all technical requirements have been satisfied;

    (2)  product(s)/service(s) set forth in the contract  schedule  have been
         satisfactorily completed within contract price/cost; and

    (3)  the final report and/or other deliverable items have been  received
         and accepted (see Exhibit  7-1  at the end of  this section for sample
         Certification Form).

    (b)  It is  the Project Officer's  responsibility to review and determine to
the best of his or her ability the accuracy  of the  contractor's reporting of
inventions.  Findings are sent to the  Contracting Officer.

    (c)  The completion voucher of the contractor, accompanied with a memo
entitled  Provisional Approval for Payment, will be sent to the Project Officer
on  all  cost-reimbursement  type contracts.  The Project Officer  has  the
responsibility  of examining the voucher from the perspective of (1) was  the
work  performed, and  (2) are  the costs  allowable   and  reasonable.  The
determination is sent to the Contracting Officer.

    (d)  All contracts after completion are to be evaluated by the cognizant
Project Officer.  A "Project Officer's Evaluation of Contractor Performance"
(Exhibit  7-2) is forwarded by the Contracting Officer.  The Form 1900-27 is to
be completed  and returned.
                                   7-27
                                                           Second Edition
                                                           April 1984

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                               EXHIBIT 7-1


•A Til
      Project Officer Certification,  Contract Mo.
      68-01-	,  vith __^_____ Contract Type
      Title;""""""                ~~~"~""~~~~~~~~~~
ric
      jccntract  Asrinistrator,  Contracts  Administration Section  (PK-21

  Tfti
      rroject  Officer
      Telephone  No.
      The  end  of the  period  of performance and/or final delirery
      date of  subject contract occurred on
      This office is  undertaking action to initiate rinai cloae-
      out  of the contract.

      It is requested that you cake a physical review of the
      contract and determine if: (1)  all technical requireaents
      have been satisfied;  (2) services set forth in the contract
      schedule have been  satisfactorily cospleted; and/or (3) the
      final report and/or other deliverable itera have been received
      and  accepted.

      In the event that the  Contractor has satisfied the perform-
      ance and/or delivery requirements of the contract, please
      check the appropriate  space and cite the date of your acceptance
      Should there be a need to withhold close-out of tne contract,
      please advise belov and this office will take proper action.
      Your reply vithin  15 days from  the date of this seaorandua
      will be  appreciated.   I say be  reached at 202/^72-93^ if
      you  have any questions.


      {  3 Contract  -requirements have been aet -and close-out-should
            proceed.'   Date of Acceptance:  "

      [  ] Delay close-out  and final payment (please indicate reaaon
            for delay under  "Reaarks").

      Reaarks:
            Date                          Project Officer
                                  7-29
                                                     Second Edition
                                                     April 1984

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                              EXHIBIT  7-2
       UNITED STATES  ENVIRONMENTAL PROTECTION AGENCY
 Subject:  Project Officer's Evaluation of Contractor Performance
          Contract No. 68-01        with
 From:    Contract Administrator, Contracts Section (PM-214-M)
 To:
Project Officer
          You are requested to review the contractor's performance under the
          subject contract and complete two copies of the attached EPA Form
          1900-27.   This form  will  serve   as  a  record  of  contractor's
          performance for use in the source selection process for  future
          contracts with this firm.  Instructions for preparation are printed on
          the reverse side of the form. One  copy should be addressed to my
          attention.  The second copy may  be kept for your records.  Your
          response is requested by	.
          Please assure that the  narrative portion of the form  is completed
          for  all  of  the  evaluation  factors.   If  you  have any  questions
          concerning   completion   of    the   form,   please   call   me
          at  	
         Title of Contract:
Enclosure
cc:
                                  7-31
                                                         Second Edition
                                                         April 1984

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     EXHIBIT 7-2  (Continued)
PROJECT OFFICER'S EVALUATION OF CONTRACTOR PERFORMANCE
i Read inMlfueiioiiM nr. ret rnr bei;n ,-o-i; 'rung ft,**.,
1. FROM 2. TO.
1. FORtARO rOnflnaf enlxl TO: 4. CONTRAC
CONTRACTOR RtkATIOM* SECTION! '*M>ai«l »p n
R AIMING TO* o.c. *M*O 08 — U
•. CONTRACTOR'S NAME AND A O OR CSS '• PROJ. OF
t. BASIC COi
11. CONTRAC
12. PROJECT TITLE
11. EVALUATED CONTRACTOR'S TECHNICAL ADHERENCE TO SCOPE OP WORK
toltomut •** !!"• iMuraMv* a/ raOnf) E V6 A P U

T NO. S. ACTIVITY
1- Wash
NCER'S NAME •. TECHNICAL PROGRAM
4TRACT COST 10. FINAL CONTRACT COST "
TOR PROJECT OFFICER'S NAME

AND COMMITMENT OF PERSONNEL (Clrcl* on. af in*
u. EVALUATE CONTRACTOR'S TECHNICAL PERFORMANCE AND TECHNICAL APPROACH TO TMB PROJECT (Cirei* an* a/ at* toiio-int
mat gl*m n~£tK» * nrtnft • ~ VC A f U-
1S. EVALUATE CONTRACTOR'S SUBMISSION/DELIVERY OF PROGRESS REPORT.
fetid* an* af III* /afl*wa« and «'*• nmtlv* ol nttof) C VG A P
FINANCIAL REPORT. FINAL REPORT. EQUIPMENT
U
14. EVALUATE CONTRACTOR'S-O«LIVERED END PRODUCT W.ponvf au*paM«f..«fc..J fClrel* an* a/ Ih* fatlavaitf and «!*• narrative a<
rating I VC A f U
17. HAS CONTRACTOR Q OVERRUN. OR Q UNOERRUN THE CONTRACT (Emflm* r**»an lor alfn*4
IS. RECOMMENDATIONS AND ADVICE TO PERSONNEL CONSIDERING THIS CONTRACTOR FOR FUTURE SOLICITATIONS.
It. PROJECT OFFICER'S SIGNATURE 20. DATE
II. OVERALL RATING tCn*..* on«
t ve A P u
tPA 'atai 1*00-27 (9*.. 10.71)
KOITIOM i* o«*ohiTi Second Edition
   -            Aoril  1934

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APPENDIX

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                        APPENDICES
APPENDIX A
APPENDIX B
APPENDIX C
APPENDIX D
APPENDIX E
APPENDIX F
APPENDIX G
APPENDIX H
                                      Page
Glossary of terms                       A-l
Acronyms                              B-l
Work Words                            C-l
Extramural Activity Report              D-l
Front Page of Commerce Business Daily    E-l
PEB Report Dated 12/14/83              F-l
Sample Award Fee Plan Dated 12/14/83    G-l
Contract Administration Case Study       H-l

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                             APPENDIX A

                         GLOSSARY OF TERMS
    A glossary does not define its terms,  but rather explains or characterizes
them  within the general context of their  use. This glossary is a collection of
some  of the terms used throughout this Handbook, as well as others commonly
associated with the EPA negotiated procurement process. While it always is
instructive (and sometimes necessary) to search the law or regulations for the
specific meaning and application of terms, there are times when it is helpful
to understand  their  fundamental  sense  and everyday  usage.  This is the
objective here.

    There  are dozens of terms  that  reflect the EPA  procurement  process
environment, but  few of them are subject to  precise, unerring  definition.
Many are terms of art, colored by circumstance and application in different
situations.  So, while the  following explanations and  characterizations are
sound, the reader is cautioned to remember that this is a  glossary, not  a
dictionary.
Allowance Holders

    EPA  managers who are responsible for implementing a  part  of the
Agency's  Annual Operating  Plan  and for reporting  on the progress of the
program and the budget.  They manage allowances which are a portion of the
Agency's  resources used  to  finance  specific parts of  the Annual Operating
Plan.   Allowance Holders are responsible to their Responsible Planning and
Implementation Officer  for   program   resources  and  the  preparation,
implementation, and submission of the Annual Operating Plan.  The Chief of
Staff,  Regional  Administrators,  Associate  Administrators,  and  Assistant
Administrators are both Allowance Holders and RPIOs.  All other Allowance
Holders serve under a RPIO.
                                   A-l
                                                          Second Edition
                                                          April 1984

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Annual Operating Plan

    Detailed quarterly distribution of  the allocation of program resources to
achieve Agency goals.  The Annual  Operating Plan  is prepared under  the
direction of RPIOs by Allowance Holders and submitted to the Office of the
Comptroller  annually and  updated as  needed.   It provides  the estimated
quarterly  obligations for  the fiscal  year  by Allowance  Holder,  program
element, section of law, and object class.


Appeal

    When a contractor disputes an action taken by the Contracting Officer
during performance regarding matters such as an equitable adjustment for  a
change order, and the two parties  fail to agree on the adjustment,  then the
contractor may receive from the Contracting Officer a "Contracting Officer's
Final Determination.11 An appeal is an appeal from the Contracting Officer's
determination and is filed with  a designated Board of  Contract Appeals
through the Contracting Officer.
Carryover Funds

    Funds that are not obligated by the end of a fiscal year and which may be
obligated in the next fiscal year. They include unobligated balances in no-year
and two-year appropriations.  Carryover funds  may be used  in  the current
fiscal year on either contract actions brought forward from  the previous year,
or on new procurement actions.


Change Order

    A  written order signed  by  the  Contracting Officer, directing  the
contractor  to make  changes  that  the  Changes  clause  of the  contract
authorizes  the Contracting  Officer to  make  without the  consent of  the
contractor. Most commonly applies  to supply-type contracts and is limited in
its application. It provides  for an equitable adjustment to  be  determined,
requires the contractor to proceed with its direction, and is  formalized by  a
Supplemental Agreement.


Commerce Business Daily (CBD)

    A Government publication  distributed  to subscribers five times weekly,
which    contains   synopses   of   upcoming   solicitations,   subcontracting
opportunities,  notices  of award, foreign trade  opportunities,  and  other
information useful to those seeking opportunities  for  contracting  with the
Federal Government or subcontracting with its prime contractors.
                                   A-2
                                                          Second Edition
                                                          April 1984

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Commitments

    The reservations of funds for specific projects or services to be procured.
The term refers to funds  which have been submitted for obligation processing
and entered in the  Financial  Management  System  (FMS)  prior  to  formal
obligation.
Common Cut-Off Date

    In negotiated procurements,  the closing date  for  the  receipt  of  initial
proposals, or the closing date for receipt of revised proposals  and Best and
Final Offers after written or oral discussions have been concluded.
Competitive Range

    A range  determined  by  the Contracting  Officer  after evaluation of
proposals that will include all offerers except those determined  to  have no
chance,  through  clarification  and  discussions,  of improving their  relative
positions to the point of being selected for the award of a contract.


Conflicts of Interest

    Organizational conflict of interest exists when an offerer or contractor
for any of a  number of  reasons has  interests relating  to  the work  to be
performed under an EPA  contract  which (1)  may diminish the  impartiality,
objectivity and  soundness  of assistance  and advice or otherwise bias  work
product,'or (2) result in an  unfair competitive advantage.

    Personal  conflict of interest exists when an EPA employee's judgment or
actions in procurement may be improperly  influenced or biased in favor of a
particular contractor for reasons such as ownership of stock or relationship to
employees of the contractor.
Consulting Services

    Those services of a purely advisory nature relating to the Governmental
functions of Agency administration and management and program management.


Contracting Officer (CO)

    That individual who because of business, administrative, leadership, and
technical skills and capabilities is assigned by EPA as responsible for assuring
that contracting is done as authorized by  law and regulation.  The  CO  is
appointed by the use of a Contracting Officer's Warrant  and is the only one
authorized to commit the U.S. Government through contracting.
                                   A-3
                                                           Second Edition
                                                           April 1984

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Contracts

    Legal documents between two or more parties which are used to acquire
and/or deliver real property or services.  In  EPA, R&D contracts,  program
contracts,  ADP   service  contracts,  and  other  contracts  and   contract
modifications processed and administered by the Procurement and Contracts
Management Division (PCMD) in Headquarters, and the Contracts Management
Divisions in Research Triangle Park (RTP) and Cincinnati are included under
this definition.  Purchase orders, construction contracts under $2,000, delivery
orders under the  Federal Supply Schedule  and  other  agencies'  contracts,
cooperative agreements,  grants, interagency agreements, training and tuition
contracts,  printing contracts, and other  contracts not  administered by the
three contracting offices are not covered in this Handbook.


Deficiencies/Questions

    In  evaluating  proposals,  deficiencies  may  be  identified  and  certain
questions may indicate the need for clarification.  The deficiencies/questions
identified form the basis of negotiation with offerers in the competitive range.


Determination and Findings (D&F)

    A series of  actions  taken  to  document  findings  of fact supporting  a
determination by a Contracting Officer or higher authority that,  for example,
it is proper to use negotiation rather than formal advertising as a method  of
procurement.


EPA Acquisition Regulation (EPAAR)

    That portion of 48 CFR (Code of  Federal  Regulations) Chapter  15  that
identifies, by addition and exception, specific  EPA implementation of the law
and the FAR.
Federal Acquisition Regulation (FAR)

    The primary regulation for use by all Federal agencies in  the acquisition
of supplies and services.


Fee Determination Official (FDO)

    That individual assigned responsibility for arriving  at  determinations
regarding a contractor's entitlement to portions of the award fee pool under a
cost-plus-award-fee  contract, such  determinations  being  made at specified
times during  the period  of contract  performance  based  on  evaluation and
assessment findings of a performance evaluation team.
                                  A-4
                                                          Second Edition
                                                          April 1984

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Full and Open Competition

    The  standard for use in Government acquisition, full and open competi-
tion, means all responsible sources are permitted to compete.
FMS and RMIS Object Class Codes

    Codes assigned to categories of goods or services for which the Agency
spends  funds.  Specific definitions for  Resources Management  Information
System  (RMIS)  and Financial Management System (FMS) Object  Class Codes
are given in Appendix B.3 of the EPA  Planning and Budgeting Manual. These
codes are used for tracking commitments, obligations, and disbursements on
these two information systems.


Invitation for Bids (IFB)
    A form  of solicitation  to  obtain bid prices  in  a formally advertised
procurement.


Justification for Other than Full and Open Competition (JOFOC)

    The  formal document prepared by the requiring  activity substantiating
and justifying that  a particular procurement should be conducted on a  non-
competitive or a limited competitive basis for certain specified reasons.


Level of Effort (LOE)
    An expression of the number and type of employee-months or hours that
the Government is purchasing under a contract. In a term type contract, the
level of effort will be based on the period of performance.
Negotiation Memorandum

    That document prepared by the contract specialist covering the details of
the conduct of negotiations and the sequence  of events leading to their
conclusion.  Justifies any actions taken during the conduct of negotiations as
having been made within  the authority delegated to the contract  specialist,
especially  as  such actions  may  have departed  in  any way from  the  pre-
negotiation objectives approved prior to the start of negotiations.


Obligations

    The result  of executed contracts or other  legal  promises  to lease,
purchase and/or deliver real property  or services.  Obligations  occur when
contracts or other legal documents are signed by the parties involved,  and
submitted  to financial management  for recording and official designation of
funds in accordance  with the  terms of the contract.  A contract or other
document is referred to as an obligating document.
                                  A-5
                                                      Second Edition-4/84
                                                      Rev. No. 2-9/30/85

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Pricing Report

    Information furnished  to  the Contracting Officer by  those who have
conducted an analysis of  contractor's  pricing proposal that identifies the
findings of that analysis concerning all  elements  of estimated cost or price,
with  special  emphasis  on any  areas  which are  either  questionable  or
nonallowable. This report is advisory to the Contracting Officer.


Procurement and Contracts Management  Division (PCMD)

    The organization responsible  for EPA contracting,  which has operations
offices in Washington Headquarters, Research Triangle Park, and Cincinnati,
Ohio.
Procurement Request (PR)

    The document prepared by a requiring activity containing the information
necessary to permit contracting.  EPA Form  1900-8  (Procurement Request/
Order) with accompanying instructions.
Project Officer

    That  individual  who  because of  superior  technical,  leadership,  and
management  skills and  capabilities is assigned technical  responsibility from
the inception of  a  requirement through its completion and  closeout  of the
contract under which the requirement was satisfied.
Protest

    An action permitted by law and regulation by which an interested party,
usually  an unsuccessful offerer, may challenge circumstances surrounding a
procurement.  Protests are filed with the Contracting Officer and also may be
forwarded to the General Accounting Office (GAO) to obtain a decision, either
a denial or an acceptance, by the Comptroller General.  Protests may be made
to the General Services Board of  Contract Appeals (GSBCA)  relative to the
acquisition of AOP equipment and services. Protest actions normally will hold
up a procurement for which a contract has not been awarded. Protests usually
encompass actions  taken  before  and  during  the preaward  phase  of the
procurement process.


Request for Proposals (RFP)

    A form of solicitation to obtain proposals in a negotiated procurement.
                                  A-6
                                                     Second Edition-4/84
                                                     Rev. No. 2-9/30/85

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Responsible Planning and Implementation Officers (RPIOs)

    Agency top managers who are responsible for the review, control, and
management over programs and resources assigned to them and for compliance
with requirements related to the overall planning and budgeting process. They
develop, submit, and implement their own Annual Operating Plan.  The Chief
of Staff, Associate Administrators, and  Assistant Administrators serve  as
RPIOs over the Allowance Holders within their respective offices.  All of the
above are both RPIOs and Allowance Holders.
Revised Proposal

    Once written or oral  discussions have been  concluded,  the  Contracting
Officer will  issue a  written  notification  to  all  offerers still in contention
calling  for  the submission  of their revised proposals.  This  is  the  final
opportunity for an offerer to revise its proposal.
Small Purchases

    Small purchases include the  following:  (1) purchases  where  the sum
involved in any one transaction does not exceed $25,000 or (2)  imprest fund
transactions  which may be used for procurements  of $250 or less ($500 for
emergencies); unless a lower limit is  established by local procedures. The
funds for these procurements  will be planned against the appropriate RMIS
object class codes and committed and obligated against the appropriate FMS
object  class codes.  Small  purchases and  contract procurements may  be
charged to the same RMIS and/or FMS code.


Source Evaluation Board (SEB)

    That body of individuals of varying technical, legal, contractual, and other
expertise that is assigned responsibility for evaluating offers and reporting  its
findings to the Source Selection Official.

Source Selection Official (SSO)

    That individual with the authority to  make the final determination as to
which source offers the arrangement most advantageous to the Government,
all factors considered, and to authorize the award of a contract.
Supplemental Agreement

     A  written  agreement  executed  by both  contracting parties for  an
agreed-to modification of a  contract.  Considers the impact of specifications
for performance, delivery, price, alteration  of terms and conditions, and any
other matter appropriate  to the modification.
                                   A-7
                                                           Second Edition
                                                           April 1984

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Technical Direction

    The  exercise of authority  by an  individual  named  and  specifically
authorized by the contract to direct the performance of the contractor within
the expressed scope  of work found in the contract, so long as such direction
does not assign additional work, constitute changes to the contract, increase
or decrease agreed-to estimated cost or price, or alter the agreed-to delivery
schedule or any other terms and conditions of the contract.
                                   A-8
                                                           Second Edition
                                                           April 1984

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                             APPENDIX B

                              ACRONYMS
    The following is an alphabetical list of all acronyms used throughout this
Handbook.  Its purpose  is to serve as a quick reference for those who may be
unfamiliar with the lettered shortcuts that are used commonly to signify terms
and phrases associated with the EPA acquisition/procurement process.

    ADP      Automatic Data Processing

    ADPE     Automatic Data Processing Equipment

    A-E       Architect-Engineer

    BEP       Business Evaluation  Panel

    CBD      Commerce Business Daily

    CFR      Code of Federal Regulations

    CO       Contracting Officer

    COI       Conflict of Interest

    CPAF     Cost-Plus-Award-Fee

    CPFF     Cost-Plus-Fixed-Fee

    D&F      Determination and Findings

    EPA       Environmental Protection Agency

    EPAAR   Environmental Protection Agency Acquisition Regulation

    FAR      Federal Acquisition  Regulation

    FDO      Fee Determination Official

    FFP       Firm Fixed-Price
                                 B-l
                                                        Second Edition
                                                        April 1984

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FSS      Federal Supply Schedule

GAO     General Accounting Office

GPO     Government Printing Office

GSA     General Services Administration

IFB      Invitation for Bids

JOFOC   Justification for Other Than Full and Open Competition

LOE     Level of Effort

MBEO    Minority Business Enterprise Office

OFPP    Office of Federal Procurement Policy

OMB     Office of Management and Budget

PCMD    Procurement and Contracts Management Division

PEB     Performance Evaluation Board

P.L.     Public Law

PO      Project Officer

PR      Procurement Request/Order

RFP     Request for Proposals

SBA     Small Business Administration

SEB     Source  Evaluation Board

SIC      Standard Industrial Classification (Code)

SOW     Statement of Work

SSO     Source Selection Official

TEP     Technical Evaluation Panel

TSP     Teleprocessing Services Program
                             B-2
                                               Second Edition-4/84
                                               Rev. No. 2-9/30/85

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                               APPENDIX C
                              WORK WORDS
    The following is an alphabetical list of work words that may be utilized to
shape and support declarative identifications of need in preparing Statements
of Work.  They are  reminders of the  various  shades of meaning that  are
conveyed through their use.
         analyze
         annotate
         ascertain
         attend
         audit
         build
         calculate
         compare
         consider
         construct
         contribute
         control
         create
         define
         design
         determine
         develop
solve by analysis
provide with comments
find out with certainty
be present at
officially examine
make by putting together
find out by computation
examine to determine likenesses or differences
think about; decide
put together; build
give along with others
direct; regulate
cause to be; make
make clear; settle the limits
perform an original act
resolve; settle; decide
bring into being or activity
        C-l
                                                           Second Edition
                                                           April 1984

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differentiate
erect
establish
estimate
evaluate
evolve
examine
explore
extract
fabricate
form
formulate
generate
inquire
inspect
install
institute
integrate
interpret
investigate
judge
make
manufacture
notice
observe
organize
originate
make a distinction between
put together; set upright
set up; settle; prove beyond dispute
approximate an opinion of
find or fix the value of
develop gradually; work out
look at closely; test quality of
examine for discovery
take out; deduce; select
build; manufacture; invent
give shape to; establish
to put together and express
produce; cause to be
ask; made a search of
examine carefully or officially
place; put into position
set up; establish; begin
add parts to make whole
explain the meaning of
search into; examine closely
decide; form an estimate of
cause to come into being
fabricate from raw materials
comment upon; review
inspect; watch
integrate; arrange in a coherent way
initiate; give rise to

        C-2
                                                   Second Edition
                                                   April 1984

-------
perform          do; carry out; accomplish
probe             investigate throughly
produce          give birth or rise to
pursue            seek; obtain or accomplish
reason            think; influence another's actions
recommend       advise; attract favor of
record            set down in  writing; act of reproducing forms of
                  communications
resolve           reduce by analysis; clear up
review            inspection; examination or evaluation
scan              look through  hastily
search            examine to find something
seek              try to discover; make an attempt
shall              required
should            preferred but not required
solve              find an answer
study             careful examination or analysis
trace             to copy  or find by searching
track             observe or plot the path of
                          C-3
                                                  Second Edition
                                                  April 1984

-------
                         Appendix D
     i     UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
    '/                 WASHINGTON. D.C. 20460
                                                      AUG 20 682
                                                        OFFICE Of
                                                 PESTICIDES AND TOXIC SUBSTANCE
MEMORANDUM

TO:       Office Directors
          Division Directors
          AA Budget Officers
          Regional Administrators

SUBJECT:  Agency Extramural Activity Report (EAR) for
          Toxics-Related Projects Volume I, Issue 2

     The second issue of the Extramural Activity Report
(EAR), prepared by the Office of Toxics Integration (OTI),
is attached for your use in developing future contract
packages.  This issue supplements Volume I. Issue 1 (April 1962)
by providing 7Y82 plans for toxics-related projects/contract
descriptions that have been developed since J'arch 1982 and
the projects of several ORD offices that were not included
in Issue 1.  In addition, Volume I, Issue 2 contains descriptions
of toxics-related grants, cooperative agreements and Interagency
Agreements awarded to date in FY82.  Also, for FYS1 research
grants, the Office of Research Grants and Centers has prepared
a description of each FY81 research grant.  For further
information on these as well as FY82 research grants,
contact Bob Woodside in ORD (426-2355).

     OTI developed the EAR with program office input to
provide information across programs to help coordinate the
planning and issuance of work assignments for level-of-
effort (term) type contracts, as well as the issuance of new
procurements.  While the sponsoring office is indicated, CTI
maintains a log of the project officer's name and phone
number to assure that only legitimate EPA users are put in
touch with project officers.  This information can be obtained
by contacting the OTI staff indicated below.

     As in the past, we strongly urge you to use this new
tool in the procurement planning process and in your contract
review and certification procedure.
                             D-l

-------
     This fall, OTI will prepare another edition of the EAR
covering headquarters FY83 procurement plans as well as the
toxicsrrelated activities of selected EPA regional offices.
By working more closely with you as you generate FY83
contract plans, we plan to issue the next edition prior to
the end of the first quarter.

     In keeping with printing limitations, the EAR cannot be
furnished to every EPA project officer; therefore, ensuring
the availability of this document to appropriate personnel
within your office is critical to its successful utilization.

     If you have any questions, suggestions, or want to
contact the project officer for any of the projects listed,
please call Arnie Edelman or Joanne LaBaw of OTI at
382-2249.
                       n,
          Assistant Administrator
            for Administration
John A. Todhunter, Ph.D.
Assistant Administrator
  for Pesticides
  and Toxic Substances
Attachment
                              D-2

-------
                                                    TABLE OF CONTENTS

                                                                                                        Page



             Literature Survey	   1

             Pate and Transport/Materials Balances	   2

             Health/Environmental Effects	  1O

             Health Effects	  13

             Environmental Effects	  25

             Exposure	  32

             Risk 	  38

             Industrial Studies	  42
a
u>            Economic Studies	  48

             Treatment/Technology Development/Evaluation.	  55

             Haste Management/Resource Recovery	  61

             Emergency Response	  73

             Policy Studies/Regulatory and Control Options...	  77

             Methodology Development/Validation

               •   Treatment Proceaaes and Monitoring..	  83

               •   Chemical Analyses	  H4

               «   Health and EvnironmeriLal Studies	  08

-------
                                                                                                          Page
V
*>
              Mode Ling	  93



              Data Base Development[[[  100




              Sampling Analysis and Monitoring




                •   General....	».	•••	  102



                •   Monitoring, Human	  107





-------
Extramural Activity Report (EAR)


     The Extramural Activity Report was developed by the Office of
Toxics Integration (OTI) to provide information to Agency staff on
upcoming extramural (i.e. contract and grant) efforts regarding
toxics-related topics.  Prior to the development of the EAR, program
offices had no mechanism to assure that their information gathering
efforts on chemicals and industries were coordinated and did not
overlap those planned by other program offices.  To avoid such
duplication, the offices could only rely upon such limited sources
of information as the library (partial listings of completed contracts)
and automated systems such as the now-discontinued Smithsonian Science
Information Exchange  (SSIE).  These systems provided some information,
but did net provide information concerning planned efforts,  or task
orders to be written under level of effort contracts.  In order to
better integrate efforts, as well as pool joint office resources, a
mechanism was needed to provide information on emerging extramural
needs that are in the early planning stages as well as projects just
underway.

     The EAR was developed for the purpose of fostering intra-Agency
contract and grant integration.  This report provides information on
those upcoming extramural projects of cross-Agency interest concerning
toxic chemicals and industries.  The first EAR, issued in April,
described about 150 contracts from the following EPA program offices:
Office of the Solid Waste, Office of Emergency and Remedial Response,
Office of Air Quality Planning and Standards, Office of Water, Office
of Pesticide Programs, Office of Toxic Substances, Office of Toxics
Integration and approximately half of the offices in the Office of
Research and Development.  The second issue  includes new or additio-
nal contracts not included in the April issue as well as ORD con-
tracts that were not previously covered.  In addition, interagency
agreements and research grants are included.  OTI plans on  issuing
the EAR quarterly with the next issues planned for January, May and
August.

     To obtain copies of the EAR, contact Arnie Edelman in the
Office of Toxics Integration  (TS-777), telephone 382-2249.
                               D-5

-------
                                                        Appendix E
                                                                                                   WEDNESOAT. SEPTEMBER 8. 1382

                                                                                                   lnua Ho. PSA-S1S3
                                                                                A  daily list of U.S. Government
                                                                                procurement invitations,  contract
                                                                                awards,  subcontracting leads,
                                                                                sales of  surplus  property and
                                                                                foreign business  opportunities
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-------
                                  APPENDIX F

                              SAMPLE PEB REPORT

         Performance Evaluation  Board's  Performance  Evaluation  Report

                           Contract No. 68-XX-XXXX

                                 Company Name

                          Report No.  (insert number)


Evaluation Period:  From - To

Attendees:  Performance Evaluation Board (PEB)

NAME               TITLE (If applicable)
Other Attendees:

NAME               TITLE (If applicable)
Summary;   Quality of Contractor performance with respect to each of the
~          performance categories defined in the Performance Evaluation Plan
           for the (insert number) evaluation period was evaluated based upon
           the performance event reports submitted to the Evaluation
           Coordinator.

The attached Table 1 provides a summary of the Award Fee awarded for the
(insert number) evaluation period.

Table 1-a provides a summary of Award Fee determination from the inception of
the contract to the (insert number)  Performance Evaluation period.
                                 F-l
                                                       Second Edition
                                                       April 1984

-------
                 SAMPLE  PEB REPORT
                      Table  1

                     Period 6

Award Fee Determination for Contract No.  68-XX-XXX

                  (Company Name)
Performance
Categories
- Program Management
- Emergency Response
- Technical Support
TOTALS
Available Award Fee Awarded Fee
% of Available $ % of Available
Fee for Period Available Fee $ Awarded Awarded
30%
40%
30%
100%
23,113
30,817
23,112
77,042
85%
90%
80%
85.5%
19,646
27,735
18,490
65,871
                   F-2
                                         Second Edition
                                         April 1984

-------
                              SAMPLE PEB REPORT
                                  Table 1-a

       AWARD FEE DETERMINATION FOR CONTRACT OVER PERIOD OF PERFORMANCE
Performance
Categories
AVAILABLE/AWARDED FEE PER CONTRACT PERIOD

Project Management
Available
Awarded
Emergency Response
Available
Awarded
Technical Support
Available
Awarded
Project Organizatior
Available
Awarded
Spill Prevention
Available
Awarded
Total
Available
Award
End of
Eval. Per
(Date)
1
5,257
100%
5,257
50%
5,257
65%
31,545
85%
5,257
100%
52,573/
100%
42,322/
80.5%
2
9,858
95%
9,857
95%
9,857
75%
NA
NA
9,857
90%
39,429/
100%
34,993/
88.7%
3
9,857
90%
11,829
100%
9,857
90%
NA
NA
7,886
90%
39,429/
100%
36,668/
92.5%
4
9,857
100%
15,772
100%
13,800
80%
NA
NA
NA
NA
39,429/
100%
36,669/
93.3%
5
9,857
70%
15,772
85%
13,800
85%
NA
NA
NA
NA
39,429/
100%
32,036/
80.45%
6
23,113
85%
30,817
90%
23,112
80%
NA
NA
NA
NA
77,042/
100%
65,871/
88.5%
                                F-3
                                                       Second Edition
                                                       April 1984

-------
                              SAMPLE PEB REPORT

                               PEB EVALUATION


Category I - Program Management

       Available                                             Awarded

     $23,113 - 30%                                        $19,646 - 85%

                           (NARRATIVE EVALUATION)


Category II - Emergency Response

       Available                                             Awarded

     $30,817 - 40%                                        $27,735 - 90%

                           (NARRATIVE EVALUATION)


Category III - Technical Support

       Available                                             Awarded

     $23,112 - 30%                                        $18,490 - 80%

                           (NARRATIVE EVALUATION)


General

     To better reflect programmatic emphasis,  the PEB has made changes in the
percentage of fee allocation.  The Performance Evaluation Categories along
with the appropriate percentage of fee allocation for period  	  ,
through	  is set forth in the attached Table No. 2.
Date                                   Name
                                       Chairman,  Performance Evaluation Board
                                       Contract No.  68-XX-XXX
                                F-4
                                                       Second Edition
                                                       April  1984

-------
                              SAMPLE PEB REPORT



                                   Table 2

                           Evaluation Period No. 7

                                  From - To

                         Award Fee Allocation Matrix

                                     for

                           Contract No. 68-XX-XXX

                                Company Name
Performance Evaluation
     Categories	

  I  Project Management

 II  Emergency Response

III  Technical Support
% of Award
Fee for Period
35%
40%
25%
100%
$
Available
26,965
30,817
19,260
77,042
                                F-5
                                                       Second Edition
                                                       April 1984

-------
Contract No:
                                  APPENDIX G

                         SAMPLE FEE ALLOCATION MATRIX


                            FEE ALLOCATION MATRIX


                                           Contractor:
EVALUATION CATEGORY
I
II
III
IV
V
VI
Total
Available Dollars
PERFORMANCE EVALUATION PERIODS
1/01/84
to
4/30/84
20%
20%
20%
20%
20%
0%
100,000
5/01/84
to
8/31/84
20%
15%
20%
15%
20%
10%
120,000
9/01/84
to
12/31/84
20%
10%
20%
10%
20%
20%
120,000
I/ 01/85
to
4/30/85
20%
5%
20%
5%
20%
30%
120,000
5/01/85
to
8/31/85
20%
0%
20%
0%
20%
40%
120,000
9/01/85
to
12/31/85
20%
0%
20%
0%
20%
40%
100,00o|
Approved:
          Chairman, Performance Evaluation Board
Date:
                                 G-l
                                                       Second Edition
                                                       April 1984

-------
Contract No:  68-01-6388
Contractor:  JRB Associates, Inc.
EVALUATION CATEGORY
1. Data Generation
Field Validation
2. of Criteria
3. Economic Analysis
Preparation of Cost/
4. Benefit Analysis
5. Program Management
Dollars Available
End of Performance Evaluation Period
9/11/81
20%
40%
10%
10%
20%
*!/
12/4/81
20%
40%
10%
10%
20%
$!/
3/26/82
25%
30%
15%
10%
20%
$!/
6/18/82
30%
20%
20%
10%
20%
*!/
9/10/82
20%
15%
25%
20%
20%
$!/
12/31/82
10%
10%
30%
30%
20%
$/
    I/The  fee  pool is allocated among  evaluation  periods in  direct proportion  to
the level of effort expended during the  period.
Approved:
         Effective Date:
          Chairman,  Performance  Evaluation Board
                                G-2
                                                      Second Edition
                                                      April 1984

-------
Contract No. 68-01-6388 Award Fee Plan
II. Performance Evaluation Categories

    Five performance  categories  have  been  selected for  evaluating
    performance  under   this   contract.    The   available   fee   is
    distributed  among  these categories  as  indicated  in  the  fee
    allocation  matrix  which   is  also  part  of   this  plan.    The
    Contractor's  performance  will  be  assessed  in  the   following
    categories:

    1. Data Generation

       This  category  includes  the  generation  of  all   toxicity,
       ecological effects and chemical data needed  for ambient  water
       criteria  development  and preparation  of  hazard  assessment
       profiles.   Toxicity  data  will  be  generated  for  acquatic
       organisms and  non-human  mammals and  will  be  obtained  from
       standard acute,  chronic  and bioconcentration/biomagnification
       tests on  a  variety of animal  and plant species.   Ecological
       data   will   include   bioconcentration   and   biodegradation
       measurements.   Chemical  data  will  include pH,   dissolved
       oxygen,   total   suspended  solids,   hardness  and   specific
       chemical  constituent  analyses.   Quality  assurance,  control
       activities and quality of reporting format  are also included
       in this evaluation category.

    2. Field Validation of Criteria

       This category includes the refining and implementation of  the
       organism testing protocol for criteria modification.  A  major
       task in this area  is coordination of protocol  implementation
       between  the  States  and  EPA.   This  category  also  includes
       supporting the development  of  the chemical model protocol  by
       generating data  specified  in  the  first  evaluation  category
       and assisting in the validation of this protocol in  the field.

    3. Economic Analysis

       This category  includes the preparation  of  economic  analyses
       and  economic  impact  statements  on  the   implementation  of
       criteria into  a  water quality based  control on point source
       dischargers  throughout  the NPDES  permitting  system.   It  is
       anticipated that the  Contractor  will  be required to cost-out
       various  treatment  technologies  and  strategies  during  the
       course of the work.

    4. Preparation of  Cost/Benefit Analyses

       This   category   includes   assessing   treatment   costs    for
       dischargers  to  attain  water  quality  based  standards  and
       analyzing corresponding  benefits achieved.   Included in  the
       analysis of  benefits  will be an  enumeration of hierarchy  of
                                 G-3

                                                       Second Edition
                                                       April 1984

-------
Contract No. 68-01-6388 Award Fee Plan
       beneficial  uses  for  the  water  bodies  with  statements  of
       expected impacts on human activities and on the ecosystem for
       each beneficial use.

    5. Program Management

       This category  includes all  those generalized activities  most
       closely associated with  managing and  administering the  work
       being  done  and  the  resources  being  expended   under   the
       contract.    The  Board   will   evaluate,   for  instance,   the
       Contractor's performance  in maintaining  effective  staffing,
       in controlling cost growth, in  submitting work plans, in the
       timely submission of required reports  which  must reflect the
       highest degree  of  quality  attainable, in  administering  its
       subcontracting program,  and in  taking appropriate  management
       action when necessary.

       This  is  a  very  broad   category,   and   will  include  other
       management related activities  not  specifically  mentioned  in
       this plan.

    Every effort has been made to describe the categories  as clearly
    and concisely  as possible.   The  Contractor will  be  cautioned,
    however, that as  a  result,  the definitions  given  above may  not
    be complete.  If  a  reported performance  event  does  not exactly
    fit one  of the above defined  categories, it will  be  evaluated
    under the most appropriate category by  the Board.
                                G-4
                                                      Second Edition
                                                      April 1984

-------
Contract No. 68-01-6388 Award Fee Plan
III. Performance Evaluation Criteria

     In   evaluating   the   performance   of   the   Contractor,   the
     Performance  Evaluation  Board will  apply  criteria  that  have
     traditionally been used  by managers to evaluate  performance  in
     almost any context.

     Performance criteria of  special  importance to the Board  are  as
     follows:

     1. Timeliness

        This  criterion includes  the  ability  of  the  Contractor  to
        follow  an   established  period  of  performance   for  work
        assigned, and for delivering required reports.

     2. Responsiveness to Technical Direction

        This   criterion  includes  the  Contractor's   demonstrated
        response to  the Project Officer's guidance of  the  technical
        aspects of the work.

     3. Initiative and Assumption of Responsibility

        This  criterion  includes  the  ability  to  anticipate   and
        respond  to  problems  or  issues  identified  by  the  Project
        Officer.  It also measures the  Contractor's ability  to apply
        necessary resources.

     4. Ingenuity and Resourcefulness

        This  criterion includes   the   ability  to  provide  new  and
        innovative  approaches or  solutions to problems  or  issues
        which in the past have been addressed in  a more  traditional
        fashion.

     Other recognized performance criteria that will be applied  when
     appropriate   are   report  quality,   including  accuracy,   and
     timeliness of communications.

     The  Contractor should recognize  that  Government  will  apply
     other  generally  accepted  performance   related   criteria   not
     specifically mentioned when they  are found to  be appropriate.
                                G-5
                                                       Second Edition
                                                       April 1984

-------
                            SAMPLE PERFORMANCE EVALUATION AND FEE DETERMINATION SCHEDULE

1 End of Evaluation Period
2 PEB Evaluation
3 FDO Determination
4 Funding Modification
1 End of Evaluation Period
2 PEB Evaluation
3 FDO Determination
4 Funding Modification
1 End of Evaluation Period
2 PEB Evaluation
3 FDO Determination
4 Funding Modification
1 End of Evaluation Period
2 PEB Evaluation
3 FDO Determination
4 Funding Modification
Optimum #
of Days
0
15
15
0
0
15
15
0
0
15
15
0
0
15
15
0
Forecast
Date
4/30/84
5/15/84
5/30/84
5/30/84
8/31/84
9/15/84
9/30/84
9/30/84
12/31/84
1/15/85
1/30/85
1/30/85
4/30/85
5/15/85
5/30/85
5/30/85

Jan
















Feb
















Mar
















Apr
















May
















Jun
















Jul
















Aug
















Sep
















Oct
















Nov
















Dec

















a
H-

-------
                              APPENDIX  H

              CONTRACT  ADMINISTRATION  CASE STUDY
BACKGROUND

This case study involves situations which occurred  with  respect  to an EPA
cost-reimbursement level-of-effort contract with the Franklin Foundation.
SITUATION

On May 30, 198X, the Franklin Foundation received Task Assignment #5 under
its cost-reimbursement level-of-effort contract.  It required the Foundation to
collect and analyze data on  the electric utility industry.  The estimated cost
of the effort under this task was $420,000 for 8400 hours.

Data collection  would be effected utilizing forms developed  by a previous
contractor and cleared by OMB prior to issuance of the task.

The following were specified to be delivered under this task:

1.   Monthly periodic progress reports.

2.   Site  visit reports pursuant to  the Foundation's  technical  assistance to
     organizations  concerning proper  compliance  with the data  collection
     forms.

3.   A final report analyzing data collected.

The final report  represented the end product of the data collection effort and
would be utilized by EPA in preparation of a  Court-ordered  report.

On July  25, 198X, the Chairman of  the Franklin Foundation contacted Dr.
Tobin, the EPA Project Officer, and informed him that a serious problem had
developed in completion  of the effort.  It  appeared that although the data
entry forms contained over  24 pages, no instruction or  glossary of terms was
included  with the package.  Several technical assistance visits had uncovered
the fact  that many firms  were experiencing total confusion in attempting to
                                   H-l
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                                                           April 1984

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complete  the  forms as  required.  The  Foundation concluded  that if the
collection and  analysis  were to be completed in time for publication in the
upcoming  report, it was essential  that an instruction manual and glossary be
developed by the Foundation immediately.

Through his own contacts within industry, Dr. Tobin was able to verify the
Foundation's assessment of the problem. The previous contractor had in  truth
not delivered the required manual and  glossary and it appeared that the
Foundation's solution was the  most effective and least costly cure for the
problem.  The Chairman of the Foundation had estimated that development of
the required manual and glossary, along with its circulation within industry,
would increase the estimated cost of the task from $420,000 to $455,000.

Upon  review of the status  of  hours available under the basic contract, Dr.
Tobin found that the 30,000 hours originally available had been consumed with
the placement of Task Assignment #5.  However, Dr. Tobin reasoned that the
additional  700  hours  needed  to   complete the  glossary  and  instructions
represented a relatively minor increase, and that, coupled with the importance
of the data collection  effort  to  EPA's success in court,  prompted him to
submit a request for task modification to the Contracting Officer along with
the required $35,000.

Shortly  thereafter, Dr. Tobin  was surprised to learn from  the  Contracting
Officer that the request could not be processed for the following reasons:

1.  The  increased number of  hours and  the establishment  of an additional
    deliverable   constituted   a   new  procurement  since  the  proposal
    modification was considered to be outside the scope of the basic contract.

2.  All new procurement contracts  had  to be  competitively  procured in
    accordance with the FAR and EPAAR or exempted from the competitive
    process by an approved  Justification  for Other  Than Full and  Open
    Competition.
QUESTIONS

1.  Do you concur with the Contracting Officer?  Why or why not?

2.  Identify at least five possible solutions to the problem.  Which situation is
    the best both contractually and technically?  Why?

3.  Would the situation have  been  any  different had  there been sufficient
    hours, but insufficient funds, available in the basic  contract?  Why?  How
    does this affect your selection of possible solutions?

4.  Would the situation have been any different had both hours and funds been
    available on another Task Assignment? Why? How does this affect your
    selection of possible solutions?
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5.  Would  the  situation  have  been  any  different  if this  had  been  a
    completion-type, cost-reimbursement contract?  Why?  How  would this
    affect your selection of possible solutions?

6.  What   could   the   Project   Officer  have   done  to   facilitate   the
    accomplishment of this task modification?

7.  How  would an indefinite quantity type  contract  have  helped  in this
    situation if the IQ contract contained fixed loaded labor  rates (labor hour)
    for category of skill that may be required?
SITUATION

When Dr. Tobin learned that  the  Contracting  Officer  would not process  the
purchase, he called the Chairman of Franklin Foundation  and told him  to
proceed with the work pending receipt of an order. The Chairman agreed.


QUESTIONS

1.  Does Dr. Tobin have the authority to direct the  contractor to perform
    work?

2.  Should  the Chairman  of  Franklin  Foundation  have  agreed  to  start
    performance or should  he have  asked Dr. Tobin to  consult with  the
    Contracting Officer?

3.  What kind of action is required to solve this problem?

4.  Can the action be ratified?
SITUATION

On the last day of the fiscal year, Dr. Tobin contacted the Contracting Officer
and told him he wanted to get an order placed on the contract that day.  He
further explained that the particular requirement  was budgeted  for  in  the
subsequent year program and he had planned to get it on contract by February
of the next fiscal year;  however, he had some  current year funds  that were
going to expire  that day and he wanted  to use the funds for this project.  He
explained that he had discussed the technical effort with contractor personnel
and they understood what was desired.


QUESTIONS

1.   Would purchase of the requirement with current year funds be legal?

2.   What "need" principle is involved?

3.   Explain the oona fide need principle.
                                   H-3
                                                           Second Edition
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 CASE
STUDIES

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                      Writing A Statement Of Work

                         PRACTICAL EXERCISE

                           "COURSES TO GO"
    You have been assigned the responsibility to prepare a statement of work
for the development  and presentation  of  25 courses to  technical personnel
entitled "Project Officer Course."

    Management has  decided  that they  wish to  have  a  firm-fixed price
contract awarded  for  both the development  and  instruction of the  courses.
The contractor will provide the developed text, all classroom materials, and
instructors)  for the  course.   All  courses  will be five  days in length,  be
presented to 30 students per course, and be taught at Government facilities
located in Washington  D.C., New York, Boston, Cincinnati, San Francisco and
Research Triangle Park.

    The approximate number of classes per location follows:

        Washington                       8
        New York                         4
        Boston                           4
        Cincinnati                         3
        San Francisco                     3
        Research Triangle Park             3

    The course materials should be developed in structure and in substance to
be most beneficial to those technical people involved in SOW and Specification
preparation,  evaluation  of  proposals and  contract  monitoring.  In addition,
examples should be used throughout the text which are agency specific.

    1.  Establish a writing outline.

    2.  Identify known and unknown risks to performance.

    3.  Determine the type of SOW to be  used—i.e., performance,  design,
        etc.—and method of expression—i.e., job or level-of-effort.

    4.  Legibly write a Statement of Work suitable for photocopying.

    5.  Prepare the Government cost estimate.

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                               THE LEAK
    A Request  for Proposals (RFP),  DU-82-AO13,  for  the Evaluation of
Time/Temperature History of Gases and Particles in the Radiant Furnace Zone
of  Pulverized  Coal-Fired Generators  was  issued July 1,  198X.  Offerers'
proposals   were  to  be  submitted  on  a  cost-plus-a-fixed-fee  basis  by
July 31,  198X. Dr. Burton was the Project Officer for this particular contract.

    On July 20, a meeting was held in Dr. Burton's office to discuss a subject
of possibly grave concern to those involved in this procurement.  Ms. Traivers,
in her capacity as Contracting Officer, was asked to attend.

    An unnamed  member of Research  International,  Inc.  (RID had  been
anonymously contacted by  a disgruntled employee of  EPA. The employee had
informed the RII's employee of the proposed budget  for this procurement, as
well as the names of  the selected technical evaluation committee members.
In an unconnected circumstance, a former EPA employee had contacted RII
offering his services help  in preparing  their proposal and in negotiating and
working on the  resultant contract.  The  president of RII had contacted Dr.
Burton  to express indignation  over  the  first  contact  and  to  request
clarification of  applicable regulations  concerning  the hiring  of the former
employee.

    Dr. Burton expressed not only embarrassment over this unfortunate event,
but also concern that:  (i) the former  employee possessed sufficient knowledge
in  the field  to  be  a  considerable  asset  in   this  undertaking;  (ii) the
Government's  estimate might have to be disclosed to all potential offerers,
thus  negating  possible  cost  competition; (iii) the  firm  may  have  to be
eliminated from the competition; and (iv) the breach of confidentiality might
seriously disrupt the procurement process, even precipitate cancellation of the
solicitation. Dr. Burton  also requested  a reading by  the Contracting Officer
on the situation concerning the former employee.
QUESTIONS

1.  Consider how the disclosure of the estimate to one offerer might affect
    that offerer's relative standing in the selection process. Should this data
    be  fully  disclosed  to  all  potential  offerers?   What  action  do  you
    recommend?

2.  If Research International,  Inc. pursued  the  hiring of the former EPA
    employee for proposal preparation or contract performance, what legal
    implications might arise for either Rn or the former employee?

3.  What are  the  implications regarding the  conduct of  the  anonymous
    employee?

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                     "WHAT TYPE OF CONTRACT"
    Review  the attached "Remedial Investigation Model Statement of Work"
and make the following determinations:

    1. List  all known economic risks that you can identify in performing the
       statement of work.  Support  your statement of work.  Support  your
       statements.

    2. Identify any  unknown risks  that you feel  may impact  the  cost of
       performance.

    3. What contract  type  should  this statement of work be written for
       fixed-price or  cost-reimbursement?   Be prepared  to  express  your
       rationale.

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      REMEDIAL INVESTIGATION MODEL STATEMENT OF WORK

PURPOSE

    The purpose of this remedial investigation is to
determine the nature and extent of the problem at the site
and to gather all necessary data to support the
feasibility study.  The Engineer will furnish all
personnel, materials, and services necessary for, or
incidental to, performing the remedial investigation at
[specific site], an uncontrolled hazardous waste site.

SCOPE

    The remedial investigation consists of seven

    Task 1 - Description of Current Situation
    Task 2 - Plans and Management
    Task 3 - Site Investigation
    Task 4 - Site Investigation Analysis
    Task 5 - Laboratory and Bench-Scale Studies
    Task 6 - Reports
    Task 7 - Community Relations Support

TASK 1 - DESCRIPTION OF CURRENT SITUATION

    Describe the background information pertinent to the
site and its problems and outline the purpose for remedial
investigation at the site.  The data gathered during any
previous investigations or inspections and other relevant
data should be used.

    This task may be conducted concurrently with Task 2,
development of the work plan.

    a.   Site Background

         Prepare a summary of the Regional location,
         pertinent area boundary features, and general
         site physiography, hydrology, and geology.
    The Remedial Investigation guidance should be
    consulted for additional information on the tasks
    listed below.

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     Define the total area of the site and the general
     nature of the problem, including pertinent
     history relative to the use of the site for
     hazardous waste disposal.

b.   Nature and Extent of Problem

     Prepare a summary of the actual and potential
     on-site and off-site health and environmental
     effects.  This may include, but is not limited
     to, the types, physical states, and amounts of
     the hazardous substances; the existence and
     conditions of drums, landfills, and lagoons
     [substitute site-specific features if different];
     affected media and pathways of exposure;
     contaminated releases such as leachate or runoff;
     and any human exposure.  Emphasis should be
     placed on describing the threat or potential
     threat to public health and the environment.

c.   History of Response Actions

     Prepare a summary of any previous response
     actions conducted by either local, State,
     Federal, or private parties, including the site
     inspection and other technical reports, and their
     results.  This summary should address any
     enforcement activities undertaken to identify
     responsible parties, compel private cleanup, and
     recover costs.  A list of reference documents and
     their location shall be included.  The scope of
     the remedial investigation should be developed to
     address the problems and questions that have
     resulted from previous work at the site.

d.   Site Visit

     Conduct an initial site visit to become familiar
     with site topography, access routes, and
     proximity of receptors to possible contamination
     and collect data for preparation of the site
     safety plan.  The visit should be used to verify
     the site information developed in this Task.

e.   Define Boundary Conditions

     Establish site boundary conditions to limit the
     areas of site investigations.  The boundary

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         conditions should be set so that subsequent
         investigations will cover the contaminated media
         in sufficient detail to support following
         activities (e.g., the feasibility study).  The
         boundary conditions may also be used to identify
         boundaries for site access control and site
         security.  [If not in existence, installation of
         a fence or other security measures should be
         considered.]

    f.    Site Map

         Prepare a site map showing all wetlands,
         floodplains,  water features, drainage patterns,
         tanks, buildings, utilities, paved areas,
         easements, rights-of-way, and other features.
         The site map  and all topographical surveys should
         be of sufficient detail and accuracy to locate
         and report all existing and future work performed
         at the site.   [Permanent baseline monuments,
         bench marks,  and reference grid tied into any
         existing reference system (i.e., State or USGS)
         should be considered, as an option.]

    g.    Site Office

         If agreed to  by EPA and the State, establish a
         temporary site office to support site work.

    h.    Contractor Procurement

         [When SOW is  used for Federal-lead, change to
         "Subcontractor Procurement" and modify as
         required.]  Prepare contractor procurement
         documents and award subagreement to secure the
         services necessary to conduct the remedial
         investigation and feasibility study.

TASK 2 - PLANS AND MANAGEMENT

    Prepare all necessary plans for the remedial
investigation.  The work plan should include a detailed
discussion of the technical approach, budget, personnel
requirements, and schedules, as well as the following:

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a.   Sampling Plan

     Prepare a Sampling Plan to address all field
     activities to obtain additional site data.   The
     plan will contain a statement of sampling
     objectives; specification of equipment, analyses
     of interest, sample types, and sample locations
     and frequency; and schedule.  Consider use  of
     field screening techniques to screen out samples
     that do not require off-site laboratory
     analysis.  The plan will also include a quality
     assurance and quality control plan with
     documentation requirements and estimates of costs
     and labor.  The plan must address all levels of
     the investigation as well as all types of
     investigations conducted (e.g., waste
     characterization, hydrogeologic, soils and
     sediments, air and surface water).  The plan will
     identify potential remedial technologies and
     associated data that may be needed to evaluate
     alternatives for the feasibility study.

b.   Health and Safety Plan

     Prepare a Health and Safety Plan to address
     hazards that the investigation activities may
     present to the investigation team and to the
     surrounding community.  The plan should address
     all applicable regulatory requirements and  detail
     personnel responsibilities, protective equipment,
     procedures and protocols, decontamination,
     training, and medical surveillance.  The plan
     should identify problems or hazards that may be
     encountered and their solutions.  Procedures for
     protecting third parties, such as visitors  or the
     surrounding community, will also be provided.

c.   Data Management Plan

     Develop and initiate a Data Management Plan to
     document and track investigation data and
     results.  This plan should identify and set up
     laboratory and data documentation materials and
     procedures, project file requirements, and
     project-related progress and financial reporting
     procedures and documents.

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    d.   Community Relations Plan

         Prepare a plan, based on on-site discussions, for
         the dissemination of information to the public
         regarding investigation activities and results.
         Opportunities for comment and input by citizen,
         community and other groups must also be
         identified and incorporated into the plan.
         Staffing and budget requirements for
         implementation also must be included.  [Not
         required if Community Relations Plan has been
         prepared.]

TASK 3 - SITE INVESTIGATION

    Conduct only those investigations necessary to
characterize the site, and its actual or potential hazard
to public health and the environment.  The investigations
should result in data of adequate technical content to
support the development and evaluation of remedial
alternatives during the feasibility study.  Investigation
activities will focus on problem definition and data to
support the screening of remedial technologies,
alternative development and screening, and detailed
evaluation of alternatives.

    The site investigation activities will follow the
plans set forth in Task 2.  All sample analyses will be
conducted at laboratories following EPA protocols or their
equivalents.  Strict chain-of-custody procedures will be
followed and all samples will be located on the site map
[and grid system] established under Tasks 1 and 2.

    a.   Waste Characteriziation

         Conduct a sampling and analysis program to
         characterize all materials of interest at the
         site.  These materials should include wastes
         stored above or below ground in tanks, drums,
         lagoons, piles, or other structures.

    b.   Hydrogeologic Investigation

         [Generally limited to investigations for off-site
         migration.]  Conduct a program to determine the
         presence and potential extent of ground water
         contamination [and to evaluate the suitability of
         the site for on-site waste containment].

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     [Identify specific aquifer to be studied.]
     Efforts should begin with a survey of previous
     hydrogeologic studies and other existing data.
     The survey should address the degree of hazard,
     the mobility of pollutants considered (from Waste
     Characterization), the soils' attenuation
     capacity and mechanisms, discharge/recharge
     areas, regional flow directions and quality, and
     effects of any pumping alternatives that are
     developed, if applicable.  Such information may
     be available from the USGS, the Soil Conservation
     Service, and local well drillers.  An
     accompanying sampling program should determine
     the horizontal and vertical distribution of
     contaminants and predict the long-term
     disposition of contaminants.

c.   Soils and Sediments Investigation

     Conduct'a program to determine the location and
     extent of contamination of surface and subsurface
     soils and sediments [identify specific areas to
     be studied].  This process.may overlap with
     certain aspects of the'hydrogeologic study (e.g.1,
     characteristics of soil strata are relevant to
     both the transport of contaminants by ground
     water and to the location of contaminants in the
     soil; cores from ground water monitoring wells
     may serve as soj.1 samples) .  A survey of existing
     data on soils and sediments may be useful.   The
     horizontal and vertical extent of contaminated
     soils and sediments should be determined.
     Information on local background levels,  degree of
     hazard, location of samples, techniques utilized,
     and methods of analysis should be included.  The
     investigation should identify the locations and
     probable quantities of subsurface wastes, such as
     buried drums, through the use of appropriate
     geophysical methods.

d.   Surface Water Investigation

     Conduct a program to determine the extent of
     contamination of [identify specific water
     bodies].  This process may overlap with the soils
     and sediments investigation; data from stream or
     lake sediments sampled may be relevant to surface
     water quality.  A survey of existing data on

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         surface water flow quantity and quality may be a
         useful first step, particularly information on
         local background levels, location and frequency
         of samples, sampling techniques, and method of
         analysis.

    e.   Air Investigation

         Conduct a program to determine the extent of
         atmospheric contamination.  The program should
         address the tendency of substances (identified
         through Waste Characterization) to enter the
         atmosphere, local wind patterns, and the degree
         of hazard.

    [Note:  Other categories of investigations may be
needed for specialized site problems.  These could include
biological and radiological investigations.]

TASK 4 - SITE INVESTIGATION ANALYSIS

    Prepare a thorough analysis and summary of all site
investigations -and their results.  The objective of this
task will be to ensure that the investigation data are
sufficient in quality (e.g., QA/QC procedures have been
followed) and quantity to support the feasibility study.

    The results and data from all site investigations must
be organized and presented logically so that the
relationships between site investigations for each medium
are apparent.  Analyze all site investigation data and
develop a summary of the type and extent of contamination
at the site.  The summary should describe the quantities
and concentrations of specific chemicals at the site and
ambient levels surrounding the site.   Describe the
number, locations, and types of nearby populations and
activities and pathways that may result in an actual or
potential threat to public health, welfare, or the
environment.   [Specify whether a contamination, public
health, and/or environmental assessment is to be
conducted.]

TASK 5 - LABORATORY AND BENCH-SCALE STUDIES

    [Note:  The following applies when additional studies
are necessary to fully evaluate remedial alternatives.
The paragraphs may be modified to meet specific project
conditions.]

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    Conduct laboratory and/or bench-scale studies to
determine the applicability of remedial technologies to
site conditions and problems.  Analyze the technologies/
based on literature review, vendor contacts, and past
experience to determine the testing requirements.

    Develop a testing plan identifying the type(s) and
goal(s)  of the study(ies), the level of effort needed, and
data management and interpretation guidelines for
submission to [specify EPA and State recipients] for
review and approval.

    Upon completion of the testing, evaluate the testing
results to assess the technologies with respect to the
site-specific questions identified in the test plan.
Scale up those technologies selected based on testing
results.

    Prepare a report summarizing the testing program and
its results, both positive-and negative.

TASK 6 - REPORTS

    a.   Progress Reporting Requirements

         [Note:  The following paragraph applies when the
         SOW is being used in a contract between the State
         and an Engineer.   Typical requirements are
         described but may be modified based on the size
         and complexity of the specific project.  When the
         SOW is used in a Cooperative Agreement, this
         section should be replaced with reporting
         requirements consistent with 40 CFR Part 30 and
         the guidance "State Participation in the
         Superfund Remedial Program," February 1984.]

         Monthly reports shall be prepared by the Engineer
         to describe the technical and financial progress
         of the project.  These reports should discuss the
         following items:

              1.   Identification of site and activity

              2.   Status of work at the site and progress
                   to date

              3.   Percentage of completion and schedule
                   status

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          4.   Difficulties encountered during the
               reporting period

          5.   Actions being taken to rectify problems

          6.   Activities planned for the next month

          7.   Changes in personnel

          8.   Actual expenditures (including fee)  and
               direct labor hours expended for this
               period

          9.   Cumulative expenditures (including fee)
               and cumulative direct labor hours

          10.   Projection of expenditures for
               completing the project, including an
               explanation of any significant
               variation from the forecasted target

          11.   A graphic representation of proposed
               versus, actual expenditures (plus fee)
               and comparison of actual versus target
               direct labor hours.  A projection to
               completion will be made for both.

     The monthly progress report will list target and
     actual completion dates for each element of
     activity,  including project completion, and will
     provide an explanation of any deviation from the
     milestones in the work plan.

b.   Final Report

     Prepare a  final report covering the remedial
     investigation and submit [specify number and
     distribution] copies to [specify EPA and State
     recipients, as appropriate].  The report shall
     include the results of Tasks 1 through 5, and
     should include additional information in
     appendices.  The report shall be structured to
     enable the reader to cross-reference with ease.
                       10

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TASK 7 - COMMUNITY RELATIONS SUPPORT

    [Note:  The following paragraph applies when community
relations support is conducted under the work covered in
this SOW  (e.g., under a Cooperative Agreement).  The
paragraph may be modified to meet specific site or project
conditions.]

    The Engineer may be required to furnish the personnel,
services, materials, and equipment to undertake a
community relations program.  Although this may be a
limited program, community relations must be integrated
closely with all remedial response activities.  The
objectives of this effort are to achieve community
understanding of the actions taken and to obtain community
input and support prior to selection of the remedial
alternative(s).

    Community relations support should include, but may
not be limited to, the following:

         Revisions or additions to community relations
         plans., including definition of community
         relations program needs for each remedial activity

         Analysis of community attitudes toward the
         proposed actions

         Preparation and dissemination of news releases,
         fact sheets, slide shows, exhibits, and other
         audio-visual materials designed to apprise the
         community of current or proposed actions

         Establishment of a community information center

         Arrangements of briefings, press conferences,
         workshops, and public and other informal meetings

         Assessment of the successes and failures of the
         community relations program

         Preparation of reports and participation in
         public meetings, project review meetings, and
         other meetings as necessary to the normal
         progress of the work

         Solicitation, selection, and approval of
          subcontractors, if needed.
                             11

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All community relations support must be consistent with
Superfund community relations policy, as stated in the
"Guidance for Implementing the Superfund Program" and
Community Relations in Superfund — A Handbook.
                            12

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                             WHO GETS IT?
    In response to a CPFF task order solicitation for Technical Analyses of
the Energy and Mining Industry Groups, the following offers were received:

       Stonewell International                $1,250,000
       JEM Associates, Inc.                     1,210,000
       LBG Corporation                         942,000
       Science International                    1,205,000

    The  technical proposals  were  forwarded to  Dr.  Henry  Burton by  the
Contracting Officer,  who distributed them to the Technical Evaluation Panel
on  which he served as a nonvoting chairperson.  The  three voting members
reviewed the proposals independently, reconvened  to share their assessment,
and reached a  group  consensus as to the technical merit of each submission.
Each was scored on a scale of 0-100 points and a  technical rating was assigned
to each proposal as follows:

                                                            Score

       Science International               Acceptable         70

       JEM Associates, Inc.                Acceptable         65

       LBG Corporation                   Unacceptable      31

       Stonewell International             Unacceptable      24

    The  findings  of the  evaluation  were  summarized by Dr.  Burton and
submitted to the Contracting Officer on  August   15,   198X.  A copy of  the
Panel's report  is  included as Addendum A to this case.  On reviewing  the
Panel's report, the  Contracting  Officer  raised  the  following  questions
concerning its content:

    1. Where  were the Evaluators' worksheets and signatory  concurrence
       with the Panel's report?

    2. Why was Stonewell International, a source initially considered as being
       the   only   firm  capable   of   performing  the  work,   considered
       "nonresponsible" ?

    Furthermore,  on  personally  examining  the  technical  content of  all
proposals, Ms. Traivers sensed a greater discrepancy in the quality of the two
top-ranked offerers than was  suggested  by the scoring and the accompanying
commentary.

    On August 17, the Contracting Officer contacted  Dr. Burton, raised  her
concerns, and received the following explanation:

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    1. No worksheets had been completed since there was no apparent EPA
       requirement addressing this aspect of the evaluation process; in lieu of
       worksheets, the  evaluators had  decided to incorporate all  of  their
       comments and recommendations directly into the Committee report.

2.  The  Stonewell  International proposal  had been  rated  as nonresponsible
    since evaluators had determined in discussions with technical personnel at
    the Departments of Energy, Navy, DOD, and NASA  that the  contractor
    consistently performed poorly.

    Finally,  Dr.  Burton commented that he  agreed  with  the Contracting
Officer's judgment  that  there  was a much greater discrepancy  between  the
technical presentations of JEM Associates, Inc. and Science International than
had been evidenced  by the  scoring.  Dr.  Burton added that the  Science
International proposal  had been reviewed in the context  of previous  work
performed by them in 1978, which was considered unsatisfactory.  The effort
which had been the subject of the problem had involved program  evaluation
and consulting services to DOD and was therefore deemed similar enough to
take into  consideration.  The  panel members had been unaware of the  prior
effort during their individual reviews until  Dr. Burton produced letters  and
memoranda  from office  files  highlighting the severe contract administration
difficulties on the 1978 effort.  A sample of the evidence was forwarded to  the
Contracting Officer and is included as Addendum B to this exercise. Taking
into account  the problems  experienced,  the panel voted  to reconsider  the
initial score of 95  points and drop their overall assessment  of  the  proposal
accordingly.


QUESTIONS

1.  Consider Agency guidelines governing your own technical evaluations and
    resulting documentation. Did this panel comply with those guidelines?

2.  Can the Panel in this case consider the evidence introduced by  Dr. Burton
    as part of  its scoring of  the  Science International  proposal?   What
    alternatives does the Panel have in this situation?

3.  Is the panel correct in its handling of the Stonewell proposal?  Explain.

4.  Describe the mission of the Technical Evaluation Panel and discuss what
    aspects  of  the  source  evaluation  process are left  beyond the panel's
    immediate purview.

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                             ADDENDUM A


August 15, 198X

TO:       Ms. Delgato Traivers
          Contracting Officer

FROM:    Chairperson, Technical Evaluation Committee

SUBJECT: TECHNICAL EVALUATION OF PROPOSALS
The  Technical  Evaluation Team   of the  subject  procurement  met  on
August 8, 198X  to review and  evaluate  proposals submitted by Stone well
International, JEM Associates,  Inc.,  LBG, Inc., and Science International for
the technical analysis of the energy and mining industry group.

The  team met to discuss  the  proposals and prepare a technical evaluation
report.   Prior to  the  team  meeting, each  panel member  evaluated the
proposals independently. It is the recommendation of the review panel that
the two  technically acceptable proposals from Science International and JEM
Associates,  Inc.  be  considered for  negotiation  based  on  the  technical
evaluation and relatively close scores.
                                         Henry Burton, Ph.D.

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                 OFFEROR: STONEWELL INTERNATIONAL


FACTORS                                          EVALUATORS

                                                   ABC  TOTAL

Problem and Approach                 (30)
   a)  Understanding the Problem       (15)            4   3   3   10
   b)  Soundness of Approach          (15)            4   3   3   10

Personnel and Experience              (60)
   a)  Experience                     (30)            842   14
   b)  Education                     (20)            5   8   4   17
   c)  Staff Utilization                (10)            1214

Facilities                            (10)            7   6   4   17
COMMENTS

   The proposal was nonresponsive to the RFP.
                                                   29  26  17   72

                                                   Avg 24-Technically
                                                       Unacceptable

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                      OFFEROR: LBG CORPORATION
FACTORS
Problem and Approach
   a) Understanding the Problem
   b) Soundness of Approach

Personnel and Experience
   a) Experience
   b) Education
   c) Staff Utilization

Facilities
EVALUATORS

(30)
(15)
(IS)
(60)
(30)
(20)
(10)
(10)
A

6
5

IS
10
4
7
B

4
4

6
4
6
6
C

3
3

5
4
5
5
Ton

13
12

20
18
18
18
                                                    47  26  21   94

                                                    Avg 31-Technically
                                                        Unacceptable
COMMENTS

   Strengths:
   •  One evaluator  found  the proposed staff  to be fairly good, otherwise no
      particular strengths were listed.

   Weaknesses:
   o  Fails to address major SOW requirements;  unclear responses when issues are
      addressed.

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                   OFFEROR: SCIENCE INTERNATIONAL
FACTORS
Problem and Approach
   a) Understanding the Problem
   b) Soundness of Approach
Personnel and Experience
   a) Experience
   b) Education
   c) Staff Utilization
Facilities
(30)
(IS)
(15)

(60)
(30)
(20)
(10)

(10)
               EVALUATORS

                ABC   TOTAL
13   9   15   37
13  14  14   41
20  15  21
11  16  13
 865
 6
    56
    40
    17
6   19
                                                    69  67  74  210

                                                    Avg 70-Technically
                                                        Acceptable
COMMENTS

   Strengths:
   •  Accurate, clear assessment and understanding of the problem
   •  Sound, novel, practical approach proposed
   r  Full, complete understanding of underlying issues.
   •  Consultants proposed are experts and readily accessible geographically
   •  Facilities are adequate

   Weaknesses!
   •  Could improve management concepts, perhaps with a team approach
   •  Need to better define specific use of staff and consultants
   -•  Misleading and inaccurate statements sometimes indicating uncertainty.
   •  Protocols are questionable

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                            ADDENDUM B


October 1, 1978

TO: The Record

FROM: Project Officer

SUBJECT: MEETING WITH SCIENCE INTERNATIONAL ON CONTRACTUAL
          NON-COMPLIANCE, SEPTEMBER  12, 1978
In accordance with Article I, Statement of Work, Science International is to
implement  the consulting services plan developed by Government staff as a
result of program evaluation. On August 10,  1978, this office received the
July 1978  monthly report  from Science International  in which two events
occurred that seemed definitely in violation of this  contract.  First, the
contractor  provided assistance to the Secretary of the  Army in the area of
recruitment because "the program had been instructed via program audit to
expand  its  recruitment.1*  Second, the contractor  developed a  procedural
manual  for  the Array without prior approval from this office and indicated
that the need for a procedural manual had been identified during the program
evaluation.  As of this date, the program staff has not completed its program
audits nor  developed a  technical assistance plan for implementation by the
above  contractor.  The contractor  met  with  the  Project  Officer and
Contracting Officer on  August  18,  1979, and an inquiry was made regarding
the projected schedule of center visits for the purposes of financial inventory.

A letter dated August  27, 1978, was received by this office from Science
International containing the financial inventories done during the month of
August.  The list of centers inventoried contains the Dallas center, which was
not in the original list submitted to the contractor by this office.

Because of these repeated contract violations, as  Project Officer for the
above contract, I recommended to the Contracting Officer that be notify the
contractor  that it is in violation of the contract. Such  notification was given
verbally to  the contractor during the  September  12,   1978, meeting and a
twix confirming same was sent on September  13,1979.
                                           Charles O. Babbott, PhJD.

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                        OFFEROR: JEM ASSOCIATES
FACTORS
Problem and Approach
   a) .Understanding the Problem
   b) Soundness of Approach
Personnel and Experience
   a) Experience
   b) Education
   c) Staff Utilization
Facilities
(30)
(15)
(15)

(60)
(30)
(20)
(10)

(10)
               EVALUATORS

                ABC  TOTAL
 6    7
 7    7
5
6
20  30  24
15  19  17
 585
18
20
    74
    51
    18

    15
                                                    58  76   62   196

                                                    Avg 65-Technically
                                                        Acceptable
COMMENTS

   Strengths:
   •  Generally good understanding
   •  Proposes routine, time worn methodologies .
   •  Generally well qualified staff and consultants
   •  Average facilities

   Weaknesses:
   •  Nothing new here
   •  No real firm proposed approach—lacks specifics
   •  Will require extensive explanation to assure we get what we need
   -•  Need'to firm-lip management aspects

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