tity is a learning or testing quantity and there is some uncertainty as to contractor or equipment performance, or (ii) due to the unavailability of funds, the option cannot be exercised at the time of award of the basic quantity: Provided, That in this latter case there is reasonable certainty that funds will be available thereafter to permit exercise of the option; and

(2) Realistic competition for the option quantity is impracticable once the initial contract is awarded and hence it is in the best interest of the Government to evaluate options in order to eliminate the possibility of a buy-in. This determination shall be based on factors such as, but not limited to, substantial start-up or phase-in costs, superior technical ability resulting from performance of the initial contract, and long preproduction lead time for a new producer. In such cases, the solicitation shall contain an Evaluation of Options provision substantially as follows:

EVALUATION OF OPTIONS

Bids and proposals will be evaluated for purposes of award by adding the total price for all option quantities to the total price for the basic quantity. Evaluation of options will not obligate the Government to exercise the option or options.

Any bid or proposal which is materially unbalanced as to prices for basic and option quantities will be rejected as nonresponsive. An unbalanced bid or proposal is one which is based on prices significantly less than cost for some work and prices which are significantly overstated for other work.

(e) Solicitations which allow the offer of option quantities at unit prices which differ from the unit prices for the basic contract quantities shall also state that varying prices may be offered for the option quantities depending on the quantities actually ordered and the date or dates when ordered. However, if the solicitation contains an Evaluation of Options provision pursuant to paragraphs (c) and (d) of this section, it shall also specify the price at which the options will be evaluated (e.g., highest option price for specified quantities or dates).

(f) Where exercise of the option would result in increasing quantities of supplies, the option may be ex

pressed in terms of (1) percentage of specific contract line items, (2) a number of additional units of specific contract line items, or (3) additional numbered line items identified as the option quantity with the same nomenclature as line items initially included in the contract. Where exercise of the option would result in an increase in the performance of services by the contractor, the option may similarly be expressed in terms of percentages, increase in specific line items, or additional numbered line items, expressed in terms of the units of work initially used in the contract such as manhours, man-years, square feet, pounds or tons handled. Where exercise of the option would result in an extension of duration of the contract, the option may be expressed in terms of an extended terminal date or of an additional time period, such as days, weeks, or months.

§ 3-1.5404 Exercise of options.

(a) The exercise of an option by the Government requires the contracting officer's written notification to the contractor within the time period specified in the contract.

(b) Where the contract provides for price escalation and the contractor requests revision of price pursuant to such provision, or the provision applies only to the option quantity, the effect of escalation on prices under the option must be ascertained before the option is exercised.

(c) Options should be exercised only if it is determined that:

(1) Funds are available;

(2) The requirements covered by the option fulfill an existing need of the Government; and

(3) The exercise of the option is most advantageous to the Government, price and other factors considered.

(d) Insofar as price is concerned, the determination under paragraph (c)(3) of this section shall be made on the basis of one of the following:

(1) A new solicitation fails to produce a better price than that offered by the option. When the contracting officer anticipates the option price will be the best price available, he should

use one of the methods stated in paragraphs (d) (2), (3), and (4), of this section to test the market before resoliciting bids or proposals.

(2) An informal investigation of prices, or other examination of the market, indicates clearly that a better price than that offered by the option cannot be obtained.

(3) The time between the award of the contract containing the option and the exercise of the option is so short that it indicates the option price is the lowest price obtainable, considering such factors as market stability and a comparison of the time since award with the usual duration of contracts for such supplies and services.

(4) Established prices are readily ascertainable and clearly indicate that formal advertising or informal solicitation can obviously serve no useful purpose.

(e) Insofar as the "other factors" mentioned in paragraph (c)(3) of this section are concerned, the determination should, among other things, take into account the Government's need - for continuity of operations and potential costs to the Government of disrupting operations, including the cost of relocating necessary Government furnished equipment.

(f) When it has been determined that an option may properly be exer=cised in accordance with the principles

set forth herein, such determination shall be set forth in writing and made a part of the contract file. Written notification to the contractor of the exercise of the option and any contract modification resulting therefrom shall cite the option clause contained in the original contract as authority for the procurement of the option quantity, and no citation under 41 U.S.C. 252(c) is required.

§3-1.5405 Examples of option articles for fixed-price type contracts.

(a) An article substantially as follows may be used where the contract expresses the option quantity as a percentage of the basic contract quantity or as an additional quantity of a specific line item, without separate pricing of the option quantity.

OPTION FOR INCREASED QUANTITY

The Government may increase the quantity of supplies called for herein by any amount of units up to (specify a quantity or a percentage of the basic quantity) at the unit price specified in the contract. The Contracting Officer may exercise this option by giving written notice of the Government's exercise of the option to the Contractor not later than (specify a date certain or a number of days before the last delivery date under the basic contract). Delivery of the items added by the exercise of this option shall continue immediately after, and at the same rate as, delivery of like items called for under this contract (this sentence may be appropriately modified to reflect agreement of the parties on delivery terms).

(b) An article substantially as follows may be used where the contract identifies the option quantity as a separately priced line item having the same nomenclature as a corresponding basic contract line item.

OPTION FOR INCREASED QUANTITY-LINE ITEM

The Government may increase the quantity of supplies called for herein by requiring the delivery of the numbered line item identified in the Schedule or specified in ARTICLE of the Special Provisions as an option item in the quantity and at the price set forth therein. The Contracting Officer may exercise this option by giving written notice of the Government's exercise of such option to the Contractor not later than (specify a date certain or a number of days before the last delivery date under the basic contract). Delivery of the items added by the exercise of this option shall continue immediately after, and at the same rate as, delivery of like items called for under this contract (this sentence may be appropriately modified to reflect agreement of the parties on delivery terms).

(c) An article substantially as follows may be used to provide for continuing performance of the contract beyond its original term.

OPTION TO EXTEND THE TERM OF THE
CONTRACT

This contract may be extended for a period of (days, months, years) at the option of the Government, by the Contracting Officer giving written notice of the Government's exercise of such option to the Contractor not later than the last day of the term of the contract; Provided, That such notice shall have no effect if given less than 60 days prior to the last day of the

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term of the contract unless the Contracting Officer has given preliminary written notice of an intent to exercise such option at least sixty (60) days prior to the last day of the term of the contract (such preliminary notice shall not be construed as an exercise of the option, and will not bind the Government to exercise the option). If the Government exercises such option, the contract as extended shall be deemed to include this option provision; Provided, however, That the total duration of this contract, including the exercise of any options under this clause, shall not exceed months.

(State terms for pricing of performance under the option, e.g., by inclusion of same price as basic quantity, an escalation provision, definitive option price set forth elsewhere in this contract.)

§ 3-1.5406 Examples of option articles for cost reimbursement contracts.

(a) The following may be used as the article which defines an option, when the contract is a Cost Only Term Form, not involving the use of task orders. This article may be used, with appropriate modifications, when the contract involves payment of fee.

OPTION TO EXTEND THE TERM OF THE
CONTRACT

1. At the option of the Government, this contract may be extended, by the Contracting Officer giving written notice of extension to the Contractor prior to the expiration date of this contract. The option may be exercised only if the Contracting Officer gives preliminary notice to the Contractor, not less than sixty (60) days prior to the last day of the term of this contract, of the Government's intention to exercise the option. Such preliminary notice shall not be construed as an exercise of the option, and will not bind the Government to exercise the option. If the Government exercises such option, the contract as extended shall be deemed to include this option provision; Provided, however, That the duration of this contract, including the exercise of any options under this clause shall not exceed

months. (State terms for pricing of performance under the option, e.g., by inclusion of the same price as for the basic period, definitive option price set forth elsewhere in this contract, escalation provisions, etc.).

2. In the event that the contract is extended in accordance with paragraph 1 of this Article, the Contractor shall continue the effort, described in ARTICLE ISCOPE OF WORK, during the () month period immediately following that set forth in ARTICLE -PERIOD

OF PERFORMANCE. The parties hereto agree that upon issuance of the order exercising this option, the following modifications will be made to the contract schedule in effect as of the date that such issuance is made:

(i) The period of performance specified in ARTICLE -PERIOD OF PERFORMANCE will be increased by months.

(ii) The estimated cost specified in ARTICLE -ESTIMATED COST will be in

creased by $

(b) The following may be used as the article which defines an option, where the contract is a CPFF Completion Form which contains a separate scope of work for the optional effort.

OPTION FOR INCREASED Scope of WoRK

1. At the option of the Government, the Scope of Work of this contract may be increased to include the work set forth in (Exhibit) attached hereto and hereby made a part hereof. This option shall be exercised by the issuance of an order by the Contracting Officer citing the authority of this article. This option may be exercised at any time within ---months, days) from the effective date of this contract.

2. The parties hereto agree that upon issuance of the order exercising this option, the following modifications will be made to the contract schedule in effect as of the date such issuance is made:

(i) ARTICLE I-SCOPE OF WORK will be modified to incorporate (Exhibit attached hereto, into this contract. (ii) The period of performance specified in ARTICLE -PERIOD OF PERFORMANCE will be increased by (months, days).

(iii) The Estimated Cost, Fixed Fee, and Total Cost Plus Fixed Fee specified in ARTICLE --will be increased by $

——, and $———, respectively.

(c) The following may be used as the article which defines an option, when the contract is a Cost Plus Fixed Fee (CPFF) Term Form involving the issuance of task orders.

OPTION TO EXTEND THE TERM OF THE
CONTRACT

1. At the option of the Government, this contract may be extended by the Contracting Officer giving written notice of extension to the Contractor prior to the expiration date of this contract: Provided, That such notice shall have no effect if given less than sixty (60) days prior to the last day of the term of the contract unless the Contracting Officer has given preliminary

notice of the Government's intention to extend at least sixty (60) days before this contract is to expire. (Such a preliminary notice will not be deemed to commit the Government to renewals.)

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2. If this option is exercised, the Contractor shall provide approximately hours of additional direct labor in pursuit of the effort described in ARTICLE I-SCOPE OF WORK, during the ---( ) month period immediately following that set forth in ARTICLE -PERIOD OF PERFORMANCE. The parties hereto agree that upon issuance of the order exercising this option, the following modifications will be made to the contract schedule, in effect as of the date that such issuance is made: (i) The period of performance specified in ARTICLE -PERIOD OF PERFORMANCE, will be increased by ——— ( ) months.

(ii) ARTICLE -LEVEL OF EFFORT, will be increased from “approximately manhours" to "approximately manhours" and the last sentence of Paragraph A will be changed to read "not less than nor more than hours."

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Subpart 3--2.2-Solicitations of Bids

§ 3-2.205 Bidders mailing lists. [37 FR 3353, Feb. 15, 1972]

§ 3-2.205-2 Removal of names from bidders mailing lists.

Bidders mailing lists shall be reviewed annually to ensure that they contain only accurate and current information which is consistent with the present needs of the procurement office.

[37 FR 3353, Feb. 15, 1972]

Subpart 3-2.4—Opening of Bids and Award of Contract

SOURCE: 39 FR 13261, Apr. 12, 1974, unless otherwise noted.

§ 3-2.403 Recording of bids.

§ 3-2.403-50 Forms.

Forms HEW-538, Abstract of Bids, and HEW-538A, Continuation Sheet, shall be used for the recording of bids. The forms are available through normal distribution channels.

§ 3-2.406-3 Other mistakes disclosed before award.

(a) Circumstances permitting the correction or withdrawal of bids are set forth in § 1-2.406-3 of this title.

(b) Authority has been delegated to the Deputy Assistant Secretary for Grants and Procurement Management to make administrative determinations in connection with mistakes in bid alleged after opening of bids and before award. This authority may not be redelegated.

(c) Each such determination shall be approved by the Assistant General Counsel, Business and Administrative Law Division, Office of General Counsel, OS.

(d) Suspected or alleged mistakes shall be processed as follows:

(1) Whenever the contracting officer suspects that a mistake may have been made in a bid, he shall immediately request the bidder to verify the bid. Such request shall inform the bidder

why the request for verification is made-that a mistake is suspected and the basis for such suspicion; e.g., that the bid is significantly out of line with the next low or other bids or with the Government's estimate. If the time for acceptance of bids is likely to expire before a decision can be made, the contracting officer shall request all bidders whose bids may become eligible for award to extend the time for acceptance of their bids. If the bidder whose bid is believed erroneous does not grant such extension of time and a decision cannot be reached before expiration of the time for acceptance, the bid shall be considered as originally submitted.

(2) If the bidder verifies his bid, the contracting officer shall consider it as originally submitted. If the bidder alleges a mistake, the contracting officer shall advise him to support his allegation by statements concerning the alleged mistake and by all pertinent evidence, such as the bidder's file copy of the bid, his original worksheets and other data used in preparing the bid, subcontractors' and suppliers' quotations, if any, published price lists, and any other evidence which will serve to establish the mistake, the manner in which it occurred, and the bid actually intended.

(3) The data required by § 1-2.4063(d)(3) of this title will be marked "IMMEDIATE ACTION-MISTAKE IN BID" and submitted, in duplicate, in the most expeditious manner through procurement channels to the Deputy Assistant Secretary for Grants and Procurement Management, OASAM, for evaluation and administrative determination. The file shall be assembled in an orderly manner including an index of enclosures.

(4) Since examination of evidence is necessary to determine the proper course of action to be taken, no action will be taken on cases referred by telephone or telegraph.

(5) Where the bidder fails or refuses to furnish evidence in support of a suspected or alleged mistake, the contracting officer shall consider the bid as submitted unless the amount of the bid is so far out of line with the amounts of other bids received or with

the amount estimated by the procuring activity or determined by the contracting officer to be reasonable, or there are other indications of error so clear, as reasonably to justify the conclusion that acceptance of the bid would be unfair to the bidder or to other bona fide bidders, in which case it may be rejected. The attempts made to obtain the information required and the action taken with respect to the bid shall be fully documented.

(6) Where the evidence submitted by the bidder is incomplete or in need of clarification, the contracting officer shall document the file to indicate his efforts to obtain clear and convincing evidence to support the alleged mistake.

(e) Doubtful mistakes in bid shall not be submitted by contracting officers directly to the Comptroller General for advance decisions, but shall be submitted as outlined in paragraph (d)(3) of this section.

§ 3-2.406-4 Disclosure of mistakes after award.

(a) When a mistake in a contractor's bid is not discovered until after the award, the mistake may be corrected by contract amendment or supplemental agreement if correcting the mistake would make the contract more favorable to the Government without changing the essential requirements of the contract.

(b) In addition to the cases contemplated in § 1-2.406-4(a) of this title, the Deputy Assistant Secretary for Grants and Procurement Management is authorized, under the circumstances set forth in § 1-2.406-4(c) of this title, to make the administrative determinations described below in connection with mistakes in bids alleged or disclosed after award.

(1) A determination may be made to rescind a contract where the original contract price does not exceed $1,000.

(2) A determination may be made to reform a contract, irrespective of amount, (i) to delete the item involved in the mistake where such deletion does not reduce the contract price by more than $1,000, or (ii) to increase the price where such increase does not exceed $1,000 and if the contract price,