8.404  Use of Federal Supply Schedules.

2.  Amend section 8.404 by adding paragraph (h) to read as follows:

8.404  Use of Federal Supply Schedules.

* * * * *

(h)  Type-of-order preference for services.

(1)  The ordering activity shall specify the order type (i.e., firm-fixed price, time-and-materials, or labor-hour) for the services offered on the schedule priced at hourly rates.

(2)  Agencies shall use fixed-price orders for the acquisition of commercial services to the maximum extent practicable.

(3)

(i)  A time-and-materials or labor-hour order may be used for the acquisition of commercial services only when it is not possible at the time of placing the order to estimate accurately the extent or duration of the work or to anticipate costs with any reasonable degree of confidence.

(ii)  Prior to the issuance of a time-and-materials or labor-hour order, the contracting officer shall--

(A)  Execute a determination and findings (D&F) for the order, in accordance with paragraph (h)(3)(iii) of this section that a fixed-price order is not suitable;

(B)  Include a ceiling price in the order that the contractor exceeds at its own risk; and

(C)  When the total performance period, including options, is more than three years, the D&F prepared in accordance with this paragraph shall be signed by the contracting officer and approved by the head of the contracting activity prior to the execution of the base period.

(iii)  The D&F required by paragraph (h)(3)(ii)(A) of this section shall contain sufficient facts and rationale to justify that a fixed-price order is not suitable. At a minimum, the D&F shall--

(A)  Include a description of the market research conducted (see 8.404(c) and 10.002(e));

(B)  Establish that it is not possible at the time of placing the order to accurately estimate the extent or duration of the work or anticipate costs with any reasonable degree of confidence;

(C)  Establish that the current requirement has been structured to maximize the use of fixed-price orders (e.g., by limiting the value or length of the time-and-materials/labor-hour order; or, establishing fixed prices for portions of the requirement) on future acquisitions for the same or similar requirements; and

(D)  Describe actions to maximize the use of fixed-price orders on future acquisitions for the same requirements.

(iv)  The contracting officer shall authorize any subsequent change in the order ceiling price only upon a determination, documented in the order file, that it is in the best interest of the ordering activity to change the ceiling price.