COMFLTFORCOMINST 4790.3 REV A CH-6 JOINT FLEET MAINTENANCE MANUAL VOLUME VII CONTRACTED SHIP MAINTENANCE LIST OF EFFECTIVE PAGES Page Numbers Change in Effect Page Numbers Change in Effect i thru ii Change 6 VII-4E-1 Change 4 iii thru iv Change 3 VII-4E-2 Change 3 v Change 6 VII-4F-1 thru VII-4F-12 Change 3 vi thru xiv Change 3 VII-5-1 thru VII-5-24 Change 3 xv Change 6 VII-5A-1 thru VII-5A-2 Change 3 xvi thru xix Change 3 VII-5B-1 Change 4 xx Change 5 VII-5B-2 Change 3 VII-FWD-1 thru VII-FWD-2 Change 3 VII-5C-1 thru VII-5C-2 Change 3 VII-FWD-A-1 thru VII-FWD-A-4 Change 3 VII-5D-1 thru VII-5D-2 Change 3 VII-FWD-B-1 thru VII-FWD-B-6 Change 3 VII-6-1 thru VII-6-12 Change 3 VII-1-1 thru VII-1-10 Change 3 VII-7-1 Change 6 VII-2-1 thru VII-2-29 Change 3 VII-7-2 thru VII-7-5 Change 3 VII-2-30 Change 6 VII-7-6 thru VII-7-7 Change 6 VII-2-31 thru VII-2-32 Change 3 VII-7-8 thru VII-7-11 Change 3 VII-2-33 Change 6 VII-7-12 thru VII-7-14 Change 6 VII-2-34 thru VII-2-38 Change 3 VII-7-15 Change 3 VII-2A-1 thru VII-2A-4 Change 3 VII-7-16 Change 6 VII-2B-1 thru VII-2B-2 Change 3 VII-7-17 thru VII-7-23 Change 3 VII-3-1 thru VII-3-12 Change 3 VII-7-24 Change 6 VII-3A-1 thru VII-3A-2 Change 3 VII-7-25 thru VII-7-40 Change 3 VII-3B-1 thru VII-3B-2 Change 3 VII-7A-1 thru VII-7A-2 Change 3 VII-4-1 thru VII-4-12 Change 3 VII-7B-1 thru VII-7B-2 Change 3 VII-4A-1 thru VII-4A-6 Change 3 VII-7C-1 thru VII-7C-2 Change 3 VII-4B-1 thru VII-4B-2 Change 3 VII-7D-1 thru VII-7D-2 Change 3 VII-4C-1 thru VII-4C-2 Change 3 VII-7E-1 thru VII-7E-2 Change 3 VII-4D-1 thru VII-4D-4 Change 3 VII-8-1 Change 4 i COMFLTFORCOMINST 4790.3 REV A CH-6 Page Numbers Change in Effect Page Numbers Change in Effect VII-8-2 thru VII-8-8 Change 3 VII-8A-1 thru VII-8A-2 Change 3 VII-9-1 thru VII-9-12 Change 3 VII-10-1 thru VII-10-6 Change 3 VII-11-1 thru VII-11-6 Change 3 VII-11-7 thru VII-11-11 Change 5 VII-11-12 Change 3 VII-11A-1 thru VII-11A-2 Change 3 VII-11B-1 thru VII-11B-4 Change 3 ii COMFLTFORCOMINST 4790.3 REV A CH-3 JOINT FLEET MAINTENANCE MANUAL VOLUME VII CONTRACTED SHIP MAINTENANCE RECORD OF CHANGES CHANGE NO. DATE TITLE OR BRIEF DESCRIPTION ENTERED BY (INITIALS) iii COMFLTFORCOMINST 4790.3 REV A CH-3 (This Page Intentionally Left Blank) iv COMFLTFORCOMINST 4790.3 REV A CH-6 JOINT FLEET MAINTENANCE MANUAL CHANGE REQUEST FORM FROM: ACTIVITY/SHIP E-MAIL ADDRESS CODE/DEPT/SHOP DATE ORIGINATOR TEL EXT ( ) VOL-PART-PARA NO. FIGURE TABLE PROCESSING NORMAL PRIORITY* * (Justify in rationale below if priority is marked) PROBLEM DESCRIPTION: RECOMMENDED CHANGE: RATIONALE: (Fold on dotted line on reverse side, staple or tape, and mail to Submarine Maintenance Engineering, Planning and Procurement (SUBMEPP) Activity, send facsimile to (207) 438-6250, or E-mail to [email protected]) v COMFLTFORCOMINST 4790.3 REV A CH-3 FOLD ----------------------------------------------------------------------------------------------------------------------------------------------- Commanding Officer ___________________ OFFICIAL BUSINESS Commanding Officer Submarine Maintenance Engineering, Planning and Procurement (SUBMEPP) Activity Attn: Code 1832 P.O. Box 2500 Portsmouth Naval Shipyard Portsmouth, NH 03804-2500 ----------------------------------------------------------------------------------------------------------------------------------------------- FOLD vi COMFLTFORCOMINST 4790.3 REV A CH-3 JOINT FLEET MAINTENANCE MANUAL VOLUME VII CONTRACTED SHIP MAINTENANCE TABLE OF CONTENTS Page No. LIST OF EFFECTIVE PAGES......................................................................................................................................i RECORD OF CHANGES............................................................................................................................................iii JOINT FLEET MAINTENANCE MANUAL CHANGE REQUEST FORM..............................................................v FOREWORD - CONTRACTED SHIP MAINTENANCE 1.1 Purpose..............................................................................................................................................VII-FWD-1 1.2 Scope.................................................................................................................................................VII-FWD-1 1.3 Changes and Corrections...................................................................................................................VII-FWD-2 1.4 Request for Copies of the Manual.....................................................................................................VII-FWD-2 Appendices A List of Acronyms...............................................................................................................VII-FWD-A-1 B Glossary of Terms..............................................................................................................VII-FWD-B-1 CHAPTER 1 - CONTRACTED SHIP REPAIR FUNCTIONS, TASKS AND STANDARDS OF CONDUCT 1.1 Contracted Ship Repair Functions and Tasks Overview...........................................................................VII-1-1 1.2 Contracted Ship Repair Functions and Tasks...........................................................................................VII-1-1 1.2.1 Functions......................................................................................................................................VII-1-1 1.2.1.1 Mission Tasks.........................................................................................................VII-1-2 1.2.2 Procurement and Contract Administrative Functions of the Regional Maintenance Center........VII-1-2 1.2.3 Relationship with Contractors......................................................................................................VII-1-3 1.2.4 Standards of Conduct....................................................................................................................VII-1-3 1.2.5 Fraudulent Violations or Irregularities..........................................................................................VII-1-4 1.3 Organizational Relationships for Vessel Modernization, Overhaul, Repair and Maintenance Contracting..........................................................................................................................VII-1-4 1.3.1 General..........................................................................................................................................VII-1-4 1.3.2 Chief of Naval Operations............................................................................................................VII-1-4 1.3.3 Systems Commands......................................................................................................................VII-1-5 1.3.4 Naval Sea Systems Command......................................................................................................VII-1-5 1.3.5 Program Executive Office Program Offices.................................................................................VII-1-6 1.3.6 Logistics, Maintenance and Industrial Operations Directorate (SEA 04).....................................VII-1-7 1.3.7 The Atlantic and Pacific Fleets.....................................................................................................VII-1-7 1.3.8 Type Commanders........................................................................................................................VII-1-7 1.3.9 Naval Shipyards............................................................................................................................VII-1-8 1.3.10 U.S. Ship Repair Facility, Yokosuka, Japan.................................................................................VII-1-8 1.3.11 User Commands or Activities (Users)..........................................................................................VII-1-8 1.3.12 Naval Inactive Ship Maintenance Facilities..................................................................................VII-1-8 1.3.13 Naval Reserve Force Vessels........................................................................................................VII-1-8 1.3.14 Defense Finance and Accounting Service Offices........................................................................VII-1-8 1.3.15 Defense Contract Audit Agency...................................................................................................VII-1-8 1.3.16 Defense Contract Management Agency Components..................................................................VII-1-9 vii COMFLTFORCOMINST 4790.3 REV A CH-3 1.3.17 General Accounting Office...........................................................................................................VII-1-9 1.3.18 Naval Reactors Representatives....................................................................................................VII-1-9 1.3.19 Foreign Governments...................................................................................................................VII-1-9 1.3.20 Private Companies - Demilitarizing and Stripping.....................................................................VII-1-10 CHAPTER 2 - CONTRACTS AND CONTRACT ADMINISTRATION 2.1 Purpose.....................................................................................................................................................VII-2-1 2.2 Overview of the Federal Acquisition Process...........................................................................................VII-2-2 2.2.1 Procurement from Private or Government Sources......................................................................VII-2-2 2.2.2 Contracting Techniques................................................................................................................VII-2-2 2.2.3 General Procurement Statutes.......................................................................................................VII-2-2 2.2.4 Procurement Regulations..............................................................................................................VII-2-2 2.2.4.1 Federal Acquisition Regulation...............................................................................VII-2-3 2.2.4.2 Department of Defense Federal Acquisition Regulation Supplement.....................VII-2-3 2.2.4.3 Navy Marine Corp Acquisition Regulation Supplement.........................................VII-2-3 2.2.4.4 NAVSEA Contracts Handbook...............................................................................VII-2-3 2.2.4.5 Other Navy Publications.........................................................................................VII-2-3 2.2.4.6 Command Publications...........................................................................................VII-2-3 2.2.4.7 Joint Fleet Maintenance Manual Relationship to Other Directives.........................VII-2-4 2.2.4.8 Field Instructions and Notices.................................................................................VII-2-4 2.2.4.9 Waiver of Regulations and Directives.....................................................................VII-2-4 2.2.4.10 Impact of Statutes and Regulations.........................................................................VII-2-4 2.3 Budget/Appropriations/Allocation Process...............................................................................................VII-2-4 2.3.1 Constitutional Authority...............................................................................................................VII-2-4 2.3.2 Statutory Authorization.................................................................................................................VII-2-4 2.3.3 Budget Authority..........................................................................................................................VII-2-5 2.3.4 Authorization of Appropriations...................................................................................................VII-2-5 2.4 Contracts...................................................................................................................................................VII-2-5 2.4.1 Types of Contracts........................................................................................................................VII-2-5 2.4.2 Contract Selection.........................................................................................................................VII-2-6 2.4.2.1 Fixed Price Contracts..............................................................................................VII-2-6 2.4.2.1.1 Administration.................................................................................VII-2-6 2.4.2.2 Cost Reimbursement Type Contracts......................................................................VII-2-6 2.4.3 Time and Materials Contract........................................................................................................VII-2-6 2.4.4 Indefinite-Delivery Indefinite-Quantity Contracts........................................................................VII-2-7 2.4.5 Letter Contracts............................................................................................................................VII-2-7 2.4.6 Basic Agreements.........................................................................................................................VII-2-7 2.4.7 Basic Ordering Agreements..........................................................................................................VII-2-7 2.4.7.1 Description..............................................................................................................VII-2-7 2.4.7.2 Background.............................................................................................................VII-2-7 2.4.8 Other Contracting Methods..........................................................................................................VII-2-7 2.4.9 Five (5) Elements of a Contract....................................................................................................VII-2-8 2.4.9.1 The Offer.................................................................................................................VII-2-8 2.4.9.2 The Acceptance.......................................................................................................VII-2-9 2.4.9.3 Consideration..........................................................................................................VII-2-9 2.4.9.4 The Legal and Possible Objective...........................................................................VII-2-9 2.4.9.5 Competent Parties...................................................................................................VII-2-9 2.5 Overview of Contracting Procedures........................................................................................................VII-2-9 2.5.1 Sealed Bidding..............................................................................................................................VII-2-9 2.5.1.1 The Purposes of Sealed Bidding.............................................................................VII-2-9 2.5.1.2 Success of Sealed Bidding......................................................................................VII-2-9 2.5.1.3 Responsibilities of the Planning and Procuring Activities......................................VII-2-9 2.5.1.3.1 Requiring/Planning Activity..........................................................VII-2-10 2.5.1.3.2 The Procuring Activity..................................................................VII-2-10 2.5.1.4 Invitation for Bid Summary..................................................................................VII-2-10 viii COMFLTFORCOMINST 4790.3 REV A CH-3 2.5.2 Contracting by Negotiation.........................................................................................................VII-2-11 2.5.3 Basic Acquisition Process...........................................................................................................VII-2-11 2.5.4 Clearance....................................................................................................................................VII-2-11 2.6 Writing Contracts....................................................................................................................................VII-2-11 2.6.1 Uniform Contract Format...........................................................................................................VII-2-11 2.6.2 Standard Procurement System....................................................................................................VII-2-11 2.6.3 Procurement Deficiencies...........................................................................................................VII-2-11 2.7 Contracting Officer Authority and Responsibilities...............................................................................VII-2-11 2.7.1 Authorized Officials...................................................................................................................VII-2-12 2.7.2 Typical Contracting Officer's Representative Responsibilities...................................................VII-2-12 2.7.3 Typical Contracting Officer's Representative Duties..................................................................VII-2-12 2.7.3.1 Actual Authority Required....................................................................................VII-2-13 2.7.4 Implied Authority.......................................................................................................................VII-2-13 2.7.5 Contractually Related Functions.................................................................................................VII-2-14 2.8 Contract Administration.........................................................................................................................VII-2-14 2.8.1 Regional Maintenance Centers...................................................................................................VII-2-14 2.8.2 Assignment of Contract Administration.....................................................................................VII-2-14 2.8.3 Contract Manager Representatives.............................................................................................VII-2-14 2.8.4 Correspondence and Visits.........................................................................................................VII-2-14 2.8.5 Contracting Officer Warrants.....................................................................................................VII-2-14 2.8.6 Involvement................................................................................................................................VII-2-14 2.8.7 Special Requirements in Schedules............................................................................................VII-2-14 2.8.8 Communications with Fleet Representatives..............................................................................VII-2-15 2.8.9 Communications and Familiarity with Contractors....................................................................VII-2-15 2.8.10 Government Furnished Property.................................................................................................VII-2-15 2.8.11 Use of Change Orders and Avoiding Constructive Change Orders............................................VII-2-15 2.8.12 Avoidance of Delays...................................................................................................................VII-2-15 2.8.13 Improper or Unsatisfactory Work...............................................................................................VII-2-16 2.8.14 Records.......................................................................................................................................VII-2-16 2.9 Socioeconomic Programs.......................................................................................................................VII-2-16 2.9.1 Deputy for Small Business.........................................................................................................VII-2-16 2.9.2 Subcontracting Program Administration....................................................................................VII-2-16 2.10 Processing Contractual Actions..............................................................................................................VII-2-16 2.10.1 Policies........................................................................................................................................VII-2-16 2.10.1.1 Forward Price Rate Agreement.............................................................................VII-2-16 2.10.1.2 Pricing of Deleted Work.......................................................................................VII-2-17 2.10.1.3 Awarding Job Orders............................................................................................VII-2-17 2.10.1.4 Objective of Procurement Process and Contract Pricing.......................................VII-2-17 2.10.1.5 Pricing Responsibility...........................................................................................VII-2-17 2.10.1.6 Adjudications on the Basis of Estimates...............................................................VII-2-17 2.11 Proposal Analysis...................................................................................................................................VII-2-17 2.11.1 Cost Analysis..............................................................................................................................VII-2-17 2.11.2 Field Pricing Support..................................................................................................................VII-2-17 2.11.3 Cost Realism Analysis................................................................................................................VII-2-18 2.11.4 Subcontract Pricing Considerations............................................................................................VII-2-18 2.11.5 Requests for Procurement Requiring Information on Purchased Materials................................VII-2-18 2.11.6 Price Analysis.............................................................................................................................VII-2-18 2.11.7 Use of Independent Estimates.....................................................................................................VII-2-18 2.12 Work Scope............................................................................................................................................VII-2-18 2.12.1 Reaching Work Scope Understandings......................................................................................VII-2-18 2.12.2 Work Scope Conferences............................................................................................................VII-2-19 2.12.3 Work Scope Data........................................................................................................................VII-2-19 ix COMFLTFORCOMINST 4790.3 REV A CH-3 2.13 Technical Analysis Reports....................................................................................................................VII-2-19 2.13.1 General........................................................................................................................................VII-2-19 2.13.2 Local Instructions and Procedures..............................................................................................VII-2-20 2.14 Audit Evaluation of Change Proposals and Submission of Advisory Audit Reports.............................VII-2-20 2.14.1 Audit Evaluation.........................................................................................................................VII-2-20 2.14.2 Contractual Audit Reports..........................................................................................................VII-2-21 2.14.3 Advisory Audit Reports..............................................................................................................VII-2-21 2.15 Contract Modifications...........................................................................................................................VII-2-21 2.15.1 Introduction................................................................................................................................VII-2-21 2.15.2 Restrictions.................................................................................................................................VII-2-21 2.15.3 Types of Contract Modifications................................................................................................VII-2-21 2.15.4 Order of Preference for Contract Modifications.........................................................................VII-2-22 2.15.5 Notification of Contract Changes...............................................................................................VII-2-22 2.15.6 Funding.......................................................................................................................................VII-2-22 2.15.7 Notification of Substantial Impact on Employment....................................................................VII-2-22 2.15.8 Identification of Foreign Military Sales Contract Modifications................................................VII-2-23 2.15.9 Change Orders............................................................................................................................VII-2-23 2.15.9.1 Authority to Issue Change Orders.........................................................................VII-2-23 2.15.9.2 Change Order Accounting Procedures..................................................................VII-2-23 2.15.10 Change Order Documentation....................................................................................................VII-2-23 2.15.11 Definitization..............................................................................................................................VII-2-24 2.15.12 Complete and Final Equitable Adjustments................................................................................VII-2-24 2.15.13 Consideration as Command Key Indicator.................................................................................VII-2-24 2.15.14 Forms..........................................................................................................................................VII-2-24 2.16 Claims Policy..........................................................................................................................................VII-2-24 2.16.1 Definitions and Approval Levels................................................................................................VII-2-24 2.16.2 Claims Prevention.......................................................................................................................VII-2-25 2.16.3 Processing Claims and Requests for Equitable Adjustment.......................................................VII-2-26 2.17 Maintenance Centers..............................................................................................................................VII-2-28 2.17.1 Regional Maintenance Center Procedures and Reports..............................................................VII-2-28 2.17.2 Operational Deficiencies.............................................................................................................VII-2-29 2.17.3 Regional Maintenance Center Authority to Formalize Identified Constructive Changes...........VII-2-29 2.17.4 Processing Identified Constructive Changes...............................................................................VII-2-30 2.18 Contract Claims......................................................................................................................................VII-2-30 2.18.1 Claims Program..........................................................................................................................VII-2-30 2.18.2 Common Basis for Claims..........................................................................................................VII-2-30 2.18.2.1 Breach of Contract................................................................................................VII-2-30 2.18.2.2 Insufficient Compensation for Formal Change.....................................................VII-2-30 2.18.2.3 Late or Defective Government Furnished Property and Information....................VII-2-31 2.18.2.4 Constructive Change Orders.................................................................................VII-2-31 2.18.3 Receipt of Proposals for Changes...............................................................................................VII-2-31 2.18.4 Contract Misinterpretation..........................................................................................................VII-2-31 2.18.4.1 Defective Specifications........................................................................................VII-2-31 2.18.4.2 Failure to Disclose Vital Information....................................................................VII-2-31 2.18.4.3 Constructive Acceleration.....................................................................................VII-2-32 2.18.4.4 Failure to Cooperate/Hindrance of Performance...................................................VII-2-32 2.18.5 Data.............................................................................................................................................VII-2-32 2.18.5.1 Significant Events.................................................................................................VII-2-32 2.18.6 Significant Events Data..............................................................................................................VII-2-33 2.19 Resolution of Disputes............................................................................................................................VII-2-33 2.19.1 Appeals.......................................................................................................................................VII-2-33 2.19.2 Negotiations with Appeal Pending.............................................................................................VII-2-33 2.19.3 Third Party Lawsuits...................................................................................................................VII-2-33 x