[Title 48 CFR ]
[Code of Federal Regulations (annual edition) - October 1, 1999 Edition]
[From the U.S. Government Printing Office]


          48



          Federal Acquisition Regulations System



[[Page i]]

          CHAPTER 1 (PARTS 1 TO 51)

                         Revised as of October 1, 1999

          CONTAINING
          A CODIFICATION OF DOCUMENTS
          OF GENERAL APPLICABILITY
          AND FUTURE EFFECT

          AS OF OCTOBER 1, 1999
          With Ancillaries
          Published by
          the Office of the Federal Register
          National Archives and Records
          Administration

          as a Special Edition of
          the Federal Register



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                     U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 1999



               For sale by U.S. Government Printing Office
 Superintendent of Documents, Mail Stop: SSOP, Washington, DC 20402-9328



[[Page iii]]




                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 48:

          Chapter 1--Federal Acquisition Regulation...........       3

  Finding Aids:

      Table of CFR Titles and Chapters........................    1061

      Alphabetical List of Agencies Appearing in the CFR......    1079

      List of CFR Sections Affected...........................    1089



[[Page iv]]





                     ----------------------------

                     Cite this Code:  CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus,  48 CFR 1.000 refers 
                       to title 48, part 1, 
                       section 000.

                     ----------------------------

[[Page v]]



                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, October 1, 1999), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

    Each volume of the Code contains amendments published in the Federal 
Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
number of the Federal Register and date of publication. Publication 
dates and effective dates are usually not the same and care must be 
exercised by the user in determining the actual effective date. In 
instances where the effective date is beyond the cut-off date for the 
Code a note has been inserted to reflect the future effective date. In 
those instances where a regulation published in the Federal Register 
states a date certain for expiration, an appropriate note will be 
inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
requirements.

OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
the cover of each volume are not carried. Code users may find the text 
of provisions in effect on a given date in the past by using the 
appropriate numerical list of sections affected. For the period before 
January 1, 1986, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, or 1973-1985, published in seven separate volumes. For 
the period beginning January 1, 1986, a ``List of CFR Sections 
Affected'' is published at the end of each CFR volume.

CFR INDEXES AND TABULAR GUIDES

    A subject index to the Code of Federal Regulations is contained in a 
separate volume, revised annually as of January 1, entitled CFR Index 
and Finding Aids. This volume contains the Parallel Table of Statutory 
Authorities and Agency Rules. A list of CFR titles, chapters, and parts 
and an alphabetical list of agencies publishing in the CFR are also 
included in this volume.
    An index to the text of ``Title 3--The President'' is carried within 
that volume.
    The Federal Register Index is issued monthly in cumulative form. 
This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.
    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.

REPUBLICATION OF MATERIAL

    There are no restrictions on the republication of material appearing 
in the Code of Federal Regulations.

INQUIRIES

    For a legal interpretation or explanation of any regulation in this 
volume, contact the issuing agency. The issuing agency's name appears at 
the top of odd-numbered pages.
    For inquiries concerning CFR reference assistance, call 202-523-5227 
or write to the Director, Office of the Federal Register, National 
Archives and Records Administration, Washington, DC 20408 or e-mail 
info@fedreg.nara.gov.

SALES

    The Government Printing Office (GPO) processes all sales and 
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Customer Service call 202-512-1803.

ELECTRONIC SERVICES

    The full text of the Code of Federal Regulations, The United States 
Government Manual, the Federal Register, Public Laws, Weekly Compilation 
of Presidential Documents and the Privacy Act Compilation are available 
in electronic format at www.access.gpo.gov/nara (``GPO Access''). For 
more information, contact Electronic Information Dissemination Services, 
U.S. Government Printing Office. Phone 202-512-1530, or 888-293-6498 
(toll-free). E-mail, gpoaccess@gpo.gov.
    The Office of the Federal Register also offers a free service on the 
National Archives and Records Administration's (NARA) World Wide Web 
site for public

[[Page vii]]

law numbers, Federal Register finding aids, and related information. 
Connect to NARA's web site at www.nara.gov/fedreg. The NARA site also 
contains links to GPO Access.

                              Raymond A. Mosley,
                                    Director,
                          Office of the Federal Register.

October 1, 1999.



[[Page ix]]



                               THIS TITLE

    Title 48--Federal Acquisition Regulations System is composed of 
seven volumes. The chapters in these volumes are arranged as follows: 
Chapter 1 (parts 1 to 51), chapter 1 (parts 52 to 99), chapter 2 (parts 
201 to 299), chapters 3 to 6, chapters 7 to 14, chapters 15 to 28 and 
chapter 29 to end. The contents of these volumes represent all current 
regulations codified under this title of the CFR as of October 1, 1999.

    The Federal acquisition regulations in chapter 1 are those 
government-wide acquisition regulations jointly issued by the General 
Services Administration, the Department of Defense, and the National 
Aeronautics and Space Administration. Chapters 2 through 99 are 
acquisition regulations issued by individual government agencies. Parts 
1 to 69 in each of chapters 2 through 99 are reserved for agency 
regulations implementing the Federal acquisition regulations in chapter 
1 and are numerically keyed to them. Parts 70 to 99 in chapters 2 
through 99 contain agency regulations supplementing the Federal 
acquisition regulations.

    The OMB control numbers for the Federal Acquisition Regulations 
System appear in section 1.106 of chapter 1. For the convenience of the 
user section 1.106 is reprinted in the Finding Aids section of the 
second volume containing chapter 1 (parts 52 to 99).

    The first volume, containing chapter 1 (parts 1 to 51), includes an 
index to the Federal acquisition regulations.

    For this volume, Ruth Reedy Green was Chief Editor. The Code of 
Federal Regulations publication program is under the direction of 
Frances D. McDonald, assisted by Alomha S. Morris.

[[Page x]]





[[Page 1]]



            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM




              (This book contains chapter 1, parts 1 to 51)

-----------------------------------------------------------------------
                                                                    Part

Chapter 1--Federal Acquisition Regulation...................           1

[[Page 3]]



                CHAPTER 1--FEDERAL ACQUISITION REGULATION




-----------------------------------------------------------------------

                          SUBCHAPTER A--GENERAL

Part                                                                Page
1               Federal Acquisition Regulations System......           5
2               Definitions of words and terms..............          20
3               Improper business practices and personal 
                    conflicts of interest...................          24
4               Administrative matters......................          49

                   SUBCHAPTER B--ACQUISITION PLANNING

5               Publicizing contract actions................          66
6               Competition requirements....................          80
7               Acquisition planning........................          92
8               Required sources of supplies and services...         107
9               Contractor qualifications...................         124
10              Market research.............................         157
11              Describing agency needs.....................         159
12              Acquisition of commercial items.............         171

          SUBCHAPTER C--CONTRACTING METHODS AND CONTRACT TYPES

13              Simplified acquisition procedures...........         184
14              Sealed bidding..............................         200
15              Contracting by negotiation..................         232
16              Types of contracts..........................         282
17              Special contracting methods.................         308
18              [Reserved]

                  SUBCHAPTER D--SOCIOECONOMIC PROGRAMS

19              Small business programs.....................         323
20-21           [Reserved]
22              Application of labor laws to Government 
                    acquisitions............................         401
23              Environment, conservation, occupational 
                    safety, and drug-free workplace.........         460
24              Protection of privacy and freedom of 
                    information.............................         473

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25              Foreign acquisition.........................         475
26              Other socioeconomic programs................         496

             SUBCHAPTER E--GENERAL CONTRACTING REQUIREMENTS

27              Patents, data, and copyrights...............         500
28              Bonds and insurance.........................         540
29              Taxes.......................................         561
30              Cost accounting standards administration....         567
31              Contract cost principles and procedures.....         575
32              Contract financing..........................         632
33              Protests, disputes, and appeals.............         700

             SUBCHAPTER F--SPECIAL CATEGORIES OF CONTRACTING

34              Major system acquisition....................         713
35              Research and development contracting........         716
36              Construction and architect-engineer 
                    contracts...............................         726
37              Service contracting.........................         746
38              Federal supply schedule contracting.........         758
39              Acquisition of information technology.......         759
40              [Reserved]
41              Acquisition of utility services.............         762

                    SUBCHAPTER G--CONTRACT MANAGEMENT

42              Contract administration and audit services..         772
43              Contract modifications......................         806
44              Subcontracting policies and procedures......         811
45              Government property.........................         818
46              Quality assurance...........................         858
47              Transportation..............................         877
48              Value engineering...........................         912
49              Termination of contracts....................         921
50              Extraordinary contractual actions...........         965
51              Use of Government sources by contractors....         975
                FAR Index...................................         980


  Editorial Note: The Federal Acquisition Regulations Index also follows 
the text of Chapter 1 in 48 CFR Chapter 1, Parts 52-99.

[[Page 5]]



                          SUBCHAPTER A--GENERAL





PART 1--FEDERAL ACQUISITION REGULATIONS SYSTEM--Table of Contents




Sec.
1.000  Scope of part.

                Subpart 1.1--Purpose, Authority, Issuance

1.101  Purpose.
1.102  Statement of guiding principles for the Federal Acquisition 
          System.
1.102-1  Discussion.
1.102-2  Performance standards.
1.102-3  Acquisition team.
1.102-4  Role of the acquisition team.
1.103  Authority.
1.104  Applicability.
1.105  Issuance.
1.105-1  Publication and code arrangement.
1.105-2  Arrangement of regulations.
1.105-3  Copies.
1.106  OMB approval under the Paperwork Reduction Act.
1.107  Certifications.

                       Subpart 1.2--Administration

1.201  Maintenance of the FAR.
1.201-1  The two councils.
1.201-2  FAR Secretariat.
1.202  Agency compliance with the FAR.

               Subpart 1.3--Agency Acquisition Regulations

1.301  Policy.
1.302  Limitations.
1.303  Publication and codification.
1.304  Agency control and compliance procedures.

                  Subpart 1.4--Deviations from the FAR

1.400  Scope of subpart.
1.401  Definition.
1.402  Policy.
1.403  Individual deviations.
1.404  Class deviations.
1.405  Deviations pertaining to treaties and executive agreements.

              Subpart 1.5--Agency and Public Participation

1.501  Solicitation of agency and public views.
1.501-1  Definition.
1.501-2  Opportunity for public comments.
1.501-3  Exceptions.
1.502  Unsolicited proposed revisions.
1.503  Public meetings.

      Subpart 1.6--Career Development, Contracting Authority, and 
                            Responsibilities.

1.601  General.
1.602  Contracting officers.
1.602-1  Authority.
1.602-2  Responsibilities.
1.602-3  Ratification of unauthorized commitments.
1.603  Selection, appointment, and termination of appointment.
1.603-1  General.
1.603-2  Selection.
1.603-3  Appointment.
1.603-4  Termination.

                Subpart 1.7--Determinations and Findings

1.700  Scope of subpart.
1.701  Definition.
1.702  General.
1.703  Class determinations and findings.
1.704  Content.
1.705  Supersession and modification.
1.706  Expiration.
1.707  Signatory authority.

    Authority: 40 U.S.C. 486(c); 10 U.S.C. Chapter 137; and 42 U.S.C. 
2473(c).

    Source: 48 FR 42103, Sept. 19, 1983, unless otherwise noted.



1.000  Scope of part.

    This part sets forth basic policies and general information about 
the Federal Acquisition Regulations System including purpose, authority, 
applicability, issuance, arrangement, numbering, dissemination, 
implementation, supplementation, maintenance, administration, and 
deviation. Subparts 1.2, 1.3, and 1.4 prescribe administrative 
procedures for maintaining the FAR System.



                Subpart 1.1--Purpose, Authority, Issuance



1.101  Purpose.

    The Federal Acquisition Regulations System is established for the 
codification and publication of uniform policies and procedures for 
acquisition by all executive agencies. The Federal Acquisition 
Regulations System consists of the Federal Acquisition Regulation (FAR), 
which is the primary document, and agency acquisition regulations that 
implement or supplement the

[[Page 6]]

FAR. The FAR System does not include internal agency guidance of the 
type described in 1.301(a)(2).

[48 FR 42103, Sept. 19, 1983, as amended at 51 FR 27116, July 29, 1986]



1.102  Statement of guiding principles for the Federal Acquisition System.

    (a) The vision for the Federal Acquisition System is to deliver on a 
timely basis the best value product or service to the customer, while 
maintaining the public's trust and fulfilling public policy objectives. 
Participants in the acquisition process should work together as a team 
and should be empowered to make decisions within their area of 
responsibility.
    (b) The Federal Acquisition System will--
    (1) Satisfy the customer in terms of cost, quality, and timeliness 
of the delivered product or service by, for example--
    (i) Maximizing the use of commercial products and services;
    (ii) Using contractors who have a track record of successful past 
performance or who demonstrate a current superior ability to perform; 
and
    (iii) Promoting competition;
    (2) Minimize administrative operating costs;
    (3) Conduct business with integrity, fairness, and openness; and
    (4) Fulfill public policy objectives.
    (c) The Acquisition Team consists of all participants in Government 
acquisition including not only representatives of the technical, supply, 
and procurement communities but also the customers they serve, and the 
contractors who provide the products and services.
    (d) The role of each member of the Acquisition Team is to exercise 
personal initiative and sound business judgment in providing the best 
value product or service to meet the customer's needs. In exercising 
initiative, Government members of the Acquisition Team may assume if a 
specific strategy, practice, policy or procedure is in the best 
interests of the Government and is not addressed in the FAR nor 
prohibited by law (statute or case law), Executive order or other 
regulation, that the strategy, practice, policy or procedure is a 
permissible exercise of authority.

[60 FR 34733, July 3, 1995]



1.102-1  Discussion.

    (a) Introduction. The statement of Guiding Principles for the 
Federal Acquisition System (System) represents a concise statement 
designed to be user-friendly for all participants in Government 
acquisition. The following discussion of the principles is provided in 
order to illuminate the meaning of the terms and phrases used. The 
framework for the System includes the Guiding Principles for the System 
and the supporting policies and procedures in the FAR.
    (b) Vision. All participants in the System are responsible for 
making acquisition decisions that deliver the best value product or 
service to the customer. Best value must be viewed from a broad 
perspective and is achieved by balancing the many competing interests in 
the System. The result is a system which works better and costs less.

[60 FR 34733, July 3, 1995]



1.102-2  Performance standards.

    (a) Satisfy the customer in terms of cost, quality, and timeliness 
of the delivered product or service. (1) The principal customers for the 
product or service provided by the System are the users and line 
managers, acting on behalf of the American taxpayer.
    (2) The System must be responsive and adaptive to customer needs, 
concerns, and feedback. Implementation of acquisition policies and 
procedures, as well as consideration of timeliness, quality and cost 
throughout the process, must take into account the perspective of the 
user of the product or service.
    (3) When selecting contractors to provide products or perform 
services the Government will use contractors who have a track record of 
successful past performance or who demonstrate a current superior 
ability to perform.
    (4) The Government must not hesitate to communicate with the 
commercial sector as early as possible in the

[[Page 7]]

acquisition cycle to help the Government determine the capabilities 
available in the commercial marketplace. The Government will maximize 
its use of commercial products and services in meeting Government 
requirements.
    (5) It is the policy of the System to promote competition in the 
acquisition process.
    (6) The System must perform in a timely, high quality, and cost-
effective manner.
    (7) All members of the Team are required to employ planning as an 
integral part of the overall process of acquiring products or services. 
Although advance planning is required, each member of the Team must be 
flexible in order to accommodate changing or unforeseen mission needs. 
Planning is a tool for the accomplishment of tasks, and application of 
its discipline should be commensurate with the size and nature of a 
given task.
    (b) Minimize administrative operating costs. (1) In order to ensure 
that maximum efficiency is obtained, rules, regulations, and policies 
should be promulgated only when their benefits clearly exceed the costs 
of their development, implementation, administration, and enforcement. 
This applies to internal administrative processes, including reviews, 
and to rules and procedures applied to the contractor community.
    (2) The System must provide uniformity where it contributes to 
efficiency or where fairness or predictability is essential. The System 
should also, however, encourage innovation, and local adaptation where 
uniformity is not essential.
    (c) Conduct business with integrity, fairness, and openness. (1) An 
essential consideration in every aspect of the System is maintaining the 
public's trust. Not only must the System have integrity, but the actions 
of each member of the Team must reflect integrity, fairness, and 
openness. The foundation of integrity within the System is a competent, 
experienced, and well-trained, professional workforce. Accordingly each 
member of the Team is responsible and accountable for the wise use of 
public resources as well as acting in a manner which maintains the 
public's trust. Fairness and openness require open communication among 
team members, internal and external customers, and the public.
    (2) To achieve efficient operations, the System must shift its focus 
from ``risk avoidance'' to one of ``risk management.'' The cost to the 
taxpayer of attempting to eliminate all risk is prohibitive. The 
Executive Branch will accept and manage the risk associated with 
empowering local procurement officials to take independent action based 
on their professional judgment.
    (3) The Government shall exercise discretion, use sound business 
judgment, and comply with applicable laws and regulations in dealing 
with contractors and prospective contractors. All contractors and 
prospective contractors shall be treated fairly and impartially but need 
not be treated the same.
    (d) Fulfill public policy objectives. The System must support the 
attainment of public policy goals adopted by the Congress and the 
President. In attaining these goals, and in its overalll operations, the 
process shall ensure the efficient use of public resources.

[60 FR 34734, July 3, 1995, as amended at 62 FR 51229, Sept. 30, 1997]



1.102-3  Acquisition team.

    The purpose of defining the Federal Acquisition Team (Team) in the 
Guiding Principles is to ensure that participants in the System are 
identified--beginning with the customer and ending with the contractor 
of the product or service. By identifying the team members in this 
manner, teamwork, unity of purpose, and open communication among the 
members of the Team in sharing the vision and achieving the goal of the 
System are encouraged. Individual team members will participate in the 
acquisition process at the appropriate time.

[60 FR 34734, July 3, 1995]



1.102-4  Role of the acquisition team.

    (a) Government members of the Team must be empowered to make 
acquisition decisions within their areas of responsibility, including 
selection, negotiation, and administration of contracts consistent with 
the Guiding

[[Page 8]]

Principles. In particular, the contracting officer must have the 
authority to the maximum extent practicable and consistent with law, to 
determine the application of rules, regulations, and policies, on a 
specific contract.
    (b) The authority to make decisions and the accountability for the 
decision made will be delegated to the lowest level within the System, 
consistent with law.
    (c) The Team must be prepared to perform the functions and duties 
assigned. The Government is committed to provide training, professional 
development, and other resources necessary for maintaining and improving 
the knowledge, skills, and abilities for all Government participants on 
the Team, both with regard to their particular area of responsibility 
within the System, and their respective role as a team member. The 
contractor community is encouraged to do likewise.
    (d) The System will foster cooperative relationships between the 
Government and its contractors consistent with its overriding 
responsibility to the taxpayers.
    (e) The FAR outlines procurement policies and procedures that are 
used by members of the Acquisition Team. If a policy or procedure, or a 
particular strategy or practice, is in the best interest of the 
Government and is not specifically addressed in the FAR, nor prohibited 
by law (statute or case law), Executive order or other regulation, 
Government members of the Team should not assume it is prohibited. 
Rather, absence of direction should be interpreted as permitting the 
Team to innovative and use sound business judgment that is otherwise 
consistent with law and within the limits of their authority. 
Contracting officers should take the lead in encouraging business 
process innovations and ensuring that business decisions are sound.

[60 FR 34734, July 3, 1995, as amended at 62 FR 44804, Aug. 22, 1997]



1.103  Authority.

    (a) The development of the FAR System is in accordance with the 
requirements of the Office of Federal Procurement Policy (OFPP) Act of 
1974 (Pub. L. 93-400), as amended by Pub. L. 96-83, and OFPP Policy 
Letter 85-1, Federal Acquisition Regulations System, dated August 19, 
1985.
    (b) The FAR is prepared, issued, and maintained, and the FAR System 
is prescribed, jointly by the Secretary of Defense, the Administrator of 
General Services, and the Administrator, National Aeronautics and Space 
Administration, under their several statutory authorities.

[48 FR 42103, Sept. 19, 1983, as amended at 51 FR 27116, July 29, 1986. 
Redesignated at 60 FR 34733, July 3, 1995]



1.104  Applicability.

    The FAR applies to all acquisitions as defined in part 2 of the FAR, 
except where expressly excluded.

[48 FR 42103, Sept. 19, 1983. Redesignated at 60 FR 34733, July 3, 1995]



1.105  Issuance.



1.105-1  Publication and code arrangement.

    (a) The FAR is published in (1) the daily issue of the Federal 
Register, (2) cumulated form in the Code of Federal Regulations (CFR), 
and (3) a separate loose-leaf edition.
    (b) The FAR is issued as Chapter 1 of Title 48, CFR. Subsequent 
chapters are reserved for agency acquisition regulations that implement 
or supplement the FAR (see subpart 1.3). The CFR Staff will assign 
chapter numbers to requesting agencies.
    (c) Each numbered unit or segment (e.g., part, subpart, section, 
etc.) of an agency acquisition regulation that is codified in the CFR 
shall begin with the chapter number. However, the chapter number 
assigned to the FAR will not be included in the numbered units or 
segments of the FAR.

[48 FR 42103, Sept. 19, 1983. Redesignated at 60 FR 34733, July 3, 1995]



1.105-2  Arrangement of regulations.

    (a) General. The FAR is divided into subchapters, parts (each of 
which deals with a separate aspect of acquisition), subparts, sections, 
and subsections.
    (b) Numbering. (1) The numbering system permits the discrete 
identification of every FAR paragraph. The digits to the left of the 
decimal point represent the part number. The numbers to the

[[Page 9]]

right of the decimal point and to the left of the dash, represent, in 
order, the subpart (one or two digits), and the section (two digits). 
The number to the right of the dash represents the subsection. 
Subdivisons may be used at the section and subsection level to identify 
individual paragraphs. The following example illustrates the make-up of 
a FAR number citation (note that subchapters are not used with 
citations):
[GRAPHIC] [TIFF OMITTED] TC03AP91.000

    (2) Subdivisions below the section or subsection level shall consist 
of parenthetical alphanumerics reading from highest to lowest indenture 
as follows: lower case alphabet, Arabic numbers, lower case Roman 
numerals, and upper case alphabet. The following example is 
illustrative:

                              (a)(1)(i)(A)

    Subdivisions, below the 4th level shall repeat the sequence.
    (c) References and citations. (1) Unless otherwise stated, cross-
references indicate parts, subparts, sections, subsections, paragraphs, 
subparagraphs, or subdivisions of this regulation.
    (2) This regulation may be referred to as the Federal Acquisition 
Regulation or the FAR.
    (3) Using the FAR coverage at 9.106-4(d) as a typical illustration, 
reference to the--
    (i) Part would be ``FAR Part 9'' outside the FAR and ``Part 9'' 
within the FAR.
    (ii) Subpart would be ``FAR Subpart 9.1'' outside the FAR and 
``Subpart 9.1'' within the FAR.
    (iii) Section would be ``FAR 9.106'' outside the FAR and ``9.106'' 
within the FAR.
    (iv) Subsection would be ``FAR 9.106-4'' outside the FAR and 
``9.106-4'' within the FAR.
    (v) Paragraph would be ``FAR 9.106-4(d)'' outside the FAR and 
``9.106-4(d)'' within the FAR.
    (4) Citations of authority (e.g., statutes or executive orders) in 
the FAR shall follow the Federal Register form guides.

[48 FR 42103, Sept. 19, 1983. Redesignated at 60 FR 34733, July 3, 1995]



1.105-3  Copies.

    Copies of the FAR in Federal Register, loose-leaf, CD-ROM and CFR 
form may be purchased from the Superintendent of Documents, Government 
Printing Office (GPO), Washington, DC 20402.

[48 FR 42103, Sept. 19, 1983. Redesignated at 60 FR 34733, July 3, 1995, 
as amended at 62 FR 40236, July 25, 1997]



1.106  OMB approval under the Paperwork Reduction Act.

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) imposes a 
requirement on Federal agencies to obtain approval from the Office of 
Management and Budget (OMB) before collecting information from ten or 
more members of the public. The information collection and recordkeeping 
requirements contained in this regulation have been approved by the OMB. 
The following OMB control numbers apply:

------------------------------------------------------------------------
                                                             OMB control
                        FAR segment                              No.
------------------------------------------------------------------------
3.103......................................................    9000-0018
3.4........................................................    9000-0003
4.102......................................................    9000-0033
4.7........................................................    9000-0034
4.9........................................................    9000-0097
4.602......................................................    9000-0145
4.603......................................................    9000-0145
5.405......................................................    9000-0036
7.2........................................................    9000-0082
8.5........................................................    9000-0113
9.1........................................................    9000-0011
9.2........................................................    9000-0020
14.201.....................................................    9000-0034
14.202-4...................................................    9000-0040
14.202-5...................................................    9000-0039
14.205.....................................................    9000-0002
14.205-4(c)................................................    9000-0037
14.214.....................................................    9000-0105
14.407.....................................................    9000-0038
14.5.......................................................    9000-0041
15.2.......................................................    9000-0037
15.209.....................................................    9000-0034
15.4.......................................................    9000-0013
15.404-1(f)................................................    9000-0080
15.407-2...................................................    9000-0078
15.408.....................................................    9000-0115
19.7.......................................................    9000-0006
19.12......................................................    9000-0150
22.103.....................................................    9000-0065
22.8.......................................................    1215-0072
22.11......................................................    9000-0066
22.13......................................................    1215-0072

[[Page 10]]

 
22.14......................................................    1215-0072
23.602.....................................................    9000-0107
27.3.......................................................    9000-0095
27.4.......................................................    9000-0090
28.1.......................................................    9000-0045
28.2.......................................................    9000-0045
29.304.....................................................    9000-0059
30.6.......................................................    9000-0129
31.205-46..................................................    9000-0079
31.205-46(a)(3)............................................    9000-0088
32.........................................................    9000-0035
32.000.....................................................    9000-0138
32.1.......................................................    9000-0070
                                                                     and
                                                               9000-0138
32.2.......................................................    9000-0138
32.4.......................................................    9000-0073
32.5.......................................................    9000-0010
                                                                     and
                                                               9000-0138
32.7.......................................................    9000-0074
32.9.......................................................    9000-0102
32.10......................................................    9000-0138
33.........................................................    9000-0035
34.1.......................................................    9000-0132
36.213-2...................................................    9000-0037
36.603.....................................................    9000-0004
                                                                     and
                                                               9000-0005
36.701.....................................................    9000-0037
41.202(c)..................................................    9000-0125
42.7.......................................................    9000-0013
42.12......................................................    9000-0076
42.13......................................................    9000-0076
42.14......................................................    9000-0056
43.205(f)..................................................    9000-0026
45.........................................................    9000-0075
46.........................................................    9000-0077
47.........................................................    9000-0061
48.........................................................    9000-0027
49.........................................................    9000-0028
50.........................................................    9000-0029
51.1.......................................................    9000-0031
51.2.......................................................    9000-0032
52.203-2...................................................    9000-0018
52.203-7...................................................    9000-0091
52.204-3...................................................    9000-0097
52.204-6...................................................    9000-0145
52.207-3...................................................    9000-0114
52.212-3...................................................    9000-0136
52.214-14..................................................    9000-0047
52.214-15..................................................    9000-0044
52.214-16..................................................    9000-0044
52.214-21..................................................    9000-0039
52.214-26..................................................    9000-0034
52.214-28..................................................    9000-0013
52.215-1(c)(2)(iv).........................................    9000-0048
52.215-1(d)................................................    9000-0044
52.215-2...................................................    9000-0034
52.215-6...................................................    9000-0047
52.215-9...................................................    9000-0078
52.215-12..................................................    9000-0013
52.215-13..................................................    9000-0013
52.215-14..................................................    9000-0080
52.215-19..................................................    9000-0015
52.215-20..................................................    9000-0013
52.215-21..................................................    9000-0013
52.216-2...................................................    9000-0068
52.216-3...................................................    9000-0068
52.216-4...................................................    9000-0068
52.216-5...................................................    9000-0071
52.216-6...................................................    9000-0071
52.216-7...................................................    9000-0069
52.216-10..................................................    9000-0067
52.216-13..................................................    9000-0069
52.216-15..................................................    9000-0069
52.216-16..................................................    9000-0067
52.216-17..................................................    9000-0067
52.219-9...................................................    9000-0006
52.219-10..................................................    9000-0006
52.219-19..................................................    9000-0100
52.219-20..................................................    9000-0100
52.219-21..................................................    9000-0100
52.219-22..................................................    9000-0150
52.219-23..................................................    9000-0150
52.219-25..................................................    9000-0150
52.222-2...................................................    9000-0065
52.222-4...................................................    1215-0119
52.222-6...................................................    1215-0140
52.222-8...................................................    1215-0149
                                                                     and
                                                               1215-0017
52.222-11..................................................    9000-0014
52.222-18..................................................    9000-0127
52.222-21..................................................    1215-0072
52.222-22..................................................    1215-0072
52.222-23..................................................    1215-0072
52.222-25..................................................    1215-0072
52.222-26..................................................    1215-0072
52.222-27..................................................    1215-0072
52.222-35..................................................    1215-0072
52.222-36..................................................    1215-0072
52.222-41..................................................    1215-0017
                                                                     and
                                                               1215-0150
52.222-46..................................................    9000-0066
52.223-1...................................................    9000-0021
52.223-4...................................................    9000-0134
52.223-5...................................................    9000-0147
52.223-6(b)(5).............................................    9000-0101
52.233-7...................................................    9000-0117
52.223-9...................................................    9000-0134
52.225-1...................................................    9000-0024
52.225-6...................................................    9000-0023
52.225-8...................................................    9000-0025
52.225-10..................................................    9000-0022
52.225-20..................................................    9000-0130
52.227-14..................................................    9000-0090
52.227-15..................................................    9000-0090
52.227-16..................................................    9000-0090
52.227-17..................................................    9000-0090
52.227-18..................................................    9000-0090
52.227-19..................................................    9000-0090
52.227-20..................................................    9000-0090
52.227-21..................................................    9000-0090
52.227-22..................................................    9000-0090
52.227-23..................................................    9000-0090
52.228-1...................................................    9000-0045
52.228-2...................................................    9000-0045
52.228-12..................................................    9000-0135
52.228-13..................................................    9000-0045
52.228-15..................................................    9000-0045
52.228-16..................................................    9000-0045
52.229-2...................................................    9000-0059
52.230-6...................................................    9000-0129
52.232-1...................................................    9000-0070
52.232-2...................................................    9000-0070
52.232-3...................................................    9000-0070
52.232-4...................................................    9000-0070
52.232-5...................................................    9000-0070
52.232-6...................................................    9000-0070
52.232-7...................................................    9000-0070
52.232-8...................................................    9000-0070
52.232-9...................................................    9000-0070
52.232-10..................................................    9000-0070
52.232-11..................................................    9000-0070

[[Page 11]]

 
52.232-12..................................................    9000-0073
52.232-13..................................................    9000-0010
52.232-14..................................................    9000-0010
52.232-15..................................................    9000-0010
52.232-16..................................................    9000-0010
52.232-20..................................................    9000-0074
52.232-21..................................................    9000-0074
52.232-22..................................................    9000-0074
52.232-27..................................................    9000-0102
52.232-29..................................................    9000-0138
52.232-30..................................................    9000-0138
52.232-31..................................................    9000-0138
52.232-32..................................................    9000-0138
52.233-1...................................................    9000-0035
52.234-1...................................................    9000-0133
52.236-5...................................................    9000-0062
52.236-13..................................................    1220-0029
                                                                     and
                                                               9000-0060
52.236-15..................................................    9000-0058
52.236-19..................................................    9000-0064
52.241-1...................................................    9000-0126
52.241-3...................................................    9000-0122
52.241-7...................................................    9000-0123
52.241-13..................................................    9000-0124
52.242-12..................................................    9000-0056
52.243-1...................................................    9000-0026
52.243-2...................................................    9000-0026
52.243-3...................................................    9000-0026
52.243-4...................................................    9000-0026
52.243-6...................................................    9000-0026
52.243-7...................................................    9000-0026
52.245-2...................................................    9000-0075
52.245-3...................................................    9000-0075
52.245-5...................................................    9000-0075
52.245-7...................................................    9000-0075
52.245-8...................................................    9000-0075
52.245-9...................................................    9000-0075
52.245-10..................................................    9000-0075
52.245-11..................................................    9000-0075
52.245-16..................................................    9000-0075
52.245-17..................................................    9000-0075
52.245-18..................................................    9000-0075
52.246-2...................................................    9000-0077
52.246-3...................................................    9000-0077
52.246-4...................................................    9000-0077
52.246-5...................................................    9000-0077
52.246-6...................................................    9000-0077
52.246-7...................................................    9000-0077
52.246-8...................................................    9000-0077
52.246-10..................................................    9000-0077
52.246-12..................................................    9000-0077
52.246-15..................................................    9000-0077
52.247-2...................................................    9000-0053
52.247-29..................................................    9000-0061
52.247-30..................................................    9000-0061
52.247-31..................................................    9000-0061
52.247-32..................................................    9000-0061
52.247-33..................................................    9000-0061
52.247-34..................................................    9000-0061
52.247-35..................................................    9000-0061
52.247-36..................................................    9000-0061
52.247-37..................................................    9000-0061
52.247-38..................................................    9000-0061
52.247-39..................................................    9000-0061
52.247-40..................................................    9000-0061
52.247-41..................................................    9000-0061
52.247-42..................................................    9000-0061
52.247-43..................................................    9000-0061
52.247-44..................................................    9000-0061
52.247-48..................................................    9000-0061
52.247-51..................................................    9000-0057
52.247-53..................................................    9000-0055
52.247-57..................................................    9000-0061
52.247-63..................................................    9000-0054
52.247-64..................................................    9000-0054
52.248-1...................................................    9000-0027
52.248-2...................................................    9000-0027
52.248-3...................................................    9000-0027
52.249-2...................................................    9000-0028
52.249-3...................................................    9000-0028
52.249-5...................................................    9000-0028
52.249-6...................................................    9000-0028
52.249-11..................................................    9000-0028
52.250-1...................................................    9000-0029
53.236-1(a)................................................    9000-0037
SF 24......................................................    9000-0045
SF 25......................................................    9000-0045
SF 25-A....................................................    9000-0045
SF 28......................................................    9000-0001
SF 34......................................................    9000-0045
SF 35......................................................    9000-0045
SF 129.....................................................    9000-0002
SF 254.....................................................    9000-0004
SF 255.....................................................    9000-0005
SF 273.....................................................    9000-0045
SF 274.....................................................    9000-0045
SF 275.....................................................    9000-0045
SF 294.....................................................    9000-0006
SF 295.....................................................    9000-0007
SF 312.....................................................    9000-0150
SF 1403....................................................    9000-0011
SF 1404....................................................    9000-0011
SF 1405....................................................    9000-0011
SF 1406....................................................    9000-0011
SF 1407....................................................    9000-0011
SF 1408....................................................    9000-0011
SF 1413....................................................    9000-0014
SF 1416....................................................    9000-0045
SF 1417....................................................    9000-0037
SF 1418....................................................    9000-0045
SF 1423....................................................    9000-0015
SF 1424....................................................    9000-0015
SF 1426....................................................    9000-0015
SF 1427....................................................    9000-0015
SF 1428....................................................    9000-0015
SF 1429....................................................    9000-0015
SF 1430....................................................    9000-0015
SF 1431....................................................    9000-0015
SF 1432....................................................    9000-0015
SF 1433....................................................    9000-0015
SF 1434....................................................    9000-0015
SF 1435....................................................    9000-0012
SF 1436....................................................    9000-0012
SF 1437....................................................    9000-0012
SF 1438....................................................    9000-0012
SF 1439....................................................    9000-0012
SF 1440....................................................    9000-0012
SF 1443....................................................    9000-0010
SF 1444....................................................    9000-0089
SF 1445....................................................    9000-0089
SF 1446....................................................    9000-0089
SF 1449....................................................    9000-0136
------------------------------------------------------------------------


[[Page 12]]


[59 FR 67065, Dec. 28, 1994. Redesignated at 60 FR 34733, 34736, July 3, 
1995, as amended at 60 FR 42650, 42665, Aug. 16, 1995; 60 FR 48211, 
Sept. 18, 1995; 60 FR 49710, Sept. 26, 1995; 61 FR 18916, Apr. 29, 1996; 
61 FR 39188, July 26, 1996; 61 FR 67410, 67430, Dec. 20, 1996; 61 FR 
69287, Dec. 31, 1996; 62 FR 227, 235, 271, Jan. 2, 1997; 62 FR 44806, 
44810, Aug. 22, 1997; 62 FR 51229, 51270, Sept. 30, 1997; 63 FR 9050, 
9051, Feb. 23, 1998; 63 FR 35720, June 30, 1998; 63 FR 36121, July 1, 
1998; 63 FR 58602, Oct. 30, 1998; 63 FR 70292, Dec. 18, 1998; 64 FR 
10532, 10549, Mar. 4, 1999; 64 FR 32748, June 17, 1999; 64 FR 51850, 
Sept. 24, 1999]



1.107  Certifications.

    In accordance with Section 29 of the Office of Federal Procurement 
Policy Act (41 U.S.C. 425), as amended by Section 4301 of the Clinger-
Cohen Act of 1996 (Public Law 104-106), a new requirement for a 
certification by a contractor or offeror may not be included in this 
chapter unless--
    (a) The certification requirement is specifically imposed by 
statute; or
    (b) Written justification for such certification is provided to the 
Administrator for Federal Procurement Policy by the Federal Acquisition 
Regulatory Council, and the Administrator approves in writing the 
inclusion of such certification requirement.

[62 FR 44813, Aug. 22, 1997]



                       Subpart 1.2--Administration



1.201  Maintenance of the FAR.



1.201-1  The two councils.

    (a) Subject to the authorities discussed in 1.102, revisions to the 
FAR will be prepared and issued through the coordinated action of two 
councils, the Defense Acquisition Regulations Council (DAR Council) and 
the Civilian Agency Acquisition Council (CAA Council). Members of these 
councils shall--
    (1) Represent their agencies on a full-time basis;
    (2) Be selected for their superior qualifications in terms of 
acquisition experience and demonstrated professional expertise; and
    (3) Be funded by their respective agencies.
    (b) The chairperson of the CAA Council shall be the representative 
of the Administrator of General Services. The other members of this 
council shall be one each representative from the (1) Departments of 
Agriculture, Commerce, Energy, Health and Human Services, Interior, 
Labor, State, Transportation, and Treasury, and (2) Environmental 
Protection Agency, Social Security Administration, Small Business 
Administration, and Department of Veterans Affairs.
    (c) The Director of the DAR Council shall be the representative of 
the Secretary of Defense. The operation of the DAR Council will be as 
prescribed by the Secretary of Defense. Membership shall include 
representatives of the military Departments, the Defense Logistics 
Agency, and the National Aeronautics and Space Administration.
    (d) Responsibility for processing revisions to the FAR is 
apportioned by the two councils so that each council has cognizance over 
specified parts or subparts.
    (e) Each council shall be responsible for--
    (1) Agreeing on all revisions with the other council;
    (2) Submitting to the FAR Secretariat (see 1.201-2) the information 
required under paragraphs 1.501-2(b) and (e) for publication in the 
Federal Register of a notice soliciting comments on a proposed revision 
to the FAR;
    (3) Considering all comments received in response to notice of 
proposed revisions;
    (4) Arranging for public meetings;
    (5) Preparing any final revision in the appropriate FAR format and 
language; and
    (6) Submitting any final revision to the FAR Secretariat for 
publication in the Federal Register and printing for distribution.

[48 FR 42103, Sept. 19, 1983, as amended at 50 FR 2269, Jan. 15, 1985; 
50 FR 26903, June 28, 1985; 51 FR 2649, Jan. 17, 1986; 54 FR 29280, July 
11, 1989; 62 FR 64940, Dec. 9, 1997; 63 FR 9069, Feb. 23, 1998]



1.201-2  FAR Secretariat.

    (a) The General Services Administration is responsible for 
establishing and operating the FAR Secretariat to print, publish, and 
distribute the FAR through the Code of Federal Regulations system 
(including a loose-leaf edition with periodic updates).

[[Page 13]]

    (b) Additionally, the FAR Secretariat shall provide the two councils 
with centralized services for--
    (1) Keeping a synopsis of current FAR cases and their status;
    (2) Maintaining official files;
    (3) Assisting parties interested in reviewing the files on completed 
cases; and
    (4) Performing miscellaneous administrative tasks pertaining to the 
maintenance of the FAR.

[48 FR 42103, Sept. 19, 1983, as amended at 62 FR 40236, July 25, 1997]



1.202  Agency compliance with the FAR.

    Agency compliance with the FAR (see 1.304) is the responsibility of 
the Secretary of Defense (for the military departments and defense 
agencies), the Administrator of General Services (for civilian agencies 
other than NASA), and the Administrator of NASA (for NASA activities).



               Subpart 1.3--Agency Acquisition Regulations



1.301  Policy.

    (a)(1) Subject to the authorities in paragraph (c) below and other 
statutory authority, an agency head may issue or authorize the issuance 
of agency acquisition regulations that implement or supplement the FAR 
and incorporate, together with the FAR, agency policies, procedures, 
contract clauses, solicitation provisions, and forms that govern the 
contracting process or otherwise control the relationship between the 
agency, including any of its suborganizations, and contractors or 
prospective contractors.
    (2) Subject to the authorities in (c) below and other statutory 
authority, an agency head may issue or authorize the issuance of 
internal agency guidance at any organizational level (e.g., designations 
and delegations of authority, assignments of responsibilities, work-flow 
procedures, and internal reporting requirements).
    (b) Agency heads shall establish procedures to ensure that agency 
acquisition regulations are published for comment in the Federal 
Register in conformance with the procedures in subpart 1.5 and as 
required by section 22 of the Office of Federal Procurement Policy Act, 
as amended (41 U.S.C. 418b), and other applicable statutes, when they 
have a significant effect beyond the internal operating procedures of 
the agency or have a significant cost or administrative impact on 
contractors or offerors. However, publication is not required for 
issuances that merely implement or supplement higher level issuances 
that have previously undergone the public comment process, unless such 
implementation or supplementation results in an additional significant 
cost or administrative impact on contractors or offerors or effect 
beyond the internal operating procedures of the issuing organization. 
Issuances under 1.301(a)(2) need not be publicized for public comment.
    (c) When adopting acquisition regulations, agencies shall ensure 
that they comply with the Paperwork Reduction Act (44 U.S.C. 3501, et 
seq.) as implemented in 5 CFR part 1320 (see 1.105) and the Regulatory 
Flexibility Act (5 U.S.C. 601, et seq.). Normally, when a law requires 
publication of a proposed regulation, the Regulatory Flexibility Act 
applies and agencies must prepare written analyses or certifications as 
provided in the law.
    (d) Agency acquisition regulations implementing or supplementing the 
FAR are, for--
    (1) The military departments and defense agencies, issued subject to 
the authority of the Secretary of Defense;
    (2) NASA activities, issued subject to the authorities of the 
Administrator of NASA; and
    (3) The civilian agencies other than NASA, issued by the heads of 
those agencies subject to the overall authority of the Administrator of 
General Services or independent authority the agency may have.

[48 FR 42103, Sept. 19, 1983, as amended at 50 FR 2269, Jan. 15, 1985; 
54 FR 5054, Jan. 31, 1989]



1.302  Limitations.

    Agency acquisition regulations shall be limited to--
    (a) Those necessary to implement FAR policies and procedures within 
the agency; and

[[Page 14]]

    (b) Additional policies, procedures, solicitation provisions, or 
contract clauses that supplement the FAR to satisfy the specific needs 
of the agency.



1.303  Publication and codification.

    (a) Agency-wide acquisition regulations shall be published in the 
Federal Register as required by law, shall be codified under an assigned 
chapter in Title 48, Code of Federal Regulations, and shall parallel the 
FAR in format, arrangement, and numbering system (but see 1.104-1(c)). 
Coverage in an agency acquisition regulation that implements a specific 
part, subpart, section, or subsection of the FAR shall be numbered and 
titled to correspond to the appropriate FAR number and title. 
Supplementary material for which there is no counterpart in the FAR 
shall be codified using chapter, part, subpart, section, or subsection 
numbers of 70 and up (e.g., for the Department of Interior, whose 
assigned chapter number in Title 48 is 14, part 1470, subpart 1401.70, 
section 1401.370, or subsection 1401.301-70.)
    (b) Issuances under 1.301(a)(2) need not be published in the Federal 
Register.

[48 FR 42103, Sept. 19, 1983, as amended at 50 FR 2269, Jan. 15, 1985]



1.304  Agency control and compliance procedures.

    (a) Under the authorities of 1.301(c), agencies shall control and 
limit issuance of agency acquisition regulations and, in particular, 
local agency directives that restrain the flexibilities found in the 
FAR, and shall establish formal procedures for the review of these 
documents to assure compliance with this part 1.
    (b) Agency acquisition regulations shall not--
    (1) Unnecessarily repeat, paraphrase, or otherwise restate material 
contained in the FAR or higher-level agency acquisition regulations; or
    (2) Except as required by law or as provided in subpart 1.4, 
conflict or be inconsistent with FAR content.
    (c) Agencies shall evaluate all regulatory coverage in agency 
acquisition regulations to determine if it could apply to other 
agencies. Coverage that is not peculiar to one agency shall be 
recommended for inclusion in the FAR.

[48 FR 42103, Sept. 19, 1983, as amended at 61 FR 39190, July 26, 1996]



                  Subpart 1.4--Deviations from the FAR



1.400  Scope of subpart.

    This subpart prescribes the policies and procedures for authorizing 
deviations from the FAR. Exceptions pertaining to the use of forms 
prescribed by the FAR are covered in part 53 rather than in this 
subpart.



1.401  Definition.

    Deviation means any one or combination of the following:
    (a) The issuance or use of a policy, procedure, solicitation 
provision (see definition in 52.101(a)), contract clause (see definition 
in 52.101(a)), method, or practice of conducting acquisition actions of 
any kind at any stage of the acquisition process that is inconsistent 
with the FAR.
    (b) The omission of any solicitation provision or contract clause 
when its prescription requires its use.
    (c) The use of any solicitation provision or contract clause with 
modified or alternate language that is not authorized by the FAR (see 
definitions of modification and alternate in 52.101(a)).
    (d) The use of a solicitation provision or contract clause 
prescribed by the FAR on a substantially as follows or substantially the 
same as basis (see definitions in 52.101(a)), if such use is 
inconsistent with the intent, principle, or substance of the 
prescription or related coverage on the subject matter in the FAR.
    (e) The authorization of lesser or greater limitations on the use of 
any solicitation provision, contract clause, policy, or procedure 
prescribed by the FAR.
    (f) The issuance of policies or procedures that govern the 
contracting process or otherwise control contracting relationships that 
are not incorporated into agency acquisition regulations in accordance 
with 1.301(a).

[[Page 15]]



1.402  Policy.

    Unless precluded by law, executive order, or regulation, deviations 
from the FAR may be granted as specified in this subpart when necessary 
to meet the specific needs and requirements of each agency. The 
development and testing of new techniques and methods of acquisition 
should not be stifled simply because such action would require a FAR 
deviation. The fact that deviation authority is required should not, of 
itself, deter agencies in their development and testing of new 
techniques and acquisition methods. Refer to 31.101 for instructions 
concerning deviations pertaining to the subject matter of part 31, 
Contract Cost Principles and Procedures. Deviations are not authorized 
with respect to 30.201-3 and 30.201-4, or the requirements of the Cost 
Accounting Standards Board (CASB) rules and regulations (48 CFR Chapter 
99 (FAR Appendix)). Refer to 30.201-5 for instructions concerning 
waivers pertaining to Cost Accounting Standards.

[48 FR 42103, Sept. 19, 1983, as amended at 52 FR 35612, Sept. 22, 1987; 
62 FR 64914, Dec. 9, 1997]



1.403  Individual deviations.

    Individual deviations affect only one contracting action, and, 
unless 1.405(e) is applicable, may be authorized by agency heads or 
their designees. The justification and agency approval shall be 
documented in the contract file.

[48 FR 42103, Sept. 19, 1983, as amended at 61 FR 67411, Dec. 20, 1996]



1.404  Class deviations.

    Class deviations affect more than one contracting action. When it is 
known that a class deviation will be required on a permanent basis, an 
agency should propose an appropriate FAR revision to cover the matter. 
For civilan agencies other than NASA, a copy of each approved class 
deviation shall be furnished to the FAR Secretariat.
    (a) For civilian agencies except NASA, class deviations may be 
authorized by agency heads or their designees, unless 1.405(e) is 
applicable. Delegation of this authority shall not be made below the 
head of a contracting activity. Authorization of class deviations by 
agency officials is subject to the following limitations:
    (1) An agency official who may authorize a class deviation, before 
doing so, shall consult with the chairperson of the Civilian Agency 
Acquisition Council (CAA Council), unless that agency official 
determines that urgency precludes such consultation.
    (2) Recommended revisions to the FAR shall be transmitted to the FAR 
Secretariat by agency heads or their designees for authorizing class 
deviations.
    (b) For DOD, class deviations shall be controlled, processed, and 
approved in accordance with the Defense FAR Supplement.
    (c) For NASA, class deviations shall be controlled and approved by 
the Associate Administrator for Procurement. Deviations shall be 
processed in accordance with agency regulations.

[48 FR 42103, Sept. 19, 1983, as amended at 56 FR 15148, Apr. 15, 1991; 
59 FR 11387, March 10, 1994; 61 FR 67411, Dec. 20, 1996]



1.405  Deviations pertaining to treaties and executive agreements.

    (a) Executive agreements, as used in this section, means Government-
to-Government agreements, including agreements with international 
organizations, to which the United States is a party.
    (b) Any deviation from the FAR required to comply with a treaty to 
which the United States is a party is authorized, unless the deviation 
would be inconsistent with FAR coverage based on a law enacted after the 
execution of the treaty.
    (c) Any deviation from the FAR required to comply with an executive 
agreement is authorized unless the deviation would be inconsistent with 
FAR coverage based on law.
    (d) For civilian agencies other than NASA, a copy of the text 
deviation authorized under paragraph (b) or (c) of this section shall be 
transmitted to the FAR Secretariat through a central agency control 
point.
    (e) For civilian agencies other than NASA, if a deviation required 
to comply with a treaty or an executive agreement is not authorized by 
paragraph (b) or (c) of this section, then the request for deviation 
shall be processed

[[Page 16]]

through the FAR Secretariat to the Civilian Agency Acquisition Council.

[48 FR 42103, Sept. 19, 1983, as amended at 61 FR 67411, Dec. 20, 1996]



              Subpart 1.5--Agency and Public Participation

    Source: 50 FR 2269, Jan. 15, 1985, unless otherwise noted.



1.501  Solicitation of agency and public views.



 1.501-1  Definition.

    Significant revisions, as used in this subpart, means revisions that 
alter the substantive meaning of any coverage in the FAR System having a 
significant cost or administrative impact on contractors or offerors, or 
a significant effect beyond the internal operating procedures of the 
issuing agency. This expression, for example, does not include 
editorial, stylistic, or other revisions that have no impact on the 
basic meaning of the coverage being revised.



1.501-2  Opportunity for public comments.

    (a) Views of agencies and nongovernmental parties or organizations 
will be considered in formulating acquisition policies and procedures.
    (b) The opportunity to submit written comments on proposed 
significant revisions shall be provided by placing a notice in the 
Federal Register. Each of these notices shall include--
    (1) The text of the revision or, if it is impracticable to publish 
the full text, a summary of the proposal;
    (2) The address and telephone number of the individual from whom 
copies of the revision, in full text, can be requested and to whom 
comments thereon should be addressed; and
    (3) When 1.501-3(b) is applicable, a statement that the revision is 
effective on a temporary basis pending completion of the public comment 
period.
    (c) A minimum of 30 days and, normally, at least 60 days will be 
given for the receipt of comments.



1.501-3  Exceptions.

    (a) Comments need not be solicited when the proposed coverage does 
not constitute a significant revision.
    (b) Advance comments need not be solicited when urgent and 
compelling circumstances make solicitation of comments impracticable 
prior to the effective date of the coverage, such as when a new statute 
must be implemented in a relatively short period of time. In such case, 
the coverage shall be issued on a temporary basis and shall provide for 
at least a 30 day public comment period.



1.502  Unsolicited proposed revisions.

    Consideration shall also be given to unsolicited recommendations for 
revisions that have been submitted in writing with sufficient data and 
rationale to permit their evaluation.



1.503  Public meetings.

    Public meetings may be appropriate when a decision to adopt, amend, 
or delete coverage is likely to benefit from significant additional 
views and discussion.



      Subpart 1.6--Career Development, Contracting Authority, and 
                            Responsibilities



1.601  General.

    (a) Unless specifically prohibited by another provision of law, 
authority and responsibility to contract for authorized supplies and 
services are vested in the agency head. The agency head may establish 
contracting activities and delegate broad authority to manage the 
agency's contracting functions to heads of such contracting activities. 
Contracts may be entered into and signed on behalf of the Government 
only by contracting officers. In some agencies, a relatively small 
number of high level officials are designated contracting officers 
solely by virtue of their positions. Contracting officers below the 
level of a head of a contracting activity shall be selected and 
appointed under 1.603.
    (b) Agency heads may mutually agree to--
    (1) Assign contracting functions and responsibilities from one 
agency to another; and

[[Page 17]]

    (2) Create joint or combined offices to exercise acquisition 
functions and responsibilities.

[60 FR 49721, Sept. 26, 1995]



1.602  Contracting officers.



1.602-1  Authority.

    (a) Contracting officers have authority to enter into, administer, 
or terminate contracts and make related determinations and findings. 
Contracting officers may bind the Government only to the extent of the 
authority delegated to them. Contracting officers shall receive from the 
appointing authority (see 1.603-1) clear instructions in writing 
regarding the limits of their authority. Information on the limits of 
the contracting officers' authority shall be readily available to the 
public and agency personnel.
    (b) No contract shall be entered into unless the contracting officer 
ensures that all requirements of law, executive orders, regulations, and 
all other applicable procedures, including clearances and approvals, 
have been met.



1.602-2  Responsibilities.

    Contracting officers are responsible for ensuring performance of all 
necessary actions for effective contracting, ensuring compliance with 
the terms of the contract, and safeguarding the interests of the United 
States in its contractual relationships. In order to perform these 
responsibilities, contracting officers should be allowed wide latitude 
to exercise business judgment. Contracting officers shall--
    (a) Ensure that the requirements of 1.602-1(b) have been met, and 
that sufficient funds are available for obligation;
    (b) Ensure that contractors receive impartial, fair, and equitable 
treatment; and
    (c) Request and consider the advice of specialists in audit, law, 
engineering, transportation, and other fields, as appropriate.



1.602-3  Ratification of unauthorized commitments.

    (a) Definitions.
    Ratification, as used in this subsection, means the act of approving 
an unauthorized commitment by an official who has the authority to do 
so.
    Unauthorized commitment, as used in this subsection, means an 
agreement that is not binding solely because the Government 
representative who made it lacked the authority to enter into that 
agreement on behalf of the Government.
    (b) Policy. (1) Agencies should take positive action to preclude, to 
the maximum extent possible, the need for ratification actions. Although 
procedures are provided in this section for use in those cases where the 
ratification of an unauthorized commitment is necessary, these 
procedures may not be used in a manner that encourages such commitments 
being made by Government personnel.
    (2) Subject to the limitations in paragraph (c) of this subsection, 
the head of the contracting activity, unless a higher level official is 
designated by the agency, may ratify an unauthorized commitment.
    (3) The ratification authority in subparagraph (b)(2) of this 
subsection may be delegated in accordance with agency procedures, but in 
no case shall the authority be delegated below the level of chief of the 
contracting office.
    (4) Agencies should process unauthorized commitments using the 
ratification authority of this subsection instead of referring such 
actions to the General Accounting Office for resolution. (See 1.602-
3(d).)
    (5) Unauthorized commitments that would involve claims subject to 
resolution under the Contract Disputes Act of 1978 should be processed 
in accordance with subpart 33.2, Disputes and Appeals.
    (c) Limitations. The authority in subparagraph (b)(2) of this 
subsection may be exercised only when--
    (1) Supplies or services have been provided to and accepted by the 
Government, or the Government otherwise has obtained or will obtain a 
benefit resulting from performance of the unauthorized commitment;
    (2) The ratifying official has the authority to enter into a 
contractual commitment;
    (3) The resulting contract would otherwise have been proper if made 
by an appropriate contracting officer;

[[Page 18]]

    (4) The contracting officer reviewing the unauthorized commitment 
determines the price to be fair and reasonable;
    (5) The contracting officer recommends payment and legal counsel 
concurs in the recommendation, unless agency procedures expressly do not 
require such concurrence;
    (6) Funds are available and were available at the time the 
unauthorized commitment was made; and
    (7) The ratification is in accordance with any other limitations 
prescribed under agency procedures.
    (d) Nonratifiable commitments. Cases that are not ratifiable under 
this subsection may be subject to resolution as recommended by the 
General Accounting Office under its claim procedure (GAO Policy and 
Procedures Manual for Guidance of Federal Agencies, Title 4, Chapter 2), 
or as authorized by FAR part 50. Legal advice should be obtained in 
these cases.

[53 FR 3689, Feb. 8, 1988, as amended at 60 FR 48225, Sept. 18, 1995]



1.603  Selection, appointment, and termination of appointment.



1.603-1  General.

    Subsection 414(4) of title 41, United States Code, requires agency 
heads to establish and maintain a procurement career management program 
and a system for the selection, appointment, and termination of 
appointment of contracting officers. Agency heads or their designees may 
select and appoint contracting officers and terminate their 
appointments. These selections and appointments shall be consistent with 
Office of Federal Procurement Policy's (OFPP) standards for skill-based 
training in performing contracting and purchasing duties as published in 
OFPP Policy Letter No. 92-3, Procurement Professionalism Program 
Policy--Training for Contracting Personnel, June 24, 1992.

[59 FR 67015, Dec. 28, 1994]



1.603-2  Selection.

    In selecting contracting officers, the appointing official shall 
consider the complexity and dollar value of the acquisitions to be 
assigned and the candidate's experience, training, education, business 
acumen, judgment, character, and reputation. Examples of selection 
criteria include--
    (a) Experience in Government contracting and administration, 
commercial purchasing, or related fields;
    (b) Education or special training in business administration, law, 
accounting, engineering, or related fields;
    (c) Knowledge of acquisition policies and procedures, including this 
and other applicable regulations;
    (d) Specialized knowledge in the particular assigned field of 
contracting; and
    (e) Satisfactory completion of acquisition training courses.



1.603-3  Appointment.

    (a) Contracting officers shall be appointed in writing on an SF 
1402, Certificate of Appointment, which shall state any limitations on 
the scope of authority to be exercised, other than limitations contained 
in applicable law or regulation. Appointing officials shall maintain 
files containing copies of all appointments that have not been 
terminated.
    (b) Agency heads are encouraged to delegate micro-purchase authority 
to individuals who are employees of an executive agency or members of 
the Armed Forces of the United States who will be using the supplies or 
services being purchased. Individuals delegated this authority are not 
required to be appointed on an SF 1402, but shall be appointed in 
writing in accordance with agency procedures.

[61 FR 39190, July 26, 1996]



1.603-4  Termination.

    Termination of a contracting officer appointment will be by letter, 
unless the Certificate of Appointment contains other provisions for 
automatic termination. Terminations may be for reasons such as 
reassignment, termination of employment, or unsatisfactory performance. 
No termination shall operate retroactively.

[[Page 19]]



                Subpart 1.7--Determinations and Findings

    Source: 50 FR 1726, Jan. 11, 1985 (interim rule), and 50 FR 52429, 
Dec. 23, 1985 (final rule), unless otherwise noted.



1.700  Scope of subpart.

    This subpart prescribes general policies and procedures for the use 
of determinations and findings (D&F's). Requirements for specific types 
of D&F's can be found with the appropriate subject matter.



1.701  Definition.

    Determination and Findings (D&F) means a special form of written 
approval by an authorized official that is required by statute or 
regulation as a prerequisite to taking certain contracting actions. The 
determination is a conclusion or decision supported by the findings. The 
findings are statements of fact or rationale essential to support the 
determination and must cover each requirement of the statute or 
regulation.



1.702  General.

    (a) A D&F shall ordinarily be for an individual contract action. 
Unless otherwise prohibited, class D&F's may be executed for classes of 
contract action (see 1.703). The approval granted by a D&F is restricted 
to the proposed contract action(s) reasonably described in that D&F. 
D&F's may provided for a reasonable degree of flexibility. Furthermore, 
in their application, reasonable variations in estimated quantities or 
prices are permitted, unless the D&F specifies otherwise.
    (b) When an option is anticipated, the D&F shall state the 
approximate quantity to be awarded initially and the extent of the 
increase to be permitted by the option.



1.703  Class determinations and findings.

    (a) A class D&F provides authority for a class of contracting 
actions. A class may consist of contracting actions for the same or 
related supplies or services or other contracting actions that require 
essentially identical justification.
    (b) The findings in a class D&F shall fully support the proposed 
action either for the class as a whole or for each action. A class D&F 
shall be for a specified period, with the expiration date stated in the 
document.
    (c) The contracting officer shall ensure that individual actions 
taken pursuant to the authority of a class D&F are within the scope of 
the D&F.



1.704  Content.

    Each D&F shall set forth enough facts and circumstances to clearly 
and convincingly justify the specific determination made. As a minimum, 
each D&F shall include, in the prescribed agency format, the following 
information:
    (a) Identification of the agency and of the contracting activity and 
specific identifications of the document as a Determination and 
Findings.
    (b) Nature and/or description of the action being approved.
    (c) Citation of the appropriate statute and/or regulation upon which 
the D&F is based.
    (d) Findings that detail the particular circumstances, facts, or 
reasoning essential to support the determination. Necessary supporting 
documentation shall be obtained from appropriate requirements and 
technical personnel.
    (e) A determination, based on the findings, that the proposed action 
is justified under the applicable statute or regulation.
    (f) Expiration date of the D&F, if required (see 1.706(b)).
    (g) The signature of the official authorized to sign the D&F (see 
1.706) and the date signed.



1.705  Supersession and modification.

    (a) If a D&F is superseded by another D&F, that action shall not 
render invalid any action taken under the original D&F prior to the date 
of its supersession.
    (b) A modification of the D&F will not require cancellation of the 
solicitation if the D&F, as modified, supports the contracting action.

[[Page 20]]



1.706  Expiration.

    Expiration dates are required for class D&F's and are optional for 
individual D&F's. Authority to act under an individual D&F expires when 
it is exercised or on an expiration date specified in the document, 
whichever occurs first. Authority to act under a class D&F expires on 
the expiration date specified in the document. When a solicitation has 
been furnished to prospective offerors before the expiration date, the 
authority under the D&F will continue until award of the contract(s) 
resulting from that solicitation.



1.707  Signatory authority.

    When a D&F is required, it shall be signed by the appropriate 
official in accordance with agency regulations. Authority to sign or 
delegate signature authority for the various D&F's is as shown in the 
applicable FAR part.



PART 2--DEFINITIONS OF WORDS AND TERMS--Table of Contents




Sec.
2.000  Scope of part.

                        Subpart 2.1--Definitions

2.101  Definitions.

                     Subpart 2.2--Definitions Clause

2.201  Contract clause.

    Authority: 40 U.S.C. 486(c); 10 U.S.C. Chapter 137; and 42 U.S.C. 
2473(c).

    Source: 48 FR 42107, Sept. 19, 1983, unless otherwise noted.



2.000  Scope of part.

    This part defines words and terms commonly used in this regulation. 
Other terms are defined in the part or subpart with which they are 
particularly associated (see the Index for locations).



                        Subpart 2.1--Definitions



2.101  Definitions.

    As used throughout this regulation, the following words and terms 
are used as defined in this subpart unless (a) the context in which they 
are used clearly requires a different meaning or (b) a different 
definition is prescribed for a particular part or portion of a part.
    Acquisition means the acquiring by contract with appropriated funds 
of supplies or services (including construction) by and for the use of 
the Federal Government through purchase or lease, whether the supplies 
or services are already in existence or must be created, developed, 
demonstrated, and evaluated. Acquisition begins at the point when agency 
needs are established and includes the description of requirements to 
satisfy agency needs, solicitation and selection of sources, award of 
contracts, contract financing, contract performance, contract 
administration, and those technical and management functions directly 
related to the process of fulfilling agency needs by contract.
    Affiliates means associated business concerns or individuals if, 
directly or indirectly, (a) either one controls or can control the other 
or (b) a third party controls or can control both.
    Agency head (see head of the agency).
    Best value means the expected outcome of an acquisition that, in the 
Government's estimation, provides the greatest overall benefit in 
response to the requirement.
    Commercial component means any component that is a commercial item.
    Commercial item means--
    (a) Any item, other than real property, that is of a type 
customarily used for nongovernmental purposes and that--
    (1) Has been sold, leased, or licensed to the general public; or,
    (2) Has been offered for sale, lease, or license to the general 
public;
    (b) Any item that evolved from an item described in paragraph (a) of 
this definition through advances in technology or performance and that 
is not yet available in the commercial marketplace, but will be 
available in the commercial marketplace in time to satisfy the delivery 
requirements under a Government solicitation;
    (c) Any item that would satisfy a criterion expressed in paragraphs 
(a) or (b) of this definition, but for--
    (1) Modifications of a type customarily available in the commercial 
marketplace; or

[[Page 21]]

    (2) Minor modifications of a type not customarily available in the 
commercial marketplace made to meet Federal Government requirements. 
``Minor'' modifications means modifications that do not significantly 
alter the nongovernmental function or essential physical characteristics 
of an item or component, or change the purpose of a process. Factors to 
be considered in determining whether a modification is minor include the 
value and size of the modification and the comparative value and size of 
the final product. Dollar values and percentages may be used as 
guideposts, but are not conclusive evidence that a modification is 
minor;
    (d) Any combination of items meeting the requirements of paragraphs 
(a), (b), (c), or (e) of this definition that are of a type customarily 
combined and sold in combination to the general public;
    (e) Installation services, maintenance services, repair services, 
training services, and other services if such services are procured for 
support of an item referred to in paragraphs (a), (b), (c), or (d) of 
this definition, and if the source of such services--
    (1) Offers such services to the general public and the Federal 
Government contemporaneously and under similar terms and conditions; and
    (2) Offers to use the same work force for providing the Federal 
Government with such services as the source uses for providing such 
services to the general public;
    (f) Services of a type offered and sold competitively in substantial 
quantities in the commercial marketplace based on established catalog or 
market prices for specific tasks performed under standard commercial 
terms and conditions. This does not include services that are sold based 
on hourly rates without an established catalog or market price for a 
specific service performed;
    (g) Any item, combination of items, or service referred to in 
paragraphs (a) through (f), notwithstanding the fact that the item, 
combination of items, or service is transferred between or among 
separate divisions, subsidiaries, or affiliates of a contractor; or
    (h) A nondevelopmental item, if the procuring agency determines the 
item was developed exclusively at private expense and sold in 
substantial quantities, on a competitive basis, to multiple State and 
local governments.
    Component means any item supplied to the Federal Government as part 
of an end item or of another component.
    Contract means a mutually binding legal relationship obligating the 
seller to furnish the supplies or services (including construction) and 
the buyer to pay for them. It includes all types of commitments that 
obligate the Government to an expenditure of appropriated funds and 
that, except as otherwise authorized, are in writing. In addition to 
bilateral instruments, contracts include (but are not limited to) awards 
and notices of awards; job orders or task letters issued under basic 
ordering agreements; letter contracts; orders, such as purchase orders, 
under which the contract becomes effective by written acceptance or 
performance; and bilaterial contract modifications. Contracts do not 
include grants and cooperative agreements covered by 31 U.S.C. 6301 et 
seq. For discussion of various types of contracts, see part 16.
    Contract administration office means an office that performs (a) 
assigned postaward functions related to the administration of contracts 
and (b) assigned preaward functions.
    Contracting means purchasing, renting, leasing, or otherwise 
obtaining supplies or services from nonfederal sources. Contracting 
includes description (but not determination) of supplies and services 
required, selection and solicitation of sources, preparation and award 
of contracts, and all phases of contract administration. It does not 
include making grants or cooperative agreements.
    Contracting activity means an element of an agency designated by the 
agency head and delegated broad authority regarding acquisition 
functions.
    Contracting office means an office that awards or executes a 
contract for supplies or services and performs postaward functions not 
assigned to a contract administration office.
    Contracting officer means a person with the authority to enter into, 
administer, and/or terminate contracts and make related determinations 
and

[[Page 22]]

findings. The term includes certain authorized representatives of the 
contracting officer acting within the limits of their authority as 
delegated by the contracting officer. Administrative contracting officer 
(ACO) refers to a contracting officer who is administering contracts. 
Termination contracting officer (TCO) refers to a contracting officer 
who is settling terminated contracts. A single contracting officer may 
be responsible for duties in any or all of these areas. Reference in 
this regulation to administrative contracting officer or termination 
contracting officer does not (a) require that a duty be performed at a 
particular office or activity or (b) restrict in any way a contracting 
officer in the performance of any duty properly assigned.
    Day means, unless otherwise specified, a calendar day.
    Delivery order means an order for supplies placed against an 
established contract or with Government sources.
    Electronic commerce means electronic techniques for accomplishing 
business transactions including electronic mail or messaging, World Wide 
Web technology, electronic bulletin boards, purchase cards, electronic 
funds transfer, and electronic data interchange.
    Executive agency means an executive department, a military 
department, or any independent establishment within the meaning of 5 
U.S.C. 101, 102, and 104(1), respectively, and any wholly owned 
Government corporation within the meaning of 31 U.S.C. 9101.
    Facsimile means electronic equipment that communicates and 
reproduces both printed and handwritten material. If used in conjunction 
with a reference to a document, e.g., facsimile bid, the term refers to 
a document (in the example given, a bid) that has been transmitted to 
and received by the Government via facsimile.
    Federal Acquisition Computer Network (FACNET) Architecture is a 
Governmentwide system that provides universal user access, employs 
nationally and internationally recognized data formats, and allows the 
electronic data interchange of acquisition information between the 
private sector and the Federal Government. FACNET qualifies as the 
single, Governmentwide point of entry pending designation by the 
Administrator of the Office of Federal Procurement Policy (OFPP).
    Federal agency means any executive agency or any independent 
establishment in the legislative or judicial branch of the Government 
(except the Senate, the House of Representatives, the Architect of the 
Capitol, and any activities under the Architect's direction).
    Head of the agency (also called agency head) means the Secretary, 
Attorney General, Administrator, Governor, Chairperson, or other chief 
official of an executive agency, unless otherwise indicated, including 
any deputy or assistant chief official of an executive agency; and the 
term authorized representative means any person, persons, or board 
(other than the contracting officer) authorized to act for the head of 
the agency or Secretary.
    Head of the contracting activity includes the official who has 
overall responsibility for managing the contracting activity.
    Information technology means any equipment, or interconnected 
system(s) or subsystem(s) of equipment, that is used in the automatic 
acquisition, storage, manipulation, management, movement, control, 
display, switching, interchange, transmission, or reception of data or 
information by the agency.
    (a) For purposes of this definition, equipment is used by an agency 
if the equipment is used by the agency directly or is used by a 
contractor under a contract with the agency which--
    (1) Requires the use of such equipment; or
    (2) Requires the use, to a significant extent, of such equipment in 
the performance of a service or the furnishing of a product.
    (b) The term information technology includes computers, ancillary 
equipment, software, firmware and similar procedures, services 
(including support services), and related resources.
    (c) The term information technology does not include--
    (1) Any equipment that is acquired by a contractor incidental to a 
contract; or
    (2) Any equipment that contains imbedded information technology that

[[Page 23]]

is used as an integral part of the product, but the principal function 
of which is not the acquisition, storage, manipulation, management, 
movement, control, display, switching, interchange, transmission, or 
reception of data or information. For example, HVAC (heating, 
ventilation, and air conditioning) equipment such as thermostats or 
temperature control devices, and medical equipment where information 
technology is integral to its operation, are not information technology.
    In writing or written means any worded or numbered expression which 
can be read, reproduced, and later communicated, and includes 
electronically transmitted and stored information.
    Major system means that combination of elements that will function 
together to produce the capabilities required to fulfill a mission need. 
The elements may include hardware, equipment, software, or any 
combination thereof, but exclude construction or other improvements to 
real property. A system shall be considered a major system if--
    (a) The Department of Defense is responsible for the system and the 
total expenditures for research, development, test, and evaluation for 
the system are estimated to be more than $115,000,000 (based on fiscal 
year 1990 constant dollars) or the eventual total expenditure for the 
acquisition exceeds $540,000,000 (based on fiscal year 1990 constant 
dollars);
    (b) A civilian agency is responsible for the system and total 
expenditures for the system are estimated to exceed $750,000 (based on 
fiscal year 1980 constant dollars) or the dollar threshold for a ``major 
system'' established by the agency pursuant to Office of Management and 
Budget Circular A-109, entitled ``Major System Acquisitions,'' whichever 
is greater; or
    (c) The system is designated a ``major system'' by the head of the 
agency responsible for the system (10 U.S.C. 2302 and 41 U.S.C. 403).
    Market research means collecting and analyzing information about 
capabilities within the market to satisfy agency needs.
    May denotes the permissive. However, the words no person may... mean 
that no person is required, authorized, or permitted to do the act 
described.
    Micro-purchase means an acquisition of supplies or services (except 
construction), the aggregate amount of which does not exceed $2,500, 
except that in the case of construction, the limit is $2,000.
    Micro-purchase threshold means $2,500.
    National defense means any activity related to programs for military 
or atomic energy production or construction, military assistance to any 
foreign nation, stockpiling, or space.
    Nondevelopmental item means--
    (a) Any previously developed item of supply used exclusively for 
governmental purposes by a Federal agency, a State or local government, 
or a foreign government with which the United States has a mutual 
defense cooperation agreement;
    (b) Any item described in paragraph (a) of this definition that 
requires only minor modification or modifications of a type customarily 
available in the commercial marketplace in order to meet the 
requirements of the procuring department or agency; or
    (c) Any item of supply being produced that does not meet the 
requirements of paragraph (a) or (b) solely because the item is not yet 
in use.
    Offer means a response to a solicitation that, if accepted, would 
bind the offeror to perform the resultant contract. Responses to 
invitations for bids (sealed bidding) are offers called bids or sealed 
bids; responses to requests for proposals (negotiation) are offers 
called proposals; responses to requests for quotations (negotiation) are 
not offers and are called quotes. For unsolicited proposals, see subpart 
15.6.
    Possessions includes the Virgin Islands, Johnston Island, American 
Samoa, Guam, Wake Island, Midway Island, and the guano islands, but does 
not include Puerto Rico, leased bases, or trust territories.
    Senior procurement executive means the individual appointed pursuant 
to section 16(3) of the Office of Federal Procurement Policy Act (41 
U.S.C. 414(3)) who is responsible for management direction of the 
acquisition system of the executive agency, including implementation of 
the unique acquisition policies, regulations, and standards of the 
executive agency.
    Shall denotes the imperative.

[[Page 24]]

    Signature or signed means the discrete, verifiable symbol of an 
individual which, when affixed to a writing with the knowledge and 
consent of the individual, indicates a present intention to authenticate 
the writing. This includes electronic systems.
    Simplified acquisition procedures means the methods prescribed in 
part 13 for making purchases of supplies or services.
    Simplified acquisition threshold means $100,000, except that in the 
case of any contract to be awarded and performed, or purchase to be 
made, outside the United States in support of a contingency operation 
(as defined in 10 U.S.C. 101(a)(13)) or a humanitarian or peacekeeping 
operation (as defined in 10 U.S.C. 2302(7) and 41 U.S.C. 259(d)), the 
term means $200,000.
    Supplies means all property except land or interest in land. It 
includes (but is not limited to) public works, buildings, and 
facilities; ships, floating equipment, and vessels of every character, 
type, and description, together with parts and accessories; aircraft and 
aircraft parts, accessories, and equipment; machine tools; and the 
alteration or installation of any of the foregoing.
    Task order means an order for services placed against an established 
contract or with Government sources.
    United States, when used in a geographic sense, means the 50 States 
and the District of Columbia.

[48 FR 42107, Sept. 19, 1983, as amended at 50 FR 1727, Jan. 11, 1985; 
50 FR 4221, Jan. 30, 1985; 50 FR 26903, June 28, 1985; 50 FR 52429, Dec. 
23, 1985; 51 FR 2649, Jan. 17, 1986; 52 FR 19802, May 27, 1987; 54 FR 
48981, Nov. 28, 1989; 56 FR 41744, Aug. 22, 1991; 60 FR 34736, July 3, 
1995; 60 FR 42653, Aug. 16, 1995; 60 FR 48235, Sept. 18, 1995; 61 FR 
39190, July 26, 1996; 61 FR 41468, Aug. 8, 1996; 61 FR 69288, Dec. 31, 
1996; 62 FR 256, Jan. 2, 1997; 62 FR 51230, 51270, Sept. 30, 1997; 62 FR 
64915, Dec. 9, 1997; 63 FR 58591, Oct. 30, 1998]



                     Subpart 2.2--Definitions Clause



2.201  Contract clause.

    The contracting officer shall insert the clause at 52.202-1, 
Definitions, in solicitations and contracts except when the contract is 
not expected to exceed the simplified acquisition threshold. If the 
contract is for personal services, construction, architect-engineer 
services, or dismantling, demolition, or removal of improvements, the 
contracting officer shall use the clause with its Alternate I. 
Additional definitions may be included, provided they are consistent 
with the clause and the FAR.

[60 FR 34744, July 3, 1995, as amended at 61 FR 39190, July 26, 1996]



PART 3--IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST--Table of Contents




Sec.
3.000  Scope of part.

                         Subpart 3.1--Safeguards

3.101  Standards of conduct.
3.101-1  General.
3.101-2  Solicitation and acceptance of gratuities by Government 
          personnel.
3.101-3  Agency regulations.
3.102  [Reserved]
3.103  Independent pricing.
3.103-1  Solicitation provision.
3.103-2  Evaluating the certification.
3.103-3  The need for further certifications.
3.104  Procurement integrity.
3.104-1  General.
3.104-2  Applicability.
3.104-3  Definitions.
3.104-4  Statutory and related prohibitions, restrictions, and 
          requirements.
3.104-5  Disclosure, protection, and marking of contractor bid or 
          proposal information and source selection information.
3.104-6  Disqualification.
3.104-7  Ethics advisory opinions regarding prohibitions on a former 
          official's acceptance of compensation from a contractor.
3.104-8  Calculating the period of compensation prohibition.
3.104-9  Contract clauses.
3.104-10  Violations or possible violations.
3.104-11  Criminal and civil penalties, and further administrative 
          remedies.

       Subpart 3.2--Contractor Gratuities to Government Personnel

3.201  Applicability.
3.202  Contract clause.
3.203  Reporting suspected violations of the Gratuities clause.
3.204  Treatment of violations.

         Subpart 3.3--Reports of Suspected Antitrust Violations

3.301  General.

[[Page 25]]

3.302  Definitions.
3.303  Reporting suspected antitrust violations.

                      Subpart 3.4--Contingent Fees

3.400  Scope of subpart.
3.401  Definitions.
3.402  Statutory requirements.
3.403  Applicability.
3.404  Contract clause.
3.405  Misrepresentations or violations of the Covenant Against 
          Contingent Fees.
3.406  Records.

             Subpart 3.5--Other Improper Business Practices

3.501  Buying-in.
3.501-1  Definition.
3.501-2  General.
3.502  Subcontractor kickbacks.
3.502-1  Definitions.
3.502-2  Subcontractor kickbacks.
3.502-3  Contract clause.
3.503  Unreasonable restrictions on subcontractor sales.
3.503-1  Policy.
3.503-2  Contract clause.

Subpart 3.6--Contracts With Government Employees or Organizations Owned 
                          or Controlled by Them

3.601  Policy.
3.602  Exceptions.
3.603  Responsibilities of the contracting officer.

              Subpart 3.7--Voiding and Rescinding Contracts

3.700  Scope of subpart.
3.701  Purpose.
3.702  Definition.
3.703  Authority.
3.704  Policy.
3.705  Procedures.

  Subpart 3.8--Limitation on the Payment of Funds to Influence Federal 
                              Transactions

3.800  Scope of subpart.
3.801  Definitions.
3.802  Prohibitions.
3.803  Certification and disclosure.
3.804  Policy.
3.805  Exemption.
3.806  Processing suspected violations.
3.807  Civil penalties.
3.808  Solicitation provision and contract clause.

     Subpart 3.9--Whistleblower Protections for Contractor Employees

3.900  Scope of subpart.
3.901  Definitions.
3.902  Applicability.
3.903  Policy.
3.904  Procedures for filing complaints.
3.905  Procedures for investigating complaints.
3.906  Remedies.

    Authority: 40 U.S.C. 486(c); 10 U.S.C. Chapter 137; and 42 U.S.C. 
2473(c).

    Source: 48 FR 42108, Sept. 19, 1983, unless otherwise noted.



3.000  Scope of part.

    This part prescribes policies and procedures for avoiding improper 
business practices and personal conflicts of interest and for dealing 
with their apparent or actual occurrence.



                         Subpart 3.1--Safeguards



3.101  Standards of conduct.



3.101-1  General.

    Government business shall be conducted in a manner above reproach 
and, except as authorized by statute or regulation, with complete 
impartiality and with preferential treatment for none. Transactions 
relating to the expenditure of public funds require the highest degree 
of public trust and an impeccable standard of conduct. The general rule 
is to avoid strictly any conflict of interest or even the appearance of 
a conflict of interest in Government-contractor relationships. While 
many Federal laws and regulations place restrictions on the actions of 
Government personnel, their official conduct must, in addition, be such 
that they would have no reluctance to make a full public disclosure of 
their actions.



3.101-2  Solicitation and acceptance of gratuities by Government personnel.

    As a rule, no Government employee may solicit or accept, directly or 
indirectly, any gratuity, gift, favor, entertainment, loan, or anything 
of monetary value from anyone who (a) has or is seeking to btain 
Government business with the employee's agency, (b) conducts activities 
that are regulated by the employee's agency, or (c) has interests that 
may be substantially affected by the performance or nonperformance of 
the employee's official

[[Page 26]]

duties. Certain limited exceptions are authorized in agency regulations.



3.101-3  Agency regulations.

    (a) Agencies are required by Executive Order 11222 of May 8, 1965, 
and 5 CFR part 735 to prescribe Standards of Conduct. These agency 
standards contain--
    (1) Agency-authorized exceptions to 3.101-2; and
    (2) Disciplinary measures for persons violating the standards of 
conduct.
    (b) Requirements for employee financial disclosure and restrictions 
on private employment for former Government employees are in Office of 
Personnel Management and agency regulations implementing Public Law 95-
521, which amended 18 U.S.C. 207.



3.102  [Reserved]



3.103  Independent pricing.



3.103-1  Solicitation provision.

    The contracting officer shall insert the provision at 52.203-2, 
Certificate of Independent Price Determination, in solicitations when a 
firm-fixed-price contract or fixed-price contract with economic price 
adjustment is contemplated, unless--
    (a) The acquisition is to be made under the simplified acquisition 
procedures in part 13;
    (b) [Reserved]
    (c) The solicitation is a request for technical proposals under two-
step sealed bidding procedures; or
    (d) The solicitation is for utility services for which rates are set 
by law or regulation.

[48 FR 42108, Sept. 19, 1983, as amended at 50 FR 1727, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985; 55 FR 25526, June 21, 1990; 60 FR 34744, 
July 3, 1995]



3.103-2  Evaluating the certification.

    (a) Evaluation guidelines. (1) None of the following, in and of 
itself, constitutes disclosure as it is used in subparagraph (a)(2) of 
the Certificate of Independent Price Determination (hereafter, the 
certificate):
    (i) The fact that a firm has published price lists, rates, or 
tariffs covering items being acquired by the Government.
    (ii) The fact that a firm has informed prospective customers of 
proposed or pending publication of new or revised price lists for items 
being acquired by the Government.
    (iii) The fact that a firm has sold the same items to commercial 
customers at the same prices being offered to the Government.
    (2) For the purpose of subparagraph (b)(2) of the certificate, an 
individual may use a blanket authorization to act as an agent for the 
person(s) responsible for determining the offered prices if--
    (i) The proposed contract to which the certificate applies is 
clearly within the scope of the authorization; and
    (ii) The person giving the authorization is the person within the 
offeror's organization who is responsible for determining the prices 
being offered at the time the certification is made in the particular 
offer.
    (3) If an offer is submitted jointly by two or more concerns, the 
certification provided by the representative of each concern applies 
only to the activities of that concern.
    (b) Rejection of offers suspected of being collusive. (1) If the 
offeror deleted or modified subparagraph (a)(1) or (a)(3) or paragraph 
(b) of the certificate, the contracting officer shall reject the 
offeror's bid or proposal.
    (2) If the offeror deleted or modified subparagraph (a)(2) of the 
certificate, the offeror must have furnished with its offer a signed 
statement of the circumstances of the disclosure of prices contained in 
the bid or proposal. The chief of the contracting office shall review 
the altered certificate and the statement and shall determine, in 
writing, whether the disclosure was made for the purpose or had the 
effect of restricting competition. If the determination is positive, the 
bid or proposal shall be rejected; if it is negative, the bid or 
proposal shall be considered for award.
    (3) Whenever an offer is rejected under subparagraph (1) or (2) 
above, or the certificate is suspected of being false, the contracting 
officer shall report the situation to the Attorney General in accordance 
with 3.303.

[[Page 27]]

    (4) The determination made under subparagraph (2) above shall not 
prevent or inhibit the prosecution of any criminal or civil actions 
involving the occurrences or transactions to which the certificate 
relates.

[48 FR 42108, Sept. 19, 1983, as amended at 55 FR 25526, June 21, 1990]



3.103-3  The need for further certifications.

    A contractor that properly executed the certificate before award 
does not have to submit a separate certificate with each proposal to 
perform a work order or similar ordering instrument issued pursuant to 
the terms of the contract, where the Government's requirements cannot be 
met from another source.



3.104  Procurement integrity.



3.104-1  General.

    (a) This FAR section 3.104 implements section 27 of the Office of 
Federal Procurement Policy Act (41 U.S.C. 423), as amended by section 
814 of the Fiscal Year 1990/1991 National Defense Authorization Act, 
Public Law 101-189, section 815 of the Fiscal Year 1991 National Defense 
Authorization Act, Public Law 101-510, and section 4304 of the Fiscal 
Year 1996 National Defense Authorization Act, Public Law 104-106 
(hereinafter, the Office of Federal Procurement Policy Act, as amended, 
is referred to as ``the Act''). Agencies may supplement 3.104 and any 
clauses required by 3.104, and may use agency specific definitions to 
identify individuals who occupy positions specified in 3.104-
4(d)(1)(ii). Such supplementation and definitions must be approved at a 
level not lower than the senior procurement executive of the agency, 
unless a higher level of approval is required by law for that agency.
    (b) Agency employees are reminded that there are other statutes and 
regulations that deal with the same or related prohibited conduct, for 
example--
    (1) The offer or acceptance of a bribe or gratuity is prohibited by 
18 U.S.C. 201, 10 U.S.C. 2207, 5 U.S.C. 7353, and 5 CFR part 2635;
    (2) Section 208 of Title 18, United States Code, and 5 CFR part 2635 
preclude a Government employee from participating personally and 
substantially in any particular matter that would affect the financial 
interests of any person from whom the employee is seeking employment;
    (3) Post-employment restrictions are covered by 18 U.S.C. 207 and 5 
CFR parts 2637 and 2641, which prohibit certain activities by former 
Government employees, including representation of a contractor before 
the Government in relation to any contract or other particular matter 
involving specific parties on which the former employee participated 
personally and substantially while employed by the Government;
    (4) Parts 14 and 15 place restrictions on the release of information 
related to procurements and other contractor information which must be 
protected under 18 U.S.C. 1905;
    (5) Other laws such as the Privacy Act (5 U.S.C. 552a) and the Trade 
Secrets Act (18 U.S.C. 1905) may preclude release of information both 
before and after award (see 3.104-5); and
    (6) Use of nonpublic information to further an employee's private 
interest or that of another and engaging in a financial transaction 
using nonpublic information are covered by 5 CFR 2635.703.

[62 FR 227, Jan. 2, 1997]



3.104-2  Applicability.

    (a) The restrictions at 3.104-4 (a) and (b) apply beginning January 
1, 1997, to the conduct of every Federal agency procurement using 
competitive procedures for the acquisition of supplies or services from 
non-Federal sources using appropriated funds.
    (b) The requirements of 3.104-4(c) apply beginning January 1, 1997, 
in connection with every Federal agency procurement using competitive 
procedures, for a contract expected to exceed the simplified acquisition 
threshold. Such requirements do not apply after the contract has been 
awarded or the procurement has been canceled.
    (c) The post-employment restrictions at 3.104-4(d) apply to any 
former official of a Federal agency, for services provided or decisions 
made on or after January 1, 1997.
    (d) Former officials of a Federal agency whose employment by a 
Federal agency ended before January 1,

[[Page 28]]

1997, are subject to the restrictions imposed by 41 U.S.C. 423 as it 
existed before Public Law 104-106. Solely for the purpose of continuing 
those restrictions on those officials to the extent they were imposed 
prior to January 1, 1997, the provisions of 41 U.S.C. 423 as it existed 
before Public Law 104-106 apply through December 31, 1998.

[62 FR 227, Jan. 2, 1997]



3.104-3  Definitions.

    As used in this section--
    Agency ethics official means the designated agency ethics official 
described in 5 CFR 2638.201 and any other designated person, including--
    (1) Deputy ethics officials described in 5 CFR 2638.204, to whom 
authority under 3.104-7 has been delegated by the designated agency 
ethics official; and
    (2) Alternate designated agency ethics officials described in 5 CFR 
2638.202(b).
    Compensation means wages, salaries, honoraria, commissions, 
professional fees, and any other form of compensation, provided directly 
or indirectly for services rendered. Compensation is indirectly provided 
if it is paid to an entity other than the individual, specifically in 
exchange for services provided by the individual.
    Contract, for purposes of the post-employment restrictions at 3.104-
4(d), includes both competitively awarded and non-competitively awarded 
contracts.
    Contractor bid or proposal information means any of the following 
information submitted to a Federal agency as part of or in connection 
with a bid or proposal to enter into a Federal agency procurement 
contract, if that information has not been previously made available to 
the public or disclosed publicly:
    (1) Cost or pricing data (as defined by 10 U.S.C. 2306a(h) with 
respect to procurements subject to that section, and section 304A(h) of 
the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 
254b(h)), with respect to procurements subject to that section).
    (2) Indirect costs and direct labor rates.
    (3) Proprietary information about manufacturing processes, 
operations, or techniques marked by the contractor in accordance with 
applicable law or regulation.
    (4) Information marked by the contractor as ``contractor bid or 
proposal information'' in accordance with applicable law or regulation.
    (5) Information marked in accordance with 52.215-1(e).
    Decision to award a subcontract or modification of subcontract means 
a decision to designate award to a particular source.
    Federal agency has the meaning provided such term in section 3 of 
the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 
472).
    Federal agency procurement means the acquisition (by using 
competitive procedures and awarding a contract) of goods or services 
(including construction) from non-Federal sources by a Federal agency 
using appropriated funds. For broad agency announcements and small 
business innovative research programs, each proposal received by an 
agency shall constitute a separate procurement for purposes of the Act.
    In excess of $10,000,000 means--
    (1) The value, or estimated value, at the time of award, of the 
contract, including all options;
    (2) The total estimated value at the time of award of all orders 
under an indefinite-delivery, indefinite-quantity, or requirements 
contract;
    (3) Any multiple award schedule contract unless the contracting 
officer documents a lower estimate;
    (4) The value of a delivery order, task order, or an order under a 
Basic Ordering Agreement;
    (5) The amount paid or to be paid in settlement of a claim; or
    (6) The estimated monetary value of negotiated overhead or other 
rates when applied to the Government portion of the applicable 
allocation base.
    Official means:
    (1) An officer, as defined in 5 U.S.C. 2104.
    (2) An employee, as defined in 5 U.S.C. 2105.
    (3) A member of the uniformed services, as defined in 5 U.S.C. 
2101(3).
    (4) A special Government employee, as defined in 18 U.S.C. 202.

[[Page 29]]

    Participating personally and substantially in a Federal agency 
procurement is defined as follows:
    (1) Participating personally and substantially in a Federal agency 
procurement means active and significant involvement of the individual 
in any of the following activities directly related to that procurement:
    (i) Drafting, reviewing, or approving the specification or statement 
of work for the procurement.
    (ii) Preparing or developing the solicitation.
    (iii) Evaluating bids or proposals, or selecting a source.
    (iv) Negotiating price or terms and conditions of the contract.
    (v) Reviewing and approving the award of the contract.
    (2) Participating ``personally'' means participating directly, and 
includes the direct and active supervision of a subordinate's 
participation in the matter.
    (3) Participating ``substantially'' means that the employee's 
involvement is of significance to the matter. Substantial participation 
requires more than official responsibility, knowledge, perfunctory 
involvement, or involvement on an administrative or peripheral issue. 
Participation may be substantial even though it is not determinative of 
the outcome of a particular matter. A finding of substantiality should 
be based not only on the effort devoted to a matter, but on the 
importance of the effort. While a series of peripheral involvements may 
be insubstantial, the single act of approving or participating in a 
critical step may be substantial. However, the review of procurement 
documents solely to determine compliance with regulatory, 
administrative, or budgetary procedures, does not constitute substantial 
participation in a procurement.
    (4) Generally, an individual will not be considered to have 
participated personally and substantially in a procurement solely by 
participating in the following activities:
    (i) Agency level boards, panels, or other advisory committees that 
review program milestones or evaluate and make recommendations regarding 
alternative technologies or approaches for satisfying broad agency level 
missions or objectives;
    (ii) The performance of general, technical, engineering, or 
scientific effort having broad application not directly associated with 
a particular procurement, notwithstanding that such general, technical, 
engineering, or scientific effort subsequently may be incorporated into 
a particular procurement;
    (iii) Clerical functions supporting the conduct of a particular 
procurement; and
    (iv) For procurements to be conducted under the procedures of OMB 
Circular A-76, participation in management studies, preparation of in-
house cost estimates, preparation of ``most efficient organization'' 
analyses, and furnishing of data or technical support to be used by 
others in the development of performance standards, statements of work, 
or specifications.
    Source selection evaluation board means any board, team, council, or 
other group that evaluates bids or proposals.
    Source selection information means any of the following information 
which is prepared for use by a Federal agency for the purpose of 
evaluating a bid or proposal to enter into a Federal agency procurement 
contract, if that information has not been previously made available to 
the public or disclosed publicly:
    (1) Bid prices submitted in response to a Federal agency invitation 
for bids, or lists of those bid prices before bid opening.
    (2) Proposed costs or prices submitted in response to a Federal 
agency solicitation, or lists of those proposed costs or prices.
    (3) Source selection plans.
    (4) Technical evaluation plans.
    (5) Technical evaluations of proposals.
    (6) Cost or price evaluations of proposals.
    (7) Competitive range determinations that identify proposals that 
have a reasonable chance of being selected for award of a contract.
    (8) Rankings of bids, proposals, or competitors.
    (9) Reports and evaluations of source selection panels, boards, or 
advisory councils.

[[Page 30]]

    (10) Other information marked as ``SOURCE SELECTION INFORMATION--SEE 
FAR 3.104'' based on a case-by-case determination by the head of the 
agency or designee, or the contracting officer, that its disclosure 
would jeopardize the integrity or successful completion of the Federal 
agency procurement to which the information relates.

[62 FR 227, Jan. 2, 1997; 62 FR 10709, Mar. 10, 1997, as amended at 62 
FR 51270, Sept. 30, 1997]



3.104-4  Statutory and related prohibitions, restrictions, and requirements.

    (a) Prohibition on disclosing procurement information (subsection 
27(a) of the Act). (1) A person described in paragraph (a)(2) of this 
subsection shall not, other than as provided by law, knowingly disclose 
contractor bid or proposal information or source selection information 
before the award of a Federal agency procurement contract to which the 
information relates. (See 3.104-5(a).)
    (2) Paragraph (a)(1) of this subsection applies to any person who--
    (i) Is a present or former official of the United States, or a 
person who is acting or has acted for or on behalf of, or who is 
advising or has advised the United States with respect to, a Federal 
agency procurement; and
    (ii) By virtue of that office, employment, or relationship, has or 
had access to contractor bid or proposal information or source selection 
information.
    (b) Prohibition on obtaining procurement information (subsection 
27(b) of the Act). A person shall not, other than as provided by law, 
knowingly obtain contractor bid or proposal information or source 
selection information before the award of a Federal agency procurement 
contract to which the information relates.
    (c) Actions required of agency officials when contacted by offerors 
regarding non-Federal employment (subsection 27(c of the Act). If an 
agency official who is participating personally and substantially in a 
Federal agency procurement for a contract in excess of the simplified 
acquisition threshold contacts or is contacted by a person who is a 
bidder or offeror in that Federal agency procurement regarding possible 
non-Federal employment for that official, the official shall--
    (1) Promptly report the contact in writing to the official's 
supervisor and to the designated agency ethics official (or designee) of 
the agency in which the official is employed; and
    (2)(i) Reject the possibility of non-Federal employment; or
    (ii) Disqualify himself or herself from further personal and 
substantial participation in that Federal agency procurement (see 3.104-
6) until such time as the agency has authorized the official to resume 
participation in such procurement, in accordance with the requirements 
of 18 U.S.C. 208 and applicable agency regulations, on the grounds 
that--
    (A) The person is no longer a bidder or offeror in that Federal 
agency procurement; or
    (B) All discussions with the bidder or offeror regarding possible 
non-Federal employment have terminated without an agreement or 
arrangement for employment.
    (d) Prohibition on former official's acceptance of compensation from 
a contractor (subsection 27(d) of the Act).
    (1) A former official of a Federal agency may not accept 
compensation from a contractor as an employee, officer, director, or 
consultant of the contractor within a period of one year after such 
former official--
    (i) Served, at the time of selection of the contractor or the award 
of a contract to that contractor, as the procuring contracting officer, 
the source selection authority, a member of a source selection 
evaluation board, or the chief of a financial or technical evaluation 
team in a procurement in which that contractor was selected for award of 
a contract in excess of $10,000,000;
    (ii) Served as the program manager, deputy program manager, or 
administrative contracting officer for a contract in excess of 
$10,000,000 awarded to that contractor; or
    (iii) Personally made for the Federal agency--
    (A) A decision to award a contract, subcontract, modification of a 
contract

[[Page 31]]

or subcontract, or a task order or delivery order in excess of 
$10,000,000 to that contractor;
    (B) A decision to establish overhead or other rates applicable to a 
contract or contracts for that contractor that are valued in excess of 
$10,000,000;
    (C) A decision to approve issuance of a contract payment or payments 
in excess of $10,000,000 to that contractor; or
    (D) A decision to pay or settle a claim in excess of $10,000,000 
with that contractor.
    (2) Nothing in paragraph (d)(1) of this subsection may be construed 
to prohibit a former official of a Federal agency from accepting 
compensation from any division or affiliate of a contractor that does 
not produce the same or similar products or services as the entity of 
the contractor that is responsible for the contract referred to in 
paragraph (d)(1) of this subsection.

[62 FR 228, Jan. 2, 1997]



3.104-5  Disclosure, protection, and marking of contractor bid or proposal information and source selection information.

    (a) Except as specifically provided for in this subsection, no 
person or other entity may disclose contractor bid or proposal 
information or source selection information to any person other than a 
person authorized, in accordance with applicable agency regulations or 
procedures, by the head of the agency or designee, or the contracting 
officer, to receive such information.
    (b) Contractor bid or proposal information and source selection 
information shall be protected from unauthorized disclosure in 
accordance with 14.401, 15.207 applicable law, and agency regulations.
    (c) In determining whether particular information is source 
selection information, see the definition in 3.104-3 and consult with 
agency officials as necessary. Individuals responsible for preparing 
material that may be source selection information under paragraph (10) 
of the definition shall mark the cover page and each page that the 
individual believes contains source selection information with the 
legend ``SOURCE SELECTION INFORMATION--SEE FAR 3.104.'' Although the 
information in paragraphs (1) through (9) of the definition in 3.104-3 
is considered to be source selection information whether or not marked, 
all reasonable efforts shall be made to mark such material with the same 
legend.
    (d) Except as provided in subparagraph (d)(4) of this subsection, if 
the contracting officer believes that information marked as proprietary 
is not proprietary, information otherwise marked as contractor bid or 
proposal information is not contractor bid or proposal information, or 
information marked in accordance with 52.215-1(e) is inappropriately 
marked, the contractor that has affixed the marking shall be notified in 
writing and given an opportunity to justify the marking.
    (1) If the contractor agrees that the marking is not justified, or 
does not respond within the time specified in the notice, the 
contracting officer may remove the marking and the information may be 
released.
    (2) If, after reviewing any justification submitted by the 
contractor, the contracting officer determines that the marking is not 
justified, the contracting officer shall notify the contractor in 
writing.
    (3) Information marked by the contractor as proprietary, otherwise 
marked as contractor bid or proposal information, or marked in 
accordance with 52.215-1(e), shall not be released until--
    (i) The review of the contractor's justification has been completed; 
or
    (ii) The period specified for the contractor's response has elapsed, 
whichever is earlier. Thereafter, the contracting officer may release 
the information.
    (4) With respect to technical data that are marked proprietary by a 
contractor, the contracting officer shall generally follow the 
procedures in 27.404(h).
    (e) Nothing in this section restricts or prohibits--
    (1) A contractor from disclosing its own bid or proposal information 
or the recipient from receiving that information;
    (2) The disclosure or receipt of information, not otherwise 
protected, relating to a Federal agency procurement

[[Page 32]]

after it has been canceled by the Federal agency, before contract award, 
unless the Federal agency plans to resume the procurement;
    (3) Individual meetings between a Federal agency official and an 
offeror or potential offeror for, or a recipient of, a contract or 
subcontract under a Federal agency procurement, provided that 
unauthorized disclosure or receipt of contractor bid or proposal 
information or source selection information does not occur; or
    (4) The Government's use of technical data in a manner consistent 
with the Government's rights in the data.
    (f) Nothing in this section shall be construed to authorize--
    (1) The withholding of any information pursuant to a proper request 
from the Congress, any committee or subcommittee thereof, a Federal 
agency, the Comptroller General, or an Inspector General of a Federal 
agency, except as otherwise authorized by law or regulation. Any such 
release which contains contractor bid or proposal information or source 
selection information shall clearly notify the recipient that the 
information or portions thereof are contractor bid or proposal 
information or source selection information related to the conduct of a 
Federal agency procurement, the disclosure of which is restricted by 
section 27 of the Act;
    (2) The withholding of information from, or restricting its receipt 
by, the Comptroller General of the United States in the course of a 
protest against the award or proposed award of a Federal agency 
procurement contract;
    (3) The release of information after award of a contract or 
cancellation of a procurement if such information is contractor bid or 
proposal information or source selection information which pertains to 
another procurement; or
    (4) The disclosure, solicitation, or receipt of bid or proposal 
information or source selection information after award where such 
disclosure, solicitation, or receipt is prohibited by law. See 3.104-
1(b)(5) and subpart 24.2.

[62 FR 229, Jan. 2, 1997, as amended at 62 FR 51270, Sept. 30, 1997]



3.104-6  Disqualification.

    (a) Contacts through agents. Disqualification pursuant to 3.104-
4(c)(2) may be required even where contacts are through an agent or 
other intermediary of the agency official or an agent or other 
intermediary of a bidder or offeror. See 18 U.S.C. 208 and 5 CFR 
2635.603(c).
    (b) Disqualification notice. In addition to submitting the contact 
report required by 3.104-4(c)(1), an agency official who must disqualify 
himself or herself pursuant to 3.104-4(c)(2)(ii) shall promptly submit 
to the head of the contracting activity (HCA), or designee, a written 
notice of disqualification from further participation in the 
procurement. Concurrent copies of the notice shall be submitted to the 
contracting officer, the source selection authority if the contracting 
officer is not the source selection authority, and the agency fficial's 
immediate supervisor. As a minimum, the notice shall--
    (1) Identify the procurement;
    (2) Describe the nature of the agency official's participation in 
the procurement and specify the approximate dates or time period of 
participation; and
    (3) Identify the bidder or offeror and describe its interest in the 
procurement.
    (c) Resumption of participation in a procurement. (1) The individual 
shall remain disqualified until such time as the agency has authorized 
the official to resume participation in the procurement in accordance 
with 3.104-4(c)(2)(ii).
    (2) Subsequent to a period of disqualification, if an agency wishes 
to reinstate the agency official to participation in the procurement, 
the HCA or designee may authorize immediate reinstatement or may 
authorize reinstatement following whatever additional period of 
disqualification the HCA determines is necessary to ensure the integrity 
of the procurement process. In determining that any additional period of 
disqualification is necessary, the HCA or designee shall consider any 
factors that might give rise to an appearance that the agency official 
acted

[[Page 33]]

without complete impartiality with respect to issues involved in the 
procurement. The HCA or designee shall consult with the agency ethics 
official in making a determination to reinstate an official. Decisions 
to reinstate an employee should be in writing. It is within the 
discretion of the HCA, or designee, to determine that the agency 
official shall not be reinstated to participation in the procurement.
    (3) An employee must comply with the provisions of 18 U.S.C. 208 and 
5 CFR part 2635 regarding any resumed participation in a procurement 
matter. An employee may not be reinstated to participate in a 
procurement matter affecting the financial interest of someone with whom 
he or she is seeking employment, unless he or she receives a waiver 
pursuant to 18 U.S.C. 208(b)(1) or (b)(3) or an authorization in 
accordance with the requirements of 5 CFR part 2635, as appropriate.

[62 FR 230, Jan. 2, 1997]



3.104-7  Ethics advisory opinions regarding prohibitions on a former official's acceptance of compensation from a contractor.

    (a) An official or former official of a Federal agency who does not 
know whether he or she is or would be precluded by subsection 27(d) of 
the Act (see 3.104-4(d)) from accepting compensation from a particular 
contractor may request advice from the appropriate agency ethics 
official prior to accepting such compensation.
    (b) The request for an advisory opinion shall be submitted in 
writing, shall be dated and signed, and shall include all information 
reasonably available to the official or former official that is relevant 
to the inquiry. As a minimum, the request shall include--
    (1) Information about the procurement(s), or decision(s) on matters 
under 3.104-4(d)(1)(iii), involving the particular contractor, in which 
the individual was or is involved, including contract or solicitation 
numbers, dates of solicitation or award, a description of the supplies 
or services procured or to be procured, and contract amount;
    (2) Information about the individual's participation in the 
procurement or decision, including the dates or time periods of that 
participation, and the nature of the individual's duties, 
responsibilities, or actions; and
    (3) Information about the contractor, including a description of the 
products or services produced by the division or affiliate of the 
contractor from whom the individual proposes to accept compensation.
    (c) Within 30 days after the date a request containing complete 
information is received, or as soon thereafter as practicable, the 
agency ethics official shall issue an opinion as to whether the proposed 
conduct is proper or would violate subsection 27(d) of the Act.
    (d)(1) Where complete information is not included in the request, 
the agency ethics official may ask the requester to provide any 
information reasonably available to the requester. Additional 
information may also be requested from other persons, including the 
source selection authority, the contracting officer, or the requester's 
immediate supervisor.
    (2) In issuing an opinion, the agency ethics official may rely upon 
the accuracy of information furnished by the requester or other agency 
sources, unless he or she has reason to believe that the information is 
fraudulent, misleading, or otherwise incorrect.
    (3) If the requester is advised in a written opinion by the agency 
ethics official that the requester may accept compensation from a 
particular contractor, and accepts such compensation in good faith 
reliance on that advisory opinion, then neither the requester nor the 
contractor shall be found to have knowingly violated subsection 27(d) of 
the Act. If the requester or the contractor has actual knowledge or 
reason to believe that the opinion is based upon fraudulent, misleading, 
or otherwise incorrect information, their reliance upon the opinion will 
not be deemed to be in good faith.

[62 FR 230, Jan. 2, 1997]



3.104-8  Calculating the period of compensation prohibition.

    The 1-year prohibition on accepting compensation (see 3.104-4(d)(1)) 
begins to run as provided in this subsection:
    (a) If the former official was serving in one of the positions 
specified in

[[Page 34]]

3.104-4(d)(1)(i) on the date of the selection of the contractor, but not 
on the date of the award of the contract, the prohibition begins on the 
date of the selection of the contractor.
    (b) If the former official was serving in one of the positions 
specified in 3.104-4(d)(1)(i) on the date of the award of the contract 
(whether or not they were serving on the date of the selection of the 
contractor), the prohibition begins on the date of the award of the 
contract.
    (c) If the former official was serving in one of the positions 
specified in 3.104-4(d)(1)(ii), the prohibition begins on the last date 
the individual served in that position.
    (d) If the former official personally made one of the decisions 
specified in 3.104-4(d)(1)(iii), the prohibition begins on the date the 
decision was made.

[62 FR 231, Jan. 2, 1997]



3.104-9  Contract clauses.

    (a) The contracting officer shall insert the clause at 52.203-8, 
Cancellation, Rescission, and Recovery of Funds for Illegal or Improper 
Activity, in solicitations and contracts with a value exceeding the 
simplified acquisition threshold.
    (b) The contracting officer shall insert the clause at 52.203-10, 
Price or Fee Adjustment for Illegal or Improper Activity, in 
solicitations and contracts with a value exceeding the simplified 
acquisition threshold.

[62 FR 231, Jan. 2, 197]



3.104-10  Violations or possible violations.

    (a) If the contracting officer receives or obtains information of a 
violation or possible violation of subsections 27 (a), (b), (c), or (d) 
of the Act (see 3.104-4), the contracting officer shall determine 
whether the reported violation or possible violation has any impact on 
the pending award or selection of the source therefor.
    (1) If the contracting officer concludes that there is no impact on 
the procurement, the contracting officer shall forward the information 
concerning the violation or possible violation, accompanied by 
appropriate documentation supporting that conclusion, to an individual 
designated in accordance with agency procedures. With the concurrence of 
that individual, the contracting officer shall, without further 
approval, proceed with the procurement.
    (2) If the individual reviewing the contracting officer's conclusion 
does not agree with that conclusion, the individual shall advise the 
contracting officer to withhold award and shall promptly forward the 
information and documentation to the HCA or designee.
    (3) If the contracting officer concludes that the violation or 
possible violation impacts the procurement, the contracting officer 
shall promptly forward the information to the HCA or designee.
    (b) The HCA or designee receiving any information describing an 
actual or possible violation of subsections 27 (a), (b), (c), or (d) of 
the Act, shall review all information available and take appropriate 
action in accordance with agency procedures, such as--
    (1) Advising the contracting officer to continue with the 
procurement;
    (2) Causing an investigation to be conducted;
    (3) Referring the information disclosed to appropriate criminal 
investigative agencies;
    (4) Concluding that a violation occurred; or
    (5) Recommending an agency head determination that the contractor, 
or someone acting for the contractor, has engaged in conduct 
constituting an offense punishable under subsection 27(e) of the Act, 
for the purpose of voiding or rescinding the contract.
    (c) Before concluding that a bidder, offeror, contractor, or person 
has violated the Act, the HCA or designee may request information from 
appropriate parties regarding the violation or possible violation when 
considered in the best interests of the Government.
    (d) If the HCA or designee concludes that the prohibitions of 
section 27 of the Act have been violated, then the HCA or designee may 
direct the contracting officer to--
    (1) If a contract has not been awarded--
    (i) Cancel the procurement;
    (ii) Disqualify an offeror; or

[[Page 35]]

    (iii) Take any other appropriate actions in the interests of the 
Government.
    (2) If a contract has been awarded--
    (i) Effect appropriate contractual remedies, including profit 
recapture as provided for in the clause at 52.203-10, Price or Fee 
Adjustment for Illegal or Improper Activity, or, if the contract has 
been rescinded under paragraph (d)(2)(ii) of this subsection, recovery 
of the amount expended under the contract;
    (ii) Void or rescind the contract with respect to which--
    (A) The contractor or someone acting for the contractor has been 
convicted for an offense where the conduct constitutes a violation of 
subsections 27 (a) or (b) of the Act for the purpose of either--
    (1) Exchanging the information covered by such subsections for 
anything of value; or
    (2) Obtaining or giving anyone a competitive advantage in the award 
of a Federal agency procurement contract; or
    (B) The head of the agency, or designee, has determined, based upon 
a preponderance of the evidence, that the contractor or someone acting 
for the contractor has engaged in conduct constituting an offense 
punishable under subsection 27(e)(1) of the Act; or
    (iii) Take any other appropriate actions in the best interests of 
the Government.
    (3) Refer the matter to the agency suspension and debarment 
official.
    (e) The HCA or designee shall recommend or direct an administrative 
or contractual remedy commensurate with the severity and effect of the 
violation.
    (f) If the HCA or designee receiving information concerning a 
violation or possible violation determines that award is justified by 
urgent and compelling circumstances, or is otherwise in the interests of 
the Government, the HCA may authorize the contracting officer to award 
the contract or execute the contract modification after notification to 
the head of the agency in accordance with agency procedures.
    (g) The HCA may delegate his or her authority under this subsection 
to an individual at least one organizational level above the contracting 
officer and of General Officer, Flag, Senior Executive Service, or 
equivalent rank.

[62 FR 231, Jan. 2, 1997]



3.104-11  Criminal and civil penalties, and further administrative remedies.

    Criminal and civil penalties, and administrative remedies, may apply 
to conduct which violates the Act (see 3.104-4). See 33.102(f) for 
special rules regarding bid protests. See 3.104-10 for administrative 
remedies relating to contracts.
    (a) An official who knowingly fails to comply with the requirements 
of 3.104-4 shall be subject to the penalties and administrative action 
set forth in subsection 27(e) of the Act.
    (b) A bidder or offeror who engages in employment discussion with an 
official subject to the restrictions of 3.104-4, knowing that the 
official has not complied with 3.104-4(c)(1), shall be subject to the 
criminal, civil or administrative penalties set forth in subsection 
27(e) of the Act.
    (c) An official who refuses to terminate employment discussions (see 
3.104-6) may be subject to agency administrative actions under 5 CFR 
2635.604(d) if the official's disqualification from participation in a 
particular procurement interferes substantially with the individual's 
ability to perform assigned duties.

[62 FR 231, Jan. 2, 1997]



       Subpart 3.2--Contractor Gratuities to Government Personnel



3.201  Applicability.

    This subpart applies to all executive agencies, except that coverage 
concerning exemplary damages applies only to the Department of Defense 
(10 U.S.C. 2207).



3.202  Contract clause.

    The contracting officer shall insert the clause at 52.203-3, 
Gratuities, in solicitations and contracts with a value exceeding the 
simplified acquisition threshold, except those for personal services and 
those between military departments or defense agencies and foreign 
governments that do not obligate

[[Page 36]]

any funds appropriated to the Department of Defense.

[61 FR 39200, July 26, 1996]



3.203  Reporting suspected violations of the Gratuities clause.

    Agency personnel shall report suspected violations of the Gratuities 
clause to the contracting officer or other designated official in 
accordance with agency procedures. The agency reporting procedures shall 
be published as an implementation of this section 3.203 and shall 
clearly specify--
    (a) What to report and how to report it; and
    (b) The channels through which reports must pass, including the 
function and authority of each official designated to review them.



3.204  Treatment of violations.

    (a) Before taking any action against a contractor, the agency head 
or a designee shall determine, after notice and hearing under agency 
procedures, whether the contractor, its agent, or another 
representative, under a contract containing the Gratuities clause--
    (1) Offered or gave a gratuity (e.g., an entertainment or gift) to 
an officer, official, or employee of the Government; and
    (2) Intended by the gratuity to obtain a contract or favorable 
treatment under a contract (intent generally must be inferred).
    (b) Agency procedures shall afford the contractor an opportunity to 
appear with counsel, submit documentary evidence, present witnesses, and 
confront any person the agency presents. The procedures should be as 
informal as practicable, consistent with principles of fundamental 
fairness.
    (c) When the agency head or designee determines that a violation has 
occurred, the Government may--
    (1) Terminate the contractor's right to proceed;
    (2) Initiate debarment or suspension measures as set forth in 
subpart 9.4; and
    (3) Assess exemplary damages, if the contract uses money 
appropriated to the Department of Defense.



         Subpart 3.3--Reports of Suspected Antitrust Violations



3.301  General.

    (a) Practices that eliminate competition or restrain trade usually 
lead to excessive prices and may warrant criminal, civil, or 
administrative action against the participants. Examples of 
anticompetitive practices are collusive bidding, follow-the-leader 
pricing, rotated low bids, collusive price estimating systems, and 
sharing of the business.
    (b) Contracting personnel are an important potential source of 
investigative leads for antitrust enforcement and should therefore be 
sensitive to indications of unlawful behavior by offerors and 
contractors. Agency personnel shall report, in accordance with agency 
regulations, evidence of suspected antitrust violations in acquisitions 
for possible referral to (1) the Attorney General under 3.303 and (2) 
the agency office responsible for contractor debarment and suspension 
under subpart 9.4.

[48 FR 42108, Sept. 19, 1983, as amended at 50 FR 1727, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985]



3.302  Definitions.

    Identical bids means bids for the same line item that are determined 
to be identical as to unit price or total line item amount, with or 
without the application of evaluation factors (e.g., discount or 
transportation cost).
    Line item means an item of supply or service, specified in an 
invitation for bids, for which the bidder must bid a separate price.

[49 FR 12974, Mar. 30, 1984]



3.303  Reporting suspected antitrust violations.

    (a) Agencies are required by 41 U.S.C. 253(B)(e) and 10 U.S.C. 
2305(b)(5) to report to the Attorney General any bids or proposals that 
evidence a violation of the antitrust laws. These reports are in 
addition to those required by subpart 9.4.
    (b) The antitrust laws are intended to ensure that markets operate 
competitively. Any agreement or mutual understanding among competing 
firms

[[Page 37]]

that restrains the natural operation of market forces is suspect. 
Paragraph (c) below identifies behavior patterns that are often 
associated with antitrust violations. Activities meeting the 
descriptions in paragraph (c) are not necessarily improper, but they are 
sufficiently questionable to warrant notifying the appropriate 
authorities, in accordance with agency procedures.
    (c) Practices or events that may evidence violations of the 
antitrust laws include--
    (1) The existence of an industry price list or price agreement to 
which contractors refer in formulating their offers;
    (2) A sudden change from competitive bidding to identical bidding;
    (3) Simultaneous price increases or follow-the-leader pricing;
    (4) Rotation of bids or proposals, so that each competitor takes a 
turn in sequence as low bidder, or so that certain competitors bid low 
only on some sizes of contracts and high on other sizes;
    (5) Division of the market, so that certain competitors bid low only 
for contracts let by certain agencies, or for contracts in certain 
geographical areas, or on certain products, and bid high on all other 
jobs;
    (6) Establishment by competitors of a collusive price estimating 
system;
    (7) The filing of a joint bid by two or more competitors when at 
least one of the competitors has sufficient technical capability and 
productive capacity for contract performance;
    (8) Any incidents suggesting direct collusion among competitors, 
such as the appearance of identical calculation or spelling errors in 
two or more competitive offers or the submission by one firm of offers 
for other firms; and
    (9) Assertions by the employees, former employees, or competitors of 
offerors, that an agreement to restrain trade exists.
    (d) Identical bids shall be reported under this section if the 
agency has some reason to believe that the bids resulted from collusion.
    (e) For offers from foreign contractors for contracts to be 
performed outside the United States, contracting officers may refer 
suspected collusive offers to the authorities of the foreign government 
concerned for appropriate action.
    (f) Agency reports shall be addressed to the Attorney General, U.S. 
Department of Justice, Washington, DC 20530, Attention: Assistant 
Attorney General, Antitrust Division, and shall include--
    (1) A brief statement describing the suspected practice and the 
reason for the suspicion; and
    (2) The name, address, and telephone number of an individual in the 
agency who can be contacted for further information.
    (g) Questions concerning this reporting requirement may be 
communicated by telephone directly to the Office of the Assistant 
Attorney General, Antitrust Division.

[48 FR 42108, Sept. 19, 1983, as amended at 49 FR 12974, Mar. 30, 1984; 
50 FR 1727, Jan. 11, 1985; 50 FR 52429, Dec. 23, 1985; 55 FR 25526, June 
21, 1990]



                      Subpart 3.4--Contingent Fees



3.400  Scope of subpart.

    This subpart prescribes policies and procedures that restrict 
contingent fee arrangements for soliciting or obtaining Government 
contracts to those permitted by 10 U.S.C. 2306(b) and 41 U.S.C. 254(a).



3.401  Definitions.

    Bona fide agency, as used in this subpart, means an established 
commercial or selling agency, maintained by a contractor for the purpose 
of securing business, that neither exerts nor proposes to exert improper 
influence to solicit or obtain Government contracts nor holds itself out 
as being able to obtain any Government contract or contracts through 
improper influence.
    Bona fide employee, as used in this subpart, means a person, 
employed by a contractor and subject to the contractor's supervision and 
control as to time, place, and manner of performance, who neither exerts 
nor proposes to exert improper influence to solicit or obtain Government 
contracts nor holds out as being able to obtain any Government contract 
or contracts through improper influence.

[[Page 38]]

    Contingent fee, as used in this subpart, means any commission, 
percentage, brokerage, or other fee that is contingent upon the success 
that a person or concern has in securing a Government contract.
    Improper influence, as used in this subpart, means any influence 
that induces or tends to induce a Government employee or officer to give 
consideration or to act regarding a Government contract on any basis 
other than the merits of the matter.



3.402  Statutory requirements.

    Contractors' arrangements to pay contingent fees for soliciting or 
obtaining Government contracts have long been considered contrary to 
public policy because such arrangements may lead to attempted or actual 
exercise of improper influence. In 10 U.S.C. 2306(b) and 41 U.S.C. 
254(a), Congress affirmed this public policy but permitted certain 
exceptions. These statutes--
    (a) Require in every negotiated contract a warranty by the 
contractor against contingent fees;
    (b) Permit, as an exception to the warranty, contingent fee 
arrangements between contractors and bona fide employees or bona fide 
agencies; and
    (c) Provide that, for breach or violation of the warranty by the 
contractor, the Government may annul the contract without liability or 
deduct from the contract price or consideration, or otherwise recover, 
the full amount of the contingent fee.



3.403  Applicability.

    This subpart applies to all contracts. Statutory requirements for 
negotiated contracts are, as a matter of policy, extended to sealed bid 
contracts.

[48 FR 42108, Sept. 19, 1983, as amended at 50 FR 1727, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985]



3.404  Contract clause.

    The contracting officer shall insert the clause at 52.203-5, 
Covenant Against Contingent Fees, in all solicitations and contracts 
exceeding the simplified acquisition threshold, other than those for 
commercial items (see parts 2 and 12).

[61 FR 39188, July 26, 1996]



3.405  Misrepresentations or violations of the Covenant Against Contingent Fees.

    (a) Government personnel who suspect or have evidence of attempted 
or actual exercise of improper influence, misrepresentation of a 
contingent fee arrangement, or other violation of the Covenant Against 
Contingent Fees shall report the matter promptly to the contracting 
officer or appropriate higher authority in accordance with agency 
procedures.
    (b) When there is specific evidence or other reasonable basis to 
suspect one or more of the violations in paragraph (a) above, the chief 
of the contracting office shall review the facts and, if appropriate, 
take or direct one or more of the following, or other, actions:
    (1) If before award, reject the bid or proposal.
    (2) If after award, enforce the Government's right to annul the 
contract or to recover the fee.
    (3) Initiate suspension or debarment action under subpart 9.4.
    (4) Refer suspected fraudulent or criminal matters to the Department 
of Justice, as prescribed in agency regulations.

[48 FR 42108, Sept. 19, 1983. Redesignated at 61 FR 39188, July 26, 
1996]



3.406  Records.

    For enforcement purposes, agencies shall preserve any specific 
evidence of one or more of the violations in 3.405(a), together with all 
other pertinent data, including a record of actions taken. Contracting 
offices shall not retire or destroy these records until it is certain 
that they are no longer needed for enforcement purposes. If the original 
record is maintained in a central file, a copy must be retained in the 
contract file.

[48 FR 42108, Sept. 19, 1983. Redesignated and amended at 61 FR 39188, 
July 26, 1996]



             Subpart 3.5--Other Improper Business Practices



3.501  Buying-in.



3.501-1  Definition.

    Buying-in means submitting an offer below anticipated costs, 
expecting to--

[[Page 39]]

    (a) Increase the contract amount after award (e.g., through 
unnecessary or excessively priced change orders); or
    (b) Receive follow-on contracts at artificially high prices to 
recover losses incurred on the buy-in contract.



3.501-2  General.

    (a) Buying-in may decrease competition or result in poor contract 
performance. The contracting officer must take appropriate action to 
ensure buying-in losses are not recovered by the contractor through the 
pricing of (1) change orders or (2) follow-on contracts subject to cost 
analysis.
    (b) The Government should minimize the opportunity for buying-in by 
seeking a price commitment covering as much of the entire program 
concerned as is practical by using--
    (1) Multiyear contracting, with a requirement in the solicitation 
that a price be submitted only for the total multiyear quantity; or
    (2) Priced options for additional quantities that, together with the 
firm contract quantity, equal the program requirements (see subpart 
17.2).
    (c) Other safeguards are available to the contracting officer to 
preclude recovery of buying-in losses (e.g., amortization of 
nonrecurring costs (see 15.408, Table 15-2, paragraph A., column (2) 
under ``Formats for Submission of Line Item Summaries) and treatment of 
unreasonable price quotations (see 15.405).

48 FR 42108, Sept. 19, 1983, as amended at 62 FR 51270, Sept. 30, 1997]



3.502  Subcontractor kickbacks.



3.502-1  Definitions.

    Kickback, as used in this section, means any money, fee, commission, 
credit, gift, gratuity, thing of value, or compensation of any kind 
which is provided, directly or indirectly, to any prime contractor, 
prime contractor employee, subcontractor, or subcontractor employee for 
the purpose of improperly obtaining or rewarding favorable treatment in 
connection with a prime contract or in connection with a subcontract 
relating to a prime contract.
    Person, as used in this section, means a corporation, partnership, 
business association of any kind, trust, joint-stock company, or 
individual.
    Prime contract, as used in this section, means a contract or 
contractual action entered into by the United States for the purpose of 
obtaining supplies, materials, equipment, or services of any kind.
    Prime Contractor, as used in this section, means a person who has 
entered into a prime contract with the United States.
    Prime Contractor employee, as used in this section, means any 
officer, partner, employee, or agent of a prime contractor.
    Subcontract, as used in this section, means a contract or 
contractural action entered into by a prime contractor or subcontractor 
for the purpose of obtaining supplies, materials, equipment, or service 
of any kind under a prime contract.
    Subcontractor, as used in this section, (a) means any person, other 
than the prime contractor, who offers to furnish or furnishes any 
supplies, materials, equipment, or services of any kind under a prime 
contract or a subcontract entered into in connection with such prime 
contract, and (b) includes any person who offers to furnish or furnishes 
general supplies to the prime contractor or a higher tier subcontractor.
    Subcontractor employee, as used in this section, means any officer, 
partner, employee, or agent of a subcontractor.

[52 FR 6121, Feb. 27, 1987, as amended at 53 FR 34226, Sept. 2, 1988]



3.502-2  Subcontractor kickbacks.

    The Anti-Kickback Act of 1986 (41 U.S.C. 51-58) was passed to deter 
subcontractors from making payments and contractors from accepting 
payments for the purpose of improperly obtaining or rewarding favorable 
treatment in connection with a prime contract or a subcontract relating 
to a prime contract. The Act--
    (a) Prohibits any person from--
    (1) Providing, attempting to provide, or offering to provide any 
kickback;
    (2) Soliciting, accepting, or attempting to accept any kickbacks; or
    (3) Including, directly or indirectly, the amount of any kickback in 
the

[[Page 40]]

contract price charged by a subcontractor to a prime contractor or a 
higher tier subcontractor or in the contract price charged by a prime 
contractor to the United States.
    (b) Imposes criminal penalties on any person who knowingly and 
willfully engages in the prohibited conduct addressed in paragraph (a) 
of this subsection.
    (c) Provides for the recovery of civil penalties by the United 
States from any person who knowingly engages in such prohibited conduct 
and from any person whose employee, subcontractor, or subcontractor 
employee provides, accepts, or charges a kickback.
    (d) Provides that--
    (1) The contracting officer may offset the amount of a kickback 
against monies owed by the United States to the prime contractor under 
the prime contract to which such kickback relates;
    (2) The contracting officer may direct a prime contractor to 
withhold from any sums owed to a subcontract under a subcontractor of 
the prime contract the amount of any kickback which was or may be offset 
against the prime contractor under subparagraph (d)(1) of this 
subsection; and
    (3) An offset under subparagraph (d)(1) or a direction under 
subparagraph (d)(2) of this subsection is a claim by the Government for 
the purposes of the Contract Disputes Act of 1978.
    (e) Authorizes contracting officers to order that sums withheld 
under subparagraph (d)(2) of this subsection be paid to the contracting 
agency, or if the sum has already been offset against the prime 
contractor, that it be retained by the prime contractor.
    (f) Requires the prime contractor to notify the contracting officer 
when the withholding under subparagraph (d)(2) of this subsection has 
been accomplished unless the amount withheld has been paid to the 
Government.
    (g) Requires a prime contractor or subcontractor to report in 
writing to the inspector general of the contracting agency, the head of 
the contracting agency if the agency does not have an inspector general, 
or the Department of Justice any possible violation of the Act when the 
prime contractor or subcontractor has reasonable grounds to believe such 
violation may have occurred.
    (h) Provides that, for the purpose of ascertaining whether there has 
been a violation of the Act with respect to any prime contract, the 
General Accounting Office and the inspector general of the contracting 
agency, or a representative of such contracting agency designated by the 
head of such agency if the agency does not have an inspector general, 
shall have access to and may inspect the facilities and audit the books 
and records, including any electronic data or records, of any prime 
contractor or subcontractor under a prime contract awarded by such 
agency.
    (i) Requires each contracting agency to include in each prime 
contract exceeding $100,000 for other than commercial items (see part 
12), a requirement that the prime contractor shall--
    (1) Have in place and follow reasonable procedures designed to 
prevent and detect violations of the Act in its own operations and 
direct business relationships (e.g., company ethics rules prohibiting 
kickbacks by employees, agents, or subcontractors; education programs 
for new employees and subcontractors, explaining policies about 
kickbacks, related company procedures and the consequences of detection; 
procurement procedures to minimize the opportunity for kickbacks; audit 
procedures designed to detect kickbacks; periodic surveys of 
subcontractors to elicit information about kickbacks; procedures to 
report kickbacks to law enforcement officials; annual declarations by 
employees of gifts or gratuities received from subcontractors; annual 
employee declarations that they have violated no company ethics rules; 
personnel practices that document unethical or illegal behavior and make 
such information available to prospective employers); and
    (2) Cooperate fully with any Federal agency investigating a possible 
violation of the Act.
    (j) Notwithstanding paragraph (i) of this subsection, a prime 
contractor shall cooperate fully with any Federal government agency 
investigating a

[[Page 41]]

violation of Section 3 of the Anti-Kickback Act of 1986 (41 U.S.C. 51-
58).

[52 FR 6121, Feb. 27, 1987; 52 FR 9989, Mar. 27, 1987, as amended at 53 
FR 34226, Sept. 2, 1988; 60 FR 48235, Sept. 18, 1995; 61 FR 39191, July 
26, 1996; 62 FR 235, Jan. 2, 1997]



3.502-3  Contract clause.

    The contracting officer shall insert the clause at 52.203-7, Anti-
Kickback Procedures, in solicitations and contracts exceeding the 
simplified acquisition threshold, other than those for commercial items 
(see part 12).

[60 FR 48235, Sept. 18, 1995, as amended at 61 FR 39190, July 26, 1996]



3.503  Unreasonable restrictions on subcontractor sales.



3.503-1  Policy.

    10 U.S.C. 2402 and 41 U.S.C. 253(g) require that subcontractors not 
be unreasonably precluded from making direct sales to the Government of 
any supplies or services made or furnished under a contract. However, 
this does not preclude contractors from asserting rights that are 
otherwise authorized by law or regulation.

[50 FR 35475, Aug. 30, 1985, and 51 FR 27116, July 29, 1986]



3.503-2  Contract clause.

    The contracting officer shall insert the clause at 52.203-6, 
Restrictions on Subcontractor Sales to the Government, in solicitations 
and contracts exceeding the simplified acquisition threshold. For the 
acquisition of commercial items, the contracting officer shall use the 
clause with its Alternate I.

[60 FR 48235, Sept. 18, 1995, as amended at 61 FR 39190, July 26, 1996]



Subpart 3.6--Contracts With Government Employees or Organizations Owned 
                          or Controlled by Them



3.601  Policy.

    (a) Except as specified in 3.602, a contracting officer shall not 
knowingly award a contract to a Government employee or to a business 
concern or other organization owned or substantially owned or controlled 
by one or more Government employees. This policy is intended to avoid 
any conflict of interest that might arise between the employees' 
interests and their Government duties, and to avoid the appearance of 
favoritism or preferential treatment by the Government toward its 
employees.
    (b) For purposes of this subpart, special Government employees (as 
defined in 18 U.S.C. 202) performing services as experts, advisors, or 
consultants, or as members of advisory committees, are not considered 
Government employees unless--
    (1) The contract arises directly out of the individual's activity as 
a special Government employee;
    (2) In the individual's capacity as a special Government employee, 
the individual is in a position to influence the award of the contract; 
or
    (3) Another conflict of interest is determined to exist.

[55 FR 34864, Aug. 24, 1990]



3.602  Exceptions.

    The agency head, or a designee not below the level of the head of 
the contracting activity, may authorize an exception to the policy in 
3.601 only if there is a most compelling reason to do so, such as when 
the Government's needs cannot reasonably be otherwise met.



3.603  Responsibilities of the contracting officer.

    (a) Before awarding a contract, the contracting officer shall obtain 
an authorization under 3.602 if--
    (1) The contracting officer knows, or has reason to believe, that a 
prospective contractor is one to which award is otherwise prohibited 
under 3.601; and
    (2) There is a most compelling reason to make an award to that 
prospective contractor.
    (b) The contracting officer shall comply with the requirements and 
guidance in subpart 9.5 before awarding a contract to an organization 
owned or substantially owned or controlled by Government employees.

[[Page 42]]



              Subpart 3.7--Voiding and Rescinding Contracts

    Source: 51 FR 27116, July 29, 1986, unless otherwise noted.



3.700  Scope of subpart.

    (a) This subpart prescribes Governmentwide policies and procedures 
for exercising discretionary authority to declare void and rescind 
contracts in relation to which--
    (1) There has been a final conviction for bribery, conflict of 
interest, disclosure or receipt of contractor bid or proposal 
information or source selection information in exchange for a thing of 
value or to give anyone a competitive advantage in the award of a 
Federal agency procurement contract, or similar misconduct; or
    (2) There has been an agency head determination that contractor bid 
or proposal information or source selection information has been 
disclosed or received in exchange for a thing of value, or for the 
purpose of obtaining or giving anyone a competitive advantage in the 
award of a Federal agency procurement contract.
    (b) This subpart does not prescribe policies or procedures for, or 
govern the exercise of, any other remedy available to the Government 
with respect to such contracts, including but not limited to, the common 
law right of avoidance, rescission, or cancellation.

[51 FR 27116, July 29, 1986, as amended at 62 FR 232, Jan. 2, 1997]



3.701  Purpose.

    This subpart provides--
    (a) An administrative remedy with respect to contracts in relation 
to which there has been--
    (1) A final conviction for bribery, conflict of interest, disclosure 
or receipt of contractor bid or proposal information or source selection 
information in exchange for a thing of value or to give anyone a 
competitive advantage in the award of a Federal agency procurement 
contract, or similar misconduct; or
    (2) An agency head determination that contractor bid or proposal 
information or source selection information has been disclosed or 
received in exchange for a thing of value, or for the purpose of 
obtaining or giving anyone a competitive advantage in the award of a 
Federal agency procurement contract; and
    (b) A means to deter similar misconduct in the future by those who 
are involved in the award, performance, and administration of Government 
contracts.

[62 FR 232, Jan. 2, 1997]



3.702  Definition.

    Final conviction means a conviction, whether entered on a verdict or 
plea, including a plea of nolo contendere, for which sentence has been 
imposed.



3.703  Authority.

    (a) Section 1(e) of Pub. L. 87-849, 18 U.S.C. 218 (the Act), 
empowers the President or the heads of executive agencies acting under 
regulations prescribed by the President, to declare void and rescind 
contracts and other transactions enumerated in the Act, in relation to 
which there has been a final conviction for bribery, conflict of 
interest, or any other violation of Chapter 11 of Title 18 of the United 
States Code (18 U.S.C. 201-224). Executive Order 12448, November 4, 
1983, delegates the President's authority under the Act to the heads of 
the executive agencies and military departments.
    (b) Subsection 27(e)(3) of the Office of Federal Procurement Policy 
Act (41 U.S.C. 423) (the OFPP Act), as amended, requires a Federal 
agency, upon receiving information that a contractor or a person has 
engaged in conduct constituting a violation of subsection 27 (a) or (b) 
of the OFPP Act, to consider recission of a contract with respect to 
which--
    (1) The contractor or someone acting for the contractor has been 
convicted for an offense punishable under subsection 27(e)(1) of the 
OFPP Act; or
    (2) The head of the agency, or designee, has determined, based upon 
a preponderance of the evidence, that the contractor or someone acting 
for the contractor has engaged in conduct constituting such an offense.

[51 FR 27116, July 29, 1986, as amended at 62 FR 232, Jan. 2, 1997]

[[Page 43]]



3.704  Policy.

    (a) In cases in which there is a final conviction for any violation 
of 18 U.S.C. 201-224 involving or relating to contracts awarded by an 
agency, the agency head or designee shall consider the facts available 
and, if appropriate, may declare void and rescind contracts, and recover 
the amounts expended and property transferred by the agency in 
accordance with the policies and procedures of this subpart.
    (b) Since a final conviction under 18 U.S.C. 201-224 relating to a 
contract also may justify the conclusion that the party involved is not 
presently responsible, the agency should consider initiating debarment 
proceedings in accordance with subpart 9.4, Debarment, Suspension, and 
Ineligibility, if debarment has not been initiated or is not in effect 
at the time the final conviction is entered.
    (c) If there is a final conviction for an offense punishable under 
subsection 27(e) of the OFPP Act, or if the head of the agency, or 
designee, has determined, based upon a preponderance of the evidence, 
that the contractor or someone acting for the contractor has engaged in 
conduct constituting such an offense, then the head of the contracting 
activity shall consider, in addition to any other penalty prescribed by 
law or regulation--
    (1) Declaring void and rescinding contracts, as appropriate, and 
recovering the amounts expended under the contracts by using the 
procedures at 3.705 (see 3.104-10); and
    (2) Recommending the initiation of suspension or debarment 
proceedings in accordance with subpart 9.4.

[51 FR 27116, July 29, 1986, as amended at 62 FR 232, Jan. 2, 1997]



3.705  Procedures.

    (a) Reporting. The facts concerning any final conviction for any 
violation of 18 U.S.C. 201-224 involving or relating to agency contracts 
shall be reported promptly to the agency head or designee for that 
official's consideration. The agency head or designee shall promptly 
notify the Civil Division, Department of Justice, that an action is 
being considered under this subpart.
    (b) Decision. Following an assessment of the facts, the agency head 
or designee may declare void and rescind contracts with respect to which 
a final conviction has been entered, and recover the amounts expended 
and the property transferred by the agency under the terms of the 
contracts involved.
    (c) Decision-making process. Agency procedures governing the voiding 
and rescinding decision-making process shall be as informal as is 
practicable, consistent with the principles of fundamental fairness. As 
a minimum, however, agencies shall provide the following:
    (1) A notice of the proposed action to declare void and rescind the 
contract shall be made in writing and sent by certified mail, return 
receipt requested.
    (2) A thirty calendar day period after receipt of the notice, for 
the contractor to submit pertinent information before any final decision 
is made.
    (3) Upon request made within the period for submission of pertinent 
information, an opportunity shall be afforded for a hearing at which 
witnesses may be presented, and any witness the agency presents may be 
confronted. However, no inquiry shall be made regarding the validity of 
a conviction.
    (4) If the agency head or designee decides to declare void and 
rescind the contracts involved, that official shall issue a written 
decision which--
    (i) States that determination;
    (ii) Reflects consideration of the fair value of any tangible 
benefits received and retained by the agency; and
    (iii) States the amount due, and the property to be returned, to the 
agency.
    (d) Notice of proposed action. The notice of the proposed action, as 
a minimum shall--
    (1) Advise that consideration is being given to declaring void and 
rescinding contracts awarded by the agency, and recovering the amounts 
expended and property transferred therefor, under the provisions of 18 
U.S.C. 218;
    (2) Specifically identify the contracts affected by the action;
    (3) Specifically identify the offense or final conviction on which 
the action is based;

[[Page 44]]

    (4) State the amounts expended and property transferred under each 
of the contracts involved, and the money and the property demanded to be 
returned;
    (5) Identify any tangible benefits received and retained by the 
agency under the contract, and the value of those benefits, as 
calculated by the agency;
    (6) Advise that pertinent information may be submitted within 30 
calendar days after receipt of the notice, and that, if requested within 
that time, a hearing shall be held at which witnesses may be presented 
and any witness the agency presents may be confronted; and
    (7) Advise that action shall be taken only after the agency head or 
designee issues a final written decision on the proposed action.
    (e) Final agency decision. The final agency decision shall be based 
on the information available to the agency head or designee, including 
any pertinent information submitted or, if a hearing was held, presented 
at the hearing. If the agency decision declares void and rescinds the 
contract, the final decision shall specify the amounts due and property 
to be returned to the agency, and reflect consideration of the fair 
value of any tangible benefits received and retained by the agency. 
Notice of the decision shall be sent promptly by certified mail, return 
receipt requested. Rescission of contracts under the authority of the 
Act and demand for recovery of the amounts expended and property 
transferred therefor, is not a claim within the meaning of the Contract 
Disputes Act of 1978 (CDA), 41 U.S.C. 601-613, or part 33. Therefore, 
the procedures required by the CDA and the FAR for the issuance of a 
final contracting officer decision are not applicable to final agency 
decisions under this subpart, and shall not be followed.

[51 FR 27116, July 29, 1986, as amended at 62 FR 232, Jan. 2, 1997]



 Subpart 3.8--Limitations on the Payment of Funds to Influence Federal 
                              Transactions

    Source: 55 FR 3190, Jan. 30, 1990, unless otherwise noted.



3.800  Scope of subpart.

    This subpart prescribes policies and procedures implementing section 
319 of the Department of the Interior and Related Agencies 
Appropriations Act, Pub. L. 101-121, which added a new section 1352 to 
title 31 U.S.C., entitled ``Limitation on use of appropriated funds to 
influence certain Federal contracting and financial transactions'' (the 
Act).



3.801  Definitions.

    Agency, as used in this section, means an executive agency as 
defined in 2.101.
    Covered Federal action, as used in this section, means any of the 
following Federal actions:
    (a) The awarding of any Federal contract.
    (b) The making of any Federal grant.
    (c) The making of any Federal loan.
    (d) The entering into of any cooperative agreement.
    (e) The extension, continuation, renewal, amendment, or modification 
of any Federal contract, grant, loan, or cooperative agreement.
    Indian tribe and tribal organization, as used in this section, have 
the meaning provided in section 4 of the Indian Self-Determination and 
Education Assistance Act (25 U.S.C. 450B) and include Alaskan Natives.
    Influencing or attempting to influence, as used in this section, 
means making, with the intent to influence, any communication to or 
appearance before an officer or employee of any agency, a Member of 
Congress, an officer or employee of Congress, or an employee of a Member 
of Congress in connection with any covered Federal action.
    Local government, as used in this section, means a unit of 
government in a State and, if chartered, established, or otherwise 
recognized by a State for the performance of a governmental duty, 
including a local public authority, a special district, an intrastate 
district, a council of governments, a sponsor group representative 
organization, and any other instrumentality of a local government.
    Officer or employee of an agency, as used in this section, includes 
the following individuals who are employed by an agency:

[[Page 45]]

    (a) An individual who is appointed to a position in the Government 
under title 5, United States Code, including a position under a 
temporary appointment;
    (b) A member of the uniformed services, as defined in subsection 
101(3), title 37, United States Code;
    (c) A special Government employee, as defined in section 202, title 
18, United States Code; and
    (d) An individual who is a member of a Federal advisory committee, 
as defined by the Federal Advisory Committee Act, title 5, United States 
Code, appendix 2.
    Person, as used in this section, means an individual, corporation, 
company, association, authority, firm, partnership, society, State, and 
local government, regardless of whether such entity is operated for 
profit or not for profit. This term excludes an Indian tribe, tribal 
organization, or any other Indian organization with respect to 
expenditures specifically permitted by other Federal law.
    Reasonable compensation, as used in this section, means, with 
respect to a regularly employed officer or employee of any person, 
compensation that is consistent with the normal compensation for such 
officer or employee for work that is not furnished to, not funded by, or 
not furnished in cooperation with the Federal Government.
    Reasonable payment, as used in this section, means, with respect to 
professional and other technical services, a payment in an amount that 
is consistent with the amount normally paid for such services in the 
private sector.
    Recipient, as used in this section, includes the contractor and all 
subcontractors. This term excludes an Indian tribe, tribal organization, 
or any other Indian organization with respect to expenditures 
specifically permitted by other Federal law.
    Regularly employed, as used in this section, means, with respect to 
an officer or employee of a person requesting or receiving a Federal 
contract, an officer or employee who is employed by such person for at 
least 130 working days within 1 year immediately preceding the date of 
the submission that initiates agency consideration of such person for 
receipt of such contract. An officer or employee who is employed by such 
person for less than 130 working days within 1 year immediately 
preceding the date of the submission that initiates agency consideration 
of such person shall be considered to be regularly employed as soon as 
he or she is employed by such person for 130 working days.
    State, as used in this section, means a State of the United States, 
the District of Columbia, the Commonwealth of Puerto Rico, a territory 
or possession of the United States, an agency or instrumentality of a 
State, and multi-State, regional, or interstate entity having 
governmental duties and powers.



3.802  Prohibitions.

    (a) Section 1352 of title 31, United States Code, among other 
things, prohibits a recipient of a Federal contract, grant, loan, or 
cooperative agreement from using appropriated funds to pay any person 
for influencing or attempting to influence an officer or employee of any 
agency, a Member of Congress, an officer or employee of Congress, or an 
employee of a Member of Congress in connection with any of the following 
covered Federal actions: the awarding of any Federal contract; the 
making of any Federal grant; the making of any Federal loan; the 
entering into of any cooperative agreement; or, the modification of any 
Federal contract, grant, loan, or cooperative agreement.
    (b) The Act also requires offerors to furnish a declaration 
consisting of both a certification and a disclosure. These requirements 
are contained in the provision at 52.203-11, Certification and 
Disclosure Regarding Payments to Influence Certain Federal Transactions, 
and the clause at 52.203-12, Limitation on Payments to Influence Certain 
Federal Transactions.
    (1) By signing its offer, an offeror certifies that no appropriated 
funds have been paid or will be paid in violation of the prohibitions in 
31 U.S.C. 1352.
    (2) The disclosure shall identify if any funds other than Federal 
appropriated funds (including profit or fee received under a covered 
Federal action) have been paid, or will be paid, to any person for 
influencing or attempting to influence an officer or employee

[[Page 46]]

of any agency, a Member of Congress, an officer or employee of Congress, 
or an employee of a Member of Congress in connection with a Federal 
contract, grant, loan, or cooperative agreement.
    (c) The prohibitions of the Act do not apply under the following 
conditions:
    (1) Agency and legislative liaison by own employees. (i) The 
prohibition on the use of appropriated funds, in paragraph (a) of this 
section, does not apply in the case of a payment of reasonable 
compensation made to an officer or employee of a person requesting or 
receiving a covered Federal action if the payment is for agency and 
legislative liaison activities not directly related to a covered Federal 
action.
    (ii) For purposes of subdivision (c)(1)(i) of this section, 
providing any information specifically requested by an agency or 
Congress is permitted at any time.
    (iii) The following agency and legislative liaison activities are 
permitted at any time where they are not related to a specific 
solicitation for any covered Federal action:
    (A) Discussing with an agency the qualities and characteristics 
(including individual demonstrations) of the person's products or 
services, conditions or terms of sale, and service capabilities;
    (B) Technical discussions and other activities regarding the 
application or adaptation of the person's products or services for an 
agency's use.
    (iv) The following agency and legislative liaison activities are 
permitted where they are prior to formal solicitation of any covered 
Federal action:
    (A) Providing any information not specifically requested but 
necessary for an agency to make an informed decision about initiation of 
a covered Federal action;
    (B) Technical discussions regarding the preparation of an 
unsolicited proposal prior to its official submission; and
    (C) Capability presentations by persons seeking awards from an 
agency pursuant to the provisions of the Small Business Act, as amended 
by Pub. L. 95-507, and subsequent amendments.
    (v) Only those activities expressly authorized by subparagraph 
(c)(1) of this section are permitted under this section.
    (2) Professional and technical services. (i) The prohibition on the 
use of appropriated funds, in paragraph (a) of this section, does not 
apply in the case of--
    (A) Payment of reasonable compensation made to an officer or 
employee of a person requesting or receiving a covered Federal action or 
an extension, continuation, renewal, amendment, or modification of a 
covered Federal action, if payment is for professional or technical 
services rendered directly in the preparation, submission, or 
negotiation of any bid, proposal, or application for that Federal action 
or for meeting requirements imposed by or pursuant to law as a condition 
for receiving that Federal action;
    (B) Any reasonable payment to a person, other than an officer or 
employee of a person requesting or receiving a covered Federal action, 
if the payment is for professional or technical services rendered 
directly in the preparation, submission, r negotiation of any bid, 
proposal, or application for that Federal action, or for meeting 
requirements imposed by or pursuant to law as a condition for receiving 
that Federal action. Persons other than officers or employees of a 
person requesting or receiving a covered Federal action include 
consultants and trade associations.
    (ii) For purposes of subdivision (c)(2)(i) of this section, 
``professional and technical services'' shall be limited to advice and 
analysis directly applying any professional or technical discipline. For 
example, drafting of a legal document accompanying a bid or proposal by 
a lawyer is allowable. Similarly, technical advice provided by an 
engineer on the performance or operational capability of a piece of 
equipment rendered directly in the negotiation of a contract is 
allowable. However, communications with the intent to influence made by 
a professional (such as a licensed lawyer) or a technical person (such 
as a licensed accountant) are not allowable under this section unless 
they provide advice and analysis directly applying their professional or 
technical expertise and unless the advice or analysis is rendered 
directly and solely in the preparation,

[[Page 47]]

submission or negotiation of a covered Federal action. Thus, for 
example, communications with the intent to influence made by a lawyer 
that do not provide legal advice or analysis directly and solely related 
to the legal aspects of his or her client's proposal, but generally 
advocate one proposal over another are not allowable under this section 
because the lawyer is not providing professional legal services. 
Similarly, communications with the intent to influence made by an 
engineer providing an engineering analysis prior to the preparation or 
submission of a bid or proposal are not allowable under this section 
since the engineer is providing technical services but not directly in 
the preparation, submission or negotiation of a covered Federal action.
    (iii) Requirements imposed by or pursuant to law as a condition for 
receiving a covered Federal award include those required by law or 
regulation and any other requirements in the actual award documents
    (iv) Only those services expressly authorized by subdivisions 
(c)(2)(i) (A) and (B) of this section are permitted under this section.
    (v) The reporting requirements of 3.803(a) shall not apply with 
respect to payments of reasonable compensation made to regularly 
employed officers or employees of a person.



3.803  Certification and disclosure.

    (a) Any contractor who requests or receives a Federal contract 
exceeding $100,000 shall submit the certification and disclosures 
required by the provision at 52.203-11, Certification and Disclosure 
Regarding Payments to Influence Certain Federal Transactions, with its 
offer. Disclosures under this section shall be submitted to the 
contracting officer using OMB standard form LLL, Disclosure of Lobbying 
Activities.
    (b) The contractor shall file a disclosure form at the end of each 
calendar quarter in which there occurs any event that materially affects 
the accuracy of the information contained in any disclosure form 
previously filed by such person under paragraph (a) of this section. An 
event that materially affects the accuracy of the information reported 
includes--
    (1) A cumulative increase of $25,000 or more in the amount paid or 
expected to be paid for influencing or attempting to influence a covered 
Federal action; or
    (2) A change in the person(s) or individual(s) influencing or 
attempting to influence a covered Federal action; or
    (3) A change in the officer(s), employee(s), or Member(s) of 
Congress contacted to influence or attempt to influence a covered 
Federal action.
    (c) The contractor shall require the submittal of a certification, 
and if required, a disclosure form, by any person who requests or 
receives any subcontract exceeding $100,000 under the Federal contract.
    (d) All subcontractor disclosure forms (but not certifications), 
shall be forwarded from tier to tier until received by the prime 
contractor. The prime contractor shall submit all disclosure forms to 
the contracting officer at the end of the calendar quarter in which the 
disclosure form is submitted by the subcontractor. Each subcontractor 
certification shall be retained in the subcontract file of the awarding 
contractor.

[55 FR 3190, Jan. 30, 1990, as amended at 55 FR 38516, Sept. 18, 1990]



3.804  Policy.

    (a) The contracting officer shall obtain certifications and 
disclosures as required by the provision at 52.203-11, Certification and 
Disclosure Regarding Payments to Influence Certain Federal Transactions, 
prior to the award of any contract exceeding $100,000.
    (b) The contracting officer shall forward a copy of all contractor 
disclosures furnished pursuant to the clause at 52.203-12, Limitation on 
Payments to Influence Certain Federal Transactions, to the official 
designated in accordance with agency procedures, for subsequent 
submission to Congress. The original of the disclosure shall be retained 
in the contract file.

[[Page 48]]



3.805  Exemption.

    The Secretary of Defense may exempt, on a case-by-case basis, a 
covered Federal action from the prohibitions of this section whenever 
the Secretary determines, in writing, that such an exemption is in the 
national interest. The Secretary shall transmit a copy of such exemption 
to Congress immediately after making such a determination.



3.806  Processing suspected violations.

    Suspected violations of the requirements of the Act shall be 
referred to the official designated in agency procedures.



3.807  Civil penalties.

    Agencies shall impose and collect civil penalties pursuant to the 
provisions of the Program Fraud and Civil Remedies Act, 31 U.S.C. 3803 
(except subsection (c)), 3804-3408, and 3812, insofar as the provisions 
therein are not inconsistent with the requirements of this subpart.



3.808  Solicitation provision and contract clause.

    (a) The provision at 52.203-11, Certification and Disclosure 
Regarding Payments to Influence Certain Federal Transactions, shall be 
included in solicitations expected to exceed $100,000.
    (b) The clause at 52.203-12, Limitation on Payments to Influence 
Certain Federal Transactions, shall be included in solicitations and 
contracts expected to exceed $100,000.



     Subpart 3.9--Whistleblower Protections for Contractor Employees

    Source: 60 FR 37776, July 21, 1995, unless otherwise noted.



3.900  Scope of subpart.

    This subpart implements 10 U.S.C. 2409 and 41 U.S.C. 251, et seq., 
as amended by Sections 6005 and 6006 of the Federal Acquisition 
Streamlining Act of 1994 (Pub. L. 103-355).



3.901  Definitions.

    Authorized official of an agency means an officer or employee 
responsible for contracting, program management, audit, inspection, 
investigation, or enforcement of any law or regulation relating to 
Government procurement or the subject matter of the contract.
    Authorized official of the Department of Justice means any person 
responsible for the investigation, enforcement, or prosecution of any 
law or regulation.
    Inspector General means an Inspector General appointed under the 
Inspector General Act of 1978, as amended. In the Department of Defense 
that is the DOD Inspector General. In the case of an executive agency 
that does not have an Inspector General, the duties shall be performed 
by an official designated by the head of the executive agency.



3.902  Applicability.

    This subpart applies to all Government contracts.



3.903  Policy.

    Government contractors shall not discharge, demote or otherwise 
discriminate against an employee as a reprisal for disclosing 
information to a Member of Congress, or an authorized official of an 
agency or of the Department of Justice, relating to a substantial 
violation of law related to a contract (including the competition for or 
negotiation of a contract).



3.904  Procedures for filing complaints.

    (a) Any employee of a contractor who believes that he or she has 
been discharged, demoted, or otherwise discriminated against contrary to 
the policy in 3.903 may file a complaint with the Inspector General of 
the agency that awarded the contract.
    (b) The complaint shall be signed and shall contain--
    (1) The name of the contractor;
    (2) The contract number, if known; if not, a description reasonably 
sufficient to identify the contract(s) involved;
    (3) The substantial violation of law giving rise to the disclosure;
    (4) The nature of the disclosure giving rise to the discriminatory 
act; and
    (5) The specific nature and date of the reprisal.

[[Page 49]]



3.905  Procedures for investigating complaints.

    (a) Upon receipt of a complaint, the Inspector General shall conduct 
an initial inquiry. If the Inspector General determines that the 
complaint is frivolous or for other reasons does not merit further 
investigation, the Inspector General shall advise the complainant that 
no further action on the complaint will be taken.
    (b) If the Inspector General determines that the complaint merits 
further investigation, the Inspector General shall notify the 
complainant, contractor, and head of the contracting activity. The 
Inspector General shall conduct an investigation and provide a written 
report of findings to the head of the agency or designee.
    (c) Upon completion of the investigation, the head of the agency or 
designee shall ensure that the Inspector General provides the report of 
findings to--
    (1) The complainant and any person acting on the complainant's 
behalf;
    (2) The contractor alleged to have committed the violation; and
    (3) The head of the contracting activity.
    (d) The complainant and contractor shall be afforded the opportunity 
to submit a written response to the report of findings within 30 days to 
the head of the agency or designee. Extensions of time to file a written 
response may be granted by the head of the agency or designee.
    (e) At any time, the head of the agency or designee may request 
additional investigative work be done on the complaint.



3.906  Remedies.

    (a) If the head of the agency or designee determines that a 
contractor has subjected one of its employees to a reprisal for 
providing information to a Member of Congress, or an authorized official 
of an agency or of the Department of Justice, the head of the agency or 
designee may take one or more of the following actions:
    (1) Order the contractor to take affirmative action to abate the 
reprisal.
    (2) Order the contractor to reinstate the person to the position 
that the person held before the reprisal, together with the compensation 
(including back pay), employment benefits, and other terms and 
conditions of employment that would apply to the person in that position 
if the reprisal had not been taken.
    (3) Order the contractor to pay the complainant an amount equal to 
the aggregate amount of all costs and expenses (including attorneys' 
fees and expert witnesses' fees) that were reasonably incurred by the 
complainant for, or in connection with, bringing the complaint regarding 
the reprisal.
    (b) Whenever a contractor fails to comply with an order, the head of 
the agency or designee shall request the Department of Justice to file 
an action for enforcement of such order in the United States district 
court for a district in which the reprisal was found to have occurred. 
In any action brought under this section, the court may grant 
appropriate relief, including injunctive relief and compensatory and 
exemplary damages.
    (c) Any person adversely affected or aggrieved by an order issued 
under this section may obtain review of the order's conformance with the 
law, and this subpart, in the United States Court of Appeals for a 
circuit in which the reprisal is alleged in the order to have occurred. 
No petition seeking such review may be filed more than 60 days after 
issuance of the order by the head of the agency or designee. Review 
shall conform to Chapter 7 of Title 5, United States Code.



PART 4--ADMINISTRATIVE MATTERS--Table of Contents




Sec.
4.000  Scope of part.

                     Subpart 4.1--Contract Execution

4.101  Contracting officer's signature.
4.102  Contractor's signature.
4.103  Contract clause.

                   Subpart 4.2--Contract Distribution

4.201  Procedures.
4.202  Agency distribution requirements.
4.203  Taxpayer identification information.

                      Subpart 4.3--Paper Documents

4.300  Scope of subpart.
4.301  Authority.
4.302  Definition.

[[Page 50]]

4.303  Policy.
4.304  Contract clause.

    Subpart 4.4--Safeguarding Classified Information Within Industry

4.401  Definitions.
4.402  General.
4.403  Responsibilities of contracting officers.
4.404  Contract clause.

             Subpart 4.5--Electronic Commerce in Contracting

4.500  Scope of subpart.
4.501  Definitions.
4.502  Policy.

                     Subpart 4.6--Contract Reporting

4.600  Scope of subpart.
4.601  Record requirements.
4.602  Federal Procurement Data System.
4.603  Solicitation provisions.

                Subpart 4.7--Contractor Records Retention

4.700  Scope of subpart.
4.701  Purpose.
4.702  Applicability.
4.703  Policy.
4.704  Calculation of retention periods.
4.705  Specific retention periods.
4.705-1  Financial and cost accounting records.
4.705-2  Pay administration records.
4.705-3  Acquisition and supply records.
4.706  [Reserved]

                 Subpart 4.8--Government Contract Files

4.800  Scope of subpart.
4.801  General.
4.802  Contract files.
4.803  Contents of contract files.
4.804  Closeout of contract files.
4.804-1  Closeout by the office administering the contract.
4.804-2  Closeout of the contracting office files if another office 
          administers the contract.
4.804-3  Closeout of paying office contract files.
4.804-4  Physically completed contracts.
4.804-5  Detailed procedures for closing out contract files.
4.805  Storage, handling, and disposal of contract files.

         Subpart 4.9--Taxpayer Identification Number Information

4.900  Scope of subpart.
4.901  Definitions.
4.902  General.
4.903  Reporting contract information to the IRS.
4.904  Reporting payment information to the IRS.
4.905  Solicitation provision.

                  Subpart 4.10--Administrative Matters

4.1001  Policy.

    Authority: 40 U.S.C. 486(c); 10 U.S.C. Chapter 137; and 42 U.S.C. 
2473(c).

    Source: 48 FR 42113, Sept. 19, 1983, unless otherwise noted.



4.000  Scope of part.

    This part prescribes policies and procedures relating to the 
administrative aspects of contract execution, contractor-submitted paper 
documents, distribution, reporting, retention, and files.

[60 FR 28493, May 31, 1995]



                     Subpart 4.1--Contract Execution



4.101  Contracting officer's signature.

    Only contracting officers shall sign contracts on behalf of the 
United States. The contracting officer's name and official title shall 
be typed, stamped, or printed on the contract. The contracting officer 
normally signs the contract after it has been signed by the contractor. 
The contracting officer shall ensure that the signer(s) have authority 
to bind the contractor (see specific requirements in 4.102 of this 
subpart).

[60 FR 34736, July 3, 1995]



4.102  Contractor's signature.

    (a) Individuals. A contract with an individual shall be signed by 
that individual. A contract with an individual doing business as a firm 
shall be signed by that individual, and the signature shall be followed 
by the individual's typed, stamped, or printed name and the words ``, an 
individual doing business as .......................'' [insert name of 
firm].
    (b) Partnerships. A contract with a partnership shall be signed in 
the partnership name. Before signing for the Government, the contracting 
officer shall obtain a list of all partners and ensure that the 
individual(s) signing for the partnership have authority to bind the 
partnership.

[[Page 51]]

    (c) Corporations. A contract with a corporation shall be signed in 
the corporate name, followed by the word ``by'' and the signature and 
title of the person authorized to sign. The contracting officer shall 
ensure that the person signing for the corporation has authority to bind 
the corporation.
    (d) Joint venturers. A contract with joint venturers may involve any 
combination of individuals, partnerships, or corporations. The contract 
shall be signed by each participant in the joint venture in the manner 
prescribed in paragraphs (a) through (c) above for each type of 
participant. When a corporation is participating, the contracting 
officer shall verify that the corporation is authorized to participate 
in the joint venture.
    (e) Agents. When an agent is to sign the contract, other than as 
stated in paragraphs (a) through (d) above, the agent's authorization to 
bind the principal must be established by evidence satisfactory to the 
contracting officer.

[48 FR 42113, Sept. 19, 1983, as amended at 62 FR 235, Jan. 2, 1997]



4.103  Contract clause.

    The contracting officer shall insert the clause at 52.204-1, 
Approval of Contract, in solicitations and contracts if required by 
agency procedures.

[49 FR 26741, June 29, 1984]



                   Subpart 4.2--Contract Distribution



4.201  Procedures.

    Contracting officers shall distribute copies of contracts or 
modifications within 10 working days after execution by all parties. As 
a minimum, the contracting officer shall--
    (a) Distribute simultaneously one signed copy or reproduction of the 
signed contract to the contractor and the paying office;
    (b) When a contract is assigned to another office for contract 
administration (see subpart 42.2), provide to that office--
    (1) One copy or reproduction of the signed contract and of each 
modification; and
    (2) A copy of the contract distribution list, showing those offices 
that should receive copies of modifications, and any changes to the list 
as they occur;
    (c) Distribute one copy to each accounting and finance office 
(funding office) whose funds are cited in the contract;
    (d) When the contract is not assigned for administration but 
contains a Cost Accounting Standards clause, provide one copy of the 
contract to the cognizant administrative contracting officer and mark 
the copy ``FOR COST ACCOUNTING STANDARDS ADMINISTRATION ONLY'' (see 
30.601(b));
    (e) Provide one copy of each contract or modification that requires 
audit service to the appropriate field audit office listed in the 
``Directory of Federal Contract Audit Offices'' (copies of this 
directory can be ordered from the U.S. Government Printing Office, 
Superintendent of Documents, Washington, DC 20402, referencing stock 
numbers 008-007-03189-9 and 008-007-03190-2 for Volumes I and II, 
respectively); and
    (f) Provide copies of contracts and modifications to those 
organizations required to perform contract administration support 
functions (e.g., when manufacturing is performed at multiple sites, the 
contract administration office cognizant of each location).

[48 FR 42113, Sept. 19, 1983, as amended at 60 FR 34736, July 3, 1995]



4.202  Agency distribution requirements.

    Agencies shall limit additional distribution requirements to the 
minimum necessary for proper performance of essential functions. When 
contracts are assigned for administration to a contract administration 
office located in an agency different from that of the contracting 
office (see part 42), the two agencies shall agree on any necessary 
distribution in addition to that prescribed in 4.201 above.



4.203  Taxpayer identification information.

    (a) If the contractor has furnished a Taxpayer Identification Number 
(TIN)

[[Page 52]]

when completing the solicitation provision at 52.204-3, Taxpayer 
Identification, or paragraph (b) of the solicitation provision at 
52.212-3, Offeror Representations and Certifications--Commercial Items, 
the contracting officer shall, unless otherwise provided in agency 
procedures, attach a copy of the completed solicitation provision as the 
last page of the copy of the contract sent to the payment office.
    (b) If the TIN or type of organization is derived from a source 
other than the provision at 52.204-3 or 52.212-3(b), the contracting 
officer shall annotate the last page of the contract or order forwarded 
to the payment office to state the contractor's TIN and type of 
organization, unless this information is otherwise provided to the 
payment office in accordance with agency procedures.
    (c) If the contractor provides its TIN or type of organization to 
the contracting officer after award, the contracting officer shall 
forward the information to the payment office within 7 days of its 
receipt.
    (d) Federal Supply Schedule contracts. Each contracting officer that 
places an order under a Federal Supply Schedule contract (see Subpart 
8.4) shall provide the TIN and type of organization information to the 
payment office in accordance with paragraph (b) of this section.
    (e) Basic ordering agreements and indefinite-delivery contracts 
(other than Federal Supply Schedule contracts).
    (1) Each contracting officer that issues a basic ordering agreement 
or indefinite-delivery contract (other than a Federal Supply Schedule 
contract) shall provide to contracting officers placing orders under the 
agreement or contract--
    (i) A copy of the agreement or contract with a copy of the completed 
solicitation provision at 52.204-3 or 52.212-3(b) as the last page of 
the agreement or contract; or
    (ii) The contractor's TIN and type of organization information.
    (2) Each contracting officer that places an order under a basic 
ordering agreement or indefinite-delivery contract (other than a Federal 
Supply Schedule contract) shall provide the TIN and type of organization 
information to the payment office in accordance with paragraph (a) or 
(b) of this section.

[63 FR 58588, Oct. 30, 1998]



                      Subpart 4.3--Paper Documents

    Source: 60 FR 28493, May 31, 1995, unless otherwise noted.



4.300  Scope of subpart.

    This subpart provides policies and procedures on contractor-
submitted paper documents.



4.301  Authority.

    The authority for this subpart is established in Executive Order 
12873, Sections 402(d) and 504, October 20, 1993, as amended by 
Executive Order 12995, March 25, 1996.

[60 FR 28493, May 31, 1995, as amended at 61 FR 31616, June 20, 1996]



4.302  Definition.

    Printing/copying double-sided, as used in this subpart, means 
printing or reproducing a document so that information is on both sides 
of a sheet of paper.



4.303  Policy.

    It is the policy of the Government that a contractor submitting 
paper documents to the Government relating to an acquisition should, if 
possible, submit those documents printed/copied double-sided on recycled 
paper. If the contractor can only print/copy double-sided or use 
recycled paper, the contractor should accomplish whichever one the 
contractor has the ability to achieve.



4.304  Contract clause.

    The contracting officer shall insert the clause at 52.204-4, 
Printing/Copying Double-Sided on Recycled Paper, in solicitations and 
contracts greater than the simplified acquisition threshold.

[60 FR 28494, May 31, 1995, as amended at 60 FR 34744, July 3, 1995]

[[Page 53]]



    Subpart 4.4--Safeguarding Classified Information Within Industry



4.401  Definitions.

    Classified acquisition means an acquisition that consists of one or 
more contracts in which offerors would be required to have access to 
classified information (Confidential, Secret, or Top Secret) to properly 
submit an offer or quotation, to understand the performance requirements 
of a classified contract under the acquisition, or to perform the 
contract.
    Classified contract means any contract that requires, or will 
require, access to classified information (Confidential, Secret, or Top 
Secret) by the contractor or its employees in the performance of the 
contract. A contract may be a classified contract even though the 
contract document is not classified.
    Classified information means any information or material, regardless 
of its physical form or characteristics, that is owned by, produced by 
or for, or under the control of the United States Government, and 
determined pursuant to Executive Order 12356, April 2, 1982 (47 FR 
14874, April 6, 1982) or prior orders to require protection against 
unauthorized disclosure, and is so designated.

[48 FR 42113, Sept. 19, 1983, as amended at 51 FR 2649, Jan. 17, 1986]



4.402  General.

    (a) Executive Order 12829, January 6, 1993 (58 FR 3479, January 8, 
1993), entitled ``National Industrial Security Program'' (NISP), 
establishes a program to safeguard Federal Government classified 
information that is released to contractors, licensees, and grantees of 
the United States Government. Executive Order 12829 amends Executive 
Order 10865, February 20, 1960 (25 FR 1583, February 25, 1960), entitled 
``Safeguarding Classified Information Within Industry,'' as amended by 
Executive Order 10909, January 17, 1961 (26 FR 508, January 20, 1961).
    (b) The National Industrial Security Program Operating Manual 
(NISPOM) incorporates the requirements of these Executive Orders. The 
Secretary of Defense, in consultation with all affected agencies and 
with the concurrence of the Secretary of Energy, the Chairman of the 
Nuclear Regulatory Commission, and the Director of Central Intelligence, 
is responsible for issuance and maintenance of this Manual. The 
following DOD publications implement the program:
    (1) National Industrial Security Program Operating Manual (NISPOM) 
(DOD 5220.22-M).
    (2) Industrial Security Regulation (ISR) (DOD 5220.22-R).
    (c) Procedures for the protection of information relating to foreign 
classified contracts awarded to U.S. industry, and instructions for the 
protection of U.S. information relating to classified contracts awarded 
to foreign firms, are prescribed in Chapter 10 of the NISPOM.
    (d) Part 27, Patents, Data, and Copyrights, contains policy and 
procedures for safeguarding classified information in patent 
applications and patents.

[48 FR 42113, Sept. 19, 1983, as amended at 61 FR 31617, June 20, 1996]



4.403  Responsibilities of contracting officers.

    (a) Presolicitation phase. Contracting officers shall review all 
proposed solicitations to determine whether access to classified 
information may be required by offerors, or by a contractor during 
contract performance.
    (1) If access to classified information of another agency may be 
required, the contracting officer shall--
    (i) Determine if the agency is covered by the NISP; and
    (ii) Follow that agency's procedures for determining the security 
clearances of firms to be solicited.
    (2) If the classified information required is from the contracting 
officer's agency, the contracting officer shall follow agency 
procedures.
    (b) Solicitation phase. Contracting officers shall--
    (1) Ensure that the classified acquisition is conducted as required 
by the NISP or agency procedures, as appropriate; and
    (2) Include (i) an appropriate Security Requirements clause in the 
solicitation (see 4.404), and (ii) as appropriate, in solicitations and 
contracts

[[Page 54]]

when the contract may require access to classified information, a 
requirement for security safeguards in addition to those provided in the 
clause (52.204-2, Security Requirements).
    (c) Award phase. Contracting officers shall inform contractors and 
subcontractors of the security classifications and requirements assigned 
to the various documents, materials, tasks, subcontracts, and components 
of the classified contract as follows:
    (1) Agencies covered by the NISP shall use the Contract Security 
Classification Specification, DD Form 254. The contracting officer, or 
authorized representative, is the approving official for the form and 
shall ensure that it is prepared and distributed in accordance with the 
ISR.
    (2) Contracting officers in agencies not covered by the NISP shall 
follow agency procedures.

[48 FR 42113, Sept. 19, 1983, as amended at 61 FR 31617, June 20, 1996]



4.404  Contract clause.

    (a) The contracting officer shall insert the clause at 52.204-2, 
Security Requirements, in solicitations and contracts when the contract 
may require access to classified information, unless the conditions 
specified in paragraph (d) below apply.
    (b) If a cost contract (see 16.302) for research and development 
with an educational institution is contemplated, the contracting officer 
shall use the clause with its Alternate I.
    (c) If a construction or architect-engineer contract where employee 
identification is required for security reasons is contemplated, the 
contracting officer shall use the clause with its Alternate II.
    (d) If the contracting agency is not covered by the NISP and has 
prescribed a clause and alternates that are substantially the same as 
those at 52.204-2, the contracting officer shall use the agency-
prescribed clause as required by agency procedures.

[48 FR 42113, Sept. 19, 1983, as amended at 61 FR 31617, June 20, 1996]



             Subpart 4.5--Electronic Commerce in Contracting

    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 U.S.C. 
2473(c).

    Source: 63 FR 58592, Oct. 30, 1998, unless otherwise noted.



4.500   Scope of subpart.

    This subpart provides policy and procedures for the establishment 
and use of electronic commerce in Federal acquisition as required by 
Section 30 of the Office of Federal Procurement Policy (OFPP) Act (41 
U.S.C. 426).



4.501   Definitions.

    Electronic data interchange (EDI), as used in this subpart, means a 
technique for electronically transferring and storing formatted 
information between computers utilizing established and published 
formats and codes, as authorized by the applicable Federal Information 
Processing Standards.
    Single, Governmentwide point of entry, as used in this subpart, 
means the one point of entry to be designated by the Administrator of 
OFPP that will allow the private sector to electronically access 
procurement opportunities Governmentwide.



4.502   Policy.

    (a) The Federal Government shall use electronic commerce whenever 
practicable or cost-effective. The use of terms commonly associated with 
paper transactions (e.g., ``copy,'' ``document,'' ``page,'' ``printed,'' 
``sealed envelope,'' and ``stamped'') shall not be interpreted to 
restrict the use of electronic commerce. Contracting officers may 
supplement electronic transactions by using other media to meet the 
requirements of any contract action governed by the FAR (e.g., transmit 
hard copy of drawings).
    (b) Agencies may exercise broad discretion in selecting the hardware 
and software that will be used in conducting electronic commerce. 
However, as required by Section 30 of the OFPP Act (41 U.S.C. 426), the 
head of each agency, after consulting with the Administrator of OFPP, 
shall ensure that systems, technologies, procedures, and

[[Page 55]]

processes used by the agency to conduct electronic commerce--
    (1) Are implemented uniformly throughout the agency, to the maximum 
extent practicable;
    (2) Are implemented only after considering the full or partial use 
of existing infrastructures, (e.g., the Federal Acquisition Computer 
Network (FACNET));
    (3) Facilitate access to Government acquisition opportunities by 
small business concerns, small disadvantaged business concerns, and 
women-owned small business concerns;
    (4) Include a means of providing widespread public notice of 
acquisition opportunities through the single, Governmentwide point of 
entry and a means of responding to notices or solicitations 
electronically; and
    (5) Comply with nationally and internationally recognized standards 
that broaden interoperability and ease the electronic interchange of 
information, such as standards established by the National Institute of 
Standards and Technology.
    (c) Before using electronic commerce, the agency head shall ensure 
that the agency systems are capable of ensuring authentication and 
confidentiality commensurate with the risk and magnitude of the harm 
from loss, misuse, or unauthorized access to or modification of the 
information.



                     Subpart 4.6--Contract Reporting



4.600  Scope of subpart.

    This subpart prescribes uniform reporting requirements for the 
Federal Procurement Data System (FPDS).



4.601  Record requirements.

    (a) Each executive agency shall establish and maintain for a period 
of 5 years a computer file, by fiscal year, containing unclassified 
records of all procurements exceeding $25,000.
    (b) With respect to each procurement carried out using competitive 
procedures, agencies shall be able to access from the computer file, as 
a minimum, the following information:
    (1) The date of contract award.
    (2) Information identifying the source to whom the contract was 
awarded.
    (3) The property or services obtained by the Government under the 
procurement.
    (4) The total cost of the procurement.
    (5) Those procurements which result in the submission of a single 
bid or proposal so that they can be separately categorized and 
designated noncompetitive procurements using competitive procedures.
    (c) In addition to paragraph (b) of this section with respect to 
each procurement carried out using procedures other than competitive 
procedures, agencies shall be able to access from the computer file--
    (1) The reason under subpart 6.3 for the use of such procedures; and
    (2) The identity of the organization or activity which conducted the 
procurement.
    (d) In addition to the information described in paragraphs (b) and 
(c) of this section, for procurements in excess of $25,000, agencies 
shall be able to access information on the following from the computer 
file:
    (1) Awards to small disadvantaged businesses using either set-asides 
or full and open competition.
    (2) Awards to business concerns owned and controlled by women.
    (3) The number of offers received in response to a solicitation.
    (4) Task or delivery order contracts.
    (5) Contracts for the acquisition of commercial items.
    (e) This information shall be transmitted to the Federal Procurement 
Data System in accordance with agency procedures.

[50 FR 52429, Dec. 23, 1985, as amended at 52 FR 19802, May 27, 1987; 60 
FR 42653, Aug. 16, 1995]



4.602  Federal Procurement Data System.

    (a) The FPDS provides a comprehensive mechanism for assembling, 
organizing, and presenting contract placement data for the Federal 
Government. Federal agencies report data to the Federal Procurement Data 
Center (FPDC), which collects, processes, and disseminates official 
statistical data on Federal contracting. The data provide (1) a basis 
for recurring and special reports to the President, the Congress, the 
General Accounting Office,

[[Page 56]]

Federal executive agencies, and the general public; (2) a means of 
measuring and assessing the impact of Federal contracting on the 
Nation's economy and the extent to which small, small disadvantaged and 
women-owned small business concerns are sharing in Federal contracts; 
and (3) data for other policy and management control purposes.
    (b) The FPDS Reporting Manual provides a complete list of reporting 
and nonreporting agencies and organizations. This manual (available at 
no charge from the General Services Administration, Federal Procurement 
Data Center, 7th & D Streets SW., room 5652, Washington, DC 20407, 
telephone (202) 401-1529, FAX (202) 401-1546) provides the necessary 
instruction to the data collection point in each agency as to what data 
are required and how often to provide the data.
    (c) Data collection points in each agency report data on SF 279, 
Federal Procurement Data System (FPDS) Individual Contract Action 
Report, and SF 281, Federal Procurement Data System (FPDS) Summary 
Contract Action Report ($25,000 or Less), or computer-generated 
equivalent. Although the SF 279 and SF 281 are not mandatory for use by 
the agencies, they do provide the mandatory format for submitting data 
to the FPDS.
    (d) The contracting officer shall report a Contractor Identification 
Number for each successful offeror. A Data Universal Numbering System 
(DUNS) number, which is a nine-digit number assigned by Dun and 
Bradstreet Information Services to an establishment, is the Contractor 
Identification Number for Federal contractors. The DUNS number reported 
must identify the successful offeror's name and address exactly as 
stated in the offer and resultant contract. The contracting officer 
shall ask the offeror to provide its DUNS number by using the provision 
prescribed at 4.603(a). If the successful offeror does not provide its 
number, the contracting officer shall contact the offeror and obtain the 
DUNS number.

[48 FR 42113, Sept. 19. 1983. Redesignated at 50 FR 52429, Dec. 23, 
1985, and amended at 54 FR 29280, July 11, 1989; 53 FR 43388, Oct. 26, 
1988; 55 FR 52788, Dec. 21, 1990; 56 FR 41744, Aug. 22, 1991; 57 FR 
60572, Dec. 21, 1992; 60 FR 48259, Sept. 18, 1995; 61 FR 67412, Dec. 20, 
1996; 62 FR 40236, July 25, 1997]



4.603  Solicitation provisions.

    (a)(1) The contracting officer shall insert the provision at 52.204-
6, Data Universal Numbering System (DUNS) Number, in solicitations that 
are expected to result in a requirement for the generation of an SF 279, 
Federal Procurement Data System (FPDS)--Individual Contract Action 
Report (see 4.602(c)), or a similar agency form.
    (2) For offerors located outside the United States, the contracting 
officer may modify paragraph (c) of the provision at 52.204-6 to provide 
the correct phone numbers for the Dun and Bradstreet offices in the 
areas from which offerors are anticipated to respond.
    (b) The contracting officer shall insert the provision at 52.204-5, 
Women-Owned Business (Other Than Small Business), in all solicitations 
that are not set aside for small business concerns and that exceed the 
simplified acquisition threshold, if the contract is to be performed 
inside the United States, its territories or possessions, Puerto Rico, 
the Trust Territory of the Pacific Islands, or the District of Columbia.

[61 FR 67412, Dec. 20, 1996, as amended at 63 FR 9050, Feb. 23, 1998; 64 
FR 10532, Mar. 4, 1999]



                Subpart 4.7--Contractor Records Retention



4.700  Scope of subpart.

    This subpart provides policies and procedures for retention of 
records by contractors to meet the records review requirements of the 
Government. In this subpart, the terms ``contracts'' and ``contractors'' 
include ``subcontracts'' and ``subcontractors.''

[[Page 57]]



4.701  Purpose.

    The purpose of this subpart is to generally describe records 
retention requirements and to allow reductions in the retention period 
for specific classes of records under prescribed circumstances.



4.702  Applicability.

    (a) This subpart applies to records generated under contracts that 
contain one of the following clauses:
    (1) Audit and Records--Sealed Bidding (52.214-26).
    (2) Audit and Records--Negotiation (52.215-2).
    (b) This subpart is not mandatory on Department of Energy contracts 
for which the Comptroller General allows alternative records retention 
periods. Apart from this exception, this subpart applies to record 
retention periods under contracts that are subject to Chapter 137, Title 
10, U.S.C., and the Federal Property and Administrative Services Act of 
1949, as amended, 40 U.S.C. 471 et seq.

[48 FR 42113, Sept. 19, 1983, as amended at 50 FR 1727, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985; 60 FR 42650, Aug. 16, 1995; 60 FR 48211, 
Sept. 18, 1995; 62 FR 258, Jan. 2, 1997]



4.703  Policy.

    (a) Except as stated in 4.703(b), contractors shall make available 
records, which includes books, documents, accounting procedures and 
practices, and other data, regardless of type and regardless of whether 
such items are in written form, in the form of computer data, or in any 
other form, and other supporting evidence to satisfy contract 
negotiation, administration, and audit requirements of the contracting 
agencies and the Comptroller General for (1) 3 years after final payment 
or, for certain records, (2) the period specified in 4.705 through 
4.705-3, whichever of these periods expires first.
    (b) Contractors shall make available the foregoing records and 
supporting evidence for a longer period of time than is required in 
4.703(a) if--
    (1) A retention period longer than that cited in 4.703(a) is 
specified in any contract clause; or
    (2) The contractor, for its own purposes, retains the foregoing 
records and supporting evidence for a longer period. Under this 
circumstance, the retention period shall be the period of the 
contractor's retention or 3 years after final payment, whichever period 
expires first.
    (3) The contractor does not meet the original due date for 
submission of final indirect cost rate proposals specified in 
subparagraph (d)(2) of the clause at 52.216-7, Allowable Cost and 
Payment, and subparagraph (c)(2) of the clause at 52.216-13, Allowable 
Cost and Payment--Facilities. Under these circumstances, the retention 
periods in 4.705 shall be automatically extended one day for each day 
the proposal is not submitted after the original due date.
    (c) Nothing in this section shall be construed to preclude a 
contractor from duplicating or storing original records in electronic 
form unless they contain significant information not shown on the record 
copy. Original records need not be maintained or produced in an audit if 
the contractor or subcontractor provides photographic or electronic 
images of the original records and meets the following requirements:
    (1) The contractor or subcontractor has established procedures to 
ensure that the imaging process preserves accurate images of the 
original records, including signatures and other written or graphic 
images, and that the imaging process is reliable and secure so as to 
maintain the integrity of the records.
    (2) The contractor or subcontractor maintains an effective indexing 
system to permit timely and convenient access to the imaged records.
    (3) The contractor or subcontractor retains the original records for 
a minimum of one year after imaging to permit periodic validation of the 
imaging systems.
    (d) If the information described in paragraph (a) of this section is 
maintained on a computer, contractors shall retain the computer data on 
a reliable medium for the time periods prescribed. Contractors may 
transfer computer data in machine readable form from one reliable 
computer medium to another. Contractors' computer data retention and 
transfer procedures shall

[[Page 58]]

maintain the integrity, reliability, and security of the original 
computer data. Contractors shall also retain an audit trail describing 
the data transfer. For the record retention time periods prescribed, 
contractors shall not destroy, discard, delete, or write over such 
computer data.

[48 FR 42113, Sept. 19, 1983, as amended at 51 FR 2649, Jan. 17, 1986; 
53 FR 43388, Oct. 26, 1988; 54 FR 48982, Nov. 28, 1989; 59 FR 67015, 
Dec. 28, 1994; 60 FR 42650, Aug. 16, 1995; 62 FR 64915, Dec. 9, 1997]



4.704  Calculation of retention periods.

    (a) The retention periods in 4.705 are calculated from the end of 
the contractor's fiscal year in which an entry is made charging or 
allocating a cost to a Government contract or subcontract. If a specific 
record contains a series of entries, the retention period is calculated 
from the end of the contractor's fiscal year in which the final entry is 
made. The contractor should cut off the records in annual blocks and 
retain them for block disposal under the prescribed retention periods.
    (b) When records generated during a prior contract are relied upon 
by a contractor for cost or pricing data in negotiating a succeeding 
contract, the prescribed periods shall run from the date of the 
succeeding contract.
    (c) If two or more of the record categories described in 4.705 are 
interfiled and screening for disposal is not practical, the contractor 
shall retain the entire record series for the longest period prescribed 
for any category of records.



4.705  Specific retention periods.

    The contractor shall retain the records identified in 4.705-1 
through 4.705-3 for the periods designated, provided retention is 
required under 4.702. Records are identified in this subpart in terms of 
their purpose or use and not by specific name or form number. Although 
the descriptive identifications may not conform to normal contractor 
usage or filing practices, these identifications apply to all contractor 
records that come within the description.



4.705-1  Financial and cost accounting records.

    (a) Accounts receivable invoices, adjustments to the accounts, 
invoice registers, carrier freight bills, shipping orders, and other 
documents which detail the material or services billed on the related 
invoices: Retain 4 years.
    (b) Material, work order, or service order files, consisting of 
purchase requisitions or purchase orders for material or services, or 
orders for transfer of material or supplies: Retain 4 years.
    (c) Cash advance recapitulations, prepared as posting entries to 
accounts receivable ledgers for amounts of expense vouchers prepared for 
employees' travel and related expenses: Retain 4 years.
    (d) Paid, canceled, and voided checks, other than those issued for 
the payment of salary and wages: Retain 4 years.
    (e) Accounts payable records to support disbursements of funds for 
materials, equipment, supplies, and services, containing originals or 
copies of the following and related documents: remittance advices and 
statements, vendors' invoices, invoice audits and distribution slips, 
receiving and inspection reports or comparable certifications of receipt 
and inspection of material or services, and debit and credit memoranda: 
Retain 4 years.
    (f) Labor cost distribution cards or equivalent documents: Retain 2 
years.
    (g) Petty cash records showing description of expenditures, to whom 
paid, name of person authorizing payment, and date, including copies of 
vouchers and other supporting documents: Retain 2 years.



4.705-2  Pay administration records.

    (a) Payroll sheets, registers, or their equivalent, of salaries and 
wages paid to individual employees for each payroll period; change 
slips; and tax withholding statements: Retain 4 years.
    (b) Clock cards or other time and attendance cards: Retain 2 years.
    (c) Paid checks, receipts for wages paid in cash, or other evidence 
of payments for services rendered by employees: Retain 2 years.

[[Page 59]]



4.705-3  Acquisition and supply records.

    (a) Store requisitions for materials, supplies, equipment, and 
services: Retain 2 years.
    (b) Work orders for maintenance and other services: Retain 4 years.
    (c) Equipment records, consisting of equipment usage and status 
reports and equipment repair orders: Retain 4 years.
    (d) Expendable property records, reflecting accountability for the 
receipt and use of material in the performance of a contract: Retain 4 
years.
    (e) Receiving and inspection report records, consisting of reports 
reflecting receipt and inspection of supplies, equipment, and materials: 
Retain 4 years.
    (f) Purchase order files for supplies, equipment, material, or 
services used in the performance of a contract; supporting documentation 
and backup files including, but not limited to, invoices, and memoranda; 
e.g., memoranda of negotiations showing the principal elements of 
subcontract price negotiations (see 52.244-2): Retain 4 years.
    (g) Production records of quality control, reliability, and 
inspection: Retain 4 years.

[48 FR 42113, Sept. 19, 1983, as amended at 63 FR 34060, June 22, 1998]



4.706  [Reserved]



                 Subpart 4.8--Government Contract Files



4.800  Scope of subpart.

    This subpart prescribes requirements for establishing, maintaining, 
and disposing of contract files for all contractual actions. The 
application of this subpart to contracts awarded using the simplified 
acquisition procedures covered by part 13 is optional. (See also 
documentation requirements in 13.106-3(b).)

[60 FR 34746, July 3, 1995, as amended at 61 FR 39191, July 26, 1996; 62 
FR 64917, Dec. 9, 1997]



4.801  General.

    (a) The head of each office performing contracting, contract 
administration, or paying functions shall establish files containing the 
records of all contractual actions.
    (b) The documentation in the files (see 4.803) shall be sufficient 
to constitute a complete history of the transaction for the purpose of--
    (1) Providing a complete background as a basis for informed 
decisions at each step in the acquisition process;
    (2) Supporting actions taken;
    (3) Providing information for reviews and investigations; and
    (4) Furnishing essential facts in the event of litigation or 
congressional inquiries.
    (c) The files to be established include--
    (1) A file for cancelled solicitations;
    (2) A file for each contract; and
    (3) A file such as a contractor general file, containing documents 
relating--for example--to (i) no specific contract, (ii) more than one 
contract, or (iii) the contractor in a general way (e.g., contractor's 
management systems, past performance, or capabilities).



4.802  Contract files.

    (a) A contract file should generally consist of--
    (1) The contracting office contract file, which shall document the 
basis for the acquisition and the award, the assignment of contract 
administration (including payment responsibilities), and any subsequent 
actions taken by the contracting office;
    (2) The contract administration office contract file, which shall 
document actions reflecting the basis for and the performance of 
contract administration responsibilities; and
    (3) The paying office contract file, which shall document actions 
prerequisite to, substantiating, and reflecting contract payments.
    (b) Normally, each file should be kept separately; however, if 
appropriate, any or all of the files may be combined; e.g., if all 
functions or any combination of the functions are performed by the same 
office.
    (c) Files shall be maintained at organizational levels that shall 
ensure--
    (1) Effective documentation of contract actions;
    (2) Ready accessibility to principal users;

[[Page 60]]

    (3) Minimal establishment of duplicate and working files;
    (4) The safeguarding of classified documents; and
    (5) Conformance with agency regulations for file location and 
maintenance.
    (d) If the contract files or file segments are decentralized (e.g., 
by type or function) to various organizational elements or to other 
outside offices, responsibility for their maintenance shall be assigned. 
A central control and, if needed, a locator system should be established 
to ensure the ability to locate promptly any contract files.
    (e) Contents of contract files that are contractor bid or proposal 
information or source selection information as defined in 3.104-3 shall 
be protected from disclosure to unauthorized persons (see 3.104-5).
    (f) Agencies may retain contract files in any medium (paper, 
electronic, microfilm, etc.) or any combination of media, as long as the 
requirements of this subpart are satisfied.

[48 FR 42113, Sept. 19, 1983, as amended at 54 FR 20496, May 11, 1989; 
55 FR 36794, Sept. 6, 1990; 59 FR 67016, Dec. 28, 1994; 62 FR 232, Jan. 
2, 1997]



4.803  Contents of contract files.

    The following are examples of the records normally contained, if 
applicable, in contract files:
    (a) Contracting office contract file. (1) Purchase request, 
acquisition planning information, and other presolicitation documents.
    (2) Justifications and approvals, determinations and findings, and 
associated documents.
    (3) Evidence of availability of funds.
    (4) Synopsis of proposed acquisition as published in the Commerce 
Business Daily or reference thereto.
    (5) The list of sources solicited, and a list of any firms or 
persons whose requests for copies of the solicitation were denied, 
together with the reasons for denial.
    (6) Set-aside decision.
    (7) Government estimate of contract price.
    (8) A copy of the solicitation and all amendments thereto.
    (9) Security requirements and evidence of required clearances.
    (10) A copy of each offer or quotation, the related abstract, and 
records of determinations concerning late offers or quotations. 
Unsuccessful offers or quotations may be maintained separately, if 
cross-referenced to the contract file. The only portions of the 
unsuccessful offer or quotation that need be retained are--
    (i) Completed solicitation sections A, B, and K;
    (ii) Technical and management proposals;
    (iii) Cost/price proposals;
    (iv) Any other pages of the solicitation that the offeror or quoter 
has altered or annotated.
    (11) Contractor's certifications and representations.
    (12) Preaward survey reports or reference to previous preaward 
survey reports relied upon.
    (13) Source selection documentation.
    (14) Contracting officer's determination of the contractor's 
responsibility.
    (15) Small Business Administration Certificate of Competency.
    (16) Records of contractor's compliance with labor policies 
including equal employment opportunity policies.
    (17) Cost or pricing data and Certificates of Current Cost or 
Pricing Data or a required justification for waiver, or information 
other than cost or pricing data.
    (18) Packaging and transportation data.
    (19) Cost or price analysis.
    (20) Audit reports or reasons for waiver.
    (21) Record of negotiation.
    (22) Justification for type of contract.
    (23) Authority for deviations from this regulation, statutory 
requirements, or other restrictions.
    (24) Required approvals of award and evidence of legal review.
    (25) Notice of award.
    (26) The original of (i) the signed contract or award, (ii) all 
contract modifications, and (iii) documents supporting modifications 
executed by the contracting office.
    (27) Synopsis of award or reference thereto.
    (28) Notice to unsuccessful quoters or offerors and record of any 
debriefing.

[[Page 61]]

    (29) Acquisition management reports (see subpart 4.6).
    (30) Bid, performance, payment, or other bond documents, or a 
reference thereto, and notices to sureties.
    (31) Report of postaward conference.
    (32) Notice to proceed, stop orders, and any overtime premium 
approvals granted at the time of award.
    (33) Documents requesting and authorizing modification in the normal 
assignment of contract administration functions and responsibility.
    (34) Approvals or disapprovals of requests for waivers or deviations 
from contract requirements.
    (35) Rejected engineering change proposals. These proposals may be 
filed separately for early disposal (see 4.805(h)).
    (36) Royalty, invention, and copyright reports (including invention 
disclosures) or reference thereto.
    (37) Contract completion documents.
    (38) Documentation regarding termination actions for which the 
contracting office is responsible.
    (39) Cross-references to pertinent documents that are filed 
elsewhere.
    (40) Any additional documents on which action was taken or that 
reflect actions by the contracting office pertinent to the contract.
    (41) A current chronological list identifying the awarding and 
successor contracting officers, with inclusive dates of responsibility.
    (b) Contract administration office contract file. (1) Copy of the 
contract and all modifications, together with official record copies of 
supporting documents executed by the contract administration office.
    (2) Any document modifying the normal assignment of contract 
administration functions and responsibility.
    (3) Security requirements.
    (4) Cost or pricing data, Certificates of Current Cost or Pricing 
Data, or information other than cost or pricing data; cost or price 
analysis; and other documentation supporting contractual actions 
executed by the contract administration office.
    (5) Preaward survey information.
    (6) Purchasing system information.
    (7) Consent to subcontract or purchase.
    (8) Performance and payment bonds and surety information.
    (9) Postaward conference records.
    (10) Orders issued under the contract.
    (11) Notice to proceed and stop orders.
    (12) Insurance policies or certificates of insurance or references 
to them.
    (13) Documents supporting advance or progress payments.
    (14) Progressing, expediting, and production surveillance records.
    (15) Quality assurance records.
    (16) Property administration records.
    (17) Documentation regarding termination actions for which the 
contract administration office is responsible.
    (18) Cross reference to other pertinent documents that are filed 
elsewhere.
    (19) Any additional documents on which action was taken or that 
reflect actions by the contract administration office pertinent to the 
contract.
    (20) Contract completion documents.
    (c) Paying office contract file. (1) Copy of the contract and any 
modifications.
    (2) Bills, invoices, vouchers, and supporting documents.
    (3) Record of payments or receipts.
    (4) Other pertinent documents.

[48 FR 42113, Sept. 19, 1983, as amended at 50 FR 1727, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985; 54 FR 5054, Jan. 31, 1989; 55 FR 36794, 
Sept. 6, 1990; 60 FR 48211, Sept. 18, 1995; 61 FR 39188, July 26, 1996; 
61 FR 67430, Dec. 20, 1996; 62 FR 232, Jan. 2, 1997; 63 FR 9052, Feb. 
23, 1998]



4.804  Closeout of contract files.



4.804-1  Closeout by the office administering the contract.

    (a) Except as provided in paragraph (c) below, time standards for 
closing out contract files are as follows:
    (1) Files for contracts using simplified acquisition procedures 
should be considered closed when the contracting officer receives 
evidence of receipt of property and final payment, unless otherwise 
specified by agency regulations.
    (2) Files for firm-fixed-price contracts, other than those using 
simplified acquisition procedures, should be closed within 6 months 
after the date on which the contracting officer receives evidence of 
physical completion.

[[Page 62]]

    (3) Files for contracts requiring settlement of indirect cost rates 
should be closed within 36 months of the month in which the contracting 
officer receives evidence of physical completion.
    (4) Files for all other contracts should be closed within 20 months 
of the month in which the contracting officer receives evidence of 
physical completion.
    (b) When closing out the contract files at 4.804-1(a)(2), (3), and 
(4), the contracting officer shall use the closeout procedures at 4.804-
5. However, these closeout actions may be modified to reflect the extent 
of administration that has been performed. Quick closeout procedures 
(see 42.708) should be used, when appropriate, to reduce administrative 
costs and to enable deobligation of excess funds.
    (c) A contract file shall not be closed if (1) the contract is in 
litigation or under appeal, or (2) in the case of a termination, all 
termination actions have not been completed.

[48 FR 42113, Sept. 19, 1983, as amended at 54 FR 34752, Aug. 21, 1989; 
60 FR 34746, July 3, 1995]



4.804-2  Closeout of the contracting office files if another office administers the contract.

    (a) Contract files for contracts using simplified acquisition 
procedures should be considered closed when the contracting officer 
receives evidence of receipt of property and final payment, unless 
otherwise specified by agency regulation.
    (b) All other contract files shall be closed as soon as practicable 
after the contracting officer receives a contract completion statement 
from the contract administration office. The contracting officer shall 
ensure that all contractual actions required have been completed and 
shall prepare a statement to that effect. This statement is authority to 
close the contract file and shall be made a part of the official 
contract file.

[48 FR 42113, Sept. 19, 1983, as amended at 60 FR 34746, July 3, 1995]



4.804-3  Closeout of paying office contract files.

    The paying office shall close the contract file upon issuance of the 
final payment voucher.



4.804-4  Physically completed contracts.

    (a) Except as provided in paragraph (b) below, a contract is 
considered to be physically completed when--
    (1)(i) The contractor has completed the required deliveries and the 
Government has inspected and accepted the supplies;
    (ii) The contractor has performed all services and the Government 
has accepted these services; and
    (iii) All option provisions, if any, have expired; or
    (2) The Government has given the contractor a notice of complete 
contract termination.
    (b) Facilities contracts and rental, use, and storage agreements are 
considered to be physically completed when--
    (1) The Government has given the contractor a notice of complete 
contract termination; or
    (2) The contract period has expired.



4.804-5  Detailed procedures for closing out contract files.

    (a) The office administering the contract is responsible for 
initiating (automated or manual) administrative closeout of the contract 
after receiving evidence of its physical completion. At the outset of 
this process, an initial contract funds status review shall be 
accomplished and, where appropriate, excess funds identified to the 
contracting office. When complete, the administrative closeout 
procedures shall ensure that--
    (1) Disposition of classified material is completed;
    (2) Final patent report is cleared;
    (3) Final royalty report is cleared;
    (4) There is no outstanding value engineering change proposal;
    (5) Plant clearance report is received;
    (6) Property clearance is received;
    (7) All interim or disallowed costs are settled;
    (8) Price revision is completed;

[[Page 63]]

    (9) Subcontracts are settled by the prime contractor;
    (10) Prior year indirect cost rates are settled;
    (11) Termination docket is completed;
    (12) Contract audit is completed;
    (13) Contractor's closing statement is completed;
    (14) Contractor's final invoice has been submitted; and
    (15) Contract funds review is completed and deobligation of any 
excess funds is recommended.
    (b) When the actions in paragraph (a) above have been verified, the 
contracting officer administering the contract shall ensure that a 
contract completion statement, containing the following information, is 
prepared:
    (1) Contract administration office name and address (if different 
from the contracting office).
    (2) Contracting office name and address.
    (3) Contract number.
    (4) Last modification number.
    (5) Last call or order number.
    (6) Contractor name and address.
    (7) Dollar amount of excess funds, if any.
    (8) Voucher number and date, if final payment has been made.
    (9) Invoice number and date, if the final approved invoice has been 
forwarded to a disbursing office of another agency or activity and the 
status of the payment is unknown.
    (10) A statement that all required contract administration actions 
have been fully and satisfactorily accomplished.
    (11) Name and signature of the contracting officer.
    (12) Date.
    (c) When the statement is completed, the contracting officer shall 
ensure that--
    (1) The signed original is placed in the contracting office contract 
file (or forwarded to the contracting office for placement in the files 
if the contract administration office is different from the contracting 
office); and
    (2) A signed copy is placed in the appropriate contract 
administration file if administration is performed by a contract 
administration office.

[48 FR 42113, Sept. 19, 1983, as amended at 54 FR 34752, Aug. 21, 1989]



4.805  Storage, handling, and disposal of contract files.

    (a) Agencies shall prescribe procedures for the handling, storing, 
and disposing of contract files. Such procedures shall take into account 
documents held in other than paper format, such as microfilm and various 
electronic media. The original medium on which the document was created 
may be changed to facilitate storage as long as the requirements of part 
4, law and other regulations are satisfied. The process used to create 
and store records must record and reproduce the original document, 
including signatures and other written and graphic images completely, 
accurately, and clearly. Data transfer, storage, and retrieval 
procedures shall protect the original data from alteration. Unless law 
or other regulations require signed originals to be kept, they may be 
destroyed after the record copies on alternate media and copies 
reproduced from the record copy are verified to be accurate, complete 
and clear representations of the originals. Agency procedures for 
contract file disposal shall include provisions that the documents 
specified in paragraph (b) of this section shall not be destroyed before 
the times indicated. When original documents have been converted to 
alternate media for storage, the requirements in paragraph (b) of this 
section shall apply to the record copies on the alternate media instead 
of the original documents.
    (b) If administrative records are mixed with program records and 
cannot be economically segregated, the entire file should be kept for 
the period of time approved for the program records. Similarly, if 
documents, specified below, are part of a subject or case file which 
documents activities different from those specified below, they should 
be treated in the same manner as the files of which they are a part.

[[Page 64]]



------------------------------------------------------------------------
                Document                         Retention Period
------------------------------------------------------------------------
(1)  Records pertaining to exceptions or  Until final clearance or
 protests, claims for or against the       settlement, or until the
 United States, investigations, cases      retention period otherwise
 pending or in litigation, or similar      specified for the document in
 matters.                                  paragraphs (b)(2) through
                                           (13) below is completed,
                                           whichever is later.
(2)  Signed originals of construction     6 years and 3 months after
 contracts over $2,000 and all other       initial payment.
 contracts over $25,000.
(3)  Signed originals of justifications   6 years and 3 months after
 and approvals and determinations and      final payment.
 findings required by part 6, and copies
 of supporting documents and data.
(4)  Signed originals of construction     3 years after final payment.
 contracts of $2,000 or less and all
 other contracts of $25,000 or less.
(5) Unsuccessful offers or quotations     Retain 1 year after date of
 that pertain to contracts using           award or until final payment,
 simplified acquisition procedures.        whichever is later; but if
                                           the contracting officer
                                           determines that the files
                                           have future value to the
                                           Government, retain as long as
                                           advisable.
(6)  Contract status (progressing),       6 months after final payment.
 expediting, and production surveillance
 records.
(7)  Rejected engineering change          6 months after final payment.
 proposals.
(8)  Labor compliance records, including  3 years after final payment.
 equal employment opportunity records.
(9)  Documents pertaining generally to    Until superseded or obsolete.
 the contractor as described at
 4.801(c)(3).
(10) Records or documents other than      1 year after final payment.
 those in paragraphs 4.805(b) (1)-(9) of
 this section pertaining to contracts
 using simplified acquisition
 procedures.
(11) Records or documents other than      6 years and 3 months after
 those in paragraphs 4.805(b) (1)-(10)     final payment.
 of this section pertaining to contracts
 not using simplified acquisition
 procedures.
(12)  Files for cancelled solicitations   5 years after cancellation.
 (see 4.801(c)(1)).
(13) Solicited and unsolicited            ..............................
 unsuccessful offers and quotations
 above the simplified acquisition
 threshold:
  (i)  When filed separately from         Until contract completion
   contract case files.                    date.
  (ii)  When filed with contract case     6 years and 3 months after
   files.                                  final payment.
------------------------------------------------------------------------

    (c) Documents listed in paragraph (b)(1) under ``Document'' shall 
not be destroyed until final clearance or settlement.

[48 FR 42113, Sept. 19, 1983, as amended at 50 FR 1727, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985; 54 FR 5054, Jan. 31, 1989; 57 FR 60573, Dec. 
21, 1992; 59 FR 67016, Dec. 28, 1994; 60 FR 34746, July 3, 1995; 61 FR 
39190, July 26, 1996]



         Subpart 4.9--Taxpayer Identification Number Information

    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 U.S.C. 
2473(c).

    Source: 63 FR 58589, Oct. 30, 1998, unless otherwise noted.



4.900  Scope of subpart.

    This subpart provides policies and procedures for obtaining--
    (a) Taxpayer Identification Number (TIN) information that may be 
used for debt collection purposes; and
    (b) Contract information and payment information for submittal to 
the payment office for Internal Revenue Service (IRS) reporting 
purposes.



4.901  Definitions.

    Common parent, as used in this subpart, means that corporate entity 
that owns or controls an affiliated group of corporations that files its 
Federal income tax returns on a consolidated basis, and of which the 
offeror is a member.
    Taxpayer Identification Number (TIN), as used in this subpart, means 
the number required by the IRS to be used by the offeror in reporting 
income tax and other returns. The TIN may be either a Social Security 
Number or an Employer Identification Number.



4.902  General.

    (a) Debt collection. 31 U.S.C. 7701(c) requires each contractor 
doing business with a Government agency to furnish its TIN to that 
agency. 31 U.S.C. 3325(d) requires the Government to include, with each 
certified voucher prepared by the Government payment office and 
submitted to a disbursing official, the TIN of the contractor receiving 
payment under the voucher. The TIN may be used by the Government to 
collect and report on any delinquent amounts arising out of the 
contractor's relationship with the Government.

[[Page 65]]

    (b) Information reporting to the IRS. The TIN is also required for 
Government reporting of certain contract information (see 4.903) and 
payment information (see 4.904) to the IRS.



4.903  Reporting contract information to the IRS.

    (a) 26 U.S.C. 6050M, as implemented in 26 CFR, requires heads of 
Federal executive agencies to report certain information to the IRS.
    (b)(1) The required information applies to contract modifications--
    (i) Increasing the amount of a contract awarded before January 1, 
1989, by $50,000 or more; and
    (ii) Entered into on or after April 1, 1990.
    (2) The reporting requirement also applies to certain contracts and 
modifications thereto in excess of $25,000 entered into on or after 
January 1, 1989.
    (c) The information to report is--
    (1) Name, address, and TIN of the contractor;
    (2) Name and TIN of the common parent (if any);
    (3) Date of the contract action;
    (4) Amount obligated on the contract action; and
    (5) Estimated contract completion date.
    (d) Transmit the information to the IRS through the Federal 
Procurement Data System (see Subpart 4.6 and implementing instructions).



4.904  Reporting payment information to the IRS.

    26 U.S.C. 6041 and 6041A, as implemented in 26 CFR, in part, require 
payors, including Government agencies, to report to the IRS, on Form 
1099, payments made to certain contractors. 26 U.S.C. 6109 requires a 
contractor to provide its TIN if a Form 1099 is required. The payment 
office is responsible for submitting reports to the IRS.



4.905  Solicitation provision.

    The contracting officer shall insert the provision at 52.204-3, 
Taxpayer Identification, in solicitations that are not conducted under 
the procedures of Part 12, unless the TIN, type of organization, and 
common parent information for each offeror will be obtained from some 
other source (e.g., centralized database) in accordance with agency 
procedures.



                  Subpart 4.10--Administrative Matters

    Source: 62 FR 51230, Sept. 30, 1997, unless otherwise noted.



4.1001  Policy.

    Contracts may identify the items or services to be acquired as 
separately identified line items. Contract line items should provide 
unit prices or lump sum prices for separately identifiable contract 
deliverables, and associated delivery schedules or performance periods. 
Line items may be further subdivided or stratified for administrative 
purposes (e.g., to provide for traceable accounting classification 
citations).

[62 FR 51230, Sept. 30, 1997]

[[Page 66]]



                   SUBCHAPTER B--ACQUISITION PLANNING





PART 5--PUBLICIZING CONTRACT ACTIONS--Table of Contents




Sec.
5.000  Scope of part.
5.001  Definition.
5.002  Policy.

                Subpart 5.1--Dissemination of Information

5.101  Methods of disseminating information.
5.102  Availability of solicitations.

           Subpart 5.2--Synopses of Proposed Contract Actions

5.201  General.
5.202  Exceptions.
5.203  Publicizing and response time.
5.204  Presolicitation notices.
5.205  Special situations.
5.206  Publicizing subcontract opportunities.
5.207  Preparation and transmittal of synopses.

                Subpart 5.3--Synopses of Contract Awards

5.301  General.
5.302  Preparation and transmittal of synopses of awards.
5.303  Announcement of contract awards.

                   Subpart 5.4--Release of Information

5.401  General.
5.402  General public.
5.403  Requests from Members of Congress.
5.404  Release of long-range acquisition estimates.
5.404-1  Release procedures.
5.404-2  Announcements of long-range acquisition estimates.
5.405  Exchange of acquisition information.

                    Subpart 5.5--Paid Advertisements

5.501  Definitions.
5.502  Authority.
5.503  Procedures.
5.504  Use of advertising agencies.

    Authority: 40 U.S.C. 486(c); 10 U.S.C. Chapter 137; and 42 U.S.C. 
2473(c).

    Source: 48 FR 42119, Sept. 19, 1983, unless otherwise noted.



5.000  Scope of part.

    This part prescribes policies and procedures for publicizing 
contract opportunities and award information.



5.001  Definition.

    Contract action, as used in this part, means an action resulting in 
a contract, as defined in subpart 2.1, including contract modifications 
for additional supplies or services, but not including contract 
modifications that are within the scope and under the terms of the 
contract, such as contract modifications issued pursuant to the Change 
clause, or funding and other administrative changes.

[50 FR 1728, Jan. 11, 1985, and 50 FR 52429, Dec. 23, 1985]



5.002  Policy.

    Contracting officers shall publicize contract actions in order to--
    (a) Increase competition;
    (b) Broaden industry participation in meeting Government 
requirements; and
    (c) Assist small business concerns, small disadvantaged business 
concerns, and women-owned small business concerns in obtaining contracts 
and subcontracts.

[50 FR 52429, Dec. 23, 1985, as amended at 60 FR 48259, Sept. 18, 1995]



                Subpart 5.1--Dissemination of Information



5.101  Methods of disseminating information.

    The Commerce Business Daily (CBD) is the public notification media 
by which U.S. Government agencies identify proposed contract actions and 
contract awards. The CBD is published in five or six daily editions 
weekly, as necessary.
    (a) As required by the Small Business Act (15 U.S.C. 637(e)) and the 
Office of Federal Procurement Policy Act (41 U.S.C. 416), contracting 
officers shall disseminate information on proposed contract actions as 
follows:
    (1) For proposed contract actions expected to exceed $25,000, by 
synopsizing in the Commerce Business Daily (CBD) (see 5.201); and

[[Page 67]]

    (2) For proposed contract actions expected to exceed $10,000, but 
not expected to exceed $25,000, by displaying in a public place, 
including on an electronic bulletin board, or any other appropriate 
electronic means located at the contracting office issuing the 
solicitation, an unclassified notice of the solicitation or a copy of 
the solicitation satisfying the requirements of 5.207 (c) and (f). The 
notice shall include a statement that all responsible sources may submit 
a quotation which, if timely received, shall be considered by the 
agency. Such information shall be posted not later than the date the 
solicitation is issued, and shall remain posted for at least 10 days or 
until after quotations have been opened, whichever is later.
    (i) If solicitations are posted in lieu of a notice, various methods 
of satisfying the requirements of 5.207 (c) and (f) may be employed. For 
example, the requirements for 5.207 (c) and (f) may be met by stamping 
the solicitation, by a cover sheet to the solicitation, or by placing a 
general statement in the display room.
    (ii) The contracting officer need not comply with the display 
requirements of this section when the exemptions at 5.202(a)(1), (a)(4) 
through (a)(9), or (a)(11) apply, when oral or FACNET solicitations are 
used, or when providing access to a notice of proposed contract action 
through the single, Governmentwide point of entry and the notice permits 
the public to respond to the solicitation electronically.
    (iii) Contracting officers shall post solicitations expected to 
exceed $25,000 if required by agency regulations.
    (iv) Electronic posting of requirements in a place accessible by the 
general public at the Government installation may be used to satisfy the 
public display requirement. Contracting offices using electronic systems 
for public posting that are not accessible outside the installation 
shall periodically publicize the methods for accessing such information.
    (b) In addition, one or more of the following methods may be used:
    (1) Preparing periodic handouts listing proposed contracts, and 
displaying them as in 5.101(a)(2).
    (2) Assisting local trade associations in disseminating information 
to their members.
    (3) Making brief announcements of proposed contracts to newspapers, 
trade journals, magazines, or other mass communication media for 
publication without cost to the Government.
    (4) Placing paid advertisements in newspapers or other 
communications media, subject to the following limitations:
    (i) Contracting officers shall place paid advertisements of proposed 
contracts only when it is anticipated that effective competition cannot 
be obtained otherwise (see 5.205(d)).
    (ii) Contracting officers shall not place advertisements of proposed 
contracts in a newspaper published and printed in the District of 
Columbia unless the supplies or services will be furnished, or the labor 
performed, in the District of Columbia or adjoining counties in Maryland 
or Virginia (44 U.S.C. 3701).
    (iii) Advertisements published in newspapers must be under proper 
written authority in accordance with 44 U.S.C. 3702 (see 5.502(a)).

[48 FR 42119, Sept. 19, 1983, as amended at 50 FR 1728, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985; 51 FR 27117, July 29, 1986; 52 FR 21885, 
June 9, 1987; 56 FR 41731, Aug. 22, 1991; 60 FR 34736, 34746, July 3, 
1995; 61 FR 39191, July 26, 1996; 62 FR 12692, Mar. 17, 1997; 63 FR 
58592, Oct. 30, 1998]



5.102  Availability of solicitations.

    (a) The contracting officer shall--
    (1) Maintain a reasonable number of copies of solicitations 
publicized in the CBD, including specifications and other pertinent 
information (upon request, potential sources not initially solicited 
shall be mailed or provided copies of solicitations, if available);
    (2) Provide copies of a solicitation issued under other than full 
and open competition to firms requesting copies that were not initially 
solicited, but only after advising the requester of the determination to 
limit the solicitation to a specified firm or firms as authorized under 
Part 6 of the FAR;

[[Page 68]]

    (3) Provide copies on a first-come-first-served basis, for pickup at 
the contracting office, to publishers, trade associations, information 
services, and other members of the public having a legitimate interest 
(for construction, see 36.211); and
    (4) In addition to the methods of disseminating proposed contract 
information in 5.101(a) and (b), provide upon request to small business 
concerns, as required by 15 U.S.C. 637(b)--
    (i) A copy of the solicitation specifications. In the case of 
solicitations disseminated by electronic data interchange, solicitations 
may be furnished directly to the electronic address of the small 
business concern;
    (ii) The name and telephone number of an employee of the contracting 
office to answer questions on the solicitation; and
    (iii) Adequate citations to each applicable major Federal law or 
agency rule with which small business concerns must comply in performing 
the contract.
    (5) Retain a copy of the solicitation and other documents for review 
by and duplication for those requesting copies after the initial number 
of copies is exhausted.
    (6) Agencies may require payment of a fee, not exceeding the actual 
cost of duplication, for a copy of the solicitation documents.
    (7) If electronic commerce is employed in the solicitation process, 
availability of the solicitation may be limited to the electronic 
medium.
    (b) This section 5.102 applies to classified contracts to the extent 
consistent with agency security requirements (see 5.202(a)(1)).

[48 FR 42119, Sept. 19, 1983, as amended at 50 FR 1728, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985; 60 FR 34737, July 3, 1995; 62 FR 51230, 
Sept. 30, 1997; 63 FR 58592, Oct. 30, 1998]



           Subpart 5.2--Synopses of Proposed Contract Actions



5.201  General.

    (a) As required by the Small Business Act (15 U.S.C. 637(e)) and the 
Office of Federal Procurement Policy Act (41 U.S.C. 416), agencies shall 
furnish for publication in the Commerce Business Daily (CBD) notices of 
proposed contract actions as specified in paragraph (b) of this section.
    (b) For acquisitions of supplies and services other than those 
covered by the exceptions in 5.202, and special situations in 5.205, the 
contracting officer shall transmit a notice to the CBD (synopsis) (see 
5.207) for each proposed--
    (1) Contract actions meeting the thresholds in 5.101(a)(1);
    (2) Effort to locate private commercial sources for cost comparison 
purposes under OMB Circular A-76 (see 5.205(e));
    (3) Modification to an existing contract for additional supplies or 
services that meets the thresholds in 5.101(a)(1); or
    (4) Contract action in any amount when advantageous to industry or 
the Government.
    (c) The primary purposes of the CBD notice are to improve small 
business access to acquisition information and enhance competition by 
identifying contracting and subcontracting opportunities.
    (d) Subcriptions to the CBD must be placed with the Superintendent 
of Documents, Government Printing Office, Washington, DC 20402 
(Telephone 202-512-1800).

[48 FR 42119, Sept. 19, 1983, as amended at 50 FR 1728, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985; 51 FR 27117, July 29, 1986; 52 FR 21886, 
June 9, 1987; 60 FR 42653, Aug. 16, 1995; 62 FR 40236, July 25, 1997; 63 
FR 34079, June 22, 1998]



5.202  Exceptions.

    The contracting officer need not submit the notice required by 5.201 
when--
    (a) The contracting officer determines that--
    (1) The synopsis cannot be worded to preclude disclosure of an 
agency's needs and such disclosure would compromise the national 
security (e.g., would result in disclosure of classified information). 
The fact that a proposed solicitation or contract action contains 
classified information, or that access to classified matter may be 
necessary to submit a proposal or perform the contract does not, in 
itself, justify use of this exception to synopsis;
    (2) The proposed contract action is made under the conditions 
described in 6.302-2 (or, for purchases conducted

[[Page 69]]

using simplified acquisition procedures, if unusual and compelling 
urgency precludes competition to the maximum extent practicable) and the 
Government would be seriously injured if the agency complies with the 
time periods specified in 5.203;
    (3) The proposed contract action is one for which either the written 
direction of a foreign government reimbursing the agency for the cost of 
the acquisition of the supplies or services for such government, or the 
terms of an international agreement or treaty between the United States 
and a foreign government or international organizations, has the effect 
of requiring that the acquisition shall be from specified sources;
    (4) The proposed contract action is expressly authorized or required 
by a statute to be made through another Government agency, including 
acquisitions from the Small Business Administration (SBA) using the 
authority of section 8(a) of the Small Business Act (but see 5.205(f)), 
or from a specific source such as a workshop for the blind under the 
rules of the Committee for the Purchase from the Blind and Other 
Severely Handicapped;
    (5) The proposed contract action is for utility services other than 
telecommunications services and only one source is available;
    (6) The proposed contract action is an order placed under Subpart 
16.5;
    (7) The proposed contract action results from acceptance of a 
proposal under the Small Business Innovation Development Act of 1982 
(Pub. L. 97-219);
    (8) The proposed contract action results from the acceptance of an 
unsolicited research proposal that demonstrates a unique and innovative 
concept (see 6.003) and publication of any notice complying with 5.207 
would improperly disclose the originality of thought or innovativeness 
of the proposed research, or would disclose proprietary information 
associated with the proposal. This exception does not apply if the 
proposed contract action results from an unsolicited research proposal 
and acceptance is based solely upon the unique capability of the source 
to perform the particular research services proposed (see 6.302-
1(a)(2)(i);
    (9) The proposed contract action is made for perishable subsistence 
supplies, and advance notice is not appropriate or reasonable;
    (10) The proposed contract action is made under conditions described 
in 6.302-3, or 6.302-5 with regard to brand name commercial items for 
authorized resale, or 6.302-7, and advance notice is not appropriate or 
reasonable;
    (11) The proposed contract action is made under the terms of an 
existing contract that was previously synopsized in sufficient detail to 
comply with the requirements of 5.207 with respect to the current 
proposed contract action;
    (12) The proposed contract action is by a Defense agency and the 
proposed contract action will be made and performed outside the United 
States, its possessions, or Puerto Rico, and only local sources will be 
solicited. This exception does not apply to proposed contract actions 
subject to the Trade Agreements Act (see subpart 25.4). This exception 
also does not apply to North American Free Trade Agreement proposed 
contract actions, which will be synopsized in accordance with agency 
regulations;
    (13) The proposed contract action--
    (i) Is for an amount not expected to exceed the simplified 
acquisition threshold;
    (ii) Will be made through FACNET or another means that provides 
access to the notice of proposed contract action through the single, 
Governmentwide point of entry; and
    (iii) Permits the public to respond to the solicitation 
electronically; or
    (14) The proposed contract action is made under conditions described 
in 6.302-3 with respect to the services of an expert to support the 
Federal Government in any current or anticipated litigation or dispute.
    (b) The head of the agency determines in writing after consultation 
with the Administrator for Federal

[[Page 70]]

Procurement Policy and the Administrator of the Small Business 
Administration, that advance notice is not appropriate or reasonable.

[50 FR 1728, Jan. 11, 1985, as amended at 50 FR 52430, Dec. 23, 1985; 51 
FR 27117, July 29, 1986; 53 FR 27463, July 20, 1988; 54 FR 46004, Oct. 
31, 1989; 56 FR 15148, Apr. 15, 1991; 56 FR 41744, Aug. 22, 1991; 59 FR 
545, Jan. 5, 1994; 60 FR 34746, July 3, 1995; 60 FR 42653, Aug. 16, 
1995; 60 FR 49725, Sept. 26, 1995; 61 FR 39192, July 26, 1996; 63 FR 
58592, 58593, Oct. 30, 1998]



5.203  Publicizing and response time.

    Whenever agencies are required to publish notice of proposed 
contract actions under 5.201, they shall proceed as follows:
    (a) A notice of proposed contract action shall be published in the 
Commerce Business Daily at least 15 days before issuance of a 
solicitation except that, for acquisitions of commercial items, the 
contracting officer may--
    (1) Establish a shorter period for issuance of the solicitation; or
    (2) Use the combined CBD synopsis/solicitation procedure (see 
12.603).
    (b) The contracting officer shall establish a solicitation response 
time that will afford potential offerors a reasonable opportunity to 
respond to--each proposed contract action (including actions via FACNET 
or for which the notice of proposed contract action is accessible 
through the single, Governmentwide point of entry), in an amount 
estimated to be greater than $25,000, but not greater than the 
simplified acquisition threshold; or each contract action for the 
acquisition of commercial items in an amount estimated to be greater 
than $25,000. The contracting officer should consider the circumstances 
of the individual acquisition, such as the complexity, commerciality, 
availability, and urgency, when establishing the solicitation response 
time.
    (c) Except for the acquisition of commercial items (see 5.203(b)), 
agencies shall allow at least a 30-day response time for receipt of bids 
or proposals from the date of issuance of a solicitation, if the 
proposed contract action is expected to exceed the simplified 
acquisition threshold.
    (d) Agencies shall allow at least a 30 day response time from the 
date of publication of a proper notice of intent to contract for 
architect-engineer services or before issuance of an order under a basic 
ordering agreement or similar arrangement if the proposed contract 
action is expected to exceed the simplified acquisition threshold.
    (e) Agencies shall allow at least a 45 day response time for receipt 
of bids or proposals from the date of publication of the notice required 
in 5.201 for proposed contract actions categorized as research and 
development if the proposed contract action is expected to exceed the 
simplified acquisition threshold.
    (f) Nothing in this subpart prohibits officers or employees of 
agencies from responding to requests for information.
    (g) Contracting officers may, unless they have evidence to the 
contrary, presume that notice has been published 10 days (6 days if 
electronically transmitted) following transmittal of the synopsis to the 
CBD. This presumption is based on the CBD's confirmation that 
publication does occur within these timeframes. This presumption does 
not negate the mandatory waiting or response times specified in 
paragraphs (a) through (d) of this section. Upon learning that a 
particular notice has not in fact been published within the presumed 
timeframes, contracting officers should consider whether the date for 
receipt of offers can be extended or whether circumstances have become 
sufficiently compelling to justify proceeding with the proposed contract 
action under the authority of 5.202(a)(2).
    (h) In addition to other requirements set forth in this section, for 
acquisitions subject to NAFTA or the Trade Agreements Act (see subpart 
25.4), the period of time between publication of the synopsis notice and 
receipt of offers shall be no less than 40 days. However, if the 
acquisition falls within a general category identified in an annual 
forecast, the availability of which

[[Page 71]]

is published in the CBD, the contracting officer may reduce this time 
period to as few as 10 days.

[50 FR 52430, Dec. 23, 1985, as amended at 51 FR 31425, Sept. 3, 1986; 
60 FR 34747, July 3, 1995; 60 FR 48236, Sept. 18, 1995; 61 FR 39192, 
July 26, 1996; 62 FR 263, Jan. 2, 1997; 62 FR 10710, Mar. 10, 1997; 63 
FR 58592, 58593, Oct. 30, 1998]



5.204  Presolicitation notices.

    Contracting officers shall publicize presolicitation notices in the 
CBD (see 15.201 and 36.213-2). Synopsizing is still required prior to 
issuance of any resulting solicitation (see 5.201 and 5.203).

[50 FR 1729, Jan. 11, 1985 and 50 FR 52429, Dec. 23, 1985; 62 FR 271, 
Jan. 2, 1997; 62 FR 51270, Sept. 30, 1997]



5.205  Special situations.

    (a) Research and development (R&D) advance notice. Contracting 
officers may publish in the CBD, advance notices of their interest in 
potential R&D programs whenever existing solicitation mailing lists do 
not include a sufficient number of concerns to obtain adequate 
competition. Advance notices shall not be used where security 
considerations prohibit such publication. Advance notices will enable 
potential sources to learn of R&D programs and provide their sources 
with an opportunity to submit information which will permit evaluation 
of their R&D capabilities. Potential sources which respond to advance 
notices shall be added to the appropriate solicitation mailing list for 
subsequent solicitation. Advance notices shall be titled ``Research and 
Development Sources Sought,'' cite the appropriate Numbered Note, and 
include the name and telephone number of the contracting officer or 
other contracting activity official from whom technical details of the 
project can be obtained. This will enable sources to submit information 
for evaluation of their R&D capabilities. Contracting officers shall 
synopsize all subsequent solicitations for R&D contracts, including 
those resulting from a previously synopsized advance notice, unless one 
of the exceptions in 5.202 applies.
    (b) Federally Funded Research and Development Centers. Before 
establishing a Federally Funded Research and Development Center (FFRDC) 
(see part 35) or before changing its basic purpose and mission, the 
sponsor shall place at least three notices over a 90-day period in the 
Commerce Business Daily and the Federal Register, indicating the 
agency's intention to sponsor an FFRDC or change the basic purpose and 
mission of an FFRDC. The notice shall indicate the scope and nature of 
the effort to be performed and request comments. Notice is not required 
where action is required by law.
    (c) Special notices. Contracting officers may publish in the CBD 
special notices of procurement matters such as business fairs, long-
range procurement estimates, pre-bid/pre-proposal conferences, meetings, 
and the availability of draft solicitations or draft specifications for 
review. Special notices shall be transmitted to the CBD in accordance 
with 5.207.
    (d) Architect-engineering services. Contracting officers shall 
publish notices of intent to contract for architect-engineering services 
as follows:
    (1) Except when exempted by 5.202, contracting officers shall 
synopsize each proposed contract action for which the total fee 
(including phases and options) is expected to exceed $25,000. Reference 
shall be made to the appropriate CBD Numbered Note.
    (2) When the total fee is expected to exceed $10,000 but not exceed 
$25,000, the contracting officer shall comply with 5.101(a)(2). When the 
proposed contract action is not required to be synopsized under 
subparagraph (d)(1) of this section, the contracting officer shall 
display a notice of the solicitation or a copy of the solicitation in a 
public place at the contracting office. Other optional publicizing 
methods are authorized in accordance with 5.101(b).
    (e) Effort to locate commercial sources under OMB Circular A-76. 
When determining the availability of commercial sources under the 
procedures prescribed in subpart 7.3 and OMB Circular A-76, the 
contracting officer shall not arrive at a conclusion that there are no 
commercial sources capable of providing the required supplies or 
services until publicizing the requirement in the CBD at least three 
times in a 90 calendar-day period, with a minimum of 30 calendar days 
between each. When

[[Page 72]]

necessary to meet an urgent requirement, this may be limited to a total 
of two publications in the CBD in a 30 calendar-day period, with a 
minimum of 15 calendar days between each.
    (f) Section 8(a) competitive acquisition. When a national buy 
requirement is being considered for competitive acquisition limited to 
eligible 8(a) concerns under Subpart 19.8, the contracting officer shall 
transmit a synopsis of the proposed contract action to the CBD in 
accordance with 5.207. The synopsis may be transmitted to the CDB 
concurrent with submission of the agency offering (see 19.804-2) to the 
Small Business Administration (SBA). The synopsis should also include 
information--
    (1) Advising that the acquisition is being offered for competition 
limited to eligible 8(a) concerns;
    (2) Specifying the Standard Industrial Classification (SIC) code;
    (3) Advising that eligibility to participate may be restricted to 
firms in either the developmental or transitional stage; and
    (4) Encouraging interested 8(a) firms to request a copy of the 
solicitation as expeditiously as possible since the solicitation will be 
issued without further notice upon SBA acceptance of the requirement for 
the section 8(a) Program.

[48 FR 42119, Sept. 19, 1983, as amended at 50 FR 1729, Jan. 11, 1985; 
50 FR 4221, Jan. 30, 1985; 50 FR 52430, Dec. 23, 1985; 51 FR 27117, July 
29, 1986; 52 FR 21886, June 9, 1987; 53 FR 43389, Oct. 26, 1988; 54 FR 
25061, June 12, 1989; 54 FR 46004, Oct. 31, 1989; 55 FR 3881, Feb. 5, 
1990; 55 FR 25526, June 21, 1990; 55 FR 52789, Dec. 21, 1990; 56 FR 
41731, Aug. 22, 1991; 60 FR 34747, July 3, 1995; 61 FR 39192, July 26, 
1996; 63 FR 58593, Oct. 30, 1998]



5.206  Publicizing subcontract opportunities.

    Prime contractors may use the CBD to publicize subcontracting 
opportunities stemming from receipt of a Government contract. The CBD 
can be used to seek competition for subcontracts, to increase 
participation by small, small disadvantaged, and women-owned business 
firms, and to meet established subcontracting plan goals. Synopses of 
subcontract opportunities should be prepared and submitted in accordance 
with 5.207.

[57 FR 60574, Dec. 21, 1992]



5.207  Preparation and transmittal of synopses.

    (a) Transmittal. Contracting officers shall transmit synopses of 
actions identified under 5.101 to the Commerce Business Daily by the 
most expeditious and reliable means available.
    (1) Electronic transmission. All synopses transmitted by electronic 
means shall be in ASCII Code. Contact your agency's communications 
center for the appropriate transmission instructions or services.
    (2) Hard copy transmission. When electronic transmission is not 
feasible, synopses should be sent to the CBD via mail or other physical 
delivery of hard copy and should be addressed to: Commerce Business 
Daily, U.S. Government Printing Office, P.O. Box 77880, Washington, DC 
20013-8880.
    (b) Format. The contracting officer shall prepare the synopsis in 
the following style and format to ensure timely processing of the 
synopsis by the Commerce Business Daily.
    (1) General. Format for all synopses shall employ conventional 
typing with abbreviations, capitalization, and punctuation all 
grammatically correct. Each synopsis shall include all 17 format items. 
Do not include the title for the format item.
    (2) Spacing. Begin each line flush left and use double spaced lines 
between each format line. If more than one synopsis is sent at one time, 
separate each synopsis with four line spaces and begin each new synopsis 
with format item number 1.
    (3) Abbreviations. Minimize abbreviations or acronyms to commonly 
recognized abbreviations.
    (4) Standard format. Prepare each synopsis in the following format. 
Begin each format item with the number of the item followed by a period 
(e.g., 1.). Then make two spaces after the period. Next type the 
appropriate information for each format item. Then conclude each format 
item with two exclamation points (i.e., !!). Conclude each complete 
synopsis, following format item 17, with five asterisks (i.e., * * * * 
*).

[[Page 73]]

            Format Item and Explanation/Description of Entry

1. ACTION CODE
    (A single alphabetic character denoting the specific action related 
in the synopsis. Choices are limited to the following: P=Presolicitation 
Notice/Procurement; A=Award announcement; M=Modification of a previously 
announced procurement action (a correction to a previous CBD 
announcement); R=Sources Sought (includes A-76 services and architect-
engineer contracts). If none of the standard codes apply, enter ``N/
A''.)
2. DATE
    (Date on which the synopsis is transmitted to the CBD for 
publication. Use a four digit number indicating month in two digits and 
date in two digits (MMDD). All four spaces must be used with preceding 0 
for months January thru September. Format: 0225 for February 25.)
3. YEAR
    (Two numeric digits denoting the calendar year of the synopsis. 
Format 85 for 1985.)
    4. GOVERNMENT PRINTING OFFICE (GPO) BILLING ACCOUNT CODE.
    (The originating office's account number used by the GPO for billing 
and collection purposes. The field length is nine alpha-numeric 
characters. The first three characters entered are ``GPO'' and then the 
following six characters are the numeric account number. Agencies should 
contact the GPO's Office of Comptroller for additional information. 
Enter N/A if an account number has not been assigned.)
5. CONTRACTING OFFICE ZIP CODE
    (The geographic zip code for the contracting office. Up to nine 
characters may be entered. When using a nine digit zip code, separate 
the first five digits and last four digits with a dash. Format: 00000-
0000.)
    6. CLASSIFICATION CODE. (Service or supply code number; see 
5.207(g). Each synopsis shall classify the contemplated contract action 
under the one classification code which most closely describes the 
acquisition. If the action is for a multiplicity of goods and/or 
services, the preparer should select the one category best describing 
the overall acquisition based upon value. Inclusion of more than one 
classification code, or failure to include a classification code, will 
result in rejection of the synopsis by the Commerce Business Daily).
7. CONTRACTING OFFICE ADDRESS
    (The complete name and address of the contracting office. Field 
length is open, but generally not expected to exceed 90 alpha-numeric 
characters.)
8. SUBJECT
    (Insert classification code for ITEM 6, and a brief title 
description of services, supplies, or project required by the agency. 
This will appear in the CBD as the bold faced title in the first line of 
the description.) (200 character spaces available.)
9. PROPOSED SOLICITATION NUMBER
    (Agency number for control, tracking, identification. For 
solicitations; if not a solicitation, enter N/A.)
10. OPENING/CLOSING RESPONSE DATE
    (For solicitations; if not a solicitation, enter N/A. Issuing agency 
deadline for receipt of bids, proposals or responses. Use a six digit 
date. Format: MMDDYY. Explanation may appear in text of synopsis in Item 
17.)
11. CONTACT POINT/CONTRACTING OFFICER
    (Include name and telephone number of contact. Also include name and 
telephone number of contracting officer if different. This will appear 
as the first item of information in the published entry. This entry may 
be alpha-numeric and up to 320 character blocks in length.)
12. CONTRACT AWARD AND SOLICITATION NUMBER
    (For awards; if not an award, enter N/A. The award, solicitation or 
project reference number assigned by the agency to provide a reference 
for bidders/subcontractors. Two hundred character spaces available for 
alpha-numeric entries.)
13. CONTRACT AWARD DOLLAR AMOUNT
    (For awards; if not an award, enter N/A. A ten digit numeric field. 
Enter whole dollars only. Output will be preceded by a dollar sign ($).)
14. CONTRACT LINE ITEM NUMBER
    (For awards--as desired; if not an award, enter N/A. The alpha-
numeric field with dashes and slashes may not exceed 32 spaces. If 
sufficient space is not available, enter N/A and insert the contract 
line item number(s) in format item 17.)
15. CONTRACT AWARD DATE
    (For awards; if not an award, enter N/A. A six digit entry showing 
the date the award is made or the contract let. Format: MMDDYY.)
16. CONTRACTOR
    (For awards; if not an award, enter N/A. Name and address of 
successful offeror. Four hundred character spaces allowed for full 
identification.)
17. DESCRIPTION
    (Enter a clear and concise description of the action. The 
description may not exceed 12,000 textual characters (approximately 3\1/
2\ single spaced pages). The suggested sequence of the content and items 
for inclusion in the description are contained in 5.207(c). Insert N/A 
when synopsizing awards.)

    (5) Nonapplicable format items. When a format item is not 
applicable, type the

[[Page 74]]

item number, a period, two blank spaces, and ``N/A'' (e.g., 10. N/A!!).
    (6) The following is a sample CBD synopsis:

    1. P!!
    2. 0925!!
    3. 85!!
    4. GPO123456!!
    5. 19111-5096!!
    6. 95!!
    7. Defense Industrial Supply Center, 700 Robbins Ave., Philadelphia, 
PA 19111-5096!!
    8. 95--Steel Plate!!
    9. DLA500-86-B-0090!!
    10. BOD, 111585!!
    11. Contact, Mary Drake, 215/697-XXXX/Contracting Officer, Larry 
Bird, 215/697-XXXX!!
    12. N/A!!
    13. N/A!!
    14. N/A!!
    15. N/A!!
    16. N/A!!
    17. NSN9515-00-237-5342, Spec Mil-S-226988, 0.1875 inch thick, 96 
inch width. 240 inch length. Carbon steel, 45,000 lbs. Delivery to NSY 
Philadelphia, PA, and NSC Norfolk, VA. Delivery by 1 Oct. 86. When 
calling, be prepared to state name, address, and solicitation number. 
See note 9. All responsible sources may submit an offer which will be 
considered. * * * * *

    (c) General format for Item 17, ``Description.'' (1) Prepare a clear 
and concise description of the supplies or services that is not 
unnecessarily restrictive of competition and will allow a prospective 
offeror to make an informed business judgment as to whether a copy of 
the solicitation should be requested.
    (2) Do not include in Item 17 the CBD supply or service 
classification code from Item 6.
    (i) National Stock Number (NSN) if assigned.
    (ii) Specification and whether an offeror, its product, or service 
must meet a qualification requirement in order to be eligible for award, 
and identification of the office from which additional information about 
the qualification requirement may be obtained (see subpart 9.2).
    (iii) Manufacturer, including part number, drawing number, etc.
    (iv) Size, dimensions, or other form, fit or functional description.
    (v) Predominant material of manufacture.
    (vi) Quantity, including any options for additional quantities.
    (vii) Unit of issue.
    (viii) Destination information.
    (ix) Delivery schedule.
    (x) Duration of the contract period.
    (xi) For a proposed contract action in an amount estimated to be 
greater than $25,000 but not greater than the simplified acquisition 
threshold, enter (A) a description of the procedures to be used in 
awarding the contract (e.g., request for oral or written quotation or 
solicitation), and (B) the anticipated award date.
    (xii) For Architect-Engineer projects and other projects for which 
the supply or service codes are insufficient, provide brief details with 
respect to: location, scope of services required, cost range and 
limitations, type of contract, estimated starting and completion dates, 
and any significant evaluation factors.
    (xiii) Numbered notes (see 5.207(e)), including instructions for 
set-asides for small businesses.
    (xiv) In the case of noncompetitive contract actions (including 
those that do not exceed the simplified acquisition threshold), identify 
the intended source (see 5.207(e)(3)) and insert a statement of the 
reason justifying the lack of competition.
    (xv) Insert a statement that all responsible sources may submit a 
bid, proposal, or quotation which shall be considered by the agency.
    (xvi) If the contracting office will accept requests for 
solicitations through alternate means (e.g., facsimile machine, Telex), 
provide the machine number and routing instructions.
    (xvii) If the solicitation will be made available to interested 
parties through electronic data interchange, provide any information 
necessary to obtain and respond to the solicitation electronically.
    (xviii) In the case of a very small business set-aside, identify the 
Designated Region (see subpart 19.9).
    (d) Set-asides. When the proposed acquisition provides for a total, 
partial, or very small business set-aside, or a HUBZone small business 
set-aside, the appropriate CBD Numbered Note will be cited.
    (e) CBD Numbered Notes. (1) Numbered Notes are footnotes. The 
purpose of the Numbered Notes is to conserve space

[[Page 75]]

and simplify the identification of repetitive notices. An explanation of 
the Numbered Notes appears each week in the Monday edition of the CBD. 
If the Monday edition of the CBD is not printed because of a holiday, an 
explanation of the Numbered Notes will appear in the next day's issue. 
When one or more of the Notes applies to a synopsis, contracting 
officers should reference the note at the end of Item 17 of the 
synopsis; e.g., ``See Note(s). . . .'' Requests to add or change Notes 
will be submitted through channels for approval by the DAR Council and 
the CAA Council. The Councils will review the Numbered Notes 
periodically and, as appropriate, after consultation with the initiating 
agency, advise the Department of Commerce to delete or modify outdated 
or unused notes from the CBD. Contracting officers shall also include 
the substance of Numbered Notes whenever a proposed contract is 
publicized by means other than the CBD (see 5.101).
    (2) If the acquisition is subject to the requirements of the Trade 
Agreements Act of 1979 (see part 25), Numbered Note 12 shall be 
referenced in the synopsis.
    (3) Except for proposed contract actions equal to or less than the 
simplified acquisition threshold or acquisitions of commercial items, 
the synopsis shall refer to Numbered Note 22 for noncompetitive proposed 
contract actions. If it is anticipated that award will be made via a 
delivery order to an existing basic ordering agreement, the synopsis 
shall so state.
    (4) If, under the proposed acquisition, the Government does not 
intend to acquire a commercial item using part 12, the synopsis shall 
refer to Numbered Note 26.
    (f) Information not covered by Numbered Notes. To alert prospective 
contractors to information not covered by Numbered Notes, contracting 
officers should identify the following unusual circumstances in the 
synopsis:
    (1) Availability of specification, plans, drawing, or other 
technical data. It is impracticable to distribute the applicable ------
------ [insert `specifications,' `plans,' `drawings,' or other 
appropriate words] with the solicitation. These contract documents may 
be examined or obtained at ------------
    (2) Availability of background research report. This contract for 
basic research is a continuation of an effort conducted for the past --
------ [insert period]. A research report containing findings to date is 
not available to the Government.
    (3) Production requirements. The production of the supplies listed 
requires a substantial initial investment or an extended period of 
preparation for manufacture.
    (4) Place of performance unknown. This contract is subject to the 
Service Contract Act and the place of performance is unknown. Wage 
determinations have been requested for (insert localities). The 
contracting officer will request wage determinations for additional 
localities if asked to do so in writing by (insert time and date).
    (g) Codes to be Used in Synopses to Identify Services or Supplies. 
(1) Contracting officers shall use one of the following classification 
codes when the contemplated contract action is for services or when the 
overall acquisition can best be described as services based upon value:

------------------------------------------------------------------------
              Code                             Description
------------------------------------------------------------------------
               A                 Research and development.
               B                 Special studies and analysis--not R&D.
               C                 Architect and engineering services.
               D                 Information technology services,
                                  including telecommunications services.
               E                 Purchase of structures and facilities.
               F                 Natural resources and conservation
                                  services.
               G                 Social services.
               H                 Quality control, testing, and
                                  inspection services.
               J                 Maintenance, repair, and rebuilding of
                                  equipment.
               K                 Modification of equipment.
               L                 Technical representative services.
               M                 Operation of Government-owned
                                  facilities.
               N                 Installation of equipment.
               P                 Salvage services.
               Q                 Medical services.
               R                 Professional, administrative, and
                                  management support services.
               S                 Utilities and housekeeping services.
               T                 Photographic, mapping, printing, and
                                  publication services.
               U                 Education and training services.
               V                 Transportation, travel, and relocation
                                  services.
               W                 Lease or rental of equipment.
               X                 Lease or rental of facilities.
               Y                 Construction of structures and
                                  facilities.
               Z                 Maintenance, repair, and alteration of
                                  real property.
------------------------------------------------------------------------

    (2) Contracting officers shall use one of the following 
classification codes when the contemplated contract action

[[Page 76]]

is for supplies or when the overall acquisition can best be described as 
supplies based upon value:

 
             Code                              Description
 
10                              Weapons.
11                              Nuclear ordnance.
12                              Fire control equipment.
13                              Ammunition and explosives.
14                              Guided missiles.
15                              Aircraft and airframe structural
                                 components.
16                              Aircraft components and accessories.
17                              Aircraft launching, landing, and ground
                                 handling equipment.
18                              Space vehicles.
19                              Ships, small craft, pontoons, and
                                 floating docks.
20                              Ship and marine equipment.
22                              Railway equipment.
23                              Ground effect vehicles, motor vehicles,
                                 trailers, and cycles.
24                              Tractors.
25                              Vehicular equipment components.
26                              Tires and tubes.
28                              Engines, turbines, and components.
29                              Engine accessories.
30                              Mechanical power transmission equipment.
31                              Bearings.
32                              Woodworking machinery and equipment.
34                              Metalworking machinery.
35                              Service and trade equipment.
36                              Special industry machinery.
37                              Agricultural machinery and equipment.
38                              Construction, mining, excavating, and
                                 highway maintenance equipment.
39                              Materials handling equipment.
40                              Rope, cable, chain, and fittings.
41                              Refrigeration, air-conditioning, and air
                                 circulating equipment.
42                              Fire fighting, rescue, and safety
                                 equipment.
43                              Pumps and compressors.
44                              Furnace, steam plant, and drying
                                 equipment; and nuclear reactors.
45                              Plumbing, heating, and sanitation
                                 equipment.
46                              Water purification and sewage treatment
                                 equipment.
47                              Pipe, tubing, hose, and fittings.
48                              Valves.
49                              Maintenance and repair shop equipment.
51                              Hand tools.
52                              Measuring tools.
53                              Hardware and abrasives.
54                              Prefabricated structures and
                                 scaffolding.
55                              Lumber, millwork, plywood, and veneer.
56                              Construction and building materials.
58                              Communication, detection, and coherent
                                 radiation equipment.
59                              Electrical and electronic equipment
                                 components.
60                              Fiber optics materials, components,
                                 assemblies, and accessories.
61                              Electric wire, and power and
                                 distribution equipment.
62                              Lighting fixtures and lamps.
63                              Alarm, signal, and security detection
                                 systems.
65                              Medical, dental, and veterinary
                                 equipment and supplies.
66                              Instruments and laboratory equipment.
67                              Photographic equipment.
68                              Chemicals and chemical products.
69                              Training aids and devices.
70                              General-purpose information technology
                                 equipment.
71                              Furniture.
72                              Household and commercial furnishings and
                                 appliances.
73                              Food preparation and serving equipment.
74                              Office machines, text processing
                                 systems, and visible record equipment.
75                              Office supplies and devices.
76                              Books, maps, and other publications.
77                              Musical instruments, phonographs, and
                                 home-type radios.
78                              Recreational and athletic equipment.
79                              Cleaning equipment and supplies.
80                              Brushes, paints, sealers, and adhesives.
81                              Containers, packaging, and packing
                                 supplies.
83                              Textiles, leather, furs, apparel and
                                 shoe findings, tents, and flags.
84                              Clothing, individual equipment, and
                                 insignia.
85                              Toiletries.
87                              Agricultural supplies.
88                              Live animals.
89                              Subsistence.
91                              Fuels, lubricants, oils, and waxes.
93                              Nonmetallic fabricated materials.
94                              Nonmetallic crude materials.
95                              Metal bars, sheets, and shapes.
96                              Ores, minerals, and their primary
                                 products.
99                              Miscellaneous.
 

    (3) Only one classification code shall be reported. If more than one 
code is applicable, the contracting officer shall use the code which 
describes the predominant product or service being procured. The FPDS 
Product and Service Codes Manual, October 1988, may be used to identify 
a specific product or service within each code.
    (h) Cancellation of synopsis. Contracting officers should not 
publish notices of solicitation cancellations (or indefinite 
suspensions) of proposed contract actions in the CBD. Cancellations of 
solicitations shall be made in accordance with 14.209 and 14.404-1.

[48 FR 42119, Sept. 19, 1983]

    Editorial Note: For Federal Register citations affecting section 
5.207, see the List of Sections Affected in the Finding Aids section of 
this volume.



                Subpart 5.3--Synopses of Contract Awards



5.301  General.

    (a) Except for contract actions described in paragraph (b) of this 
section, contracting officers shall synopsize in the Commerce Business 
Daily (CBD) awards exceeding $25,000 that (1) are subject to the Trade 
Agreements Act (see 25.402 and 25.403), or (2) are likely to result in 
the award of any subcontracts. However, the dollar threshold is not a 
prohibition against publicizing an award of a smaller amount

[[Page 77]]

when publicizing would be advantageous to industry or to the Government.
    (b) A notice is not required under paragraph (a) of this section 
if--
    (1) The notice would disclose the executive agency's needs and the 
disclosure of such needs would compromise the national security;
    (2) The award results from acceptance of an unsolicited research 
proposal that demonstrates a unique and innovative research concept and 
publication of any notice would disclose the originality of thought or 
innovativeness of the proposed research or would disclose proprietary 
information associated with the proposal;
    (3) The award results from a proposal submitted under the Small 
Business Innovation Development Act of 1982 (Pub. L. 97-219);
    (4) The contract action is an order placed under Subpart 16.5;
    (5) The award is made for perishable subsistence supplies;
    (6) The award is for utility services, other than telecommunications 
services, and only one source is available;
    (7) The contract action--
    (i) Is for an amount not greater than the simplified acquisition 
threshold;
    (ii) Was conducted by using FACNET, or access to the notice of 
proposed contract action was provided through the single, Governmentwide 
point of entry; and
    (iii) Permitted the public to respond to the solicitation 
electronically; or
    (8) The award is for the services of an expert to support the 
Federal Government in any current or anticipated litigation or dispute 
pursuant to the exception to full and open competition authorized at 
6.302-3.
    (c) With respect to acquisitions subject to the Trade Agreements 
Act, contracting officers shall submit synopses in sufficient time to 
permit their publication in the CBD not later than 60 days after award.

[52 FR 19802, May 27, 1987, as amended at 53 FR 27463, July 20, 1988; 60 
FR 34747, July 3, 1995; 60 FR 42653, Aug. 16, 1995; 60 FR 49725, Sept. 
26, 1995; 63 FR 58593, Oct. 30, 1998]



5.302  Preparation and transmittal of synopses of awards.

    Contracting officers shall transmit synopses of contract awards in 
the same manner as prescribed in 5.207.

[55 FR 52790, Dec. 21, 1990]



5.303  Announcement of contract awards.

    (a) Public announcement. Contracting officers shall make information 
available on awards over $3 million (unless another dollar amount is 
specified in agency acquisition regulations) in sufficient time for the 
agency concerned to announce it by 5:00 p.m. Washington, DC time on the 
day of award. Contracts excluded from this reporting requirement include 
(1) those placed with the Small Business Administration under Section 
8(a) of the Small Business Act, (2) those placed with foreign firms when 
the place of delivery or performance is outside the United States or its 
possessions, and (3) those for which synopsis was exempted under 
5.202(a)(1). Agencies shall not release information on awards before the 
public release time of 5:00 p.m. Washington, DC time.
    (b) Local announcement. Agencies may also release information on 
contract awards to the local press or other media. When local 
announcements are made for contract awards in excess of the simplified 
acquisition threshold, they shall include--
    (1) For awards after sealed bidding, a statement that the contract 
was awarded after competition by sealed bidding, the number of offers 
solicited and received, and the basis for selection (e.g., the lowest 
responsible bidder); or
    (2) For awards after negotiation, the information prescribed by 
15.503(b), and after competitive negotiation (either price or design 
competition), a statement to this effect, and in general terms the basis 
for selection.

[48 FR 42119, Sept. 19, 1983, as amended at 50 FR 1729, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985; 52 FR 30076, Aug. 12, 1987; 55 FR 3881, Feb. 
5, 1990; 56 FR 67128, Dec. 27, 1991; 59 FR 67017, Dec. 28, 1994; 60 FR 
34747, July 3, 1995; 60 FR 42653, Aug. 16, 1995; 61 FR 39190, July 26, 
1996; 61 FR 69289, Dec. 31, 1996; 62 FR 51270, Sept. 30, 1997]

[[Page 78]]



                   Subpart 5.4--Release of Information



5.401  General.

    (a) A high level of business security must be maintained in order to 
preserve the integrity of the acquisition process. When it is necessary 
to obtain information from potential contractors and others outside the 
Government for use in preparing Government estimates, contracting 
officers shall ensure that the information is not publicized or 
discussed with potential contractors.
    (b) Contracting officers may make available maximum information to 
the public, except information--
    (1) On plans that would provide undue or discriminatory advantage to 
private or personal interests;
    (2) Received in confidence from an offeror;
    (3) Otherwise requiring protection under Freedom of Information Act 
(see subpart 24.2) or Privacy Act (see subpart 24.1); or
    (4) Pertaining to internal agency communications (e.g., technical 
reviews, contracting authority or other reasons, or recommendations 
referring thereto).
    (c) This policy applies to all Government personnel who participate 
directly or indirectly in any stage of the acquisition cycle.



5.402  General public.

    Contracting officers shall process requests for specific information 
from the general public, including suppliers, in accordance with subpart 
24.1 or 24.2, as appropriate.



5.403  Requests from Members of Congress.

    (a) Individual requests. Contracting officers shall give Members of 
Congress, upon their request, detailed information regarding any 
particular contract. When responsiveness would result in disclosure of 
classified matter, business confidential information, or information 
prejudicial to competitive acquisition, the contracting officer shall 
refer the proposed reply, with full documentation, to the agency head 
and inform the legislative liaison office of the action.
    (b) Inclusion on solicitation mailing lists. Upon request of a 
Congressional Committee or Subcommittee Chairperson, contracting 
officers shall place any member of a Committee or Subcommittee on the 
applicable solicitation mailing lists to receive automatic distribution 
of solicitations in the specific area of interest.

[48 FR 42119, Sept. 19, 1983, as amended at 50 FR 1729, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985]



5.404  Release of long-range acquisition estimates.

    To assist industry planning and to locate additional sources of 
supply, it may be desirable to publicize estimates of unclassified long-
range acquisition requirements. Estimates may be publicized as far in 
advance as possible.



5.404-1  Release procedures.

    (a) Application. The agency head, or a designee, may release long-
range acquisition estimates if the information will--
    (1) Assist industry in its planning and facilitate meeting the 
acquisition requirements;
    (2) Not encourage undesirable practices (e.g., attempts to corner 
the market or hoard industrial materials); and
    (3) Not indicate the existing or potential mobilization of the 
industry as a whole.
    (b) Conditions. The agency head shall ensure that--
    (1) Classified information is released through existing security 
channels in accordance with agency security regulations;
    (2) The information is publicized as widely as practicable to all 
parties simultaneously by any of the means described in this part;
    (3) Each release states that (i) the estimate is based on the best 
information available, (ii) the information is subject to modification 
and is in no way binding on the Government, and (iii) more specific 
information relating to any individual item or class of items will not 
be furnished until the proposed acquisition is synopsized in the CBD, or 
the solicitation is issued;
    (4) Each release contains the name and address of the contracting 
officer that will process the acquisition;

[[Page 79]]

    (5) Modifications to the original release are publicized as soon as 
possible, in the same manner as the original; and
    (6) Each release--
    (i) Is coordinated in advance with small business, public 
information, and public relations personnel, as appropriate;
    (ii) Contains, if applicable, a statement that small business set-
asides may be involved, but that a determination can be made only when 
acquisition action is initiated; and
    (iii) Contains the name or description of the item, and the 
estimated quantity to be acquired by calendar quarter, fiscal year, or 
other period. It may also contain such additional information as the 
number of units last acquired, the unit price, and the name of the last 
supplier.

[48 FR 42119, Sept. 19, 1983, as amended at 60 FR 48259, Sept. 18, 1995]



5.404-2  Announcements of long-range acquisition estimates.

    Further publication, consistent with the needs of the individual 
case, may be accomplished by announcing in the CBD that long-range 
acquisition estimates have been published and are obtainable, upon 
request, from the contracting officer.



5.405  Exchange of acquisition information.

    (a) When the same item or class of items is being acquired by more 
than one agency, or by more than one contracting activity within an 
agency, the exchange and coordination of pertinent information, 
particularly cost and pricing data, between these agencies or 
contracting activities is necessary to promote uniformity of treatment 
of major issues and the resolution of particularly difficult or 
controversial issues. The exchange and coordination of information is 
particularly beneficial during the period of acquisition planning, 
presolicitation, evaluation, and pre-award survey.
    (b) When substantial acquisitions of major items are involved or 
when the contracting activity deems it desirable, the contracting 
activity shall request appropriate information (on both the end item and 
on major subcontracted components) from other agencies or contracting 
activities responsible for acquiring similar items. Each agency or 
contracting activity receiving such a request shall furnish the 
information requested. The contracting officer, early in a negotiation 
of a contract, or in connection with the review of a subcontract, shall 
request the contractor to furnish information as to the contractor's or 
subcontractor's previous Government contracts and subcontracts for the 
same or similar end items and major subcontractor components.



                    Subpart 5.5--Paid Advertisements



5.501  Definitions.

    Advertisement, as used in this subpart, means any single message 
prepared for placement in communication media, regardless of the number 
of placements.
    Publication, as used in this subpart, means (a) the placement of an 
advertisement in a newspaper, magazine, trade or professional journal, 
or any other printed medium, or (b) the broadcasting of an advertisement 
over radio or television.



5.502  Authority.

    (a) Newspapers. Authority to approve the publication of paid 
advertisements in newspapers is vested in the head of each agency (44 
U.S.C. 3702). This approval authority may be delegated (5 U.S.C. 302 
(b)). Contracting officers shall obtain written authorization in 
accordance with agency procedures before advertising in newspapers.
    (b) Other media. Unless the agency head determines otherwise, 
advance written authorization is not required to place advertisements in 
media other than newspapers.



5.503  Procedures.

    (a) General. (1) Orders for paid advertisements may be placed 
directly with the media or through an advertising agency. Contracting 
officers shall give small, small disadvantaged and women-owned small 
business concerns maximum opportunity to participate in these 
acquisitions.
    (2) The contracting officer shall use the SF 1449 for paper 
solicitations. The

[[Page 80]]

SF 1449 shall be used to make awards or place orders unless the award/
order is made by using electronic commerce or by using the 
Governmentwide commercial purchase card for micropurchases.
    (b) Rates. Advertisements may be paid for at rates not over the 
commercial rates charged private individuals, with the usual discounts 
(44 U.S.C. 3703).
    (c) Proof of advertising. Every invoice for advertising shall be 
accompanied by a copy of the advertisement or an affidavit of 
publication furnished by the publisher, radio or television station, or 
advertising agency concerned (44 U.S.C. 3703). Paying offices shall 
retain the proof of advertising until the General Accounting Office 
settles the paying office's account.
    (d) Payment. Upon receipt of an invoice supported by proof of 
advertising, the contracting officer shall attach a copy of the written 
authority (see 5.502(a)) and submit the invoice for payment under agency 
procedures.

[48 FR 42119, Sept. 19, 1983, as amended at 54 FR 48982, Nov. 28, 1989; 
60 FR 34747, July 3, 1995; 60 FR 48259, Sept. 18, 1995; 61 FR 39192, 
July 26, 1996; 63 FR 58593, Oct. 30, 1998]



5.504  Use of advertising agencies.

    (a) General. Basic ordering agreements may be placed with 
advertising agencies for assistance in producing and placing 
advertisements when a significant number will be placed in several 
publications and in national media. Services of advertising agencies 
include, but are not limited to, counseling as to selection of the media 
for placement of the advertisement, contacting the media in the interest 
of the Government, placing orders, selecting and ordering typography, 
copywriting, and preparing rough layouts.
    (b) Use of commission-paying media. The services of advertising 
agencies in placing advertising with media often can be obtained at no 
cost to the Government, over and above the space cost, as many media 
give advertising agencies a commission or discount on the space cost 
that is not given to the Government.
    (c) Use of noncommission-paying media. Some media do not grant 
advertising agencies a commission or discount, meaning the Government 
can obtain the same rate as the advertising agency. If the advertising 
agency agrees to place advertisements in noncommission-paying media as a 
no-cost service, the basic ordering agreement shall so provide. If the 
advertising agency will not agree to place advertisements at no cost, 
the agreement shall (1) provide that the Government may place orders 
directly with the media, or (2) specify an amount that the Government 
will pay if the agency places the orders.
    (d) Art work, supplies, and incidentals. The basic ordering 
agreement also may provide for the furnishing by the advertising agency 
of art work, supplies, and incidentals, including brochures and 
pamphlets, but not their printing. Incidentals may include telephone 
calls, telegrams, and postage incurred by the advertising agency on 
behalf of the Government.



PART 6--COMPETITION REQUIREMENTS--Table of Contents




Sec.
6.000  Scope of part.
6.001  Applicability.
6.002  Limitations.
6.003  Definitions.

                 Subpart 6.1--Full and Open Competition

6.100  Scope of subpart.
6.101  Policy.
6.102  Use of competitive procedures.

    Subpart 6.2--Full and Open Competition After Exclusion of Sources

6.200  Scope of subpart.
6.201  Policy.
6.202  Establishing or maintaining alternative sources.
6.203  Set-asides for small business concerns.
6.204  Section 8(a) competition.
6.205  Set-asides for HUBZone small business concerns.

            Subpart 6.3--Other Than Full and Open Competition

6.300  Scope of subpart.
6.301  Policy.
6.302  Circumstances permitting other than full and open competition.
6.302-1  Only one responsible source and no other supplies or services 
          will satisfy agency requirements.
6.302-2  Unusual and compelling urgency.

[[Page 81]]

6.302-3  Industrial mobilization; engineering, developmental, or 
          research capability; or expert services.
6.302-4  International agreement.
6.302-5  Authorized or required by statute.
6.302-6  National security.
6.302-7  Public interest.
6.303  Justifications.
6.303-1  Requirements.
6.303-2  Content.
6.304  Approval of the justification.
6.305  Availability of the justification.

          Subpart 6.4--Sealed Bidding and Competitive Proposals

6.401  Sealed bidding and competitive proposals.

                   Subpart 6.5--Competition Advocates

6.501  Requirement.
6.502  Duties and responsibilities.

    Authority: 40 U.S.C. 486(c); 10 U.S.C. Chapter 137; and 42 U.S.C. 
2473(c).

    Source: 50 FR 1729, Jan. 11, 1985 (interim rule), and 50 FR 52429, 
Dec. 23, 1985 (final rule), unless otherwise noted.



6.000  Scope of part.

    This part prescribes policies and procedures to promote full and 
open competition in the acquisition process and to provide for full and 
open competition, full and open competition after exclusion of sources, 
other than full and open competition, and competition advocates. As used 
in this part, full and open competition is the process by which all 
responsible offerors are allowed to compete. This part does not deal 
with the results of competition (e.g., adequate price competition), 
which are addressed in other parts (e.g., part 15).



6.001  Applicability.

    This part applies to all acquisitions except--
    (a) Contracts awarded using the simplified acquisition procedures of 
part 13 (but see 13.501 for requirements pertaining to sole source 
acquisition of commercial items under subpart 13.5).
    (b) Contracts awarded using contracting procedures (other than those 
addressed in this part) that are expressly authorized by statute;
    (c) Contract modifications, that are within the scope of the 
contract, including the exercise of priced options that were evaluated 
as part of the original competition (see 17.207(f));
    (d) Orders placed under requirements contracts or definite-quantity 
contracts;
    (e) Orders placed under indefinite-quantity contracts that were 
entered into pursuant to this part when--
    (1) The contract was awarded under subpart 6.1 or 6.2 and all 
responsible sources were realistically permitted to compete for the 
requirements contained in the order; or
    (2) The contract was awarded under subpart 6.3 and the required 
justification and approval adequately covers the requirements contained 
in the order; or
    (f) Orders placed against task order and delivery order contracts 
entered into pursuant to subpart 16.5.

[50 FR 52431, Dec. 23, 1985, as amended at 55 FR 52790, Dec. 21, 1990; 
60 FR 34747, July 3, 1995; 60 FR 49725, Sept. 26, 1995; 62 FR 263, Jan. 
2, 1997; 62 FR 64917, Dec. 9, 1997]



6.002  Limitations.

    No agency shall contract for supplies or services from another 
agency for the purpose of avoiding the requirements of this part.



6.003  Definitions.

    Full and open competition, when used with respect to a contract 
action, means that all responsible sources are permitted to compete.
    Procuring activity, as used in this part, means a component of an 
executive agency having a significant acquisition function and 
designated as such by the head of the agency. Unless agency regulations 
specify otherwise, the term procuring activity shall be synonymous with 
contracting activity as defined in subpart 2.1.
    Sole source acquisition means a contract for the purchase of 
supplies or services that is entered into or proposed to be entered into 
by an agency after soliciting and negotiating with only one source.
    Unique and innovative concept, when used relative to an unsolicited 
research proposal, means that, in the opinion and to the knowledge of 
the Government evaluator, the meritorious proposal is the product of 
original thinking submitted in confidence by one

[[Page 82]]

source; contains new novel or changed concepts, approaches, or methods; 
was not submitted previously by another; and, is not otherwise available 
within the Federal Government. In this context, the term does not mean 
that the source has the sole capability of performing the research.

[50 FR 1729, Jan. 11, 1985; 50 FR 52429, Dec. 23, 1985, as amended at 53 
FR 27463, July 20, 1988]



                 Subpart 6.1--Full and Open Competition



6.100  Scope of subpart.

    This subpart prescribes the policy and procedures that are to be 
used to promote and provide for full and open competition.



6.101  Policy.

    (a) 10 U.S.C. 2304 and 41 U.S.C. 253 require, with certain limited 
exceptions (see subparts 6.2 and 6.3), that contracting officers shall 
promote and provide for full and open competition in soliciting offers 
and awarding Government contracts.
    (b) Contracting officers shall provide for full and open competition 
through use of the competitive procedure(s) contained in this subpart 
that are best suited to the circumstances of the contract action and 
consistent with the need to fulfill the Government's requirements 
efficiently (10 U.S.C. 2304 and 41 U.S.C. 253).

[50 FR 1729, Jan. 11, 1985, and 50 FR 52429, Dec. 23, 1985, as amended 
at 62 FR 51230, Sept. 30, 1997]



6.102  Use of competitive procedures.

    The competitive procedures available for use in fulfilling the 
requirement for full and open competition are as follows:
    (a) Sealed bids. (See 6.401(a).)
    (b) Competitive proposals. (See 6.401(b).) If sealed bids are not 
appropriated under (a) above, contracting officers shall request 
competitive proposals or use the other competitive procedures under (c) 
or (d) below.
    (c) Combination of competitive procedures. If sealed bids are not 
appropriate, contracting officers may use any combination of competitive 
procedures (e.g., two-step sealed bidding).
    (d) Other competitive procedures. (1) Selection of sources for 
architect-engineer contracts in accordance with the provisions of Pub. 
L. 92-582 (40 U.S.C. 541 et seq.) is a competitive procedure (see 
subpart 36.6 for procedures).
    (2) Competitive selection of basic and applied research and that 
part of development not related to the development of a specific system 
or hardware procurement is a competitive procedure if award results 
from--
    (i) A broad agency announcement that is general in nature 
identifying areas of research interest, including criteria for selecting 
proposals, and soliciting the participation of all offerors capable of 
satisfying the Government's needs; and
    (ii) A peer of scientific review.
    (3) Use of multiple award schedules issued under the procedures 
established by the Administrator of General Services consistent with the 
requirement of 41 U.S.C. 259(b)(3)(A) for the multiple award schedule 
program of the General Services Administration is a competitive 
procedure.

[50 FR 1729, Jan. 11, 1985; 50 FR 52429, Dec. 23, 1985, as amended at 53 
FR 27463, July 20, 1988; 59 FR 53716, Oct. 25, 1994]



    Subpart 6.2--Full and Open Competition After Exclusion of Sources



6.200  Scope of subpart.

    This subpart prescribes policies and procedures for providing for 
full and open competition after excluding one or more sources.



6.201   Policy.

    Acquisitions made under this subpart require use of the competitive 
procedures prescribed in 6.102.

[64 FR 51831, Sept. 24, 1999]

    Effective Date Note: At 64 FR 51831, Sept. 24, 1999, section 6.201 
was revised, effective Nov. 23, 1999. For the convenience of the user, 
the superseded text is set forth as follows:

6.201  Policy.

    Acquisitions made under this subpart require use of the competitive 
procedures prescribed in 6.102 after agencies have excluded a source or 
sources from participation in a

[[Page 83]]

contract action under the circumstances described in 6.202 or 6.203 
below.



6.202  Establishing or maintaining alternative sources.

    (a) Agencies may exclude a particular source from a contract action 
in order to establish or maintain an alternative source or sources for 
the supplies or services being acquired if the agency head determines 
that to do so would--
    (1) Increase or maintain competition and likely result in reduced 
overall costs for the acquisition, or for any anticipated acquisition;
    (2) Be in the interest of national defense in having a facility (or 
a producer, manufacturer, or other supplier) available for furnishing 
the supplies or services in case of a national emergency or industrial 
mobilization;
    (3) Be in the interest of national defense in establishing or 
maintaining an essential engineering, research, or development 
capability to be provided by an educational or other nonprofit 
institution or a federally funded research and development center;
    (4) Ensure the continuous availability of a reliable source of 
supplies or services;
    (5) Satisfy projected needs based on a history of high demand; or
    (6) Satisfy a critical need for medical, safety, or emergency 
supplies.
    (b)(1) Every proposed contract action under the authority of 
paragraph (a) above shall be supported by a determination and findings 
(D&F) (see subpart 1.7) signed by the head of the agency or designee. 
This D&F shall not be made on a class basis.
    (2) Technical and requirements personnel are responsible for 
providing all necessary data to support their recommendation to exclude 
a particular source.
    (3) When the authority in (a)(1) above is cited, the findings shall 
include a description of the estimated reduction in overall costs and 
how the estimate was derived.

[50 FR 1729, Jan. 11, 1985, as amended at 60 FR 42653, Aug. 16, 1995]



6.203  Set-asides for small business concerns.

    (a) To fulfill the statutory requirements relating to small business 
concerns, contracting officers may set aside solicitations to allow only 
such business concerns to compete. This includes contract actions 
conducted under the Small Business Innovation Research Program 
established under Pub. L. 97-219.
    (b) No separate justification or determination and findings is 
required under this part to set aside a contract action for small 
business concerns.
    (c) Subpart 19.5 prescribes policies and procedures that shall be 
followed with respect to set-asides.

[60 FR 48259, Sept. 18, 1995]



6.204  Section 8(a) competition.

    (a) To fulfill statutory requirements relating to section 8(a) of 
the Small Business Act, as amended by Pub. L. 100-656, contracting 
officers may limit competition to eligible 8(a) contractors (see subpart 
19.8).
    (b) No separate justification or determination and findings is 
required under this part to limit competition to eligible 8(a) 
contractors.

[54 FR 46005, Oct. 31, 1989]



6.205  Set-asides for HUBZone small business concerns.

    (a) To fulfill the statutory requirements relating to the HUBZone 
Act of 1997 (15 U.S.C. 631 note), contracting officers in participating 
agencies (see 19.1302) may set aside solicitations to allow only 
qualified HUBZone small business concerns to compete (see 19.1305).
    (b) No separate justification or determination and findings is 
required under this part to set aside a contract action

[[Page 84]]

for qualified HUBZone small business concerns.

[63 FR 70267, Dec. 18, 1998]



            Subpart 6.3--Other Than Full and Open Competition



6.300  Scope of subpart.

    This subpart prescribes policies and procedures, and identifies the 
statutory authorities, for contracting without providing for full and 
open competition.



6.301  Policy.

    (a) 41 U.S.C. 253(c) and 10 U.S.C. 2304(c) each authorize, under 
certain conditions, contracting without providing for full and open 
competition. The Department of Defense, Coast Guard, and National 
Aeronautics and Space Administration are subject to 10 U.S.C. 2304(c). 
Other executive agencies are subject to 41 U.S.C. 253(c). Contracting 
without providing for full and open competition or full and open 
competition after exclusion of sources is a violation of statute, unless 
permitted by one of the exceptions in 6.302.
    (b) Each contract awarded without providing for full and open 
competition shall contain a reference to the specific authority under 
which it was so awarded. Contracting officers shall use the U.S. Code 
citation applicable to their agency. (See 6.302.)
    (c) Contracting without providing for full and open competition 
shall not be justified on the basis of (1) a lack of advance planning by 
the requiring activity or (2) concerns related to the amount of funds 
available (e.g., funds will expire) to the agency or activity for the 
acquisition of supplies or services.
    (d) When not providing for full and open competition, the 
contracting officer shall solicit offers from as many potential sources 
as is practicable under the circumstances.
    (e) For contracts under this subpart, the contracting officer shall 
use the contracting procedures prescribed in 6.102 (a) or (b), if 
appropriate, or any other procedures authorized by this regulation.



6.302  Circumstances permitting other than full and open competition.

    The following statutory authorities (including applications and 
limitations) permit contracting without providing for full and open 
competition. Requirements for justifications to support the use of these 
authorities are in 6.303.

[50 FR 52431, Dec. 23, 1985]



6.302-1  Only one responsible source and no other supplies or services will satisfy agency requirements.

    (a) Authority. (1) Citations: 10 U.S.C. 2304(c)(1) or 41 U.S.C. 
253(c)(1).
    (2) When the supplies or services required by the agency are 
available from only one responsible source, or, for DoD, NASA, and the 
Coast Guard, from only one or a limited number of responsible sources, 
and no other type of supplies or services will satisfy agency 
requirements, full and open competiton need not be provided for.
    (i) Supplies or services may be considered to be available from only 
one source if the source has submitted an unsolicited research proposal 
that:
    (A) Demonstrates a unique and innovative concept, or, demonstrates a 
unique capability of the source to provide the particular research 
services proposed;
    (B) Offers a concept or services not otherwise available to the 
Government; and
    (C) Does not resemble the substance of a pending competitive 
acquisition. (See 10 U.S.C. 2304(d)(1)(A) and 41 U.S.C. 253(d)(1)(A).)
    (ii) Supplies may be deemed to be available only from the original 
source in the case of a follow-on contract for the continued development 
or production of a major system or highly specialized equipment, 
including major components thereof, when it is likely that award to any 
other source would result in (A) substantial duplication of cost to the 
Government that is not expected to be recovered through competition, or 
(B) unacceptable delays in fulfilling the agency's requirements. (See 10 
U.S.C. 2304(d)(1)(B) or 41 U.S.C. 253(d)(1)(B).)
    (iii) For DoD, NASA, and the Coast Guard, services may be deemed to 
be available only from the original source

[[Page 85]]

in the case of follow-on contracts for the continued provision of highly 
specialized services when it is likely that award to any other source 
would result in (A) substantial duplication of cost to the Government 
that is not expected to be recovered through competition, or (B) 
unacceptable delays in fulfilling the agency's requirements. (See 10 
U.S.C. 2304(d)(1)(B)).
    (b) Application. This authority shall be used, if appropriate, in 
preference to the authority in 6.302-7; it shall not be used when any of 
the other circumstances is applicable. Use of this authority may be 
appropriate in situations such as the following (these examples are not 
intended to be all-inclusive and do not consitute authority in and of 
themselves):
    (1) When there is a reasonable basis to conclude that the agency's 
minimum needs can only be satisfied by (i) unique supplies or services 
available from only one source or only one supplier with unique 
capabilities; or, (ii) for DoD, NASA, and the Coast Guard, unique 
supplies or services available from only one or a limited number of 
sources or from only one or a limited number of suppliers with unique 
capabilities.
    (2) The existence of limited rights in data, patent rights, 
copyrights, or secret processes; the control of basic raw material; or 
similar circumstances, make the supplies and services available from 
only one source (however, the mere existence of such rights or 
circumstances does not in and of itself justify the use of these 
authorities) (see part 27).
    (3) When acquiring utility services (see 41.101), circumstances may 
dictate that only one supplier can furnish the service (see 41.202); or 
when the contemplated contract is for construction of a part of a 
utility system and the utility company itself is the only source 
available to work on the system.
    (4) When the agency head has determined in accordance with the 
agency's standardization program that only specified makes and models of 
technical equipment and parts will satisfy the agency's needs for 
additional units or replacement items, and only one source is available.
    (c) Application for brand name descriptions. An acquisition that 
uses a brand name description or other purchase description to specify a 
particular brand name, product, or feature of a product, peculiar to one 
manufacturer does not provide for full and open competition regardless 
of the number of sources solicited. It shall be justified and approved 
in accordance with FAR 6.303 and 6.304. The justification should 
indicate that the use of such descriptions in the acquisition is 
essential to the Government's requirements, thereby precluding 
consideration of a product manufactured by another company. (Brand-name 
or equal descriptions, and other purchase descriptions that permit 
prospective contractors to offer products other than those specifically 
referenced by brand name, provide for full and open competition and do 
not require justifications and approvals to support their use.)
    (d) Limitations. (1) Contracts awarded using this authority shall be 
supported by the written justifications and approvals described in 6.303 
and 6.304.
    (2) For contracts awarded using this authority, the notices required 
by 5.201 shall have been published and any bids and proposals must have 
been considered. (See 15.402(g).)

[50 FR 52431, Dec. 23, 1985, as amended at 52 FR 21886, June 9, 1987; 53 
FR 27463, July 20, 1988; 56 FR 29127, June 25, 1991; 59 FR 67018, Dec. 
28, 1994]



6.302-2  Unusual and compelling urgency.

    (a) Authority. (1) Citations: 10 U.S.C. 2304(c)(2) or 41 U.S.C. 
253(c)(2).
    (2) When the agency's need for the supplies or services is of such 
an unusual and compelling urgency that the Government would be seriously 
injured unless the agency is permitted to limit the number of sources 
from which it solicits bids or proposals, full and open competition need 
not be provided for.
    (b) Application. This authority applies in those situations where 
(1) an unusual and compelling urgency precludes full and open 
competition, and (2) delay in award of a contract would result in 
serious injury, financial or other, to the Government.
    (c) Limitations. (1) Contracts awarded using this authority shall be 
supported

[[Page 86]]

by the written justifications and approvals described in 6.303 and 
6.304. These justifications may be made and approved after contract 
award when preparation and approval prior to award would unreasonably 
delay the acquisition.
    (2) This statutory authority requires that agencies shall request 
offers from as many potential sources as is practicable under the 
circumstances.

[50 FR 52431, Dec. 23, 1985]



6.302-3  Industrial mobilization; engineering, developmental, or research capability; or expert services.

    (a) Authority. (1) Citations: 10 U.S.C. 2304(c)(3) or 41 U.S.C. 
253(c)(3).
    (2) Full and open competition need not to be provided for when it is 
necessary to award the contract to a particular source or sources in 
order--
    (i) To maintain a facility, producer, manufacturer, or other 
supplier available for furnishing supplies or services in case of a 
national emergency or to achieve industrial mobilization,
    (ii) To establish or maintain an essential engineering, research, or 
development capability to be provided by an educational or other 
nonprofit institution or a federally funded research and development 
center, or
    (iii) To acquire the services of an expert or neutral person (see 
33.201) for any current or anticipated litigation or dispute.
    (b) Application. (1) Use of the authority in paragraph (a)(2)(i) 
above may be appropriate when it is necessary to--
    (i) Keep vital facilities or suppliers in business or make them 
available in the event of a national emergency;
    (ii) Train a selected supplier in the furnishing of critical 
supplies or services, prevent the loss of a supplier's ability and 
employees' skills, or maintain active engineering, research, or 
development work;
    (iii) Maintain properly balanced sources of supply for meeting the 
requirements of acquisition programs in the interest of industrial 
mobilization (when the quantity required is substantially larger than 
the quantity that must be awarded in order to meet the objectives of 
this authority, that portion not required to meet such objectives will 
be acquired by providing for full and open competition as appropriate 
under this part);
    (iv) Limit competition for current acquisition of selected supplies 
or services approved for production planning under the Department of 
Defense Industrial Preparedness Program to planned producers with whom 
industrial preparedness agreements for those items exist, or limit award 
to offerors who agree to enter into industrial preparedness agreements;
    (v) Create or maintain the required domestic capability for 
production of critical supplies by limiting competition to items 
manufactured in the United States or the United States and Canada;
    (vi) Continue in production, contractors that are manufacturing 
critical items, where there would otherwise be a break in production; or
    (vii) Divide current production requirements among two or more 
contractors to provide for an adequate industrial mobilization base.
    (2) Use of the authority in paragraph (a)(2)(ii) above may be 
appropriate when it is necessary to--
    (i) Establish or maintain an essential capability for theoretical 
analyses, exploratory studies, or experiments in any field of science or 
technology;
    (ii) Establish or maintain an essential capability for engineering 
or developmental work calling for the practical application of 
investigative findings and theories of a scientific or technical nature; 
or
    (iii) Contract for supplies or services as are necessary incident to 
paragraphs (b)(2)(i) or (ii) above.
    (3) Use of the authority in paragraph (a)(2)(iii) of this section 
may be appropriate when it is necessary to acquire the services of 
either--
    (i) An expert to use, in any litigation or dispute (including any 
reasonably foreseeable litigation or dispute) involving the Government 
in any trial, hearing, or proceeding before any court, administrative 
tribunal, or agency, whether or not the expert is expected to testify. 
Examples of such services include, but are not limited to:
    (A) Assisting the Government in the analysis, presentation, or 
defense of any claim or request for adjustment to contract terms and 
conditions, whether

[[Page 87]]

asserted by a contractor or the Government, which is in litigation or 
dispute, or is anticipated to result in dispute or litigation before any 
court, administrative tribunal, or agency, or
    (B) Participating in any part of an alternative dispute resolution 
process, including but not limited to evaluators, fact finders, or 
witnesses, regardless of whether the expert is expected to testify; or
    (ii) A neutral person, e.g., mediators or arbitrators, to facilitate 
the resolution of issues in an alternative dispute resolution process.
    (c) Limitations. Contracts awarded using this authority shall be 
supported by the written justifications and approvals described in 6.303 
and 6.304.

[50 FR 52431, Dec. 23, 1985, as amended at 60 FR 42654, Aug. 16, 1995; 
60 FR 44548, Aug. 28, 1995; 62 FR 235, Jan. 2, 1997; 63 FR 58594, 58602, 
Oct. 30, 1998]



6.302-4  International agreement.

    (a) Authority. (1) Citations: 10 U.S.C. 2304(c)(4) or 41 U.S.C. 
253(c)(4).
    (2) Full and open competition need not be provided for when 
precluded by the terms of an international agreement or a treaty between 
the United States and a foreign government or international 
organization, or the written directions of a foreign government 
reimbursing the agency for the cost of the acquisition of the supplies 
or services for such government.
    (b) Application. This authority may be used in circumstances such 
as--
    (1) When a contemplated acquisition is to be reimbursed by a foreign 
country that requires that the product be obtained from a particular 
firm as specified in official written direction such as a Letter of 
Offer and Acceptance; or
    (2) When a contemplated acquisition is for services to be performed, 
or supplies to be used, in the sovereign territory of another country 
and the terms of a treaty or agreement specify or limit the sources to 
be solicited.
    (c) Limitations. Except for DoD, NASA, and the Coast Guard, 
contracts awarded using this authority shall be supported by written 
justifications and approvals described in 6.303 and 6.304.


[50 FR 52432, Dec. 23, 1985, as amended at 55 FR 52790, Dec. 21, 1990]



6.302-5  Authorized or required by statute.

    (a) Authority. (1) Citations: 10 U.S.C. 2304(c)(5) or 41 U.S.C. 
253(c)(5).
    (2) Full and open competition need not be provided for when (i) a 
statute expressly authorizes or requires that the acquisition be made 
through another agency or from a specified source, or (ii) the agency's 
need is for a brand name commercial item for authorized resale.
    (b) Application. This authority may be used when statutes, such as 
the following, expressly authorize or require that acquisition be made 
from a specified source or through another agency:
    (1) Federal Prison Industries (UNICOR)--18 U.S.C. 4124 (see subpart 
8.6);
    (2) Qualified Nonprofit Agencies for the Blind or other Severely 
Handicapped--41 U.S.C. 46-48c (see subpart 8.7);
    (3) Government Printing and Binding--44 U.S.C. 501-504, 1121 (see 
subpart 8.8);
    (4) Sole source awards under the 8(a) Program--15 U.S.C. 637 (see 
subpart 19.8); or
    (5) The Robert T. Stafford Disaster Relief and Emergency Assistance 
Act--42 U.S.C. 5150 (see subpart 26.2).
    (6) Sole source awards under the HUBZone Act of 1997--15 U.S.C. 657a 
(see 19.1306).
    (c) Limitations. (1) This authority shall not be used when a 
provision of law requires an agency to award a new contract to a 
specified non-Federal Government entity unless the provision of law 
specifically--
    (i) Identifies the entity involved;
    (ii) Refers to 10 U.S.C. 2304(j) for armed services acquisitions or 
section 303(h) of the Federal Property and Administrative Services Act 
of 1949 for civilian agency acquisitions; and
    (iii) States that award to that entity shall be made in 
contravention of the merit-based selection procedures in 10 U.S.C. 
2304(j) or section 303(h) of the Federal Property and Administrative

[[Page 88]]

Services Act, as appropriate. However, this limitation does not apply--
    (A) When the work provided for in the contract is a continuation of 
the work performed by the specified entity under a preceding contract; 
or
    (B) To any contract requiring the National Academy of Sciences to 
investigate, examine, or experiment upon any subject of science or art 
of significance to an executive agency and to report on those matters to 
the Congress or any agency of the Federal Government.
    (2) Contracts awarded using this authority shall be supported by the 
written justifications and approvals described in 6.303 and 6.304, 
except for--
    (i) Contracts awarded under (a)(2)(ii), (b)(2), or (b)(4) of this 
subsection; or
    (ii) Contracts awarded under (a)(2)(i) of this subsection when the 
statute expressly requires that the procurement be made from a specified 
source. (Justification and approval requirements apply when the statute 
authorizes, but does not require, that the procurement be made from a 
specified source.)
    (3) The authority in (a)(2)(ii) of this subsection may be used only 
for purchases of brand-name commercial items for resale through 
commissaries or other similar facilities. Ordinarily, these purchases 
will involve articles desired or preferred by customers of the selling 
activities (but see 6.301(d)).

[50 FR 52432, Dec. 23, 1985, as amended at 51 FR 36971, Oct. 16, 1986; 
54 FR 46005, Oct. 31, 1989; 60 FR 42654, Aug. 16, 1995; 61 FR 39200, 
July 26, 1996; 63 FR 70267, Dec. 18, 1998]



6.302-6  National security.

    (a) Authority. (1) Citations: 10 U.S.C. 2304(c)(6) or 41 U.S.C. 
253(c)(6).
    (2) Full and open competition need not be provided for when the 
disclosure of the agency's needs would compromise the national security 
unless the agency is permitted to limit the number of sources from which 
it solicits bids or proposals.
    (b) Application. This authority may be used for any acquisition when 
disclosure of the Government's needs would compromise the national 
security (e.g., would violate security requirements); it shall not be 
used merely because the acquisition is classified, or merely because 
access to classified matter will be necessary to submit a proposal or to 
perform the contract.
    (c) Limitations. (1) Contracts awarded using this authority shall be 
supported by the written justifications and approvals described in 6.303 
and 6.304.
    (2) See 5.202(a)(1) for synopsis requirements.
    (3) This statutory authority requires that agencies shall request 
offers from as many potential sources as is practicable under the 
circumstances.

[50 FR 52432, Dec. 23, 1985]



6.302-7  Public interest.

    (a) Authority. (1) Citations: 10 U.S.C. 2304(c)(7) or 41 U.S.C. 
253(c)(7).
    (2) Full and open competition need not be provided for when the 
agency head determines that it is not in the public interest in the 
particular acquisition concerned.
    (b) Application. This authority may be used when none of the other 
authorities in 6.302 apply.
    (c) Limitations. (1) A written determination to use this authority 
shall be made in accordance with subpart 1.7, by (i) the Secretary of 
Defense, the Secretary of the Army, the Secretary of the Navy, the 
Secretary of the Air Force, the Secretary of Transportation for the 
Coast Guard, or the Administrator of the National Aeronautics and Space 
Administration; or (ii) the head of any other executive agency. This 
authority may not be delegated.
    (2) The Congress shall be notified in writing of such determination 
not less than 30 days before award of the contract.
    (3) If required by the head of the agency, the contracting officer 
shall prepare a justification to support the determination under 
paragraph (c)(1) above.
    (4) This Determination and Finding (D & F) shall not be made on a 
class basis.

[50 FR 52432, Dec. 23, 1985]



6.303  Justifications.



6.303-1  Requirements.

    (a) A contracting officer shall not commence negotiations for a sole 
source contract, commence negotiations for a contract resulting from an

[[Page 89]]

unsolicited proposal, or award any other contract without providing for 
full and open competition unless the contracting officer--
    (1) Justifies, if required in 6.302, the use of such actions in 
writing;
    (2) Certifies the accuracy and completeness of the justification; 
and
    (3) Obtains the approval required by 6.304.
    (b) Technical and requirements personnel are responsible for 
providing and certifying as accurate and complete necessary data to 
support their recommendation for other than full and open competition.
    (c) Justifications required by paragraph (a) above may be made on an 
individual or class basis. Any justification for contracts awarded under 
the authority of 6.302-7 shall only be made on an individual basis. 
Whenever a justification is made and approved on a class basis, the 
contracting officer must ensure that each contract action taken pursuant 
to the authority of the class justification and approval is within the 
scope of the class justification and approval and shall document the 
contract file for each contract action accordingly.
    (d) Contract actions subject to the Agreement on Government 
Procurement (see subpart 25.4, Foreign Acquisition) may be made without 
providing for full and open competition only when permitted and 
justified pursuant to this subpart. If, in such a contract action, the 
authority of 6.302-3(a)(2)(i) or 6.302-7 is being cited as a basis for 
not providing for full and open competition, a copy of the justification 
shall also be forwarded, in accordance with agency procedures, to the 
agency's point of contact with the Office of the United States Trade 
Representative.
    (e) The justifications for contracts awarded under the authority 
cited in 6.302-2 may be prepared and approved within a reasonable time 
after contract award when preparation and approval prior to award would 
unreasonably delay the acquisitions.

[50 FR 1729, Jan. 11, 1985, as amended at 50 FR 52433, Dec. 23, 1985; 55 
FR 25526, June 21, 1990]



 6.303-2  Content.

    (a) Each justification shall contain sufficient facts and rationale 
to justify the use of the specific authority cited. As a minimum, each 
justification shall include the following information:
    (1) Identification of the agency and the contracting activity, and 
specific identification of the document as a ``Justification for other 
than full and open competition.''
    (2) Nature and/or description of the action being approved.
    (3) A description of the supplies or services required to meet the 
agency's needs (including the estimated value).
    (4) An identification of the statutory authority permitting other 
than full and open competition.
    (5) A demonstration that the proposed contractor's unique 
qualifications or the nature of the acquisition requires use of the 
authority cited.
    (6) A description of efforts made to ensure that offers are 
solicited from as many potential sources as is practicable, including 
whether a CBD notice was or will be publicized as required by subpart 
5.2 and, if not, which exception under 5.202 applies.
    (7) A determination by the contracting officer that the anticipated 
cost to the Government will be fair and reasonable.
    (8) A description of the market research conducted (see part 10) and 
the results or a statement of the reason market research was not 
conducted.
    (9) Any other facts supporting the use of other than full and open 
competition, such as:
    (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) When 6.302-1 is cited for follow-on acquisitions as described 
in 6.302-1(a)(2)(ii), an estimate of the cost to the Government that 
would be duplicated and how the estimate was derived.
    (iii) When 6.302-2 is cited, data, estimated cost, or other 
rationale as to the extent and nature of the harm to the Government.

[[Page 90]]

    (10) A listing of the sources, if any, that expressed, in writing, 
an interest in the acquisition.
    (11) A statement of the actions, if any, the agency may take to 
remove or overcome any barriers to competition before any subsequent 
acquisition for the supplies or services required.
    (12) Contracting officer certification that the justification is 
accurate and complete to the best of the contracting officer's knowledge 
and belief.
    (b) Each justification shall include evidence that any supporting 
data that is the responsibility of technical or requirements personnel 
(e.g., verifying the Government's minimum needs or schedule requirements 
or other rationale for other than full and open competition) and which 
form a basis for the justification have been certified as complete and 
accurate by the technical or requirements personnel.

[50 FR 1729, Jan. 11, 1985, as amended at 50 FR 52433, Dec. 23, 1985; 60 
FR 48236, Sept. 18, 1995]



6.304  Approval of the justification.

    (a) Except for paragraph (b) of this section, the justification for 
other than full and open competition shall be approved in writing--
    (1) For a proposed contract not exceeding $500,000, the contracting 
officer's certification required by 6.303-2(a)(12) will serve as 
approval unless a higher approving level is established in agency 
procedures.
    (2) For a proposed contract over $500,000 but not exceeding 
$10,000,000, by the competition advocate for the procuring activity 
designated pursuant to 6.501 or an official described in paragraph 
(a)(3) or (a)(4) of this section. This authority is not delegable.
    (3) For a proposed contract over $10,000,000, but not exceeding 
$50,000,000, by the head of the procuring activity, or a designee who--
    (i) If a member of the armed forces, is a general or flag officer; 
or
    (ii) If a civilian, is serving in a position in grade GS 16 or above 
under the General Schedule (or in a comparable or higher position under 
another schedule).
    (4) For a proposed contract over $50,000,000, by the senior 
procurement executive of the agency designated pursuant to the OFPP Act 
(41 U.S.C. 414(3)) in accordance with agency procedures. This authority 
is not delegable except in the case of the Under Secretary of Defense 
(Acquisition and Technology), acting as the senior procurement executive 
for the Department of Defense.
    (b) Any justification for a contract awarded under the authority of 
6.302-7, regardless of dollar amount, shall be considered approved when 
the determination required by 6.302-7(c)(1) is made.
    (c) A class justification for other than full and open competition 
shall be approved in writing in accordance with agency procedures. The 
approval level shall be determined by the estimated total value of the 
class.
    (d) The estimated dollar value of all options shall be included in 
determining the approval level of a justification.

[50 FR 1729, Jan. 11, 1985, as amended at 50 FR 52433, Dec. 23, 1985; 54 
FR 13023, Mar. 29, 1989; 55 FR 3881, Feb. 5, 1990; 55 FR 52790, Dec. 21, 
1990; 60 FR 42654, 42665, Aug. 16, 1995; 61 FR 31618, June 20, 1996]



6.305  Availability of the justification.

    (1) The justification required by 6.303-1 and any related 
information shall be made available for public inspection as required by 
10 U.S.C. 2304(f)(4) and 41 U.S.C. 303(f)(4). Contracting officers shall 
carefully screen all justifications for contractor proprietary data and 
remove all such data, and such references and citations as are necessary 
to protect the proprietary data, before making the justifications 
available for public inspection. Contracting officers shall also be 
guided by the exemptions to disclosure of information contained in the 
Freedom of Information Act (5 U.S.C. 552) and the prohibitions against 
disclosure in 24.202 in determining whether other data should be 
removed.
    (2) If a Freedom of Information request is received, contracting 
officers shall comply with subpart 24.2.

[50 FR 1729, Jan. 11, 1985 and 50 FR 52429, Dec. 23, 1985, as amended at 
62 FR 257, Jan. 2, 1997]

[[Page 91]]



          Subpart 6.4--Sealed Bidding and Competitive Proposals



6.401  Sealed bidding and competitive proposals.

    Sealed bidding and competitive proposals, as described in Parts 14 
and 15, are both acceptable procedures for use under Subparts 6.1, 6.2; 
and, when appropriate, under Subpart 6.3.
    (a) Sealed bids. (See part 14 for procedures.) Contracting officers 
shall solicit sealed bids if--
    (1) Time permits the solicitation, submission, and evaluation of 
sealed bids;
    (2) The award will be made on the basis of price and other price-
related factors;
    (3) It is not necessary to conduct discussions with the responding 
offerors about their bids; and
    (4) There is reasonable expectation of receiving more than one 
sealed bid.
    (b) Competitive proposals. (See part 15 for procedures.)
    (1) Contracting officers may request competitive proposals if sealed 
bids are not appropriate under paragraph (a) above.
    (2) Because of differences in areas such as law, regulations, and 
business practices, it is generally necessary to conduct discussions 
with offerors relative to proposed contracts to be made and performed 
outside the United States, it possessions, or Puerto Rico. Competitive 
proposals will therefore be used for these contracts unless discussions 
are not required and the use of sealed bids is otherwise appropriate.

[50 FR 1729, Jan. 11, 1985; 50 FR 4221, Jan. 30, 1985; 50 FR 52429, Dec. 
23, 1985; 54 FR 5054, Jan. 31, 1989; 64 FR 51833, Sept. 24, 1999]

    Effective Date Note: At 64 FR 51833, Sept. 24, 1999, Sec. 6.401 was 
amended by revising the introductory text, effective Nov. 23, 1999. For 
the convenience of the user, the superseded text is set forth as 
follows:

6.401  Sealed bidding and competitive proposals.

    Sealed bidding and competitive proposals, as described in parts 14 
and 15, are both acceptable procedures for use under subparts 6.1, 6.2, 
and when appropriate, under subpart 6.3. Contracting officers shall 
exercise good judgment in selecting the method of contracting that best 
meets the needs of the Government. If the choice is to use competitive 
proposals rather than sealed bidding, the contracting officer shall 
briefly explain, in writing, which of the four conditions in paragraph 
(a) of this section has not been met. No additional documentation or 
justification is required.

                                * * * * *



                   Subpart 6.5--Competition Advocates



6.501  Requirement.

    As required by section 20 of the Office of Federal Procurement 
Policy Act, the head of each executive agency shall designate a 
competition advocate for the agency and for each procuring activity of 
the agency. The competition advocates shall--
    (a) Be in positions other than that of the agency senior procurement 
executive;
    (b) Not be assigned any duties or responsibilities that are 
inconsistent with 6.502 below; and
    (c) Be provided with staff or assistance (e.g., specialists in 
engineering, technical operations, contract administration, financial 
management, supply management, and utilization of small business 
concerns), as may be necessary to carry out the advocate's duties and 
responsibilities.

[50 FR 1729, Jan. 11, 1985, and 50 FR 52429, Dec. 23, 1985, as amended 
at 60 FR 48259, Sept. 18, 1995]



6.502  Duties and responsibilities.

    (a) Agency and procuring activity competition advocates are 
responsible for promoting the acquisition of commercial items, promoting 
full and open competition, challenging requirements that are not stated 
in terms of functions to be performed, performance required or essential 
physical characteristics, and challenging barriers to the acquisition of 
commercial items and full and open competition such as unnecessarily 
restrictive statements of work, unnecessarily detailed specifications, 
and unnecessarily burdensome contract clauses.
    (b) Agency competition advocates shall--
    (1) Review the contracting operations of the agency and identify and 
report

[[Page 92]]

to the agency senior procurement executive--
    (i) Opportunities and actions taken to acquire commercial items to 
meet the needs of the agency;
    (ii) Opportunities and actions taken to achieve full and open 
competition in the contracting operations of the agency;
    (iii) Actions taken to challenge requirements that are not stated in 
terms of functions to be performed, performance required or essential 
physical characteristics;
    (iv) Any condition or action that has the effect of unnecessarily 
restricting the acquisition of commercial items or competition in the 
contracting actions of the agency;
    (2) 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 the acquisition of 
commercial items;
    (iii) New initiatives required to increase competition;
    (iv) New initiatives to ensure requirements are stated in terms of 
functions to be performed, performance required or essential physical 
characteristics;
    (v) Any barriers to the acquisition of commercial items or 
competition that remain; and
    (vi) Other ways in which the agency has emphasized the acquisition 
of commercial items and competition in areas such as acquisition 
training and research;
    (3) Recommend to the senior procurement executive of the agency 
goals and plans for increasing competition on a fiscal year basis; and
    (4) 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.

[60 FR 48236, Sept. 18, 1995]



PART 7--ACQUISITION PLANNING--Table of Contents




Sec.
7.000  Scope of part.

                     Subpart 7.1--Acquisition Plans

7.101  Definitions.
7.102  Policy.
7.103  Agency-head responsibilities.
7.104  General procedures.
7.105  Contents of written acquisition plans.
7.106  Additional requirements for major systems.

     Subpart 7.2--Planning for the Purchase of Supplies in Economic 
                               Quantities

7.200  Scope of subpart.
7.201  [Reserved]
7.202  Policy.
7.203  Solicitation provision.
7.204  Responsibilities of contracting officers.

          Subpart 7.3--Contractor Versus Government Performance

7.300  Scope of subpart.
7.301  Policy.
7.302  General.
7.303  Determining availability of private commercial sources.
7.304  Procedures.
7.305  Solicitation provisions and contract clause.
7.306  Evaluation.
7.307  Appeals.

                Subpart 7.4--Equipment Lease or Purchase

7.400  Scope of subpart.
7.401  Acquisition considerations.
7.402  Acquisition methods.
7.403  General Services Administration assistance.
7.404  Contract clause.

             Subpart 7.5--Inherently Governmental Functions

7.500  Scope of subpart.
7.501  Definition.
7.502  Applicability.
7.503  Policy.

    Authority: 40 U.S.C. 486(c); 10 U.S.C. Chapter 137; and 42 U.S.C. 
2473(c).

    Source: 48 FR 42124, Sept. 19, 1983, unless otherwise noted.



7.000  Scope of part.

    This part prescribes policies and procedures for--
    (a) Developing acquisition plans;

[[Page 93]]

    (b) Determining whether to use commercial or Government resources 
for acquisition of supplies or services;
    (c) Deciding whether it is more economical to lease equipment rather 
than purchase it; and
    (d) Determining whether functions are inherently governmental.

[48 FR 42124, Sept. 19, 1983, as amended at 61 FR 2628, Jan. 26, 1996]



                     Subpart 7.1--Acquisition Plans



7.101  Definitions.

    Acquisition planning means the process by which the efforts of all 
personnel responsible for an acquisition are coordinated and integrated 
through a comprehensive plan for fulfilling the agency need in a timely 
manner and at a reasonable cost. It includes developing the overall 
strategy for managing the acquisition.
    Acquisition streamlining, as used in this subpart means any effort 
that results in more efficient and effective use of resources to design 
and develop, or produce quality systems. This includes ensuring that 
only necessary and cost-effective requirements are included, at the most 
appropriate time in the acquisition cycle, in solicitations and 
resulting contracts for the design, development, and production of new 
systems, or for modifications to existing systems that involve redesign 
of systems or subsystems.
    Design-to-cost is a concept that establishes cost elements as 
management goals to achieve the best balance between life-cycle cost, 
acceptable performance, and schedule. Under this concept, cost is a 
design constraint during the design and development phases and a 
management discipline throughout the acquisition and operation of the 
system or equipment.
    Life-cycle cost means the total cost to the Government of acquiring, 
operating, supporting, and (if applicable) disposing of the items being 
acquired.
    Planner, as used in this subpart, means the designated person or 
office responsible for developing and maintaining a written plan, or for 
the planning function in those acquisitions not requiring a written 
plan.

[48 FR 42124, Sept. 19, 1983, as amended at 50 FR 1735, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985; 53 FR 34226, Sept. 2, 1988; 60 FR 48236, 
Sept. 18, 1995]



7.102  Policy.

    (a) Agencies shall perform acquisition planning and conduct market 
research (see part 10) for all acquisitions in order to promote and 
provide for--
    (1) Acquisition of commercial items or, to the extent that 
commercial items suitable to meet the agency's needs are not available, 
nondevelopmental items, to the maximum extent practicable (10 U.S.C. 
2377 and 41 U.S.C. 251, et seq.); and
    (2) Full and open competition (see part 6) or, when full and open 
competition is not required in accordance with part 6, to obtain 
competition to the maximum extent practicable, with due regard to the 
nature of the supplies or services to be acquired (10 U.S.C. 2301(a)(5) 
and 41 U.S.C. 253a(a)(1)).
    (b) This planning shall integrate the efforts of all personnel 
responsible for significant aspects of the acquisition. The purpose of 
this planning is to ensure that the Government meets its needs in the 
most effective, economical, and timely manner. Agencies that have a 
detailed acquisition planning system in place that generally meets the 
requirements of 7.104 and 7.105 need not revise their system to 
specifically meet all of these requirements.

[60 FR 48236, Sept. 18, 1995]



7.103  Agency-head responsibilities.

    The agency head or a designee shall prescribe procedures for--
    (a) Promoting and providing for full and open competition (see part 
6) or, when full and open competition is not required in accordance with 
part 6, for obtaining competition to the maximum extent practicable, 
with due regard to the nature of the supplies and services to be 
acquired (41 U.S.C. 253a(a)(1)).
    (b) Encouraging offerors to supply commercial items, or to the 
extent that commercial items suitable to

[[Page 94]]

meet the agency needs are not available, nondevelopmental items in 
response to agency solicitations (10 U.S.C. 2377 and 41 U.S.C. 251, et 
seq.); and
    (c) Ensuring that acquisition planners address the requirement to 
specify needs, develop specifications, and to 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 (10 
U.S.C. 2305(a)(1)(A) and 41 U.S.C. 253A(a)(1)). (See part 6 and 10.002.)
    (d) Establishing criteria and thresholds at which increasingly 
greater detail and formality in the planning process is required as the 
acquisition becomes more complex and costly, specifying those cases in 
which a written plan shall be prepared;
    (e) Writing plans either on a system basis or on an individual 
contract basis, depending upon the acquisition;
    (f) Ensuring that the principles of this subpart are used, as 
appropriate, for those acquisitions that do not require a written plan 
as well as for those that do;
    (g) Designating planners for acquisitions;
    (h) Reviewing and approving acquisition plans and revisions to these 
plans;
    (i) Establishing criteria and thresholds at which design-to-cost and 
life-cycle-cost techniques will be used;
    (j) Establishing standard acquisition plan formats, if desired, 
suitable to agency needs; and
    (k) Waiving requirements of detail and formality, as necessary, in 
planning for acquisitions having compressed delivery or performance 
schedules because of the urgency of the need.
    (l) Assuring that the contracting officer, prior to contracting, 
reviews:
    (1) The acquisition history of the supplies and services; and
    (2) A description of the supplies, including, when necessary for 
adequate description, a picture, drawing, diagram, or other graphic 
representation.
    (m) Ensuring that agency planners include use of the metric system 
of measurement in proposed acquisitions in accordance with 15 U.S.C. 
205b (see 11.002(b)) and agency metric plans and guidelines.
    (n) Ensuring that agency planners specify needs and develop plans, 
drawings, work statements, specifications, or other product descriptions 
promoting the use of environmentally preferable and energy-efficient 
products and services (e.g., promoting energy conservation and the use 
of recovered material content and the elimination or reduction of ozone-
depleting substances usage), and that these are considered in the 
evaluation and award of contracts, as appropriate (see part 23).
    (o) Making a determination, prior to issuance of a solicitation for 
advisory and assistance services involving the analysis and evaluation 
of proposals submitted in response to a solicitation, that a sufficient 
number of covered personnel with the training and capability to perform 
an evaluation and analysis of proposals submitted in response to a 
solicitation are not readily available within the agency or from another 
Federal agency in accordance with the guidelines at 37.204.
    (p) Ensuring that no purchase request is initiated or contract 
entered into that would result in the performance of an inherently 
governmental function by a contractor and that all contracts are 
adequately managed so as to ensure effective official control over 
contract performance.
    (q) Ensuring that knowledge gained from prior acquisitions is used 
to further refine requirements and acquisition strategies. For services, 
greater use of performance-based contracting methods and, therefore, 
fixed-price contracts (see 37.602-5) should occur for follow-on 
acquisitions.

[48 FR 42124, Sept. 19, 1983, as amended at 50 FR 1735, Jan. 11, 1985; 
50 FR 27561, July 3, 1985; 50 FR 52429, Dec. 23, 1985; 51 FR 27116, July 
29, 1986; 57 FR 60574, Dec. 21, 1992; 60 FR 28495, May 31, 1995; 60 FR 
48236, Sept. 18, 1995; 60 FR 49721, Sept. 26, 1995; 61 FR 2628, Jan. 26, 
1996; 62 FR 40236, July 25, 1997; 62 FR 44814, Aug. 22, 1997]



7.104  General procedures.

    (a) Acquisition planning should begin as soon as the agency need is 
identified, preferably well in advance of the fiscal year in which 
contract award is necessary. In developing the plan, the planner shall 
form a team consisting of

[[Page 95]]

all those who will be responsible for significant aspects of the 
acquisition, such as contracting, fiscal, legal, and technical 
personnel. The planner should review previous plans for similar 
acquisitions and discuss them with the key personnel involved in those 
acquisitions. At key dates specified in the plan or whenever significant 
changes occur, and no less often than annually, the planner shall review 
the plan and, if appropriate, revise it.
    (b) Requirements and logistics personnel should avoid issuing 
requirements on an urgent basis or with unrealistic delivery or 
performance schedules, since it generally restricts competition and 
increases prices. Early in the planning process, the planner should 
consult requirements and logistics personnel who determine type, 
quality, quantity, and delivery requirements.
    (c) The planner shall coordinate with and secure the concurrence of 
the contracting officer in all acquisition planning. If the plan 
proposes using other than full and open competition, the plan shall also 
be coordinated with the cognizant competition advocate.

[48 FR 42124, Sept. 19, 1983, as amended at 50 FR 1735, Jan. 11, 1985; 
50 FR 52433, Dec. 23, 1985]



7.105  Contents of written acquisition plans.

    In order to facilitate attainment of the acquisition objectives, the 
plan must identify those milestones at which decisions should be made 
(see subparagraph (b)(19) below). The plan shall address all the 
technical, business, management, and other significant considerations 
that will control the acquisition. The specific content of plans will 
vary, depending on the nature, circumstances, and stage of the 
acquisition. In preparing the plan, the planner shall follow the 
applicable instructions in paragraphs (a) and (b) below, together with 
the agency's implementing procedures. Acquisition plans for service 
contracts shall describe the strategies for implementing performance-
based contracting methods or shall provide rationale for not using those 
methods (see subpart 37.6).
    (a) Acquisition background and objectives--(1) Statement of need. 
Introduce the plan by a brief statement of need. Summarize the technical 
and contractual history of the acquisition. Discuss feasible acquisition 
alternatives, the impact of prior acquisitions on those alternatives, 
and any related in-house effort.
    (2) Applicable conditions. State all significant conditions 
affecting the acquisition, such as (i) requirements for compatibility 
with existing or future systems or programs and (ii) any known cost, 
schedule, and capability or performance constraints.
    (3) Cost. Set forth the established cost goals for the acquisition 
and the rationale supporting them, and discuss related cost concepts to 
be employed, including, as appropriate, the following items:
    (i) Life-cycle cost. Discuss how life-cycle cost will be considered. 
If it is not used, explain why. If appropriate, discuss the cost model 
used to develop life-cycle-cost estimates.
    (ii) Design-to-cost. Describe the design-to-cost objective(s) and 
underlying assumptions, including the rationale for quantity, learning-
curve, and economic adjustment factors. Describe how objectives are to 
be applied, tracked, and enforced. Indicate specific related 
solicitation and contractual requirements to be imposed.
    (iii) Application of should-cost. Describe the application of 
should-cost analysis to the acquisition (see 15.407-4).
    (4) Capability or performance. Specify the required capabilities or 
performance characteristics of the supplies or the performance standards 
of the services being acquired and state how they are related to the 
need.
    (5) Delivery or performance-period requirements. Describe the basis 
for establishing delivery or performance-period requirements (see 
subpart 11.4). Explain and provide reasons for any urgency if it results 
in concurrency of development and production or constitutes 
justification for not providing for full and open competition.
    (6) Trade-offs. Discuss the expected consequences of trade-offs 
among the various cost, capability or performance, and schedule goals.

[[Page 96]]

    (7) Risks. Discuss technical, cost, and schedule risks and describe 
what efforts are planned or underway to reduce risk and the consequences 
of failure to achieve goals. If concurrency of development and 
production is planned, discuss its effects on cost and schedule risks.
    (8) Acquisition streamlining. If specifically designated by the 
requiring agency as a program subject to acquisition streamlining, 
discuss plans and procedures to:
    (i) Encourage industry participation by using draft solicitations, 
presolicitation conferences, and other means of stimulating industry 
involvement during design and development in recommending the most 
appropriate application and tailoring of contract requirements;
    (ii) Select and tailor only the necessary and cost-effective 
requirements; and
    (iii) State the timeframe for identifying which of those 
specifications and standards, originally provided for guidance only, 
shall become mandatory.
    (b) Plan of action--(1) Sources. Indicate the prospective sources of 
supplies and/or services that can meet the need. Consider required 
sources of supplies or services (see part 8). Include consideration of 
small business, HUBZone small business, small disadvantaged business, 
and women-owned small business concerns (see part 19). Address the 
extent and results of the market research and indicate their impact on 
the various elements of the plan (see part 10).
    (2) Competition. (i) Describe how competition will be sought, 
promoted, and sustained throughout the course of the acquisition. If 
full and open competition is not contemplated cite the authority in 
6.302, discuss the basis for the application of that authority, identify 
the source(s), and discuss why full and open competition cannot be 
obtained.
    (ii) Identify the major components or subsystems. Discuss component 
breakout plans relative to these major components or subsystems. 
Describe how competition will be sought, promoted, and sustained for 
these components or subsystems.
    (iii) Describe how competition will be sought, promoted, and 
sustained for spares and repair parts. Identify the key logistic 
milestones, such as technical data delivery schedules and acquisition 
method coding conferences, that affect competition.
    (iv) When effective subcontract competition is both feasible and 
desirable, describe how such subcontract competition will be sought, 
promoted, and sustained throughout the course of the acquisition. 
Identify any known barriers to increasing subcontract competition and 
address how to overcome them.
    (3) Source-selection procedures. Discuss the source-selection 
procedures for the acquisition, including the timing for submission and 
evaluation of proposals, and the relationship of evaluation factors to 
the attainment of the acquisition objectives (see subpart 15.3).
    (4) Contracting considerations. For each contract contemplated, 
discuss contract type selection (see part 16); use of multiyear 
contracting, options, or other special contracting methods (see part 
17); any special clauses, special solicitation provisions, or FAR 
deviations required (see subpart 1.4); whether sealed bidding or 
negotiation will be used and why; whether equipment will be acquired by 
lease or purchase (see subpart 7.4) and why; and any other contracting 
considerations.
    (5) Budgeting and funding. Include budget estimates, explain how 
they were derived, and discuss the schedule for obtaining adequate funds 
at the time they are required (see subpart 32.7).
    (6) Product or service descriptions. Explain the choice of product 
or service description types (including performance-based contracting 
descriptions) to be used in the acquisition.
    (7) Priorities, allocations, and allotments. When urgency of the 
requirement dictates a particularly short delivery or performance 
schedule, certain priorities may apply. If so, specify the method for 
obtaining and using priorities, allocations, and allotments, and the 
reasons for them (see subpart 11.6).
    (8) Contractor versus Government performance. Address the 
consideration

[[Page 97]]

given to OMB Circular No. A-76 (see subpart 7.3).
    (9) Inherently governmental functions. Address the consideration 
given to OFPP Policy Letter 92-1 (see subpart 7.5).
    (10) Management information requirements. Discuss, as appropriate, 
what management system will be used by the Government to monitor the 
contractor's effort.
    (11) Make or buy. Discuss any consideration given to make-or-buy 
programs (see subpart 15.407-2).
    (12) Test and evaluation. To the extent applicable, describe the 
test program of the contractor and the Government. Describe the test 
program for each major phase of a major system acquisition. If 
concurrency is planned, discuss the extent of testing to be accomplished 
before production release.
    (13) Logistics considerations. Describe--
    (i) The assumptions determining contractor or agency support, both 
initially and over the life of the acquisition, including consideration 
of contractor or agency maintenance and servicing (see subpart 7.3) and 
distribution of commercial items;
    (ii) The reliability, maintainability, and quality assurance 
requirements, including any planned use of warranties (see part 46);
    (iii) The requirements for contractor data (including repurchase 
data) and data rights, their estimated cost, and the use to be made of 
the data (see part 27); and
    (iv) Standardization concepts, including the necessity to designate, 
in accordance with agency procedures, technical equipment as standard so 
that future purchases of the equipment can be made from the same 
manufacturing source.
    (14) Government-furnished property. Indicate any property to be 
furnished to contractors, including material and facilities, and discuss 
any associated considerations, such as its availability or the schedule 
for its acquisition (see part 45).
    (15) Government-furnished information. Discuss any Government 
information, such as manuals, drawings, and test data, to be provided to 
prospective offerors and contractors.
    (16) Environmental and energy conservation objectives. Discuss all 
applicable environmental and energy conservation objectives associated 
with the acquisition (see part 23), the applicability of an 
environmental assessment or environmental impact statement (see 40 CFR 
part 1502), the proposed resolution of environmental issues, and any 
environmentally-related requirements to be included in solicitations and 
contracts.
    (17) Security considerations. For acquisitions dealing with 
classified matters, discuss how adequate security will be established, 
maintained, and monitored (see subpart 4.4).
    (18) Contract administration. Describe how the contract will be 
administered. In contracts for services, include how inspection and 
acceptance corresponding to the work statement's performance criteria 
will be enforced.
    (19) Other considerations. Discuss, as applicable, standardization 
concepts, the industrial readiness program, the Defense Production Act, 
the Occupational Safety and Health Act, foreign sales implications, and 
any other matters germane to the plan not covered elsewhere.
    (20) Milestones for the acquisition cycle. Address the following 
steps and any others appropriate:

    Acquisition plan approval.
    Statement of work.
    Specifications.
    Data requirements.
    Completion of acquisition-package preparation.
    Purchase request.
    Justification and approval for other than full and open competition 
where applicable and/or any required D&F approval.
    Issuance of synopsis.
    Issuance of solicitation.
    Evaluations of proposals, audits, and field reports.
    Beginning and completion of negotiations.
    Contract preparation, review, and clearance.
    Contract award.

    (21) Identification of participants in acquisition plan preparation. 
List the individuals who participated in preparing

[[Page 98]]

the acquisition plan, giving contact information for each.

[48 FR 42124, Sept. 19, 1983, as amended at 50 FR 1735, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985, and 51 FR 27116, July 29, 1986; 53 FR 17856, 
May 18, 1988; 53 FR 34226, Sept. 2, 1988; 60 FR 28495, May 31, 1995; 60 
FR 48237, Sept. 18, 1995; 61 FR 2628, Jan. 26, 1996; 62 FR 40236, July 
25, 1997; 62 FR 44814, Aug. 22, 1997; 62 FR 51230, 51270, Sept. 30, 
1997; 63 FR 70267, Dec. 18, 1998]



7.106  Additional requirements for major systems.

    (a) In planning for the solicitation of a major system (see part 34) 
development contract, planners shall consider requiring offerors to 
include, in their offers, proposals to incorporate in the design of a 
major system--
    (1) Items which are currently available within the supply system of 
the agency responsible for the major system, available elsewhere in the 
national supply system, or commercially available from more than one 
source; and
    (2) Items which the Government will be able to acquire competitively 
in the future if they are likely to be needed in substantial quantities 
during the system's service life.
    (b) In planning for the solicitation of a major system (see part 34) 
production contract, planners shall consider requiring offerors to 
include, in their offers, proposals identifying opportunities to assure 
that the Government will be able to obtain, on a competitive basis, 
items acquired in connection with the system that are likely to be 
acquired in substantial quantities during the service life of the 
system. Proposals submitted in response to such requirements may include 
the following:
    (1) Proposals to provide the Government the right to use technical 
data to be provided under the contract for competitive future 
acquisitions, together with the cost to the Government, if any, of 
acquiring such technical data and the right to use such data.
    (2) Proposals for the qualification or development of multiple 
sources of supply for competitive future acquisitions.
    (c) In determining whether to apply paragraphs (a) and (b) above, 
planners shall consider the purposes for which the system is being 
acquired and the technology necessary to meet the system's required 
capabilities. If such proposals are required, the contracting officer 
shall consider them in evaluating competing offers. In noncompetitive 
awards, the factors in paragraphs (a) and (b) above, may be considered 
by the contracting officer as objectives in negotiating the contract.

[50 FR 27561, July 3, 1985 and 51 FR 27116, July 29, 1986]



     Subpart 7.2--Planning for the Purchase of Supplies in Economic 
                               Quantities

    Source: 50 FR 35475, Aug. 30, 1985, unless otherwise noted.



7.200  Scope of subpart.

    This subpart prescribes policies and procedures for gathering 
information from offerors to assist the Government in planning the most 
advantageous quantities in which supplies should be purchased.



7.201  [Reserved]



7.202  Policy.

    (a) Agencies are required by 10 U.S.C. 2384(a) and 41 U.S.C. 253(f) 
to procure supplies in such quantity as (1) will result in the total 
cost and unit cost most advantageous to the Government, where 
practicable, and (2) does not exceed the quantity reasonably expected to 
be required by the agency.
    (b) Each solicitation for a contract for supplies is required, if 
practicable, to include a provision inviting each offeror responding to 
the solicitation (1) to state an opinion on whether the quantity of the 
supplies proposed to be acquired is economically advantageous to the 
Government, and (2) if applicable, to recommend a quantity or quantities 
which would be more economically advantageous to the Government. Each 
such recommendation is required to include a quotation of the total 
price and the unit price for supplies procured in each recommended 
quantity.

[[Page 99]]



7.203  Solicitation provision.

    Contracting officers shall insert the provision at 52.207-4, 
Economic Purchase Quantity--Supplies, in solicitations for supplies. The 
provision need not be inserted if the solicitation is for a contract 
under the General Services Administration's multiple award schedule 
contract program, or if the contracting officer determines that (a) the 
Government already has the data, (b) the data is otherwise readily 
available, or (c) it is impracticable for the Government to vary its 
future requirements.

[52 FR 30076, Aug. 12, 1987]



7.204  Responsibilities of contracting officers.

    (a) Contracting officers are responsible for transmitting offeror 
responses to the solicitation provision at 52.207-4 to appropriate 
inventory management/requirements development activities in accordance 
with agency procedures. The economic purchase quantity data so obtained 
are intended to assist inventory managers in establishing and evaluating 
economic order quantities for supplies under their cognizance.
    (b) In recognition of the fact that economic purchase quantity data 
furnished by offerors are only one of many data inputs required for 
determining the most economical order quantities, contracting officers 
should generally take no action to revise quantities to be acquired in 
connection with the instant procurement. However, if a significant price 
variation is evident from offeror responses, and the potential for 
significant savings is apparent, the contracting officer shall consult 
with the cognizant inventory manager or requirements development 
activity before proceeding with an award or negotiations. If this 
consultation discloses that the Government should be ordering an item of 
supply in different quantities and the inventory manager/requirements 
development activity concurs, the solicitation for the item should be 
amended or canceled and a new requisition should be obtained.



          Subpart 7.3--Contractor Versus Government Performance



7.300  Scope of subpart.

    This subpart prescribes policies and procedures for use in 
acquisitions of commercial or industrial products and services subject 
to (a) OMB Circular No. A-76 (Revised) (the Circular), Performance of 
Commercial Activities, and (b) the Supplement to the Circular.

[57 FR 60575, Dec. 21, 1992]



7.301  Policy.

    The Circular provides that it is the policy of the Government to (a) 
rely generally on private commercial sources for supplies and services, 
if certain criteria are met, while recognizing that some functions are 
inherently Governmental and must be performed by Government personnel, 
and (b) give appropriate consideration to relative cost in deciding 
between Government performance and performance under contract. In 
comparing the costs of Government and contractor performance, the 
Circular provides that agencies shall base the contractor's cost of 
performance on firm offers.



7.302  General.

    The Circular and the Supplement--
    (a) Prescribe the overall policies and detailed procedures required 
of all agencies in making cost comparisons between contractor and 
Government performance. In making cost comparisons, agencies shall--
    (1) Prepare an estimate of the cost of Government performance based 
on the same work statement and level of performance as apply to 
offerors; and
    (2) Compare the total cost of Government performance to the total 
cost of contracting with the potentially successful offeror.
    (b) Provide that solicitations and synopses of the solicitations 
issued to obtain offers for comparison purposes shall state that they 
will not result in a contract if Government performance is determined to 
be more advantageous (see the solicitation provisions at 52.207-1 and 
52.207-2);
    (c) Provide that each cost comparison shall be reviewed by an 
activity

[[Page 100]]

independent of the activity which prepared the cost analysis to ensure 
conformance with the instructions in the Supplement; and
    (d) Provide that, ordinarily, agencies should not incur the delay 
and expense of conducting cost comparison studies when the full-time 
equivalent Government employees involved are fewer than those specified 
by law, the Circular, and implementing agency guidance. Cost comparisons 
may be conducted in these instances if there is reason to believe that 
commercial prices are unreasonable.

[50 FR 35475, Aug. 30, 1985, as amended at 53 FR 17856, May 18, 1988; 55 
FR 25526, June 21, 1990; 57 FR 60575, Dec. 21, 1992]



7.303  Determining availability of private commercial sources.

    (a) During acquisition planning reviews, contracting officers shall 
assist in identifying private commercial sources.
    (b) In making all reasonable efforts to identify such sources, the 
contracting officer shall assist in--
    (1) Synopsizing the requirement in the Commercial Business Daily 
until a reasonable number of potential sources are identified. If 
necessary, synopsis shall be submitted up to three times in a 90-day 
period with a minimum of 30 days between notices (but, when necessary to 
meet an urgent requirement, this notification may be limited to a total 
of two notices in a 30-day period with a minimum of 15 days between 
them).
    (2) Requesting assistance from the Small Business Administration, 
the Department of Commerce, and the General Services Administration.
    (3) If sufficient sources are not identified through synopses or 
from subparagraph (b)(2) of this section, a finding that no commercial 
source is available may be made and the cost comparison canceled.

[48 FR 42124, Sept. 19, 1983, as amended at 55 FR 25526, June 21, 1990; 
57 FR 60575, Dec. 21, 1992]



7.304  Procedures.

    (a) Work statement. When private commercial sources are available 
and a cost comparison is required, the Government's functional managers 
responsible for the comparison or another group shall prepare a 
comprehensive, performance work statement. The work statement must--
    (1) Accurately reflect the actual Government requirement, stating 
adequately what is to be done without prescribing how it is to be done;
    (2) Include performance standards that can be used to ensure a 
comparable level of performance for both Government and contractor and a 
common basis for evaluation; and
    (3) Be reviewed by the contracting officer to ensure that it is 
adequate and appropriate to serve as a basis for solicitation and award.
    (b) Cost estimate. The agency personnel who develop the cost 
estimate for Government performance--
    (1) Enter on a cost comparison form (see Part IV of the Supplement) 
the cost estimate and the other elements required to accomplish a cost 
comparison;
    (2) Review the estimate for completeness and accuracy and have the 
estimate audited; and
    (3) Submit to the contracting officer the completed form and all 
necessary detailed supporting data in a sealed, dated envelope, or 
electronic equivalent, not later than the time established for receipt 
of initial proposals or bid opening. If more time is needed to develop 
the Government's cost estimate, the contracting officer shall amend the 
opening date of the solicitation.
    (c) Solicitation. (1) The contracting officer shall issue a 
solicitation based on the performance work statement prepared in 
accordance with paragraph (a) of this section. Prepriced option prices 
in existing contracts will not be used instead of issuing a new 
solicitation when conducting a cost comparison under a new start.
    (2) Firm offers shall be required for the period covered by the cost 
comparison, by using (i) a base contract period and any applicable 
priced options to total the amount of time represented by the cost 
estimate for Government performance (see subpart 17.2), or (ii) a 
multiyear contract when appropriate (see subpart 17.1).

[[Page 101]]

    (3) Solicitations shall not, unless a proper determination to the 
contrary is made, limit award to U.S. offerors.
    (d) Integrity of cost comparison. (1) The confidentiality of (i) the 
cost estimate for Government performance and (ii) the bids in sealed bid 
cost comparisons shall be maintained until the time of bid opening, to 
ensure that they are completely independent.
    (2) For cost comparisons conducted using the results of negotiation 
procedures, confidentiality and independence shall be maintained until 
after negotiations are completed and the most advantageous offer has 
been selected.
    (3) Personnel who have knowledge of the cost figures in the cost 
estimate for Government performance shall not participate in the offer-
evaluation process unless the contract file is adequately documented to 
show that no other qualified personnel were available.

[48 FR 42124, Sept. 19, 1983, as amended at 50 FR 1735, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985; 55 FR 25526, June 21, 1990; 57 FR 60575, 
Dec. 21, 1992; 60 FR 34737, July 3, 1995]



7.305  Solicitation provisions and contract clause.

    (a) The contracting officer shall, when contracting by sealed 
bidding, insert in solicitations issued for the purpose of comparing the 
costs of contractor and Government performance the provision at 52.207-
1, Notice of Cost Comparison (Sealed-Bid).
    (b) The contracting officer shall, when contracting by negotiation, 
insert in requests for proposals issued for the purpose of comparing the 
costs of contractor and Government performance the provision at 52.207-
2, Notice of Cost Comparison (Negotiated).
    (c) The contracting officer shall insert the clause at 52.207-3, 
Right of First Refusal of Employment, in all solicitations which may 
result in a conversion from in-house performance to contract performance 
of work currently being performed by the Government and in contracts 
that result from the solicitations, whether or not a cost comparison is 
conducted. The 10-day period in the clause may be varied by the 
contracting officer up to a period of 90 days.

[48 FR 42124, Sept. 19, 1983, as amended at 50 FR 1735, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985; 52 FR 9037, Mar. 20, 1987; 56 FR 55372, Oct. 
25, 1991]



7.306  Evaluation.

    The evaluation procedure to be followed after the contracting 
officer receives the cost estimate for Government performance (see 
7.304(b)) and the responses to the solicitation differs from 
conventional contracting procedures as follows:
    (a) Sealed bidding. (1) At the public bid opening, after recording 
of bids, the contracting officer shall--
    (i) Open the sealed cost comparison on which the cost estimate for 
Government performance has been entered;
    (ii) Enter on the cost comparison form the price of the apparent low 
bidder;
    (iii) Announce the result, based on the initial cost comparison 
form, stating that this result is subject to required agency processing, 
including evaluation for responsiveness and responsibility, completion 
and audit of the cost comparison form (see Supplement, Part IV, 
Illustration 1), and resolution of any requests for review under the 
appeals procedure (see 7.307);
    (iv) State that no final determination for performance by the 
Government or under contract will be made during the public review 
period specified in the solicitation (at least 15 working days, up to a 
maximum of 30 working days if the contracting officer considers the 
action to be complex; the public review period begins when the documents 
identified in (v) below are available to interested parties), plus any 
additional time required for the appeals procedure; and
    (v) Make available for this public review by interested parties the 
abstract of bids, completed cost comparison form, and detailed data 
supporting the cost estimate for Government performance.
    (2) After evaluation of bids (see subpart 14.4) and determinations 
of responsibility, the contracting officer shall provide the price of 
the low responsive, responsible bidder to the preparer of

[[Page 102]]

the cost estimate for Government performance, for final Government 
review of the cost comparison form.
    (3) Upon completion of the review process, including resolution of 
any request under 7.307, the responsible agency official shall make the 
final determination for performance by the Government or under contract 
and provide written notification to the contracting officer, who shall 
either award a contract or cancel the solicitation as required.
    (4) The contracting officer shall make the completed and approved 
cost comparison analysis available to interested parties upon request.
    (b) Negotiation. The contracting officer shall receive proposals, 
evaluate them (see subpart 15.3), conduct negotiations, and select the 
most advantageous proposal in accordance with normal contracting 
procedures (see part 15). The contracting officer shall, before public 
announcement, open the sealed estimate in the presence of the preparer, 
enter the amount of the most advantageous proposal on the cost 
comparison form, and return the form to the preparer of the cost 
estimate for Government performance for completion. The preparer shall 
give due consideration to all types of costs which could add or subtract 
from the cost of either mode of performance.
    (1) If the result of the cost comparison favors performance under 
contract and the responsible agency official approves the result, the 
contracting officer shall award a contract in accordance with agency 
procedures. Concurrently with the award, the contracting officer shall 
publicly--
    (i) Notify interested parties of the result of the cost comparison;
    (ii) Inform interested parties that the completed cost comparison 
form and detailed supporting data are available for review;
    (iii) Announce the contractor's name; and
    (iv) Advise interested parties that contractor preparations for 
performance are conditioned upon completion of the public review period 
specified in the solicitation plus any additional period required by the 
appeals procedure.
    (2) If the result of the cost comparison favors Government 
performance, the contracting officer shall--
    (i) Notify interested parties of the result of the cost comparison;
    (ii) Inform interested parties that the completed cost comparison 
form and detailed supporting data relative to the Government cost 
estimate are available for public review (see subparagraph (3) below); 
and
    (iii) Announce the price of the offer most advantageous to the 
Government.
    (3) The public review period shall begin with the contracting 
officer's announcement of the cost comparison result and availability of 
the cost comparison forms and detailed supporting data to interested 
parties. The review period shall last for the period specified in the 
solicitation (at least 15 working days, up to a maximum of 30 working 
days if the contracting officer considers the action to be complex). 
Upon completion of the public review period and resolution of any 
questions raised under 7.307, the responsible agency official shall 
provide the contracting officer written notification of the final cost 
comparison decision. The contracting officer shall then, in the case of 
subparagraph (b)(1) of this section, give the contractor notice to 
commence or cancel the contract as appropriate or, in the case of 
subparagraph (b)(2) of this section, cancel the solicitation or award 
the contract, as appropriate.

[48 FR 42124, Sept. 19, 1983, as amended at 50 FR 1735, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985; 51 FR 34125, Sept. 3, 1986; 53 FR 661, Jan. 
11, 1988; 55 FR 25526, June 21, 1990; 56 FR 41744, Aug. 22, 1991; 57 FR 
60575, Dec. 21, 1992; 60 FR 34737, July 3, 1995; 62 FR 51270, Sept. 30, 
1997]



7.307  Appeals.

    (a) The Circular provides that each agency shall establish an 
appeals procedure for informal administrative review of the initial cost 
comparison result. The appeals procedure shall provide for an 
independent, objective review of the initial result by an official at a 
higher level than the official who approved that result. The purpose is 
to protect the rights of affected parties

[[Page 103]]

and to ensure that final agency determinations are fair, equitable, and 
in accordance with established policy.
    (b) The Circular provides that the appeals procedure shall be used 
only to resolve questions concerning the calculation of the cost 
comparison and shall not apply to questions concerning selection of one 
contractor in preference to another, which shall be treated as 
prescribed in subpart 33.1, Protests. Directly affected parties may 
request review of any discrepancy in the cost comparison. Any such 
requests shall be made in writing to the contracting officer, who shall 
forward them in accordance with agency procedures. Such requests shall 
be considered only if based on specific objections and received within 
the public review period stated in the solicitation.

[48 FR 42124, Sept. 19, 1983, as amended at 55 FR 25527, June 21, 1990; 
57 FR 60575, Dec. 21, 1992; 60 FR 34737, July 3, 1995; 62 FR 40236, July 
25, 1997]



                Subpart 7.4--Equipment Lease or Purchase



7.400  Scope of subpart.

    This subpart provides guidance pertaining to the decision to acquire 
equipment by lease or purchase. It applies to both the initial 
acquisition of equipment and the renewal or extension of existing 
equipment leases.



7.401  Acquisition considerations.

    (a) Agencies should consider whether to lease or purchase equipment 
based on a case-by-case evaluation of comparative costs and other 
factors. The following factors are the minimum that should be 
considered:
    (1) Estimated length of the period the equipment is to be used and 
the extent of use within that period.
    (2) Financial and operating advantages of alternative types and 
makes of equipment.
    (3) Cumulative rental payments for the estimated period of use.
    (4) Net purchase price.
    (5) Transportation and installation costs.
    (6) Maintenance and other service costs.
    (7) Potential obsolescence of the equipment because of imminent 
technological improvements.
    (b) The following additional factors should be considered, as 
appropriate, depending on the type, cost, complexity, and estimated 
period of use of the equipment:
    (1) Availability of purchase options.
    (2) Potential for use of the equipment by other agencies after its 
use by the acquiring agency is ended.
    (3) Trade-in or salvage value.
    (4) Imputed interest.
    (5) Availability of a servicing capability, especially for highly 
complex equipment; e.g., can the equipment be serviced by the Government 
or other sources if it is purchased?



7.402  Acquisition methods.

    (a) Purchase method. (1) Generally, the purchase method is 
appropriate if the equipment will be used beyond the point in time when 
cumulative leasing costs exceed the purchase costs.
    (2) Agencies should not rule out the purchase method of equipment 
acquisition in favor of leasing merely because of the possibility that 
future technological advances might make the selected equipment less 
desirable.
    (b) Lease method. (1) The lease method is appropriate if it is to 
the Government's advantage under the circumstances. The lease method may 
also serve as an interim measure when the circumstances--
    (i) Require immediate use of equipment to meet program or system 
goals; but
    (ii) Do not currently support acquisition by purchase.
    (2) If a lease is justified, a lease with option to purchase is 
preferable.
    (3) Generally, a long term lease should be avoided, but may be 
appropriate if an option to purchase or other favorable terms are 
included.
    (4) If a lease with option to purchase is used, the contract shall 
state the purchase price or provide a formula which shows how the 
purchase price will be established at the time of purchase.

[50 FR 35475, Aug. 30, 1985, as amended at 59 FR 67026, Dec. 28, 1994]

[[Page 104]]



7.403  General Services Administration assistance.

    (a) When requested by an agency, the General Services Administration 
(GSA) will assist in lease or purchase decisions by providing 
information such as--
    (1) Pending price adjustments to Federal Supply Schedule contracts;
    (2) Recent or imminent technological developments;
    (3) New techniques; and
    (4) Industry or market trends.
    (b) Agencies may request information from the following GSA offices:
    (1) Center for Strategic IT Analysis (MKS), Washington, DC 20405, 
for information on acquisition of information technology.
    (2) Federal Supply Service, Office of Acquisition (FC), Washington, 
DC 20406, for information on other types of equipment.

[48 FR 42124, Sept. 19, 1983, as amended at 54 FR 29280, July 11, 1989; 
61 FR 41468, Aug. 8, 1996; 62 FR 40236, July 25, 1997]



7.404  Contract clause.

    The contracting officer shall insert a clause substantially the same 
as the clause in 52.207-5, Option to Purchase Equipment, in 
solicitations and contracts involving a lease with option to purchase.

[59 FR 67026, Dec. 28, 1994]



             Subpart 7.5--Inherently Governmental Functions

    Source: 61 FR 2628, Jan. 26, 1996, unless otherwise noted.



7.500  Scope of subpart.

    The purpose of this subpart is to prescribe policies and procedures 
to ensure that inherently governmental functions are not performed by 
contractors. It implements the policies of Office of Federal Procurement 
Policy (OFPP) Policy Letter 92-1, Inherently Governmental Functions.



7.501  Definition.

    Inherently governmental function means, as a matter of policy, a 
function that is so intimately related to the public interest as to 
mandate performance by Government employees. This definition is a policy 
determination, not a legal determination. An inherently governmental 
function includes activities that require either the exercise of 
discretion in applying Government authority, or the making of value 
judgments in making decisions for the Government. Governmental functions 
normally fall into two categories: the act of governing, i.e., the 
discretionary exercise of Government authority, and monetary 
transactions and entitlements.
    (a) An inherently governmental function involves, among other 
things, the interpretation and execution of the laws of the United 
States so as to--
    (1) Bind the United States to take or not to take some action by 
contract, policy, regulation, authorization, order, or otherwise;
    (2) Determine, protect, and advance United States economic, 
political, territorial, property, or other interests by military or 
diplomatic action, civil or criminal judicial proceedings, contract 
management, or otherwise;
    (3) Significantly affect the life, liberty, or property of private 
persons;
    (4) Commission, appoint, direct, or control officers or employees of 
the United States; or
    (5) Exert ultimate control over the acquisition, use, or disposition 
of the property, real or personal, tangible or intangible, of the United 
States, including the collection, control, or disbursement of Federal 
funds.
    (b) Inherently governmental functions do not normally include 
gathering information for or providing advice, opinions, 
recommendations, or ideas to Government officials. They also do not 
include functions that are primarily ministerial and internal in nature, 
such as building security, mail operations, operation of cafeterias, 
housekeeping, facilities operations and maintenance, warehouse 
operations, motor vehicle fleet management operations, or other routine 
electrical or mechanical services. The list of commercial activities 
included in the attachment to Office of Management and Budget (OMB) 
Circular No. A-76 is an authoritative, nonexclusive list of functions 
which are not inherently governmental functions.

[[Page 105]]



7.502  Applicability.

    The requirements of this subpart apply to all contracts for 
services. This subpart does not apply to services obtained through 
either personnel appointments, advisory committees, or personal services 
contracts issued under statutory authority.



7.503  Policy.

    (a) Contracts shall not be used for the performance of inherently 
governmental functions.
    (b) Agency decisions which determine whether a function is or is not 
an inherently governmental function may be reviewed and modified by 
appropriate Office of Management and Budget officials.
    (c) The following is a list of examples of functions considered to 
be inherently governmental functions or which shall be treated as such. 
This list is not all inclusive:
    (1) The direct conduct of criminal investigations.
    (2) The control of prosecutions and performance of adjudicatory 
functions other than those relating to arbitration or other methods of 
alternative dispute resolution.
    (3) The command of military forces, especially the leadership of 
military personnel who are members of the combat, combat support, or 
combat service support role.
    (4) The conduct of foreign relations and the determination of 
foreign policy.
    (5) The determination of agency policy, such as determining the 
content and application of regulations, among other things.
    (6) The determination of Federal program priorities for budget 
requests.
    (7) The direction and control of Federal employees.
    (8) The direction and control of intelligence and counter-
intelligence operations.
    (9) The selection or non-selection of individuals for Federal 
Government employment, including the interviewing of individuals for 
employment.
    (10) The approval of position descriptions and performance standards 
for Federal employees.
    (11) The determination of what Government property is to be disposed 
of and on what terms (although an agency may give contractors authority 
to dispose of property at prices within specified ranges and subject to 
other reasonable conditions deemed appropriate by the agency).
    (12) In Federal procurement activities with respect to prime 
contracts--
    (i) Determining what supplies or services are to be acquired by the 
Government (although an agency may give contractors authority to acquire 
supplies at prices within specified ranges and subject to other 
reasonable conditions deemed appropriate by the agency);
    (ii) Participating as a voting member on any source selection 
boards;
    (iii) Approving any contractual documents, to include documents 
defining requirements, incentive plans, and evaluation criteria;
    (iv) Awarding contracts;
    (v) Administering contracts (including ordering changes in contract 
performance or contract quantities, taking action based on evaluations 
of contractor performance, and accepting or rejecting contractor 
products or services);
    (vi) Terminating contracts;
    (vii) Determining whether contract costs are reasonable, allocable, 
and allowable; and
    (viii) Participating as a voting member on performance evaluation 
boards.
    (13) The approval of agency responses to Freedom of Information Act 
requests (other than routine responses that, because of statute, 
regulation, or agency policy, do not require the exercise of judgment in 
determining whether documents are to be released or withheld), and the 
approval of agency responses to the administrative appeals of denials of 
Freedom of Information Act requests.
    (14) The conduct of Administrative hearings to determine the 
eligibility of any person for a security clearance, or involving actions 
that affect matters of personal reputation or eligibility to participate 
in Government programs.
    (15) The approval of Federal licensing actions and inspections.
    (16) The determination of budget policy, guidance, and strategy.
    (17) The collection, control, and disbursement of fees, royalties, 
duties,

[[Page 106]]

fines, taxes, and other public funds, unless authorized by statute, such 
as 31 U.S.C. 952 (relating to private collection contractors) and 31 
U.S.C. 3718 (relating to private attorney collection services), but not 
including--
    (i) Collection of fees, fines, penalties, costs, or other charges 
from visitors to or patrons of mess halls, post or base exchange 
concessions, national parks, and similar entities or activities, or from 
other persons, where the amount to be collected is easily calculated or 
predetermined and the funds collected can be easily controlled using 
standard case management techniques; and
    (ii) Routine voucher and invoice examination.
    (18) The control of the treasury accounts.
    (19) The administration of public trusts.
    (20) The drafting of Congressional testimony, responses to 
Congressional correspondence, or agency responses to audit reports from 
the Inspector General, the General Accounting Office, or other Federal 
audit entity.
    (d) The following is a list of examples of functions generally not 
considered to be inherently governmental functions. However, certain 
services and actions that are not considered to be inherently 
governmental functions may approach being in that category because of 
the nature of the function, the manner in which the contractor performs 
the contract, or the manner in which the Government administers 
contractor performance. This list is not all inclusive:
    (1) Services that involve or relate to budget preparation, including 
workload modeling, fact finding, efficiency studies, and should-cost 
analyses, etc.
    (2) Services that involve or relate to reorganization and planning 
activities.
    (3) Services that involve or relate to analysis, feasibility 
studies, and strategy options to be used by agency personnel in 
developing policy.
    (4) Services that involve or relate to the development of 
regulations.
    (5) Services that involve or relate to the evaluation of another 
contractor's performance.
    (6) Services in support of acquisition planning.
    (7) Contractors providing assistance in contract management (such as 
where the contractor might influence official evaluations of other 
contractors).
    (8) Contractors providing technical evaluation of contract 
proposals.
    (9) Contractors providing assistance in the development of 
statements of work.
    (10) Contractors providing support in preparing responses to Freedom 
of Information Act requests.
    (11) Contractors working in any situation that permits or might 
permit them to gain access to confidential business information and/or 
any other sensitive information (other than situations covered by the 
National Industrial Security Program described in 4.402(b)).
    (12) Contractors providing information regarding agency policies or 
regulations, such as attending conferences on behalf of an agency, 
conducting community relations campaigns, or conducting agency training 
courses.
    (13) Contractors participating in any situation where it might be 
assumed that they are agency employees or representatives.
    (14) Contractors participating as technical advisors to a source 
selection board or participating as voting or nonvoting members of a 
source evaluation board.
    (15) Contractors serving as arbitrators or providing alternative 
methods of dispute resolution.
    (16) Contractors constructing buildings or structures intended to be 
secure from electronic eavesdropping or other penetration by foreign 
governments.
    (17) Contractors providing inspection services.
    (18) Contractors providing legal advice and interpretations of 
regulations and statutes to Government officials.
    (19) Contractors providing special non-law enforcement, security 
activities that do not directly involve criminal investigations, such as 
prisoner detention or transport and non-military national security 
details.
    (e) Agency implementation shall include procedures requiring the 
agency head or designated requirements official to provide the 
contracting officer, concurrent with transmittal of the

[[Page 107]]

statement of work (or any modification thereof), a written determination 
that none of the functions to be performed are inherently governmental. 
This assessment should place emphasis on the degree to which conditions 
and facts restrict the discretionary authority, decision-making 
responsibility, or accountability of Government officials using 
contractor services or work products. Disagreements regarding the 
determination will be resolved in accordance with agency procedures 
before issuance of a solicitation.

[61 FR 2628, Jan. 26, 1996, as amended at 62 FR 40236, July 25, 1997]



PART 8--REQUIRED SOURCES OF SUPPLIES AND SERVICES--Table of Contents




Sec.
8.000  Scope of part.
8.001  Priorities for use of Government supply sources.
8.002  Use of other Government supply sources.
8.003  Contract clause.

                  Subpart 8.1--Excess Personal Property

8.101  Definition.
8.102  Policy.
8.103  Information on available excess personal property.
8.104  Obtaining nonreportable property.

Subpart 8.2--8.3  [Reserved]

                  Subpart 8.4--Federal Supply Schedules

8.401  General.
8.402  Applicability.
8.402--8.403-4  [Reserved]
8.404  Using schedules.
8.404-1--8.404-2  [Reserved]
8.404-3  Requests for waivers.
8.405  Ordering office responsibilities.
8.405-1  [Reserved]
8.405-2  Order placement.
8.405-3  Inspection and acceptance.
8.405-4  Delinquent performance.
8.405-5  Termination for default.
8.405-6  Termination for convenience.
8.405-7  Disputes.

                   Subpart 8.5--Acquisition of Helium

8.500  Scope of subpart.
8.501  Definitions.
8.502  Policy.
8.503  Exception.
8.504  Procedures.
8.505  Contract clause.

      Subpart 8.6--Acquisition From Federal Prison Industries, Inc.

8.601  General.
8.602  Policy.
8.603  Purchase priorities.
8.604  Ordering procedures.
8.605  Clearances.
8.606  Exceptions.

 Subpart 8.7--Acquisition From Nonprofit Agencies Employing People Who 
                     Are Blind or Severely Disabled

8.700  Scope of subpart.
8.701  Definitions.
8.702  General.
8.703  Procurement list.
8.704  Purchase priorities.
8.705  Procedures.
8.705-1  General.
8.705-2  Direct-order process.
8.705-3  Allocation process.
8.705-4  Compliance with orders.
8.706  Purchase exceptions.
8.707  Prices.
8.708  Shipping.
8.709  Payments.
8.710  Quality of merchandise.
8.711  Quality complaints.
8.712  Specification changes.
8.713  Optional acquisition of supplies and services.
8.714  Communications with the central nonprofit agencies and the 
          Committee.
8.715  Replacement commodities.
8.716  Change-of-name and successor in interest procedures.

        Subpart 8.8--Acquisition of Printing and Related Supplies

8.800  Scope of subpart.
8.801  Definitions.
8.802  Policy.

  Subpart 8.9--Financial Management Systems Software (FMSS) Mandatory 
             Multiple Award Schedule (MAS) Contracts Program

8.901  General.
8.902  Policy.
8.903  Exceptions.
8.904  Procedures.

Subpart 8.10  [Reserved]

                 Subpart 8.11--Leasing of Motor Vehicles

8.1100  Scope of subpart.
8.1101  Definitions.
8.1102  Presolicitation requirements.
8.1103  Contract requirements.
8.1104  Contract clauses.

    Authority: 40 U.S.C. 486(c); 10 U.S.C. Chapter 137; and 42 U.S.C. 
2473(c).

[[Page 108]]


    Source: 48 FR 42129, Sept. 19, 1983, unless otherwise noted.



8.000  Scope of part.

    This part deals with the acquisition of supplies and services from 
or through Government supply sources.



8.001  Priorities for use of Government supply sources.

    (a) Except as required by 8.002, or as otherwise provided by law, 
agencies shall satisfy requirements for supplies and services from or 
through the sources and publications listed below in descending order of 
priority--
    (1) Supplies. (i) Agency inventories;
    (ii) Excess from other agencies (see subpart 8.1);
    (iii) Federal Prison Industries, Inc. (see subpart 8.6);
    (iv) Products available from the Committee for Purchase from People 
Who Are Blind or Severely Disabled (see subpart 8.7);
    (v) Wholesale supply sources, such as stock programs of the General 
Services Administration (GSA) (see 41 CFR 101-26.3), the Defense 
Logistics Agency (see 41 CFR 101-26.6), the Department of Veterans 
Affairs (see 41 CFR 101-26.704), and military inventory control points;
    (vi) Mandatory Federal Supply Schedules (see subpart 8.4);
    (vii) Optional use Federal Supply Schedules (see subpart 8.4); and
    (viii) Commercial sources (including educational and nonprofit 
institutions).
    (2) Services. (i) Services available from the Committee for Purchase 
from People Who Are Blind or Severely Disabled (see subpart 8.7);
    (ii) Mandatory Federal Supply Schedules (see subpart 8.4);
    (iii) Optional use Federal Supply Schedules (see subpart 8.4); and
    (iv) Federal Prison Industries, Inc. (see subpart 8.6), or 
commercial sources (including educational and nonprofit institutions).
    (b) Sources other than those listed in paragraph (a) may be used as 
prescribed in 41 CFR 101-26.301 and in an unusual and compelling urgency 
as prescribed in 6.302-2 and in 41 CFR 101-25.101-5.
    (c) The statutory obligation for Government agencies to satisfy 
their requirements for supplies available from the Committee for 
Purchase From People Who Are Blind or Severely Disabled also applies 
when contractors purchase the supply items for Government use.

[48 FR 42129, Sept. 19, 1983, as amended at 50 FR 1735, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985; 54 FR 29280, July 11, 1989; 56 FR 15148, 
Apr. 15, 1991; 59 FR 53716, Oct. 25, 1994; 59 FR 67027, Dec. 28, 1994; 
61 FR 2630, Jan. 26, 1996]



8.002  Use of other Government supply sources.

    Agencies shall satisfy requirements for the following supplies or 
services from or through specified sources, as applicable:
    (a) Public utility services (see part 41);
    (b) Printing and related supplies (see subpart 8.8);
    (c) Leased motor vehicles (see subpart 8.11);
    (d) Strategic and critical materials (e.g., metals and ores) from 
inventories exceeding National Defense Stockpile requirements (detailed 
information is available from the Defense National Stockpile Center, 
8725 John J. Kingman Rd., Suite 4528, Fort Belvior, VA 22060-6223; and
    (e) Helium (see subpart 8.5--Acquisition of Helium).

[48 FR 42129, Sept. 19, 1983, as amended at 57 FR 60576, Dec. 21, 1992; 
59 FR 67018, Dec. 28, 1994; 59 FR 67030, Dec. 28, 1994; 61 FR 41468, 
Aug. 8, 1996; 62 FR 235, Jan. 2, 1997]



8.003  Contract clause.

    The contracting officer shall insert the clause at 52.208-9, 
Contractor Use of Mandatory Sources of Supply, in solicitations and 
contracts which require a contractor to purchase supply items for 
Government use that are available from the Committee for Purchase from 
People Who Are Blind or Severely Disabled. The contracting officer shall 
identify in the contract schedule the items which must be purchased from 
a mandatory source and the specific source.

[61 FR 2631, Jan. 26, 1996]

[[Page 109]]



                  Subpart 8.1--Excess Personal Property



8.101  Definition.

    Excess personal property means any personal property (see 45.601) 
under the control of a Federal agency that the agency head or a designee 
determines is not required for its needs and for the discharge of its 
responsibilities.



8.102  Policy.

    When it is practicable to do so, agencies shall use excess personal 
property as the first source of supply in fulfilling their requirements 
and those of their cost-reimbursement contractors. Accordingly, agencies 
shall ensure that all personnel make positive efforts to satisfy agency 
requirements by obtaining and using excess personal property (including 
that suitable for adaptation or substitution) before initiating 
contracting action.



8.103  Information on available excess personal property.

    Information regarding the availability of excess personal property 
can be obtained through--
    (a) Review of excess personal property catalogs and bulletins issued 
by the General Services Administration (GSA);
    (b) Personal contact with GSA or the activity holding the property;
    (c) Submission of supply requirements to the regional offices of GSA 
(GSA Form 1539, Request for Excess Personal Property, is available for 
this purpose); and
    (d) Examination and inspection of reports and samples of excess 
personal property in GSA regional offices.



8.104  Obtaining nonreportable property.

    GSA will assist agencies in meeting their requirements for supplies 
of the types excepted from reporting as excess by the Federal Property 
Management Regulations (41 CFR 101-43.312). Federal agencies requiring 
such supplies should contact the appropriate GSA regional office.

Subpart 8.2--8.3  [Reserved]



                  Subpart 8.4--Federal Supply Schedules



8.401  General.

    (a) The Federal Supply Schedule program, directed and managed by the 
General Services Administration (GSA), provides Federal agencies with a 
simplified process for obtaining commonly used commercial supplies and 
services at prices associated with volume buying (also see 8.001). 
Indefinite delivery contracts (including requirements contracts) are 
established with commercial firms to provide supplies and services at 
stated prices for given periods of time. Similar systems of schedule-
type contracting are used for military items managed by the Department 
of Defense. These systems are not included in the Federal Supply 
Schedule program covered by this subpart.
    (b) The GSA schedule contracting office issues publications, 
entitled Federal Supply Schedules, containing the information necessary 
for placing delivery orders with schedule contractors. Ordering offices 
issue delivery orders directly to the schedule contractors for the 
required supplies and services. Ordering offices may request copies of 
schedules by completing GSA Form 457, FSS Publications Mailing List 
Application, and mailing it to the GSA Centralized Mailing List Service 
(7CAFL), P.O. Box 6477, Fort Worth, TX 76115. Copies of GSA Form 457 
also may be obtained from this address.
    (c) GSA offers an on-line shopping service called ``GSA Advantage!'' 
that enables ordering offices to search product specific information 
(i.e., national stock number, part number, common name), review delivery 
options, place orders directly with contractors (or ask GSA to place 
orders on the agency's behalf), and pay contractors for orders using the 
Governmentwide commercial purchase card (or pay GSA). Ordering offices 
may access the ``GSA Advantage!'' shopping service by connecting to the 
Internet and using a web browser to connect to the Acquisition Reform 
Network (http://www.arnet.gov) or the GSA, Federal Supply Service (FSS) 
Home Page (http://www.fss.gsa.gov). For more information or assistance, 
contact GSA at

[[Page 110]]

Internet e-mail address: gsa.advantage@gsa.gov.

[62 FR 44817, Aug. 22, 1997]



8.402  Applicability.

    Procedures in this subpart apply to Federal Supply Schedule 
contracts. Occasionally, special ordering procedures may be established. 
In such cases the procedures will be outlined in the ``Federal Supply 
Schedules''.

[62 FR 44818, Aug. 22, 1997]



8.402--8.403-4  [Reserved]



8.404  Using schedules.

    (a) General. When agency requirements are to be satisfied through 
the use of Federal Supply Schedules as set forth in this subpart, the 
simplified acquisition procedures of Part 13 and the small business 
provisions of Part 19 do not apply, except for the provision at 13.303-
2(c)(3). Orders placed pursuant to a Multiple Award Schedule (MAS), 
using the procedures in this subpart, are considered to be issued 
pursuant to full and open competition (see 6.102(d)(3)). Therefore, when 
placing orders under Federal Supply Schedules, ordering offices need not 
seek further competition, synopsize the requirement, make a separate 
determination of fair and reasonable pricing, or consider small business 
programs. GSA has already determined the prices of items under schedule 
contracts to be fair and reasonable. By placing an order against a 
schedule using the procedures in this section, the ordering office has 
concluded that the order represents the best value and results in the 
lowest overall cost alternative (considering price, special features, 
administrative costs, etc.) to meet the Government's needs.
    (b) Ordering procedures for optional use schedules--(1) Orders at or 
below the micro-purchase threshold. Ordering offices can place orders at 
or below the micro-purchase threshold with any Federal Supply Schedule 
contractor.
    (2) Orders exceeding the micro-purchase threshold but not exceeding 
the maximum order threshold. Orders should be placed with the schedule 
contractor that can provide the supply or service that represents the 
best value. Before placing an order, ordering offices should consider 
reasonably available information about the supply or service offered 
under MAS contracts by using the ``GSA Advantage!'' on-line shopping 
service, or by reviewing the catalogs/pricelists of at least three 
schedule contractors and select the delivery and other options available 
under the schedule that meet the agency's needs. In selecting the supply 
or service representing the best value, the ordering office may 
consider--
    (i) Special features of the supply or service that are required in 
effective program performance and that are not provided by a comparable 
supply or service;
    (ii) Trade-in considerations;
    (iii) Probable life of the item selected as compared with that of a 
comparable item;
    (iv) Warranty considerations;
    (v) Maintenance availability;
    (vi) Past performance; and
    (vii) Environmental and energy efficiency considerations.
    (3) Orders exceeding the maximum order threshold. Each schedule 
contract has an established maximum order threshold. This threshold 
represents the point where it is advantageous for the ordering office to 
seek a price reduction. In addition to following the procedures in 
paragraph (b)(2) of this section and before placing an order that 
exceeds the maximum order threshold, ordering offices shall--
    (i) Review additional schedule contractors' catalogs/pricelists or 
use the ``GSA Advantage!'' on-line shopping service;
    (ii) Based upon the initial evaluation, generally seek price 
reductions from the schedule contractor(s) appearing to provide the best 
value (considering price and other factors); and
    (iii) After price reductions have been sought, place the order with 
the schedule contractor that provides the best value and results in the 
lowest overall cost alternative (see 8.404(a)). If further price 
reductions are not offered, an order may still be placed, if the 
ordering office determines that it is appropriate.
    (4) Blanket purchase agreements (BPAs). The establishment of Federal 
Supply Schedule BPAs is permitted

[[Page 111]]

(see 13.303-2(c)(3)) when following the ordering procedures in this 
subpart. All schedule contracts contain BPA provisions. Ordering offices 
may use BPAs to establish accounts with contractors to fill recurring 
requirements. BPAs should address the frequency of ordering and 
invoicing, discounts, and delivery locations and times.
    (5) Price reductions. In addition to the circumstances outlined in 
paragraph (b)(3) of this section, there may be instances when ordering 
offices will find it advantageous to request a price reduction. For 
example, when the ordering office finds a schedule supply or service 
elsewhere at a lower price or when a BPA is being established to fill 
recurring requirements, requesting a price reduction could be 
advantageous. The potential volume of orders under these agreements, 
regardless of the size of the individual order, may offer the ordering 
office the opportunity to secure greater discounts. Schedule contractors 
are not required to pass on to all schedule users a price reduction 
extended only to an individual agency for a specific order.
    (6) Small business. For orders exceeding the micro-purchase 
threshold, ordering offices should give preference to the items of small 
business concerns when two or more items at the same delivered price 
will satisfy the requirement.
    (7) Documentation. Orders should be documented, at a minimum, by 
identifying the contractor the item was purchased from, the item 
purchased, and the amount paid. If an agency requirement in excess of 
the micro-purchase threshold is defined so as to require a particular 
brand name, product, or a feature of a product peculiar to one 
manufacturer, thereby precluding consideration of a product manufactured 
by another company, the ordering office shall include an explanation in 
the file as to why the particular brand name, product, or feature is 
essential to satisfy the agency's needs.
    (c) Ordering procedures for mandatory use schedules. (1) This 
paragraph (c) applies only to orders against schedule contracts with 
mandatory users. When ordering from multiple-award schedules, mandatory 
users shall also follow the procedures in paragraphs (a) and (b) of this 
section.
    (2) In the case of mandatory schedules, ordering offices shall not 
solicit bids, proposals, quotations, or otherwise test the market solely 
for the purpose of seeking alternative sources to Federal Supply 
Schedules.
    (3) Schedules identify executive agencies required to use them as 
mandatory sources of supply. The single-award schedule shall be used as 
a primary source and the multiple-award schedule as a secondary source. 
Mandatory use of schedules is not a requirement if--
    (i) The schedule contractor is unable to satisfy the ordering 
office's urgent delivery requirement;
    (ii) The order is below the minimum order thresholds;
    (iii) The order is above the maximum order limitation;
    (iv) The consignee is located outside the area of geographic 
coverage stated in the schedule; or
    (v) A lower price for an identical item (i.e., same make and model) 
is available from another source.
    (4) Absence of follow-on award. Ordering offices, after any 
consultation required by the schedule, are not required to forego or 
postpone their legitimate needs pending the award or renewal of any 
schedule contract.

[59 FR 53716, Oct. 25, 1994, as amended at 59 FR 60319, Nov. 23, 1994; 
60 FR 34747, July 3, 1995; 62 FR 44818, Aug. 22, 1997; 62 FR 64917, Dec. 
9, 1997; 63 FR 34079, June 22, 1998; 64 FR 10536, Mar. 4, 1999]



8.404-1--8.404-2  [Reserved]



8.404-3  Requests for waivers.

    (a) When an ordering office that is a mandatory user under a 
schedule determines that items available from the schedule will not meet 
its specific needs, but similar items from another source will, it shall 
submit a request for waiver to the Commissioner, Federal Supply Service 
(F), GSA, Washington, DC 20406, except as provided in (b) below. 
Requests shall contain the following information:
    (1) A complete description of the required items, whenever possible; 
e.g., descriptive literature such as cuts, illustrations, drawings, and 
brochures

[[Page 112]]

that explain the characteristics and/or construction.
    (2) A comparison of prices and the technical differences between the 
requested item and the schedule item, identifying as a minimum the--
    (i) Inadequacies of the schedule item to perform required functions; 
and
    (ii) Technical, economic, or other advantages of the item requested.
    (3) Quantity required.
    (4) Estimated annual usage or a statement that the requirement is 
nonrecurrent or unpredictable.
    (b) Ordering offices shall not initiate action to acquire similar 
items from nonschedule sources until a request for waiver is approved, 
except as otherwise provided in interagency agreements.

[48 FR 42129, Sept. 19, 1983, as amended at 54 FR 29280, July 11, 1989]



8.405  Ordering office responsibilities.



8.405-1  [Reserved]



8.405-2  Order placement.

    Ordering offices may use Optional Form 347, an agency-prescribed 
form, or an established electronic communications format to order items 
from schedules and shall place orders directly with the contractor 
within the limitations specified in each schedule. Orders shall include, 
at a minimum, the following information in addition to any information 
required by the schedule:
    (a) Complete shipping and billing addresses.
    (b) Contract number and date.
    (c) Agency order number.
    (d) F.o.b. delivery point; i.e., origin or destination.
    (e) Discount terms.
    (f) Delivery time.
    (g) Special item number or national stock number.
    (h) Brief, complete description of each item (when ordering by model 
number, features and options such as color, finish, and electrical 
characteristics, if available, must be specified).
    (i) Quantity and any variation in quantity.
    (j) Number of units.
    (k) Unit price.
    (l) Total price of order.
    (m) Points of inspection and acceptance.
    (n) Other pertinent data; e.g., delivery instructions or receiving 
hours and size-of-truck limitation.
    (o) Marking requirements.
    (p) Level of preservation, packaging, and packing.

[48 FR 42129, Sept. 19, 1983, as amended at 60 FR 34737, July 3, 1995]



8.405-3  Inspection and acceptance.

    (a) Consignees shall inspect supplies at destination except when--
    (1) The schedule provides for the schedule contracting agency to 
perform source inspection (in this case, the schedule will indicate that 
mandatory source inspection is required); or
    (2) A schedule item is covered by a product description, and the 
ordering office determines that the schedule contracting agency's 
inspection assistance is needed (inspection assistance may be based on 
the ordering volume, the complexity of items, or the past performance of 
the supplier).
    (b) When the schedule contracting agency performs the inspection, as 
specified in the schedule, the ordering office will provide two copies 
of the order specifying source inspection to the schedule contracting 
agency. The schedule contracting agency will notify the ordering office 
of acceptance or rejection of the supplies.
    (c) Material inspected at source by the schedule contracting agency, 
and determined to conform with the product description of the schedule, 
shall not be reinspected for the same purpose. The consignee shall limit 
inspection to quantity and condition on receipt.
    (d) Unless otherwise provided in the schedule, acceptance shall be 
conclusive except as regards latent defects, fraud, or such gross 
mistakes as amount to fraud.



8.405-4  Delinquent performance.

    If the contractor fails to perform on the order, the ordering office 
may terminate the order for default or give the

[[Page 113]]

contractor further opportunity to perform by modifying the order to 
establish a new delivery date (obtaining consideration as necessary).

[48 FR 42129, Sept. 19, 1983, as amended at 59 FR 53717, Oct. 25, 1994]



8.405-5  Termination for default.

    (a)(1) An ordering office may terminate any one or more orders for 
default in accordance with part 49, Termination of Contracts. The 
schedule contracting office shall be notified of all cases where an 
ordering office has declared a Federal Supply Schedule contractor in 
default or fraud is suspected.
    (2) Should the contractor claim that the failure was excusable, the 
ordering office shall promptly refer the matter to the schedule 
contracting office. In the absence of a decision by the schedule 
contracting office (or by the head of the schedule contracting agency, 
on appeal) excusing the failure, the ordering office may charge the 
contractor with excess costs resulting from repurchase.
    (3) Any repurchase shall be made at as reasonable a price as 
possible considering the quality required by the Government, delivery 
requirement, and administrative expenses. Copies of all repurchase 
orders, except the copy furnished to the contractor or any other 
commercial concern, shall include the notation ``Repurchase against the 
account of ____________ [insert contractor's name] under Delivery Order 
____________ [insert number] under Contract ____________ [insert 
number]''.
    (4) When excess costs are anticipated, the ordering office may 
withhold funds due the contractor as offset security. Ordering offices 
shall minimize excess costs to be charged against the contractor and 
collect or setoff any excess costs owed.
    (5) If an ordering office is unable to collect excess costs, it 
shall take the following actions:
    (i) Notify the schedule contracting office within 60 days after 
final payment to the replacement contractor. The notice shall include 
the following information about the defaulted order:
    (A) Name and address of the contractor.
    (B) Schedule, contract, and order number.
    (C) National stock or special item number(s), and a brief 
description of the item(s).
    (D) Cost of schedule items involved.
    (E) Excess costs to be collected.
    (F) Other pertinent data.
    (ii) In addition to the above, the notice shall include the 
following information about the replacement contract:
    (A) Name and address of the contractor.
    (B) Item repurchase cost.
    (C) Repurchase order number and date of payment.
    (D) Contract number, if any.
    (E) Other pertinent data.
    (b) Only the schedule contracting officer may terminate for default 
any or all items covered by the schedule contract. When notified of 
default action by the schedule contracting officer with respect to 
defaulted items, ordering offices shall--
    (1) Refuse to accept further performance by the contractor;
    (2) Not place further orders with the contractor;
    (3) Repurchase against the contractor in default from sources 
designated by the schedule contracting officer; or
    (4) Proceed as otherwise directed by the schedule contracting 
officer.
    (c) All actions taken regarding terminations for default shall 
comply with the applicable requirements in part 49.

[48 FR 42129, Sept. 19, 1983, as amended at 59 FR 53717, Oct. 25, 1994]



8.405-6  Termination for convenience.

    (a) Ordering offices may terminate individual orders for the 
convenience of the Government. Only the schedule contracting officer may 
terminate any or all items covered by the schedule contract for the 
convenience of the Government.
    (b) Before terminating orders for convenience, the ordering office 
shall endeavor to enter into a ``no cost'' cancellation agreement with 
the contractor.
    (c) All actions taken regarding terminations for convenience shall 
comply with the applicable requirements in part 49.

[[Page 114]]



8.405-7  Disputes.

    The ordering office shall refer all unresolved disputes under orders 
to the schedule contracting office for action under the Disputes clause 
of the contract.



                   Subpart 8.5--Acquisition of Helium

    Source: 59 FR 67030, Dec. 28, 1994, unless otherwise noted.



8.500  Scope of subpart.

    This subpart implements the requirements of the Helium Act (50 
U.S.C. 167a, et seq.) concerning the acquisition of liquid or gaseous 
helium by Federal agencies or by Government contractors or 
subcontractors for use in the performance of a Government contract (also 
see 30 CFR Parts 601 and 602).



8.501  Definitions.

    Bureau helium distributor means a private helium distributor which 
has established and maintains eligibility to distribute helium purchased 
from the Bureau of Land Management, as specified in 30 CFR part 602.
    Bureau of Land Management, as used in this subpart, means the 
Department of the Interior, Bureau of Land Management, Helium Field 
Operations, located at 801 South Fillmore Street, Amarillo, TX 79101-
3545.
    Helium requirement forecast means an estimate by the contractor or 
subcontractor of the amount of helium required for performance of the 
contract or subcontract.
    Major helium requirement means a helium requirement during a 
calendar month of 5,000 or more standard cubic feet (measured at 14.7 
pounds per square inch absolute pressure and 70 degrees Fahrenheit 
temperature), including liquid helium gaseous equivalent. In any month 
in which the major requirement threshold is met, all helium purchased 
during that month is considered part of the major helium requirement.

[59 FR 67030, Dec. 28, 1994, as amended at 62 FR 40236, July 25, 1997]



8.502  Policy.

    To the extent that supplies are readily available, all major helium 
requirements purchased by a Government agency or used in the performance 
of a Government contract shall be purchased from the Bureau of Mines. 
This requirement may be satisfied as follows:
    (a) By ordering against a GSA Federal Supply Schedule contract (for 
contractor use and authorization procedures, see subpart 51.1).
    (b)(1) For requirements not covered by a Federal Supply Schedule 
contract, by purchasing from--
    (i) The Bureau of Land Management; or
    (ii) A Bureau helium distributor.
    (2) A copy of the ``List by Shipping Points of Private Distributors 
Eligible to Sell Helium to Federal Agencies'' may be obtained from the 
Bureau of Land Management.

[59 FR 67030, Dec. 28, 1994, as amended at 62 FR 40236, July 25, 1997]



8.503  Exception.

    The requirements of this subpart do not apply to contracts or 
subcontracts in which the helium was acquired by the contractor prior to 
award of the contract or subcontract.



8.504  Procedures.

    (a) Upon receipt of the helium requirement forecast, point of 
contact, and telephone number from the contractor, the contracting 
officer shall forward this information, along with a copy of the 
contract, to the Bureau of Land Management.
    (b) Upon notification by the Bureau of Land Management of an 
apparent discrepancy between helium sales data and the contractor's 
helium requirement forecast, the contracting officer shall determine 
appropriate action and inform the Bureau of Land Management.

[59 FR 67030, Dec. 28, 1994, as amended at 62 FR 40236, July 25, 1997]



8.505  Contract clause.

    The contracting officer shall insert the clause at 52.208-8, Helium 
Requirement Forecast and Required Sources for Helium, in solicitations 
and contracts if it is anticipated that performance of the contract 
involves a major helium requirement.

[[Page 115]]



      Subpart 8.6--Acquisition From Federal Prison Industries, Inc.



8.601  General.

    (a) Federal Prison Industries, Inc. (FPI), also referred to as 
UNICOR, is a self-supporting, wholly owned Government corporation of the 
District of Columbia.
    (b) FPI provides training and employment for prisoners confined in 
Federal penal and correctional institutions through the sale of its 
supplies and services to Government agencies (18 U.S.C. 4121-4128).
    (c) FPI diversifies its supplies and services to prevent private 
industry from experiencing unfair competition from prison workshops or 
activities.

[48 FR 42129, Sept. 19, 1983, as amended at 56 FR 15148, Apr. 15, 1991]



8.602  Policy.

    (a) Agencies shall purchase required supplies of the classes listed 
in the Schedule of Products made in Federal Penal and Correctional 
Institutions (referred to in this subpart as the Schedule) at prices not 
to exceed current market prices, using the procedures in this subpart.
    (b) Subject to the priorities in 8.001 and 8.603, agencies are 
encouraged to use the facilities of FPI to the maximum extent 
practicable in purchasing (1) supplies that are not listed in the 
Schedule, but that are of a type manufactured in Federal penal and 
correctional institutions, and (2) services that are listed in the 
Schedule.
    (c) If a supply not listed in the Schedule is of a type normally 
produced by Federal penal and correctional institutions, agencies are 
encouraged to suggest that FPI consider the feasibility of adding the 
item to its Schedule.

[48 FR 42129, Sept. 19, 1983, as amended at 56 FR 15148, Apr. 15, 1991]



8.603  Purchase priorities.

    (a) FPI and nonprofit agencies participating in the Javits-Wagner-
O'Day (JWOD) Program (see subpart 8.7) may produce identical supplies or 
services. When this occurs, ordering offices shall purchase supplies and 
services in the following priorities:
    (1) Supplies:
    (i) Federal Prison Industries, Inc. (41 U.S.C. 48).
    (ii) JWOD participating nonprofit agencies.
    (iii) Commercial sources.
    (2) Services:
    (i) JWOD participating nonprofit agencies.
    (ii) Federal Prison Industries, Inc., or commercial sources.
    (b) Supplies and services manufactured or performed by FPI are in 
strict conformity with Federal Specifications. These supplies and 
services are listed in the Schedule. Copies of the Schedule are 
available from Federal Prison Industries, Inc., Department of Justice, 
Washington, DC 20534.

[48 FR 42129, Sept. 19, 1983, as amended at 56 FR 15149, Apr. 15, 1991; 
59 FR 67027, Dec. 28, 1994]



8.604  Ordering procedures.

    (a) Contracting officers shall order (1) less-than-carload lots of 
common-use items (Schedule A of the Schedule) from the regional 
warehouses of GSA, unless it is more practical and economical to 
purchase directly from FPI, and (2) carload lots of common-use items, 
and other items listed in the Schedule, from FPI.
    (b) Contracting officers shall prepare orders to FPI using the 
procedures in the Schedule.
    (c) When the contracting officer believes that the FPI price exceeds 
the market price, the matter may be referred to the cognizant product 
division identified in the Schedule or to the FPI Washington office for 
resolution.



8.605  Clearances.

    (a) Clearance is required from FPI before supplies on the Schedule 
are acquired from other sources, except when the conditions in 8.606 
apply. FPI clearances ordinarily are of the following types:
    (1) General or blanket clearances issued when classes of articles or 
services are not available from FPI.
    (2) Formal clearances issued in response to requests from offices 
desiring to acquire, from other sources, supplies listed in the Schedule 
and not covered by a general clearance. Requests should be addressed to 
Federal Prison

[[Page 116]]

Industries, Inc., Department of Justice, Washington, DC 20534.
    (b) Purchases from other sources because of a lower price are not 
normally authorized, and clearances will not be issued on this basis 
except as a result of action taken to resolve questions of price under 
8.604(c).
    (c) Disputes regarding price, quality, character, or suitability of 
supplies produced by FPI are subject to arbitration as specified in 18 
U.S.C. 4124. The statute provides that the arbitration shall be 
conducted by a board consisting of the Comptroller General of the United 
States, the Administrator of General Services, and the President, or 
their representatives. The decisions of the board are final and binding 
on all parties.

[48 FR 42129, Sept. 19, 1983, as amended at 56 FR 15149, Apr. 15, 1991]



8.606  Exceptions.

    FPI clearances are not required when--
    (a) Public exigency requires immediate delivery or performance;
    (b) Suitable used or excess supplies are available;
    (c) Purchases are made from GSA of less-than-carload lots of common-
use items stocked by GSA (see Schedule A of the Schedule);
    (d) The supplies are acquired and used outside the United States; or
    (e) Orders are for listed items totaling $25 or less that require 
delivery within 10 days.

[48 FR 42129, Sept. 19, 1983, as amended at 56 FR 15149, Apr. 15, 1991]



 Subpart 8.7--Acquisition From Nonprofit Agencies Employing People Who 
                     Are Blind or Severely Disabled



8.700  Scope of subpart.

    This subpart prescribes the policies and procedures for implementing 
the Javits-Wagner-O'Day Act (41 U.S.C. 46-48c), referred to in this 
subpart as ``the JWOD Act,'' and the rules of the Committee for Purchase 
from People Who Are Blind or Severely Disabled (41 CFR chapter 51).

[59 FR 67027, Dec. 28, 1994]



8.701  Definitions.

    Allocation, as used in this subpart, means an action taken by a 
central nonprofit agency to designate the JWOD participating nonprofit 
agencies that will furnish definite quantities of supplies or perform 
specific services upon receipt of orders from ordering offices.
    Central nonprofit agency, as used in this subpart, means National 
Industries for the Blind (NIB), which has been designated to represent 
people who are blind; or NISH, which has been designated to represent 
JWOD participating nonprofit agencies serving people with severe 
disabilities other than blindness.
    Committee, as used in this subpart, means the Committee for Purchase 
from People Who Are Blind or Severely Disabled.
    Government or entity of the Government means any entity of the 
legislative or judicial branch, any executive agency, military 
department, Government corporation, or independent establishment, the 
U.S. Postal Service, or any nonappropriated-fund instrumentality of the 
Armed Forces.
    Ordering office means any activity in an entity of the Government 
that places orders for the purchase of supplies or services under the 
JWOD Program.
    Procurement List, as used in this subpart, means a list of supplies 
(including military resale commodities) and services that the Committee 
has determined are suitable for purchase by the Government under the 
Javits-Wagner-O'Day Act.
    Nonprofit agency serving people who are blind or nonprofit agency 
serving people with other severe disabilities (referred to jointly as 
JWOD participating nonprofit agencies) means a qualified nonprofit 
agency employing people who are blind or have other severe disabilities 
approved by the Committee to furnish a commodity or a service to the 
Government under the Act.

[59 FR 67027, Dec. 28, 1994]

[[Page 117]]



8.702  General.

    The Committee is an independent Government activity with members 
appointed by the President of the United States. It is responsible for--
    (a) Determining those supplies and services to be purchased by all 
entities of the Government from JWOD participating nonprofit agencies;
    (b) Establishing prices for the supplies and services; and
    (c) Establishing rules and regulations to implement the JWOD Act.

[59 FR 67028, Dec. 28, 1994]



8.703  Procurement list.

    The Committee maintains a Procurement List of all supplies and 
services required to be purchased from JWOD participating nonprofit 
agencies. Questions concerning whether a supply item or service is on 
the Procurement List should be referred to the Committee offices at the 
following address and telephone number: Committee for Purchase from 
People Who Are Blind or Severely Disabled, Crystal Square 3, Room 403, 
1735 Jefferson Davis Highway, Arlington, VA 22202-3461, (703) 603-7740.
    Many items on the Procurement List are identified in the General 
Services Administration (GSA) Supply Catalog and GSA's Customer Service 
Center Catalogs with a black square and the words ``NIB/NISH Mandatory 
Source,'' and in similar catalogs issued by the Defense Logistics Agency 
(DLA) and the Department of Veterans Affairs (VA). GSA, DLA, and VA are 
central supply agencies from which other Federal agencies are required 
to purchase certain supply items on the Procurement List.

[59 FR 67028, Dec. 28, 1994]



8.704  Purchase priorities.

    (a) The JWOD Act requires the Government to purchase supplies or 
services on the Procurement List, at prices established by the 
Committee, from JWOD participating nonprofit agencies if they are 
available within the period required. When identical supplies or 
services are on the Procurement List and the Schedule of Products issued 
by Federal Prison Industries, Inc., ordering offices shall purchase 
supplies and services in the following priorities:
    (1) Supplies:
    (i) Federal Prison Industries, Inc. (41 U.S.C. 48).
    (ii) JWOD participating nonprofit agencies.
    (iii) Commercial sources.
    (2) Services:
    (i) JWOD participating nonprofit agencies.
    (ii) Federal Prison Industries, Inc., or commercial sources.
    (b) No other provision of the FAR shall be construed as permitting 
an exception to the mandatory purchase of items on the Procurement List.
    (c) The Procurement List identifies those supplies for which the 
ordering office must obtain a formal clearance (8.605) from Federal 
Prison Industries, Inc., before making any purchases from JWOD 
participating nonprofit agencies.

[48 FR 42129, Sept. 19, 1983, as amended at 51 FR 19713, May 30, 1986; 
56 FR 15149, Apr. 15, 1991; 59 FR 67028, Dec. 28, 1994]



8.705  Procedures.



8.705-1  General.

    (a) Ordering offices shall obtain supplies and services on the 
Procurement List from the central nonprofit agency or its designated 
JWOD participating nonprofit agencies, except that supplies identified 
on the Procurement List as available from DLA, GSA, or VA supply 
distribution facilities shall be obtained through DLA, GSA, or VA 
procedures. If a distribution facility cannot provide the supplies, it 
shall inform the ordering office, which shall then order from the JWOD 
participating nonprofit agency designated by the Committee.
    (b) Supply distribution facilities in DLA and GSA shall obtain 
supplies on the Procurement List from the central nonprofit agency 
identified or its designated JWOD participating nonprofit agency.

[48 FR 42129, Sept. 19, 1983, as amended at 59 FR 67028, 67029, Dec. 28, 
1994]

[[Page 118]]



8.705-2  Direct-order process.

    Central nonprofit agencies may authorize ordering offices to 
transmit orders for specific supplies or services directly to a JWOD 
participating nonprofit agency. The written authorization remains valid 
until it is revoked by the central nonprofit agency or the Committee. 
The central nonprofit agency shall specify the normal delivery or 
performance lead time required by the nonprofit agency. The ordering 
office shall reflect this lead time in its orders.

[48 FR 42129, Sept. 19, 1983, as amended at 56 FR 67136, Dec. 27, 1991; 
59 FR 67029, Dec. 28, 1994]



8.705-3  Allocation process.

    (a) When the direct order process has not been authorized, the 
ordering office shall submit a written request for allocation 
(requesting the designation of the JWOD participating nonprofit agency 
to produce the supplies or perform the service) to the central nonprofit 
agency designated in the Procurement List. Ordering offices shall 
request allocations in sufficient time for a reply, for orders to be 
placed, and for the nonprofit agency to produce the supplies or provide 
the service within the required delivery or performance schedule.
    (b) The ordering office's request to the central nonprofit agency 
for allocation shall include the following information:
    (1) For supplies--Item name, stock number, latest specification, 
quantity, unit price, date delivery is required, and destination to 
which delivery is to be made.
    (2) For services--Type and location of service required, latest 
specification, work to be performed, estimated volume, and required date 
or dates for completion.
    (3) Other requirements; e.g., packing, marking, as necessary.
    (c) When an allocation is received, the ordering office shall 
promptly issue an order to the specified JWOD participating nonprofit 
agency or to the central nonprofit agency, as instructed by the 
allocation. If the issuance of an order is to be delayed for more than 
15 days beyond receipt of the allocation, or canceled, the ordering 
office shall advise the central nonprofit agency immediately.
    (d) Ordering offices may issue orders without limitation as to 
dollar amount and shall record them upon issuance as obligations. Each 
order shall include, as a minimum, the information contained in the 
request for allocation. Ordering offices shall also include additional 
instructions necessary for performance under the order; e.g., on the 
handling of Government-furnished property, reports required, and 
notification of shipment.

[48 FR 42129, Sept. 19, 1983, as amended at 59 FR 67029, Dec. 28, 1994; 
60 FR 34737, July 3, 1995]



8.705-4  Compliance with orders.

    (a) The central nonprofit agency shall inform the ordering office of 
changes in lead time experienced by its JWOD participating nonprofit 
agencies to minimize requests for extensions once the ordering office 
places an order.
    (b) The ordering office shall grant a request by a central nonprofit 
agency or JWOD participating nonprofit agency for revision in the 
delivery or completion schedule, if feasible. If extension of the 
delivery or completion date is not feasible, the ordering office shall 
notify the appropriate central nonprofit agency and request that it 
reallocate the order, or grant a purchase exception authorizing 
acquisition from commercial sources.
    (c) When a JWOD participating nonprofit agency fails to perform 
under the terms of an order, the ordering office shall make every effort 
to resolve the noncompliance with the nonprofit agency involved and to 
negotiate an adjustment before taking action to cancel the order. If the 
problem cannot be resolved with the nonprofit agency, the ordering 
office shall refer the matter for resolution first to the central 
nonprofit agency and then, if necessary, to the Committee.
    (d) When, after complying with 8.705-4(c), the ordering office 
determines that it must cancel an order, it shall notify the central 
nonprofit agency and, if practical, request a reallocation of the order. 
When the central nonprofit agency cannot reallocate the

[[Page 119]]

order, it shall grant a purchase exception permitting use of commercial 
sources, subject to approval by the Committee when the value of the 
purchase exception is $25,000 or more.

[48 FR 42129, Sept. 19, 1983, as amended at 56 FR 67136, Dec. 27, 1991; 
59 FR 67028, 67029, Dec. 28, 1994]



8.706  Purchase exceptions.

    (a) Ordering offices may acquire supplies or services on the 
Procurement List from commercial sources only if the acquisition is 
specifically authorized in a purchase exception granted by the 
designated central nonprofit agency.
    (b) The central nonprofit agency shall promptly grant purchase 
exceptions when--
    (1) The JWOD participating nonprofit agencies cannot provide the 
supplies or services within the time required, and commercial sources 
can provide them significantly sooner in the quantities required; or
    (2) The quantity required cannot be produced or provided 
economically by the JWOD participating nonprofit agencies.
    (c) The central nonprofit agency granting the exception shall 
specify the quantity and delivery or performance period covered by the 
exception.
    (d) When a purchase exception is granted, the contracting officer 
shall--
    (1) Initiate purchase action within 15 days following the date of 
the exception or any extension granted by the central nonprofit agency; 
and
    (2) Provide a copy of the solicitation to the central nonprofit 
agency when it is issued.
    (e) The Committee may also grant a purchase exception, under any 
circumstances it considers appropriate.

[48 FR 42129, Sept. 19, 1983, as amended at 59 FR 67028, 67029, Dec. 28, 
1994]



8.707  Prices.

    (a) The prices of items on the Procurement List are fair market 
prices established by the Committee. All prices for supplies ordered 
under this subpart are f.o.b. origin.
    (b) Prices for supplies are normally adjusted semiannually. Prices 
for services are normally adjusted annually.
    (c) The Committee may request the agency responsible for acquiring 
the supplies or service to assist it in establishing or revising the 
fair market price. The Committee has the authority to establish prices 
without prior coordination with the responsible contracting office.
    (d) Price changes shall normally apply to all orders received by the 
JWOD participating nonprofit agency on or after the effective date of 
the change. In special cases, after considering the views of the 
ordering office, the Committee may make price changes applicable to 
orders received by the JWOD participating nonprofit agency prior to the 
effective date of the change.
    (e) If an ordering office desires packing, packaging, or marking of 
supplies other than the standard pack as provided on the Procurement 
List, any difference in costs shall be included as a separate item on 
the nonprofit agency's invoice. The ordering office shall reimburse the 
nonprofit agency for these costs.
    (f) Ordering offices may make recommendations to the Committee at 
any time for price revisions for supplies and services on the 
Procurement List.

[48 FR 42129, Sept. 19, 1983, as amended at 59 FR 67028, 67029, Dec. 28, 
1994]



8.708  Shipping.

    (a) Delivery is accomplished when a shipment is placed aboard the 
vehicle of the initial carrier. The time of delivery is the date 
shipment is released to and accepted by the initial carrier.
    (b) Shipment is normally under Government bills of lading. However, 
for small orders, ordering offices may specify other shipment methods.
    (c) When shipments are under Government bills of lading, the bills 
of lading may accompany orders or be otherwise furnished promptly. 
Failure of an ordering office to furnish bills of lading or to designate 
a method of transportation may result in an excusable delay in delivery.
    (d) JWOD participating nonprofit agencies shall include 
transportation costs for small shipments paid by the nonprofit agencies 
as an item on the

[[Page 120]]

invoice. The ordering office shall reimburse the nonprofit agencies for 
these costs.

[48 FR 42129, Sept. 19, 1983, as amended at 51 FR 19713, May 30, 1986; 
59 FR 67028, Dec. 28, 1994]



8.709  Payments.

    The ordering office shall make payments for supplies or services on 
the Procurement List within 30 days after shipment or after receipt of a 
proper invoice or voucher.

[59 FR 67028, Dec. 28, 1994]



8.710  Quality of merchandise.

    Supplies and services provided by JWOD participating nonprofit 
agencies shall comply with the applicable Government specifications and 
standards cited in the order. When no specifications or standards 
exist--
    (a) Supplies shall be of the highest quality and equal to similar 
items available on the commercial market; and
    (b) Services shall conform to good commercial practices.

[48 FR 42129, Sept. 19, 1983, as amended at 59 FR 67029, Dec. 28, 1994]



8.711  Quality complaints.

    (a) When the quality of supplies or services received is 
unsatisfactory, the using activity shall take the following actions:
    (1) For supplies received from DLA supply centers, GSA supply 
distribution facilities, or Department of Veterans Affairs distribution 
division, notify the supplying agency.
    (2) For supplies or services received from JWOD participating 
nonprofit agencies, address complaints to the individual nonprofit 
agency involved, with a copy to the appropriate central nonprofit 
agency.
    (b) When quality problems cannot be resolved by the JWOD 
participating nonprofit agency and the ordering office, the ordering 
office shall first contact the central nonprofit agency and then, if 
necessary, the Committee for resolution.

[48 FR 42129, Sept. 19, 1983, as amended at 59 FR 67029, Dec. 28, 1994]



8.712  Specification changes.

    (a) The contracting activity shall notify the JWOD participating 
nonprofit agency and appropriate central nonprofit agency of any change 
in specifications or descriptions. In the absence of such written 
notification, the JWOD participating nonprofit agency shall furnish the 
supplies or services under the specification or description cited in the 
order.
    (b) The contracting activity shall provide 90-days advance 
notification to the Committee and the central nonprofit agency on 
actions that affect supplies on the Procurement List and shall permit 
them to comment before action is taken, particularly when it involves--
    (1) Changes that require new national stock numbers or item 
designations;
    (2) Deleting items from the supply system;
    (3) Standardization; or
    (4) Developing new items to replace items on the Procurement List.
    (c) For services, the contracting activity shall notify the JWOD 
participating nonprofit agency and central nonprofit agency concerned at 
least 90 days prior to the date that any changes in the scope of work or 
other conditions will be required.
    (d) When, in order to meet its emergency needs, a contracting 
activity is unable to give the 90-day notification required in 
paragraphs (b) and (c) of this section, the contracting activity shall, 
at the time it places the order or change notice, inform the JWOD 
participating nonprofit agency and the central nonprofit agency in 
writing of the reasons that it cannot meet the 90-day notification 
requirement.

[48 FR 42129, Sept. 19, 1983, as amended at 51 FR 19714, May 30, 1986; 
59 FR 67029, Dec. 28, 1994]



8.713  Optional acquisition of supplies and services.

    (a) Ordering offices may acquire supplies and services not included 
on the Procurement List from a JWOD participating nonprofit agency that 
is the low responsive, responsible offeror under a solicitation issued 
by other authorized acquisition methods.
    (b) Ordering offices should forward solicitations to JWOD 
participating

[[Page 121]]

nonprofit agencies that may be qualified to provide the supplies or 
services required.

[48 FR 42129, Sept. 19, 1983, as amended at 59 FR 67029, Dec. 28, 1994]



8.714  Communications with the central nonprofit agencies and the Committee.

    (a) The addresses of the central nonprofit agencies are:

(1) National Industries for the Blind, 1901 N. Beauregard St., Suite 
    200, Alexandria, VA 22311-1727, (703) 998-0770; and
(2) NISH, 2235 Cedar Lane, Vienna, VA 22182-5200, (703) 560-6800.

    (b) Any matter requiring referral to the Committee shall be 
addressed to the Executive Director of the Committee at 1735 Jefferson-
Davis Highway, Crystal Square 3, Suite 403, Arlington, VA 22202-3461.

[59 FR 67029, Dec. 28, 1994]



8.715  Replacement commodities.

    When a commodity on the Procurement List is replaced by another 
commodity which has not been previously acquired, and a qualified JWOD 
participating nonprofit agency can furnish the replacement commodity in 
accordance with the Government's quality standards and delivery 
schedules and at a fair market price, the replacement commodity is 
automatically on the Procurement List and shall be acquired from the 
JWOD participating nonprofit agency designated by the Committee. The 
commodity being replaced shall continue to be included on the 
Procurement List until there is no longer a requirement for that 
commodity.

[51 FR 19714, May 30, 1986, as amended at 59 FR 67029, Dec. 28, 1994]



8.716  Change-of-name and successor in interest procedures.

    When the Committee recognizes a name change or a successor in 
interest for a JWOD participating nonprofit agency providing supplies or 
services on the Procurement List--
    (a) The Committee will provide a notice of a change to the 
Procurement List to the cognizant contracting officers; and
    (b) Upon receipt of a notice of a change to the Procurement List 
from the Committee, the contracting officer must--
    (1) Prepare a Standard Form (SF) 30, Amendment of Solicitation/
Modification of Contract, incorporating a summary of the notice and 
attaching a list of contracts affected; and
    (2) Distribute the SF 30, including a copy to the Committee.

[64 FR 51834, Sept. 24, 1999]

    Effective Date Note: At 64 FR 51834, Sept. 24, 1999, section 8.716 
was added, effective Nov. 23, 1999.



        Subpart 8.8--Acquisition of Printing and Related Supplies



8.800  Scope of subpart.

    This subpart provides policy for the acquisition of Government 
printing and related supplies.

[52 FR 9037, Mar. 20, 1987]



8.801  Definitions.

    Government printing means printing, binding, and blankbook work for 
the use of an executive department, independent agency, or establishment 
of the Government.
    Related supplies, as used in this subpart, means supplies that are 
used and equipment that is usable in printing and binding operations.

[48 FR 42129, Sept. 19, 1983, as amended at 52 FR 9037, Mar. 20, 1987]



8.802  Policy.

    (a) Government printing must be done by or through the Government 
Printing Office (GPO) (44 U.S.C. 501), unless--
    (1) The GPO cannot provide the printing service (44 U.S.C. 504);
    (2) The printing is done in field printing plants operated by an 
executive agency (44 U.S.C. 501(2));
    (3) The printing is acquired by an executive agency from allotments 
for contract field printing (44 U.S.C. 501(2)); or
    (4) The printing is specifically authorized by statute to be done 
other than by the GPO.
    (b) The head of each agency shall designate a central printing 
authority;

[[Page 122]]

that central printing authority may serve as the liaison with the 
Congressional Joint Committee on Printing (JCP) and the Public Printer 
on matters related to printing. Contracting officers shall obtain 
approval from their designated central printing authority before 
contracting in any manner, whether directly or through contracts for 
other supplies or services, for the items defined in 8.801 and for 
composition, platemaking, presswork, binding, and micrographics (when 
used as a substitute for printing).
    (c)(1) Further, 44 U.S.C. 1121 provides that the Public Printer may 
acquire and furnish paper and envelopes (excluding envelopes printed in 
the course of manufacture) in common use by two or more Government 
departments, establishments, or services within the District of 
Columbia, and provides for reimbursement of the Public Printer from 
available appropriations or funds. Paper and envelopes that are 
furnished by the Public Printer may not be acquired in any other manner.
    (2) Paper and envelopes for use by Executive agencies outside the 
District of Columbia and stocked by GSA shall be requisitioned from GSA 
in accordance with the procedures listed in Federal Property Management 
Regulations (FPMR) 41 CFR part 101, subpart 101-26.3.

[48 FR 42129, Sept. 19, 1983, as amended at 52 FR 9037, Mar. 20, 1987; 
54 FR 48982, Nov. 28, 1989; 59 FR 67032, Dec. 28, 1994]



  Subpart 8.9--Financial Management Systems Software (FMSS) Mandatory 
             Multiple Award Schedule (MAS) Contracts Program

    Source: 61 FR 41468, Aug. 8, 1996, unless otherwise noted.



8.901  General.

    (a) OMB has established a mandatory Governmentwide Financial 
Management Systems Software (FMSS) program.
    (b) Agencies may obtain information and assistance concerning the 
use of the FMSS MAS contracts program from: General Services 
Administration, Procurement Services Center (TFB), FMSS Contracting 
Officer, 5203 Leesburg Pike, Suite 1100, Falls Church, VA 22041.
    (c) OMB Circular No. A-127, Revised, ``Financial Management 
Systems,'' provides further policy direction regarding the FMSS program.

[61 FR 41468, Aug. 8, 1996, as amended at 62 FR 40236, July 25, 1997]



8.902  Policy.

    The FMSS MAS contracts program is mandatory for use by executive 
agencies for the acquisition of commercial software for core financial 
systems and for the acquisition of services and support related to the 
implementation of such software.



8.903  Exceptions.

    (a) If an executive agency holds a licensing agreement for a 
software package that is available on the FMSS MAS contracts, and the 
package was obtained under a contract awarded before the award of the 
FMSS MAS contracts, the agency's use of the FMSS MAS contracts program 
is optional for the acquisition of services and support related to the 
implementation of that package until the previous non-MAS contract 
expires.
    (b) Use of the FMSS MAS contracts program by Federal agencies that 
are not executive agencies is optional and is subject to the FMSS 
contractor accepting the order.
    (c) An executive agency shall obtain a waiver from GSA if it 
determines that its requirements for financial management systems 
software cannot be satisfied through use of the FMSS MAS contracts 
program.
    (1) The request for a waiver shall contain the following 
information--
    (i) A description of the agency's requirements;
    (ii) The reasons the FMSS MAS contracts program does not satisfy the 
requirements; and
    (iii) A description of how the agency proposes to satisfy its needs 
for financial management system software.
    (2) Agencies shall send waiver requests to GSA at the address in 
8.901(b).

[[Page 123]]



8.904  Procedures.

    (a) The contracting officer shall announce the agency's requirements 
in a letter of interest (LOI) to all contractors participating in the 
FMSS MAS contracts program.
    (b) At the time of issuance, the contracting officer shall provide a 
copy of the LOI to--
    (1) GSA at the address in 8.901(b);
    (2) OMB at: Office of Federal Financial Management, Federal 
Financial Systems Branch, Office of Management and Budget, 725 17th 
Street, NW, Washington, DC 20503; and
    (3) Department of Treasury at: Division of Financial Management, 
Financial Management Service, Department of the Treasury, PG Center #2, 
Room 800A, Hyattsville, MD 20782.
    (c) The LOI shall--
    (1) Contain sufficient information to enable a competitive 
acquisition under the FMSS MAS contracts program;
    (2) Include instructions to the FMSS MAS contractors for responding 
to the LOI; and
    (3) Include evaluation and award factors.
    (d) The agency shall conduct an analysis of the offerings of the 
FMSS MAS contractors and issue a delivery order to the contractor that 
provides the most advantageous alternative to the Government.
    (e) The contracting officer may issue single or multiple delivery 
orders to satisfy the total requirement.
    (f) The contracting officer shall provide a copy of each delivery 
order, or modification thereto, to OMB and the Department of Treasury at 
the address shown in paragraph (b) of this section and to GSA at the 
address in 8.901(b).

Subpart 8.10  [Reserved]



                 Subpart 8.11--Leasing of Motor Vehicles



8.1100  Scope of subpart.

    This subpart covers the procedures for the leasing, from commercial 
concerns, of motor vehicles that comply with Federal Motor Vehicle 
Safety Standards and applicable State motor vehicle safety regulations. 
It does not apply to motor vehicles leased outside the United States.



8.1101  Definitions.

    Leasing, as used in this subpart, means the acquisition of motor 
vehicles, other than by purchase from private or commercial sources, and 
includes the synonyms hire and rent.
    Motor vehicle means an item of equipment, mounted on wheels and 
designed for highway and/or land use, that (a) derives power from a 
self-contained power unit or (b) is designed to be towed by and used in 
conjunction with self-propelled equipment.



8.1102  Presolicitation requirements.

    (a) Except as specified in 8.1102(b), before preparing solicitations 
for leasing of motor vehicles, contracting officers shall obtain from 
the requiring activity a written certification that--
    (1) The vehicles requested are of maximum fuel efficiency and 
minimum body size, engine size, and equipment (if any) necessary to 
fulfill operational needs, and meet prescribed fuel economy standards;
    (2) The head of the requiring agency, or a designee, has certified 
that the requested passenger automobiles (sedans and station wagons) 
larger than Type IA, IB, or II (small, subcompact, or compact) are 
essential to the agency's mission;
    (3) Internal approvals have been received; and
    (4) The General Services Administration has advised that it cannot 
furnish the vehicles.
    (b) With respect to requirements for leasing motor vehicles for a 
period of less than 60 days, the contracting officer need not obtain the 
certification specified in 8.1102(a)--
    (1) If the requirement is for type 1A, 1B, or II vehicles, which are 
by definition fuel efficient; or
    (2) If the requirement is for passenger vehicles larger than 1A, 1B, 
or II, and the agency has established procedures for advance approval, 
on a case-by-case basis, of such requirements.
    (c) Generally, solicitations shall not be limited to current-year 
production models. However, with the prior approval of the head of the 
contracting office, solicitations may be limited to

[[Page 124]]

current models on the basis of overall economy.

[48 FR 42129, Sept. 19, 1983, as amended at 55 FR 25527, June 21, 1990]



8.1103  Contract requirements.

    Contracting officers shall include the following items in each 
contract for leasing motor vehicles:
    (a) Scope of contract.
    (b) Method of computing payments.
    (c) A listing of the number and type of vehicles required, and the 
equipment and accessories to be provided with each vehicle.
    (d) Responsibilities of the contractor or the Government for 
furnishing gasoline, motor oil, antifreeze, and similar items.
    (e) Unless it is determined that it will be more economical for the 
Government to perform the work, a statement that the contractor shall 
perform all maintenance on the vehicles.
    (f) A statement as to the applicability of pertinent State and local 
laws and regulations, and the responsibility of each party for 
compliance with them.
    (g) Responsibilities of the contractor or the Government for 
emergency repairs and services.



8.1104  Contract clauses.

    The contracting officer shall insert the following clauses in 
solicitations and contracts for leasing of motor vehicles, unless the 
motor vehicles are leased in foreign countries:
    (a) The clause at 52.208-4, Vehicle Lease Payments.
    (b) The clause at 52.208-5, Condition of Leased Vehicles.
    (c) The clause at 52.208-6, Marking of Leased Vehicles.
    (d) A clause substantially the same as the clause at 52.208-7, 
Tagging of Leased Vehicles, for vehicles leased over 60 days (see 41 CFR 
101-38.6).
    (e) The provisions and clauses prescribed elsewhere in the FAR for 
solicitations and contracts for supplies when a fixed-price contract is 
contemplated, but excluding--
    (1) The clause at 52.211-16, Variation in Quantity;
    (2) The clause at 52.232-1, Payments;
    (3) The clause at 52.222-20, Walsh-Healey Public Contracts Act; and
    (4) The clause at 52.246-16, Responsibility for Supplies.

[48 FR 42129, Sept. 19, 1983, as amended at 51 FR 19714, May 30, 1986; 
60 FR 48237, Sept. 18, 1995]



PART 9--CONTRACTOR QUALIFICATIONS--Table of Contents




Sec.
9.000  Scope of part.

            Subpart 9.1--Responsible Prospective Contractors

9.100  Scope of subpart.
9.101  Definitions.
9.102  Applicability.
9.103  Policy.
9.104  Standards.
9.104-1  General standards.
9.104-2  Special standards.
9.104-3  Application of standards.
9.104-4  Subcontractor responsibility.
9.105  Procedures.
9.105-1  Obtaining information.
9.105-2  Determinations and documentation.
9.105-3  Disclosure of preaward information.
9.106  Preaward surveys.
9.106-1  Conditions for preaward surveys.
9.106-2  Requests for preaward surveys.
9.106-3  Interagency preaward surveys.
9.106-4  Reports.
9.107  Surveys of nonprofit agencies serving people who are blind or 
          have other severe disabilities under the Javits-Wagner-O'Day 
          (JWOD) Program.

                Subpart 9.2--Qualifications Requirements

9.200  Scope of subpart.
9.201  Definitions.
9.202  Policy.
9.203  QPL's, QML's, and QBL's.
9.204  Responsibilities for establishment of a qualification 
          requirement.
9.205  Opportunity for qualification before award.
9.206  Acquisitions subject to qualification requirements.
9.206-1  General.
9.206-2  Contract clause.
9.206-3  Competition.
9.207  Changes in status regarding qualification requirements.

             Subpart 9.3--First Article Testing and Approval

9.301  Definitions.
9.302  General.
9.303  Use.
9.304  Exceptions.
9.305  Risk.
9.306  Solicitation requirements.

[[Page 125]]

9.307  Government administration procedures.
9.308  Contract clauses.
9.308-1  Testing performed by the contractor.
9.308-2  Testing performed by the Government.

          Subpart 9.4--Debarment, Suspension, and Ineligibility

9.400  Scope of subpart.
9.401  Applicability.
9.402  Policy.
9.403  Definitions.
9.404  List of Parties Excluded from Federal Procurement and 
          Nonprocurement Programs.
9.405  Effect of listing.
9.405-1  Continuation of current contracts.
9.405-2  Restrictions on subcontracting.
9.406  Debarment.
9.406-1  General.
9.406-2  Causes for debarment.
9.406-3  Procedures.
9.406-4  Period of debarment.
9.406-5  Scope of debarment.
9.407  Suspension.
9.407-1  General.
9.407-2  Causes for suspension.
9.407-3  Procedures.
9.407-4  Period of suspension.
9.407-5  Scope of suspension.
9.408  Certification regarding debarment, suspension, proposed 
          debarment, and other responsibility matters.
9.409  Solicitation provision and contract clause.

    Subpart 9.5--Organizational and Consultant Conflicts of Interest

9.500  Scope of subpart.
9.501  Definitions.
9.502  Applicability.
9.503  Waiver.
9.504  Contracting officer responsibilities.
9.505  General rules.
9.505-1  Providing systems engineering and technical direction.
9.505-2  Preparing specifications or work statements.
9.505-3  Providing evaluation services.
9.505-4  Obtaining access to proprietary information.
9.506  Procedures.
9.507  Solicitation provisions and contract clause.
9.507-1  Solicitation provisions.
9.507-2  Contract clause.
9.508  Examples.

                Subpart 9.6--Contractor Team Arrangements

9.601  Definition.
9.602  General.
9.603  Policy.
9.604  Limitations.

Subpart 9.7--Defense Production Pools and Research and Development Pools

9.701  Definition.
9.702  Contracting with pools.
9.703  Contracting with individual pool members.

    Authority: 40 U.S.C. 486(c); 10 U.S.C. Chapter 137; and 42 U.S.C. 
2473(c).

    Source: 48 FR 42142, Sept. 19, 1983, unless otherwise noted.



9.000  Scope of part.

    This part prescribes policies, standards, and procedures pertaining 
to prospective contractors' responsibility; debarment, suspension, and 
ineligibility; qualified products; first article testing and approval; 
contractor team arrangements; defense production pools and research and 
development pools; and organizational conflicts of interest.



            Subpart 9.1--Responsible Prospective Contractors



9.100  Scope of subpart.

    This subpart prescribes policies, standards, and procedures for 
determining whether prospective contractors and subcontractors are 
responsible.



9.101  Definitions.

    Preaward survey means an evaluation by a surveying activity of a 
prospective contractor's capability to perform a proposed contract.
    Responsible prospective contractor means a contractor that meets the 
standards in 9.104.
    Surveying activity means the cognizant contract administration 
office or, if there is no such office, another organization designated 
by the agency to conduct preaward surveys.



9.102  Applicability.

    (a) This subpart applies to all proposed contracts with any 
prospective contractor that is located--
    (1) In the United States, its possessions, or Puerto Rico; or
    (2) Elsewhere, unless application of the subpart would be 
inconsistent with

[[Page 126]]

the laws or customs where the contractor is located.
    (b) This subpart does not apply to proposed contracts with (1) 
foreign, State, or local governments; (2) other U.S. Government agencies 
or their instrumentalities; or (3) agencies for the blind or other 
severely handicapped (see subpart 8.7).



9.103  Policy.

    (a) Purchases shall be made from, and contracts shall be awarded to, 
responsible prospective contractors only.
    (b) No purchase or award shall be made unless the contracting 
officer makes an affirmative determination of responsibility. In the 
absence of information clearly indicating that the prospective 
contractor is responsible, the contracting officer shall make a 
determination of nonresponsibility. If the prospective contractor is a 
small business concern, the contracting officer shall comply with 
subpart 19.6, Certificates of Competency and Determinations of 
Responsibility. (If Section 8(a) of the Small Business Act (15 U.S.C. 
637) applies, see subpart 19.8.)
    (c) The award of a contract to a supplier based on lowest evaluated 
price alone can be false economy if there is subsequent default, late 
deliveries, or other unsatisfactory performance resulting in additional 
contractual or administrative costs. While it is important that 
Government purchases be made at the lowest price, this does not require 
an award to a supplier solely because that supplier submits the lowest 
offer. A prospective contractor must affirmatively demonstrate its 
responsibility, including, when necessary, the responsibility of its 
proposed subcontractors.

[48 FR 42142, Sept. 19, 1983, as amended at 61 FR 67410, Dec. 20, 1996; 
62 FR 44819, Aug. 22, 1997; 62 FR 48921, Sept. 17, 1997]



9.104  Standards.



9.104-1  General standards.

    To be determined responsible, a prospective contractor must--
    (a) Have adequate financial resources to perform the contract, or 
the ability to obtain them (see 9.104-3(a));
    (b) Be able to comply with the required or proposed delivery or 
performance schedule, taking into consideration all existing commercial 
and governmental business commitments;
    (c) Have a satisfactory performance record (see 48 CFR 9.104-3(b) 
and part 42, subpart 42.15). A prospective contractor shall not be 
determined responsible or nonresponsible solely on the basis of a lack 
of relevant performance history, except as provided in 9.104-2;
    (d) Have a satisfactory record of integrity and business ethics;
    (e) Have the necessary organization, experience, accounting and 
operational controls, and technical skills, or the ability to obtain 
them (including, as appropriate, such elements as production control 
procedures, property control systems, quality assurance measures, and 
safety programs applicable to materials to be produced or services to be 
performed by the prospective contractor and subcontractors) (see 9.104-
3(a));
    (f) Have the necessary production, construction, and technical 
equipment and facilities, or the ability to obtain them (see 9.104-
3(a)); and
    (g) Be otherwise qualified and eligible to receive an award under 
applicable laws and regulations.

[48 FR 42142, Sept. 19, 1983, as amended at 51 FR 27119, July 29, 1986; 
56 FR 55374, Oct. 25, 1991; 60 FR 16718, Mar. 31, 1995; 61 FR 67410, 
Dec. 20, 1996]



9.104-2  Special standards.

    (a) When it is necessary for a particular acquisition or class of 
acquisitions, the contracting officer shall develop, with the assistance 
of appropriate specialists, special standards of responsibility. Special 
standards may be particularly desirable when experience has demonstrated 
that unusual expertise or specialized facilities are needed for adequate 
contract performance. The special standards shall be set forth in the 
solicitation (and so identified) and shall apply to all offerors.
    (b) Contracting officers shall award contracts for subsistence only 
to those prospective contractors that meet the general standards in 
9.104-1 and are approved in accordance with agency sanitation standards 
and procedures.

[[Page 127]]



9.104-3  Application of standards.

    (a) Ability to obtain resources. Except to the extent that a 
prospective contractor has sufficient resources or proposes to perform 
the contract by subcontracting, the contracting officer shall require 
acceptable evidence of the prospective contractor's ability to obtain 
required resources (see 9.104-1(a), (e), and (f)). Acceptable evidence 
normally consists of a commitment or explicit arrangement, that will be 
in existence at the time of contract award, to rent, purchase, or 
otherwise acquire the needed facilities, equipment, other resources, or 
personnel. Consideration of a prime contractor's compliance with 
limitations on subcontracting shall take into account the time period 
covered by the contract base period or quantites plus option periods or 
quantities, if such options are considered when evaluating offers for 
award.
    (b) Satisfactory performance record. A prospective contractor that 
is or recently has been seriously deficient in contract performance 
shall be presumed to be nonresponsible, unless the contracting officer 
determines that the circumstances were properly beyond the contractor's 
control, or that the contractor has taken appropriate corrective action. 
Past failure to apply sufficient tenacity and perseverance to perform 
acceptably is strong evidence of nonresponsibility. Failure to meet the 
quality requirements of the contract is a significant factor to consider 
in determining satisfactory performance. The contracting officer shall 
consider the number of contracts involved and the extent of deficient 
performance in each contract when making this determination. If the 
pending contract requires a subcontracting plan pursuant to Subpart 
19.7, The Small Business Subcontracting Program, the contracting officer 
shall also consider the prospective contractor's compliance with 
subcontracting plans under recent contracts.
    (c) Affiliated concerns. Affiliated concerns (see Affiliates and 
Concerns in 19.101) are normally considered separate entities in 
determining whether the concern that is to perform the contract meets 
the applicable standards for responsibility. However, the contracting 
officer shall consider the affiliate's past performance and integrity 
when they may adversely affect the prospective contractor's 
responsibility.
    (d)(1) Small business concerns. If a small business concern's offer 
that would otherwise be accepted is to be rejected because of a 
determination of nonresponsibility, the contracting officer shall refer 
the matter to the Small Business Administration, which will decide 
whether or not to issue a Certificate of Competency (see subpart 19.6).
    (2) A small business that is unable to comply with the limitations 
on subcontracting at 52.219-14 may be considered nonresponsible.

[48 FR 42142, Sept. 19, 1983, as amended at 53 FR 27463, July 20, 1988; 
53 FR 34226, Sept. 2, 1988; 56 FR 55378, Oct. 25, 1991; 60 FR 48260, 
Sept. 18, 1995; 61 FR 67410, Dec. 20, 1996; 62 FR 44820, Aug. 22, 1997; 
63 FR 70267, Dec. 18, 1998]



9.104-4  Subcontractor responsibility.

    (a) Generally, prospective prime contractors are responsible for 
determining the responsibility of their prospective subcontractors (but 
see 9.405 and 9.405-2 regarding debarred, ineligible, or suspended 
firms). Determinations of prospective subcontractor responsibility may 
affect the Government's determination of the prospective prime 
contractor's responsibility. A prospective contractor may be required to 
provide written evidence of a proposed subcontractor's responsibility.
    (b) When it is in the Government's interest to do so, the 
contracting officer may directly determine a prospective subcontractor's 
responsibility (e.g., when the prospective contract involves medical 
supplies, urgent requirements, or substantial subcontracting). In this 
case, the same standards used to determine a prime contractor's 
responsibility shall be used by the Government to determine 
subcontractor responsibility.



9.105  Procedures.



9.105-1  Obtaining information.

    (a) Before making a determination of responsibility, the contracting 
officer

[[Page 128]]

shall possess or obtain information sufficient to be satisfied that a 
prospective contractor currently meets the applicable standards in 
9.104.
    (b)(1) Generally, the contracting officer shall obtain information 
regarding the responsibility of prospective contractors, including 
requesting preaward surveys when necessary (see 9.106), promptly after a 
bid opening or receipt of offers. However, in negotiated contracting, 
especially when research and development is involved, the contracting 
officer may obtain this information before issuing the request for 
proposals. Requests for information shall ordinarily be limited to 
information concerning (i) the low bidder or (ii) those offerors in 
range for award.
    (2) Preaward surveys shall be managed and conducted by the surveying 
activity.
    (i) If the surveying activity is a contract administration office--
    (A) That office shall advise the contracting officer on prospective 
contractors' financial competence and credit needs; and
    (B) The administrative contracting officer shall obtain from the 
auditor any information required concerning the adequacy of prospective 
contractors' accounting systems and these systems' suitability for use 
in administering the proposed type of contract.
    (ii) If the surveying activity is not a contract administration 
office, the contracting officer shall obtain from the auditor any 
information required concerning prospective contractors' financial 
competence and credit needs, the adequacy of their accounting systems, 
and these systems' suitability for use in administering the proposed 
type of contract.
    (3) Information on financial resources and performance capability 
shall be obtained or updated on as current a basis as is feasible up to 
the date of award.
    (c) In making the determination of responsibility (see 9.104-1(c)), 
the contracting officer shall consider relevant past performance 
information (see subpart 42.15). In addition, the contracting officer 
should use the following sources of information to support such 
determinations:
    (1) The List of Parties Excluded from Federal Procurement and 
Nonprocurement Programs maintained in accordance with subpart 9.4.
    (2) Records and experience data, including verifiable knowledge of 
personnel within the contracting office, audit offices, contract 
administration offices, and other contracting offices.
    (3) The prospective contractor--including bid or proposal 
information, questionnaire replies, financial data, information on 
production equipment, and personnel information.
    (4) Commercial sources of supplier information of a type offered to 
buyers in the private sector.
    (5) Preaward survey reports (see 9.106).
    (6) Other sources such as publications; suppliers, subcontractors, 
and customers of the prospective contractor; financial institutions; 
Government agencies; and business and trade associations.
    (7) If the contract is for construction, the contracting officer may 
consider performance evaluation reports (see 36.201(c)(2)).
    (d) Contracting offices and cognizant contract administration 
offices that become aware of circumstances casting doubt on a 
contractor's ability to perform contracts successfully shall promptly 
exchange relevant information.

[48 FR 42142, Sept. 19, 1983, as amended at 51 FR 27119, July 29, 1986; 
52 FR 9038, Mar. 20, 1987; 54 FR 19813, May 8, 1989; 60 FR 16718, Mar. 
31, 1995; 60 FR 33065, June 26, 1995; 61 FR 39201, July 26, 1996]



9.105-2  Determinations and documentation.

    (a) Determinations. (1) The contracting officer's signing of a 
contract constitutes a determination that the prospective contractor is 
responsible with respect to that contract. When an offer on which an 
award would otherwise be made is rejected because the prospective 
contractor is found to be nonresponsible, the contracting officer shall 
make, sign, and place in the contract file a determination of 
nonresponsibility, which shall state the basis for the determination.
    (2) If the contracting officer determines and documents that a 
responsive small business lacks certain elements

[[Page 129]]

of responsibility, the contracting officer shall comply with the 
procedures in subpart 19.6. When a certificate of competency is issued 
for a small business concern (see subpart 19.6), the contracting officer 
may accept the factors covered by the certificate without further 
inquiry.
    (b) Support documentation. Documents and reports supporting a 
determination of responsibility or nonresponsibility, including any 
preaward survey reports and any applicable Certificate of Competency, 
must be included in the contract file.



9.105-3  Disclosure of preaward information.

    (a) Except as provided in subpart 24.2, Freedom of Information Act, 
information (including the preaward survey report) accumulated for 
purposes of determining the responsibility of a prospective contractor 
shall not be released or disclosed outside the Government.
    (b) The contracting officer may discuss preaward survey information 
with the prospective contractor before determining responsibility. After 
award, the contracting officer or, if it is appropriate, the head of the 
surveying activity or a designee may discuss the findings of the 
preaward survey with the company surveyed.
    (c) Preaward survey information may contain proprietary and/or 
source selection information and should be marked with the appropriate 
legend and protected accordingly (see 3.104-3).

[48 FR 42142, Sept. 19, 1983, as amended by 54 FR 20496, May 11, 1989; 
62 FR 232, Jan. 2, 1997]



9.106  Preaward surveys.



9.106-1  Conditions for preaward surveys.

    (a) A preaward survey is normally required only when the information 
on hand or readily available to the contracting officer, including 
information from commercial sources, is not sufficient to make a 
determination regarding responsibility. In addition, if the contemplated 
contract will have a fixed price at or below the simplified acquisition 
threshold or will involve the acquisition of commercial items (see part 
12), the contracting officer should not request a preaward survey unless 
circumstances justify its cost.
    (b) When a cognizant contract administration office becomes aware of 
a prospective award to a contractor about which unfavorable information 
exists and no preaward survey has been requested, it shall promptly 
obtain and transmit details to the contracting officer.
    (c) Before beginning a preaward survey, the surveying activity shall 
ascertain whether the prospective contractor is debarred, suspended, or 
ineligible (see subpart 9.4). If the prospective contractor is debarred, 
suspended, or ineligible, the surveying activity shall advise the 
contracting officer promptly and not proceed with the preaward survey 
unless specifically requested to do so by the contracting officer.

[48 FR 42142, Sept. 19, 1983, as amended at 51 FR 27489, July 31, 1986; 
60 FR 48237, Sept. 18, 1995; 61 FR 39201, July 26, 1996]



9.106-2  Requests for preaward surveys.

    The contracting officer's request to the surveying activity 
(Preaward Survey of Prospective Contractor (General), SF 1403) shall--
    (a) Identify additional factors about which information is needed;
    (b) Include the complete solicitation package (unless it has 
previously been furnished), and any information indicating prior 
unsatisfactory performance by the prospective contractor;
    (c) State whether the contracting office will participate in the 
survey;
    (d) Specify the date by which the report is required. This date 
should be consistent with the scope of the survey requested and normally 
shall allow at least 7 working days to conduct the survey; and
    (e) When appropriate, limit the scope of the survey.



9.106-3  Interagency preaward surveys.

    When the contracting office and the surveying activity are in 
different agencies, the procedures of this section 9.106 and subpart 
42.1 shall be followed along with the regulations of the agency in which 
the surveying activity is located, except that reasonable special

[[Page 130]]

requests by the contracting office shall be accommodated.

[48 FR 42142, Sept. 19, 1983, as amended at 54 FR 20496, May 11, 1989; 
55 FR 36795, Sept. 6, 1990; 62 FR 232, Jan. 2, 1997]



9.106-4  Reports.

    (a) The surveying activity shall complete the applicable parts of SF 
1403, Preaward Survey of Prospective Contractor (General); SF 1404, 
Preaward Survey of Prospective Contractor--Technical; SF 1405, Preaward 
Survey of Prospective Contractor--Production; SF 1406, Preaward Survey 
of Prospective Contractor--Quality Assurance; SF 1407, Preaward Survey 
of Prospective Contractor--Financial Capability; and SF 1408, Preaward 
Survey of Prospective Contractor--Accounting System; and provide a 
narrative discussion sufficient to support both the evaluation ratings 
and the recommendations.
    (b) When the contractor surveyed is a small business that has 
received preferential treatment on an ongoing contract under Section 
8(a) of the Small Business Act (15 U.S.C. 637) or has received a 
Certificate of Competency during the last 12 months, the surveying 
activity shall consult the appropriate Small Business Administration 
field office before making an affirmative recommendation regarding the 
contractor's responsibility or nonresponsibility.
    (c) When a preaward survey discloses previous unsatisfactory 
performance, the surveying activity shall specify the extent to which 
the prospective contractor plans, or has taken, corrective action. Lack 
of evidence that past failure to meet contractual requirements was the 
prospective contractor's fault does not necessarily indicate 
satisfactory performance. The narrative shall report any persistent 
pattern of need for costly and burdensome Government assistance (e.g., 
engineering, inspection, or testing) provided in the Government's 
interest but not contractually required.
    (d) When the surveying activity possesses information that supports 
a recommendation of complete award without an on-site survey and no 
special areas for investigation have been requested, the surveying 
activity may provide a short-form preaward survey report. The short-form 
report shall consist solely of the Preaward Survey of Prospective 
Contractor (General), SF 1403. Sections III and IV of this form shall be 
completed and block 21 shall be checked to show that the report is a 
short-form preaward report.



9.107  Surveys of nonprofit agencies serving people who are blind or have other severe disabilities under the Javits-Wagner-O'Day (JWOD) Program.

    (a) The Committee for Purchase From People Who Are Blind or Severely 
Disabled (Committee), as authorized by 41 U.S.C. 46-48c, determines what 
supplies and services Federal agencies are required to purchase from 
JWOD participating nonprofit agencies serving people who are blind or 
have other severe disabilities (see subpart 8.7). The Committee is 
required to find a JWOD participating nonprofit agency capable of 
furnishing the supplies or services before the nonprofit agency can be 
designated as a mandatory source under the JWOD Program. The Committee 
may request a contracting office to assist in assessing the capabilities 
of a nonprofit agency.
    (b) The contracting office, upon request from the Committee, shall 
request a capability survey from the activity responsible for performing 
preaward surveys, or notify the Committee that the JWOD participating 
nonprofit agency is capable, with supporting rationale, and that the 
survey is waived. The capability survey will focus on the technical and 
production capabilities and applicable preaward survey elements to 
furnish specific supplies or services being considered for addition to 
the Procurement List.
    (c) The contracting office shall use the Standard Form 1403 to 
request a capability survey of organizations employing people who are 
blind or have other severe disabilities.
    (d) The contracting office shall furnish a copy of the completed 
survey, or notice that the JWOD participating nonprofit agency is 
capable and the survey is waived, to the Executive Director, Committee 
for Purchase from People Who Are Blind or Severely Disabled.

[59 FR 67029, Dec. 28, 1994]

[[Page 131]]



                Subpart 9.2--Qualifications Requirements

    Source: 50 FR 35476, Aug. 30, 1985, unless otherwise noted.



9.200  Scope of subpart.

    This subpart implements 10 U.S.C. 2319 and 41 U.S.C. 253(e) and 
prescribes policies and procedures regarding qualification requirements 
and the acquisitions that are subject to such requirements.



9.201  Definitions.

    Procuring activity, as used in this part or subpart, means a 
component of an executive agency having a significant acquisition 
function and designated as such by the head of the agency. Unless agency 
regulations specify otherwise, the term procuring activity shall be 
synonymous with contracting activity as defined in subpart 2.1.
    Qualification requirement means a Government requirement for testing 
or other quality assurance demonstration that must be completed before 
award of a contract.
    Qualified bidders list (QBL) means a list of bidders who have had 
their products examined and tested and who have satisfied all applicable 
qualification requirements for that product or have otherwise satisfied 
all applicable qualification requirements.
    Qualified manufacturers list (QML) means a list of manufacturers who 
have had their products examined and tested and who have satisfied all 
applicable qualification requirements for that product.
    Qualified products list (QPL) means a list of products which have 
been examined, tested, and have satisfied all applicable qualification 
requirements.

[50 FR 35476, Aug. 30, 1985, as amended at 53 FR 34227, Sept. 2, 1988]



9.202  Policy.

    (a)(1) The head of the agency or designee shall, before establishing 
a qualification requirement, prepare a written justification--
    (i) Stating the necessity for establishing the qualification 
requirement and specifying why the qualification requirement must be 
demonstrated before contract award;
    (ii) Estimating the likely costs for testing and evaluation which 
will be incurred by the potential offeror to become qualified; and
    (iii) Specifying all requirements that a potential offeror (or its 
product) must satisfy in order to become qualified. Only those 
requirements which are the least restrictive to meet the purposes 
necessitating the establishment of the qualification requirements shall 
be specified.
    (2) Upon request to the contracting activity, potential offerors 
shall be provided--
    (i) All requirements that they or their products must satisfy to 
become qualified;
    (ii) At their expense (but see 9.204(a)(2) with regard to small 
businesses), a prompt opportunity to demonstrate their abilities to meet 
the standards specified for qualification using qualified personnel and 
facilities of the agency concerned, or of another agency obtained 
through interagency agreements, or under contract, or other methods 
approved by the agency (including use of approved testing and evaluation 
services not provided under contract to the agency).
    (3) If the services in (a)(2)(ii) above are provided by contract, 
the contractors selected to provide testing and evaluation services 
shall be--
    (i) Those that are not expected to benefit from an absence of 
additional qualified sources; and
    (ii) Required by their contracts to adhere to any restriction on 
technical data asserted by the potential offeror seeking qualification.
    (4) A potential offeror seeking qualification shall be promptly 
informed as to whether qualification is attained and, in the event it is 
not, promptly furnished specific reasons why qualification was not 
attained.
    (b) When justified under the circumstances, the agency activity 
responsible for establishing a qualification requirement shall submit to 
the competition advocate for the procuring activity responsible for 
purchasing the item subject to the qualification requirement, a 
determination that it is unreasonable to specify the standards

[[Page 132]]

for qualification which a prospective offeror (or its product) must 
satisfy. After considering any comments of the competition advocate 
reviewing the determination, the head of the procuring activity may 
waive the requirements of 9.202(a)(1)(ii) through (4) above for up to 2 
years with respect to the item subject to the qualification requirement. 
A copy of the waiver shall be furnished to the head of the agency or 
other official responsible for actions under 9.202(a)(1). The waiver 
authority provided in this paragraph does not apply with respect to 
qualification requirements contained in a QPL, QML, or QBL.
    (c) If a potential offeror can demonstrate to the satisfaction of 
the contracting officer that the potential offeror (or its product) 
meets the standards established for qualification or can meet them 
before the date specified for award of the contract, a potential offeror 
may not be denied the opportunity to submit and have considered an offer 
for a contract solely because the potential offeror--
    (1) Is not on a QPL, QML, or QBL maintained by the Department of 
Defense (DOD) or the National Aeronautics and Space Administration 
(NASA); or
    (2) Has not been identified as meeting a qualification requirement 
established after October 19, 1984, by DOD or NASA; or
    (3) Has not been identified as meeting a qualification requirement 
established by a civilian agency (not including NASA).
    (d) The procedures in subpart 19.6 for referring matters to the 
Small Business Administration are not mandatory on the contracting 
officer when the basis for a referral would involve a challenge by the 
offeror to either the validity of the qualification requirement or the 
offeror's compliance with such requirement.
    (e) The contracting officer need not delay a proposed award in order 
to provide a potential offeror with an opportunity to demonstrate its 
ability to meet the standards specified for qualification. In addition, 
when approved by the head of an agency or designee, a procurement need 
not be delayed in order to comply with 9.202(a).
    (f) Within 7 years following enforcement of a QPL, QML, or QBL by 
DOD or NASA, or within 7 years after any qualification requirement was 
originally established by a civilian agency other than NASA, the 
qualification requirement shall be examined and revalidated in 
accordance with the requirements of 9.202(a). For DOD and NASA, 
qualification requirements, other than QPL's, QML's, and QBL's, shall be 
examined and revalidated within 7 years after establishment of the 
requirement under 9.202(a). Any periods for which a waiver under 
9.202(b) is in effect shall be excluded in computing the 7 years within 
which review and revalidation must occur.

[50 FR 35476, Aug. 30, 1985, as amended at 53 FR 34227, Sept. 2, 1988]



9.203  QPL's, QML's, and QBL's.

    (a) Qualification and listing in a QPL, QML, or QBL is the process 
by which products are obtained from manufacturers or distributors, 
examined and tested for compliance with specification requirements, or 
manufacturers or potential offerors, are provided an opportunity to 
demonstrate their abilities to meet the standards specified for 
qualification. The names of successful products, manufacturers, or 
potential offerors are included on lists evidencing their status. 
Generally, qualification is performed in advance and independently of 
any specific acquisition action. After qualification, the products, 
manufacturers, or potential offerors are included in a Federal or 
Military QPL, QML, or QBL. (See 9.202(a)(2) with regard to any product, 
manufacturer, or potential offeror not yet included on an applicable 
list.)
    (b) Specifications requiring a qualified product are included in the 
following publications:
    (1) GSA Index of Federal Specifications, Standards and Commercial 
Item Descriptions.
    (2) Department of Defense Index of Specifications and Standards.
    (c) Instructions concerning qualification procedures are included in 
the following publications:
    (1) Federal Standardization Manual, FSPM-0001.

[[Page 133]]

    (2) Defense Standardization Manual 4120.3-M, Chapter IV, as amended 
by Military Standards 961 and 962.
    (d) The publications listed in paragraphs (b) and (c) of this 
section are sold to the public. The publications in paragraphs (b)(1) 
and (c)(1) of this section may be obtained from the addressee in 
11.201(d)(1). The publications in paragraphs (b)(2) and (c)(2) of this 
section may be obtained from the addressee in 11.201(d)(2).

[50 FR 35476, Aug. 30, 1985, as amended at 53 FR 17857, May 18, 1988; 63 
FR 34062, June 22, 1998]



9.204  Responsibilities for establishment of a qualification requirement.

    The responsibilities of agency activities that establish 
qualification requirements include the following:
    (a) Arranging publicity for the qualification requirements. If 
active competition on anticipated future qualification requirements is 
likely to be fewer than two manufacturers or the products of two 
manufacturers, the activity responsible for establishment of the 
qualification requirements shall--
    (1) Periodically publish notice in the Commerce Business Daily 
soliciting additional sources or products to seek qualification unless 
the contracting officer determines that such publication would 
compromise the national security.
    (2) Bear the cost of conducting the specified testing and evaluation 
(excluding the costs associated with producing the item or establishing 
the production, quality control, or other system to be tested and 
evaluated) for a small business concern or a product manufactured by a 
small business concern which has met the standards specified for 
qualification and which could reasonably be expected to compete for a 
contract for that requirement. However, such costs may be borne only if 
it is determined in accordance with agency procedures that such 
additional qualified sources or products are likely to result in cost 
savings from increased competition for future requirements sufficient to 
amortize the costs incurred by the agency within a reasonable period of 
time, considering the duration and dollar value of anticipated future 
requirements. A prospective contractor requesting the United States to 
bear testing and evaluation costs must certify as to its status as a 
small business concern under section 3 of the Small Business Act in 
order to receive further consideration.
    (b) Qualifying products that meet specification requirements.
    (c) Listing manufacturers and suppliers whose products are qualified 
in accordance with agency procedures.
    (d) Furnishing QPL's, OML's, or QBL's or the qualification 
requirements themselves to prospective offerors and the public upon 
request (see 9.202(a)(2)(i) above).
    (e) Clarifying, as necessary, qualification requirements.
    (f) In appropriate cases, when requested by the contracting officer, 
providing concurrence in a decision not to enforce a qualification 
requirement for a solicitation.
    (g) Withdrawing or omitting qualification of a listed product, 
manufacturer or offeror, as necessary.
    (h) Advising persons furnished any list of products, manufacturers 
or offerors meeting a qualification requirement and suppliers whose 
products are on any such list that--
    (1) The list does not constitute endorsement of the product, 
manufacturer, or other source by the Government;
    (2) The products or sources listed have been qualified under the 
latest applicable specification;
    (3) The list may be amended without notice;
    (4) The listing of a product or source does not release the supplier 
from compliance with the specification; and
    (5) Use of the list for advertising or publicity is permitted. 
However, it must not be stated or implied that a particular product or 
source is the only product or source of that type qualified, or that the 
Government in any way recommends or endorses the products or the sources 
listed.
    (i) Reexamining a qualified product or manufacturer when--
    (1) The manufacturer has modified its product, or changed the 
material or the processing sufficiently so that the validity of previous 
qualification is questionable;

[[Page 134]]

    (2) The requirements in the specification have been amended or 
revised sufficiently to affect the character of the product; or
    (3) It is otherwise necessary to determine that the quality of the 
product is maintained in conformance with the specification.



9.205  Opportunity for qualification before award.

    (a) If an agency determines that a qualification requirement is 
necessary, the agency activity responsible for establishing the 
requirement shall urge manufacturers and other potential sources to 
demonstrate their ability to meet the standards specified for 
qualification and, when possible, give sufficient time to arrange for 
qualification before award. The responsible agency activity shall, 
before establishing any qualification requirement, furnish notice to the 
U.S. Department of Commerce, Office of Field Operations, P.O. Box 5999, 
Chicago, Illinois 60680, for synopsis in the Commerce Business Daily. 
The notice shall include--
    (1) Intent to establish a qualification requirement;
    (2) The specification number and name of the product;
    (3) The name and address of the activity to which a request for the 
information and opportunity described in 9.202(a)(2) should be 
submitted;
    (4) The anticipated date that the agency will begin awarding 
contracts subject to the qualification requirement;
    (5) A precautionary notice that when a product is submitted for 
qualification testing, the applicant must furnish any specific 
information that may be requested of the manufacturer before testing 
will begin; and
    (6) The approximate time period following submission of a product 
for qualification testing within which the applicant will be notified 
whether the product passed or failed the qualification testing (see 
9.202(a)(4)).
    (b) The activity responsible for establishing a qualification 
requirement shall keep any list maintained of those already qualified 
open for inclusion of additional products, manufacturers, or other 
potential sources, including eligible products from designated countries 
under terms of the International Agreement on Government Procurement 
(see subpart 25.4).



9.206  Acquisitions subject to qualification requirements.



9.206-1  General.

    (a) Agencies may not enforce any QPL, QML, or QBL without first 
complying with the requirements of 9.202(a). However, qualification 
requirements themselves, whether or not previously embodied in a QPL, 
QML, or QBL, may be enforced without regard to 9.202(a) if they are in 
either of the following categories:
    (1) Any qualification requirement established by statute prior to 
October 30, 1984, for civilian agencies (not including NASA); or
    (2) Any qualification requirement established by statute or 
administrative action prior to October 19, 1984, for DOD or NASA. 
Qualification requirements established after the above dates must comply 
with 9.202(a) to be enforceable.
    (b) Except when the agency head or designee determines that an 
emergency exists, whenever an agency elects, whether before or after 
award, not to enforce a qualification requirement which it established, 
the requirement may not thereafter be enforced unless the agency 
complies with 9.202(a).
    (c) If a qualification requirement applies, the contracting officer 
need consider only those offers identified as meeting the requirement or 
included on the applicable QPL, QML, or QBL, unless an offeror can 
satisfactorily demonstrate to the contracting officer that it or its 
product or its subcontractor or its product can meet the standards 
established for qualification before the date specified for award.
    (d) If a product subject to a qualification requirement is to be 
acquired as a component of an end item, the contracting officer must 
assure that all such components and their qualification requirements are 
properly identified in the solicitation since the product or source must 
meet the standards specified for qualification before award.

[[Page 135]]

    (e) In acquisitions subject to qualification requirements, the 
contracting officer shall take the following steps:
    (1) Use presolicitation notices in appropriate cases to advise 
potential suppliers before issuing solicitations involving qualification 
requirements. The notices shall identify the specification containing 
the qualification requirement and establish an allowable time period, 
consistent with delivery requirements, for prospective offerors to 
demonstrate their abilities to meet the standards specified for 
qualification. The notice shall be publicized in accordance with 5.204. 
Whether or not a presolicitation notice is used, the general synopsizing 
requirements of subpart 5.2 apply.
    (2) Distribute solicitations to prospective contractors whether or 
not they have been identified as meeting applicable qualification 
requirements.
    (3) When appropriate, request in accordance with agency procedures 
that a qualification requirement not be enforced in a particular 
acquisition and, if granted, so specify in the solicitation (see 9.206-
1(b)).
    (4) Forward requests from potential suppliers for information on a 
qualification requirement to the agency activity responsible for 
establishing the requirement.
    (5) Allow the maximum time, consistent with delivery requirements, 
between issuing the solicitation and the contract award. As a minimum, 
contracting officers shall comply with the time frames specified in 
5.203 when applicable.

[50 FR 35476, Aug. 30, 1985, as amended at 53 FR 34227, Sept. 2, 1988]



9.206-2  Contract clause.

    The contracting officer shall insert the clause at 52.209-1, 
Qualification Requirements, in solicitations and contracts when the 
acquisition is subject to a qualification requirement.

[53 FR 34227, Sept. 2, 1988]



9.206-3  Competition.

    (a) Presolicitation. If a qualification requirement applies to an 
acquisition, the contracting officer shall review the applicable QPL, 
QML, or QBL or other identification of those sources which have met the 
requirement before issuing a solicitation to ascertain whether the 
number of sources is adequate for competition. (See 9.204(a) for duties 
of the agency activity responsible for establishment of the 
qualification requirement.) If the number of sources is inadequate, the 
contracting officer shall request the agency activity which established 
the requirement to--
    (1) Indicate the anticipated date on which any sources presently 
undergoing evaluation will have demonstrated their abilities to meet the 
qualification requirement so that the solicitation could be rescheduled 
to allow as many additional sources as possible to qualify; or
    (2) Indicate whether a means other than the qualification 
requirement is feasible for testing or demonstrating quality assurance.
    (b) Postsolicitation. The contracting officer shall submit to the 
agency activity which established the qualification requirement the 
names and addresses of concerns which expressed interest in the 
acquisition but are not included on the applicable QPL, QML, or QBL or 
identified as meeting the qualification requirement. The activity will 
then assist interested concerns in meeting the standards specified for 
qualification (see 9.202(a) (2) and (4)).

[50 FR 35476, Aug. 30, 1985, as amended at 60 FR 34737, July 3, 1995]



9.207  Changes in status regarding qualification requirements.

    (a) The contracting officer shall promptly report to the agency 
activity which established the qualification requirement any conditions 
which may merit removal or omission from a QPL, QML, or QBL or affect 
whether a source should continue to be otherwise identified as meeting 
the requirement. These conditions exist when--
    (1) Products or services are submitted for inspection or acceptance 
that do not meet the qualification requirement;
    (2) Products or services were previously rejected and the defects 
were not corrected when resubmitted for inspection or acceptance;
    (3) A supplier fails to request reevaluation following change of 
location or

[[Page 136]]

ownership of the plant where the product which met the qualification 
requirement was manufactured (see the clause at 52.209-1, Qualification 
Requirements);
    (4) A manufacturer of a product which met the qualification 
requirement has discontinued manufacture of the product;
    (5) A source requests removal from a QPL, QML, or QBL;
    (6) A condition of meeting the qualification requirement was 
violated; e.g., advertising or publicity contrary to 9.204(h)(5);
    (7) A revised specification imposes a new qualification requirement;
    (8) Manufacturing or design changes have been incorporated in the 
qualification requirement;
    (9) The source is on the List of Parties Excluded from Federal 
Procurement and Nonprocurement Programs (see subpart 9.4); or
    (10) Performance of a contract subject to a qualification 
requirement is otherwise unsatisfactory.
    (b) After considering any of the above or other conditions 
reasonably related to whether a product or source continues to meet the 
standards specified for qualification, an agency may take appropriate 
action without advance notification. The agency shall, however, promptly 
notify the affected parties if a product or source is removed from a 
QPL, QML, or QBL, or will no longer be identified as meeting the 
standards specified for qualification. This notice shall contain 
specific information why the product or source no longer meets the 
qualification requirement.

[50 FR 35476, Aug. 30, 1985, as amended at 53 FR 34227, Sept. 2, 1988; 
56 FR 15149, Apr. 15, 1991; 60 FR 33065, June 26, 1995]



             Subpart 9.3--First Article Testing and Approval



9.301  Definitions.

    Approval, as used in this subpart, means the contracting officer's 
written notification to the contractor accepting the test results of the 
first article.
    First article, as used in this subpart, means preproduction models, 
initial production samples, test samples, first lots, pilot lots, and 
pilot models.
    First article testing means testing and evaluating the first article 
for conformance with specified contract requirements before or in the 
initial stage of production.



9.302  General.

    First article testing and approval (hereafter referred to as testing 
and approval) ensures that the contractor can furnish a product that 
conforms to all contract requirements for acceptance. Before requiring 
testing and approval, the contracting officer shall consider the--
    (a) Impact on cost or time of delivery;
    (b) Risk to the Government of foregoing such test; and
    (c) Availability of other, less costly, methods of ensuring the 
desired quality.



9.303  Use.

    Testing and approval may be appropriate when--
    (a) The contractor has not previously furnished the product to the 
Government;
    (b) The contractor previously furnished the product to the 
Government, but--
    (1) There have been subsequent changes in processes or 
specifications;
    (2) Production has been discontinued for an extended period of time; 
or
    (3) The product acquired under a previous contract developed a 
problem during its life.
    (c) The product is described by a performance specification; or
    (d) It is essential to have an approved first article to serve as a 
manufacturing standard.



9.304  Exceptions.

    Normally, testing and approval is not required in contracts for--
    (a) Research or development;
    (b) Products requiring qualification before award (e.g., when an 
applicable qualified products list exists (see subpart 9.2));
    (c) Products normally sold in the commercial market; or
    (d) Products covered by complete and detailed technical 
specifications, unless the requirements are so novel or

[[Page 137]]

exacting that it is questionable whether the products would meet the 
requirements without testing and approval.



9.305  Risk.

    Before first article approval, the acquisition of materials or 
components, or commencement of production, is normally at the sole risk 
of the contractor. To minimize this risk, the contracting officer shall 
provide sufficient time in the delivery schedule for acquisition of 
materials and components, and for production after receipt of first 
article approval. When Government requirements preclude this action, the 
contracting officer may, before approval of the first article, authorize 
the contractor to acquire specific materials or components or commence 
production to the extent essential to meet the delivery schedule (see 
Alternate II of the clause at 52.209-3, First Article Approval--
Contractor Testing, and Alternate II of the clause at 52.209-4, First 
Article Approval--Government Testing. Costs incurred based on this 
authorization are allocable to the contract for (1) progress payments 
and (2) termination settlements if the contract is terminated for the 
convenience of the Government.



9.306  Solicitation requirements.

    Solicitations containing a testing and approval requirement shall--
    (a) Provide, in the circumstance where the contractor is to be 
responsible for the first article approval testing--
    (1) The performance or other characteristics that the first article 
must meet for approval;
    (2) The detailed technical requirements for the tests that must be 
performed for approval; and
    (3) The necessary data that must be submitted to the Government in 
the first article approval test report.
    (b) Provide, in the circumstance where the Government is to be 
responsible for the first article approval testing--
    (1) The performance or other characteristics that the first article 
must meet for approval; and
    (2) The tests to which the first article will be subjected for 
approval.
    (c) Inform offerors that the requirement may be waived when supplies 
identical or similar to those called for have previously been delivered 
by the offeror and accepted by the Government (see 52.209-3(h) and 
52.209-4(i);
    (d) Permit the submission of alternative offers, one including 
testing and approval and the other excluding testing and approval (if 
eligible under 9.306(c));
    (e) State clearly the first article's relationship to the contract 
quantity (see paragraph (e) of the clause at 52.209-3, First Article 
Approval--Contractor Testing, or 52.209-4, First Article Approval--
Government Testing);
    (f) Contain a delivery schedule for the production quantity (see 
11.404). The delivery schedule may--
    (1) Be the same whether or not testing and approval is waived; or
    (2) Provide for earlier delivery when testing and approval is waived 
and the Government desires earlier delivery. In the latter case, any 
resulting difference in delivery schedules shall not be a factor in 
evaluation for award. The clause at 52.209-4, First Article Approval--
Government Testing, shall contain the delivery schedule for the first 
article;
    (g) Provide for the submission of contract numbers, if any, to 
document the offeror's eligibility under 9.306(c);
    (h) State whether the approved first article will serve as a 
manufacturing standard; and
    (i) Include, when the Government is responsible for first article 
testing, the Government's estimated testing costs as a factor for use in 
evaluating offers (when appropriate).
    (j) Inform offerors that the prices for first articles and first 
article tests in relation to production quantities shall not be 
materially unbalanced (see 15.404-1(g)) if first article test items or 
tests are to be separately priced.

[48 FR 42142, Sept. 19, 1983, as amended at 54 FR 34753, Aug. 21, 1989; 
55 FR 25527, June 21, 1990; 60 FR 48237, Sept. 18, 1995; 62 FR 51270, 
Sept. 30, 1997]



9.307  Government administration procedures.

    (a) Before the contractor ships the first article, or the first 
article test report, to the Government laboratory or other activity 
responsible for approval

[[Page 138]]

at the address specified in the contract, the contract administration 
office shall provide that activity with as much advance notification as 
is feasible of the forthcoming shipment, and--
    (1) Advise that activity of the contractual requirements for testing 
and approval, or evaluation, as appropriate;
    (2) Call attention to the notice requirement in paragraph (b) of the 
clause at 52.209-3, First Article Approval-- Contractor Testing, or 
52.209-4, First Article Approval--Government Testing; and
    (3) Request that the activity inform the contract administration 
office of the date when testing or evaluation will be completed.
    (b) The Government laboratory or other activity responsible for 
first article testing or evaluation shall inform the contracting office 
whether to approve, conditionally approve, or disapprove the first 
article. The contracting officer shall then notify the contractor of the 
action taken and furnish a copy of the notice to the contract 
administration office. The notice shall include the first article 
shipment number, when available, and the applicable contract line item 
number. Any changes in the drawings, designs, or specifications 
determined by the contracting officer to be necessary shall be made 
under the Changes clause, and not by the notice of approval, conditional 
approval, or disapproval furnished the contractor.



9.308  Contract clauses.



9.308-1  Testing performed by the contractor.

    (a)(1) The contracting officer shall insert the clause at 52.209-3, 
First Article Approval--Contractor Testing, in solicitations and 
contracts when a fixed-price contract is contemplated and it is intended 
that the contract require (i) first article approval and (ii) that the 
contractor be required to conduct the first article testing.
    (2) If it is intended that the contractor be required to produce the 
first article and the production quantity at the same facility, the 
contracting officer shall use the clause with its Alternate I.
    (3) If it is necessary to authorize the contractor to purchase 
material or to commence production before first article approval, the 
contracting officer shall use the clause with its Alternate II.
    (b)(1) The contracting officer shall insert a clause substantially 
the same as the clause at 52.209-3, First Article Approval--Contractor 
Testing, in solicitations and contracts when a cost-reimbursement 
contract is contemplated and it is intended that the contract require 
(i) first article approval and (ii) that the contractor be required to 
conduct the first article test.
    (2) If it is intended that the contractor be required to produce the 
first article and the production quantity at the same facility, the 
contracting officer shall use a clause substantially the same as the 
clause at 52.209-3, First Article Approval--Contractor Testing, with its 
Alternate I.
    (3) If it is necessary to authorize the contractor to purchase 
material or to commence production before first article approval, the 
contracting officer shall use a clause substantially the same as the 
clause at 52.209-3, First Article Approval--Contractor Testing, with its 
Alternate II.



9.308-2  Testing performed by the Government.

    (a)(1) The contracting officer shall insert the clause at 52.209-4, 
First Article Approval--Government Testing, in solicitations and 
contracts when a fixed-price contract is contemplated and it is intended 
that the contract require first article approval and that the Government 
will be responsible for conducting the first article test.
    (2) If it is intended that the contractor be required to produce the 
first article and the production quantity at the same facility, the 
contracting officer shall use the basic clause with its Alternate I.
    (3) If it is necessary to authorize the contractor to purchase 
material or to commence production before first article approval, the 
contracting officer shall use the basic clause with its Alternate II.
    (b)(1) The contracting officer shall insert a clause substantially 
the same

[[Page 139]]

as the clause at 52.209-4, First Article Approval--Government Testing, 
in solicitations and contracts when a cost-reimbursement contract is 
contemplated and it is intended that the contract require first article 
approval and that the Government be responsible for conducting the first 
article test.
    (2) If it is intended that the contractor be required to produce the 
first article and the production quantity at the same facility, the 
contracting officer shall use a clause substantially the same as the 
clause at 52.209-4, First Article Approval--Government Testing, with its 
Alternate I.
    (3) If it is necessary to authorize the contractor to purchase 
material or to commence production before first article approval, the 
contracting officer shall use a clause substantially the same as the 
clause at 52.209-4, First Article Approval--Government Testing, with its 
Alternate II.



          Subpart 9.4--Debarment, Suspension, and Ineligibility



9.400  Scope of subpart.

    (a) This subpart--
    (1) Prescribes policies and procedures governing the debarment and 
suspension of contractors by agencies for the causes given in 9.406-2 
and 9.407-2;
    (2) Provides for the listing of contractors debarred, suspended, 
proposed for debarment, and declared ineligible (see the definition of 
ineligible in 9.403); and
    (3) Sets forth the consequences of this listing.
    (b) Although this subpart does cover the listing of ineligible 
contractors (9.404) and the effect of this listing (9.405(b)), it does 
not prescribe policies and procedures governing declarations of 
ineligibility.

[48 FR 42142, Sept. 19, 1983, as amended at 54 FR 19814, May 8, 1989]



9.401  Applicability.

    In accordance with Public Law 103-355, Section 2455 (31 U.S.C. 6101, 
note), and Executive Order 12689, any debarment, suspension or other 
Government-wide exclusion initiated under the Nonprocurement Common Rule 
implementing Executive Order 12549 on or after August 25, 1995 shall be 
recognized by and effective for Executive Branch agencies as a debarment 
or suspension under this subpart. Similarly, any debarment, suspension, 
proposed debarment or other Government-wide exclusion initiated on or 
after August 25, 1995 under this subpart shall also be recognized by and 
effective for those agencies and participants as an exclusion under the 
Nonprocurement Common Rule.

[60 FR 33065, June 26, 1995]



9.402  Policy.

    (a) Agencies shall solicit offers from, award contracts to, and 
consent to subcontracts with responsible contractors only. Debarment and 
suspension are discretionary actions that, taken in accordance with this 
subpart, are appropriate means to effectuate this policy.
    (b) The serious nature of debarment and suspension requires that 
these sanctions be imposed only in the public interest for the 
Government's protection and not for purposes of punishment. Agencies 
shall impose debarment or suspension to protect the Government's 
interest and only for the causes and in accordance with the procedures 
set forth in this subpart.
    (c) When more than one agency has an interest in the debarment or 
suspension of a contractor, consideration shall be given to designating 
one agency as the lead agency for making the decision. Agencies are 
encouraged to establish methods and procedures for coordinating their 
debarment or suspension actions.
    (d) Agencies shall establish appropriate procedures to implement the 
policies and procedures of this subpart.

[48 FR 42142, Sept. 19, 1983, as amended at 54 FR 19814, May 8, 1989]



9.403  Definitions.

    Adequate evidence means information sufficient to support the 
reasonable belief that a particular act or omission has occurred.
    Affiliates. Business concerns, organizations, or individuals are 
affiliates of each other if, directly or indirectly, (a) either one 
controls or has the power to control the other, or (b) a third party 
controls or has the power to control

[[Page 140]]

both. Indicia of control include, but are not limited to, interlocking 
management or ownership, identity of interests among family members, 
shared facilities and equipment, common use of employees, or a business 
entity organized following the debarment, suspension, or proposed 
debarment of a contractor which has the same or similar management, 
ownership, or principal employees as the contract or that was debarred, 
suspended, or proposed for debarment.
    Agency, as used in this subpart, means any executive department, 
military department or defense agency, or other agency or independent 
establishment of the executive branch.
    Civil judgment means a judgment or finding of a civil offense by any 
court of competent jurisdiction.
    Contractor, as used in this subpart, means any individual or other 
legal entity that--
    (a) Directly or indirectly (e.g., through an affiliate), submits 
offers for or is awarded, or reasonably may be expected to submit offers 
for or be awarded, a Government contract, including a contract for 
carriage under Government or commercial bills of lading, or a 
subcontract under a Government contract; or
    (b) Conducts business, or reasonably may be expected to conduct 
business, with the Government as an agent or representative of another 
contractor.
    Conviction means a judgment or conviction of a criminal offense by 
any court of competent jurisdiction, whether entered upon a verdict or a 
plea, and includes a conviction entered upon a plea of nolo contendere.
    Debarment, as used in this subpart, means action taken by a 
debarring official under 9.406 to exclude a contractor from Government 
contracting and Government-approved subcontracting for a reasonable, 
specified period; a contractor so excluded is debarred.
    Debarring official means (a) an agency head or (b) a designee 
authorized by the agency head to impose debarment.
    Indictment means indictment for a criminal offense. An information 
or other filing by competent authority charging a criminal offense shall 
be given the same effect as an indictment.
    Ineligible, as used in this subpart, means excluded from Government 
contracting (and subcontracting, if appropriate) pursuant to statutory, 
Executive order, or regulatory authority other than this regulation and 
its implementing and supplementing regulations; for example, pursuant to 
the Davis-Bacon Act and its related statutes and implementing 
regulations, the Service Contract Act, the Equal Employment Opportunity 
Acts and Executive orders, the Walsh-Healey Public Contracts Act, the 
Buy American Act, or the Environmental Protection Acts and Executive 
orders.
    Legal proceedings means any civil judicial proceeding to which the 
Government is a party or any criminal proceeding. The term includes 
appeals from such proceedings.
    List of Parties Excluded from Federal Procurement and Nonprocurement 
Programs means a list compiled, maintained and distributed by the 
General Services Administration (GSA) containing the names and other 
information about parties debarred, suspended, or voluntarily excluded 
under the Nonprocurement Common Rule or the Federal Acquisition 
Regulation, parties who have been proposed for debarment under the 
Federal Acquisition Regulation, and parties determined to be ineligible.
    Nonprocurement Common Rule means the procedures used by Federal 
Executive Agencies to suspend, debar, or exclude individuals or entities 
from participation in nonprocurement transactions under Executive Order 
12549. Examples of nonprocurement transactions are grants, cooperative 
agreements, scholarships, fellowships, contracts of assistance, loans, 
loan guarantees, subsidies, insurance, payments for specified use, and 
donation agreements.
    Preponderance of the evidence means proof by information that, 
compared with that opposing it, leads to the conclusion that the fact at 
issue is more probably true than not.
    Suspending official means (a) an agency head or (b) a designee 
authorized by the agency head to impose suspension.

[[Page 141]]

    Suspension, as used in this subpart, means action taken by a 
suspending official under 9.407 to disqualify a contractor temporarily 
from Government contracting and Government-approved subcontracting; a 
contractor so disqualified is suspended.
    Unfair trade practices, as used in this subpart, means the 
commission of any of the following acts by a contractor:
    (1) A violation of section 337 of the Tariff Act of 1930 (19 U.S.C. 
1337) as determined by the International Trade Commission.
    (2) A violation, as determined by the Secretary of Commerce, of any 
agreement of the group known as the ``Coordination Committee'' for 
purposes of the Export Administration Act of 1979 (50 U.S.C. App. 2401, 
et seq.) or any similar bilateral or multilateral export control 
agreement.
    (3) A knowingly false statement regarding a material element of a 
certification concerning the foreign content of an item of supply, as 
determined by the Secretary of the Department or the head of the agency 
to which such certificate was furnished.

[48 FR 42142, Sept. 19, 1983, as amended at 54 FR 19814, May 8, 1989; 56 
FR 15149, Apr. 15, 1991; 59 FR 11372, Mar. 10, 1994; 60 FR 33065, June 
26, 1995]



9.404  List of Parties Excluded from Federal Procurement and Nonprocurement Programs.

    (a) The General Services Administration (GSA) shall--
    (1) Compile and maintain a current list of all parties debarred, 
suspended, proposed for debarment, or declared ineligible by agencies or 
by the General Accounting Office;
    (2) Periodically revise and distribute the list and issue 
supplements, if necessary, to all agencies and the General Accounting 
Office; and
    (3) Include in the list the name and telephone number of the 
official responsible for its maintenance and distribution.
    (b) The List of Parties Excluded from Federal Procurement and 
Nonprocurement Programs shall indicate--
    (1) The names and addresses of all contractors debarred, suspended, 
proposed for debarment, or declared ineligible, in alphabetical order, 
with cross-references when more than one name is involved in a single 
action;
    (2) The name of the agency or other authority taking the action;
    (3) The cause for the action (see 9.406-2 and 9.407-2 for causes 
authorized under this subpart) or other statutory or regulatory 
authority;
    (4) The effect of the action;
    (5) The termination date for each listing;
    (6) The DUNS No.; and
    (7) The name and telephone number of the point of contact for the 
action.
    (c) Each agency shall--
    (1) Notify GSA of the information required by paragraph (b) above 
within 5 working days after the action becomes effective;
    (2) Notify GSA within 5 working days after modifying or rescinding 
an action;
    (3) Notify GSA of the names and addresses of agency organizations 
that are to receive the list and the number of copies to be furnished to 
each;
    (4) In accordance with internal retention procedures, maintain 
records relating to each debarment, suspension, or proposed debarment 
taken by the agency;
    (5) Establish procedures to provide for the effective use of the 
List of Parties Excluded from Federal Procurement and Nonprocurement 
Programs, including internal distribution thereof, to ensure that the 
agency does not solicit offers from, award contracts to, or consent to 
subcontracts with contractors on the List of Parties Excluded from 
Federal Procurement and Nonprocurement Programs, except as otherwise 
provided in this subpart; and
    (6) Direct inquiries concerning listed contractors to the agency or 
other authority that took the action.
    (d) Information on the List of Parties Excluded from Federal 
Procurement and Nonprocurement Programs is available as follows:
    (1) The printed version is published monthly. Copies may be obtained 
by purchasing a yearly subscription.
    (i) Federal agencies may subscribe to the list through their 
organization's printing and distribution office.
    (ii) The public may subscribe by writing the Superintendent of 
Documents, U.S. Government Printing Office,

[[Page 142]]

Washington, DC 20402, or by calling the Government Printing Office 
Inquiry and Order Desk at (202) 512-1800.
    (2) The electronic version is updated daily and provides access to 
the names of firms and individuals on the list by using an asynchronous 
ASCII terminal (e.g., a word processor or microcomputer). Users can 
access the system 24 hours a day, 7 days a week using FTS 2000, or 
commercial telephone lines and the equipment described in the user's 
manual. Aside from the normal costs of local or long-distance telephone 
calls, access is free of charge to the user. To obtain a copy of the 
user's manual for accessing the system, contact GSA at (202) 501-4740.
    (3) A telephone inquiry service to answer general questions about 
entries on the List of Parties Excluded from Federal Procurement and 
Nonprocurement Programs is also available by calling GSA at (202) 501-
4873 or 501-4740. The inquiry will be answered within one working day.

[48 FR 42142, Sept. 19, 1983, as amended at 54 FR 19814, May 8, 1989; 57 
FR 60577, Dec. 21, 1992; 60 FR 33065, June 26, 1995; 62 FR 40236, July 
25, 1997]



9.405  Effect of listing.

    (a) Contractors debarred, suspended, or proposed for debarment are 
excluded from receiving contracts, and agencies shall not solicit offers 
from, award contracts to, or consent to subcontracts with these 
contractors, unless the agency head or a designee determines that there 
is a compelling reason for such action (see 9.405-2, 9.406-1(c), 9.407-
1(d), and 23.50(e)). Contractors debarred, suspended or proposed for 
debarment are also excluded from conducting business with the Government 
as agents or representatives of other contractors.
    (b) Contractors included on the List of Parties Excluded from 
Federal Procurement and Nonprocurement Programs as having been declared 
ineligible on the basis of statutory or other regulatory procedures are 
excluded from receiving contracts, and if applicable, subcontracts, 
under the conditions and for the period set forth in the statute or 
regulation. Agencies shall not solicit offers from, award contracts to, 
or consent to subcontracts with these contractors under those conditions 
and for that period.
    (c) Contractors debarred, suspended, or proposed for debarment are 
excluded from acting as individual sureties (see part 28).
    (d)(1) After the opening of bids or receipt of proposals, the 
contracting officer shall review the List of Parties Excluded from 
Federal Procurement and Nonprocurement Programs.
    (2) Bids received from any listed contractor in response to an 
invitation for bids shall be entered on the abstract of bids, and 
rejected unless the agency head or a designee determines in writing that 
there is a compelling reason to consider the bid.
    (3) Proposals, quotations, or offers received from any listed 
contractor shall not be evaluated for award or included in the 
competitive range, nor shall discussions be conducted with a listed 
offeror during a period of ineligibility, unless the agency head or a 
designee determines, in writing, that there is a compelling reason to do 
so. If the period of ineligibility expires or is terminated prior to 
award, the contracting officer may, but is not required to, consider 
such proposals, quotations, or offers.
    (4) Immediately prior to award, the contracting officer shall again 
review the List to ensure that no award is made to a listed contractor.

[48 FR 42142, Sept. 19, 1983, as amended at 52 FR 9038, Mar. 20, 1987; 
54 FR 19814, May 8, 1989; 54 FR 48982, Nov. 28, 1989; 55 FR 21707, May 
25, 1990; 56 FR 29127, June 25, 1991; 59 FR 67033, Dec. 28, 1994; 60 FR 
33065, June 26, 1995]



9.405-1  Continuation of current contracts.

    (a) Notwithstanding the debarment, suspension, or proposed debarment 
of a contractor, agencies may continue contracts or subcontracts in 
existence at the time the contractor was debarred, suspended, or 
proposed for debarment unless the agency head or a designee directs 
otherwise. A decision as to the type of termination action, if any, to 
be taken should be made only after review by agency contracting and 
technical personnel and by counsel to ensure the propriety of the 
proposed action.

[[Page 143]]

    (b) Ordering activities may continue to place orders against 
existing contracts, including indefinite delivery contracts, in the 
absence of a termination.
    (c) Agencies shall not renew or otherwise extend the duration of 
current contracts, or consent to subcontracts, with contractors 
debarred, suspended, or proposed for debarment, unless the agency head 
or a designee authorized representative states, in writing, the 
compelling reasons for renewal or extension.

[54 FR 19815, May 8, 1989, as amended at 59 FR 67033, Dec. 28, 1994]



9.405-2  Restrictions on subcontracting.

    (a) When a contractor debarred, suspended, or proposed for debarment 
is proposed as a subcontractor for any subcontract subject to Government 
consent (see subpart 44.2), contracting officers shall not consent to 
subcontracts with such contractors unless the agency head or a designee 
states in writing the compelling reasons for this approval action. (See 
9.405(b) concerning declarations of ineligibility affecting 
subcontracting.)
    (b) The Government suspends or debars contractors to protect the 
Government's interests. By operation of the clause at 52.209-6, 
Protecting the Government's Interests When Subcontracting with 
Contractors Debarred, Suspended or Proposed for Debarment, contractors 
shall not enter into any subcontract in excess of $25,000 with a 
contractor that has been debarred, suspended, or proposed for debarment 
unless there is a compelling reason to do so. If a contractor intends to 
subcontract with a party that is debarred, suspended, or proposed for 
debarment as evidenced by the party's inclusion on the List of Parties 
Excluded from Federal Procurement and Nonprocurement Programs (see 
9.404), a corporate officer or designee of the contractor is required by 
operation of the clause at 52.209-6, Protecting the Government's 
Interests when Subcontracting with Contractors Debarred, Suspended, or 
Proposed for Debarment, to notify the contracting officer, in writing, 
before entering into such subcontract. The notice must provide the 
following:
    (1) The name of the subcontractor;
    (2) The contractor's knowledge of the reasons for the subcontractor 
being on the List of Parties Excluded from Federal Procurement and 
Nonprocurement Programs;
    (3) The compelling reason(s) for doing business with the 
subcontractor notwithstanding its inclusion on the List of Parties 
Excluded from Federal Procurement and Nonprocurement Programs; and
    (4) The systems and procedures the contractor has established to 
ensure that it is fully protecting the Government's interests when 
dealing with such subcontractor in view of the specific basis for the 
party's debarment, suspension, or proposed debarment.
    (c) The contractor's compliance with the requirements of 52.209-6 
will be reviewed during Contractor Purchasing System Reviews (see 
subpart 44.3).

[54 FR 19815, May 8, 1989, as amended at 56 FR 29127, June 25, 1991; 59 
FR 67033, Dec. 28, 1994; 60 FR 33066, June 26, 1995; 60 FR 48237, Sept. 
18, 1995]



9.406  Debarment.



9.406-1  General.

    (a) It is the debarring official's responsibility to determine 
whether debarment is in the Government's interest. The debarring 
official may, in the public interest, debar a contractor for any of the 
causes in 9.406-2, using the procedures in 9.406-3. The existence of a 
cause for debarment, however, does not necessarily require that the 
contractor be debarred; the seriousness of the contractor's acts or 
omissions and any remedial measures or mitigating factors should be 
considered in making any debarment decision. Before arriving at any 
debarment decision, the debarring official should consider factors such 
as the following:
    (1) Whether the contractor had effective standards of conduct and 
internal control systems in place at the time of the activity which 
constitutes cause for debarment or had adopted such procedures prior to 
any Government investigation of the activity cited as a cause for 
debarment.

[[Page 144]]

    (2) Whether the contractor brought the activity cited as a cause for 
debarment to the attention of the appropriate Government agency in a 
timely manner.
    (3) Whether the contractor has fully investigated the circumstances 
surrounding the cause for debarment and, if so, made the result of the 
investigation available to the debarring official.
    (4) Whether the contractor cooperated fully with Government agencies 
during the investigation and any court or administrative action.
    (5) Whether the contractor has paid or has agreed to pay all 
criminal, civil, and administrative liability for the improper activity, 
including any investigative or administrative costs incurred by the 
Government, and has made or agreed to make full restitution.
    (6) Whether the contractor has taken appropriate disciplinary action 
against the individuals responsible for the activity which constitutes 
cause for debarment.
    (7) Whether the contractor has implemented or agreed to implement 
remedial measures, including any identified by the Government.
    (8) Whether the contractor has instituted or agreed to institute new 
or revised review and control procedures and ethics training programs.
    (9) Whether the contractor has had adequate time to eliminate the 
circumstances within the contractor's organization that led to the cause 
for debarment.
    (10) Whether the contractor's management recognizes and understands 
the seriousness of the misconduct giving rise to the cause for debarment 
and has implemented programs to prevent recurrence.

The existence or nonexistence of any mitigating factors or remedial 
measures such as set forth in this paragraph (a) is not necessarily 
determinative of a contractor's present responsibility. Accordingly, if 
a cause for debarment exists, the contractor has the burden of 
demonstrating, to the satisfaction of the debarring official, its 
present responsibility and that debarment is not necessary.
    (b) Debarment constitutes debarment of all divisions or other 
organizational elements of the contractor, unless the debarment decision 
is limited by its terms to specific divisions, organizational elements, 
or commodities. The debarring official may extend the debarment decision 
to include any affiliates of the contractor if they are (1) specifically 
named and (2) given written notice of the proposed debarment and an 
opportunity to respond (see 9.406-3(c)).
    (c) A contractor's debarment, or proposed debarment, shall be 
effective throughout the executive branch of the Government, unless the 
agency head or a designee (except see 23.506(e)) states in writing the 
compelling reasons justifying continued business dealings between that 
agency and the contractor.
    (d)(1) When the debarring official has authority to debar 
contractors from both acquisition contracts pursuant to this regulation 
and contracts for the purchase of Federal personal property pursuant to 
the Federal Property Management Regulations (FPMR) 101-45.6, that 
official shall consider simultaneously debarring the contractor from the 
award of acquisition contracts and from the purchase of Federal personal 
property.
    (2) When debarring a contractor from the award of acquisition 
contracts and from the purchase of Federal personal property, the 
debarment notice shall so indicate and the appropriate FAR and FPMR 
citations shall be included.

[48 FR 42142, Sept. 19, 1983, as amended at 52 FR 6121, Feb. 27, 1987; 
54 FR 19815, May 8, 1989; 55 FR 21707, May 25, 1990; 55 FR 30465, July 
26, 1990; 56 FR 67129, Dec. 27, 1991; 59 FR 67033, Dec. 28, 1994]



9.406-2  Causes for debarment.

    (a) The debarring official may debar a contractor for a conviction 
of or civil judgment for--
    (1) Commission of fraud or a criminal offense in connection with (i) 
obtaining, (ii) attempting to obtain, or (iii) performing a public 
contract or subcontract;
    (2) Violation of Federal or State antitrust statutes relating to the 
submission of offers;
    (3) Commission of embezzlement, theft, forgery, bribery, 
falsification or destruction of records, making false

[[Page 145]]

statements, tax evasion, or receiving stolen property;
    (4) Intentionally affixing a label bearing a ``Made in America'' 
inscription (or any inscription having the same meaning) to a product 
sold in or shipped to the United States, when the product was not made 
in the United States (see Section 202 of the Defense Production Act 
(Pub. L. 102-558)); or
    (5) Commission of any other offense indicating a lack of business 
integrity or business honesty that seriously and directly affects the 
present responsibility of a Government contractor or subcontractor.
    (b)(1) The debarring official may debar a contractor, based upon a 
preponderance of the evidence, for--
    (i) Violation of the terms of a Government contract or subcontract 
so serious as to justify debarment, such as--
    (A) Willful failure to perform in accordance with the terms of one 
or more contracts; or
    (B) A history of failure to perform, or of unsatisfactory 
performance of, one or more contracts.
    (ii) Violations of the Drug-Free Workplace Act of 1988 (Public Law 
100-690), as indicated by--
    (A) Failure to comply with the requirements of the clause at 52.223-
6, Drug-Free Workplace; or
    (B) Such a number of contractor employees convicted of violations of 
criminal drug statutes occurring in the workplace as to indicate that 
the contractor has failed to make a good faith effort to provide a drug-
free workplace (see 23.504).
    (iii) Intentionally affixing a label bearing a ``Made in America'' 
inscription (or any inscription having the same meaning) to a product 
sold in or shipped to the United States, when the product was not made 
in the United States (see Section 202 of the Defense Production Act 
(Public Law 102-558)).
    (iv) Commission of an unfair trade practice as defined in 9.403 (see 
Section 201 of the Defense Production Act (Public Law 102-558)).
    (2) The debarring official may debar a contractor, based on a 
determination by the Attorney General of the United States, or designee, 
that the contractor is not in compliance with Immigration and 
Nationality Act employment provisions (see Executive Order 12989). The 
Attorney General's determination is not reviewable in the debarment 
proceedings.
    (c) Any other cause of so serious or compelling a nature that it 
affects the present responsibility of a Government contractor or 
subcontractor.

[48 FR 42142, Sept. 19, 1983, as amended at 54 FR 4968, Jan. 31 ,1989; 
54 FR 19815, May 8, 1989; 55 FR 21707, May 25, 1990; 59 FR 11372, Mar. 
10, 1994; 61 FR 2633, Jan. 26, 1996; 61 FR 41473, Aug. 8, 1996; 61 FR 
69291, Dec. 31, 1996]



9.406-3  Procedures.

    (a) Investigation and referral. Agencies shall establish procedures 
for the prompt reporting, investigation, and referral to the debarring 
official of matters appropriate for that official's consideration.
    (b) Decisionmaking process. (1) Agencies shall establish procedures 
governing the debarment decisionmaking process that are as informal as 
is practicable, consistent with principles of fundamental fairness. 
These procedures shall afford the contractor (and any specifically named 
affiliates) an opportunity to submit, in person, in writing, or through 
a representative, information and argument in opposition to the proposed 
debarment.
    (2) In actions not based upon a conviction or civil judgment, if it 
is found that the contractor's submission in opposition raises a genuine 
dispute over facts material to the proposed debarment, agencies shall 
also--
    (i) Afford the contractor an opportunity to appear with counsel, 
submit documentary evidence, present witnesses, and confront any person 
the agency presents; and
    (ii) Make a transcribed record of the proceedings and make it 
available at cost to the contractor upon request, unless the contractor 
and the agency, by mutual agreement, waive the requirement for a 
transcript.
    (c) Notice of proposal to debar. A notice of proposed debarment 
shall be issued by the debarring official advising the contractor and 
any specifically named affiliates, by certified mail, return receipt 
requested--
    (1) That debarment is being considered;

[[Page 146]]

    (2) Of the reasons for the proposed debarment in terms sufficient to 
put the contractor on notice of the conduct or transaction(s) upon which 
it is based;
    (3) Of the cause(s) relied upon under 9.406-2 for proposing 
debarment;
    (4) That, within 30 days after receipt of the notice, the contractor 
may submit, in person, in writing, or through a representative, 
information and argument in opposition to the proposed debarment, 
including any additional specific information that raises a genuine 
dispute over the material facts;
    (5) Of the agency's procedures governing debarment decisionmaking;
    (6) Of the effect of the issuance of the notice of proposed 
debarment; and
    (7) Of the potential effect of an actual debarment.
    (d) Debarring official's decision. (1) In actions based upon a 
conviction or judgment, or in which there is no genuine dispute over 
material facts, the debarring official shall make a decision on the 
basis of all the information in the administrative record, including any 
submission made by the contractor. If no suspension is in effect, the 
decision shall be made within 30 working days after receipt of any 
information and argument submitted by the contractor, unless the 
debarring official extends this period for good cause.
    (2)(i) In actions in which additional proceedings are necessary as 
to disputed material facts, written findings of fact shall be prepared. 
The debarring official shall base the decision on the facts as found, 
together with any information and argument submitted by the contractor 
and any other information in the administrative record.
    (ii) The debarring official may refer matters involving disputed 
material facts to another official for findings of fact. The debarring 
official may reject any such findings, in whole or in part, only after 
specifically determining them to be arbitrary and capricious or clearly 
erroneous.
    (iii) The debarring official's decision shall be made after the 
conclusion of the proceedings with respect to disputed facts.
    (3) In any action in which the proposed debarment is not based upon 
a conviction or civil judgment, the cause for debarment must be 
established by a preponderance of the evidence.
    (e) Notice of debarring official's decision. (1) If the debarring 
official decides to impose debarment, the contractor and any affiliates 
involved shall be given prompt notice by certified mail, return receipt 
requested--
    (i) Referring to the notice of proposed debarment;
    (ii) Specifying the reasons for debarment;
    (iii) Stating the period of debarment, including effective dates; 
and
    (iv) Advising that the debarment is effective throughout the 
executive branch of the Government unless the head of an agency or a 
designee makes the statement called for by 9.406-1(c).
    (2) If debarment is not imposed, the debarring official shall 
promptly notify the contractor and any affiliates involved, by certified 
mail, return receipt requested.

[48 FR 42142, Sept. 19, 1983, as amended at 54 FR 19815, May 8, 1989; 59 
FR 67033, Dec. 28, 1994]



9.406-4  Period of debarment.

    (a)(1) Debarment shall be for a period commensurate with the 
seriousness of the cause(s). Generally, debarment should not exceed 3 
years, except that--
    (i) Debarment for violation of the provisions of the Drug-Free 
Workplace Act of 1988 (see 23.506) may be for a period not to exceed 5 
years; and
    (ii) Debarments under 9.406-2(b)(2) shall be for one year unless 
extended pursuant to paragraph (b) of this subsection.
    (2) If suspension precedes a debarment, the suspension period shall 
be considered in determining the debarment period.
    (b) The debarring official may extend the debarment for an 
additional period, if that official determines that an extension is 
necessary to protect the Government's interest. However, a debarment may 
not be extended solely on the basis of the facts and circumstances upon 
which the initial debarment action was based. Debarments under 9.406-
2(b)(2) may be extended for additional periods of one year if the 
Attorney General or designee determines that the contractor continues to 
be in

[[Page 147]]

violation of the employment provisions of the Immigration and 
Nationality Act. If debarment for an additional period is determined to 
be necessary, the procedures of 9.406-3 shall be followed to extend the 
debarment.
    (c) The debarring official may reduce the period or extent of 
debarment, upon the contractor's request, supported by documentation, 
for reasons such as--
    (1) Newly discovered material evidence;
    (2) Reversal of the conviction or civil judgment upon which the 
debarment was based;
    (3) Bona fide change in ownership or management;
    (4) Elimination of other causes for which the debarment was imposed; 
or
    (5) Other reasons the debarring offical deems appropriate.

[48 FR 42142, Sept. 19, 1983, as amended at 54 FR 4968, Jan. 31 ,1989; 
54 FR 19815, May 8, 1989; 55 FR 21707, May 25, 1990; 61 FR 41473, Aug. 
8, 1996]



9.406-5  Scope of debarment.

    (a) The fraudulent, criminal, or other seriously improper conduct of 
any officer, director, shareholder, partner, employee, or other 
individual associated with a contractor may be imputed to the contractor 
when the conduct occurred in connection with the individual's 
performance of duties for or on behalf of the contractor, or with the 
contractor's knowledge, approval, or acquiescence. The contractor's 
acceptance of the benefits derived from the conduct shall be evidence of 
such knowledge, approval, or acquiescence.
    (b) The fraudulent, criminal, or other seriously improper conduct of 
a contractor may be imputed to any officer, director, shareholder, 
partner, employee, or other individual associated with the contractor 
who participated in, knew of, or had reason to know of the contractor's 
conduct.
    (c) The fraudulent, criminal, or other seriously improper conduct of 
one contractor participating in a joint venture or similar arrangement 
may be imputed to other participating contractors if the conduct 
occurred for or on behalf of the joint venture or similar arrangement, 
or with the knowledge, approval, or acquiescence of these contractors. 
Acceptance of the benefits derived from the conduct shall be evidence of 
such knowledge, approval, or acquiescence.



9.407  Suspension.



9.407-1  General.

    (a) The suspending official may, in the public interest, suspend a 
contractor for any of the causes in 9.407-2, using the procedures in 
9.407-3.
    (b)(1) Suspension is a serious action to be imposed on the basis of 
adequate evidence, pending the completion of investigation or legal 
proceedings, when it has been determined that immediate action is 
necessary to protect the Government's interest. In assessing the 
adequacy of the evidence, agencies should consider how much information 
is available, how credible it is given the circumstances, whether or not 
important allegations are corroborated, and what inferences can 
reasonably be drawn as a result. This assessment should include an 
examination of basic documents such as contracts, inspection reports, 
and correspondence.
    (b)(2) The existence of a cause for suspension does not necessarily 
require that the contractor be suspended. The suspending official should 
consider the seriousness of the contractor's acts or omissions and may, 
but is not required to, consider remedial measures or mitigating 
factors, such as those set forth in 9.406-1(a). A contractor has the 
burden of promptly presenting to the suspending official evidence of 
remedial measures or mitigating factors when it has reason to know that 
a cause for suspension exists. The existence or nonexistence of any 
remedial measures or mitigating factors is not necessarily determinative 
of a contractor's present responsibility.
    (c) Suspension constitutes suspension of all divisions or other 
organizational elements of the contractor, unless the suspension 
decision is limited by its terms to specific divisions, organizational 
elements, or commodities. The suspending official may extend the 
suspension decision to include any affiliates of the contractor if they 
are (1) specifically named and (2) given written notice of the 
suspension and an opportunity to respond (see 9.407-3(c)).

[[Page 148]]

    (d) A contractor's suspension shall be effective throughout the 
executive branch of the Government, unless the agency head or a designee 
(except see 23.506(e)) states in writing the compelling reasons 
justifying continued business dealings between that agency and the 
contractor.
    (e)(1) When the suspending official has authority to suspend 
contractors from both acquisition contracts pursuant to this regulation 
and contracts for the purchase of Federal personal property pursuant to 
FPMR 101-45.6, that official shall consider simultaneously suspending 
the contractor from the award of acquisition contracts and from the 
purchase of Federal personal property.
    (2) When suspending a contractor from the award of acquisition 
contracts and from the purchase of Federal personal property, the 
suspension notice shall so indicate and the appropriate FAR and FPMR 
citations shall be included.

[48 FR 42142, Sept. 19, 1983, as amended at 54 FR 4968, Jan. 31, 1989; 
54 FR 19816, May 8, 1989; 56 FR 67130, Dec. 27, 1991; 59 FR 67033, Dec. 
28, 1994]



9.407-2  Causes for suspension.

    (a) The suspending official may suspend a contractor suspected, upon 
adequate evidence, of--
    (1) Commission of fraud or a criminal offense in connection with (i) 
obtaining, (ii) attempting to obtain, or (iii) performing a public 
contract or subcontract;
    (2) Violation of Federal or State antitrust statutes relating to the 
submission of offers;
    (3) Commission of embezzlement, theft, forgery, bribery, 
falsification or destruction of records, making false statements, tax 
evasion, or receiving stolen property; or
    (4) Violations of the Drug-Free Workplace Act of 1988 (Public Law 
100-690), as indicated by--
    (i) Failure to comply with the requirements of the clause at 52.223-
6, Drug-Free Workplace; or
    (ii) Such a number of contractor employees convicted of violations 
of criminal drug statutes occurring in the workplace as to indicate that 
the contractor has failed to make a good faith effort to provide a drug-
free workplace (see 23.504);
    (5) Intentionally affixing a label bearing a ``Made in America'' 
inscription (or any inscription having the same meaning) to a product 
sold in or shipped to the United States, when the product was not made 
in the United States (see section 202 of the Defense Production Act 
(Pub. L. 102-558));
    (6) Commission of an unfair trade practice as defined in 9.403 (see 
section 201 of the Defense Production Act (Pub. L. 102-558)); or
    (7) Commission of any other offense indicating a lack of business 
integrity or business honesty that seriously and directly affects the 
present responsibility of a Government contractor or subcontractor.
    (b) Indictment for any of the causes in paragraph (a) above 
constitutes adequate evidence for suspension.
    (c) The suspending official may upon adequate evidence also suspend 
a contractor for any other cause of so serious or compelling a nature 
that it affects the present responsibility of a Government contractor or 
subcontractor.

[48 FR 42142, Sept. 19, 1983, as amended at 54 FR 4968, Jan. 31, 1989; 
55 FR 21707, May 25, 1990; 59 FR 11373, Mar. 10, 1994; 61 FR 2633, Jan. 
26, 1996; 61 FR 69291, Dec. 31, 1996]



9.407-3  Procedures.

    (a) Investigation and referral. Agencies shall establish procedures 
for the prompt reporting, investigation, and referral to the suspending 
official of matters appropriate for that official's consideration.
    (b) Decisionmaking process. (1) Agencies shall establish procedures 
governing the suspension decisionmaking process that are as informal as 
is practicable, consistent with principles of fundamental fairness. 
These procedures shall afford the contractor (and any specifically named 
affiliates) an opportunity, following the imposition of suspension, to 
submit, in person, in writing, or through a representative, information 
and argument in opposition to the suspension.
    (2) In actions not based on an indictment, if it is found that the 
contractor's submission in opposition raises a genuine dispute over 
facts material to

[[Page 149]]

the suspension and if no determination has been made, on the basis of 
Department of Justice advice, that substantial interests of the 
Government in pending or contemplated legal proceedings based on the 
same facts as the suspension would be prejudiced, agencies shall also--
    (i) Afford the contractor an opportunity to appear with counsel, 
submit documentary evidence, present witnesses, and confront any person 
the agency presents; and
    (ii) Make a transcribed record of the proceedings and make it 
available at cost to the contractor upon request, unless the contractor 
and the agency, by mutual agreement, waive the requirement for a 
transcript.
    (c) Notice of suspension. When a contractor and any specifically 
named affiliates are suspended, they shall be immediately advised by 
certified mail, return receipt requested--
    (1) That they have been suspended and that the suspension is based 
on an indictment or other adequate evidence that the contractor has 
committed irregularities (i) of a serious nature in business dealings 
with the Government or (ii) seriously reflecting on the propriety of 
further Government dealings with the contractor--any such irregularities 
shall be described in terms sufficient to place the contractor on notice 
without disclosing the Government's evidence;
    (2) That the suspension is for a temporary period pending the 
completion of an investigation and such legal proceedings as may ensue;
    (3) Of the cause(s) relied upon under 9.407-2 for imposing 
suspension;
    (4) Of the effect of the suspension;
    (5) That, within 30 days after receipt of the notice, the contractor 
may submit, in person, in writing, or through a representative, 
information and argument in opposition to the suspension, including any 
additional specific information that raises a genuine dispute over the 
material facts; and
    (6) That additional proceedings to determine disputed material facts 
will be conducted unless (i) the action is based on an indictment or 
(ii) a determination is made, on the basis of Department of Justice 
advice, that the substantial interests of the Government in pending or 
contemplated legal proceedings based on the same facts as the suspension 
would be prejudiced.
    (d) Suspending official's decision. (1) In actions (i) based on an 
indictment, (ii) in which the contractor's submission does not raise a 
genuine dispute over material facts, or (iii) in which additional 
proceedings to determine disputed material facts have been denied on the 
basis of Department of Justice advice, the suspending official's 
decision shall be based on all the information in the administrative 
record, including any submission made by the contractor.
    (2)(i) In actions in which additional proceedings are necessary as 
to disputed material facts, written findings of fact shall be prepared. 
The suspending official shall base the decision on the facts as found, 
together with any information and argument submitted by the contractor 
and any other information in the administrative record.
    (ii) The suspending official may refer matters involving disputed 
material facts to another official for findings of fact. The suspending 
official may reject any such findings, in whole or in part, only after 
specifically determining them to be arbitrary and capricious or clearly 
erroneous.
    (iii) The suspending official's decision shall be made after the 
conclusion of the proceedings with respect to disputed facts.
    (3) The suspending official may modify or terminate the suspension 
or leave it in force (for example, see 9.406-4(c) for the reasons for 
reducing the period or extent of debarment). However, a decision to 
modify or terminate the suspension shall be without prejudice to the 
subsequent imposition of (i) suspension by any other agency or (ii) 
debarment by any agency.
    (4) Prompt written notice of the suspending official's decision 
shall be sent to the contractor and any affiliates involved, by 
certified mail, return receipt requested.

[48 FR 42142, Sept. 19, 1983, as amended at 51 FR 2649, Jan. 17, 1986]



9.407-4  Period of suspension.

    (a) Suspension shall be for a temporary period pending the 
completion

[[Page 150]]

of investigation and any ensuing legal proceedings, unless sooner 
terminated by the suspending official or as provided in this subsection.
    (b) If legal proceedings are not initiated within 12 months after 
the date of the suspension notice, the suspension shall be terminated 
unless an Assistant Attorney General requests its extension, in which 
case it may be extended for an additional 6 months. In no event may a 
suspension extend beyond 18 months, unless legal proceedings have been 
initiated within that period.
    (c) The suspending official shall notify the Department of Justice 
of the proposed termination of the suspension, at least 30 days before 
the 12-month period expires, to give that Department an opportunity to 
request an extension.

[48 FR 42142, Sept. 19, 1983, as amended at 51 FR 2649, Jan. 17, 1986]



9.407-5  Scope of suspension.

    The scope of suspension shall be the same as that for debarment (see 
9.406-5), except that the procedures of 9.407-3 shall be used in 
imposing suspension.



9.408  Certification regarding debarment, suspension, proposed debarment, and other responsibility matters.

    (a) When an offeror, in compliance with the provision at 52.209-5, 
Certification Regarding Debarment, Suspension, Proposed Debarment, and 
Other Responsibility Matters, indicates an indictment, charge, civil 
judgment, conviction, suspension, debarment, proposed debarment, 
ineligibility, or default of a contract, the contracting officer shall--
    (1) Request such additional information from the offeror as the 
contracting officer deems necessary in order to make a determination of 
the offeror's responsibility (but see 9.405); and
    (2) Notify, prior to proceeding with award, in accordance with 
agency procedures (see 9.406-3(a) and 9.407-3(a)), the agency official 
responsible for initiating debarment or suspension action, where an 
offeror indicates the existence of an indictment, charge, conviction, or 
civil judgment.
    (b) Offerors who do not furnish the certification or such 
information as may be requested by the contracting officer shall be 
given an opportunity to remedy the deficiency. Failure to furnish the 
certification or such information may render the offeror nonresponsible.

[54 FR 19816, May 8, 1989]



9.409  Solicitation provision and contract clause.

    (a) The contracting officer shall insert the provision at 52.209-5, 
Certification Regarding Debarment, Suspension, Proposed Debarment, and 
Other Responsibility Matters, in solicitations where the contract value 
is expected to exceed the simplified acquisition threshold.
    (b) The contracting officer shall insert the clause at 52.209-6, 
Protecting the Government's Interests when Subcontracting with 
Contractors Debarred, Suspended, or Proposed for Debarment, in 
solicitations and contracts where the contract value exceeds $25,000.

[60 FR 34748, July 3, 1995]



    Subpart 9.5--Organizational and Consultant Conflicts of Interest



9.500  Scope of subpart.

    This subpart:
    (a) Prescribes responsibilities, general rules, and procedures for 
identifying, evaluating, and resolving organizational conflicts of 
interest;
    (b) Provides examples to assist contracting officers in applying 
these rules and procedures to individual contracting situations; and
    (c) Implements section 8141 of the 1989 Department of Defense 
Appropriation Act, Pub. L. 100-463, 102 Stat. 2270-47 (1988) and Office 
of Federal Procurement Policy (OFPP) Letter 89-1, Conflict of Interest 
Policies Applicable to Consultants.

[55 FR 42685, Oct. 22, 1990]

[[Page 151]]



9.501  Definitions.

    Marketing consultant means any independent contractor who furnishes 
advice, information, direction, or assistance to an offeror or any other 
contractor in support of the preparation or submission of an offer for a 
Government contract by that offeror. An independent contractor is not a 
marketing consultant when rendering--
    (a) Services excluded in subpart 37.2;
    (b) Routine engineering and technical services (such as 
installation, operation, or maintenance of systems, equipment, software, 
components, or facilities);
    (c) Routine legal, actuarial, auditing, and accounting services; and
    (d) Training services.
    Organizational conflict of interest means that because of other 
activities or relationships with other persons, a person is unable or 
potentially unable to render impartial assistance or advice to the 
Government, or the person's objectivity in performing the contract work 
is or might be otherwise impaired, or a person has an unfair competitive 
advantage.

[55 FR 42685, Oct. 22, 1990]



9.502  Applicability.

    (a) This subpart applies to contracts with either profit or 
nonprofit organizations, including nonprofit organizations created 
largely or wholly with Government funds.
    (b) The applicability of this subpart is not limited to any 
particular kind of acquisition. However, organizational conflicts of 
interest are more likely to occur in contracts involving--
    (1) Management support services;
    (2) Consultant or other professional services;
    (3) Contractor performance of or assistance in technical 
evaluations; or
    (4) Systems engineering and technical direction work performed by a 
contractor that does not have overall contractual responsibility for 
development or production.
    (c) An oganizational conflict of interest may result when factors 
create an actual or potential conflict of interest on an instant 
contract, or when the nature of the work to be performed on the instant 
contract creates an actual or potential conflict of interest on a future 
acquisition. In the latter case, some restrictions on future activities 
of the contractor may be required.
    (d) Acquisitions subject to unique agency organizational conflict of 
interest statutes are excluded from the requirements of this subpart.

[48 FR 42142, Sept. 19, 1983, as amended at 55 FR 42686, Oct. 22, 1990; 
56 FR 55377, Oct. 25, 1991]



9.503  Waiver.

    The agency head or a designee may waive any general rule or 
procedure of this subpart by determining that its application in a 
particular situation would not be in the Government's interest. Any 
request for waiver must be in writing, shall set forth the extent of the 
conflict, and requires approval by the agency head or a designee. Agency 
heads shall not delegate waiver authority below the level of head of a 
contracting activity.



9.504  Contracting officer responsibilities.

    (a) Using the general rules, procedures, and examples in this 
subpart, contracting officers shall analyze planned acquisitions in 
order to--
    (1) Identify and evaluate potential organizational conflicts of 
interest as early in the acquisition process as possible; and
    (2) Avoid, neutralize, or mitigate significant potential conflicts 
before contract award.
    (b) Contracting officers should obtain the advice of counsel and the 
assistance of appropriate technical specialists in evaluating potential 
conflicts and in developing any necessary solicitation provisions and 
contract clauses (see 9.506).
    (c) Before issuing a solicitation for a contract that may involve a 
significant potential conflict, the contracting officer shall recommend 
to the head of the contracting activity a course of action for resolving 
the conflict (see 9.506).
    (d) In fulfilling their responsibilities for identifying and 
resolving potential conflicts, contracting officers should avoid 
creating unnecessary delays, burdensome information requirements,

[[Page 152]]

and excessive documentation. The contracting officer's judgment need be 
formally documented only when a substantive issue concerning potential 
organizational conflict of interest exists.
    (e) The contracting officer shall award the contract to the apparent 
successful offeror unless a conflict of interest is determined to exist 
that cannot be avoided or mitigated. Before determining to withhold 
award based on conflict of interest considerations, the contracting 
officer shall notify the contractor, provide the reasons therefor, and 
allow the contractor a reasonable opportunity to respond. If the 
contracting officer finds that it is in the best interest of the United 
States to award the contract notwithstanding a conflict of interest, a 
request for waiver shall be submitted in accordance with 9.503. The 
waiver request and decision shall be included in the contract file.

[48 FR 42142, Sept. 19, 1983, as amended at 55 FR 42686, Oct. 22, 1990; 
56 FR 55377, Oct. 25, 1991]



9.505  General rules.

    The general rules in 9.505-1 through 9.505-4 prescribe limitations 
on contracting as the means of avoiding, neutralizing, or mitigating 
organizational conflicts of interest that might otherwise exist in the 
stated situations. Some illustrative examples are provided in 9.508. 
Conflicts may arise in situations not expressly covered in this section 
9.505 or in the examples in 9.508. Each individual contracting situation 
should be examined on the basis of its particular facts and the nature 
of the proposed contract. The exercise of common sense, good judgment, 
and sound discretion is required in both the decision on whether a 
significant potential conflict exists and, if it does, the development 
of an appropriate means for resolving it. The two underlying principles 
are--
    (a) Preventing the existence of conflicting roles that might bias a 
contractor's judgment; and
    (b) Preventing unfair competitive advantage. In addition to the 
other situations described in this subpart, an unfair competitive 
advantage exists where a contractor competing for award for any Federal 
contract possesses--
    (1) Proprietary information that was obtained from a Government 
official without proper authorization; or
    (2) Source selection information (as defined in 3.104-3) that is 
relevant to the contract but is not available to all competitors, and 
such information would assist that contractor in obtaining the contract.

[48 FR 42142, Sept. 19, 1983, as amended at 55 FR 42686, Oct. 22, 1990; 
56 FR 55377, Oct. 25, 1991; 62 FR 232, Jan. 2, 1997; 64 FR 32748, June 
17, 1999]



9.505-1  Providing systems engineering and technical direction.

    (a) A contractor that provides systems engineering and technical 
direction for a system but does not have overall contractual 
responsibility for its development, its integration, assembly, and 
checkout, or its production shall not (1) be awarded a contract to 
supply the system or any of its major components or (2) be a 
subcontractor or consultant to a supplier of the system or any of its 
major components.
    (b) Systems engineering includes a combination of substantially all 
of the following activities: determining specifications, identifying and 
resolving interface problems, developing test requirements, evaluating 
test data, and supervising design. Technical direction includes a 
combination of substantially all of the following activities: developing 
work statements, determining parameters, directing other contractors' 
operations, and resolving technical controversies. In performing these 
activities, a contractor occupies a highly influential and responsible 
position in determining a system's basic concepts and supervising their 
execution by other contractors. Therefore this contractor should not be 
in a position to make decisions favoring its own products or 
capabilities.



9.505-2  Preparing specifications or work statements.

    (a)(1) If a contractor prepares and furnishes complete 
specifications covering nondevelopmental items, to be used in a 
competitive acquisition, that

[[Page 153]]

contractor shall not be allowed to furnish these items, either as a 
prime contractor or as a subcontractor, for a reasonable period of time 
including, at least, the duration of the initial production contract. 
This rule shall not apply to--
    (i) Contractors that furnish at Government request specifications or 
data regarding a product they provide, even though the specifications or 
data may have been paid for separately or in the price of the product; 
or
    (ii) Situations in which contractors, acting as industry 
representatives, help Government agencies prepare, refine, or coordinate 
specifications, regardless of source, provided this assistance is 
supervised and controlled by Government representatives.
    (2) If a single contractor drafts complete specifications for 
nondevelopmental equipment, it should be eliminated for a reasonable 
time from competition for production based on the specifications. This 
should be done in order to avoid a situation in which the contractor 
could draft specifications favoring its own products or capabilities. In 
this way the Government can be assured of getting unbiased advice as to 
the content of the specifications and can avoid allegations of 
favoritism in the award of production contracts.
    (3) In development work, it is normal to select firms that have done 
the most advanced work in the field. These firms can be expected to 
design and develop around their own prior knowledge. Development 
contractors can frequently start production earlier and more 
knowledgeably than firms that did not participate in the development, 
and this can affect the time and quality of production, both of which 
are important to the Government. In many instances the Government may 
have financed the development. Thus, while the development contractor 
has a competitive advantage, it is an unavoidable one that is not 
considered unfair; hence no prohibition should be imposed.
    (b)(1) If a contractor prepares, or assists in preparing, a work 
statement to be used in competitively acquiring a system or services--or 
provides material leading directly, predictably, and without delay to 
such a work statement--that contractor may not supply the system, major 
components of the system, or the services unless--
    (i) It is the sole source;
    (ii) It has participated in the development and design work; or
    (iii) More than one contractor has been involved in preparing the 
work statement.
    (2) Agencies should normally prepare their own work statements. When 
contractor assistance is necessary, the contractor might often be in a 
position to favor its own products or capabilities. To overcome the 
possibility of bias, contractors are prohibited from supplying a system 
or services acquired on the basis of work statements growing out of 
their services, unless excepted in subparagraph (1) above.
    (3) For the reasons given in 9.505-2(a)(3), no prohibitions are 
imposed on development and design contractors.



9.505-3  Providing evaluation services.

    Contracts for the evaluation of offers for products or services 
shall not be awarded to a contractor that will evaluate its own offers 
for products or services, or those of a competitor, without proper 
safeguards to ensure objectivity to protect the Government's interests.

[62 FR 12694, Mar. 17, 1997]



9.505-4  Obtaining access to proprietary information.

    (a) When a contractor requires proprietary information from others 
to perform a Government contract and can use the leverage of the 
contract to obtain it, the contractor may gain an unfair competitive 
advantage unless restrictions are imposed. These restrictions protect 
the information and encourage companies to provide it when necessary for 
contract performance. They are not intended to protect information (1) 
furnished voluntarily without limitations on its use or (2) available to 
the Government or contractor from other sources without restriction.
    (b) A contractor that gains access to proprietary information of 
other companies in performing advisory and assistance services for the 
Government must agree with the other companies to protect their 
information from unauthorized use or disclosure for as long as it 
remains proprietary and refrain

[[Page 154]]

from using the information for any purpose other than that for which it 
was furnished. The contracting officer shall obtain copies of these 
agreements and ensure that they are properly executed.
    (c) Contractors also obtain proprietary and source selection 
information by acquiring the services of marketing consultants which, if 
used in connection with an acquisition, may give the contractor an 
unfair competitive advantage. Contractors should make inquiries of 
marketing consultants to ensure that the marketing consultant has 
provided no unfair competitive advantage.

[48 FR 42142, Sept. 19, 1983, as amended at 55 FR 42686, Oct. 22, 1990; 
56 FR 55377, Oct. 25, 1991; 62 FR 235, Jan. 2, 1997]



9.506  Procedures.

    (a) If information concerning prospective contractors is necessary 
to identify and evaluate potential organizational conflicts of interest 
or to develop recommended actions, contracting officers should first 
seek the information from within the Government or from other readily 
available sources. Government sources include the files and the 
knowledge of personnel within the contracting office, other contracting 
offices, the cognizant contract administration and audit activities and 
offices concerned with contract financing. Non-Government sources 
include publications and commercial services, such as credit rating 
services, trade and financial journals, and business directories and 
registers.
    (b) If the contracting officer decides that a particular acquisition 
involves a significant potential organizational conflict of interest, 
the contracting officer shall, before issuing the solicitation, submit 
for approval to the chief of the contracting office (unless a higher 
level official is designated by the agency)--
    (1) A written analysis, including a recommended course of action for 
avoiding, neutralizing, or mitigating the conflict, based on the general 
rules in 9.505 or on another basis not expressly stated in that section;
    (2) A draft solicitation provision (see 9.507-1); and
    (3) If appropriate, a proposed contract clause (see 9.507-2).
    (c) The approving official shall--
    (1) Review the contracting officer's analysis and recommended course 
of action, including the draft provision and any proposed clause;
    (2) Consider the benefits and detriments to the Government and 
prospective contractors; and
    (3) Approve, modify, or reject the recommendations in writing.
    (d) The contracting officer shall--
    (1) Include the approved provision(s) and any approved clause(s) in 
the solicitation or the contract, or both;
    (2) Consider additional information provided by prospective 
contractors in response to the solicitation or during negotiations; and
    (3) Before awarding the contract, resolve the conflict or the 
potential conflict in a manner consistent with the approval or other 
direction by the head of the contracting activity.
    (e) If, during the effective period of any restriction (see 9.507), 
a contracting office transfers acquisition responsibility for the item 
or system involved, it shall notify the successor contracting office of 
the restriction, and send a copy of the contract under which the 
restriction was imposed.

[55 FR 42686, Oct. 22, 1990, as amended at 62 FR 235, Jan. 2, 1997]



9.507  Solicitation provisions and contract clause.



9.507-1  Solicitation provisions.

    As indicated in the general rules in 9.505, significant potential 
organizational conflicts of interest are normally resolved by imposing 
some restraint, appropriate to the nature of the conflict, upon the 
contractor's eligibilty for future contracts or subcontracts. Therefore, 
affected solicitations shall contain a provision that--
    (a) Invites offerors' attention to this subpart;
    (b) States the nature of the potential conflict as seen by the 
contracting officer;
    (c) States the nature of the proposed restraint upon future 
contractor activities; and
    (d) Depending on the nature of the acquisition, states whether or 
not the

[[Page 155]]

terms of any proposed clause and the application of this subpart to the 
contract are subject to negotiation.

[55 FR 42687, Oct. 22, 1990, as amended at 56 FR 55377, Oct. 25, 1991; 
60 FR 34748, July 3, 1995; 60 FR 49721, Sept. 26, 1995; 62 FR 235, Jan. 
2, 1997]



9.507-2  Contract clause.

    (a) If, as a condition of award, the contractor's eligibility for 
future prime contract or subcontract awards will be restricted or the 
contractor must agree to some other restraint, the solicitation shall 
contain a proposed clause that specifies both the nature and duration of 
the proposed restraint. The contracting officer shall include the clause 
in the contract, first negotiating the clause's final terms with the 
successful offeror, if it is appropriate to do so (see 9.508-1(d) of 
this subsection).
    (b) The restraint imposed by a clause shall be limited to a fixed 
term of reasonable duration, sufficient to avoid the circumstance of 
unfair competitive advantage or potential bias. This period varies. It 
might end, for example, when the first production contract using the 
contractor's specifications or work statement is awarded, or it might 
extend through the entire life of a system for which the contractor has 
performed systems engineering and technical direction. In every case, 
the restriction shall specify termination by a specific date or upon the 
occurrence of an identifiable event.

[55 FR 42687, Oct. 22, 1990]



9.508  Examples.

    The examples in paragraphs (a) through (i) following illustrate 
situations in which questions concerning organizational conflicts of 
interest may arise. They are not all inclusive, but are intended to help 
the contracting officer apply the general rules in 9.505 to individual 
contract situations.
    (a) Company A agrees to provide systems engineering and technical 
direction for the Navy on the powerplant for a group of submarines 
(i.e., turbines, drive shafts, propellers, etc.). Company A should not 
be allowed to supply any powerplant components. Company A can, however, 
supply components of the submarine unrelated to the powerplant (e.g., 
fire control, navigation, etc.). In this example, the system is the 
powerplant, not the submarine, and the ban on supplying components is 
limited to those for the system only.
    (b) Company A is the systems engineering and technical direction 
contractor for system X. After some progress, but before completion, the 
system is canceled. Later, system Y is developed to achieve the same 
purposes as system X, but in a fundamentally different fashion. Company 
B is the systems engineering and technical direction contractor for 
system Y. Company A may supply system Y or its components.
    (c) Company A develops new electronic equipment and, as a result of 
this development, prepares specifications. Company A may supply the 
equipment.
    (d) XYZ Tool Company and PQR Machinery Company, representing the 
American Tool Institute, work under Government supervision and control 
to refine specifications or to clarify the requirements of a specific 
acquisition. These companies may supply the item.
    (e) Before an acquisition for information technology is conducted, 
Company A is awarded a contract to prepare data system specifications 
and equipment performance criteria to be used as the basis for the 
equipment competition. Since the specifications are the basis for 
selection of commercial hardware, a potential conflict of interest 
exists. Company A should be excluded from the initial follow-on 
information technology hardware acquisition.
    (f) Company A receives a contract to define the detailed performance 
characteristics an agency will require for purchasing rocket fuels. 
Company A has not developed the particular fuels. When the definition 
contract is awarded, it is clear to both parties that the agency will 
use the performance characteristics arrived at to choose competitively a 
contractor to develop or produce the fuels. Company A may not be awarded 
this follow-on contract.
    (g) Company A receives a contract to prepare a detailed plan for 
scientific and technical training of an agency's personnel. It suggests 
a curriculum

[[Page 156]]

that the agency endorses and incorporates in its request for proposals 
to institutions to establish and conduct the training. Company A may not 
be awarded a contract to conduct the training.
    (h) Company A is selected to study the use of lasers in 
communications. The agency intends to ask that firms doing research in 
the field make proprietary information available to Company A. The 
contract must require Company A to (1) enter into agreements with these 
firms to protect any proprietary information they provide and (2) 
refrain from using the information in supplying lasers to the Government 
or for any purpose other than that for which it was intended.
    (i) An agency that regulates an industry wishes to develop a system 
for evaluating and processing license applications. Contractor X helps 
develop the system and process the applications. Contractor X should be 
prohibited from acting as a consultant to any of the applicants during 
its period of performance and for a reasonable period thereafter.

[48 FR 42142, Sept. 19, 1983. Redesignated at 55 FR 42687, Oct. 22, 
1990; 61 FR 41469, Aug. 8, 1996]



                Subpart 9.6--Contractor Team Arrangements



9.601  Definition.

    Contractor team arrangement means an arrangement in which--
    (a) Two or more companies form a partnership or joint venture to act 
as a potential prime contractor; or
    (b) A potential prime contractor agrees with one or more other 
companies to have them act as its subcontractors under a specified 
Government contract or acquisition program.



9.602  General.

    (a) Contractor team arrangements may be desirable from both a 
Government and industry standpoint in order to enable the companies 
involved to (1) complement each other's unique capabilities and (2) 
offer the Government the best combination of performance, cost, and 
delivery for the system or product being acquired.
    (b) Contractor team arrangements may be particularly appropriate in 
complex research and development acquisitions, but may be used in other 
appropriate acquisitions, including production.
    (c) The companies involved normally form a contractor team 
arrangement before submitting an offer. However, they may enter into an 
arrangement later in the acquisition process, including after contract 
award.



9.603  Policy.

    The Government will recognize the integrity and validity of 
contractor team arrangements; provided, the arrangements are identified 
and company relationships are fully disclosed in an offer or, for 
arrangements entered into after submission of an offer, before the 
arrangement becomes effective. The Government will not normally require 
or encourage the dissolution of contractor team arrangements.



9.604  Limitations.

    Nothing in this subpart authorizes contractor team arrangements in 
violation of antitrust statutes or limits the Government's rights to--
    (a) Require consent to subcontracts (see subpart 44.2);
    (b) Determine, on the basis of the stated contractor team 
arrangement, the responsibility of the prime contractor (see subpart 
9.1);
    (c) Provide to the prime contractor data rights owned or controlled 
by the Government;
    (d) Pursue its policies on competitive contracting, subcontracting, 
and component breakout after initial production or at any other time; 
and
    (e) Hold the prime contractor fully responsible for contract 
performance, regardless of any team arrangement between the prime 
contractor and its subcontractors.



Subpart 9.7--Defense Production Pools and Research and Development Pools



9.701  Definition.

    Pool, as used in this subpart, means a group of concerns (see 
19.001) that have--

[[Page 157]]

    (a) Associated together in order to obtain and perform, jointly or 
in conjunction with each other, defense production or research and 
development contracts;
    (b) Entered into an agreement governing their organization, 
relationship, and procedures; and
    (c) Obtained approval of the agreement by either--
    (1) The Small Business Administration (SBA) under section 9 or 11 of 
the Small Business Act (15 U.S.C. 638 or 640) (see 13 CFR part 125); or
    (2) A designated official under Part V of Executive Order 10480, 
August 14, 1953 (18 FR 4939, August 20, 1953) and section 708 of the 
Defense Production Act of 1950 (50 U.S.C. App. 2158).

[48 FR 42142, Sept. 19, 1983, as amended at 51 FR 2649, Jan. 17, 1986]



9.702  Contracting with pools.

    (a) Except as specified in this subpart, a pool shall be treated the 
same as any other prospective or actual contractor.
    (b) The contracting officer shall not award a contract to a pool 
unless the offer leading to the contract is submitted by the pool in its 
own name or by an individual pool member expressly stating that the 
offer is on behalf of the pool.
    (c) Upon receipt of an offer submitted by a group representing that 
it is a pool, the contracting officer shall verify its approved status 
with the SBA District Office Director or other approving agency and 
document the contract file that the verification was made.
    (d) Pools approved by the SBA under the Small Business Act are 
entitled to the preferences and privileges accorded to small business 
concerns. Approval under the Defense Production Act does not confer 
these preferences and privileges.
    (e) Before awarding a contract to an unincorporated pool, the 
contracting officer shall require each pool member participating in the 
contract to furnish a certified copy of a power of attorney identifying 
the agent authorized to sign the offer or contract on that member's 
behalf. The contracting officer shall attach a copy of each power of 
attorney to each signed copy of the contract retained by the Government.

[48 FR 42142, Setp. 19, 1983, as amended at 61 FR 67410, Dec. 20, 1996]



9.703  Contracting with individual pool members.

    (a) Pool members may submit individual offers, independent of the 
pool. However, the contracting officer shall not consider an independent 
offer by a pool member if that pool member participates in a competing 
offer submitted by the pool.
    (b) If a pool member submits an individual offer, independent of the 
pool, the contracting officer shall consider the pool agreement, along 
with other factors, in determining whether that pool member is a 
responsible prospective contractor under subpart 9.1.



PART 10--MARKET RESEARCH--Table of Contents




Sec.
10.000  Scope of part.
10.001  Policy.
10.002  Procedures.

    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 U.S.C. 
2473(c).

    Source: 60 FR 48237, Sept. 18, 1995, unless otherwise noted.



10.000  Scope of part.

    This part prescribes policies and procedures for conducting market 
research to arrive at the most suitable approach to acquiring, 
distributing, and supporting supplies and services. This part implements 
requirements of 41 U.S.C. 253a(a)(1), 41 U.S.C 264b, and 10 U.S.C. 2377.



10.001  Policy.

    (a) Agencies shall--
    (1) Ensure that legitimate needs are identified and trade-offs 
evaluated to acquire items which meet those needs;
    (2) Conduct market research appropriate to the circumstances--
    (i) Before developing new requirements documents for an acquisition 
by that agency;
    (ii) Before soliciting offers for acquisitions with an estimated 
value in excess of the simplified acquisition threshold; and

[[Page 158]]

    (iii) Before soliciting offers for acquisitions with an estimated 
value less than the simplified acquisition threshold when adequate 
information is not available and the circumstances justify its cost; and
    (3) Use the results of market research to--
    (i) Determine if sources capable of satisfying the agency's 
requirements exist;
    (ii) Determine if commercial items or, to the extent commercial 
items suitable to meet the agency's needs are not available, 
nondevelopmental items are available that--
    (A) Meet the agency's requirements;
    (B) Could be modified to meet the agency's requirements; or
    (C) Could meet the agency's requirements if those requirements were 
modified to a reasonable extent;
    (iii) Determine the extent to which commercial items or 
nondevelopmental items could be incorporated at the component level;
    (iv) Determine the practices of firms engaged in producing, 
distributing, and supporting commercial items, such as terms for 
warranties, buyer financing, maintenance and packaging, and marking; and
    (v) Ensure maximum practicable use of recovered materials (see 
subpart 23.4) and promote energy conservation and efficiency.
    (b) When conducting market research, agencies should not request 
potential sources to submit more than the minimum information necessary.



10.002  Procedures.

    (a) Acquisitions begin with a description of the Government's needs 
stated in terms sufficient to allow conduct of market research.
    (b) Market research is then conducted to determine if commercial 
items or nondevelopmental items are available to meet the Government's 
needs or could be modified to meet the Government's needs.
    (1) The extent of market research will vary, depending on such 
factors as urgency, estimated dollar value, complexity, and past 
experience. Market research involves obtaining information specific to 
the item being acquired and should include--
    (i) Whether the Government's needs can be met by--
    (A) Items of a type customarily available in the commercial 
marketplace;
    (B) Items of a type customarily available in the commercial 
marketplace with modifications; or
    (C) Items used exclusively for governmental purposes;
    (ii) Customary practices regarding customizing, modifying or 
tailoring of items to meet customer needs and associated costs;
    (iii) Customary practices, including warranty, buyer financing, 
discounts, etc., under which commercial sales of the products are made;
    (iv) The requirements of any laws and regulations unique to the item 
being acquired;
    (v) The availability of items that contain recovered materials and 
items that are energy efficient;
    (vi) The distribution and support capabilities of potential 
suppliers, including alternative arrangements and cost estimates; and
    (vii) Size and status of potential sources (see part 19).
    (2) Techniques for conducting market research may include any or all 
of the following:
    (i) Contacting knowledgeable individuals in Government and industry 
regarding market capabilities to meet requirements.
    (ii) Reviewing the results of recent market research undertaken to 
meet similar or identical requirements.
    (iii) Publishing formal requests for information in appropriate 
technical or scientific journals or business publications.
    (iv) Querying Government data bases that provide information 
relevant to agency acquisitions.
    (v) Participating in interactive, on-line communication among 
industry, acquisition personnel, and customers.
    (vi) Obtaining source lists of similar items from other contracting 
activities or agencies, trade associations or other sources.
    (vii) Reviewing catalogs and other generally available product 
literature published by manufacturers, distributors, and dealers or 
available on-line.

[[Page 159]]

    (viii) Conducting interchange meetings or holding presolicitation 
conferences to involve potential offerors early in the acquisition 
process.
    (c) If market research indicates commercial or nondevelopmental 
items might not be available to satisfy agency needs, agencies shall 
reevaluate the need in accordance with 10.001(a)(3)(ii) and determine 
whether the need can be restated to permit commercial or 
nondevelopmental items to satisfy the agency's needs.
    (d)(1) If market research establishes that the Government's need may 
be met by a type of item or service customarily available in the 
commercial marketplace that would meet the definition of a commercial 
item at subpart 2.1, the contracting officer shall solicit and award any 
resultant contract using the policies and procedures in part 12.
    (2) If market research establishes that the Government's need cannot 
be met by a type of item or service customarily available in the 
marketplace, part 12 shall not be used. When publication of the notice 
at 5.201 is required, the contracting officer shall include a notice to 
prospective offerors that the Government does not intend to use part 12 
for the acquisition (see 5.207(e)(4)).
    (e) Agencies should document the results of market research in a 
manner appropriate to the size and complexity of the acquisition.



PART 11--DESCRIBING AGENCY NEEDS--Table of Contents




Sec.
11.000  Scope of part.
11.001  Definitions.
11.002  Policy.

      Subpart 11.1--Selecting and Developing Requirements Documents

11.101  Order of precedence for requirements documents.
11.102  Standardization program.
11.103  Market acceptance.
11.104  Use of brand name or equal purchase descriptions.
11.105  Items peculiar to one manufacturer.
11.106  Purchase descriptions for service contracts.
11.107  Solicitation provision.

       Subpart 11.2--Using and Maintaining Requirements Documents

11.201  Identification and availability of specifications.
11.202  Maintenance of standardization documents.
11.203  Customer satisfaction.
11.204  Solicitation provisions and contract clauses.

                    Subpart 11.3--Acceptable Material

11.301  Policy.
11.302  Contract clause.

             Subpart 11.4--Delivery or Performance Schedules

11.401  General.
11.402  Factors to consider in establishing schedules.
11.403  Supplies or services.
11.404  Contract clauses.

                    Subpart 11.5--Liquidated Damages

11.501  General.
11.502  Policy.
11.503  Procedures.
11.504  Contract clauses.

                Subpart 11.6--Priorities and Allocations

11.600  Scope of subpart.
11.601  Definitions.
11.602  General.
11.603  Procedures.
11.604  Solicitation provisions and contract clauses.

                   Subpart 11.7--Variation in Quantity

11.701  Supply contracts.
11.702  Construction contracts.
11.703  Contract clauses.

                          Subpart 11.8--Testing

11.801  Preaward in-use evaluation.

    Authority: 40 U.S.C. 486 (c); 10 U.S.C. Chapter 137; 42 U.S.C. 2473 
(c).

    Source: 60 FR 48238, Sept. 18, 1995, unless otherwise noted.



11.000  Scope of part.

    This part prescribes policies and procedures for describing agency 
needs.



11.001  Definitions.

    As used in this part--
    Reconditioned means restored to the original normal operating 
condition by readjustments and material replacement.

[[Page 160]]

    Recovered material has the meaning provided such term in 23.402.
    Remanufactured means factory rebuilt to original specifications.
    Virgin material means previously unused raw material, including 
previously unused copper, aluminum, lead, zinc, iron, other metal or 
metal ore, or any undeveloped resource that is, or with new technology 
will become, a source of raw materials.

[62 FR 44810, Aug. 22, 1997, as amended at 63 FR 9051, Feb. 23, 1998]



11.002  Policy.

    (a) In fulfilling requirements of 10 U.S.C. 2305(a)(1), 10 U.S.C. 
2377, 41 U.S.C. 253a(a), and 41 U.S.C. 264b, agencies shall--
    (1) Specify needs using market research in a manner designed to--
    (i) Promote full and open competition (see part 6), or maximum 
practicable competition when using simplified acquisition procedures, 
with due regard to the nature of the supplies or services to be 
acquired; and
    (ii) Only include restrictive provisions or conditions to the extent 
necessary to satisfy the needs of the agency or as authorized by law.
    (2) To the maximum extent practicable, ensure that acquisition 
officials--
    (i) State requirements with respect to an acquisition of supplies or 
services in terms of--
    (A) Functions to be performed;
    (B) Performance required; or
    (C) Essential physical characteristics;
    (ii) Define requirements in terms that enable and encourage offerors 
to supply commercial items, or, to the extent that commercial items 
suitable to meet the agency's needs are not available, nondevelopmental 
items, in response to the agency solicitations;
    (iii) Provide offerors of commercial items and nondevelopmental 
items an opportunity to compete in any acquisition to fill such 
requirements;
    (iv) Require prime contractors and subcontractors at all tiers under 
the agency contracts to incorporate commercial items or nondevelopmental 
items as components of items supplied to the agency; and
    (v) Modify requirements in appropriate cases to ensure that the 
requirements can be met by commercial items or, to the extent that 
commercial items suitable to meet the agency's needs are not available, 
nondevelopmental items.
    (b) The Metric Conversion Act of 1975, as amended by the Omnibus 
Trade and Competitiveness Act of 1988 (15 U.S.C. 205a, et seq.), 
designates the metric system of measurement as the preferred system of 
weights and measures for United States trade and commerce, and it 
requires that each agency use the metric system of measurement in its 
acquisitions, except to the extent that such use is impracticable or is 
likely to cause significant inefficiencies or loss of markets to United 
States firms. Requiring activities are responsible for establishing 
guidance implementing this policy in formulating their requirements for 
acquisitions.
    (c) To the extent practicable and consistent with subpart 9.5, 
potential offerors should be given an opportunity to comment on agency 
requirements or to recommend application and tailoring of requirements 
documents and alternative approaches. Requiring agencies should apply 
specifications, standards, and related documents initially for guidance 
only, making final decisions on the application and tailoring of these 
documents as a product of the design and development process. Requiring 
agencies should not dictate detailed design solutions prematurely (see 
7.101 and 7.105(a)(8)).
    (d) The Resource Conservation and Recovery Act of 1976 (42 U.S.C. 
6901, et seq.), as amended, Executive Order 12873, dated October 20, 
1993, and Executive Order 12902, dated March 8, 1994, establish 
requirements for the procurement of products containing recovered 
materials, and environmentally preferable and energy-efficient products 
and services. Requiring activities shall prepare plans, drawings, 
specifications, standards (including voluntary standards), and purchase 
descriptions that consider the requirements set forth in part 23. 
Environmental objectives, such as pollution prevention (e.g., promoting 
waste reduction, source reduction, energy efficiency and maximum

[[Page 161]]

practicable recovered material content) (see part 23) shall be 
considered when describing Government requirements for supplies and 
services, and when developing source selection factors for competitive 
negotiated acquisitions (see 15.304), when appropriate.
    (e) Some or all of the performance levels or performance 
specifications in a solicitation may be identified as targets rather 
than as fixed or minimum requirements.

[60 FR 48238, Sept. 18, 1995, as amended at 61 FR 39192, July 26, 1996; 
62 FR 263, Jan. 2, 1997; 62 FR 44810, Aug. 22, 1997; 62 FR 51230, Sept. 
30, 1997]



      Subpart 11.1--Selecting and Developing Requirements Documents



11.101  Order of precedence for requirements documents.

    (a) Agencies may select from existing requirements documents, modify 
or combine existing requirements documents, or create new requirements 
documents to meet agency needs, consistent with the following order of 
precedence:
    (1) Documents mandated for use by law.
    (2) Performance-oriented documents.
    (3) Detailed design-oriented documents.
    (4) Standards, specifications and related publications issued by the 
Government outside the Defense or Federal series for the non-repetitive 
acquisition of items.
    (b) Agencies should prepare product descriptions to achieve maximum 
practicable use of recovered material, other materials that are 
environmentally preferable, and products that are energy-efficient (see 
subparts 23.4 and 23.7).
    (c) In accordance with OMB Circular A-119, ``Federal Participation 
in the Development and Use of Voluntary Consensus Standards and in 
Conformity Assessment Activities,`` agencies must use voluntary 
consensus standards, when they exist, in lieu of Government-unique 
standards, except where inconsistent with law or otherwise impractical. 
The private sector manages and administers voluntary consensus 
standards. Such standards are not mandated by law (e.g., industry 
standards such as ISO 9000).

[60 FR 48238, Sept. 18, 1995, as amended at 62 FR 44810, Aug. 22, 1997; 
64 FR 51834, Sept. 24, 1999]

    Effective Date Note: At 64 FR 51834, Sept. 24, 1999, section 11.101 
was amended by adding paragraph (c), effective Nov. 23, 1999.



11.102  Standardization program.

    Agencies shall select existing requirements documents or develop new 
requirements documents that meet the needs of the agency in accordance 
with the guidance contained in the Federal Standardization Manual, FSPM-
0001, and, for DoD components, DoD 4120.3-M, Defense Standardization 
Program Policies and Procedures. The Federal Standardization Manual may 
be obtained from the General Services Administration (see address in 
11.201(d)(1)). DoD 4120.3-M may be obtained from DoD (see address in 
11.201(d)(2)).

[63 FR 34062, June 22, 1998]



11.103  Market acceptance.

    (a) Section 8002(c) of Pub. L. 103-355 provides that, in accordance 
with agency procedures, the head of an agency may, under appropriate 
circumstances, require offerors to demonstrate that the items offered--
    (1) Have either--
    (i) Achieved commercial market acceptance; or
    (ii) Been satisfactorily supplied to an agency under current or 
recent contracts for the same or similar requirements; and
    (2) Otherwise meet the item description, specifications, or other 
criteria prescribed in the public notice and solicitation.
    (b) Appropriate circumstances may, for example, include situations 
where the agency's minimum need is for an item that has a demonstrated 
reliability, performance or product support record in a specified 
environment. Use of market acceptance is inappropriate when new or 
evolving items may meet the agency's needs.
    (c) In developing criteria for demonstrating that an item has 
achieved commercial market acceptance, the

[[Page 162]]

contracting officer shall ensure the criteria in the solicitation--
    (1) Reflect the minimum need of the agency and are reasonably 
related to the demonstration of an item's acceptability to meet the 
agency's minimum need;
    (2) Relate to an item's performance and intended use, not an 
offeror's capability;
    (3) Are supported by market research;
    (4) Include consideration of items supplied satisfactorily under 
recent or current Government contracts, for the same or similar items; 
and
    (5) Consider the entire relevant commercial market, including small 
business concerns.
    (d) Commercial market acceptance shall not be used as a sole 
criterion to evaluate whether an item meets the Government's 
requirements.
    (e) When commercial market acceptance is used, the contracting 
officer shall document the file to--
    (1) Describe the circumstances justifying the use of commercial 
market acceptance criteria; and
    (2) Support the specific criteria being used.



11.104   Use of brand name or equal purchase descriptions.

    (a) While the use of performance specifications is preferred to 
encourage offerors to propose innovative solutions, the use of brand 
name or equal purchase descriptions may be advantageous under certain 
circumstances.
    (b) Brand name or equal purchase descriptions must include, in 
addition to the brand name, a general description of those salient 
physical, functional, or performance characteristics of the brand name 
item that an ``equal'' item must meet to be acceptable for award. Use 
brand name or equal descriptions when the salient characteristics are 
firm requirements.

[64 FR 32742, June 17, 1999]



11.105  Items peculiar to one manufacturer.

    Agency requirements shall not be written so as to require a 
particular brand name, product, or a feature of a product, peculiar to 
one manufacturer, thereby precluding consideration of a product 
manufactured by another company, unless--
    (a) The particular brand name, product, or feature is essential to 
the Government's requirements, and market research indicates other 
companies' similar products, or products lacking the particular feature, 
do not meet, or cannot be modified to meet, the agency's minimum needs;
    (b) The authority to contract without providing for full and open 
competition is supported by the required justifications and approvals 
(see 6.302-1); and
    (c) The basis for not providing for maximum practicable competition 
is documented in the file when the acquisition is awarded using 
simplified acquisition procedures.

[60 FR 48238, Sept. 18, 1995, as amended at 61 FR 39192, July 26, 1996; 
62 FR 263, Jan. 2, 1997; 62 FR 10710, Mar. 10, 1997. Redesignated and 
amended at 64 FR 32742, June 17, 1999]



11.106  Purchase descriptions for service contracts.

    In drafting purchase descriptions for service contracts, agency 
requiring activities shall ensure that inherently governmental functions 
(see subpart 7.5) are not assigned to a contractor. These purchase 
descriptions shall
    (a) Reserve final determination for Government officials;
    (b) Require proper identification of contractor personnel who attend 
meetings, answer Government telephones, or work in situations where 
their actions could be construed as acts of Government officials unless, 
in the judgment of the agency, no harm can come from failing to identify 
themselves; and
    (c) Require suitable marking of all documents or reports produced by 
contractors.

[61 FR 2629, Jan. 26, 1996. Redesignated at 64 FR 32742, June 17, 1999]



Sec. 11.107   Solicitation provision.

    (a) Insert the provision at 52.211-6, Brand Name or Equal, when 
brand name or equal purchase descriptions are included in a 
solicitation.
    (b) Insert the provision at 52.211-7, Alternatives to Government-
Unique Standards, in solicitations that use Government-unique standards 
when

[[Page 163]]

the agency uses the transaction-based reporting method to report its use 
of voluntary consensus standards to the National Institute of Standards 
and Technology (see OMB Circular A-119, ``Federal Participation in the 
Development and Use of Voluntary Consensus Standards and in Conformity 
Assessment Activities''). Use of the provision is optional for agencies 
that report their use of voluntary consensus standards to the National 
Institute of Standards and Technology using the categorical reporting 
method. Agencies that manage their specifications on a contract-by-
contract basis use the transaction-based method of reporting. Agencies 
that manage their specifications centrally use the categorical method of 
reporting. Agency regulations regarding specification management 
describe which method is used.

[64 FR 51835, Sept. 24, 1999]

    Effective Date Note: At 64 FR 51835, Sept. 24, 1999, section 11.107 
was revised, effective Nov. 23, 1999. For the convenience of the user, 
the supersed text is set forth as follows:

11.107   Solicitation provision.

    The contracting officer must insert the provision at 52.211-6, Brand 
Name or Equal, when brand name or equal purchase descriptions are 
included in a solicitation.

[64 FR 32742, June 17, 1999]



       Subpart 11.2--Using and Maintaining Requirements Documents



11.201  Identification and availability of specifications.

    (a) Solicitations citing requirements documents listed in the 
General Services Administration (GSA) Index of Federal Specifications, 
Standards and Commercial Item Descriptions, the DoD Index of 
Specifications and Standards (DoDISS), or other agency index shall 
identify each document's approval date and the dates of any applicable 
amendments and revisions. Do not use general identification references, 
such as ``the issue in effect on the date of the solicitation.'' 
Contracting offices will not normally furnish these cited documents with 
the solicitation, except when--
    (1) The requirements document must be furnished with the 
solicitation to enable prospective contractors to make a competent 
evaluation of the solicitation;
    (2) In the judgment of the contracting officer, it would be 
impracticable for prospective contractors to obtain the documents in 
reasonable time to respond to the solicitation; or
    (3) A prospective contractor requests a copy of a Government 
promulgated requirements document.
    (b) Contracting offices shall clearly identify in the solicitation 
any pertinent documents not listed in the GSA Index of Federal 
Specifications, Standards and Commercial Item Descriptions or DoDISS. 
Such documents shall be furnished with the solicitation or specific 
instructions shall be furnished for obtaining or examining such 
documents.
    (c) When documents refer to other documents, such references shall
    (1) Be restricted to documents, or appropriate portions of 
documents, that apply in the acquisition;
    (2) Cite the extent of their applicability;
    (3) Not conflict with other documents and provisions of the 
solicitation; and
    (4) Identify all applicable first tier references.
    (d)(1) The GSA Index of Federal Specifications, Standards and 
Commercial Item Descriptions, FPMR Part 101-29, may be purchased from 
the--General Services Administration, Federal Supply Service, 
Specifications Section, Suite 8100, 470 East L'Enfant Plaza, SW, 
Washington, DC 20407, Telephone (202) 619-8925.
    (2) The DoDISS may be purchased from the--Department of Defense 
Single Stock Point (DoDSSP), Building 4, Section D, 700 Robbins Avenue, 
Philadelphia, PA 19111-5094, Telephone (215) 697-2667/2179.
    (e) Agencies may purchase some nongovernment standards, including 
voluntary consensus standards, from the National Technical Information 
Service's Fedworld Information Network. Agencies may also obtain 
nongovernment standards from the standards developing organization 
responsible for

[[Page 164]]

the preparation, publication, or maintenance of the standard, or from an 
authorized document reseller. The National Institute of Standards and 
Technology can assist agencies in identifying sources for, and content 
of, nongovernment standards. DoD activities may obtain from the DoDSSP 
those nongovernment standards, including voluntary consensus standards, 
adopted for use by defense activities.

[60 FR 48238, Sept. 18, 1995, as amended at 62 FR 40236, July 25, 1997; 
63 FR 34063, June 22, 1998; 64 FR 51835, Sept. 24, 1999]

    Effective Date Note: At 64 FR 51835, Sept. 24, 1999, section 11.201 
was amended by revising paragraph (e), effective Nov. 23, 1999. For the 
convenience of the user, the supersed text is set forth as follows:

Sec. 11.201   Identification and availability of specifications.

                                * * * * *

    (e) Agencies may generally obtain from the GSA Specifications 
Section or DoDSSP those nongovernment (voluntary) standards adopted for 
use by Federal or Defense activities. Standards not available from these 
sources may be obtained from Government libraries, activities 
subscribing to document handling services or the organization 
responsible for the preparation, publication or maintenance of the 
standard.



11.202  Maintenance of standardization documents.

    (a) Recommendations for changes to standardization documents listed 
in the GSA Index of Federal Specifications, Standards and Commercial 
Item Descriptions should be submitted to the General Services 
Administration, Federal Supply Service, Office of Acquisition, 
Washington, DC 20406. Agencies shall submit recommendations for changes 
to standardization documents listed in the DoDISS to the cognizant 
preparing activity.
    (b) When an agency cites an existing standardization document but 
modifies it to meet its needs, the agency shall follow the guidance in 
Federal Standardization Manual and, for Defense components, DoD 4120.3-
M, Defense Standardization Program Policies and Procedures.



11.203  Customer satisfaction.

    Acquisition organizations shall communicate with customers to 
determine how well the requirements document reflects the customer's 
needs and to obtain suggestions for corrective actions. Whenever 
practicable, the agency may provide affected industry an opportunity to 
comment on the requirements documents.



11.204  Solicitation provisions and contract clauses.

    (a) The contracting officer shall insert the provision at 52.211-1, 
Availability of Specifications Listed in the GSA Index of Federal 
Specifications, Standards and Commercial Item Descriptions, FPMR Part 
101-29, in solicitations that cite specifications listed in the Index 
that are not furnished with the solicitation.
    (b) The contracting officer shall insert the provision at 52.211-2, 
Availability of Specifications Listed in the DoD Index of Specifications 
and Standards (DoDISS) and Descriptions Listed in the Acquisition 
Management Systems and Data Requirements Control List, DoD 5010.12-L, in 
solicitations that cite specifications listed in the DoDISS or DoD 
5010.12-L that are not furnished with the solicitation.
    (c) The contracting officer shall insert a provision substantially 
the same as the provision at 52.211-3, Availability of Specifications 
Not Listed in the GSA Index of Federal Specifications, Standards and 
Commercial Item Descriptions, in solicitations that cite specifications 
that are not listed in the Index and are not furnished with the 
solicitation, but may be obtained from a designated source.
    (d) The contracting officer shall insert a provision substantially 
the same as the provision at 52.211-4, Availability for Examination of 
Specifications Not Listed in the GSA Index of Federal Specifications, 
Standards and Commercial Item Descriptions, in solicitations that cite 
specifications that are not listed in the Index and are available for 
examination at a specified location.

[60 FR 48238, Sept. 18, 1995, as amended at 63 FR 34063, June 22, 1998]

[[Page 165]]



                    Subpart 11.3--Acceptable Material

    Source: 62 FR 44810, Aug. 22, 1997, unless otherwise noted.



11.301  Policy.

    (a) Agencies shall not require virgin material or supplies composed 
of or manufactured using virgin material unless compelled by law or 
regulation or unless virgin material is vital for safety or meeting 
performance requirements of the contract.
    (b) Except when acquiring commercial items, agencies shall require 
offerors to identify used, reconditioned, or remanufactured supplies, or 
unused former Government surplus property, proposed for use under the 
contract. Such supplies or property may not be used in contract 
performance unless authorized by the contracting officer.
    (c) When acquiring commercial items, the contracting officer shall 
consider the customary practices in the industry for the item being 
acquired. The contracting officer may require offerors to provide 
information on used, reconditioned, or remanufactured supplies, or 
unused former Government surplus property, proposed for use under the 
contract. The request for such information shall be included in the 
solicitation and shall, to the maximum practicable extent, be limited to 
information provided pursuant to normal commercial practices.



11.302  Contract clause.

    Except when acquiring commercial items, the contracting officer 
shall insert the clause at 52.211-5, Material Requirements, in 
solicitations and contracts for supplies.



             Subpart 11.4--Delivery or Performance Schedules

    Source: 48 FR 42159, Sept. 19, 1983, unless otherwise noted. 
Redesignated at 60 FR 48241, Sept. 18, 1995.



11.401  General.

    (a) The time of delivery or performance is an essential contract 
element and shall be clearly stated in solicitations. Contracting 
officers shall ensure that delivery or performance schedules are 
realistic and meet the requirements of the acquisition. Schedules that 
are unnecessarily short or difficult to attain--
    (1) Tend to restrict competition,
    (2) Are inconsistent with small business policies, and
    (3) May result in higher contract prices.
    (b) Solicitations shall, except when clearly unnecessary, inform 
bidders or offerors of the basis on which their bids or proposals will 
be evaluated with respect to time of delivery or performance.
    (c) If timely delivery or performance is unusually important to the 
Government, liquidated damages clauses may be used (see subpart 11.5).

[48 FR 42159, Sept. 19, 1983. Redesignated and amended at 60 FR 48241, 
Sept. 18, 1995]



11.402  Factors to consider in establishing schedules.

    (a) Supplies or services. When establishing a contract delivery or 
performance schedule, consideration shall be given to applicable factors 
such as the--
    (1) Urgency of need;
    (2) Industry practices;
    (3) Market conditions;
    (4) Transportation time;
    (5) Production time;
    (6) Capabilities of small business concerns;
    (7) Administrative time for obtaining and evaluating offers and for 
awarding contracts;
    (8) Time for contractors to comply with any conditions precedent to 
contract performance; and
    (9) Time for the Government to perform its obligations under the 
contract; e.g., furnishing Government property.
    (b) Construction. When scheduling the time for completion of a 
construction contract, the contracting officer shall consider applicable 
factors such as the--
    (1) Nature and complexity of the project;
    (2) Construction seasons involved;
    (3) Required completion date;
    (4) Availability of materials and equipment;

[[Page 166]]

    (5) Capacity of the contractor to perform; and
    (6) Use of multiple completion dates. (In any given contract, 
separate completion dates may be established for separable items of 
work. When multiple completion dates are used, requests for extension of 
time must be evaluated with respect to each item, and the affected 
completion dates modified when appropriate.)

[48 FR 42159, Sept. 19, 1983. Redesignated and amended at 60 FR 48241, 
Sept. 18, 1995]



11.403  Supplies or services.

    (a) The contracting officer may express contract delivery or 
performance schedules in terms of--
    (1) Specific calendar dates;
    (2) Specific periods from the date of the contract; i.e., from the 
date of award or acceptance by the Government, or from the date shown as 
the effective date of the contract;
    (3) Specific periods from the date of receipt by the contractor of 
the notice of award or acceptance by the Government (including notice by 
receipt of contract document executed by the Government); or
    (4) Specific time for delivery after receipt by the contractor of 
each individual order issued under the contract, as in indefinite 
delivery type contracts and GSA schedules.
    (b) The time specified for contract performance should not be 
curtailed to the prejudice of the contractor because of delay by the 
Government in giving notice of award.
    (c) If the delivery schedule is based on the date of the contract, 
the contracting officer shall mail or otherwise furnish to the 
contractor the contract, notice of award, acceptance of proposal, or 
other contract document not later than the date of the contract.
    (d) If the delivery schedule is based on the date the contractor 
receives the notice of award, or if the delivery schedule is expressed 
in terms of specific calendar dates on the assumption that the notice of 
award will be received by a specified date, the contracting officer 
shall send the contract, notice of award, acceptance of proposal, or 
other contract document by certified mail, return receipt requested, or 
by any other method that will provide evidence of the date of receipt.
    (e) In invitations for bids, if the delivery schedule is based on 
the date of the contract, and a bid offers delivery based on the date 
the contractor receives the contract or notice of award, the contracting 
officer shall evaluate the bid by adding 5 calendar days (as 
representing the normal time for arrival through ordinary mail). If the 
contract or notice of award will be transmitted electronically, (1) the 
solicitation shall so state; and (2) the contracting officer shall 
evaluate delivery schedule based on the date of contract receipt or 
notice of award, by adding one working day. (The term ``working day'' 
excludes weekends and U.S. Federal holidays.) If the offered delivery 
date computed with mailing or transmittal time is later than the 
delivery date required by the invitation for bids, the bid shall be 
considered nonresponsive and rejected. If award is made, the delivery 
date will be the number of days offered in the bid after the contractor 
actually receives the notice of award.



11.404  Contract clauses.

    (a) Supplies or services. (1) The contracting officer may use a time 
of delivery clause to set forth a required delivery schedule and to 
allow an offeror to propose an alternative delivery schedule. The 
clauses and their alternates may be used in solicitations and contracts 
for other than construction and architect-engineering substantially as 
shown, or they may be changed or new clauses written.
    (2) The contracting officer may insert in solicitations and 
contracts other than those for construction and architect-engineering, a 
clause substantially the same as the clause at 52.211-8, Time of 
Delivery, if the Government requires delivery by a particular time and 
the delivery schedule is to be based on the date of the contract. If the 
delivery schedule is expressed in terms of specific calendar dates or 
specific periods and is based on an assumed date of award, the 
contracting officer may use the clause with its Alternate I. If the 
delivery schedule is expressed in terms of specific calendar dates or 
specific periods and is based on an assumed date

[[Page 167]]

the contractor will receive notice of award, the contracting officer may 
use the clause with its Alternate II. If the delivery schedule is to be 
based on the actual date the contractor receives a written notice of 
award, the contracting officer may use the clause with its Alternate 
III.
    (3) The contracting officer may insert in solicitations and 
contracts other than those for construction and architect-engineering, a 
clause substantially the same as the clause at 52.211-9, Desired and 
Required Time of Delivery, if the Government desires delivery by a 
certain time but requires delivery by a specified later time, and the 
delivery schedule is to be based on the date of the contract. If the 
delivery schedule is expressed in terms of specific calendar dates or 
specific periods and is based on an assumed date of award, the 
contracting officer may use the clause with its Alternate I. If the 
delivery schedule is expressed in terms of specific calendar dates or 
specific periods and is based on an assumed date the contractor will 
receive notice of award, the contracting officer may use the clause with 
its Alternate II. If the delivery schedule is to be based on the actual 
date the contractor receives a written notice of award, the contracting 
officer may use the clause with its Alternate III.
    (b) Construction. The contracting officer shall insert the clause at 
52.211-10, Commencement, Prosecution, and Completion of Work, in 
solicitations and contracts when a fixed-price construction contract is 
contemplated. The clause may be changed to accommodate the issuance of 
orders under indefinite-delivery contracts. If the completion date is 
expressed as a specific calendar date, computed on the basis of the 
contractor receiving the notice to proceed by a certain day, the 
contracting officer may use the clause with its Alternate I.

[48 FR 42159, Sept. 19, 1983, as amended at 56 FR 41732, Aug. 22, 1991. 
Redesignated and amended at 60 FR 48241, Sept. 18, 1995]



                    Subpart 11.5--Liquidated Damages

    Source: 48 FR 42159, Sept. 19, 1983, unless otherwise noted. 
Redesignated at 60 FR 48241, Sept. 18, 1995.



11.501  General.

    This subpart provides policies and procedures for the use of 
liquidated damages clauses in solicitations and contracts for supplies, 
services, and construction, except for the Liquidated Damages--
Subcontracting Plan clause at 52.219-16, which may be applied pursuant 
to 19.705-7.

[63 FR 34064, June 22, 1998]



11.502  Policy.

    (a) Liquidated damages clauses should be used only when both (1) the 
time of delivery or performance is such an important factor in the award 
of the contract that the Government may reasonably expect to suffer 
damage if the delivery or performance is delinquent, and (2) the extent 
or amount of such damage would be difficult or impossible to ascertain 
or prove. In deciding whether to include a liquidated damage clause in a 
contract, the contracting officer should consider the probable effect on 
such matters as pricing, competition, and the costs and difficulties of 
contract administration.
    (b) The rate of liquidated damages used must be reasonable and 
considered on a case-by-case basis since liquidated damages fixed 
without any reference to probable actual damages may be held to be a 
penalty, and therefore unenforceable. The contract may also include an 
overall maximum dollar amount or period of time, or both, during which 
liquidated damages may be assessed, to ensure that the result is not an 
unreasonable assessment of liquidated damages.
    (c) The contracting officer shall take all reasonable steps to 
mitigate liquidated damages. If a liquidated damages clause is included 
in a contract and a basis for termination for default exists, the 
contracting officer should take appropriate action expeditiously

[[Page 168]]

to obtain performance by the contractor or to terminate the contract 
(see subpart 49.4). If delivery or performance is desired after 
termination for default, efforts must be made to obtain the delivery or 
performance elsewhere within a reasonable time. Efficient administration 
of contracts containing a liquidated damages clause is imperative to 
prevent undue loss to defaulting contractors and to protect the 
interests of the Government.
    (d) If a contract provides for liquidated damages for delay, the 
Comptroller General, on the recommendation of the head of the agency 
concerned, is authorized and empowered by law to make a remission, that 
in the discretion of the Comptroller General is just and equitable, of 
the whole or any part of such damages.



11.503  Procedures.

    (a) If a liquidated damages clause is to be used in a contract, the 
applicable clause and appropriate rate(s) of liquidated damages shall be 
included in the solicitation.
    (b) If a liquidated damages clause is used in a construction 
contract, the rate(s) of liquidated damages to be assessed against the 
contractor should be for each day of delay and the rate(s) should as a 
minimum cover the estimated cost of inspection and superintendence for 
each day of delay in completion. Whenever the Government will suffer 
other specific losses due to the failure of the contractor to complete 
the work on time, the rate(s) should also include an amount for these 
items. Examples of specific losses are--
    (1) The cost of substitute facilities;
    (2) The rental of buildings and/or equipment; or
    (3) The continued payment of quarters allowances.
    (c) If appropriate to reflect the probable damages, considering that 
the Government can terminate for default or take other appropriate 
action, the rate of assessment of liquidated damages may be in two or 
more increments which provide a declining rate of assessment as the 
delinquency continues. The contract may also include an overall maximum 
dollar amount or period of time, or both, during which liquidated 
damages may be assessed, to ensure that the result is not an 
unreasonable assessment of liquidated damages.



11.504  Contract clauses.

    (a) The contracting officer may insert the clause at 52.211-11, 
Liquidated Damages--Supplies, Services, or Research and Development, in 
solicitations and contracts when a fixed-price contract is contemplated 
for supplies, services, or research and development (see 12.202).
    (b) The contracting officer may insert the clause at 52.211-12, 
Liquidated Damages--Construction, in solicitations and contracts for 
construction, except construction contracts on a cost-plus-fixed-fee 
basis (see 12.202). If different completion dates are specified in the 
contract for separate parts or stages of the work, the contracting 
officer shall use the clause with its Alternate I.
    (c) The contracting officer shall insert the clause at 52.211-13, 
Time Extensions, in solicitations and contracts for construction in 
which the clause at 52.211-12, Liquidated Damages--Construction, is used 
with its Alternate I.

[48 FR 42159, Sept. 19, 1983. Redesignated and amended at 60 FR 48241, 
Sept. 18, 1995]



                Subpart 11.6--Priorities and Allocations

    Source: 51 FR 19714, May 30, 1986, unless otherwise noted. 
Redesignated at 60 FR 48241, Sept. 18, 1995.



11.600  Scope of subpart.

    This subpart implements the Defense Priorities and Allocations 
System (DPAS), a Department of Commerce (DOC) regulation in support of 
authorized national defense programs (see 15 CFR part 700).

[51 FR 19714, May 30, 1986, as amended at 56 FR 41744, Aug. 22, 1991]



11.601  Definitions.

    Authorized program, as used in this subpart, means a program 
approved by the Federal Emergency Management Agency (FEMA) for 
priorities and allocations support under the Defense Production Act of 
1950, as amended (50

[[Page 169]]

U.S.C. app. 2061, et seq.), to promote the national defense. Schedule I 
of the DPAS lists currently authorized programs.
    Controlled materials, as used in this subpart, means the various 
shapes and forms of steel, copper, aluminum, and nickel alloys specified 
in Schedule II, and defined in Schedule III, of the DPAS.
    Delegate Agency, as used in this subpart, means an agency of the 
U.S. Government authorized by delegation from DOC to place priority 
ratings on contracts that support authorized programs. Schedule I of the 
DPAS lists the Delegate Agencies.
    Rated order means a prime contract for any product, service, or 
material (including controlled materials) placed by a Delegate Agency 
under the provisions of the DPAS in support of an authorized program and 
which requires preferential treatment, and includes subcontracts and 
purchase orders resulting under such contracts.

[51 FR 19714, May 30, 1986. Redesignated at 60 FR 48241, Sept. 18, 1995]



11.602  General.

    (a) Under Title I of the Defense Production Act of 1950, as amended 
(50 U.S.C. app. 2061, et seq.), the President is authorized (1) to 
require that contracts in support of the national defense be accepted 
and performed on a preferential or priority basis over all other 
contracts, and (2) to allocate materials and facilities in such a manner 
as to promote the national defense.
    (b) The Office of Industrial Resource Administration (OIRA), DOC, is 
responsible for administering and enforcing a system of priorities and 
allocations to carry out Title I of the Defense Production Act for 
industrial items. The DPAS has been established to promote the timely 
availability of the necessary industrial resources to meet current 
national defense requirements and to provide a framework to facilitate 
rapid industrial mobilization in case of national emergency.
    (c) The Delegate Agencies (see Schedule I of the DPAS) have been 
given authority by DOC to place rated orders in support of authorized 
programs. Other government agencies, Canada, and other friendly foreign 
nations may apply for special rating authority in support of authorized 
programs (see 15 CFR 700.55).
    (d) Rated orders shall be placed in accordance with the procedures 
in the DPAS. Contracting officers responsible for acquisitions in 
support of authorized programs shall be familiar with the DPAS and 
should provide guidance on the DPAS to contractors and suppliers 
receiving rated orders. Agency heads shall ensure compliance with the 
DPAS by contracting activities within their agencies.
    (e) Under the Defense Production Act, any willful violation of the 
Act, the DPAS, or any official action taken by DOC under the DPAS, is a 
crime punishable by a maximum fine of $10,000, one year in prison, or 
both (see 15 CFR 700.70 and 15 CFR 700.74).

[51 FR 19714, May 30, 1986, as amended at 56 FR 41744, Aug. 22, 1991]



11.603  Procedures.

    (a) There are two levels of priority for rated orders established by 
the DPAS, identified by the rating symbols ``DO'' and ``DX.'' All DO 
rated orders have equal priority with each other and take preference 
over unrated orders. All DX rated orders have equal priority with each 
other and take preference over DO rated and unrated orders. DX ratings 
are used for special defense programs designated by the President to be 
of the highest national priority.
    (b) DOC may issue a Directive to compel a contractor or supplier to 
accept a rated order, to rearrange production or delivery schedules, or 
to improve shipments against particular rated orders. Directives issued 
by DOC take precedence over all rated and unrated orders as stated in 
the Directive.
    (c) In addition to any other contractual requirements, a valid rated 
order must contain (see 15 CFR 700.12) the following:
    (1) A priority rating consisting of the appropriate DO or DX rating 
symbol and a program of identification symbol to indicate the authorized 
program (see Schedule I of the DPAS).
    (2) A required delivery date or delivery dates.

[[Page 170]]

    (3) The signature of an individual authorized by the agency to sign 
rated orders.
    (d) The DPAS has the following three basic elements which are 
essential to the operation of the system:
    (1) Mandatory acceptance of rated orders. A rated order shall be 
accepted by a contractor or supplier unless rejected for the reasons 
provided for mandatory rejection in 15 CFR 700.13(b), or for optional 
rejection in 15 CFR 700.13(c).
    (2) Mandatory extension of priority ratings throughout the 
acquisition chain. Contractors and suppliers receiving rated orders 
shall extend priority ratings to subcontractors or vendors when 
acquiring items to fill the rated orders (see 15 CFR 700.15).
    (3) Priority scheduling of production and delivery. Contractors and 
suppliers receiving rated orders shall give the rated orders priority 
over other contracts as needed to meet delivery requirements (see 15 CFR 
700.14).
    (e) Agencies shall provide contracting activities with specific 
guidance on the issuance of rated orders in support of agency programs.
    (f) Contracting officers shall follow agency procedural instructions 
concerning the use of rated orders in support of agency programs.
    (g) Contracting officers, contractors, or subcontractors at any 
tier, that experience difficulty placing rated orders, obtaining timely 
delivery under rated orders, locating a contractor or supplier to fill a 
rated order, ensuring that rated orders receive preferential treatment 
by contractors or suppliers, or require rating authority for items not 
automatically ratable under the DPAS, should promptly seek special 
priorities assistance in accordance with agency procedures (see 15 CFR 
700.50-700.55).
    (h) Contracting officers shall report promptly any violations of the 
DPAS to DOC in accordance with agency procedures.

[51 FR 19714, May 30, 1986, as amended at 56 FR 41744, Aug. 22, 1991]



11.604  Solicitation provisions and contract clauses.

    (a) Contracting officers shall insert the provision at 52.211-14, 
Notice of Priority Rating for National Defense Use, in solicitations 
when the contract to be awarded will be a rated order.
    (b) Contracting officers shall insert the clause at 52.211-15, 
Defense Priority and Allocation Requirements, in contracts that are 
rated orders.

[51 FR 19714, May 30, 1986. Redesignated and amended at 60 FR 48241, 
Sept. 18, 1995]



                   Subpart 11.7--Variation in Quantity

    Source: 48 FR 42159, Sept. 19, 1983, unless otherwise noted. 
Redesignated at 60 FR 48241, Sept. 18, 1995.



11.701  Supply contracts.

    (a) A fixed-price supply contract may authorize Government 
acceptance of a variation in the quantity of items called for if the 
variation is caused by conditions of loading, shipping, or packing, or 
by allowances in manufacturing processes. Any permissible variation 
shall be stated as a percentage and it may be an increase, a decrease, 
or a combination of both; however, contracts for subsistence items may 
use other applicable terms of variation in quantity.
    (b) There should be no standard or usual variation percentage. The 
overrun or underrun permitted in each contract should be based upon the 
normal commercial practices of a particular industry for a particular 
item, and the permitted percentage should be no larger than is necessary 
to afford a contractor reasonable protection. The permissible variation 
shall not exceed plus or minus 10 percent unless a different limitation 
is established in agency regulations. Consideration shall be given to 
the quantity to which the percentage variation applies. For example, 
when delivery will be made to multiple destinations and it is desired 
that the quantity variation apply to the item quantity for each 
destination, this requirement must be stated in the contract.
    (c) Contractors are responsible for delivery of the specified 
quantity of items in a fixed-price contract, within allowable 
variations, if any. If a contractor delivers a quantity of items in 
excess of the contract requirements

[[Page 171]]

plus any allowable variation in quantity, particularly small dollar 
value overshipments, it results in unnecessary administrative costs to 
the Government in determining disposition of the excess quantity. 
Accordingly, the contract may include the clause at 52.211-17, Delivery 
of Excess Quantities, to provide that--
    (1) Excess quantities of items totaling up to $250 in value may be 
retained without compensating the contractor; and
    (2) Excess quantities of items totaling over $250 in value may, at 
the Government's option, be either returned at the contractor's expense 
or retained and paid for at the contract unit price.

[48 FR 42159, Sept. 19, 1983, as amended at 54 FR 34753, Aug. 21, 1989; 
62 FR 40236, July 25, 1997]



11.702  Construction contracts.

    Construction contracts may authorize a variation in estimated 
quantities of unit-priced items. When the variation between the 
estimated quantity and the actual quantity of a unit-priced item is more 
than plus or minus 15 percent, an equitable adjustment in the contract 
price shall be made upon the demand of either the Government or the 
contractor. The contractor may request an extension of time if the 
quantity variation is such as to cause an increase in the time necessary 
for completion. The contracting officer must receive the request in 
writing within 10 days from the beginning of the period of delay. 
However, the contracting officer may extend this time limit before the 
date of final settlement of the contract. The contracting officer shall 
ascertain the facts and make any adjustment for extending the completion 
date that the findings justify.



11.703  Contract clauses.

    (a) The contracting officer shall insert the clause at 52.211-16, 
Variation in Quantity, in solicitations and contracts, if authorizing a 
variation in quantity in fixed-price contracts for supplies or for 
services that involve the furnishing of supplies.
    (b) The contracting officer may insert the clause at 52.211-17, 
Delivery of Excess Quantities, in solicitations and contracts, when a 
fixed-price supply contract is contemplated.
    (c) The contracting officer shall insert the clause at 52.211-18, 
Variation in Estimated Quantity, in solicitations and contracts when a 
fixed-price construction contract is contemplated that authorizes a 
variation in the estimated quantity of unit-priced items.

[48 FR 42159, Sept. 19, 1983, as amended at 54 FR 34753, Aug. 21, 1989. 
Redesignated and amended at 60 FR 48241, Sept. 18, 1995; 64 FR 10538, 
Mar. 4, 1999]



                          Subpart 11.8--Testing

    Source: 62 FR 51230, Sept. 30, 1997, unless otherwise noted.



11.801  Preaward in-use evaluation.

    Supplies may be evaluated under comparable in-use conditions without 
a further test plan, provided offerors are so advised in the 
solicitation. The results of such tests or demonstrations may be used to 
rate the proposal, to determine technical acceptability, or otherwise to 
evaluate the proposal (see 15.305).



PART 12--ACQUISITION OF COMMERCIAL ITEMS--Table of Contents




Sec.
12.000  Scope of part.
12.001  Definition.

         Subpart 12.1--Acquisition of Commercial Items--General

12.101  Policy.
12.102  Applicability.

  Subpart 12.2--Special Requirements for the Acquisition of Commercial 
                                  Items

12.201  General.
12.202  Market research and description of agency need.
12.203  Procedures for solicitation, evaluation, and award.
12.204  Solicitation/contract form.
12.205  Offers.
12.206  Use of past performance.
12.207  Contract type.
12.208  Contract quality assurance.
12.209  Determination of price reasonableness.
12.210  Contract financing.
12.211  Technical data.
12.212  Computer software.
12.213  Other commercial practices.

[[Page 172]]

12.214  Cost Accounting Standards.

   Subpart 12.3--Solicitation Provisions and Contract Clauses for the 
                     Acquisition of Commercial Items

12.300  Scope of subpart.
12.301  Solicitation provisions and contract clauses for the acquisition 
          of commercial items.
12.302  Tailoring of provisions and clauses for the acquisition of 
          commercial items.
12.303  Contract format.

  Subpart 12.4--Unique Requirements Regarding Terms and Conditions for 
                            Commercial Items

12.401  General.
12.402  Acceptance.
12.403  Termination.
12.404  Warranties.

   Subpart 12.5--Applicability of Certain Laws to the Acquisition of 
                            Commercial Items

12.500  Scope of subpart.
12.501  Applicability.
12.502  Procedures.
12.503  Applicability of certain laws to executive agency contracts for 
          the acquisition of commercial items.
12.504  Applicability of certain laws to subcontracts for the 
          acquisition of commercial items.

Subpart 12.6--Streamlined Procedures for Evaluation and Solicitation for 
                            Commercial Items

12.601  General.
12.602  Streamlined evaluation of offers.
12.603  Streamlined solicitation for commercial items.

    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 U.S.C. 
2473(c).

    Source: 60 FR 48241, Sept. 18, 1995, unless otherwise noted.



12.000  Scope of part.

    This part prescribes policies and procedures unique to the 
acquisition of commercial items. It implements the Federal Government's 
preference for the acquisition of commercial items contained in Title 
VIII of the Federal Acquisition Streamlining Act of 1994 (Public Law 
103-355) by establishing acquisition policies more closely resembling 
those of the commercial marketplace and encouraging the acquisition of 
commercial items and components.



12.001  Definition.

    Subcontract, as used in this part, includes, but is not limited to, 
a transfer of commercial items between divisions, subsidiaries, or 
affiliates of a contractor or subcontractor.



         Subpart 12.1--Acquisition of Commercial Items--General



12.101  Policy.

    Agencies shall--
    (a) Conduct market research to determine whether commercial items or 
nondevelopmental items are available that could meet the agency's 
requirements;
    (b) Acquire commercial items or nondevelopmental items when they are 
available to meet the needs of the agency; and
    (c) Require prime contractors and subcontractors at all tiers to 
incorporate, to the maximum extent practicable, commercial items or 
nondevelopmental items as components of items supplied to the agency.



12.102  Applicability.

    (a) This part shall be used for the acquisition of supplies or 
services that meet the definition of commercial items at section 2.101.
    (b) Contracting officers shall use the policies in this part in 
conjunction with the policies and procedures for solicitation, 
evaluation and award prescribed in part 13, Simplified Acquisition 
Procedures; part 14, Sealed Bidding; or part 15, Contracting by 
Negotiation, as appropriate for the particular acquisition.
    (c) Contracts for the acquisition of commercial items are subject to 
the policies in other parts of this chapter. When a policy in another 
part of this chapter is inconsistent with a policy in this part, this 
part 12 shall take precedence for the acquisition of commercial items.
    (d) This part shall not apply to the acquisition of commercial 
items--
    (1) At or below the micro-purchase threshold;
    (2) Using the Standard Form 44 (see 13.306);
    (3) Using the imprest fund (see 13.305);

[[Page 173]]

    (4) Using the Governmentwide commercial purchase card; or
    (5) Directly from another Federal agency.

[60 FR 48241, Sept. 18, 1995, as amended at 61 FR 39192, July 26, 1996; 
62 FR 64917, Dec. 9, 1997; 64 FR 32743, June 17, 1999]



  Subpart 12.2--Special Requirements for the Acquisition of Commercial 
                                  Items



12.201  General.

    Public Law 103-355 establishes special requirements for the 
acquisition of commercial items intended to more closely resemble those 
customarily used in the commercial marketplace. This subpart identifies 
those special requirements as well as other considerations necessary for 
proper planning, solicitation, evaluation and award of contracts for 
commercial items.



12.202  Market research and description of agency need.

    (a) Market research (see 10.001) is an essential element of building 
an effective strategy for the acquisition of commercial items and 
establishes the foundation for the agency description of need (see part 
11), the solicitation, and resulting contract.
    (b) The description of agency need must contain sufficient detail 
for potential offerors of commercial items to know which commercial 
products or services may be suitable. Generally, for acquisitions in 
excess of the simplified acquisition threshold, an agency's statement of 
need for a commercial item will describe the type of product or service 
to be acquired and explain how the agency intends to use the product or 
service in terms of function to be performed, performance requirement or 
essential physical characteristics. Describing the agency's needs in 
these terms allows offerors to propose methods that will best meet the 
needs of the Government.
    (c) Follow the procedures in subpart 11.2 regarding the 
identification and availability of specifications, standards and 
commercial item descriptions.

[60 FR 48241, Sept. 18, 1995, as amended at 62 FR 264, Jan. 2, 1997]



12.203  Procedures for solicitation, evaluation, and award.

    Contracting officers shall use the policies unique to the 
acquisition of commercial items prescribed in this part in conjunction 
with the policies and procedures for solicitation, evaluation and award 
prescribed in part 13, Simplified Acquisition Procedures; part 14, 
Sealed Bidding; or part 15, Contracting by Negotiation, as appropriate 
for the particular acquisition. The contracting officer may use the 
streamlined procedure for soliciting offers for commercial items 
prescribed in 12.603. For acquisitions of commercial items exceeding the 
simplified acquisition threshold but not exceeding $5,000,000, including 
options, contracting activities shall employ the simplified procedures 
authorized by subpart 13.5 to the maximum extent practicable.

[60 FR 48241, Sept. 18, 1995, as amended at 62 FR 264, Jan. 2, 1997; 62 
FR 64917, Dec. 9, 1997]



12.204  Solicitation/contract form.

    (a) The contracting officer shall use the Standard Form 1449, 
Solicitation/Contract/Order for Commercial Items, if (1) the acquisition 
is expected to exceed the simplified acquisition threshold; (2) a paper 
solicitation or contract is being issued; and (3) procedures at 12.603 
are not being used. Use of the SF 1449 is nonmandatory but encouraged 
for commercial acquisitions not exceeding the simplified acquisition 
threshold.
    (b) Consistent with the requirements at 5.203 (a) and (h), the 
contracting officer may allow fewer than 15 days before issuance of the 
solicitation.

[62 FR 264, Jan. 2, 1997]



12.205  Offers.

    (a) Where technical information is necessary for evaluation of 
offers, agencies should, as part of market research, review existing 
product literature generally available in the industry to determine its 
adequacy for purposes of evaluation. If adequate, contracting officers 
shall request existing product literature from offerors of commercial 
items in lieu of unique technical proposals.

[[Page 174]]

    (b) Contracting officers should allow offerors to propose more than 
one product that will meet a Government need in response to 
solicitations for commercial items. The contracting officer shall 
evaluate each product as a separate offer.
    (c) Consistent with the requirements at 5.203 (b) and (h), the 
contracting officer may allow fewer than 30 days response time for 
receipt of offers for commercial items.

[60 FR 48241, Sept. 18, 1995, as amended at 62 FR 264, Jan. 2, 1997]



12.206  Use of past performance.

    Past performance should be an important element of every evaluation 
and contract award for commercial items. Contracting officers should 
consider past performance data from a wide variety of sources both 
inside and outside the Federal Government in accordance with the 
policies and procedures contained in subpart 9.1, section 13.106, or 
subpart 15.3, as applicable.

[60 FR 48241, Sept. 18, 1995, as amended at 61 FR 39192, July 26, 1996; 
62 FR 51270, Sept. 30, 1997; 62 FR 64917, Dec. 9, 1997]



12.207  Contract type.

    Agencies shall use firm-fixed-price contracts or fixed-price 
contracts with economic price adjustment for the acquisition of 
commercial items. Indefinite-delivery contracts (see subpart 16.5) may 
be used where the prices are established based on a firm-fixed-price or 
fixed-price with economic price adjustment. Use of any other contract 
type to acquire commercial items is prohibited.



12.208  Contract quality assurance.

    Contracts for commercial items shall rely on contractors' existing 
quality assurance systems as a substitute for Government inspection and 
testing before tender for acceptance unless customary market practices 
for the commercial item being acquired include in-process inspection. 
Any in-process inspection by the Government shall be conducted in a 
manner consistent with commercial practice.



12.209  Determination of price reasonableness.

    When contracting for commercial items, the contracting officer must 
establish price reasonableness in accordance with 13.106-3, 14.408-2, or 
Subpart 15.4, as applicable.

[64 FR 51836, Sept. 24, 1999]



12.210  Contract financing.

    Customary market practice for some commercial items may include 
buyer contract financing. The contracting officer may offer Government 
financing in accordance with the policies and procedures in part 32.



12.211  Technical data.

    Except as provided by agency-specific statutes, the Government shall 
acquire only the technical data and the rights in that data customarily 
provided to the public with a commercial item or process. The 
contracting officer shall presume that data delivered under a contract 
for commercial items was developed exclusively at private expense. When 
a contract for commercial items requires the delivery of technical data, 
the contracting officer shall include appropriate provisions and clauses 
delineating the rights in the technical data in addenda to the 
solicitation and contract (see part 27 or agency FAR supplements).



12.212  Computer software.

    (a) Commercial computer software or commercial computer software 
documentation shall be acquired under licenses customarily provided to 
the public to the extent such licenses are consistent with Federal law 
and otherwise satisfy the Government's needs. Generally, offerors and 
contractors shall not be required to--
    (1) Furnish technical information related to commercial computer 
software or commercial computer software documentation that is not 
customarily provided to the public; or
    (2) Relinquish to, or otherwise provide, the Government rights to 
use, modify, reproduce, release, perform, display, or disclose 
commercial computer software or commercial computer software 
documentation except as mutually agreed to by the parties.

[[Page 175]]

    (b) With regard to commercial computer software and commercial 
computer software documentation, the Government shall have only those 
rights specified in the license contained in any addendum to the 
contract.



12.213  Other commercial practices.

    It is a common practice in the commercial marketplace for both the 
buyer and seller to propose terms and conditions written from their 
particular perspectives. The terms and conditions prescribed in this 
part seek to balance the interests of both the buyer and seller. These 
terms and conditions are generally appropriate for use in a wide range 
of acquisitions. However, market research may indicate other commercial 
practices that are appropriate for the acquisition of the particular 
item. These practices should be considered for incorporation into the 
solicitation and contract if the contracting officer determines them 
appropriate in concluding a business arrangement satisfactory to both 
parties and not otherwise precluded by law or Executive order.

[62 FR 264, Jan. 2, 1997]



12.214  Cost Accounting Standards.

    Cost Accounting Standards (CAS) do not apply to contracts and 
subcontracts for the acquisition of commercial items when these 
contracts and subcontracts are firm-fixed-price or fixed-price with 
economic price adjustment (provided that the price adjustment is not 
based on actual costs incurred). See 48 CFR 30.201-1 for CAS 
applicability to fixed-price with economic price adjustment contracts 
and subcontracts for commercial items when the price adjustment is based 
on actual costs incurred. When CAS applies, the contracting officer 
shall insert the appropriate provisions and clauses as prescribed in 48 
CFR 30.201.

[63 FR 9054, Feb. 23, 1998]



   Subpart 12.3--Solicitation Provisions and Contract Clauses for the 
                     Acquisition of Commercial Items



12.300  Scope of subpart.

    This subpart establishes provisions and clauses to be used when 
acquiring commercial items.



12.301  Solicitation provisions and contract clauses for the acquisition of commercial items.

    (a) In accordance with Section 8002 of Public Law 103-355 (41 U.S.C 
264, note), contracts for the acquisition of commercial items shall, to 
the maximum extent practicable, include only those clauses--
    (1) Required to implement provisions of law or executive orders 
applicable to the acquisition of commercial items; or
    (2) Determined to be consistent with customary commercial practice.
    (b) To implement this Act, the contracting officer shall insert the 
following provisions in solicitations for the acquisition of commercial 
items, and clauses in solicitations and contracts for the acquisition of 
commercial items:
    (1) The provision at 52.212-1, Instructions to Offerors--Commercial 
Items. This provision provides a single, streamlined set of instructions 
to be used when soliciting offers for commercial items and is 
incorporated in the solicitation by reference (see Block 27a, SF 1449). 
The contracting officer may tailor these instructions or provide 
additional instructions tailored to the specific acquisition in 
accordance with 12.302;
    (2) The provision at 52.212-3, Offeror Representations and 
Certifications-Commercial Items. This provision provides a single, 
consolidated list of certifications and representations for the 
acquisition of commercial items and is attached to the solicitation for 
offerors to complete and return with their

[[Page 176]]

offer. This provision may not be tailored except in accordance with 
Subpart 1.4. Use the provision with its Alternate I in solicitations 
issued by DoD, NASA, or the Coast Guard that are expected to exceed the 
threshold at 4.601(a). Use the provision with its Alternate II in 
solicitations for acquisitions for which small disadvantaged business 
procurement mechanisms are authorized on a regional basis. Use the 
provision with its Alternate III in solicitations issued by Federal 
agencies subject to the requirements of the HUBZone Act of 1997 (see 
19.1302);
    (3) The clause at 52.212-4, Contract Terms and Conditions--
Commercial Items. This clause includes terms and conditions which are, 
to the maximum extent practicable, consistent with customary commercial 
practices and is incorporated in the solicitation and contract by 
reference (see Block 27, SF 1449). The contracting officer may tailor 
this clause in accordance with 12.302; and
    (4) The clause at 52.212-5, Contract Terms and Conditions Required 
to Implement Statutes or Executive Orders--Commercial Items. This clause 
incorporates by reference only those clauses required to implement 
provisions of law or executive orders applicable to the acquisition of 
commercial items. The contracting officer shall attach this clause to 
the solicitation and contract and, using the appropriate clause 
prescriptions, indicate which, if any, of the additional clauses cited 
in 52.2125(b) or (c) are applicable to the specific acquisition. When 
cost information is obtained pursuant to part 15 to establish the 
reasonableness of prices for commercial items, the contracting officer 
shall insert the clauses prescribed for this purpose in an addendum to 
the solicitation and contract. This clause may not be tailored.
    (c) When the use of evaluation factors is appropriate, the 
contracting officer may--
    (1) Insert the provision at 52.212-2, Evaluation-- Commercial Items, 
in solicitations for commercial items (see 12.602); or
    (2) Include a similar provision containing all evaluation factors 
required by section 13.106, subpart 14.2 or subpart 15.3, as an addendum 
(see 12.302(d)).
    (d) Use of required provisions and clauses. Notwithstanding 
prescriptions contained elsewhere in the FAR, when acquiring commercial 
items, contracting officers shall be required to use only those 
provisions and clauses prescribed in this part. The provisions and 
clauses prescribed in this part shall be revised, as necessary, to 
reflect the applicability of statutes and executive orders to the 
acquisition of commercial items.
    (e) Discretionary use of FAR provisions and clauses. The contracting 
officer may include in solicitations and contracts by addendum other FAR 
provisions and clauses when their use is consistent with the limitations 
contained in 12.302. For example:
    (1) The contracting officer may include appropriate clauses when an 
indefinite-delivery type of contract will be used. The clauses 
prescribed at 16.505 may be used for this purpose.
    (2) The contracting officer may include appropriate provisions and 
clauses when the use of options is in the Government's interest. The 
provisions and clauses prescribed in 17.208 may be used for this 
purpose. If the provision at 52.212-2 is used, paragraph (b) provides 
for the evaluation of options.
    (3) The contracting officer may use the provisions and clauses 
contained in part 23 regarding the use of recovered material when 
appropriate for the item being acquired.
    (f) Agencies may supplement the provisions and clauses prescribed in 
this part (to require use of additional provisions and clauses) only as 
necessary to reflect agency unique statutes applicable to the 
acquisition of commercial items or as may be approved by the agency 
senior procurement executive, or the individual responsible for 
representing the agency on the FAR Council, without power of delegation.

[60 FR 48241, Sept. 18, 1995, as amended at 61 FR 39192, July 26, 1996; 
61 FR 67430, Dec. 20, 1996; 62 FR 51270, Sept. 30, 1997; 62 FR 64917, 
Dec. 9, 1997; 63 FR 35720, June 30, 1998; 63 FR 52427, Sept. 30, 1998; 
63 FR 70267, Dec. 18, 1998; 64 FR 32748, June 17, 1999]

[[Page 177]]



12.302  Tailoring of provisions and clauses for the acquisition of commercial items.

    (a) General. The provisions and clauses established in this subpart 
are intended to address, to the maximum extent practicable, commercial 
market practices for a wide range of potential Government acquisitions 
of commercial items. However, because of the broad range of commercial 
items acquired by the Government, variations in commercial practices, 
and the relative volume of the Government's acquisitions in the specific 
market, contracting officers may, within the limitations of this 
subpart, and after conducting appropriate market research, tailor the 
provision at 52.212-1, Instructions to Offerors-Commercial Items, and 
the clause at 52.212-4, Contract Terms and Conditions-Commercial Items, 
to adapt to the market conditions for each acquisition.
    (b) Tailoring 52.212-4, Contract Terms and Conditions--Commercial 
Items. The following paragraphs of the clause at 52.212-4, Contract 
Terms and Conditions--Commercial Items, implement statutory requirements 
and shall not be tailored--
    (1) Assignments;
    (2) Disputes;
    (3) Payment (except as provided in subpart 32.11);
    (4) Invoice;
    (5) Other compliances; and
    (6) Compliance with laws unique to Government contracts.
    (c) Tailoring inconsistent with customary commercial practice. The 
contracting officer shall not tailor any clause or otherwise include any 
additional terms or conditions in a solicitation or contract for 
commercial items in a manner that is inconsistent with customary 
commercial practice for the item being acquired unless a waiver is 
approved in accordance with agency procedures. The request for waiver 
must describe the customary commercial practice found in the 
marketplace, support the need to include a term or condition that is 
inconsistent with that practice and include a determination that use of 
the customary commercial practice is inconsistent with the needs of the 
Government. A waiver may be requested for an individual or class of 
contracts for that specific item.
    (d) Tailoring shall be by addenda to the solicitation and contract. 
The contracting officer shall indicate in Block 27a of the SF 1449 if 
addenda are attached. These addenda may include, for example, a 
continuation of the schedule of supplies/services to be acquired from 
blocks 18 through 21 of the SF 1449; a continuation of the description 
of the supplies/services being acquired; further elaboration of any 
other item(s) on the SF 1449; any other terms or conditions necessary 
for the performance of the proposed contract (such as options, ordering 
procedures for indefinite-delivery type contracts, warranties, contract 
financing arrangements, etc.).

[60 FR 48241, Sept. 18, 1995, as amended at 61 FR 45772, Aug. 29, 1996; 
61 FR 67430, Dec. 20, 1996; 62 FR 264, Jan. 2, 1997]



12.303  Contract format.

    Solicitations and contracts for the acquisition of commercial items 
prepared using this part 12 shall be assembled, to the maximum extent 
practicable, using the following format:
    (a) Standard Form (SF) 1449;
    (b) Continuation of any block from SF 1449, such as--
    (1) Block 10 if a price evaluation adjustment for small 
disadvantaged business concerns is applicable (the contracting officer 
shall indicate the percentage(s) and applicable line item(s)), if an 
incentive subcontracting clause is used (the contracting officer shall 
indicate the applicable percentage), or if set aside for emerging small 
businesses, or set-aside for very small business concerns;
    (2) Block 18B for remittance address;
    (3) Block 19 for contract line item numbers;
    (4) Block 20 for schedule of supplies/services; or
    (5) Block 25 for accounting data;
    (c) Contract clauses--
    (1) 52.212-4, Contract Terms and Conditions--Commercial Items, by 
reference (see SF 1449, Block 27a);
    (2) Any addendum to 52.212-4; and
    (3) 52.212-5, Contract Terms and Conditions Required to Implement 
Statutes and Executive Orders;

[[Page 178]]

    (d) Any contract documents, exhibits or attachments; and
    (e) Solicitation provisions--
    (1) 52.212-1, Instructions to Offerors--Commercial Items, by 
reference (see SF 1449, Block 27a);
    (2) Any addendum to 52.212-1;
    (3) 52.212-2, Evaluation--Commercial Items, or other description of 
evaluation factors for award, if used; and
    (4) 52.212-3, Offeror Representations and Certifications--Commercial 
Items.

[60 FR 48241, Sept. 18, 1995; 60 FR 54817, Oct. 26, 1995; 61 FR 67430, 
Dec. 20, 1996; 63 FR 35720, June 30, 1997; 63 FR 36121, July 1, 1998; 64 
FR 10536, Mar. 4, 1999]



  Subpart 12.4--Unique Requirements Regarding Terms and Conditions for 
                            Commercial Items



12.401  General.

    This subpart provides--
    (a) Guidance regarding tailoring of the paragraphs in the clause at 
52.212-4, Contract Terms and Conditions--Commercial Items, when the 
paragraphs do not reflect the customary practice for a particular 
market; and
    (b) Guidance on the administration of contracts for commercial items 
in those areas where the terms and conditions in 52.212-4 differ 
substantially from those contained elsewhere in the FAR.



12.402  Acceptance.

    (a) The acceptance paragraph in 52.212-4 is based upon the 
assumption that the Government will rely on the contractor's assurances 
that the commercial item tendered for acceptance conforms to the 
contract requirements. The Government inspection of commercial items 
will not prejudice its other rights under the acceptance paragraph. 
Additionally, although the paragraph does not address the issue of 
rejection, the Government always has the right to refuse acceptance of 
nonconforming items. This paragraph is generally appropriate when the 
Government is acquiring noncomplex commercial items.
    (b) Other acceptance procedures may be more appropriate for the 
acquisition of complex commercial items or commercial items used in 
critical applications. In such cases, the contracting officer shall 
include alternative inspection procedure(s) in an addendum and ensure 
these procedures and the postaward remedies adequately protect the 
interests of the Government. The contracting officer must carefully 
examine the terms and conditions of any express warranty with regard to 
the effect it may have on the Government's available postaward remedies 
(see 12.404).
    (c) The acquisition of commercial items under other circumstances 
such as on an ``as is'' basis may also require acceptance procedures 
different from those contained in 52.212-4. The contracting officer 
should consider the effect the specific circumstances will have on the 
acceptance paragraph as well as other paragraphs of the clause.



12.403  Termination.

    (a) General. The clause at 52.212-4 permits the Government to 
terminate a contract for commercial items either for the convenience of 
the Government or for cause. However, the paragraphs in 52.212-4 
entitled ``Termination for the Government's Convenience'' and 
``Termination for Cause'' contain concepts which differ from those 
contained in the termination clauses prescribed in part 49. 
Consequently, the requirements of part 49 do not apply when terminating 
contracts for commercial items and contracting officers shall follow the 
procedures in this section. Contracting officers may continue to use 
part 49 as guidance to the extent that part 49 does not conflict with 
this section and the language of the termination paragraphs in 52.212-4.
    (b) Policy. The contracting officer should exercise the Government's 
right to terminate a contract for commercial items either for 
convenience or for cause only when such a termination would be in the 
best interests of the Government. The contracting officer should consult 
with counsel prior to terminating for cause.
    (c) Termination for cause. (1) The paragraph in 52.2124 entitled 
``Excusable Delay'' requires contractors notify the contracting officer 
as soon as possible after commencement of any excusable

[[Page 179]]

delay. In most situations, this requirement should eliminate the need 
for a show cause notice prior to terminating a contract. The contracting 
officer shall send a cure notice prior to terminating a contract for a 
reason other than late delivery.
    (2) The Government's rights after a termination for cause shall 
include all the remedies available to any buyer in the marketplace. The 
Government's preferred remedy will be to acquire similar items from 
another contractor and to charge the defaulted contractor with any 
excess reprocurement costs together with any incidental or consequential 
damages incurred because of the termination.
    (3) When a termination for cause is appropriate, the contracting 
officer shall send the contractor a written notification regarding the 
termination. At a minimum, this notification shall--
    (i) Indicate the contract is terminated for cause;
    (ii) Specify the reasons for the termination;
    (iii) Indicate which remedies the Government intends to seek or 
provide a date by which the Government will inform the contractor of the 
remedy; and
    (iv) State that the notice constitutes a final decision of the 
contracting officer and that the contractor has the right to appeal 
under the Disputes clause (see 33.211).
    (d) Termination for the Government's convenience. (1) When the 
contracting officer terminates a contract for commercial items for the 
Government's convenience, the contractor shall be paid--
    (i) The percentage of the contract price reflecting the percentage 
of the work performed prior to the notice of the termination, and
    (ii) Any charges the contractor can demonstrate directly resulted 
from the termination. The contractor may demonstrate such charges using 
its standard record keeping system and is not required to comply with 
the cost accounting standards or the contract cost principles in part 
31. The Government does not have any right to audit the contractor's 
records solely because of the termination for convenience.
    (2) Generally, the parties should mutually agree upon the 
requirements of the termination proposal. The parties must balance the 
Government's need to obtain sufficient documentation to support payment 
to the contractor against the goal of having a simple and expeditious 
settlement.



12.404  Warranties.

    (a) Implied warranties. The Government's post award rights contained 
in 52.212-4 are the implied warranty of merchantability, the implied 
warranty of fitness for particular purpose and the remedies contained in 
the acceptance paragraph.
    (1) The implied warranty of merchantability provides that an item is 
reasonably fit for the ordinary purposes for which such items are used. 
The items must be of at least average, fair or medium-grade quality and 
must be comparable in quality to those that will pass without objection 
in the trade or market for items of the same description.
    (2) The implied warranty of fitness for a particular purpose 
provides that an item is fit for use for the particular purpose for 
which the Government will use the items. The Government can rely upon an 
implied warranty of fitness for particular purpose when--
    (i) The seller knows the particular purpose for which the Government 
intends to use the item; and
    (ii) The Government relied upon the contractor's skill and judgment 
that the item would be appropriate for that particular purpose.
    (3) Contracting officers should consult with legal counsel prior to 
asserting any claim for a breach of an implied warranty.
    (b) Express warranties. The Federal Acquisition Streamlining Act of 
1994 (41 U.S.C. 264 note) requires contracting officers to take 
advantage of commercial warranties. To the maximum extent practicable, 
solicitations for commercial items shall require offerors to offer the 
Government at least the same warranty terms, including offers of 
extended warranties, offered to the general public in customary 
commercial practice. Solicitations may specify minimum warranty

[[Page 180]]

terms, such as minimum duration, appropriate for the Government's 
intended use of the item.
    (1) Any express warranty the Government intends to rely upon must 
meet the needs of the Government. The contracting officer should analyze 
any commercial warranty to determine if--
    (i) The warranty is adequate to protect the needs of the Government, 
e.g., items covered by the warranty and length of warranty;
    (ii) The terms allow the Government effective postaward 
administration of the warranty to include the identification of 
warranted items, procedures for the return of warranted items to the 
contractor for repair or replacement, and collection of product 
performance information; and
    (iii) The warranty is cost-effective.
    (2) In some markets, it may be customary commercial practice for 
contractors to exclude or limit the implied warranties contained in 
52.212-4 in the provisions of an express warranty. In such cases, the 
contracting officer shall ensure that the express warranty provides for 
the repair or replacement of defective items discovered within a 
reasonable period of time after acceptance.
    (3) Express warranties shall be included in the contract by addendum 
(see 12.302).



   Subpart 12.5--Applicability of Certain Laws to the Acquisition of 
                            Commercial Items



12.500  Scope of subpart.

    As required by Section 34 of the Office of Federal Procurement 
Policy Act (41 U.S.C. 430), this subpart lists provisions of laws that 
are not applicable to contracts for the acquisition of commercial items, 
or are not applicable to subcontracts, at any tier, for the acquisition 
of a commercial item. This subpart also lists provisions of law that 
have been amended to eliminate or modify their applicability to either 
contracts or subcontracts for the acquisition of commercial items.



12.501  Applicability.

    (a) This subpart applies to any contract or subcontract at any tier 
for the acquisition of commercial items.
    (b) Nothing in this subpart shall be construed to authorize the 
waiver of any provision of law with respect to any subcontract if the 
prime contractor is reselling or distributing commercial items of 
another contractor without adding value. This limitation is intended to 
preclude establishment of unusual contractual arrangements solely for 
the purpose of Government sales.
    (c) For purposes of this subpart, contractors awarded subcontracts 
under subpart 19.8, Contracting with the Small Business Administration 
(the 8(a) Program), shall be considered prime contractors.



12.502  Procedures.

    (a) The FAR prescription for the provision or clause for each of the 
laws listed in 12.503 has been revised in the appropriate part to 
reflect its proper application to prime contracts for the acquisition of 
commercial items.
    (b) For subcontracts for the acquisition of commercial items or 
commercial components, the clauses at 52.212-5, Contract Terms and 
Conditions Required to Implement Statutes or Executive Orders--
Commercial Items, and 52.244-6, Subcontracts for Commercial Items and 
Commercial Components, reflect the applicability of the laws listed in 
12.504 by identifying the only provisions and clauses that are required 
to be included in a subcontract at any tier for the acquisition of 
commercial items or commercial components.



12.503  Applicability of certain laws to executive agency contracts for the acquisition of commercial items.

    (a) The following laws are not applicable to executive agency 
contracts for the acquisition of commercial items:
    (1) 41 U.S.C. 43, Walsh-Healey Act (see subpart 22.6).
    (2) 41 U.S.C. 254(a) and 10 U.S.C. 2306(b), Contingent Fees (see 
3.404).
    (3) 41 U.S.C. 416(a)(6), Minimum Response Time for Offers under 
Office of Federal Procurement Policy Act (see 5.203).
    (4) 41 U.S.C. 701, et seq., Drug-Free Workplace Act of 1988 (see 
23.501).
    (b) Certain requirements of the following laws have been eliminated 
for

[[Page 181]]

executive agency contracts for the acquisition of commercial items:
    (1) 33 U.S.C. 1368, Requirement for a clause under the Federal Water 
Pollution Control Act (see 23.105).
    (2) 40 U.S.C. 327 et seq., Requirement for a certificate and clause 
under the Contract Work Hours and Safety Standards Act (see 22.305).
    (3) 41 U.S.C. 57(a) and (b), and 58, Requirement for a clause and 
certain other requirements related to the Anti-Kickback Act of 1986 (see 
3.502).
    (4) 42 U.S.C. 7606, Requirement for a clause under the Clean Air Act 
(see 23.105).
    (5) 49 U.S.C. 40118, Requirement for a clause under the Fly American 
provisions (see 47.405).
    (c) The applicability of the following laws have been modified in 
regards to Executive agency contracts for the acquisition of commercial 
items:
    (1) 41 U.S.C. 253g and 10 U.S.C. 2402, Prohibition on Limiting 
Subcontractor Direct Sales to the United States (see 3.503).
    (2) 41 U.S.C. 254(d) and 10 U.S.C. 2306a, Truth in Negotiations Act 
(see 15.403).
    (3) 41 U.S.C. 422, Cost Accounting Standards (see 48 CFR chapter 99) 
(see 12.214).

[60 FR 48241, Sept. 18, 1995, as amended at 61 FR 67418, Dec. 20, 1996; 
62 FR 232, 236, Jan. 2, 1997; 62 FR 10710, Mar. 10, 1997; 62 FR 51270, 
Sept. 30, 1997; 64 FR 10532, Mar. 4, 1999]



12.504  Applicability of certain laws to subcontracts for the acquisition of commercial items.

    (a) The following laws are not applicable to subcontracts at any 
tier for the acquisition of commercial items or commercial components at 
any tier:
    (1) 15 U.S.C. 644(d), Requirements relative to labor surplus areas 
under the Small Business Act (see subpart 19.2).
    (2) 19 U.S.C. 1202, Tariff Act of 1930 (see subpart 25.6).
    (3) 19 U.S.C. 1309, Supplies for Certain Vessels and Aircraft (see 
subpart 25.6).
    (4) 19 U.S.C. 2701, et seq., Authority to Grant Duty Free Treatment 
(see subpart 25.6).
    (5) 31 U.S.C. 1352, Limitation on Payments to Influence Certain 
Federal Transactions (see subpart 3.8).
    (6) 41 U.S.C. 43, Walsh-Healey Act (see subpart 22.6).
    (7) 41 U.S.C. 253d, Validation of Proprietary Data Restrictions (see 
subpart 27.4).
    (8) 41 U.S.C. 254(a) and 10 U.S.C. 2306(b), Contingent Fees (see 
subpart 3.4).
    (9) 41 U.S.C. 254d(c) and 10 U.S.C. 2313(c), Examination of Records 
of Contractor, when a subcontractor is not required to provide cost or 
pricing data (15.209(b)).
    (10) 41 U.S.C. 351, Service Contract Act of 1965, as amended (see 
subpart 22.10).
    (11) 41 U.S.C. 416(a)(6), Minimum Response Time for Offers under 
Office of Federal Procurement Policy Act (see subpart 5.2).
    (12) 41 U.S.C. 418a, Rights in Technical Data (see subpart 27.4).
    (13) 41 U.S.C. 701, et seq., Drug-Free Workplace Act of 1988 (see 
subpart 23.5).
    (14) 46 U.S.C. 1241(b), Transportation in American Vessels of 
Government Personnel and Certain Cargo (see subpart 47.5) 
(inapplicability effective May 1, 1996).
    (15) 49 U.S.C. 40118, Fly American provisions (see subpart 47.4).
    (b) Certain requirements of the following laws have been eliminated 
for subcontracts at any tier for the acquisition of commercial items or 
commercial components:
    (1) 33 U.S.C. 1368, Requirement for a certificate and clause under 
the Federal Water Pollution Control Act (see subpart 23.1).
    (2) 40 U.S.C. 327, et seq., Requirement for a certificate and clause 
under the Contract Work Hours and Safety Standards Act (see subpart 
22.3).
    (3) 42 U.S.C. 7606, Requirements for a certificate and clause under 
the Clean Air Act (see subpart 23.1).
    (c) The applicability of the following laws have been modified in 
regards to subcontracts at any tier for the acquisition of commercial 
items or commercial components:
    (1) 41 U.S.C. 253g and 10 U.S.C. 2402, Prohibition on Limiting 
Subcontractor Direct Sales to the United States (see subpart 3.5).
    (2) 41 U.S.C. 254(d) and 10 U.S.C. 2306a, Truth in Negotiations Act 
(see subpart 15.4).

[[Page 182]]

    (3) 41 U.S.C. 422, Cost Accounting Standards (48 CFR chapter 99) 
(see 12.214).

[60 FR 48241, Sept. 18, 1996 as amended at 61 FR 67418, Dec. 20, 1996; 
62 FR 232, 236, Jan. 2, 1997; 62 FR 51270, Sept. 30, 1997]



Subpart 12.6--Streamlined Procedures for Evaluation and Solicitation for 
                            Commercial Items



12.601  General.

    This subpart provides optional procedures for--
    (a) Streamlined evaluation of offers for commercial items; and
    (b) Streamlined solicitation of offers for commercial items for use 
where appropriate.
    These procedures are intended to simplify the process of preparing 
and issuing solicitations, and evaluating offers for commercial items 
consistent with customary commercial practices.



12.602  Streamlined evaluation of offers.

    (a) When evaluation factors are used, the contracting officer may 
insert a provision substantially the same as the provision at 52.212-2, 
Evaluation--Commercial Items, in solicitations for commercial items or 
comply with the procedures in 13.106 if the acquisition is being made 
using simplified acquisition procedures. When the provision at 52.212-2 
is used, paragraph (a) of the provision shall be tailored to the 
specific acquisition to describe the evaluation factors and relative 
importance of those factors. However, when using the simplified 
acquisition procedures in part 13, contracting officers are not required 
to describe the relative importance of evaluation factors.
    (b) Offers shall be evaluated in accordance with the criteria 
contained in the solicitation. For many commercial items, the criteria 
need not be more detailed than technical (capability of the item offered 
to meet the agency need), price and past performance. Technical 
capability may be evaluated by how well the proposed products meet the 
Government requirement instead of predetermined subfactors. 
Solicitations for commercial items do not have to contain subfactors for 
technical capability when the solicitation adequately describes the 
item's intended use. A technical evaluation would normally include 
examination of such things as product literature, product samples (if 
requested), technical features and warranty provisions. Past performance 
shall be evaluated in accordance with the procedures in section 13.106 
or subpart 15.3, as applicable. The contracting officer shall ensure the 
instructions provided in the provision at 52.212-1, Instructions to 
Offerors--Commercial Items, and the evaluation criteria provided in the 
provision at 52.212-2, Evaluation--Commercial Items, are in agreement.
    (c) Select the offer that is most advantageous to the Government 
based on the factors contained in the solicitation. Fully document the 
rationale for selection of the successful offeror including discussion 
of any tradeoffs considered.

[60 FR 48241, Sept. 18, 1995, as amended at 61 FR 39192, July 26, 1996; 
62 FR 264, Jan. 2, 1997; 62 FR 51270, Sept. 30, 1997; 62 FR 64917, Dec. 
9, 1997]



12.603  Streamlined solicitation for commercial items.

    (a) When a written solicitation will be issued, the contracting 
officer may use the following procedure to reduce the time required to 
solicit and award contracts for the acquisition of commercial items. 
This procedure combines the Commerce Business Daily (CBD) synopsis 
required by 5.203 and the issuance of the solicitation into a single 
document with the following limitations:
    (1) Section 5.207 limits submissions to the CBD to 12,000 textual 
characters (approximately 3 \1/2\ single-spaced pages).
    (2) This combined CBD synopsis/solicitation is only appropriate 
where the solicitation is relatively simple and is not recommended for 
use when lengthy addenda to the solicitation are necessary.
    (b) When using the combined synopsis/solicitation procedure, the SF 
1449 is not used for issuing the solicitation.
    (c) To use these procedures, the contracting officer shall--

[[Page 183]]

    (1) Prepare the synopsis as described at 5.207 for items 1-16.
    (2) In item 17, Description, include the following additional 
information:
    (i) The following statement:

    This is a combined synopsis/solicitation for commercial items 
prepared in accordance with the format in FAR Subpart 12.6, as 
supplemented with additional information included in this notice. This 
announcement constitutes the only solicitation; proposals are being 
requested and a written solicitation will not be issued.


    (ii) The solicitation number and a statement that the solicitation 
is issued as an invitation to bid (IFB), request for quotation (RFQ) or 
request for proposal (RFP).
    (iii) A statement that the solicitation document and incorporated 
provisions and clauses are those in effect through Federal Acquisition 
Circular ______.
    (iv) A notice regarding any set-aside and the associated standard 
industrial classification code and small business size standard. Also 
include a statement regarding the Small Business Competitiveness 
Demonstration Program, if applicable.
    (v) A list of contract line item number(s) and items, quantities and 
units of measure, (including option(s), if applicable).
    (vi) Description of requirements for the items to be acquired.
    (vii) Date(s) and place(s) of delivery and acceptance and FOB point.
    (viii) A statement that the provision at 52.212-1, Instructions to 
Offerors--Commercial, applies to this acquisition and a statement 
regarding any addenda to the provision.
    (ix) A statement regarding the applicability of the provision at 
52.212-2, Evaluation--Commercial Items, if used, and the specific 
evaluation criteria to be included in paragraph (a) of that provision. 
If this provision is not used, describe the evaluation procedures to be 
used.
    (x) A statement advising offerors to include a completed copy of the 
provision at 52.212-3, Offeror Representations and Certifications--
Commercial Items, with its offer.
    (xi) A statement that the clause at 52.212-4, Contract Terms and 
Conditions--Commercial Items, applies to this acquisition and a 
statement regarding any addenda to the clause.
    (xii) A statement that the clause at 52.212-5, Contract Terms and 
Conditions Required To Implement Statutes Or Executive Orders--
Commercial Items, applies to this acquisition and a statement regarding 
which, if any, of the additional FAR clauses cited in the clause are 
applicable to the acquisition.
    (xiii) A statement regarding any additional contract requirement(s) 
or terms and conditions (such as contract financing arrangements or 
warranty requirements) determined by the contracting officer to be 
necessary for this acquisition and consistent with customary commercial 
practices.
    (xiv) A statement regarding the Defense Priorities and Allocations 
System (DPAS) and assigned rating, if applicable.
    (xv) A statement regarding any applicable Commerce Business Daily 
numbered notes.
    (xvi) The date, time and place offers are due.
    (xvii) The name and telephone number of the individual to contact 
for information regarding the solicitation.
    (3) Allow response time for receipt of offers as follows:
    (i) Because the CBD synopsis and solicitation are contained in a 
single document, it is not necessary to publish a separate CBD synopsis 
15 days before the issuance of the solicitation.
    (ii) When using the combined CBD synopsis/solicitation, contracting 
officers shall establish a response time in accordance with 5.203(b) 
(but see 5.203(h).
    (4) Publish amendments to solicitations in the same manner as the 
initial synopsis/solicitation.

[60 FR 48241, Sept. 18, 1995, as amended at 61 FR 41469, Aug. 8, 1996; 
62 FR 264, Jan. 2, 1997]

[[Page 184]]



          SUBCHAPTER C--CONTRACTING METHODS AND CONTRACT TYPES





PART 13--SIMPLIFIED ACQUISITION PROCEDURES--Table of Contents




Sec.
13.000  Scope of part.
13.001  Definitions.
13.002  Purpose.
13.003  Policy.
13.004  Legal effect of quotations.
13.005  Federal Acquisition Streamlining Act of 1994 list of 
          inapplicable laws.
13.006  Inapplicable provisions and clauses.

                        Subpart 13.1--Procedures

13.101  General.
13.102  Source list.
13.103  Use of standing price quotations.
13.104  Promoting competition.
13.105  Synopsis and posting requirements.
13.106  Soliciting competition, evaluation of quotations or offers, 
          award and documentation.
13.106-1  Soliciting competition.
13.106-2  Evaluation of quotations or offers.
13.106-3  Award and documentation.

     Subpart 13.2--Actions at or Below the Micro-Purchase Threshold

13.201  General.
13.202  Purchase guidelines.

              Subpart 13.3--Simplified Acquisition Methods

13.301  Governmentwide commercial purchase card.
13.302  Purchase orders.
13.302-1  General.
13.302-2  Unpriced purchase orders.
13.302-3  Obtaining contractor acceptance and modifying purchase orders.
13.302-4  Termination or cancellation of purchase orders.
13.302-5  Clauses.
13.303  Blanket purchase agreements (BPAs).
13.303-1  General.
13.303-2  Establishment of BPAs.
13.303-3  Preparation of BPAs.
13.303-4  Clauses.
13.303-5  Purchases under BPAs.
13.303-6  Review procedures.
13.303-7  Completion of BPAs.
13.303-8  Optional clause.
13.304  [Reserved]
13.305  Imprest funds and third party drafts.
13.305-1  General.
13.305-2  Agency responsibilities.
13.305-3  Conditions for use.
13.305-4  Procedures.
13.306   SF 44, Purchase Order--Invoice--Voucher.
13.307  Forms.

                  Subpart 13.4--Fast Payment Procedure

13.401  General.
13.402  Conditions for use.
13.403  Preparation and execution of orders.
13.404  Contract clause.

         Subpart 13.5--Test Program for Certain Commercial Items

13.500  General.
13.501  Special documentation requirements.

    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 U.S.C. 
2473(c).

    Source: 62 FR 64917, Dec. 9, 1997, unless otherwise noted.



13.000  Scope of part.

    This part prescribes policies and procedures for the acquisition of 
supplies and services, including construction, research and development, 
and commercial items, the aggregate amount of which does not exceed the 
simplified acquisition threshold (see 2.101). Subpart 13.5 provides 
special authority for acquisitions of commercial items exceeding the 
simplified acquisition threshold but not exceeding $5,000,000, including 
options. See part 12 for policies applicable to the acquisition of 
commercial items exceeding the micro-purchase threshold. See 36.602-5 
for simplified procedures to be used when acquiring architect-engineer 
services.



13.001  Definitions.

    As used in this part--
    Authorized individual means a person who has been granted authority, 
in accordance with agency procedures, to acquire supplies and services 
in accordance with this part.
    Governmentwide commercial purchase card means a purchase card, 
similar in nature to a commercial credit card, issued to authorized 
agency personnel to use to acquire and to pay for supplies and services.
    Imprest fund means a cash fund of a fixed amount established by an 
advance of funds, without charge to an

[[Page 185]]

appropriation, from an agency finance or disbursing officer to a duly 
appointed cashier, for disbursement as needed from time to time in 
making payment in cash for relatively small amounts.
    Purchase order means an offer by the Government to buy supplies or 
services, including construction and research and development, upon 
specified terms and conditions, using simplified acquisition procedures.
    Third party draft means an agency bank draft, similar to a check, 
that is used to acquire and to pay for supplies and services. (See 
Treasury Financial Management Manual, Section 3040.70.)



13.002  Purpose.

    The purpose of this part is to prescribe simplified acquisition 
procedures in order to--
    (a) Reduce administrative costs;
    (b) Improve opportunities for small, small disadvantaged, and women-
owned small business concerns to obtain a fair proportion of Government 
contracts;
    (c) Promote efficiency and economy in contracting; and
    (d) Avoid unnecessary burdens for agencies and contractors.



13.003  Policy.

    (a) Agencies shall use simplified acquisition procedures to the 
maximum extent practicable for all purchases of supplies or services not 
exceeding the simplified acquisition threshold (including purchases at 
or below the micro-purchase threshold). This policy does not apply if an 
agency can meet its requirement using--
    (1) Required sources of supply under part 8 (e.g., Federal Prison 
Industries, Committee for Purchase from People Who are Blind or Severely 
Disabled, and Federal Supply Schedule contracts);
    (2) Existing indefinite delivery/indefinite quantity contracts; or
    (3) Other established contracts.
    (b)(1) Each acquisition of supplies or services that has an 
anticipated dollar value exceeding $2,500 and not exceeding $100,000 is 
reserved exclusively for small business concerns and shall be set aside 
(see 19.000 and subpart 19.5). See 19.502-2 for exceptions.
    (2) The contracting officer may set aside for HUBZone small business 
concerns (see 19.1305) an acquisition of supplies or services that has 
an anticipated dollar value exceeding $2,500 and not exceeding the 
simplified acquisition threshold. The contracting officer's decision not 
to set aside an acquisition for HUBZone participation below the 
simplified acquisition threshold is not subject to review under subpart 
19.4.
    (3) Each written solicitation under a set-aside shall contain the 
appropriate provisions prescribed by part 19. If the solicitation is 
oral, however, information substantially identical to that in the 
provision shall be given to potential quoters.
    (c) The contracting officer shall not use simplified acquisition 
procedures to acquire supplies and services if the anticipated award 
will exceed the simplified acquisition threshold (or $5,000,000, 
including options, for acquisitions of commercial items using Subpart 
13.5). Do not break down requirements aggregating more than the 
simplified acquisition threshold (or for commercial items, the threshold 
in subpart 13.5) or the micro-purchase threshold into several purchases 
that are less than the applicable threshold merely to--
    (1) Permit use of simplified acquisition procedures; or
    (2) Avoid any requirement that applies to purchases exceeding the 
micro-purchase threshold.
    (d) An agency that has specific statutory authority to acquire 
personal services (see 37.104) may use simplified acquisition procedures 
to acquire those services.
    (e) Agencies shall use the Governmentwide commercial purchase card 
and electronic purchasing techniques to the maximum extent practicable 
in conducting simplified acquisitions.
    (f) Agencies shall maximize the use of electronic commerce when 
practicable and cost-effective (see Subpart 4.5). Drawings and lengthy 
specifications can be provided off-line in hard copy or through other 
appropriate means.
    (g) Authorized individuals shall make purchases in the simplified 
manner

[[Page 186]]

that is most suitable, efficient, and economical based on the 
circumstances of each acquisition. For acquisitions not expected to 
exceed--
    (1) The simplified acquisition threshold for other than commercial 
items, use any appropriate combination of the procedures in parts 13, 
14, 15, 35, or 36, including the use of Standard Form 1442, 
Solicitation, Offer, and Award (Construction, Alteration, or Repair), 
for construction contracts (see 36.701(b)); or
    (2) $5 million for commercial items, use any appropriate combination 
of the procedures in parts 12, 13, 14, and 15 (see paragraph (d) of this 
section).
    (h) In addition to other considerations, contracting officers 
shall--
    (1) Promote competition to the maximum extent practicable (see 
13.104);
    (2) Establish deadlines for the submission of responses to 
solicitations that afford suppliers a reasonable opportunity to respond 
(see 5.203);
    (3) Consider all quotations or offers that are timely received. For 
evaluation of quotations or offers received electronically, see 13.106-
2(b)(3); and
    (4) Use innovative approaches, to the maximum extent practicable, in 
awarding contracts using simplified acquisition procedures.

[62 FR 64917, Dec. 9, 1997, as amended at 63 FR 58593, Oct. 30, 1998; 63 
FR 70267, Dec. 18, 1998]



13.004  Legal effect of quotations.

    (a) A quotation is not an offer and, consequently, cannot be 
accepted by the Government to form a binding contract. Therefore, 
issuance by the Government of an order in response to a supplier's 
quotation does not establish a contract. The order is an offer by the 
Government to the supplier to buy certain supplies or services upon 
specified terms and conditions. A contract is established when the 
supplier accepts the offer.
    (b) When appropriate, the contracting officer may ask the supplier 
to indicate acceptance of an order by notification to the Government, 
preferably in writing, as defined at 2.101. In other circumstances, the 
supplier may indicate acceptance by furnishing the supplies or services 
ordered or by proceeding with the work to the point where substantial 
performance has occurred.
    (c) If the Government issues an order resulting from a quotation, 
the Government may (by written notice to the supplier, at any time 
before acceptance occurs) withdraw, amend, or cancel its offer. (See 
13.302-4 for procedures on termination or cancellation of purchase 
orders.)



13.005  Federal Acquisition Streamlining Act of 1994 list of inapplicable laws.

    (a) The following laws are inapplicable to all contracts and 
subcontracts (if otherwise applicable to subcontracts) at or below the 
simplified acquisition threshold:
    (1) 41 U.S.C. 57 (a) and (b) (Anti-Kickback Act of 1986). (Only the 
requirement for the incorporation of the contractor procedures for the 
prevention and detection of violations, and the contractual requirement 
for contractor cooperation in investigations are inapplicable.).
    (2) 40 U.S.C. 270a (Miller Act). (Although the Miller Act does not 
apply to contracts at or below the simplified acquisition threshold, 
alternative forms of payment protection for suppliers of labor and 
material (see 28.102) are still required if the contract exceeds 
$25,000.).
    (3) 40 U.S.C. 327--333 (Contract Work Hours and Safety Standards 
Act--Overtime Compensation).
    (4) 41 U.S.C. 701(a)(1) (Section 5152 of the Drug-Free Workplace Act 
of 1988), except for individuals.
    (5) 42 U.S.C. 6962 (Solid Waste Disposal Act). (Only the requirement 
for providing the estimate of recovered material utilized in the 
performance of the contract is inapplicable.)
    (6) 10 U.S.C. 2306(b) and 41 U.S.C. 254(a) (Contract Clause 
Regarding Contingent Fees).
    (7) 10 U.S.C. 2313 and 41 U.S.C. 254(c) (Authority to Examine Books 
and Records of Contractors).
    (8) 10 U.S.C. 2402 and 41 U.S.C. 253g (Prohibition on Limiting 
Subcontractor Direct Sales to the United States).
    (9) 15 U.S.C. 631 note (HUBZone Act of 1997), except for 15 U.S.C. 
657a(b)(2)(B), which is optional for the

[[Page 187]]

agencies subject to the requirements of the Act.
    (b) The Federal Acquisition Regulatory (FAR) Council will include 
any law enacted after October 13, 1994, that sets forth policies, 
procedures, requirements, or restrictions for the acquisition of 
property or services, on the list set forth in paragraph (a) of this 
section. The FAR Council may make exceptions when it determines in 
writing that it is in the best interest of the Government that the 
enactment should apply to contracts or subcontracts not greater than the 
simplified acquisition threshold.
    (c) The provisions of paragraph (b) of this section do not apply to 
laws that--
    (1) Provide for criminal or civil penalties; or
    (2) Specifically state that notwithstanding the language of Section 
4101, Public Law 103-355, the enactment will be applicable to contracts 
or subcontracts in amounts not greater than the simplified acquisition 
threshold.
    (d) Any individual may petition the Administrator, Office of Federal 
Procurement Policy (OFPP), to include any applicable provision of law 
not included on the list set forth in paragraph (a) of this section 
unless the FAR Council has already determined in writing that the law is 
applicable. The Administrator, OFPP, will include the law on the list in 
paragraph (a) of this section unless the FAR Council makes a 
determination that it is applicable within 60 days of receiving the 
petition.

[62 FR 64917, Dec. 9, 1997, as amended at 63 FR 58593, Oct. 30, 1998; 63 
FR 70267, Dec. 18, 1998]



13.006  Inapplicable provisions and clauses.

    While certain statutes still apply, pursuant to Public Law 103-355, 
the following provisions and clauses are inapplicable to contracts and 
subcontracts at or below the simplified acquisition threshold:
    (a) 52.203-5, Covenant Against Contingent Fees.
    (b) 52.203-6, Restrictions on Subcontractor Sales to the
    Government.
    (c) 52.203-7, Anti-Kickback Procedures.
    (d) 52.215-2, Audits and Records--Negotiation.
    (e) 52.222-4, Contract Work Hours and Safety Standards Act--Overtime 
Compensation.
    (f) 52.223-6, Drug-Free Workplace, except for individuals.
    (g) 52.223-9, Certification and Estimate of Percentage of Recovered 
Material Content for EPA Designated Items.



                        Subpart 13.1--Procedures



13.101  General.

    (a) In making purchases, contracting officers shall--
    (1) Comply with the policy in 7.202 relating to economic purchase 
quantities, when practicable;
    (2) Satisfy the procedures described in subpart 19.6 with respect to 
Certificates of Competency before rejecting a quotation, oral or 
written, from a small business concern determined to be nonresponsible 
(see subpart 9.1);
    (3) Use United States-owned excess or near-excess foreign currency, 
if appropriate, in making payments under simplified acquisition 
procedures (see subpart 25.3); and
    (4) Provide for the inspection of supplies or services as prescribed 
in 46.404.
    (b) In making purchases, contracting officers should--
    (1) Include related items (such as small hardware items or spare 
parts for vehicles) in one solicitation and make award on an ``all-or-
none'' or ``multiple award'' basis provided suppliers are so advised 
when quotations or offers are requested;
    (2) Incorporate provisions and clauses by reference in solicitations 
and in awards under requests for quotations, provided the requirements 
in 52.102 are satisfied;
    (3) Make maximum effort to obtain trade and prompt payment discounts 
(see 14.408-3). Prompt payment discounts shall not be considered in the 
evaluation of quotations; and
    (4) Use bulk funding to the maximum extent practicable. Bulk funding 
is a system whereby the contracting officer receives authorization from 
a fiscal and accounting officer to obligate funds on purchase documents 
against a specified lump sum of funds reserved for the purpose for a 
specified period of

[[Page 188]]

time rather than obtaining individual obligational authority on each 
purchase document. Bulk funding is particularly appropriate if numerous 
purchases using the same type of funds are to be made during a given 
period.



13.102  Source list.

    (a) Each contracting office should maintain a source list (or lists, 
if more convenient). A list of new supply sources may be obtained from 
the Procurement Marketing and Access Network (PRO-Net) of the Small 
Business Administration. The list should identify the status of each 
source (when the status is made known to the contracting office) in the 
following categories:
    (1) Small business.
    (2) Small disadvantaged business.
    (3) Women-owned small business.
    (b) The status information may be used as the basis to ensure that 
small business concerns are provided the maximum practicable 
opportunities to respond to solicitations issued using simplified 
acquisition procedures.

[62 FR 64917, Dec. 9, 1997, as amended at 63 FR 58593, Oct. 30, 1998]



13.103  Use of standing price quotations.

    Authorized individuals do not have to obtain individual quotations 
for each purchase. Standing price quotations may be used if--
    (a) The pricing information is current; and
    (b) The Government obtains the benefit of maximum discounts before 
award.



13.104  Promoting competition.

    The contracting officer shall promote competition to the maximum 
extent practicable to obtain supplies and services from the source whose 
offer is the most advantageous to the Government, considering the 
administrative cost of the purchase.
    (a) The contracting officer shall not--
    (1) Solicit quotations based on personal preference; or
    (2) Restrict solicitation to suppliers of well-known and widely 
distributed makes or brands.
    (b) If using simplified acquisition procedures and not using either 
FACNET or providing access to the notice of proposed contract action 
through the single, Governmentwide point of entry, maximum practicable 
competition ordinarily can be obtained by soliciting quotations or 
offers from sources within the local trade area. Unless the contract 
action requires synopsis pursuant to 5.101 and an exception under 5.202 
is not applicable, consider solicitation of at least three sources to 
promote competition to the maximum extent practicable. Whenever 
practicable, request quotations or offers from two sources not included 
in the previous solicitation.

[62 FR 64917, Dec. 9, 1997, as amended at 63 FR 58593, Oct. 30, 1998]



13.105  Synopsis and posting requirements.

    (a) The contracting officer shall comply with the public display and 
synopsis requirements of 5.101 and 5.203 unless--
    (1)(i) FACNET is used for an acquisition at or below the simplified 
acquisition threshold; or
    (ii) The single, Governmentwide point of entry is used at or below 
the simplified acquisition threshold for providing widespread public 
notice of acquisition opportunities and offerors are provided a means of 
responding to the solicitation electronically; or
    (2) An exception in 5.202 applies.
    (b) When acquiring commercial items, the contracting officer may use 
a combined synopsis/solicitation. In such cases, a separate solicitation 
is not required. The contracting officer must include enough information 
to permit suppliers to develop quotations or offers.

[62 FR 64917, Dec. 9, 1997, as amended at 63 FR 58593, Oct. 30, 1998]



13.106  Soliciting competition, evaluation of quotations or offers, award and documentation.



13.106-1  Soliciting competition.

    (a) Considerations. In soliciting competition, the contracting 
officer shall consider the guidance in 13.104 and the following before 
requesting quotations or offers:

[[Page 189]]

    (1)(i) The nature of the article or service to be purchased and 
whether it is highly competitive and readily available in several makes 
or brands, or is relatively noncompetitive.
    (ii) Information obtained in making recent purchases of the same or 
similar item.
    (iii) The urgency of the proposed purchase.
    (iv) The dollar value of the proposed purchase.
    (v) Past experience concerning specific dealers' prices.
    (2) When soliciting quotations or offers, the contracting officer 
shall notify potential quoters or offerors of the basis on which award 
will be made (price alone or price and other factors, e.g., past 
performance and quality). Contracting officers are encouraged to use 
best value. Solicitations are not required to state the relative 
importance assigned to each evaluation factor and subfactor, nor are 
they required to include subfactors.
    (b) Soliciting from a single source. (1) For purchases not exceeding 
the simplified acquisition threshold, contracting officers may solicit 
from one source if the contracting officer determines that the 
circumstances of the contract action deem only one source reasonably 
available (e.g., urgency, exclusive licensing agreements, or industrial 
mobilization).
    (2) For sole source acquisitions of commercial items in excess of 
the simplified acquisition threshold conducted pursuant to subpart 13.5, 
the requirements at 13.501(a) apply.
    (c) Soliciting orally. (1) The contracting officer shall solicit 
quotations orally to the maximum extent practicable, if--
    (i) The acquisition does not exceed the simplified acquisition 
threshold;
    (ii) Oral solicitation is more efficient than soliciting through 
available electronic commerce alternatives; and
    (iii) Notice is not required under 5.101.
    (2) However, an oral solicitation may not be practicable for 
contract actions exceeding $25,000 unless covered by an exception in 
5.202.
    (d) Written solicitations. If obtaining electronic or oral 
quotations is uneconomical or impracticable, the contracting officer 
should issue paper solicitations for contract actions likely to exceed 
$25,000. The contracting officer shall issue a written solicitation for 
construction requirements exceeding $2,000.
    (e) Use of options. Options may be included in solicitations, 
provided the requirements of subpart 17.2 are met and the aggregate 
value of the acquisition and all options does not exceed the dollar 
threshold for use of simplified acquisition procedures.
    (f) Inquiries. An agency should respond to inquiries received 
through any medium (including FACNET) if doing so would not interfere 
with the efficient conduct of the acquisition. For an acquisition 
conducted through FACNET, an agency must respond to telephonic or 
facsimile inquiries only if it is unable to receive inquiries through 
FACNET.

[62 FR 64917, Dec. 9, 1997, as amended at 63 FR 58593, Oct. 30, 1998]



13.106-2  Evaluation of quotations or offers.

    (a) General. (1) The contracting officer shall evaluate quotations 
or offers--
    (i) In an impartial manner; and
    (ii) Inclusive of transportation charges from the shipping point of 
the supplier to the delivery destination.
    (2) Quotations or offers shall be evaluated on the basis established 
in the solicitation.
    (3) All quotations or offers shall be considered (see paragraph (b) 
of this subsection).
    (b) Evaluation procedures. (1) The contracting officer has broad 
discretion in fashioning suitable evaluation procedures. The procedures 
prescribed in parts 14 and 15 are not mandatory. At the contracting 
officer's discretion, one or more, but not necessarily all, of the 
evaluation procedures in part 14 or 15 may be used.
    (2) If using price and other factors, ensure that quotations or 
offers can be evaluated in an efficient and minimally burdensome 
fashion. Formal evaluation plans and establishing a competitive range, 
conducting discussions, and scoring quotations or offers are not 
required. Contracting offices may conduct comparative evaluations

[[Page 190]]

of offers. Evaluation of other factors, such as past performance--
    (i) Does not require the creation or existence of a formal data 
base; and
    (ii) May be based on information such as the contracting officer's 
knowledge of and previous experience with the supply or service being 
acquired, customer surveys, or other reasonable basis.
    (3) For acquisitions conducted using FACNET or a method that permits 
electronic response to the solicitation, the contracting officer may--
    (i) After preliminary consideration of all quotations or offers, 
identify from all quotations or offers received one that is suitable to 
the user, such as the lowest priced brand name product, and quickly 
screen all lower priced quotations or offers based on readily 
discernible value indicators, such as past performance, warranty 
conditions, and maintenance availability; or
    (ii) Where an evaluation is based only on price and past 
performance, make an award based on whether the lowest priced of the 
quotations or offers having the highest past performance rating possible 
represents the best value when compared to any lower priced quotation or 
offer.

[62 FR 64917, Dec. 9, 1997, as amended at 63 FR 58593, Oct. 30, 1998]



13.106-3  Award and documentation.

    (a) Basis for award. Before making award, the contracting officer 
must determine that the proposed price is fair and reasonable.
    (1) Whenever possible, base price reasonableness on competitive 
quotations or offers.
    (2) If only one response is received, include a statement of price 
reasonableness in the contract file. The contracting officer may base 
the statement on--
    (i) Market research;
    (ii) Comparison of the proposed price with prices found reasonable 
on previous purchases;
    (iii) Current price lists, catalogs, or advertisements. However, 
inclusion of a price in a price list, catalog, or advertisement does 
not, in and of itself, establish fairness and reasonableness of the 
price;
    (iv) A comparison with similar items in a related industry;
    (v) The contracting officer's personal knowledge of the item being 
purchased;
    (vi) Comparison to an independent Government estimate; or
    (vii) Any other reasonable basis.
    (3) Occasionally an item can be obtained only from a supplier that 
quotes a minimum order price or quantity that either unreasonably 
exceeds stated quantity requirements or results in an unreasonable price 
for the quantity required. In these instances, the contracting officer 
should inform the requiring activity of all facts regarding the 
quotation or offer and ask it to confirm or alter its requirement. The 
file shall be documented to support the final action taken.
    (b) File documentation and retention. Keep documentation to a 
minimum. Purchasing offices shall retain data supporting purchases 
(paper or electronic) to the minimum extent and duration necessary for 
management review purposes (see subpart 4.8). The following illustrate 
the extent to which quotation or offer information should be recorded:
    (1) Oral solicitations. The contracting office should establish and 
maintain records of oral price quotations in order to reflect clearly 
the propriety of placing the order at the price paid with the supplier 
concerned. In most cases, this will consist merely of showing the names 
of the suppliers contacted and the prices and other terms and conditions 
quoted by each.
    (2) Written solicitations (see 2.101). For acquisitions not 
exceeding the simplified acquisition threshold, limit written records of 
solicitations or offers to notes or abstracts to show prices, delivery, 
references to printed price lists used, the supplier or suppliers 
contacted, and other pertinent data.
    (3) Special situations. Include additional statements--
    (i) Explaining the absence of competition if only one source is 
solicited and the acquisition does not exceed the simplified acquisition 
threshold (does not apply to an acquisition of utility services 
available from only one source); or

[[Page 191]]

    (ii) Supporting the award decision if other than price-related 
factors were considered in selecting the supplier.
    (c) Notification. For acquisitions that do not exceed the simplified 
acquisition threshold and for which automatic notification is not 
provided through FACNET or an electronic commerce method that employs 
widespread electronic public notice, notification to unsuccessful 
suppliers shall be given only if requested or required by 5.301.
    (d) Request for information. If a supplier requests information on 
an award that was based on factors other than price alone, a brief 
explanation of the basis for the contract award decision shall be 
provided (see 15.503(b)(2)).
    (e) Taxpayer Identification Number. If an oral solicitation is used, 
the contracting officer shall ensure that the copy of the award document 
sent to the payment office is annotated with the contractor's Taxpayer 
Identification Number (TIN) and type of organization (see 4.203), unless 
this information will be obtained from some other source (e.g., 
centralized database). The contracting officer shall disclose to the 
contractor that the TIN may be used by the Government to collect and 
report on any delinquent amounts arising out of the contractor's 
relationship with the Government (31 U.S.C. 7701(c)(3)).

[62 FR 64917, Dec. 9, 1997, as amended at 63 FR 58589, 58593, Oct. 30, 
1998; 64 FR 51836, Sept. 24, 1999]



     Subpart 13.2--Actions at or Below the Micro-Purchase Threshold



13.201  General.

    (a) Agency heads are encouraged to delegate micro-purchase authority 
(see 1.603-3).
    (b) The Governmentwide commercial purchase card shall be the 
preferred method to purchase and to pay for micro-purchases (see 2.101).
    (c) Purchases at or below the micro-purchase threshold may be 
conducted using any of the methods described in subpart 13.3, provided 
the purchaser is authorized and trained, pursuant to agency procedures, 
to use those methods.
    (d) Micro-purchases do not require provisions or clauses, except as 
provided at 32.1110. This paragraph takes precedence over any other FAR 
requirement to the contrary, but does not prohibit the use of any 
clause.
    (e) The requirements in part 8 apply to purchases at or below the 
micro-purchase threshold.

[62 FR 64917, Dec. 9, 1997, as amended at 64 FR 10539, Mar. 4, 1999]



13.202  Purchase guidelines.

    (a) Solicitation, evaluation of quotations, and award. (1) To the 
extent practicable, micro-purchases shall be distributed equitably among 
qualified suppliers.
    (2) Micro-purchases may be awarded without soliciting competitive 
quotations if the contracting officer or individual appointed in 
accordance with 1.603-3(b) considers the price to be reasonable.
    (3) The administrative cost of verifying the reasonableness of the 
price for purchases may more than offset potential savings from 
detecting instances of overpricing. Therefore, action to verify price 
reasonableness need only be taken if--
    (i) The contracting officer or individual appointed in accordance 
with 1.603-3(b) suspects or has information to indicate that the price 
may not be reasonable (e.g., comparison to the previous price paid or 
personal knowledge of the supply or service); or
    (ii) Purchasing a supply or service for which no comparable pricing 
information is readily available (e.g., a supply or service that is not 
the same as, or is not similar to, other supplies or services that have 
recently been purchased on a competitive basis).
    (b) Documentation. If competitive quotations were solicited and 
award was made to other than the low quoter, documentation to support 
the purchase may be limited to identification of the solicited concerns 
and an explanation for the award decision.



              Subpart 13.3--Simplified Acquisition Methods



13.301  Governmentwide commercial purchase card.

    (a) The Governmentwide commercial purchase card is authorized for 
use in

[[Page 192]]

making and/or paying for purchases of supplies, services, or 
construction. The Governmentwide commercial purchase card may be used by 
contracting officers and other individuals designated in accordance with 
1.603-3. The card may be used only for purchases that are otherwise 
authorized by law or regulation.
    (b) Agencies using the Governmentwide commercial purchase card shall 
establish procedures for use and control of the card that comply with 
the Treasury Financial Manual for Guidance of Departments and Agencies 
(TFM 4-4500) and that are consistent with the terms and conditions of 
the GSA Federal Supply Service Contract Guide for Governmentwide 
Commercial Purchase Card Service. Agency procedures should not limit the 
use of the Governmentwide commercial purchase card to micro-purchases. 
Agency procedures should encourage use of the card in greater dollar 
amounts by contracting officers to place orders and to pay for purchases 
against contracts established under part 8 procedures, when authorized; 
and to place orders and/or make payment under other contractual 
instruments, when agreed to by the contractor. See 32.1110(d) for 
instructions for use of the appropriate clause when payment under a 
written contract will be made through use of the card.
    (c) The Governmentwide commercial purchase card may be used to--
    (1) Make micro-purchases;
    (2) Place a task or delivery order (if authorized in the basic 
contract, basic ordering agreement, or blanket purchase agreement); or
    (3) Make payments, when the contractor agrees to accept payment by 
the card.

[62 FR 64917, Dec. 9, 1997, as amended at 64 FR 10539, Mar. 4, 1999]



13.302  Purchase orders.



13.302-1  General.

    (a) Except as provided under the unpriced purchase order method (see 
13.302-2), purchase orders generally are issued on a fixed-price basis. 
See 12.207 for acquisition of commercial items.
    (b) Purchase orders shall--
    (1) Specify the quantity of supplies or scope of services ordered;
    (2) Contain a determinable date by which delivery of the supplies or 
performance of the services is required;
    (3) Provide for inspection as prescribed in part 46. Generally, 
inspection and acceptance should be at destination. Source inspection 
should be specified only if required by part 46. When inspection and 
acceptance will be performed at destination, advance copies of the 
purchase order or equivalent notice shall be furnished to the 
consignee(s) for material receipt purposes. Receiving reports shall be 
accomplished immediately upon receipt and acceptance of supplies;
    (4) Specify f.o.b. destination for supplies to be delivered within 
the United States, except Alaska or Hawaii, unless there are valid 
reasons to the contrary; and
    (5) Include any trade and prompt payment discounts that are offered, 
consistent with the applicable principles at 14.408-3.
    (c) The contracting officer's signature on purchase orders shall be 
in accordance with 4.101 and the definitions at 2.101. Facsimile and 
electronic signature may be used in the production of purchase orders by 
automated methods.
    (d) Limit the distribution of copies of purchase orders and related 
forms to the minimum deemed essential for administration and 
transmission of contractual information.
    (e) In accordance with 31 U.S.C. 3332, electronic funds transfer 
(EFT) is required for payments except as provided in 32.1110. See 
Subpart 32.11 for instructions for use of the appropriate clause in 
purchase orders. When obtaining oral quotes, the contracting officer 
shall inform the quoter of the EFT clause that will be in any resulting 
purchase order.

[62 FR 64917, Dec. 9, 1997, as amended at 64 FR 10540, Mar. 4, 1999]



13.302-2  Unpriced purchase orders.

    (a) An unpriced purchase order is an order for supplies or services, 
the price of which is not established at the time of issuance of the 
order.
    (b) An unpriced purchase order may be used only when--

[[Page 193]]

    (1) It is impractical to obtain pricing in advance of issuance of 
the purchase order; and
    (2) The purchase is for--
    (i) Repairs to equipment requiring disassembly to determine the 
nature and extent of repairs;
    (ii) Material available from only one source and for which cost 
cannot readily be established; or
    (iii) Supplies or services for which prices are known to be 
competitive, but exact prices are not known (e.g., miscellaneous repair 
parts, maintenance agreements).
    (c) Unpriced purchase orders may be issued on paper or 
electronically. A realistic monetary limitation, either for each line 
item or for the total order, shall be placed on each unpriced purchase 
order. The monetary limitation shall be an obligation subject to 
adjustment when the firm price is established. The contracting office 
shall follow up on each order to ensure timely pricing. The contracting 
officer or the contracting officer's designated representative shall 
review the invoice price and, if reasonable (see 13.106-3(a)), process 
the invoice for payment.



13.302-3  Obtaining contractor acceptance and modifying purchase orders.

    (a) When it is desired to consummate a binding contract between the 
parties before the contractor undertakes performance, the contracting 
officer shall require written (see 2.101) acceptance of the purchase 
order by the contractor.
    (b) Each purchase order modification shall identify the order it 
modifies and shall contain an appropriate modification number.
    (c) A contractor's written acceptance of a purchase order 
modification may be required only if--
    (1) Determined by the contracting officer to be necessary to ensure 
the contractor's compliance with the purchase order as revised; or
    (2) Required by agency regulations.



13.302-4  Termination or cancellation of purchase orders.

    (a) If a purchase order that has been accepted in writing by the 
contractor is to be terminated, the contracting officer shall process 
the termination in accordance with--
    (1) 12.403(d) and 52.212-4(l) for commercial items; or
    (2) Part 49 or 52.213-4 for other than commercial items.
    (b) If a purchase order that has not been accepted in writing by the 
contractor is to be canceled, the contracting officer shall notify the 
contractor in writing that the purchase order has been canceled, request 
the contractor's written acceptance of the cancellation, and proceed as 
follows:
    (1) If the contractor accepts the cancellation and does not claim 
that costs were incurred as a result of beginning performance under the 
purchase order, no further action is required (i.e., the purchase order 
shall be considered canceled).
    (2) If the contractor does not accept the cancellation or claims 
that costs were incurred as a result of beginning performance under the 
purchase order, the contracting officer shall process the termination 
action as prescribed in paragraph (a) of this subsection.



13.302-5  Clauses.

    (a) Each purchase order (and each purchase order modification (see 
13.302-3)) shall incorporate all clauses prescribed for the particular 
acquisition.
    (b) The contracting officer shall insert the clause at 52.213-2, 
Invoices, in purchase orders that authorize advance payments (see 31 
U.S.C. 3324(d)(2)) for subscriptions or other charges for newspapers, 
magazines, periodicals, or other publications (i.e., any publication 
printed, microfilmed, photocopied, or magnetically or otherwise recorded 
for auditory or visual usage).
    (c) The contracting officer shall insert the clause at 52.213-3, 
Notice to Supplier, in unpriced purchase orders.
    (d) The contracting officer may use the clause at 52.213-4, Terms 
and Conditions--Simplified Acquisitions (Other Than Commercial Items), 
in simplified acquisitions exceeding the micro-purchase threshold that 
are for other than commercial items (see 12.301). The clause--
    (1) Is a compilation of the most commonly used clauses that apply to 
simplified acquisitions; and

[[Page 194]]

    (2) May be modified to fit the individual acquisition to add other 
needed clauses, or those clauses may be added separately. Modifications 
(i.e., additions, deletions, or substitutions) must not create a void or 
internal contradiction in the clause. For example, do not add an 
inspection and acceptance or termination for convenience requirement 
unless the existing requirement is deleted. Also, do not delete a 
paragraph without providing for an appropriate substitute.



13.303  Blanket purchase agreements (BPAs).



13.303-1  General.

    (a) A blanket purchase agreement (BPA) is a simplified method of 
filling anticipated repetitive needs for supplies or services by 
establishing ``charge accounts'' with qualified sources of supply (see 
subpart 16.7 for additional coverage of agreements).
    (b) BPAs should be established for use by an organization 
responsible for providing supplies for its own operations or for other 
offices, installations, projects, or functions. Such organizations, for 
example, may be organized supply points, separate independent or 
detached field parties, or one-person posts or activities.
    (c) The use of BPAs does not exempt an agency from the 
responsibility for keeping obligations and expenditures within available 
funds.



13.303-2  Establishment of BPAs.

    (a) The following are circumstances under which contracting officers 
may establish BPAs:
    (1) There is a wide variety of items in a broad class of supplies or 
services that are generally purchased, but the exact items, quantities, 
and delivery requirements are not known in advance and may vary 
considerably.
    (2) There is a need to provide commercial sources of supply for one 
or more offices or projects in a given area that do not have or need 
authority to purchase otherwise.
    (3) The use of this procedure would avoid the writing of numerous 
purchase orders.
    (4) There is no existing requirements contract for the same supply 
or service that the contracting activity is required to use.
    (b) After determining a BPA would be advantageous, contracting 
officers shall--
    (1) Establish the parameters to limit purchases to individual items 
or commodity groups or classes, or permit the supplier to furnish 
unlimited supplies or services; and
    (2) Consider suppliers whose past performance has shown them to be 
dependable, who offer quality supplies or services at consistently lower 
prices, and who have provided numerous purchases at or below the 
simplified acquisition threshold.
    (c) BPAs may be established with--
    (1) More than one supplier for supplies or services of the same type 
to provide maximum practicable competition;
    (2) A single firm from which numerous individual purchases at or 
below the simplified acquisition threshold will likely be made in a 
given period; or
    (3) Federal Supply Schedule contractors, if not inconsistent with 
the terms of the applicable schedule contract.
    (d) BPAs should be prepared without a purchase requisition and only 
after contacting suppliers to make the necessary arrangements for--
    (1) Securing maximum discounts;
    (2) Documenting individual purchase transactions;
    (3) Periodic billings; and
    (4) Incorporating other necessary details.



13.303-3  Preparation of BPAs.

    Prepare BPAs on the forms specified in 13.307. Do not cite 
accounting and appropriation data (see 13.303-5(e)(4)).
    (a) The following terms and conditions are mandatory:
    (1) Description of agreement. A statement that the supplier shall 
furnish supplies or services, described in general terms, if and when 
requested by the contracting officer (or the authorized representative 
of the contracting officer) during a specified period and within a 
stipulated aggregate amount, if any.
    (2) Extent of obligation. A statement that the Government is 
obligated only

[[Page 195]]

to the extent of authorized purchases actually made under the BPA.
    (3) Purchase limitation. A statement that specifies the dollar 
limitation for each individual purchase under the BPA (see 13.303-5(b)).
    (4) Individuals authorized to purchase under the BPA. A statement 
that a list of individuals authorized to purchase under the BPA, 
identified either by title of position or by name of individual, 
organizational component, and the dollar limitation per purchase for 
each position title or individual shall be furnished to the supplier by 
the contracting officer.
    (5) Delivery tickets. A requirement that all shipments under the 
agreement, except those for newspapers, magazines, or other periodicals, 
shall be accompanied by delivery tickets or sales slips that shall 
contain the following minimum information:
    (i) Name of supplier.
    (ii) BPA number.
    (iii) Date of purchase.
    (iv) Purchase number.
    (v) Itemized list of supplies or services furnished.
    (vi) Quantity, unit price, and extension of each item, less 
applicable discounts (unit prices and extensions need not be shown when 
incompatible with the use of automated systems, provided that the 
invoice is itemized to show this information).
    (vii) Date of delivery or shipment.
    (6) Invoices. One of the following statements shall be included 
(except that the statement in paragraph (a)(6)(iii) of this subsection 
should not be used if the accumulation of the individual invoices by the 
Government materially increases the administrative costs of this 
purchase method):
    (i) A summary invoice shall be submitted at least monthly or upon 
expiration of this BPA, whichever occurs first, for all deliveries made 
during a billing period, identifying the delivery tickets covered 
therein, stating their total dollar value, and supported by receipt 
copies of the delivery tickets.
    (ii) An itemized invoice shall be submitted at least monthly or upon 
expiration of this BPA, whichever occurs first, for all deliveries made 
during a billing period and for which payment has not been received. 
These invoices need not be supported by copies of delivery tickets.
    (iii) When billing procedures provide for an individual invoice for 
each delivery, these invoices shall be accumulated, provided that--
    (A) A consolidated payment will be made for each specified period; 
and
    (B) The period of any discounts will commence on the final date of 
the billing period or on the date of receipt of invoices for all 
deliveries accepted during the billing period, whichever is later.
    (iv) An invoice for subscriptions or other charges for newspapers, 
magazines, or other periodicals shall show the starting and ending dates 
and shall state either that ordered subscriptions have been placed in 
effect or will be placed in effect upon receipt of payment.
    (b) If the fast payment procedure is used, include the requirements 
stated in 13.403.



13.303-4  Clauses.

    (a) The contracting officer shall insert in each BPA the clauses 
prescribed elsewhere in this part that are required for or applicable to 
the particular BPA.
    (b) Unless a clause prescription specifies otherwise (e.g., see 
22.305(a), 22.605(a)(5), or 22.1006), if the prescription includes a 
dollar threshold, the amount to be compared to that threshold is that of 
any particular order under the BPA.



13.303-5  Purchases under BPAs.

    (a) Use a BPA only for purchases that are otherwise authorized by 
law or regulation.
    (b) Individual purchases shall not exceed the simplified acquisition 
threshold. However, agency regulations may establish a higher threshold 
consistent with the following:
    (1) The simplified acquisition threshold and the $5,000,000 
limitation for individual purchases do not apply to BPAs established in 
accordance with 13.303-2(c)(3).
    (2) The limitation for individual purchases for commercial item 
acquisitions conducted under subpart 13.5 is $5,000,000.
    (c) The existence of a BPA does not justify purchasing from only one

[[Page 196]]

source or avoiding small business set-asides. The requirements of 
13.003(b) and subpart 19.5 also apply to each order.
    (d) If, for a particular purchase greater than the micro-purchase 
threshold, there is an insufficient number of BPAs to ensure maximum 
practicable competition, the contracting officer shall--
    (1) Solicit quotations from other sources (see 13.105) and make the 
purchase as appropriate; and
    (2) Establish additional BPAs to facilitate future purchases if--
    (i) Recurring requirements for the same or similar supplies or 
services seem likely;
    (ii) Qualified sources are willing to accept BPAs; and
    (iii) It is otherwise practical to do so.
    (e) Limit documentation of purchases to essential information and 
forms as follows:
    (1) Purchases generally should be made electronically, or orally 
when it is not considered economical or practical to use electronic 
methods.
    (2) A paper purchase document may be issued if necessary to ensure 
that the supplier and the purchaser agree concerning the transaction.
    (3) Unless a paper document is issued, record essential elements 
(e.g., date, supplier, supplies or services, price, delivery date) on 
the purchase requisition, in an informal memorandum, or on a form 
developed locally for the purpose.
    (4) Cite the pertinent purchase requisitions and the accounting and 
appropriation data.
    (5) When delivery is made or the services are performed, the 
supplier's sales document, delivery document, or invoice may (if it 
reflects the essential elements) be used for the purpose of recording 
receipt and acceptance of the supplies or services. However, if the 
purchase is assigned to another activity for administration, the 
authorized Government representative shall document receipt and 
acceptance of supplies or services by signing and dating the agency 
specified form after verification and after notation of any exceptions.



13.303-6  Review procedures.

    (a) The contracting officer placing orders under a BPA, or the 
designated representative of the contracting officer, shall review a 
sufficient random sample of the BPA files at least annually to ensure 
that authorized procedures are being followed.
    (b) The contracting officer that entered into the BPA shall--
    (1) Ensure that each BPA is reviewed at least annually and, if 
necessary, updated at that time; and
    (2) Maintain awareness of changes in market conditions, sources of 
supply, and other pertinent factors that may warrant making new 
arrangements with different suppliers or modifying existing 
arrangements.
    (c) If an office other than the purchasing office that established a 
BPA is authorized to make purchases under that BPA, the agency that has 
jurisdiction over the office authorized to make the purchases shall 
ensure that the procedures in paragraph (a) of this subsection are being 
followed.



13.303-7  Completion of BPAs.

    An individual BPA is considered complete when the purchases under it 
equal its total dollar limitation, if any, or when its stated time 
period expires.



13.303-8  Optional clause.

    The clause at 52.213-4, Terms and Conditions--Simplified 
Acquisitions (Other Than Commercial Items), may be used in BPAs 
established under this section.



13.304  [Reserved]



13.305  Imprest funds and third party drafts.



13.305-1  General.

    Imprest funds and third party drafts may be used to acquire and to 
pay for supplies or services. Policies and regulations concerning the 
establishment of and accounting for imprest funds and third party 
drafts, including the responsibilities of designated cashiers and 
alternates, are contained in Part IV of the Treasury Financial Manual 
for Guidance of Departments and Agencies, Title 7 of the General 
Accounting Office Policy and Procedures Manual

[[Page 197]]

for Guidance of Federal Agencies, and the agency implementing 
regulations. Agencies also shall be guided by the Manual of Procedures 
and Instructions for Cashiers, issued by the Financial Management 
Service, Department of the Treasury.



13.305-2  Agency responsibilities.

    Each agency using imprest funds and third party drafts shall--
    (a) Periodically review and determine whether there is a continuing 
need for each fund or third party draft account established, and that 
amounts of those funds or accounts are not in excess of actual needs;
    (b) Take prompt action to have imprest funds or third party draft 
accounts adjusted to a level commensurate with demonstrated needs 
whenever circumstances warrant such action; and
    (c) Develop and issue appropriate implementing regulations. These 
regulations shall include (but are not limited to) procedures covering--
    (1) Designation of personnel authorized to make purchases using 
imprest funds or third party drafts; and
    (2) Documentation of purchases using imprest funds or third party 
drafts, including documentation of--
    (i) Receipt and acceptance of supplies and services by the 
Government;
    (ii) Receipt of cash or third party draft payments by the suppliers; 
and
    (iii) Cash advances and reimbursements.



13.305-3  Conditions for use.

    Imprest funds or third party drafts may be used for purchases when--
    (a) The imprest fund transaction does not exceed $500 or such other 
limits as have been approved by the agency head;
    (b) The third party draft transaction does not exceed $2,500, unless 
authorized at a higher level in accordance with Treasury restrictions;
    (c) The use of imprest funds or third party drafts is considered to 
be advantageous to the Government; and
    (d) The use of imprest funds or third party drafts for the 
transaction otherwise complies with any additional conditions 
established by agencies and with the policies and regulations referenced 
in 13.305-1.



13.305-4  Procedures.

    (a) Each purchase using imprest funds or third party drafts shall be 
based upon an authorized purchase requisition, contracting officer 
verification statement, or other agency approved method of ensuring that 
adequate funds are available for the purchase.
    (b) Normally, purchases should be placed orally and without 
soliciting competition if prices are considered reasonable.
    (c) Since there is, for all practical purposes, simultaneous 
placement of the order and delivery of the items, clauses are not 
required for purchases using imprest funds or third party drafts.
    (d) Forms prescribed at 13.307(e) may be used if a written order is 
considered necessary (e.g., if required by the supplier for discount, 
tax exemption, or other reasons). If a purchase order is used, endorse 
it ``Payment to be made from Imprest Fund'' (or ``Payment to be made 
from Third Party Draft,'' as appropriate).
    (e) The individual authorized to make purchases using imprest funds 
or third party drafts shall--
    (1) Furnish to the imprest fund or third party draft cashier a copy 
of the document required under paragraph (a) of this subsection 
annotated to reflect--
    (i) That an imprest fund or third party draft purchase has been 
made;
    (ii) The unit prices and extensions; and
    (iii) The supplier's name and address; and
    (2) Require the supplier to include with delivery of the supplies an 
invoice, packing slip, or other sales instrument giving--
    (i) The supplier's name and address;
    (ii) List and quantity of items supplied;
    (iii) Unit prices and extensions; and
    (iv) Cash discount, if any.



13.306  SF 44, Purchase Order--Invoice--Voucher.

    The SF 44, Purchase Order--Invoice--Voucher, is a multipurpose 
pocket-size

[[Page 198]]

purchase order form designed primarily for on-the-spot, over-the-counter 
purchases of supplies and nonpersonal services while away from the 
purchasing office or at isolated activities. It also can be used as a 
receiving report, invoice, and public voucher.
    (a) This form may be used if all of the following conditions are 
satisfied:
    (1) The amount of the purchase is at or below the micro-purchase 
threshold, except for purchases made under unusual and compelling 
urgency or in support of contingency operations. Agencies may establish 
higher dollar limitations for specific activities or items;
    (2) The supplies or services are immediately available;
    (3) One delivery and one payment will be made; and
    (4) Its use is determined to be more economical and efficient than 
use of other simplified acquisition procedures.
    (b) General procedural instructions governing the form's use are 
printed on the form and on the inside front cover of each book of forms.
    (c) Since there is, for all practical purposes, simultaneous 
placement of the order and delivery of the items, clauses are not 
required for purchases using this form.
    (d) Agencies shall provide adequate safeguards regarding the control 
of forms and accounting for purchases.



13.307  Forms.

    (a) Commercial items. For use of the SF 1449, Solicitation/Contract/
Order for Commercial Items, see 12.204.
    (b) Other than commercial items.
    (1) Except when quotations are solicited via FACNET, electronically, 
or orally, the SF 1449; SF 18, Request for Quotations; or an agency 
form/automated format may be used. Each agency request for quotations 
form/automated format should conform with the SF 18 or SF 1449 to the 
maximum extent practicable.
    (2) Both SF 1449 and OF 347, Order for Supplies or Services, are 
multipurpose forms used for negotiated purchases of supplies or 
services, delivery or task orders, inspection and receiving reports, and 
invoices. An agency form/automated format also may be used.
    (c) Forms used for both commercial and other than commercial items.
    (1) OF 336, Continuation Sheet, or an agency form/automated format 
may be used when additional space is needed.
    (2) OF 348, Order for Supplies or Services Schedule--Continuation, 
or an agency form/automated format may be used for negotiated purchases 
when additional space is needed. Agencies may print on these forms the 
clauses considered to be generally suitable for purchases.
    (3) SF 30, Amendment of Solicitation/Modification of Contract, or a 
purchase order form may be used to modify a purchase order, unless an 
agency form/automated format is prescribed in agency regulations.
    (d) SF 44, Purchase Order--Invoice--Voucher, is a multipurpose 
pocket-size purchase order form that may be used as outlined in 13.306.
    (e) SF 1165, Receipt for Cash--Subvoucher, or an agency purchase 
order form may be used for purchases using imprest funds or third party 
drafts.

[62 FR 64917, Dec. 9, 1997, as amended at 63 FR 58593, Oct. 30, 1998]



                  Subpart 13.4--Fast Payment Procedure



13.401  General.

    (a) The fast payment procedure allows payment under limited 
conditions to a contractor prior to the Government's verification that 
supplies have been received and accepted. The procedure provides for 
payment for supplies based on the contractor's submission of an invoice 
that constitutes a certification that the contractor--
    (1) Has delivered the supplies to a post office, common carrier, or 
point of first receipt by the Government; and
    (2) Shall replace, repair, or correct supplies not received at 
destination, damaged in transit, or not conforming to purchase 
agreements.
    (b) The contracting officer shall be primarily responsible for 
collecting debts resulting from failure of contractors to properly 
replace, repair, or correct supplies lost, damaged, or not conforming to 
purchase requirements (see 32.605(b) and 32.606).

[[Page 199]]



13.402  Conditions for use.

    If the conditions in paragraphs (a) through (f) of this section are 
present, the fast payment procedure may be used, provided that use of 
the procedure is consistent with the other conditions of the purchase. 
The conditions for use of the fast payment procedure are as follows:
    (a) Individual purchasing instruments do not exceed $25,000, except 
that executive agencies may permit higher dollar limitations for 
specified activities or items on a case-by-case basis.
    (b) Deliveries of supplies are to occur at locations where there is 
both a geographical separation and a lack of adequate communications 
facilities between Government receiving and disbursing activities that 
will make it impractical to make timely payment based on evidence of 
Government acceptance.
    (c) Title to the supplies passes to the Government--
    (1) Upon delivery to a post office or common carrier for mailing or 
shipment to destination; or
    (2) Upon receipt by the Government if the shipment is by means other 
than Postal Service or common carrier.
    (d) The supplier agrees to replace, repair, or correct supplies not 
received at destination, damaged in transit, or not conforming to 
purchase requirements.
    (e) The purchasing instrument is a firm-fixed-price contract, a 
purchase order, or a delivery order for supplies.
    (f) A system is in place to ensure--
    (1) Documentation of evidence of contractor performance under fast 
payment purchases;
    (2) Timely feedback to the contracting officer in case of contractor 
deficiencies; and
    (3) Identification of suppliers that have a current history of 
abusing the fast payment procedure (also see subpart 9.1).



13.403  Preparation and execution of orders.

    Priced or unpriced contracts, purchase orders, or BPAs using the 
fast payment procedure shall include the following:
    (a) A requirement that the supplies be shipped transportation or 
postage prepaid.
    (b) A requirement that invoices be submitted directly to the finance 
or other office designated in the order, or in the case of unpriced 
purchase orders, to the contracting officer (see 13.302-2(c)).
    (c) The following statement on the consignee's copy:

 Consignee's Notification to Purchasing Activity of Nonreceipt, Damage, 
                            or Nonconformance

The consignee shall notify the purchasing office promptly after the 
specified date of delivery of supplies not received, damaged in transit, 
or not conforming to specifications of the purchase order. Unless 
extenuating circumstances exist, the notification should be made not 
later than 60 days after the specified date of delivery.



13.404  Contract clause.

    The contracting officer shall insert the clause at 52.213-1, Fast 
Payment Procedure, in solicitations and contracts when the conditions in 
13.402 are applicable and it is intended that the fast payment procedure 
be used in the contract (in the case of BPAs, the contracting officer 
may elect to insert the clause either in the BPA or in orders under the 
BPA).



         Subpart 13.5--Test Program for Certain Commercial Items



13.500  General.

    (a) This subpart authorizes, as a test program, use of simplified 
procedures for the acquisition of supplies and services in amounts 
greater than the simplified acquisition threshold but not exceeding 
$5,000,000, including options, if the contracting officer reasonably 
expects, based on the nature of the supplies or services sought, and on 
market research, that offers will include only commercial items. Under 
this test program, contracting officers may use any simplified 
acquisition procedure in this part, subject to any specific dollar 
limitation applicable to the particular procedure. The purpose of this 
test program is to vest contracting officers

[[Page 200]]

with additional procedural discretion and flexibility, so that 
commercial item acquisitions in this dollar range may be solicited, 
offered, evaluated, and awarded in a simplified manner that maximizes 
efficiency and economy and minimizes burden and administrative costs for 
both the Government and industry (10 U.S.C. 2304(g) and 2305 and 41 
U.S.C. 253(g) and 253a and 253b).
    (b) For the period of this test, contracting activities shall employ 
the simplified procedures authorized by the test to the maximum extent 
practicable.
    (c) When acquiring commercial items using the procedures in this 
part, the requirements of part 12 apply subject to the order of 
precedence provided at 12.102(c). This includes use of the provisions 
and clauses in subpart 12.3.
    (d) The authority to issue solicitations under this subpart shall 
expire on January 1, 2000. Contracts may be awarded after the expiration 
of this authority for solicitations issued before the expiration of the 
authority.



13.501  Special documentation requirements.

    (a) Sole source acquisitions. (1) Acquisitions conducted under 
simplified acquisition procedures are exempt from the requirements in 
part 6. However, contracting officers shall--
    (i) Conduct sole source acquisitions, as defined in 6.003, under 
this subpart only if the need to do so is justified in writing and 
approved at the levels specified in paragraphs (a)(2)(i) and (a)(2)(ii) 
of this section; and
    (ii) Prepare sole source justifications using the format at 6.303-2, 
modified to reflect an acquisition under the authority of the test 
program for commercial items (section 4202 of the Clinger-Cohen Act of 
1996).
    (2) Justifications and approvals are required under this subpart 
only for sole source acquisitions.
    (i) For a proposed contract exceeding $100,000, but not exceeding 
$500,000, the contracting officer's certification that the justification 
is accurate and complete to the best of the contracting officer's 
knowledge and belief will serve as approval, unless a higher approval 
level is established in accordance with agency procedures.
    (ii) For a proposed contract exceeding $500,000, the approval shall 
be by the competition advocate for the procuring activity, designated 
pursuant to 6.501; or an official described in 6.304(a)(3) or (a)(4). 
This authority is not delegable.
    (b) Contract file documentation. The contract file shall include--
    (1) A brief written description of the procedures used in awarding 
the contract, including the fact that the test procedures in FAR subpart 
13.5 were used;
    (2) The number of offers received;
    (3) An explanation, tailored to the size and complexity of the 
acquisition, of the basis for the contract award decision; and
    (4) Any justification approved under paragraph (a) of this section.



PART 14--SEALED BIDDING--Table of Contents




Sec.
14.000  Scope of part.

                   Subpart 14.1--Use of Sealed Bidding

14.101  Elements of sealed bidding.
14.102  [Reserved]
14.103  Policy.
14.103-1  General.
14.103-2  Limitations.
14.104  Types of contracts.
14.105  Solicitations for informational or planning purposes.

                   Subpart 14.2--Solicitation of Bids

14.201  Preparation of invitations for bids.
14.201-1  Uniform contract format.
14.201-2  Part I--The Schedule.
14.201-3  Part II--Contract clauses.
14.201-4  Part III--Documents, exhibits, and other attachments.
14.201-5  Part IV--Representations and instructions.
14.201-6  Solicitation provisions.
14.201-7  Contract clauses.
14.201-8  Price-related factors.
14.201-9  Simplified contract format.
14.202  General rules for solicitation of bids.
14.202-1  Bidding time.
14.202-2  Telegraphic bids.
14.202-3  Bid envelopes.
14.202-4  Bid samples.
14.202-5  Descriptive literature.
14.202-6  Final review of invitations for bids.
14.202-7  Facsimile bids.
14.202-8  Electronic bids.
14.203  Methods of soliciting bids.
14.203-1  Transmittal to prospective bidders.

[[Page 201]]

14.203-2  Dissemination of information concerning invitations for bids.
14.203-3  Master solicitation.
14.204  Records of invitations for bids and records of bids.
14.205  Solicitation mailing lists.
14.205-1  Establishment of lists.
14.205-2  Removal of names from solicitation mailing lists.
14.205-3  Reinstatement on solicitation mailing lists.
14.205-4  Excessively long solicitation mailing lists.
14.205-5  Release of solicitation mailing lists.
14.206  [Reserved]
14.207  Pre-bid conference.
14.208  Amendment of invitation for bids.
14.209  Cancellation of invitations before opening.
14.210  Qualified products.
14.211  Release of acquisition information.
14.212  Economic purchase quantities (supplies).
14.213  Annual submission of representations and certifications.
14.214  [Reserved]

                    Subpart 14.3--Submission of Bids

14.301  Responsiveness of bids.
14.302  Bid submission.
14.303  Modification or withdrawal of bids.
14.304  Submission, modification, and withdrawal of bids.

           Subpart 14.4--Opening of Bids and Award of Contract

14.400  Scope of subpart.
14.401  Receipt and safeguarding of bids.
14.402  Opening of bids.
14.402-1  Unclassified bids.
14.402-2  Classified bids.
14.402-3  Postponement of openings.
14.403  Recording of bids.
14.404  Rejection of bids.
14.404-1  Cancellation of invitations after opening.
14.404-2  Rejection of individual bids.
14.404-3  Notice to bidders of rejection of all bids.
14.404-4  Restrictions on disclosure of descriptive literature.
14.404-5  All or none qualifications.
14.405  Minor informalities or irregularities in bids.
14.406  Receipt of an unreadable electronic bid.
14.407  Mistakes in bids.
14.407-1  General.
14.407-2  Apparent clerical mistakes.
14.407-3  Other mistakes disclosed before award.
14.407-4  Mistakes after awards.
14.408  Award.
14.408-1  General.
14.408-2  Responsible bidder--reasonableness of price.
14.408-3  Prompt payment discounts.
14.408-4  Economic price adjustment.
14.408-5  [Reserved]
14.408-6  Equal low bids.
14.408-7  Documentation of award.
14.408-8  Protests against award.
14.409  Information to bidders.
14.409-1  Award of unclassified contracts.
14.409-2  Award of classified contracts.

                  Subpart 14.5--Two-Step Sealed Bidding

14.501  General.
14.502  Conditions for use.
14.503  Procedures.
14.503-1  Step one.
14.503-2  Step two.

    Authority: 40 U.S.C. 486(c); 10 U.S.C. Chapter 137; and 42 U.S.C. 
2473(c).

    Source: 48 FR 42171, Sept. 19, 1983, unless otherwise noted.



14.000  Scope of part.

    This part prescribes (a) the basic requirements of contracting for 
supplies and services (including construction) by sealed bidding, (b) 
the information to be included in the solicitation (invitation for 
bids), (c) procedures concerning the submission of bids, (d) 
requirements for opening and evaluating bids and awarding contracts, and 
(e) procedures for two-step sealed bidding.

[48 FR 42171, Sept. 19, 1983, as amended at 50 FR 1737, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985]



                   Subpart 14.1--Use of Sealed Bidding



14.101  Elements of sealed bidding.

    Sealed bidding is a method of contracting that employs competitive 
bids, public opening of bids, and awards. The following steps are 
involved:
    (a) Preparation of invitations for bids. Invitations must describe 
the requirements of the Government clearly, accurately, and completely. 
Unnecessarily restrictive specifications or requirements that might 
unduly limit the number of bidders are prohibited. The invitation 
includes all documents (whether attached or incorporated by reference) 
furnished prospective bidders for the purpose of bidding.
    (b) Publicizing the invitation for bids. Invitations must be 
publicized through

[[Page 202]]

distribution to prospective bidders, posting in public places, and such 
other means as may be appropriate. Publicizing must occur a sufficient 
time before public opening of bids to enable prospective bidders to 
prepare and submit bids.
    (c) Submission of bids. Bidders must submit sealed bids to be opened 
at the time and place stated in the solicitation for the public opening 
of bids.
    (d) Evaluation of bids. Bids shall be evaluated without discussions.
    (e) Contract award. After bids are publicly opened, an award will be 
made with reasonable promptness to that responsible bidder whose bid, 
conforming to the invitation for bids, will be most advantageous to the 
Government, considering only price and the price-related factors 
included in the invitation.

[48 FR 42171, Sept. 19, 1983, as amended at 50 FR 1737, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985]



14.102  [Reserved]



14.103  Policy.



14.103-1  General.

    (a) Sealed bidding shall be used whenever the conditions in 6.401(a) 
are met. This requirement applies to any proposed contract action under 
part 6.
    (b) Current lists of bidders shall be maintained in accordance with 
14.205.
    (c) Sealed bidding may be used for classified acquisitions (see 
4.401) if its use does not violate agency security requirements.
    (d) The policy for pricing modifications of sealed bid contracts 
appears in 15.403-4(a)(1)(iii).

[48 FR 42171, Sept. 19, 1983, as amended at 50 FR 1737, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985; 62 FR 51270, Sept. 30, 1997]



14.103-2  Limitations.

    No awards shall be made as a result of sealed bidding unless--
    (a) Bids have been solicited as required by subpart 14.2;
    (b) Bids have been submitted as required by subpart 14.3;
    (c) The requirements of 1.602-1(b) and part 6 have been met; and
    (d) An award is made to the responsible bidder (see 9.1) whose bid 
is responsive to the terms of the invitation for bids and is most 
advantageous to the Government, considering only price and the price-
related factors included in the invitation, as provided in subpart 14.4.

[48 FR 42171, Sept. 19, 1983, as amended at 50 FR 1737, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985]



14.104  Types of contracts.

    Firm-fixed-price contracts shall be used when the method of 
contracting is sealed bidding, except that fixed-price contracts with 
economic price adjustment clauses may be used if authorized in 
accordance with 16.203 when some flexibility is necessary and feasible. 
Such clauses must afford all bidders an equal opportunity to bid.

[48 FR 42171, Sept. 19, 1983, as amended at 50 FR 1737, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985]



14.105  Solicitations for informational or planning purposes.

    See 15.201(e).

[48 FR 42171, Sept. 19, 1983, as amended at 62 FR 51270, Sept. 30, 1997]



                   Subpart 14.2--Solicitation of Bids



14.201  Preparation of invitations for bids.



14.201-1  Uniform contract format.

    (a) Contracting officers shall prepare invitations for bids and 
contracts using the uniform contract format outlined in Table 14-1 to 
the maximum practicable extent. The use of the format facilitates 
preparation of the solicitation and contract as well as reference to, 
and use of, those documents by bidders and contractors. It need not be 
used for acquisition of the following:
    (1) Construction (see part 36).
    (2) Shipbuilding (including design, construction, and conversion), 
ship overhaul, and ship repair.
    (3) Subsistence items.
    (4) Supplies or services requiring special contract forms prescribed 
elsewhere in this regulation that are inconsistent with the uniform 
contract format.

[[Page 203]]

    (5) Firm-fixed-price or fixed-price with economic price adjustment 
acquisitions that use the simplified contract format (see 14.201-9).
    (b) Information suitable for inclusion in invitations for bids under 
the uniform contract format shall also be included in invitations for 
bids not subject to that format if applicable.
    (c) Solicitations to which the uniform contract format applies shall 
include Parts I, II, III, and IV. If any section of the uniform contract 
format does not apply, the contracting officer should so mark that 
section in the solicitation. Upon award, the contracting officer shall 
not physically include Part IV in the resulting contract, but shall 
retain it in the contract file. Award by acceptance of a bid on the 
award portion of Standard Form 33, Solicitation Offer and Award (SF 33), 
Standard Form 26, Award/Contract (SF 26), or Standard Form 1447, 
Solicitation/Contract (SF 1447), incorporates Section K, 
Representations, certifications, and other statements of bidders, in the 
resultant contract even though not physically attached.

                               Table 14-1
                         Uniform Contract Format
------------------------------------------------------------------------
           Section                               Title
------------------------------------------------------------------------
                          Part I--The Schedule
 
A                              Solicitation/contract form
B                              Supplies or services and prices
C                              Description/specifications
D                              Packaging and marking
E                              Inspection and acceptance
F                              Deliveries or performance
G                              Contract administration data
H                              Special contract requirements
 
                        Part II--Contract Clauses
 
I                              Contract clauses
 
      Part III--List of Documents, Exhibits, and Other Attachments
 
J                              List of documents, exhibits, and other
                                attachments
 
                Part IV--Representations and Instructions
 
K                              Representations, certifications, and
                                other statements of bidders
L                              Instructions, conditions, and notices to
                                bidders
M                              Evaluation factors for award
------------------------------------------------------------------------


[48 FR 42171, Sept. 19, 1983, as amended at 54 FR 48982, Nov. 28, 1989]



14.201-2  Part I--The Schedule.

    The contracting officer shall prepare the Schedule as follows:
    (a) Section A, Solicitation/contract form. (1) Prepare the 
invitation for bids on SF 33, or the SF 1447, unless otherwise permitted 
by this regulation. The SF 33 is the first page of the solicitation and 
includes Section A of the uniform contract format. When the SF 1447 is 
used as the solicitation document, the information in subdivisions 
(a)(2)(i) and (a)(2)(iv) of this subsection shall be inserted in block 9 
of the SF 1447.
    (2) When the SF 33 or SF 1447 is not used, include the following on 
the first page of the invitation for bids:
    (i) Name, address, and location of issuing activity, including room 
and building where bids must be submitted.
    (ii) Invitation for bids number.
    (iii) Date of issuance.
    (iv) Time specified for receipt of bids.
    (v) Number of pages.
    (vi) Requisition or other purchase authority.
    (vii) Requirement for bidder to provide its name and complete 
address, including street, city, county, State, and ZIP code.
    (viii) A statement that bidders should include in the bid the 
address to which payment should be mailed, if that address is different 
from that of the bidder.
    (b) Section B, Supplies or services and prices. Include a brief 
description of the supplies or services; e.g., item number, national 
stock number/part number if applicable, title or name identifying the 
supplies or services, and quantities (see part 11). The SF 33 and SF 
1447 may be supplemented as necessary by the Optional Form 336 (OF 336), 
Continuation Sheet (53.302-336).
    (c) Section C, Description/specifications. Include any description 
or specifications needed in addition to Section B to permit full and 
open competition (see part 11).
    (d) Section D, Packaging and marking. Provide packaging, packing, 
preservation, and marking requirements, if any.
    (e) Section E, Inspection and acceptance. Include inspection, 
acceptance, quality assurance, and reliability requirements (see part 
46, Quality Assurance).
    (f) Section F, Deliveries or performance. Specify the requirements 
for time, place, and method of delivery or performance (see subpart 
11.4, Delivery or Performance Schedules).

[[Page 204]]

    (g) Section G, Contract administration data. Include any required 
accounting and appropriation data and any required contract 
administration information or instructions other than those on the 
solicitation form.
    (h) Section H, Special contract requirements. Include a clear 
statement of any special contract requirements that are not included in 
Section I, Contract clauses, or in other sections of the uniform 
contract format.

[48 FR 42171, Sept. 19, 1983, as amended at 50 FR 1737, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985; 51 FR 27119, July 29, 1986; 54 FR 48982, 
Nov. 28, 1989; 55 FR 38516, Sept. 18, 1990; 60 FR 48248, Sept. 18, 1995]



14.201-3  Part II--Contract clauses.

    Section I, Contract clauses. The contracting officer shall include 
in this section the clauses required by law or by this regulation and 
any additional clauses expected to apply to any resulting contract, if 
these clauses are not required to be included in any other section of 
the uniform contract format.

[48 FR 42171, Sept. 19, 1983, as amended at 53 FR 17857, May 18, 1988]



14.201-4  Part III--Documents, exhibits, and other attachments.

    Section J, List of documents, exhibits, and other attachments. The 
contracting officer shall list the title, date, and number of pages for 
each attached document.



14.201-5  Part IV--Representations and instructions.

    The contracting officer shall prepare the representations and 
instructions as follows:
    (a) Section K, Representations, certifications, and other statements 
of bidders. Include in this section those solicitation provisions that 
require representations, certifications, or the submission of other 
information by bidders.
    (b) Section L, Instructions, conditions, and notices to bidders. 
Insert in this section solicitation provisions and other information and 
instructions not required elsewhere to guide bidders. Invitations shall 
include the time and place for bid openings, and shall advise bidders 
that bids will be evaluated without discussions (see 52.214-10 and, for 
construction contracts, 52.214-19).
    (c) Section M, Evaluation factors for award. Identify the price-
related factors other than the bid price that will be considered in 
evaluating bids and awarding the contract. (See 14.201-8.)

[48 FR 42171, Sept. 19, 1983, as amended at 50 FR 1737, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985; 53 FR 17857, May 18, 1988]



14.201-6  Solicitation provisions.

    (a) The provisions prescribed in this subsection are limited to 
subjects that are general in nature, do not come under other subject 
areas of the FAR, and pertain to the preparation and submission of bids.
    (b) Insert in all invitations for bids the provisions at--
    (1) 52.214-1, Solicitation Definitions--Sealed Bidding;
    (2) [Reserved]
    (3) 52.214-3, Amendments to Invitations for Bids; and
    (4) 52.214-4, False Statements in Bids.
    (c) Insert the following provisions in invitations for bids:
    (1) 52.214-5, Submission of Bids.
    (2) 52.214-6, Explanation to Prospective Bidders.
    (3) 52.214-7, Late Submissions, Modifications, and Withdrawals of 
Bids.
    (4) 52.214-32, Late Submissions, Modifications, and Withdrawals of 
Bids (Overseas), for solicitations under which bids are to be submitted 
to a contracting office outside the United States or Canada.
    (d) [Reserved]
    (e) Insert in invitations for bids, except those for construction, 
the provisions at--
    (1) 52.214-9, Failure to Submit Bid, except when using electronic 
data interchange methods not requiring solicitation mailing lists; and
    (2) 52.214-10, Contract Award--Sealed Bidding.
    (f) Insert in invitations for bids to which the uniform contract 
format applies, the provision at 52.214-12, Preparation of Bids.
    (g)(1) Insert the provision at 52.214-13, Telegraphic Bids, in 
invitations for bids if the contracting officer decides to authorize 
telegraphic bids.
    (2) Use the provision with its Alternate I in invitations for bids 
that are for perishable subsistence, and when the contracting officer 
considers that

[[Page 205]]

offerors will be unwilling to provide acceptance periods long enough to 
allow written confirmation.
    (h) Insert the provision at 52.214-14, Place of Performance--Sealed 
Bidding, in invitations for bids except those in which the place of 
performance is specified by the Government.
    (i) Insert the provision at 52.214-15, Period for Acceptance of 
Bids, in invitations for bids (IFB's) that are not issued on SF 33 or SF 
1447 except IFB's (1) for construction work or (2) in which the 
Government specifies a minimum acceptance period.
    (j) Insert the provision at 52.214-16, Minimum Bid Acceptance 
Period, in invitations for bids, except for construction, if the 
contracting officer determines that a minimum acceptance period must be 
specified.
    (k) [Reserved]
    (l) Insert the provision at 52.214-18, Preparation of Bids--
Construction, in invitations for bids for construction work.
    (m) Insert the provision at 52.214-19, Contract Award--Sealed 
Bidding--Construction, in all invitations for bids for construction 
work.
    (n) [Reserved]
    (o)(1) Insert the provision at 52.214-20, Bid Samples, in 
invitations for bids if bid samples are required.
    (2) If it appears that the conditions in 14.202-4(f)(1) will apply 
and the contracting officer anticipates granting waivers thereunder 
and--
    (i) If the nature of the required product does not necessitate 
limiting the grant of a waiver to a product produced at the same plant 
in which the product previously acquired or tested was produced, use the 
provision with its Alternate I; or
    (ii) If the nature of the required product necessitates limiting the 
grant of a waiver to a product produced at the same plant in which the 
product previously acquired or tested was produced, use the provision 
with its Alternate II.
    (3) See 14.202-4(f)(2) regarding waiving the requirement for all 
bidders.
    (p)(1) Insert the provision at 52.214-21, Descriptive Literature, in 
invitations for bids if (i) descriptive literature is required to 
evaluate the technical acceptability of an offered product and (ii) the 
required information will not be readily available unless it is 
submitted by bidders.
    (2) Use the basic clause with its Alternate I if the possibility 
exists that the contracting officer may waive the requirement for 
furnishing descriptive literature for a bidder offering a previously 
supplied product that meets specification requirements of the current 
solicitation.
    (3) See 14.202-5(e)(2) regarding waiving the requirement for all 
bidders.
    (q) Insert the provision at 52.214-22, Evaluation of Bids for 
Multiple Awards, in invitations for bids if the contracting officer 
determines that multiple awards might be made if doing so is 
economically advantageous to the Government.
    (r) Insert the provision at 52.214-23, Late Submissions, 
Modifications, and Withdrawals of Technical Proposals under Two-Step 
Sealed Bidding, in solicitations for technical proposals in step one of 
two-step sealed bidding.
    (s) Insert the provision at 52.214-24, Multiple Technical Proposals, 
in solicitations for technical proposals in step one of two-step sealed 
bidding if the contracting officer permits the submission of multiple 
technical proposals.
    (t) Insert the provision at 52.214-25, Step Two of Two-Step Sealed 
Bidding, in invitations for bids issued under step two of two-step 
sealed bidding.
    (u) Insert the provision at 52.214-30, Annual Representations and 
Certifications-Sealed Bidding, in invitations for bids if annual 
representations and certifications are used (see 14.213).
    (v) Insert the provision at 52.214-31, Facsimile Bids, in 
solicitations if facsimile bids are authorized (see 14.202-7).
    (w) Insert the provision at 52.214-34, Submission of Offers in the 
English Language, in solicitations subject to the Trade Agreements Act 
or the North American Free Trade Agreement Implementation Act (see 
25.408(d)). It may be included in other solicitations when the 
contracting officer decides that it is necessary.
    (x) Insert the provision at 52.214-35, Submission of Offers in U.S. 
Currency, in solicitations subject to the Trade Agreements Act or the 
North American Free Trade Agreement Implementation

[[Page 206]]

Act (see 25.408(d)). It may be included in other solicitations when the 
contracting officer decides that it is necessary.

[48 FR 42171, Sept. 19, 1983, as amended at 50 FR 1737, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985; 51 FR 2649, Jan. 17, 1986; 53 FR 43390, Oct. 
26, 1988; 54 FR 5054, Jan. 31, 1989; 54 FR 48982, Nov. 28, 1989; 55 FR 
25527, June 21, 1990; 56 FR 15149, Apr. 15, 1991; 58 FR 31141, May 28, 
1993; 59 FR 545, Jan. 5, 1994; 60 FR 34737, July 3, 1995; 62 FR 51230, 
Sept. 30, 1997; 63 FR 58589, Oct. 30, 1998; 64 FR 10532, Mar. 4, 1999; 
64 FR 51838, Sept. 24, 1999]

    Effective Date Note: At 64 FR 51838, Sept. 24, 1999, section 14.201-
6 was amended by revising paragraphs (c)(3), (g)(2), (o)(2)(i), 
(o)(2)(ii), and (r), removing paragraphs (c)(4) and (v), redesignating 
paragraphs (w) through (y) as (v) through (x) respectively and revising 
newly designated paragraphs (w) and (x); and by removing ``The 
contracting officer shall insert'' and adding ``Insert'' in paragraphs 
(b), (c), and (e) introductory text, (f), (g)(1), (h), (i), (j), (l), 
(m), (o)(1), (p)(1), (q), (s), (t), (u), and newly redesignated 
paragraph (v), effective Nov. 23, 1999. For the convenience of the user, 
the supersed text is set forth as follows:

14.201-6  Solicitation provisions.

                                * * * * *

    (c) * * *
    (3) 52.214-7, Late Submissions, Modifications, and Withdrawals of 
Bids, for solicitations issued in the United States and Canada for 
submission of bids to a contracting office in the United States or 
Canada.

                                * * * * *

    (g) * * *
    (2) The contracting officer shall insert the basic provision with 
its Alternate I in invitations for bids that are for perishable 
subsistence, and when the contracting officer considers that offerors 
will be unwilling to provide acceptance periods long enough to allow 
written confirmation.

                                * * * * *

    (o) * * *
    (2) * * *
    (i) If the nature of the required product does not necessitate 
limiting the grant of a waiver to a product produced at the same plant 
in which the product previously acquired or tested was produced, the 
contracting officer shall use the provision with its Alternate I; or
    (ii) If the nature of the required product necessitates limiting the 
grant of a waiver to a product produced at the same plant in which the 
product previously acquired or tested was produced, the contracting 
officer shall use the provision with its Alternate II.

                                * * * * *

    (r) The contracting officer shall insert the provision at 52.214-23, 
Late Submissions, Modifications, and Withdrawals of Technical Proposals 
under Two-Step Sealed Bidding, in solicitations for technical proposals 
in step one of two-step sealed bidding issued in the United States and 
Canada for submission of technical proposals to a contracting office in 
the United States or Canada.

                                * * * * *

    (v) The contracting officer shall insert the provision at 52.214-33, 
Late Submissions, Modifications, and Withdrawals of Technical Proposals 
under Two-Step Sealed Bidding (Overseas), in solicitations for technical 
proposals in step one of two-step sealed bidding under which technical 
proposals are to be submitted to a contracting office outside the United 
States or Canada.
    (w) The provision at 52.214-34, Submission of Offers in the English 
Language, is required in solicitations subject to the Trade Agreements 
Act or the North American Free Trade Agreement Implementation Act (see 
25.408(d)). It may be included in other solicitations when the 
contracting officer decides that it is necessary.
    (x) The provision at 52.214-35, Submission of Offers in U.S. 
Currency, is required in solicitations subject to the Trade Agreements 
Act or the North American Free Trade Agreement Implementation Act (see 
25.408(d)). It may be included in other solicitations when the 
contracting officer decides that it is necessary.



14.201-7  Contract clauses.

    (a) When contracting by sealed bidding, the contracting officer 
shall insert the clause at 52.214-26, Audit and Records--Sealed Bidding, 
in solicitations and contracts if the contract amount is expected to 
exceed the threshold at 15.403-4(a)(1) for submission of cost or pricing 
data.
    (b)(1) When contracting by sealed bidding, the contracting officer 
shall insert the clause at 52.214-27, Price Reduction for Defective Cost 
or Pricing Data--Modifications--Sealed Bidding, in solicitations and 
contracts if the contract amount is expected to exceed the threshold for 
submission of cost or pricing data at 15.403-4(a)(1).

[[Page 207]]

    (2) In exceptional cases, the head of the contracting activity may 
waive the requirement for inclusion of the clause in a contract with a 
foreign government or agency of that government. The authorizations for 
the waiver and the reasons for granting it shall be in writing.
    (c)(1) When contracting by sealed bidding, the contracting officer 
shall insert the clause at 52.214-28, Subcontractor Cost or Pricing 
Data--Modifications--Sealed Bidding, in solicitations and contracts if 
the contract amount is expected to exceed the threshold for submission 
of cost or pricing data at 15.403-4(a)(1).
    (2) In exceptional cases, the head of the contracting activity may 
waive the requirement for inclusion of the clause in a contract with a 
foreign government or agency of that government. The authorizations for 
the waiver and the reasons for granting it shall be in writing.
    (d) When contracting by sealed bidding, the contracting officer 
shall insert the clause at 52.214-29, Order of Precedence--Sealed 
Bidding, in solicitations and contracts to which the uniform contract 
format applies.

[48 FR 42171, Sept. 19, 1983, as amended at 50 FR 1738, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985; 51 FR 2649, Jan. 17, 1986; 56 FR 67413, Dec. 
30, 1991; 59 FR 62499, Dec. 5, 1994; 60 FR 42650, Aug. 16, 1995; 60 FR 
48211, Sept. 18, 1995; 62 FR 51270, Sept. 30, 1997]



14.201-8  Price-related factors.

    The factors set forth in paragraphs (a) through (e) below may be 
applicable in evaluation of bids for award and shall be included in the 
solicitation when applicable. (See 14.201-5(c).)
    (a) Foreseeable costs or delays to the Government resulting from 
such factors as differences in inspection, locations of supplies, and 
transportation. If bids are on an f.o.b. origin basis (see 47.303 and 
47.305), transportation costs to the designated points shall be 
considered in determining the lowest cost to the Government.
    (b) Changes made, or requested by the bidder, in any of the 
provisions of the invitation for bids, if the change does not constitute 
a ground for rejection under 14.404.
    (c) Advantages or disadvantages to the Government that might result 
from making more than one award (see 14.201-6(q)). The contracting 
officer shall assume, for the purpose of making multiple awards, that 
$500 would be the administrative cost to the Government for issuing and 
administering each contract awarded under a solicitation. Individual 
awards shall be for the items or combinations of items that result in 
the lowest aggregate cost to the Government, including the assumed 
administrative costs.
    (d) Federal, State, and local taxes (see part 29).
    (e) Origin of supplies, and, if foreign, the application of the Buy 
American Act or any other prohibition on foreign purchases (see part 
25).

[50 FR 1738, Jan. 11, 1985, and 50 FR 52429, Dec. 23, 1985; 55 FR 25527, 
June 21, 1990]



14.201-9  Simplified contract format.

    Policy. For firm-fixed-price or fixed-price with economic price 
adjustment acquisitions of supplies and services, the contracting 
officer may use the simplified contract format in lieu of the uniform 
contract format (see 14.201-1). The contracting officer has flexibility 
in preparation and organization of the simplified contract format. 
However, the following format should be used to the maximum practical 
extent:
    (a) Solicitation/contract form. Standard Form (SF) 1447, 
Solicitation/Contract, shall be used as the first page of the 
solicitation.
    (b) Contract schedule. Include the following for each contract line 
item:
    (1) Contract line item number.
    (2) Description of supplies or services, or data sufficient to 
identify the requirement.
    (3) Quantity and unit of issue.
    (4) Unit price and amount.
    (5) Packaging and marking requirements.
    (6) Inspection and acceptance, quality assurance, and reliability 
requirements.
    (7) Place of delivery, performance and delivery dates, period of 
performance, and f.o.b. point.
    (8) Other item-peculiar information as necessary (e.g., individual 
fund citations).

[[Page 208]]

    (c) Clauses. Include the clauses required by this regulation. 
Additional clauses shall be incorporated only when considered absolutely 
necessary to the particular acquisition.
    (d) List of documents and attachments. Include if necessary.
    (e) Representations and instructions--(1) Representations and 
certifications. Insert those solicitation provisions that require 
representations, certifications, or the submission of other information 
by offerors.
    (2) Instructions, conditions, and notices. Include the solicitation 
provisions required by 14.201-6. Include any other information/
instructions necessary to guide offerors.
    (3) Evaluation factors for award. Insert all evaluation factors and 
any significant subfactors for award.
    (4) Upon award, the contracting officer need not physically include 
the provisions in subparagraphs (e)(1), (2), and (3) of this subsection 
in the resulting contract, but shall retain them in the contract file. 
Award by acceptance of a bid on the award portion of SF 1447 
incorporates the representations, certifications, and other statements 
of bidders in the resultant contract even though not physically 
attached.

[54 FR 48983, Nov. 28, 1989, as amended at 56 FR 41733, Aug. 22, 1991]



14.202  General rules for solicitation of bids.



14.202-1  Bidding time.

    (a) Policy. A reasonable time for prospective bidders to prepare and 
submit bids shall be allowed in all invitations, consistent with the 
needs of the Government. (For construction contracts, see 36.213-3(a).) 
A bidding time (i.e., the time between issuance of the solicitation and 
opening of bids) of at least 30 calendar days shall be provided when 
synopsis is required by subpart 5.2.
    (b) Factors to be considered. Because of unduly limited bidding 
time, some potential sources may be precluded from bidding and others 
may be forced to include amounts for contingencies that, with additional 
time, could be eliminated. To avoid unduly restricting competition or 
paying higher-than-necessary prices, consideration shall be given to 
such factors as the following in establishing a reasonable bidding time: 
(1) degree of urgency; (2) complexity of requirement; (3) anticipated 
extent of subcontracting; (4) whether use was made of presolicitation 
notices; (5) geographic distribution of bidders; and (6) normal 
transmittal time for both invitations and bids.

[48 FR 42171, Sept. 19, 1983, as amended at 50 FR 1738, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985; 60 FR 34737, July 3, 1995; 62 FR 272, Jan. 
2, 1997]



14.202-2  Telegraphic bids.

    (a) Telegraphic bids and mailgrams shall be authorized only when--
    (1) The date for the opening of bids will not allow bidders 
sufficient time to submit bids in the prescribed format; or
    (2) Prices are subject to frequent changes.
    (b) If telegraphic bids are to be authorized, see 14.201-6(g). 
Unauthorized telegraphic bids shall not be considered (see 14.301(b)).

[48 FR 42171, Sept. 19, 1983, as amended at 60 FR 34737, July 3, 1995]



14.202-3  Bid envelopes.

    (a) Postage or envelopes bearing Postage and Fees Paid indicia shall 
not be distributed with the invitation for bids or otherwise supplied to 
prospective bidders.
    (b) To provide for ready identification and proper handling of bids, 
Optional Form 17, Offer Label, may be furnished with each bid set. The 
form may be obtained from the General Services Administration (see 
53.107).

[48 FR 42171, Sept. 19, 1983, as amended at 59 FR 67033, Dec. 28, 1994]



14.202-4  Bid samples.

    (a) Definition. Bid sample means a sample to be furnished by a 
bidder to show the characteristics of the product offered in a bid.
    (b) Policy. (1) Bidders shall not be required to furnish bid samples 
unless there are characteristics of the product that cannot be described 
adequately in the specification or purchase description.
    (2) Bid samples will be used only to determine the responsiveness of 
the bid

[[Page 209]]

and will not be used to determine a bidder's ability to produce the 
required items.
    (3) Bid samples may be examined for any required characteristic, 
whether or not such characteristic is adequately described in the 
specification, if listed in accordance with subdivision (e)(1)(ii) 
below.
    (4) Bids will be rejected as nonresponsive if the sample fails to 
conform to each of the characteristics listed in the invitation.
    (c) When to use. The use of bid samples would be appropriate for 
products that must be suitable from the standpoint of balance, facility 
of use, general ``feel,'' color, pattern, or other characteristics that 
cannot be described adequately in the specification. However, when more 
than a minor portion of the characteristics of the product cannot be 
adequately described in the specification, products should be acquired 
by two-step sealed bidding or negotiation, as appropriate.
    (d) Justification. The reasons why acceptable products cannot be 
acquired without the submission of bid samples shall be set forth in the 
contract file, except where the submission is required by the formal 
specifications (Federal, Military, or other) applicable to the 
acquisition.
    (e) Requirements for samples in invitations for bids. (1) 
Invitations for bids shall--
    (i) State the number and, if appropriate, the size of the samples to 
be submitted and otherwise fully describe the samples required; and
    (ii) List all the characteristics for which the samples will be 
examined.
    (2) If bid samples are required, see 14.201-6(o).
    (f) Waiver of requirement for bid samples. (1) The requirement for 
furnishing bid samples may be waived when a bidder offers a product 
previously or currently being contracted for or tested by the Government 
and found to comply with specification requirements conforming in every 
material respect with those in the current invitation for bids. When the 
requirement may be waived, see 14.201-6(o)(2).
    (2) Where samples required by a Federal, Military, or other formal 
specification are not considered necessary and a waiver of the sample 
requirements of the specification has been authorized, a statement shall 
be included in the invitation that notwithstanding the requirements of 
the specification, samples will not be required.
    (g) Unsolicited samples. Bid samples furnished with a bid that are 
not required by the invitation generally will not be considered as 
qualifying the bid and will be disregarded. However, the bid sample will 
not be disregarded if it is clear from the bid or accompanying papers 
that the bidder's intention was to qualify the bid. (See 14.404-2(d) if 
the qualification does not conform to the solicitation.)
    (h) Handling of bid samples. (1) Samples that are not destroyed in 
testing shall be returned to bidders at their request and expense, 
unless otherwise specified in the invitation.
    (2) Disposition instructions shall be requested from bidders and 
samples disposed of accordingly.
    (3) Samples ordinarily will be returned collect to the address from 
which received if disposition instructions are not received within 30 
days. Small items may be returned by mail, postage prepaid.
    (4) Samples that are to be retained for inspection purposes in 
connection with deliveries shall be transmitted to the inspecting 
activity concerned, with instructions to retain the sample until 
completion of the contract or until disposition instructions are 
furnished.
    (5) Where samples are consumed or their usefulness is impaired by 
tests, they will be disposed of as scrap unless the bidder requests 
their return.

[48 FR 42171, Sept. 19, 1983, as amended at 50 FR 1738, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985]



14.202-5  Descriptive literature.

    (a) Definition. Descriptive literature means information, such as 
cuts, illustrations, drawings, and brochures, which shows the 
characteristics or construction of a product or explains its operation. 
It is furnished by bidders as a part of their bids to describe the 
products offered. The term includes only information required to 
determine acceptability of the product. It excludes other information 
such as that

[[Page 210]]

furnished in connection with the qualifications of a bidder or for use 
in operating or maintaining equipment.
    (b) Policy. Bidders shall not be required to furnish descriptive 
literature unless the contracting office needs it to determine before 
award whether the products offered meet the specification and to 
establish exactly what the bidder proposes to furnish.
    (c) Justification. The reasons why product acceptability cannot be 
determined without the submission of descriptive literature shall be set 
forth in the contract file, except when such submission is required by 
formal specifications (Federal, Military, or other) applicable to the 
acquisition.
    (d) Requirements of invitation for bids. (1) The invitation shall 
clearly state (i) what descriptive literature is to be furnished, (ii) 
the purpose for which it is required, (iii) the extent to which it will 
be considered in the evaluation of bids, and (iv) the rules that will 
apply if a bidder fails to furnish the literature before bid opening or 
if the literature furnished does not comply with the requirements of the 
invitation.
    (2) If bidders are to furnish descriptive literature, see 14.201-
6(p).
    (e) Waiver of requirements for descriptive literature. (1) The 
requirement for furnishing descriptive literature may be waived if--
    (i) The bidder states in the bid that the product being offered is 
the same as a product previously or currently being furnished to the 
contracting activity; and
    (ii) The contracting officer determines that the product offered by 
the bidder complies with the specification requirements of the current 
invitation for bids. When the requirement may be waived, see 14.201-
6(p)(2).
    (2) When descriptive literature is not considered necessary and a 
waiver of literature requirements of a Federal, Military, or other 
formal specification has been authorized, a statement shall be included 
in the invitation that, notwithstanding the requirements of the 
specifications, descriptive literature will not be required.
    (3) If the solicitation provides for a waiver, a bidder may submit a 
bid on the basis of either the descriptive literature to be furnished or 
a previously furnished product. If the bid is submitted on one basis, 
the bidder is precluded from having it considered on the other basis 
after bids are opened.
    (f) Unsolicited descriptive literature. If descriptive literature is 
furnished when not required by the invitation for bids, the procedures 
set forth in 14.202-4(g) shall be followed.



14.202-6  Final review of invitations for bids.

    Each invitation for bids shall be thoroughly reviewed before 
issuance to detect and correct discrepancies or ambiguities that could 
limit competition or result in the receipt of nonresponsive bids. 
Contracting officers are responsible for the reviews.



14.202-7  Facsimile bids.

    (a) Unless prohibited or otherwise restricted by agency procedures, 
contracting officers may authorize facsimile bids (see 14.201-6(v)). In 
determining whether or not to authorize facsimile bids, the contracting 
officer shall consider factors such as--
    (1) Anticipated bid size and volume;
    (2) Urgency of the requirement;
    (3) Frequency of price changes;
    (4) Availability, reliability, speed, and capacity of the receiving 
facsimile equipment; and
    (5) Adequacy of administrative procedures and controls for 
receiving, identifying, recording, and safeguarding facsimile bids, and 
ensuring their timely delivery to the bids opening location.
    (b) If facsimile bids are authorized, contracting officers may, 
after the date set for bid opening, request the apparently successful 
offeror to provide the complete original signed bid.

[54 FR 48983, Nov. 28, 1989, as amended at 64 FR 51838, Sept. 24, 1999]

    Effective Date Note: At 64 FR 51838, Sept. 24, 1999, section 14.202-
7 was amended in paragraph (a) introductory text by removing ``(see 
14.201-6(w)'' and adding ``(see 14.201-6(v)'', effective Nov. 23, 1999.



14.202-8  Electronic bids.

    In accordance with subpart 4.5, contracting officers may authorize 
use of electronic commerce for submission of bids. If electronic bids 
are authorized,

[[Page 211]]

the solicitation shall specify the electronic commerce method(s) that 
bidders may use.

[60 FR 34737, July 3, 1995



14.203  Methods of soliciting bids.



14.203-1  Transmittal to prospective bidders.

    Invitations for bids or presolicitation notices shall be transmitted 
as specified in 14.205, and shall be provided to others in accordance 
with 5.102. When a contracting office is located in the United States, 
any solicitation sent to a prospective bidder located at a foreign 
address shall be sent by electronic data interchange or international 
air mail if security classification permits.

[60 FR 34737, July 3, 1995]



14.203-2  Dissemination of information concerning invitations for bids.

    (a) Procedures concerning display of invitations for bids in a 
public place, information releases to newspapers and trade journals, 
paid advertisements, and synopsizing in the Commerce Business Daily are 
set forth in 5.101 and 5.2.
    (b) For procedures that apply to publishing notices in the Commerce 
Business Daily to determine whether commercial sources are available, as 
prescribed by OMB Circular A-76, see 5.205(d) and 7.303(b).

[48 FR 42171, Sept. 19, 1983, as amended at 50 FR 1738, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985; 54 FR 48983, Nov. 28, 1989]



14.203-3  Master solicitation.

    (a) Definition. Master solicitation, as used in this subsection, 
means a document containing special clauses and provisions that have 
been identified as essential for the acquisition of a specific type of 
supply or service that is acquired repetitvely.
    (b) Use. The master solicitation is provided to potential sources 
who are requested to retain it for continued and repetitive use. 
Individual solicitations shall reference the date of the current master 
solicitation and any changes thereto. Copies of the master solicitation 
shall be made available on request. Cognizant contract administration 
activities shall be provided a current copy of the master solicitation.

[54 FR 29280, July 11, 1989]



14.204  Records of invitations for bids and records of bids.

    (a) Each contracting office shall retain a record of each invitation 
that it issues and each abstract or record of bids. Contracting officers 
shall review and utilize the information available in connection with 
subsequent acquisitions of the same or similar items.
    (b) The file for each invitation shall show the distribution that 
was made and the date the invitation was issued. The names and addresses 
of prospective bidders who requested the invitation and were not 
included on the original solicitation list shall be added to the list 
and made a part of the record.



14.205  Solicitation mailing lists.



14.205-1  Establishment of lists.

    (a) Solicitation mailing lists shall be established by contracting 
activities to assure access to adequate sources of supplies and 
services. This rule need not be followed, however, when the requirements 
of the contracting office can be obtained through use of simplified 
acquisition procedures (see part 13); the requirements are nonrecurring; 
or electronic commerce methods are used that transmit solicitations or 
notices of procurement opportunities automatically to all interested 
sources. Lists may be established as a central list for use by all 
contracting offices within the contracting activity, or as local lists 
maintained by each contracting office.
    (b) All eligible and qualified concerns that have submitted 
solicitation mailing list applications, or that the contracting office 
considers capable of filling the requirements of a particular 
acquisition, shall be placed on the appropriate solicitation mailing 
list. See also 5.403(b). Planned producers under the Industrial 
Preparedness Planning Program shall be included on lists for their 
planned items. Prospective bidders shall be notified that they have been 
added to solicitation mailing lists in accordance with agency 
procedures. The issuance of a solicitation within a

[[Page 212]]

reasonable time may be considered appropriate notification. Applicants 
shall be notified if they do not meet the criteria for placement on the 
list.
    (c) The names of prospective bidders who are furnished invitations 
in response to their requests shall be added to the list of those 
initially mailed copies of a particular solicitation, so that they will 
be furnished copies of any solicitation amendments, etc. However, when 
it is known that the request was made by a person or an organization 
that is known not to be a prospective bidder, no entry shall be made on 
the list.
    (d)(1) Standard Form 129, Solicitation Mailing List Application, 
shall be used for obtaining information needed to establish and maintain 
lists. Supplemental information, where required, may be obtained as 
specified in agency implementing regulations.
    (2) The application shall be submitted and signed by the supplier, 
as distinguished from an agent of the supplier. However, suppliers are 
not precluded from designating, in the Standard Form 129, their agents 
to receive solicitations.
    (3) In order to enable suppliers to indicate readily the items on 
which they will generally desire to submit bids, there shall be attached 
to Standard Form 129 forwarded to suppliers for completion, a list of 
items, or item groups, or an index to such listing of the items, 
acquired by the contracting activity maintaining the list, which are 
considered applicable to the supplier's type of business.
    (e) Business concerns listed on solicitation mailing lists shall be 
identified by size in accordance with 19.102. Size status should be 
established before listing a business concern on a list. Disadvantaged 
and women-owned business concern designations shall be shown on the list 
whenever noted on the Standard Form 129 submitted by a particular 
concern.

[48 FR 42171, Sept. 19, 1983, as amended at 60 FR 34737, July 3, 1995; 
60 FR 48260, Sept. 18, 1995; 61 FR 67410, Dec. 20, 1996; 63 FR 58594, 
Oct. 30, 1998]



14.205-2  Removal of names from solicitation mailing lists.

    (a) The name of each concern failing to either (1) submit a bid, (2) 
respond to a presolicitation notice (see 14.205-4(c)), or (3) otherwise 
respond to an invitation for bids may be removed from the solicitation 
mailing list without notice to the concern. However, the removal shall 
be limited to the items involved in the invitation or notice. When a 
concern fails to respond to two consecutive invitations or 
presolicitation notices, its name shall be removed from the list to the 
extent indicated in this paragraph. However, in individual cases, 
concerns failing to respond may be retained on a list if retention is in 
the best interest of the Government. Both actual bids and written 
requests for retention on the lists shall be deemed to be responses to 
invitations for bids or presolicitation notices. If this procedure 
results in limited solicitation mailing lists, the contracting officer 
should request an explanation from the concerns that did not respond.
    (b) Concerns that have been debarred from Government contracts or 
otherwise determined to be ineligible to receive an award shall be 
removed from solicitation mailing lists to the extent required by the 
debarment, suspension, or other determination of ineligibility.

[48 FR 42171, Sept. 19, 1983, as amended at 50 FR 1738, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985]



14.205-3  Reinstatement on solicitation mailing lists.

    Concerns that have been removed from solicitation mailing lists may 
be reinstated (a) upon written request, (b) by filing a new application 
on Standard Form 129, or (c) by the submission of a bid. Debarred or 
suspended firms shall not be reinstated during the period of a debarment 
or suspension.



14.205-4  Excessively long solicitation mailing lists.

    (a) General. Solicitation mailing lists should be used to promote 
competition commensurate with the dollar value of the proposed contract. 
As much of the solicitation mailing list shall be used

[[Page 213]]

as is compatible with efficiency and economy in securing competition. 
Where the number of bidders on a mailing list is excessive in relation 
to a specific acquisition, the list may be reduced consistent with this 
paragraph and paragraphs (b) and (c) below. Nonetheless, solicitations 
should be furnished to others upon request, in accordance with 5.102. 
Also, bids shall not be disregarded merely because the bidder was not 
formally invited to bid.
    (b) Rotation of lists. By using different portions of a list for 
separate acquisitions, solicitation mailing lists may be rotated. 
However, considerable judgment must be exercised in determining whether 
the size of the acquisiton justifies the rotation. The use of a 
presolicitation notice (see paragraph (c) below), time permitting, also 
should be considered. In rotating a list, the interests of small, small 
disadvantaged and women-owned small businesses (see 19.202-4) shall be 
considered. Whenever a list is rotated, bids shall be solicited from (1) 
the previously successful bidder, (2) prospective suppliers who have 
been added to the solicitation mailing list since the last solicitation, 
and (3) concerns on the segment of the list selected for use in a 
particular acquisition. However, the rule does not apply when such 
action would be precluded by use of a total set-aside (see part 19).
    (c) Presolicitation notices. In lieu of initially forwarding 
complete bid sets, the contracting officer may send presolicitation 
notices to concerns on the solicitation mailing list. The notice shall 
(1) specify the final date for receipt of requests for a complete bid 
set, (2) briefly describe the requirement and furnish other essential 
information to enable concerns to determine whether they have an 
interest in the invitation, and (3) notify concerns that, if no bid is 
to be submitted, they should advise the issuing office in writing if 
future invitations are desired for the type of supplies or services 
involved. Drawings, plans, and specifications normally will not be 
furnished with the presolicitation notice. The return date of the notice 
must be sufficiently in advance of the mailing date of the invitation 
for bids to permit an accurate estimate of the number of bid sets 
required. Bid sets shall be sent to concerns that request them in 
response to the notice. This procedure is particularly suitable when 
invitations for bids and solicitation mailing lists are lengthy.

[48 FR 42171, Sept. 19, 1983, as amended at 50 FR 1738, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985; 60 FR 48260, Sept. 18, 1995]



14.205-5  Release of solicitation mailing lists.

    (a) Contracting activities shall make the central and local 
solicitation mailing lists established under this part available to the 
public in response to written requests made in accordance with agency 
regulations implementing subpart 24.2.
    (b) When invitations for bids for construction contracts have been 
issued, trade journals, prospective subcontractors, material suppliers, 
bidders, and others having a bona fide interest will be supplied upon 
request with a list of all prospective bidders furnished copies of the 
plans and specifications. Contracting offices may require written 
requests and establish appropriate procedures.

[48 FR 42171, Sept. 19, 1983, as amended at 52 FR 38189, Oct. 14, 1987; 
53 FR 661, Jan. 11, 1988; 53 FR 43390, Oct. 26, 1988]



14.206  [Reserved]



14.207  Pre-bid conference.

    A pre-bid conference may be used, generally in a complex 
acquisition, as a means of briefing prospective bidders and explaining 
complicated specifications and requirements to them as early as possible 
after the invitation has been issued and before the bids are opened. It 
shall never be used as a substitute for amending a defective or 
ambiguous invitation. The conference shall be conducted in accordance 
with the procedure prescribed in 15.201.

[48 FR 42171, Sept. 19, 1983, as amended at 62 FR 51270, Sept. 30, 1997]



14.208  Amendment of invitation for bids.

    (a) If it becomes necessary to make changes in quantity, 
specifications, delivery schedules, opening dates, etc., or to correct a 
defective or ambiguous invitation, such changes shall be accomplished by 
amendment of the invitation

[[Page 214]]

for bids using Standard Form 30, Amendment of Solicitation/Modification 
of Contract. The fact that a change was mentioned at a pre-bid 
conference does not relieve the necessity for issuing an amendment. 
Amendments shall be sent, before the time for bid opening, to everyone 
to whom invitations have been furnished and shall be displayed in the 
bid room.
    (b) Before amending an invitation for bids, the period of time 
remaining until bid opening and the need to extend this period shall be 
considered. When only a short time remains before the time set for bid 
opening, consideration should be given to notifying bidders of an 
extension of time by telegrams or telephone. Such extension must be 
confirmed in the amendment.
    (c) Any information given to a prospective bidder concerning an 
invitation for bids shall be furnished promptly to all other prospective 
bidders as an amendment to the invitation (1) if such information is 
necessary for bidders to submit bids or (2) if the lack of such 
information would be prejudicial to uninformed bidders. The information 
shall be furnished even though a pre-bid conference is held. No award 
shall be made on the invitation unless such amendment has been issued in 
sufficient time to permit all prospective bidders to consider such 
information in submitting or modifying their bids.



14.209  Cancellation of invitations before opening.

    (a) The cancellation of an invitation for bids usually involves a 
loss of time, effort, and money spent by the Government and bidders. 
Invitations should not be cancelled unless cancellation is clearly in 
the public interest; e.g., (1) where there is no longer a requirement 
for the supplies or services or (2) where amendments to the invitation 
would be of such magnitude that a new invitation is desirable.
    (b) When an invitation issued other than electronically is 
cancelled, bids that have been received shall be returned unopened to 
the bidders and notice of cancellation shall be sent to all prospective 
bidders to whom invitations were issued. When an invitation issued 
electronically is cancelled, a general notice of cancellation shall be 
posted electronically, the bids received shall not be viewed, and the 
bids shall be purged from primary and backup data storage systems.
    (c) The notice of cancellation shall (1) identify the invitation for 
bids by number and short title or subject matter, (2) briefly explain 
the reason the invitation is being cancelled, and (3) where appropriate, 
assure prospective bidders that they will be given an opportunity to bid 
on any resolicitation of bids or any future requirements for the type of 
supplies or services involved. Cancellations shall be recorded in 
accordance with 14.403(d).

[48 FR 42171, Sept. 19, 1983, as amended at 60 FR 34737, July 3, 1995; 
62 FR 12692, Mar. 17, 1997]



14.210  Qualified products.

    See subpart 9.2.



14.211  Release of acquisition information.

    (a) Before solicitation. Information concerning proposed 
acquisitions shall not be released outside the Government before 
solicitation except for presolicitation notices in accordance with 
14.205-4(c) or 36.213-2, or long-range acquisition estimates in 
accordance with 5.404, or synopses in accordance with 5.201. Within the 
Government, such information shall be restricted to those having a 
legitimate interest. Releases of information shall be made (1) to all 
prospective bidders, and (2) as nearly as possible at the same time, so 
that one prospective bidder shall not be given unfair advantage over 
another. See 3.104 regarding requirements for proprietary and source 
selection information including access to and disclosure thereof.
    (b) After solicitation. Discussions with prospective bidders 
regarding a solicitation shall be conducted and technical or other 
information shall be transmitted only by the contracting officer or 
superiors having contractual authority or by others specifically 
authorized. Such personnel shall not furnish any information to a 
prospective bidder that alone or together with other information may 
afford an advantage over others. However, general information that would 
not be prejudicial to other prospective bidders may

[[Page 215]]

be furnished upon request; e.g., explanation of a particular contract 
clause or a particular condition of the schedule in the invitation for 
bids, and more specific information or clarifications may be furnished 
by amending the solicitation (see 14.208).

[48 FR 42171, Sept. 19, 1983, as amended at 50 FR 1738, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985; 55 FR 36795, Sept. 6, 1990; 62 FR 272, Jan. 
2, 1997]



14.212  Economic purchase quantities (supplies).

    Contracting officers shall comply with the economic purchase 
quantity planning requirements for supplies in subpart 7.2. See 7.203 
for instructions regarding use of the provision at 52.207-4, Economic 
Purchase Quantity--Supplies, and 7.204 for guidance on handling 
responses to that provision.

[50 FR 35479, Aug. 30, 1985]



14.213  Annual submission of representations and certifications.

    (a) Submission of offeror representations and certifications on an 
annual basis, as an alternative to submission in each solicitation, may 
be authorized by agencies subject to the requirements of this section. 
The decision to use annual representations and certifications shall be 
made in accordance with agency procedures.
    (b) In accordance with agency procedures, each contracting office 
utilizing annual representations and certifications shall establish 
procedures and assign responsibilities for centrally requesting, 
receiving, storing, verifying and updating offeror's annual submissions. 
Generally, the representations and certifications shall be effective for 
a period of 1 year from date of signature.
    (c) The contracting officer shall not include in individual 
solicitations the full text of provisions that are contained in the 
annual representations and certifications.
    (d) Offerors shall make changes that affect only one solicitation by 
completing the appropriate section of the provision at 52.214-30, Annual 
Representations and Certifications--Sealed Bidding.

[54 FR 48983, Nov. 28, 1989]



14.214  [Reserved]



                    Subpart 14.3--Submission of Bids



14.301  Responsiveness of bids.

    (a) To be considered for award, a bid must comply in all material 
respects with the invitation for bids. Such compliance enables bidders 
to stand on an equal footing and maintain the integrity of the sealed 
bidding system.
    (b) Telegraphic bids shall not be considered unless permitted by the 
invitation. The term telegraphic bids means bids submitted by telegram 
or by mailgram.
    (c) Facsimile bids shall not be considered unless permitted by the 
solicitation (see 14.202-7).
    (d) Bids should be filled out, executed, and submitted in accordance 
with the instructions in the invitation. If a bidder uses its own bid 
form or a letter to submit a bid, the bid may be considered only if (1) 
the bidder accepts all the terms and conditions of the invitation and 
(2) award on the bid would result in a binding contract with terms and 
conditions that do not vary from the terms and conditions of the 
invitation.
    (e) Bids submitted by electronic commerce shall be considered only 
if the electronic commerce method was specifically stipulated or 
permitted by the solicitation.

[48 FR 42171, Sept. 19, 1983, as amended at 50 FR 1738, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985; 54 FR 48983, Nov. 28, 1989; 60 FR 34738, 
July 3, 1995]



14.302  Bid submission.

    (a) Bids shall be submitted so that they will be received in the 
office designated in the invitation for bids (referred to in paragraphs 
(b) and (c) below as the designated office) not later than the exact 
time set for opening of bids.
    (b) Except as specified in paragraph (c) below, if telegraphic bids 
are authorized, a telegraphic bid that is communicated by means of a 
telephone call to the designated office shall be considered if--
    (1) Agency regulations authorize such consideration;

[[Page 216]]

    (2) The telephone call is made by the telegraph office that received 
the telegraphic bid;
    (3) The telephone call is received by the designated office not 
later than the time set for the bid opening;
    (4) The telegraph office that received the telegraphic bid sends the 
designated office the telegram that formed the basis for the telephone 
call;
    (5) The telegram indicates on its face that it was received in the 
telegraph office before the telephone call was received by the 
designated office; and
    (6) The bid in the telegram is identical in all essential respects 
to the bid received in the telephone call from the telegraph office.
    (c) If the conditions in paragraph (b) above apply and the bid 
received by telephone is the apparent low bid, award may not be made 
until the telegram is received by the designated office; however, if the 
telegram is not received by the designated office within 5 days after 
the bid opening date, the bid shall be rejected.



14.303  Modification or withdrawal of bids.

    (a) Bids may be modified or withdrawn by any method authorized by 
the solicitation, if notice is received in the office designated in the 
solicitation not later than the exact time set for opening of bids. 
Unless proscribed by agency regulations, a telegraphic modification or 
withdrawal of a bid received in such office by telephone from the 
receiving telegraph office shall be considered. However, the message 
shall be confirmed by the telegraph company by sending a copy of the 
written telegram that formed the basis for the telephone call. If the 
solicitation authorizes facsimile bids, bids may be modified or 
withdrawn via facsimile received at any time before the exact time set 
for receipt of bids, subject to the conditions specified in the 
provision prescribed in 14.201-6(v). Modifications received by telephone 
(including a record of those telephoned by the telegraph company) or 
facsimile shall be sealed in an envelope by a proper official. The 
official shall write on the envelope (1) the date and time of receipt 
and by whom, and (2) the number of the invitation for bids, and shall 
sign the envelope. No information contained in the envelope shall be 
disclosed before the time set for bid opening.
    (b) A bid may be withdrawn in person by a bidder or its authorized 
representative if, before the exact time set for opening of bids, the 
identity of the persons requesting withdrawal is established and that 
person signs a receipt for the bid.
    (c) Upon withdrawal of an electronically transmitted bid, the data 
received shall not be viewed and shall be purged from primary and backup 
data storage systems.

[48 FR 42171, Sept. 19, 1983, as amended at 54 FR 48983, Nov. 28, 1989; 
60 FR 34738, July 3, 1995; 64 FR 51838, Sept. 24, 1999]

    Effective Date Note: At 64 FR 51838, Sept. 24, 1999, was amended by 
revising section 14.303 in the fourth sentence of paragraph (a) by 
removing ``14.201-6(w)'' and adding ``14.201-6(v)'', effective Nov. 23, 
1999.



14.304  Submission, modification, and withdrawal of bids.

    (a) Bidders are responsible for submitting bids, and any 
modifications or withdrawals, so as to reach the Government office 
designated in the invitation for bid (IFB) by the time specified in the 
IFB. They may use any transmission method authorized by the IFB (i.e., 
regular mail, electronic commerce, or facsimile). If no time is 
specified in the IFB, the time for receipt is 4:30 p.m., local time, for 
the designated Government office on the date that bids are due.
    (b)(1) Any bid, modification, or withdrawal of a bid received at the 
Government office designated in the IFB after the exact time specified 
for receipt of bids is ``late'' and will not be considered unless it is 
received before award is made, the contracting officer determines that 
accepting the late bid would not unduly delay the acquisition; and--
    (i) If it was transmitted through an electronic commerce method 
authorized by the IFB, it was received at the initial point of entry to 
the Government infrastructure not later than 5:00 p.m. one working day 
prior to the date specified for receipt of bids; or
    (ii) There is acceptable evidence to establish that it was received 
at the

[[Page 217]]

Government installation designated for receipt of bids and was under the 
Government's control prior to the time set for receipt of bids.
    (2) However, a late modification of an otherwise successful bid, 
that makes its terms more favorable to the Government, will be 
considered at any time it is received and may be accepted.
    (c) Acceptable evidence to establish the time of receipt at the 
Government installation includes the time/date stamp of that 
installation on the bid wrapper, other documentary evidence of receipt 
maintained by the installation, or oral testimony or statements of 
Government personnel.
    (d) If an emergency or unanticipated event interrupts normal 
Government processes so that bids cannot be received at the Government 
office designated for receipt of bids by the exact time specified in the 
IFB, and urgent Government requirements preclude amendment of the bid 
opening date, the time specified for receipt of bids will be deemed to 
be extended to the same time of day specified in the IFB on the first 
work day on which normal Government processes resume.
    (e) Bids may be withdrawn by written notice received at any time 
before the exact time set for receipt of bids. If the IFB authorizes 
facsimile bids, bids may be withdrawn via facsimile received at any time 
before the exact time set for receipt of bids, subject to the conditions 
specified in the provision at 52.214-31, Facsimile Bids. A bid may be 
withdrawn in person by a bidder or its authorized representative if, 
before the exact time set for receipt of bids, the identity of the 
person requesting withdrawal is established and the person signs a 
receipt for the bid. Upon withdrawal of an electronically transmitted 
bid, the data received must not be viewed and, where practicable, must 
be purged from primary and backup data storage systems.
    (f) The contracting officer must promptly notify any bidder if its 
bid, modification, or withdrawal was received late, and must inform the 
bidder whether its bid will be considered, unless contract award is 
imminent and the notices prescribed in 14.409 would suffice.
    (g) Late bids and modifications that are not considered must be held 
unopened, unless opened for identification, until after award and then 
retained with other unsuccessful bids. However, any bid bond or 
guarantee must be returned.
    (h) If available, the following must be included in the contract 
files for each late bid, modification, or withdrawal:
    (1) The date and hour of receipt.
    (2) A statement, with supporting rationale, regarding whether the 
bid was considered for award.
    (3) The envelope, wrapper, or other evidence of the date of receipt.

[64 FR 51838, Sept. 24, 1999]

    Effective Date Note: At 64 FR 51838, Sept. 24, 1999, section 14.304, 
consisting of sections 14.304-1 through 14.304-4 was revised, effective 
Nov. 23, 1999. For the convenience of the user, the supersed text is set 
forth as follows:

14.304  Late bids, late modifications of bids, or late withdrawal of 
          bids.

14.304-1  General.

    Bids received in the office designated in the invitation for bids 
after the exact time set for opening are late bids.
    (a) A late bid, modification of bid, or withdrawal of bid shall not 
be considered unless received before contract award, and--
    (1) It was sent to a contracting office in the United States or 
Canada by registered or certified mail not later than 5 calendar days 
before the bid receipt date specified;
    (2) It was sent by mail (or telegram or facsimile, if authorized) or 
hand-carried (including delivery by a commercial carrier) if it is 
determined by the Government that the late receipt was due primarily to 
government mishandling after receipt at the Government installation;
    (3) It was sent to a contracting office in the United States or 
Canada by U.S. Postal Service Express Mail Next Day Service-Post Office 
to Addressee not later than 5:00 PM at the place of mailing 2 working 
days prior to the date specified for receipt of bids. The term working 
days excludes weekends and Federal holidays; or
    (4) It was transmitted through an electronic commerce method 
authorized by the solicitation and was received at the initial point of 
entry to the Government infrastructure not later than 5:00 p.m. one 
working day prior to the date specified for receipt of bids.
    (b) The only acceptable evidence to establish the date of mailing of 
a late bid, modification, or withdrawal sent to a contracting office in 
the United States or Canada either by registered or certified mail is a 
U.S. or

[[Page 218]]

Canadian Postal Service postmark both on the envelope or wrapper and on 
the original receipt from the U.S. or Canadian Postal Service. Both 
postmarks must show a legible date, or the bid, modification, or 
withdrawal shall be deemed to have been mailed late. (The term postmark 
means a printed, stamped, or otherwise placed impression (exclusive of a 
postage meter machine impression) that is readily identifiable without 
further action as having been supplied and affixed on the date of 
mailing by employees of the U.S. or Canadian Postal Service. Therefore, 
bidders should request the postal clerk to place a legible hand 
cancellation bull's-eye postmark on both the receipt and the envelope or 
wrapper.)
    (c) Acceptable evidence to establish the time of receipt at the 
Government installation includes the time/date stamp of such 
installation on the bid wrapper, other documentary evidence of receipt 
maintained by the installation, or oral testimony or statements of 
Government personnel.
    (d) The only acceptable evidence to establish the date of mailing of 
a late bid, modification, or withdrawal sent by U.S. Postal Service 
Express Mail Next Day Service-Post Office to Addressee is the date 
entered by the post office receiving clerk on the Express Mail Next Day 
Service-Post Office to Addressee label and the postmark on the envelope 
or wrapper and on the original receipt from the U.S. Postal Service. 
Postmark has the same meaning as defined in paragraph (b) of this 
subsection, excluding postmarks of the Canadian Postal Service. 
Therefore, bidders should request the postal clerks to place a legible 
hand cancellation bull's-eye postmark on both the receipt and the 
envelope or wrapper.
    (e) Notwithstanding the above, a late modification of an otherwise 
successful bid which makes its terms more favorable to the Government 
will be considered at any time it is received and may be accepted.

[48 FR 42171, Sept. 19, 1983, as amended at 54 FR 48984, Nov. 28, 1989; 
60 FR 34738, July 3, 1995; 61 FR 69293, Dec. 31, 1996; 62 FR 12693, Mar. 
17, 1997]

14.304-2  Notification to late bidders.

    When a bid, modification of bid, or withdrawal of bid is received 
late and it is clear from available information that it cannot be 
considered, the contracting officer shall promptly notify the bidder 
accordingly. However, when a late bid, modification of bid, or 
withdrawal of bid is transmitted to a contracting office in the United 
States or Canada by registered or certified mail or by U.S. Postal 
Service Express Mail Next Day Service-Post Office to Addressee and is 
received before award, the bidder shall be promptly notified 
substantially as follows: Your bid in response to Invitation for Bids 
Number ---- dated ---- for ---- [insert subject matter or short title] 
was received after the time for opening specified in the Invitation. 
Accordingly, your bid will not be opened or considered for award unless 
there is received from you by ---- [insert date] the original post 
office receipt for (insert one of the following, as appropriate):
    (a) Registered or certified mail showing a date of mailing not later 
than the fifth calendar day before the date specified for opening (e.g., 
a bid submitted in response to a solicitation requiring receipt of bids 
by the 20th of the month must have been mailed by the 15th or earlier); 
or
    (b) U.S. Postal Service Express Mail Next Day Service-Post Office to 
Addressee showing a date of mailing not later than 5:00 PM two Federal 
working days prior to the date specified for opening.

[54 FR 48984, Nov. 28, 1989]

14.304-3  Disposition of late submissions.

    Late bids, modification of bids, or withdrawal of bids that are not 
considered for award shall be held unopened, unless opened for 
identification, until after award and then retained with other 
unsuccessful bids. However, any bid bond or guarantee shall be returned.

14.304-4  Records.

    The following shall, if available, be included in the contracting 
office files with respect to each late bid, modification of bid, or 
withdrawal of bid:
    (a) A statement of the date and hour of mailing, filing, or 
delivery.
    (b) A statement of the date and hour of receipt.
    (c) The determination, with supporting facts, as to whether or not 
the late bid was considered for award.
    (d) A statement of the disposition of the late bid.
    (e) The envelope, or other covering, if the late bid was considered 
for award.



           Subpart 14.4--Opening of Bids and Award of Contract



14.400  Scope of subpart.

    This subpart contains procedures for the receipt, handling, opening, 
and disposition of bids including mistakes in bids, and subsequent award 
of contracts.

[48 FR42171, Sept. 19, 1983, as amended at 63 FR 58594, Oct. 30, 1998].

[[Page 219]]



14.401  Receipt and safeguarding of bids.

    (a) All bids (including modifications) received before the time set 
for the opening of bids shall be kept secure. Except as provided in 
paragraph (b) of this section, the bids shall not be opened or viewed, 
and shall remain in a locked bid box, a safe, or in a secured, 
restricted-access electronic bid box. If an invitation for bids is 
cancelled, bids shall be returned to the bidders. Necessary precautions 
shall be taken to ensure the security of the bid box or safe. Before bid 
opening, information concerning the identity and number of bids received 
shall be made available only to Government employees. Such disclosure 
shall be only on a need to know basis. When bid samples are submitted, 
they shall be handled with sufficient care to prevent disclosure of 
characteristics before bid opening.
    (b) Envelopes marked as bids but not identifying the bidder or the 
solicitation may be opened solely for the purpose of identification, and 
then only by an official designated for this purpose. If a sealed bid is 
opened by mistake (e.g., because it is not marked as being a bid), the 
envelope shall be signed by the opener, whose position shall also be 
written thereon, and delivered to the designated official. This official 
shall immediately write on the envelope (1) an explanation of the 
opening, (2) the date and time opened, and (3) the invitation for bids 
number, and shall sign the envelope. The official shall then immediately 
reseal the envelope.

[48 FR 42171, Sept. 19, 1983, as amended at 60 FR 34738, July 3, 1995]



14.402  Opening of bids.



14.402-1  Unclassified bids.

    (a) The bid opening officer shall decide when the time set for 
opening bids has arrived and shall inform those present of that 
decision. The officer shall then (1) personally and publicly open all 
bids received before that time, (2) if practical, read the bids aloud to 
the persons present, and (3) have the bids recorded. The original of 
each bid shall be carefully safeguarded, particularly until the abstract 
of bids required by 14.403 has been made and its accuracy verified.
    (b) Performance of the procedure in paragraph (a) above may be 
delegated to an assistant, but the bid opening officer remains fully 
responsible for the actions of the assistant.
    (c) Examination of bids by interested persons shall be permitted if 
it does not interfere unduly with the conduct of Government business. 
Original bids shall not be allowed to pass out of the hands of a 
Government official unless a duplicate bid is not available for public 
inspection. The original bid may be examined by the public only under 
the immediate supervision of a Government official and under conditions 
that preclude possibility of a substitution, addition, deletion, or 
alteration in the bid.



14.402-2  Classified bids.

    The opening of classified bids shall not be accessible to the 
general public. Openings may be witnessed and the results recorded by 
those bidder representatives (a) who have been previously cleared from a 
security standpoint and (b) who represent bidders who were invited to 
bid. Bids shall be made available to those persons authorized to attend 
the opening of bids. No public record shall be made of bids or bid 
prices received in response to classified invitations for bids.



14.402-3  Postponement of openings.

    (a) A bid opening may be postponed even after the time scheduled for 
bid opening (but otherwise in accordance with 14.208) and--
    (1) The contracting officer has reason to believe that the bids of 
an important segment of bidders have been delayed in the mails, or in 
the communications system specified for transmission of bids, for causes 
beyond their control and without their fault or negligence (e.g., flood, 
fire, accident, weather conditions, strikes, or Government equipment 
blackout or malfunction when bids are due); or
    (2) Emergency or unanticipated events interrupt normal governmental 
processes so that the conduct of bid openings as scheduled is 
impractical.
    (b) At the time of a determination to postpone a bid opening under 
subparagraph (a)(1) above, an announcement of the determination shall be 
publicly

[[Page 220]]

posted. If practical before issuance of a formal amendment of the 
invitation, the determination shall be otherwise communicated to 
prospective bidders who are likely to attend the scheduled bid opening.
    (c) In the case of paragraph (a)(2) of this section, and when urgent 
Government requirements preclude amendment of the solicitation as 
prescribed in 14.208, the time specified for opening of bids will be 
deemed to be extended to the same time of day specified in the 
solicitation on the first work day on which normal Government processes 
resume. In such cases, the time of actual bid opening shall be deemed to 
be the time set for bid opening for the purpose of determining ``late 
bids'' under 14.304. A note should be made on the abstract of bids or 
otherwise added to the file explaining the circumstances of the 
postponement.

[48 FR 42171, Sept. 19, 1983, as amended at 60 FR 34738, July 3, 1995; 
61 FR 31619, June 20, 1996]



14.403  Recording of bids.

    (a) Standard Form 1409, Abstract of Offers, or Optional Form 1419, 
Abstract of Offers--Construction (or automated equivalent), shall be 
completed and certified as to its accuracy by the bid opening officer as 
soon after bid opening as practicable. Where bid items are too numerous 
to warrant complete recording of all bids, abstract entries for 
individual bids may be limited to item numbers and bid prices. In 
preparing these forms, the extra columns and SF 1410, Abstract of 
Offers--Continuation, and OF 1419A, Abstract of Offers--Construction, 
Continuation Sheet, may be used to label and record such information as 
the contracting activity deems necessary.
    (b) Abstracts of offers for unclassified acquisitions shall be 
available for public inspection. Such abstracts shall not contain 
information regarding failure to meet minimum standards of 
responsibility, apparent collusion of bidders, or other notations 
properly exempt from disclosure to the public in accordance with agency 
regulations implementing subpart 24.2.
    (c) The forms identified in paragraph (a) above need not be used by 
the Defense Fuel Supply Center for acquisitions of coal or petroleum 
products or by the Defense Personnel Support Center for perishable 
subsistence items.
    (d) If an invitation for bids is cancelled before the time set for 
bid opening, this fact shall be recorded together with a statement of 
the number of bids invited and the number of bids received.

[48 FR 42171, Sept. 19, 1983, as amended at 54 FR 29280, July 11, 1989]



14.404  Rejection of bids.



14.404-1  Cancellation of invitations after opening.

    (a)(1) Preservation of the integrity of the competitive bid system 
dictates that, after bids have been opened, award must be made to that 
responsible bidder who submitted the lowest responsive bid, unless there 
is a compelling reason to reject all bids and cancel the invitation.
    (2) Every effort shall be made to anticipate changes in a 
requirement before the date of opening and to notify all prospective 
bidders of any resulting modification or cancellation. This will permit 
bidders to change their bids and prevent unnecessary exposure of bid 
prices.
    (3) As a general rule, after the opening of bids, an invitation 
should not be cancelled and resolicited due solely to increased 
requirements for the items being acquired. Award should be made on the 
initial invitation for bids and the additional quantity should be 
treated as a new acquisition.
    (b) When it is determined before award but after opening that the 
requirements of 11.201 (relating to the availability and identification 
of specifications) have not been met, the invitation shall be cancelled.
    (c) Invitations may be cancelled and all bids rejected before award 
but after opening when, consistent with paragraph (a)(1) above, the 
agency head determines in writing that--
    (1) Inadequate or ambiguous specifications were cited in the 
invitation;
    (2) Specifications have been revised;
    (3) The supplies or services being contracted for are no longer 
required;
    (4) The invitation did not provide for consideration of all factors 
of cost to

[[Page 221]]

the Government, such as cost of transporting Government-furnished 
property to bidders' plants;
    (5) Bids received indicate that the needs of the Government can be 
satisfied by a less expensive article differing from that for which the 
bids were invited;
    (6) All otherwise acceptable bids received are at unreasonable 
prices, or only one bid is received and the contracting officer cannot 
determine the reasonableness of the bid price;
    (7) The bids were not independently arrived at in open competition, 
were collusive, or were submitted in bad faith (see subpart 3.3 for 
reports to be made to the Department of Justice);
    (8) No responsive bid has been received from a responsible bidder.
    (9) A cost comparison as prescribed in OMB Circular A-76 and subpart 
7.3 shows that performance by the Government is more economical; or
    (10) For other reasons, cancellation is clearly in the public's 
interest.
    (d) Should administrative difficulties be encountered after bid 
opening that may delay award beyond bidders' acceptance periods, the 
several lowest bidders whose bids have not expired (irrespective of the 
acceptance period specified in the bid) should be requested, before 
expiration of their bids, to extend in writing the bid acceptance period 
(with consent of sureties, if any) in order to avoid the need for 
resoliciting.
    (e) Under some circumstances, completion of the acquisition after 
cancellation of the invitation for bids may be appropriate.
    (1) If the invitation for bids has been cancelled for the reasons 
specified in subparagraphs (c) (6), (7), or (8) of this subsection, and 
the agency head has authorized, in the determination in paragraph (c) of 
this subsection, the completion of the acquisition through negotiation, 
the contracting officer shall proceed in accordance with paragraph (f) 
of this subsection.
    (2) If the invitation for bids has been cancelled for the reasons 
specified in subparagraphs (c) (1), (2), (4), (5), or (10) of this 
subsection, or for the reasons in subparagraphs (c) (6), (7), or (8) of 
this subsection and completion through negotiation is not authorized 
under subparagraph (e)(1) of this subsection, the contracting officer 
shall proceed with a new acquisition.
    (f) When the agency head has determined, in accordance with 
paragraph (e)(1) of this subsection, that an invitation for bids should 
be canceled and that use of negotiation is in the Government's interest, 
the contracting officer may negotiate (in accordance with part 15, as 
appropriate) and make award without issuing a new solicitation 
provided--
    (1) Each responsible bidder in the sealed bid acquisition has been 
given notice that negotiations will be conducted and has been given an 
opportunity to participate in negotiations; and
    (2) The award is made to the responsible bidder offering the lowest 
negotiated price.

[48 FR 42171, Sept. 19, 1983, as amended at 50 FR 1738, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985; 55 FR 52790, Dec. 21, 1990; 60 FR 48248, 
Sept. 18, 1995; 62 FR 51230, Sept. 30, 1997]



14.404-2  Rejection of individual bids.

    (a) Any bid that fails to conform to the essential requirements of 
the invitation for bids shall be rejected.
    (b) Any bid that does not conform to the applicable specifications 
shall be rejected unless the invitation authorized the submission of 
alternate bids and the supplies offered as alternates meet the 
requirements specified in the invitation.
    (c) Any bid that fails to conform to the delivery schedule or 
permissible alternates stated in the invitation shall be rejected.
    (d) A bid shall be rejected when the bidder imposes conditions that 
would modify requirements of the invitation or limit the bidder's 
liability to the Government, since to allow the bidder to impose such 
conditions would be prejudicial to other bidders. For example, bids 
shall be rejected in which the bidder--
    (1) Protects against future changes in conditions, such as increased 
costs, if total possible costs to the Government cannot be determined;
    (2) Fails to state a price and indicates that price shall be price 
in effect at time of delivery;

[[Page 222]]

    (3) States a price but qualifies it as being subject to price in 
effect at time of delivery;
    (4) When not authorized by the invitation, conditions or qualifies a 
bid by stipulating that it is to be considered only if, before date of 
award, the bidder receives (or does not receive) award under a separate 
solicitation;
    (5) Requires that the Government is to determine that the bidder's 
product meets applicable Government specifications; or
    (6) Limits rights of the Government under any contract clause.
    (e) A low bidder may be requested to delete objectionable conditions 
from a bid provided the conditions do not go to the substance, as 
distinguished from the form, of the bid, or work an injustice on other 
bidders. A condition goes to the substance of a bid where it affects 
price, quantity, quality, or delivery of the items offered.
    (f) Any bid may be rejected if the contracting officer determines in 
writing that it is unreasonable as to price. Unreasonableness of price 
includes not only the total price of the bid, but the prices for 
individual line items as well.
    (g) Any bid may be rejected if the prices for any line items or 
subline items are materially unbalanced (see 15.404-1(g)).
    (h) Bids received from any person or concern that is suspended, 
debarred, proposed for debarment, or declared ineligible as of the bid 
opening date shall be rejected unless a compelling reason determination 
is made (see subpart 9.4).
    (i) Low bids received from concerns determined to be not responsible 
pursuant to subpart 9.1 shall be rejected (but if a bidder is a small 
business concern, see 19.6 with respect to certificates of competency).
    (j) When a bid guarantee is required and a bidder fails to furnish 
the guarantee in accordance with the requirements of the invitation for 
bids, the bid shall be rejected, except as otherwise provided in 28.101-
4.
    (k) The originals of all rejected bids, and any written findings 
with respect to such rejections, shall be preserved with the papers 
relating to the acquisition.
    (l) After submitting a bid, if all of a bidder's assets or that part 
related to the bid are transferred during the period between the bid 
opening and the award, the transferee may not be able to take over the 
bid. Accordingly, the contracting officer shall reject the bid unless 
the transfer is effected by merger, operation of law, or other means not 
barred by 41 U.S.C. 15 or 31 U.S.C. 3727.

[48 FR 42171, Sept. 19, 1983, as amended at 51 FR 2649, Jan. 17, 1986; 
55 FR 25527, June 21, 1990; 55 FR 36795, Sept. 6, 1990; 56 FR 29127, 
June 25, 1991; 62 FR 232, Jan. 2, 1997; 62 FR 51270, Sept. 30, 1997]



14.404-3  Notice to bidders of rejection of all bids.

    When it is determined necessary to reject all bids, the contracting 
officer shall notify each bidder that all bids have been rejected and 
shall state the reason for such action.



14.404-4  Restrictions on disclosure of descriptive literature.

    When a bid is accompanied by descriptive literature (as defined in 
14.202-5(a)), and the bidder imposes a restriction that prevents the 
public disclosure of such literature, the restriction may render the bid 
nonresponsive. The restriction renders the bid nonresponsive if it 
prohibits the disclosure of sufficient information to permit competing 
bidders to know the essential nature and type of the products offered or 
those elements of the bid that relate to quantity, price, and delivery 
terms. The provisions of this paragraph do not apply to unsolicited 
descriptive literature submitted by a bidder if such literature does not 
qualify the bid (see 14.202-5(f)).



14.404-5  All or none qualifications.

    Unless the solicitation provides otherwise, a bid may be responsive 
notwithstanding that the bidder specifies that award will be accepted 
only on all, or a specified group, of the items. Bidders shall not be 
permitted to withdraw or modify all or none qualifications after bid 
opening since such qualifications are substantive and affect the rights 
of other bidders.

[[Page 223]]



14.405  Minor informalities or irregularities in bids.

    A minor informality or irregularity is one that is merely a matter 
of form and not of substance. It also pertains to some immaterial defect 
in a bid or variation of a bid from the exact requirements of the 
invitation that can be corrected or waived without being prejudicial to 
other bidders. The defect or variation is immaterial when the effect on 
price, quantity, quality, or delivery is negligible when contrasted with 
the total cost or scope of the supplies or services being acquired. The 
contracting officer either shall give the bidder an opportunity to cure 
any deficiency resulting from a minor informality or irregularity in a 
bid or waive the deficiency, whichever is to the advantage of the 
Government. Examples of minor informalities or irregularities include 
failure of a bidder to--
    (a) Return the number of copies of signed bids required by the 
invitation;
    (b) Furnish required information concerning the number of its 
employees;
    (c) Sign its bid, but only if--
    (1) The unsigned bid is accompanied by other material indicating the 
bidder's intention to be bound by the unsigned bid (such as the 
submission of a bid guarantee or a letter signed by the bidder, with the 
bid, referring to and clearly identifying the bid itself); or
    (2) The firm submitting a bid has formally adopted or authorized, 
before the date set for opening of bids, the execution of documents by 
typewritten, printed, or stamped signature and submits evidence of such 
authorization and the bid carries such a signature;
    (d) Acknowledge receipt of an amendment to an invitation for bids, 
but only if--
    (1) The bid received clearly indicates that the bidder received the 
amendment, such as where the amendment added another item to the 
invitation and the bidder submitted a bid on the item; or
    (2) The amendment involves only a matter of form or has either no 
effect or merely a negligible effect on price, quantity, quality, or 
delivery of the item bid upon; and
    (e) Execute the representations with respect to Equal Opportunity 
and Affirmative Action Programs, as set forth in the clauses at 52.222-
22, Previous Contracts and Compliance Reports, and 52.222-25, 
Affirmative Action Compliance.

[48 FR 42171, Sept. 19, 1983, as amended at 55 FR 25527, June 21, 1990; 
62 FR 236, Jan. 2, 1997; 64 FR 10532, Mar. 4, 1999]



14.406  Receipt of an unreadable electronic bid.

    If a bid received at the Government facility by electronic data 
interchange is unreadable to the degree that conformance to the 
essential requirements of the invitation for bids cannot be ascertained, 
the contracting officer immediately shall notify the bidder that the bid 
will be rejected unless the bidder provides clear and convincing 
evidence--
    (a) Of the content of the bid as originally submitted; and
    (b) That the unreadable condition of the bid was caused by 
Government software or hardware error, malfunction, or other Government 
mishandling.

[60 FR 34738, July 3, 1995]



14.407  Mistakes in bids.



14.407-1  General.

    After the opening of bids, contracting officers shall examine all 
bids for mistakes. In cases of apparent mistakes and in cases where the 
contracting officer has reason to believe that a mistake may have been 
made, the contracting officer shall request from the bidder a 
verification of the bid, calling attention to the suspected mistake. If 
the bidder alleges a mistake, the matter shall be processed in 
accordance with this section 14.407. Such actions shall be taken before 
award.

[48 FR 42171, Sept. 19, 1983. Redesignated and amended at 60 FR 34738, 
July 3, 1995]



14.407-2  Apparent clerical mistakes.

    (a) Any clerical mistake, apparent on its face in the bid, may be 
corrected by the contracting officer before award. The contracting 
officer first shall obtain from the bidder a verification of the bid 
intended. Examples of apparent mistakes are--
    (1) Obvious misplacement of a decimal point;

[[Page 224]]

    (2) Obviously incorrect discounts (for example, 1 percent 10 days, 2 
percent 20 days, 5 percent 30 days);
    (3) Obvious reversal of the price f.o.b. destination and price 
f.o.b. origin; and
    (4) Obvious mistake in designation of unit.
    (b) Correction of the bid shall be effected by attaching the 
verification to the original bid and a copy of the verification to the 
duplicate bid. Correction shall not be made on the face of the bid; 
however, it shall be reflected in the award document.
    (c) Correction of bids submitted by electronic data interchange 
shall be effected by including in the electronic solicitation file the 
original bid, the verification request, and the bid verification.

[48 FR 42171, Sept. 19, 1983. Redesignated and amended at 60 FR 34738, 
July 3, 1995]



14.407-3  Other mistakes disclosed before award.

    In order to minimize delays in contract awards, administrative 
determinations may be made as described in this 14.407-3 in connection 
with mistakes in bids alleged after opening of bids and before award. 
The authority to permit correction of bids is limited to bids that, as 
submitted, are responsive to the invitation and may not be used to 
permit correction of bids to make them responsive. This authority is in 
addition to that in 14.407-2 or that may be otherwise available.
    (a) If a bidder requests permission to correct a mistake and clear 
and convincing evidence establishes both the existence of the mistake 
and the bid actually intended, the agency head may make a determination 
permitting the bidder to correct the mistake; provided, that if this 
correction would result in displacing one or more lower bids, such a 
determination shall not be made unless the existence of the mistake and 
the bid actually intended are ascertainable substantially from the 
invitation and the bid itself.
    (b) If (1) a bidder requests permission to withdraw a bid rather 
than correct it, (2) the evidence is clear and convincing both as to the 
existence of a mistake and as to the bid actually intended, and (3) the 
bid, both as uncorrected and as corrected, is the lowest received, the 
agency head may make a determination to correct the bid and not permit 
its withdrawal.
    (c) If, under paragraph (a) or (b) of this subsection,
    (1) The evidence of a mistake is clear and convincing only as to the 
mistake but not as to the intended bid, or
    (2) The evidence reasonably supports the existence of a mistake but 
is not clear and convincing, an official above the contracting officer, 
unless otherwise provided by agency procedures, may make a determination 
permitting the bidder to withdraw the bid.
    (d) If the evidence does not warrant a determination under paragraph 
(a), (b), or (c) above, the agency head may make a determination that 
the bid be neither withdrawn nor corrected.
    (e) Heads of agencies may delegate their authority to make the 
determinations under paragraphs (a), (b), (c), and (d) of this 14.407-3 
to a central authority, or a limited number of authorities as necessary, 
in their agencies, without power of redelegation.
    (f) Each proposed determination shall have the concurrence of legal 
counsel within the agency concerned before issuance.
    (g) Suspected or alleged mistakes in bids shall be processed as 
follows. A mere statement by the administrative officials that they are 
satisfied that an error was made is insufficient.
    (1) The contracting officer shall immediately request the bidder to 
verify the bid. Action taken to verify bids must be sufficient to 
reasonably assure the contracting officer that the bid as confirmed is 
without error, or to elicit the allegation of a mistake by the bidder. 
To assure that the bidder will be put on notice of a mistake suspected 
by the contracting officer, the bidder should be advised as 
appropriate--
    (i) That its bid is so much lower than the other bids or the 
Government's estimate as to indicate a possibility of error;
    (ii) Of important or unusual characteristics of the specifications;
    (iii) Of changes in requirements from previous purchases of a 
similar item; or
    (iv) Of any other information, proper for disclosure, that leads the 
contracting officer to believe that there is a mistake in bid.

[[Page 225]]

    (2) If the bid is verified, the contracting officer shall consider 
the bid as originally submitted. 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 in accordance with 14.404-
1(d). If the bidder whose bid is believed erroneous does not (or cannot) 
grant an extension of time, the bid shall be considered as originally 
submitted (but see subparagraph (5) below). If the bidder alleges a 
mistake, the contracting officer shall advise the bidder to make a 
written request to withdraw or modify the bid. The request must be 
supported by statements (sworn statements, if possible) and shall 
include all pertinent evidence such as the bidder's file copy of the 
bid, the original worksheets and other data used in preparing the bid, 
subcontractors' quotations, if any, published price lists, and any other 
evidence that establishes the existence of the error, the manner in 
which it occurred, and the bid actually intended.
    (3) When the bidder furnishes evidence supporting an alleged 
mistake, the contracting officer shall refer the case to the appropriate 
authority (see paragraph (e) above) together with the following data:
    (i) A signed copy of the bid involved.
    (ii) A copy of the invitation for bids and any specifications or 
drawings relevant to the alleged mistake.
    (iii) An abstract or record of the bids received.
    (iv) The written request by the bidder to withdraw or modify the 
bid, together with the bidder's written statement and supporting 
evidence.
    (v) A written statement by the contracting officer setting forth--
    (A) A description of the supplies or services involved;
    (B) The expiration date of the bid in question and of the other bids 
submitted;
    (C) Specific information as to how and when the mistake was alleged;
    (D) A summary of the evidence submitted by the bidder;
    (E) In the event only one bid was received, a quotation of the most 
recent contract price for the supplies or services involved or, in the 
absence of a recent comparable contract, the contracting officer's 
estimate of a fair price for the supplies or services;
    (F) Any additional pertinent evidence; and
    (G) A recommendation that either the bid be considered for award in 
the form submitted, or the bidder be authorized to withdraw or modify 
the bid.
    (4) When time is of the essence because of the expiration of bids or 
otherwise, the contracting officer may refer the case by telegraph or 
telephone to the appropriate authority. Ordinarily, the contracting 
officer will not refer mistake in bid cases by telegraph or telephone to 
the appropriate authority when the determination set forth in paragraphs 
(a) or (b) above is applicable, since actual examination is generally 
necessary to determine whether the evidence presented is clear and 
convincing.
    (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 (i) 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 agency or determined by the contracting officer to be 
reasonable, or (ii) there are other indications of error so clear, as to 
reasonably justify the conclusion that acceptance of the bid would be 
unfair to the bidder or to other bona fide bidders. Attempts made to 
obtain the information required and the action taken with respect to the 
bid shall be fully documented.
    (h) Each agency shall maintain records of all determinations made in 
accordance with this subsection 14.407-3, the facts involved, and the 
action taken in each case. Copies of all such determinations shall be 
included in the file.
    (i) Nothing contained in this subsection 14.407-3 prevents an agency 
from submitting doubtful cases to the Comptroller General for advance 
decision.

[48 FR 42171, Sept. 19, 1983, as amended at 53 FR 17857, May 18, 1988; 
54 FR 13023, Mar. 29, 1989. Redesignated and amended at 60 FR 34738, 
July 3, 1995]

[[Page 226]]



14.407-4  Mistakes after award.

    If a contractor's discovery and request for correction of a mistake 
in bid is not made until after the award, it shall be processed under 
the procedures of subpart 33.2 and the following:
    (a) When a mistake in a contractor's bid is not discovered until 
after award, the mistake may be corrected by contract modification if 
correcting the mistake would be favorable to the Government without 
changing the essential requirements of the specifications.
    (b) In addition to the cases contemplated in paragraph (a) above or 
as otherwise authorized by law, agencies are authorized to make a 
determination--
    (1) To rescind a contract;
    (2) To reform a contract (i) to delete the items involved in the 
mistake or (ii) to increase the price if the contract price, as 
corrected, does not exceed that of the next lowest acceptable bid under 
the original invitation for bids; or
    (3) That no change shall be made in the contract as awarded, if the 
evidence does not warrant a determination under subparagraphs (1) or (2) 
above.
    (c) Determinations under subparagraphs (b)(1) and (2) above may be 
made only on the basis of clear and convincing evidence that a mistake 
in bid was made. In addition, it must be clear that the mistake was (1) 
mutual, or (2) if unilaterally made by the contractor, so apparent as to 
have charged the contracting officer with notice of the probability of 
the mistake.
    (d) Each proposed determination shall be coordinated with legal 
counsel in accordance with agency procedures.
    (e) Mistakes alleged or disclosed after award shall be processed as 
follows:
    (1) The contracting officer shall request the contractor to support 
the alleged mistake by submission f written statements and pertinent 
evidence, such as (i) the contractor's file copy of the bid, (ii) the 
contractor's original worksheets and other data used in preparing the 
bid, (iii) subcontractors' and suppliers' quotations, if any, (iv) 
published price lists, and (v) any other evidence that will serve to 
establish the mistake, the manner in which the mistake occurred, and the 
bid actually intended.
    (2) The case file concerning an alleged mistake shall contain the 
following:
    (i) All evidence furnished by the contractor in support of the 
alleged mistake.
    (ii) A signed statement by the contracting officer--
    (A) Describing the supplies or services involved;
    (B) Specifying how and when the mistake was alleged or disclosed;
    (C) Summarizing the evidence submitted by the contractor and any 
additional evidence considered pertinent;
    (D) Quoting, in cases where only one bid was received, the most 
recent contract price for the supplies or services involved, or in the 
absence of a recent comparable contract, the contracting officer's 
estimate of a fair price for the supplies or services and the basis for 
the estimate;
    (E) Setting forth the contracting officer's opinion whether a bona 
fide mistake was made and whether the contracting officer was, or should 
have been, on constructive notice of the mistake before the award, 
together with the reasons for, or data in support of, such opinion;
    (F) Setting forth the course of action with respect to the alleged 
mistake that the contracting officer considers proper on the basis of 
the evidence, and if other than a change in contract price is 
recommended, the manner by which the supplies or services will otherwise 
be acquired; and
    (G) Disclosing the status of performance and payments under the 
contract, including contemplated performance and payments.
    (iii) A signed copy of the bid involved.
    (iv) A copy of the invitation for bids and any specifications or 
drawings relevant to the alleged mistake.
    (v) An abstract of written record of the bids received.
    (vi) A written request by the contractor to reform or rescind the 
contract, and copies of all other relevant correspondence between the 
contracting officer and the contractor concerning the alleged mistake.

[[Page 227]]

    (vii) A copy of the contract and any related change orders or 
supplemental agreements.
    (f) Each agency shall include in the contract file a record of (1) 
all determinations made in accordance with this 14.407-4, (2) the facts 
involved, and (3) the action taken in each case.

[48 FR 42171, Sept. 19, 1983, as amended at 50 FR 1738, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985. Redesignated and amended at 60 FR 34738, 
July 3, 1995; 63 FR 58602, Oct. 30, 1998]



14.408  Award.



14.408-1  General.

    (a) The contracting officer shall make a contract award (1) by 
written or electronic notice, (2) within the time for acceptance 
specified in the bid or an extension (see 14.404-1(d)), and (3) to that 
responsible bidder whose bid, conforming to the invitation, will be most 
advantageous to the Government, considering only price and the price-
related factors (see 14.201-8) included in the invitation. Award shall 
not be made until all required approvals have been obtained and the 
award otherwise conforms with 14.103-2.
    (b) If less than three bids have been received, the contracting 
officer shall examine the situation to ascertain the reasons for the 
small number of responses. Award shall be made notwithstanding the 
limited number of bids. However, the contracting officer shall initiate, 
if appropriate, corrective action to increase competition in future 
solicitations for the same or similar items, and include a notation of 
such action in the records of the invitation for bids (see 14.204).
    (c)(1) Award shall be made by mailing or otherwise furnishing a 
properly executed award document to the successful bidder.
    (2) When a notice of award is issued, it shall be followed as soon 
as possible by the formal award.
    (3) When more than one award results from any single invitation for 
bids, separate award documents shall be suitably numbered and executed.
    (4) When an award is made to a bidder for less than all of the items 
that may be awarded to that bidder and additional items are being 
withheld for subsequent award, the award shall state that the Government 
may make subsequent awards on those additional items within the bid 
acceptance period.
    (5) All provisions of the invitation for bids, including any 
acceptable additions or changes made by a bidder in the bid, shall be 
clearly and accurately set forth (either expressly or by reference) in 
the award document. The award is an acceptance of the bid, and the bid 
and the award constitute the contract.
    (d)(1) Award is generally made by using the Award portion of 
Standard Form (SF) 33, Solicitation, Offer, and Award, or SF 1447, 
Solicitation/Contract (see 53.214). If an offer on an SF 33 leads to 
further changes, the resulting contract shall be prepared as a bilateral 
document on SF 26, Award/Contract.
    (2) Use of the Award portion of SF 33, SF 26, or SF 1447, does not 
preclude the additional use of informal documents, including telegrams 
or electronic transmissions, as notices of awards.

[48 FR 42171, Sept. 19, 1983, as amended at 50 FR 1739, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985; 54 FR 48984, Nov. 28, 1989; 55 FR 3881, Feb. 
5, 1990. Redesignated at 60 FR 34738, July 3, 1995; 60 FR 42654, Aug. 
16, 1995]



14.408-2  Responsible bidder--reasonableness of price.

    (a) The contracting officer shall determine that a prospective 
contractor is responsible (see subpart 9.1) and that the prices offered 
are reasonable before awarding the contract. The price analysis 
techniques in 15.404-1(b) may be used as guidelines. In each case the 
determination shall be made in the light of all prevailing 
circumstances. Particular care must be taken in cases where only a 
single bid is received.
    (b) The price analysis shall consider whether bids are materially 
unbalanced (see 15.404-1(g)).

[48 FR 42171, Sept. 19, 1983, as amended at 55 FR 25527, June 21, 1990. 
Redesignated at 60 FR 34738, July 3, 1995, as amended at 62 FR 51270, 
Sept. 30, 1997]



14.408-3  Prompt payment discounts.

    (a) Prompt payment discounts shall not be considered in the 
evaluation of bids. However, any discount offered will form a part of 
the award, and will

[[Page 228]]

be taken by the payment center if payment is made within the discount 
period specified by the bidder. As an alternative to indicating a 
discount in conjunction with the offer, bidders may prefer to offer 
discounts on individual invoices.
    (b) See 32.111(c)(1), which prescribes the contract clause at 
52.232-8, Discounts for Prompt Payment.

[48 FR 42171, Sept. 19, 1983, as amended at 50 FR 26903, June 28, 1985. 
Redesignated at 60 FR 34738, July 3, 1995]



14.408-4  Economic price adjustment.

    (a) Bidder proposes economic price adjustment.
    (1) When a solicitation does not contain an economic price 
adjustment clause but a bidder proposes one with a ceiling that the 
price will not exceed, the bid shall be evaluated on the basis of the 
maximum possible economic price adjustment of the quoted base price.
    (2) If the bid is eligible for award, the contracting officer shall 
request the bidder to agree to the inclusion in the award of an approved 
economic price adjustment clause (see 16.203) that is subject to the 
same ceiling. If the bidder will not agree to an approved clause, the 
award may be made on the basis of the bid as originally submitted.
    (3) Bids that contain economic price adjustments with no ceiling 
shall be rejected unless a clear basis for evaluation exists.
    (b) Government proposes economic price adjustment.
    (1) When an invitation contains an economic price adjustment clause 
and no bidder takes exception to the provisions, bids shall be evaluated 
on the basis of the quoted prices without the allowable economic price 
adjustment being added.
    (2) When a bidder increases the maximum percentage of economic price 
adjustment stipulated in the invitation or limits the downward economic 
price adjustment provisions of the invitation, the bid shall be rejected 
as nonresponsive.
    (3) When a bid indicates deletion of the economic price adjustment 
clause, the bid shall be rejected as nonresponsive since the downward 
economic price adjustment provisions are thereby limited.
    (4) When a bidder decreases the maximum percentage of economic price 
adjustment stipulated in the invitation, the bid shall be evaluated at 
the base price on an equal basis with bids that do not reduce the 
stipulated ceiling. However, after evaluation, if the bidder offering 
the lower ceiling is in a position to receive the award, the award shall 
reflect the lower ceiling.

[48 FR 42171, Sept. 19, 1983. Redesignated at 60 FR 34738, July 3, 1995]



14.408-5  [Reserved]



14.408-6  Equal low bids.

    (a) Contracts shall be awarded in the following order of priority 
when two or more low bids are equal in all respects:
    (1) Small business concerns that are also labor surplus area 
concerns.
    (2) Other small business concerns.
    (3) Other business concerns.
    (b) If two or more bidders still remain equally eligible after 
application of paragraph (a) above, award shall be made by a drawing by 
lot limited to those bidders. If time permits, the bidders involved 
shall be given an opportunity to attend the drawing. The drawing shall 
be witnessed by at least three persons, and the contract file shall 
contain the names and addresses of the witnesses and the person 
supervising the drawing.
    (c) When an award is to be made by using the priorities under this 
14.408-6, the contracting officer shall include a written agreement in 
the contract that the contractor will perform, or cause to be performed, 
the contract in accordance with the circumstances justifying the 
priority used to break the tie or select bids for a drawing by lot.

[48 FR 42171, Sept. 19, 1983. Redesignated and amended at 60 FR 34738, 
July 3, 1995; 60 FR 48260, Sept. 18, 1995]



14.408-7  Documentation of award.

    (a) The contracting officer shall document compliance with 14.103-2 
in the contract file.
    (b) The documentation shall either state that the accepted bid was 
the lowest bid received, or list all lower bids with reasons for their 
rejection in sufficient detail to justify the award.

[[Page 229]]

    (c) When an award is made after receipt of equal low bids, the 
documentation shall describe how the tie was broken.

[48 FR 42171, Sept. 19, 1983. Redesignated at 60 FR 34738, July 3, 1995]



14.408-8  Protests against award.

    See subpart 33.1, Protests.

[50 FR 23606, June 4, 1985. Redesignated at 60 FR 34738, July 3, 1995]



14.409  Information to bidders.



14.409-1  Award of unclassified contracts.

    (a)(1) The contracting officer shall as a minimum (subject to any 
restrictions in Subpart 9.4)--
    (i) Notify each unsuccessful bidder in writing or electronically 
within three days after contract award, that its bid was not accepted. 
``Day,'' for purposes of the notification process, means calendar day, 
except that the period will run until a day which is not a Saturday, 
Sunday, or legal holiday;
    (ii) Extend appreciation for the interest the unsuccessful bidder 
has shown in submitting a bid; and
    (iii) When award is made to other than a low bidder, state the 
reason for rejection in the notice to each of the unsuccessful low 
bidders.
    (2) For acquisitions subject to the Trade Agreements Act or the 
North American Free Trade Agreement (NAFTA) Implementation Act (see 
25.405(e)), agencies shall include in notices given unsuccessful bidders 
from designated or NAFTA countries--
    (i) The dollar amount of the successful bid; and
    (ii) The name and address of the successful bidder.
    (b) Information included in paragraph (a)(2) of this subsection 
shall be provided to any unsuccessful bidder upon request except when 
multiple awards have been made and furnishing information on the 
successful bids would require so much work as to interfere with normal 
operations of the contracting office. In such circumstances, only 
information concerning location of the abstract of offers need be given.
    (c) When a request is received concerning an unclassified invitation 
from an inquirer who is neither a bidder nor a representative of a 
bidder, the contracting officer should make every effort to furnish the 
names of successful bidders and, if requested, the prices at which 
awards were made. However, when such requests require so much work as to 
interfere with the normal operations of the contracting office, the 
inquirer will be advised where a copy of the abstract of offers may be 
seen.
    (d) Requests for records shall be governed by agency regulations 
implementing Subpart 24.2.

[60 FR 42654, Aug. 16, 1995]



14.409-2  Award of classified contracts.

    In addition to 14.409-1, if classified information was furnished or 
created in connection with the solicitation, the contracting officer 
shall advise the unsuccessful bidders, including any who did not bid, to 
take disposition action in accordance with agency procedures. The name 
of the successful bidder and the contract price will be furnished to 
unsuccessful bidders only upon request. Information regarding a 
classified award shall not be furnished by telephone.

[48 FR 42171, Sept. 19, 1983. Redesignated and amended at 60 FR 34738, 
July 3, 1995]



                  Subpart 14.5--Two-Step Sealed Bidding



14.501  General.

    Two-step sealed bidding is a combination of competitive procedures 
designed to obtain the benefits of sealed bidding when adequate 
specifications are not available. An objective is to permit the 
development of a sufficiently descriptive and not unduly restrictive 
statement of the Government's requirements, including an adequate 
technical data package, so that subsequent acquisitions may be made by 
conventional sealed bidding. This method is especially useful in 
acquisitions requiring technical proposals, particularly those for 
complex items. It is conducted in two steps:

[[Page 230]]

    (a) Step one consists of the request for, submission, evaluation, 
and (if necessary) discussion of a technical proposal. No pricing is 
involved. The objective is to determine the acceptability of the 
supplies or services offered. As used in this context, the word 
technical has a broad connotation and includes, among other things, the 
engineering approach, special manufacturing processes, and special 
testing techniques. It is the proper step for clarification of questions 
relating to technical requirements. Conformity to the technical 
requirements is resolved in this step, but not responsibility as defined 
in 9.1.
    (b) Step two involves the submission of sealed priced bids by those 
who submitted acceptable technical proposals in step one. Bids submitted 
in step two are evaluated and the awards made in accordance with 
subparts 14.3 and 14.4.

[48 FR 42171, Sept. 19, 1983, as amended at 50 FR 1739, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985]



14.502  Conditions for use.

    (a) Unless other factors require the use of sealed bidding, two-step 
sealed bidding may be used in preference to negotiation when all of the 
following conditions are present:
    (1) Available specifications or purchase descriptions are not 
definite or complete or may be too restrictive without technical 
evaluation, and any necessary discussion, of the technical aspects of 
the requirement to ensure mutual understanding between each source and 
the Government.
    (2) Definite criteria exist for evaluating technical proposals.
    (3) More than one technically qualified source is expected to be 
available.
    (4) Sufficient time will be available for use of the two-step 
method.
    (5) A firm-fixed-price contract or a fixed-price contract with 
economic price adjustment will be used.
    (b) None of the following precludes the use of two-step sealed 
bidding:
    (1) Multi-year contracting.
    (2) Government-owned facilities or special tooling to be made 
available to the successful bidder.
    (3) A total small business set-aside (see 19.502-2).
    (4) The use of the price evaluation adjustment for small 
disadvantaged business concerns (see Subpart 19.11).
    (5) The use of a set-aside or price evaluation preference for 
HUBZone small business concerns (see subpart 19.13).
    (6) A first or subsequent production quantity is being acquired 
under a performance specification.

[48 FR 42171, Sept. 19, 1983, as amended at 50 FR 1739, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985; 60 FR 48260, Sept. 18, 1995; 63 FR 35721, 
June 30, 1998; 63 FR 70267, Dec. 18, 1998]



14.503  Procedures.



14.503-1  Step one.

    (a) Requests for technical proposals shall be distributed in 
accordance with 14.203-1. In addition, requests shall be synopsized in 
accordance with part 5. The request must include, as a minimum, the 
following:
    (1) A description of the supplies or services required.
    (2) A statement of intent to use the two step method.
    (3) The requirements of the technical proposal.
    (4) The evaluation criteria, to include all factors and any 
significant subfactors.
    (5) A statement that the technical proposals shall not include 
prices or pricing information.
    (6) The date, or date and hour, by which the proposal must be 
received (see 14.201-6(r)).
    (7) A statement that (i) in the second step, only bids based upon 
technical proposals determined to be acceptable, either initially or as 
a result of discussions, will be considered for awards and (ii) each bid 
in the second step must be based on the bidder's own technical 
proposals.
    (8) A statement that (i) offerors should submit proposals that are 
acceptable without additional explanation or information, (ii) the 
Government may make a final determination regarding a proposal's 
acceptability solely on the basis of the proposal as submitted, and 
(iii) the Government may proceed with the second step without requesting 
further information

[[Page 231]]

from any offeror; however, the Government may request additional 
information from offerors of proposals that it considers reasonably 
susceptible of being made acceptable, and may discuss proposals with 
their offerors.
    (9) A statement that a notice of unacceptability will be forwarded 
to the offeror upon completion of the proposal evaluation and final 
determination of unacceptability.
    (10) A statement either that only one technical proposal may be 
submitted by each offeror or that multiple technical proposals may be 
submitted. When specifications permit different technical approaches, it 
is generally in the Government's interest to authorize multiple 
proposals. If multiple proposals are authorized, see 14.201-6(s).
    (b) Information on delivery or performance requirements may be of 
assistance to bidders in determining whether or not to submit a proposal 
and may be included in the request. The request shall also indicate that 
the information is not binding on the Government and that the actual 
delivery or performance requirements will be contained in the invitation 
issued under step two.
    (c) Upon receipt, the contracting officer shall--
    (1) Safeguard proposals against disclosure to unauthorized persons;
    (2) Accept and handle data marked in accordance with 15.609 as 
provided in that section; and
    (3) Remove any reference to price or cost.
    (d) The contracting officer shall establish a time period for 
evaluating technical proposals. The period may vary with the complexity 
and number of proposals involved. However, the evaluation should be 
completed quickly.
    (e)(1) Evaluations shall be based on the criteria in the request for 
proposals but not consideration of responsibility as defined in 9.1. 
Proposals shall be categorized as--
    (i) Acceptable;
    (ii) Reasonably susceptible of being made acceptable; or
    (iii) Unacceptable.
    (2) Any proposal which modifies, or fails to conform to the 
essential requirements or specifications of, the request for technical 
proposals shall be considered nonresponsive and categorized as 
unacceptable.
    (f)(1) The contracting officer may proceed directly with step two if 
there are sufficient acceptable proposals to ensure adequate price 
competition under step two, and if further time, effort and delay to 
make additional proposals acceptable and thereby increase competition 
would not be in Government's interest. If this is not the case, the 
contracting officer shall request bidders whose proposals may be made 
acceptable to submit additional clarifying or supplementing information. 
The contracting officer shall identify the nature of the deficiencies in 
the proposal or the nature of the additional information required. The 
contracting officer may also arrange discussions for this purpose. No 
proposal shall be discussed with any offeror other than the submitter.
    (2) In initiating requests for additional information, the 
contracting officer shall fix an appropriate time for bidders to 
conclude discussions, if any, submit all additional information, and 
incorporate such additional information as part of their proposals 
submitted. Such time may be extended in the discretion of the 
contracting officer. If the additional information incorporated as part 
of a proposal within the final time fixed by the contracting officer 
establishes that the proposal is acceptable, it shall be so categorized. 
Otherwise, it shall be categorized as unacceptable.
    (g) When a technical proposal is found unacceptable (either 
initially or after clarification), the contracting officer shall 
promptly notify the offeror of the basis of the determination and that a 
revision of the proposal will not be considered. Upon written request, 
the contracting officer shall debrief unsuccessful offerors (see 15.505 
and 15.506).
    (h) Late technical proposals are governed by 15.208(b), (c), and 
(f).
    (i) If it is necessary to discontinue two-step sealed bidding, the 
contracting officer shall include a statement of the facts and 
circumstances in the contract file. Each offeror shall be

[[Page 232]]

notified in writing. When step one results in no acceptable technical 
proposal or only one acceptable technical proposal, the acquisition may 
be continued by negotiation.

[48 FR 42171, Sept. 19, 1983, as amended at 50 FR 1739, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985; 51 FR 2649, Jan. 17, 1986; 56 FR 41733, Aug. 
22, 1991; 60 FR 42654, Aug. 16, 1995; 61 FR 69289, Dec. 31, 1996; 62 FR 
51270, Sept. 30, 1997; 64 FR 51839, Sept. 24, 1999]

    Effective Date Note: At 64 FR 51839, Sept. 24, 1999, section 14.503-
1 was amended by revising paragraph (h), effective Nov. 23,1999. For the 
convenience of the user, the supersed text is set forth as follows:

14.503-1   Step one.

                                * * * * *

    (h) Late technical proposals are governed by 15.208 (b) and (c).

                                * * * * *



14.503-2  Step two.

    (a) Sealed bidding procedures shall be followed except that 
invitations for bids shall--
    (1) Be issued only to those offerors submitting acceptable technical 
proposals in step one;
    (2) Include the provision prescribed in 14.201-6(t);
    (3) Prominently state that the bidder shall comply with the 
specifications and the bidder's technical proposal; and
    (4) Not be synopsized in the Commerce Business Daily as an 
acquisition opportunity nor publicly posted (see 5.101(a)).
    (b) The names of firms that submitted acceptable proposals in step 
one will be listed in the Commerce Business Daily for the benefit of 
prospective subcontractors (see 5.207(a)(2)).

[48 FR 42171, Sept. 19, 1983, as amended at 50 FR 1739, Jan. 11, 1985; 
50 FR 52429, Dec. 23, 1985; 56 FR 15149, Apr. 15, 1991]



PART 15--CONTRACTING BY NEGOTIATION--Table of Contents




Sec.
15.000  Scope of part.
15.001  Definitions.
15.002  Types of negotiated acquisition.

         Subpart 15.1--Source Selection Processes and Techniques

15.100  Scope of subpart.
15.101  Best value continuum.
15.101-1  Tradeoff process.
15.101-2  Lowest price technically acceptable source selection process.
15.102  Oral presentations.

   Subpart 15.2--Solicitation and Receipt of Proposals and Information

15.200  Scope of subpart.
15.201  Exchanges with industry before receipt of proposals.
15.202  Advisory multi-step process.
15.203  Requests for proposals.
15.204  Contract format.
15.204-1  Uniform contract format
Table 15-1  Uniform Contract Format
15.204-2  Part I--The Schedule.
15.204-3  Part II--Contract Clauses.
15.204-4  Part III--List of Documents, Exhibits, and Other Attachments.
15.204-5  Part IV--Representations and Instructions.
15.205  Issuing solicitations.
15.206  Amending the solicitation.
15.207  Handling proposals and information.
15.208  Submission, modification, revision, and withdrawal of proposals.
15.209  Solicitation provisions and contract clauses.
15.210  Forms.

                     Subpart 15.3--Source Selection

15.300  Scope of subpart.
15.301  Definitions.
15.302  Source selection objective.
15.303  Responsibilities.
15.304  Evaluation factors and significant subfactors.
15.305  Proposal evaluation.
15.306  Exchanges with offerors after receipt of proposals.
15.307  Proposal revisions.
15.308  Source selection decision

                     Subpart 15.4--Contract Pricing

15.400  Scope of subpart.
15.401  Definitions.
15.402  Pricing policy.
15.403  Obtaining cost or pricing data.
15.403-1  Prohibition on obtaining cost or pricing data (10 U.S.C. 2306a 
          and 41 U.S.C. 254b).
15.403-2  Other circumstances where cost or pricing data are not 
          required.
15.403-3  Requiring information other than cost or pricing data.
15.403-4  Requiring cost or pricing data (10 U.S.C. 2306a and 41 U.S.C. 
          254b).
15.403-5  Instructions for submission of cost or pricing data or 
          information other than cost or pricing data.

[[Page 233]]

15.404  Proposal analysis.
15.404-1  Proposal analysis techniques.
15.404-2  Information to support proposal analysis.
15.404-3  Subcontract pricing considerations.
15.404-4  Profit.
15.405  Price negotiation.
15.406  Documentation.
15.406-1  Prenegotiation objectives.
15.406-2  Certificate of current cost or pricing data.
15.406-3  Documenting the negotiation.
15.407  Special cost or pricing areas.
15.407-1  Defective cost or pricing data.
15.407-2  Make-or-buy programs.
15.407-3  Forward pricing rate agreements.
15.407-4  Should-cost review.
15.407-5  Estimating systems.
15.408  Solicitation provisions and contract clauses.

    Table 15-2--Instructions for Submitting Cost or Pricing Data Are 
                                Required

 Subpart 15.5--Preaward, Award, and Postaward Notifications, Protests, 
                              and Mistakes

15.501  Definition.
15.502  Applicability.
15.503  Notifications to unsuccessful offerors.
15.504  Award to successful offeror.
15.505  Preaward debriefing of offerors.
15.506  Postaward debriefing of offerors.
15.507  Protests against award.
15.508  Discovery of mistakes.
15.509  Forms.

                   Subpart 15.6--Unsolicited Proposals

15.600  Scope of subpart.
15.601  Definitions.
15.602  Policy.
15.603  General.
15.604  Agency points of contact.
15.605  Content of unsolicited proposals.
15.606  Agency procedures.
15.606-1  Receipt and initial review.
15.606-2  Evaluation.
15.607  Criteria for acceptance and negotiation of an unsolicited 
          proposal.
15.608  Prohibitions.
15.609  Limited use of data.


    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 U.S.C. 
2473(c).

    Source: 62 FR 51230, Sept. 30, 1997, unless otherwise noted.



15.000  Scope of part.

    This part prescribes policies and procedures governing competitive 
and noncompetitive negotiated acquisitions. A contract awarded using 
other than sealed bidding procedures is a negotiated contract (see 
14.101).



15.001  Definitions.

    As used in this part--
    Proposal modification is a change made to a proposal before the 
solicitation closing date and time, or made in response to an amendment, 
or made to correct a mistake at any time before award.
    Proposal revision is a change to a proposal made after the 
solicitation closing date, at the request of or as allowed by a 
contracting officer, as the result of negotiations.



15.002  Types of negotiated acquisition.

    (a) Sole source acquisitions. When contracting in a sole source 
environment, the request for proposals (RFP) should be tailored to 
remove unnecessary information and requirements; e.g., evaluation 
criteria and voluminous proposal preparation instructions.
    (b) Competitive acquisitions. When contracting in a competitive 
environment, the procedures of this part are intended to minimize the 
complexity of the solicitation, the evaluation, and the source selection 
decision, while maintaining a process designed to foster an impartial 
and comprehensive evaluation of offerors' proposals, leading to 
selection of the proposal representing the best value to the Government 
(see 2.101).



         Subpart 15.1--Source Selection Processes and Techniques



15.100  Scope of subpart.

    This subpart describes some of the acquisition processes and 
techniques that may be used to design competitive acquisition strategies 
suitable for the specific circumstances of the acquisition.



15.101  Best value continuum.

    An agency can obtain best value in negotiated acquisitions by using 
any one or a combination of source selection approaches. In different 
types of acquisitions, the relative importance of cost or price may 
vary. For example, in acquisitions where the requirement is clearly 
definable and the risk of unsuccessful contract performance is minimal, 
cost or price may play a dominant role in source selection. The less

[[Page 234]]

definitive the requirement, the more development work required, or the 
greater the performance risk, the more technical or past performance 
considerations may play a dominant role in source selection.



15.101-1  Tradeoff process.

    (a) A tradeoff process is appropriate when it may be in the best 
interest of the Government to consider award to other than the lowest 
priced offeror or other than the highest technically rated offeror.
    (b) When using a tradeoff process, the following apply:
    (1) All evaluation factors and significant subfactors that will 
affect contract award and their relative importance shall be clearly 
stated in the solicitation; and
    (2) The solicitation shall state whether all evaluation factors 
other than cost or price, when combined, are significantly more 
important than, approximately equal to, or significantly less important 
than cost or price.
    (c) This process permits tradeoffs among cost or price and non-cost 
factors and allows the Government to accept other than the lowest priced 
proposal. The perceived benefits of the higher priced proposal shall 
merit the additional cost, and the rationale for tradeoffs must be 
documented in the file in accordance with 15.406.



15.101-2  Lowest price technically acceptable source selection process.

    (a) The lowest price technically acceptable source selection process 
is appropriate when best value is expected to result from selection of 
the technically acceptable proposal with the lowest evaluated price.
    (b) When using the lowest price technically acceptable process, the 
following apply:
    (1) The evaluation factors and significant subfactors that establish 
the requirements of acceptability shall be set forth in the 
solicitation. Solicitations shall specify that award will be made on the 
basis of the lowest evaluated price of proposals meeting or exceeding 
the acceptability standards for non-cost factors. If the contracting 
officer documents the file pursuant to 15.304(c)(3)(iii), past 
performance need not be an evaluation factor in lowest price technically 
acceptable source selections. If the contracting officer elects to 
consider past performance as an evaluation factor, it shall be evaluated 
in accordance with 15.305. However, the comparative assessment in 
15.305(a)(2)(i) does not apply. If the contracting officer determines 
that a small business' past performance is not acceptable, the matter 
shall be referred to the Small Business Administration for a Certificate 
of Competency determination, in accordance with the procedures contained 
in subpart 19.6 and 15 U.S.C. 637(b)(7)).
    (2) Tradeoffs are not permitted.
    (3) Proposals are evaluated for acceptability but not ranked using 
the non-cost/price factors.
    (4) Exchanges may occur (see 15.306).



15.102  Oral presentations.

    (a) Oral presentations by offerors as requested by the Government 
may substitute for, or augment, written information. Use of oral 
presentations as a substitute for portions of a proposal can be 
effective in streamlining the source selection process. Oral 
presentations may occur at any time in the acquisition process, and are 
subject to the same restrictions as written information, regarding 
timing (see 15.208) and content (see 15.306). Oral presentations provide 
an opportunity for dialogue among the parties. Pre-recorded videotaped 
presentations that lack real-time interactive dialogue are not 
considered oral presentations for the purposes of this section, although 
they may be included in offeror submissions, when appropriate.
    (b) The solicitation may require each offeror to submit part of its 
proposal through oral presentations. However, certifications, 
representations, and a signed offer sheet (including any exceptions to 
the Government's terms and conditions) shall be submitted in writing.
    (c) Information pertaining to areas such as an offeror's capability, 
past performance, work plans or approaches, staffing resources, 
transition plans, or sample tasks (or other types

[[Page 235]]

of tests) may be suitable for oral presentations. In deciding what 
information to obtain through an oral presentation, consider the 
following:
    (1) The Government's ability to adequately evaluate the information;
    (2) The need to incorporate any information into the resultant 
contract;
    (3) The impact on the efficiency of the acquisition; and
    (4) The impact (including cost) on small businesses. In considering 
the costs of oral presentations, contracting officers should also 
consider alternatives to on-site oral presentations (e.g., 
teleconferencing, video teleconferencing).
    (d) When oral presentations are required, the solicitation shall 
provide offerors with sufficient information to prepare them. 
Accordingly, the solicitation may describe--
    (1) The types of information to be presented orally and the 
associated evaluation factors that will be used;
    (2) The qualifications for personnel that will be required to 
provide the oral presentation(s);
    (3) The requirements for, and any limitations and/or prohibitions 
on, the use of written material or other media to supplement the oral 
presentations;
    (4) The location, date, and time for the oral presentations;
    (5) The restrictions governing the time permitted for each oral 
presentation; and
    (6) The scope and content of exchanges that may occur between the 
Government's participants and the offeror's representatives as part of 
the oral presentations, including whether or not discussions (see 
15.306(d)) will be permitted during oral presentations.
    (e) The contracting officer shall maintain a record of oral 
presentations to document what the Government relied upon in making the 
source selection decision. The method and level of detail of the record 
(e.g., videotaping, audio tape recording, written record, Government 
notes, copies of offeror briefing slides or presentation notes) shall be 
at the discretion of the source selection authority. A copy of the 
record placed in the file may be provided to the offeror.
    (f) When an oral presentation includes information that the parties 
intend to include in the contract as material terms or conditions, the 
information shall be put in writing. Incorporation by reference of oral 
statements is not permitted.
    (g) If, during an oral presentation, the Government conducts 
discussions (see 15.306(d)), the Government must comply with 15.306 and 
15.307.



   Subpart 15.2--Solicitation and Receipt of Proposals and Information



15.200  Scope of subpart.

    This subpart prescribes policies and procedures for--
    (a) Exchanging information with industry prior to receipt of 
proposals;
    (b) Preparing and issuing requests for proposals (RFPs) and requests 
for information (RFIs); and
    (c) Receiving proposals and information.



15.201  Exchanges with industry before receipt of proposals.

    (a) Exchanges of information among all interested parties, from the 
earliest identification of a requirement through receipt of proposals, 
are encouraged. Any exchange of information must be consistent with 
procurement integrity requirements (see 3.104). Interested parties 
include potential offerors, end users, Government acquisition and 
supporting personnel, and others involved in the conduct or outcome of 
the acquisition.
    (b) The purpose of exchanging information is to improve the 
understanding of Government requirements and industry capabilities, 
thereby allowing potential offerors to judge whether or how they can 
satisfy the Government's requirements, and enhancing the Government's 
ability to obtain quality supplies and services, including construction, 
at reasonable prices, and increase efficiency in proposal preparation, 
proposal evaluation, negotiation, and contract award.
    (c) Agencies are encouraged to promote early exchanges of 
information about future acquisitions. An early exchange of information 
among industry and the program manager, contracting officer, and other 
participants in the

[[Page 236]]

acquisition process can identify and resolve concerns regarding the 
acquisition strategy, including proposed contract type, terms and 
conditions, and acquisition planning schedules; the feasibility of the 
requirement, including performance requirements, statements of work, and 
data requirements; the suitability of the proposal instructions and 
evaluation criteria, including the approach for assessing past 
performance information; the availability of reference documents; and 
any other industry concerns or questions. Some techniques to promote 
early exchanges of information are--
    (1) Industry or small business conferences;
    (2) Public hearings;
    (3) Market research, as described in part 10;
    (4) One-on-one meetings with potential offerors (any that are 
substantially involved with potential contract terms and conditions 
should include the contracting officer; also see paragraph (f) of this 
section regarding restrictions on disclosure of information);
    (5) Presolicitation notices;
    (6) Draft RFPs;
    (7) RFIs;
    (8) Presolicitation or preproposal conferences; and
    (9) Site visits.
    (d) The special notices of procurement matters at 5.205(c), or 
electronic notices, may be used to publicize the Government's 
requirement or solicit information from industry.
    (e) RFIs may be used when the Government does not presently intend 
to award a contract, but wants to obtain price, delivery, other market 
information, or capabilities for planning purposes. Responses to these 
notices are not offers and cannot be accepted by the Government to form 
a binding contract. There is no required format for RFIs.
    (f) General information about agency mission needs and future 
requirements may be disclosed at any time.
    After release of the solicitation, the contracting officer shall be 
the focal point of any exchange with potential offerors. When specific 
information about a proposed acquisition that would be necessary for the 
preparation of proposals is disclosed to one or more potential offerors, 
that information shall be made available to the public as soon as 
practicable, but no later than the next general release of information, 
in order to avoid creating an unfair competitive advantage. Information 
provided to a particular offeror in response to that offeror's request 
shall not be disclosed if doing so would reveal the potential offeror's 
confidential business strategy, and would be protected under 3.104 or 
subpart 24.2. When a presolicitation or preproposal conference is 
conducted, materials distributed at the conference should be made 
available to all potential offerors, upon request.



15.202  Advisory multi-step process.

    (a) The agency may publish a presolicitation notice (see 5.204) that 
provides a general description of the scope or purpose of the 
acquisition and invites potential offerors to submit information that 
allows the Government to advise the offerors about their potential to be 
viable competitors. The presolicitation notice should identify the 
information that must be submitted and the criteria that will be used in 
making the initial evaluation. Information sought may be limited to a 
statement of qualifications and other appropriate information (e.g., 
proposed technical concept, past performance, and limited pricing 
information). At a minimum, the notice shall contain sufficient 
information to permit a potential offeror to make an informed decision 
about whether to participate in the acquisition. This process should not 
be used for multi-step acquisitions where it would result in offerors 
being required to submit identical information in response to the notice 
and in response to the initial step of the acquisition.
    (b) The agency shall evaluate all responses in accordance with the 
criteria stated in the notice, and shall advise each respondent in 
writing either that it will be invited to participate in the resultant 
acquisition or, based on the information submitted, that it is unlikely 
to be a viable competitor. The agency shall advise respondents 
considered not to be viable competitors of the general basis for that 
opinion. The agency shall inform all respondents

[[Page 237]]

that, notwithstanding the advice provided by the Government in response 
to their submissions, they may participate in the resultant acquisition.



15.203  Requests for proposals.

    (a) Requests for proposals (RFPs) are used in negotiated 
acquisitions to communicate Government requirements to prospective 
contractors and to solicit proposals. RFPs for competitive acquisitions 
shall, at a minimum, describe the--
    (1) Government's requirement;
    (2) Anticipated terms and conditions that will apply to the 
contract:
    (i) The solicitation may authorize offerors to propose alternative 
terms and conditions, including the contract line item number (CLIN) 
structure; and
    (ii) When alternative CLIN structures are permitted, the evaluation 
approach should consider the potential impact on other terms and 
conditions or the requirement (e.g., place of performance or payment and 
funding requirements) (see 15.206);
    (3) Information required to be in the offeror's proposal; and
    (4) Factors and significant subfactors that will be used to evaluate 
the proposal and their relative importance.
    (b) An RFP may be issued for OMB Circular A-76 studies. See subpart 
7.3 for additional information regarding cost comparisons between 
Government and contractor performance.
    (c) Electronic commerce may be used to issue RFPs and to receive 
proposals, modifications, and revisions. In this case, the RFP shall 
specify the electronic commerce method(s) that offerors may use (see 
subpart 4.5).
    (d) Contracting officers may issue RFPs and/or authorize receipt of 
proposals, modifications, or revisions by facsimile.
    (1) In deciding whether or not to use facsimiles, the contracting 
officer should consider factors such as--
    (i) Anticipated proposal size and volume;
    (ii) Urgency of the requirement;
    (iii) Availability and suitability of electronic commerce methods; 
and
    (iv) Adequacy of administrative procedures and controls for 
receiving, identifying, recording, and safeguarding facsimile proposals, 
and ensuring their timely delivery to the designated proposal delivery 
location.
    (2) If facsimile proposals are authorized, contracting officers may 
request offeror(s) to provide the complete, original signed proposal at 
a later date.
    (e) Letter RFPs may be used in sole source acquisitions and other 
appropriate circumstances. Use of a letter RFP does not relieve the 
contracting officer from complying with other FAR requirements. Letter 
RFPs should be as complete as possible and, at a minimum, should contain 
the following:
    (1) RFP number and date;
    (2) Name, address (including electronic address and facsimile 
address, if appropriate), and telephone number of the contracting 
officer;
    (3) Type of contract contemplated;
    (4) Quantity, description, and required delivery dates for the item;
    (5) Applicable certifications and representations;
    (6) Anticipated contract terms and conditions;
    (7) Instructions to offerors and evaluation criteria for other than 
sole source actions;
    (8) Proposal due date and time; and
    (9) Other relevant information; e.g., incentives, variations in 
delivery schedule, cost proposal support, and data requirements.
    (f) Oral RFPs are authorized when processing a written solicitation 
would delay the acquisition of supplies or services to the detriment of 
the Government and a notice is not required under 5.202 (e.g., 
perishable items and support of contingency operations or other 
emergency situations). Use of an oral RFP does not relieve the 
contracting officer from complying with other FAR requirements.
    (1) The contract files supporting oral solicitations should 
include--
    (i) A description of the requirement;
    (ii) Rationale for use of an oral solicitation;
    (iii) Sources solicited, including the date, time, name of 
individuals contacted, and prices offered; and
    (iv) The solicitation number provided to the prospective offerors.
    (2) The information furnished to potential offerors under oral 
solicitations should include appropriate items from paragraph (e) of 
this section.

[[Page 238]]



15.204  Contract format.

    The use of a uniform contract format facilitates preparation of the 
solicitation and contract as well as reference to, and use of, those 
documents by offerors, contractors, and contract administrators. The 
uniform contract format need not be used for the following:
    (a) Construction and architect-engineer contracts (see part 36).
    (b) Subsistence contracts.
    (c) Supplies or services contracts requiring special contract 
formats prescribed elsewhere in this part that are inconsistent with the 
uniform format.
    (d) Letter requests for proposals (see 15.203(e)).
    (e) Contracts exempted by the agency head or designee.



15.204-1  Uniform contract format.

    (a) Contracting officers shall prepare solicitations and resulting 
contracts using the uniform contract format outlined in Table 15-1 of 
this subsection.
    (b) Solicitations using the uniform contract format shall include 
Parts I, II, III, and IV (see 15.204-2 through 15.204-5). Upon award, 
contracting officers shall not physically include Part IV in the 
resulting contract, but shall retain it in the contract file. Section K 
shall be incorporated by reference in the contract.

                  Table 15-1.--Uniform Contract Format
------------------------------------------------------------------------
            Section                               Title
------------------------------------------------------------------------
                          Part I--The Schedule
------------------------------------------------------------------------
A..............................  Solicitation/contract form.
B..............................  Supplies or services and prices/costs.
C..............................  Description/specifications/statement of
                                  work.
D..............................  Packaging and marking.
E..............................  Inspection and acceptance.
F..............................  Deliveries or performance.
G..............................  Contract administration data.
H..............................  Special contract requirements.
------------------------------------------------------------------------
                        Part II--Contract Clauses
------------------------------------------------------------------------
I..............................  Contract clauses.
------------------------------------------------------------------------
      Part III--List of Documents, Exhibits, and Other Attachments
------------------------------------------------------------------------
J..............................  List of attachments.
------------------------------------------------------------------------
                Part IV--Representations and Instructions
------------------------------------------------------------------------
K..............................  Representations, certifications, and
                                  other statements of offerors or
                                  respondents.
L..............................  Instructions, conditions, and notices
                                  to offerors or respondents.
M..............................  Evaluation factors for award.
------------------------------------------------------------------------



15.204-2  Part I--The Schedule.

    The contracting officer shall prepare the contract Schedule as 
follows:
    (a) Section A, Solicitation/contract form.
    (1) Optional Form (OF) 308, Solicitation and Offer-Negotiated 
Acquisition, or Standard Form (SF) 33, Solicitation, Offer and Award, 
may be used to prepare RFPs.
    (2) When other than OF 308 or SF 33 is used, include the following 
information on the first page of the solicitation:
    (i) Name, address, and location of issuing activity, including room 
and building where proposals or information must be submitted.
    (ii) Solicitation number.
    (iii) Date of issuance.
    (iv) Closing date and time.
    (v) Number of pages.
    (vi) Requisition or other purchase authority.
    (vii) Brief description of item or service.
    (viii) Requirement for the offeror to provide its name and complete 
address, including street, city, county, state, and zip code, and 
electronic address (including facsimile address), if appropriate.
    (ix) Offer expiration date.
    (b) Section B, Supplies or services and prices/costs. Include a 
brief description of the supplies or services; e.g., item number, 
national stock number/part number if applicable, nouns, nomenclature, 
and quantities. (This includes incidental deliverables such as manuals 
and reports.)
    (c) Section C, Description/specifications/statement of work. Include 
any description or specifications needed in addition to Section B (see 
part 11, Describing Agency Needs).
    (d) Section D, Packaging and marking. Provide packaging, packing, 
preservation, and marking requirements, if any.
    (e) Section E, Inspection and acceptance. Include inspection, 
acceptance,

[[Page 239]]

quality assurance, and reliability requirements (see part 46, Quality 
Assurance).
    (f) Section F, Deliveries or performance. Specify the requirements 
for time, place, and method of delivery or performance (see subpart 
11.4, Delivery or Performance Schedules, and 47.301-1).
    (g) Section G, Contract administration data. Include any required 
accounting and appropriation data and any required contract 
administration information or instructions other than those on the 
solicitation form. Include a statement that the offeror should include 
the payment address in the proposal, if it is different from that shown 
for the offeror.
    (h) Section H, Special contract requirements. Include a clear 
statement of any special contract requirements that are not included in 
Section I, Contract clauses, or in other sections of the uniform 
contract format.



15.204-3  Part II--Contract Clauses.

    Section I, Contract clauses. The contracting officer shall include 
in this section the clauses required by law or by this part and any 
additional clauses expected to be included in any resulting contract, if 
these clauses are not required in any other section of the uniform 
contract format. An index may be inserted if this section's format is 
particularly complex.



15.204-4  Part III--List of Documents, Exhibits, and Other Attachments.

    Section J, List of attachments. The contracting officer shall list 
the title, date, and number of pages for each attached document, 
exhibit, and other attachment. Cross-references to material in other 
sections may be inserted, as appropriate.



15.204-5  Part IV--Representations and Instructions.

    The contracting officer shall prepare the representations and 
instructions as follows:
    (a) Section K, Representations, certifications, and other statements 
of offerors. Include in this section those solicitation provisions that 
require representations, certifications, or the submission of other 
information by offerors.
    (b) Section L, Instructions, conditions, and notices to offerors or 
respondents. Insert in this section solicitation provisions and other 
information and instructions not required elsewhere to guide offerors or 
respondents in preparing proposals or responses to requests for 
information. Prospective offerors or respondents may be instructed to 
submit proposals or information in a specific format or severable parts 
to facilitate evaluation. The instructions may specify further 
organization of proposal or response parts, such as--
    (1) Administrative;
    (2) Management;
    (3) Technical;
    (4) Past performance; and
    (5) Cost or pricing data (see Table 15-2 of 15.408) or information 
other than cost or pricing data.
    (c) Section M, Evaluation factors for award. Identify all 
significant factors and any significant subfactors that will be 
considered in awarding the contract and their relative importance (see 
15.304(d)). The contracting officer shall insert one of the phrases in 
15.304(e).



15.205  Issuing solicitations.

    (a) The contracting officer shall issue solicitations to potential 
sources in accordance with the policies and procedures in 5.102, 19.202-
4, and part 6.
    (b) A master solicitation, as described in 14.203-3, may also be 
used for negotiated acquisitions.



15.206  Amending the solicitation.

    (a) When, either before or after receipt of proposals, the 
Government changes its requirements or terms and conditions, the 
contracting officer shall amend the solicitation.
    (b) Amendments issued before the established time and date for 
receipt of proposals shall be issued to all parties receiving the 
solicitation.
    (c) Amendments issued after the established time and date for 
receipt of proposals shall be issued to all offerors that have not been 
eliminated from the competition.
    (d) If a proposal of interest to the Government involves a departure 
from

[[Page 240]]

the stated requirements, the contracting officer shall amend the 
solicitation, provided this can be done without revealing to the other 
offerors the alternate solution proposed or any other information that 
is entitled to protection (see 15.207(b) and 15.306(e)).
    (e) If, in the judgment of the contracting officer, based on market 
research or otherwise, an amendment proposed for issuance after offers 
have been received is so substantial as to exceed what prospective 
offerors reasonably could have anticipated, so that additional sources 
likely would have submitted offers had the substance of the amendment 
been known to them, the contracting officer shall cancel the original 
solicitation and issue a new one, regardless of the stage of the 
acquisition.
    (f) Oral notices may be used when time is of the essence. The 
contracting officer shall document the contract file and formalize the 
notice with an amendment (see subpart 4.5, Electronic Commerce in 
Contracting).
    (g) At a minimum, the following information should be included in 
each amendment:
    (1) Name and address of issuing activity.
    (2) Solicitation number and date.
    (3) Amendment number and date.
    (4) Number of pages.
    (5) Description of the change being made.
    (6) Government point of contact and phone number (and electronic or 
facsimile address, if appropriate).
    (7) Revision to solicitation closing date, if applicable.



15.207  Handling proposals and information.

    (a) Upon receipt at the location specified in the solicitation, 
proposals and information received in response to a request for 
information (RFI) shall be marked with the date and time of receipt and 
shall be transmitted to the designated officials.
    (b) Proposals shall be safeguarded from unauthorized disclosure 
throughout the source selection process. (See 3.104 regarding the 
disclosure of source selection information (41 U.S.C. 423)). Information 
received in response to an RFI shall be safeguarded adequately from 
unauthorized disclosure.
    (c) If any portion of a proposal received by the contracting officer 
electronically or by facsimile is unreadable, the contracting officer 
immediately shall notify the offeror and permit the offeror to resubmit 
the unreadable portion of the proposal. The method and time for 
resubmission shall be prescribed by the contracting officer after 
consultation with the offeror, and documented in the file. The 
resubmission shall be considered as if it were received at the date and 
time of the original unreadable submission for the purpose of 
determining timeliness under 15.208(a), provided the offeror complies 
with the time and format requirements for resubmission prescribed by the 
contracting officer.



15.208   Submission, modification, revision, and withdrawal of proposals.

    (a) Offerors are responsible for submitting proposals, and any 
revisions, and modifications, or withdrawals, so as to reach the 
Government office designated in the solicitation by the time specified 
in the solicitation. Offerors may use any transmission method authorized 
by the solicitation (i.e., regular mail, electronic commerce, or 
facsimile). If no time is specified in the solicitation, the time for 
receipt is 4:30 p.m., local time, for the designated Government office 
on the date that proposals are due.
    (b)(1) Any proposal, modification, revision, or withdrawal that is 
received at the designated Government office after the exact time 
specified for receipt of proposals is ``late'' and will not be 
considered unless it is received before award is made, the contracting 
officer determines that accepting the late proposal would not unduly 
delay the acquisition; and--
    (i) If it was transmitted through an electronic commerce method 
authorized by the solicitation, it was received at the initial point of 
entry to the Government infrastructure not later than 5:00 p.m. one 
working day prior to the date specified for receipt of proposals; or
    (ii) There is acceptable evidence to establish that it was received 
at the Government installation designated for

[[Page 241]]

receipt of proposals and was under the Government's control prior to the 
time set for receipt of proposals; or
    (iii) It was the only proposal received.
    (2) However, a late modification of an otherwise successful 
proposal, that makes its terms more favorable to the Government, will be 
considered at any time it is received and may be accepted.
    (c) Acceptable evidence to establish the time of receipt at the 
Government installation includes the time/date stamp of that 
installation on the proposal wrapper, other documentary evidence of 
receipt maintained by the installation, or oral testimony or statements 
of Government personnel.
    (d) If an emergency or unanticipated event interrupts normal 
Government processes so that proposals cannot be received at the 
Government office designated for receipt of proposals by the exact time 
specified in the solicitation, and urgent Government requirements 
preclude amendment of the solicitation closing date, the time specified 
for receipt of proposals will be deemed to be extended to the same time 
of day specified in the solicitation on the first work day on which 
normal Government processes resume.
    (e) Proposals may be withdrawn by written notice at any time before 
award. Oral proposals in response to oral solicitations may be withdrawn 
orally. The contracting officer must document the contract file when 
oral withdrawals are made. One copy of withdrawn proposals should be 
retained in the contract file (see 4.803(a)(10)). Extra copies of the 
withdrawn proposals may be destroyed or returned to the offeror at the 
offerors request. Where practicable, electronically transmitted 
proposals that are withdrawn must be purged from primary and backup data 
storage systems after a copy is made for the file. Extremely bulky 
proposals must only be returned at the offeror's request and expense.
    (f) The contracting officer must promptly notify any offeror if its 
proposal, modification, or revision was received late, and must inform 
the offeror whether its proposal will be considered, unless contract 
award is imminent and the notice prescribed in 15.503(b) would suffice.
    (g) Late proposals and modifications that are not considered must be 
held unopened, unless opened for identification, until after award and 
then retained with other unsuccessful proposals.
    (h) If available, the following must be included in the contracting 
office files for each late proposal, modification, revision, or 
withdrawal:
    (1) The date and hour of receipt.
    (2) A statement regarding whether the proposal was considered for 
award, with supporting rationale.
    (3) The envelope, wrapper, or other evidence of date of receipt.

[64 FR 51839, Sept. 24, 1999]

    Effective Date Note: At 64 FR 51839, Sept. 24, 1999, section 15.208 
was revised, effective Nov. 23, 1999. For the convenience of the user, 
the supersed text is set forth as follows:

15.208  Submission, modification, revision, and withdrawal of proposals.

    (a) Offerors are responsible for submitting offers, and any 
revisions and modifications to them, so as to reach the Government 
office designated in the solicitation on time. If an emergency or 
unanticipated event interrupts normal Government processes so that 
proposals cannot be received at the office designated for receipt of 
proposals by the exact time specified in the solicitation, and urgent 
Government requirements preclude amendment of the solicitation closing 
date, the time specified for receipt of proposals will be deemed to be 
extended to the same time of day specified in the solicitation on the 
first work day on which normal Government processes resume. If no time 
is specified in the solicitation, the time for receipt is 4:30 p.m., 
local time, for the designated Government office on the date that 
proposals are due.
    (b) Proposals, and modifications to them, that are received in the 
designated Government office after the exact time specified are ``late 
and shall be considered only if--
    (1) They are received before award is made; and
    (2) The circumstances meet the specific requirements of 52.215-
1(c)(3)(i).
    (c) The contracting officer shall promptly notify any offeror if its 
proposal, modification, or revision was received late, and shall inform 
the offeror whether or not it will be considered, unless contract award 
is imminent and the notice prescribed in 15.503(b) would suffice.
    (d) When a late proposal or modification is transmitted to a 
contracting office in the

[[Page 242]]

United States or Canada by registered or certified mail or by U.S. 
Postal Service Express Mail Next Day Service-Post Office to Addressee 
and is received before award, the offeror shall be promptly notified 
substantially in accordance with the notice in 14.304-2, appropriately 
modified to relate to proposals.
    (e) Late proposals and modifications that are not considered shall 
be held unopened, unless opened for identification, until after award 
and then retained with other unsuccessful proposals.
    (f) The following shall, if available, be included in the 
contracting office files for each late proposal, response to request for 
information, or modification:
    (1) The date of mailing, filing, or delivery.
    (2) The date and hour of receipt.
    (3) Whether or not considered for award.
    (4) The envelope, wrapper, or other evidence of date of submission.
    (g) Proposals may be withdrawn at any time before award. Written 
proposals are withdrawn upon receipt by the contracting officer of a 
written notice of withdrawal. Oral proposals in response to oral 
solicitations may be withdrawn orally. The contracting officer shall 
document the contract file when such oral withdrawals are made. One copy 
of withdrawn proposals should be retained in the contract file (see 
4.803(a)(10)). Extra copies of the withdrawn proposals may be destroyed 
or returned to the offeror at the offeror's request. Extremely bulky 
proposals shall only be returned at the offeror's request and expense.
    (h) Upon withdrawal of an electronically transmitted proposal, the 
data received shall not be viewed and shall be purged from primary and 
backup data storage systems.



15.209  Solicitation provisions and contract clauses.

    When contracting by negotiation--
    (a) The contracting officer shall insert the provision at 52.215-1, 
Instructions to Offerors--Competitive Acquisition, in all competitive 
solicitations where the Government intends to award a contract without 
discussions.
    (1) If the Government intends to make award after discussions with 
offerors within the competitive range, the contracting officer shall use 
the basic provision with its Alternate I.
    (2) If the Government would be willing to accept alternate 
proposals, the contracting officer shall alter the basic clause to add a 
paragraph (c)(9) substantially the same as Alternate II.
    (b)(1) The contracting officer shall insert the clause at 52.215-2, 
Audit and Records-Negotiation (10 U.S.C. 2313, 41 U.S.C. 254d, and OMB 
Circular No. A-133), in solicitations and contracts except those for--
    (i) Acquisitions not exceeding the simplified acquisition threshold;
    (ii) The acquisition of utility services at rates not exceeding 
those established to apply uniformly to the general public, plus any 
applicable reasonable connection charge; or
    (iii) The acquisition of commercial items exempted under 15.403-1.
    (2) For facilities acquisitions, the contracting officer shall use 
the clause with its Alternate I.
    (3) For cost-reimbursement contracts with State and local 
Governments, educational institutions, and other nonprofit 
organizations, the contracting officer shall use the clause with its 
Alternate II.
    (4) When the examination of records by the Comptroller General is 
waived in accordance with 25.901, the contracting officer shall use the 
clause with its Alternate III.
    (c) When issuing a solicitation for information or planning 
purposes, the contracting officer shall insert the provision at 52.215-
3, Request for Information or Solicitation for Planning Purposes, and 
clearly mark on the face of the solicitation that it is for information 
or planning purposes.
    (d) [Reserved]
    (f) The contracting officer shall insert the provision at 52.215-6, 
Place of Performance, in solicitations unless the place of performance 
is specified by the Government.
    (g) The contracting officer shall insert the provision at 52.215-7, 
Annual Representations and Certifications--Negotiation, in solicitations 
if annual representations and certifications are used (see 14.213).
    (h) The contracting officer shall insert the clause at 52.215-8, 
Order of Precedence--Uniform Contract Format, in solicitations and 
contracts using the format at 15.204.

[62 FR 51230, Sept. 30, 1997, as amended at 63 FR 9055, Feb. 23, 1998; 
63 FR 58589, Oct. 30, 1998]



15.210  Forms.

    Prescribed forms are not required to prepare solicitations described 
in this part. The following forms may be used

[[Page 243]]

at the discretion of the contracting officer:
    (a) Standard Form 33, Solicitation, Offer, and Award, and Optional 
Form 308, Solicitation and Offer-- Negotiated Acquisition, may be used 
to issue RFPs and RFIs.
    (b) Standard Form 30, Amendment of Solicitation/Modification of 
Contract, and Optional Form 309, Amendment of Solicitation, may be used 
to amend solicitations of negotiated contracts.
    (c) Optional Form 17, Offer Label, may be furnished with each 
request for proposal.



                     Subpart 15.3--Source Selection



15.300  Scope of subpart.

    This subpart prescribes policies and procedures for selection of a 
source or sources in competitive negotiated acquisitions.



15.301  Definitions.

    Deficiency, as used in this subpart, is a material failure of a 
proposal to meet a Government requirement or a combination of 
significant weaknesses in a proposal that increases the risk of 
unsuccessful contract performance to an unacceptable level.
    Weakness, as used in this subpart, is a flaw in the proposal that 
increases the risk of unsuccessful contract performance. A ``significant 
weakness'' in the proposal is a flaw that appreciably increases the risk 
of unsuccessful contract performance.



15.302  Source selection objective.

    The objective of source selection is to select the proposal that 
represents the best value.



15.303  Responsibilities.

    (a) Agency heads are responsible for source selection. The 
contracting officer is designated as the source selection authority, 
unless the agency head appoints another individual for a particular 
acquisition or group of acquisitions.
    (b) The source selection authority shall--
    (1) Establish an evaluation team, tailored for the particular 
acquisition, that includes appropriate contracting, legal, logistics, 
technical, and other expertise to ensure a comprehensive evaluation of 
offers;
    (2) Approve the source selection strategy or acquisition plan, if 
applicable, before solicitation release;
    (3) Ensure consistency among the solicitation requirements, notices 
to offerors, proposal preparation instructions, evaluation factors and 
subfactors, solicitation provisions or contract clauses, and data 
requirements;
    (4) Ensure that proposals are evaluated based solely on the factors 
and subfactors contained in the solicitation (10 U.S.C. 2305(b)(1) and 
41 U.S.C. 253b(d)(3));
    (5) Consider the recommendations of advisory boards or panels (if 
any); and
    (6) Select the source or sources whose proposal is the best value to 
the Government (10 U.S.C. 2305(b)(4)(B) and 41 U.S.C. 253b(d)(3)).
    (c) The contracting officer shall--
    (1) After release of a solicitation, serve as the focal point for 
inquiries from actual or prospective offerors;
    (2) After receipt of proposals, control exchanges with offerors in 
accordance with 15.306; and
    (3) Award the contract(s).



15.304  Evaluation factors and significant subfactors.

    (a) The award decision is based on evaluation factors and 
significant subfactors that are tailored to the acquisition.
    (b) Evaluation factors and significant subfactors must--
    (1) Represent the key areas of importance and emphasis to be 
considered in the source selection decision; and
    (2) Support meaningful comparison and discrimination between and 
among competing proposals.
    (c) The evaluation factors and significant subfactors that apply to 
an acquisition and their relative importance are within the broad 
discretion of agency acquisition officials, subject to the following 
requirements:
    (1) Price or cost to the Government shall be evaluated in every 
source selection (10 U.S.C. 2305(a)(3)(A) (ii) and 41 U.S.C. 
253a(c)(1)(B)) (also see part 36 for architect-engineer contracts);
    (2) The quality of the product or service shall be addressed in 
every source selection through consideration of one

[[Page 244]]

or more non-cost evaluation factors such as past performance, compliance 
with solicitation requirements, technical excellence, management 
capability, personnel qualifications, and prior experience (10 U.S.C. 
2305(a)(3) (A)(i) and 41 U.S.C. 253a(c)(1)(A)); and
    (3)(i) Except as set forth in paragraph (c)(3)(iii) of this section, 
past performance shall be evaluated in all source selections for 
negotiated competitive acquisitions expected to exceed $1,000,000.
    (ii) Except as set forth in paragraph (c)(3)(iii) of this section, 
past performance shall be evaluated in all source selections for 
negotiated competitive acquisitions issued on or after January 1, 1999, 
for acquisitions expected to exceed $100,000. Agencies should develop 
phase-in schedules that meet or exceed this schedule.
    (iii) Past performance need not be evaluated if the contracting 
officer documents the reason past performance is not an appropriate 
evaluation factor for the acquisition (OFPP Policy Letter 92-5).
    (4) The extent of participation of small disadvantaged business 
concerns in performance of the contract shall be evaluated in 
unrestricted acquisitions expected to exceed $500,000 ($1,000,000 for 
construction) subject to certain limitations (see 19.201 and 19.1202).
    (d) All factors and significant subfactors that will affect contract 
award and their relative importance shall be stated clearly in the 
solicitation (10 U.S.C. 2305(a)(2)(A)(i) and 41 U.S.C. 253a(b)(1)(A)) 
(see 15.204-5(c)). The rating method need not be disclosed in the 
solicitation. The general approach for evaluating past performance 
information shall be described.
    (e) The solicitation shall also state, at a minimum, whether all 
evaluation factors other than cost or price, when combined, are--
    (1) Significantly more important than cost or price;
    (2) Approximately equal to cost or price; or
    (3) Significantly less important than cost or price (10 U.S.C. 
2305(a)(3)(A)(iii) and 41 U.S.C. 253a(c)(1)(C)).

[62 FR 51230, Sept. 30, 1997, as amended at 63 FR 36121, July 1, 1998]



15.305  Proposal evaluation.

    (a) Proposal evaluation is an assessment of the proposal and the 
offeror's ability to perform the prospective contract successfully. An 
agency shall evaluate competitive proposals and then assess their 
relative qualities solely on the factors and subfactors specified in the 
solicitation. Evaluations may be conducted using any rating method or 
combination of methods, including color or adjectival ratings, numerical 
weights, and ordinal rankings. The relative strengths, deficiencies, 
significant weaknesses, and risks supporting proposal evaluation shall 
be documented in the contract file.
    (1) Cost or price evaluation. Normally, competition establishes 
price reasonableness. Therefore, when contracting on a firm-fixed-price 
or fixed-price with economic price adjustment basis, comparison of the 
proposed prices will usually satisfy the requirement to perform a price 
analysis, and a cost analysis need not be performed. In limited 
situations, a cost analysis (see 15.403-1(c)(1)(i)(B)) may be 
appropriate to establish reasonableness of the otherwise successful 
offeror's price. When contracting on a cost-reimbursement basis, 
evaluations shall include a cost realism analysis to determine what the 
Government should realistically expect to pay for the proposed effort, 
the offeror's understanding of the work, and the offeror's ability to 
perform the contract. Cost realism analyses may also be used on fixed-
price incentive contracts or, in exceptional cases, on other competitive 
fixed-price-type contracts (see 15.404-1(d)(3)). (See 37.115 for 
uncompensated overtime evaluation.) The contracting officer shall 
document the cost or price evaluation.
    (2) Past performance evaluation. (i) Past performance information is 
one indicator of an offeror's ability to perform the contract 
successfully. The currency and relevance of the information, source of 
the information, context of the data, and general trends in contractor's 
performance shall be considered. This comparative assessment of past 
performance information is separate from the responsibility 
determination required under subpart 9.1.

[[Page 245]]

    (ii) The solicitation shall describe the approach for evaluating 
past performance, including evaluating offerors with no relevant 
performance history, and shall provide offerors an opportunity to 
identify past or current contracts (including Federal, State, and local 
government and private) for efforts similar to the Government 
requirement. The solicitation shall also authorize offerors to provide 
information on problems encountered on the identified contracts and the 
offeror corrective actions. The Government shall consider this 
information, as well as information obtained from any other sources, 
when evaluating the offeror past performance. The source selection 
authority shall determine the relevance of similar past performance 
information.
    (iii) The evaluation should take into account past performance 
information regarding predecessor companies, key personnel who have 
relevant experience, or subcontractors that will perform major or 
critical aspects of the requirement when such information is relevant to 
the instant acquisition.
    (iv) In the case of an offeror without a record of relevant past 
performance or for whom information on past performance is not 
available, the offeror may not be evaluated favorably or unfavorably on 
past performance.
    (v) The evaluation should include the past performance of offerors 
in complying with subcontracting plan goals for small disadvantaged 
business (SDB) concerns (see Subpart 19.7), monetary targets for SDB 
participation (see 19.1202), and notifications submitted under 19.1202-
4(b).
    (3) Technical evaluation. When tradeoffs are performed (see 15.101-
1), the source selection records shall include--
    (i) An assessment of each offeror's ability to accomplish the 
technical requirements; and
    (ii) A summary, matrix, or quantitative ranking, along with 
appropriate supporting narrative, of each technical proposal using the 
evaluation factors.
    (4) Cost information. Cost information may be provided to members of 
the technical evaluation team in accordance with agency procedures.
    (b) The source selection authority may reject all proposals received 
in response to a solicitation, if doing so is in the best interest of 
the Government.
    (c) For restrictions on the use of support contractor personnel in 
proposal evaluation, see 37.203(d).

[62 FR 51230, Sept. 30, 1997, as amended at 63 FR 36121, July 1, 1998; 
64 FR 51842, 51850, Sept. 24, 1999]

    Effective Date Note: At 64 FR 51842, Sept. 24, 1999, section 15.305 
was amended in paragraph (a)(1) by adding a parenthetical as the 
penultimate sentence, effective Nov. 23, 1999.



15.306  Exchanges with offerors after receipt of proposals.

    (a) Clarifications and award without discussions. (1) Clarifications 
are limited exchanges, between the Government and offerors, that may 
occur when award without discussions is contemplated.
    (2) If award will be made without conducting discussions, offerors 
may be given the opportunity to clarify certain aspects of proposals 
(e.g., the relevance of an offeror's past performance information and 
adverse past performance information to which the offeror has not 
previously had an opportunity to respond) or to resolve minor or 
clerical errors.
    (3) Award may be made without discussions if the solicitation states 
that the Government intends to evaluate proposals and make award without 
discussions. If the solicitation contains such a notice and the 
Government determines it is necessary to conduct discussions, the 
rationale for doing so shall be documented in the contract file (see the 
provision at 52.215-1) (10 U.S.C. 2305(b)(4)(A)(ii) and 41 U.S.C. 
253b(d)(1)(B)).
    (b) Communications with offerors before establishment of the 
competitive range. Communications are exchanges, between the Government 
and offerors, after receipt of proposals, leading to establishment of 
the competitive range. If a competitive range is to be established, 
these communications--
    (1) Shall be limited to the offerors described in paragraphs 
(b)(1)(i) and (b)(1)(ii) of this section and--
    (i) Shall be held with offerors whose past performance information 
is the

[[Page 246]]

determining factor preventing them from being placed within the 
competitive range. Such communications shall address adverse past 
performance information to which an offeror has not had a prior 
opportunity to respond; and
    (ii) May only be held with those offerors (other than offerors under 
paragraph (b)(1)(i) of this section) whose exclusion from, or inclusion 
in, the competitive range is uncertain;
    (2) May be conducted to enhance Government understanding of 
proposals; allow reasonable interpretation of the proposal; or 
facilitate the Government's evaluation process. Such communications 
shall not be used to cure proposal deficiencies or material omissions, 
materially alter the technical or cost elements of the proposal, and/or 
otherwise revise the proposal. Such communications may be considered in 
rating proposals for the purpose of establishing the competitive range;
    (3) Are for the purpose of addressing issues that must be explored 
to determine whether a proposal should be placed in the competitive 
range. Such communications shall not provide an opportunity for the 
offeror to revise its proposal, but may address--
    (i) Ambiguities in the proposal or other concerns (e.g., perceived 
deficiencies, weaknesses, errors, omissions, or mistakes (see 14.407)); 
and
    (ii) Information relating to relevant past performance; and
    (4) Shall address adverse past performance information to which the 
offeror has not previously had an opportunity to comment.
    (c) Competitive range. (1) Agencies shall evaluate all proposals in 
accordance with 15.305(a), and, if discussions are to be conducted, 
establish the competitive range. Based on the ratings of each proposal 
against all evaluation criteria, the contracting officer shall establish 
a competitive range comprised of all of the most highly rated proposals, 
unless the range is further reduced for purposes of efficiency pursuant 
to paragraph (c)(2) of this section.
    (2) After evaluating all proposals in accordance with 15.305(a) and 
paragraph (c)(1) of this section, the contracting officer may determine 
that the number of most highly rated proposals that might otherwise be 
included in the competitive range exceeds the number at which an 
efficient competition can be conducted. Provided the solicitation 
notifies offerors that the competitive range can be limited for purposes 
of efficiency (see 52.215-1(f)(4)), the contracting officer may limit 
the number of proposals in the competitive range to the greatest number 
that will permit an efficient competition among the most highly rated 
proposals (10 U.S.C. 2305(b)(4) and 41 U.S.C. 253b(d)).
    (3) If the contracting officer, after complying with paragraph 
(d)(3) of this section, decides that an offeror's proposal should no 
longer be included in the competitive range, the proposal shall be 
eliminated from consideration for award. Written notice of this decision 
shall be provided to unsuccessful offerors in accordance with 15.503.
    (4) Offerors excluded or otherwise eliminated from the competitive 
range may request a debriefing (see 15.505 and 15.506).
    (d) Exchanges with offerors after establishment of the competitive 
range. Negotiations are exchanges, in either a competitive or sole 
source environment, between the Government and offerors, that are 
undertaken with the intent of allowing the offeror to revise its 
proposal. These negotiations may include bargaining. Bargaining includes 
persuasion, alteration of assumptions and positions, give-and-take, and 
may apply to price, schedule, technical requirements, type of contract, 
or other terms of a proposed contract. When negotiations are conducted 
in a competitive acquisition, they take place after establishment of the 
competitive range and are called discussions.
    (1) Discussions are tailored to each offeror's proposal, and shall 
be conducted by the contracting officer with each offeror within the 
competitive range.
    (2) The primary objective of discussions is to maximize the 
Government's ability to obtain best value, based on the requirement and 
the evaluation factors set forth in the solicitation.
    (3) The contracting officer shall, subject to paragraphs (d)(4) and 
(e) of this section and 15.307(a), indicate to, or discuss with, each 
offeror still being

[[Page 247]]

considered for award, significant weaknesses, deficiencies, and other 
aspects of its proposal (such as cost, price, technical approach, past 
performance, and terms and conditions) that could, in the opinion of the 
contracting officer, be altered or explained to enhance materially the 
proposal's potential for award. The scope and extent of discussions are 
a matter of contracting officer judgment. In discussing other aspects of 
the proposal, the Government may, in situations where the solicitation 
stated that evaluation credit would be given for technical solutions 
exceeding any mandatory minimums, negotiate with offerors for increased 
performance beyond any mandatory minimums, and the Government may 
suggest to offerors that have exceeded any mandatory minimums (in ways 
that are not integral to the design), that their proposals would be more 
competitive if the excesses were removed and the offered price 
decreased.
    (4) If, after discussions have begun, an offeror originally in the 
competitive range is no longer considered to be among the most highly 
rated offerors being considered for award, that offeror may be 
eliminated from the competitive range whether or not all material 
aspects of the proposal have been discussed, or whether or not the 
offeror has been afforded an opportunity to submit a proposal revision 
(see 15.307(a) and 15.503(a)(1)).
    (e) Limits on exchanges. Government personnel involved in the 
acquisition shall not engage in conduct that--
    (1) Favors one offeror over another;
    (2) Reveals an offeror's technical solution, including unique 
technology, innovative and unique uses of commercial items, or any 
information that would compromise an offeror's intellectual property to 
another offeror;
    (3) Reveals an offerors price without that offeror's permission. 
However, the contracting officer may inform an offeror that its price is 
considered by the Government to be too high, or too low, and reveal the 
results of the analysis supporting that conclusion. It is also 
permissible, at the Government's discretion, to indicate to all offerors 
the cost or price that the Government's price analysis, market research, 
and other reviews have identified as reasonable (41 U.S.C. 
423(h)(1)(2));
    (4) Reveals the names of individuals providing reference information 
about an offeror's past performance; or
    (5) Knowingly furnishes source selection information in violation of 
3.104 and 41 U.S.C. 423(h)(1)(2).



15.307  Proposal revisions.

    (a) If an offerors proposal is eliminated or otherwise removed from 
the competitive range, no further revisions to that offeror's proposal 
shall be accepted or considered.
    (b) The contracting officer may request or allow proposal revisions 
to clarify and document understandings reached during negotiations. At 
the conclusion of discussions, each offeror still in the competitive 
range shall be given an opportunity to submit a final proposal revision. 
The contracting officer is required to establish a common cut-off date 
only for receipt of final proposal revisions. Requests for final 
proposal revisions shall advise offerors that the final proposal 
revisions shall be in writing and that the Government intends to make 
award without obtaining further revisions.



15.308  Source selection decision.

    The source selection authority's (SSA) decision shall be based on a 
comparative assessment of proposals against all source selection 
criteria in the solicitation. While the SSA may use reports and analyses 
prepared by others, the source selection decision shall represent the 
SSA's independent judgment. The source selection decision shall be 
documented, and the documentation shall include the rationale for any 
business judgments and tradeoffs made or relied on by the SSA, including 
benefits associated with additional costs. Although the rationale for 
the selection decision must be documented, that documentation need not 
quantify the tradeoffs that led to the decision.

[[Page 248]]



                     Subpart 15.4--Contract Pricing



15.400  Scope of subpart.

    This subpart prescribes the cost and price negotiation policies and 
procedures for pricing negotiated prime contracts (including 
subcontracts) and contract modifications, including modifications to 
contracts awarded by sealed bidding.



15.401  Definitions.

    Cost or pricing data (10 U.S.C. 2306a(h)(1) and 41 U.S.C. 254b) 
means all facts that, as of the date of price agreement or, if 
applicable, an earlier date agreed upon between the parties that is as 
close as practicable to the date of agreement on price, prudent buyers 
and sellers would reasonably expect to affect price negotiations 
significantly. Cost or pricing data are data requiring certification in 
accordance with 15.406-2. Cost or pricing data are factual, not 
judgmental; and are verifiable. While they do not indicate the accuracy 
of the prospective contractor's judgment about estimated future costs or 
projections, they do include the data forming the basis for that 
judgment. Cost or pricing data are more than historical accounting data; 
they are all the facts that can be reasonably expected to contribute to 
the soundness of estimates of future costs and to the validity of 
determinations of costs already incurred. They also include such factors 
as: vendor quotations; nonrecurring costs; information on changes in 
production methods and in production or purchasing volume; data 
supporting projections of business prospects and objectives and related 
operations costs; unit-cost trends such as those associated with labor 
efficiency; make-or-buy decisions; estimated resources to attain 
business goals; and information on management decisions that could have 
a significant bearing on costs.
    Cost realism means that the costs in an offeror's proposal are 
realistic for the work to be performed; reflect a clear understanding of 
the requirements; and are consistent with the various elements of the 
offeror's technical proposal.
    Forward pricing rate agreement means a written agreement negotiated 
between a contractor and the Government to make certain rates available 
during a specified period for use in pricing contracts or modifications. 
Such rates represent reasonable projections of specific costs that are 
not easily estimated for, identified with, or generated by a specific 
contract, contract end item, or task. These projections may include 
rates for such things as labor, indirect costs, material obsolescence 
and usage, spare parts provisioning, and material handling.
    Forward pricing rate recommendation means a rate set unilaterally by 
the administrative contracting officer for use by the Government in 
negotiations or other contract actions when forward pricing rate 
agreement negotiations have not been completed or when the contractor 
will not agree to a forward pricing rate agreement.
    Information other than cost or pricing data means any type of 
information that is not required to be certified in accordance with 
15.406-2 and is necessary to determine price reasonableness or cost 
realism. For example, such information may include pricing, sales, or 
cost information, and includes cost or pricing data for which 
certification is determined inapplicable after submission.
    Price, as used in this subpart, means cost plus any fee or profit 
applicable to the contract type.
    Subcontract, as used in this subpart, also includes a transfer of 
commercial items between divisions, subsidiaries, or affiliates of a 
contractor or a subcontractor (10 U.S.C. 2306a(h)(2) and 41 U.S.C. 
254b(h)(2)).



15.402  Pricing policy.

    Contracting officers shall--
    (a) Purchase supplies and services from responsible sources at fair 
and reasonable prices. In establishing the reasonableness of the offered 
prices, the contracting officer shall not obtain more information than 
is necessary. To the extent that cost or pricing data are not required 
by 15.403-4, the contracting officer shall generally use the following 
order of preference in determining the type of information required:

[[Page 249]]

    (1) No additional information from the offeror, if the price is 
based on adequate price competition, except as provided by 15.403-3(b).
    (2) Information other than cost or pricing data:
    (i) Information related to prices (e.g., established catalog or 
market prices or previous contract prices), relying first on information 
available within the Government; second, on information obtained from 
sources other than the offeror; and, if necessary, on information 
obtained from the offeror. When obtaining information from the offeror 
is necessary, unless an exception under 15.403-1(b) (1) or (2) applies, 
such information submitted by the offeror shall include, at a minimum, 
appropriate information on the prices at which the same or similar items 
have been sold previously, adequate for evaluating the reasonableness of 
the price.
    (ii) Cost information, that does not meet the definition of cost or 
pricing data at 15.401.
    (3) Cost or pricing data. The contracting officer should use every 
means available to ascertain whether a fair and reasonable price can be 
determined before requesting cost or pricing data. Contracting officers 
shall not require unnecessarily the submission of cost or pricing data, 
because it leads to increased proposal preparation costs, generally 
extends acquisition lead time, and consumes additional contractor and 
Government resources.
    (b) Price each contract separately and independently and not--
    (1) Use proposed price reductions under other contracts as an 
evaluation factor; or
    (2) Consider losses or profits realized or anticipated under other 
contracts.
    (c) Not include in a contract price any amount for a specified 
contingency to the extent that the contract provides for a price 
adjustment based upon the occurrence of that contingency.



15.403  Obtaining cost or pricing data.



15.403-1  Prohibition on obtaining cost or pricing data (10 U.S.C. 2306a and 41 U.S.C. 254b).

    (a) Cost or pricing data shall not be obtained for acquisitions at 
or below the simplified acquisition threshold.
    (b) Exceptions to cost or pricing data requirements. The contracting 
officer shall not require submission of cost or pricing data to support 
any action (contracts, subcontracts, or modifications) (but may require 
information other than cost or pricing data to support a determination 
of price reasonableness or cost realism)--
    (1) When the contracting officer determines that prices agreed upon 
are based on adequate price competition (see standards in paragraph 
(c)(1) of this subsection);
    (2) When the contracting officer determines that prices agreed upon 
are based on prices set by law or regulation (see standards in paragraph 
(c)(2) of this subsection);
    (3) When a commercial item is being acquired (see standards in 
paragraph (c)(3) of this subsection);
    (4) When a waiver has been granted (see standards in paragraph 
(c)(4) of this subsection); or
    (5) When modifying a contract or subcontract for commercial items 
(see standards in paragraph (c)(3) of this subsection).
    (c) Standards for exceptions from cost or pricing data 
requirements--(1) Adequate price competition. A price is based on 
adequate price competition if--
    (i) Two or more responsible offerors, competing independently, 
submit priced offers that satisfy the Government's expressed requirement 
and if--
    (A) Award will be made to the offeror whose proposal represents the 
best value (see 2.101) where price is a substantial factor in source 
selection; and
    (B) There is no finding that the price of the otherwise successful 
offeror is unreasonable. Any finding that the price is unreasonable must 
be supported by a statement of the facts and approved at a level above 
the contracting officer;
    (ii) There was a reasonable expectation, based on market research or 
other assessment, that two or more responsible offerors, competing 
independently, would submit priced offers in response to the 
solicitation's expressed requirement, even though only one offer is 
received from a responsible offeror and if--

[[Page 250]]

    (A) Based on the offer received, the contracting officer can 
reasonably conclude that the offer was submitted with the expectation of 
competition, e.g., circumstances indicate that--
    (1) The offeror believed that at least one other offeror was capable 
of submitting a meaningful offer; and
    (2) The offeror had no reason to believe that other potential 
offerors did not intend to submit an offer; and
    (B) The determination that the proposed price is based on adequate 
price competition, is reasonable, and is approved at a level above the 
contracting officer; or
    (iii) Price analysis clearly demonstrates that the proposed price is 
reasonable in comparison with current or recent prices for the same or 
similar items, adjusted to reflect changes in market conditions, 
economic conditions, quantities, or terms and conditions under contracts 
that resulted from adequate price competition.
    (2) Prices set by law or regulation. Pronouncements in the form of 
periodic rulings, reviews, or similar actions of a governmental body, or 
embodied in the laws, are sufficient to set a price.
    (3) Commercial items. Any acquisition for an item that meets the 
commercial item definition in 2.101, or any modification, as defined in 
paragraph (c)(1) or (2) of that definition, that does not change the 
item from a commercial item to a noncommercial item, is exempt from the 
requirement for cost or pricing data. If the contracting officer 
determines that an item claimed to be commercial is, in fact, not 
commercial and that no other exception or waiver applies, the 
contracting officer must require submission of cost or pricing data.
    (4) Waivers. The head of the contracting activity (HCA) may, without 
power of delegation, waive the requirement for submission of cost or 
pricing data in exceptional cases. The authorization for the waiver and 
the supporting rationale shall be in writing. The HCA may consider 
waiving the requirement if the price can be determined to be fair and 
reasonable without submission of cost or pricing data. For example, if 
cost or pricing data were furnished on previous production buys and the 
contracting officer determines such data are sufficient, when combined 
with updated information, a waiver may be granted. If the HCA has waived 
the requirement for submission of cost or pricing data, the contractor 
or higher-tier subcontractor to whom the waiver relates shall be 
considered as having been required to provide cost or pricing data. 
Consequently, award of any lower-tier subcontract expected to exceed the 
cost or pricing data threshold requires the submission of cost or 
pricing data unless--
    (i) An exception otherwise applies to the subcontract; or
    (ii) The waiver specifically includes the subcontract and the 
rationale supporting the waiver for that subcontract.

[62 FR 51230, Sept. 30, 1997, as amended at 64 FR 10545, Mar. 4, 1999; 
64 FR 51836, Sept. 24, 1999]



15.403-2  Other circumstances where cost or pricing data are not required.

    (a) The exercise of an option at the price established at contract 
award or initial negotiation does not require submission of cost or 
pricing data.
    (b) Cost or pricing data are not required for proposals used solely 
for overrun funding or interim billing price adjustments.



15.403-3  Requiring information other than cost or pricing data.

    (a) General. (1) The contracting officer is responsible for 
obtaining information that is adequate for evaluating the reasonableness 
of the price or determining cost realism, but the contracting officer 
should not obtain more information than is necessary (see 15.402(a)). If 
the contracting officer cannot obtain adequate information from sources 
other than the offeror, the contracting officer must require submission 
of information other than cost or pricing data from the offeror that is 
adequate to determine a fair and reasonable price (10 U.S.C. 2306a(d)(1) 
and 41 U.S.C. 254b(d)(1)). Unless an exception under 15.403-1(b) (1) or 
(2) applies, the contracting officer must require that the information 
submitted by the offeror include, at a minimum, appropriate information 
on the

[[Page 251]]

prices at which the same item or similar items have previously been 
sold, adequate for determining the reasonableness of the price. To 
determine the information an offeror should be required to submit, the 
contracting officer should consider the guidance in Section 3.3, Chapter 
3, Volume I, of the Contract Pricing Reference Guide cited at 15.404-
1(a)(7).
    (2) The contractor's format for submitting the information should be 
used (see 15.403-5(b)(2)).
    (3) The contracting officer must ensure that information used to 
support price negotiations is sufficiently current to permit negotiation 
of a fair and reasonable price. Requests for updated offeror information 
should be limited to information that affects the adequacy of the 
proposal for negotiations, such as changes in price lists.
    (4) As specified in Section 808 of Public Law 105-261, an offeror 
who does not comply with a requirement to submit information for a 
contract or subcontract in accordance with paragraph (a)(1) of this 
subsection is ineligible for award unless the HCA determines that it is 
in the best interest of the Government to make the award to that 
offeror, based on consideration of the following:
    (i) The effort made to obtain the data.
    (ii) The need for the item or service.
    (iii) Increased cost or significant harm to the Government if award 
is not made.
    (b) Adequate price competition. When adequate price competition 
exists (see 15.403-1(c)(1)), generally no additional information is 
necessary to determine the reasonableness of price. However, if there 
are unusual circumstances where it is concluded that additional 
information is necessary to determine the reasonableness of price, the 
contracting officer shall, to the maximum extent practicable, obtain the 
additional information from sources other than the offeror. In addition, 
the contracting officer may request information to determine the cost 
realism of competing offers or to evaluate competing approaches.
    (c) Commercial items. (1) At a minimum, the contracting officer must 
use price analysis to determine whether the price is fair and reasonable 
whenever the contracting officer acquires a commercial item (see 15.404-
1(b)). The fact that a price is included in a catalog does not, in and 
of itself, make it fair and reasonable. If the contracting officer 
cannot determine whether an offered price is fair and reasonable, even 
after obtaining additional information from sources other than the 
offeror, then the contracting officer must require the offeror to submit 
information other than cost or pricing data to support further analysis 
(see 15.403-3(a)(1)).
    (2) Limitations relating to commercial items (10 U.S.C. 2306a(d)(2) 
and 41 U.S.C. 254b(d)). (i) The contracting officer must limit requests 
for sales data relating to commercial items to data for the same or 
similar items during a relevant time period.
    (ii) The contracting officer must, to the maximum extent 
practicable, limit the scope of the request for information relating to 
commercial items to include only information that is in the form 
regularly maintained by the offeror as part of its commercial 
operations.
    (iii) The Government must not disclose outside the Government 
information obtained relating to commercial items that is exempt from 
disclosure under 24.202(a) or the Freedom of Information Act (5 U.S.C. 
552(b)).

[62 FR 51230, Sept. 30, 1997, as amended at 64 FR 51836, Sept. 24, 1999]



15.403-4  Requiring cost or pricing data (10 U.S.C. 2306a and 41 U.S.C. 254b).

    (a)(1) Cost or pricing data shall be obtained only if the 
contracting officer concludes that none of the exceptions in 15.403-1(b) 
applies. However, if the contracting officer has sufficient information 
available to determine price reasonableness, then a waiver under the 
exception at 15.403-1(b)(4) should be considered. The threshold for 
obtaining cost or pricing data is $500,000. Unless an exception applies, 
cost or pricing data are required before accomplishing any of the 
following actions expected to exceed the current threshold or, in the 
case of existing contracts, the threshold specified in the contract:

[[Page 252]]

    (i) The award of any negotiated contract (except for undefinitized 
actions such as letter contracts).
    (ii) The award of a subcontract at any tier, if the contractor and 
each higher-tier subcontractor have been required to furnish cost or 
pricing data (but see waivers at 15.403-1(c)(4)).
    (iii) The modification of any sealed bid or negotiated contract 
(whether or not cost or pricing data were initially required) or any 
subcontract covered by paragraph (a)(1)(ii) of this subsection. Price 
adjustment amounts shall consider both increases and decreases (e.g., a 
$150,000 modification resulting from a reduction of $350,000 and an 
increase of $200,000 is a pricing adjustment exceeding $500,000). This 
requirement does not apply when unrelated and separately priced changes 
for which cost or pricing data would not otherwise be required are 
included for administrative convenience in the same modification. 
Negotiated final pricing actions (such as termination settlements and 
total final price agreements for fixed-price incentive and 
redeterminable contracts) are contract modifications requiring cost or 
pricing data if the total final price agreement for such settlements or 
agreements exceeds the pertinent threshold set forth at paragraph (a)(1) 
of this subsection, or the partial termination settlement plus the 
estimate to complete the continued portion of the contract exceeds the 
pertinent threshold set forth at paragraph (a)(1) of this subsection 
(see 49.105(c)(15)).
    (2) Unless prohibited because an exception at 15.403-1(b) applies, 
the head of the contracting activity, without power of delegation, may 
authorize the contracting officer to obtain cost or pricing data for 
pricing actions below the pertinent threshold in paragraph (a)(1) of 
this subsection, provided the action exceeds the simplified acquisition 
threshold. The head of the contracting activity shall justify the 
requirement for cost or pricing data. The documentation shall include a 
written finding that cost or pricing data are necessary to determine 
whether the price is fair and reasonable and the facts supporting that 
finding.
    (b) When cost or pricing data are required, the contracting officer 
shall require the contractor or prospective contractor to submit to the 
contracting officer (and to have any subcontractor or prospective 
subcontractor submit to the prime contractor or appropriate 
subcontractor tier) the following in support of any proposal:
    (1) The cost or pricing data.
    (2) A certificate of current cost or pricing data, in the format 
specified in 15.406-2, certifying that to the best of its knowledge and 
belief, the cost or pricing data were accurate, complete, and current as 
of the date of agreement on price or, if applicable, an earlier date 
agreed upon between the parties that is as close as practicable to the 
date of agreement on price.
    (c) If cost or pricing data are requested and submitted by an 
offeror, but an exception is later found to apply, the data shall not be 
considered cost or pricing data as defined in 15.401 and shall not be 
certified in accordance with 15.406-2.
    (d) The requirements of this subsection also apply to contracts 
entered into by an agency on behalf of a foreign government.



15.403-5  Instructions for submission of cost or pricing data or information other than cost or pricing data.

    (a) Taking into consideration the policy at 15.402, the contracting 
officer shall specify in the solicitation (see 15.408 (l) and (m))--
    (1) Whether cost or pricing data are required;
    (2) That, in lieu of submitting cost or pricing data, the offeror 
may submit a request for exception from the requirement to submit cost 
or pricing data;
    (3) Any information other than cost or pricing data that is 
required; and
    (4) Necessary preaward or postaward access to offeror's records.
    (b)(1) Unless required to be submitted on one of the termination 
forms specified in Subpart 49.6, the contracting officer may require 
submission of cost or pricing data in the format indicated in Table 15-2 
of 15.408, specify an alternative format, or permit submission in the 
contractor's format.
    (2) Information other than cost or pricing data may be submitted in 
the offeror's own format unless the contracting officer decides that use 
of a

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specific format is essential and the format has been described in the 
solicitation.
    (3) Data supporting forward pricing rate agreements or final 
indirect cost proposals shall be submitted in a form acceptable to the 
contracting officer.



15.404  Proposal analysis.



15.404-1  Proposal analysis techniques.

    (a) General. The objective of proposal analysis is to ensure that 
the final agreed-to price is fair and reasonable.
    (1) The contracting officer is responsible for evaluating the 
reasonableness of the offered prices. The analytical techniques and 
procedures described in this section may be used, singly or in 
combination with others, to ensure that the final price is fair and 
reasonable. The complexity and circumstances of each acquisition should 
determine the level of detail of the analysis required.
    (2) Price analysis shall be used when cost or pricing data are not 
required (see paragraph (b) of this subsection and 15.404-3).
    (3) Cost analysis shall be used to evaluate the reasonableness of 
individual cost elements when cost or pricing data are required. Price 
analysis should be used to verify that the overall price offered is fair 
and reasonable.
    (4) Cost analysis may also be used to evaluate information other 
than cost or pricing data to determine cost reasonableness or cost 
realism.
    (5) The contracting officer may request the advice and assistance of 
other experts to ensure that an appropriate analysis is performed.
    (6) Recommendations or conclusions regarding the Government's review 
or analysis of an offeror's or contractor's proposal shall not be 
disclosed to the offeror or contractor without the concurrence of the 
contracting officer. Any discrepancy or mistake of fact (such as 
duplications, omissions, and errors in computation) contained in the 
cost or pricing data or information other than cost or pricing data 
submitted in support of a proposal shall be brought to the contracting 
officer's attention for appropriate action.
    (7) The Air Force Institute of Technology (AFIT) and the Federal 
Acquisition Institute (FAI) jointly prepared a five-volume set of 
Contract Pricing Reference Guides to guide pricing and negotiation 
personnel. The five guides are: I Price Analysis, II Quantitative 
Techniques for Contract Pricing, III Cost Analysis, IV Advanced Issues 
in Contract Pricing, and V Federal Contract Negotiation Techniques. 
These references provide detailed discussion and examples applying 
pricing policies to pricing problems. They are to be used for 
instruction and professional guidance. However, they are not directive 
and should be considered informational only. Free copies of the 
references are available on the World Wide Web, Internet address http://
www.gsa.gov/fai.
    (b) Price analysis. (1) Price analysis is the process of examining 
and evaluating a proposed price without evaluating its separate cost 
elements and proposed profit.
    (2) The Government may use various price analysis techniques and 
procedures to ensure a fair and reasonable price. Examples of such 
techniques include, but are not limited to, the following:
    (i) Comparison of proposed prices received in response to the 
solicitation. Normally, adequate price competition establishes price 
reasonableness (see 15.403-1(c)(1)).
    (ii) Comparison of previously proposed prices and previous 
Government and commercial contract prices with current proposed prices 
for the same or similar items, if both the validity of the comparison 
and the reasonableness of the previous price(s) can be established.
    (iii) Use of parametric estimating methods/application of rough 
yardsticks (such as dollars per pound or per horsepower, or other units) 
to highlight significant inconsistencies that warrant additional pricing 
inquiry.
    (iv) Comparison with competitive published price lists, published 
market prices of commodities, similar indexes, and discount or rebate 
arrangements.
    (v) Comparison of proposed prices with independent Government cost 
estimates.

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    (vi) Comparison of proposed prices with prices obtained through 
market research for the same or similar items.
    (vii) Analysis of pricing information provided by the offeror.
    (3) The first two techniques at 15.404-1(b)(2) are the preferred 
techniques. However, if the contracting officer determines that 
information on competitive proposed prices or previous contract prices 
is not available or is insufficient to determine that the price is fair 
and reasonable, the contracting officer may use any of the remaining 
techniques as appropriate to the circumstances applicable to the 
acquisition.
    (4) Value analysis can give insight into the relative worth of a 
product and the Government may use it in conjunction with the price 
analysis techniques listed in paragraph (b)(2) of this section.
    (c) Cost analysis. (1) Cost analysis is the review and evaluation of 
the separate cost elements and profit in an offeror's or contractor's 
proposal (including cost or pricing data or information other than cost 
or pricing data), and the application of judgment to determine how well 
the proposed costs represent what the cost of the contract should be, 
assuming reasonable economy and efficiency.
    (2) The Government may use various cost analysis techniques and 
procedures to ensure a fair and reasonable price, given the 
circumstances of the acquisition. Such techniques and procedures include 
the following:
    (i) Verification of cost or pricing data and evaluation of cost 
elements, including--
    (A) The necessity for, and reasonableness of, proposed costs, 
including allowances for contingencies;
    (B) Projection of the offeror's cost trends, on the basis of current 
and historical cost or pricing data;
    (C) Reasonableness of estimates generated by appropriately 
calibrated and validated parametric models or cost-estimating 
relationships; and
    (D) The application of audited or negotiated indirect cost rates, 
labor rates, and cost of money or other factors.
    (ii) Evaluating the effect of the offeror's current practices on 
future costs. In conducting this evaluation, the contracting officer 
shall ensure that the effects of inefficient or uneconomical past 
practices are not projected into the future. In pricing production of 
recently developed complex equipment, the contracting officer should 
perform a trend analysis of basic labor and materials, even in periods 
of relative price stability.
    (iii) Comparison of costs proposed by the offeror for individual 
cost elements with--
    (A) Actual costs previously incurred by the same offeror;
    (B) Previous cost estimates from the offeror or from other offerors 
for the same or similar items;
    (C) Other cost estimates received in response to the Government's 
request;
    (D) Independent Government cost estimates by technical personnel; 
and
    (E) Forecasts of planned expenditures.
    (iv) Verification that the offeror's cost submissions are in 
accordance with the contract cost principles and procedures in part 31 
and, when applicable, the requirements and procedures in 48 CFR Chapter 
99 (Appendix to the FAR looseleaf edition), Cost Accounting Standards.
    (v) Review to determine whether any cost or pricing data necessary 
to make the contractor's proposal accurate, complete, and current have 
not been either submitted or identified in writing by the contractor. If 
there are such data, the contracting officer shall attempt to obtain 
them and negotiate, using them or making satisfactory allowance for the 
incomplete data.
    (vi) Analysis of the results of any make-or-buy program reviews, in 
evaluating subcontract costs (see 15.407-2).
    (d) Cost realism analysis. (1) Cost realism analysis is the process 
of independently reviewing and evaluating specific elements of each 
offeror's proposed cost estimate to determine whether the estimated 
proposed cost elements are realistic for the work to be performed; 
reflect a clear understanding of the requirements; and are consistent 
with the unique methods of performance and materials described in the 
offeror's technical proposal.

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    (2) Cost realism analyses shall be performed on cost-reimbursement 
contracts to determine the probable cost of performance for each 
offeror.
    (i) The probable cost may differ from the proposed cost and should 
reflect the Government's best estimate of the cost of any contract that 
is most likely to result from the offeror's proposal. The probable cost 
shall be used for purposes of evaluation to determine the best value.
    (ii) The probable cost is determined by adjusting each offeror's 
proposed cost, and fee when appropriate, to reflect any additions or 
reductions in cost elements to realistic levels based on the results of 
the cost realism analysis.
    (3) Cost realism analyses may also be used on competitive fixed-
price incentive contracts or, in exceptional cases, on other competitive 
fixed-price-type contracts when new requirements may not be fully 
understood by competing offerors, there are quality concerns, or past 
experience indicates that contractors proposed costs have resulted in 
quality or service shortfalls. Results of the analysis may be used in 
performance risk assessments and responsibility determinations. However, 
proposals shall be evaluated using the criteria in the solicitation, and 
the offered prices shall not be adjusted as a result of the analysis.
    (e) Technical analysis. (1) The contracting officer may request that 
personnel having specialized knowledge, skills, experience, or 
capability in engineering, science, or management perform a technical 
analysis of the proposed types and quantities of materials, labor, 
processes, special tooling, facilities, the reasonableness of scrap and 
spoilage, and other associated factors set forth in the proposal(s) in 
order to determine the need for and reasonableness of the proposed 
resources, assuming reasonable economy and efficiency.
    (2) At a minimum, the technical analysis should examine the types 
and quantities of material proposed and the need for the types and 
quantities of labor hours and the labor mix. Any other data that may be 
pertinent to an assessment of the offeror's ability to accomplish the 
technical requirements or to the cost or price analysis of the service 
or product being proposed should also be included in the analysis.
    (f) Unit prices. (1) Except when pricing an item on the basis of 
adequate price competition or catalog or market price, unit prices shall 
reflect the intrinsic value of an item or service and shall be in 
proportion to an item's base cost (e.g., manufacturing or acquisition 
costs). Any method of distributing costs to line items that distorts the 
unit prices shall not be used. For example, distributing costs equally 
among line items is not acceptable except when there is little or no 
variation in base cost.
    (2) Except for the acquisition of commercial items, contracting 
officers shall require that offerors identify in their proposals those 
items of supply that they will not manufacture or to which they will not 
contribute significant value, unless adequate price competition is 
expected (10 U.S.C. 2304 and 41 U.S.C. 254(d)(5)(A)(i)). Such 
information shall be used to determine whether the intrinsic value of an 
item has been distorted through application of overhead and whether such 
items should be considered for breakout. The contracting officer may 
require such information in all other negotiated contracts when 
appropriate.
    (g) Unbalanced pricing. (1) Unbalanced pricing may increase 
performance risk and could result in payment of unreasonably high 
prices. Unbalanced pricing exists when, despite an acceptable total