[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]]

          CHAPTERS 3 TO 6

                         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



[[Page ii]]

                                      




                     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 3--Department of Health and Human Services         3
          Chapter 4--Department of Agriculture                     227
          Chapter 5--General Services Administration               297
          Chapter 6--Department of State                           427
  Finding Aids:
      Table of CFR Titles and Chapters........................     501
      Alphabetical List of Agencies Appearing in the CFR......     519
      List of CFR Sections Affected...........................     529



[[Page iv]]


      


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

                     Cite this Code:  CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus,  48 CFR 301.101 
                       refers to title 48, part 
                       301, section 101.

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

[[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 
distribution of the CFR. For payment by credit card, call 202-512-1800, 
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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, Melanie L. Marcec 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 chapters 3 to 6)

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

chapter 3--Department of Health and Human Services..........         301

chapter 4--Department of Agriculture........................         401

chapter 5--General Services Administration..................         501

chapter 6--Department of State..............................         601

[[Page 3]]



           CHAPTER 3--DEPARTMENT OF HEALTH AND HUMAN SERVICES




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

                          SUBCHAPTER A--GENERAL
Part                                                                Page
301             HHS Acquisition Regulation System...........           5
302             Definitions of words and terms..............          13
303             Improper business practices and personal 
                    conflicts of interest...................          14
304             Administrative matters......................          17
                   SUBCHAPTER B--ACQUISITION PLANNING
305             Publicizing contract actions................          24
306             Competition requirements....................          25
307             Acquisition planning........................          28
309             Contractor qualifications...................          41
          SUBCHAPTER C--CONTRACTING METHODS AND CONTRACT TYPES
313             Small purchase and other simplified purchase 
                    procedures..............................          45
314             Formal advertising..........................          47
315             Contracting by negotiation..................          48
316             Types of contracts..........................          80
317             Special contracting methods.................          84
                  SUBCHAPTER D--SOCIOECONOMIC PROGRAMS
319             Small business and small disadvantaged 
                    business concerns.......................          87
320             Labor surplus area concerns.................          94
322             Application of labor laws to Government 
                    acquisitions............................          94
324             Protection of privacy and freedom of 
                    information.............................          95
325             Foreign acquisition.........................          97
             SUBCHAPTER E--GENERAL CONTRACTING REQUIREMENTS
328             Bonds and insurance.........................         100
330             Cost accounting standards...................         100
332             Contract financing..........................         100

[[Page 4]]

333             Protests, disputes, and appeals.............         104
             SUBCHAPTER F--SPECIAL CATEGORIES OF CONTRACTING
334             Major system acquisition....................         111
335             Research and development contracting........         111
337             Service contracting.........................         114
339             Management, acquisition, and use of 
                    information resources...................         117
                    SUBCHAPTER G--CONTRACT MANAGEMENT
342             Contract administration.....................         119
345             Government property.........................         124
                     SUBCHAPTER H--CLAUSES AND FORMS
352             Solicitation provisions and contract clauses         126
353             Forms.......................................         140
                   SUBCHAPTER T--HHS SUPPLEMENTATIONS
370             Special programs affecting acquisition......         143

Attachment I--Single Letter of Credit Recipients and Central 
  Point Addressees..........................................         145
Attachment II--HHSAR Subject Index..........................         152
Appendix A--Public Health Service...........................         159

[[Page 5]]



                          SUBCHAPTER A--GENERAL





PART 301--HHS ACQUISITION REGULATION SYSTEM--Table of Contents




               Subpart 301.1--Purpose, Authority, Issuance

Sec.
301.101  Purpose.
301.102  Authority.
301.103  Applicability.
301.104  Issuance.
301.104-1  Publication and code arrangement.
301.104-2  Arrangement of regulations.
301.104-3  Copies.
301.105  OMB approval under the Paperwork Reduction Act.

                      Subpart 301.2--Administration

301.201  Maintenance of the HHSAR.
301.270  Executive Committee for Acquisition.
301.271  Timing of HHSAR revisions.

              Subpart 301.3--Agency Acquisition Regulations

301.301  Policy.
301.302  Limitations.
301.303  Publication and codification.
301.304  Agency control and compliance procedures.

                 Subpart 301.4--Deviations From the FAR

301.403  Individual deviations.
301.404  Class deviations.
301.470  Procedure.

             Subpart 301.5--Agency and Public Participation

301.501  Solicitation of agency and public views.
301.501-2  Opportunity for public comments.
301.501-3  Exceptions.
301.503  Public meetings.

         Subpart 301.6--Contracting Authority and Responsibility

301.602-3  Ratification of unauthorized commitments.
301.603  Selection, appointment, and termination of appointment.
301.603-1  General.
301.603-2  Selection.
301.603-3  Appointment.
301.603-4  Termination.
301.603-70  Delegation of contracting officer responsibilities.
301.670  Head of the contracting activity.
301.670-1  Responsibility.
301.670-2  Designation.
301.670-3  Redelegation.

               Subpart 301.7--Determinations and Findings

301.703  Class determinations and findings.
301.704  Content.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

    Source: 49 FR 13961, Apr. 9, 1984, unless otherwise noted.



               Subpart 301.1--Purpose, Authority, Issuance



301.101  Purpose.

    (a) The Department of Health and Human Services Acquisition 
Regulation (HHSAR) is issued to establish uniform acquisition policies 
and procedures for the Department of Health and Human Services (HHS) 
which conform to the Federal Acquisition Regulation (FAR) System.
    (b) The HHSAR implements and supplements the FAR. (Implementing 
material expands upon or indicates the manner of compliance with related 
FAR material. Supplementing material is new material which has no 
counterpart in the FAR.)
    (c) The HHSAR contains all formal departmental policies and 
procedures that govern the acquisition process or otherwise control 
contracting relationships between the Department's contracting offices 
and contractors.



301.102  Authority.

    The HHSAR is prescribed by the Assistant Secretary for Management 
and Budget under the authority of 5 U.S.C. 301 and section 205(c) of the 
Federal Property and Administrative Services Act of 1949, as amended (40 
U.S.C. 486(c)), as delegated by the Secretary. The Assistant Secretary 
for Management and Budget has redelegated the authority to establish all 
departmental acquisition policy and publish all acquisition regulations 
to the Deputy Assistant Secretary for Management and

[[Page 6]]

Acquisition. This authority is not redelegable.

[49 FR 13961, Apr. 9, 1984, as amended at 54 FR 24342, June 7, 1989]



301.103  Applicability.

    The FAR and HHSAR apply to all HHS acquisitions as stated in FAR 
1.103. Unless specified otherwise, these regulations apply to 
acquisitions within and outside the United States.



301.104  Issuance.



301.104-1  Publication and code arrangement.

    (a) The HHSAR is also published in the same forms as indicated in 
FAR 1.104-1(a).
    (b) The HHSAR is issued in the Code of Federal Regulations (CFR) as 
Chapter 3 of Title 48, Department of Health and Human Services 
Acquisition Regulation. It may be referenced as ``48 CFR Chapter 3.''



301.104-2  Arrangement of regulations.

    (a) General. The HHSAR conforms to the FAR with respect to 
divisional arrangements; i.e., subchapters, parts, subparts, sections, 
subsections, and paragraphs.
    (b) Numbering. The FAR System of numbering permits the keying of the 
same or similar subject matter throughout Chapters 1 (FAR) and 3 
(HHSAR). However, unlike the FAR numbering scheme, our scheme varies 
somewhat in the numbering to the left of the decimal point. Whereas the 
FAR only identifies the part number to the left of the decimal point, 
our corresponding reference identifies the chapter as well. For example, 
this corresponding paragraph in the FAR is numbered 1.104-2(b) where 
``1'' is the part number (may be one or two digits and is followed by a 
decimal point), ``1'' (to the right of the decimal point) is the subpart 
number, ``04'' (always two digits) is the section number, ``2'' is the 
subsection number (always hyphenated), and ``(b)'' is the paragraph 
reference. The corresponding HHSAR reference is 301.104-2(b) where the 
``3'' or first digit is the chapter number assigned to the particular 
department or agency (may be two digits) and the ``01'' represents the 
part number (part numbers will always be two digits for agencies 
implementing the FAR). The remaining numbers are identical to and 
represent the same divisions as the FAR example.
    (c) References and citations. (1) Unless otherwise stated, 
references, indicate parts, subparts, sections, subsections, etc, of 
this regulation, the HHSAR.
    (2) This regulation shall be referred to as the Department of Health 
and Human Services Acquisition Regulation (HHSAR). Any reference may be 
cited as ``HHSAR'' followed by the appropriate number. Within the HHSAR, 
the number alone will be used.
    (3) Citations of authority shall be incorporated where necessary. 
All FAR reference numbers shall be preceded by ``FAR''.



301.104-3  Copies.

    Copies of the HHSAR in Federal Register and CFR form may be 
purchased by the public from the Superintendent of Documents, Government 
Printing Office (GPO), Washington, DC 20402. Lose-leaf copies of the 
HHSAR may be obtained by departmental personnel having a need for the 
document by placing an order with a Directives Distribution Coordinator 
in accordance with General Administration Manual Chapter 1-00, HHS Staff 
Manual System.



301.105  OMB approval under the Paperwork Reduction Act.

    The following OMB control numbers apply to the information 
collection and recordkeeping requirements contained in this regulation:

------------------------------------------------------------------------
                                                             OMB control
                       HHSAR segment                             no.
------------------------------------------------------------------------
315.4......................................................    0990-0139
324.70.....................................................    0990-0136
332.406....................................................    0990-0134
342.7103...................................................    0990-0131
352.215-71.................................................    0990-0139
352.216-70.................................................    0990-0138
352.224-70.................................................    0990-0136
352.228-70.................................................    0990-0135
352.232-71.................................................    0990-0134
352.232-73.................................................    0990-0134
352.233-70.................................................    0990-0133
352.270-1..................................................    0990-0129
352.270-2..................................................    0990-0129
352.270-3..................................................    0990-0129
352.270-5..................................................    0990-0130
370.1......................................................    0990-0129
370.2......................................................    0990-0129
------------------------------------------------------------------------


[[Page 7]]


The OMB control number ``OMB No. 0990-0115'' is to be included in the 
upper right corner of the first page of all solicitations, purchase 
orders, and contracts issued by departmental contracting activities. The 
number represents approval of the HHS acquisition process and covers 
recordkeeping and reporting requirements which are unique to individual 
acquisitions (e.g., requirements contained in specifications, statements 
of work, etc.).

[49 FR 13961, Apr. 9, 1984, as amended at 50 FR 23126, May 31, 1985; 50 
FR 38004, Sept. 19, 1985; 51 FR 44293, Dec. 9, 1986; 53 FR 15562, May 2, 
1988]



                      Subpart 301.2--Administration



301.201  Maintenance of the HHSAR.

    (a) The HHSAR is prepared and issued under the authority of the 
Deputy Assistant Secretary for Management and Acquisition. Acquisition 
policies and procedures which are necessary to implement, supplement, or 
deviate from the FAR will be issued in the HHSAR by the Deputy Assistant 
Secretary for Management and Acquisition when necessary to accomplish 
Department-wide acquisition objectives.
    (b) The HHSAR is maintained by the Office of Acquisition and Grants 
Management. The Director, Office of Acquisition and Grants Management is 
responsible for developing and preparing for issuance all acquisition 
regulatory material to be included in the HHSAR.

[49 FR 13961, Apr. 9, 1984, as amended at 50 FR 23126, May 31, 1985; 50 
FR 38004, Sept. 19, 1985; 54 FR 24342, June 7, 1989]



301.270  Executive Committee for Acquisition.

    (a) The Deputy Assistant Secretary for Management and Acquisition 
has established the Executive Committee for Acquisition (ECA) to assist 
and facilitate the planning and development of departmental acquisition 
policies and procedures and to assist in responding to other agencies 
and organizations concerning policies and procedures impacting the 
Federal acquisition process.
    (b) The ECA consists of members and alternates from the Office of 
Acquisition and Grants Management, Division of Contract Operations-OS, 
Office of Human Development Services, Health Care Financing 
Administration, Social Security Administration, Public Health Service, 
and, collectively, the regional offices. The ECA is chaired by the 
Director, Office of Acquisition and Grants Management. All meetings will 
be held at the call of the Chairman, and all activities will be carried 
out under the direction of the Chairman.
    (c) The ECA, to facilitate the planning, development, and 
coordination of government-wide and department-wide acquisition policies 
and procedures, is to:
    (1) Advise and assist the Chairman concerning major acquisition 
policy matters;
    (2) Review and appraise, at appropriate intervals, the overall 
effectiveness of existing policies and procedures; and
    (3) Review and appraise the impact of new major acquisition 
policies, procedures, regulations, and developments on current 
acquisition policies and procedures.
    (d) The Chairman will periodically issue a list of current members 
and alternates specifying the name, title, organization, address, and 
telephone number of each. The member organizations are responsible for 
apprising the Chairman whenever a new member or alternate is to be 
appointed to the ECA.

[49 FR 13961, Apr. 9, 1984, as amended at 50 FR 23126, May 31, 1985; 50 
FR 38004, Sept. 19, 1985; 54 FR 24342, June 7, 1989]



301.271  Timing of HHSAR revisions.

    HHSAR revisions will be issued throughout the year as the need 
arises. HHSAR material shall become effective on the date cited in the 
Federal Register issuance or on the date of the transmittal notice which 
distributes it to HHSAR Staff Manual holders, unless otherwise 
indicated.



              Subpart 301.3--Agency Acquisition Regulations



301.301  Policy.

    (a)(1) The FAR and HHSAR are intended to provide all necessary 
regulatory guidance for the conduct of the

[[Page 8]]

acquisition process within the Department. However, there may be some 
rare instances where regulations are necessary to implement and/or 
supplement the FAR and/or HHSAR at the Operating Division (OPDIV) level 
or lower. The Department discourages the proliferation of OPDIV and 
lower level issuances, but will allow lower level issuances when deemed 
pertinent.

[49 FR 13961, Apr. 9, 1984, as amended at 50 FR 23126, May 31, 1985; 50 
FR 38004, Sept. 19, 1985]



301.302  Limitations.

    The same limitations applicable to the FAR also apply to the HHSAR.



301.303  Publication and codification.

    (a) The HHSAR shall be codified in Chapter 3 of Title 48, Code of 
Federal Regulations. Any OPDIV or lower implementation or 
supplementation of the HHSAR or FAR shall also be codified as part of 
Chapter 3. Implementing material is that which expands upon or indicates 
the manner of compliance with related higher level material. 
Supplementing material is that for which there is no counterpart. Where 
material in the FAR requires no implementation, there will be no 
corresponding number in the HHSAR. Thus, there are gaps in the HHSAR 
sequence of numbers where the FAR, as written, is deemed adequate. 
Supplementary material shall be numbered as specified in FAR 1.303.

[49 FR 13961, Apr. 9, 1984, as amended at 50 FR 23126, May 31, 1985; 50 
FR 38004, Sept. 19, 1985]



301.304  Agency control and compliance procedures.

    (a) Whenever an OPDIV or lower level organization determines a need 
for an acquisition regulation not covered by the FAR or HHSAR or wishes 
to implement or supplement the coverage in either, the organization 
shall prepare a memorandum that explains the need, background, 
justification, and significant aspects of the proposed regulation and 
send it, together with an outline, to the Director, Office of 
Acquisition and Grants Management. The Director will analyze the request 
to determine if it has applicability to the HHSAR or FAR; if not, the 
Director will either approve or disapprove the request for incorporation 
into the organization's acquisition regulation. If the request is 
approved, the organization must prepare the proposed regulation in 
Federal Register format, obtain all necessary concurrences, including 
Office of General Counsel--Business and Administrative Law Division, and 
send it to the Director, Office of Acquisition and Grants Management for 
review and approval. The regulation must be prepared for signature by 
the Deputy Assistant Secretary for Management and Acquisition. All 
regulations will be required to be processed through the public 
rulemaking process in the Federal Register.
    (b) Only the organizations listed in paragraph (d) are authorized to 
established acquisition regulations. As of the date of issuance of the 
HHSAR, no acquisition regulations below the HHSAR level exist, and the 
procedures detailed in paragraph (a) must be followed to initiate the 
establishment of an OPDIV or lower level regulation.
    (c) Under no circumstances shall any organization's implementation 
or supplementation of the FAR or HHSAR conflict with, supersede, or 
repeat, paraphrase, or otherwise restate policies or procedures 
prescribed by these regulatory issuances. OPDIV or lower level material 
shall follow the numbering system, format, and arrangement of the FAR 
and HHSAR and will be applicable only within the organization issuing 
it. One copy of all OPDIV or lower level material issued in loose-leaf 
format shall be furnished the Director, Office of Acquisition and Grants 
Management at the times of issuance.
    (d) Material issued by OPDIV or lower level organizations to 
implement and supplement the HHSAR and FAR shall be identified by 
prefixes to the digit 3 (indicating Chapter 3-HHSAR) as follows, and 
shall use the same numbering system as the HHSAR:

------------------------------------------------------------------------
                Organization                            Prefix
------------------------------------------------------------------------
Office of the Secretary....................  OS
Health Care Financing Administration.......  HCFA
Office of Human Development Services.......  OHDS
Public Health Service......................  PHS
  Alcohol, Drug Abuse, and Mental Health     ADAMHA
   Administration.
  Centers for Disease Control..............  CDC
  Food and Drug Administration.............  FDA

[[Page 9]]

 
  Health Resources and Services              HRSA
   Administration.
  Indian Health Service....................  IHS
  National Institutes of Health............  NIH
Social Security Administration.............  SSA
------------------------------------------------------------------------


Each OPDIV or lower level acquisition regulation will be included in its 
entirety as a separate appendix to 48 CFR Chapter 3. The Director, 
Office of Acquisition and Grants Management will assign the appendix 
designation upon approval of the initial request to establish the OPDIV 
or lower level acquisition regulation.

[49 FR 13961, Apr. 9, 1984, as amended at 49 FR 36110, Sept. 14, 1984; 
50 FR 23126, May 31, 1985; 50 FR 38004, Sept. 19, 1985; 53 FR 43206, 
Oct. 26, 1988, 54 FR 24342, June 7, 1989]



                 Subpart 301.4--Deviations From the FAR



301.403  Individual deviations.

    Requests for individual deviations to either the FAR or HHSAR shall 
be prepared in accordance with 301.470 and forwarded through 
administrative channels to the Director, Office of Acquisition and 
Grants Management for review and approval.

[49 FR 13961, Apr. 9, 1984, as amended at 50 FR 23126, May 31, 1985; 50 
FR 38004, Sept. 19, 1985; 54 FR 24342, June 7, 1989]



301.404  Class deviations.

    Requests for class deviations to either the FAR or HHSAR shall be 
prepared in accordance with 301.470 and forwarded through administrative 
channels to the Deputy Assistant Secretary for Management and 
Acquisition for review and approval.

[49 FR 13961, Apr. 9, 1984, as amended at 50 FR 23126, May 31, 1985; 50 
FR 38004, Sept. 19, 1985; 54 FR 24342, June 7, 1989]



301.470  Procedure.

    (a) When a contracting activity or contracting office determines 
that a deviation is needed, it shall prepare a deviation request in 
memorandum form and forward it through administrative channels to the 
official designated as stated in 301.403 or 301.404. In an exigency 
situation, the contracting activity or contracting office may request a 
deviation verbally, but is required to confirm the request in writing as 
soon as possible.
    (b) A deviation request shall clearly and precisely set forth the:
    (1) Nature of the needed deviation;
    (2) Identification of the FAR or HHSAR from which the deviation is 
needed;
    (3) Circumstances under which the deviation would be used;
    (4) Intended effect of the deviation;
    (5) Time-frame; and
    (6) Reasons which will contribute to complete understanding and 
support of the requested deviation. A copy of pertinent background 
papers such as a form or contractor's request should accompany the 
deviation request.

[49 FR 13961, Apr. 9, 1984, as amended at 50 FR 23126, May 31, 1985; 50 
FR 38004, Sept. 19, 1985; 54 FR 24342, June 7, 1989]



             Subpart 301.5--Agency and Public Participation



301.501  Solicitation of agency and public views.

[49 FR 13961, Apr. 9, 1984, as amended at 50 FR 23126, May 31, 1985; 50 
FR 38004, Sept. 19, 1985]



301.501-2  Opportunity for public comments.

    (b) Public opportunity for comment on proposed changes or additions 
to the HHSAR or lower level acquisition regulations will be offered 
whenever the proposed regulation will have an impact on the public and/
or contractors. This will be accomplished by publishing a notice of 
proposed rulemaking in the Federal Register which will include the 
proposed language and the background and rationale for the proposed 
regulation. Comments will not be solicited directly from professional or 
industry associations or other interested parties; they will be expected 
to respond based upon the Federal Register notification. Normally, the 
public will be given 45 days to comment. Proposed changes or additions 
to the HHSAR or FAR shall be staffed to the Executive Committee

[[Page 10]]

for Acquisition in accordance with 301.270.

[49 FR 13961, Apr. 9, 1984. Redesignated and amended at 50 FR 23126, May 
31, 1985; 50 FR 38004, Sept. 19, 1985]



301.501-3  Exceptions.

    (e) Comments will not be solicited from the public when the change 
or addition to the HHSAR or lower level acquisition regulation is deemed 
procedural in nature and concerns internal administrative directions 
aimed at departmental personnel (see FAR 1.301(b)).

[49 FR 13961, Apr. 9, 1984, as amended at 49 FR 36110, Sept. 14, 1984. 
Redesignated and amended at 50 FR 23126, May 31, 1985; 50 FR 38004, 
Sept. 19, 1985]



301.503  Public meetings.

    Public meetings will not normally be used to solicit comments or 
views on HHSAR or lower level acquisition regulations. However, when the 
topic is so controversial that the Department or OPDIV believes a public 
meeting would be beneficial, public meetings will be convened.

[49 FR 13961, Apr. 9, 1984. Redesignated at 50 FR 23127, May 31, 1985; 
50 FR 38004, Sept. 19, 1985]



         Subpart 301.6--Contracting Authority and Responsibility

    Source: 53 FR 15562, May 2, 1988, unless otherwise noted.



301.602-3  Ratification of unauthorized commitments.

    (b) Policy. (1) The Government is not bound by agreements or 
contractual commitments made to prospective contractors by persons to 
whom contracting authority has not been delegated. However, execution of 
otherwise proper contracts made by individuals without contracting 
authority, or by contracting officers in excess of the limits of their 
delegated authority, may be later ratified. The ratification must be in 
the form of a written document clearly stating that ratification of a 
previously unauthorized act is intended and must be signed by the head 
of the contracting activity (HCA).
    (2) The HCA or his/her designee is the official authorized to ratify 
an unauthorized commitment (but see (b)(3), below).
    (3) Ratification authority may be redelegated by the HCA, but not 
below the level of the principal official responsible for acquisition 
(PORA).
    (c) Limitations. (5) The concurrence of legal counsel concerning the 
payment issue is optional.
    (7) The ratification shall be in written document form containing 
verification of each limitation stated in FAR 1.602-3(c)(1)-(6), and 
shall be processed in accordance with 301.602-3(e) Procedures.
    (e) Procedures. (1) The individual who made the unauthorized 
contractual commitment shall furnish the reviewing contracting officer 
all records and documents concerning the commitment and a complete 
written statement of facts, including, but not limited to: a statement 
as to why the contracting office was not used, a statement as to why the 
proposed contractor was selected, a list of other sources considered, a 
description of work to be performed or products to be furnished, the 
estimated or agreed contract price, a citation of the appropriation 
available, and a statement of whether the contractor has commenced 
performance.
    (2) The contracting officer will review the submitted material, and 
prepare the ratification document if he/she determines that the 
commitment may be ratifiable. The contracting officer shall forward the 
ratification document and the submitted material to the HCA or designee 
with any comments or information which should be considered in 
evaluation of the request for ratification. If legal review is 
desirable, the HCA or designee will coordinate the request for 
ratification with the Office of General Counsel, Business and 
Administrative Law Division.
    (3) If ratification is authorized by the HCA or designee, the file 
will be returned, along with the ratification document, to the 
contracting officer for issuance of a purchase order or contract, as 
appropriate.
    (4) HCA's or their designees will report the number and dollar value 
of requests for ratifications received and

[[Page 11]]

ratifications authorized each calendar quarter. Reports shall be 
submitted in an original and one copy to the Deputy Assistant Secretary 
for Management and Acquisition to arrive no later than 30 calendar days 
after the close of each calendar quarter.

[53 FR 43206, Oct. 26, 1988]



301.603  Selection, appointment, and termination of appointment.



301.603-1  General.

    (a) The appointment and termination of appointment of contracting 
officers shall be made by the principal official responsible for 
acquisition (PORA). This authority is not delegable. The head of the 
contracting activity shall ensure that only the PORA is redelegated, and 
exercises, this authority.
    (b) Only GS-1105 and 1106 and GS/GM-1101 and 1102 personnel shall be 
appointed as contracting officers (see 301.603-3(b)).
    (c) The appointment of contracting officers shall be made at one of 
the four levels specified under the HHS Acquisition Certification 
Program (see 301.603-3(b)).
    (d) An individual shall be appointed only in instances where a valid 
organizational need for a contracting officer can be demonstrated or a 
replacement position is to be filled. Factors to be considered in 
assessing the need for a contracting officer appointment include volume 
of actions, complexity of work, and structure of the organization.



301.603-2  Selection.

    (a) When an organizational need for a contracting officer is 
determined or a replacement is required, an official (usually the 
prospective contracting officer's immediate supervisor) will nominate a 
contracting officer candidate. The nomination shall be accompanied by 
the candidate's current Standard Form (SF) 171, Personal Qualifications 
Statement, that contains all relevant information, to include that 
stated in FAR 1.603-2, a copy of the nominee's most recent performance 
appraisal, and a copy of the certificate issued under the HHS 
Acquisition Certification Program indicating the current level of 
certification.
    (b) The PORA shall review the submitted material to determine the 
candidate's ability to perform the contracting functions required to 
meet the organizational need. If the PORA requires additional 
information to make the decision, it shall be provided expeditiously by 
the nominating official.



301.603-3  Appointment.

    (a) Contracting officer appointments shall become effective when the 
PORA signs the Standard Form 1402, Certificate of Appointment. SF 1402's 
shall be prepared and maintained in accordance with FAR 1.603-3.
    (b) Appointments shall be made at one of the four levels established 
by the HHS Acquisition Certification Program. Therefore, the contracting 
officer candidate must meet the minimum eligibility requirements of 
certification for one of the four stated levels. The level will be 
determined by the organizational need or position being refilled 
(replacement). The four levels are as follows:
    (1) Level I--Purchasing Agent. Mandatory for all personnel who have 
signature authority for small purchases (GS-1102, 1105, and 1106), 
including orders from GSA sources.
    (2) Level II--Acquisition Official. Mandatory for those in the GS-
1102 series. Sufficient for delegation of contracting officer authority 
to a maximum of $100,000.
    (3) Level III--Senior Acquisition Official. Mandatory for those in 
the GS-1102 series for delegation of contracting officer authority above 
$100,000.
    (4) Level IV--Acquisition Manager. Mandatory for preaward review and 
approval authority as specified in HHSAR Subpart 304.71.
    (c) Changes to contracting officer appointments, either increasing 
or decreasing the warrant limitations, shall be made by the PORA. 
Changes must be made from one of the four certification levels to 
another, or within one of the certification levels, and must be 
implemented by the PORA's issuance of a new SF 1402 to replace the 
existing SF 1402.
    (d) Personnel shall not ordinarily be appointed as contracting 
officers if they do not meet the qualifications

[[Page 12]]

prescribed for one of the four certification levels. However, if it is 
essential to appoint a contracting officer who does not fully meet the 
certification qualifications, an interim appointment may be granted by 
the PORA. The PORA shall require as a condition of the interim 
appointment that all training or experience requirements be met within a 
six month time period. Usually, interim appointments shall not exceed 
six months. Failure to successfully complete the necessary training 
requirements or gain the experience within this time frame will result 
in termination of the appointment, unless the PORA determines that 
unusual circumstances prevented the attainment of either. In this 
instance, one additional six month interim appointment may be issued, 
but no more shall be allowed. The PORA shall fully document all interim 
appointment actions.
    (e) The original SF 1402 shall be provided to the contracting 
officer, and a copy shall be retained by the PORA. Another copy of the 
SF 1402 along with the SF 171 material shall be forwarded to the 
servicing personnel office for inclusion in the individual's personnel 
file folder. Files on individuals should not be established by the PORA.



301.603-4  Termination.

    Termination of contracting officer appointments shall be executed by 
the PORA in accordance with FAR 1.603-4.



301.603-70  Delegation of contracting officer responsibilities.

    (a) Non-GS/GM-1101 or 1102 or GS-1105 or 1106 personnel shall only 
be delegated contracting officer responsibilities when determined 
necessary by a warranted contracting officer (holder of a valid SF 
1402), and in accordance with this subsection. Personnel, such as a 
contracting officer's representative or an ordering officer, shall be 
delegated only the needed responsibilities by the warranted contracting 
officer in a written memorandum of delegation which clearly states any 
limitations on the delegation. Personnel who are not in the GS/GM-1101 
or 1102 or GS-1105 or 1106 job series shall not be issued a SF 1402, 
Certificate of Appointment.
    (b) Non-acquisition personnel who are delegated acquisition 
responsibilities shall be required to have the training, experience, and 
education requirements necessary for the responsibilities assigned. If, 
for example, responsibility is to be delegated for making small 
purchases, the training, education, and experience for Level I--
Purchasing Agent, or its equivalent as determined by the PORA, shall be 
required.



301.670  Head of the contracting activity.



301.670-1  Responsibility.

    The head of the contracting activity (HCA) is responsible for 
conducting an effective and efficient acquisition program. Adequate 
controls shall be established to assure compliance with applicable laws, 
regulations, procedures, and the dictates of good management practices. 
Periodic reviews shall be conducted by qualified personnel, preferably 
assigned to positions other than in the contracting office being 
reviewed, to determine the extent of adherence to prescribed policies 
and regulations, and to detect a need for guidance and/or training.



301.670-2  Designation.

    Each OPDIV head and PHS agency head has been designated as HCA along 
with the following officials:
    (a) Deputy Assistant Secretary for Management and Acquisition; and
    (b) Each Regional Director.

[53 FR 15562, May 2, 1988, as amended at 54 FR 24342, June 7, 1989]



301.670-3  Redelegation.

    (a) The heads of contracting activities may redelegate their HCA 
authorities to the extent that redelegation is not prohibited by the 
terms of their respective delegations of authority, by law, by the 
Federal Acquisition Regulation, by the HHS Acquisition Regulation, or by 
other regulations. However, HCA and other contracting approvals and 
authorities shall not be redelegated below the levels specified in the 
HHS Acquisition Regulation or, in the

[[Page 13]]

absence of coverage in the HHS Acquisition Regulation, the Federal 
Acquisition Regulation. To ensure proper control of redelegated 
acquisition authorities, HCA's shall maintain a file containing 
successive delegations of HCA authority through and including the 
contracting officer level.
    (b) Personnel delegated responsibility for acquisition functions 
must possess a level of experience, training, and ability commensurate 
with the complexity and magnitude of the acquisition actions involved.



               Subpart 301.7--Determinations and Findings

    Source: 50 FR 23127, May 31, 1985 (interim rule) and 50 FR 38004, 
Sept. 19, 1985 (final rule), unless otherwise noted.



301.703  Class determinations and findings.

    (b) All class determinations and findings (D&F's) shall be limited 
to a period of one year or less.



301.704  Content.

    An example of a D&F format may be found in 316.301-3(c). All D&F's 
shall be prepared using the referenced format and shall include the 
information required by FAR 1.704(a)-(g).



PART 302--DEFINITIONS OF WORDS AND TERMS--Table of Contents




    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).



                       Subpart 302.1--Definitions



302.100  Definitions of terms.

    Chief of the contracting office (CCO) is a mid-level management 
official in charge of a contracting office who controls and oversees the 
daily contracting operation of an Operating Division (OPDIV) or major 
component of an OPDIV. The CCO is subordinate to the principal official 
responsible for acquisition and is located at a management level above 
other contracting personnel, usually as a branch chief.
    Head of the agency or agency head means the head of the Operating 
Division (OPDIV) for HCFA, OHDS, PHS, and SSA, or the Assistant 
Secretary for Management and Budget (ASMB) for the Office of the 
Secretary (OS).
    Head of the contracting activity (HCA)--see 301.670-2.
    Principal official responsible for acquisition (PORA) is defined in 
terms of certain organizational positions within the Office of 
Management and Acquisition (OMAC-OS), Health Care Financing 
Administration (HCFA), Office of Human Development Services (OHDS), 
Office of the Assistant Secretary for Health (OASH), Alcohol, Drug 
Abuse, and Mental Health Administration (ADAMHA), Centers for Disease 
Control (CDC), Food and Drug Administration (FDA), Health Resources and 
Services Administration (HRSA), Indian Health Service (IHS), National 
Institutes of Health (NIH), Social Security Administration (SSA), and 
the Regional Offices (RO's), as follows:

OMAC-OS--Director, Division of Contract Operations
HCFA--Director, Office of Acquisition and Grants, Office of Budget and 
Administration
OHDS-- Director, Grants and Contracts Management Division, Office of 
Management Services
OASH--Director, Division of Acquisitions Management, Administrative 
Services Center, Office of Management
ADAMHA-- Director, Division of Grants and Contracts Management, Office 
of the Administrator
CDC-- Director, Procurement and Grants Office, Office of the Center 
Director
FDA-- Director, Division of Contracts and Grants Management, Office of 
the Associate Commissioner for Management and Operations
HRSA-- Director, Division of Grants and Procurement Management, Office 
of Management
IHS-- Director, Division of Contracts and Grants Policy, Office of 
Administration and Management
NIH-- Director, Division of Contracts and Grants, Office of 
Administration
SSA-- Associate Commissioner, Office of Acquisition and Grants
RO's-- Director, Regional Administrative Support Center


The PORA is subordinate to the head of the contracting activity and is 
the official in charge of the major contracting operation activity 
within the

[[Page 14]]

OPDIV, agency, staff office, or regional office.

[49 FR 13964, Apr. 9, 1984, as amended at 51 FR 23231, June 26, 1986; 51 
FR 44293, Dec. 9, 1986; 52 FR 27558, July 22, 1987; 53 FR 43207, Oct. 
26, 1988; 54 FR 24342, June 7, 1989; 55 FR 13536, Apr. 11, 1990; 56 FR 
47002, Sept. 17, 1991]



PART 303--IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST--Table of Contents




                        Subpart 303.1--Safeguards

Sec.
303.101  Standards of conduct.
303.101-3  Agency regulations.
303.104  Procurement integrity.
303.104-4  Definitions.
303.104-5  Disclosure of proprietary and source selection information.
303.104-6  Restrictions on Government officials, employees, and 
          consultants.
303.104-9  Certification requirements.
303.104-11  Processing violations or possible violations.
303.104-12  Ethics program training requirements.

       Subpart 303.2--Contract Gratuities to Government Personnel

303.203  Reporting suspected violations of the Gratuities clause.

         Subpart 303.3--Report of Suspected Antitrust Violations

303.303  Reporting suspected antitrust violations.

                     Subpart 303.4--Contingent Fees

303.408  Evaluation of the SF 119.
303.408-1  Responsibilities.
303.409  Misrepresentations or violations of the Covenant Against 
          Contingent Fees.

            Subpart 303.5--Other Improper Business Practices

303.502  Subcontractor kickbacks.

  Subpart 303.6--Contracts With Government Employees or Organizations 
                       Owned or Controlled by Them

303.602  Exceptions.

             Subpart 303.7--Voiding and Rescinding Contracts

303.704  Policy.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

    Source: 49 FR 13964, Apr. 9, 1984, unless otherwise noted.



                        Subpart 303.1--Safeguards

    Source: 54 FR 31528, July 31, 1989, unless otherwise noted.



303.101  Standards of conduct.



303.101-3  Agency regulations.

    The Department of Health and Human Services' Standards of Conduct 
are prescribed in Part 73 of Title 45.



303.104  Procurement integrity.



303.104-4  Definitions.

    (h)(1) Procurement official means any individual who has 
participated personally and substantially in the conduct of a 
procurement. The following classes of employees may be considered 
procurement officials depending on the circumstances prevailing in a 
given case: contracting officers, contract specialists, contract 
administrators, procurement agents, procurement clerks, cost/price 
analysts, procurement analysts, clerical support and administrative 
personnel, auditors, professional staff of the Division of Cost 
Allocation, acquisition review and approval officials, contract 
clearance staff, board of award members, supervisory procurement 
officials, small and disadvantaged business utilization specialists, 
project officers, project managers, program officials, officials who 
provide special program clearances and approvals, program managers, 
technical evaluation panelists, peer reviewers, source selection 
evaluation board members, source selection advisory council members, 
source selection authorities, finance officials, and procurement 
lawyers. Concept peer reviewers are not considered to be procurement 
officials when participating in project concept reviews pursuant to 42 
CFR 52h.10(a). However, concept peer reviewers, or other peer reviewers, 
who participate in a project approach review are procurement officials. 
When there is a question whether an individual is a procurement 
official, the activities of the individual should be analyzed by the 
contracting officer to determine

[[Page 15]]

whether there is both personal and substantial involvement in a 
procurement. If there is doubt in a particular case, the doubt should be 
resolved by including the individual as a procurement official. The 
contracting officer has the authority to decide who is or who is not a 
procurement official in a particular case. The opinion of the Office of 
the General Counsel (OGC) should be requested when the contracting 
officer believes the situation is particularly complex or sensitive. 
When the contracting officer's decision is disputed by the individual 
whose status as a procurement official is in question, the matter will 
be referred to the Principal Official Responsible for Acquisition (PORA) 
for a final determination.
    (k)(1) Source selection information includes ``derivative 
documents'' which are documents containing references to or directly 
citing or paraphrasing proprietary or source selection information.



303.104-5  Disclosure of proprietary and source selection information.

    (a) The contracting officer or any other individual who prepares, 
makes or controls proprietary, source selection information, or 
derivative documents shall--
    (1) Ensure documents are marked as prescribed in FAR 3.104-4 (j) and 
(k);
    (2) Provide physical security for documents in the office 
environment during and after duty hours; and
    (3) Ensure security of interoffice mailing of documents by using 
opaque envelopes, double wrapping with more than one envelope, and 
sealing of envelopes, as necessary.
    (b) Individuals responsible for preparing derivative documents are 
responsible for marking such documents in accordance with FAR 3.104-
5(b).
    (c) Only the contracting officer has the authority to authorize 
individuals, or classes of individuals, access to proprietary or source 
selection information for each procurement except for paragraph (d) of 
this section.
    (d) The following classes of individuals are authorized blanket 
access to only that source selection information developed before a 
request for contract is sent to the contract office, or to later 
modifications or supplements to such information--
    (1) The generators of the requirements, including program, 
scientific, and technical experts involved in the development of the 
statements of work, specifications, evaluation plans, budget estimates, 
or similar documents;
    (2) Reviewing officials; and
    (3) Supervisors in the management chain of the individuals listed in 
paragraphs (d) (1) and (2) of this section. The contracting officer 
shall include in the contract file names and functions of any other 
individuals authorized access to proprietary or source selection 
information.



303.104-6  Restrictions on Government officials, employees, and consultants.

    (b) Procurement officials leaving the Department will be required to 
complete the certification set forth in Chapter 1-90 of the General 
Administration Manual if that official leaves the Department during the 
conduct of a procurement expected to result in a contract or 
modification in excess of $100,000. The administrative officer will 
forward a copy of the certification to each responsible contracting 
officer for incorporation into the contract file.



303.104-9  Certification requirements.

    (c) The contracting officer shall include the contracting officer 
certification in the contract file for each contract action over 
$100,000. Including the certificate in the contract file shall be 
considered notification to the head of the agency.
    (e)(2) The waiver shall be submitted to the Office of Acquisition 
and Grants Management in the Office of Management and Acquisition, 
Office of Management and Budget in the Office of the Secretary for 
review and approval before submission to the head of the agency.



303.104-11  Processing violations or possible violations.

    (a)(1) The contracting officer determination that a reported 
violation or possible violation of the statutory prohibitions has no 
impact on the impending award or selection of a source must

[[Page 16]]

be submitted through channels, along with supporting documentation, to 
the PORA for review and approval of the determination before award of a 
contract.
    (2) The contracting officer's determination that a reported 
violation or possible violation of the statutory prohibitions has an 
impact on the pending award or selection of a source must be referred 
through channels, along with all related information available, to the 
PORA (if the PORA is an SES) or to another SES official designated by 
the OPDIV. That individual will--
    (i) Refer the matter immediately to the Office of Acquisition and 
Grants Management in the Office of Management and Acquisition, Office of 
Management and Budget, Office of the Secretary for review, which office 
may consult with the Office of the General Counsel and the Office of the 
Inspector General, as appropriate; and
    (ii) Determine the action to be taken on the procurement in 
accordance with FAR 3.104-11 (c) and (d).
    (b) The individual in paragraph (a)(2) of this section acts as the 
agency head designee with respect to actions taken under the FAR clause 
at 52.203-10, Remedies for Illegal or Improper Activity.



303.104-12  Ethics program training requirements.

    (a) The Office of Acquisition and Grants Management in the Office of 
Management and Acquisition (OAGM), Office of Management and Budget in 
the Office of the Secretary is responsible for developing a training 
module which can be used by the Department's OPDIVs and Regional offices 
to train procurement officials. Upon receipt of the module, each OPDIV 
and Regional Office must train the procurement officials set forth in 
303.104-4(h)(1) before they can act as procurement officials.
    (b) After the training has been completed, each procurement official 
must sign the ``Procurement Official's Certificate of Procurement 
Integrity'' before he/she can act as a procurement official on any 
procurement. The certificate shall be submitted to the servicing 
personnel office, where the certificate will be filed on the left side 
of the employee's Official Personnel Folder. A copy of the certificate 
shall be provided to the contract office which shall maintain a list of 
the procurement officials who have signed the certificates.
    (c) Procurement officials who serve multiple contracting offices 
(such as procurement lawyers) shall submit copies of their certificates 
to OAGM with the originals being transmitted to their servicing 
personnel office. OAGM shall maintain a list of such procurement 
officials and inform cognizant contracting officers upon telephonic 
request whether particular individuals are included on the list.



      Subpart 303.2--Contractor Gratuities to Government Personnel



303.203  Reporting suspected violations of the Gratuities clause.

    Departmental personnel shall report suspected violations of the 
Gratuities clause in accordance with subpart M, Reporting Violations, of 
the Department's Standards of Conduct (45 CFR part 73) and General 
Administration Manual Chapter 5-10, rather than as specified in FAR 
3.203. Refer to subpart E, Gifts, Entertainment, and Favors, of 45 CFR 
part 73 for an explanation regarding what is prohibited and what is 
permitted.



         Subpart 303.3--Report of Suspected Antitrust Violations



303.303  Reporting suspected antitrust violations.

    A copy of each report of suspected antitrust violations submitted to 
the Attorney General shall also be submitted to the Director, Office of 
Acquisition and Grants Management.

[49 FR 13964, Apr. 9, 1984, as amended at 54 FR 24342, June 7, 1989]



                     Subpart 303.4--Contingent Fees



303.408  Evaluation of the SF 119.



303.408-1  Responsibilities.

    (b) The chief of the contracting office shall perform the review 
required by FAR 3.408-1(b) and should consult with the Office of General 
Counsel, Business

[[Page 17]]

and Administrative Law Division, when deemed necessary.



303.409  Misrepresentations or violations of the Covenant Against Contingent Fees.

    (a) Reports shall be made promptly to the contracting officer.
    (b)(1)-(3)  [Reserved]
    (4) Suspected fraudulent or criminal matters to be reported to the 
Department of Justice shall be prepared in letter format and forwarded 
through acquisition channels to the head of the contracting activity for 
signature. The letter must contain all pertinent facts and background 
information considered by the contracting officer and chief of the 
contracting office that led to the decision that fraudulent or criminal 
matters may be present. A copy of the signed letter shall be sent to the 
Director, Office of Acquisition and Grants Management.

[49 FR 13964, Apr. 9, 1984, as amended at 54 FR 24342, June 7, 1989]



            Subpart 303.5--Other Improper Business Practices



303.502  Subcontractor kickbacks.

    (b) Any known or suspected violations of the Anti-Kickback Act (41 
U.S.C. 51-54) shall be reported to the contracting officer who shall 
investigate the matter, document the findings, and report the results to 
the chief of the contracting office. If the results substantiate the 
known or suspected violation, the chief of the contracting office shall 
notify the Office of General Counsel, Business and Administrative Law 
Division and report the matter, through acquisition channels, to the 
head of the contracting activity. The head of the contracting activity 
shall take appropriate action is consonance with the Act, and notify the 
Director, Office of Acquisition and Grants Management of the case and 
its disposition.

[49 FR 13964, Apr. 9, 1984, as amended at 54 FR 24342, June 7, 1989]



  Subpart 303.6--Contracts With Government Employees or Organizations 
                       Owned or Controlled by Them



303.602  Exceptions.

    Approval of an exception to the policy stated in FAR 3.601 shall be 
made by the head of the OPDIV (Assistant Secretary for Management and 
Budget in OS cases) or the Regional Director.



             Subpart 303.7--Voiding and Rescinding Contracts



303.704  Policy.

    For the purposes of implementing FAR subpart 3.7, the authorities 
granted to the ``agency head or designee'' shall be exercised by the 
principal official responsible for acquisition.

[51 FR 44293, Dec. 9, 1986]



PART 304--ADMINISTRATIVE MATTERS--Table of Contents




                    Subpart 304.1--Contract Execution

Sec.
304.101  Contracting officer's signature.
304.170  [Reserved]

                  Subpart 304.2--Contract Distribution

304.201  Procedures.

                    Subpart 304.6--Contract Reporting

304.602  Federal Procurement Data System.

                      Subpart 304.8--Contract Files

304.801  General.
304.804  Closeout of contract files.
304.804-1  Closeout by the office administering the contract.
304.870  Closing review.

 Subpart 304.70--Acquisition Instrument Identification Numbering System

304.7000  Scope of subpart.
304.7001  Numbering contracts.
304.7002  Numbering solicitation documents.
304.7003  Numbering purchase and delivery orders.
304.7004  Numbering basic agreements.

[[Page 18]]

304.7005  Numbering basic ordering agreements.

     Subpart 304.71--Review and Approval of Proposed Contract Awards

304.7100  Scope of subpart.
304.7101  Contracts requiring review and approval.
304.7102  Conduct of the review.
304.7103  Approvals.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

    Source: 49 FR 13965, Apr. 9, 1984, unless otherwise noted.



                    Subpart 304.1--Contract Execution



304.101  Contracting officer's signature.

    An original of each bilateral contract or modification shall be 
executed by the contractor and contracting officer. An original of each 
unilateral contract or modification shall be executed by the contracting 
officer. The contracting officer need only sign the original when carbon 
paper is used in sets of forms such as Standard Form 44 or Optional Form 
347 or 348. A legible carbon impression of the contracting officer's 
signature shall carry the same force and effect as a pen and ink 
signature for unilateral contracts.



304.170  [Reserved]



                  Subpart 304.2--Contract Distribution



304.201  Procedures.

    The signed original of bilateral contracts and modifications shall 
be placed in the contract file, and duplicate originals shall be 
furnished the contractor, the appropriate accounting point, the project 
officer, and other individuals or offices, as applicable. Purchase 
orders, delivery orders, and other unilateral contracts and 
modifications shall be distributed the same as bilateral contracts 
except the original shall be furnished the contractor or seller. Copies 
of unilateral contracts and modifications with carbon impressioned 
signatures may be used but must be stamped ``DUPLICATE ORIGINAL'' (see 
304.101).

[49 FR 36110, Sept. 14, 1984]



                    Subpart 304.6--Contract Reporting



304.602  Federal Procurement Data System.

    The Department-wide Contract Information System (DCIS) represents 
the Department's implementation of the FPDS. All departmental 
contracting activities are required to participate in the DCIS and 
follow the procedures stated in the Contract Information System Manual 
and amendments to it. The principal official responsible for acquisition 
shall ensure that all required contract information is collected, 
submitted, and received into the DCIS on or before the 15th of each 
month for all appropriate contract and contract modification awards of 
the prior month.

[49 FR 13965, Apr. 9, 1984. Redesignated at 51 FR 44293, Dec. 9, 1986]



                      Subpart 304.8--Contract Files



304.801  General.

    OPDIVs shall prescribe the contents of contract files and establish 
filing procedures consistent with the nature of the contracting actions 
and in accordance with FAR 4.801, 4.802, and 4.803. Contract files 
should contain an index of the contents to facilitate review and should 
be separated into logical categories (see FAR 4.803).



304.804  Closeout of contract files.



304.804-1  Closeout by the office administering the contract.

    (3) Files for all cost-reimbursement type contracts should be closed 
within 20 months of the month in which the contracting officer receives 
evidence of physical completion (see FAR 4.804-4). The contracting 
officer responsible for contract closeout may negotiate settlement of 
indirect costs for a specific contract, in advance of the determination 
of final indirect cost rates in accordance with FAR 42.708.



304.870  Closing review.

    (a) Contracting officers shall assure the applicable items in FAR 
4.804-5,

[[Page 19]]

other than a field audit, have been accomplished prior to closing any 
physically completed contract. Cost-reimbursement type contracts will be 
subject to the additional requirements set forth below before they may 
be closed.
    (b) Contracting officers shall use the instructions in the October 
5, 1982 memorandum from the Deputy Assistant Secretary for Procurement, 
Assistance and Logistics to closeout cost-reimbursement type contracts 
physically completed prior to fiscal year 1977 and cost-reimbursement 
type contracts completed subsequent to that date for which field audit 
information is available.
    (c) Contracting officers shall closeout all other cost-reimbursement 
type contracts physically completed after September 30, 1977 in 
accordance with the following procedures:
    (1) Field audits will be conducted for contracts in excess of 
$500,000 awarded to commercial organizations and non-profit 
organizations other than colleges and universities, hospitals and State 
and local units of government for which an agency other than HHS has 
audit cognizance. Field audits will also be conducted each year on 
approximately 25 of the same type contractors for which HHS has audit 
cognizance. These contracts may be closed after receipt of the field 
audit report.
    (2) Contracts of any dollar value with non-proprietary colleges and 
universities, hospitals and State and local units of government and 
contracts not in excess of $500,000 with other institutions/
organizations shall be closed out on the basis of a desk audit. The desk 
audit should include (i) a confirmation from the project officer that 
labor, material, travel, and other types of direct costs are 
commensurate with contract requirements, (ii) a review of available 
audit reports to determine if any adjustments were made that may be 
applicable to the contract under review, and (iii) discussions with the 
cognizant government auditor when considered appropriate. These 
contracts shall be closed with the condition that they are subject to 
adjustment should an on-site audit be conducted at a later date and 
should unallowable costs be identified as a result of that audit. The 
release executed by the contractor shall contain the following:

    The Contractor agrees, pursuant to the clause in this contract 
entitled Allowable Cost (for cost-reimbursement contracts) or Allowable 
Cost and Fixed Fee (for CPFF contracts), that the amount of any 
sustained audit exceptions resulting from any audit made after final 
payment will be refunded to the Government.

    (3) The contracting officer may request a field audit of any 
contract when, in his/her judgment, the risk attendant with the contract 
warrants it. The contracting officer, however, shall exercise discretion 
in requesting such audits on creditable evidence such as unsatisfactory 
dealings with the contractor during the period of contract performance, 
prior audit reports containing serious findings against the contractor, 
the known experience of other government officials in dealing with the 
contractor when the contracting officer is personally knowledgeable 
about the circumstances, formal third party complaints or allegations 
which bear upon the contractor's integrity or the propriety of costs 
charged to the Government, and other comparable allegations or advice of 
a derogatory nature about the contractor made by responsible individuals 
which in the contracting officer's judgment should be investigated. 
Except where a contracting officer suspects misrepresentation or fraud, 
audits should not be requested if their cost of performance is likely to 
exceed their potential cost recovery.
    (4) When an audit is warranted prior to closing out a contract, the 
contracting officer should request the audit directly from the 
Department of Health and Human Services Office of the Inspector General, 
Office of Audits (HHSOA). The request should cite the reasons the 
contracting officer believes an audit is warranted. A copy of the 
request should be forwarded to the Director, Office of Acquisition and 
Grants Management (DOAGM). In the event the Office of the Inspector 
General cannot honor the request in a reasonable period of time, it will 
consult with DOAGM and the contracting officer. The final decision on 
the need and scope of an audit will be made on the basis of the value of 
the contract, the

[[Page 20]]

nature of the contracting officer's concerns, and the availability of 
HHSOA or other existing resources in the Department to perform a review 
to satisfy the contracting officer's concerns.
    (5) Closeout procedures are to be followed in conjunction with the 
regular procedures now followed in administering contracts. These 
procedures are not meant or to be interpreted as imposing any 
requirement or responsibility on contracting officers or necessitating 
any reviews on the part of the contracting officials not currently 
required by the FAR. With some rare exceptions, Standard Form 1034, 
Public Voucher for Purchases and Services Other than Personal, will 
contain sufficient information to allow a contracting officer to satisfy 
requirements for desk audits. Accordingly, these closeout procedures 
shall not cause contracting officers to engage in extraordinary 
oversight or review and shall not be used by contracting officers as the 
basis for requiring contractors to submit extraordinary documentation 
such as payroll listing, labor billings, travel details, etc.

[49 FR 13965, Apr. 9, 1984, as amended at 54 FR 24342, June 7, 1989; 54 
FR 43965, Oct. 30, 1989; 56 FR 47002, Sept. 17, 1991]



 Subpart 304.70--Acquisition Instrument Identification Numbering System



304.7000  Scope of subpart.

    This subpart prescribes policy and procedures for assigning 
identifying numbers to contracts and related instruments, including 
solicitation documents, purchase orders, and delivery orders.



304.7001  Numbering contracts.

    (a) Contracts which require numbering. The following contracts shall 
be numbered in accordance with the system prescribed in paragraph (b) of 
this section:
    (1) All contracts, including letter contracts and task orders under 
basic ordering agreements, which involve the payment of $2,500 or more 
for the acquisition of personal property or nonpersonal services.
    (2) All contracts which involve the payment of $2,000 or more for 
construction (including renovation or alteration).
    (3) All contracts which involve more than one payment regardless of 
amount.

(The number assigned to a letter contract shall be assigned to the 
superseding definitized contract.)
    (b) Numbering system. All contracts which require numbering shall be 
assigned a number consisting of the following:
    (1) The three digit code assigned to the contracting office by the 
Office of Financial Operations, Office of Finance.
    (2) A two digit fiscal year designation; and
    (3) A four digit serial number. While it is required that a 
different series of four digit serial numbers be used for each fiscal 
year, serial numbers assigned need not be sequential.
    (c) Illustration of contract numbers. The initial contract executed 
by the Division of Contract Operations, Office of the Secretary, for 
fiscal year 1983 should be numbered 100-83-0001, the second contract 
100-83-0002. Alternatively, if it is desirable for internal 
identification purposes to establish separate series of numbers for 
sealed bid and negotiated contracts, this procedure is permissible. In 
this instance, the initial sealed bid contract might be numbered 100-83-
0001 and the initial negotiated contract numbered 100-83-0500.
    (d) Assignment of identification codes. Each contracting office of 
the Department shall be assigned a three digit identification code by 
the Office of Financial Operations. Requests for the assignment of such 
codes for newly established contracting offices shall be submitted by 
the headquarters acquisition staff office of the contracting activity to 
the Director, Office of Financial Operations. Conversely, in the event 
that a contracting office is to be disestablished, the Director, Office 
of Financial Operations shall be notified.

[[Page 21]]

A listing of the contracting office identification codes currently in 
use is contained in the Department-wide Contract Information System 
Manual (DCIS).

[49 FR 13961, Apr. 9, 1984, as amended at 50 FR 23126, May 31, 1985; 50 
FR 38004, Sept. 19, 1985; 54 FR 24342, June 7, 1989]



304.7002  Numbering solicitation documents.

    Requests for proposals and invitations for bids shall be numbered in 
accordance with procedures prescribed by the headquarters staff office 
of the contracting activity.



304.7003  Numbering purchase and delivery orders.

    Contracting offices shall establish procedures for numbering 
purchase orders as required for effective identification and control.



304.7004  Numbering basic agreements.

    Basic agreements shall be numbered in accordance with procedures 
prescribed by the headquarters staff office of the cognizant contracting 
activity. However, individual contracts entered into pursuant to the 
terms and conditions of a basic agreement shall be numbered in 
accordance with 304.7001(b).



304.7005  Numbering basic ordering agreements.

    Basic ordering agreements shall be numbered in accordance with 
procedures prescribed by the headquarters staff office of the 
contracting activity.

[49 FR 13965, Apr. 9, 1984, as amended at 53 FR 15563, May 2, 1988]



     Subpart 304.71--Review and Approval of Proposed Contract Awards



304.7100  Scope of subpart.

    This subpart prescribes review and approval procedures for contract 
actions to ensure that:
    (a) Contract awards are in conformance with law, established 
policies and procedures, and sound business practices;
    (b) Contractual documents properly reflect the mutual understanding 
of the parties; and
    (c) The contracting officer is informed of deficiencies and items of 
questionable acceptability and corrective action is taken.



304.7101  Contracts requiring review and approval.

    (a) General. All contractual documents, regardless of dollar value, 
are to be reviewed by the contracting officer prior to award, even if 
the review and approval procedures prescribed in this section are 
applicable. However, under no circumstances may the individual who signs 
a contract instrument as contracting officer perform final review and 
approval of that contract action if it, or any modification to it, is 
expected to exceed the levels set forth in (b) (1) or (2) below.
    (b) Required reviews and approvals. (1) Officials responsible for 
the acquisition function in the Office of the Secretary, OPDIVs (except 
the Public Health Service), and regional offices are to assure that 
sealed bid or negotiated contracts, and/or modifications to them, 
expected to exceed $300,000, are reviewed and approved prior to award. 
In order to assure the propriety of smaller dollar acquisitions, a 
statistically significant sample of contract actions not expected to 
exceed $300,000 are to be reviewed and approved prior to award.
    (2) Contract actions of the Public Health Service are to be reviewed 
and approved prior to award in accordance with the dollar thresholds 
stated in Subpart PHS 304.71. In order to assure the propriety of 
smaller dollar acquisitions, a statistically significant sample of 
contract actions not expected to exceed those dollar thresholds 
referenced in Subpart PHS 304.71 are to be reviewed and approved prior 
to award.
    (c) Reviewing officials. Officials assigned responsibility for 
review and approval of contract actions must possess qualifications in 
the field of acquisition commensurate with the level of review 
performed, and, as a minimum, possess those acquisition skills expected 
of a contracting officer. The following officials are responsible for 
preaward contract review and approval:

Office of the Secretary--

[[Page 22]]

    Director, Division of Contract and Grant Operations
    Director, Division of Contract Operations, Office of Administrative 
and Management Services
Office of Human Development Services--Director, Grants and Contracts 
Management Division
Social Security Administration--Director, Office of Acquisition and 
Grants (may be redelegated to the appropriate division direction within 
the Office of Acquisition and Grants)
Health Care Financing Administration--Director, Division of Procurement 
Services.
Public Health Service--The reviewing official is designated in Subpart 
PHS 304.71, as approved by the Director, Office of Procurement and 
Logistics Policy, OPAL.


However, if any of the officials are to serve as the contracting officer 
and sign the contractual document, the review and approval function 
shall be performed by an appropriate official at least one level above.
    (d) Regional offices. The Director, Regional Administrative Support 
Center (RASC) is responsible for review and approval of contracts, or 
modifications to them, expected to exceed $300,000 and executed by the 
regional office's contracting staff. The RASC may obtain the advice of 
the Regional Attorney in the review of proposed contract awards.

[49 FR 13961, Apr. 9, 1984, as amended at 50 FR 23127, May 31, 1985; 50 
FR 38004, Sept. 19, 1985; 51 FR 44293, Dec. 9, 1986; 52 FR 27558, July 
22, 1987; 54 FR 24343, June 7, 1989]



304.7102  Conduct of the review.

    (a) General. Reviewing officials may solicit the participation of 
specialists in various technical and administrative disciplines to aid 
in the review. The method of the review is not prescribed here in order 
to permit discretionary judgment in determining the depth to which 
significant areas are to be examined.
    (b) Contract file. The reviewer is to: (1) Determine that the 
contract file constitutes an independent record, documented to provide a 
complete chronology of actions related to all aspects of the 
acquisition, and that the documentation is consistent with the 
requirements of FAR 4.803;
    (2) Determine that each contract file contains documentation or 
other data (i.e., technical and business management evaluation, cost 
advisory and audit reports, negotiation memorandum, etc.) sufficient to 
explain and support the rationales, judgments, and authorities upon 
which all decisions and actions were predicated; and
    (3) Ascertain:
    (i) If the proposed acquisition action is to be awarded by other 
than full and open competition, that the documentation and approvals 
supporting the decision are present in the contract file;
    (ii) That proper publicizing of the proposed acquisition was made 
pursuant to FAR Part 5;
    (iii) That approval was obtained for any deviation from prescribed 
contract clauses;
    (iv) That sufficient competition was obtained, the competitive range 
was appropriately determined, and oral or written discussions were 
conducted with all firms in the competitive range;
    (v) That all the rules set forth in FAR Part 14 were complied with 
when the proposed award is a result of an IFB; and
    (vi) That appropriate determinations and findings which justify the 
type of contract and advance payments are a part of the contract file.

[49 FR 13961, Apr. 9, 1984, as amended at 50 FR 23127, May 31, 1985; 50 
FR 38004, Sept. 19, 1985]



304.7103  Approvals.

    (a) Awards are not to be made until approval is granted by the 
reviewing official identified in 304.7101. All approvals are to be in 
writing, except that when time is of the essence approval may be given 
orally and subsequently confirmed in writing.
    (b) The reviewing official shall not approve a proposed contract 
award if a substantive issue (or issues) remains to be resolved. 
However, in appropriate circumstances, the reviewing official may use 
discretion and grant approval on a conditional basis and require the 
contracting officer to submit follow-up written documentation that the 
substantive issue has been resolved. This provides the reviewing 
official the option to require the contracting officer to resolve the 
substantive issue and submit documenting evidence before award approval 
is given, or to grant

[[Page 23]]

conditional approval providing the substantive issue is resolved before 
the contract is awarded and require the contracting officer to submit 
documenting evidence either before or after the award. The reviewing 
official also has the option to determine the extent of documentation 
evidence to be submitted by the contracting officer. This may range from 
complete resubmission of the contract file to submission of a memorandum 
stating the contracting officer's actions in resolving the substantive 
issue.

[[Page 24]]



                   SUBCHAPTER B--ACQUISITION PLANNING





PART 305--PUBLICIZING CONTRACT ACTIONS--Table of Contents




               Subpart 305.1--Dissemination of Information

Sec.
305.102  [Reserved]

          Subpart 305.2--Synopsis of Proposed Contract Actions

305.202  Exceptions.

               Subpart 305.3--Synopses of Contract Awards

305.303  Announcement of contract awards.

                   Subpart 305.5--Paid Advertisements

305.502  Authority.
305.503  Procedures.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

    Source: 49 FR 13969, Apr. 9, 1984, unless otherwise noted.



               Subpart 305.1--Dissemination of Information



305.102  [Reserved]



          Subpart 305.2--Synopsis of Proposed Contract Actions



305.202  Exceptions.

    (b) When a contracting office believes that it has a situation where 
advance notice is not appropriate or reasonable, it shall prepare a 
memorandum citing all pertinent facts and details and send it, through 
normal acquisition channels, to the Director, Office of Acquisition and 
Grants Management (DOAGM) requesting relief from synopsizing. The DOAGM 
shall review the request and decide whether an exception to synopsizing 
is appropriate or reasonable. If it is, the DOAGM shall take the 
necessary coordinating actions required by FAR 5.202(b). Whatever the 
decision is on the request, the DOAGM shall promptly notify the 
contracting office when a determination has been made.

[51 FR 44293, Dec. 9, 1986, as amended at 54 FR 24343, June 7, 1989]



               Subpart 305.3--Synopses of Contract Awards



305.303  Announcement of contract awards.

    (a) Public announcement. Any contract, contract modification, or 
delivery order in the amount of $1 million or more shall be reported by 
the contracting officer to the Office of the Deputy Assistant Secretary 
for Legislation (Congressional Liaison), Room 406G, Hubert H. Humphrey 
Building. Notification shall be accomplished by providing a copy of the 
contract or award document face page to the referenced office prior to 
the day of award, or in sufficient time to allow for an announcement to 
be made by 5 p.m. Washington, DC time on the day of award.

[53 FR 43207, Oct. 26, 1988, as amended at 57 FR 11689, April 7, 1992]



                   Subpart 305.5--Paid Advertisements



305.502  Authority.

    The contracting officer is authorized to publish advertisements, 
notices, and contract proposals in newspapers and periodicals in 
accordance with the requirements and conditions referenced in FAR 
Subpart 5.5.



305.503  Procedures.

    Requests for acquisition of advertising shall be accompanied by 
written authority to advertise or publish which sets forth justification 
and includes the names of newspapers or journals concerned, frequency 
and dates of proposed advertisements, estimated cost, and other 
pertinent information. Paid advertisements shall be limited to the 
publication of essential details of grant announcements, invitations for 
bids, and requests for proposals, including those for the sale of 
personal property, and for the recruitment of employees.

[[Page 25]]



PART 306--COMPETITION REQUIREMENTS--Table of Contents




   Subpart 306.2--Full and Open Competition After Exclusion of Sources

Sec.
306.202  Establishing or maintaining alternative sources.

           Subpart 306.3--Other Than Full and Open Competition

306.302  Circumstances permitting other than full and open competition.
306.302-1  Only one responsible source and no other supplies or services 
          will satisfy agency requirements.
306.302-7  Public interest.
306.303  Justifications.
306.303-1  Requirements.
306.303-2  Content.
306.304  Approval of the justification.

         Subpart 306.4--Sealed Bidding and Competitive Proposals

306.401  Sealed bidding and competitive proposals.

                  Subpart 306.5--Competition Advocates

306.501  Requirement.
306.502  Duties and responsibilities.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

    Source: 50 FR 23127, May 31, 1985, unless otherwise noted.



   Subpart 306.2--Full and Open Competition After Exclusion of Sources



306.202  Establishing or maintaining alternative sources.

    (a) The reference to the agency head in FAR 6.202(a) shall mean the 
appropriate competition advocate cited in 306.501.
    (b)(1) The required determination and findings (D&F) shall be 
prepared by the contracting officer based on the data provided by 
program personnel, and shall be signed by the appropriate competition 
advocate. The D&F signatory authority is not delegable.

[50 FR 23127, May 31, 1985, and 50 FR 38004, Sept. 19, 1985, as amended 
at 51 FR 44293, Dec. 9, 1986]



           Subpart 306.3--Other Than Full and Open Competition



306.302  Circumstances permitting other than full and open competition.



306.302-1  Only one responsible source and no other supplies or services will satisfy agency requirements.

    (a) Authority. (2)(ii) Follow-on contracts for the continuation of 
major research and development studies on long-term social and health 
programs, major research studies, or clinical trails may be deemed to be 
available only from the original source when it is likely that award to 
any other source would result in unacceptable delays in fulfilling the 
Department's or OPDIV's requirements.
    (b) Application. (4) When the OPDIV head has determined that a 
specific item of technical equipment or parts must be obtained to meet 
an activity's program responsibility to test and evaluate certain kinds 
and types of products, and only one source is available. (This criterion 
is limited to testing and evaluation purposes only and may not be used 
for initial outfitting or repetitive acquisitions. Project officers 
should support the use of this criterion with citations from their 
agency's legislation and the technical rationale for the item of 
equipment required.)
    (c) Application for brand name descriptions. There is existing 
equipment which, for reasons of compatibility and interchangeability, 
requires an item which is manufactured only by one source. (This 
criterion is for use in acquisitions where a particular brand name item 
is required, and an ``or equal'' will not meet the Government's 
requirements. This criterion may not be used when there are other 
manufacturers available which may be able to produce acceptable items 
even though their products might require some adjustments and 
modifications. These other manufacturers must be given the opportunity 
to compete.)

[50 FR 23127, May 31, 1985, and 50 FR 38004, Sept. 19, 1985, as amended 
at 51 FR 44293, Dec. 9, 1986; 57 FR 11689, Apr. 7, 1992]

[[Page 26]]



306.302-7  Public interest.

    (a) Authority. (2) Agency head, in this instance, means the 
Secretary.
    (c) Limitations. When using the authority cited in FAR 6.302-
7(a)(1), the Secretary's approval must be obtained. Therefore, an 
``approval package'' must be prepared and staffed through departmental 
acquisition channels to the Secretary. The package shall include:
    (1) A determination and findings, prepared by the contracting 
officer, for the Secretary to sign.
    (2) A letter for the Secretary to sign notifying Congress of the 
determination to award a contract under the authority of 41 U.S.C. 
253(c)(7). This letter must be received by Congress at least 30 days 
before contract award.
    (3) A ``Justification for Other than Full and Open Competition'' 
(JOFOC).
    (4) A briefing paper presenting background, need, etc.
    (5) Any other pertinent papers or documents required by the 
Department.



306.303  Justifications.



306.303-1  Requirements.

    (b) Preliminary arrangements or agreements with the proposed 
contractor made by someone other than the contracting officer shall have 
no effect on the rationale used to support an acquisition for other than 
full and open competition.
    (f) The program office should discuss prospective other than full 
and open competition requests with their supporting contracting office 
as early as possible during the acquisition planning stage (see FAR 
Subpart 7.1 and Subpart 307.1), and before submitting the requisition or 
request for contract. The discussions may resolve uncertainties, provide 
program offices with names of other sources, allow proper scheduling of 
the acquisition, and avoid delays which might otherwise occur should it 
be determined that the request for other than full and open competition 
is not justified.
    (g) When a program office desires to obtain certain goods or 
services by contract without full and open competition, it shall, at the 
time of forwarding the requisition or request for contract, furnish the 
contracting office a justification explaining why full and open 
competition is not feasible. All justifications shall be initially 
reviewed by the contracting officer.
    (1) Justifications in excess of the small purchase limitation shall 
be in the form of a separate, self-contained document, prepared in 
accordance with FAR 6.303 and 306.303, and called a ``JOFOC'' 
(Justification for Other than Full and Open Competition). Justifications 
of $25,000 or less may be in the form of a paragraph or paragraphs 
contained in the requisition or request for contract.
    (2) Justifications, whether over or under the small purchase 
limitation, shall fully describe what is to be acquired, offer reasons 
which go beyond inconvenience, and explain why it is not feasible to 
obtain competition. The justifications shall be supported by verifiable 
facts rather than mere opinions. Documentation in the justifications 
should be sufficient to permit an individual with technical competence 
in the area to follow the rationale.

[50 FR 23127, May 31, 1985, as amended at 57 FR 11689, Apr. 7, 1992]



306.303-2  Content.

    (a)(1) The program office and name, address, and telephone number of 
the project officer shall also be included.
    (2) This item shall include project identification such as the 
authorizing program legislation, to include citations or other internal 
program identification data such as title, contract number, etc.
    (3) A full description of the requirement and its dollar amount is 
to be included. It may be in the form of a statement of work, purchase 
description, or specification. A statement is to be included to explain 
whether the acquisition is an entity in itself, whether it is one in a 
series, or part of a related group of acquisitions.
    (c) Each JOFOC shall conclude with at least the following signatory 
lines (other concurrence lines may be added as deemed necessary by the 
contracting activity):

Recommended, Project Officer____________________________________________
Date____________________________________________________________________
Concur, Project Officer's Immediate Supervisor__________________________
Date____________________________________________________________________
Concur, Contracting Officer_____________________________________________

[[Page 27]]

Date____________________________________________________________________
Approved, Approving Official____________________________________________
Date____________________________________________________________________



306.304  Approval of the justification.

    (a)(1) For purchases in excess of 10 percent of the small purchase 
limitation but not over the small purchase limitation, the contracting 
officer is authorized to review and approve (or disapprove) the 
justification (see 313.106(c)(2)). For acquisitions over the small 
purchase limitation, but not exceeding $100,000, the JOFOC shall be 
submitted to the contracting officer for review. The contracting officer 
will either concur or nonconcur, and forward the JOFOC to the principal 
official responsible for acquisition for approval. (When the contracting 
officer and principal official responsible for acquisition are the same 
individual, the approval will be made by the respective official listed 
in 306.501.) The principal official responsible for acquisition may 
redelegate approval for acquisitions between the small purchase 
limitation and $50,000 to the chief of the contracting office, provided 
that individual is at least one level above the contracting officer who 
will sign the contract.
    (2) The competition advocates are listed in 306.501.
    (3) The following shall serve as the approving officials referenced 
in FAR 6.304(a)(3):

HCFA--Administrator for Health Care Financing
OHDS--Assistant Secretary for Human Development Services
OS--Assistant Secretary for Management and Budget
PHS--Assistant Secretary for Health (may be delegated to the Deputy 
Assistant Secretary for Health Operations)
SSA--Commissioner of Social Security
RO's--Regional Director


This authority is not delegable, except as indicated for PHS.
    (4) The senior procurement executive of the Department is the 
Assistant Secretary for Management and Budget.
    (c) A class justification shall be processed the same as an 
individual justification.
    (d) The contracting officer who receives a JOFOC for processing 
shall, after ascertaining that the document is complete, request advice 
from pricing, audit, legal, and other appropriate staff offices, and 
forward the JOFOC with his or her concurrence or nonconcurrence, to the 
appropriate approving official. When the contracting officer does not 
concur with the JOFOC, a written explanation setting forth the reasons 
must be provided the approving official. If the JOFOC is disapproved by 
the approving official, the contracting officer shall promptly notify 
the concerned program office.
    (e) It is the responsibility of the approving official to determine 
whether a contract may properly be awarded without full and open 
competition. The program office and project officer are responsible for 
furnishing the contracting officer and approving official with pertinent 
supporting information necessary to make such determinations. Other 
staff offices shall advise the contracting officer and approving 
official as requested.
    (f) As each justification is reviewed, the approving official should 
ask: why the acquisition cannot be competed, are there sufficient 
grounds for excluding all other actual or potential sources, what 
actions can be taken to obtain full and open competition in the instant 
acquisition, and what actions are needed to avoid the need for a 
subsequent or continuing acquisition that is for other than full and 
open competition?

[50 FR 23127, May 31, 1985, as amended at 56 FR 47002, Sept. 17, 1991]



         Subpart 306.4--Sealed Bidding and Competitive Proposals



306.401  Sealed bidding and competitive proposals.

    The requirement in FAR 6.401 to document the reasons sealed bidding 
is not appropriate may be accomplished by adding a sentence to the 
negotiation memorandum (see 315.672) specifying which criterion (or 
criteria) listed in FAR 6.401(a) is (are) not applicable to the 
acquisition.

[[Page 28]]



                  Subpart 306.5--Competition Advocates



306.501  Requirement.

    The Department's competition advocate is the Deputy Assistant 
Secretary for Management and Acquisition. The competition advocates for 
the Department's primary contracting offices are as follows:

HCFA--Associate Administrator for Management and Support Services
OHDS--Director, Office of Management Services
OS--Director, Office of Acquisition and Grants Management
OASH--Director, Administrative Services Center
ADAMHA--Associate Administrator for Management
AHCPR--Executive Officer, Agency for Health Care Policy and Research
CDC--Director, Office of Program Support
FDA--Associate Commissioner for Management and Operations
HRSA--Associate Administrator for Operations and Management
IHS--Associate Director, Office of Administration and Management
NIH--(R&D)--Associate Director for Extramural Affairs (Other than R&D)--
Associate Director for Intramural Affairs
SSA--Deputy Commissioner for Management.
RO's--Director, Regional Administrative Support Center

[50 FR 23127, May 31, 1985, and 50 FR 38004, Sept. 19, 1985, as amended 
at 52 FR 27558, July 22, 1987; 53 FR 15563, May 2, 1988; 53 FR 43207, 
Oct. 26, 1988; 54 FR 24343, June 7, 1989; 55 FR 42197, Oct. 18, 1990]



306.502  Duties and responsibilities.

    (b) The competition advocates listed in 306.501 shall assist the 
Department's competition advocate, when requested, by providing data and 
reports to aid in the accomplishment of the duties required of the 
Department's competition advocate as stated in FAR 6.502(a).

[50 FR 23127, May 31, 1985, as amended at 50 FR 38004, Sept. 19, 1985]



PART 307--ACQUISITION PLANNING--Table of Contents




                    Subpart 307.1--Acquisition Plans

Sec.
307.104  General procedures.
307.104-1  Requirement for acquisition planning.
307.104-2  Responsibilities for acquisition planning.
307.104-3  Preparation of acquisition plan.
307.105  Contents of written acquisition plans.
307.105-1  Format and content.
307.105-2  Special program clearances or approvals.
307.105-3  Specification, purchase description, and statement of work.
307.170  Program training requirements.
307.170-1  Policy exceptions.
307.170-2  Training course prerequisites.

         Subpart 307.3--Contractor Versus Government Performance

307.302  General.
307.303  Determining availability of private commercial sources.
307.304  Procedures.
307.307  Appeals.

     Subpart 307.70--Considerations in Selecting an Award Instrument

307.7000  Scope of subpart.
307.7001  Applicability.
307.7002  Purpose.
307.7003  Distinction between acquisition and assistance.
307.7004  Procedures.

   Subpart 307.71--Phase II Advance Acquisition Planning (Scheduling)

307.7101  Background.
307.7102  Accountability and responsibility.
307.7103  Purpose.
307.7104  Contracting activity actions.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

    Source: 49 FR 13969, Apr. 9, 1984, unless otherwise noted.



                    Subpart 307.1--Acquisition Plans



307.104  General procedures.

    (a) The acquisition planning document is an administrative tool 
designed to enable the contracting officer and project officer to plan 
effectively for the accomplishment of an acquisition during a specified 
time frame. The acquisition planning document serves as an outline of 
the method by which the contracting officer expects to accomplish the 
acquisition task.
    (c) If the plan proposes using other than full and open competition, 
the plan shall also be coordinated with the

[[Page 29]]

Chief of the contracting office, acting for the competition advocate.

[49 FR 13969, Apr. 9, 1984, as amended at 50 FR 23129, May 31, 1985; 50 
FR 38004, Sept. 19, 1985; 51 FR 44293, Dec. 9, 1986]



307.104-1  Requirement for acquisition planning.

    (a) The acquisition planning document is required for all new 
negotiated acquisitions which are expected to exceed $100,000, except 
the following:
    (1) Acquisition of architect-engineer services;
    (2) Acquisitions of utility services where the services are 
available from only one source; and
    (3) Acquisitions made from or through other Government agencies.
    (b) An acquisition planning document is also required for all two-
step sealed bid acquisitions expected to exceed $100,000.
    (c) The principal official responsible for acquisition shall 
prescribe acquisition planning procedures for:
    (1) Negotiated acquisitions which are not expected to exceed 
$100,000;
    (2) Two-step sealed bid acquisitions which are not expected to 
exceed $100,000; and
    (3) All other sealed bid acquisitions regardless of dollar amount.
    (d) An acquisition planning document is not required for a contract 
modification which either exercises an option or adds funds to an 
incrementally funded contract, provided there is an approved acquisition 
planning document in accordance with 307.105 and there is no significant 
deviation from that plan.

[49 FR 13969, Apr. 9, 1984, as amended at 50 FR 23126, May 31, 1985; 50 
FR 38004, Sept. 19, 1985]



307.104-2  Responsibilities for acquisition planning.

    (a) Planning by program and staff activities. Whenever execution of 
a program or project requires the acquisition of property or services by 
contract, the program or project plan shall delineate all elements to be 
acquired by contract. The program or project plans must include a plan 
and time-frame for completion action.
    (b) Planning for acquisition actions. Action should commence as 
early as possible to effect an orderly and balanced acquisition workload 
throughout a fiscal year. Project officers who expect to initiate 
acquisitions are required to discuss their requirements with the 
contracting officials who will be responsible for these acquisitions to 
compare current staff capabilities with anticipated requirements to 
achieve an even distribution of fiscal year workload consistent with 
program needs. These discussions should result in understandings on:
    (1) The details of the acquisition plan;
    (2) Schedule for the completion of the acquisition plan;
    (3) Preliminary discussions on the work statement/specifications and 
appropriate evaluation criteria; and
    (4) Preliminary discussions on the content and timing of the request 
for contract (RFC).
    (c) Planning by contracting activities. Contracting activities are 
required to coordinate with program and staff offices to ensure:
    (1) Timely and comprehensive planning for acquisitions;
    (2) Timely initiation of requests for contracts; and
    (3) Instruction of program and staff offices in proper acquisition 
practices and methods.



307.104-3  Preparation of acquisition plan.

    (a) The acquisition planning document serves as an advance agreement 
between program and contracting personnel by outlining the methods of 
how and when the acquisition is to be accomplished. It serves to resolve 
problems early in the acquisition cycle thereby precluding delays in 
contract placement. It is developed prior to the preparation and 
submission of the formal request for contract to the contracting 
activity. (For detailed information concerning the request for contract, 
see Subpart 315.70.)
    (b) The acquisition planning document shall be prepared jointly by 
the project officer and the contract negotiator or in accordance with 
procedures prescribed by the principal official responsible for 
acquisition.

[[Page 30]]



307.105  Contents of written acquisition plans.



307.105-1  Format and content.

    The Department does not prescribe a standard format for the 
acquisition planning document, but recommends the use of a format 
similar to what is provided in this section. The subject areas addressed 
in paragraphs (a) through (e) must be included in every acquisition 
planning document. An OPDIV, agency, or regional office contracting 
activity may prescribe a standard format for the acquisition planning 
document and may include additional subject areas that are pertinent to 
that activity's needs.
    (a) Identification information. The contracting activity shall 
prescribe the information necessary for readily identifying a planned 
acquisition. The information may include items such as acquisition 
planning document number, request for contract number, public law, 
program or project officer, etc.
    (b) Programmatic considerations. (1) Description of the project/
supplies/services. Include a brief description of the proposed project/
supplies/services. Discuss all anticipated future requirements related 
to the acquisition. Discuss any past, present or future interrelated 
projects.
    (2) Project funding. Include the summary of funds expected to be 
obligated for the entire project by fiscal years and phases. Include 
expenditures for previous years. Discuss the probability of obtaining 
future years funding and/or what specific managerial action can be taken 
to insure future funding (if applicable).
    (3) Background and acquisition history. Provide a brief factual 
summary of the technical and contractual history of the supplies/
services being acquired.
    (4) Related projects, efforts undertaken to avoid duplication of 
effort. Discuss efforts made to determine if existing projects, supplies 
or materials will satisfy the requirement. Include any related in-house 
efforts, searches, and clearinghouse reviews made to avoid duplication 
of effort.
    (5) Need for project/supplies/services. Discuss rationale for 
deciding on the need for the project/supplies/services.
    (6) Special program clearances or approvals. Review 307.105-2 to 
determine which special program clearances or approvals are required. 
Specify clearances or approvals applicable to this acquisition.
    (7) Phasing. Briefly describe discrete tasks or stages of 
accomplishment which could be susceptible to phasing. Describe criteria 
for evaluation of performance of each phase before proceeding to the 
next. (See 307.105-3(c)(3) for a discussion on phasing.)
    (8) Government furnished material/facilities. Indicate material and 
facilities that will be furnished to the contractor and any associated 
problems which may be encountered. Discuss possible inequities which may 
arise in furnishing the materials or facilities. Discuss screening 
efforts for availability through GSA excess property schedules.
    (9) Discussion of project risk. Provide a discussion of major areas 
of project risk including technical, cost, and schedule risk. Describe 
what efforts are planned to reduce risk. If an acquisition, which is 
planned to be awarded using other than full and open competition 
represents a significant portion of a proposed contractor's business, 
discuss the impact on technical capability, realism of schedule, changes 
in contractor workload and related cost impact.
    (10) Reporting/delivery requirements. Describe the basis for 
establishing the delivery/reporting requirements and include the 
anticipated deliverables and time(s) for delivery.
    (11) Replication, dissemination, or use of the results. Discuss 
anticipated replication, dissemination, or use of the results. Describe 
user audience and their expected use. Include a description of the 
delivery system.
    (12) Data, data rights, patents, copyrights. Discuss data to be 
developed. Specify data to be delivered and data to remain in the 
contractor's possession. Discuss how the data is to be used, maintained, 
disclosed and disposed of by the contractor. Discuss data subject to the 
Privacy Act or Confidentiality of Information clause. Discuss data to be 
delivered with limited rights, data where title would not vest in the 
Government, and anticipated

[[Page 31]]

copyrights or patents. Discuss whether or not the data will permit any 
follow-on acquisitions to be competitive.
    (13) Post-award administration and monitoring. Detail milestones 
that require periodic evaluation of the contractor's progress. Discuss 
any formal management systems to be used to monitor the contractor. 
Discuss plans for post-award conference and site visits. Delineate the 
timing of the periodic status reports.
    (14) Technical evaluation plans. Discuss the plans for technical 
evaluation of the proposal. Discuss whether non-Federal technical 
evaluators will review the proposals. Discuss potential conflict of 
interest situations.
    (c) Acquisition approach. (1) Proposed sources. Include sources or 
categories of sources (if apparent). Address the pertinent areas stated 
in FAR 7.105(b)(2).
    (2) Contract type. Provide the rationale for recommendation of 
contract type.
    (3) Socioeconomic programs. Discuss preliminary liaison with the 
Small and Disadvantaged Business Utilization Specialist for review to 
determine requirements susceptible for the various socioeconomic 
acquisition programs; i.e., small business, disadvantaged business, or 
labor surplus area set-asides.
    (4) Other considerations, as applicable. Discuss special contract 
clauses and proposed HHSAR deviations, if required. Discuss 
circumstances such as the effect of a protest on a previous acquisition 
to this acquisition, special public law or regulatory requirements which 
place restrictions on this acquisition, and use of a special type of 
synopsis. Address planned preproposal conference, preaward survey and 
preaward site visits.
    (d) Planning for the acquisition cycle. (1) Scheduling 
considerations. The project officer and the contract negotiator shall 
establish realistic planned dates which meet the program needs for award 
to assure timely delivery or completion of the project. The following 
factors should be considered in planning realistic dates:
    (i) Individual project officer and contract negotiator workloads;
    (ii) Planned, extended absences from the office; and
    (iii) Schedules are in consonance with established office goals for 
overall orderly and balanced workloads.
    (2) Acquisition planning schedule. The following acquisition 
planning schedule should be included in all plans to the extent the 
items are significant or appropriate to the acquisition. Additional 
items may be added as appropriate.

                      Acquisition Planning Schedule

                            Actions and Date

Advance or sources sought synopsis released
Advance or sources sought synopsis closed
Synopsis evaluation received
Request for contract received
Special program approvals received
Synopsis publicizing proposed acquisition released
Request for proposal released
Preproposal conference conducted
Proposals received
Technical evaluation received
Cost advisory or audit report received
Equal opportunity clearance obtained
Prenegotiation conference conducted
Negotiation completed
Contract document prepared
Contract approval completed
Contract released
Award

    (e) Approvals. All acquisition planning documents shall be signed by 
the project officer and the contract negotiator. Acquisition planning 
documents for acquisitions estimated to be between $100,000 and 
$1,000,000 shall be approved by the contracting officer. Acquisition 
planning documents for acquisitions estimated to be in excess of $1 
million shall be approved by the principal official responsible for 
acquisition or his/her designee. The designated official shall be in a 
position no lower than the level above the contracting officer. One copy 
of all acquisition planning documents shall be filed with the principal 
official responsible for acquisition or the designated official for 
planning purposes. The original acquisition planning document shall be 
retained in the contract file.

[49 FR 13969, Apr. 9, 1984, as amended at 50 FR 23129, May 31, 1985; 50 
FR 38004, Sept. 19, 1985]

[[Page 32]]



307.105-2  Special program clearances or approvals.

    The following special program clearances or approvals should be 
reviewed for applicability to each planned acquisition. The ones which 
are applicable should be addressed in the acquisition planning document 
and immediate programmatic action should be initiated to obtain the 
necessary clearances or approvals.
    (a) Clearances or approvals required to be completed and submitted 
with the request for contract (RFC). (1) Automatic data processing. All 
proposed acquisitions of automatic data processing hardware, software 
packages, and services, as well as telecommunications equipment, which 
exceed the dollar thresholds stated in Chapter 4-10 of the HHS 
Information Resources Management (IRM) Manual, must be reviewed and 
approved by the Office of Information Resources Management (OIRM), 
OASMB-0S. (See HHS Information Resources Management (IRM) Manual, 
Chapter 4-10; Title 41 CFR Chapter 201; and Subpart 339.70.)
    (2) ADP systems security. All ADP systems regardless of dollar 
amount are required to have a Certification of ADP Systems Security 
Adequacy signed by the ADP system manager and the cognizant ADP systems 
security officer. (See HHS IRM Manual, Part 6--ADP Systems Security; OMB 
Circular No. A-71, Transmittal Memorandum No. 1; and Subpart 339.70.)
    (3) Advisory and assistance services. OPDIV and STAFFDIV heads and 
regional directors are responsible for review and approval of all 
proposed advisory and assistance services contracts and purchase orders. 
(See General Administration Manual Chapter 8-15.)
    (4) Evaluation contracts. The Assistant Secretary for Planning and 
Evaluation (ASPE) must approve all evaluation projects for proposed 
solicitations, except those which have been included in research, 
demonstration, or evaluation plans previously approved by the ASPE.
    (5) Commercial activities. (OMB Circular No. A-76) A request for 
contract (RFC) must contain a statement as to whether the proposed 
solicitation is or is not to be used as part of an OMB Circular No. A-76 
cost comparison. (See General Administrative Manual (GAM) Chapter 18-10; 
FAR Subpart 7.3, Subpart 307.3; OMB Circular No. A-76.)
    (6) Paid advertising. Paid advertisements, notices or contract 
proposals to be published in newspapers and periodicals may be 
authorized by the contracting officer. (See FAR Subpart 5.5, Subpart 
305.5; Title 7, Chapter 5-25.2, and the General Accounting Office Policy 
and Procedures Manual for Guidance of Federal Agencies.)
    (7) Printing. The acquisition of printing by contract is prohibited 
unless it is authorized by the Joint Committee on Printing of the U.S. 
Congress. Procedures to be followed are contained in the ``Government 
Printing and Binding Regulations'' and the HHS Printing Management 
Manual and FAR Subpart 8.8.
    (8) Fraud, abuse and waste. All proposed acquisitions that concern 
the subjects of fraud, abuse and waste must be reviewed and approved by 
the Inspector General or Deputy Inspector General, and written approval 
from either must be included in the request for contract.
    (9) Paperwork Reduction Act. Under the Paperwork Reduction Act of 
1980 (Pub. L. 96-511), a Federal agency shall not collect information or 
sponsor the collection of information from ten or more persons (other 
than Federal employees acting within the scope of their employment) 
unless, in advance, the agency has submitted Standard Form 83, Request 
for OMB Review, to the Director of the Office of Management and Budget, 
and the Director has approved the proposed collection of information. 
Procedures for the approval may be obtained by contacting the OPDIV 
reports clearance officer. (See Title 5 CFR Part 1320 and General 
Administration Manual Chapter 10-20.)
    (10) Contracts with federal employees. Contracts between the 
Government and Government employees or between the Government and 
organizations which are substantially owned or controlled by Government 
employees may not knowingly be entered into, except for the most 
compelling reasons (see FAR Subpart 3.6). Authority to enter into a 
contract with a Government employee or an organization substantially 
owned

[[Page 33]]

or controlled by a Government employee must be approved prior to award 
of the contract by either the Assistant Secretary for Management and 
Budget, the head of the OPDIV, or the regional director, or their 
designees. (See 45 CFR Part 73 and HHS Standards of Conduct.)
    (11) Publications. All projects which will result in contracts and 
which include publications require review and approval by the Office of 
the Assistant Secretary for Public Affairs (OASPA). Form HHS-615, 
Publication Planning and Clearance Request, should be forwarded to OASPA 
through the OPDIV public affairs officer. Publications are defined in 
the chapter on publications in the Public Affairs Management Manual.
    (12) Public affairs services. Projects for the acquisition of public 
affairs services in excess of $5,000 shall be submitted to the Office of 
the Assistant Secretary for Public Affairs (OASPA) for review and 
approval on Form HHS-524, Request for Public Affairs Service Contract.
    (13) Audiovisual (videotape and motion picture production). Any 
proposed acquisition of an audiovisual production requires the 
submission of a Standard Form 282, Mandatory Title Check, to the 
National Audiovisual Center (NAC). When the results of this title check 
have been reviewed by the project office and if a determination is made 
that existing materials are not adequate to fulfill the requirement, a 
statement to that effect shall be prepared by the project office. For 
acquisitions in excess of $5,000, a copy of that statement, together 
with a Standard Form 202, Federal Audiovisual Production Report, and 
Form HHS-524A, Request for Audiovisual Material, shall be submitted 
through the OPDIV public affairs officer to the Office of the Assistant 
Secretary for Public Affairs (OASPA) for review and approval. Following 
approval by OASPA, the SF 202 and the statement explaining why existing 
materials are insufficient will be forwarded to NAC by OASPA. An 
approved copy of the Form HHS-524A will be returned to the OPDIV for 
transmission to the contract negotiator. All audiovisuals are required 
to be acquired under the Government-wide Contracting System for Motion 
Picture and Videotape Productions, unless they are included in the 
exceptions to the mandatory use of the uniform system. (See the 
Executive Agent for Government-Wide Contracting System for Audiovisual 
Productions' March 21, 1980, memorandum on Implementation of OFPP Policy 
Letter No. 79-4, November 28, 1979, Contracting for Motion Picture and 
Videotape Productions; HHS General Administration Manual Chapter 1-121.)
    (14) Privacy Act (Pub. L. 93-579.) Whenever the Department contracts 
for the design, development, operation, or maintenance of a system of 
records on individuals on behalf of the Department in order to 
accomplish a departmental function, the Privacy Act is applicable. The 
program official, after consultation with the activity's Privacy Act 
Coordinator and the Office of General Counsel as necessary shall include 
a statement in the request for contract as to the applicability of the 
Act. Whenever an acquisition is subject to the Act, the program official 
prepares a ``system notice'' and has it published in the Federal 
Register. (See HHS Privacy Act regulation, 45 CFR 5b; FAR Subpart 24.1 
and Subpart 324.1.)
    (b) Clearances or approvals required to be completed prior to 
contract award. All foreign research contract projects to be conducted 
in a foreign country and financed by HHS funds (U.S. dollars) must have 
clearance by the Department of State with respect to consistency with 
foreign policy objectives. This clearance should be obtained prior to 
negotiation. Procedures for obtaining this clearance are set forth in 
the HHS General Administration Manual, Chapter 20-60.

[49 FR 13969, Apr. 9, 1984, as amended at 49 FR 36110, Sept. 14, 1984; 
50 FR 23129, May 31, 1985; 50 FR 38004, Sept. 19, 1985; 53 FR 15563, May 
2, 1988; 53 FR 43207, Oct. 26, 1988; 53 FR 44551, Nov. 3, 1988]



307.105-3  Specification, purchase description, and statement of work.

    One of the most important parts of a contract is the description of 
the work to be done. The description of that work may be in the form of 
a specification, purchase description or statement

[[Page 34]]

of work. A brief reference to specifications and purchase descriptions 
is provided, although the nature of the work performed in this 
Department usually results in the development of work statements. The 
development of the acquisition planning document should result in 
sufficient information to readily develop the description of work, 
usually in the form of a statement of work.
    (a) Specification. Specification is defined in FAR 10.001. Use of 
the specification is primarily limited to supply or service contracts 
where the material end item or service to be delivered is well defined 
by the Government.
    (b) Purchase description. FAR 10.001 also contains the definition of 
purchase description.
    (c) Statement of work. (1) General. A statement of work differs from 
a specification and purchase description primarily in that it describes 
work or services to be performed in reaching an end result rather than a 
detailed, well defined description or specification of the end product. 
The statement of work may enumerate or describe the methods 
(statistical, clinical, laboratory, etc.) that will be used. However, it 
is preferable for the offeror to propose the method of performing the 
work. The statement of work should specify the desired results, 
functions, or end items without telling the offeror what has to be done 
to accomplish those results unless the method of performance is critical 
or required for the successful performance of the contract. The 
statement of work should be clear and concise and must completely define 
the responsibilities of the Government and the contractor. The statement 
of work should be worded so as to make more than one interpretation 
virtually impossible because it has to be read and interpreted by 
persons of varied backgrounds, such as attorneys, contracting personnel, 
cost estimators, accountants, scientists, sociologists, educators, 
functional specialists, etc. If the statement of work does not state 
exactly what is wanted, or does not state it precisely, it will generate 
many contract management problems for both the project officer and the 
contracting officer. Ambiguous statements of work can create 
unsatisfactory performance, delays, and disputes, and can result in 
higher costs.
    (2) Term (level of effort) vs. completion work statement. Careful 
distinctions must be drawn between term (level of effort) statements of 
work, which essentially require the furnishing of technical effort and a 
report thereof, and completion type work statements, which often require 
development of tangible end items designed to meet specific performance 
characteristics.
    (i) Term or level of effort. A term or level of effort type 
statement of work is appropriate to research where one seeks to discover 
the feasibility of later development, or to gather general information. 
A term or level of effort type statement of work may only specify that 
some number of labor-hours be expended on a particular course of 
research, or that a certain number of tests be run, without reference to 
any intended conclusion.
    (ii) Completion. A completion type statement of work is appropriate 
to development work where the feasibility of producing an end item is 
already known. A completion type statement of work may describe what is 
to be achieved through the contracted effort, such as the development of 
new methods, new end items, or other tangible results.
    (3) Phasing. Individual research, development, or demonstration 
projects frequently lie well beyond the present state of the art and 
entail procedures and techniques of great complexity and difficulty. 
Under these circumstances, a contractor, no matter how carefully 
selected, may be unable to deliver the desired result. Moreover, the job 
of evaluating the contractor's progress is often difficult. Such a 
contract is frequently phased and often divided into stages of 
accomplishment, each of which must be completed and approved before the 
contractor may proceed to the next. Phasing makes it necessary to 
develop methods and controls, including reporting requirements for each 
phase of the contract and criteria for evaluation of the reports 
submitted, that will provide, at the earliest possible time, appropriate 
data for making decisions relative to all phases. A phased contract may 
include

[[Page 35]]

stages of accomplishment such as research, development, and 
demonstration. Within each phase, there may be a number of tasks which 
should be included in the statement of work. When phases of work can be 
identified, the statement of work will provide for phasing and the 
request for proposals will require the submission of proposed costs by 
phases. The resultant contract will reflect costs by phases, require the 
contractor to identify incurred costs by phases, establish delivery 
schedules by phases, and require the written acceptance of each phase. 
The provisions of the Limitation of Cost clause shall apply to the 
estimated cost of each phase. Contractors shall not be allowed to incur 
costs for phases which are dependent upon successful completion of 
earlier phases until written acceptance of the prior work is obtained 
from the contracting officer.
    (4) Elements of the statement of work. The elements of the statement 
of work will vary with the objective, complexity, size, and nature of 
the acquisition. In general, it should cover the following matters as 
appropriate.
    (i) A general description of the required objectives and desired 
results. Initially, a broad, nontechnical statement of the nature of the 
work to be performed. This should summarize the actions to be performed 
by the contractor and the results that the Government expects.
    (ii) Background information helpful to a clear understanding of the 
requirements and how they evolved. Include a brief historical summary as 
appropriate. Include pertinent legislative history, related contracts or 
grants, and the relationship to overall program objectives.
    (iii) A detailed description of the technical requirements. A 
comprehensive description of the work to be performed to provide 
whatever details are necessary for prospective offerors to submit 
meaningful proposals.
    (iv) Subordinate tasks or types of work. A listing of the various 
tasks or types of work (it may be desirable in some cases to indicate 
that this is not all-inclusive). The degree of task breakout is directly 
dependent on the size and complexity of the work to be performed and the 
logical groupings. A single cohesive task should not be broken out 
merely to conform to a format. Indicate whether the tasks are sequential 
or concurrent for offeror planning purposes.
    (v) Phasing. When phasing is applicable, describe in detail the work 
or effort required in each phase and the criteria for determining 
whether the next phase will take place. If one or more phases contain 
subordinate tasks or types of work, the preceding information in 
paragraph (c)(4) (iv) may be incorporated into the part.
    (vi) Reference material. All reference material to be used in the 
conduct of the project, such as technical publications, reports, 
specifications, architect or engineering drawings, etc., that tell how 
the work is to be carried out must be identified. Applicability should 
be explained, and a statement made as to where the material can be 
obtained.
    (vii) Level of effort. When a level of effort is required, the 
number and type of personnel required should be stated. If known, the 
type and degree of expertise should be specified.
    (viii) Special requirements (as applicable). An unusual or special 
contractual requirement, which would impact on contract performance, 
should be included as a separate section. Such items could include 
required place(s) of performance or unusual travel requirements. 
Clearance requirements, such as forms clearance, should be addressed.
    (ix) Deliverables reporting requirements. All deliverables and/or 
reports must be clearly and completely described. For example, in a 
Final Study Report it is important to indicate what areas the report 
should cover and the criteria for use in accepting the final report to 
determine if the contract objectives have been satisfied. It is 
important to require the preparation and submission of progress reports 
(administrative, technical and financial) to reflect contractor 
certification of satisfactory progress. If possible, the reports should 
be coordinated in such a manner as to provide a correlation between 
costs incurred and the state of completion. All delivery and reporting 
requirements shall include the quantities, the place of delivery, and 
time of delivery.

[[Page 36]]



307.170  Program training requirements.

    (a) Chapter 8-95 of the General Administration Manual (GAM) 
addresses the general parameters for acquisition planning as stated in 
307.104. In conjunction with the principles of proper acquisition 
planning, the Department has established training courses for program 
officials to promote expedient program management in the planning and 
other pertinent aspects of the acquisition process. Chapter 8-96 of the 
GAM sets forth specific training requirements for program officials as 
follows:
    (1) All program personnel selected to serve as project officer for 
an HHS contract shall have successfully completed either the 
Department's appropriate ``Base Project Officer'' course, or an 
equivalent course (see paragraph (b), below).
    (2) At least fifty percent of the HHS program personnel performing 
the function of technical proposal evaluator on a technical evaluation 
team or panel for any competitively solicited HHS contract shall have 
successfully completed the appropriate ``Basic Project Officer'' course, 
or an equivalent course (see paragraph (b), below). This requirement 
applies to the initial technical proposal evaluation and any subsequent 
technical evaluations that may be required.
    (b) Determination of course equivalency shall be made by the 
principal official responsible for acquisition of the cognizant 
contracting activity. The contracting officer is responsible for 
ensuring that the project officer and technical proposal evaluators have 
successfully completed the required training discussed in 307.170-2.

[49 FR 13969, Apr. 9, 1984, as amended at 56 FR 47002, Sept. 17, 1991]



307.170-1  Policy exceptions.

    (a) Small contracting activities. (1) Program personnel designated 
to serve as project officers and technical proposal evaluators for 
contracts which originate in offices having a mission which only 
incidentally and infrequently involves the generation of contract 
requirements (i.e., normally less than three contract requirements per 
fiscal year and in an amount not exceeding $100,000 per contract) are 
not required to have completed any of the referenced training courses, 
although completion of an appropriate ``Basic Project Officer'' course 
is recommended.
    (2) As a substitute for the training, contracting officers servicing 
these program offices are required to ensure, as a minimum, that program 
personnel designated to serve as project officers and technical proposal 
evaluators have read and studied the ``DHHS Project Officers' 
Contracting Handbook,'' and fully understand their responsibilities. The 
contracting officer shall require these program personnel to furnish 
written certification that they have fulfilled this requirement prior to 
discharging the duties of project officer or technical proposal 
evaluator.
    (b) Urgent requirements. In the event there is an urgent requirement 
for a specific individual to serve as a project officer and that 
individual has not successfully completed the prerequisite training 
course, the principal official responsible for acquisition may waive the 
training requirement and authorize the individual to perform the project 
duties, provided that:
    (1) The individual first meets with the cognizant contracting 
officer to review the ``DHHS Project Officers' Contracting Handbook,'' 
and to discuss the important aspects of the contracting--program office 
relationship as appropriate to the circumstances; and
    (2) The individual attends the next scheduled and appropriate 
``Basic Project Officer'' course.

[49 FR 13969, Apr. 9, 1984, as amended at 56 FR 47002, Sept. 17, 1991]



307.170-2  Training course prerequisites.

    (a) Project officers. (1) Newly appointed project officers, and 
project officers with less than three years experience and no previous 
related training, are required to take the appropriate ``Basic Project 
Officer'' course. (The grade level for project officers attending the 
course should be GS-7 and above). All project officers are encouraged to 
take the appropriate ``Writing Statements of Work'' course.

[[Page 37]]

    (2) Project officers with more than three years experience, and 
project officers with less than three years experience who have 
successfully completed the appropriate basic course, are qualified (and 
encouraged) to take the ``Advanced Project Officer'' course.
    (3) Additional information on prerequisites for attendance of these 
courses may be found in the ``DHHS Acquisition Training and 
Certification Program Handbook.''
    (b) Technical proposal evaluators. Technical proposal evaluators, 
regardless of experience, are required to take the appropriate ``Basic 
Project Officer'' course. Upon successful completion of the basic 
course, it is recommended that they take the appropriate ``Advanced 
Project Officer'' course.

[49 FR 13969, Apr. 4, 1984, as amended at 56 FR 47002, Sept. 17, 1991]



         Subpart 307.3--Contractor Versus Government Performance



307.302  General.

    (a) GAM Chapter 18-10, Commercial-Industrial Activities of the 
Department of Health and Human Services Providing Products or Services 
for Government Use, assigns responsibilities for making method-of-
performance decisions (contract vs. in-house performance) to various 
management levels within the Department depending on the dollar amount 
of capital investment or annual operating costs. It also requires that 
each operating division (OPDIV), staff division (STAFFDIV) and regional 
office (RO) designate a ``Commercial-Industrial Control Officer'' (CICO) 
to be responsible for ensuring compliance with the requirements of the 
Chapter.
    (d) Besides contracts with annual operating costs under $100,000, 
contracts under an authorized acquisition set-aside for small business 
or labor surplus area concerns and contracts made pursuant to section 
8(a) of the Small Business Act are exempted from the requirements of FAR 
Subpart 7.3, GAM Chapter 18-10, and OMB Circular No. A-76.



307.303  Determining availability of private commercial sources.

    In accordance with the provisions of GAM Chapter 18-10, OPDIVs, 
STAFFDIVs, and ROs and must prepare and maintain a complete inventory of 
all individual commercial or industrial activities, including those 
conducted under contracts in excess of $100,000 annually. They must also 
conduct periodic reviews of each activity and contract in the inventory 
to determine if the existing performance, in-house or by contract, 
continues to be in accordance with the policy guidelines of GAM Chapter 
18-10.



307.304  Procedures.

    Contracting officers shall ensure that no acquisition action 
involving a commercial-industrial activity is initiated unless it is in 
compliance with the requirements of GAM Chapter 18-10. The contracting 
officer must check each request for contract expected to result in a 
contract in excess of $100,000 to ensure that it contains a statement as 
to whether the proposed contract is or is not subject to review under 
GAM Chapter 18-10 requirements. If the contracting officer has any 
questions regarding the determination of applicability or 
nonapplicability, or if the required statement is missing, the program 
office submitting the request for contract should be contacted and the 
situation rectified. If the issue cannot be resolved with the program 
office, the contracting officer shall refer the matter to the CICO for a 
final determination. The principal official responsible for acquisition 
is responsible for ensuring that contracting activities are in full 
compliance with FAR Subpart 7.3.



307.307  Appeals.

    The review and appeals procedures discussed in FAR 7.307 are 
addressed in GAM Chapter 18-10.



     Subpart 307.70--Considerations in Selecting an Award Instrument



307.7000  Scope of subpart.

    This subpart provides guidance on the appropriate selection of award 
instruments consistent with the Federal

[[Page 38]]

Grant and Cooperative Agreement Act of 1977 (Pub. L. 95-224) and the OMB 
implementation of the Act as published in the Federal Register on August 
18, 1978 (41 FR 36860). This subpart addresses acquisition relationships 
where the award instrument is the contract, and assistance relationships 
where the award instrument is either a grant or cooperative agreement.



307.7001  Applicability.

    This subpart applies to the choice of award instrument--contract, 
grant, or cooperative agreement--for all program and individual 
transactions, except where specifically prohibited by law.



307.7002  Purpose.

    This subpart provides guidance to assist in the determination of 
whether to use the acquisition or assistance process to fulfill program 
needs. The distinction between, and use of, grants and cooperative 
agreements is not discussed in detail. Detailed guidance may be found in 
Chapter 1-02 of the Grants Administration Manual.



307.7003  Distinction between acquisition and assistance.

    (a) The Federal Grant and Cooperative Agreement Act of 1977 requires 
the use of contracts to acquire property or services for the direct 
benefit or use of the Government and grants or cooperative agreements to 
transfer money, property, services, or anything of value to recipients 
to accomplish a public purpose of support or stimulation authorized by 
Federal statute.
    (b) A contract is to be used as the legal instrument to reflect a 
relationship between the Federal Government and a recipient whenever:
    (1) The principal purpose of the instrument is the acquisition, by 
purchase, lease, or barter, of property or services for the direct 
benefit or use of the Federal Government; or
    (2) The Department determines in a specific instance that the use of 
a type of contract is appropriate. That is, it is determined in a 
certain situation that specific needs can be satisfied best by using the 
acquisition process. However, this authority does not permit 
circumventing the criteria for use of acquisition or assistance 
instruments. Use of this authority is restricted to extraordinary 
circumstances and only with the prior approval of the Director, Office 
of Acquisition and Grants Management.
    (c) A grant or cooperative agreement is to be used as the legal 
instrument to reflect a relationship between the Federal Government and 
a recipient whenever the principal purpose of the relationship is the 
transfer of money, property, services, or anything of value to the 
recipient to accomplish a public purpose of support or stimulation 
authorized by Federal statute.
    (1) A grant is the legal instrument to be used when no substantial 
involvement is anticipated between the Department and the recipient 
during performance of the contemplated activity.
    (2) A cooperative agreement is the legal instrument to be used when 
substantial involvement is anticipated between the Department and the 
recipient during performance of the contemplated activity.
    (d) As a general rule, contracts are to be used for the following 
purposes:
    (1) Evaluation (including research of an evaluative nature) of the 
performance of Government programs or projects or grantee activity 
initiated by the funding agency for its direct benefit or use.
    (2) Technical assistance rendered to the Government, or on behalf of 
the Government, to any third party, including those receiving grants or 
cooperative agreements.
    (3) Surveys, studies, and research which provide specific 
information desired by the Government for its direct activities, or for 
dissemination to the public.
    (4) Consulting services or professional services of all kinds if 
provided to the Government or, on behalf of the Government, to any third 
party.
    (5) Training projects where the Government selects the individuals 
or specific groups whose members are to be trained or specifies the 
content of the curriculum (not applicable to fellowship awards).
    (6) Planning for Government use.

[[Page 39]]

    (7) Production of publications or audiovisual materials required 
primarily for the conduct of the direct operations of the Government.
    (8) Design or development of items for Government use or pursuant to 
agency definition or specifications.
    (9) Conferences conducted on behalf of the Government.
    (10) Generation of management information or other data for 
Government use.
    (e) As a general rule, grants or cooperative agreements are to be 
used for the following purposes:
    (1) General financial assistance (stimulation or support) to 
eligible recipients under specific legislation authorizing the 
assistance.
    (2) Financial assistance (stimulation or support) to a specific 
program activity eligible for assistance under specific legislation 
authorizing the assistance.

[49 FR 13969, Apr. 9, 1984, as amended at 54 FR 24343, June 7, 1989]



307.7004  Procedures.

    (a) OPDIV, agency, and regional office program officials should use 
existing budget and program planning procedures to propose new 
activities and major changes in ongoing programs. It is the 
responsibility of these program officials to meet with the principal 
official responsible for acquisition and the principal grants management 
official, or their designees, to distinguish the relationships and 
determine whether award is to be made through the acquisition process or 
assistance process. This determination should be made prior to the time 
when the annual acquisition plan is reviewed and approved so that the 
plan will reflect all known proposed contract actions. The cognizant 
contracting officer will confirm the appropriateness of the use of the 
contract instrument when reviewing the request for contract.
    (b) Shifts from one award instrument to another must be fully 
documented in the appropriate files to show a fundamental change in 
program purpose that unequivocably justifies the rationale for the 
shift.
    (c) OPDIVs, agencies, and regional offices must ensure that the 
choice of instrument is determined in accordance with the Federal Grant 
and Cooperative Agreement Act of 1977 and applicable departmental 
policies. If, however, there are major individual transactions or 
programs which contain elements of both acquisition and assistance in 
such a way that they cannot be characterized as having a principal 
purpose of one or the other, guidance should be obtained from the 
Director, Office of Acquisition and Grants Management through normal 
channels, before proceeding with a determination.
    (d) Any public notice, program announcement, solicitation, or 
request for applications or proposals must indicate whether the intended 
relationship will be one of acquisition or assistance and specify the 
award instrument to be used.

[49 FR 13969, Apr. 9, 1984, as amended at 54 FR 24343, June 7, 1989]



   Subpart 307.71--Phase II Advance Acquisition Planning (Scheduling)



307.7101  Background.

    (a) Failure to properly plan individual acquisitions and failure to 
schedule the overall acquisition workload of an office, agency, or OPDIV 
tends to result in an inordinate percentage of contract awards being 
made in the closing weeks and even days of the fiscal year. This 
phenomenon, variously identified as ``The September Rush'', ``Hurry-up 
Spending'', ``End-of-Year Purchasing'', and ``Year-End Spending 
Abuses'', in turn fosters rushed, other than full and open competition, 
inadequately documented, and potentially wasteful acquisitions. 
Excessive year-end spending also invites increased intervention and/or 
scrutiny from Congress, the Office of Management and Budget, and the 
media. The end of the fiscal year, however, is usually too late to take 
corrective actions that are effective without being unduly damaging to 
necessary programs. The key is to begin advance acquisition planning far 
earlier.
    (b) To avoid the historic pattern of wasteful and unnecessary year-
end spending, the Department introduced the Acquisition Planning 
Initiative by Under Secretarial memorandum of

[[Page 40]]

February 19, 1980, Subject: New Procedures to Improve Planning and 
Scheduling of Contract Awards and Curb Last-Minute Year-End Procurement 
Spending. Phase II of this initiative, beginning with Fiscal Year 1981, 
established the present acquisition planning mechanism. Basic guidance 
on the Phase II mechanism is contained in the ASMB memorandum of March 
28, 1980, Subject: Phase II of (Fiscal Year 1981) Procurement Planning 
Initiative--Guidelines for Program Funding Milestones. For the Public 
Health Service, the above guidance is supplemented by the ASMB 
memorandum of April 21, 1982, Subject: Phase II Annual Procurement 
Planning.

[49 FR 13969, Apr. 9, 1984, as amended at 50 FR 23129, May 31, 1985; 50 
FR 38004, Sept. 19, 1985]



307.7102  Accountability and responsibility.

    Phase II is a Department-wide monitoring and accountability system 
that requires early planning of acquisition requirements down to the 
individual project level. The Phase II mechanism includes the following:
    (a) Accountability lies with the OPDIV and STAFFDIV heads who are 
required to coordinate overall schedules which plot the planned 
distribution of RFC deliveries and contract awards over an eighteen-
month timeline extending to fiscal year-end.
    (b) Each OPDIV and STAFFDIV retains the flexibility to schedule 
individual RFC deliveries and contract awards as desired, so long as the 
overall schedule presents a relatively even distribution of contract 
awards and workload across the fiscal year.
    (c) The schedules are updated quarterly to compare actual versus 
planned progress and, when necessary, to revise the schedules for the 
remainder of the fiscal year.
    (d) Project officers are responsible for initiating the project 
planning by coordinating with contracting activities prior to RFC 
preparation, and taking the lead in developing acquisition plans that 
establish the date(s) for delivering complete RFC packages to the 
contracting activity, and that establish the planned award dates for 
individual projects.
    (e) The Director, Office of Acquisition and Grants Management 
monitors the OPDIV and STAFFDIV Phase II plans throughout the year to 
assure that an even distribution of awards, dollar obligations, and 
workload is maintained.

[49 FR 13969, Apr. 9, 1984, as amended at 50 FR 23126, May 31, 1985; 50 
FR 38004, Sept. 19, 1985; 54 FR 24343, June 7, 1989]



307.7103  Purpose.

    The Phase II Advance Acquisition Planning mechanism serves to avoid 
excessive year-end spending and distributes the contract workload as 
evenly as possible over the fiscal year, and provides a mechanism for 
planning at the program/acquisition operational level and a management 
tool for monitoring at the program, OPDIV, and departmental levels.



307.7104  Contracting activity actions.

    The contracting activity shall take the following actions:
    (a) Advise program and staff personnel of their responsibilities to 
ensure that:
    (1) Year-end acquisitions of unplanned items are not entered into to 
use available balances of expiring appropriations (which would otherwise 
revert to the Treasury);
    (2) Orders for supplies, materials, and equipment are kept to the 
minimum needed to carry on approved programs;
    (3) Inventories are held to normal levels; and
    (4) New contracts for future services and payments to contractors 
are made only in accordance with established plans.
    (b) Determine closing dates for purchases to be made from 
appropriations ending on September 30.
    (c) Expedite the preparation and processing of determinations and 
findings which require the approval of the Assistant Secretary for 
Management and Budget or the OPDIV head.

[[Page 41]]



PART 309--CONTRACTOR QUALIFICATIONS--Table of Contents




           Subpart 309.1--Responsible Prospective Contractors

Sec.
309.104  Standards.
309.104-1  General standards.
309.105  Procedures.
309.105-1  Obtaining information.

         Subpart 309.4--Debarment, Suspension, and Ineligibility

309.403  Definitions.
309.404  Parties excluded from procurement programs.
309.405  Effect of listing.
309.405-1  Continuation of current contracts.
309.406  Debarment.
309.406-3  Procedures.
309.407  Suspension.
309.407-3  Procedures.
309.470  Reporting of suspected causes for debarment or suspension, or 
          the taking of evasive actions.
309.470-1  Situations where reports are required.
309.470-2  Contents of reports.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

    Source: 49 FR 13976, Apr. 9, 1984, unless otherwise noted.



           Subpart 309.1--Responsible Prospective Contractors



309.104  Standards.



309.104-1  General standards.

    (a) In determining the adequacy of a prospective contractor's 
financial resources for the performance of the proposed contract, 
particular attention shall be given to the ability of the contractor to 
discharge its full financial responsibility for charges and losses of 
Government-furnished material, when the contractor has responsibility 
for such material.
    (e) The prospective contractor must have an established system of 
accounting and financial controls which are determined by the 
contracting officer to be adequate to permit the effective 
administration of the type of contract proposed, particularly if under 
its terms the costs incurred are a factor in determining the amount 
payable under the contract, or if advance or progress payments are 
requested.



309.105  Procedures.



309.105-1  Obtaining information.

    (b)(2)(ii) To ensure that a prospective contractor has the necessary 
accounting and operational controls (see 309.104-1(e)), a written 
determination must be made by the contracting officer that the 
prospective contractor has an adequate accounting system for determining 
costs applicable to the contract and a billing system that satisfies the 
contractual payment provisions. The determination must explain the basis 
for this judgment.
    (A) When dealing with high risk organizations, i.e., new 
organizations, those with known problems, and those with accounting 
system deficiencies, the contracting officer shall use every reasonable 
means available to protect the Government from the improper expenditure 
of Federal funds. Actions should include at least one of the following: 
preaward and postaward audits; direct identification of cost with 
deliverables; billing by contract phases or tasks; fidelity bonding or 
other guarantees by the parent company or principals of the 
organization; increased scrutiny of vouchers and financial reports; and 
frequent site visits to verify the incurrence of specific costs and the 
relationship of technical progress with the amount billed.
    (B) If a prospective contractor's accounting or billing system (or 
both) is determined to be inadequate, corrective action must be taken 
before that organization is awarded a contract. When corrective action 
cannot be completed until after the award and the contracting officer 
determines that the award must be made, the contracting officer shall 
consult with the cognizant cost advisor and take the appropriate actions 
set forth in FAR 16.104 to ensure that the Government's interests will 
be protected and the contract will be adequately costed and 
administered. Awards made under the preceding condition must be approved 
in writing by the principal official responsible for acquisition.

[[Page 42]]



         Subpart 309.4--Debarment, Suspension, and Ineligibility

    Source: 50 FR 7780, Feb. 26, 1985, unless otherwise noted.



309.403  Definitions.

    Acquiring agency's head or a designee, as used in the FAR, shall 
mean, unless otherwise stated in this subpart, the head of the 
contracting activity. Acting in the capacity of the acquiring agency's 
head, the head of the contracting activity may make the required 
justifications or determinations, and take the necessary actions, 
specified in FAR 9.405, 9.406, and 9.407 for his or her respective 
activity, but only after obtaining the approval of the debarring or 
suspending official, as the case may be.
    Debarring official means the Assistant Secretary for Management and 
Budget, or his/her designee.
    Initiating official means either the contracting officer, the head 
of the contracting activity, the Deputy Assistant Secretary for 
Management and Acquisition, or the Inspector General.
    Suspending official means the Assistant Secretary for Management and 
Budget, or his/her designee.

[50 FR 7780, Feb. 26, 1985, as amended at 54 FR 24343, June 7, 1989; 54 
FR 43965, Oct. 30, 1989]



309.404  Parties excluded from procurement programs.

    (c) The Office of Management and Acquisition (OMAC) shall perform 
the actions required by FAR 9.404(c).
    (4) OMAC shall maintain all documentation submitted by the 
initiating official recommending the debarment or suspension action and 
all correspondence and other pertinent documentation generated during 
the OMAC review.

[50 FR 7780, Feb. 26, 1985, as amended at 54 FR 24343, June 7, 1989; 54 
FR 43966, Oct. 30, 1989]



309.405  Effect of listing.

    (a) The head of the contracting activity may, with the concurrence 
of the debarring or suspending official, make the determinations 
referenced in FAR 9.405(a), regarding contracts for their respective 
activities.
    (1) If a contracting officer considers it necessary to award a 
contract, or consent to a subcontract with a debarred or suspended 
contractor, the contracting officer shall prepare a determination, 
including all pertinent documentation, and submit it through acquisition 
channels to the head of the contracting activity. The documentation must 
include the date by which approval is required and a compelling reason 
for the proposed action. Some examples of circumstances that may 
constitute a compelling reason for the award to, or consent to a 
subcontract with, a debarred or suspended contractor include:
    (i) The property or services to be acquired are available only from 
the listed contractor;
    (ii) The urgency of the requirement dictates that the Department 
deal with the listed contractor; or
    (iii) There are other compelling reasons which require business 
dealings with the listed contractor.
    (2) If the head of the contracting activity decides to approve the 
requested action, he/she shall request the concurrence of the debarring 
or suspending official and, if given, shall, in writing, inform the 
contracting officer of the decision within the required time period.



309.405-1  Continuation of current contracts.

    (a) Notwithstanding the debarment or suspension of a contractor, 
contracting officers may continue contracts or subcontracts in existence 
at the time the contractor was debarred or suspended, unless the head of 
the contracting activity or debarring or suspending official directs 
otherwise. A decision as to the type of termination action, if any, to 
be taken should be made only after review by the awarding activity's 
contracting and technical personnel. The contracting officer shall 
coordinate any termination with the Office of the General Counsel to 
ensure the propriety of the proposed action.
    (b) Contracting officers shall not renew the current contracts of 
debarred or suspended contractors, or otherwise extend their duration, 
unless

[[Page 43]]

the head of the contracting activity determines to do so, with the 
concurrence of the debarring or suspending official. The contracting 
officer shall prepare a determination meeting the requirements of 
309.405(a) and submit it, through acquisition channels, to the head of 
the contracting activity. If the head of the contracting activity agrees 
with the determination, he/she shall obtain the concurrence of the 
debarring or suspending official.



309.406  Debarment.



309.406-3  Procedures.

    (a) Investigation and referral. Whenever an apparent cause for 
debarment becomes known to an initiating official, that person shall 
prepare a report incorporating the information required by 309.470-2, if 
known, and forward it through appropriate channels, with a written 
recommendation, to the debarring official. Contracting officers shall 
forward their reports in accordance with 309.470-1. The debarring 
official shall initiate an investigation through such means as he/she 
deems appropriate.
    (b) Decisionmaking process. The debarring official shall review the 
results of the investigation, if any, and make a written determination 
whether or not debarment procedures are to be commenced. A copy of the 
determination shall be promptly sent through appropriate channels to the 
initiating official, and the contracting officer, if necessary. If the 
debarring official determines to commence debarment procedures, he/she 
shall, after consultation with the Office of the General Counsel, notify 
the contractor in accordance with FAR 9.406-3(c). If the proposed action 
is not based on a conviction or judgment and the contractor's submission 
in response to the notice raises a genuine dispute over facts material 
to the proposed debarment, the debarring official shall arrange for 
fact-finding hearings and take the necessary actions specified in FAR 
9.406-3(b)(2). The debarring official shall also ensure that written 
findings of fact are prepared, and shall base the debarment decision on 
the facts as found, after considering information and argument submitted 
by the contractor and any other information in the administrative 
record. The Office of the General Counsel shall represent the Department 
at any fact-finding hearing and may present witnesses for HHS and 
question any witnesses presented by the contractor.



309.407  Suspension.



309.407-3  Procedures.

    (a) Investigation and referral. Whenever an apparent cause for 
suspension becomes known to an initiating official, that person shall 
prepare a report incorporating the information required by 309.470-2, if 
known, and forward it through appropriate channels, with a written 
recommendation, to the suspending official. Contracting officers shall 
forward their reports in accordance with 309.470-1. The suspending 
official shall initiate an investigation through such means as he/she 
deems appropriate.
    (b) Decisionmaking process. The suspending official shall review the 
results of the investigation, if any, and make a written determination 
whether or not suspension should be imposed. A copy of this 
determination shall be promptly sent through appropriate channels to the 
initiating official and the contracting officer, if necessary. If the 
suspending official determines to impose suspension, he/she shall, after 
consultation with the Office of the General Counsel, notify the 
contractor in accordance with FAR 9.407-3(c). If the action is not based 
on an indictment and, subject to the provisions of FAR 9.407-3(b)(2), 
the contractor's submission in response to the notice raises a genuine 
dispute over facts material to the suspension, the suspending official 
shall, after suspension has been imposed, arrange for fact-finding 
hearings and take the necessary actions specified in FAR 9.407-3(b)(2).



309.470  Reporting of suspected causes for debarment or suspension, or the taking of evasive actions.



309.470-1  Situations where reports are required.

    A report incorporating the information required by 309.470-2 shall 
be forwarded, in duplicate, by the contracting officer through 
acquisition channels to the OMAC when--

[[Page 44]]

    (a) A contractor has committed, or is suspected of having committed, 
any of the acts described in FAR 9.406-2 or FAR 9.407-2; or
    (b) A contractor is suspected of attempting to evade the 
prohibitions of debarment or suspension imposed under this regulation, 
or any other comparable regulation, by changes of address, multiple 
addresses, formation of new companies, or by other devices.

[50 FR 7780, Feb. 26, 1985, as amended at 54 FR 24343, June 7, 1989]



309.470-2  Contents of reports.

    Each report prepared under 309.470-1 shall be coordinated with the 
Office of the General Counsel and shall include the following 
information, where available:
    (a) Name and address of contractor.
    (b) Name of the principal officers, partners, owners, or managers.
    (c) All known affiliates, subsidiaries, or parent firms, and the 
nature of the affiliation.
    (d) Description of the contract or contracts concerned, including 
the contract number, and office identifying numbers or symbols, the 
amount of each contract, the amount paid the contractor and the amount 
still due, and the percentage of work completed and to be completed.
    (e) The status of vouchers.
    (f) Whether contract funds have been assigned pursuant to the 
Assignment of Claims Act, as amended, 31 U.S.C. 3727, 41 U.S.C. 15, and, 
if so assigned, the name and address of the assignee and a copy of the 
assignment.
    (g) Whether any other contracts are outstanding with the contractor 
or any affiliates, and, if so, the amount of such contracts, whether 
these funds have been assigned pursuant to the Assignment of Claims Act, 
as amended, 31 U.S.C. 3727, 41 U.S.C. 15, and the amounts paid or due on 
such contracts.
    (h) A complete summary of all available pertinent evidence.
    (i) A recommendation as to the continuation of current contracts.
    (j) An estimate of damages, if any, sustained by the Government as a 
result of the action of the contractor, including an explanation of the 
method used in making the estimate.
    (k) The comments and recommendations of the contracting officer and 
statements regarding whether the contractor should be suspended or 
debarred, whether any limitations should be applied to such action, and 
the period of any proposed debarment.
    (l) As an enclosure, a copy of the contract(s) or pertinent excerpts 
therefrom, appropriate exhibits, testimony or statements of witnesses, 
copies of assignments, and other relevant documentation or a written 
summary of any information for which documentation is not available.

[[Page 45]]



          SUBCHAPTER C--CONTRACTING METHODS AND CONTRACT TYPES





PART 313--SMALL PURCHASE AND OTHER SIMPLIFIED PURCHASE PROCEDURES--Table of Contents




                         Subpart 313.1--General

Sec.
313.101  Definitions.
313.104  Procedures.
313.105  Small business-small purchase set-aside.
313.106  Competition and price reasonableness.
313.107  Solicitation and evaluation of quotations.

               Subpart 313.2--Blanket Purchase Agreements

313.201  General.
313.204  Purchases under Blanket Purchase Agreements.

                       Subpart 313.4--Imprest Fund

313.403  Agency responsibilities.

                     Subpart 313.5--Purchase Orders

313.505  Purchase order and related forms.
313.505-3  Standard Form 44, Purchase Order--Invoice--Voucher.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

    Source: 49 FR 13977, Apr. 9, 1984, unless otherwise noted.



                         Subpart 313.1--General



313.101  Definitions.

    ``Small purchase procedures''
    (d) Acquisition of architect-engineer professional services of any 
dollar amount.



313.104  Procedures.

    (i) Small purchase methods are designed to acquire defined, off-the-
shelf, standard supplies, equipment, or services which may be awarded on 
the basis of a fixed price quotation. Small purchase methods should not 
be used to acquire R & D, complex studies, services, and the like (which 
require judgmental technical evaluations and involve negotiations) where 
the award cannot be confidently made on the low price. Where 
requirements are not suitable for accomplishment using small purchase 
methods, more formal negotiation methods or sealed bidding should be 
used.
    (j) Small purchases accomplished in accordance with this part may 
not be awarded on a cost-reimbursement basis.
    (k) Small purchase methods should be used with great prudence for 
the acquisition of consultants to avoid the increased possibility of 
using consultants in an improper personal services capacity.

[49 FR 13977, Apr. 9, 1984, as amended at 50 FR 23129, May 31, 1985; 50 
FR 38004, Sept. 19, 1985; 53 FR 15563, May 2, 1988]



313.105  Small business-small purchase set-aside.

    (d)(2) The contracting officer shall consult with the small and 
disadvantaged business utilization specialist (SADBUS) to determine 
whether small business sources are known by the SADBUS before 
determining not to proceed with the small business-small purchase set-
aside. Coordination with the SADBUS is not required for small purchases 
at or below ten percent of the small purchase limitation.

[57 FR 11689, Apr. 7, 1992]



313.106  Competition and price reasonableness.

    (a) Purchases not over 10 percent of the small purchase limitation. 
Purchases not exceeding this limit are exempt from the documentary 
requirements of FAR Subpart 6.3 and Subpart 306.3. However, purchases 
shall not be made repetitively from one source except for reasons which 
clearly and convincingly justify other than full and open competition 
(see FAR Subpart 6.3).
    (b) Purchases over 10 percent of the small purchase limitation.
    (4)(i)(D) Women-owned small business.
    (c) Data to support small purchases over 10 percent of the small 
purchase limitation.

[[Page 46]]

    (2) Purchases ranging in excess of 10 percent of the small purchase 
limitation up to and including the small purchase limitation which are 
made without full and open competition require justification as to why 
competition was not obtained. The justification, which may be in the 
form of a paragraph or paragraphs in the request for contract or 
requisition, must address the considerations in FAR Subpart 6.3 and 
Subpart 306.3. The contracting officer may approve or disapprove the 
justification. Award of the contract or purchase order by the 
contracting officer shall constitute approval of the justification (see 
306.304(a)(1)).

[49 FR 13977, Apr. 9, 1984, as amended at 50 FR 23129, May 31, 1985; 50 
FR 38004, Sept. 19, 1985; 56 FR 47002, Sept. 17, 1991]



313.107  Solicitation and evaluation of quotations.

    (e) Amendments. (1) If after the issuance of a request for 
quotations but before the closing date of their receipt, it becomes 
necessary (i) to make significant changes in the quantity, 
specifications, or delivery schedule, (ii) to make any change in the 
closing date, or (iii) to correct a defect or ambiguity, the change 
shall be accomplished by issuance of an amendment to the request. 
Requests for quotations using the Standard Form 18 may be amended by 
letter. Oral requests for quotations may be amended orally.
    (2) When it is considered necessary to issue an amendment to a 
request for quotations, the period of time remaining before closing and 
the need for extending this period by postponing the time set for 
closing must be considered. Where only a short time remains before the 
time set for closing, extension of time may be made by telegram or 
telephone. This notification should be confirmed in the amendment.
    (3) Any information given to one potential quoter concerning a 
request for quotations shall be furnished promptly to all other 
potential quoters in an amendment to the request, if the information is 
necessary to potential quoters in submitting quotations, or if the lack 
of the information would be prejudicial to uninformed potential quoters.

[49 FR 13977, Apr. 9, 1984, as amended at 49 FR 36110, Sept. 14, 1984; 
56 FR 47003, Sept. 17, 1991]



               Subpart 313.2--Blanket Purchase Agreements



313.201  General.

    (e) Each blanket purchase arrangement (BPA) shall be documented by 
issuance of a contractual instrument which is appropriately numbered.



313.204  Purchases under Blanket Purchase Agreements.

    (e)(5) Delivery documents, invoices, etc. signed by the Government 
employee receiving the item or service, will be forwarded to the fiscal 
office or other paying office as designated by the OPDIV. Payment will 
be made on the basis of the signed document, invoice, etc. Contracting 
offices will ensure that established procedures allowing for 
availability of funds are in effect prior to placement of orders.

[49 FR 13977, Apr. 9, 1984, as amended at 56 FR 47003, Sept. 17, 1991]



                       Subpart 313.4--Imprest Fund



313.403  Agency responsibilities.

    (a) The amount of each imprest fund shall be established on the 
basis of the estimated monthly payment and the need for replenishment. A 
review shall be made by the responsible official at least quarterly to 
insure that the fund is not in excess of needs, and appropriate 
adjustments are made accordingly.
    (c) Requests to establish imprest funds shall be made to the 
responsible fiscal office. At larger activities where the cashier may 
not be conveniently located near the purchasing office, a Class C 
Cashier may be installed in the purchasing office. Documentation of cash 
purchases shall be in accordance with instructions contained in the HHS 
Voucher Audit Manual Part 1, Chapter 1-10.

[[Page 47]]



                     Subpart 313.5--Purchase Orders



13.505  Purchase order and related forms.



313.505-3  Standard Form 44, Purchase Order--Invoice--Voucher.

    (d) Since the Standard Form 44 is an accountable form, a record 
shall be maintained of serial numbers of the form, to whom issued, and 
date issued. SF-44's shall be kept under adequate lock and key to 
prevent unauthorized use. A reservation of funds shall be established to 
cover total anticipated expenditures prior to use of the SF-44.



PART 314--FORMAL ADVERTISING--Table of Contents




                   Subpart 314.2--Solicitation of Bids

Sec.
314.202-7  Facsimile bids.
314.213  Annual submission of representations and certifications.

          Subpart 314.4--Opening of Bids and Award of Contract

314.404  Rejection of bids.
314.404-1  Cancellation of invitations after opening.
314.406  Mistakes in bids.
314.406-3  Other mistakes disclosed before award.
314.406-4  Mistakes after award.
314.407  Award.
314.407-8  Protests against award.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).



                   Subpart 314.2--Solicitation of Bids

    Source: 55 FR 13536, Apr. 11, 1990, unless otherwise noted.



314.202-7  Facsimile bids.

    The principal official responsible for acquisition (PORA) shall 
determine whether to allow the use of facsimile bids. If the PORA 
decides to allow the use of facsimile bids, internal procedures shall be 
developed, in accordance with the FAR, to ensure uniform processing and 
control.



314.213  Annual submission of representations and certifications.

    Each principal official responsible for acquisition (PORA) shall 
determine whether to allow the use of the annual submission of 
representations and certifications by bidders. If allowed, the 
provisions of FAR 14.213 shall be followed.



          Subpart 314.4--Opening of Bids and Award of Contract



314.404  Rejection of bids.



314.404-1  Cancellation of invitations after opening.

    (c) The chief of the contracting office (CCO) shall make the 
determination required by FAR 14.404-1(c).
    (e) The CCO shall make the referenced determination.

[51 FR 44294, Dec. 9, 1986]



314.406  Mistakes in bids.



314.406-3  Other mistakes disclosed before award.

    (e) Authority has been delegated to the Protest Control Officer, 
Division of Acquisition Policy, Office of Acquisition and Grants 
Management (OAGM) to make administrative determinations in connection 
with mistakes in bid alleged after opening and before award. This 
authority may not be redelegated.
    (f) Each proposed determination shall have the concurrence of the 
Chief, Business Law Branch, Business and Administrative Law Division, 
Office of General Counsel.
    (g)(3) The data required by FAR 14.406-3(g)(3) shall be marked 
``IMMEDIATE ACTION--MISTAKE IN BID'' and submitted through acquisition 
channels to the Protest Control Officer, Division of Acquisition Policy, 
Office of Acquisition and Grants Management (OAGM). The file shall be 
assembled in an orderly manner and shall include an index of enclosures. 
A single copy of the file is sufficient.
    (4) Since examination of evidence is necessary to determine the 
proper course of action to be taken, no action will be taken on cases 
referred by telephone or telegraph.
    (5) Where the evidence submitted by the bidder is incomplete or in 
need of clarification, the contracting officer shall document the file 
to indicate the effort made to obtain clear and convincing evidence to 
support the alleged mistake. Since the burden of providing

[[Page 48]]

such evidence lies with the bidder-claimant, repeated efforts to obtain 
such information are neither necessary nor desirable.
    (i) Doubtful cases shall not be submitted by the contracting officer 
directly to the Comptroller General, but shall be submitted as indicated 
in 314.406-3(g)(3).

[49 FR 13978, Apr. 9, 1984, as amended at 50 FR 23126, May 31, 1985; 50 
FR 38004, Sept. 19, 1985; 54 FR 24343, June 7, 1989]



314.406-4  Mistakes after award.

    (c) Authority has been delegated to the Protest Control Officer, 
Division of Acquisition Policy, OAGM to make administrative 
determinations in connection with mistakes in bid alleged after award. 
This authority may not be redelegated.
    (d) Each proposed determination shall have the concurrence of the 
Chief, Business Law Branch, Business and Administrative Law Division, 
Office of General Counsel.
    (2) The data required by FAR 14.406-4(e)(2) shall be marked 
``IMMEDIATE ACTION--MISTAKE IN BID'' and submitted as prescribed in 
314.406-3(g)(3).

[49 FR 13978, Apr. 9, 1984, as amended at 50 FR 23126, May 31, 1985; 50 
FR 38004, Sept. 19, 1985; 54 FR 24343, June 7, 1989]



314.407  Award.



314.407-8  Protests against award.

    See Subpart 333.1--Protests.

[50 FR 23129, May 31, 1985, and 50 FR 38004, Sept. 19, 1985]



PART 315--CONTRACTING BY NEGOTIATION--Table of Contents




           Subpart 315.1--General Requirements for Negotiation

Sec.
315.103  Converting from sealed bidding to negotiation procedures.

   Subpart 315.4--Solicitation and Receipt of Proposals and Quotations

315.402  General.
315.404  Presolicitation notices and conferences.
315.405  Solicitations for information or planning purposes.
315.405-1  General.
315.406  Preparing requests for proposals (RFP's) and requests for 
          quotations (RFQ's).
315.406-1  Uniform contract format.
315.406-2  Part I--The Schedule.
315.406-3  Part II--Contract clauses.
315.406-5  Part IV--Representations and instructions.
315.407  Solicitation provisions.
315.408  Issuing solicitations.
315.409  Pre-proposal conferences.
315.410  Amendment of solicitations before closing date.
315.413  Disclosure and use of information before award.
315.413-1  Alternate I.
315.413-2  Alternate II.
315.470  Review of RFP.
315.471  Annual submission of representations and certifications.

                  Subpart 315.5--Unsolicited Proposals

315.505  Content of unsolicited proposals.
315.506  Agency procedures.
315.506-1  Receipt and initial review.
315.509  Limited use of data.

                     Subpart 315.6--Source Selection

315.602  Applicability.
315.604  Responsibilities.
315.605  Evaluation factors.
315.607  Disclosure of mistakes before award.
315.608  Proposal evaluation.
315.608-70  Technical evaluation plan.
315.608-71  Technical evaluation panel.
315.608-72  Procedures for handling and disclosing proposals.
315.608-73  Receipt of proposals.
315.608-74  Convening the technical evaluation panel.
315.608-75  Rating and ranking of proposals.
315.608-76  Technical evaluation report.
315.608-77  Evaluation of business proposals.
315.609  Competitive range.
315.610  Written or oral discussions.
315.611  Best and final offers.
315.670  Negotiation with the selected source.
315.671  Post negotiation contract preparation and award.
315.672  Preparation of negotiation memorandum.

                    Subpart 315.8--Price Negotiation

315.804  Cost or pricing data.
315.804-3  Exemptions from or waiver of submission of certified cost or 
          pricing data.
315.805  Proposal analysis.
315.805-5  Field pricing support.

                          Subpart 315.9--Profit

315.900  Scope of subpart.
315.905-70  Structured approach.
315.905-71  Profit factors.

[[Page 49]]

315.905-72  Contractor effort.
315.905-73  Other factors.
315.905-74  Facilities capital cost of money.

Subpart 315.10--Preaward, Award, and Postaward Notifications, Protests, 
                              and Mistakes

315.1000  General.
315.1003  Debriefing of unsuccessful offerors.
315.1004  Protests against award.
315.1005  Discovery of mistakes.

                  Subpart 315.70--Requests for Contract

315.7000  Scope of subpart.
315.7001  General.
315.7002  Procedures.
315.7003  Responsibilities.
315.7004  Transmittal.
315.7005  Format and content.
315.7006  Review.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486cc).

    Source: 49 FR 13979, Apr. 9, 1984, unless otherwise noted.



           Subpart 315.1--General Requirements for Negotiation



315.103  Converting from sealed bidding to negotiation procedures.

    The chief of the contracting office has the authority to make the 
determination referenced in FAR 15.103.

[51 FR 44294, Dec. 9, 1986]



   Subpart 315.4--Solicitation and Receipt of Proposals and Quotations



315.402  General.

    (i) The principal official responsible for acquisition (PORA) shall 
determine whether to allow the use of facsimile proposals. If the PORA 
decides to allow the use of facsimile proposals, internal procedures 
shall be developed, in accordance with the FAR, to ensure uniform 
processing and control.

[55 FR 13536, Apr. 11, 1990]



315.404  Presolicitation notices and conferences.

    (c) Presolicitation conferences. (1) The presolicitation conference 
may only be used when approved by the chief of the contracting office.



315.405  Solicitations for information or planning purposes.



315.405-1  General.

    The determination approval required by FAR 15.405-1 that a 
solicitation for information or planning purposes is appropriate shall 
be made by the chief of the contracting office.



315.406  Preparing requests for proposals (RFP's) and requests for quotations (RFQ's).

    (a) The contracting officer is responsible for preparing the RFP 
with the assistance of the project officer. The purpose of the RFP is to 
convey information that prospective offerors need to prepare a proposal. 
The RFP includes the statement of work and the terms, conditions and 
provisions that will form the basis for the final definitive contract. 
It specifies all the information that prospective offerors must furnish 
to permit a meaningful and equitable evaluation of their offers. The RFP 
must be clear, complete, accurate, and consistent with the requirements 
of the acquisition so that it provides all who receive it with the same 
understanding of the requirements. Much of the information in the RFP is 
either derived directly from the request for contract or is otherwise 
furnished by the project officer. Therefore, it is important that the 
project officer develop a meaningful request for contract and supporting 
documentation during the initial presolicitation phase which will fully 
satisfy program needs and objectives when included in the RFP (see 
subpart 315.70).
    (b) Careful drafting of the RFP is vital to the proper working of 
the competitive process. The success of the acquisition depends, in 
large measure, on how well the work to be performed and the basic ground 
rules under which the competition will be conducted are described in the 
RFP. Particular effort must be made to develop a comprehensive and 
accurate statement of work (see 307.105-3 and FAR 35.007) to prevent 
ambiguities and to avoid misunderstandings which might otherwise surface 
at later stages of the acquisition.
    (c) Care should be taken to avoid conflicting statements in the RFP. 
Clear

[[Page 50]]

distinctions must be made as to the contents and purpose of the 
statement of work, the instructions to offerors, and the evaluation 
criteria. Briefly:
    (1) The statement of work must clearly specify the work to be done 
by the resultant contractor (or, if it is an R & D acquisition, present 
a clear statement of the requirements, see FAR part 35);
    (2) The general, technical, and business instructions must delineate 
all the essential information prospective offerors need to know in 
preparing their proposals (see 315.406-5(b)); and
    (3) The evaluation criteria must clearly indicate the technical, 
management, personnel, and cost or pricing factors which are to be the 
major considerations in selecting the successful offeror (see 315.406-
5(c)).
    (d) The RFP must require that proposals be submitted in two parts--a 
``Technical Proposal'' and a ``Business Proposal.'' Each part is to be 
separate and complete in itself so that evaluation of one may be 
accomplished independently of the other.
    (e) The technical and business proposal instructions of the RFP must 
provide all the information deemed essential for proper evaluation of 
the proposals so that all prospective offerors are aware of all 
requirements, and so that differences in proposals will reflect each 
offeror's individual approach to the clear and unambiguous requirements 
and criteria stated in the RFP.
    (f) The RFP must inform prospective offerors of all evaluation 
criteria and of the relative importance or weight attached to each 
criterion. Evaluation criteria must be described sufficiently enough in 
the RFP to inform prospective offerors of the significant matters which 
should be addressed in the proposals. Only the evaluation criteria set 
forth in the RFP shall be used in the evaluation of proposals, and the 
criteria can only be modified by a formal amendment to the RFP.
    (g) Generally, the RFP will provide that the technical proposal not 
contain any reference to cost. However, resource information, such as 
data concerning labor hours and categories, materials, subcontracts, 
travel, computer time, etc., must be included in the technical proposal 
so that the offeror's understanding of the scope of work may be 
evaluated.
    (h) The project officer should be offered the opportunity to review 
the finalized RFP before it is printed and released.



315.406-1  Uniform contract format.

    The uniform contract format specified in FAR 15.406-1 and Table 15-1 
shall be used by all contracting activities of the Department.

[49 FR 13979, Apr. 9, 1984, as amended at 50 FR 23129, May 31, 1985; 50 
FR 38004, Sept. 19, 1985]



315.406-2  Part I--The Schedule.

    (a) Section A, Solicitation/contract form.
    (3) Contracting activities are encouraged to use SF 33 for RFPs. In 
those instances where a contracting activity believes the SF 33 is not 
appropriate, a transmittal letter may be used. However, it is essential 
that the transmittal letter contain the pertinent information that must 
be brought to the attention of prospective offerors, so the information 
contained in FAR 15.406-2(a)(3) shall be included in it. The transmittal 
letter should also contain reference to the solicitation provision 
``Late Submissions, Modifications, and Withdrawals of Proposals or 
Quotations'' and stress the importance of timeliness. The last paragraph 
of the transmittal letter should provide the name and complete telephone 
number of a contract specialist who can provide information concerning 
the solicitation.

[49 FR 13979, Apr. 9, 1984, as amended 54 FR 24343, June 7, 1989]



315.406-3  Part II--Contract clauses.

    Section I, Contract clauses.
    This section should contain all the pertinent contract clauses 
applicable to the acquisition, to include those contained in the general 
provisions, any additions or modifications to the general provisions, 
and special contract clauses (see part 352--Solicitation Provisions and 
Contract Clauses).

[[Page 51]]



315.406-5  Part IV--Representations and instructions.

    (a) Section K, Representations, certifications, and other statements 
of offerors or quoters.
    (1) This section shall begin with the following statements and 
continue with the applicable representations and certifications:

    To Be Completed by the Offeror: (The Representations and 
Certifications must be executed by an individual authorized to bind the 
offeror.)
    The offeror makes the following Representations and Certifications 
as part of its proposal (check or complete all appropriate boxes or 
blanks on the following pages).

Name of offeror ________

RFP No. ______

Signature of authorized individual ________

Date ______

Type name of authorized individual ________

    Note: The penalty for making false statements in offers is 
prescribed in 18 U.S.C. 1001.

    (2) The contracting officer shall insert in all solicitations the 
representations and certifications at--
    (i) FAR 52.203-2, Certificate of Independent Price Determination;
    (ii) FAR 52.203-4, Contingent Fee Representation and Agreement;
    (iii) FAR 52.204-3, Taxpayer Identification;
    (iv) FAR 52.209-5, Certification Regarding Debarment, Suspension, 
Proposed Debarment, and Other Responsibility Matters;
    (v) FAR 52.215-6, Type of Business Organization;
    (vi) FAR 52.215-20, Place of Performance;
    (vii) FAR 52.219-1, Small Business Concern Representation;
    (viii) FAR 52.219-2, Small Disadvantaged Business Concern 
Representation;
    (ix) FAR 52.219-3, Women-Owned Small Business Representation;
    (x) FAR 52.222-19, Walsh-Healy Public Contracts Act Representation;
    (xi) FAR 52.222-21, Certification of Nonsegregated Facilities;
    (xii) FAR 52.222-22, Previous Contracts and Compliance Reports;
    (xiii) FAR 52.222-25, Affirmative Action Compliance;
    (xiv) FAR 52.223-1, Clean Air and Water Certification;
    (xv) FAR 52.223-5, Certification Regarding a Drug-Free Workplace;
    (xvi) FAR 52.225-1, Buy American Certification;
    (xvii) FAR 52.225-12, Notice of Restrictions on Contracting With 
Sanctioned Persons;
    (xviii) FAR 52.230-2, Cost Accounting Standards Notices and 
Certification (Nondefense); and
    (xix) FAR 15.804-4, Certificate of Current Cost or Pricing Data; and

    Note: The following paragraph shall be inserted between the title 
and text of this certificate:

    (When a certificate of cost or pricing data is required to be 
submitted in accordance with Federal Acquisition Regulation (FAR) 
15.804-4, the Contracting Officer will request that the offeror 
complete, execute, and submit to the Contracting Officer a certification 
in the format shown in the following Certificate of Current Cost or 
Pricing Data. The certification shall be submitted only at the time 
negotiations are concluded. Offerors should complete the certificate set 
forth below and return it when requested by the Contracting Officer.)

    (xx) 352.215-71, Employer's Identification Number.
    (b) Section L, Instructions, conditions, and notices to offerors and 
quoters. This section shall be comprised of the general instructions, 
technical proposal instructions, and business proposal instructions, as 
well as pertinent solicitation provisions (see FAR 15.407).
    (1) General instructions.
    (i) The general instructions provide basic guidance to prospective 
offerors that informs them of what is required in the preparation and 
submission of proposals. The general instructions must include the 
following statements and any instructions pertinent to the individual 
acquisition and applicable requirements of the OPDIV, agency, or 
regional office.

                          General Instructions

    The following instructions establish the acceptable minimum 
requirements for the format and content of proposals:
    Your special attention is directed to the requirements for technical 
and business proposals to be submitted in accordance with these 
instructions.
    Any resultant contract shall include the general provisions 
applicable to the selected offeror's organization and type of contract 
awarded. Copies of general provisions may be

[[Page 52]]

obtained by contacting the contracting officer. Any additional clauses 
required by public law, executive order, or acquisition regulations, in 
effect at the time of execution of the proposed contract, will be 
included.
    The proposal must be prepared in two parts: a ``Technical Proposal'' 
and a ``Business Proposal.'' Each of the parts shall be separate and 
complete in itself so that evaluation of one may be accomplished 
independently of evaluation of the other. The technical proposal must 
not contain reference to cost; however, resource information, such as 
data concerning labor hours and categories, materials, subcontracts, 
etc., must be contained in the technical proposal so that your 
understanding of the scope of the work may be evaluated. It must 
disclose your technical approach in sufficient detail to provide a clear 
and concise presentation that includes, but is not limited to, the 
requirements of the technical proposal instructions.
    The proposal must be signed by an official authorized to bind your 
organization. (Number) copies of your technical proposal and (number) 
copies of your business proposal must be submitted to: (Insert complete 
address indicating where the proposal is to be sent and how it is to be 
marked. Provide similar information for hand-delivered proposals.)
    You may, at your discretion, submit alternate proposals, or 
proposals which deviate from the requirements; provided, that you also 
submit a proposal for performance of the work as specified in the 
statement of work. These proposals may be considered if overall 
performance would be improved or not compromised, and if they are in the 
best interest of the Government. Alternate proposals, or deviations from 
any requirements of this RFP, must be clearly identified.
    The Government will evaluate proposals in accordance with the 
evaluation criteria set forth in Section M of this request for 
proposals.
    It is understood that your proposal will become part of the official 
contract file.
    The RFP does not commit the Government to pay any cost for the 
preparation and submission of a proposal. In addition, the Contracting 
Officer is the only individual who can legally commit the Government to 
the expenditure of public funds in connection with this proposed 
acquisition.

    (ii) Include either of the following in the General Instructions if 
prospective offerors are to be informed of the Government's estimate of 
the level of effort necessary to accomplish the requirement:

    The Government considers the level of effort to perform the 
resultant contract should take the following staff-hours: (insert a 
breakdown of the Government's staff-hour estimates by categories). These 
estimates are furnished for the offeror's information only and are not 
to be considered restrictive for proposal purposes; or
    To assist you in the preparation of your proposal, the Government 
considers the effort to perform this contract to be approximately 
(insert the total number) staff-hours. This number is furnished for the 
offeror's information only and is not considered restrictive for 
proposal purposes.

    Note: The first paragraph should only be used for term (e.g. level 
of effort task order), rather than completion type, contracts.)

    (iii) If the proposed contract will involve performance or services 
on a Government installation, insert the following in the General 
Instructions:

    Offerors are urged and expected to inspect the site where services 
are to be performed and to satisfy themselves as to all general and 
local conditions that may affect the cost of performance of the 
contract, to the extent such information is reasonably obtainable. In no 
event will failure to inspect the site constitute grounds for claims by 
the contractor after the award of a contract.

    (iv) If reference material is to be provided for use in preparation 
of proposals, insert either of the following:

    To assist offerors in preparing their proposals, reference material 
consisting of (insert title or description of publications, 
specifications, drawings, reports, or other documentation being made 
available as reference material) will be available for inspection at 
(insert name and address of building and room number).
    Offerors are expected to examine all reference material prior to 
preparation and submission of their proposals. Failure to do so will be 
at the offeror's risk; or
    To assist offerors in preparing their proposals, reference material 
consisting of (insert title or description of publications, 
specifications, drawings, reports, or other documentation being 
furnished as reference material) is enclosed. Offerors are expected to 
examine all reference material prior to preparation and submission of 
their proposal. Failure to do so will be at the offeror's risk.

    (v) If the reference material being provided is to be returned to 
the Government, include the following statement:

    All reference material furnished hereunder shall be returned within 
(insert number) days after the submission of proposals to (insert name 
and address of building and room number).


[[Page 53]]


    (vi) If an incentive type contract is being considered, a notice to 
the offeror of the Government's desire as to use of incentives 
considered applicable, objectives of the incentive performance goals, 
schedules, milestones, critical delivery parameters, and similar 
information must be included.
    (2) Technical proposal instructions.
    (i) The technical proposal instructions should clearly and concisely 
describe the information prospective offerors must provide in their 
technical proposals. The instructions should address the need for 
submission of a detailed work plan indicating how each aspect of the 
statement of work is to be accomplished, a discussion of how the work is 
to be organized, staffed, and managed, and statements of the 
qualifications and experience of the prospective offeror and its key 
personnel.
    (ii) The technical proposal instructions must be specific enough to 
convey the information the program office will require from offerors to 
allow the technical proposal evaluators to determine whether a proposal 
is acceptable. Therefore, it is essential that the instructions are 
written to elicit the information necessary to fully address all the 
elements of the work plan with particular emphasis on the evaluation 
criteria, so that evaluators may readily evaluate each offer in the 
pertinent areas. The instructions should not require the submission of 
excessive information since this will complicate the evaluation process 
and could cause unnecessary proposal preparation costs for offerors.
    (iii) The technical proposal instructions should require that 
technical proposals be prepared in a specified format to facilitate 
evaluation. A uniform format will minimize evaluators' efforts and 
should minimize the amount of extraneous and voluminous material 
sometimes included in proposals.
    (iv) Since specific instructions must be developed to suit the needs 
of the individual acquisition, detailed guidance concerning the contents 
of the technical proposal instructions is not presented here. However, 
the following represents a sampling of general statements which may be 
helpful in the preparation of the instructions:

                     Technical Proposal Instructions

    Proposals which merely offer to conduct a program in accordance with 
the requirements of the Government's scope of work will not be eligible 
for award. You must submit an explanation of the proposed technical 
approach in conjunction with the tasks to be performed in achieving the 
project objectives.
    A detailed work plan must be submitted indicating how each aspect of 
the statement of work is to be accomplished. Your technical approach 
should be in as much detail as you consider necessary to fully explain 
your proposed technical approach or method. The technical proposal 
should reflect a clear understanding of the nature of the work being 
undertaken.
    The technical proposal must include information on how the project 
is to be organized, staffed, and managed. Information should be provided 
which will demonstrate your understanding and management of important 
events or tasks. You must explain how the management and coordination of 
consultant and/or subcontractor efforts will be accomplished.
    The technical proposal must include a list of names and proposed 
duties of the professional personnel, consultants, and key subcontractor 
employees assigned to the project. Their resumes should be included and 
should contain information on education, background, recent experience, 
and specific scientific or technical accomplishments. The approximate 
percentage of time each individual will be available for this project 
must be included. The proposed staff hours for each of the above 
individuals should be allocated against each task or subtask for the 
project.
    The technical proposal must provide the general background, 
experience, and qualifications of the organization. Similar or related 
contracts, subcontracts, or grants should be included and contain the 
name of the customer, contract or grant number, dollar amount, time of 
performance, and the names and telephone numbers of the project officer 
and contracting/grants officer.
    The technical proposal must contain a discussion of present or 
proposed facilities and equipment which will be used in the performance 
of the contract.
    The technical proposal must be prepared and submitted in the 
following format:
    (Provide the required format.)

    (3) Business proposal instructions. Business proposal instructions 
consist of cost and pricing data and administrative and management data.
    (i) Cost and pricing data. Prospective offerors must be informed in 
the business proposal instruction that they are

[[Page 54]]

required to submit cost or pricing information in sufficient detail to 
allow a complete cost analysis. (See FAR 15.804 for requirements on cost 
or pricing data.) Categories and amounts of labor, materials, travel, 
computer time, overhead and other costs should be requested. Prospective 
offerors are to be provided Standard Form 1411, Contract Pricing 
Proposal Cover Sheet, for use in preparing the cost of pricing data, and 
are to be told to submit, as a minimum, cost proposals fully supported 
by cost and pricing data adequate to establish the reasonableness of the 
proposed amount. Prospective offerors are to comply with the instruction 
on the SF 1411 and fill in or check the appropriate boxes. In addition, 
they should be informed to itemize the cost for individual elements, 
each as analytical studies, reports, etc., and the estimated cost of 
each phase or segment of the offered performance.
    (ii) Administrative and management data.
    (A) The business proposal instructions must be written so that the 
contracting officer receives adequate information to evaluate each 
offeror's management capability and to determine whether each offeror is 
responsible. Therefore, under this section, information should be 
requested to allow the contracting officer to assess the following 
factors as they apply to the instant acquisition:
    (1) The offeror's financial capability;
    (2) The offeror's capability to meet delivery or performance 
schedules;
    (3) The offeror's record of past performance;
    (4) The offeror's record of business integrity;
    (5) The offerors's possession of necessary organization, experience, 
and technical skills, or the ability to obtain them;
    (6) The offeror's possession of required facilities; and
    (7) Any other special consideration involved in the instant 
acquisition.

In some cases, these factors may duplicate evaluation criteria and may 
be adequately addressed in the technical proposal instructions. However, 
the contracting officer must ensure that they are covered in both the 
business proposal instructions and the technical proposal instructions.
    (B) The contracting officer may determine that other administrative 
data in the form of additional business or cost information is 
necessary. Some examples of additional information include:
    (1) A copy of the current agreement on indirect cost rates;
    (2) A copy of the most recent financial statements;
    (3) A discussion on the extent of proposed subcontracting with small 
and disadvantaged business enterprises;
    (4) A request for pricing or cost breakdown tailored to the instant 
acquisition to provide information for a more thorough and complete cost 
analysis; and
    (5) A request for explicit instructions on pricing of options and 
individual line items.

However, care should be taken to request additional information only 
when necessary, to prevent excessive proposal preparation costs for 
offerors.
    (C) The following are required statements which must be included in 
the RFP.

    Your proposal must stipulate that it is predicated upon all the 
terms and conditions of this RFP. In addition, it must contain a 
statement to the effect that it is firm for a period of at least (insert 
number) days from the date of receipt by the Government.
    It is HHS policy that contractors provide all equipment and 
facilities necessary for performance of contracts; however, in some 
instances, an exception may be granted to furnish Government-owned 
property or to authorize purchase with contract funds. If additional 
equipment must be acquired, you must include in your proposal the 
description and estimated cost of each item, and whether you propose to 
furnish the item with your own funds.
    You must identify all Government-owned property in your possession 
and all property acquired from Federal funds, to which you have title, 
that is proposed to be used in the performance of the prospective 
contract.
    The management and control of Government property must be in 
accordance with HHS Publication (OS) 686 entitled, ``Contractor's Guide 
for Control of Government Property (1990),'' a copy of which will be 
provided upon request.

    (c) Section M, Evaluation factors for award--(1) General. (i) The 
evaluation criteria must be developed by the

[[Page 55]]

project officer and submitted to the contracting officer in the request 
for contract (RFC) for inclusion in the RFP. Development of these 
criteria and the assignment of the relative importance or weight to each 
criterion require the exercise of judgment on a case-by-case basis 
because they must be tailored to the requirements of the individual 
acquisition. Since the criteria will serve as a standard against which 
all proposals will be evaluated, it is imperative that they be chosen 
carefully to emphasize those factors considered to be critical in the 
selection of a contractor.
    (ii) The finalized evaluation criteria and indications of their 
relative importance or weights, as included in the RFP, cannot be 
changed except by a formal amendment to the RFP issued by the 
contracting officer. No factors other than those set forth in the RFP 
shall be used in the evaluation of proposals.
    (2) Review of evaluation criteria. (i) The evaluation criteria 
should be reviewed by the contracting officer in terms of the work 
statement. This review is not intended to dictate to the program office 
or project officer, but rather to ensure that the evaluation criteria 
are clear, concise, and fair so that all potential offerors are fully 
aware of the bases for proposal evaluation and are given an equal 
opportunity to compete.
    (ii) The project officer and the contracting officer should then 
review the evaluation criteria together to ascertain the following:
    (A) The criteria are described in sufficient detail to provide the 
offerors (and evaluators) with a total understanding of the factors to 
be involved in the evaluation process;
    (B) The criteria address the key programmatic concerns which the 
offerors must be aware of in preparing proposals;
    (C) The criteria are specifically applicable to the instant 
acquisition and are not merely restatements of criteria from previous 
acquisitions which are not relevant to this acquisition; and
    (D) The criteria are selected to represent only the significant 
areas of importance which must be emphasized rather than a multitude of 
factors. (All criteria tend to lose importance if too many are included. 
Using too many criteria will prove as detrimental as using too few.)
    (3) Examples of topics that form a basis for evaluation criteria. 
Typical examples of topics that form a basis for the development of 
evaluation criteria are listed in the following paragraphs. These 
examples are intended to assist in the development of actual evaluation 
criteria for a specific acquisition and should only be used if they are 
applicable to that acquisition. They are not to be construed as actual 
examples of evaluation criteria to be included in the RFP.
    (i) Understanding of the problem and statement of work;
    (ii) Method of accomplishing the objectives and intent of the 
statement of work;
    (iii) Soundness of the scientific or technical approach for 
executing the requirements of the statement of work (to include, when 
applicable, preliminary layouts, sketches, diagrams, other graphic 
representations, calculations, curves, and other data necessary for 
presentation, substantiation, justification, or understanding of the 
approach);
    (iv) Special technical factors, such as experience or pertinent 
novel ideas in the specific branch of science or technology involved;
    (v) Feasibility and/or practicality of successfully accomplishing 
the requirements (to include a statement and discussion of anticipated 
major difficulties and problem areas and recommended approaches for 
their resolution);
    (vi) Availability of required special research, test, and other 
equipment or facilities;
    (vii) Managerial capability (ability to achieve delivery or 
performance requirements as demonstrated by the proposed use of 
management and other personnel resources, and to successfully manage the 
project, including subcontractor and/or consultant efforts, if 
applicable, as evidenced by the management plan and demonstrated by 
previouis experience).
    (viii) Availability, qualifications, experience, education, and 
competence of

[[Page 56]]

professional, technical, and other personnel, to include proposed 
subcontractors and consultants (as evidenced by resumes, endorsements, 
and explanations of previous efforts); and
    (ix) Soundness of the proposed staff time or labor hours, propriety 
of personnel classifications (professional, technical, others), 
necessity for type and quantity of material and facilities proposed, 
validity of proposed subcontracting, and necessity of proposed travel.
    (4) Relative importance or weight.
    (i) A statement or indication of the relative importance or weight 
must be assigned to each evaluation criterion to inform prospective 
offerors (and evaluators) of the specific significance of each criterion 
in comparsion to the other criteria. Similarly, if a criterion is 
subdivided into parts, each of the parts must be assigned a statement or 
indication of the relative importance or weight.
    (ii) The two principal methods used to indicate the relative 
importance or weight are the numerical score and adjective description. 
The Department does not prescribe a single method for determining the 
relative importance or weight, but recommends the use of the numerical 
score method because it is more precise and informative. However, it is 
recognized that in some instances the use of the adjective description 
method be more appropriate and, hence, may be used when that 
determination is made.
    (iii) Cost or price is not generally included as one of the 
evaluation criteria and is not assigned an indication of relative 
importance or weight. However, a statement must be included in the RFP 
to reflect the relationship of cost or price in comparison to the other 
criteria. The contracting officer must ensure that this statement 
accurately reflects the appropriate balance between cost or price and 
the technical factors. The contracting officer and project officer 
should work together in arriving at the final determination regarding 
the relationship. The following are examples of statements that may be 
used to reflect this relationship. However, since these examples 
represent only the two extremes and the middle position, another 
statement may be developed to reflect the relationship which applies to 
the instant acquisition.
    (A) You are advised that paramount consideration shall be given to 
the evaluation of technical proposals rather then cost or price.
    (B) You are advised that paramount consideration shall be given to 
cost or price rather than the evaluation of technical proposals.
    (C) You are advised that the evaluation of technical proposals and 
cost or price are of approximately equal value.

[49 FR 13979, Apr. 9, 1984; 49 FR 36110, Sept. 14, 1984, as amended at 
53 FR 43207, Oct. 26, 1988; 54 FR 24343, June 7, 1989; 54 FR 43966, Oct. 
30, 1989; 56 FR 47003, Sept. 17, 1991]



315.407  Solicitation provisions.

    (c)(2) The referenced provision (FAR 52.215-6, Type of Business 
Organization) is a representation, has been included under Section K 
(see 315.406-5(a)(2)(iii)), and need not be restated again.
    (8) The provision at 352.215-12 shall be used in place of that 
specified at FAR 52.215-12.
    (g) The referenced provision (FAR 52.215-20, Place of Performance) 
is to be considered a certification and is included under section K (see 
315.406-5(a)(2)(iv)); it need not be restated again.
    (n) The contracting officer shall insert the provision at FAR 
52.233-2, Service of Protest, in solicitations as required by FAR 
33.106(a).

[49 FR 13979, Apr. 9, 1984, as amended at 54 FR 43966, Oct. 30, 1989; 57 
FR 11690, Apr. 7, 1992]



315.408  Issuing solicitations.

    The minimum proposal preparation or response time between the date 
of distribution of a RFP and the date set for receipt of proposals shall 
not be less than 30 calendar days.

[49 FR 13979, Apr. 9, 1984, as amended at 53 FR 43208, Oct. 26, 1988]



315.409  Pre-proposal conferences.

    If a pre-proposal conference is to be held, the provision at 
352.215-72 shall be included in the solicitation.

[[Page 57]]



315.410  Amendment of solicitations before closing date.

    For additional information on amendments to solicitations, see FAR 
15.606.



315.413  Disclosure and use of information before award.



315.413-1  Alternate I.

    The Department shall not use Alternate I procedures.



315.413-2  Alternate II.

    The Department shall use the Alternate II procedures as modified in 
this subsection and shall use the provision at 352.215-12, Restriction 
on Disclosure and Use of Data, rather than the similar provision at FAR 
15.215-12 (see 315.407(c)(8)). Any reference in the FAR to the provision 
at FAR 52.215-12 shall apply to the provision at 352.215-12.
    (b) The term data, as used in this section and in 352.215-12, refers 
to trade secrets, business data, and technical data. Trade secrets, 
within the meaning of 18 U.S.C. 1905, include, for example, processes, 
formulas, and chemical compositions. Business data includes, for 
example, commercial information, financial information, and cost and 
pricing data. Technical data includes, for example, plans, designs, 
suggestions, improvements and concepts.

The Department recognizes that requests for proposals may require the 
offeror, including its prospective subcontractor(s), if any, to submit 
data which the offeror does not want used or disclosed for any purpose 
other than for evaluation of the proposal. Each proposal containing data 
which the offeror desires to restrict must be marked on the cover sheet 
by the offeror with the legend set forth at 352.215-12. Proposals, or 
portions of proposals, so marked shall be handled in accordance with the 
provisions of the legend.
    (c) Contracting officers receiving proposals which contain 
restrictive statements or legends not conforming to the referenced 
provision at 352.215-12 must carefully evaluate the form and substance 
of the restriction before making a determination to reject the proposal. 
Deviations in form which do not compromise the Government's rights may 
be accepted if approved by the activity's FOI official and the Office of 
General Counsel, Business and Administrative Law Division.
    (e) The Government notice shown in FAR 15.413-2(e) shall be used by 
this Department and is to be placed on the cover sheet of each proposal 
or quotation upon its receipt. The Government notice shall be completed 
by adding the following to the end of the last sentence: ``HHSAR 
paragraph 315.608-72.''
    (f) The Department sometimes finds it necessary (and in some 
instances is required by law) to seek evaluation of proposals outside 
the Department (see 315.608(d)(6)). All conditions required by FAR 
15.413-2(f) have been met and are covered in 315.608-72, Procedures for 
handling and disclosing proposals. In regard to item (f)(1) of FAR 
15.413-2, the Department has found that the procedure stated in the 
first sentence of paragraph 315.608-72 is best and considers it in 
compliance with the FAR requirement.
    (g) See subpart 324.2 for detailed procedures concerning FOIA 
requests.

[49 FR 13979, Apr. 9, 1984; 49 FR 36110, Sept. 14, 1984, as amended at 
51 FR 44294, Dec. 9, 1986]



315.470  Review of RFP.

    The principal official responsible for acquisition shall establish 
procedures to ensure that an independent review of the RFP is made 
between the time the synopsis is sent to the Commerce Business Daily 
announcing the availability of the RFP and the release date of the RFP. 
The individual selected to conduct the review must possess the 
acquisition knowledge necessary to readily ascertain whether the RFP 
contains the required information to be in conformance with all laws, 
regulations, and internal procedures and instructions. The individual 
selected to conduct the review must be a person other than the preparer 
of the RFP.

[49 FR 13979, Apr. 9, 1984, as amended at 50 FR 23129, May 31, 1985; 50 
FR 38004, Sept. 19, 1985]



315.471  Annual submission of representations and certifications.

    Each Principal Official Responsible for Acquisition (PORA) shall 
determine whether to allow the use of the annual

[[Page 58]]

submission of representations and certifications by offerors. If 
allowed, the provisions of FAR 14.213 shall be followed.

[55 FR 13536, Apr. 11, 1990]



                  Subpart 315.5--Unsolicited Proposals



315.505  Content of unsolicited proposals.

    (d) Certification by offeror--To ensure against contacts between 
Department employees and prospective offerors which would exceed the 
limits of advance guidance set forth in FAR 15.504 resulting in an 
unfair advantage to an offeror, the principal official responsible for 
acquisition (or designee) shall ensure that the following certification 
is furnished to the prospective offeror and the executed certification 
is included as part of the resultant unsolicited proposal:

              Unsolicited Proposal Certification by Offeror

    This is to certify, to the best of my knowledge and belief, that:
    a. This proposal has not been prepared under Government supervision.
    b. The methods and approaches stated in the proposal were developed 
by this offeror.
    c. Any contact with employees of the Department of Health and Human 
Services has been within the limits of appropriate advance guidance set 
forth in FAR 15.504.
    d. No prior commitments were received from departmental employees 
regarding acceptance of this proposal.
Date:___________________________________________________________________
Organization:___________________________________________________________
Name:___________________________________________________________________
Title:__________________________________________________________________

(This certification shall be signed by a responsible official of the 
proposing organization or a person authorized to contractually obligate 
the organization.)



315.506  Agency procedures.

    (a) The principal official responsible for acquisition is 
responsible for establishing procedures to comply with FAR 15.506(a).
    (b) The principal official responsible for acquisition or his/her 
designee shall be the point of contact for coordinating the receipt and 
handling of unsolicited proposals. Contacts made outside the contracting 
activity shall be promptly coordinated with the principal official 
responsible for acquisition or the designee.



315.506-1  Receipt and initial review.

    (d) An unsolicited proposal shall not be refused consideration 
merely because it was initially submitted as a grant application. 
However, contracts shall not be awarded on the basis of unsolicited 
proposals which have been rejected for grant support on the ground that 
they lack scientific merit.



315.509  Limited use of data.

    The legend, Use and Disclosure of Data, prescribed in FAR 15.509(a) 
is to be used by the offeror to restrict the use of data for evaluation 
purposes only. However, data contained within the unsolicited proposal 
may have to be disclosed as a result of a request submitted pursuant to 
the Freedom of Information Act. Because of this possibility, the 
following notice shall be furnished to all prospective offerors of 
unsolicited proposals whenever the legend is provided in accordance with 
FAR 15.504(b)(7):

    The Government will attempt to comply with the ``Use and Disclosure 
of Data'' legend. However, the Government may not be able to withhold a 
record (data, document, etc.) nor deny access to a record requested by 
an individual (the public) when an obligation is imposed on the 
Government under the Freedom of Information Act, 5 U.S.C. 552, as 
amended. The Government's determination to withhold or disclose a record 
will be based upon the particular circumstances involving the record in 
question and whether the record may be exempted from disclosure under 
the Freedom of Information Act. Records which the offeror considers to 
be trade secrets and commercial or financial information and privileged 
or confidential must be identified by the offeror as indicated in the 
referenced legend.



                     Subpart 315.6--Source Selection



315.602  Applicability.

    (b) This subpart does not apply to contracts for architect-engineer 
services or contracts awarded to the Small Business Administration under 
section 8(a) of the Small Business Act.



315.604  Responsibilities.

    (d) Personnel participating in the evaluation process must not 
discuss or

[[Page 59]]

reveal information concerning the evaluations except to an individual 
participating in the same evaluation proceedings, and then only to the 
extent that the information is required in connection with the 
proceedings. Divulging information during the evaluation, selection, and 
negotiation phases of the acquisition to offerors or to personnel not 
having a need to know could jeopardize the resultant award. Therefore, 
the contracting officer must instruct personnel participating in the 
evaluations to observe these restrictions and insure that all personnel 
understand that unauthorized disclosure of information, no matter how 
innocent, could compromise the acquisition process and is prohibited.
    (e) Only the contracting officer or his/her authorized 
representative within the contracting office shall conduct discussions 
with offerors relative to any aspect of the acquisition.



315.605  Evaluation factors.

    (e) The evaluation criteria included in the solicitation serve as 
the standard against which all proposals are evaluated. Prospective 
offerors rely upon the evaluation criteria in the solicitation in 
developing proposals, and they must be assured that the evaluation is 
conducted in accordance with those criteria. All personnel involved in 
the evaluation process must make sure that the evaluation criteria 
contained in the solicitation are the only criteria used in conducting 
the evaluation. See FAR 15.406-5(c) and 315.406-5(c) for detailed 
guidance on evaluation criteria.



315.607  Disclosure of mistakes before award.

    (a) The contracting officer shall require that offerors' 
clarifications are in writing.
    (c)(3) The chief of the contracting office is authorized to make the 
written determination permitting a correction of a mistake in a 
proposal.



315.608  Proposal evaluation.

    (a)(1) Cost of price evaluation. (See 315.608-77.)
    (2) Technical evaluation. (See 315.608-75 and 76.)
    (b) The determination required by FAR 15.608(b) shall be made by the 
chief of the contracting office.

[50 FR 23130, May 31, 1985, and 50 FR 38004, Sept. 19, 1985, as amended 
at 51 FR 44294, Dec. 9, 1986]



315.608-70  Technical evaluation plan.

    (a) A technical evaluation plan may be required by the contracting 
officer, at his/her discretion, when an acquisition is sufficiently 
complex as to warrant a formal plan.
    (b) The technical evaluation plan should include at least the 
following:
    (1) A list of technical evaluation panel members, their 
organizations as well as a list of their major consulting clients (if 
applicable), their qualifications, and curricula vitae (if available);
    (2) A justification for using non-Government technical evaluation 
panel members. (Justification is not required if non-Government 
evaluators will be used in accordance with standard contracting activity 
procedures or policies);
    (3) A statement that there is no apparent or actual conflict of 
interest regarding any panel member;
    (4) A copy of each rating sheet, approved by the contracting 
officer, to be used to assure consistency with the evaluation criteria; 
and
    (5) A brief description of the general evaluation approach.
    (c) The technical evaluation plan must be signed by an official 
within the program office in a position at least one level above the 
project officer or in accordance with contracting activity procedures.
    (d) The technical evaluation plan should be submitted to the 
contracting officer for review and approval before the solicitation is 
issued. The contracting officer shall make sure that the principal 
factors relating to the evaluation are reflected in the evaluation 
criteria when conducting the review of the plan.

[50 FR 23130, May 31, 1985, and 50 FR 38004, Sept. 19, 1985]



315.608-71  Technical evaluation panel.

    (a) General. (1) A technical evaluation panel is required for all 
acquisitions

[[Page 60]]

applicable to this subpart which are expected to exceed $300,000. The 
contracting officer has the discretion to require a technical evaluation 
panel for acquisitions not exceeding $300,000 based on the complexity of 
the acquisition.
    (2) The technical evaluation process requires careful consideration 
regarding the size, composition, expertise, and function of the 
technical evaluation panel. The efforts of the panel can result in the 
success or failure of the acquisition.
    (b) Role of the project officer. (1) The project officer is the 
contracting officer's technical representative for the acquisition 
action. The project officer may be a voting member of the technical 
evaluation panel, and may also serve as the chairperson of the panel, 
unless prohibited by law or contracting activity procedures.
    (2) The project officer is responsible for recommending panel 
members who are knowledgeable in the technical aspects of the 
acquisition and who are competent to identify strengths and weaknesses 
of the various proposals. The program training requirements specified in 
307.170 must be adhered to when selecting prospective panel members.
    (3) The project officer shall ensure that persons possessing 
expertise and experience in addressing issues relative to sex, race, 
national origin, and handicapped discrimination be included as panel 
members in acquisitions which address those issues. The intent is to 
balance the composition of the panel so that qualified and concerned 
individuals may provide insight to other panel members regarding ideas 
and approaches to be taken in the evaluation of proposals.
    (4) The project officer is to submit the recommended list of panel 
members to an official within the program office in a position at least 
one level above the project officer or in accordance with contracting 
activity procedures. This official will review the recommendations, 
appoint the panel members, and select the chairperson.
    (5) The project officer shall arrange for adequate and secure 
working space for the panel.
    (c) Role of the contracting officer. (1) The contracting officer is 
the Department's official representative with delegated acquisition 
authority to enter into and administer contracts. The term ``contracting 
officer,'' as used in this subpart, may be the contracting officer or 
his/her designated representative within the contracting office.
    (2) The contracting officer shall not serve as a member of the 
technical evaluation panel but should be available to:
    (i) Address the initial meeting of the technical evaluation panel 
(see 315.608-74(c));
    (ii) Provide assistance to the evaluators as required; and
    (iii) Ensure that the scores adequately reflect the written 
technical evaluation report comments (see 315.608-76).
    (d) Conflicts of interest. (1) If a panel member has an actual or 
apparent conflict of interest related to a proposal under evaluation, 
he/she shall be removed from the panel and replaced with another 
evaluator. If a suitable replacement is not available, the panel shall 
perform the review without a replacement.
    (2) For the purposes of this subpart, conflicts of interest are 
defined in the Department's Standards of Conduct set forth in 45 CFR 
part 73 which incorporates 5 CFR part 737, Post Employment Conflict of 
Interest. The Standards of Conduct shall be applicable to both in-house 
personnel and outside evaluators serving on the technical evaluation 
panel.
    (e) Continuity of evaluation process. (1) The technical evaluation 
panel is responsible for evaluating the original proposals, making 
recommendations to the chairperson regarding clarifications and 
deficiencies of proposals, and, if required by the contracting officer, 
assisting the contracting officer during discussions and negotiations, 
and reviewing supplemental, revised and/or ``best and final'' offers. To 
the extent possible, the same evaluators should be available throughout 
the entire evaluation and selection process to ensure continuity and 
consistency in the treatment of proposals. The following are examples of 
circumstances when it

[[Page 61]]

would not be necessary for the technical evaluation panel to evaluate 
revised proposals submitted during the acquisition:
    (i) The answers to questions do not have a substantial impact on the 
proposal (see 315.609(i));
    (ii) The ``best and final'' offers are not materially different from 
the original proposals; or
    (iii) The rankings of the offerors are not affected because the 
revisions to the proposals are relatively minor.
    (2) The chairperson, with the concurrence of the contracting 
officer, may decide not to have the panel evaluate the revised 
proposals. Whenever this decision is made, it must be fully documented 
by the chairperson and approved by the contracting officer.
    (3) When technical evaluation panel meetings are considered 
necessary by the contracting officer, the attendance of evaluators is 
mandatory. When the chairperson determines that an evaluator's failure 
to attend the meetings is prejudicial to the evaluation, the chairperson 
shall replace the individual after discussing the situation with the 
contracting officer and obtaining his/her concurrence and the approval 
of the program official responsible for appointing the panel members 
(see 315.608-71(b)(4)).
    (4) Whenever continuity of the evaluation process is not possible, 
and either new evaluators are selected or a reduced panel is decided 
upon, each proposal which is being reviewed at any stage of the 
acquisition shall be reviewed at that stage by all members of the 
revised panel unless it is impractical to do so because of the receipt 
of an unusually large number of proposals.
    (f) Use of outside evaluators. (1) The technical evaluation panel 
shall be composed of Government employees except when outside evaluators 
possess a required expertise which is not available within the 
Government, or as required by law.
    (2) The National Institutes of Health (NIH) and the Alcohol, Drug 
Abuse, and Mental Health Administration (ADAMHA) are required to have a 
peer review of research and development contracts in accordance with 
Pub. L. (Pub. L.) 93-352 as amended by Pub. L. 94-63; 42 U.S.C. 289 1-4. 
This legislation requires peer review of projects and proposals, and not 
more than one-fourth of the members of a peer review group may be 
officers or employees of the United States. NIH and ADAMHA are therefore 
exempt from the provisions of 315.608-71 to the extent that 42 U.S.C. 
289 1-4 applies.

[50 FR 23130, May 31, 1985, and 50 FR 38004, Sept. 19, 1985, as amended 
at 53 FR 15563, May 2, 1988]



315.608-72  Procedures for handling and disclosing proposals.

    (a) The procedures and notice specified in FAR 15.413-2 and 315.413-
2 shall be used in handling solicited proposals and for disclosing 
proposals outside the Government for evaluation purposes. (For 
unsolicited proposals, see FAR 15.509 and 315.509.)
    (b) Decisions to disclose proposals outside the Government for 
evaluation purposes shall be made by the chief official having 
programmatic responsibility for the acquisition, after consultation with 
the contracting officer and in accordance with operating division 
procedures. The decision to disclose either a solicited or unsolicited 
proposal outside the Government for the purpose of obtaining an 
evaluation shall take into consideration the avoidance of organizational 
conflicts of interest and any competitive relationship between the 
submitter of the proposal and the prospective evaluator(s).
    (c) When it is determined to disclose a solicited proposal outside 
the Government for evaluation purposes, the following or similar 
conditions shall be included in the written agreement with the 
evaluator(s) prior to disclosure (see FAR 15.413-2(f) and 315.413-2(f)). 
Also, a review must be made to ensure that the notice required by FAR 
15.413-2(e) is affixed to the proposal before it is disclosed to the 
evaluator(s).

                   Conditions for Evaluating Proposals

    The evaluator agrees to use the data (trade secrets, business data, 
and technical data) contained in the proposal only for evaluation 
purposes.
    This requirement does not apply to data obtained from another source 
without restriction.

[[Page 62]]

    Any notice or legend placed on the proposal by either the Department 
or the submitter of the proposal shall be applied to any reproduction or 
abstract provided to the evaluator or made by the evaluator. Upon 
completion of the evaluation, the evaluator shall return the Government-
furnished copy of the proposal or abstract, and all copies thereof, to 
the Departmental office which initially furnished the proposal for 
evaluation.
    Unless authorized by the Department's initiating office, the 
evaluator shall not contact the submitter of the proposal concerning any 
apsects of its contents.
    The evaluator will be obligated to obtain commitments from its 
employees and subcontractors, if any, in order to effect the purposes of 
these conditions.

[50 FR 23131, May 31, 1985, and 50 FR 38004, Sept. 19, 1985]



315.608-73  Receipt of proposals.

    (a) After the closing date set by the solicitation for the receipt 
of proposals, the contracting officer will use a transmittal memorandum 
to forward the technical proposals to the project officer or chairperson 
for evaluation. The business proposals will be retained by the 
contracting officer for evaluation (see 315.608-77).
    (b) The transmittal memorandum to the chairperson shall include at 
least the following:
    (1) A list of the names of the organizations submitting proposals;
    (2) A reference to 315.604(d) on the need to preserve the integrity 
of the source selection process;
    (3) A requirement for a technical evaluation report in accordance 
with 315.608-76; and
    (4) The establishment of a date for receipt of the technical 
evaluation report.

[50 FR 23131, May 31, 1985, and 50 FR 38004, Sept. 19, 1985]



315.608-74  Convening the technical evaluation panel.

    (a) Normally, the technical evaluation panel will convene to 
evaluate the proposals. However, there may be situations when the 
contracting officer determines that it is not feasible for the panel to 
convene. Whenever this decision is made, care must be taken to assure 
that the technical review is closely monitored to produce acceptable 
results.
    (b) When a panel is convened, the chairperson is responsible for the 
control of the technical proposals provided to him/her by the 
contracting officer for use during the evaluation process. The 
chairperson will generally distribute the technical proposals at the 
initial panel meeting and will establish procedures for securing the 
proposals whenever they are not being evaluated to insure their 
confidentiality. After the evaluation is complete, all proposals must be 
returned to the contracting officer, destroyed or filed in an 
appropriate manner to maintain the confidential nature of the data.
    (c) The contracting officer shall address the initial meeting of the 
panel and state the basic rules for conducting the evaluation. The 
contracting officer shall provide written guidance to the panel if he/
she is unable to attend the initial panel meeting. The guidance should 
include:
    (1) An explanation of conflicts of interest (see 315.608-71(d));
    (2) The necessity to read and understand the solicitation, 
especially the statement of work and evaluation criteria, prior to 
reading the proposals;
    (3) The need for evaluators to restrict the review to only the 
solicitation and the contents of the technical proposals;
    (4) The need for each evaluator to review all the proposals;
    (5) The need to watch for ambiguities, inconsistencies, errors, and 
deficiencies which should be surfaced during the evaluation process;
    (6) An explanation of the evaluation process and what will be 
expected of the evaluators throughout the process;
    (7) The need for the evaluators to be aware of the requirement to 
have complete written documentation of the individual strengths and 
weaknesses which affect the scoring of the proposals; and
    (8) An instruction directing the evaluators that, until the award is 
made, information concerning the acquisition must not be disclosed to 
any person not directly involved in the evaluation process.

[50 FR 23131, May 31, 1985, and 50 FR 38004, Sept. 19, 1985]

[[Page 63]]



315.608-75  Rating and ranking of proposals.

    The evaluators will individually read each proposal, describe 
tentative strengths and weaknesses, and develop preliminary scores in 
relation to each evaluation criterion set forth in the solicitation. The 
evaluators will use the rating sheets either in the technical evaluation 
plan or approved by the contracting officer when a technical evaluation 
plan is not required (see 315.608-70). After this has been accomplished, 
the evaluators shall discuss in detail the individual strengths and 
weaknesses described by each evaluator and, if possible, arrive at a 
common understanding of the major strengths and weaknesses and the 
potential for correcting each offeror's weakness(es). Each evaluator 
will score each proposal, and then the technical evaluation panel will 
collectively rank the proposals. Generally, ranking will be determined 
by adding the numerical scores assigned to the evaluation criteria and 
finding the average for each offeror. The evaluators should then 
identify whether each proposal is acceptable or unacceptable. 
Predetermined cutoff scores shall not be employed.

[50 FR 23131, May 31, 1985, and 50 FR 38004, Sept. 19, 1985]



315.608-76  Technical evaluation report.

    A technical evaluation report shall be prepared and furnished to the 
contracting officer by the chairperson and maintained as a permanent 
record in the contract file. The report must reflect the ranking of the 
proposals and identify each proposal as acceptable or unacceptable in 
accordance with 315.608-75. The report must also include a narrative 
evaluation specifying the strengths and weaknesses of each proposal, a 
copy of each rating sheet, and any reservations, qualifications, or 
areas to be addressed that might bear upon the selection of sources for 
negotiation and award. Concrete technical reasons supporting a 
determination of unacceptability with regard to any proposal must be 
included. The report should also include specific points and questions 
which are to be raised in discussions or negotiations.

[50 FR 23132, May 31, 1985, and 50 FR 38004, Sept. 19, 1985]



315.608-77  Evaluation of business proposals.

    (a) The contracting officer shall evaluate the business proposals 
concurrently with the evaluation of the technical proposals. The 
contracting officer must adhere to the requirements for cost or price 
analysis included in FAR 15.805-1 for each business proposal in the 
competitive range. An audit report may be required in accordance with 
FAR 15.805-5 and 315.805-5. The contracting officer must determine the 
extent of analysis in each case depending on the amount of the proposal, 
the technical complexity and related cost or price, and cost realism. 
The contracting officer should request the project officer to analyze 
such items as the number of labor hours proposed for various labor 
categories; the mix of labor hours and categories of labor in relation 
to the technical requirements of the project; the kinds and quantities 
of material, equipment, and supplies; types, numbers, and hours/days of 
proposed consultants; logic of proposed subcontracting; analysis of the 
travel proposed including number of trips, locations, purpose, and 
travelers; and kinds and quantities of data processing. The project 
officer shall provide his/her opinion as to whether these elements are 
necessary and reasonable for efficient contract performance. Exceptions 
to proposed elements shall be supported by adequate rationale to allow 
for effective negotiations. The contracting officer should also request 
the assistance of a cost/price analyst when considered necessary. In all 
cases, the negotiation memorandum (see 315.672) must include the 
rationale used in determining that the price or cost is fair and 
reasonable.
    (b) The contracting officer must appraise the management capability 
of the offeror to perform the required work in a timely manner. In 
making this appraisal, the contracting officer should consider factors 
such as the offeror's management organization,

[[Page 64]]

past performance, reputation for reliability, availability of the 
required facilities, and cost controls. This information is to be used 
by the contracting officer to determine the offeror's responsibility.

[50 FR 23132, May 31, 1975, and 50 FR 38004, Sept. 19, 1985]



315.609  Competitive range.

    (a) A proposal must be included in the competitive range unless 
there is no real possibility that it can be improved to the point where 
it becomes the most acceptable.
    (e) In certain circumstances, when deciding which proposals should 
be included in the competitive range, the contracting officer may 
request that the technical evaluation panel review the cost or price 
data. Typical situations which may necessitate this review include a 
suspected ``buy-in,'' large differences in cost or price among the 
proposals, proposals receiving high technical ratings which have 
relatively high costs, and proposals receiving low technical ratings 
which have relatively low costs. The resultant comparison of cost or 
price to technical factors and the determination of cost or price 
realism should assist the contracting officer in deciding which 
proposals are to be included in the competitive range.
    (f) All determinations regarding the inclusion or exclusion of 
proposals in the competitive range must be completely documented, 
including the salient reasons for the determinations, and set forth in 
the negotiation memorandum.
    (g) Some of the factors which the contracting officer should 
consider in determining the competitive range are:
    (1) The relative importance of cost or price as compared to 
technical factors in accordance with the solicitation provisions 
required in 315.406-5(c);
    (2) The susceptibility of significantly reducing a proposal with an 
unreasonable high price or cost without undermining the technical merit 
if the offeror otherwise has a reasonable chance to receive an award; 
and
    (3) The likelihood of reducing cost or price of a proposal which 
exceeds the Government's requirements.
    (h) The contacting officer shall conduct a thorough review of the 
technical evaluation report to be assured that:
    (1) All determinations of unacceptability are supported by concrete 
and comprehensive statements that are factual and convincing and are 
consistent with the evaluation criteria set forth in the solicitation. 
Every statement should be reviewed carefully to eliminate any doubts as 
to the unacceptability of a proposal;
    (2) All recommendations to exclude proposals from the competitive 
range are supported by persuasive rationale and sufficient facts to 
substantiate a judgment that meaningful discussions are not possible or 
there is no reasonable chance of the proposal being selected for award;
    (3) Those cases where only one organization is found to be 
technically acceptable are fully scrutinized; and
    (4) Unacceptable proposals contain ``information'' deficiencies 
which are so material as to preclude any possibility of upgrading the 
proposal to a competitive level except through major revisions and 
additions which would be tantamount to the submission of another 
proposal.
    (i) The contracting officer and project officer should discuss the 
uncertainties and/or deficiencies that are included in the technical 
evaluation report for each proposal in the competitive range. Technical 
questions should be developed by the project officer and/or the 
technical evaluation panel and should be included in the technical 
evaluation report. The management and cost or price questions should be 
prepared by the contracting officer with assistance from the project 
officer and/or panel as required. The method of requesting offerors in 
the competitive range to submit the additional information will vary 
depending on the complexity of the questions, the extent of additional 
information requested, the time needed to analyze the responses, and the 
time frame for making the award. However, to the extent practicable, all 
questions and answers should be in writing. Each offeror in the 
competitive range shall be given an equitable period of time for 
preparation of responses to questions to the extent practicable. The 
questions

[[Page 65]]

should be developed so as to disclose the ambiguities, uncertainties, 
and deficiencies of the offeror (see FAR 15.610(c)).



315.610  Written or oral discussions.

    (b) The contracting officer, with the support of personnel who 
evaluated the technical proposals, and, if necessary, cost analysts, 
attorneys, etc., must conduct written or oral discussions with all 
responsible offerors within the competitive range.
    (d) Careful judgment must be exercised in determining the extent of 
discussions. In some cases, more than one round of discussions with all 
the offerors within the competitive range may be required. The time 
available, the expense and administrative limitations, and the 
complexity, size, and significance of the acquisition should all be 
considered in deciding on the type, duration, and depth of the 
discussions.



315.611  Best and final offers.

    (b)(5) Notice that confirmation of a prior offer should be 
specifically stated as a final offer; and
    (6) Notice that all revisions to former offers should be submitted 
on Standard Form 1411, Contract Pricing Proposal Cover Sheet, and should 
be fully documented.
    (c) ``Best and final'' offers are subject to a final evaluation of 
price or cost and other salient factors by the contracting officer and 
project officer with assistance from a cost/price analyst, and an 
evaluation of technical factors by the technical evaluation panel, as 
necessary. Proposals may be technically rescored and reranked by the 
technical evaluation panel and a technical evaluation report prepared. 
To the extent practicable, the evaluation shall be performed by the same 
evaluators who reviewed the original proposals (see 315.670--).
    (e) Of particular importance in the award of research or development 
contracts, including those with educational institutions, is the 
competence of key personnel in the specific field of science or 
technology involved, as reflected in the proposal. However, awards 
should not be made for research and development capabilities that exceed 
those needed for the successful performance of the particular project.



315.670  Negotiation with the selected source.

    (a) After selection of the successful proposal, a limited 
negotiation with the selected offeror may be conducted if deemed 
necessary. However, no factor which could have any effect on the 
selection process may be introduced into the negotiation after the 
common cutoff date for receipt of best and final offers. The negotiation 
shall not in any way prejudice the competitive interests or right of the 
unsuccessful offerors. Negotiations with the selected offeror shall be 
restricted to definitizing the final agreement on terms and conditions; 
e.g., assuming none of these factors were involved in the selection 
process, negotiation could include such topics as payment provisions, 
patent rights, rights in data, property provisions, labor rates, 
indirect cost rates, and fees. Prior to conducting the limited 
negotiation, the contracting officer shall approve a written 
determination citing both the specific issues to be discussed and the 
rationale showing that the negotiations shall not have any effect on the 
selection process.
    (b) Caution must be exercised by the contracting officer to insure 
that the negotiation is not used to change the requirement contained in 
the solicitation, nor to make any other changes which would impact on 
the source selection decision. Whenever a material change occurs in the 
requirements as a result of the negotiation, the competition must be 
reopened and all offerors submitting ``best and final'' offers must be 
given an opportunity to resubmit proposals based on the revised 
requirements. Whenever there is a question as to whether a change is 
material, the contracting officer should obtain the advice of technical 
personnel and legal counsel before reopening the competition. 
Significant changes in the offeror's cost proposal may also necessitate 
a reopening of competition if such changes alter the factors involved in 
the original selection process.
    (c) Should negotiations beyond those specified in (a) above be 
required for

[[Page 66]]

any reason, discussions must be reopened with all offerors submitting 
``best and final'' offers.
    (d) Upon completion of the negotiation, the contracting officer 
shall obtain a confirmation letter from the successful offeror which 
includes any revisions to the technical proposal, the agreed to price or 
cost, and, as applicable, a certificate of current cost or pricing data.

[49 FR 13979, Apr. 9, 1984, 49 FR 36110, Sept. 14, 1984]



315.671  Post negotiation contract preparation and award.

    (a) The contracting officer must perform the following actions after 
negotiations have been completed:
    (1) Prepare the negotiation memorandum in accordance with 315.672;
    (2) Prepare the contract containing all agreed to terms and 
conditions and clauses required by law or regulation;
    (3) Include in the contract file the pertinent documents referenced 
in FAR 4.803; and
    (4) Obtain the appropriate approval of proposed contract awards in 
accordance with subpart 304.71 and contracting activity procedures.
    (b) After receiving the required approvals, the contract should be 
transmitted to the prospective contractor for signature. The prospective 
contractor must be informed that the contract is not effective until 
accepted by the contracting officer.
    (c) The contract shall not be issued until the finance office 
certifies that the funds are available for obligation.



315.672  Preparation of negotiation memorandum.

    The negotiation memorandum or summary of negotiations is a complete 
record of all actions leading to award of a contract and is prepared by 
the contract negotiator. It should be in sufficient detail to explain 
and support the rationale judgments, and authorities upon which all 
actions were predicated. The memorandum will document the negotiation 
process and reflect the negotiator's actions, skills, and judgments in 
concluding a satisfactory agreement for the Government. Negotiation 
memorandums shall contain discussion of the following or a statement of 
nonapplicability; however, information already contained in the contract 
file need not be reiterated. A reference to the document which contains 
the required information is satisfactory.
    (a) Description of articles and services and period of performance. 
A description of articles and services, quantity, unit price, total 
contract amount, and period of contract performance should be set forth 
(if Supplemental Agreement--show previous contract amount as revised, as 
well as information with respect to the period of performance).
    (b) Acquisition planning. Summarize any acquisition planning 
activities that have taken place. Include items such as meetings with 
program and staff personnel and the development of acquisition planning 
schedules.
    (c) Synopsis of proposed acquisition. A statement as to whether the 
acquisition has or has not been publicized in accordance with FAR 
subpart 5.2. A brief statement of explanation should be included with 
reference to the specific basis for exemption under the FAR, if 
applicable.
    (d) Contract type. Provide sufficient detail to support the type of 
contractural instrument recommended for the acquisition and cite any 
required D & F. If the contract is a cost-sharing type, explain the 
essential cost-sharing features.
    (e) Extent of competition. The extent to which full and open 
competition was solicited and obtained must be discussed. The discussion 
shall include the date of solicitation, sources solicited, and 
solicitation results. If a late proposal was received, discuss whether 
or not the late proposal was evaluated and the rationale for the 
decision. If the acquisition is to be awarded without full and open 
competition, discuss the rationale for the decision.
    (f) Technical evaluation. Summarize the results presented in the 
technical evaluation report and delineate the basis of acceptability or 
unacceptability of the proposals from a technical standpoint. Discussion 
should be in nontechnical terms.
    (g) Business evaluation. Summarize the results presented in the 
business report and delineate the basis for the determination of 
acceptability or

[[Page 67]]

unacceptability of the business proposals.
    (h) Competitive range. If full and open competition, describe how 
the zone of consideration or competitive range was determined and state 
the offerors who were included in the competitive range and the ones who 
were not. Explain why any offeror who submitted a technically acceptable 
proposal was not included in further discussions. Comment on any changes 
made in the offeror's proposal as a result of the discussions.
    (i) Cost breakdown and analysis. Include a complete cost breakdown 
together with the negotiator's analysis of the estimated cost by 
individual cost elements. The negotiator's analysis should contain such 
information as:
    (1) A comparison of cost factors proposed in the instant case with 
actual cost factors used in earlier contracts, using the same cost 
centers of the same supplier or cost centers or other sources having 
recent contracts for the same or similar item.
    (2) Any pertinent Government-conducted audit of the proposed 
contractor's records of any pertinent cost advisory report (see FAR 
15.805).
    (3) Any pertinent technical evaluation inputs as to necessity, 
allocability and reasonableness of labor, material and other direct 
expenses.
    (4) Any other pertinent information to fully support the basis for 
and rationale of the cost analysis.
    (5) If the contract is an incentive type, discuss the rationale for 
the following:
    (i) Cost-plus-award-fee.
    (A) Base fee.
    (B) Maximum fee.
    (C) Award fee.
    (ii) Cost-plus-incentive-fee.
    (A) Minimum fee.
    (B) Target fee.
    (C) Maximum fee.
    (D) Incentives relative to performance and/or delivery.
    (E) Sharing ratios.
    (iii) Fixed-price incentives.
    (A) Target profit.
    (B) Target price.
    (C) Ceiling price.
    (D) Sharing rations.
    (E) Incentives relative to performance and/or delivery.
    (6) A justification of the reasonableness of the proposed 
contractor's estimated profit or fixed fee, considering such factors as 
any competitive elements, established efficiency or performance, extent 
of the risk assumed by the proposed contractor, character of the 
proposed contractor's normal business, the extent of subcontracting in 
the instant case and the reasons, capital employed, and other factors as 
are appropriate, including type of organization.
    (j) Government-furnished property and Government-provided 
facilities. With respect to Government-furnished material or Government-
provided facilities, equipment, tooling, or other property, include the 
following: (A separate D & F is required for facilities construction.)
    (1) Where no property is to be provided, a statement to that effect.
    (2) Where property is to be provided, a full description, the 
estimated dollar value, the basis of price comparison with competitors, 
and the basis of rental charge, if rental is involved.
    (3) Where the furnishing of any property or the extent has not been 
determined and is left open for future resolution, a detailed 
explanation.
    (k) Negotiations. Include a statement as to the date and place 
negotiations were conducted, and identify members of both the Government 
and contractor negotiating teams by area of responsibility. Include 
negotiation details relative to the statement of work, terms and 
conditions, and special provisions. The results of cost or price 
negotiations must include the information required by FAR 31.109 and 
15.808. In addition, if cost or pricing data was required to be 
submitted and certified, the negotiation record must also contain the 
extent to which the contracting officer relied upon the factual cost or 
pricing data submitted and used in negotiating the cost or price.
    (l) Other considerations. Include coverage of areas such as:
    (1) Financial data with respect to a contractor's capacity and 
stability.
    (2) Determination of contractor responsibility.
    (3) Details as to why the method of payment, such as progress 
payment,

[[Page 68]]

advance payment, etc., is necessary. Also cite any required D & F's.
    (4) Information with respect to obtaining of a certificate of 
current cost or pricing data.
    (5) Other required special approvals, such as those referenced in 
307.105-2.
    (6) If the contract represents an extension of previous work, the 
status of funds and performance under the prior contract(s) should be 
reflected. Also, a determination should be made that the Government has 
obtained enough actual or potential value from the work previously 
performed to warrant continuation with the same contractor. (Project 
officer should furnish the necessary information.)
    (7) If the contract was awarded by full and open competition state 
where the unsuccessful offerors' proposals are filed.
    (8) State that equal opportunity provisions of the proposed contract 
have been explained to the contractor, and it is aware of its 
responsibilities. Also state whether or not a clearance is required.
    (9) If the contract is for services, a statement must be made, in 
accordance with FAR 37.103 and 337.103, that the services to be acquired 
are nonpersonal in nature.
    (m) Terms and conditions. Identify the general provisions and any 
special clauses and conditions that are contained in the contract, such 
as option arrangements, incremental funding, anticipatory costs, 
deviations from the standard clauses, etc. The basis and rationale for 
inclusion of any special terms and conditions must be stated and, where 
applicable, the document which granted approval for its use identified.
    (n) Recommendation. A brief statement setting forth the 
recommendations for award.
    (o) Signature. The memorandum must be signed by the contract 
negotiator who prepared the memorandum.

[49 FR 13979, Apr. 9, 1984, as amended at 50 FR 23132, May 31, 1985; 50 
FR 38004, Sept. 19, 1985]



                    Subpart 315.8--Price Negotiation



315.804  Cost or pricing data.



315.804-3  Exemptions from or waiver of submission of certified cost or pricing data.

    (i) Waiver for exceptional cases. The authority referenced in FAR 
15.804-3(i) may be delegated to the principal official responsible for 
acquisition.

[51 FR 44294, Dec. 9, 1986]



315.805  Proposal analysis.



315.805-5  Field pricing support.

    (2) When some or all information sufficient to determine the 
reasonableness of the proposed cost or price is already available or can 
be obtained by phone from the cognizant audit agency, contracting 
officers may request less-than-complete field pricing support 
(specifying in the request the information needed) or may waive in 
writing the requirement for audit and field pricing support by 
documenting the file to indicate what information is to be used instead 
of the audit report and the field pricing report.
    (c)(1) When initiating audit and field pricing support, the 
contracting officer shall do so by sending a request to the cognizant 
administrative contracting officer (ACO), with an information copy to 
the cognizant audit office. When field pricing support is not available, 
the contracting officer shall initiate an audit by sending, in 
accordance with agency procedures, two (2) copies of the request to the 
OIG Office of Audits' Regional Audit Director. In both cases, the 
contracting officer shall, in the request:
    (i) Prescribe the extent of the support needed;
    (ii) State the specific areas for which input is required;
    (iii) Include the information necessary to perform the review (such 
as the offeror's proposal and the applicable portions of the 
solicitations, particularly those describing requirements and delivery 
schedules);
    (iv) Provide the complete address of the location of the offeror's 
financial records that support the proposal;

[[Page 69]]

    (v) Identify the office having audit responsibility if other than an 
HHS Regional Audit Office; and
    (vi) Specify a due date for receipt of a verbal report to be 
followed by a written audit report. (If the time available is not 
adequate to permit satisfactory coverage of the proposal, the auditor 
shall so advise the contracting officer and indicate the additional time 
needed.) Normally, the Office of Audits will need 30 days after receipt 
of the proposal for submission of oral results. However, the Office of 
Audits' ability to conduct reviews by the due date will be influenced by 
the OPDIV's ability to properly plan its acquisitions. If the Office of 
Audits requires additional time to conduct the review, the contracting 
officer has the option, at the time the auditor acknowledges receipt of 
the request, to accept the revised due date or cancel the request and 
use cost advisory services within the agency to satisfy the requirement. 
In such cases, the contracting officer shall immediately advise the OIG/
OA/Regional Audit Director and the OIG/OA/Division of Audit Coordination 
(OIG/OA/DAC) of the revised due date or cancellation of the request.
    (4) One copy of the audit request letter that was submitted to the 
Regional Audit Director and a complete copy of the contract price 
proposal shall be submitted to OIG/OA/DAC.
    (5) Whenever, an audit review has been conducted by the Office of 
Audits, two (2) copies of the memorandum of negotiation shall be 
forwarded to OIG/OA/DAC by the contracting officer (see FAR 15.808(b)).



                          Subpart 315.9--Profit



315.900  Scope of subpart.

    This subpart--
    (c) Prescribes a structured approach for establishing the profit or 
fee portion of the Government prenegotiation objective in all contracts 
requiring cost analysis except as stated in 315.905-70(b). The profit 
analysis factors set forth at FAR 15.905 shall be used in all excepted 
contracts requiring cost analysis.



315.905-70  Structured approach.

    (a) General. (1) The structured approach for determining profit or 
fee (hereafter referred to as profit) provides contracting officers with 
a technique that will ensure consideration of the relative value of the 
appropriate profit factors described in 315.905-71 in the establishment 
of a profit objective for the conduct of negotiations. The contracting 
officer's analysis of these profit factors is based on information 
available to him/her prior to negotiations. Such information is 
furnished in proposals, audit data, assessment reports, preaward surveys 
and the like. The structured approach also provides a basis for 
documentation of this objective, including an explanation of any 
significant departure from this objective in reaching an agreement. The 
extent of documentation should be directly related to the dollar value 
and complexity of the proposed acquisition.
    (2) The negotiation process does not require agreement on either 
estimated cost elements or profit elements. The profit objective is a 
part of an overall negotiation objective which, as a going-in objective, 
bears a distinct relationship to the cost objective and any proposed 
sharing arrangement. Since profit is merely one of several interrelated 
variables, the Government negotiator generally should not complete the 
profit negotiation without simultaneously agreeing on the other 
variables. Specific agreement on the exact weights or values of the 
individual profit factors is not required and should not be attempted.
    (b) Exceptions. (1) The profit-analysis factors set forth at FAR 
15.905 shall be used for establishing profit objectives under the 
following listed circumstances. Generally, it is expected that this 
method will be supported in a manner similar to that used in the 
structured approach (profit factor breakdown and documentation of the 
profit objective); however, factors within FAR 15.905 considered 
inapplicable to the acquisition will be excluded from the profit 
objective.
    (i) Contracts not expected to exceed $100,000;
    (ii) Architect-engineer contracts;

[[Page 70]]

    (iii) Management contracts for operation and/or maintenance of 
Government facilities;
    (iv) Construction contracts;
    (v) Contracts primarily requiring delivery of material supplies by 
subcontractors;
    (vi) Termination settlements; and
    (vii) Cost-plus-award-fee contracts (However, contracting officers 
may find it advantageous to perform a structured profit analysis as an 
aid in arriving at an appropriate fee arrangement).
    (2) Other exceptions may be made in the negotiation of contracts 
having unusual pricing situations. Such exceptions shall be justified in 
writing by the contracting officer in situations where the structured 
approach is determined to be unsuitable.
    (c) Limitation. The maximum profit objective shall be the percentage 
allowed pursuant to statute or regulation (see FAR 15.903(d)).
    (d) Profit objective. (1) A profit objective is that part of the 
estimated contract price objective or value which, in the judgment of 
the contracting officer, constitutes an appropriate amount of profit for 
the acquisition being considered. This objective should realistically 
reflect the total overall task to be performed and the requirements 
placed on the contractor.
    (2) Development of a profit objective should not begin until the 
following actions have been accomplished:
    (i) A thorough review of proposed contract work;
    (ii) A review of all available knowledge regarding the contractor 
pursuant to FAR subpart 9.1, including audit data, preaward survey 
reports and financial statements, as appropriate; and
    (iii) An analysis of the contractor's cost estimate and comparison 
with the Government's estimate or projection of cost.



315.905-71  Profit factors.

    (a) The following factors shall be considered in all cases in which 
profit is to be negotiated. The weight ranges listed after each factor 
shall be used in all instances where the structured approach is used.

------------------------------------------------------------------------
                                                               Weight
                      Profit factors                           ranges
                                                              (percent)
------------------------------------------------------------------------
Contractor effort:
  Material acquisition....................................        1 to 5
  Direct labor............................................       4 to 15
  Overhead................................................        4 to 9
  General management (G&A)................................        4 to 8
  Other costs.............................................        1 to 5
Other factors:
  Cost risk...............................................        0 to 7
  Investment..............................................      -2 to +2
  Performance.............................................      -1 to +1
  Socioeconomic programs..................................    -.5 to +.5
  Special situations......................................  ............
------------------------------------------------------------------------

    (b) Under the structured approach, the contracting officer shall 
first measure ``Contractor Effort'' by the assignment of a profit 
percentage within the designated weight ranges to each element of 
contract cost recognized by the contracting officer. The amount 
calculated for the cost of money for facilities capital is not to be 
included for the computation of profit as part of the cost base.
    (c) The suggested categories under ``Contractor Effort'' are for 
reference purposes only. Often individual proposals will be in a 
different format, but since these categories are broad and basic, they 
provide sufficient guidance to evaluate all other items of cost.
    (d) After computing a total dollar profit for ``Contractor Effort,'' 
the contracting officer shall then calculate the specific profit dollars 
assigned for cost risk, investment, performance, socioeconomic programs, 
and special situations. This is accomplished by multiplying the total 
Government Cost Objective, exclusive of any cost of money for facilities 
capital, by the specific weight assigned to the elements within the 
``Other Factors'' category. Form HHS-674, Structured Approach Profit/Fee 
Objective, should be used, as appropriate, to facilitate the calculation 
of this profit objective. Form HHS-674 is illustrated in 353.370-674.
    (e) In making a judgment of the value of each factor, the 
contracting officer should be governed by the definition, description, 
and purpose of the factors together with considerations for evaluating 
them as set forth in 315.905-72 and 315.905-73.
    (f) The structured approach was designed for arriving at profit 
objectives for other than nonprofit organizations. However, if 
appropriate adjustments

[[Page 71]]

are made to reflect differences between profit and nonprofit 
organizations, the structured approach can be used as a basis for 
arriving at profit objectives for nonprofit organizations. Therefore, 
the structured approach, as modified in paragraph (f)(2) below, shall be 
used to establish profit objectives for nonprofit organizations.
    (1) For purposes of this section, nonprofit organizations are 
defined as those business entities organized and operated exclusively 
for charitable, scientific, or educational purposes, no part of the net 
earnings of which inure to the benefit of any private shareholder or 
individual, and which are exempt from Federal income taxation under 
Section 501 of the Internal Revenue Code.
    (2) For contracts with nonprofit organizations where profit is 
involved, an adjustment of up to 3 percentage points will be subtracted 
from the total profit objective percentage. In developing this 
adjustment, it will be necessary to consider the following factors:
    (i) Tax position benefits;
    (ii) Granting of financing through advance payments; and
    (iii) Other pertinent factors which may work to either the advantage 
or disadvantage of the contractor in its position as a nonprofit 
organization.

[49 FR 13979, Apr. 9, 1984, as amended at 53 FR 15563, May 2, 1988; 56 
FR 47003, Sept. 17, 1991]



315.905-72  Contractor effort.

    (a) General. Contractor effort is a measure of how much the 
contractor is expected to contribute to the overall effort necessary to 
meet the contract performance requirement in an efficient manner. This 
factor, which is apart from the contractor's responsibility for contract 
performance, takes into account what resources are necessary and what 
the contractor must do to accomplish a conversion of ideas and material 
into the final service or product called for in the contract. This is a 
recognition that within a given performance output, or within a given 
sales dollar figure, necessary efforts on the part of individual 
contractors can vary widely in both value and quantity, and that the 
profit objective should reflect the extent and nature of the 
contractor's contribution to total performance. A major consideration, 
particularly in connection with experimental, developmental, or research 
work, is the difficulty or complexity of the work to be performed, and 
the unusual demands of the contract, such as whether the project 
involves a new approach unrelated to existing technology and/or 
equipment or only refinements to these items. The evaluation of this 
factor requires an analysis of the cost content of the proposed contract 
as follows:
    (1) Material acquisition. (Subcontracted items, purchased parts, and 
other material.) Analysis of these cost items shall include an 
evaluation of the managerial and technical effort necessary to obtain 
the required subcontracted items, purchased parts, material or services. 
The contracting officer shall determine whether the contractor will 
obtain the items or services by routine order from readily available 
sources or by detailed subcontracts for which the prime contractor will 
be required to develop complex specifications. Consideration shall also 
be given to the managerial and technical efforts necessary for the prime 
contractor to select subcontractors and to perform subcontract 
administration functions. In application of this criterion, it should be 
recognized that the contribution of the prime contractor to its 
purchasing program may be substantial. Normally, the lowest unadjusted 
weight for direct material is 2 percent. A weighting of less than 2 
percent would be appropriate only in unusual circumstances when there is 
a minimal contribution by the contractor.
    (2) Direct Labor (Professional, service, manufacturing and other 
labor). Analysis of the various labor categories of the cost content of 
the contract should include evaluation of the comparative quality and 
quantity of professional and semiprofessional talents, manufacturing and 
service skills, and experience to be employed. In evaluating 
professional and semiprofessional labor for the purpose of assigning 
profit dollars, consideration should be given to the amount of notable 
scientific talent or

[[Page 72]]

unusual or scarce talent needed in contrast to nonprofessional effort. 
The assessment should consider the contribution this talent will provide 
toward the achievement of contract objectives. Since nonprofessional 
labor is relatively plentiful and rather easily obtained by the 
contractor and is less critical to the successful performance of 
contract objectives, it cannot be weighted nearly as high as 
professional or semiprofessional labor. Service contract labor should be 
evaluated in a like manner by assigning higher weights to engineering or 
professional type skills and lower weights to semiprofessional or other 
type skills required for contract performance. Similarly, the variety of 
manufacturing and other categories of labor skills required and the 
contractor's manpower resources for meeting these requirements should be 
considered. For purposes of evaluation, categories of labor (i.e., 
quality control, receiving and inspection, etc.) which do not fall 
within the definition for professional, service or manufacturing labor 
may be categorized as appropriate. However, the same evaluation 
considerations as outlined above will be applied.
    (3) Overhead and general management (G&A). (i) Analysis of these 
overhead items of cost should include the evaluation of the makeup of 
these expenses and how much they contribute to contract performance. To 
the extent practicable, analysis should include a determination of the 
amount of labor within these overhead pools and how this labor would be 
treated if it were considered as direct labor under the contract. The 
allocable labor elements should be given the same profit considerations 
that they would receive if they were treated as direct labor. The other 
elements of these overhead pools should be evaluated to determine 
whether they are routine expenses, such as utilities and maintenance, 
and hence given lesser profit consideration, or whether they are 
significant contributing elements. The composite of the individual 
determinations in relation to the elements of the overhead pools will be 
the profit consideration given the pools as a whole. The procedure for 
assigning relative values to these overhead expenses differs from the 
method used in assigning values of the direct labor. The upper and lower 
limits assignable to the direct labor are absolute. In the case of 
overhead expenses, individual expenses may be assigned values outside 
the range as long as the composite ratio is within the range.
    (ii) It is not necessary that the contractor's accounting system 
break down overhead expenses within the classifications of research 
overhead, other overhead pools, and general administrative expenses, 
unless dictated otherwise by Cost Accounting Standards (CAS). The 
contractor whose accounting system reflects only one overhead rate on 
all direct labor need not change its system (if CAS exempt) to 
correspond with the above classifications. The contracting officer, in 
an evaluation of such a contractor's overhead rate, could break out the 
applicable sections of the composite rate which could be classified as 
research overhead, other overhead pools, and general and administrative 
expenses, and follow the appropriate evaluation technique.
    (iii) Management problems surface in various degrees and the 
management expertise exercised to solve them should be considered as an 
element of profit. For example, a contract for a new program for 
research or an item which is on the cutting edge of the state of the art 
will cause more problems and require more managerial time and abilities 
of a higher order than a follow-on contract. If new contracts create 
more problems and require a higher profit weight, follow-ons should be 
adjusted downward because many of the problems should have been solved. 
In any event, an evaluation should be made of the underlying managerial 
effort involved on a case-by-case basis.
    (iv) It may not be necessary for the contracting officer to make a 
separate profit evaluation of overhead expenses in connection with each 
acquisition action for substantially the same project with the same 
contractor. Where an analysis of the profit weight to be assigned to the 
overhead pool has been made, that weight assigned may be used for future 
acquisitions with the same contractor until there is a change in the 
cost composition of the overhead

[[Page 73]]

pool or the contract circumstances, or the factors discussed in (iii) 
above are involved.
    (b) Other costs. Analysis of this factor should include all other 
direct costs associated with contractor performance (e.g., travel and 
relocation, direct support, and consultants). Analysis of these items of 
cost should include:
    (1) The significance of the cost of contract performance;
    (2) Nature of the cost; and
    (3) How much they contribute to contract performance. Normally, 
travel costs require minimal administrative effort by the contractor 
and, therefore, usually receive a weight no greater than 1 percent. 
Also, the contractor may designate individuals as ``consultants'' but in 
reality these individuals may be obtained by the contractor to 
supplement its workforce in the performance of routine duties required 
by contract. These costs would normally receive a minimum weight. 
However, there will be instances when the contractor may be required to 
locate and obtain the services of consultants having expertise in such 
fields as medicine or human services. In these instances, the contractor 
will be required to expend greater managerial and technical effort to 
obtain such services and, consequently, such costs should receive a much 
greater weight.



315.905-73  Other factors.

    (a) Contract cost risk. The contract type employed basically 
determines the degree of cost risk assumed by the contractor. For 
example, where a portion of the risk has been shifted to the Government 
through cost-reimbursement provisions, unusual contingency provisions, 
or other risk-reducing measures, the amount of profit should be less 
than where the contractor assumes all the risk. In developing the 
prenegotiation profit objective, the contracting officer will need to 
consider the type of contract anticipated to be negotiated and the 
contractor risk associated therewith when selecting the position in the 
weight range for profit that is appropriate for the risk to be borne by 
the contractor. This factor should be one of the most important in 
arriving at prenegotiation profit objectives.
    (1) Evaluation of this risk requires a determination of:
    (i) The degree of cost responsibility the contractor assumes;
    (ii) The reliability of the cost estimates in relation to the task 
assumed; and
    (iii) The complexity of the task assumed by the contractor. This 
factor is specifically limited to the risk of contract costs. Thus, such 
risks on the part of the contractor as reputation, losing a commercial 
market, risk of losing potential profits in other fields, or any risk 
which falls on the contracting office such as the risk of not acquiring 
a satisfactory report, are not within the scope of this factor.
    (2) The first and basic determination of the degree of cost 
responsibility assumed by the contractor is related to the sharing of 
total risk of contract cost by the Government and the contractor through 
the selection of contract type. The extremes are a cost-plus-a-fixed-fee 
contract requiring the contractor to use its best efforts to perform a 
task and a firm fixed-price contract for a service or a complex item. A 
cost-plus-a-fixed-fee contract would reflect a minimum assumption of 
cost responsibility, whereas a firm fixed-price contract would reflect a 
complete assumption of cost responsibility. Where proper contract 
selection has been made, the regard for risk by contract type would 
usually fall into the following percentage ranges:

                                 Percent

Cost-reimbursement type contracts--0-3
Fixed-price type contracts--2-7

    (3) The second determination is that of the reliability of the cost 
estimates. Sound price negotiation requires well-defined contract 
objectives and reliable cost estimates. Prior experience assists the 
contractor in preparing reliable cost estimates on new acquisitions for 
similar related efforts. An excessive cost estimate reduces the 
possibility that the cost of performance will exceed the contract price, 
thereby reducing the contractor's assumption of contract cost risk.
    (4) The third determination is that of the difficulty of the 
contractor's task. The contractor's task can be difficult

[[Page 74]]

or easy, regardless of the type of contract.
    (5) Contractors are likely to assume greater cost risk only if 
contracting officers objectively analyze the risk incident to proposed 
contracts and are willing to compensate contractors for it. Generally, a 
cost-plus-fixed fee contract will not justify a reward for risk in 
excess of 0.5 percent, nor will a firm fixed-price contract justify a 
reward of less than the minimum in the structured approach. Where proper 
contract-type selection has been made, the reward for risk, by contract 
type, will usually fall into the following percentage ranges:
    (i) Type of contract and percentage ranges for profit objectives 
developed by using the structured approach for research and development 
and manufacturing contracts:

                                 Percent

Cost-plus-fixed fee--0 to 0.5
Cost-plus-incentive fee:
    With cost incentive only--1 to 2
    With multiple incentives--1.5 to 3
Fixed-price-incentive:
    With cost incentive only--2 to 4
    With multiple incentives--3 to 5
Prospective price redetermination--3 to 5
Firm fixed-price--5 to 7

    (ii) Type of contract and percentage ranges for profit objectives 
developed by using the structured approach for service contracts:

                                 Percent

Cost-plus-fixed fee--0 to 0.5
Cost-plus-incentive fee--1 to 2
Fixed-price incentive--2 to 3
Firm fixed-price--3 to 4

    (6) These ranges may not be appropriate for all acquisitions. For 
instance, a fixed-price-incentive contract that is closely priced with a 
low ceiling price and high incentive share may be tantamount to a firm 
fixed-price contract. In this situation, the contracting officer may 
determine that a basis exists for high confidence in the reasonableness 
of the estimate and that little opportunity exists for cost reduction 
without extraordinary efforts. On the other hand, a contract with a high 
ceiling and low incentive formula can be considered to contain cost-
plus-incentive-fee contract features. In this situation, the contracting 
officer may determine that the Government is retaining much of the 
contract cost responsibility and that the risk assumed by the contractor 
is minimal. Similarly, if a cost-plus-incentive-fee contract includes an 
unlimited downward (negative) fee adjustment on cost control, it could 
be comparable to a fixed-price-incentive contract. In such a pricing 
environment, the contracting officer may determine that the Government 
has transferred a greater amount of cost responsibility to the 
contractor than is typical under a normal cost-plus-incentive-fee 
contract.
    (7) The contractor's subcontracting program may have a significant 
impact on the contractor's acceptance of risk under a contract form. It 
could cause risk to increase or decrease in terms of both cost and 
performance. This consideration should be a part of the contracting 
officer's overall evaluation in selecting a factor to apply for cost 
risk. It may be determined, for instance, that the prime contractor has 
effectively transferred real cost risk to a subcontractor and the 
contract cost risk evaluation may, as a result, be below the range which 
would otherwise apply for the contract type being proposed. The contract 
cost risk evaluation should not be lowered, however, merely on the basis 
that a substantial portion of the contract costs represents subcontracts 
without any substantial transfer of contractor's risk.
    (8) In making a contract cost risk evaluation in an acquisition 
action that involves definitization of a letter contract, unpriced 
change orders, and unpriced orders under BOA's, consideration should be 
given to the effect on total contract cost risk as a result of having 
partial performance before definitization. Under some circumstances it 
may be reasoned that the total amount of cost risk has been effectively 
reduced. Under other circumstances it may be apparent that the 
contractor's cost risk remained substantially unchanged. To be 
equitable, the determination of profit weight for application to the 
total of all recognized costs, both those incurred and those yet to be 
expended, must be made with consideration to all attendant 
circumstances--not just the portion of costs incurred or percentage

[[Page 75]]

of work completed prior to definitization.
    (9) Time and material and labor hour contracts will be considered to 
be cost-plus-a-fixed-fee contracts for the purpose of establishing 
profit weights unless otherwise exempt under 315.905-70(b) in the 
evaluation of the contractor's assumption of contract cost risk.
    (b) Investment. HHS encourages its contractors to perform their 
contracts with the minimum of financial, facilities, or other assistance 
from the Government. As such, it is the purpose of this factor to 
encourage the contractor to acquire and use its own resources to the 
maximum extent possible. The evaluation of this factor should include an 
analysis of the following:
    (1) Facilities (Including equipment). To evaluate how this factor 
contributes to the profit objective requires knowledge of the level of 
facilities utilization needed for contract performance, the source and 
financing of the required facilities, and the overall cost effectiveness 
of the facilities offered. Contractors who furnish their own facilities 
which significantly contribute to lower total contract costs should be 
provided with additional profit. On the other hand, contractors who rely 
on the Government to provide or finance needed facilities should receive 
a corresponding reduction in profit. Cases between the above examples 
should be evaluated on their merits with either positive or negative 
adjustments, as appropriate, in profit being made. However, where a 
highly facilitized contractor is to perform a contract which does not 
benefit from this facilitization or where a contractor's use of its 
facilities has a minimum cost impact on the contract, profit need not be 
adjusted. When applicable, the prospective contractor's computation of 
facilities capital cost of money for pricing purposes under CAS 414 can 
help the contracting officer identify the level of facilities investment 
to be employed in contract performance.
    (2) Payments. In analyzing this factor, consideration should be 
given to the frequency of payments by the Government to the contractor. 
The key to this weighting is to give proper consideration to the impact 
the contract will have on the contractor's cash flow. Generally, 
negative consideration should be given for advance payments and payments 
more frequent than monthly with maximum reduction being given as the 
contractor's working capital approaches zero. Positive consideration 
should be given for payments less frequent than monthly with additional 
consideration given for a capital turn-over-rate on the contract which 
is less than the contractor's or the industry's normal capital turn-over 
rate.
    (c) Performance. (Cost-control and other past accomplishments.) The 
contractor's past performance should be evaluated in such areas as 
quality of service or product, meeting performance schedules, efficiency 
in cost control (including need for and reasonableness of cost 
incurred), accuracy and reliability of previous cost estimates, degree 
of cooperation by the contractor (both business and technical), timely 
processing of changes and compliance with other contractual provisions, 
and management of subcontract programs. Where a contractor has 
consistently achieved excellent results in the foregoing areas in 
comparison with other contractors in similar circumstances, such 
performance merits a proportionately greater opportunity for profit. 
Conversely a poor record in this regard should be reflected in 
determining what constitutes a fair and reasonable profit.
    (d) Federal socioeconomic programs. This factor, which may apply to 
special circumstances or particular acquisitions, relates to the extent 
of a contractor's successful participation in the Government sponsored 
programs such as small business, small disadvantaged business, labor 
surplus area, and energy conservation efforts. The contractor's policies 
and procedures which energetically support Government socioeconomic 
programs and achieve successful results should be given positive 
considerations. Conversely, failure or unwillingness on the part of the 
contractor to support Government socioeconomic programs should be viewed 
as evidence of poor performance for the purpose of establishing a profit 
objective.
    (e) Special situations. (1) Inventive and developmental 
contributions. The extent

[[Page 76]]

and nature of contractor-initiated and financed independent development 
should be considered in developing the profit objective, provided that 
the contracting officer has made a determination that such effort will 
benefit the contract. The importance of the development in furthering 
health and human services purposes, the demonstrable initiative in 
determining the need and application of the development, the extent of 
the contractor's cost risk, and whether the development cost was 
recovered directly or indirectly from Government sources should be 
weighed.
    (2) Unusual pricing agreements. Occasionally, unusual contract 
pricing arrangements are made with the contractor wherein it agrees to 
cost ceilings, e.g., a ceiling on overhead rates for conditions other 
than those discussed at FAR 42.707. In such circumstances, the 
contractor should receive favorable consideration in developing the 
profit objective.
    (3) Negative factors. Special situations need not be limited to 
those which only increase profit levels. A negative consideration may be 
appropriate when the contractor is expected to obtain spin-off benefits 
as a direct result of the contract (e.g., products or services with 
commercial application).

[49 FR 13979, Apr. 9, 1984, as amended at 53 FR 15563, May 2, 1988]



315.905-74  Facilities capital cost of money.

    When facilities capital cost of money (cost of capital committed to 
facilities) is included as an item of cost in the contractor's proposal, 
a reduction in the profit objective shall be made in an amount equal to 
the amount of facilities capital cost of money allowed in accordance 
with the Facilities Capital Cost-of-Money Cost Principal. If the 
contractor does not propose this cost, a provision must be inserted in 
the contract that facilities capital cost of money is not an allowable 
cost.

[49 FR 13979, Apr. 9, 1984, as amended at 53 FR 15563, May 2, 1988]



Subpart 315.10--Preaward, Award, and Postaward Notifications, Protests, 
                              and Mistakes



315.1000  General.

    Once a contract action has progressed through the evaluation 
process, and even after the selection of a contractor, all queries as to 
the relative merits of the submitted proposals shall be courteously but 
firmly directed to the contracting officer. All other personnel will 
avoid any exchange of comments with offerors.

[49 FR 13979, Apr. 9, 1984. Redesignated and amended at 50 FR 23132, May 
31, 1985; 50 FR 38004, Sept. 19, 1985]



315.1003  Debriefing of unsuccessful offerors.

    (a) Any HHS employee who receives either a written or oral request 
for a debriefing from an unsuccessful offeror shall immediately, without 
any discussion regarding the merits or deficiencies of the unsuccessful 
offeror's proposal, refer the request to the contracting officer. If the 
request is made orally, the contracting officer shall require that the 
request be made in writing. The contracting officer or his/her designee 
shall be present at all debriefings and shall review written debriefings 
prior to release.
    (b) A debriefing is intended to:
    (1) Tell an unsuccessful offeror which areas of its proposal were 
judged to be weak and deficient and whether the weaknesses or 
deficiencies were factors in its not having been selected; and
    (2) Identify the factors which were the basis for selection of the 
successful contractor. If the quality of the successful offeror's 
proposal to satisfy the mission requirement was the basis, the 
unsuccessful offeror should be so informed, and given a general 
comparison of significant areas, but not a point-by-point comparison of 
all the elements considered in the evaluation criteria. If the 
successful offeror was selected on the basis of cost, the unsuccessful 
offeror should be told that was the case. If selection was based on 
other factors, they should be specified.

[[Page 77]]

    (d) If an unsuccessful offeror feels that its failure to obtain the 
award was not justified, it will rely, at least in part, on the 
information given in the debriefing to determine whether it should seek 
recourse. Accordingly, it is essential that a debriefing be conducted in 
a scrupulously fair, objective, and impartial manner, and that the 
information given the unsuccessful offeror be absolutely factual and 
consistent with the findings of the contracting officer and the basis on 
which the award was made.
    (e) In some cases, it may be necessary to arrange informal 
debriefings for an unsuccessful offeror's personnel by departmental 
technical evaluators. This determination will be made by, and meeting 
arrangements will be the responsibility of, the contracting officer.
    (f) It is very important that all departmental personnel engaged in 
the evaluation and selection processes be aware of the policies and 
procedures in FAR subpart 15.10 and this subpart 315.10. Detailed and 
complete records of the acquisition will be maintained by key technical 
and contracting personnel in a manner which will facilitate either a 
written or an oral debriefing of any unsuccessful offeror.

[49 FR 13979, Apr. 9, 1984. Redesignated and amended at 50 FR 23132, May 
31, 1985; 50 FR 38004, Sept. 19, 1985]



315.1004  Protests against award.

    See subpart 333.1.

[49 FR 13979, Apr. 9, 1984. Redesignated and amended at 50 FR 23132, May 
31, 1985; 50 FR 38004, Sept. 19, 1985]



315.1005  Discovery of mistakes.

    See 314.406 and 315.607.

[49 FR 13979, Apr. 9, 1984. Redesignated at 50 FR 23132, May 31, 1985; 
50 FR 38004, Sept. 19, 1985]



                  Subpart 315.70--Requests for Contract



315.7000  Scope of subpart.

    This subpart prescribes the format and contents of the request for 
contract and provides procedures for the preparation and submission of 
the request for contract document.



315.7001  General.

    The program office's preparation of the request for contract (RFC) 
and submission to the contracting activity finalizes the presolicitation 
phase of the acquisition planning process and commences the solicitation 
phase. The RFC is the formal document which initiates the preparation of 
the request for proposals by the contracting activity and sets the 
acquisition process in motion. It represents the results of planning by 
the project officer and contract negotiator and contains much of the 
pertinent information necessary for the development of a sound, 
comprehensive RFP.



315.7002  Procedures.

    (a) Requests for contract are required to be prepared by the program 
office for all proposed negotiated acquisitions estimated to exceed the 
small purchase limitation.
    (b) The program office should submit the RFC as early as possible to 
the contracting activity. The proposed period of time between the date 
of submission of the RFC and the date of contract award (or date of 
delivery of the product, service, study, etc.) should be determined by 
the project officer, contract negotiator, and, if necessary, the 
contracting officer. The amount of leadtime should be determined on a 
case-by-case basis and should reflect the characteristics and 
complexities of the individual acquisition. When lengthy and/or involved 
clearances or special approval are required, for example, they must be 
taken into account when the leadtime is determined. If a formal 
acquisition planning document is used, (see subpart 307.1), the RFC 
should be submitted in accordance with the timetable set forth in that 
document. OPDIV, agency, and regional office contracting activities may 
prescribe specific leadtimes for submission of RFC's in their 
implementation of this subpart.

[49 FR 13979, Apr. 9, 1984, as amended at 53 FR 15563, May 2, 1988; 56 
FR 47003, Sept. 17, 1991]



315.7003  Responsibilities.

    It is the responsibility of the project officer to prepare the RFC 
so that it

[[Page 78]]

complies with the requirements of this subpart and any OPDIV, agency, or 
regional office guidance issued in accordance with this subpart. Prior 
to the submission of the RFC to the contracting activity, the head of 
the program office sponsoring the project shall review the RFC to ensure 
that all required information is provided in the prescribed format and a 
technical review of the statement of work has been made. The level and 
extent of the technical review is to be commensurate with the estimated 
cost, importance, and complexity of the proposed acquisition, and must 
be thorough enough to ensure that vague and ambiguous language is 
eliminated, the statement of work is structured by phases or tasks, if 
appropriate, and methods are available for assessing the contractor's 
technical, cost, and delivery performances.



315.7004  Transmittal.

    The RFC will be conveyed to the contracting activity by use of a 
covering memorandum or other form of transmittal. The transmittal 
document must be signed by the head of the sponsoring program office and 
include both a statement attesting to the conclusiveness of the review 
discussed in the preceding section and a list identifying all 
attachments to the RFC. A standard format for the transmittal document 
may be prescribed by the OPDIV, agency, or regional office contracting 
activity.



315.7005  Format and content.

    The Department does not prescribe a standard format for the RFC 
document, but recommends the use of a format similar to what is provided 
in this section. The subject areas addressed in paragraphs (a) and (b) 
must be included in every RFC document, whereas the areas addressed in 
paragraph (c) need only be included if applicable. An OPDIV, agency, or 
regional office contracting activity may prescribe a standard format for 
the RFC document and may include additional subject areas that are 
pertinent to that activity's needs. Some of the information to be 
furnished in the RFC document may be repetitive of that found in the 
acquisition planning document. If this information has not changed since 
the development of the acquisition planning document, the RFC document 
may either restate the information as it appears in the acquisition 
planning document or cross reference the applicable portion where the 
information appears.
    (a) The RFC document must contain the following:
    (1) Purpose of contract. A brief, general description of 
requirements, including the citation of the legislation which authorizes 
the program or project, is to be provided, along with a statement as to 
the intended purpose/use of the proposed contract.
    (2) Background and need. The background history and necessity for 
the proposed contract are to be described. This section is to include 
prior, present, and planned efforts by the program office in the same or 
related areas, and a description of efforts by other departmental 
activities and Federal agencies in the same or related program areas, if 
known. In addition, specific project information such as the relevance 
or contribution to overall program objectives, reasons for the need, 
priority, and project overlap are to be provided.
    (3) Period of performance. The number of months (or other time 
period) required for total performance, and, if applicable, for each 
phase of work indicated in the statement of work, is to be specified. 
The program office must indicate the proposed starting date and the 
required date of delivery for each deliverable.
    (4) Estimated cost and fund citation. The project officer's estimate 
of the total cost of the proposed contract, and, if applicable, the 
estimate for each phase indicated in the statement of work, is to be 
provided. The project officer must provide a cost breakdown of all 
contributing cost factors, to include an estimate of the technical staff 
hours, direct materials, subcontracting, travel, etc. The project 
officer may consult with contracting and cost advisory personnel in 
developing this information. This section must include the certification 
of funds availability for the particular proposed acquisition, along 
with the appropriation and accounting information citations. When funds 
are not currently available

[[Page 79]]

but are anticipated, a statement indicating that the financial plan 
includes provision for the funds for the proposed acquisition but the 
funds are not yet available for obligation shall be included in lieu of 
the certification of funds availability. (Contracts cannot be awarded 
unless funds are available, but see FAR 32.703-2.)
    (5) Reference material. A list, by title and description, of study 
reports, plans, drawings, and other data to be made available to 
prospective offerors for use in preparation of proposals and/or the 
contractor for use in performance of the contract is to be provided. The 
project officer must indicate whether this material is currently 
available or when it will be available.
    (6) Technical evaluation criteria and instructions. The project 
officer is to include the technical evaluation criteria, which have been 
developed based on the requirements of the specific project, and any 
instructions and information which will assist in the preparation of 
prospective offerors' technical proposals. For example, critical areas 
discussed in the statement of work and the relative order of importance 
and weights assigned to each of these areas for technical evaluation 
purposes must be identified. These areas may include understanding of 
the problem, technical approach, experience, personnel, facilities, etc.
    (7) Sources for solicitation. The project officer is to develop and 
include a list of known potential sources by name and mailing address. 
The project officer is encouraged to use trade and professional journals 
and publications to identify new prospective sources to supplement the 
list of known sources. Efforts to identify set-aside possibilities, 
i.e., small, disadvantaged, and labor surplus areas, and women-owned 
businesses, must be explained.
    (8) Special approvals, clearances, and requirements. All special 
approvals, clearances, and requirements pertinent to the proposed 
acquisition are to be listed in this section. Copies of the actual 
documents are to be attached to the RFC. If the approval, clearance, or 
requirement has been requested and is being processed, a footnote to 
this effect, including all pertinent details, must be included in this 
section. A list of Government-wide and Department imposed approvals, 
clearances, and requirements is set forth in 307.105-2. Comprehensive 
checklists of these and any OPDIV, agency, regional office, etc. special 
approvals, clearances, and requirements shall be provided for reference 
purposes to program offices by the servicing contracting activity.
    (9) Identification and disposition of data. The project officer must 
identify the data expected to be generated by the acquisition and 
specify the data to be delivered to the Department (see 315.7005(b)(2)) 
and that to be retained by the contractor. The project officer must also 
include information relative to the use, maintenance, disclosure, and 
disposition of data. The project officer must include a statement as to 
whether or not another acquisition, based upon the data generated by the 
proposed acquisition, is anticipated. The project officer must also 
include a statement indicating whether the proposed acquisition is or is 
not subject to the Privacy Act (see FAR subpart 24.1 and subpart 324.1).
    (10) Project officer and alternate. The project officer's name, 
title, organization, mailing address, and telephone number are to be 
provided in this section, along with the same data for the project 
officer's alternate. In addition, a statement that the project officer 
has completed the Department's project officer training course is to be 
provided (see 307.170).
    (b) The following must be submitted with every RFC but are to be 
prepared as separate attachments so they may be readily adopted into the 
request for proposal format:
    (1) Statement of work or specification. The statement of work 
describes the requirements to be performed and may describe the methods 
to be used (see 307.105-3 and FAR 35.005 for a detailed explanation). A 
specification is used in lieu of a statement of work when a clear and 
accurate description of the technical requirements for a product, 
material, or service can be provided along with the procedure to 
determine that the requirements have been met. It is essential that a 
complete and comprehensive statement of work or specification be 
provided by the project officer.

[[Page 80]]

    (2) Schedule of deliverables or reporting requirements. The project 
officer must specifically describe what is to be delivered and when it 
is to be delivered to ensure proper contract monitoring. Usually, 
technical and financial progress reports and the final report are 
prescribed in this section. These reports should be tailored to the 
instant acquisition and should avoid unnecessary and burdensome 
reporting requirements.
    (c) The following may not be applicable to all RFC's but must be 
included as attachments whenever any do apply:
    (1) Government property. The project officer must identify, as 
referenced in the statement of work, the types, individual items, and 
quantities of Government property to be furnished to or allowed to be 
acquired by, the resultant contractor, if known. The project officer 
must specify when the Government property is to be made available to the 
resultant contractor.
    (2) Special terms and conditions. The project officer may suggest 
inclusion of any special terms and conditions applicable to the proposed 
acquisition not already covered in the statement of work or the 
applicable contract general provisions.
    (3) Justification for other than full and open competition. If the 
proposed acquisition is to be awarded using other than full and open 
competition, a justification, prepared in accordance with FAR subpart 
6.3 and subpart 306.3, must be submitted as an attachment to the RFC.
    (4) Privacy Act ``system notice.'' When the project officer has 
determined that the requirements of the Privacy Act are applicable to 
the proposed acquisition, a copy of the ``system notice'' must be 
attached to the RFC (see 324.103(d)).

[49 FR 13979, Apr. 9, 1984, as amended at 50 FR 23132, May 31, 1985; 50 
FR 38004, Sept. 19, 1985]



315.7006  Review.

    Upon receipt of the RFC, the contracting activity shall review the 
contents to ensure that all pertinent information has been provided by 
the program office. If pertinent information is missing or if there are 
discrepancies in previously agreed upon information, such as significant 
alterations in the statement of work, the contracting activity shall 
obtain or clarify the information so that the acquisition schedule is 
met. If the program office delays furnishing the information or 
clarification, the acquisition schedule may have to be changed. When 
this circumstance arises, the contracting activity should notify the 
head of the sponsoring program office of the problem, in writing, of the 
possible slippage in the acquisition schedule, and the need for an 
expeditious remedy. If the head of the sponsoring program office is not 
responsive to the request for expediency, the matter should be referred 
to higher management authorities for resolution.

[49 FR 13979, Apr. 9, 1984, as amended at 49 FR 36110, Sept. 14, 1984]



PART 316--TYPES OF CONTRACTS--Table of Contents




               Subpart 316.3--Cost-Reimbursement Contracts

Sec.
316.301  General.
316.301-3  Limitations.
316.303  Cost-sharing contracts.
316.306  Cost-plus-fixed-fee contracts.
316.307  Contract clauses.

                   Subpart 316.4--Incentive Contracts

316.403  Fixed-price incentive contracts.

   Subpart 316.6--Time-and-Materials, Labor-Hour, and Letter Contracts

316.601  Time-and-materials contracts.
316.603  Letter contracts.
316.603-2  Application.
316.603-3  Limitations.
316.603-70  Information to be furnished when requesting authority to 
          issue a letter contract.
316.603-71  Approval for modifications to letter contracts.

                        Subpart 316.7--Agreements

316.702  Basic agreements.
316.770  Unauthorized types of agreements.
316.770-1  Letters of intent.
316.770-2  Memorandums of understanding.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

    Source: 49 FR 14004, Apr. 9, 1984, unless otherwise noted.

[[Page 81]]



               Subpart 316.3--Cost-Reimbursement Contracts



316.301  General.



316.301-3  Limitations.

    (c) The following format shall be used and executed by the 
contracting officer as the determination and findings authorizing the 
use of a cost-reimbursement contract and establishing the fee:

   Department of Health and Human Services--Determination and Findings

              Authority to Use Cost-Reimbursement Contract

    I hereby find that:
    (1) The (agency title) proposes to contract with (name of proposed 
contractor) for (describe work, service, or product) (identify program 
or project). The estimated cost is ($______) (if contract is CPFF type, 
insert, ``plus a fixed fee of ($______) which is ____ percent of the 
estimated cost exclusive of fee'').
    (2) (Set forth facts and circumstances that show why it is 
impracticable to secure property or services of the kind or quantity 
required without the use of the proposed type of contract or why the 
proposed method of contracting is likely to be less costly than other 
methods.) I hereby determine that:
    On the basis of the above findings, and in accordance with FAR 
16.301-3, it is impracticable to secure the property or services of the 
kind or quality required without the use of a (cost, cost-sharing, or 
cost-plus-a-fixed fee*) type of contract, or the (cost, cost-sharing, or 
cost-plus-a-fixed fee*) method of contracting is likely to be less 
costly than other methods.
---------------------------------------------------------------------------

    *Use applicable word, words, or statement.
---------------------------------------------------------------------------

Date____________________________________________________________________
Signature_______________________________________________________________

[49 FR 14004, Apr. 9, 1984, as amended at 50 FR 23132, May 31, 1985; 50 
FR 38004, Sept. 19, 1985; 51 FR 44294, Dec. 9, 1986]



316.303  Cost-sharing contracts.

    For detailed information concerning the use of cost-sharing 
contracts, see 335.070.



316.306  Cost-plus-fixed-fee contracts.

    (c)(2) The determination and findings (D&F) required by FAR 
16.306(c)(2) has been combined with the D&F required by FAR 16.301-3(c) 
authorizing the use of cost-reimbursement contract, and is shown in 
316.301-3(c). The contracting officer is responsible for executing the 
D&F and is authorized to make both determinations required by the FAR.

[51 FR 44294, Dec. 9, 1986]



316.307  Contract clauses.

    (a) If the contract is with a hospital (profit or nonprofit), modify 
the ``Allowable Cost and Payment'' clause at FAR 52.216-7 by deleting 
from paragraph (a) the words ``subpart 31.2 of the Federal Acquisition 
Regulation (FAR)'' and substituting ``45 CFR part 74 appendix E.''
    (j) The contracting officer shall insert the clause at 352.216-72, 
Additional Cost Principles, in solicitations and resultant cost-
reimbursement contracts with nonprofit organizations, as identified in 
OMB Circular A-122.

[55 FR 42197, Oct. 18, 1990]



                   Subpart 316.4--Incentive Contracts



316.403  Fixed-price incentive contracts.

    (c) The determination and findings required by FAR 16.403(c) shall 
be executed by the chief of the contracting office after it is prepared 
by the contracting officer.

[51 FR 44294, Dec. 9, 1986]



   Subpart 316.6--Time-and-Materials, Labor-Hour, and Letter Contracts



316.601  Time-and-materials contracts.

    (c) Limitations. The format prescribed in 316.301-3(c) shall be used 
and executed by the contracting officer as the determination and 
findings authorizing the use of either a time-and-materials contract or 
a labor-hour contract, except that the final paragraph shall be changed 
to read as follows:

    I hereby determine that:
    On the basis of the above findings, no other type of contract will 
suitably serve for the acquisition of the required work or services.



316.603  Letter contracts.



316.603-2  Application.

    It is the policy of the Department to refrain from issuing letter 
contracts.

[[Page 82]]

Exceptions to this policy will be permitted only in those cases where 
all matters of a substantive nature, such as statements of work, 
delivery schedules, and general and special clauses have been resolved 
and agreed upon.



316.603-3  Limitations.

    The principal official responsible for acquisition shall be the 
approving official who executes the prescribed written statement. 
However, if the principal official responsible for acquisition is to 
sign the letter contract as the contracting officer, the approving 
official becomes the head of the contracting activity.

[49 FR 14004, Apr. 9, 1984, as amended at 51 FR 44294, Dec. 9, 1986]



316.603-70  Information to be furnished when requesting authority to issue a letter contract.

    The following information should be included by the contracting 
officer in any memorandum requesting approval to issue a letter 
contract:
    (a) Name and address of proposed contractor.
    (b) Location where contract is to be performed.
    (c) Contract number, including modification number, if possible.
    (d) Brief description of work and services to be performed.
    (e) Performance or delivery schedule.
    (f) Amount of letter contract.
    (g) Estimated total amount of definitized contract.
    (h) Type of definitive contract to be executed (fixed price, cost-
reimbursement, etc.).
    (i) Statement of the necessity and advantage to the Government of 
the use of the proposed letter contract.
    (j) Statement of percentage of the estimated cost that the 
obligation of funds represents. In rare instances where the obligation 
represents 50 percent or more of the proposed estimated cost of the 
acquisition, a justification for that obligation must be included which 
would indicate the basis and necessity for the obligation (e.g., the 
contractor requires a large initial outlay of funds for major 
subcontract awards or an extensive purchase of materials to meet an 
urgent delivery requirement). In every case, documentation must assure 
that the amount to be obligated is not in excess of an amount reasonably 
required to perform the work.
    (k) Period of effectiveness of the proposed letter contract. If more 
than 180 days, complete justification must be given.
    (l) Statement of any substantive matters that need to be resolved.



316.603-71  Approval for modifications to letter contracts.

    All letter contract modifications (amendments) must be approved by 
the principal official responsible for acquisition. Requests for 
authority to issue letter contract modifications shall be processed in 
the same manner as requests for authority to issue letter contracts and 
shall include the following:
    (a) Name and address of the contractor.
    (b) Description of work and services.
    (c) Date original request was approved and indicate approving 
official.
    (d) Letter contract number and date issued.
    (e) Complete justification as to why the letter contract cannot be 
definitized at this time.
    (f) Complete justification as to why the level of funding must be 
increased.
    (g) Complete justification as to why the period of effectiveness is 
increased beyond 180 days, if applicable.
    (h) If the funding of the letter contract is to be increased to more 
than 50 percent of the estimated cost of the acquisition, the 
information required by 316.603-70(j) must be included.



                        Subpart 316.7--Agreements



316.702  Basic agreements.

    (b) Application.
    (2) Basic agreements shall continue in effect until termination, 
supersession, or expiration of the term.
    (d) Contracts incorporating basic agreements.
    (2) Any provision of a contract which conflicts with the terms of a 
basic agreement must be approved by the Director, Division of 
Acquisition Policy, OAGM.

[[Page 83]]

    (4) Basic agreements may include negotiated overhead rates for cost-
reimbursement type contracts. Where negotiated overhead rates are 
included, the bases to which the rates apply and the period of 
applicability must also be stated. All pertinent provisions such as 
final rates for past periods, provisional rates for current or future 
periods, ceilings, and any specific items to be treated as indirect 
costs shall also be included as appropriate.
    (e) Content and format. A basic agreement shall consist of an 
execution page(s), contents page, special provisions, and general 
provisions. The following is illustrative of an execution page:

Basic Agreement    Page 1 of--
Number              pages

Basic Agreement
    Between the United States of America, as represented by the 
Department of Health and Human Services, and (Name of Contractor), this 
agreement, effective (Insert Date) by and between the United States of 
America, hereinafter called the ``Government,'' as represented by the 
Department of Health and Human Services, and (Name of Contractor), a 
corporation organized and existing under the laws of the (State/
Commonwealth) of ________ with its principal office in (City, State), 
hereinafter called the ``Contractor''.

                             Witnesseth That

    Whereas, the Government and the Contractor desire to enter into a 
single basic agreement for use only in connection ith negotiated (insert 
type of contract and categories of effort that the basic agreement will 
cover) entered into on or after the effective date of this Agreement, 
and prior to its termination; and
    Whereas, the parties understand that this Agreement shall not in any 
manner provide for or imply any agreement on the part of the Government 
to place future orders or contracts with the Contractor.
    Now therefore, the Government and the Contractor agree that the 
provisions and clauses of the Special Provisions, as set forth herein, 
and the General Provisions, as set forth and modified herein, shall be 
incorporated in and constitute the terms and conditions applicable to 
all negotiated (insert type of contract and categories of effort that 
the basic agreement will cover) entered into on or after the effective 
date of this Agreement, and prior to its termination.
    In witness whereof, the parties hereto have executed this Agreement 
as of the day and year first above written.
            United States of America
Name of Contractor______________________________________________________
_______________________________________________________________________
Signature of Contracting Officer
By______________________________________________________________________
Signature of Authorized Official
Typed name______________________________________________________________
Typed name______________________________________________________________
Date____________________________________________________________________

    (f) Procedures. (1) Negotiation of basic agreements may be 
undertaken by OPDIV contracting activities on behalf of the Department. 
When an OPDIV contracting activity decides to negotiate a basic 
agreement with an organization, prior authorization must be requested, 
in writing, from the Director, Division of Acquisition Policy (DAP). 
When the Director, DAP, gives written authorization to the OPDIV 
contracting activity designated to conduct negotiations on behalf of the 
Department, all other OPDIVs will be notified of this designation. If 
another OPDIV elects, it may attend the negotiation or furnish special 
terms and conditions or provisions for inclusion in the proposed basic 
agreement by advising the designated negotiating activity in writing 
within ten (10) days from the date of the authorization. After review 
and resolution of all requests for inclusion of special terms and 
conditions or provisions, the designated negotiating activity will 
invite those OPDIVs which expressed an interest in attending the 
negotiations and make the necessary arrangements for the negotiation of 
the basic agreement.
    (2) Prior to the conclusion of negotiations, the designated 
negotiating activity shall furnish the OPDIVs a draft copy of the 
proposed basic agreement together with:
    (i) A resume of all salient features of the basic agreement which 
will facilitate review;
    (ii) Any of the negotiating OPDIV's guides or procedures which are 
being considered for incorporation into the basic agreement by 
reference;
    (iii) A listing of nonstandard clauses used, the genesis of such 
clauses, and the reasons for such clauses in the basic agreement; and
    (iv) The contractor's comments, including the basis for requesting 
any deviation from the HHSAR and the designated negotiating activity's 
position with respect thereto.

[[Page 84]]

    (3) The OPDIVs shall have fifteen (15) days from the date of the 
memorandum transmitting the information to submit comments on the draft 
copy of the basic agreement. After receipt, analysis, and resolution of 
the comments of the OPDIVs, the designated negotiating activity will 
proceed to conclude the negotiation of the basic agreement.
    (4) After conclusion of the negotiation, but prior to execution of 
the basic agreement, a copy of the basic agreement, together with the 
information specified in paragraph (f)(2) above, the comments of the 
OPDIVs, the designated negotiating activity's analysis of the OPDIV 
comments, and the basis for the action taken will be furnished to the 
Director, DAP for review by DPP and the Office of General Counsel. 
Approval by the Director, DAP must be given prior to the execution of 
the basic agreement. After approval and execution of the basic 
agreement, the designated negotiating activity will distribute the 
executed document to the OPDIVs, Office of General Counsel, and the 
Director, DAP. The basic agreement is mandatory for use by all 
activities of the Department for all acquisitions falling within the 
scope of the basic agreement.

[49 FR 14004, Apr. 9, 1984, as amended at 50 FR 23126, 23133, May 31, 
1985; 50 FR 38004, Sept. 19, 1985; 54 FR 24343 June 7, 1989; 54 FR 
24343, June 7, 1989]



316.770  Unauthorized types of agreements.



316.770-1  Letters of intent.

    A letter of intent is an informal unauthorized agreement between the 
Government and a prospective contractor which indicates that products or 
services will be produced after completion of funding and/or other 
contractual formalities. Letters of intent are often solicited by 
prospective contractors or may be originated by Government personnel. 
Letters of intent are not authorized by the FAR and are prohibited for 
use by Department personnel.



316.770-2  Memorandums of understanding.

    A ``memorandum of understanding'' is an unauthorized agreement, 
usually drafted during the course of negotiations, to modify mandatory 
FAR and HHSAR provisions in such a manner as to make them more 
acceptable to a prospective contractor. It may be used to bind the 
contracting officer in attempting to exercise rights given the 
Government under the contract, or may contain other matters directly 
contrary to the language of the solicitation or prospective contractual 
document. Use of such memorandums of understanding is not authorized. 
Any change in a solicitation or contract shall be made by amendment or 
modification to that document. When a change to a prescribed contract 
clause is considered necessary, a deviation shall be requested.



PART 317--SPECIAL CONTRACTING METHODS--Table of Contents




                         Subpart 317.2--Options

Sec.
317.201  Definition.
317.202  Use of options.
317.203  Solicitations.
317.206  Evaluation.

                Subpart 317.70--Consolidated Acquisitions

317.7001  General.
317.7002  Policy.

  Subpart 317.71--Supply and Service Acquisitions Under the Government 
                         Employees Training Act

317.7100  Scope of subpart.
317.7101  Applicable regulations.
317.7102  Acquisition of training.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

    Source: 49 FR 14006, Apr. 9, 1984, unless otherwise noted.



                         Subpart 317.2--Options



317.201  Definition.

    (a) An option must:
    (1) Identify the supplies or services as a discrete option quantity 
in addition to the basic quantity of supplies or services to be 
delivered under the initial contract award;
    (2) Establish a price or specify a method of calculation which will 
make the price certain;
    (3) Be agreed to and included in the initial contract award; and

[[Page 85]]

    (4) Permit the Government the right to exercise the option 
unilaterally.
    (b) Contract provisions which provide the Government the right to 
buy additional requirements, subject to the written agreement of the 
contractor, do not meet the requirements of paragraph (a)(4) of this 
section and are not authorized. Further, any contract provision which 
merely extends the initial contract period without requiring delivery of 
additional supplies or services is not an option.



317.202  Use of options.

    (c)(6) The primary purpose for inclusion would be the achievement of 
administrative convenience.



317.203  Solicitations.

    (g)(2) When unusual circumstances exist, the principal official 
responsible for acquisition (not delegable) may approve a greater 
percentage (but see FAR 17.205).



317.206  Evaluation.

    The determination referenced in FAR 17.206(b) shall be made by the 
chief of the contracting office.

[49 FR 14006, Apr. 9, 1984, as amended at 53 FR 43208, Oct. 26, 1988]



                Subpart 317.70--Consolidated Acquisitions



317.7001  General.

    Studies have indicated that substantial savings can be realized 
through centralized and consolidated acquisitions of common use 
supplies, services, and equipment. The Department has identified common 
use items and has applied the principle of consolidated acquisition to 
these items.



317.7002  Policy.

    (a) The following supplies, services, and equipment have been 
indentified as common use items and are to be acquired by the 
centralized contracting activity identified in paragraph (b):
    (1) Administrative supplies, equipment, and services (i.e., general 
use office items or related services), as distinguished from functional 
or program requirements.
    (2) Automated data processing services (but see ADP Systems Manual, 
Chapter 4).
    (3) Stenographic reporting services.
    (4) Visual arts, graphics, and supplementing services.
    (5) Press clipping services.
    (b) Activities within the metropolitan Washington, DC area are 
required to submit purchase requests for the above items to the 
applicable centralized contracting activity as follows:
    (1) Activities located in the Southwest Washington complex; 
Procurement Branch, Division of Contract Operations, Office of 
Acquisition and Grants Management, Office of the Secretary.
    (2) Parklawn Complex, Rockville, Maryland (Montgomery and Prince 
Georges Counties area); Division of Acquisition Management, 
Administrative Services Center, Office of Management, Public Health 
Service.
    (3) National Institutes of Health; Division of Procurement, National 
Institutes of Health.
    (c) Activities outside the metropolitan Washington, DC area are 
encouraged to establish centralized points to conduct acquisitions for 
common use items.

[49 FR 14006, Apr. 9, 1984, as amended at 54 FR 24343, June 7, 1989; 55 
FR 13536, Apr. 11, 1990]



  Subpart 317.71--Supply and Service Acquisitions Under the Government 
                         Employees Training Act

    Source: 53 FR 43208, Oct. 26, 1988, unless otherwise noted.



317.7100  Scope of subpart.

    This subpart provides alternate methods for obtaining training in 
non-Government facilities under the Government Employees Training Act, 5 
U.S.C. chapter 41.



317.7101  Applicable regulations.

    Basic policy, standards, and delegations of authority to approve 
training are contained in HHS Personnel Manual Instruction 410-1.

[[Page 86]]



317.7102  Acquisition of training.

    (a) The acquisition of interagency training courses and non-
governmental off-the-shelf training courses, whether for individual 
employees or for groups of employees, is the responsibility of the 
Assistant Secretary for Personnel Administration.
    (b) Non-governmental training must be acquired through the 
contracting office if there are costs for training course development or 
for modification of off-the-shelf training courses.

[[Page 87]]



                  SUBCHAPTER D--SOCIOECONOMIC PROGRAMS





PART 319--SMALL BUSINESS AND SMALL DISADVANTAGED BUSINESS CONCERNS--Table of Contents




                         Subpart 319.2--Policies

Sec.
319.201  General policy.
319.201-70  Small and disadvantaged business utilization specialist.
319.270  Federal acquisition conferences.

              Subpart 319.5--Set-Asides for Small Business

319.501  General.
319.503  Setting aside a class of acquisitions.
319.503-70  Small business class set-aside for construction, repair, and 
          alteration work.
319.505  Rejecting set-aside recommendations.
319.506  Withdrawing or modifying set-asides.
319.570  Contract payments.

      Subpart 319.7--Subcontracting With Small Business and Small 
                     Disadvantaged Business Concerns

319.705  Responsibilities of the contracting officer under the 
          subcontracting assistance program.
319.705-2  Determining the need for a subcontracting plan.
319.705-3  Preparing the solicitation.
319.705-4  Reviewing the subcontracting plan.
319.705-5  Awards involving subcontracting plans.
319.705-6  Postaward responsibilities of the contracting officer.
319.706  Responsibilities of the cognizant administrative contracting 
          officer.

 Subpart 319.8--Contracting with the Small Business Administration (the 
                              8(a) Program)

319.800  General.
319.803  Selecting acquisitions for the 8(a) Program.
319.812  Contract administration.
319.870  Liaison with the Small Business Administration.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

    Source: 49 FR 14007, Apr. 9, 1984, unless otherwise noted.



                         Subpart 319.2--Policies



319.201  General policy.

    (c) The functional management responsibilities for the Department's 
small business, disadvantaged business, and labor surplus area programs 
are delegated to the Director of the Office of Small and Disadvantaged 
Business Utilization (OSDBU).
    (1) The Director, OSDBU is responsible for:
    (i) Recommending to the Under Secretary overall Department-wide 
operating concepts and policies relating to the Department's small 
business, disadvantaged business, and labor surplus area programs;
    (ii) Implementing policy decisions through the issuance of operating 
procedures (Operating Divisions (OPDIVs) may develop alternative 
procedures for achieving departmental policy goals, and objectives. 
However, any change in procedures must be approved by the Under 
Secretary);
    (iii) Reviewing and evaluating the Department's policies, practices, 
and procedures pertaining to the disadvantaged business, small business, 
and labor surplus area programs, as well as recommending changes or 
corrective actions to the OPDIV heads or to the Under Secretary, as 
appropriate;
    (iv) Providing the Under Secretary with regular appraisals of 
performance and quality of effort, including timely notification of 
significant problems, events, and accomplishments, and the need for 
changes in Department-wide objectives and policies; and
    (v) Providing technical assistance and support to the small and 
disadvantaged business utilization specialists.
    (2) The Director, OSDBU is authorized to:
    (i) Establish standards, procedures and operating guidelines 
controlling the manner in which the small business, disadvantaged 
business, and labor surplus area programs are conducted throughout the 
Department;
    (ii) Provide advice on proposed allocations of personnel, funds, and 
other resources in light of the total needs of the Department;

[[Page 88]]

    (iii) Prescribe, after coordination with appropriate concerned 
personnel, reporting requirements necessary to preserve openness in 
reporting, identifying emerging problems, monitor Department-wide 
activity, and provide a basis for appraisal and evaluation of 
performance. To the maximum extent, these reporting requirements will be 
satisfied through existing Department-wide reporting systems or by 
making modifications to them;
    (iv) Conduct surveys and review of operating practices in the OPDIVs 
and regional offices; and
    (v) Communicate directly with the small and disadvantaged business 
utilization specialists to assist them in carrying out their individual 
and collective responsibilities.



319.201-70  Small and disadvantaged business utilization specialist.

    (a) The Head of each OPDIV shall appoint a qualified full time small 
and disadvantaged business utilization specialist (SADBUS) in the 
following activities: Office of Human Development Services (OHDS), 
Health Care Financing Administration (HCFA), Social Security 
Administration (SSA), Public Health Service (PHS), to include the Food 
and Drug Administration (FDA), Health Resources and Services 
Administration (HRSA) (and each regional Office of Engineering 
Services), Indian Health Service (IHS), National Institutes of Health 
(NIH), Alcohol, Drug Abuse, and Mental Health Administration (ADAMHA), 
Centers for Disease Control (CDC), and Administrative Services Center 
(ASC). A SADBUS shall also be appointed for the Office of the Secretary 
(OS) and for each Regional Office. As deemed necessary, additional small 
and disadvantaged business utilization specialists may be appointed in 
larger contracting activities.
    (b) When the volume of contracting does not warrant assignment of a 
full-time SADBUS, an individual shall be appointed as the specialist on 
a part-time basis. The responsibilities of this assignment shall take 
precedence over other responsibilities. The specialist shall be 
responsible directly to the appointing authority and shall be at an 
organizational level outside the direct acquisition chain of command, 
i.e., should report directly to the principal official responsible for 
acquistion, where appropriate.
    (c) The Director, OSDBU will exercise functional management 
authority over small and disadvantaged business utilization specialist 
regarding small business, disadvantaged business, and labor surplus area 
matters. Appointments of SADBUS's shall only be made after consultation 
with the Director, OSDBU. A copy of each appointment and termination of 
appointment of specialists shall be forwarded to the Director, OSDBU.
    (d) The SADBUS shall perform the following duties, as determined to 
be appropriate to the activity by the appointing official or by the 
Director, OSDBU. The SADBUS shall:
    (1) Maintain a program designed to locate capable small business, 
disadvantaged business, women-owned business and labor surplus area 
business sources for current and future acquisitions, through SBA or by 
using other methods, establish appropriate source lists for each 
category, and work closely with contracting and small purchasing offices 
to ensure offers are solicited from firms on the source lists;
    (2) Coordinate inquiries and requests for advice from small 
business, disadvantaged business, women-owned business, and labor 
surplus area business concerns on acquisition matters, and counsel them 
with respect to business opportunities to enhance their potential 
participation in the Department's acquisition program;
    (3) Prior to the issuance of solicitations (or contract 
modifications for additional supplies or services) in excess of the 
small purchase limitation, which have not been reviewed, reserved, or 
set-aside by the contracting officer, review the contracting officer's 
justification for such action;
    (4) Assure that small business, disadvantaged business, women-owned 
business, and labor surplus area concerns are provided adequate 
specifications or drawings by initiating actions, in writing, with 
appropriate technical and contracting personnel to ensure that all 
necessary specifications or

[[Page 89]]

drawings for current and future acquisitions, as appropriate, are 
available;
    (5) Review proposed requirements for possible breakout of items 
suitable for acquisitions from small business, disadvantaged business, 
women-owned business, and labor surplus area concerns;
    (6) Assure that financial assistance, available under existing 
regulations, is offered, and that requests by small business concerns 
for proper assistance are not treated as a handicap in the award of 
contracts;
    (7) Participate in determinations concerning responsibility of 
prospective contractors whenever small business concerns are involved;
    (8) Participate in the evaluation of a prime contractor's small 
business, labor surplus area, and disadvantaged business subcontracting 
plans;
    (9) Advise and assist contracting officers in discharging their 
responsibilities by:
    (i) Monitoring and reviewing contractor performance to determine 
compliance with small and small disadvantaged business subcontracting 
plans, and
    (ii) Developing and maintaining records and reports that reflect 
such compliance or noncompliance;
    (10) Review and make appropriate recommendations to the contracting 
officer on proposals to furnish Government-owned facilities to 
contractors if this action may enhance the small business program;
    (11) Assure that the participation of small businesses, 
disadvantaged businesses, women-owned business, and labor surplus area 
concerns is accurately reported;
    (12) Make available to SBA copies of solicitations when so 
requested;
    (13) When a bid or offer from a small business, disadvantaged 
business, women-owned business, or labor surplus area concern has been 
rejected for nonresponsiveness or nonresponsibility, upon request, aid, 
counsel and assist that firm in understanding requirements for 
responsiveness and responsibility so that the firm may be able to 
qualify for future awards;
    (14) Participate in government-industry conferences to assist small 
business, disadvantaged business, women-owned business, and labor 
surplus area concerns, including Business Opportunity/ Federal 
Acquisition Conferences, Minority Business Enterprises Acquisition 
Seminars, and Business Opportunity Committee meetings;
    (15) Advise potential sources how they can obtain information about 
sealed bid and negotiated acquisitions;
    (16) Brief the head of the contracting activity at least once 
quarterly concerning the status of the activity's small business, 
disadvantaged business, women-owned business, and labor surplus area 
programs in relation to goals and objectives established;
    (17) Participate in the development, implementation, and review of 
automated source systems to assure that the interests of small business, 
disadvantaged business, women-owned business, and labor surplus area 
concerns are fully considered;
    (18) Assure that the organization maintains a list of products and 
services which are categorized as repetitive small business set-aside;
    (19) Provide small business, disadvantaged business, women-owned 
business, and labor surplus area concerns information regarding 
assistance available from Federal agencies such as the Small Business 
Administration, Minority Business Development Agency, Bureau of Indian 
Affairs, Economic Development Administration, National Science 
Foundation, Department of Labor, and others, including State agencies 
and trade associations;
    (20) Be responsible for establishing an education and training 
program for personnel whose duties and functions affect the activity's 
small business, disadvantaged business, women-owned business, and labor 
surplus areas programs; and
    (21) Participate in interagency programs relating to small business, 
disadvantaged business, women-owned business, and labor surplus area 
matters as authorized by the Director, OSDBU.

[49 FR 14007, Apr. 9, 1984, as amended at 50 FR 23126, 23133, May 31, 
1985; 50 FR 38004, Sept. 19, 1985; 54 FR 24343, June 7, 1989; 57 FR 
11690, Apr. 7, 1992]

[[Page 90]]



319.270  Federal acquisition conferences.

    The Department of Commerce is responsible for coordinating the 
participation of Federal civilian agencies in a continuing series of 
conferences which are sponsored by members of Congress. The objectives 
of these conferences are:
    (a) Location of additional acquisition sources to broaden the 
acquisition base of Federal agencies;
    (b) Stimulation of local, regional, and national economic growth, 
national security, and cost reduction;
    (c) Location of underutilized production capacity;
    (d) Prevention or elimination of pockets of underemployment; and
    (e) Assistance of small and small disadvantaged business concerns.

As notified by the OSDBU, contracting activities shall provide 
appropriate SADBUS or acquisition personnel to participate in person-to-
person counseling at these conferences. Ordinarily, participation by 
contracting activities will be restricted to conferences held within the 
geographical areas adjacent to their officers. The brochure, ``How To Do 
Business With DHHS'' should be of great assistance in this counseling as 
it has been specifically prepared to assist individuals, firms, and 
institutions who may wish to do business with this Department. It 
contains a brief description of the mission and programs of HHS and its 
Operating Divisions and provides a listing of contracting offices and 
the types of services and commodities acquired by each.



              Subpart 319.5--Set-Asides for Small Business



319.501  General.

    (c) Prior to the contracting officer's review, the SADBUS shall 
review each proposed acquisition to determine the feasibility of 
recommending award to the Small Business Administration (SBA) pursuant 
to section 8(a) of the Small Business Act. When it cannot be awarded to 
SBA pursuant to section 8(a), the SADBUS shall review the proposed 
acquisition to determine if it can be recommended as a set-aside under 
one of the set-aside priorities stated in FAR 19.504. The SADBUS's 
recommendation shall be entered on Form HHS-653, Small Business-Labor 
Surplus Set-Aside Review Form, with the reasons for the type of set-
aside recommended, or the reasons for not recommending a set-aside, and 
provided to the contracting officer. Upon receipt of the Form HHS-653, 
the contracting officer shall promptly concur or nonconcur with the 
SADBUS's recommendation. The contracting officer will make the final 
determination as to whether the proposed acquisition will be set-aside 
or not. If the contracting officer approves the SADBUS's set-aside 
recommendation, the proposed acquisition will be set-aside as specified. 
However, if the contracting officer disapproves the SADBUS's set-aside 
recommendation, the reasons must be documented on the Form HHS-653, and 
the form signed. (See 319.505 for options available to the SADBUS 
regarding the contracting officer's disapproval of a set-aside 
recommendation.) In all cases, the completed Form HHS-653 is to be 
retained by the contracting officer and placed in the contract file.

[57 FR 11690, Apr. 7, 1992]



319.503  Setting aside a class of acquisitions.



319.503-70  Small business class set-aside for construction, repair, and alteration work.

    A small business class set-aside is considered to have been made for 
each proposed acquisition for construction, repair, and alteration work 
in an estimated amount ranging from $2,500 to $2 million. Accordingly, 
the contracting officer shall set aside for small business each proposed 
acquisition. If, in his/her judgment, the particular acquisition falling 
within the dollar limits specified above is unsuitable for a set-aside 
for exclusive small business participation, the procedure set forth in 
FAR 19.506 shall apply. Proposed acquisitions for construction, repair, 
and alteration work in an estimated amount of more than $2 million shall 
be processed on a case by case basis.



319.505  Rejecting set-aside recommendations.

    (a) If the contracting officer rejects the SADBUS's recommendation 
for a

[[Page 91]]

set-aside and an SBA procurement center representative (PCR) is not 
assigned or available, the SADBUS may appeal, in writing, to the head of 
the contracting activity (HCA) or his/her designee. The SADBUS shall 
provide the HCA or designee all the pertinent information concerning the 
set-aside disagreement, and the HCA shall respond in writing within 
seven business days. The HCA's decision is final and not appealable. The 
decision by the HCA shall be attached to the Form HHS-653 and placed in 
the contract file. After receipt of a final decision by the HCA, and if 
the decision approves the action of the contracting officer, the SADBUS 
shall forward, for information and management purposes, complete 
documentation of the case to the OSDBU Director. Documentation 
transmitted shall include, as a minimum, a copy of the appeal memorandum 
submitted to the HCA, a copy of the IFB or RFP, a list of proposed 
sources, a copy of the Form HHS-653 and attachments completed by the 
SADBUS and the contracting officer, a copy of the HCA's decision, and 
all other written material considered by the HCA in arriving at the 
decision. The SADBUS' transmittal memorandum shall contain an 
affirmative statement that the attachments constitute the complete file 
reviewed and considered by the HCA in making the final decision.

    If an SBA PCR is assigned or available and the SADBUS refers the 
case to that person, the SBA PCR may either concur with the decision of 
the contracting officer not to set-aside the proposed acquisition or 
recommend to the contracting officer that it be set-aside. For the SBA 
PCR to make a comprehensive review, at least the following should be 
provided as attachments to the Form HHS-653: the statement of work, 
evaluation criteria, Government cost estimate, source list including 
size of firms, and a copy of any justification for other than small 
business considerations that may be applicable. Once the case has been 
referred to the SBA PCR, no further appeal action shall be taken by the 
SADBUS. (Refer to FAR 19.505 for the procedures available to the SBA PCR 
if the contracting officer rejects the set-aside recommendation.)

[49 FR 14007, Apr. 9, 1984, as amended at 57 FR 11690, Apr. 7, 1992]



319.506  Withdrawing or modifying set-asides.

    (b) If an SBA PCR is not assigned, the disagreement between the 
contracting officer and the SADBUS shall be referred to the HCA for 
resolution.
    (d) Immediately upon notice from the contracting officer, the SADBUS 
shall provide telephone notification regarding all set-aside withdrawals 
to the OSDBU Director.



319.570  Contract payments.

    Contract payments to small business concerns must be made on a 
timely basis. Payment of an invoice or voucher must be made within 30 
days after receipt of the invoice or voucher or from acceptance of the 
goods or services. Each invoice or voucher from a small business concern 
not sent directly to the servicing finance office, but received by the 
contracting activity, shall be stamped or otherwise identified for 
expedited payment before it is forwarded to the servicing finance 
office.



      Subpart 319.7--Subcontracting With Small Business and Small 
                     Disadvantaged Business Concerns



319.705  Responsibilities of the contracting officer under the subcontracting assistance program.



319.705-2  Determining the need for a subcontracting plan.

    The dollar value of all proposed incremental funding actions shall 
be included in determining whether the acquisition meets the dollar 
threshold requiring a subcontracting plan. The subcontracting plan shall 
be based on the total value of the acquisition which will include the 
value of all option quantities or funding actions.



319.705-3  Preparing the solicitation.

    The SBA PCR should be allowed a period of one to five business days 
for the review of the solicitation, depending

[[Page 92]]

upon the circumstances and complexity of the individual acquisition.

[49 FR 14007, Apr. 9, 1984, as amended at 57 FR 11690, Apr. 7, 1992]



319.705-4  Reviewing the subcontracting plan.

    The offeror's/bidder's subcontracting plan for small business 
concerns shall be judged independently of the subcontracting plan for 
small disadvantaged business concerns. If a subcontracting plan is not 
obtained, the contracting officer must document the contract file to 
substantiate the reasons why the plan was not obtained. The contracting 
officer must obtain a satisfactory subcontracting plan prior to awarding 
the contract.
    (d) If the contracting officer determines that the subcontracting 
plan submitted reflects the best effort by the offeror/bidder to award 
subcontracts to small and small disadvantaged business concerns, but the 
SADBUS disagrees with the contracting officer's determination, a final 
determination shall be made by the principal official responsible for 
acquisition. The SADBUS shall submit this final determination to the 
Director, OSDBU with the appropriate supporting documentation.
    (1) The contracting officer may accept the terms of an overall or 
``master'' company subcontracting plan if it is incorporated by 
reference into a specific subcontracting plan submitted by the apparent 
successful offeror/bidder for a specific contract, if:
    (i) The master plan contains all the elements required by the 
statute;
    (ii) Subcontracting goals for small and small disadvantaged business 
concerns are specifically set forth in each contract or modification 
over the statutory thresholds;
    (iii) Any changes to the plan deemed necessary and required by the 
contracting officer in areas other than goals are specifically set forth 
in the contract or modification;
    (iv) The contracting officer has copies of the entire plan; and
    (v) The SBA PCR has had an opportunity to comment on the master 
plan.
    (2) If the prime contract is for a commercial product, the required 
subcontracting plan may relate to the company's production of the item 
generally (both for the Government contract and for regular commercial 
sale) rather than solely to the item being acquired under the Government 
contract. In such cases, the contractor shall be required to submit one 
company-wide, annual plan to be reviewed for approval by the first 
agency with which it enters into a prime contract (which requires a 
subcontracting plan) during the fiscal year. The approved plan will 
remain in effect for the entire fiscal year and is applicable to all 
deliveries made under contracts entered into during the contractor's 
fiscal year, even though these deliveries are made in a succeeding 
fiscal year. The contractor shall submit a new plan to the first agency 
with which it enters into a contract (over the statutory threshold) 
during a succeeding fiscal year. The new plan shall apply to all 
deliveries made under contracts entered into during the succeeding 
fiscal year, no matter when the deliveries are made.

[49 FR 14007, Apr. 9, 1984, as amended at 57 FR 11690, Apr. 7, 1992]



319.705-5  Awards involving subcontracting plans.

    (a)(3) The SBA PCR shall be allowed a period of one to five business 
days to review the contract award package, depending upon the 
circumstances and complexity of the individual acquisition.



319.705-6  Postaward responsibilities of the contracting officer.

    The SADBUS shall perform the distribution requirements stated in 
paragraphs (a) through (c) of FAR 19.705-6. A copy of any company-wide 
plans and associated approvals shall also be sent to the Director, OSDBU 
by the SADBUS. In addition, the SADBUS is responsible for summarizing 
and reporting to the Director, OSDBU, on a quarterly basis, all prime 
contracts $500,000 and over ($1 million for construction) using the 
following reporting format:
    (a) Name of the OPDIV and program office;
    (b) Number and dollar amount of contracts requiring subcontracting 
plans;
    (c) Number of contracts with subcontracting plans;

[[Page 93]]

    (d) Number of contracts without subcontracting plans;
    (e) Small and small disadvantaged business subcontracting goals; and
    (f) Statements citing reasons why small and small disadvantaged 
business subcontracting plans were not included in the contracts.



 319.706  Responsibilities of the cognizant administrative contracting officer.

    (a) The contracting officer shall comply with the requirements of 
FAR 19.706(a), and shall use the Standard Form 294, Subcontracting 
Report for Individual Contracts, to monitor the contractor's progress in 
achieving both the small business and small disadvantaged business 
subcontracting goals. The contracting officer shall require the 
contractor to provide in the Remarks block of each Standard Form 294 
submitted a narrative of the progress in fulfilling the small business 
and small disadvantaged business subcontracting goals. The contracting 
officer shall require the contractor to report any difficulties in 
achieving the goals and the actions being taken by the contractor to 
overcome the difficulties. The contracting officer shall document the 
contract file whenever the contractor is experiencing difficulties in 
achieving the planned subcontracting goals, and shall indicate the 
actions taken by the contractor to resolve the difficulties and the 
actions taken by the contracting officer to remedy the situation. A copy 
of this documentation shall be provided to the SADBUS.
    (b) At the time of physical completion of the contract, the 
contracting officer shall prepare a memorandum for record for inclusion 
in the contract file indicating whether or not the contractor complied 
with the subcontracting plan and subcontracting provisions of the 
contract.
    (1) If the contractor achieved its subcontracting dollar goals for 
both small business and small disadvantaged business, the memorandum 
shall state that the contractor complied with the subcontracting plan 
and provisions of the contract. No other documentation is needed.
    (2) If the contractor failed to achieve its subcontracting dollar 
goals for either small business or small disadvantaged business, or 
both, the contracting officer shall indicate this failure in the 
memorandum and determine whether the contractor did or did not exercise 
its best efforts in attempting to achieve the goals.
    (i) If determined that the contractor exercised its best efforts, 
the contractor shall be found to have complied with the subcontracting 
plan and provisions of the contract. The rationale for this 
determination shall be documented in the memorandum.
    (ii) If determined that the contractor did not exercise its best 
efforts, the contractor shall be found to have not complied with the 
subcontracting plan and provisions of the contract. The reasons for this 
determination shall be documented in the memorandum, along with a 
description of specific actions taken by the contracting officer during 
the performance of the contracting to attempt to remedy the failure.
    (c) A copy of the memorandum pertaining to either situation 
described in paragraph (b)(2) (i) or (ii) of this section shall be sent 
to the Director, Office of Small and Disadvantaged Business Utilization.

[50 FR 46299, Nov. 7, 1985]



 Subpart 319.8--Contracting with the Small Business Administration (the 
                              8(a) Program)

    Source: 55 FR 13536, Apr. 11, 1990, unless otherwise noted.



319.800  General.

    (c) The signing of the contract document may be accepted as the 
Small Business Administration's (SBA) certification that SBA is 
competent to perform a specific HHS requirement.



319.803  Selecting acquisitions for the 8(a) Program.

    (c) Brochures of 8(a) concerns which have been interviewed by the 
Office of Small and Disadvantaged Business Utilization (OSDBU) are 
forwarded to each small and disadvantaged business utilization 
specialist (SADBUS). These brochures are to be reviewed by the SADBUS to 
match HHS requirements

[[Page 94]]

with the capabilities of these concerns. The SADBUS will make the 
capabilities of these concerns known to program personnel and will 
obtain information, as needed, by contacting OSDBU or SBA.



319.812  Contract administration.

    (b) The responsibility for subcontract administration and field 
inspection will, in most cases, be delegated by SBA to the contracting 
activity. The contracting activity may develop a tripartite agreement 
for execution by SBA, the 8(a) subcontractor, and the contracting 
activity instead of developing separate modifications for the SBA 
contract and the 8(a) subcontract.
    (c) Some 8(a) concerns may need additional management expertise for 
optimal performance and completion of a particular contract. Therefore, 
when subcontract administration is delegated to HHS by SBA, the 
contracting activity shall promptly apprise the SBA, the SADBUS, and 
OSDBU whenever the contractor is experiencing problems. SBA should 
provide necessary technical assistance so the contractor can 
successfully complete the contract.
    (d) The OSDBU, SADBUS, and SBA are to be notified prior to 
initiating final action to terminate an 8(a) contract.



319.870  Liaison with the Small Business Administration.

    (a) Contracting activities will maintain a continuous liaison with 
the SBA to ensure that the overall goals of each activity are achieved. 
In the event there is a dispute between the contracting activity and a 
SBA representative regarding any aspect of 8(a) contracting, the 
contracting activity must promptly notify OSDBU.
    (b) The business development responsibility of SBA requires them to 
assist in and monitor the growth and development of all 8(a) concerns. 
Therefore, it is incumbent upon HHS to assist SBA in this effort by 
utilizing the source selection process in a manner that would make use 
of the largest possible number of 8(a) concerns.



PART 320--LABOR SURPLUS AREA CONCERNS--Table of Contents




    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).



                         Subpart 320.1--General



320.102  General policy.

    Contracting activities should obtain appropriate publications and 
other information identifying labor surplus areas from:

    U.S. Department of Labor, Employment and Training Administration, 
Office of Policy Evaluation and Research, Division of Labor Market 
Information, Washington, D.C. 20530.


Contracting officers shall use the ``Directory of Labor Surplus Area 
Contractors,'' provided by the Office of Small and Disadvantaged 
Business Utilization, as a source to identify labor surplus area 
concerns and to augment other labor surplus area source lists. 
Contracting officers should also seek to identify concerns from labor 
surplus areas by placing sources sought synopses in the Commerce 
Business Daily. Small and disadvantaged business utilization specialists 
shall assist contracting officers in developing and maintaining source 
lists of small business and other concerns in labor surplus areas. 
Department of Commerce and SBA regional and field offices should be 
contacted for assistance in identifying labor surplus area concerns.

[49 FR 14012, Apr. 9, 1984]



PART 322--APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS--Table of Contents




            Subpart 322.6--Walsh-Healey Public Contracts Act

Sec.
322.604  Exemptions.
322.604-2  Regulatory exemptions.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

[[Page 95]]



            Subpart 322.6--Walsh-Healey Public Contracts Act



322.604  Exemptions.



322.604-2  Regulatory exemptions.

    (c)(1) The actions required by FAR 22.604-2(c)(1) shall be exercised 
by the Director, Office of Acquisition and Grants Management (DOAGM). 
Contracting offices requiring exemptions shall forward requests through 
normal acquisition channels to the DOAGM.

[51 FR 44294, Dec. 9, 1986; 51 FR 47353, Dec. 31, 1986, as amended at 54 
FR 24343, June 7, 1989]



PART 324--PROTECTION OF PRIVACY AND FREEDOM OF INFORMATION--Table of Contents




             Subpart 324.1--Protection of Individual Privacy

Sec.
324.100  Scope of subpart.
324.102  General.
324.103  Procedures.

                Subpart 324.2--Freedom of Information Act

324.202  Policy.

             Subpart 324.70--Confidentiality of Information

324.7001  General.
324.7002  Policy.
324.7003  Applicability.
324.7004  Required clause.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

    Source: 49 FR 14013, Apr. 9, 1984, unless otherwise noted.



             Subpart 324.1--Protection of Individual Privacy



324.100  Scope of subpart.

    This subpart implements 45 CFR part 5b, Privacy Act Regulations, and 
FAR subpart 24.1, Protection of Individual Privacy, which implement the 
Privacy Act of 1974 (Pub. L. 93-579, December 31, 1974; 5 U.S.C. 552a) 
and OMB Circular No. A-108, July 9, 1975.



324.102  General.

    (a) It is the Department's policy to protect the privacy of 
individuals to the maximum possible extent while permitting the exchange 
of records required to fulfill the Department's administrative and 
program responsibilities and its responsibilities for disclosing records 
to which the general public is entitled under the Freedom of Information 
Act (5 U.S.C. 552). The Privacy Act of 1974 and the Department's 
implementation under 45 CFR part 5b apply ``when an agency provides by a 
contract for the operation by or on behalf of the agency of a system of 
records to accomplish any agency function . . .'' The key factor is 
whether a departmental function is involved. Therefore, the Privacy Act 
requirements apply to a departmental contract when, under the contract, 
the contractor must maintain or operate a system of records to 
accomplish a departmental function.
    (e) The program official, and, as necessary, the official designated 
as the activity's Privacy Act Coordinator and the Office of General 
Counsel, shall determine the applicability of the Act to each proposed 
acquisition. The program official is required to include a statement in 
the request for contract indicating whether the Privacy Act is or is not 
applicable to the proposed acquisition.
    (f) Whenever the contracting officer is informed that the Privacy 
Act is not applicable, but the resultant contract will involve the 
collection of individually identifiable personal data by the contractor, 
the contracting officer shall include provisions to protect the 
confidentiality of the records and the privacy of individuals identified 
in the records (see subpart 324.70).



324.103  Procedures.

    (a) All requests for contract shall be reviewed by the contracting 
officer to determine whether the Privacy Act requirements are 
applicable. If applicable, the contracting officer shall include the 
solicitation notification and contract clause required by FAR 24.104 in 
the solicitation, and the contract clause in the resultant contract. In 
addition, the contracting officer shall ensure that the solicitation 
notification, contract clause, and other pertinent information specified 
in this subpart are included in any contract modification

[[Page 96]]

which results in the Privacy Act requirements becoming applicable to a 
contract.
    (b)(1) The contracting officer shall identify the system(s) of 
records on individuals in solicitations, contracts, and contract 
modifications to which the Privacy Act and the implementing regulations 
are applicable.
    (2) The contracting officer shall include a statement in the 
contract notifying the contractor that the contractor and its employees 
are subject to criminal penalties for violations of the Act (5 U.S.C. 
552a(i)) to the same extent as employees of the Department. The 
statement shall require that the contractor assure that each contractor 
employee knows the prescribed rules of conduct, and each contractor 
employee is aware that he/she can be subjected to criminal penalties for 
violations of the Act. The contracting officer shall provide the 
contractor with a copy of the rules of conduct and other requirements 
set forth in 45 CFR 5b.
    (c) The contracting officer shall include in the contract the 
disposition to be made of the system(s) of records on individuals upon 
completion of performance of the contract. For example, the contract may 
require the contractor to completely destroy the records, to remove 
personal identifiers, to turn the records over to the Department, or to 
keep the records but take certain measures to keep the records 
confidential and protect the individuals' privacy.
    (d) Whenever an acquisition is determined to be subject to the 
Privacy Act requirements, a ``system notice,'' prepared by the program 
official and describing the Department's intent to establish a new 
system of records on individuals, to make modifications to an existing 
system, or to disclose information in regard to an existing system, is 
required to be published in the Federal Register. A copy of the ``system 
notice'' shall be attached to the request for contract or purchase 
request. If a ``system notice'' is not attached, the contracting officer 
shall inquire about its status and shall obtain a copy from the program 
official for inclusion in the contract file. If a ``system notice'' has 
not been published in the Federal Register, the contracting officer may 
proceed with the acquisition but shall not award the contract until the 
``system notice'' is published, and publication is verified by the 
contracting officer.



                Subpart 324.2--Freedom of Information Act



324.202  Policy.

    (a) The Department's regulation implementing the Freedom of 
Information Act (FOIA), 5 U.S.C. 552, as amended, is set forth in 45 CFR 
part 5.
    (b) The contracting officer, upon receiving a FOIA request, shall 
follow Department and operating division procedures. As necessary, 
actions should be coordinated with the cognizant Freedom of Information 
(FOI) Officer and the Business and Administrative Law Division of the 
Office of General Counsel. The contracting officer must remember that 
only the FOI Officer has the authority to release or deny release of 
records. While the contracting officer should be familiar with the 
entire FOIA regulation in 45 CFR part 5, particular attention should be 
focused on sections 5.65 and 5.66; also of interest are sections 5.32, 
5.33, and 5.35.

[54 FR 24343, June 7, 1989]



             Subpart 324.70--Confidentiality of Information



324.7001  General.

    In the performance of certain HHS contracts, it is necessary for the 
contractor to generate data, or be furnished data by the Government, 
which is about individuals, organizations, or Federal programs. This 
subpart and the accompanying contract clause require contractors to 
prudently handle disclosure of certain types of information not subject 
to the Privacy Act or the HHS human subject regulations set forth in 45 
CFR Part 46. This subpart and contract clause address the kinds of data 
to be generated by the contractor and/or data to be furnished by the 
Government that are considered confidential and how it should be 
treated.

[[Page 97]]



324.7002  Policy.

    It is the policy of HHS to protect personal interests of 
individuals, corporate interests of non-governmental organizations, and 
the capacity of the Government to provide public services when 
information from or about individuals, organizations, or Federal 
agencies is provided to or obtained by contractors in performance of HHS 
contracts. This protection depends on the contractor's recognition and 
proper handling of such information. As a result, the ``Confidentiality 
of Information'' contract clause was developed.



324.7003  Applicability.

    (a) The ``Confidentiality of Information'' clause, set forth in 
352.24-70, should be used in solicitations and resultant contracts 
whenever the need exists to keep information confidential. Examples of 
situations where the clause may be appropriate include:
    (1) Studies performed by the contractor which generate information 
or invlove Government-furnished information that is personally 
identifiable, such as medical records, vital statistics, surveys, and 
questionnaires;
    (2) Contracts which involve the use of salary structures, wage 
schedules, proprietary plans or processes, or confidential financial 
information of organizations other than the contractor's; and
    (3) Studies or research which may result in preliminary or 
unvalidated findings which, upon disclosure to the public, might create 
erroneous conclusions which, if acted upon, could threaten public health 
or safety.
    (b) With regard to protecting individuals, this subpart and contract 
clause are not meant to regulate or control the method of selecting 
subjects and performing studies or experiments involving them. These 
matters are dealt with in the HHS regulation entitled ``Protection of 
Human Subjects,'' 45 CFR part 46. If a system of records under contract, 
or portions thereof, is determined to be subject to the requirements of 
the Privacy Act, in accordance with FAR 24.1 and 324.1 and Title 45 CFR 
part 5b, the procedures cited in those references are applicable and the 
Privacy Act contract clause shall be included in the contract. If the 
contract also involves confidential information, as described herein, 
which is not subject to the Privacy Act, the contract shall include the 
``Confidentiality of Information'' clause in addition to the Privacy Act 
clause.



324.7004  Required clause.

    The clause set forth in 352.224-70 shall be included in any RFP and 
resultant contract(s) where it has been determined that confidentiality 
of information provisions may apply. Any REP announcing the intent to 
include this clause in any resultant contract(s) shall indicate, as 
specifically as possible, the types of data which would be covered and 
requirements for handling such data.



PART 325--FOREIGN ACQUISITION--Table of Contents




                Subpart 325.1--Buy American Act--Supplies

Sec.
325.102  Policy.
325.108  Excepted articles, materials, and supplies.
325.108-70  Formats for nonavailability determinations.

               Subpart 325.3--Balance of Payments Program

325.302  Policy.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

    Source: 49 FR 14015, Apr. 9, 1984, unless otherwise noted.



                Subpart 325.1--Buy American Act--Supplies



325.102  Policy.

    (b) The head of the contracting activity shall make the 
determinations required by FAR 25.102(a) (1) through (5) and FAR 
25.102(b).

[51 FR 44294, Dec. 9, 1986; 51 FR 47353, Dec. 31, 1986]



325.108  Excepted articles, materials, and supplies.

    (b) Articles, materials, and supplies not listed in FAR 25.108(d) 
may be excepted only after a written determination has been made by the 
head of the contracting activity. These determinations are required only 
in instances

[[Page 98]]

where it has been determined that only suppliers of foreign source end 
items shall be solicited. However, approvals and determinations covering 
individual acquisitions in the following categories may be made by the 
contracting officer:
    (1) Acquisition of spare and replacement parts for foreign 
manufactured items, if the acquisition must be restricted to the 
original manufacturer or its supplier; and
    (2) Acquisition of foreign drugs when it has been determined, in 
writing, by the responsible program official, that only the requested 
foreign drug will fulfill the requirement.

Formats for the above referenced written determinations are shown in 
325.108-70.



325.108-70  Formats for nonavailability determinations.

    (a) The following is the format for a nonavailability determination 
made by a contracting officer:

                    Determination of Nonavailability

    Pursuant to the authority contained in section 2, Title III, of the 
Act of March 3, 1933, popularly called the Buy American Act (41 U.S.C. 
10(a-d)), and authority delegated to me by 325.108(b), I hereby find 
that:
    (a) (Insert a description of the item or items to be acquired, 
including unit, quantity, and estimated cost inclusive of duty and 
transportation costs to destination.)
    (b) (Enter the name and address of the proposed contractor or 
supplier, and country of origin of the item or items.)
    (c) (Include a statement of the necessity for the acquisition.)
    (d) (Include a statement of facts establishing the nonavailability 
of a similar item or items of domestic origin. If there is no known 
domestic item or items which can be used as a reasonable substitute, a 
statement to this effect will be made.)
    Based upon these findings, it is determined that the above-described 
item(s) is (are) not mined, produced, or manufactured, or the articles, 
materials, or supplies from which it (they) is (are) manufactured, are 
not mined, produced, or manufactured, as the case may be, in the United 
States in sufficient and reasonably available commercial quantities and 
of a satisfactory quality.
    Accordingly, the requirement of the Buy American Act that 
acquisition be made from domestic sources and that it be of domestic 
origin is not applicable to this acquisition, since the referenced 
acquisition is within the nonavailability exception stated in the Buy 
American Act. Authority is granted to acquire the above-described 
item(s) of foreign origin (country of origin) at an estimated total cost 
of $______, including duty and transportation cost to destination.
(Date)__________________________________________________________________
_______________________________________________________________________
        (Contracting Officer)

    (b) The following is the format for a nonavailability determination 
made by the head of the contracting activity. Part 1 of the 
determination shall be signed by the preparing authority (contracting 
officer of official with contracting authority), and Part 2 shall be 
signed by the approving authority.

                    Determination of Nonavailability

                                 Part 1

Date____________________________________________________________________
    Pursuant to the authority contained in Section 2, Title III, of the 
Act of March 3, 1933, popularly called the Buy American Act (41 U.S.C. 
10(a-d)), I hereby find:
    (a) (Insert a description of the item or items to be acquired, 
including unit, quantity, and estimated cost inclusive of duty and 
transportation costs to destination.)
    (b) (Insert a brief statement of the necessity for the acquisition.)
    (c) (Include a statement of facts establishing the nonavailability 
of a similar item or items of domestic origin.)
    Based upon the above showing of fact, it is determined that the 
above described item(s) is (are) not mined, produced, or manufactured, 
or the articles, materials, or supplies from which it (they) is (are) 
manufactured, are not mined, produced or manufactured, as the case may 
be, in the United States in sufficient and reasonably available 
commercial quantities and of a satisfactory quality.
(Signature)_____________________________________________________________

                                 Part 2

    The requirement of the Buy American Act that acquisition be made 
from domestic sources and that it be of domestic origin is not 
applicable to the above described acquisition, since the referenced 
acquisition is within the nonavailability exception stated in the Act. 
The feasibility of foregoing the requirement or providing a United 
States substitute has been considered. Authority is granted to acquire 
the above described item(s) of foreign origin (country of origin) at an 
estimated total cost of $______, including duty and transportation costs 
to destination.
(Signature)_____________________________________________________________

[[Page 99]]



               Subpart 325.3--Balance of Payments Program



325.302  Policy.

    All determinations addressed in FAR 25.302 shall be made by the 
principal official responsible for acquisition (not delegable).

[[Page 100]]



             SUBCHAPTER E--GENERAL CONTRACTING REQUIREMENTS





PART 328--BONDS AND INSURANCE--Table of Contents




                        Subpart 328.3--Insurance

Sec.
328.301  Policy.
328.311  Solicitation provision and contract clause on liability 
          insurance under cost-reimbursement contracts.
328.311-2  Contract clause.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

    Source: 56 FR 58316, Nov. 19, 1991, unless otherwise noted.



                        Subpart 328.3--Insurance



328.301  Policy.

    (a) It is the policy of this Department to limit the Government's 
reimbursement of its contractors' liability to third persons for claims 
not covered by insurance in cost-reimbursement contracts to the 
Limitation of Funds or Limitation of Cost clause of the contract.
    (b) In addition to the limitations in paragraph (a) of this section, 
the amount of the Government's reimbursement will be limited to final 
judgments or settlements approved in writing by the Government.



328.311  Solicitation provision and contract clause on liability insurance under cost-reimbursement contracts.



328.311-2  Contract clause.

    (a) The contracting officer shall insert the clause at 352.228-7, 
Insurance--Liability to Third Persons, in all solicitations and 
resulting cost-reimbursement contracts, in lieu of the clause at FAR 
52.228-7.



PART 330--COST ACCOUNTING STANDARDS--Table of Contents




    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).



                 Subpart 330.2--CAS Program Requirements



330.201-5  Waiver.

    (c) The requirements of FAR 30.201-5 shall be exercised by the 
Director, Office of Acquisition and Grants Management (DOAGM). Requests 
for waivers shall be forwarded through normal acquisition channels to 
the DOAGM.

[54 FR 24344, June 7, 1989]



PART 332--CONTRACT FINANCING--Table of Contents




                     Subpart 332.4--Advance Payments

Sec.
332.402  General.
332.403  Applicability.
332.406  Letters of credit.
332.407  Interest.
332.409  Contracting officer action.
332.409-1  Recommendation for approval.

             Subpart 332.5--Progress Payments Based on Costs

332.501  General.
332.501-2  Unusual progress payments.

                     Subpart 332.7--Contract Funding

332.702  Policy.
332.703  Contract funding requirements.
332.703-1  General.
332.704  Limitation of cost or funds.
332.705  Contract clauses.
332.705-2  Clauses for limitation of costs or funds.

                      Subpart 332.9--Prompt Payment

332.902  Definitions.
332.905  Invoice payments.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

    Source: 49 FR 14018, Apr. 9, 1984, unless otherwise noted.



                     Subpart 332.4--Advance Payments



332.402  General.

    (e) The determination that the making of an advance payment is in 
the public interest (See FAR 32.402(c)(1)(iii)(A)) shall be made by the

[[Page 101]]

respective principal official responsible for acquisition (PORA).

[52 FR 27560, July 22, 1987, as amended at 55 FR 42197, Oct. 18, 1990]



332.403  Applicability.

    All contracts for research work with educational institutions 
located in the United States shall provide for financing by use of 
advance payments, in reasonable amounts, unless otherwise prohibited by 
law.



332.406  Letters of credit.

    (c)(1) A blanket determination and findings authorizing interest 
free advance payments under a single letter of credit has been executed 
and remains in effect for each of the nonprofit organizations listed in 
Attachment I ``Single Letter of Credit Recipients and Central Point 
Addressees.'' These determinations and findings are applicable to all 
existing and future contracts entered into by the Department, its 
operating divisions, OS staff offices, and regional offices. All 
contracts with the listed organizations which require advance payments 
(whether under section 305 of the Federal Property and Administrative 
Services Act of 1949, as amended, or other statutory authority) shall 
provide for payment to be made under the appropriate letter of credit. 
The clause set forth in 352.232-73 shall be included in all such 
contracts and the cognizant fiscal office shall be apprised of its 
inclusion.
    (2) In those instances where it is practical and feasible to finance 
an advance payment under a letter of credit other than one which is 
incorporated under a single letter of credit described in paragraph 
(c)(1) above, a determination and findings shall be executed by the PORA 
if the cited authority is to be section 305 of the Federal Property and 
Administrative Services Act. In cases where an authority other than 
section 305 is to be used, a determination and findings shall be 
submitted to the appropriate official authorized by the cited statute to 
approve the advance payment.
    (3) The Treasury Department's letter of credit method of financing 
advance payments shall be employed, whenever feasible. Department-wide 
blanket letters of credit, which apply to the financing of research 
contracts and grants between the institution and all activities of the 
Department, shall be utilized to the maximum extent practicable. Where a 
particular educational institution is supported by research contracts 
and grants with only one operating division of the Department, a single 
letter of credit, applicable to all research contracts and grants 
between the institution and that operating division may be employed.

[49 FR 14018, Apr. 9, 1984, as amended at 50 FR 23133, May 31, 1985; 50 
FR 38004, Sept. 19, 1985; 51 FR 44294, Dec. 9, 1986; 55 FR 42197, Oct. 
18, 1990]



332.407  Interest.

    (d) The PORA is authorized to make the determinations in FAR 
32.407(d) and as follows. In addition to the interest-free advance 
payments for the types of contracts listed in FAR 32.407(d), advance 
payments without interest may be approved for nonprofit contracts which 
are without fee with educational institutions and other nonprofit 
organizations, whether public or private, which are for the performance 
of work involving health services, educational programs, or social 
service programs, including, but not limited to, programs such as:
    (1) Community health representative services for an Indian Tribe or 
Band;
    (2) Narcotic addict rehabilitative services;
    (3) Comprehensive health care service program for Model Neighborhood 
programs;
    (4) Planning and development of health maintenance organizations;
    (5) Dissemination of information derived from educational research;
    (6) Surveys or demonstrations in the field of education;
    (7) Producing or distributing educational media for handicapped 
persons including captioned films for the deaf;
    (8) Operation of language or area centers;
    (9) Conduct of biomedical research and support services;
    (10) Research surveys or demonstrations involving the training and 
placement of health manpower and health professionals, and dissemination 
of related information; and

[[Page 102]]

    (11) Surveys or demonstrations in the field of social service.

[49 FR 14018, Apr. 9, 1984, as amended at 51 FR 44294, Dec. 9, 1986; 52 
FR 27560, July 22, 1987; 55 FR 42197, Oct. 18, 1990]



332.409  Contracting officer action.



332.409-1  Recommendation for approval.

    The information in FAR 32.409-1 (or FAR 32.409-2) shall be 
transmitted to the PORA in the form of a briefing memorandum.

[49 FR 14018, Apr. 9, 1984, as amended at 51 FR 44294, Dec. 9, 1986; 52 
FR 27560, July 22, 1987; 55 FR 42197, Oct. 18, 1990]



             Subpart 332.5--Progress Payments Based on Costs



332.501  General.

[51 FR 44294, Dec. 9, 1986]



332.501-2  Unusual progress payments.

    (a)(3) The approval of an unusual progress payment shall be made by 
the appropriate principal official responsible for acquisition (PORA).

[51 FR 44294, Dec. 9, 1986, as amended at 52 FR 27560, July 22, 1987; 55 
FR 42197, Oct. 18, 1990]



                     Subpart 332.7--Contract Funding



332.702  Policy.

    An incrementally funded contract is a contract in which the total 
work effort is to be performed over multiple time periods and funds are 
allotted to cover discernible phases or increments of performance.
    (a) Incremental funding may be applied to cost-reimbursement type 
contracts for the acquisition of research and development and other 
types of nonpersonal, nonseverable services. It shall not be applied to 
contracts for construction services, architect-engineer services, or 
severable services. Incremental funding allows nonseverable cost-
reimbursement contracts, awarded for more than one year, to be funded 
from succeeding fiscal years.
    (b) It is departmental policy that contracts for projects of 
multiple year duration be fully funded, whenever possible, to cover the 
entire project. However, incrementally funded contracts may be used 
when:
    (1) A project, which is part of an approved program, is anticipated 
to be of multiple year duration, but funds are not currently available 
to cover the entire project;
    (2) The project represents a valid need of the fiscal year in which 
the contract is awarded and of the succeeding fiscal years of the 
project's duration, during which additional funds may be obligated by 
increasing the allotment to the contract;
    (3) The project is so significant to the approved program that there 
is reasonable assurance that it will command a high priority for 
proposed appropriations to cover the entire multiple year duration; and
    (4) The statement of work is specific and is defined by separate 
phases or increments so that, at the completion of each, progress can be 
effectively measured.

[49 FR 14018, Apr. 9, 1984, as amended at 57 FR 35473, Aug. 10, 1992]



332.703  Contract funding requirements.



332.703-1  General.

    (b) The following general guidelines are applicable to incrementally 
funded contracts:
    (1) The estimated total cost of the project (all planned phases or 
increments) is to be taken into consideration when determining the 
requirements which must be met before entering into the contract; i.e., 
justification for noncompetitive acquisition, approval of award, etc.
    (2) The RFP and resultant contract are to include a statement of 
work which describes the total project covering the proposed multiple 
year period of performance and indicating timetables consistent with 
planned phases or increments and corresponding allotments of funds.
    (3) Offerors will be expected to respond to RFPs with technical and 
cost proposals for the entire project indicating distinct break-outs of 
the planned phases or increments.
    (4) Negotiations will be conducted based upon the total project, 
including

[[Page 103]]

all planned phases or increments, and the multiple year period of 
performance.
    (5) Sufficient funds must be obligated under the basic contract to 
cover no less than the first year of performance, unless the contracting 
officer determines it is advantageous to the Government to fund the 
contract for a lesser period. In that event, the contracting officer 
shall ensure that the obligated funds are sufficient to cover a complete 
phase or increment of performance representing a material and measurable 
part of the total project, and the contract period shall be reduced 
accordingly.
    (6) Because of the magnitude of the scope of work and multiple year 
period of performance under an incrementally funded contract, there is a 
critical need for careful program planning. Program planning must 
provide for appropriate surveillance of the contractor's performance and 
adequate controls to ensure that projected funding will not impinge on 
the program office's ability to support, within anticipated 
appropriations, other equally important contract or grant programs.
    (7) An incrementally funded contract must contain precise 
requirements for progress reports to enable the project officer to 
effectively monitor the contract. The project officer should be required 
to prepare periodic performance evaluation reports to facilitate the 
program office's ultimate decision to allot additional funds under the 
contract.



332.704  Limitation of cost or funds.

    For detailed instruction regarding administrative actions in 
connection with anticipated cost overruns, see subpart 342.71.



332.705  Contract clauses.



332.705-2  Clauses for limitation of costs or funds.

    (c) (1) When using the Limitation of Funds clause (FAR 52.232-22) in 
the solicitation and resultant incrementally funded contract, the 
contracting officer shall insert the following legend between the clause 
title and the clause text:

    (This clause supersedes the Limitation of Cost clause found in the 
General Provisions of this contract.)

    (2) The contracting officer shall also include a clause reading 
substantially as that shown in 352.232-74 in the Special Provisions of 
the resultant incrementally funded contract.
    (3) The request for proposals must inform prospective offerors of 
the Department's intention to enter into an incrementally funded 
contract. Therefore, the contracting officer shall include the provision 
at 352.232-75 in the request for proposals whenever the use of 
incremental funding is contemplated.



                      Subpart 332.9--Prompt Payment



332.902  Definitions.

    Fiscal office means the office responsible for: (a) Determining 
whether interest penalties are due a contractor and, if so, the amount, 
(b) determining whether an invoice offers a financially advantageous 
discount, (c) maintaining records for and submission of prompt payment 
reports to the Deputy Assistant Secretary, Finance (DASF), ASMB, OS, and 
(d) processing payments to the Treasury Department to allow for payment 
to a contractor when due. The fiscal office shall fulfill the roles of 
the ``designated billing office'' and the ``designated payment office.''

[53 FR 43208, Oct. 26, 1988]



332.905  Invoice payments.

    (a)(1)(ii), (b)(4), (c)(5). In most instances, the contracting 
officer will use the seven (7) day constructive acceptance period 
(specified in paragraph (a)(6)(i) of the Prompt Payment clause at FAR 
52.232-25, paragraph (a)(5)(i) of the Prompt Payment clause at FAR 
52.232-26, and paragraph (a)(4)(i) of the Prompt Payment clause at FAR 
52.232.-27) for solicitations and resultant contracts as the basis for 
the fiscal office's computation of interest penalties. However, where 
the contracting officer extends the constructive acceptance period, 
under the conditions described in FAR 32.905, the extension shall be 
coordinated with the fiscal office. A constructive acceptance period of 
less than seven (7) days is not authorized.

[[Page 104]]

    (j) When the contracting officer mistakenly receives an invoice 
first, or is specified in the contract as the first recipient of the 
invoice, and the contract requires payment with thirty (30) days from 
receipt of a ``proper invoice'' (as defined by FAR 32.902), the 
contracting officer shall review the invoice to determine whether or not 
it is proper; and, if so, shall approve the invoice and submit it to the 
fiscal office within sixteen (16) days from the date of receipt. When 
the contracting officer is the first recipient of the invoice and the 
contract establishes a payment due date of more than thirty (30) days 
after receipt, the contracting officer shall review, approve, and submit 
the ``proper invoice'' to the fiscal office at least fourteen (14) days 
prior to the payment due date (unless the contracting officer and fiscal 
office agree, prior to contract award, to a longer period).

[54 FR 43966, Oct. 30, 1989]



PART 333--PROTESTS, DISPUTES, AND APPEALS--Table of Contents




                         Subpart 333.1--Protests

Sec.
333.101  Definitions.
333.102  General.
333.103  Protests to the agency.
333.104  Protests to GAO.
333.105  Protests to GSBCA.
333.106  Solicitation provision and contract clause.

                   Subpart 333.2--Disputes and Appeals

333.203  Applicability.
333.209  Suspected fraudulent claims.
333.210  Contracting officer's authority.
333.211  Contracting officer's decision.
333.212  Contracting officer's duties upon appeal.
333.212-70  Formats.
333.213  Obligation to continue performance.
333.214  Contract clause.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).



                         Subpart 333.1--Protests

    Source: 50 FR 23133, May 31, 1985, unless otherwise noted.



333.101  Definitions.

    Filed, as used in this subpart, means receipt in the contracting 
office, the immediate Office of the Secretary, the General Accounting 
Office (GAO), or the General Services Board of Contract Appeals (GSBCA), 
as the case may be.



333.102  General.

    (a) Contracting officers shall consider all protests or objections 
regarding the award of a contract, whether submitted before or after 
award, provided the protests are filed in a timely manner and are 
submitted by interested parties. To be considered timely, protests based 
on alleged improprieties in any type of solicitation which are apparent 
before bid opening or the closing date for receipt of proposals shall be 
filed prior to bid opening or the closing date for receipt of proposals. 
In the case of negotiated acquisitions, alleged improprieties which do 
not exist in initial solicitations, but which are subsequently 
incorporated by amendment, must be protested not later than the next 
closing date for receipt of proposals following the incorporation. In 
other cases, protests shall be filed not later than ten (10) Federal 
Government working days after the basis for protest is known or should 
have been known, whichever is earlier. Provided a timely protest has 
been filed initially with the contracting officer, any subsequent 
protest to the Secretary or GAO filed within ten (10) Federal Government 
working days of notification of adverse action will be considered. 
Written confirmation of all oral protests shall be requested from 
protestants and must be timely filed.
    (d)(1) Office of Acquisition and Grants Management (OAGM) has been 
designated as the headquarters office to serve as the liaison for 
protests lodged with GAO. Within OAGM, the Departmental Protest Control 
Officer (DPCO) has been designated as the individual to be contacted by 
GAO.
    (2) The Office of General Counsel--Business and Administrative Law 
Division (OGC-BAL) has been designated to serve as the liaison for 
protests lodged with the GSBCA.
    (3) Each contracting activity shall designate a protest control 
officer to serve as an advisor to the contracting officer and to monitor 
protests from the time of initial notification until the protest has 
been resolved. The protest control officer should be a senior

[[Page 105]]

acquisition specialist in the headquarters acquisition staff office. In 
addition, contracting activities should designate similar officials 
within their principal components to the extent practicable and 
feasible. A copy of each appointment and termination of appointment of 
protest control officers shall be forwarded to the Director, OAGM.

[50 FR 23133, May 31, 1985, as amended at 54 FR 24344, June 7, 1989; 56 
FR 47003, Sept. 17, 1991]



333.103  Protests to the agency.

    (a)(2) The contracting officer is authorized to make the 
determination, using the criteria in FAR 33.103(a), to award a contract 
notwithstanding the protest after obtaining the concurrence of the 
contracting activity's protest control officer and OGC-BAL. If the 
protest has been lodged with the Secretary, is addressed to the 
Secretary, or requests referral to the Secretary, approval shall also be 
obtained from the Director, OAGM before making the award.
    (3) The contracting officer shall require written confirmation of 
any oral protest. To be considered timely, the written confirmation must 
be filed in accordance with the applicable provisions in 333.102(a). In 
the following cases, written protests received by the contracting 
officer before award shall be forwarded, through acquisition channels, 
to the DPCO for processing. Files concerning these protests shall be 
submitted, in duplicate, by the most expeditious means, marked 
``IMMEDIATE ACTION--PROTEST BEFORE AWARD'', and contain the 
documentation referenced in 333.104(a)(3).
    (i) The protestant requests referral to the Secretary of Health and 
Human Services;
    (ii) The protest is known to have been lodged with the Comptroller 
General or the Secretary, or is addressed to either; or
    (iii) The contracting officer entertains some doubt as to the proper 
action regarding the protest or believes it to be in the best interest 
of the Government that the protest be considered by the Secretary or the 
Comptroller General.

Otherwise, submissions of protests to the DPCO may be dispensed with by 
the contracting officer if he/she is reasonably satisfied that the 
protest is groundless. In this instance, the contracting officer, with 
the concurrence of the contracting activity's protest control officer 
and OGC-BAL, may disallow the protest.
    (4) Protests received after award shall be treated as indicated in 
333.103(a)(3), above; however, if the files are to be submitted to the 
DPCO for action, they shall be marked ``IMMEDIATE ACTION--PROTEST AFTER 
AWARD''.

[50 FR 23133, May 31, 1985, as amended at 54 FR 24344, June 7, 1989; 56 
FR 47003, Sept. 17, 1991; 57 FR 35473, Aug. 10, 1992]



333.104  Protests to GAO.

    (a) General. (1) A protestor shall be required to furnish a copy of 
its complete protest to the contracting officer no later than the first 
working day after the protest is filed with GAO. Immediately upon 
receiving a copy of the complete protest, the contracting officer shall 
telephonically notify the contractng activity's protest control officer, 
who, in turn, shall immediately notify the DPCO. The contracting officer 
shall provide the name of the protestor, the solicitation number, the 
date and time the protest was received from the protestor, and any other 
significant information.
    (3) Protests lodged with GAO, whether before or after award, shall 
be processed by the DPCO. Protest files shall be prepared by the 
contracting office and distributed as follows: two copies to the DPCO, 
one copy to the contracting activity's protest control officer, and one 
copy to OGC-BAL. Files shall include the following documentation:
    (i) The contracting officer's statement of facts and circumstances, 
including a discussion of the merits of the protest, and conclusions and 
recommendations, including documentary evidence on which they are based.
    (ii) A copy of the IFB or RFP.
    (iii) A copy of the abstract of bids or proposals.
    (iv) A copy of the bid or proposal of the successful offeror to whom 
award

[[Page 106]]

has been made or is proposed to be made.
    (v) A copy of the bid or proposal of the protestant, if any.
    (vi) The current status of award. When award has been made, this 
shall include whether performance has commenced, shipment or delivery 
has been made, or a stop work order has been issued.
    (vii) A copy of any mutual agreement to suspend work on a no-cost 
basis, when appropriate (see FAR 33.104(c)(4)).
    (viii) Copies of the notice of protest given offerors and other 
parties when the notice is appropriate (see FAR 33.104(a)(4)).
    (ix) A copy of the technical evaluation report required by 315.608-
76, when applicable, and a copy of each evaluator's rating for all 
proposals.
    (x) A copy of the negotiation memorandum, when applicable (see 
315.672).
    (xi) The name and telephone number of the person in the contracting 
office who may be contacted for information relevant to the protest, and
    (xii) Any document which is referred to in the contracting officer's 
statement of facts.
    The files shall be assembled in an orderly manner and shall include 
an index of enclosures.
    (4) The contracting officer is responsible for making the necessary 
notifications referenced in FAR 33.104(a)(4). Copies of the views of 
interested parties submitted in response to the notifications shall be 
immediately provided to the DPCO upon receipt by the contracting 
officer.
    (5) The contracting officer shall furnish the protest file 
containing the documentation specified in 333.104(a)(3), except item 
(i), to the DPCO within twelve (12) work days from receipt of the 
protest. The contracting officer shall provide the documentation 
required by item (i) of 333.104(a)(3) to the DPCO within nineteen (19) 
work days from receipt of the protest. (The contracting activity's 
protest control officer may provide a written opinion and recommendation 
on the protest to the DPCO within nineteen (19) work days from receipt 
of the protest by the contracting officer.) The contracting officer 
shall clearly identify any documents or portions of documents he or she 
desires to withhold from the protester, and shall include justification 
for the withholding of each document or portion of a document in the 
contracting officer's statement of facts. Since the statute allows only 
a short time period in which to respond to protests lodged with GAO, the 
contracting officer shall handle each protest on a priority basis.
    The DPCO shall prepare the report and submit it and the protest file 
to GAO in accordance with FAR 33.104(a)(5).
    (6)(i) The DPCO shall take the necessary actions specified in FAR 
33.104(a)(6)(i) after receiving all the documentation required by 
333.104(a)(3) from the contracting officer.
    (ii) Since the DPCO will furnish the report to GAO, the protestor, 
and other interested parties, comments on the report from the protester 
and other interested parties will be requested to be sent to the DPCO.
    (7) The Office of Acquisition and Grants Management (OAGM) has been 
designated as the headquarters office, and the DPCO as the individual, 
that GAO should contact concerning all protests lodged with GAO.
    (b) Protests before award. (1) To make an award notwithstanding a 
protest, the contracting officer shall prepare a finding using the 
criteria in FAR 33.104(b)(1), have it executed by the principal official 
responsible for acquisition (PORA), and forward it, along with a written 
request for approval to make the award, to the Director, OAGM.
    (2) If the request to make an award notwithstanding the protest is 
approved by the Director, OAGM, the DPCO shall notify GAO. Whether the 
request is approved or not, the DPCO shall telephonically notify the 
contracting activity's protest control officer of the decision by the 
Director, OAGM, and the contracting activity's protest control officer 
shall immediately notify the contracting officer. The DPCO shall confirm 
the decision by memorandum to the contracting activity's protest control 
officer.
    (4) The contracting office shall prepare the protest file in 
accordance with 333.104(a)(2), and forward it, in duplicate, to the DPCO 
(see 333.104(a)(4)).

[[Page 107]]

The file shall be marked ``IMMEDIATE ACTION--PROTEST BEFORE AWARD.''
    (c) Protests after award. (2) If the contracting officer believes 
performance should be allowed to continue notwithstanding the protest, a 
finding shall be prepared by the contracting officer, executed by the 
PORA, and forwarded, along with a written request for approval, to the 
Director, OAGM. The same procedures for notification stated in 
333.104(b)(2), above shall be followed.
    (6) The contracting officer shall prepare the protest file in 
accordance with 333.104(a)(3), and forward it, in duplicate, to the DPCO 
(see 333.104(a)(5)). The file shall be marked ``IMMEDIATE ACTION--
PROTEST AFTER AWARD.''
    (d) Findings and notice. The contracting officer shall perform the 
actions required by FAR 33.104(d); however, notification to GAO shall be 
made by the DPCO.
    (g) Notice to GAO. The Director, Office of Acquisition and Grants 
Management shall be the official to comply with the requirements of FAR 
33.104(g).
    (i) Express option. When GAO invokes the express option, the 
contracting officer shall prepare the complete protest file as described 
in 333.104(a)(3), to include item (i), and deliver it (hand-carry, if 
necessary) to the DPCO no later than the close of business on the ninth 
work day after the express option is invoked. The contracting officer 
shall involve OGC-BAL as early as possible after receiving notification 
of the invocation of the express option, and obtain the concurrence of 
the cognizant OGC-BAL attorney prior to transmitting the protest file to 
the DPCO. The DPCO shall prepare the report and submit it and the 
protest file to GAO.

[50 FR 23133, May 31, 1985, as amended at 50 FR 38004, Sept. 19, 1985; 
54 FR 24344, June 7, 1989; 55 FR 42197, Oct. 18, 1990; 56 FR 47003, 
Sept. 17, 1991]



333.105  Protests to GSBCA.

    (a)(1) The contracting officer shall give telephone notification to 
the DPCO, OGC-BAL, and the contracting activity's protest control 
officer immediately upon notification of the protest.
    (2)(i) The contracting officer is responsible for complying with the 
requirement in FAR 33.105(a)(2)(i).
    (ii) The cognizant OGC-BAL attorney is responsible for complying 
with the requirement stated in FAR 33.105(a)(2)(ii).
    (b) As soon as possible but no later than six (6) work days after 
the filing of the protest, a copy of the protest file containing all 
documents (see FAR 33.105(b), especially (b)(7)), and labeled on the 
cover ``FOR USE BY DPCO ONLY'', shall be in the hands of the DPCO for 
review. Simultaneously, two copies of the same protest file provided to 
the DPCO shall be provided to the cognizant OGC-BAL attorney. These two 
copies shall be labeled on the cover ``FOR USE BY OGC-BAL.'' After 
consultation with the cognizant OGC-BAL attorney, the DPCO shall 
transmit the protest file to the GSBCA.
    (1) Rather than furnishing a decision, the contracting officer shall 
include a statement of facts and circumstances and a discussion of the 
merits of the protest, as well as conclusions and recommendations and 
documentary evidence on which they are based. These statements shall be 
reviewed by the cognizant OGC-BAL attorney before being finalized.
    (7) The DPCO shall provide all parties with a list of documents 
furnished to the GSBCA for in camera review.
    (10) The copies of the protest files to be provided to the DPCO and 
OGC-BAL shall also contain the documents or information specified in 
333.104(a)(3)(vii) through (xii). The file shall be assembled in an 
orderly manner and include an index of enclosures.
    (c) The cognizant OGC-BAL attorney is responsible for complying with 
the requirement stated in FAR 33.105(c).
    (d)(1) If the protest requests a suspension of acquisition 
authority, the contracting officer must make this known to the DPCO, 
OGC-BAL, and the contracting activity's protest control officer at the 
time of the initial telephone notification of the filing of the protest 
to afford an opportunity for the DPCO, OGC-BAL, principal official 
responsible for acquisition (PORA), and contracting officer to take 
appropriate action.

[[Page 108]]

    (2) If it can be established that the conditions stated in FAR 
33.105(d)(1)(i) and (ii) are present, the contracting officer shall 
prepare a D&F setting forth the circumstances. The D&F shall be 
concurred in by the cognizant OGC-BAL attorney before being executed by 
the PORA (not delegable).
    (g) If an appeal is to be made by the Department regarding a final 
decision issued by the GSBCA, it shall be made by OGC-BAL.

[50 FR 23133, May 31, 1985, as amended at 50 FR 38004, Sept. 19, 1985; 
56 FR 47003, Sept. 17, 1991]



333.106  Solicitation provision and contract clause.

    (a) The provision at FAR 52.233-2, Service of Protest, shall be 
completed by entering the name and complete mailing address of the 
contracting officer.

[50 FR 23133, May 31, 1985, as amended at 50 FR 38004, Sept. 19, 1985]



                   Subpart 333.2--Disputes and Appeals

    Source: 53 FR 15563, May 2, 1988, unless otherwise noted.



333.203  Applicability.

    (c) The Armed Services Board of Contract Appeals (ASBCA) has been 
designated by the Secretary as the authorized ``Board'' to hear and 
determine disputes for the Department.



333.209  Suspected fraudulent claims.

    The contracting officer shall submit any instance of a contractor's 
suspected fraudulent claim to the Office of the Inspector General for 
investigation.



333.210  Contracting officer's authority.

    The contracting officer shall refer a proposed final decision to the 
Office of General Counsel, Business and Administrative Law Division 
(OGC-BAL), or the Regional Attorney in the HHS regional office servicing 
the region in which the contracting officer is located, for advice as to 
the legal sufficiency and format before sending the final decision to 
the contractor. The contracting officer shall provide OGC-BAL or the 
Regional Attorney with the pertinent documents with the submission of 
each proposed final decision.



333.211  Contracting officer's decision.

    (a)(2) See 333.210.
    (a)(4)(v) When using the paragraph in FAR 33.211(a)(4)(v), the 
contracting officer shall insert the words ``Armed Services'' before 
each mention of the term ``Board of Contract Appeals''.
    (c)(2) The contracting officer does not have jurisdiction to 
consider a claim from the contractor over $50,000, unless that claim has 
been certified.
    (h) At any time within the period of appeal, the contracting officer 
may modify or withdraw his/her final decision. If an appeal from the 
final decision has been taken to the ASBCA, the contracting officer will 
forward his/her recommended action to OGC-BAL or the cognizant Regional 
Attorney with the supplement to the contract file which supports the 
recommended correction or amendment.



333.212  Contracting officer's duties upon appeal.

    (a) Appeals shall be governed by the rules set forth in the ``Rules 
of the Armed Services Board of Contract Appeals'', or by the rules 
established by the U.S. Claims Court, as appropriate.
    (b) OGC-BAL or the cognizant Regional Attorney is designated as the 
Government Trial Attorney to represent the Government in the defense of 
appeals before the ASBCA. A decision by the ASBCA will be transmitted by 
the Government Trial Attorney to the appropriate contracting officer for 
compliance in accordance with the ASBCA's decision.
    (c) If an appeal is filed with the ASBCA, the contracting officer 
shall assemble a file within 30 days of receipt of an appeal, or advice 
that an appeal has been filed, that consists of all documents pertinent 
to the appeal, including:
    (1) The decision and findings of fact from which the appeal is 
taken;
    (2) The contract, including specifications and pertinent 
modifications, plans and drawings;

[[Page 109]]

    (3) All correspondence between the parties pertinent to the appeal, 
including the letter or letters of claims in response to which the 
decision was issued;
    (4) Transcripts of any testimony taken during the course of 
proceedings, and affidavits or statements of any witnesses on the matter 
in dispute made prior to the filing of the notice of appeal with the 
Board; and
    (5) Any additional information considered pertinent.

The contracting officer shall furnish the appeal file to the Government 
Trial Attorney for review and approval. After approval, the contracting 
officer shall prepare four copies of the file, one for the ASBCA, one 
for the appellant, one for the Government Trial Attorney, and one for 
the contracting office.
    (d) At all times after the filing of an appeal, the contracting 
officer shall render whatever assistance is requested by the Government 
Trial Attorney. When an appeal is set for hearing, the concerned 
contracting officer, acting under the guidance of the Government Trial 
Attorney, shall be responsible for arranging for the presence of 
Government witnesses and specified physical and documentary evidence at 
both the pre-hearing conference and the hearing.
    (e) If a contractor which has filed an appeal with the ASBCA elects 
to accept fully the decision from which the appeal was taken, or any 
modification to it, and gives written notification of acceptance to the 
Government Trial Attorney or the concerned contracting officer, the 
Government Trial Attorney will notify the ASBCA of the disposition of 
the dispute in accordance with Rule 27 of the ASBCA.
    (f) If the contractor has elected to appeal to the U.S. Claims 
Court, the U.S. Department of Justice will represent the Department. 
However, the contracting officer shall still coordinate all actions 
through OGC-BAL.



333.212-70  Formats.

    (a) The following format is suggested for use in transmitting appeal 
files to the ASBCA:

Your reference:

_______________________________________________________________________
(Docket No.)
_______________________________________________________________________
(Name)

    Recorder, Armed Services Board of Contracts Appeals, Skyline Six, 
5109 Leesburg Pike, Falls Church, Virginia 22041.

Dear (Name):
    Transmitted herewith are documents relative to the appeal under 
Contract No.________ with the (name of contractor), in accordance with 
the procedures under Rule 4.
    The Government Trial Attorney for this case is (Insert Division of 
Business and Administrative Law, Office of General Counsel, Department 
of Health and Human Services, 330 Independence Avenue SW., Washington, 
DC 20201, or Regional Attorney and office address, as appropriate).
    The request for payment of charges resulting from the processing of 
this appeal should be addressed to: (Insert name and address of 
cognizant finance office.)

    Sincerely yours,

    Contracting Officer

Enclosures

    (b) The following format is suggested for use in notifying the 
appellant that the appeal file was submitted to ASBCA:

(Contractor Address)

_______________________________________________________________________

_______________________________________________________________________
    Dear ________:
    An appeal file has been compiled relative to the appeal under 
Contract No. ________, and has been submitted to the Armed Services 
Board of Contract Appeals (ASBCA). The enclosed duplicate of the appeal 
file is identical to that submitted to the Board, except that contract 
documents which you already have may have been excluded.
    You may furnish or suggest any additional information deemed 
pertinent to the appeal to the Armed Services Board of Contract Appeals 
according to their rules.
    The ASBCA will provide you with further information concerning this 
appeal.

    Sincerely yours,

    Contracting Officer

Enclosure



333.213  Obligation to continue performance.

    (a) The Disputes clause at FAR 52.233-1 shall be used without the 
use of Alternate I. However, if the contracting officer determines that 
the Government's interest would be better served by use of paragraph (h) 
in Alternate I, he/she must request approval for its use from the 
Director, Division

[[Page 110]]

of Acquisition Policy (through normal acquisition channels).

[53 FR 15563, May 2, 1988, as amended at 54 FR 24344, June 7, 1989]



333.214  Contract clause.

    The clause at FAR 52.233-1 shall be used in all circumstances except 
as indicated in 333.213.

[[Page 111]]



             SUBCHAPTER F--SPECIAL CATEGORIES OF CONTRACTING





PART 334--MAJOR SYSTEM ACQUISITION--Table of Contents




    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).



334.003  Agency head responsibilities.

    The Department's implementation of OMB Circular No. A-109 may be 
found in Chapter 1-150 of the General Administration Manual.

[49 FR 14020, Apr. 9, 1984]



PART 335--RESEARCH AND DEVELOPMENT CONTRACTING--Table of Contents




Sec.
335.070  Cost-sharing.
335.070-1  Policy.
335.070-2  Amount of cost-sharing.
335.070-3  Method of cost-sharing.
335.070-4  Institutional cost-sharing agreements.
335.070-5  Contract clauses.
335.070-6  Contract award.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

    Source: 49 FR 14020, Apr. 9, 1984, unless otherwise noted.



335.070  Cost-sharing.



335.070-1  Policy.

    (a) In addition to utilizing cost-sharing type contracts when 
required by statute, the desirability of utilizing this type of 
contract, when authorized should also be considered under certain 
circumstances when not required by statute. Contractors should be 
encouraged to contribute to the cost of performing research where there 
is a probability that the contractor will receive present or future 
benefits from participation, such as, increased technical know-how, 
training to employees, acquisition of equipment, use of background 
knowledge in future contracts, etc. Cost-sharing is intended to serve 
the mutual interest of the Government and the performing organization by 
helping to assure efficient utilization of the resources available for 
the conduct of research projects and by promoting sound planning and 
prudent fiscal policies by the performing organization. If cost-sharing 
is not required by statute, encouragement should be given to 
organizations to contribute to the cost of performing research under 
research contracts unless the contracting officer determines that a 
request for cost-sharing would not be appropriate because of the 
following circumstances:
    (1) The particular research objective or scope of effort for the 
project is specified by the Government rather than proposed by the 
performing organization. This would usually include any formal 
Government requests for proposals for a specific project.
    (2) The research effort has only minor relevance to the non-Federal 
activities of the performing organization, and the organization is 
proposing to undertake the research primarily as a service to the 
Government.
    (3) The organization has little or no non-Federal sources or funds 
from which to make a cost contribution. Cost-sharing should generally 
not be requested if cost-sharing would require the Government to provide 
funds through some other means (such as fees) to enable the organization 
to cost-share. It should be recognized that those organizations which 
are predominantly engaged in research and development and have little or 
no production or other service activities may not be in a favorable 
position to make a cost contribution.
    (b) Cost-sharing may be negotiated in either of two ways. When cost-
sharing is negotiated on a contract by contract basis, the 
responsibility for negotiating the cost-sharing arrangement is that of 
the contracting officer. In the case of institutional cost-sharing 
arrangements (see 335.070-4), the responsibility for negotiating cost-
sharing is that of the Office of the Assistant Secretary for Health. 
Each research contract file should show whether the contracting officer 
considered cost-sharing appropriate for that particular contract and, 
except when an institutional cost-sharing agreement is applicable, in 
what amount. If cost-sharing was not considered appropriate, the file 
must indicate the factual basis for that decision, e.g., ``Because the 
contractor will derive no

[[Page 112]]

benefits from this award that can be applied to its commercial 
activities, cost-sharing is not considered appropriate.'' The 
contracting officer may wish to coordinate with the project officer 
before documenting this decision.
    (c) If the contracting officer considers cost-sharing to be 
appropriate for a research contract and the contractor refuses to accept 
this type of contract, the award may be made without cost-sharing, 
except when cost-sharing is required by statute, if the contracting 
officer concludes that payment of the full cost of the research effort 
is necessary in order to obtain the services of that particular 
contractor.

[49 FR 14020, Apr. 9, 1984; 49 FR 36110, Sept. 14, 1984]



335.070-2  Amount of cost-sharing.

    When cost-sharing is required by statute or determined to be 
appropriate, the following guidelines shall be utilized in determining 
the amount of cost participation by the contractor, except where an 
institutional cost-sharing agreement is applicable:
    (a) Cost participation by educational institutions and other not-
for-profit or nonprofit organizations should normally be at least 1 
percent of the total project cost. In many cases, cost-sharing of less 
than 5 percent of the total project cost would be appropriate in view of 
the organizations' nonprofit status and their normally limited ability 
to recover the cost of such participation from non-Federal sources. 
However, in some cases, it may be appropriate for educational 
institutions to provide a higher degree of cost-sharing, such as when 
the cost of the research consists primarily of the academic year salary 
of faculty members (or when the equipment acquired by the institution 
for the project will be of significant value to the institution in its 
educational activities). The percentages stated above are not intended 
as a substitution for those set forth in any legislation and are not to 
be used in lieu of those contained in that legislation.
    (b) The amount of cost participation by commercial or industrial 
organizations should depend to a large extent on whether the research 
effort or results are likely to enhance the performing organization's 
capability, expertise, or competitive position, and the value of such 
enhancement to the performing organization. It should be recognized that 
those organizations which are predominantly engaged in research and 
development and have little or no production or other service activities 
may not be in a favorable position to derive a monetary benefit from 
their research under Federal agreements. Therefore, cost participation 
by commercial or industrial organizations could reasonably range from as 
little as 1 percent or less of the total project cost, to more than 50 
percent of the total project cost.
    (c) If the performing organization will not acquire title to or the 
right to use inventions, patents, or technical information resulting 
from the research project, it would generally be appropriate to obtain 
less cost-sharing than in cases in which the performer acquires such 
rights.
    (d) When cost-sharing is required by statute, cost participation of 
less than 1 percent may be appropriate if consistent with the provisions 
of the statute, and:
    (1) A formal request for proposal is issued;
    (2) The contractor proposes to perform the research primarily as a 
service to the Government; or
    (e) The contractor has little or no non-Federal sources of funds 
from which to make a cost contribution.
    (3) A fee or profit will usually not be paid to the performing 
organization if the organization is to contribute to the cost of the 
research effort, but the amount of cost-sharing may be reduced to 
reflect the fact that the organization is foregoing its normal fee or 
profit in the research. However, if the research is expected to be of 
only minor value to the performing organization and if cost-sharing is 
not required by statute, it may be appropriate for the performer to make 
a contribution in the form of a reduced fee or profit rather than 
sharing the costs of the project.
    (f) The organization's participation may be considered over the 
total term of the project so that a relatively high contribution in one 
year may be offset

[[Page 113]]

by a relatively low contribution in another.
    (g) A relatively low degree of cost-sharing may be appropriate if, 
in the view of the operating divisions or their subordinate elements, an 
area of research requires special stimulus in the national interest.
    (h) In the final analysis, the amount of cost participation should 
reflect the mutual agreement of the parties, provided that it is 
consistent with any statutory requirements.



335.070-3  Method of cost-sharing.

    Cost-sharing on individual contracts may be accomplished either by a 
contribution of part or all of one or more elements of allowable cost of 
the work being performed, or by a fixed amount or stated percentage of 
the total allowable costs of the project. Costs so contributed may not 
be charged to the Government under any other grant or contract 
(including allocations to other grants or contracts as part of any 
independent research and development program).

[49 FR 14020, Apr. 9, 1984. Correctly designated at 49 FR 36110, Sept. 
14, 1984]



335.070-4  Institutional cost-sharing agreements.

    (a) An institutional cost-sharing agreement covers the aggregate of 
some or all of the research projects supported by HHS research contracts 
and grants at a given performing organization. With respect to 
contracts, these agreements will apply only to cost-sharing type 
contracts resulting from unsolicited proposals and awarded without fee 
or profit. Eligibility for institutional cost-sharing agreements is 
limited to nonprofit institutions of higher education and other public 
or private nonprofit or not-for-profit organizations. Usually, a single 
agreement will cover all applicable research projects at a given 
performing organization; however, in unusual cases, separate agreements 
for individual departments or locations of the performing organization 
may be negotiated if deemed advantageous.
    (b) The institutional cost-sharing agreements establish an overall 
sharing ratio applicable to the aggregate of all covered projects. 
Individual awards will incorporate the institutional agreement by 
reference, but will not establish a specific sharing ratio for the 
individual project. The amount of sharing on any particular project will 
therefore be left to the discretion of the performing organization, and 
relatively high contributions on some projects may offset relatively low 
contributions on other projects, provided that the agreed aggregate 
contribution is made during each of the contractor's fiscal years, and a 
contribution, even if nominal, is made to each covered project.
    (c) The Public Health Service shall be responsible for negotiating 
all HHS institutional cost-sharing agreements. Agreements, when 
negotiated, will be binding upon all HHS activities. Eligible 
contractors wishing to negotiate institutional cost-sharing agreements 
should contact the Division of Grants and Contracts, Office of Resource 
Management, Public Health Service, Room 18 A 19, Parklawn Building, 5600 
Fishers Lane, Rockville, Maryland 20857.
    (1) All necessary implementing instructions to cover matters such as 
content of proposals, format of agreements, documentation, etc. shall be 
issued by the Public Health Service, subject to the prior approval of 
the Office of Acquisition and Grants Management.
    (2) The Public Health Service shall provide the Office of 
Acquisition and Grants Management, and the Department's operating 
divisions with current listings of all institutional cost-sharing 
agreements, indicating the date on which they became effective with 
respect to contracts. Copies of individual agreements will be made 
available to the Department's other activities upon request. Each 
activity shall designate only one individual who shall be authorized to 
make such requests.
    (d) The amount of cost-sharing negotiated under an institutional 
cost-sharing agreement will be determined in accordance with the 
appropriate guidelines contained in ``A Guide to Institutional Cost 
Sharing Agreements'' issued by the Office of Resource Management, PHS. 
The extent to which the performing organization shared in the costs of 
HHS-sponsored research in the

[[Page 114]]

past, and its anticipated ability to do so in the future, should also be 
taken into account.

[49 FR 14020, Apr. 9, 1984, as amended at 54 FR 24344, June 7, 1989]



335.070-5  Contract clauses.

    Clauses for cost sharing in individually negotiated contracts or 
under institutional agreements are set forth in 352.232-71.



335.070-6  Contract award.

    In consonance with the Department's objectives of competition and 
support of the small business program, award of contracts should not be 
made solely on the basis of ability or willingness to cost-share. Awards 
should be made primarily on the contractor's competence and only after 
adequate competition has been obtained among large and small business 
organizations whenever possible. The offeror's willingness to share 
costs should not be considered in the technical evaluation process but 
as a business consideration, which is secondary to selecting the best 
qualified source.



PART 337--SERVICE CONTRACTING--Table of Contents




                Subpart 337.1--Service Contracts--General

Sec.
337.101  Definitions.
337.103  Contracting officer responsibility.
337.104  Personal services contracts.
337.109  Services of quasi-military armed forces.

                   Subpart 337.2--Consulting Services

337.204  Policy.
337.270  Consulting services reporting.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

    Source: 49 FR 14022, Apr. 9, 1984, unless otherwise noted.



                Subpart 337.1--Service Contracts--General



337.101  Definitions.

    Service contract. A contract may require the furnishing of both 
property and services, such as a research and development contract which 
requires a final report. In a case such as this, this subpart will apply 
to the extent that the furnishing of services is involved. Other 
examples of service contracts include training and education, surveys 
and data collection, data processing, medical services, and stenographic 
services.



337.103  Contracting officer responsibility.

    (b) Contract actions for the services of experts and consultants are 
also exempt from the requirements of FAR Part 37.103(a)(3); they are to 
be certified in accordance with the provisions in General Administration 
Manual Chapter 8-15.
    (c) For negotiated acquisitions, the determination shall be included 
as a statement in the negotiation memorandum. For sealed bid 
acquisitions, the determination shall be included as a separate 
statement in the contract file.
    (d) In most cases, gathering the information and data on which to 
base the determination should be a joint effort between contracting and 
program personnel. The contracting officer shall request the advice of 
the Office of General Counsel and/or the personnel office before 
processing any request to acquire services if there is doubt as to 
whether an employer-employee relationship would be involved in 
performance of the contract.

[49 FR 14022, Apr. 9, 1984, as amended at 50 FR 23126, May 31, 1985; 50 
FR 38004, Sept. 19, 1985]



337.104  Personal services contracts.

    (a) As indicated in FAR 37.104, the paramount consideration in 
determining if an employer-employee relationship exists is the presence 
of direction or supervision by Government personnel of contractor 
employees, as a result of either the inherent nature of the service or 
the manner in which the service is provided. A personal service 
relationship exists if this direction or supervision is necessary to:
    (1) Adequately protect the Government's interest;
    (2) Retain control of the function involved; and/or
    (3) Retain full personal responsibility by a duly authorized Federal 
officer or employee for the function supported.

[[Page 115]]

    (c)(2) The degree of supervision necessary to establish an employer-
employee relationship is relatively continuous, close supervision. 
Sporadic supervision is not sufficient to constitute an employer-
employee relationship. (In determining whether the Government rather 
than the contractor exercises ``relatively continuous, close 
supervision'' of contractor personnel, the fact that an engineer, for 
example, may require less supervision and may exercise more independence 
of judgment than a food service worker is not itself determinative. If 
the Government takes over that degree of supervision that the contractor 
would otherwise exercise over either individual, the relationship 
created between the Government and either individual is tantamount to 
that of employer and employee.)
    (d) The likelihood of the existence of an employer-employee 
relationship increases as the number and extent of the elements in FAR 
37.104(d) increases. However, the mere existence of these elements does 
not constitute an employer-employee relationship unless continuous, 
close supervision exists. In determining the presence of the referenced 
elements, relevant factors including the following shall be considered:
    (1) The nature of the work. (i) If the Government can use Federal 
personnel to perform the required work, or if the Government has rights 
to the specialized knowledge or equipment which is needed to perform the 
work;
    (ii) Whether the services represent the discharge of a Government 
function which calls for the exercise of personal judgment and 
discretion on behalf of the Government. (This factor, if present in 
sufficient degree, may alone render the service personal in nature.); 
and/or
    (iii) If the services are to be a one-time occurrence (or a 
continuing requirement of short term duration).
    (2) Contractual provisions concerning the contractor's employees. 
(i) To what extent the Government specifies the qualifications of, or 
has the right to approve, individual contractor employees (other than 
the Government's right to approve or disapprove new key personnel, 
remove key personnel, grant or deny security clearances, and provide for 
necessary health qualifications). (Also, it is permissible for the 
Government to specify the technical and experience qualifications of 
contractor employees, if this is necessary to assure satisfactory 
performance.);
    (ii) To what extent the Government can assign tasks to, and prepare 
work schedules for, contractor employees during performance of the 
contract. (This does not preclude inclusion in the contract of work 
schedules for the contractor--but not individual employees--or the 
establishment of a time of performance for orders issued under a 
requirement or other indefinite delivery-type contract.);
    (iii) To what extent the Government can supervise or control the 
method in which the contractor performs the service, the number of 
people that will be employed, the specific duties of individual 
employees, and similar details. (However, it is permissible to require 
that contractor employees comply with regulations for the protection of 
life and property. Also, it is permissible to recommend a specific 
number of people the contractor may employ, if this is necessary to 
assure performance; but in that event, the contract must specify that 
this does not in any way minimize the contractor's obligation to use as 
many employees as are necessary for proper contract performance.);
    (iv) If the Government can review performance of each individual 
contractor employee (as opposed to reviewing the final product after 
completion of the work.); and/or
    (v) If the Government has the right to have contractor employees 
removed from the job for reasons other than misconduct or security.
    (3) Other provisions of the contract. (i) Whether the contractor 
undertakes a specific task or project that is definable either at the 
inception of the contract or at some point during performance, or 
whether the work is defined on a day-to-day basis. (However, this does 
not preclude use of a requirement or other indefinite delivery-type 
contract, provided the nature of the work is specifically described in 
the contract, and orders are formally issued to the contractor rather 
than to individual employees.);

[[Page 116]]

    (ii) Whether payment will be for results accomplished or solely 
according to time worked. (This is a factor which might be useful in a 
doubtful case, but should not in itself create doubt about services 
which are otherwise clearly nonpersonal.); and/or
    (iii) Whether Government office or working space, facilities, 
equipment, and supplies will be used for contract performance. (This is 
a factor which might be useful in a doubtful case, but should not in 
itself create doubt about services which are otherwise clearly 
nonpersonal.).
    (4) Administration of the contract. (i) If contractor employees are 
used interchangeably with Government personnel; and/or
    (ii) If contractor employees are integrated into the Government's 
organizational structure.
    (e) and (f) Reserved.
    (g) The following are examples of personal and nonpersonal services, 
but are illustrative only and are not to be used as the basis for 
determination in any specific case.
    (1) The following are examples of personal services contracts:
    (i) A contract to furnish ordinary, day-to-day, stenographic and 
secretarial services in a Government office under direct Government 
supervision.
    (ii) A contract for the testing of a substance where the project 
officer visits the contractor's facility several times each week to 
consult with the principal investigator, review data, specify methods of 
quality control, specify testing to be done, and provide instruction to 
investigators.
    (iii) A contract for the performance of a function which management 
must perform in order to retain essential control over the conduct of 
agency programs (e.g., negotiating contract amounts).
    (2) The following are examples of nonpersonal services contracts:
    (i) A contract for technical assistance work requiring specialized 
equipment and trained personnel unavailable to the Government. The 
contractor performs work described in the contract free of Government 
supervision, and does not act on behalf of the Government.
    (ii) A contract with an individual for delivery of lectures without 
Government supervision (even if they are to be given on specific dates, 
or on specialized subjects, or if payment will be by the hour).
    (iii) A fixed price contract for janitorial services which provides 
for specific tasks to be performed in specific places, free of 
Government direction, supervision, and control over the contractor's 
employees.
    (iv) A research and development contract providing for a level of 
effort which will be performed by the contractor independent of 
Government direction, supervision, and control.



337.109  Services of quasi-military armed forces.

    As distinguished in FAR 37.109, solicitations for protective 
services shall include the following certification:

    The bidder/offeror certifies it is not a detective agency, nor an 
employee of such agency as contemplated by 5 U.S.C. 3108.



                   Subpart 337.2--Consulting Services



337.204  Policy.

    General Administration Manual Chapter 8-15 prescribes policies and 
procedures concerning approvals required before contracting for expert 
or consulting services.
    (e) Services of experts or consultants may be acquired by contract 
only when:
    (1) The services will be nonpersonal in nature, are critical to the 
planning, development, operation, or evaluation of a Department program, 
cannot be accomplished by Government employees, and are economically 
available from the private sector; or
    (2) The performance of the work by a consultant is directed by 
statute.



337.270  Consulting services reporting.

    The clause set forth in 352.237-70 shall be included in every 
contract for expert or consulting services.

[[Page 117]]



PART 339--MANAGEMENT, ACQUISITION, AND USE OF INFORMATION RESOURCES--Table of Contents




           Subpart 339.70--ADP Clearances and Systems Security

Sec.
339.7001  ADP Clearances.
339.7002  ADP systems security.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486 (c).

    Source: 49 FR 14023, Apr. 9, 1984, unless otherwise noted.



           Subpart 339.70--ADP Clearances and Systems Security



339.7001  ADP clearances.

    In accordance with Chapter 4-10 of the HHS Information Resources 
Management (IRM) Manual, the Office of Information Resources Management 
(OIRM), OASMB-OS, is responsible for the review and approval of all 
requests for proposed automatic data processing (ADP) systems and 
modifications to existing ADP systems which require the acquisition of 
ADP hardware, software packages, and services, and telecommunications 
equipment, which exceed the dollar thresholds stated in Chapter 4-10.
    (a) It is the responsibility of the program office to obtain written 
approval from OIRM on proposed ADP acquisitions which exceed the 
thresholds stated in Exhibit 4-10-A of Chapter 4-10 prior to submitting 
the request for contract to the contracting activity.
    (b) The OIRM approval document (delegation of procurement authority 
(DPA)) is to be attached to the request for contract when it is 
submitted by the program office to the contracting activity. The 
contracting activity shall not issue a solicitation based on the request 
for contract until a properly executed approval document (DPA) is 
obtained.

[49 FR 14023, Apr. 9, 1984, as amended at 53 FR 43208, Oct. 26, 1988]



339.7002  ADP systems security.

    (a) Program responsibilities. Whenever a proposed contract action 
requires the design, development, maintenance, or use of an ADP system 
or the use of ADP resources, the program office is required to designate 
a responsible individual to serve as the ADP system manager who is to 
ensure, in coordination with the cognizant systems security officer, 
that ADP security requirements are met and that each contractor 
maintains an acceptable security program. The project officer is 
responsible for setting forth the specific portions of Part 6, ADP 
Systems Security, of the HHS IRM Manual which are applicable to the 
instant acquisition.
    (b) Contracting responsibilities. (1) The contracting officer is 
responsible for ensuring that a certification of ADP systems security 
requirements, signed by both the ADP system manager and the ADP systems 
security officer, is submitted with the request for contract. The 
contracting officer shall not initiate action on the request for 
contract until the properly executed certification is received. The 
certification will state that the security requirements specified are 
reasonably sufficient for the intended application and that they comply 
with current Federal and HHS computer security policies, procedures, 
standards, and guidelines.
    (2) When developing the request for proposals, the contracting 
officer shall include in the technical proposal instructions a statement 
requiring that the offeror present a detailed outline of its proposed 
ADP system security program which complies with the requirements of the 
statement of work and applicable portions of Part 6, ADP Systems 
Security, of the HHS IRM Manual.
    (3) The contracting officer shall include a special provision 
reading substantially as follows in all applicable solicitations and 
resultant contracts:

    The Contractor agrees to comply with the ADP system security 
requirements set forth in the system of work and applicable portions of 
Part 6, ADP Systems Security, of the HHS IRM Manual. The Contractor 
further agrees to include this provision in any subcontract awarded 
pursuant to this prime contract.

    (4) The contracting officer shall ensure that a properly executed 
certification confirming that the offerors comply with the necessary 
security requirements is attached to the technical evaluation report 
received from the evaluation panel before proceeding

[[Page 118]]

with the acquisition process. This certification must be countersigned 
by the officials designated in paragraph (b)(1) above and must contain a 
similar statement of compliance.

[49 FR 14023, Apr. 9, 1984, as amended at 53 FR 43208, Oct. 26, 1988]

[[Page 119]]



                    SUBCHAPTER G--CONTRACT MANAGEMENT





PART 342--CONTRACT ADMINISTRATION--Table of Contents




                  Subpart 342.5--Postaward Orientation

Sec.
342.504  Postaward letters.

                   Subpart 342.7--Indirect Cost Rates

342.705  Final indirect cost rates.

                   Subpart 342.70--Contract Monitoring

342.7001  Purpose.
342.7002  Contract monitoring responsibilities.
342.7003  Withholding of contract payments.
342.7003-1  Policy.
342.7003-2  Procedures.
342.7003-3  Withholding payments.

        Subpart 342.71--Administrative Actions for Cost Overruns

342.7100  Scope of subpart.
342.7101  Applicability.
342.7102  General.
342.7103  Contract administration.
342.7103-1  General.
342.7103-2  Procedures.
342.7104  Contract modifications.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

    Source: 49 FR 14024, Apr. 9, 1984, unless otherwise noted.



                  Subpart 342.5--Postaward Orientation



342.504  Postaward letters.

    To the extent practicable, contracting officers should use letters 
to accomplish postaward orientation objectives. A postaward orientation 
conference should only be arranged when letters cannot resolve key 
issues.



                   Subpart 342.7--Indirect Cost Rates



342.705  Final indirect cost rates.

    The Director, Division of Cost Allocation of the Regional 
Administrative Support Center within each HHS regional office has been 
delegated the authority to establish indirect cost rates, research 
patient care rates, and, as necessary, fringe benefit, computer, and 
other special costing rates for use in contracts and grants awarded to 
State and local governments, colleges and universities, hospitals, and 
other nonprofit organizations.



                   Subpart 342.70--Contract Monitoring



342.7001  Purpose.

    Contract monitoring is an essential element of contract 
administration and the acquisition process. This subpart describes the 
Department's operating concepts regarding contract monitoring, performed 
jointly by the project officer and the contracting officer, to ensure 
that the required monitoring is performed, timely remedial action is 
taken when necessary, and a determination is made that contract 
objectives have been met.



342.7002  Contract monitoring responsibilities.

    (a) Upon execution of the contract, the mutual obligations of the 
Government and the contractor are established by, and limited to, the 
written stipulations in the contract. Unless authorized by the 
contracting officer, HHS personnel shall not direct or request the 
contractor to assume any obligation or take any actions not specifically 
required by the contract. Only the contracting officer may impose a 
requirement which will result in a change to the contract. All contract 
changes must be directed in writing or confirmed in writing by the 
contracting officer.
    (b) The contracting officer is responsible for assuring compliance 
with all terms of the contract, especially the statutory, legal, 
business, and regulatory provisions. Whether or not a postaward 
conference is held, the contracting officer shall inform the contractor 
by letter (if not already stipulated by contract provisions) of the 
authorities and responsibilities of the Government personnel with whom 
the contractor will be dealing throughout the life of the contract.
    (c) The contracting officer must depend on program, technical, and 
other

[[Page 120]]

personnel for assistance and advice in monitoring the contractor's 
performance, and in other areas of postaward administration. The 
contracting officer must assure that responsibilities assigned to these 
personnel are understood and carried out. The individual roles and 
corresponding responsibilities typically involve, but are not limited 
to, the following:
    (1) The role of program and technical personnel in monitoring the 
contract to assist or advise the contracting officer (or act as his/her 
representative when so designated by the contracting officer) in 
activities such as:
    (i) Providing technical monitoring during contract performance, and 
issuing letters to the contractor and contracting officer relating to 
delivery acceptance, or rejection in accordance with the terms of the 
contract;
    (ii) Assessing contractor performance, including inspection and 
testing of products and evaluation of reports and data;
    (iii) Recommending necessary changes to the schedule of work and 
period of performance in order to accomplish the objectives of the 
contract. This shall be accomplished by a written request to the 
contracting officer, together with an appropriate justification and 
funds availability citation;
    (iv) Reviewing invoices/vouchers and recommending approval/
disapproval action by the contracting officer, to include comments 
regarding anything unusual discovered in the review;
    (v) Reviewing and recommending approval or disapproval of 
subcontracts, overtime, travel, and key personnel changes; and
    (vi) Participating, as necessary, in various phases of the contract 
closeout process.
    (2) The role of the project officer in performing required aspects 
of the contract monitoring process. In addition to those applicable 
activities set forth in (c)(1) above, the project officer shall:
    (i) Submit periodic reports to the contracting officer that 
concisely explain the status of the contract, and include recommended 
actions for any problems reported. Provide the contracting officer with 
written notification of evaluation and approval/disapproval of contract 
deliverables and of completion of tasks or phases. The contracting 
officer will, in turn, provide the contractor with written notification 
of approval or disapproval unless the responsibility has been delegated 
by the contracting officer, in which case the person responsible for 
such action will notify the contractor and provide a copy to the 
contracting officer for inclusion in the contract file;
    (ii) Monitor the technical aspects of the contractor's business and 
technical progress, identify existing and potential problems that 
threaten performance, and immediately inform the contracting officer of 
deviations from contract objectives, or from any technical or delivery 
requirements, so that remedial measures may be instituted accordingly;
    (iii) Provide immediate notification to the head of the program 
office responsible for the program whenever it is determined that 
program objectives are not being met, together with specific 
recommendations of action to be taken. A copy of the project officer's 
report and recommendations shall be transmitted to the contracting 
officer for appropriate action;
    (iv) Submit, within 120 days after contract completion, a final 
assessment report to the contracting officer. The report should include 
an analysis of the contractor's performance, including the contract and 
program objectives achieved and missed. A copy of the final assessment 
report shall be forwarded to the head of the program office responsible 
for the program for management review and followup, as necessary; and
    (v) Accompany and/or provide, when requested, technical support to 
the HHS auditor in the conduct of floor checks.
    (3) The role of the contract administrator, auditor, cost analyst, 
and property administrator in assisting or advising the contracting 
officer in postaward administration activities such as:
    (i) Evaluation of contractor systems and procedures, to include 
accounting policies and procedures, purchasing policies and practices, 
property accounting and control, wage and salary

[[Page 121]]

plans and rate structures, personnel policies and practices, etc.;
    (ii) Processing of disputes under the Disputes clause and any 
resultant appeals;
    (iii) Modification or termination of the contract; and
    (iv) Determination of the allowability of cost charges to incentive 
or cost-reimbursement type contracts and progress payments under fixed-
price contracts. This is especially important when award is made to new 
organizations or those with financial weaknesses.
    (d) The contracting officer is responsible for assuring that 
contractor performance and contract monitoring are carried out in 
conformance with contract provisions. If performance is not satisfactory 
or if problems are anticipated, it is essential that the contracting 
officer take immediate action to protect the Government's rights under 
the contract. The contracting officer shall notify his/her immediate 
supervisor of problems that cannot be resolved within contract 
limitations and whenever contract or program objectives are not met. The 
notification shall include a statement of action being taken by the 
contracting officer.
    (e) Contract cost and manpower reporting shall be required on all 
cost-reimbursement type contracts financed under letter of credit or 
Departmental Federal Assistance Financing System (DFAFS) methods of 
payment regardless of dollar value, and on all other cost-reimbursement 
type contracts of $100,000 or more. Financial reporting may be required 
on cost-reimbursement contracts under $100,000, when financed by other 
than the letter of credit or DFAFS methods, but only if it is necessary 
for effective contract administration. Financial and manpower 
information may be submitted either as a separate contract financial 
report or as an addendum to a public voucher, as prescribed by the 
contracting officer. Frequency, format (including instructions), extent, 
structure (including cost elements and labor categories), and 
distribution of reporting fall within the discretion of the contracting 
officer. The contracting officer shall set forth financial reporting 
requirements in all applicable RFPs and contracts, shall limit the 
requirements to those necessary for effectual cost and manpower 
management of the contract, and shall avoid the use of reporting 
requirements that are unduly burdensome on the contractor.

[49 FR 14024, Apr. 9, 1984, as amended at 54 FR 43966, Oct. 30, 1989; 54 
FR 47750, Nov. 16, 1989]



342.7003  Withholding of contract payments.



342.7003-1  Policy.

    (a) All solicitations and resultant contracts shall contain a 
withholding of contract payments clause and an excusable delays clause 
or a clause which incorporates the definition of excusable delays. These 
clauses are contained in the Department's contract general provisions.
    (b) The transmittal letter used to convey the contract to each 
contractor shall contain a notice which highlights the contractor's 
agreement with the withholding of contract payments clause.
    (c) No contract payment shall be made when any report required to be 
submitted by the contractor is overdue, or the contractor fails to 
perform or deliver work or services as required by the contract.
    (d) The contracting officer shall issue a ten-day cure notice or 
initiate appropriate termination action for any failure in the 
contractor's performance as stated in the preceding paragraph (c).



342.7003-2  Procedures.

    (a) The contracting officer is responsible for initiating immediate 
action to protect the Government's rights whenever the contractor fails 
to comply with either the delivery or reporting provisions of the 
contract. Compliance with the reporting provisions includes those 
reports to be submitted directly to the payment office. If such a report 
is not submitted on time, the contracting officer is to be notified 
promptly by the payment office.
    (b) When the contract contains a termination for default clause, the 
contractor's failure to either submit any required report when due or 
perform or deliver services or work when required by the contract is to 
be considered a

[[Page 122]]

default in performance. In either circumstance, the contracting officer 
is to immediately issue a formal ten-day cure notice pursuant to the 
default clause. The cure notice is to follow the format prescribed in 
FAR 49.607 and is to include a statement to the effect that contract 
payments will be withheld if the default is not cured or is not 
determined to be excusable.
    (1) If the default is cured or is determined to be excusable, the 
contracting officer is not to initiate the withholding action.
    (2) If the default is not determined to be excusable or a response 
is not received within the allotted time, the contracting officer is to 
initiate withholding action on all contract payments and is to determine 
whether termination for default or other action would be in the best 
interest of the Government.
    (c) When the contract does not contain a termination for default 
clause, the contractor's failure to either submit any required report 
when due or perform or deliver services or work when required by the 
contract is to be considered a failure to perform. In either 
circumstance, the contracting officer is to immediately issue a written 
notice to the contractor specifying the failure and providing a period 
of ten days, or a longer period as determined necessary by the 
contracting officer, in which the contractor is to cure the failure or 
establish an excusable delay. The contracting officer is to include a 
statement in the written notice to the effect that contract payments 
will be withheld if the failure is not cured or is not determined to be 
excusable.
    (1) If the failure is cured or is determined to be excusable, the 
contracting officer is not to initiate the withholding action.
    (2) If the failure is not determined to be excusable or a response 
is not received within the allotted time, the contracting officer is to 
initiate withholding action on all contract payments and is to determine 
whether termination for convenience or other action would be in the best 
interest of the Government.
    (d) The contracting officer should consult FAR Subpart 49.4 for 
further guidance before taking any of the actions described in this 
section.



342.7003-3  Withholding payments.

    (a) When making the determination that contract payments should be 
withheld in accordance with the Withholding of Contract Payments clause, 
the contracting officer is to immediately notify the servicing finance 
office in writing of the determination to suspend payments. The notice 
of suspension is to contain all elements of information required by the 
payment office to properly identify the contract and the applicable 
accounts involved.
    (b) The contracting officer is to immediately notify the contractor 
in writing that payments have been suspended until the default or 
failure is cured.
    (c) When the contractor cures the default or failure, the 
contracting officer is to immediately notify, in writing, all recipients 
of the notice of suspension that the suspension is to be lifted and 
contract payments are to be resumed.
    (d) When exercising actions regarding the withholding of payment 
procedures, the contracting officer must be careful not to waive any of 
the Government's rights when corresponding with the contractor or when 
taking any other actions.



        Subpart 342.71--Administrative Actions for Cost Overruns



342.7100  Scope of subpart.

    This subpart sets forth the procedures to be followed when a cost 
overrun is anticipated; i.e., the allowable actual cost of performing a 
cost-reimbursement type contract is expected to exceed the total 
estimated cost specified in the contract.



342.7101  Applicability.

    This subpart applies to the administration of cost-reimbursement 
type contracts and the cost-reimbursement portion of other types of 
contracts. Nothing in this subpart shall be construed to relieve 
contractors from compliance with the Limitation of Cost clause or any 
other provisions of contracts.

[[Page 123]]



342.7102  General.

    Reimbursement for costs incurred under cost-reimbursement contracts 
shall not exceed the amount of funds obligated by the contract, unless 
increased by the contracting officer. Cost overruns shall be held to an 
absolute minimum, compatible with accomplishment of the statement of 
work.



342.7103  Contract administration.



342.7103-1  General.

    Upon receipt of information that a contractor's accumulated cost and 
projected expenditures will exceed the limit of funds obligated by the 
contract, the contracting officer shall coordinate immediately with the 
appropriate program office to determine whether the contract should be 
modified or terminated. If the contracting officer receives information 
from a source other than the contractor that a cost overrun is 
anticipated, the contracting officer shall verify the information with 
the contractor, and remind the contractor of the notification 
requirements of the Limitation of Cost clause.



342.7103-2  Procedures.

    (a) Upon notification that a cost overrun is anticipated, the 
contracting officer shall inform the contractor to submit a request for 
additional funds which is to include:
    (1) Name and address of contractor.
    (2) Contract number and expiration date.
    (3) Contract item(s) and amount(s) creating the overrun.
    (4) The elements of cost which changed from the original estimate 
(i.e., labor, material, travel, overhead, etc.) to be furnished in the 
following format:
    (i) Original estimate,
    (ii) Costs incurred to date,
    (iii) Estimated cost to completion,
    (iv) Revised estimate, and
    (v) Amount of adjustment.
    (5) The factors responsible for the increase, i.e., error in 
estimate, changed conditions, etc.
    (6) The latest date by which funds must be available for commitment 
to avoid contract slippage, work stoppage, or other program impairment.
    (b) When the contractor submits a notice of an impending overrun, 
the contracting officer shall:
    (1) Immediately advise the appropriate program office and furnish a 
copy of the notice and any other data received;
    (2) Request audit or cost advisory services, and technical support, 
as necessary, for evaluation of information and data received; and
    (3) Maintain continuous follow-up with the program office in order 
to obtain a timely decision as to whether the work under the contract 
should be continued and additional funds provided, or the contract 
terminated. The decision of the program office must be supported by an 
appropriate written statement and funding authority, or a formal request 
for termination, when applicable. After a programming and funding 
decision is received from the program office, the contracting officer 
shall promptly notify the contractor in writing that:
    (i) A specified amount of additional funds has been allotted to the 
contract by a contractual instrument; or
    (ii) Work will be discontinued when the funds allotted to the 
contract have been exhausted, and that any work performed after that 
date is at the contractor's risk; or
    (iii) The Government is considering whether additional funds should 
be allotted to the contract and will notify the contractor as soon as 
possible, but that any work performed after the funds then allocated to 
the contract have been exhausted is at the contractor's risk.

Timely, formal notification of the Government's intention is essential 
in order to preclude loss of contractual rights in the event of dispute, 
termination, or litigation.
    (c) If program requirements permit, contracting officers should 
refrain from issuing any contractual documents which will require new 
work or an extension of time, pending resolution of an overrun or 
additional fund request.



342.7104  Contract modifications.

    (a) Modifications to contracts containing the Limitation of Cost 
clause shall include either:

[[Page 124]]

    (1) A provision increasing the estimated or ceiling amount referred 
to in the Limitation of Cost clause of the contract and stating that the 
clause will thereafter apply in respect to the increase amount; or
    (2) A provision stating that the estimated or ceiling amount 
referred to in the contract is not changed by the modification and that 
the Limitation of Cost clause will continue to apply with respect to the 
amount in effect prior to the modification.
    (b) A fixed-fee provided in a contract shall not be changed when 
funding a cost overrun. Changes in fixed-fee will be made only to 
reflect changes in the scope of work which justify an increase or 
decrease in fee.



PART 345--GOVERNMENT PROPERTY--Table of Contents




       Subpart 345.3--Providing Government Property to Contractors

Sec.
345.370  Providing Government property (in general).

     Subpart 345.4--Contractor Use and Rental of Government Property

345.405  Contracts with foreign governments or international 
          organizations.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

    Source: 49 FR 14030, Apr. 9, 1984, unless otherwise noted.



       Subpart 345.3--Providing Government Property to Contractors



345.370  Providing Government property (in general).

    (a) A contractor may be provided Government property or allowed to 
acquire such property at Government expense upon determination that:
    (1) No practicable or economical alternative exists; e.g., 
acquisition from other sources, utilization of subcontractors, rental of 
property, or modification of program project requirements, etc.;
    (2) The Government receives adequate consideration for providing the 
property; or
    (3) Furnishing Government property is likely to result in 
substantially lower cost to the Government for the items produced or 
services rendered when all costs involved (e.g., transportation, 
installation, modification, maintenance, etc.) are compared with the 
cost to the Government of the contractor's use of privately-owned 
property.
    (b) The determination that it is necessary to provide a contractor 
or subcontractor with property will be made by the contracting officer 
with the advice of the agency property official.
    (c) If the program office is aware, prior to the submission of the 
request for contract, that it will be necessary to provide prospective 
contractors with property, a written justification must accompany the 
request for contract to the contracting activity.



     Subpart 345.4--Contractor Use and Rental of Government Property



345.405  Contracts with foreign governments or international organizations.

    Upon the request of a foreign government or international 
organization, or a contractor certifying that it is acting on behalf of 
a foreign government or international organization, the contracting 
officer, with advice from the agency property official cognizant of 
Government property located in the United States, its possessions, or 
Puerto Rico, may give written approval for its use without charge on 
contracts or subcontracts thereunder if:
    (a) The foreign government or international organization would be 
authorized to place the contract with the activity concerned under the 
Foreign Assistance Act of 1961, as amended, or such use is authorized by 
an agreement with the foreign government;
    (b) The foreign government's placement of the contract directly with 
the contractor is consistent with the best interests of the United 
States;
    (c) It appears that the foreign government will place the contract 
with the contractor whether or not use is authorized, and no competitive 
pricing advantage will accrue to the contractor by virtue of its use;
    (d) The contractor agrees that no charge for the use of the property 
will

[[Page 125]]

be included in the price charged the foreign government under the 
contract; and
    (e) The use will not interfere with foreseeable requirements of the 
United States.

[[Page 126]]



                     SUBCHAPTER H--CLAUSES AND FORMS





PART 352--SOLICITATION PROVISIONS AND CONTRACT CLAUSES--Table of Contents




             Subpart 352.2--Texts of Provisions and Clauses

Sec.
352.202-1  Definitions.
352.215-12  Restriction on disclosure and use of data.
352.215-71  [Reserved]
352.215-72  Pre-proposal conference.
352.216-70  Negotiated overhead rates--fixed.
352.216-72  Additional cost principles.
352.224-70  Confidentiality of information.
352.228-7  Insurance--Liability to third persons.
352.232-9  Withholding of contract payments.
352.232-71  Cost sharing.
352.232-73  Method of payment--letter of credit.
352.232-74  Estimated cost and fixed fee--incrementally funded contract.
352.232-75  Incremental funding.
352.233-70  Litigation and claims.
352.237-70  Consulting services reporting.
352.242-71  Final decisions on audit findings.
352.242-72--352.242-79  [Reserved]
352.249-14  Excusable delays.
352.270-1  Accessibility of meetings, conferences, and seminars to 
          persons with disabilities.
352.270-2  Indian preference.
352.270-3  Indian preference program.
352.270-4  Pricing of adjustments.
352.270-5  Key personnel.
352.270-6  Publication and publicity.
352.270-7  Paperwork Reduction Act.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

    Source: 49 FR 14031, Apr. 9, 1984, unless otherwise noted.



             Subpart 352.2--Texts of Provisions and Clauses



352.202-1  Definitions.

    Insert the following clause in all solicitations and resultant 
contracts instead of the clause in FAR 52.202-1 except when 
contemplating (a) a fixed price research and development contract that 
is expected to be $2,500 or less or (b) a purchase order.

                         Definitions (APR 1984)

    (a) The term Secretary or Head of the Agency (also called Agency 
Head) means the Secretary, Under Secretary, or any Assistant Secretary, 
Administrator or Commissioner, of the Department of Health and Human 
Services; and the term ``his/her duly authorized representative'' means 
any person, persons, or board authorized to act for the Secretary.
    (b) The term Contracting Officer means a person with the authority 
to enter into, administer, and/or terminate contracts and make related 
determinations and findings. The term includes certain authorized 
representatives of the Contracting Officer acting within the limits of 
their authority as delegated by the Contracting Officer.
    (c) The term Project Officer means the person representing the 
Government for the purpose of technical monitoring of contract 
performance. The Project Officer is not authorized to issue any 
instructions or directions which effect any increases or decreases in 
the scope of work or which would result in the increase or decrease of 
the price of this contract or a change in the delivery dates or 
performance period of this contract.
    (d) The term Department means the Department of Health and Human 
Services.
    (e) Except as otherwise provided in this contract, the term 
subcontract includes purchase order under this contract.

                             (End of clause)

    Alternate I (APR 1984). For cost-reimbursement contracts other than 
purchase orders, delete paragraph (c) above and replace with the 
following paragraph (c):
    (c) The term Project Officer means the person representing the 
Government for the purpose of technical monitoring of contract 
performance. The Project Officer is not authorized to issue any 
instructions or directions which effect any increases or decreases in 
the scope of work or which would result in the increase or decrease of 
the cost of this contract or a change in performance period of this 
contract. In addition, the Project Officer is not authorized to receive 
or act upon the Contractor's notification of a revised cost estimate 
pursuant to the Limitation of Cost or Limitation of Funds clause of this 
contract.

[49 FR 14031, Apr. 9, 1984, as amended at 53 FR 15564, May 2, 1988]



352.215-12  Restriction on disclosure and use of data.

    Insert the following provision in all requests for proposals, and 
all requests for quotations other than those for information or planning 
purposes. This

[[Page 127]]

provision shall be used in lieu of the provision in FAR 52.215-12.

          Restriction on Disclosure and Use of Data (APR 1984)

    The proposal submitted in response to this request may contain data 
(trade secrets; business data, e.g., commercial information, financial 
information, and cost and pricing data; and technical data) which the 
offeror, including its prospective subcontractor(s), does not want used 
or disclosed for any purpose other than for evaluation of the proposal. 
The use and disclosure of any data may be so restricted; provided, that 
the Government determines that the data is not required to be disclosed 
under the Freedom of Information Act, 5 U.S.C. 552, as amended, and the 
offeror marks the cover sheet of the proposal with the following legend, 
specifying the particular portions of the proposal which are to be 
restricted in accordance with the conditions of the legend. The 
Government's determination to withhold or disclose a record will be 
based upon the particular circumstances involving the record in question 
and whether the record may be exempted from disclosure under the Freedom 
of Information Act:
    Unless disclosure is required by the Freedom of Information Act, 5 
U.S.C. 552, as amended, (the Act) as determined by Freedom of 
Information (FOI) Officials of the Department of Health and Human 
Services, data contained in the portions of this proposal which have 
been specifically identified by page number, paragraph, etc. by the 
offeror as containing restricted information shall not be used or 
disclosed except for evaluation purposes. The offeror acknowledges that 
the Department may not be able to withhold a record (data, document, 
etc.) nor deny access to a record requested pursuant to the Act and that 
the Department's FOI Officials must make that determination. The offeror 
hereby agrees that the Government is not liable for disclosure if the 
Department has determined that disclosure is required by the Act.
    If a contract is awarded to the offeror as a result of, or in 
connection with, the submission of this proposal, the Government shall 
have the right to use or disclose the data to the extent provided in the 
contract. Proposals not resulting in a contract remain subject to the 
Act.
    The offeror also agrees that the Government is not liable for 
disclosure or use of unmarked data and may use or disclose the data for 
any purpose, including the release of the information pursuant to 
requests under the Act.
    The data subject to this restriction are contained in pages (insert 
page numbers, paragraph designations, etc. or other identification).
    In addition, the offeror should mark each page of data it wishes to 
restrict with the following legend:
    Use or disclosure of data contained on this page is subject to the 
restriction on the cover sheet of this proposal or quotation.
    Offerors are cautioned that proposals submitted with restrictive 
legends or statements differing in substance from the above legend may 
not be considered for award. The Government reserves the right to reject 
any proposal submitted with a nonconforming legend.

                           (End of provision)



352.215-71  [Reserved]



352.215-72  Pre-proposal conference.

    If a pre-proposal conference is to be held as indicated in FAR 
15.409, insert the following provision in the affected solicitation:

                   Pre-Proposal Conference (APR 1984)

    A pre-proposal conference will be held with prospective offerors at 
(insert local prevailing time) on (insert date) in room (insert room 
number) at (insert name and location of building).
    The pre-proposal conference will be held for the purpose of 
providing information concerning the Government's requirements which may 
be helpful in the preparation of proposals and for answering any 
questions which you have regarding this solicitation.
    The success of this type of conference depends largely on the 
leadtime available to the Government for research in connection with 
questions submitted by prospective offerors. Therefore, you are 
requested to mail written questions concerning any areas of uncertainty 
which, in your opinion, require clarification or correction, in 
sufficient time to be received on or before (insert date).
    Your questions should be submitted to the Contract-Officer, (insert 
name of Contracting Officer), and the envelope should be marked ``Pre-
Proposal Conference, RFP No. (insert number of RFP).'' A set of 
questions and answers will be furnished to all prospective offerors 
whether or not they are in attendance.
    Because of space limitations, each prospective offeror will be 
limited to a total of (insert number) representatives.
    Attendance at the pre-proposal conference is recommended; however, 
attendance is not a prerequisite for proposal submission and will not be 
considered a factor in proposal evaluation.

[[Page 128]]

                           (End of provision)



352.216-70  Negotiated overhead rates--fixed.

    Insert the following clause in all cost-reimbursement contracts with 
educational institutions and nonprofit organizations when fixed rates 
subject to carryforward adjustments are used.

               Negotiated Overhead Rates--Fixed (APR 1984)

    (a) Notwithstanding the provisions of the clause entitled 
``Allowable Cost and Payment,'' the allowable indirect costs under this 
contract shall be obtained by applying negotiated fixed overhead rates 
for the applicable period(s) to bases agreed upon by the parties, as 
specified below. A negotiated fixed rate(s) is based on an estimate of 
the costs which will be incurred during the period for which the rate(s) 
applies. When the application of the negotiated fixed rates against the 
actual bases during a given fiscal period produces an amount greater or 
less than the indirect costs determined for such period, such greater or 
lesser amount(s) will be carried forward to a subsequent period.
    (b) The Contractor, as soon as possible but no later than six months 
after the close of its fiscal year, or such other period as may be 
specified in the contract, shall submit to the Secretary or the duly 
authorized representative, with a copy to the cognizant audit activity, 
a proposed fixed overhead rate or rates based on the Contractor's actual 
cost experience during the fiscal year, including adjustment, if any, 
for amounts carried forward, together with supporting cost data. 
Negotiation of fixed overhead rates, including carryforward adjustments, 
if any, by the Contractor and the Secretary, or the duly authorized 
representative, shall be undertaken as promptly as practicable after 
receipt of the Contractor's proposal.
    (c) Allowability of costs and acceptability of cost allocation 
methods shall be determined in accordance with Part 31 of the Federal 
Acquisition Regulation (FAR) as in effect on the date of this contract.
    (d) The results of each negotiation shall be set forth in an 
amendment to this contract, which shall specify: (1) The agreed fixed 
overhead rates, (2) the bases to which the rates apply, (3) the fiscal 
year, unless the parties agreed to a different period, for which the 
rates apply, and (4) the specific items treated as direct costs or any 
changes in the items previously agreed to be direct costs.
    (e) Pending establishment of fixed overhead rates for any fiscal 
year or different period agreed to by the parties, the Contractor shall 
be reimbursed either at the rates fixed for the previous fiscal year or 
other period or at billing rates acceptable to the Contracting Officer, 
subject to appropriate adjustment when the final rates for that fiscal 
year or other period are established.
    (f) Any failure of the parties to agree on any fixed overhead rate 
or rates or to the amount of any carryforward adjustment under this 
clause shall not be considered a dispute concerning a question of fact 
for decision by the Contracting Officer within the meaning of the 
``Disputes'' clause of this contract. If for any fiscal year or other 
period specified in the contract, the parties fail to agree to a fixed 
overhead rate or rates, it is agreed that the allowable indirect costs 
under this contract shall be obtained by applying negotiated final 
overhead rates in accordance with the terms of the ``Allowable Cost and 
Payment'' clause set forth in FAR 52.216-7, as in effect on the date of 
this contract.
    (g) Submission of proposed fixed, provisional, and/or final overhead 
rates, together with appropriate data in support thereof, to the 
Secretary or the duly authorized representative and agreements on fixed, 
provisional, and/or final overhead rates entered into between the 
Contractor and the Secretary or the duly authorized representative, as 
evidenced by Negotiated Overhead Rate Agreements signed by both parties, 
shall be deemed to satisfy the requirements of paragraphs (b), (d), and 
(e), of this clause.

                             (End of clause)



352.216-72  Additional cost principles.

    As prescribed in 316.307(j), insert the following clause in all 
solicitations and resultant cost-reimbursement contracts with nonprofit 
organizations, as identified in OMB Circular A-122.

                  Additional Cost Principles (OCT 1990)

    (a) Bid and proposal costs. (1) Bid and proposal costs are the 
immediate costs of preparing bids, proposals, and applications for 
potential Federal and non-Federal contracts, grants, and agreements, 
including the development of scientific, cost, and other data needed to 
support the bids, proposals, and applications.
    (2) Bid and proposal costs of the current accounting period are 
allowable as indirect costs.
    (3) Bid and proposal costs of past accounting periods are 
unallowable in the current period. However, if the organization's 
established practice is to treat these costs by some other method, they 
may be accepted if they are found to be reasonable and equitable.
    (4) Bid and proposal costs do not include independent research and 
development costs covered by the following paragraph, or

[[Page 129]]

preaward costs covered by paragraph 33 of Attachment B to OMB Circular 
A-122.
    (b) Independent research and development costs. (1) Independent 
research and development is research and development conducted by an 
organization which is not sponsored by Federal or non-Federal contracts, 
grants, or other agreements.
    (2) Independent research and development shall be allocated its 
proportionate share of indirect costs on the same basis as the 
allocation of indirect costs to sponsored research and development.
    (3) The costs of independent research and development, including its 
proportionate share of indirect costs, are unallowable.

                             (End of clause)

[55 FR 42197, Oct. 18, 1990]



352.224-70  Confidentiality of information.

    The following clause is covered by the policy set forth in subpart 
324.70 and is to be used in accordance with the instructions set forth 
in 324.7004.

                Confidentiality of Information (APR 1984)

    (a) Confidential information, as used in this clause, means (1) 
information or data of a personal nature about an individual, or (2) 
proprietary information or data submitted by or pertaining to an 
institution or organization.
    (b) In addition to the types of confidential information described 
in (a)(1) and (2) above, information which might require special 
consideration with regard to the timing of its disclosure may derive 
from studies or research, during which public disclosure of preliminary 
unvalidated findings could create erroneous conclusions which might 
threaten public health or safety if acted upon.
    (c) The Contracting Officer and the Contractor may, by mutual 
consent, identify elsewhere in this contract specific information and/or 
categories of information which the Government will furnish to the 
Contractor or that the Contractor is expected to generate which is 
confidential. Similarly, the Contracting Officer and the Contractor may, 
by mutual consent, identify such confidential information from time to 
time during the performance of the contract. Failure to agree will be 
settled pursuant to the ``Disputes'' clause.
    (d) If it is established elsewhere in this contract that information 
to be utilized under this contract, or a portion thereof, is subject to 
the Privacy, Act, the Contractor will follow the rules and procedures of 
disclosure set forth in the Privacy Act of 1974, 5 U.S.C. 552a, and 
implementing regulations and policies, with respect to systems of 
records determined to be subject to the Privacy Act.
    (e) Confidential information, as defined in (a)(1) and (2) above, 
that is information or data of a personal nature about an individual, or 
proprietary information or data submitted by or pertaining to an 
institution or organization, shall not be disclosed without the prior 
written consent of the individual, institution, or organization.
    (f) Written advance notice of at least 45 days will be provided to 
the Contracting Officer of the Contractor's intent to release findings 
of studies or research, which have the possibility of adverse effects on 
the public or the Federal agency, as described in (b) above. If the 
Contracting Officer does not pose any objections in writing within the 
45-day period, the Contractor may proceed with disclosure. Disagreements 
not resolved by the Contractor and the Contracting Officer will be 
settled pursuant to the ``Disputes'' clause.
    (g) Whenever the Contractor is uncertain with regard to the proper 
handling of material under the contract, or if the material in question 
is subject to the Privacy Act or is confidential information subject to 
the provisions of this clause, the Contractor should obtain a written 
determination from the Contracting Officer prior to any release, 
disclosure, dissemination, or publication.
    (h) Contracting Officer determinations will reflect the results of 
internal coordination with appropriate program and legal officials.
    (i) The provisions of paragraph (e) of this clause shall not apply 
when the information is subject to conflicting or overlapping provisions 
in other Federal, State or local laws.

                             (End of clause)



352.228-7  Insurance--Liability to third persons.

    As prescribed in 328.311-2, contracting officers shall include the 
following clause in all cost-reimbursement contracts, in lieu of the 
clause at FAR 52.228-7:

            Insurance--Liability to Third Persons (DEC 1991)

    (a)(1) Except as provided in subparagraph (2) immediately following, 
or in paragraph (h) of this clause (if the clause has a paragraph (h)), 
the Contractor shall provide and maintain workers' compensation, 
employer's liability, comprehensive general liability (bodily injury), 
comprehensive automobile liability (bodily injury and property damage) 
insurance, and such other insurance as the Contracting Officer may 
require under this contract.
    (2) The Contractor may, with the approval of the Contracting 
Officer, maintain a self-

[[Page 130]]

insurance program; Provided That, with respect to workers' compensation, 
the Contractor is qualified pursuant to statutory authority.
    (3) All insurance required by this paragraph shall be in a form and 
amount and for those periods as the Contracting Officer may require or 
approve and with insurers approved by the Contracting Officer.
    (b) The Contractor agrees to submit for the Contracting Officer's 
approval, to the extent and in the manner required by the Contracting 
Officer, any other insurance that is maintained by the Contractor in 
connection with performance of this contract and for which the 
Contractor seeks reimbursement.
    (c) Except as provided in paragraph (h) of this clause (if the 
clause has a paragraph (h)), the Contractor shall be reimbursed--
    (1) For that portion (i) of the reasonable cost of insurance 
allocable to this contract, and (ii) required or approved under this 
clause; and
    (2) For certain liabilities (and expenses incidental to such 
liabilities) to third persons not compensated by insurance or otherwise 
within the funds available under the Limitation of Cost or the 
Limitation of Funds clause of this contract. These liabilities must 
arise out of the performance of this contract, whether or not caused by 
the negligence of the Contractor or of the Contractor's agents, 
servants, or employees, and must be represented by final judgments or 
settlements approved in writing by the Government. These liabilities are 
for--
    (i) Loss of or damage to property (other than property owned, 
occupied, or used by the Contractor, rented to the Contractor, or in the 
care, custody, or control of the Contractor); or
    (ii) Death or bodily injury.
    (d) The Government's liability under paragraph (c) of this clause is 
limited to the amounts reflected in final judgments, or settlements 
approved in writing by the Government, but in no event to exceed the 
funds available under the Limitation of Cost or Limitation of Funds 
clause of this contract. Nothing in this contract shall be construed as 
implying that, at a later date, the Government will request, or the 
Congress will appropriate, funds sufficient to meet any deficiencies.
    (e) The Contractor shall not be reimbursed for liabilities (and 
expenses incidental to such liabilities)--
    (1) For which the Contractor is otherwise responsible under the 
express terms of any clause specified in the Schedule or elsewhere in 
the contract;
    (2) For which the Contractor has failed to insure or to maintain 
insurance as required by the Contracting Officer; or
    (3) That result from willful misconduct or lack of good faith on the 
part of the Contractor's directors, officers, managers, superintendents, 
or other representatives who have supervision or direction of--
    (i) All or substantially all of the Contractor's business;
    (ii) All or substantially all of the Contractor's operations at any 
one plant or separate location in which this contract is being 
performed; or
    (iii) A separate and complete major industrial operation in 
connection with the performance of this contract.
    (f) The provisions of paragraph (e) of this clause shall not 
restrict the right of the Contractor to be reimbursed for the cost of 
insurance maintained by the Contractor in connection with the 
performance of this contract, other than insurance required in 
accordance with this clause: Provided, That such cost is allowable under 
the Allowable Cost and Payment clause of this contract.
    (g) If any suit or action is filed or any claim is made against the 
Contractor, the cost and expense of which may be reimbursable to the 
Contractor under this contract, and the risk of which is then uninsured 
or is insured for less than the amount claimed, the Contractor shall--
    (1) Immediately notify the Contracting Officer and promptly furnish 
copies of all pertinent papers received;
    (2) Authorize Government representatives to collaborate with counsel 
for the insurance carrier in settling or defending the claim when the 
amount of the liability claimed exceeds the amount of coverage; and
    (3) Authorize Government representatives to settle or defend the 
claim and to represent the Contractor in or to take charge of any 
litigation, if required by the Government, when the liability is not 
insured or covered by bond. The Contractor may, at its own expense, be 
associated with the Government representatives in any such claim or 
litigation.

                             (End of clause)

    Alternate I (APR 1984). If the solicitation includes the provision 
at 52.228-6, Insurance-Immunity from Tort Liability, and the successful 
offeror represents in the offer that the offeror is partially immune 
from tort liability as a State agency or as a charitable institution, 
add the following paragraph (h) to the basic clause:
    (h) Notwithstanding paragraphs (a) and (c) of this clause--
    (1) The Government does not assume any liability to third persons, 
nor will the Government reimburse the Contractor for its liability to 
third persons, with respect to loss due to death, bodily injury, or 
damage to property resulting in any way from the performance of this 
contract or any subcontract under this contract; and

[[Page 131]]

    (2) The contractor need not provide or maintain insurance coverage 
as required by paragraph (a) of this clause; provided, that the 
Contractor may obtain any insurance coverage deemed necessary, subject 
to approval by the Contracting Officer as to form, amount, and duration. 
The Contractor shall be reimbursed for the cost of such insurance and, 
to the extent provided in paragraph (c) of this clause, to liabilities 
to third persons for which the contractor has obtained insurance 
coverage as provided in this paragraph, but for which such coverage is 
insufficient in amount.

                             (End of clause)

    Alternate II (APR 1984). If the solicitation includes the provision 
at 52.228-6, Insurance-Immunity from Tort Liability, and the successful 
offeror represents in the offer that the offeror is totally immune from 
tort liability as a State agency or as a charitable institution, 
substitute the following paragraphs (a) and (b) for paragraphs (a) 
through (g) of the basic clause:
    (a) The Government does not assume any liability to third persons, 
nor will the Government reimburse the Contractor for its liability to 
third persons, with respect to loss due to death, bodily injury, or 
damage to property resulting in any way from the performance of this 
contract or any subcontract under this contract.
    (b) If any suit or action is filed, or if any claim is made against 
the Contractor, the cost and expense of which may be reimbursable to the 
Contractor under this contract, the Contractor shall immediately notify 
the Contracting Officer and promptly furnish copies of all pertinent 
papers received by the Contractor. The Contractor shall, if required by 
the Government, authorize Government representatives to settle or defend 
the claim and to represent the Contractor in or take charge of any 
litigation. The Contractor may, at its own expense, be associated with 
the Government representatives in any such claim or litigation.

                             (End of clause)

[56 FR 58316, Nov. 19, 1991]



352.232-9  Withholding of contract payments.

    Insert the following clause in all solicitations and contracts other 
than purchase orders:

               Withholding of Contract Payments (APR 1984)

    Notwithstanding any other payment provisions of this contract, 
failure of the Contractor to submit required reports when due or failure 
to perform or deliver required work, supplies, or services, will result 
in the withholding of payments under this contract unless such failure 
arises out of causes beyond the control, and without the fault or 
negligence of the Contractor as defined by the clause entitled 
``Excusable Delays'' or ``Default'', as applicable. The Government shall 
promptly notify the Contractor of its intention to withhold payment of 
any invoice or voucher submitted.

                             (End of clause)



352.232-71  Cost sharing.

    The policy relative to cost sharing is set forth in 335.070.
    (a) In contracts for which cost-sharing has been individually 
negotiated, the clause set forth in FAR 52.232-20 shall be used. Also, 
an article reading substantially as follows, which includes a cost-
sharing formula agreed upon by the contracting officer and the 
contractor that provides for the ratio of cost-sharing for both the 
originally established estimated cost and any increase pursuant to the 
FAR clause, shall be included in the contract.

                         Cost Sharing (APR 1984)

    The Contractor agrees to share in the cost of the work hereunder to 
the extent of not less than (indicate percent of the total cost or 
dollar amount, etc.) and shall maintain records of all costs so 
contributed, as well as costs to be paid by the Government. Such records 
shall be subject to audit. Costs contributed by the Contractor shall not 
be charged to the Government under any other grant or contract 
(including allocation to other grants or contracts as part of an 
independent research and development program).

                             (End of clause)

    (b) In contracts for which cost-sharing will be in accordance with a 
previously negotiated institutional agreement, the clause set forth in 
FAR 52.232-20 shall also be used. However, instead of specifying a cost-
sharing formula, the following shall be included as a special provision.

[[Page 132]]

          Cost Sharing Under Institutional Agreement (APR 1984)

    This contract is subject to an Institutional Cost-Sharing Agreement 
which became effective with respect to HHS research contracts on (date), 
and the Contractor agrees that the Government shall not bear the entire 
cost of the work hereunder.

                             (End of clause)



352.232-73  Method of payment--letter of credit.

    When authorized by an individual or blanket determination, findings, 
and authorization for advance payment, under a letter of credit, the 
following clause shall be used: (See 332.406 for further instructions 
regarding use of the clause.)

             Method of payment--letter of credit (APR 1984)

    (a) The Contractor shall be paid with funds made available under the 
Federal Reserve Letter of Credit No. ____, established by ____________ 
Department of Health and Human Services, against which the Contractor 
will withdraw funds pursuant to Federal Reserve Letter of Credit 
procedures contained in Treasury Department Circular 1075 (31 CFR part 
205).
    (b) At the request of the Contractor and subject to the following 
conditions, the Government shall make an advance payment, or advance 
payments, from time to time, to the Contractor. No advance payment shall 
be made: (1) Without the approval of the office administering advance 
payments (hereinafter called the ``Administering Office'' and designated 
in paragraph (g)(2)) as to the financial necessity therefor (except in 
the case of educational institutions); (2) in an amount which, together 
with all advance payments made, exceeds the contract amount; and (3) 
without a properly certified invoice. The Contractor shall (1) initiate 
cash drawdowns only when actually needed for its disbursements, (2) 
report timely the case disbursements and balances as required by the 
Administering Office, and (3) impose the same standards of timing and 
amount upon any subcontractors including the furnishing of reports of 
cash disbursements and balances. Failure to adhere to these material 
provisions will be considered an event under paragraph (f) of this 
clause.
    (c) The funds drawn by the Contractor against the Federal Reserve 
Letter of Credit shall be only for current allowable expenditures 
necessary for the performance of this contract.
    (d) When requested in writing by the Contracting Officer, the 
Contractor shall repay to the Government such part of the unliquidated 
balance of the advance payments as shall, in the opinion of the 
Contracting Officer, be in excess of the Contractor's current needs or 
in excess of the contract price.
    (e) If, upon completion or termination of this contract, all amounts 
obtained by the Contractor under this letter of credit have not been 
fully liquidated by authorized charges under the contract, the balance 
thereof shall be deducted from any sums otherwise due to the Contractor 
from the Government, and any excess funds shall be repaid by the 
Contractor to the Government upon demand.
    (f) Upon the happening of any of the following events of default: 
(1) A finding by the Administering Office that the Contractor (i) has 
failed to observe any of the covenants, conditions, or warranties of 
these provisions or has failed to comply with any material provisions of 
this contract, or (ii) has so failed to make progress, or is in such 
unsatisfactory financial condition, as to endanger performance of this 
contract, or (iii) has allocated inventory to this contract 
substantially exceeding reasonable requirements, or (iv) is delinquent 
in payment of taxes or of the costs of performance of this contract in 
the ordinary course of business; (2) appointment of a trustee, receiver 
or liquidator for all or a substantial part of the Contractor's 
property, or institution of bankruptcy, reorganization, arrangement or 
liquidation proceedings by or against the Contractor; (3) service of any 
writ of attachment, levy of execution, or commencement of garnishment 
proceedings; or (4) the commission of an act of bankruptcy; the 
Government, without limiting any rights it may otherwise have, may, in 
its discretion and upon written notice to the Contractor, withhold 
further withdrawals under the Letter of Credit and withhold further 
payments on this contract. Payment can also be stopped for lack of 
submission of timely and accurate reports in accordance with contract 
requirements. Upon the continuance of any such events of default for a 
period of thirty (30) days after such written notice to the Contractor, 
the Government may, in its discretion, and without limiting any other 
rights which the Government may have, take the following additional 
actions as it may deem appropriate in the circumstances:
    (1) Charge interest on advance payments outstanding during the 
period of any such default at the rate established by the Secretary of 
the Treasury pursuant to Public Law 92-41, 80 Stat. 97 for the 
Renegotiation Board;
    (2) Demand immediate repayment of the unliquidated balance of 
advance payments hereunder; and/or
    (3) Take possession of and, with or without advertisement, sell at 
public sale at which the Government may be purchaser, or at a private 
sale, all or any part of the property

[[Page 133]]

on which the Government has a lien under this contract, and after 
deducting any expenses incident to such sale, apply the net proceeds of 
such sale in reduction of the unliquidated balance of advance payments 
hereunder and in reduction of any other claims of the Government against 
the Contractor.
    (g)(1) No interest shall be charged for advance payments made 
hereunder, except interest during a period of default as provided in 
paragraph (f)(2). The Contractor shall charge interest at the rate 
established by the Secretary of the Treasury pursuant to Public Law 92-
41 85 Stat. 97 for the Renegotiation Board on subadvances or 
downpayments to subcontractors and such interest will be credited to the 
account of the Government. However, interest need not be charged on 
subadvances on subcontracts with educational or research institutions 
provided such subcontracts are awarded without profit or fee for 
research, development or experimental work.
    (2) The office administering advance payments is designated as 
________________

                             (End of clause)



352.232-74  Estimated cost and fixed fee--incrementally funded contract.

    The following clause, or one reading substantially as it, shall be 
included in the Special Provisions of an incrementally funded contract:

         Consideration--Estimated Cost and Fixed Fee (APR 1984)

    (a) It is estimated that the total cost to the Government for full 
performance of this contract will be $______, of which the sum of 
$______ represents the estimated reimbursable costs and $______ 
represents the fixed-fee.
    (b) Total funds currently available for payment and allotted to this 
contract are $______, of which $______ represents the estimated 
reimbursable costs and $______ represents the fixed-fee. For further 
provisions on funding, see the Limitation of Funds clause.
    (c) It is estimated that the amount currently allotted will cover 
performance of Phase I which is scheduled to be completed by (date) 
____________.
    (d) The Contracting Officer may allot additional funds to the 
contract without the concurrence of the Contractor.

                             (End of clause)



352.232-75  Incremental funding.

    The following provision shall be included in all requests for 
proposals whenever the use of incremental funding is contemplated:

                     Incremental Funding (APR 1984)

    (a) Sufficient funds are not presently available to cover the total 
cost of the complete multiple year project described in this 
solicitation. However, it is the Government's intention to negotiate and 
award a contract using the incremental funding concepts described in the 
clause entitled Limitation of Funds. Under that clause, which will be 
included in the resultant contract, initial funds will be obligated 
under the contract to cover the first year of performance. Additional 
funds are intended to be allotted to the contract by contract 
modification, up to and including the full estimated cost of the 
contract, to accomplish the entire project. While it is the Government's 
intention to progressively fund this contract over the entire period of 
performance up to and including the full estimated cost, the Government 
will not be obligated to reimburse the Contractor for costs incurred in 
excess of the periodic allotments, nor will the Contractor be obligated 
to perform in excess of the amount allotted.
    (b) The Limitation of Funds clause to be included in the resultant 
contract shall supersede the Limitation of Cost clause found in the 
General Provisions.

                           (End of provision)



352.233-70  Litigation and claims.

    Insert the following clause in all solicitations and resultant cost-
reimbursement contracts:

                    Litigation and Claims (APR 1984)

    The Contractor shall give the Contracting Officer immediate notice 
in writing of (a) any action, including any proceeding before an 
administrative agency, filed against the Contractor arising out of the 
performance of this contract, including, but not limited to the 
performance of any subcontract hereunder; and (b) any claim against the 
Contractor the cost and expense of which is allowable under the clause 
entitled ``Allowable Cost and Payment.'' Except as otherwise directed by 
the Contracting Officer, the Contractor shall furnish immediately to the 
Contracting Officer copies of all pertinent papers received by the 
Contractor with respect to such action or claim. To the extent not in 
conflict with any applicable policy of insurance, the Contractor may, 
with the Contracting Officer's approval, settle any such action or 
claim. If required by the Contracting Officer, the Contractor shall (a) 
effect an assignment and subrogation in favor of the Government of all 
the Contractor's rights and claims (except those against the

[[Page 134]]

Government) arising out of any such action or claim against the 
Contractors; and (b) authorize representatives of the Government to 
settle or defend any such action or claim and to represent the 
Contractor in, or to take charge of, any action. If the settlement or 
defense of an action or claim is undertaken by the Government, the 
Contractor shall furnish all reasonable assistance in effecting a 
settlement or asserting a defense. Where an action against the 
Contractor is not covered by a policy of insurance, the Contractor 
shall, with the approval of the Contracting Officer, proceed with the 
defense of the action in good faith. The Government shall not be liable 
for the expense of defending any action or for any costs resulting from 
the loss thereof to the extent that the Contractor would have been 
compensated by insurance which was required by law or regulation or by 
written direction of the Contracting Officer, but which the Contractor 
failed to secure through its own fault or negligence.
    In any event, unless otherwise expressly provided in this contract, 
the Contractor shall not be reimbursed or indemnified by the Government 
for any liability loss, cost or expense, which the Contractor may incur 
or be subject to by reason of any loss, injury, or damage, to the person 
or to real or personal property of any third parties as may accrue 
during, or arise from, the performance of this contract.

                             (End of clause)



352.237-70  Consulting services reporting.

    The contracting officer shall include the following clause in every 
contract for consulting services, as defined in the General 
Administration Manual Chapter 8-15 and as required by 337.270.

                Consulting Services Reporting (APR 1984)

    The Contractor shall set forth on the cover of every report 
submitted pursuant to this contract the following information: (a) Name 
and business address of the Contractor; (b) Contract number; (c) 
Contract dollar amount; (d) Whether the contract was competitively or 
noncompetitively awarded; (e) Name of the Department's project officer 
and complete office identification and address; and (f) Names of the 
managerial and professional personnel responsible for the content and 
preparation of the report.

                             (End of clause)



352.242-71  Final decisions on audit findings.

    Insert the following clause in all solicitations and resultant cost-
reimbursement contracts.

              Final Decisions on Audit Findings (APR 1984)

    For the purpose of issuing final decisions under the Disputes clause 
of this contract concerning monetary audit findings, the Contracting 
Officer shall be that person with ultimate responsibility for making 
that decision in accordance with Chapter 1-105, Resolution of Audit 
Findings, of the Department's Grants Administration Manual.

                             (End of clause)



352.242-72--352.242-79  [Reserved]



352.249-14  Excusable delays.

    Insert the following clause in all solicitations and resultant 
contracts other than purchase orders which do not have either a default 
or excusable delays clause.

                       Excusable Delays (APR 1984)

    (a) Except with respect to failures of subcontractors, the 
Contractor shall not be considered to have failed in performance of this 
contract if such failure arises out of causes beyond the control and 
without the fault or negligence of the Contractor.
    (b) Such causes may include, but are not restricted to, acts of God 
or of the public enemy, acts of the Government in either its sovereign 
or contractual capacity, fires, floods, epidemics, quarantine 
restrictions, strikes, freight embargoes, and unusually severe weather, 
but in every case the failure to perform must be beyond the control and 
without the fault or negligence of the Contractor. If the failure to 
perform is caused by the failure of a subcontractor to perform, and if 
such failure arises out of causes beyond the control of both the 
Contractor and subcontractor, and without the fault or negligence of 
either of them, the Contractor shall not be deemed to have failed in 
performance of the contract, unless: (1) The supplies or services to be 
furnished by the subcontractor were obtainable from other sources, (2) 
The Contracting Officer shall have ordered the Contractor in writing to 
procure such supplies or services from such other sources, and (3) The 
Contractor shall have failed to comply reasonably with such order. Upon 
request of the Contractor, the Contracting Officer shall ascertain the 
facts and extent of such failure and, if he/she shall determine that any 
failure to perform was occasioned by any one or more of the said causes, 
the delivery schedule shall be revised accordingly, subject to the 
rights of the Government under the termination clause hereof. (As used 
in this clause, the terms ``subcontractor'' and ``subcontractors'' mean 
subcontractor(s) at any tier.)

[[Page 135]]

                             (End of clause)



352.270-1  Accessibility of meetings, conferences, and seminars to persons with disabilities.

    The following clause is to be used in accordance with 370.102:

  Accessibility of Meetings, Conferences, and Seminars to Persons with 
                         Disabilities (APR 1984)

    The Contractor agrees as follows:
    (a) Planning. The Contractor will develop a plan to assure that any 
meeting, conference, or seminar held pursuant to this contract will meet 
or exceed the minimum accessibility standards set forth below. This plan 
shall include a provision for ascertaining the number and types of 
disabled individuals planning to attend the meeting, conference, or 
seminar. The plan shall be submitted to the project officer for approval 
prior to initiating action. (A consolidated or master plan for contracts 
requiring numerous meetings, conferences, or seminars may be submitted 
in lieu of separate plans.)
    (b) Facilities. Any facility to be utilized for meetings, 
conferences, or seminars in performance of this contract shall be 
accessible to persons with disabilities. The Contractor shall determine, 
by an on-site inspection if necessary, that the following minimum 
accessibility requirements are met, or suitable modifications are made 
to meet these requirements, before the meeting:
    (1) Parking. (i) Where parking is available on or adjacent to the 
site, one 12' wide space must be set aside for the care of each mobility 
impaired attendee. The space need not be permanently striped but may be 
temporarily marked by signs, ropes, or other means satisfactory to carry 
out this provision.
    (ii) Where parking is not available on or adjacent to the site, 
valet parking or other alternative means to assist a person who has a 
mobility impairment may be used. Alternate means must be satisfactory in 
the judgment of the Government project officer.
    (2) Entrances. (i) ``Entrances'' shall include at least one 
accessible entrance from the street/sidewalk level, and at least one 
accessible entrance from any available parking facility.
    (ii) The entrance shall be level or accessible by ramp with an 
incline that allows independent negotiation by a person in a wheelchair. 
In general, the slope of the incline shall be no more than 1'' rise per 
foot of ramp length (1:12).
    (iii) Entrance doorways shall be at least 30'' in clear width and 
capable of operation by persons with disabilities. Revolving doors, 
regardless of foldback capability, will not meet this requirement.
    (3) Meeting Rooms. (i) Meeting room access from the main entrance 
area must be level or at an independently negotiable incline 
(approximately 1:12) and/or served by elevators from the main entrance 
level. All elevators shall be capable of accommodating a wheelchair 29'' 
wide by 45'' long.
    (ii) Meeting rooms shall be on one level or, if on different levels, 
capable of being reached by elevators or by ramps that can be 
independently negotiated by a person in a wheelchair. Doorways to all 
meeting rooms shall be at least 30'' in clear width.
    (iii) The interior of the meeting room shall be on one level or 
ramped so as to be independently negotiable for a person in a 
wheelchair.
    (iv) Stages, speaker platforms, etc. which are to be used by persons 
in wheelchairs must be accessible by ramps or lifts. When used, the 
ramps may not necessarily be independently negotiable if space does not 
permit. However, any slope over 1:12 must be approved by the project 
officer. Each case is to be judged on its own merits.
    (v) If a meeting room with fixed seating is utilized, seating 
arrangements for persons in wheelchairs shall be made so that these 
persons are incorporated into the group rather than isolated on the 
perimeter of the group.
    (4) Restrooms. (i) Restrooms shall have level access, signs 
indicating accessibility, and doorways at least 30'' in clear width.
    (ii) Sufficient turning space within restrooms shall be provided for 
independent use by a person in a wheelchair 29'' wide by 45'' long. A 
space 60'' by 60'' or 63'' by 56'' of unobstructed floor space as 
measured 12'' above the floor is acceptable by standard; other layouts 
will be accepted if it can be demonstrated that they are usable as 
indicated.
    (iii) There will be a restroom for each sex or a unisex restroom 
with at least one toilet stall capable of accommodating a wheelchair 
29'' wide by 45'' long (by standard, the minimum is 3'-0'' by 4'-8'') 
with outswinging doors or privacy curtains. Wall mounted grab bars are 
required.
    (iv) When separate restrooms have been set up for mobility impaired 
persons, they shall be located adjacent to the regular restrooms and 
shall be fully accessible.
    (5) Eating Facilities. (i) Eating facilities in the meeting facility 
must be accessible under the same general guidelines as are applied to 
meeting rooms.
    (ii) If the eating facility is a cafeteria, the food service area 
(cafeteria line) must allow sufficient room for independent wheelchair 
movement and accessibility to food for persons in wheelchairs, and 
cafeteria staff shall be available to assist disabled persons.
    (6) Overnight Facilities. If overnight accommodations are required:
    (i) Sufficient accessible guest rooms to accommodate each attendee 
who is disabled shall be located in the facility where the meeting, 
conference, or seminar is held, or in a facility housing the attendees 
which is

[[Page 136]]

conveniently located nearby, whichever is satisfactory to the project 
officer.
    (ii) Overnight facilities shall provide for the same minimum 
accessiblity requirements as the facility utilized for the meeting, 
conference, or seminar. In addition, guest room access from the main 
entrance area shall be level, ramped at an independently negotiable 
incline (1:12), and/or served by elevators capable of accommodating a 
wheelchair 29'' wide by 45'' long.
    (iii) Doorways to guest rooms, including the doorway to the 
bathroom, shall be at least 30'' in clear width.
    (iv) Bathrooms shall have wall mounted grab bars at the tub and 
water closet.
    (v) Guest rooms for persons with a disability shall be provided at 
the same rate as a guest room for other attendees.
    (7) Water Fountains. Water fountains shall be accessible to disabled 
persons, or have cup dispensers for use by persons in wheelchairs.
    (c) Provisions of Services for Sensory Impaired Attendees. (1) The 
Contractor, in planning the meeting, conference, or seminar, shall 
include in all announcements and other materials pertaining to the 
meeting, conference, or seminar a notice indicating that services will 
be made available to sensory impaired persons attending the meeting, if 
requested within five (5) days of the date of the meeting, conference, 
or seminar. The announcement(s) and other material(s) shall indicate 
that sensory impaired persons may contact a specific person(s), at a 
specific address and phone number(s), to make their service requirements 
known. The phone number(s) shall include a teletype number for the 
hearing impaired.
    (2) The Contractor shall provide, at no cost to the individual, 
those services required by persons with sensory impairments to insure 
their complete participation in the meeting, conference, or seminar.
    (3) As a minimum, when requested in advance, the Contractor shall 
provide the following services:
    (i) For hearing impaired persons, qualified interpreters. Provisions 
will also be made for volume controlled phone lines and, if necessary, 
transportation to local teletype equipment to enable hearing impaired 
individuals to receive and send meeting related calls. If local teletype 
equipment is not available, the Contractor shall provide on site 
teletype equipment. Also, the meeting rooms will be adequately 
illuminated so signing by interpreters can be easily seen.
    (ii) For vision impaired persons, readers and/or cassette materials, 
as necessary, to enable full participation. Also, meeting rooms will be 
adequately illuminated.
    (iii) Agenda and other conference material(s) shall be translated 
into a usable form for the visually and hearing impaired. Readers, 
braille translations, and/or tape recordings are all acceptable. These 
materials shall be available to sensory impaired individuals upon their 
arrival.
    (4) The Contractor is responsible for making every effort to 
ascertain the number of sensory impaired individuals who plan to attend 
the meeting, conference, or seminar. However, if it can be determined 
that there will be no sensory impaired person (deaf and/or blind) in 
attendance, the provision of those services under paragraph (c) for the 
nonrepresented group, or groups, is not required.

                             (End of clause)



352.270-2  Indian preference.

    The following clause shall be used as prescribed in 370.202(a):

                      Indian Preference (APR 1984)

    (a) The Contractor agrees to give preference in employment 
opportunities under this contract to Indians who can perform required 
work, regardless of age (subject to existing laws and regulations), sex, 
religion, or tribal affiliation. To the extent feasible and consistent 
with the efficient performance of this contract, the Contractor further 
agrees to give preference in employment and training opportunities under 
this contract to Indians who are not fully qualified to perform 
regardless of age (subject to existing laws and regulations), sex, 
religion, or tribal affiliation. The Contractor also agrees to give 
preference to Indian organizations and Indian-owned economic enterprises 
in the awarding of any subcontracts to the extent feasible and 
consistent with the efficient performance of this contract. The 
Contractor shall maintain statistical records as are necessary to 
indicate compliance with this paragraph.
    (b) In connection with the Indian employment preference requirements 
of this clause, the Contractor shall provide opportunities for training 
incident to such employment. Such training shall include on-the-job, 
classroom or apprenticeship training which is designed to increase the 
vocational effectiveness of an Indian employee.
    (c) If the Contractor is unable to fill its employment and training 
opportunities after giving full consideration to Indians as required by 
this clause, those needs may be satisfied by selection of persons other 
than Indians in accordance with the clause of this contract entitled 
``Equal Opportunity.''
    (d) If no Indian organizations or Indian-owned economic enterprises 
are available under reasonable terms and conditions, including price, 
for awarding of subcontracts in connection with the work performed under 
this contract, the Contractor agrees to comply with the provisions of 
this contract involving utilization of small business concerns, small 
business concerns owned and

[[Page 137]]

controlled by socially and economically disadvantaged individuals, or 
labor surplus area concerns.
    (e) As used in this clause:
    (1) ``Indian'' means a person who is a member of an Indian Tribe. If 
the contractor has reason to doubt that a person seeking employment 
preference is an Indian, the Contractor shall grant the preference but 
shall require the individual to provide evidence within thirty (30) days 
from the Tribe concerned that the person is a member of that Tribe.
    (2) ``Indian Tribe'' means an Indian Tribe, pueblo, band, nation, or 
other organized group or community, including any Alaska Native village 
or regional or village corporation as defined in or established pursuant 
to the Alaska Native Claims Settlement Act (85 Stat. 688; 43 U.S.C. 
1601) which is recognized as eligible for the special programs and 
services provided by the United States to Indians because of their 
status as Indians.
    (3) ``Indian organization'' means the governing body of any Indian 
Tribe or entity established or recognized by such governing body in 
accordance with the Indian Financing Act of 1974 (88 Stat. 77; 25 U.S.C. 
1451); and
    (4) ``Indian-owned economic enterprise'' means any Indian-owned 
commercial, industrial, or business activity established or organized 
for the purpose of profit, provided that such Indian ownership shall 
constitute not less than 51 percent of the enterprise, and that 
ownership shall encompass active operation and control of the 
enterprise.
    (f) The Contractor agrees to include the provisions of this clause, 
including this paragraph (f), in each subcontract awarded at any tier 
under this contract.
    (g) In the event of noncompliance with this clause, the Contracting 
Officer may terminate the contract in whole or in part or may impose any 
other sanctions authorized by law or by other provisions of the 
contract.

                             (End of clause)



352.270-3  Indian preference program.

    The following clause shall be used as prescribed in 370.202(b):

                  Indian Preference Program (APR 1984)

    (a) In addition to the requirements of the clause of this contract 
entitled ``Indian Preference,'' the Contractor agrees to establish and 
conduct an Indian preference program which will expand opportunities for 
Indians to receive perference for employment and training in connection 
with the work to be performed under this contract, and which will expand 
the opportunities for Indian organizations and Indian-owned economic 
enterprises to receive a preference in the awarding of subcontracts. In 
this connection, the Contractor shall:
    (1) Designate a liaison officer who will (i) Maintain liaison with 
the Government and the Tribe(s) on Indian perference matters; (ii) 
Supervise compliance with the provisions of this clause; and (iii) 
Administer the Contractor's Indian perference program.
    (2) Advise its recruitment sources in writing and include a 
statement in all advertisements for employment that Indian applicants 
will be given preference in employment and training incident to such 
employment.
    (3) Not more than twenty (20) calendar days after award of the 
contract, post a written notice in the Tribal office of any reservations 
on which or near where the work under this contract is to be performed 
that sets forth the Contractor's employment needs and related training 
opportunities. The notice shall include the approximate numbers and 
types of employees needed; the approximate dates of employment; the 
experience or special skills required for employment, if any; training 
opportunities available; and other pertinent information necessary to 
advise prospective employees of any other employment requirements. The 
Contractor shall also request the Tribe(s) on or near whose 
reservation(s) the work is to be performed to provide assistance to the 
Contractor in filling its employment needs and training opportunities. 
The Contracting Officer will advise the Contractor of the name, 
location, and phone number of the Tribal officials to contact in regard 
to the posting of notices and requests for Tribal assistance.
    (4) Establish and conduct a subcontracting program which gives 
preference to Indian organizations and Indian-owned economic enterprises 
as subcontractors and suppliers under this contract. The Contractor 
shall give public notice of existing subcontracting opportunities and, 
to the extent feasible and consistent with the efficient performance of 
this contract, shall solicit bids or proposals only from Indian 
organizations or Indian-owned economic enterprises. The Contractor shall 
request assistance and information on Indian firms qualified as 
suppliers or subcontractors from the Tribe(s) on or near whose 
reservation(s) the work under the contract is to be performed. The 
Contracting Officer will advise the contractor of the name, location, 
and phone number of the Tribal officials to be contacted in regard to 
the request for assistance and information. Public notices and 
solicitations for existing subcontracting opportunities shall provide an 
equitable opportunity for Indian firms to submit bids or proposals by 
including:
    (i) A clear description of the supplies or services required, 
including quantities, specifications, and delivery schedules which 
facilitate the participation of Indian firms; (ii) A statement 
indicating that preference will

[[Page 138]]

be given to Indian organizations and Indian-owned economic enterprises 
in accordance with section 7(b) of Public Law 93-638 (88 Stat. 2205; 25 
U.S.C. 450e(b)); (iii) Definitions for the terms ``Indian organization'' 
and ``Indian-owned economic enterprise'' as prescribed under the 
``Indian Preference'' clause of this contract; (iv) A representation to 
be completed by the bidder or offeror that it is an Indian organization 
or ``Indian-owned economic enterprise; and (v) A closing date for 
receipt of bids or proposals which provides sufficient time for 
preparation and submission of a bid or proposal. If after soliciting 
bids or proposals from Indian orgnizations and Indian-owned economic 
enterprises, no responsive bid or acceptable proposal is received, the 
Contractor shall comply with the requirements of paragraph (d) of the 
``Indian Preference'' clause of this contract. If one or more responsive 
bids or acceptable proposals are received, award shall be made to the 
low responsible bidder or acceptable offeror if the price is determined 
to be reasonable. If the low responsive bid or acceptable proposal is 
determined to be unreasonable as to price, the Contractor shall attempt 
to negotiate a reasonable price and award a subcontract. If a reasonable 
price cannot be agreed upon, the Contractor shall comply with the 
requirements of paragraph (d) of the ``Indian Preference'' clause of 
this contract. (5) Maintain written records under this contract which 
indicate: (i) The numbers of Indians seeking employment for each 
employment position available under this contract; (ii) the number and 
types of positions filled by Indians and non-Indians, and the total 
number of Indians employed under this contract; (iii) For those 
positions where there are both Indian and non-Indian applicants, and a 
non-Indian is selected for employment, the reason(s) why the Indian 
applicant was not selected; (iv) Actions taken to give preference to 
Indian organizations and Indian-owned economic enterprises for 
subcontracting opportunities which exist under this contract; (v) 
Reasons why preference was not given to Indian firms as subcontracators 
or suppliers for each requirement where it was determined by the 
Contractor that such preference would not be consistent with the 
efficient performance of the contract; and (vi) The number of Indian 
organizations and Indian-owned economic enterprises contacted, and the 
number receiving subcontract awards under this contract.
    (6) Submit to the Contracting Officer for approval a quarterly 
report which summarizes the Contractor's Indian preference program and 
indicates the number and types of available positions filled by Indians 
and non-Indians, and the dollar amounts of all subcontracts awarded to 
Indian organizations and Indian-owned economic enterprises, and to all 
other firms.
    (7) Maintain records pursuant to this clause and keep them available 
for review by the Government until expiration of one (1) year after 
final payment under this contract, or for such longer period as may be 
required by any other clause of this contract or by applicable law or 
regulation.
    (b) For purposes of this clause, the following definitions of terms 
shall apply:
    (1) The terms ``Indian,'' ``Indian Tribe,'' ``Indian Organization,'' 
and ``Indian-owned economic enterprise'' are defined in the clause of 
this contract entitled ``Indian Preference.''
    (2) ``Indian reservation'' includes Indian reservations, public 
domain Indian Allotments, former Indian reservations in Oklahoma, and 
land held by incorporated Native groups, regional corporations, and 
village corporations under the provisions of the Alaska Native Claims 
Settlement Act (85 Stat. 688; 43 U.S.C. 1601 et seq.)
    (3) ``On or near an Indian Reservation'' means on a reservation or 
reservations or within that area surrounding an Indian reservation(s) 
where a person seeking employment could reasonably be expected to 
commute to and from in the course of a workday.
    (c) Nothing in the requirements of this clause shall be interpreted 
to preclude Indian Tribes from independently developing and enforcing 
their own Indian preference requirements. Such requirements must not 
conflict with any Federal statutory or regulatory requirement dealing 
with the award and administration of contracts.
    (d) The Contractor agrees to include the provisions of this clause, 
including this paragraph (d), in each subcontract awarded at any tier 
under this contract and to notify the Contracting Officer of such 
subcontracts.
    (e) In the event of noncompliance with this clause, the Contracting 
Officer may terminate the contract in whole or in part or may impose any 
other sanctions authorized by law or by other provisions of the 
contract.

                             (End of clause)



352.270-4  Pricing of adjustments.

    Insert the following clause in all solicitations and resultant 
fixed-priced contracts other than purchase orders.

                    Pricing of Adjustments (APR 1984)

    When costs are a factor in determination of a contract price 
adjustment pursuant to the ``Changes'' clause or any provision of this 
contract, such costs shall be determined in accordance with the 
applicable cost principles and procedures set forth below:

------------------------------------------------------------------------
                 Principles                     Types of organizations
------------------------------------------------------------------------
(a) Subpart 31.2 of the Federal Acquisition  Commercial.
 Regulation.

[[Page 139]]

 
(b) Subpart 31.3 of the Federal Acquisition  Education.
 Regulation.
(c) Subpart 31.6 of the Federal Acquisition  State or local governments.
 Regulation.
(d) 45 CFR Part 74 Appendix E..............  Hospitals.
(e) Subpart 31.7 of the Federal Acquisition  Other nonprofit
 Regulation.                                  institutions.
------------------------------------------------------------------------

                             (End of clause)

[49 FR 14031, Apr. 9, 1984, as amended at 50 FR 38005, Sept. 19, 1985]



352.270-5  Key personnel.

    Insert the following clause in all solicitations and resultant cost-
reimbursement contracts.

                        Key Personnel (APR 1984)

    The personnel specified in this contract are considered to be 
essential to the work being performed hereunder. Prior to diverting any 
of the specified individuals to other programs, the Contractor shall 
notify the Contracting Officer reasonably in advance and shall submit 
justification (including proposed substitutions) in sufficient detail to 
permit evaluation of the impact on the program. No diversion shall be 
made by the Contractor without the written consent of the Contracting 
Officer; Provided, that the Contracting Officer may ratify in writing 
such diversion and such ratification shall constitute the consent of the 
Contracting Officer required by the clause. The contract may be amended 
from time to time during the course of the contract to either add or 
delete personnel, as appropriate.

                             (End of clause)



352.270-6  Publication and publicity.

    Insert the following clause in all solicitations and resultant 
contracts.

                  Publications and Publicity (JUL 1991)

    (a) Unless otherwise specified in this contract, the Contractor is 
encouraged to publish the results of its work under this contract. A 
copy of each article submitted by the Contractor for publication shall 
be promptly sent to the Project Officer. The Contractor shall also 
inform the Project Officer when the article or other publication is 
published, and furnish a copy of it as finally published.
    (b) The Contractor shall include in any publication resulting from 
work performed under this contract a disclaimer reading as follows:
    The content of this publication does not necessarily reflect the 
views or policies of the Department of Health and Human Services, nor 
does mention of trade names, commercial products, or organizations imply 
endorsement by the U.S. Government.

                             (End of clause)

[56 FR 33882, July 24, 1991, as amended at 56 FR 57602, Nov. 13, 1991]



352.270-7  Paperwork Reduction Act.

    Insert the following clause in all solicitations and contracts.

                   Paperwork Reduction Act (APR 1984)

    (a) In the event that it subsequently becomes a contractual 
requirement to collect or record information calling either for answers 
to identical questions from 10 or more persons other than Federal 
employees, or information from Federal employees which is outside the 
scope of their employment, for use by the Federal government or 
disclosure to third parties, the Paperwork Reduction Act of 1980 (Pub. 
L. 96-511) shall apply to this contract. No plan, questionnaire, 
interview guide or other similar device for collecting information 
(whether repetitive or single-time) may be used without first obtaining 
clearance from the Assistant Secretary for Management and Budget (ASMB) 
within the Department of Health and Human Services (HHS) and the Office 
of Management and Budget (OMB). Contractors and Project Officers should 
be guided by the provisions of 5 CFR part 1320, Controlling Paperwork 
Burdens on the Public, and seek the advice of the HHS operating division 
or Office of the Secretary Reports Clearance Officer to determine the 
procedures for acquiring ASMB and OMB clearance.
    (b) The Contractor shall obtain the required ASMB and OMB clearance 
through the Project Officer before expending any funds or making public 
contacts for the collection of data. The authority to expend funds and 
proceed with the collection of information shall be in writing by the 
Contracting Officer. The Contractor must plan at least 120 days for ASMB 
and OMB clearance. Excessive delay caused by the Government which arises 
out of causes beyond the control and without the fault or negligence of 
the Contractor will be considered in accordance with the Excusable 
Delays or Default clause of this contract.

[[Page 140]]

                             (End of clause)



PART 353--FORMS--Table of Contents




                  Subpart 353.3--Illustrations of Forms

Sec.
353.370-393  Form HHS 393, Purchase/Service/Stock Requisition.
353.370-674  Form HHS 674, Structured Approach Profit/Fee Objective.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).



                  Subpart 353.3--Illustrations of Forms

[[Page 141]]

353.370-393    Form HHS 393, Purchase/Service/Stock Requisition.
[GRAPHIC] [TIFF OMITTED] TC01MR91.124

[51 FR 44295, Dec. 9, 1986]

[[Page 142]]

353.370-674    Form HHS 674, Structured Approach Profit/Fee Objective.
[GRAPHIC] [TIFF OMITTED] TC01MR91.125

[49 FR 14047, Apr. 9, 1984]

[[Page 143]]



                   SUBCHAPTER T--HHS SUPPLEMENTATIONS





PART 370--SPECIAL PROGRAMS AFFECTING ACQUISITION--Table of Contents




 Subpart 370.1--Accessibility of Meetings, Conferences, and Seminars to 
                        Persons With Disabilities

Sec.
370.101  Policy.
370.102  Responsibilities.

     Subpart 370.2--Indian Preference in Employment, Training, and 
                      Subcontracting Opportunities

370.201  Statutory requirements.
370.202  Applicability.
370.203  Definitions.
370.204  Compliance enforcement.
370.205  Tribal preference requirements.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

    Source: 49 FR 14048, Apr. 9, 1984, unless otherwise noted.



 Subpart 370.1--Accessibility of Meetings, Conferences, and Seminars to 
                        Persons With Disabilities



370.101  Policy.

    (a) It is the policy of HHS that all meetings, conferences, and 
seminars be accessible to individuals with disabilities. For the 
purposes of this policy, accessibility is defined as both physical 
access to meeting, conference, and seminar sites, and aids and services 
to enable individuals with sensory disabilities to fully participate in 
meetings, conferences, and seminars.
    (b) In regard to acquisition, the policy is applicable to all 
contracts where the statement of work requires the contractor to conduct 
meetings, conferences, or seminars that are open to the public or 
involve HHS personnel, but not to ad hoc meetings that may be necessary 
or incidental to contract performance.



370.102  Responsibilities.

    (a) The contracting officer shall include the clause in 352.270-1 in 
every solicitation and resulting contract when the statement of work 
requires the contractor to conduct meetings, conferences, or seminars in 
accordance with 370.101(b).
    (b) The project officer shall be responsible for obtaining, 
reviewing, and approving the contractor's plan, which is to be submitted 
in response to paragraph (a) of the contract clause in 352.270-1. A 
consolidated or master plan for contracts requiring numerous meetings, 
conferences, or seminars will be acceptable. The project officer, prior 
to approving the plan, shall consult with the Office of Engineering 
Services serving the region where the meeting, conference, or seminar is 
to be held, to assure that the contractor's plan meets the accessibility 
requirements of the contract clause. The Office of Engineering Services 
shall make a determination on the adequacy of the contractor's plan, and 
notify the project officer, in writing, within ten (10) working days of 
receiving the request from the project officer.

[49 FR 14048, Apr. 9, 1984, as amended at 50 FR 23135, May 31, 1985; 50 
FR 38004, Sept. 19, 1985]



     Subpart 370.2--Indian Preference in Employment, Training, and 
                      Subcontracting Opportunities



370.201  Statutory requirements.

    Section 7(b) of the Indian Self-Determination and Education 
Assistance Act, Public Law 93-638, 88 Stat. 2205; 25 U.S.C. 450e(b) 
requires:

    Any contract, subcontract, grant, or subgrant pursuant to this Act, 
the Act of April 16, 1934 (48 Stat. 596), as amended, or any other Act 
authorizing Federal contracts with or grants to Indian organizations or 
for the benefit of Indians, shall require that to the greatest extent 
feasible--
    (1) Preferences and opportunities for training and employment in 
connection with the administration of such contracts or grants shall be 
given to Indians; and
    (2) Preference in the award of subcontracts and subgrants in 
connection with the administration of such contracts or grants shall be 
given to Indian organizations and to Indian-owned economic enterprises 
as defined in section 3 of the Indian Financing Act of 1974 (88 Stat. 
77).

[[Page 144]]



370.202  Applicability.

    The Indian Preference clause set forth in 352.270-2 and the Indian 
Preference Program clause set forth in 352.270-3 have been developed to 
implement section 7(b) of Public Law 93-638 for all activities of the 
Department. The clauses shall be used by any affected departmental 
contracting activity as follows, except solicitations issued and 
contracts awarded pursuant to Title I of Public Law 93-638 (25 U.S.C. 
450 et seq.) are exempted:
    (a) The Indian Preference clause (352.270-2) shall be included in 
each solicitation and resultant contract, regardless of dollar amount:
    (1) When the contract is to be awarded pursuant to an act 
specifically authorizing contracts with Indian organizations; or
    (2) Where the work to be performed under the contract is 
specifically for the benefit of Indians and is in addition to any 
incidental benefits which might otherwise accrue to the general public.
    (b) The Indian Preference Program clause (352.270-3) shall be 
included in each solicitation and resultant contract when:
    (1) The dollar amount of the acquisition is expected to equal or 
exceed $50,000 for nonconstruction work or $100,000 for construction 
work;
    (2) The Indian Preference clause is to be included in the 
solicitation and resultant contract; and
    (3) The determination is made, prior to solicitation that the work 
to be performed under the resultant contract will take place in whole or 
in substantial part on or near an Indian reservation(s). In addition, 
the Indian Preference Program clause may be included in any solicitation 
and resultant contract below the $50,000 or $100,000 level for 
nonconstruction or construction contracts, respectively, but which meet 
the requirements of paragraphs (b) (2) and (3) of this section, and, in 
the opinion of the contracting activity, offer substantial opportunities 
for Indian employment, training, and subcontracting.



370.203  Definitions.

    For purposes of this Subpart 370.2, the following definitions shall 
apply:
    (a) Indian means a person who is a member of an Indian Tribe. If the 
contractor has reason to doubt that a person seeking employment 
preference is an Indian, the contractor shall grant the preference but 
shall require the individual to provide evidence within thirty (30) days 
from the Tribe concerned that the person is a member of that Tribe.
    (b) Indian Tribe means an Indian Tribe, pueblo, band, nation, or 
other organized group or community, including any Alaska Native village 
or regional or village corporation or village corporation as defined in 
or established pursuant to the Alaska Native Claims Settlement Act (85 
Stat. 688; 43 U.S.C. 1601) which is recognized as eligible for the 
special programs and services provided by the United States to Indians 
because of their status as Indians.
    (c) Indian organization means the governing body of any Indian Tribe 
or entity established or recognized by such governing body in accordance 
with the Indian Financing Act of 1974 (88 Stat. 77; 25 U.S.C. 1451).
    (d) Indian-owned economic enterprise means any Indian-owned 
commercial, industrial, or business activity established or organized 
for the purpose of profit, provided that such Indian ownership shall 
constitute not less than 51 percent of the enterprise, and that 
ownership shall encompass active operation and control.
    (e) Indian reservation includes Indian reservations, public domain 
Indian allotments, former Indian reservations in Oklahoma, and land held 
by incorporated Native groups, regional corporations, and village 
corporations under the provisions of the Alaska Native Claims Settlement 
Act (85 Stat. 688; 43 U.S.C. 1601 et seq.).
    (f) On or near an Indian Reservation means on a reservation or 
reservations or within that area surrounding an Indian reservation(s) 
where a person seeking employment could reasonably be expected to 
commute to and from in the course of a work day.



370.204  Compliance enforcement.

    (a) The concerned contracting activity shall be responsible for 
conducting periodic reviews to insure contractor compliance with the 
requirements of

[[Page 145]]

the clauses set forth in 352.270-2 and 352.270-3. These reviews may be 
conducted with the assistance of the Indian Tribe(s) concerned.
    (b) Complaints of noncompliance with the requirements of the clauses 
set forth in 352.270-2 and 352.270-3 which are filed in writing with the 
contracting activity shall be promptly investigated and resolved by the 
contracting officer.



370.205  Tribal preference requirements.

    (a) Where the work under a contract is to be performed on an Indian 
reservation, the contracting activity may supplement the clause set 
forth in 352.270-3 by adding specific Indian preference requirements of 
the Tribe on whose reservation the work is to be performed. The 
supplemental requirements shall be jointly developed for the contract by 
the contracting activity and the Tribe. Supplemental preference 
requirements must represent a further implementation of the requirements 
of section 7(b) of Public Law 93-638 and must be approved by the 
affected program director and approved for legal sufficiency by the 
Business and Administrative Law Division, OGC, or a regional attorney 
before being added to a solicitation and resultant contract. Any 
supplemental preference requirements to be added to the clause in 
352.270-3 shall be included in the solicitation and clearly identified 
in order to ensure uniform understanding of the additional requirements 
by all prospective bidders or offerors.
    (b) Nothing in these regulations shall be interpreted to preclude 
Tribes from independently developing and enforcing their own tribal 
preference requirements. Such independently developed tribal preference 
requirements shall not, except as provided in paragraph (a) above, 
become a requirement in contracts covered under this Subpart 370.2, and 
must not conflict with any Federal statutory or regulatory requirement 
concerning the award and administration of contracts.

    Attachment I to Chapter 3--Single Letter of Credit Recipients and
                         Central Point Addresses
------------------------------------------------------------------------
                      Organization and    Recipient CRS-EIN    Letter of
       State             payee No.               \1\            credit
------------------------------------------------------------------------
Alabama...........  University of        1-636001138-A2, 1-    750080110
                     Alabama Medical      636001138-A3, 1-
                     Center, 1-           636001138-A4, 1-
                     636005396-A4.        636001138-A5,.
                    Director, Office of  1-636001138-B1, 1-   ..........
                     Grants and           636005396-A3 1-
                     Contracts            636005396-A4, 1-
                     Accounting,          636005396-A5, 1-
                     University of        636005396-A6, 1-
                     Alabama,             636005396-A7, 1-
                     University           636005396-A8.
                     Station,
                     Birmingham,
                     Alabama 35296.
                    University of        1-636001138-A1, 1-     75080115
                     Alabama, 1-          636001138-A6.
                     636001138-A1.
                    Comptroller,         1-636001138-A7, 1-   ..........
                     University of        636001138-A8, 1-
                     Alabama, P.O. Box    636001138-A9, 1-
                     M, University,       636001138-B2, 1-
                     Alabama.             636001138-B3, 1-
                                          636001138-B4.
                    Southern Research,   1-630288868-A1, 1-     75083532
                     Institute, 1-        630288868-A2.
                     630288868-A2.
                    Financial Officer,   ...................  ..........
                     Southern Research
                     Institute, 2000
                     9th Avenue, South,
                     Birmingham,
                     Alabama 35205.
Alaska............  State of Alaska, 1-  1-000700389-A1, 1-     75080021
                     900001517-A1.        926001185-A2, 1-
                                          926001185-A3.
                    Director, Division   1-926001185-A4, 1-   ..........
                     of Finance,          926001185-A5, 1-
                     Department of        926001185-A7, 1-
                     Administration,      926001185-B1, 1-
                     Pouch C, Juneau,     926001185-B2, 1-
                     Alaska 99801.        926001185-B3, 1-
                                          926001185-B6, 1-
                                          926001185-B7, 1-
                                          926001185-B8, 1-
                                          926001185-B9, 1-
                                          926001185-C1, 1-
                                          926001185-C2.
Arizona...........
                    State of Arizona, 1- 1-866004791-A1, 1-     75080628
                     866004791-B7.        866004791-A2, 1-
                                          866004791-A3,

[[Page 146]]

 
                    State Treasurer's    1-866004791-A4, 1-   ..........
                     Office, State        866004791-A5, 1-
                     Capitol, Phoenix,    866004791-A6, 1-
                     Arizona, 85007.      866004791-A7, 1-
                                          866004791-A8, 1-
                                          866004791-A9, 1-
                                          866004791-B2, 1-
                                          866004791-B3, 1-
                                          866004791-B7, 1-
                                          866004791-B8, 1-
                                          866004791-C2, 1-
                                          866004791-C5, 1-
                                          866004791-C7, 1-
                                          866004791-C8, 1-
                                          866004791-C9, 1-
                                          866004791-D1, 1-
                                          866004791-D2, 1-
                                          866004791-D3, 1-
                                          866004791-D5, 1-
                                          866004791-D6, 1-
                                          866004791-D7, 1-
                                          866004791-D8, 1-
                                          866004791-D9, 1-
                                          866004791-E3, 1-
                                          866004791-E5, 1-
                                          866004791-E6, 1-
                                          866004791-E7, 1-
                                          866004791-E8, 1-
                                          866004791-E9.
California........  County of San        1-956000924-A1 1-      75080386
                     Diego, 1-95000934-   956000924-A2.
                     A2.
                    Auditor and          ...................  ..........
                     Controller, County
                     of San Diego,
                     County
                     Administration
                     Center, 1600
                     Pacific Highway,
                     San Diego,
                     California 92101.
                    University of        ...................    75081471
                     California, 1-
                     900001727-A1.
                    Letter of Credit,    ...................  ..........
                     Universities of
                     California,
                     Berkeley,
                     California 94720.
                    Santa Barbara......  1-956006145-A1 1-      75081471
                                          956006145-A2.
                    San Diego..........  1-956006144-A1, 1-     75081471
                                          956006144-A2, 1-
                                          956006144-A3.
                    Davis..............  1-946036494-A1.....    75081471
                    Los Angeles........  1-956006143-A1, 1-     75081471
                                          956006143-A2, 1-
                                          956006143-A3, 1-
                                          956006143-A4, 1-
                                          956006143-A6.
                    Irvine.............  1-952226406-A1, 1-     75081471
                                          952226406-A2.
                    Berkeley...........  1-946002133-A1, 1-     75081471
                                          946002133-A2.
                    Riverside..........  1-237361894-A1, 1-     75081471
                                          956006142-A1.
                    Santa Cruz.........  1-941539563-A1.....    75081471
                    San Francisco......  1-946036493-A1, 1-     75081471
                                          946036493-A6, 1-
                                          946036493-A7, 1-
                                          946036493-A8.
                    Los Alamos Lab.....  1-856004458-A1.....    75081471
                    Lawrence Livermore   1-946031193-A1.....    75081471
                     Lab.
                    Scripps Clinic and   1-951684089-A1.....    75087560
                     Res. Fndn.
                    Comptroller,         ...................  ..........
                     Scripps Clinic and
                     Res. Fndn. 476
                     Prospect Street,
                     La Jolla,
                     California 92037.
Connecticut.......  Yale University, 1-  1-060646973-A1, 1-     75089755
                     060646973-A1.        060646973-A2, 1-
                                          060646973-A4.
                    Treasurer, Yale      1-060646973-A5, 1-   ..........
                     University, Grants   060646973-A6, 1-
                     and Contracts, 155   060646973-A7, 1-
                     Whitney Avenue,      060646973-A8.
                     New Haven, Conn.
                     05611.
District of         Georgetown           1-530196603-A1, 1-     75083450
 Columbia.           University, 1-       530196603-A2, 1-
                     530196603-A1.        530196603-A3.
                    Treasurer,           1-530196603-A4, 1-   ..........
                     Georgetown           530196603-A5, 1-
                     University, 37th     530196603-A6, 1-
                     and O Streets NW.,   530196603-A7.
                     Washington, D.C.
                     20007.
                    George Washington    1-530196584-A1, 1-     75083441
                     University, 1-       530196584-A3.
                     530196584-A1.
                    Treasurer, George    ...................  ..........
                     Washington
                     University, Rice
                     Hall, Washington,
                     D.C. 20006.
                    Gorgas Memorial      1-530196518-A1.....    75083522
                     Institute, 1-
                     530196518-A1.
                    Treasurer, Gorgas    ...................  ..........
                     Memorial
                     Institute, 2007 I
                     Street NW.,
                     Washington, D.C.
                     20007.
                    National Academy of  1-530196932-A1, 1-     75085992
                     Sciences, 1-         530196932-A2.
                     530196932-A1.
                    Treasurer, National  ...................  ..........
                     Academy of
                     Sciences, 2101
                     Constitution,
                     Avenue NW.,
                     Washington, D.C.
                     20037.
Florida...........  University of        1-596001874-C7, 1-     75083326
                     Florida, 1-          596001874-F2.
                     596001874-C7,
                     Fiscal Contract
                     Officer,
                     University of
                     Florida, Room 106,
                     R. Johnson Hall,
                     Gainesville,
                     Florida 32611.
                    University of        1-590624458-A1, 1-     75085253
                     Miami, 1-590624458-  590624458-A2, 1-
                     A1.                  590624458-A3.
                    Chief Accountant,    1-590624458-A6.....  ..........
                     University of
                     Miami, P.O. Box
                     9057, Coral
                     Gables, Florida
                     33124.

[[Page 147]]

 
Georgia...........  State of Georgia, 1- 1-580973190-A2, 1-     75083462
                     581130678-Al.        581130678-A1, 1-
                                          581130678-A5,.
                    Director,            1-581130678-A6, 1-
                     Department of Adm.   586000246-A2, 1-
                     Services, Fiscal     586002042-A1, 1-
                     Division, Pryor-     586002042-A2, 1-
                     Mitchell Building,   586002042-A3, 1-
                     Atlanta, Georgia     586002042-A4, 1-
                     30334.               586002042-A6, 1-
                                          900000257-A1, 1-
                                          900000648-A1.
Guam..............  Territory of Guam,   1-000040215-A1, 1-     7508B368
                     1-980018947-E6.      000040218-A1, 1-
                                          000040228-A1.
                    Department of        1-000040238-A1,1-00  ..........
                     Administration,      0307495-A1,1-00031
                     P.O. Box 884,        3462-A1,1-90000027
                     Government of        0-A1,1-900000273-A
                     Guam, Agana, Guam    1,1-900000274-A1,1
                     96110.               -980018947-A1,1-98
                                          0018947-A2,1-98001
                                          8947-A3,1-98001894
                                          7-A4,1-980018947-A
                                          7,1-980018947-A8,1
                                          -980018947-A9,1-98
                                          0018947-B1,1-98001
                                          8947-B2,1-98001894
                                          7-B3,1-980018947-B
                                          5,1-980018947-D1,1
                                          -980018947-E5,1-98
                                          0018947-E7,1-98001
                                          8947-F1.
Illinois..........  University of        1-376000511-A1,1-37    75083885
                     Illinois Medical     6000511-A3,1-37600
                     Center, 1-           0511-A5,1-37600051
                     376000511-A5.        1-A8.
                    Business Manager,    01-376000511-A9,1-3
                     University of        76000511-B2,1-3760
                     Illinois, Chicago,   00511-B4,1-3760005
                     Illinois, P.O. Box   11-B5,1-376000511-
                     6998, Chicago,       C1,1-376000511-C2,
                     Illinois 60680.      1-376000511-C3.
Kansas............  Kansas State         1-480771751-A1,1-48    75084200
                     University 1-        0771751-A2.
                     480771751-A1,
                     Comptroller,
                     Kansas State,
                     University of
                     Agriculture &
                     Applied Sciences,
                     Anderson Hall,
                     Manhattan, Kansas
                     66502.
Louisiana.........  State of Louisiana,  1-000014399-A1,1-00    75080020
                     1-900001516-A1,.     0014607-A1,1-23720
                                          8290-A1.
                    Assistant State      1-237208290-A2,1-72
                     Treasurer, State     0591509-A1,1-72063
                     Treasurer's          7038-A1,1-72063703
                     Office, P.O. Box     8-A2,1-720645546-A
                     44154, Capital       1,1-720650883-A1,1
                     Station, Baton       -720695435-A1,1-72
                     Rouge, Louisiana     0707278-A1,1-72600
                     70804.               0720-A1,1-72600073
                                          3-A1,1-726000734-A
                                          1,1-726000734-A2,1
                                          -726000734-A3,1-72
                                          6000743-A1,1-72600
                                          0745-A1,1-72600075
                                          6-A1,1-726000766-A
                                          1,1-726000800-A1,1
                                          -726000800-A2,1-72
                                          6000813-A1,1-72600
                                          0821-A1,1-72600082
                                          1-A2,1-726000821-A
                                          3,1-726000821-A4,1
                                          -726000821-A5,1-72
                                          6000826-A1,1-72600
                                          1901-A1,1-72601159
                                          5-A1,1-726011595-A
                                          3,1-726011595-A5,1
                                          -726011595-A6,1-72
                                          6011595-A8,1-72601
                                          1595-A9,1-72601249
                                          8-A1,1-726014571-A
                                          1,1-726101595-A1,1
                                          -900001256-A1,1-90
                                          0001342-A1,1-90000
                                          2575-A1.
Maine.............  Jackson              1-01211513-A1......    75087315
                     Laboratories, 1-
                     010211513-A1.
                    Financial Officer,
                     The Jackson
                     Laboratories,
                     Otter Creek Road,
                     Bar Harbor, Maine
                     04609.
Massachusetts.....  Boston University,   1-042103547-A1, 1-     75081272
                     1-042103547-A1.      042103547-A2, 1-
                                          042103547-A4.
                    Comptroller, Boston
                     University, 755
                     Commonwealth
                     Avenue, Boston,
                     Mass. 02215.
                    Forsyth Dental       1-042104230-A1, 1-     75083375
                     Center, 1-           042104230-A2.
                     042104230-A2.
                    Assistant
                     Treasurer, Forsyth
                     Dental Center, 140
                     Fenway, Boston,
                     Mass. 02115.
                    Harvard University   1-042103580-A2, 1-     75083630
                     1-042103580-B1.      042103580-A3, 1-
                                          042103580-A4.
                    Office of the        1-042103580-A5, 1-
                     Comptroller.         042103580-A6.
                    President & Fellows  1-042103580-A7, 1-   ..........
                     of Harvard College   042103580-A8, 1-
                     Cambridge, Mass.     042103580-A9, 1-
                     02138.               042103580-B1.
                    Massachusetts        1-041564300-A1, 1-     75084810
                     General Hospital,    041564655-A3, 1-
                     1-041564655-A4.      041564655-A4.

[[Page 148]]

 
                    Treasurer,           1-041564655-A5.....  ..........
                     Massachusetts
                     General Hospital,
                     45 Milk Street,
                     Boston, Mass.
                     02114.
                    Massachusetts        1-042103594-A1, 1-     75084836
                     Institute of         042103594-A2.
                     Technology, 1-
                     042103594-A1.
                    Fiscal Officer,      ...................  ..........
                     Division of
                     Sponsored
                     Research,
                     Massachusetts
                     Institute of
                     Technology,
                     Cambridge, Mass.
                     02139.
                    Worcester            1-042121658-A1.....    75089680
                     Foundation, 1-
                     042121658-A1.
                    Finance Officer,     ...................  ..........
                     Worcester
                     Foundation for
                     Experimental
                     Biology, Inc., 222
                     Maple Avenue,
                     Shrewsbury,
                     Massachusetts
                     01545.
Maryland..........  Johns Hopkins        1-000701501-A1, 1-     75084130
                     University, 1-       520595110-A1, 1-
                     520595110-A5,        520595110-A2, 1-
                     University Budget    520595110-A3, 1-
                     Officer Johns        520595110-A4, 1-
                     Hopkins              520595110-A5.
                     University,
                     Garland Hall, Rm
                     327, Charles and
                     34th Streets,
                     Baltimore, Md.
                     21218.
Michigan  ........  University of        1-386006309-A1, 1-     75085301
                     Michigan, 1-         386006309-A2, 1-
                     386006309-A1.        386006309-A3.
                    University Cashier,  1-386006309-A4, 1-   ..........
                     Regents of the       386006309-A5, 1-
                     University of        386006309-A6, 1-
                     Michigan, 1015       386006309-A7, 1-
                     L.S. & A. Bldg.,     386006309-A8, 1-
                     Ann Arbor,           386006309-A9, 1-
                     Michigan 48104.      386006309-B1,1-386
                                          006309-B2.
Minnesota  .......  Mayo Foundation, 1-  1-4160011702-A1, 1-    75084875
                     416011702-A1.        4160011702-A2.
                    Treasurer, Mayo      ...................  ..........
                     Foundation, 200
                     First Street, SW.,
                     Rochester,
                     Minnesota 55901.
                    University of        1-416007513-A1, 1-     75085448
                     Minnesota, 1-        416007513-A2, 1-
                     416007513-A5.        416007513-A3.
                    Director, Research   1-416007513-A5, 1-   ..........
                     Administration,      416007513-A8, 1-
                     105 Admin. Servs.    416007513-B2, 1-
                     Building, 2610       416007513-B3, 1-
                     University Avenue,   416007513-B4, 1-
                     St. Paul,            416007513-B5, 1-
                     Minnesota 55114.     416007513-B7.
Missouri  ........  Midwest Research     1-440545878-A1.....    75085361
                     Institute, 1-
                     440545878-A1.
                    Treasurer, Midwest   ...................  ..........
                     Research
                     Institute, 425
                     Volker Blvd.,
                     Kansas City,
                     Missouri 64110.
Nebraska  ........  State of Nebraska,   1-000021900-A1, 1-     75086320
                     1-470491233-C5.      210674761-A1, 1-
                                          470491233-A1.
                    State of Nebraska    1-470491233-A3, 1-   ..........
                     Accounting Dept.,    470491233-A4, 1-
                     Administrative       470491233-A6, 1-
                     Services Office,     470491233-A7, 1-
                     State Capitol        470491233-A8, 1-
                     Bldg., Lincoln,      470491233-A9, 1-
                     Nebraska 68509.      470491233-B1, 1-
                                          470491233-B2, 1-
                                          470491233-B3, 1-
                                          470491233-B4, 1-
                                          470491233-B5, 1-
                                          470491233-B6, 1-
                                          470491233-B7, 1-
                                          470491233-B8, 1-
                                          470491233-B9, 1-
                                          470491233-C1, 1-
                                          470491233-C2, 1-
                                          470491233-C3, 1-
                                          470491233-C4, 1-
                                          470491233-C5, 1-
                                          470491233-C6, 1-
                                          470491233-C7, 1-
                                          470491233-C8, 1-
                                          470491233-C9, 1-
                                          470491233-D1, 1-
                                          470491233-D2, 1-
                                          470491233-D4, 1-
                                          476000479-A1, 1-
                                          476000535-A1, 1-
                                          476000535-A8, 1-
                                          741699874-A1, 1-
                                          900001910-A1, 1-
                                          900001919-A1, 1-
                                          900002209-A1, 1-
                                          900002333-A1, 1-
                                          900003427-A1, 1-
                                          900003437-A1.
New York..........  Adelphi University,  1-111630741-A1.....    75080040
                     1-111630741-A1.
                    Business Manager,    ...................  ..........
                     Adelphi
                     University, South
                     Avenue, Garden
                     City, New York
                     11530.
                    Albany Medical       1-141338310-A1.....    75080150
                     Center, 1-
                     141338310-A1,.
                    Assistant            ...................  ..........
                     Treasurer, Albany
                     Medical College of
                     Union University,
                     47 New Scotland
                     Avenue, Albany,
                     New York 12208.
                    Children's Hospital  1-160748423-A1.....    75082160
                     of Buffalo, 1-
                     160748423-A1.
                    Comptroller,         ...................  ..........
                     Children's
                     Hospital of
                     Buffalo, 219
                     Bryant Street,
                     Buffalo, N.Y.
                     14222.
                    New York Medical     1-131099420-A1.....    75086270
                     College, 1-
                     131099420-A1.
                    Treasurer, New York  ...................  ..........
                     Medical College,
                     Flower/Fifth
                     Avenue Hospitals,
                     1 East 105th
                     Street, New York,
                     N.Y. 10029.

[[Page 149]]

 
                    New York             1-135562308-A1, 1-     75086330
                     University, 1-       135562308-A3, 1-
                     135562308-A1.        135562308-A4.
                    Assistant            1-135562308-A5, 1-   ..........
                     Controller, New      135562308-A6.
                     York University,
                     500 Kimball Hall,
                     Washington Square,
                     New York, New York
                     10003.
                    New York University  1-135562308-A2, 1-     75086333
                     Medical Center, 1-   135562308-B1, 1-
                     135562309-A1.        135562309-A1, 1-
                                          135562309-A2.
                    Comptroller, New     1-135562309-A3, 1-   ..........
                     York University      229124053-A1.
                     Medical Center,
                     550 First Avenue,
                     New York, New York
                     10016.
                    University of        1-160743209-A1, 1-      7508272
                     Rochester, 1-        160743209-A2, 1-
                     160743209-A1,        160743209-A3, 1-
                     Research             160743209-A4, 1-
                     Accountant           160743209-A5.
                     University of
                     Rochester, River
                     Campus, Rochester,
                     New York 14627.
                    Research Foundation  1-131819472-A1, 1-     75087210
                     of the State,        132633612-A1, 1-
                     University of New    141363361-A1, 1-
                     York, 1-14136861-    141368361-A1, 1-
                     J3, Comptroller,     141368361-A2, 1-
                     Research             141368361-J3, 1-
                     Foundation of        146013200-E4, 1-
                     State University     146013200-E5, 1-
                     of New York, P.O.    146013200-E6, 1-
                     Box 7126, Albany,    146013200-E7, 1-
                     New York 12224.      146013200-E8, 1-
                                          146013200-E9, 1-
                                          146013200-F1, 1-
                                          146013200-F2, 1-
                                          146013200-F3, 1-
                                          146013200-F4, 1-
                                          146013200-F5, 1-
                                          146013200-F6, 1-
                                          146013200-F7, 1-
                                          146013200-F8, 1-
                                          146013200-F9, 1-
                                          146013200-G1, 1-
                                          146013200-G2, 1-
                                          146013200-G3, 1-
                                          146013200-G4, 1-
                                          146013200-G5, 1-
                                          146013200-G6, 1-
                                          146013200-G7, 1-
                                          146013200-G8, 1-
                                          146013200-G9, 1-
                                          146013200-H1, 1-
                                          146013200-H2, 1-
                                          146013200-H3, 1-
                                          146013200-H4, 1-
                                          146013200-J3, 1-
                                          146013200-K4, 1-
                                          146013200-L5, 1-
                                          146013200-L6, 1-
                                          146013200-L7.
                    Research Foundation  1-131988190-A1, 1-     75082337
                     of the City,         131988190-A8.
                     University of New
                     York, 1-131988190-
                     A1.
                    Treasurer, Research  ...................  ..........
                     Foundation of the
                     City, University
                     of New York, 1411
                     Broadway, New
                     York, New York
                     10018.
                    State of New York,   1-146013200-A1, 1-     75086340
                     1-146013200-J7.      146013200-A2, 1-
                                          146013200-A3.

[[Page 150]]

 
                    Director, State      1-146013200-A4, 1-
                     Accounts, Alfred     146013200-A5, 1-
                     E. Smith,            146013200-A6, 1-
                     Building, Albany,    146013200-A7, 1-
                     New York 12225.      146013200-A8, 1-
                                          146013200-A9, 1-
                                          146013200-B1, 1-
                                          146013200-B2, 1-
                                          146013200-B3, 1-
                                          146013200-B4, 1-
                                          146013200-B5, 1-
                                          146013200-B6, 1-
                                          146013200-B7, 1-
                                          146013200-B8, 1-
                                          146013200-B9, 1-
                                          146013200-C1, 1-
                                          146013200-C2, 1-
                                          146013200-C3, 1-
                                          146013200-C4, 1-
                                          146013200-C5, 1-
                                          146013200-C6, 1-
                                          146013200-C8, 1-
                                          146013200-C9, 1-
                                          146013200-D1, 1-
                                          146013200-D2, 1-
                                          146013200-D3, 1-
                                          146013200-D4, 1-
                                          146013200-D5, 1-
                                          146013200-D6, 1-
                                          146013200-D7, 1-
                                          146013200-D9, 1-
                                          146013200-E1, 1-
                                          146013200-E2, 1-
                                          146013200-E3, 1-
                                          146013200-H5, 1-
                                          146013200-H6, 1-
                                          146013200-H7, 1-
                                          146013200-H8, 1-
                                          146013200-H9, 1-
                                          146013200-I1, 1-
                                          146013200-I2, 1-
                                          146013200-I3, 1-
                                          146013200-I4, 1-
                                          146013200-I7, 1-
                                          146013200-I8, 1-
                                          146013200-J1, 1-
                                          146013200-J4, 1-
                                          146013200-J5, 1-
                                          146013200-J6, 1-
                                          146013200-J7, 1-
                                          146013200-J8, 1-
                                          146013200-J9, 1-
                                          146013200-K1, 1-
                                          146013200-K2, 1-
                                          146013200-K3, 1-
                                          146013200-K6, 1-
                                          146013200-K7, 1-
                                          146013200-K9, 1-
                                          146013200-L3, 1-
                                          146013200-L4, 1-
                                          146013200-L8.
Ohio..............  Case Western         1-341018992-A4, 1-     75089472
                     Reserve              341018992-A1, 1-
                     University, 1-       341018992-A2.
                     341018992-A1.
                    Comptroller Case     ...................  ..........
                     Western Reserve
                     University, 2040
                     Adelbert Road,
                     Cleveland, Ohio
                     44106.
Tennessee.........  St. Jude's           1-62646012-A1......    75083427
                     Children's
                     Research Hospital,
                     1-620646012-A1.
                    Treasurer, St.       ...................  ..........
                     Jude's Children's
                     Hospital, 332 N.
                     Lauderdale,
                     Memphis, Tennessee
                     38101.
Texas.............  Baylor University    1-741613878-A1, 1-     75081070
                     College of           741613878-A2.
                     Medicine, 1-
                     741613878-A2.
                    Business Manager,    ...................  ..........
                     Baylor College of
                     Medicine, 1200
                     Moursund Ave.,
                     Houston, Texas
                     77025.
                    University of Texas  1-741761309-A4, 1-     75088056
                     at Houston Health    741761309-A6.
                     Center, 1-
                     741761309-A4.
                    Associate Dean for   ...................  ..........
                     Business Affairs,
                     University of
                     Texas, Medical
                     School, P.O. Box
                     20036 Houston,
                     Texas 77025.
                    University of Texas  1-756002868-A3, 1-     75088130
                     Medical School, 1-   756002868-A4, 1-
                     756002868-A4.        756002868-A5.
                    Business Manager,    ...................  ..........
                     University of
                     Texas,
                     Southwestern
                     Medical Schools,
                     5323 Harry Hines
                     Blvd., Dallas, Tex
                     75235.
                    University of        1746001118-A1......    75088910
                     Texas, M.D.
                     Anderson Hospital,
                     1-746001118-A1.
                    Supervisor, Grant    ...................  ..........
                     Reporting, M.D.
                     Anderson Hospital,
                     University of
                     Texas, 6723
                     Bertner Ave.,
                     Houston, Texas
                     77025.
                    University of Texas  1-74600949-A1......    75088916
                     Medical Branch,
                     Galveston, Texas,
                     1-74600949-A1.
                    Business Manager,    ...................  ..........
                     University of
                     Texas, Medical
                     Branch, 1000
                     Strand, Galveston,
                     Texas 77550.
Utah..............  University of Utah   1-876000525-A1, 1-     75089067
                     and University of    876000525-A2, 1-
                     Utah Research 1-     876000525-A3, 1-
                     876000525-A6.        876000525-A6, 1-
                                          876000525-A7,.
                    Controller,          1-876000525-A8.....  ..........
                     University of
                     Utah, 122 Park
                     Building, Salt
                     Lake City, Utah
                     84112.

[[Page 151]]

 
Washington........  University of        1-916001537-A1, 1-     75089320
                     Washington, 1-       916001537-A2, 1-
                     916001537-A5,        916001537-A4, 1-
                     Director, Office     916001537-A5, 1-
                     of Grant/Contract    916001537-A6, 1-
                     Services,            916001537-A9.
                     University of
                     Washington, 211
                     Administration
                     Building, Seattle,
                     Washington 98195.
Wisconsin.........  State of Wisconsin,  1-000039594-A1, 1-     7508H610
                     1-396006469-B1.      000702000-A1, 1-
                                          390808464-A1.
                    Budget Operations,   1-391051231-A1, 1-   ..........
                     State Budget         396006436-A1, 1-
                     Office, One West     396006443-A3, 1-
                     Wilson St.,          396006447-A1, 1-
                     Madison Wisconsin    396006461-A1, 1-
                     53607.               396006461-A2, 1-
                                          396006461-A3, 1-
                                          396006461-A4, 1-
                                          396006461-A5, 1-
                                          396006461-A6, 1-
                                          396006461-A7, 1-
                                          396006461-A8, 1-
                                          396006461-A9, 1-
                                          396006461-B1, 1-
                                          396006466-A1, 1-
                                          396006469-A1, 1-
                                          396006469-A5, 1-
                                          396006469-A6, 1-
                                          396006469-A7, 1-
                                          396006469-B1, 1-
                                          396006469-B5, 1-
                                          396006487-A1, 1-
                                          396006487-A2, 1-
                                          396006488-A1, 1-
                                          396006492-A1, 1-
                                          396006492-A2, 1-
                                          396006492-A3, 1-
                                          396006492-A5, 1-
                                          396006492-A6, 1-
                                          396006492-A7, 1-
                                          396006492-A8, 1-
                                          396006492-B1, 1-
                                          396006492-B2, 1-
                                          396006492-B3, 1-
                                          396006492-B4, 1-
                                          396006492-B5, 1-
                                          396006492-B6, 1-
                                          396006492-B7, 1-
                                          396006492-B8, 1-
                                          396006492-B9, 1-
                                          396006492-C1, 1-
                                          396006492-C2, 1-
                                          396006492-C3, 1-
                                          396006492-C4, 1-
                                          396006492-C5, 1-
                                          396006492-C6, 1-
                                          396006492-C7, 1-
                                          396006492-C8, 1-
                                          396006492-C9, 1-
                                          396006492-D1, 1-
                                          396028867-A1, 1-
                                          396028867-A2, 1-
                                          396091677-A1, 1-
                                          396091677-A2, 1-
                                          396320507-A1, 1-
                                          900000022-A1, 1-
                                          900002012-A1, 1-
                                          900002564-A1, 1-
                                          900002665-A1, 1-
                                          900003134-A1.
------------------------------------------------------------------------
\1\ Central Registry-System Entity Identification Number (CRS-EIN).
CRS-EIN is a twelve digit number used to identify a recipient
  organization/individual in the HHS Central Registry System (CRS). This
  system utilizes a standard identification number within HHS to
  identify recipients of Federal assistance-like programs. The first
  digit identifies whether the recipient is an organization (1) or
  individual (2). The next nine (9) digits uniquely associate the
  organization/individual to an Employer Identification Number assigned
  by the Internal Revenue Service in the case of an organization, or a
  Social Security Number assigned by the Social Security Administration
  in the case of an individual. A two character suffix code is assigned
  by the Central Registry System, HHS, to identify component levels
  within the recipient organization, such as: School of Medicine,
  Research Division, Department of Biology, etc. A suffix is not applied
  to a Social Security Number since that number is unique to each
  individual.

[49 FR 14049, Apr. 9, 1984. Redesignated at 49 FR 36110, Sept. 14, 1984]

[[Page 152]]

                   ATTACHMENT II--HHSAR SUBJECT INDEX

  Editorial Note: This listing is provided for information purposes 
only. It is compiled and kept up-to-date by the Department of Health and 
Human Services.

``A-76''................................................................

307.3

Accessibility of Meetings, Conferences, and Seminars to Persons with 
Disabilities............................................................

370.1

Acquisition Planning....................................................

307.1
Contents of.............................................................
307.105

Administration of HHSAR.................................................

301.201

Administration, Post-Award Contract.....................................

342.70

ADP Review and Clearance................................................

339.7001

ADP Systems Security....................................................

339.7002

Advance Acquisition Planning (Scheduling)...............................

307.71

Advance Payments........................................................

332.4

Advertisements, Paid....................................................

305.5

Advocates for Competition...............................................

306.5

Agency Acquisition Regulations..........................................

301.3

Agency Head.............................................................

302.1

Amendments to Solicitations.............................................

315.410

Announcement of Contract Award..........................................

305.303

Antitrust Violations....................................................

303.303

Appeals, Disputes and...................................................

333.2

Appointment of Contracting Officers.....................................

301.603

Arrangement of Regulation...............................................

301.104-2

Audiovisual Materials, Acquisition Clearance of.........................

307.105-2(a)(14)

Audit, Closing Completed Contracts......................................

304.804-1

Award Instrument, Selection of..........................................

307.70

Balance of Payments Program.............................................

325.302

Basic Agreements........................................................

316.702

Basic Agreements, Numbering of..........................................

304.7004

Basic Ordering Agreements, Numbering of.................................

304.7005

Best and Final Offers...................................................

315.611

Blanket Purchase Agreements.............................................

313.2

Business Proposal Instructions..........................................

315.406-5(b)(3)

Buy American Act........................................................

325.1
Excepted Articles, Materials, Supplies..................................
325.108
Formats for Nonavailability Determinations..............................
325.108-70

Certifications, Representations and.....................................

315.406-5

Chief of Contracting Office.............................................

302.100

Class Determinations and Findings.......................................

301.703

Class Deviation.........................................................

301.404

Clauses, Special Contract...............................................

352.2

Closing Completed Contracts.............................................

304.804

Closing Review (of Contracts)...........................................

304.870

Coding of HHSAR.........................................................

301.104-1

Competition Advocates...................................................

306.5

Competition Requirements................................................

306

Competitive Range.......................................................

315.609

Completion (Work Statement).............................................

307.105-3

Confidentiality of Information..........................................

324.70

Considerations in Selecting an Award Instrument.........................

307.70

Consolidated Acquisitions...............................................

317.70

[[Page 153]]

Consulting Services.....................................................

337.2

Contingent Fee Violations...............................................

303.409
Contract Awards:
Announcement of.........................................................
305.303
Review and Approval of Proposed.........................................
304.71

Contract Clauses........................................................

352.2

Contract Closeout.......................................................

304.804

Contract Cost and Manpower Reporting....................................

342.7002(e)

Contract Distribution...................................................

304.201

Contract Execution......................................................

304.101

Contract Files..........................................................

304.801

Contract Financing......................................................

332

Contract Format.........................................................

315.406-1

Contract Funding........................................................

332.7

Contract Monitoring.....................................................

342.70

Contract Numbering......................................................

304.7001

Contract Reporting......................................................

304.601
Contract Types:
Cost-Plus-Fixed-Fee.....................................................
316.306
Cost-Reimbursement......................................................
316.3
Cost Sharing............................................................
316.303; 335.070
Incentive...............................................................
316.403
Time-and-Materials, Labor-Hour, and Letter..............................
316.6

Contracts with Government Employees.....................................

303.602

Contracts, Voiding and Rescinding.......................................

303.704

Contracting Authority...................................................

301.601

Contracting Officer Selection and Appointment...........................

301.603

Contracting Officer's Signature.........................................

304.101

Contracting with SBA....................................................

319.8

Contractors, Responsible Prospective....................................

309.1

Contractor vs. Government Performance (A-76)............................

307.3

Cost Accounting Standards, Waiver.......................................

330.201-5

Cost Overruns...........................................................

342.71

Cost/Pricing Data.......................................................

315.804; 315.805

Cost-Reimbursement Contracts............................................

316.3

Cost Sharing............................................................

316.303; 335.070

Data, Treatment of (in Contract Proposals)..............................

315.413

DCIS (Departmental Contract Information System).........................

304.601

Debarment, Suspension, and Ineligibility................................

309.4

Debriefing of Unsuccessful Offerors.....................................

315.1003

Definitions.............................................................

302.1

Determinations and Findings.............................................

301.7
Determinations and Findings Format:
Cost-Type Contract......................................................
316.301-3

Deviation...............................................................

301.4

Disclosure and Use of Information Before Award..........................

315.413

Discussion, Written or Oral.............................................

315.610

Disputes and Appeals....................................................

333.2

Distribution of Contract Documents......................................

304.201

Duty-Free Importation of Goods..........................................

325.1

Eight-A (8a) Program (SBA)..............................................

319.8

Evaluation of Proposals.................................................

315.608
Cost or Price...........................................................
315.608-77
Technical...............................................................
315.608-75, and 76

Evaluation Factors (RFP)................................................

315.406-5(c)

Evaluators, Use of Outside..............................................

315.608-71(f)

Exclusion of Sources....................................................

306.2

Execution of Contract...................................................

304.101

[[Page 154]]

Executive Committee for Acquisition.....................................

301.202

Expert and Consulting Services..........................................

337.2

Facsimile Bids..........................................................

314.202-7

Facsimile Proposals.....................................................

315.402

Federal Procurement Data System.........................................

See DCIS

Field Pricing Support...................................................

315.805-5

Final Indirect Cost Rates...............................................

342.705

Financing, Contract.....................................................

332

Foreign Purchases.......................................................

325

Forms, Acquisition (Illustration of)....................................

353.3

Freedom of Information Act (FOIA).......................................

324.2

Full and Open Competition After Exclusion of Sources....................

306.2

Funding Contracts.......................................................

332.7

Government Employees Training Act (Acquisition Under)...................

317.71

Government Property.....................................................

345

Gratuities, Contractor (to Government Personnel)........................

303.203

Head of the Agency......................................................

302.1

Head of Contracting Activity............................................

301.670

Imprest Fund............................................................

313.4

Incremental Funding of Cost-Reimbursement Contracts.....................

332.702

Indirect Cost Rates.....................................................

342.705

Indian Preference.......................................................

370.2

Individual Deviation....................................................

301.403

Ineligibility...........................................................

309.4

Institutional Cost-Sharing Agreements...................................

335.070-4

Invoice Processing......................................................

332.905

Justification for Other than Full and Open Competition..................

306.303

Labor Surplus Area Concerns.............................................

320.1

Letter Contract.........................................................

316.603

Letter of Credit, Recipients and Central Point Addressees...............

Attachment I

Letters of Credit.......................................................

332.406

Letters of Intent.......................................................

316.770-1

Limitation of Costs or Funds............................................

332.704

Major System Acquisition................................................

334.003

Meetings, Conferences, Seminars (Accessibility to for Disabled).........

370.1

Memorandums of Understanding............................................

316.770-2

Mistakes in Bids........................................................

314.406 (315.607)
Before Award............................................................
314.406-3
After Award.............................................................
314.406-4

Monitoring, Contract....................................................

342.70

Negotiation Memorandum, Preparation of..................................

315.672

Negotiation with Selected Source........................................

315.670

Notifications to Offerors...............................................

315.1001

Numbering System, Acquisition Instrument Identification.................

304.70

OMB Control Numbers.....................................................

301.105

Options.................................................................

317.2

Other than Full and Open Competition....................................

306.3

Paid Advertisements.....................................................

305.5

Paperwork Reduction Act (Clause)........................................

352.270-7

Personal Service Contracts..............................................

337.104

Phasing.................................................................

307.105-3

Plan, Subcontracting, Small and Disadvantaged Businesses................

319.705

Plan, Technical Evaluation..............................................

315.608-70

Planning, Acquisition...................................................

307.1

Post Negotiation Contract Preparation and Award.........................

315.671

Postaward Orientation (Letters).........................................

342.504

Pre-Proposal Conferences................................................

315.409

[[Page 155]]

Presolicitation Notices and Conferences.................................

315.404

Price Negotiation.......................................................

315.805

Pricing Data............................................................

See Cost/Pricing Data

Principal Official Responsible for Acquisition..........................

302.1

Privacy Act.............................................................

324.1

Processing Requests for Training........................................

317.7102

Profit or Free (Structured Approach)....................................

315.905-70
Program Personnel Responsibilities:
Accessibility of Meetings, Conferences, Seminars to Persons with 
Disabilities............................................................
370.102(b)
ADP Clearances..........................................................
339.7001
ADP Systems Security....................................................
339.7002
Award Instrument, Selecting.............................................
307.7004
Business Practices, Reporting Improper..................................
303
Contract Monitoring.....................................................
342.7002
Government Property, Providing..........................................
345.370(c)
    Other than Full and Open Competition:
Approval of JOFOC.......................................................
306.304
Circumstances Permitting................................................
306.302
Preparing JOFOC.........................................................
306.303
    Planning:
Advance Acquisition (Scheduling)........................................
307.71
Acquisition Document:
Content.................................................................
307.105
Preparation.............................................................
307.104-3
Responsibility..........................................................
307.104-2
Special Program Clearances..............................................
307.105-2
Statement of Work.......................................................
307.105-3
    Privacy Act:
Determination...........................................................
324.102
System Notice...........................................................
324.103
    Request for Contract:
Content.................................................................
315.7004
Procedures..............................................................
315.7002
Responsibilities........................................................
315.7003
    Request for Proposals:
Evaluation Criteria Development.........................................
315.406-5(c)
Preparation.............................................................
315.406
Technical Proposal Instructions.........................................
315.406-5(b)(2)
    Source Selection:
Competitive Range.......................................................
315.609(i)
Evaluation of Proposals (Need for Confidentiality)......................
315.604(d)
Handling and Disclosing Proposals.......................................
315.608-72
Rating and Ranking Proposals............................................
315.608-75
Technical Evaluation Panel..............................................
315.608-71, 74
Technical Evaluation Plan...............................................
315.608-70
Technical Evaluation Report.............................................
315.608-76
Training................................................................
307.170

Program Training Requirements...........................................

307.170

Progress Payments, Unusual..............................................

332.501

Prompt Payment..........................................................

332.9

Prompt Payment..........................................................

332.905

Proposals, Evaluation of................................................

315.608

Proposals, Unsolicited..................................................

315.5

Proposed Contract Awards, Review and Approval of........................

304.71

Protective Services.....................................................

337.109

Protests Against Award..................................................

333.1

[[Page 156]]

Providing Government Property...........................................

345.370

Provisions, Solicitation................................................

352.2; 315.407

Purchase Descriptions, Statements of Work, Specifications...............

307.105-3

Purchase Orders.........................................................

313.5

Purchase Orders, Numbering of...........................................

304.7003

Ratification of Unauthorized Commitments................................

301.602-3

Records of Contract Actions.............................................

304.801

References and Citations to HHSAR and FAR...............................

301.104-2(c)

Regulation System.......................................................

301.101

Rejection of Bids (After Opening).......................................

314.404

Relative Importance or Weight (Evaluation Criteria).....................

315.406-5(c)(4)

Representations and Certifications......................................

315.406-5
Annual Submission.......................................................
314.213; 315.471

Requests for Contract-Content, Format, Procedures.......................

315.70
Requests for Proposals:
Review..................................................................
315.470
Preparation and Contents................................................
315.406

Requests for Quotations.................................................

313.107; 315.406

Rescinding Contracts....................................................

303.7

Research and Development Contracts......................................

335.070

Response Time for Solicitations.........................................

315.408

Responsible Prospective Contractors.....................................

309.1

Retention of Files......................................................

FAR 4.805

Review and Approval of Proposed Contract Awards.........................

304.71

Review and Approval of JOFOC's..........................................

306.304

Review of Requests for Contracts........................................

315.7007

Review of Requests for Proposals........................................

315.470

Review of Work Statements...............................................

315.7004

Revisions to HHSAR......................................................

301.206

Scheduling..............................................................

307.71

Selection of Contracting Officers.......................................

301.603

Selection of Offerors...................................................

315.609

Service Contracts in General............................................

337.1

Set-Asides for Small Business...........................................

319.5

Small Business and Small Disadvantaged Business Concerns................

319

Small and Disadvantaged Business Utilization Specialist (SADBUS)........

319.201-70

Small Purchases.........................................................

313.1
Solicitations:
Amendment...............................................................
315.410
Availability............................................................
305.102
Issuance................................................................
315.408
Information and Planning Purposes.......................................
315.405
Numbering...............................................................
304.7002
Provisions..............................................................
352.2

Source List.............................................................

315.7005(a)(7)

Source Selection........................................................

315.6

Special Contract Clauses................................................

352.2

Special Program Clearances and Approvals................................

307.105-2; 315.7005(a)(8)

Specifications, Purchase Descriptions, Statements of Work...............

307.105-3

Standards of Conduct....................................................

303.101-3

Statements of Work, Specifications, Purchase Descriptions...............

307.105-3

Subcontracting with Small and Disadvantaged Businesses..................

319.7

Subcontractor Kickbacks.................................................

303.502

Synopsizing, Exceptions to..............................................

305.202

System, Departmental Contract Information (DCIS)........................

304.601

Systems (ADP) Security..................................................

339.7002

[[Page 157]]

Technical Evaluation Panel..............................................

315.608-71

Technical Evaluation Plan...............................................

315.608-70

Technical Evaluation Report.............................................

315.608-76

Technical Proposal Instructions.........................................

315.406-5(b)(2)

Training, Processing Requests for.......................................

317.7102

Treatment of Data in Contract Proposals.................................

315.413

Term or Level of Effort Work Statement..................................

307.105-3

Time-and-Materials Contract.............................................

316.601

Unauthorized Commitments, Ratification of...............................

301.602-3

Unauthorized Types of Agreements........................................

316.770

Unsolicited Proposals...................................................

315.5

Voiding Contracts.......................................................

303.704

Walsh-Healey Act........................................................

322.6

Weight, Relative Importance (Evaluation Criteria).......................

315.406-5(c)(4)

Withdrawing or Modifying Small Business Set-Aside.......................

319.506

Withholding of Payments.................................................

342.7003

Year-end Acquisitions...................................................

307.71

[[Page 159]]



                    APPENDIX A--PUBLIC HEALTH SERVICE




                       (Parts PHS 300 to PHS 399)

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

                          SUBCHAPTER A--GENERAL
PHS Part                                                            Page
301             PHS Acquisition Regulation System...........         161
302             Definitions of words and terms..............         163
304             Administrative matters......................         163
                   SUBCHAPTER B--ACQUISITION PLANNING
305             Publicizing contract actions................         167
306             Competition requirements....................         167
          SUBCHAPTER C--CONTRACTING METHODS AND CONTRACT TYPES
314             Formal advertising..........................         168
315             Contracting by negotiation..................         168
                  SUBCHAPTER D--SOCIOECONOMIC PROGRAMS
323             Environment, conservation, and occupational 
                    safety..................................         169
             SUBCHAPTER E--GENERAL CONTRACTING REQUIREMENTS
333             Protests, disputes, and appeals.............         171
             SUBCHAPTER F--SPECIAL CATEGORIES OF CONTRACTING
335             Research and development contracting........         172
336             Construction and architect-engineer 
                    contracts...............................         172
                     SUBCHAPTER H--CLAUSES AND FORMS
352             Solicitation provisions and contract clauses         174
                   SUBCHAPTER T--PHS SUPPLEMENTATIONS
380             Special program requirements affecting PHS 
                    acquisitions............................         213

[[Page 161]]



                          SUBCHAPTER A--GENERAL





PART PHS 301--PHS ACQUISITION REGULATION SYSTEM--Table of Contents




             Subpart PHS 301.1--Purpose, Authority, Issuance

Sec.
PHS 301.101  Purpose.
PHS 301.102  Authority.
PHS 301.103  Applicability.
PHS 301.104  Issuance.
PHS 301.104-1  Publication and code arrangement.
PHS 301.104-2  Arrangement of regulations.
PHS 301.104-3  Copies.
PHS 301.105  OMB approval under the Paperwork Reduction Act.

                    Subpart PHS 301.2--Administration

PHS 301.201  Maintenance of the PHSAR.
PHS 301.270  Procurement Management Advisory Committee.
PHS 301.271  Timing of PHSAR revisions.

               Subpart PHS 301.4--Deviations From the FAR

PHS 301.470  Procedure.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

    Source: 49 FR 36237, Sept. 14, 1984, unless otherwise noted.



             Subpart PHS 301.1--Purpose, Authority, Issuance



PHS 301.101  Purpose.

    (a) The Public Health Service Acquisition Regulation (PHSAR) is 
issued to establish uniform acquisition policies and procedures 
throughout PHS which are necessary to implement or supplement the 
Department of Health and Human Services Acquisition Regulation (HHSAR).
    (b) PHS issuances do not reiterate material published in the HHSAR 
or the Federal Acquisition Regulation (FAR).
    (c) The PHSAR implements and supplements the HHSAR. Implementing 
material expands upon or indicates the manner of compliance with the 
related HHSAR. Supplementing material is new material which has no 
counterpart in the HHSAR. The omission of sections or subsections in 
PHSAR means no further explanation or qualification is necessary for 
implementation within PHS. Therefore, in order to obtain comprehensive 
coverage and assure consideration of all acquisition policies and 
procedures pertinent to PHS, the FAR, HHSAR, and PHSAR should be read.



PHS 301.102  Authority.

    (a) The HHSAR authorizes supplementation or implementation of the 
FAR and HHSAR in accordance with prescribed procedures (see 301.301) in 
order to publish essential acquisition instructions, policies, and 
procedures that do not conflict with, supersede or duplicate that 
prescribed by the FAR and the HHSAR.



PHS 301.103  Applicability.

    The FAR, HHSAR and PHSAR issuances apply to all acquisitions made by 
PHS procuring activities as defined in FAR 1.103.



PHS 301.104  Issuance.



PHS 301.104-1  Publication and code arrangement.

    (a) The PHSAR is published in the same forms as indicated in FAR 
1.104-1(a).
    (b) PHS issuances will be published on yellow pages in looseleaf 
form for insertion into the HHSAR.



PHS 301.104-2  Arrangement of regulations.

    (a) General. The PHSAR conforms to the FAR and HHSAR with respect to 
divisional arrangements; i.e., subchapters, parts, subparts, sections, 
subsections, and paragraphs.
    (c) References and citations.
    (2) This regulation shall be referred to as the Public Health 
Service Acquisition Regulation (PHSAR), Appendix A to the Department of 
Health and Human Services Acquisition Regulation. Any reference shall be 
cited as ``PHS'' followed by the appropriate number.
    (3) Citations of authority shall be incorporated where necessary. 
All FAR reference numbers shall be preceded by ``FAR.'' References to 
the HHSAR shall

[[Page 162]]

state only the number without the prefix ``HHSAR.''



PHS 301.104-3  Copies.

    Copies of the PHSAR in Federal Register form may be purchased by the 
public from the Superintendent of Documents, Government Printing Office 
(GPO), Washington, DC 20402. Looseleaf copies of the PHSAR may be 
obtained by departmental personnel having a need for the document by 
placing an order with a Directives Distribution Coordinator in 
accordance with General Administration Manual Chapter 1-00, Exhibit G, 
HHS Staff Manual System.



PHS 301.105  OMB approval under the Paperwork Reduction Act.

    The following OMB control numbers apply to the information 
collection and recordkeeping requirements contained in this regulation:

------------------------------------------------------------------------
                                                                  OMB
                        PHSAR segment                           control
                                                                  No.
------------------------------------------------------------------------
All segments (excluding PHS 352.223-70 and PHS 252.232-70)..   0990-0128
PHS 352.223-70..............................................   0990-0137
PHS 352.232-70..............................................   0990-0134
------------------------------------------------------------------------


[49 FR 36237, Sept. 14, 1984, as amended at 51 FR 20486, June 5, 1986]



                    Subpart PHS 301.2--Administration



PHS 301.201  Maintenance of PHSAR.

    The PHSAR is maintained by the Division of Grants and Contracts, 
Office of Resource Management, Office of Management, PHS. The Director, 
Division of Grants and Contracts is responsible for developing and 
preparing material to be included in the PHSAR.



PHS 301.270  Procurement Management Advisory Committee.

    (a) The Director, Division of Grants and Contracts has established 
the Procurement Management Advisory Committee (PMAC) to assist and 
facilitate the planning and development of acquisition policies and 
procedures, and the resolving of operational problems affecting all 
acquisition activities in the PHS.
    (b) The PMAC consists of members and alternates from the Office of 
the Assistant Secretary for Health, Alcohol, Drug Abuse, and Mental 
Health Administration, Centers for Disease Control, Food and Drug 
Administration, Health Resources and Services Administration, and 
National Institutes of Health.

[49 FR 36237, Sept. 14, 1984, as amended at 51 FR 20486, June 5, 1986]



PHS 301.271  Timing of PHSAR revisions.

    PHSAR revisions will be issued throughout the year as the need 
arises. PHS issuances shall be effective on the date cited in the 
Federal Register issuance or on the date of the transmittal notice which 
distributes it to PHSAR Staff Manual holders, unless otherwise directed.



               Subpart PHS 301.4--Deviations From the FAR



PHS 301.470  Procedure.

    (a) Requests for deviations from the FAR, HHSAR or any PHSAR 
issuance for implementation or supplementation shall be submitted in 
writing by the PHS agency principal official responsible for acquisition 
to the Director, Division of Grants and Contracts, ORM/OM/PHS for 
approval and/or further processing as may be required. When it is 
recognized that a deviation will be required prior to the issuance of a 
solicitation, the request for deviation must be processed and approved 
prior to release of the solicitation. When completion of a contract 
action is contingent on approval of a deviation, the request for 
deviation must be processed and approval granted by the appropriate 
level, prior to contract execution. In an exigency situation, initial 
verbal contact should be made with the Chief, Contracts Management 
Branch, DGC/ORM/OM/PHS or his/her designee. Only deviations to the PHSAR 
may be granted by the Director, Division of Grants and Contracts.
    (b) Each request for deviation shall provide sufficient information 
to permit PHS compliance with the HHSAR. Generally, such requests shall 
contain the following in addition to the information required by 
301.470(b):
    (1) The name of the contractor and contract number, or the name of 
the

[[Page 163]]

proposed contractor and the solicitation number.
    (2) A statement indicating whether or not the deviation had been 
previously requested. If so, outline the circumstances involved and the 
disposition of that request.

[49 FR 36237, Sept. 14, 1984, as amended at 51 FR 20486, June 5, 1986]



PART PHS 302--DEFINITIONS OF WORDS AND TERMS--Table of Contents




    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).



                     Subpart PHS 302.1--Definitions



PHS 302.170  Definitions of terms.

    The following terms, when utilized in PHS supplementing or 
implementing issuances to the HHSAR, have the meanings set forth below.
    PHS agencies identifies collectively that group of organizational 
entities within the PHS which have assigned major health functions as 
currently shown in the PHS Organization Handbook. The PHS agencies are 
as follows:

Alcohol, Drug Abuse, and Mental Health Administration (ADAMHA)
Centers for Disease Control (CDC)
Food and Drug Administration (FDA)
Health Resources and Services Administration (HRSA)
National Institutes of Health (NIH)

    PHS agency heads identifies collectively those individuals who are 
given the responsibility and authority to manage and direct the efforts 
of the PHS agencies. These are the Administrators of ADAMHA and HRSA, 
Commissioner of FDA, and Directors of NIH and CDC.
    PHS contracting activities identifies collectively those 
organizational elements of the PHS staff offices and the PHS agencies 
which have functional responsibility to contract for the acquisition of 
personal property and nonpersonal services.

[49 FR 36238, Sept. 14, 1984]



PART PHS 304--ADMINISTRATIVE MATTERS--Table of Contents




                  Subpart PHS 304.1--Contract Execution

Sec.
PHS 304.170  Ratification of unauthorized contract awards.

                  Subpart PHS 304.6--Contract Reporting

PHS 304.670  PHS Contract Information System (PHSCIS).
PHS 304.670-1  Policy.
PHS 304.670-2  PHS agency implementation.

   Subpart PHS 304.71--Review and Approval of Proposed Contract Awards

PHS 304.7101  Contracts requiring review and approval.
PHS 304.7102  Conduct of the review.

    Authority: 5 U.S.C. 301, 40 U.S.C. 486(c).

    Source: 49 FR 36238, Sept. 14, 1984, unless otherwise noted.



                  Subpart PHS 304.1--Contract Execution



PHS 304.170  Ratification of unauthorized contract awards.

    (c)(2) Where ratification of an unauthorized contract action within 
a PHS agency is requested, the contracting officer shall forward the 
file through acquisition channels to an official at an organizational 
level above the contracting officer. He/she in turn shall analyze and 
evaluate the contracting officer's submission and make appropriate 
recommendations regarding ratification to the head of the contracting 
activity.
    The Administrative Services Center (ASC), Office of Management (OM), 
will submit its requests for ratification to the Director, OM through 
the Division of Grants and Contracts (DGC), Office of Resource 
Management, OM/PHS.
    (c)(4)(i) PHS agencies, and ASC, OM/PHS, shall submit a report of 
ratification data as specified in 304.170. PHS agencies with several 
contracting offices will be required to collect the required information 
from these activities and submit a consolidated agency report.

[[Page 164]]

    (ii) These reports shall be submitted to DGC/ORM/OM/PHS within 20 
days following the expiration of the reporting period. A consolidated 
PHS report will be prepared for submission to the Deputy Assistant 
Secretary for Procurement, Assistance, and Logistics as specified in 
304.170.



                  Subpart PHS 304.6--Contract Reporting



PHS 304.670  PHS Contract Information System (PHSCIS).

    The PHS Contract Information System consolidates all PHS contract 
data for the Department-wide Contract Information System (DCIS) from the 
PHS contracting activities.



PHS 304.670-1  Policy

    The PHS principal officials responsible for acquisition (PORA) are 
responsible for ensuring that all required information is collected, 
submitted, and received into the PHSCIS in accordance with the central 
PHSCIS User Manual.

[49 FR 36238, Sept. 14, 1984, as amended at 51 FR 20486, June 5, 1986]



PHS 304.670-2  PHS agency implementation.

    It is the responsibility of the PORAs to develop and implement 
appropriate procedures within their activities to ensure that data 
submissions to the PHSCIS are timely, error free, and contain all the 
required information.



   Subpart PHS 304.71--Review and Approval of Proposed Contract Awards



PHS 304.7101  Contracts requiring review and approval.

    (b)(2)(i) In addition to the reviews required by 304.7101(a) and PHS 
304.7101(c), internal reviews are to be conducted of acquisitions made 
by the following contracting offices in the National Institutes of 
Health for contract awards that fall below the dollar threshold for 
review and approval set forth in PHS 304.7101(c) but exceed the dollar 
threshold set forth herein:

National Cancer Institute--$750,000
National Heart, Lung, and Blood Institute--$500,000
National Institute of Environmental Health Sciences--$250,000
National Institute of Allergy and Infectious Diseases--$250,000
National Institute of Child Health and Human Development--$250,000
Centralized procuring activity for all other National Institutes of 
Health Research Organizations (Research Contracts Branch)--$250,000


These internal reviews shall be conducted by senior personnel with each 
contracting office. Typically, the chief of contracting office or his/
her deputy should be involved in the review. Personnel involved in the 
contract action shall not perform the review. Each review shall be 
documented in writing, and any substantive issues identified shall be 
resolved prior to award.
    (ii) Furthermore, to assure that an adequate review of smaller 
dollar acquisitions is made prior to award, a statistically significant 
sample of contract actions of dollar values, less than those amounts 
referenced in this section is required to be approved prior to award. 
This review and approval will be by the designated Reviewing Official 
listed in paragraph (c) (but see PHS 304.7102(a)). Records of such 
review actions will be maintained and will include documentation of the 
resolution of any significant issue raised by the review.
    (iii) Contract awards and modifications of proposed architect-
engineer contracts expected to exceed $50,000 shall be reviewed and 
approved prior to award by the reviewing official designated in PHS 
304.7101(c).
    (c) Reviewing officials. For PHS agency contract awards expected to 
exceed the dollar amounts stated in this paragraph, the reviewing 
official indicated will personally approve the award. Other than these 
specified requirements for the designated reviewing official, PHS 
agencies may assign other review and approval responsibilities at their 
discretion. The following officials shall be responsible for preaward 
contract review and approval of all proposed contracts and modifications 
which are expected to exceed the dollar limits expressed below:

[[Page 165]]



------------------------------------------------------------------------
 Review and
  approval
  required
    for          PHS acquisition              Reviewing official
 contracts          activity
expected to
   exceed
------------------------------------------------------------------------
              Office of the Assistant Secretary for Health
 
------------------------------------------------------------------------
   $300,000  Administrative          Director, Administrative Services
              Services Center,        Center.
              Office of Management.
 
------------------------------------------------------------------------
          Alcohol, Drug Abuse and Mental Health Administration
 
------------------------------------------------------------------------
    300,000  National Institute on   Director, Division of Grants and
              Drug Abuse.             Contracts Management.
    300,000  National Institute on       Do.
              Alcohol Abuse and
              Alcoholism.
    300,000  National Institute of       Do.
              Mental Health.
    300,000  St Elizabeths,              Do.
              Hospital, NIMH.
     50,000  Addiction Research          Do.
              Center.
 
------------------------------------------------------------------------
                       Centers for Disease Control
 
------------------------------------------------------------------------
    300,000  Centers for Disease     Director, Procurement and Grants
              Control.                Office.
 
------------------------------------------------------------------------
                      Food and Drug Administration
 
------------------------------------------------------------------------
    300,000  Division of Contracts   Director, Division of Contracts and
              and Grants Management.  Grants Management.
    300,000  National Center for         Do.
              Toxicological
              Research.
 
------------------------------------------------------------------------
                      National Institutes of Health
 
------------------------------------------------------------------------
  1,500,000  National Cancer         Director, Division of Contracts and
              Institute.              Grants.
  1,000,000  National Heart, Lung,       Do.
              and Blood Institute.
 
------------------------------------------------------------------------
          National Institutes of Environmental Health Sciences
 
------------------------------------------------------------------------
  1,000,000  Research and                Do.
              development awards.
    100,000  Other than research     Director, Division of Procurement.
              and development.
    750,000  National Institute of   Director, Division of Contracts and
              Child Health and        Grants.
              Human Development.
    750,000  National Institute of       Do.
              Allergy and
              Infectious Diseases.
    500,000  National Institute of       Do.
              Neurological and
              Communicative
              Disorders and Stroke.
 
------------------------------------------------------------------------
                      National Library of Medicine
 
------------------------------------------------------------------------
    500,000  Research and            Director, Division of Contracts and
              development awards.     Grants.
    250,000  Other than research     Director, Division of Procurement.
              and development.
    250,000  National Institute of   Director, Division of Contracts and
              Dental Research.        Grants.
    250,000  National Institute of       Do.
              Arthritis, Metabolism
              and Digestive
              Diseases.
    750,000  Centralized procuring       Do.
              activity for all
              other National
              Institutes of Health
              Research
              Organizations.
    250,000  Procurement Branch,     Director, Division of Procurement.
              Division of
              Procurement, ORS.
 
------------------------------------------------------------------------
              Health Resources and Services Administration
 
------------------------------------------------------------------------
    500,000  Awards made by          Director, Division of Grants and
              Headquarters and the    Procurement Management.
              Indian Health Service.
    300,000  Awards made by other        Do.
              than Headquarters and
              the Indian Health
              Service.
------------------------------------------------------------------------


[[Page 166]]


[49 FR 36238, Sept. 14, 1984, as amended at 51 FR 20486, June 5, 1986]



PHS 304.7102  Conduct of the review.

    (a) General. The reviewing official is not required to personally 
perform the review, but he or she is responsible for assuring that the 
reviewer is knowledgeable in the acquisition field and has sufficient 
expertise to perform a comprehensive review and to make cogent 
recommendations to the reviewing official for actions exceeding the 
dollar amounts stated in this subpart. The reviewing official shall 
approve each proposed contract award that is reviewed.

[[Page 167]]



                   SUBCHAPTER B--ACQUISITION PLANNING





PART PHS 305--PUBLICIZING CONTRACT ACTIONS--Table of Contents




    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).



        Subpart PHS 305.2--Synopses of Proposed Contract Actions



PHS 305.202  Exceptions.

    (b) A determination and finding has been executed by the Acting 
Assistant Secretary for Health after concurrence by the Administrator of 
the Office of Federal Procurement Policy and the Administrator of the 
Small Business Administration, which exempts for the period September 
30, 1985 through September 29, 1988, certain acquisitions with the 
National Academy of Sciences (NAS) from the synopsis requirements set 
forth in FAR 5.201. This exemption is applicable only to acquisitions 
where NAS is the only source which can provide the measure of expertise, 
independence, objectivity, and audience acceptance necessary to meet the 
program requirements. To ensure that this exemption will be used only 
when appropriate, the agency competition advocate shall certify, prior 
to award, each acquisition with NAS which is not synopsized regardless 
of the dollar value. The certification must state that only NAS can 
provide the measure of expertise, independence, objectivity, and 
audience acceptance necessary to meet the program needs.

[51 FR 20487, June 5, 1986]



PART PHS 306--COMPETITION REQUIREMENTS--Table of Contents




         Subpart PHS 306.3--Other Than Full and Open Competition

Sec.
PHS 306.304  Approval of the justification.

                Subpart PHS 306.5--Competition Advocates

PHS 306.502  Duties and responsibilities.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

    Source: 51 FR 20487, June 5, 1986, unless otherwise noted.



         Subpart PHS 306.3--Other Than Full and Open Competition



PHS 306.304  Approval of the justification.

    (a)(3) The Deputy Assistant Secretary for Health, Operations, PHS, 
is designated as the approving official referenced in FAR 6.304(a)(3) 
and 306.304(a)(3).



                Subpart PHS 306.5--Competition Advocates



PHS 306.502  Duties and responsibilities

    (b) The competition advocates for the PHS activities shall 
coordinate their efforts with the PHS competition advocate, the Deputy 
Assistant Secretary for Health Operations.

[[Page 168]]



          SUBCHAPTER C--CONTRACTING METHODS AND CONTRACT TYPES





PART PHS 314--FORMAL ADVERTISING--Table of Contents




        Subpart PHS 314.4--Opening of Bids and Award of Contract

Sec.
PHS 314.406-3  Other mistakes disclosed before award.
PHS 314.406-4  Mistakes after award.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).



        Subpart PHS 314.4--Opening of Bids and Award of Contract



PHS 314.406-3  Other mistakes disclosed before award.

    (g)(3) In addition to the requirement in 314.406-3(g)(3), a copy of 
the data required by FAR 14.406-3(g)(3) shall be sent to the Office of 
General Counsel, Business and Administrative Law Division, Parklawn 
Building, Room 17A-32, 5600 Fishers Lane, Rockville, MD 20857. An 
information copy of the contracting officer's written statement of facts 
and circumstances shall be provided to the Contracts Management Branch, 
DGC/ORM/OM/PHS.

[51 FR 20488, June 5, 1986]



PHS 314.406-4  Mistakes after award.

    (e)(2) The data shall be submitted as prescribed in PHS 314.406-
3(g)(3).

[51 FR 20488, June 5, 1986]



PART PHS 315--CONTRACTING BY NEGOTIATION--Table of Contents






 Subpart PHS 315.4--Solicitation and Receipt of Proposals and Quotations

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).



PHS 315.412  Late proposals and modifications.

    (c)(1) When the principal official responsible for acquisition 
determines that certain classes of biomedical or behavioral research and 
development acquisitions should be subject to conditions other than 
those specified in FAR 52.215-10, Late Submissions, Modifications and 
Withdrawals of Proposals, he/she may authorize the use of the provision 
in PHS 352.215-10 in addition to the provision at FAR 52.215-10.
    (2) When the provision in PHS 352.215-10 is included in the 
solicitation and a proposal is received after the exact time specified 
for receipt, the contracting officer, with the assistance of cost and 
technical personnel, shall make a written determination as to whether 
the proposal meets the requirements of the provision at PHS 352.215-10 
and, therefore, can be considered.

[51 FR 43357, Dec. 2, 1986; 51 FR 45229, Dec. 17, 1987, as amended at 52 
FR 44397, Nov. 19, 1987]

[[Page 169]]



                  SUBCHAPTER D--SOCIOECONOMIC PROGRAMS





PART PHS 323--ENVIRONMENT, CONSERVATION, AND OCCUPATIONAL SAFETY--Table of Contents




                  Subpart PHS 323.70--Safety and Health

Sec.
PHS 323.7000  Scope of subpart.
PHS 323.7001  General.
PHS 323.7002  Policy.
PHS 323.7003  Actions required.
PHS 323.7004  Contract clause.
PHS 323.7005  Solicitation notice--construction.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

    Source: 51 FR 20488, June 5, 1986, unless otherwise noted.



                  Subpart PHS 323.70--Safety and Health



PHS 323.7000  Scope of subpart.

    This subpart prescribes the use of a safety and health clause in 
contracts involving hazardous material or operations, and procedures for 
developing and administering safety and health provisions.



PHS 323.7001  General.

    Various statutes and regulations (e.g., Walsh-Healey Act; Service 
Contract Act) require adherence to minimum safety and health standards 
by contractors engaged in potentially hazardous work. Positive action to 
reduce accidents and conditions hazardous to health under all contracts 
is in the Government's interest since the cost of such accident and 
health hazards is borne by the Government through higher prices and 
sometimes by direct indemnification of contractors against liability 
claims.



PHS 323.7002  Policy.

    (a) The guidance contained in FAR Subpart 23.3 shall be used for 
hazardous material as the primary reference. When that guidance is 
judged insufficient or does not meet the safety and health situation in 
the instant acquisition, this subpart shall be followed.
    (b) Whenever the performance of a contract will require use of 
hazardous materials or operations, the contracting activity shall 
require the prime contractor and subcontractors to:
    (1) Provide protection for the life and health of PHS employees, 
contractor employees, other persons involved with work on PHS programs 
and projects, and the public;
    (2) Avoid accidental work interruptions which could delay progress 
of PHS programs and project;
    (3) Maintain controls for the prevention of damage and loss to 
property; and
    (4) Accumulate and provide data necessary for analysis of risk and 
loss factors relating to PHS programs and projects.



PHS 323.7003  Actions required.

    (a) Contracting activities. Contracting activities shall use the 
clause set forth in PHS 352.223-70 as a guide in developing appropriate 
safety and health clauses for use in prospective contracts involving the 
following:
    (1) Services or products;
    (2) Research, development, or test projects;
    (3) Transportation of hazardous materials; and
    (4) Construction, including construction of facilities on the 
contractor's premises.
    (b) Safety officers. OPDIV safety officers shall advise and assist 
initiators of acquisition requests and contracting officers in:
    (1) Determining whether safety and health provisions should be 
included in a prospective contract;
    (2) Selecting or developing safety and health clause provisions for 
incorporation in a prospective contract;
    (3) Evaluating a prospective contractor's safety and health 
programs; and
    (4) Conducting post-award review and surveillance to the extent 
deemed necessary.
    (c) Initiators. Initiators of acquisition requests for items 
described in paragraph (a) of this section shall:
    (1) During the preparation of a request for contract, and in the RFP 
or IFB:

[[Page 170]]

    (i) Ensure that hazardous materials and operations to be utilized in 
the performance of the contract are clearly identified; and
    (ii) Coordinate with the appropriate safety officer to ensure that 
all hazardous materials and operations are evaluated and that adequate 
safety requirements are established in the RFP or IFB.
    (2) During the period of performance:
    (i) Apprise the contracting officer of any noncompliance with safety 
and health provisions identified in the contract; and
    (ii) Cooperate with the safety officer in conducting review and 
surveillance activities.



PHS 323.7004  Contract clause.

    All contracts which require the use of hazardous materials or 
operations shall include a clause to provide adherence to minimum safety 
and health standards. The clause set forth in PHS 352.223-70 may be used 
or appropriately modified to meet the needs of the individual contract.



PHS 323.7005  Solicitation notice--construction.

    The contracting officer shall include the clause in PHS 352.223-71 
in all solicitations and resultant contracts for construction and 
construction services.

[[Page 171]]



             SUBCHAPTER E--GENERAL CONTRACTING REQUIREMENTS





PART PHS 333--PROTESTS, DISPUTES, AND APPEALS--Table of Contents




                       Subpart PHS 333.1--Protests

Sec.
PHS 333.102  General.
PHS 333.104  Protests to GAO.
PHS 333.105  Protests to GSBCA.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

    Source: 51 FR 20488, June 5, 1986, unless otherwise noted.



                       Subpart PHS 333.1--Protests



PHS 333.102  General.

    The Division of Grants and Contracts (DGC), ORM/OM/PHS, will 
participate directly in the resolution of protests against PHS agencies 
when the Office of the Secretary, HHS, requests DGC involvement, or when 
DGC considers a protest action to be sensitive or controversial, or 
otherwise has an interest in the protest. In cases where DGC will 
participate, the cognizant PHS contracting office shall be notified. In 
those instances, all file materials and written statements normally 
forwarded directly to the Departmental Protest Control Officer shall be 
forwarded to DGC, ORM/OM/PHS.



PHS 333.104  Protests to GAO.

    (a) General. (2) A copy of the protest files shall be sent to the 
Office of General Counsel, Business and Administrative Law Division 
(OGC-BAL), Parklawn Building, Room 17A-32, 5600 Fishers Lane, Rockville, 
MD 20857. In addition, an information copy of the contracting officer's 
statement of facts required by 333.104(a)(2)(i) shall be sent to the 
Contracts Management Branch, DGC/ORM/OM/PHS.
    (b) Protests before award. (1) The head of the contracting activity 
authority to approve the written finding required by FAR 33.104(b)(1) to 
authorize a contract award while a protest is pending, may be delegated 
to an organizational level no lower than the Executive Officer of each 
PHS Agency.
    (4) The data shall be submitted as prescribed in PHS 333.104(a)(2).
    (c) Protests after award. (1) The data shall be submitted as 
prescribed in PHS 333.104(a)(2).
    (2) The head of the contracting activity authority to authorize 
contract performance notwithstanding a protest as set forth in FAR 
33.104(c)(2), may be delegated to an organizational level no lower than 
the Executive Officer of each PHS Agency.



PHS 333.105  Protests to GSBCA.

    (b) The copy of the protest file to be sent to OGC-BAL shall be sent 
to OGC-BAL, Parklawn Building, Room 17A-32, 5600 Fishers Lane, 
Rockville, MD 20857. In addition, an information copy of the contracting 
officer's statement of facts required by 333.105(b)(1) shall be sent to 
the Contracts Management Branch, DGC/ORM/OM/PHS.

[[Page 172]]



             SUBCHAPTER F--SPECIAL CATEGORIES OF CONTRACTING





PART PHS 335--RESEARCH AND DEVELOPMENT CONTRACTING--Table of Contents




    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).



PHS 335.080  Special determinations and findings affecting research and development contracting.

    The Assistant Secretary for Health shall sign individual and class 
determinations and findings for:
    (a) Acquisition or construction of equipment or facilities on 
property not owned by the United States pursuant to 42 U.S.C. 241(a)(7); 
and
    (b) Use of an indemnification provision in a research contract 
pursuant to 42 U.S.C. 241(a)(7).

[51 FR 20489, June 5, 1986]



PART PHS 336--CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS--Table of Contents




             Subpart PHS 336.6--Architect-Engineer Services

Sec.
PHS 336.680  Program of Requirements approval.
PHS 336.681  Funding.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

    Source: 51 FR 20489, June 5, 1986, unless otherwise noted.



             Subpart PHS 336.6--Architect-Engineer Services



PHS 336.680  Program of Requirements approval.

    The programmatic and technical requirements for PHS design projects 
are established in a special document known as a Program of Requirements 
(POR). In the case of design projects involving the construction of new 
space, including new facilities, replacement facilities, and building 
additions, the contracting officer shall ensure that the Office of the 
Assistant Secretary for Health has approved, or waived approval of, a 
POR prior to the issuance of the synopsis or solicitation for 
architectural/engineering services.



PHS 336.681  Funding.

    (a) The contracting officer shall ensure that the agency financial 
management officer has identified and certified that design funds have 
been appropriated and apportioned prior to the release of a synopsis or 
solicitation for architect-engineer services for the types of 
acquisitions specified in PHS 336.680. New facilities, replacement 
facilities, and building additions must only be acquired with funds 
appropriated for that specific project as evidenced by either (1) 
specific language in an appropriations act, or (2) Congressional 
appropriations intent as reflected in appropriations committee reports 
or Congressional budget justification.
    (b) In the case of ADAMHA, FDA, HRSA, and NIH, the referenced agency 
financial management officer is the Director of the agency's Division of 
Financial Management. In the case of CDC, this official is the Director 
of the Financial Management Office. Subject to HRSA concurrence, funding 
for projects of the Indian Health Service/HRSA may be certified by the 
designated financial management officer within the IHS Office of 
Administration.
    (c) The funding source certification shall include identification of 
the title, appropriation symbol, and fiscal year of the appropriation 
plus any relevant project or activity description in the appropriation 
act or reports.
    (d) In an unusual circumstance where time is critical, a synopsis or 
solicitation for architect-engineer services may be issued after the POR 
has been approved if the agency financial management officer certifies 
that appropriation and apportionment of proper funds as set forth in 
paragraph (a) above are expected within 60 days. In such cases, the 
synopsis or solicitation must specify that award is subject to the 
availability of funds. In these circumstances the contracting officer 
shall ensure that contract award is not made until the agency financial 
management officer has certified in writing

[[Page 173]]

that proper funds have been appropriated and apportioned. Other 
exceptions to the funding requirements set forth in paragraph (a) above, 
must be specifically approved in writing by the Office of the Assistant 
Secretary for Health prior to the release of a synopsis or solicitation 
for architect-engineer services for new facilities, replacement 
facilities, and building additions.

[[Page 174]]



                     SUBCHAPTER H--CLAUSES AND FORMS





PART PHS 352--SOLICITATION PROVISIONS AND CONTRACT CLAUSES--Table of Contents




           Subpart PHS 352.2--Texts of Provisions and Clauses

Sec.
PHS 352.215-10  Late proposals, modifications of proposals, and 
          withdrawals of proposals.
PHS 352.223-70  Safety and health.
PHS 352.223-71  Safety and health--construction.
PHS 352.232-70  Additional payment provision.
PHS 352.280-1  Protection of human subjects.
PHS 352.280-2  Care of laboratory animals.
PHS 352.280-3  Maximum allowable cost for drugs.
PHS 352.280-4  Contracts awarded under the Indian Self-Determination 
          Act.
PHS 352.280-6  Demurrage charge provisions for reusable cylinders and 
          containers.

            Subpart PHS 352.3--Provision and Clause Matrices

PHS 352.380-4  Contract clauses for contracts awarded under the Indian 
          Self-Determination Act.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

    Source: 49 FR 36242, Sept. 14, 1984, unless otherwise noted.



             Subpart 352.2--Texts of Provisions and Clauses



PHS 352.215-10  Late proposals, modifications of proposals, and withdrawals of proposals.

    As prescribed in PHS 315.412, the following provision may be 
included in the solicitation when authorized by the principal official 
responsible for acquisition.

Late Proposals, Modifications of Proposals, and Withdrawals of Proposals 
                               (NOV 1986)

    Notwithstanding the procedures contained in the provision of this 
solicitation entitled Late Submissions, Modifications, and Withdrawals 
of Proposals, a proposal received after the date specified for receipt 
may be considered if it offers significant cost or technical advantages 
to the Government, and it was received before proposals were distributed 
for evaluation, or within five calendar days after the exact time 
specified for receipt, whichever is earlier.

                           (End of provision)

[51 FR 43357, Dec. 2, 1986; 51 FR 45229, Dec. 17, 1987, and 52 FR 44357, 
Nov. 19, 1987]



PHS 352.223-70  Safety and health.

    The following clause is covered by the policy set forth in Subpart 
PHS 323.70 and is to be used in accordance with the instructions set 
forth in PHS 323.7002 and PHS 323.7003.

                      Safety and Health (APR 1984)

    (a) In order to provide safety controls for protection to the life 
and health of employees and other persons; for prevention of damage to 
all property; and for avoidance of work interruptions in the performance 
of the contract; the Contractor will comply with the following 
standards: (Insert codes, standards, and criteria (including any 
applicable State and local requirements) prescribed by the Safety 
Officer.)
    Further, the Contractor shall take or cause to be taken such 
additional safety measures as the Contracting Officer may determine to 
be reasonably necessary; Provided, that, if compliance with such 
additonal safety measures results in a material increase in the cost or 
time of performance of the contract, an equitable adjustment will be 
made in accordance with the clause of this contract entitled 
``Changes.''
    (b) Prior to commencement of work, the Contractor will submit in 
writing its plan for complying with the safety and health provisions of 
this contract, and will meet with the Contracting Officer or his/her 
designated representative to discuss and develop a mutual understanding 
relative to administration of the overall safety program.
    (c) During the performance of work under this contract, the 
Contractor share comply with all procedures prescribed by the 
Contracting Officer for the control and safety of persons visiting the 
job site and will comply with such requirements to prevent accidents as 
may be prescribed by the Contracting Officer.
    (d) The Contractor will maintain an accurate record of, and report 
to the Contracting Officer in such manner as the Contracting Officer may 
prescribe, all accidents and incidents resulting in death, traumatic 
injury, occupational disease, and/or damage to all property incident to 
work performed under the contract.

[[Page 175]]

    (e) The Contracting Officer shall notify (if otherwise, confirm in 
writing) the Contractor of any noncompliance with the provisions of this 
clause and corrective action to be taken. After receipt of such notice, 
the Contractor shall immediately take such corrective action. (Such 
notice, when delivered to the Contractor or its representative at the 
site of the work, shall be deemed sufficient for the purpose.) If the 
Contractor fails or refuses to comply promptly, the Contracting Officer 
may issue an order stopping all or part of the work until satisfactory 
corrective action has been taken. No part of the time lost due to any 
such stop order shall be the subject of claim for extension of time or 
for costs or damages by the Contractor.
    (f) The Contractor shall insert the substance of this clause in each 
subcontract involving the use of hazardous materials or operations. 
Compliance with the provisions of this clause by subcontractors will be 
the responsibility of the Contractor.

                             (End of clause)

[51 FR 20489, June 5, 1986]



PHS 352.223-71  Safety and health--construction.

    The following clause shall be included in all solicitations and 
resultant contracts for construction and construction services, as 
required by PHS 323.7005.

               Safety and Health--Construction (APR 1984)

    Your attention is invited to the regulations issued by the Secretary 
of Labor pursuant to section 107 of the Contract Work Hours and Safety 
Standards Act (40 U.S.C. 333) entitled ``Safety and Health Regulations 
for Construction'' (29 CFR part 1926). The Contractor is required to 
comply with the referenced regulations to the extent that the resultant 
contract involves construction.

                             (End of clause)

[51 FR 20490, June 5, 1986]



PHS 352.232-70  Additional payment provision.

    The following clause shall be included in all solicitations and 
resultant contracts for construction which contain the ``Payments Under 
Fixed-Price Construction Contracts'' clause set forth in FAR 52.232-4:

                 Additional Payment Provision (APR 1984)

    Unless otherwise stated in this contract, there will be taken into 
consideration in computing progress payments material that will be 
incorporated into the structure if such material is delivered at the 
site, or is delivered to the Contractor and properly stored by it in a 
suitable warehouse, storage yard, or similar place either within 25 
miles of the site or as otherwise approved by the Contracting Officer. 
Before each payment is made, the Contractor shall furnish to the 
Contracting Officer such evidence as he/she may require of the quantity 
and value of such material and that it will be incorporated into the 
structure. If such material is stored off the site, the Contractor shall 
also furnish to the Contracting Officer, before payment, properly 
executed bills of sale to the Government for the delivered material upon 
which such payment is to be made.

                             (End of clause)

[51 FR 20490, June 5, 1986]



PHS 352.280-1  Protection of human subjects.

    The policy and procedures to be followed whenever individuals may be 
involved as subjects in research activities supported or conducted by 
the Department under a contract are provided in Subpart PHS 380.1 and 45 
CFR Part 46, Protection of Human Subjects.
    (a) The following provisions shall be included in solicitations 
expected to involve human subjects:

  Notice To Offerors Of Requirements Of 45 CFR Part 46, Protection Of 
                        Human Subjects (SEP 1985)

    (a) Copies of the Department of Health and Human Services 
(Department) regulations for the protection of human subjects, 45 CFR 
part 46, are available from the Office for Protection from Research 
Risks (OPRR), National Institutes of Health, Bethesda, Maryland 20892. 
The regulations provide a systematic means, based on established ethical 
principles, to safeguard the rights and welfare of individuals who 
participate as subjects in research activities supported or conducted by 
the Department.
    (b) The regulations define a human subject as a living individual 
about whom an investigator (whether professional or student) conducting 
research obtains (1) data through intervention of interaction with the 
individual, or (2) identifiable private information. The regulations 
extend to the use of human organs, tissue, and body fluids from 
individually identifiable human subjects as well as to graphic, written, 
or recorded information derived from individually identifiable human 
subjects. The use of autopsy materials is governed by applicable State 
and

[[Page 176]]

local law and is not directly regulated by 45 CFR part 46.
    (c) Activities in which the only involvement of human subjects will 
be in one or more of the categories set forth in 45 CFR 46.101(b)(1-6) 
are exempt from coverage.
    (d) Inappropriate designations of the non-involvement of human 
subjects or of exempt categories of research in a project may result in 
delays in the review of a proposal. The Public Health Service will make 
a final determination of whether the proposed activities are covered by 
the regulations or are in an exempt category, based on the information 
provided in the proposal. In doubtful cases, prior consultation with 
OPRR, (telephone: 301-496-7014), is recommended.
    (e) In accordance with 45 CFR part 46, prospective Contractors being 
considered for award shall be required to file with OPRR an acceptable 
Assurance of Compliance with the regulations, specifying review 
procedures and assigning responsibilities for the protection of human 
subjects. The initial and continuing review of a research project by an 
institutional review board shall assure that the rights and welfare of 
the human subjects involved are adequately protected, that the risks to 
the subjects are reasonable in relation to the potential benefits, if 
any, to the subjects and the importance of the knowledge to be gained, 
and that informed consent will be obtained by methods that are adequate 
and appropriate. Prospective Contractors proposing research that 
involves human subjects shall be contacted by OPRR and given detailed 
instructions for establishing an institutional review board and filing 
an Assurance of Compliance.
    (f) It is recommended that OPRR be consulted for advice or guidance 
concerning either regulatory requirements or ethical issues pertaining 
to research involving human subjects.

                           (End of provision)

    (b) The following clause shall be included in contracts involving 
human subjects:

                 Protection of Human Subjects (OCT 1986)

    (a) The Contractor agrees that the rights and welfare of human 
subjects involved in research under this contract shall be protected in 
accordance with 45 CFR part 46 and with the Contractor's current 
Assurance of Compliance on file with the Office for Protection for 
Research Risks, National Institutes of Health, Public Health Service. 
The Contractor further agrees to provide certification at least annually 
that the institutional review board has reviewed and approved the 
procedures which involve human subjects in accordance with 45 CFR part 
46 and the Assurance of Compliance.
    (b) The Contractor shall bear full responsibility for the 
performance of all work and services involving the use of human subjects 
under this contract in a proper manner and as safely as is feasible. The 
parties hereto agree that the Contractor retains the right to control 
and direct the performance of all work under this contract. Nothing in 
this contract shall be deemed to constitute the Contractor or any 
subcontractor, agent or employee of the Contractor, or any other person, 
organization, institution, or group of any kind whatsoever, as the 
agency or employee of the Government. The Contractor agrees that it has 
entered into this contract and will discharge its obligations, duties, 
and undertakings and the work pursuant thereto, whether requiring 
professional judgement or otherwise, as an independent Contractor 
without imputing liability on the part of the Government for the acts of 
the Contractor or its employees.
    (c) If at any time during performance of this contract, the 
Contracting Officer determines, in consultation with the Office for 
Protection from Research Risks (OPRR), National Institutes of Health 
(NIH), that the Contractor is not in compliance with any of the 
requirements and/or standards stated in paragraphs (a) and (b), above, 
the Contracting Officer may immediately suspend, in whole or in part, 
work and further payments under this contract until the Contractor 
corrects such noncompliance. Notice of the suspension may be 
communicated by telephone and confirmed in writing. If the Contractor 
fails to complete the corrective action within the period of time 
designated in the Contracting Officer's written notice of suspension, 
the Contracting Officer may, in consultation with OPRR, NIH, terminate 
this contract in whole or in part, and the Contractor's name may be 
removed from the list of those Contractors with approved Department of 
Health and Human Services Human Subject Assurances.

                             (End of clause)

[51 FR 20490, June 5, 1986, as amended at 52 FR 9300, Mar. 24, 1987]



PHS 352.280-2  Care of laboratory animals.

    The policies and procedures to be used when contracts involve live 
vertebrate animals are provided in Subpart PHS 380.2, and in the PHS 
Policy on Humane Care and Use of Laboratory Animals by Awardee 
Institutions and accompanying implementation instructions published in a 
special edition of the NIH Guide for Grants and Contracts, Vol. 14, No. 
8, June 25, 1985.

[[Page 177]]

    (a) The following provision shall be included in solicitations 
expected to involve vertebrate animals:

 Notice To Offerors of Requirement for Adequate Assurance of Protection 
                of Vertebrate Animal Subjects (SEP 1985)

    The PHS Policy on Humane Care and Use of Laboratory Animals by 
Awardee Institutions establishes a number of requirements for research 
activities involving animals. Before a PHS award may be made to an 
applicant organization, the organization shall file, with the Office for 
Protection from Research Risks (OPRR), National Institutes of Health 
(NIH), PHS, a written Animal Welfare Assurance which commits the 
organization to comply with the provisions of the PHS Policy on Humane 
Care and Use of Laboratory Animals by Awardee Institutions, the Animal 
Welfare Act, and the Guide for the Care and Use of Laboratory Animals 
prepared by the Institute of Laboratory Animal Resources. In accordance 
with the PHS Policy on Humane Care and Use of Laboratory Animals by 
Awardee Institutions, applicant organizations must establish a 
committee, qualified through the experience and expretise of its 
members, to oversee the institution's animal program, facilities and 
procedures. No PHS award involving the use of animals shall be made 
unless the Animal Welfare Assurance has been approved by OPRR. Prior to 
award, the contracting officer will notify Contractor(s) selected for 
projects that involve live vertebrate animals that an Animal Welfare 
Assurance is required. The contracting officer will request that OPRR 
negotiate an acceptable Animal Welfare Assurance with those 
Contractor(s). For further information, OPRR may be contacted at NIH, 
Bethesda, Maryland 20892 (301-496-7041).

                           (End of provision)

    (b) The following clause shall be included in all contracts 
involving research on vertebrate animals:

               Care of Live Vertebrate Animals (OCT 1986)

    (a) Before undertaking performance of any contract involving 
research on live vertebrate animals, the Contractor shall register with 
the Secretary of Agriculture of the United States in accordance with 7 
U.S.C. 2316 and 9 CFR 2.25-2.28. The Contractor shall furnish evidence 
of such registration to the Contracting Officer.
    (b) The Contractor shall acquire vertebrate animals used in research 
from a dealer licensed by the Secretary of Agriculture under 7 U.S.C. 
2133 and 9 CFR 2.1-2.11, or from a source that is exempt from licensing 
under those sections.
    (c) The Contractor agrees that the care and use of any live 
vertebrate animals used or intended for use in the performance of this 
contract will conform with the PHS Policy on Humane Care and Use of 
Laboratory Animals by Awardee Institutions, the current Animal Welfare 
Assurance, the Guide for the Care and Use of Laboratory Animals prepared 
by the Institute of Laboratory Animal Resources and the pertinent laws 
and regulations of the United States Department of Agriculture (see 7 
U.S.C. 2131 et seq. and 9 CFR subchapter A, parts 1-4). In case of 
conflict between standards, the more stringent standard shall be used.
    (d) If at any time during performance of this contract, the 
Contracting Officer determines, in consultation with the Office for 
Protection from Research Risks (OPRR), National Institutes of Health 
(NIH), that the Contractor is not in compliance with any of the 
requirements and/or standards stated in paragraphs (a) and (c), above, 
the Contracting Officer may immediately suspend, in whole or in part, 
work and further payments under this contract until the Contractor 
corrects such noncompliance. Notice of the suspension may be 
communicated by telephone and confirmed in writing. If the Contractor 
fails to complete corrective action within the period of time designated 
in the Contracing Officer's written notice of suspension, the 
Contracting Officer may, in consultation with OPRR, NIH, terminate this 
contract in whole or in part, and the Contractor's name may be removed 
from the list of those Contractors with approved Public Health Service 
Animal Welfare Assurances.

    Note: The Contractor may request registration of its facility and a 
current listing of licensed dealers from the Regional Office of the 
Animal and Plant Health Inspection Service (APHIS), USDA, for the region 
in which its research facility is located. The location of the 
appropriate APHIS Regional Office, as well as information concerning 
this program may be obtained by contacting the Senior Staff Officer, 
Animal Care Staff, USDA/APHIS, Federal Center Building, Hyattsville, 
Maryland 20782.

                             (End of clause)

[51 FR 20491, June 5, 1986, as amended at 52 FR 9300, Mar. 24, 1987]



PHS 352.280-3  Maximum allowable cost for drugs.

    The following clause, or one reading substantially as follows, shall 
be included in all contracts subject to the provisions of the Maximum 
Allowable Cost (MAC) regulation and PHS 380.305.

[[Page 178]]

               Maximum Allowable Cost for Drugs (APR 1984)

    (a) Reimbursement for drugs provided or used under this contract 
shall be in accordance with the Maximum Allowable Cost (MAC) regulation 
set forth in 45 CFR subtitle A, part 19. In accordance with 19.3 of the 
MAC regulation, the amount which is recognized for reimbursement or 
payment purposes for any drug purchased under the terms of the contract 
shall not exceed the lowest of:
    (1) The maximum allowable cost of the drug, if any, established in 
accordance with 19.5 of the MAC regulation plus a reasonable dispensing 
fee;
    (2) The acquisition cost of the drug plus a reasonable dispensing 
fee; or
    (3) The provider's usual and customary charge to the public for the 
drug; Provided, That:
    (i) The maximum allowable cost established for any drug shall not 
apply to a brand of that drug prescribed for a patient which the 
prescriber has certified in his/her own handwriting is medically 
necessary for that patient; and Provided, further, That:
    (ii) When compensation for drug dispensing is included in some other 
amount payable to the provider by the reimbursing or payment program 
agency, a separate dispensing fee will not be recognized.
    (b) The Contractor agrees:
    (1) To include the following solicitation notification in all 
applicable solicitations issued under this contract and to ensure that 
subcontractors include it in any subsequent applicable solicitation:
    This acquisition is subject to the Maximum Allowable Cost (MAC) 
regulation set forth in part 19 to subtitle A of title 45 of the Code of 
Federal Regulations.
    (2) To include this clause, including this paragraph (b), in all 
applicable subcontracts, regardless of tier, awarded pursuant to this 
contract.
    (3) To include the furnished MAC determination or acquisition cost 
data in all applicable solicitations issued under this contract and in 
all resultant subcontracts awarded pursuant to this contract.

                             (End of clause)



PHS 352.280-4  Contracts awarded under the Indian Self-Determination Act.

    (a) Insert the following clauses in cost-reimbursement contracts 
awarded under the Indian Self-Determination Act as described in subpart 
PHS 380.4.

                  Clause No. 1--Definitions (JUN 1977)

    As used throughout this contract, the following terms shall have the 
meaning set forth below:
    (a) The term ``Secretary'' means the Secretary, the Under Secretary, 
or any Assistant Secretary of the Department of Health and Human 
Services (HHS); and the term ``his/her duly authorized representative'' 
means any person, persons, or board (other than the Contracting Officer) 
authorized to act for the Secretary.
    (b) The term ``Contracting Officer'' means the person executing this 
contract on behalf of the Government, and any other officer or employee 
who is properly designated Contracting Officer; and the term includes, 
except as otherwise provided in this contract, the authorized 
representative of the Contracting Officer acting within the limits of 
his/her authority.
    (c) The term ``Project Officer'' means the person representing the 
Government for the purpose of monitoring contract performance. The 
Project Officer is not authorized to issue any instructions or 
directions which effect any increase or decrease in the cost of this 
contract or which change the period of this contract.
    (d) The term ``Department'' means the Department of Health and Human 
Services.
    (e) Except as otherwise provided in this contract, the term 
``subcontract'' includes purchase orders under this contract.

                             (End of clause)

                    Clause No. 2--Disputes (JUN 1977)

    (a) Except as otherwise provided in this contract, any dispute 
concerning a question of fact arising under this contract which is not 
disposed of by agreement shall be decided by the Contracting Officer, 
who shall reduce his/her decision to writing and mail or otherwise 
furnish a copy thereof to the Contractor. The decision of the 
Contracting Officer shall be final and conclusive unless within 30 days 
from the date of receipt of such copy, the Contractor mails or otherwise 
furnishes to the Contracting Officer a written appeal addressed to the 
Secretary. The decision of the Secretary or his/her duly authorized 
representative for the determination of such appeals shall be final and 
conclusive unless determined by a court of competent jurisdiction to 
have been fraudulent, or capricious, or arbitrary, or so grossly 
erroneous as necessarily to imply bad faith, or not supported by 
substantial evidence. In connection with any appeal proceeding under 
this clause, the Contractor shall be afforded an opportunity to be heard 
and to offer evidence in support of its appeal. Pending final

[[Page 179]]

decision of a dispute hereunder, the Contractor shall proceed diligently 
with the performance of the contract and in accordance with the 
Contracting Officer's decision.
    (b) This ``Disputes'' clause does not preclude consideration of law 
questions in connection with decisions provided for in paragraph (a) 
above: Provided, That nothing in this contract shall be construed as 
making final the decision of any administrative official, 
representative, or board on a question of law.

                             (End of clause)

               Clause No. 3--Limitation of Cost (JUN 1977)

    (a) It is estimated that the total cost to the Government for the 
performance of this contract will not exceed the estimated cost set 
forth in this contract and the Contractor agrees to use its best efforts 
to perform all work and all obligations under this contract within such 
estimated costs. If at any time the Contractor has reason to believe 
that the costs which it expects to incur in the performance of this 
contract in the next succeeding sixty (60) days, when added to all costs 
previously incurred, will exceed seventy-five percent (75%) of the 
estimated cost set forth in the contract, or, if at any time the 
Contractor has reason to believe that the total cost to the Government, 
for the performance of this contract, will be substantially greater or 
less than the estimated cost thereof, the Contractor shall notify the 
Contracting Officer in writing to that effect, giving its revised 
estimate of such total cost for the performance of this contract.
    (b) The Government shall not be obligated to reimburse the 
Contractor for costs incurred in excess of the estimated cost set forth 
in the contract and the Contractor shall not be obligated to continue 
performance under the contract or to incur costs in excess of such 
estimated cost unless and until the Contracting Officer shall have 
notified the Contractor in writing that such estimated cost has been 
increased and shall have specified in such notice a revised estimated 
cost which shall thereupon constitute the estimated cost of performance 
of this contract. When and to the extent that the estimated cost set 
forth in this contract has been increased by the Contracting Officer in 
writing, any costs incurred by the Contractor in excess of such 
estimated cost prior to the increase in estimated cost shall be 
allowable to the same extent as if such costs had been incurred after 
such increase in estimated cost.

                             (End of clause)

                 Clause No. 4--Allowable Cost (JUN 1977)

    (a) Compensation for Contractor's performance. Payment for the 
allowable cost, as herein defined and as actually incurred by the 
Contractor shall constitute full and complete compensation for the 
performance of the work under this contract.
    (b) Allowable cost. The allowable cost of performing the work under 
this contract shall be the cost actually incurred by the Contractor, 
either directly incident or properly allocable to the contract, in the 
performance of this contract in accordance with its terms. The allowable 
cost, direct and indirect, including acceptability of cost allocation 
methods, shall be determined by the Contracting Officer in accordance 
with:
    (1)(i) ``A Guide for Nonprofit Institutions Establishing Indirect 
Cost Rates for Research Grants and Contracts with the Department of 
Health and Human Services, HHS Publication OASC-5'' or (ii) ``A Guide 
for Hospitals, Grants and Contracts with the Department of Health and 
Human Services, HHS Publication OASC-3,'' or (iii) Subpart 1-15.7 of the 
Federal Procurement Regulations (41 CFR subpart 1-15.7) if the contract 
is with a state or local government agency, or (iv) Subpart 1-15.4 of 
the Federal Procurement Regulations (41 CFR subpart 1-15.4) if the 
contract is for the procurement of construction or architect-engineer 
services.
    (2) The terms of the contract.

                             (End of clause)

           Clause No. 5--Negotiated Overhead Rates (JUN 1977)

    (a) Notwithstanding the provisions of the clause of this contract 
entitled, ``Allowable Cost,'' the allowable indirect costs shall be 
obtained by applying negotiated overhead rates to bases agreed upon by 
the parties, as specified below.
    (b) The Contractor, as soon as possible, but not later than six (6) 
months after the expiration of each of the Contractor's financial years 
or such period as may mutually be agreed upon by the Government and the 
Contractor, shall submit to the Contracting Officer, with a copy to the 
cognizant audit agency, a proposed final overhead rate or rates for that 
period based on the Contractor's cost experience during that period, 
together with supporting cost data. Negotiation of final overhead rates 
by the Contractor and the Contracting Officer shall be undertaken as 
promptly as practicable after receipt of the Contractor's proposal.
    (c) Allowability of costs and acceptability of cost allocation 
methods shall be determined in accordance with the applicable cost 
principles set forth in paragraph (b)(1) of Clause 4, as in effect on 
the date of this contract, and the same hereby incorporated herein by 
reference.
    (d) The results of each negotiation shall be set forth in an 
amendment to this contract, which shall specify (1) the agreed final 
rate,

[[Page 180]]

(2) the bases to which the rates apply, and (3) the periods for which 
the rates apply.
    (e) Pending establishment of final overhead rates for any period, 
the Contractor shall be reimbursed either at negotiated provisional 
rates as provided in this contract or at billing rates acceptable to the 
Contracting Officer, subject to appropriate adjustment when the final 
rates for that period are established. To prevent substantial over or 
under payment, the provisional or billing rates may, at the request of 
either party, be revised by mutual agreement, either retroactively or 
prospectively. Any such revision of negotiated provisional rates 
provided in this contract shall be set forth in an amendment to this 
contract.
    (f) Any failure by the parties to agree on any final rate or rates 
under this clause shall be considered a dispute concerning a question of 
fact for decision by the Contracting Officer within the meaning of the 
clause of this contract entitled ``Disputes.''
    (g) Submission of proposed provisional and/or final overhead rates, 
together with appropriate data in support thereof, to the Secretary or 
his/her duly authorized representative, and agreements on provisional 
and/or final overhead rates entered into between the Contractor and the 
Secretary or his/her duly authorized representative, as evidenced by 
Negotiated Overhead Rate Agreements signed by both parties, shall be 
deemed to satisfy the requirements of (b), (d) and (e) above.

                             (End of clause)

                    Clause No. 6--Payment (JUN 1977)

    (a) Payment on account of allowable cost. Once each month (or at 
more frequent intervals if approved by the Contracting Officer) the 
Contractor may submit to the Contracting Officer, in such form and 
reasonable detail as may be required, an invoice or voucher supported by 
a statement of costs incurred by the Contractor in the performance of 
this contract and claimed to constitute allowable costs. Promptly after 
receipt of each invoice or voucher, the Government shall, subject to the 
provisions of (b) below, make payment thereon as approved by the 
Contracting Officer.
    (b) Audit Adjustments. At any time or times prior to settlement 
under this contract the Contracting Officer may have invoices or 
vouchers and statements of cost audited. Each payment theretofore made 
shall be subject to reduction for amounts included in the related 
invoice or voucher which are found by the Contracting Officer, on the 
basis of such audit, not to constitute allowable cost. Any payment may 
be reduced for overpayment, or increased for underpayments on preceding 
invoices or vouchers.
    (c) Completion voucher. On receipt and approval of the invoice or 
voucher designated by the Contractor as the ``completion invoice'' or 
``Completion Voucher'' and upon compliance by the Contractor with all 
the provisions of this contract (including without limitation, the 
provisions relating to patents and provisions of (d) below) the 
Government shall promptly pay to the Contractor any balance of allowable 
cost. The completion invoice or voucher shall be submitted by the 
Contractor promptly following completion of the work under this contract 
but in no event later than 6 months (or such longer period as the 
Contracting Officer may in his/her discretion approve in writing) from 
the date of such completion.
    (d) Applicable credits. The Contractor agrees that any refunds, 
rebates, credits, or other amounts (including any interest thereon) 
accruing to or received by the Contractor or any assignee under this 
contract shall be paid by the Contractor to the Government, to the 
extent that they are properly allocable to costs for which the 
Contractor has been reimbursed by the Government under this contract. 
Reasonable expenses incurred by the Contractor for the purpose of 
securing such refunds, rebates, credits, or other amounts shall be 
allowable cost hereunder when approved by the Contracting Officer.
    (e) Financial settlement. Prior to final payment under this 
contract, the Contractor and each assignee under this contract whose 
assignment is in effect at the time of final payment under this contract 
shall execute and deliver:
    (1) An assignment to the Government in form and substance 
satisfactory to the Contracting Officer, of refunds, rebates, credits, 
or other amounts (including any interest thereon) properly allocable to 
costs for which the Contractor has been reimbursed by the Government 
under this contract, and
    (2) A release discharging the Government, its officers, agents, and 
employees from all liabilities, obligations, and claims arising out of 
or under this contract, subject only to the following exceptions:
    (i) Specified claims in stated amounts or in estimated amounts where 
the amounts are susceptible to exact statement by the Contractor;
    (ii) Claims, together with reasonable expenses incidental thereto, 
based upon liabilities of the Contractor to third parties arising out of 
the performance of this contract; Provided, That such claims are not 
known to the Contractor on the date of the execution of the release; And 
provided further, That the Contractor gives notice of such claims in 
writing to the Contracting Officer not more than 6 years after the date 
of the release or the date of any notice to the Contractor that the 
Government is prepared to make final payment, whichever is earlier; and
    (iii) Claims for reimbursement of costs (other than expenses of the 
Contractor by

[[Page 181]]

reason of its indemnification of the Government against patent 
liability), including reasonable expenses incidental thereto, incurred 
by the Contractor under the provisions of this contract relating to 
patents.

                             (End of clause)

                Clause No. 7--Advance Payments (JUN 1977)

    (a) Amount of Advance. At the request of the Contractor, and subject 
to the conditions hereinafter set forth, the Government shall make an 
advance payment, or advance payments from time to time, to the 
Contractor. No advance payment shall be made (1) without the approval of 
the office administering advance payments (hereinafter called the 
``Administering Office'' and designated in paragraph (k)(4) as with all 
advance payments theretofore made, shall exceed the amount stated in 
paragraph (k)(1) hereof; and (3) without a properly certified invoice or 
invoices.
    (b) Special Bank Account. Until all advance payments made hereunder 
are liquidated and the Administering Office approves in writing the 
release of any funds due and payable to the Contractor, all advance 
payments and all other payments under the contract shall be made by 
check payable to the Contractor, and be marked for deposit only in a 
Special Bank Account with the bank designated in paragraph (k)(2) 
hereof. No part of the funds in the Special Bank Account shall be 
mingled with other funds of the Contractor prior to withdrawal thereof 
from the Special Bank Account as hereinafter provided. Except as 
hereinafter provided, each withdrawal shall be made only by check of the 
Contractor countersigned on behalf of the Government by the Contracting 
Officer or such other person or persons as he/she may designate in 
writing (hereinafter called the ``Countersigning Agent''). Until 
otherwise determined by the Administering Office, countersignature on 
behalf of the Government will not be required.
    (c) Use of Funds. The funds in the Special Bank Account may be 
withdrawn by the Contractor solely for the purposes of making payments 
for items of allowable cost or to reimburse the Contractor for such 
items of allowable cost, and for such other purposes as the 
Administering Office may approve in writing. An interpretation required 
as to the proper use of funds shall be made in writing by the 
Administering Office.
    (d) Return of Funds. The Contractor may at any time repay all or any 
part of the funds advanced hereunder. Whenever so requested in writing 
by the Administering Office, the Contractor shall repay to the 
Government such part of the unliquidated balance of advance payments as 
shall in the opinion of the Administering Office be in excess of current 
requirements, or (when added to total advance previously made and 
liquidated) in excess of the amount specified in paragraph (k)(1) 
hereof. In the event the Contractor fails to repay such part of the 
unliquidated balance of advance payments when so requested by the 
Administering Office, all or any part thereof may be withdrawn from the 
Special Bank Account by checks payable to the Treasurer of the United 
States signed solely by the Countersigning Agent and applied in 
reduction of advance payments then outstanding hereunder.
    (e) Liquidation. If not otherwise liquidated, the advance payments 
made hereunder shall be liquidated as herein provided. When the sum of 
all payments under this contract, other than advance payments, plus the 
unliquidated amount of advance payments are equal to the total estimated 
cost for the work under this contract or such lesser amount to which the 
total estimated cost under this contract may have been reduced, plus 
increases, if any, in this total estimated cost not exceeding, in the 
aggregate (including, without limitation, reimbursable costs incident to 
termination for cause and retrocession as estimated by the Contracting 
Officer), the Government shall thereafter withhold further payments to 
the Contractor and apply the amounts withheld against the Contractor's 
obligation to repay such advance payments until such advance payments 
shall have been fully liquidated. If upon completion, termination, or 
retrocession of the contract all advance payments have not been fully 
liquidated, the balances therefor shall be deducted from any sums 
otherwise due or which may become due to the Contractor from the 
Government, and any deficiency shall be paid by the Contractor to the 
Government upon demand.
    (f) Bank Agreement. Before an advance payment is made hereunder, the 
Contractor shall transmit to the Administering Office, in the form 
prescribed by such office, an Agreement in triplicate from the bank in 
which the Special Bank Account is established, clearly setting forth the 
special character of the account and the responsibilities of the bank 
thereunder. Wherever possible, such bank shall be a member bank of the 
Federal Reserve System, or an ``insured'' bank within the meaning of the 
Act creating the Federal Deposit Insurance Corporation Act of August 23, 
1935, 49 Stat. 685, as amended (12 U.S.C. 264).
    (g) Lien on Special Bank Account. The Government shall have a lien 
upon any balance in the Special Bank Account paramount to all other 
liens, which lien shall secure the repayment of any advance payments 
made hereunder.
    (h) Lien on Property Under Contract. Any and all advance payments 
made under this contract shall be secured, when made, by a lien in favor 
of the Government, paramount to all other liens, upon the supplies or 
other

[[Page 182]]

things covered by this contract and on all material and other property 
acquired for or allocated to the performance of this contract, except to 
the extent that the Government by virtue of any other provision of this 
contract, or otherwise, shall have valid title to such supplies, 
materials, or other property as against other creditors of the 
Contractor. The Contractor shall identify, by marking or segregation, 
all property which is subject to a lien in favor of the Government by 
virtue of any provision of this contract in such a way as to indicate 
that it is subject to such lien and that it has been acquired for or 
allocated to the performance of this contract. If for any reason such 
supplies, materials, or other property are not identified by marking or 
segregation, the Government shall be deemed to have a lien to the extent 
of the Government's interest under this contract on any mass of property 
with which such supplies, materials, or other property are commingled. 
The Contractor shall maintain adequate accounting control over such 
property on its books and records. If at any time during the progress of 
the work on the contract it becomes necessary to deliver any item or 
items and materials upon which the Government has a lien as aforesaid to 
a third person, the Contractor shall notify such third person of the 
lien herein provided and shall obtain from such third person a receipt, 
in duplicate, acknowledging, inter alia, the existence of such lien. A 
copy of each receipt shall be delivered by the Contractor to the 
Contracting Officer. If this contract is terminated in whole or in part 
and the Contractor is authorized to sell or retain termination inventory 
acquired for or allocated to this contract, such sale or retention shall 
be made only if approved by the Contracting Officer, which approval 
shall constitute a release to the Government's lien hereunder to the 
extent that such termination inventory is sold or retained, and to the 
extent that the proceeds of the sale, or the credit allowed for such 
retention on the Contractor's termination claim, is applied in reduction 
of advance payments then outstanding hereunder.
    (i) Insurance. The Contractor represents and warrants that it is now 
maintaining with responsible insurance carriers, (1) insurance upon its 
own plant and equipment against fire and other hazards to the extent 
that like properties are usually insured by others operating plants and 
properties of similar character in the same general locality; (2) 
adequate insurance against liability on account of damage to persons or 
property; and (3) adequate insurance under all applicable workmen's 
compensation laws. The Contractor agrees that, until work under this 
contract has been completed and all advance payments made hereunder have 
been liquidated, it will (i) maintain such insurance; (ii) maintain 
adequate insurance upon any materials, parts, assembles, subassemblies, 
supplies, equipment and other property acquired for or allocable to this 
contract and subject to the Government lien hereunder; and (iii) furnish 
such certificates with respect to its insurance as the Administering 
Office may from time to time require.
    (j) Prohibition Against Assignment. Notwithstanding any other 
provision of this contract, the Contractor shall not transfer, pledge, 
or otherwise assign this contract, or any interest therein, or any claim 
arising thereunder, to any party or parties, bank, trust company, or 
other financing institution.
    (k) Designations and Determinations. (1) Amount. The amount of 
advance payments at any time outstanding hereunder shall not exceed 
$________.
    (2) Depository. The bank designated for the deposit of payments made 
hereunder shall be:
    (3) Interest Charge. No interest shall be charged for advance 
payments made hereunder. The Contractor shall charge interest at the 
rate of 6 percent per annum on subadvances or down payments to 
subcontractors, and such interest will be credited to the account of the 
Government. However, interest need not be charged on subadvances on 
nonprofit subcontracts with nonprofit educational or research 
institutions for experimental, research or development work.
    (4) Administering Office. The office administering advance payments 
shall be the office designated as having responsibility for awarding the 
contract.
    (l) Other Security. The terms of this contract shall be considered 
adequate security for advance payments hereunder, except that if at any 
time the administering office deems the security furnished by the 
Contractor to be inadequate, the Contractor shall furnish such 
additional security as may be satisfactory to the administering office, 
to the extent that such additional security is available.

                             (End of clause)

             Clause No. 8--Examination of Records (JUN 1977)

    (a) This clause is applicable if the amount of this contract exceeds 
$2,500 and was entered into by means of negotiation including small 
business restricted advertising, but is not applicable if this contract 
was entered into by means of formal advertising.
    (b) The Contractor agrees that the Comptroller General of the United 
States and the Secretary, or any of their duly authorized 
representatives, shall until expiration of 3 years after final payment 
under this contract or of the time period for the particular records in 
Part 1-20 of the Federal Procurement Regulations (41 CFR part 1-20) 
whichever expires earlier, have access to and the

[[Page 183]]

right to examine any directly pertinent books, documents, papers, and 
records of the Contractor involving transactions related to this 
contract.
    (c) The Contractor further agrees to include in all its subcontracts 
hereunder a provision to the effect that the subcontractor agrees that 
the Comptroller General of the United States, or his/her duly authorized 
representatives shall, until expiration of 3 years after final payment 
under the subcontract or of the time periods for the particular records 
specified in Part 1-20 of the Federal Procurement Regulations (41 CFR 
part 1-20) whichever expires earlier, have access to and the right to 
examine any directly pertinent books, documents, papers, and records of 
such subcontractor, involving transactions related to the subcontract. 
The term ``subcontract'' as used in this clause excludes (1) purchases 
orders not exceeding $2,500 and (2) subcontracts or purchase orders for 
public utility services at rates established for uniform applicability 
to the general public.
    (d) The periods of access and examination described in (b) and (c) 
above, for records which relate to (1) appeals under the ``Disputes'' 
clause of this contract, (2) litigation or the settlement of claims 
arising out of the performance of this contract, or (3) costs and 
expenses of this contract as to which exception has been taken by the 
Comptroller General or any of his/her duly authorized representatives, 
shall continue until such appeals, litigation, claims, or exceptions 
have been disposed of.

                             (End of clause)

             Clause No. 9--Inspection and Reports (JUN 1977)

    (a) Inspection of work. The Government shall have the right to 
inspect the work and activities under this contract, including without 
limitation, premises where any Government property may be located at 
such reasonable times and in such manner as it may deem appropriate and 
the Contractor shall afford the Government proper facilities and 
assistance for such inspection.
    (b) Reports. The Contractor shall furnish such progress reports, 
schedules, financial and cost reports, and other reports, concerning the 
work under this contract as specified elsewhere in this contract. Cost 
and other financial data and projections furnished pursuant to this 
paragraph (b) shall not relieve the Contractor of the requirements for 
furnishing notice specified in the clause of this contract entitled 
``Limitation of Cost.''
    (c) In addition, where Federal financial assistance is involved in 
the contract effort, the following clause will apply:

                      Reports to the Indian People

    The contractor, as a recipient of Federal financial assistance, 
shall make reports and information available to the Indian people served 
or represented by the contractor. Such reports will reflect how the 
Federal assistance funds were utilized to the benefit of the Indian 
people served or represented as follows: (specific reporting 
requirements, formats and methods of distribution to the Indian people 
will be prescribed in the scope of the contract.)
    (d) Annual Reporting.
    (1) For each fiscal year during which a tribal organization receives 
or expends funds pursuant to a contract under this Part, the tribe which 
requested the contract must submit a report to the Contracting Officer. 
The report shall include, but not be limited to, an accounting of the 
amounts and purposes for which the contract funds were expended and 
information on the conduct of the program or services involved. The 
reports shall include any other information requested by the Contracting 
Officer and may be submitted as follows:
    (i) When the contract is with the governing body of an Indian tribe, 
the tribe shall submit the report to the Contracting Officer.
    (ii) When the contract is with a tribal organization other than the 
governing body of the tribe, the tribe has the option of having the 
tribal organization prepare the report and submit it to the tribe for 
review and approval before the tribe submits it to the Contracting 
Officer.
    (iii) When the contract benefits more than one tribe, the tribal 
organization shall prepare and submit the report to each of the tribes 
benefiting under the contract. Each tribe shall endorse the report 
before submitting it to the Contracting Officer.
    (2) The annual report shall be submitted to the Contracting Officer 
within 90 days of the end of the fiscal year in which the contract was 
performed. However, the period for submitting the report may be extended 
if there is just cause for such extension.
    (3) In addition to the yearly reporting requirement given in 
paragraphs (a) and (b) of this section, the tribal contractor shall 
furnish other reports when and as required by the Secretary.

                             (End of clause)

                Clause No. 10--Subcontracting (JUN 1977)

    (a) Prior approval required. Except as provided in (c) below, the 
Contractor shall not enter into any subcontract or purchase order not 
otherwise expressly authorized elsewhere in this contract without the 
prior written approval of the Contracting Officer and subject to such 
conditions as the Contracting Officer may require.

[[Page 184]]

    (b) Request for approval. The Contractor's request for approval to 
enter into a subcontract pursuant to this clause shall include: (1) A 
description of the supplies or services to be called for by the 
subcontract; (2) identification of the proposed subcontractor and an 
explanation of why and how the proposed subcontractor was selected, 
including the degree of competition obtained; (3) the proposed 
subcontract price, together with the Contractor's cost or price analysis 
thereof; (4) identification of the type of subcontract to be used; (5) a 
copy or draft of the proposed subcontract, if available; and (6) any 
other information which the Contracting Officer may require.
    (c) Certain purchases of property and services. Prior written 
approval shall not be required for firm fixed-price subcontracts for the 
purchase or rental of items of personal property having a unit 
acquisition cost of less than $200 or for subcontracts in a total amount 
less than $1,000 unless otherwise specified elsewhere in this contract: 
Provided, however, That advance notification shall be given by the 
Contractor of any subcontract which exceeds in dollar amount 5 percentum 
of the total estimated cost of this contract.
    (d) Contractor's procurement system. The contractor shall use 
methods, practices or procedures in subcontracting or purchasing 
(hereinafter referred to as the Contractor's ``procurement system'') 
acceptable to the Contracting Officer. The Contracting Officer may, at 
any time during the performance of this contract, require the Contractor 
to provide information concerning its procurement system.
    (e) Effect of subcontracting. Subcontracts shall be made in the name 
of the Contractor and shall not bind nor purport to bind the Government. 
The making of subcontracts hereunder shall not relieve the Contractor of 
any requirement under this contract (including, but not limited to, the 
duty to properly supervise and coordinate the work of subcontracts, and 
the duty to maintain and account for property pursuant to the clause of 
this contract entitled ``Government Property''). Approval of the 
provisions of any subcontract by the Contracting Officer shall not be 
construed to constitute a determination of the allowability of any cost 
under this contract, unless such approval specifically provides that it 
constitutes a determination of the allowability of such cost. In no 
event shall approval of any subcontract by the Contracting Officer be 
construed as effecting any increase in the estimated cost set forth in 
this contract. No subcontract placed under this contract shall provide 
for payment on a cost-plus-a-percentage-of-cost basis.
    (f) Procurements from contractor-controlled sources. Procurement or 
transfer of equipment, materials, supplies, or services from contractor-
controlled source (any division or other organizational component of the 
prime contractor, exclusive of the contracting component, and any 
subsidiary or affiliate of the Contractor under a common control) shall 
be considered a subcontract for the purpose of this clause.

                             (End of clause)

          Clause No. 11--Accounts, Audit and Records (JUN 1977)

    (a) The Contractor shall maintain books, records, documents, and 
other evidence, accounting procedures, and practices, sufficient to 
reflect properly all direct and indirect costs of whatever nature 
claimed to have been incurred and anticipated to be incurred for the 
performance of this contract. The foregoing constitutes ``records'' for 
the purposes of this clause.
    (b) The Contractor's facility(ies), or such part thereof as may be 
engaged in the performance of this contract, and its records shall be 
subject at all reasonable times to inspection and audit by the 
Contracting Officer or his/her authorized representative.
    (c) The contractor shall preserve and make available its records (1) 
until the expiration of 3 years from the date of final payment under 
this contract, or the time periods for the particular records specified 
in (41 CFR part 1-20), whichever expires earlier and (2) for such longer 
period, if any, as is required by applicable statute, or by other clause 
of this contract, or by (i) or (ii) below.
    (i) If this contract is completely or partially retroceded or 
reassumed by the Government, the records relating to the work terminated 
shall be preserved and made available for a period of 3 years from the 
date of any resulting final settlement.
    (ii) Records which relate to (A) appeals under the ``Disputes'' 
clause of this contract, (B) litigation or the settlement of claims 
arising out of the performance of this contract, or (C) costs and 
expenses of this contract to which exception has been taken by the 
Contracting Officer or any of his/her duly authorized representatives, 
shall be retained until such appeals, litigation, claims, or exceptions 
have been disposed of.
    (d) The Contractor shall insert the substance of this clause, 
including this paragraph (d), in each subcontract hereunder that is not 
firm fixed-price or fixed-price with escalation. When so inserted, 
changes shall be made to designate the higher-tier subcontractor at this 
level involved in place of the Contractor: to add ``of the Government 
prime contract'' in place of ``this contract'' in (B) of subparagraph 
(c)(ii) above.

[[Page 185]]

                             (End of clause)

              Clause No. 12--Government Property (JUN 1977)

    (a) Government furnished property. (1) The Government reserves the 
right to furnish any property or services required for the performance 
of the work under this contract.
    (2) The Government shall deliver to the Contractor, for use in 
connection with and under the terms of this contract, the property 
described elsewhere in this contract, together with such related data 
and information as the Contractor may request and as may reasonably be 
required for the intended use of such property (such property to be 
referred to as ``Government furnished property'').
    In the event that Government furnished property is not delivered to 
the contractor by the time or times as stated, or if not stated, in 
sufficient time to enable the Contractor to meet such delivery or 
performance dates under this contract, the Contracting Officer shall, 
upon timely written request made by the Contractor, make a determination 
of the delay occasioned the Contractor and make appropriate equitable 
adjustments to any contractual provisions affected by any such delay in 
accordance with the provisions of the clause of this contract entitled 
``Changes.''
    In the event that Government furnished property is received by the 
Contractor in a condition not suitable for the intended use, the 
Contractor shall, immediately upon receipt thereof, notify the 
Contracting Officer of such fact, and, as directed by the Contracting 
Officer either (i) return or otherwise dispose of such property, or (ii) 
effect repairs or modifications thereto. Upon completion of (i) or (ii) 
above, the Contracting Officer, upon timely written request of the 
Contractor, shall make appropriate equitable adjustments to any 
contractual provisions affected thereby in accordance with the 
provisions of the clause of this contract entitled ``Changes.'' The 
foregoing provisions for adjustment are exclusive and the Government 
shall not be liable to suit for breach of contract by reason of any 
delay in delivery of Government furnished property or delivery of such 
property in a condition not suitable for its intended use.
    (b) Title. (1) Title to all property furnished by the Government 
shall remain in the Government. Title to all property purchased by the 
Contractor, the cost of which the Contractor is entitled to be 
reimbursed as a direct item of cost under this contract, shall pass to 
and vest in the Government upon delivery of such property by the vendor. 
Title to other property, the cost of which is reimbursable to the 
Contractor under this contract, shall pass and vest in the Government 
upon (i) issuance for use of such property in the performance of this 
contract, or (ii) commencement of processing or use of such property in 
the performance of this contract, or (iii) reimbursement of the cost 
thereof by the Government in whole or in part, whichever first occurs. 
All Government furnished property, together with all property acquired 
by the Contractor, title to which vests in the Government under this 
paragraph, are subject to the provisions of this clause and are 
hereinafter collectively referred to as ``Government property.''
    (2) Title to the Government property shall not be affected by the 
incorporation or attachment thereof to any property now owned by the 
Government, nor shall such Government property, or any part thereof, be 
or become a fixture or lose its identity or personality by reason of 
affixation to any realty.
    (c) Use of Government property. Government property shall, unless 
otherwise provided herein or approved by the Contracting Officer, be 
used only for the performance of this contract.
    (d) Property management and control. The Contractor shall maintain 
and administer in accordance with sound business practice a program for 
the maintenance repair, protection, and preservation, control of and 
accountability for Government property, so as to assure its full 
availability and usefulness for the performance of this contract. The 
Contractor shall comply with Federal, State, and local laws, codes, 
ordinances, regulations, and orders pertaining to standards of 
construction, safety, environment quality, energy conservation, historic 
site preservation, facilities for the handicapped, emergency 
preparedness, and other requirements that are applicable to the physical 
characteristics, operation, and maintenance of Government property. The 
Contractor agrees to promptly receipt for all Government property in a 
form and manner as prescribed by the Contracting Officer. The Contractor 
further agrees to take all reasonable steps to comply with all 
directions or instructions which the Contracting Officer may prescribe 
regarding the management and control of Government property.
    (e) Risk or loss. (1) The Contractor shall not be liable for any 
loss of or damage to Government property, or for expenses incidental to 
such loss or damage, except that the Contractor shall be responsible for 
any such loss or damage (including expenses incidental thereto);
    (i) Which results from willful misconduct or lack of good faith on 
the part of any of the Contractor's directors or officers, or on the 
part of any of its managers, superintendents, or other equivalent 
representatives, who have supervision or direction of
    (A) all or substantially all of the Contractor's operations at any 
one plant, laboratory or separate location in which this contract is 
being performed or

[[Page 186]]

    (B) a separate and complete major organization, industrial or 
otherwise in connection with the performance of this contract;
    (ii) Which results from a failure on the part of the Contractor, due 
to willful misconduct or lack of good faith on the part of any of its 
directors, officers, or other representatives mentioned in subparagraph 
(i) above, (A) to maintain and administer, in accordance with sound 
business practice, the program for maintenance, repair, protection, and 
preservation of Government property as required by paragraph (d) hereof, 
or (B) to take all reasonable steps to comply with any appropriate 
written directions of the Contracting Officer under paragraph (4) 
hereof;
    (iii) For which the Contractor is otherwise responsible under the 
express terms of this contract;
    (iv) Which results from a risk expressly required to be insured 
under this contract, but only to the extent of the insurance so required 
to be procured and maintained, or to the extent of insurance actually 
procured and maintained, whichever is greater; or
    (v) Which results from a risk which is in fact covered by insurance 
or for which the Contractor is otherwise reimbursed, but only to the 
extent of such insurance or reimbursement; Provided That, if more than 
one of the above exceptions shall be applicable in any case, the 
Contractor's liability under any one exception shall not be limited by 
any other exception.
    (2) If the Contractor transfers Government property to the 
possession and control of a subcontractor the transfer shall not affect 
the liability of the Contractor for loss or destruction of or damage to 
Government property as set forth in (1) above. The Contractor shall 
require the subcontractor to assume the risk of and be responsible for 
any loss or destruction of or damage to Government property while in the 
latter's possession or control, and the subcontract shall contain 
appropriate provisions requiring the return of all Government property 
in as good condition as when received (except for reasonable wear and 
tear or for the utilization of the property in accordance with the 
provisions of this contract). Provided, however, That the subcontractor 
may be relieved from such liability only to the extent that the 
subcontract, with the prior approval of the Contracting Officer, so 
provides.
    (3) The Contractor shall not be reimbursed for, and shall not 
include as an item of overhead, the cost of insurance, or any provisions 
for a reserve, covering the risk of loss or damage to the Government 
property, except to the extent that the Government may have required the 
Contractor to carry such insurance under any other provision of this 
contract.
    (4) Upon the happening of loss or destruction of or damage to the 
Government property, the Contractor shall notify the Contracting Officer 
thereof, and shall take all reasonable steps to protect the Government 
property from further damage, separate the damaged and undamaged 
Government property, put all the Government property in the best order, 
and furnish to the Contracting Officer a statement of:
    (i) The lost, destroyed, and damaged Government property;
    (ii) The time and origin of the loss, destruction or damage;
    (iii) All known interests in commingled property of which the 
Government property is a part; and
    (iv) The insurance, if any, covering any part of or interest in such 
commingled property.

The Contractor shall make repairs and renovation of the damaged 
Government property, or take such other actions as the Contracting 
Officer directs.
    (5) In the event the Contractor is indemnified, reimbursed, or 
otherwise compensated for any loss or destruction of or damage to the 
Government property, it shall use the proceeds to repair, renovate, or 
replace the Government property involved, or shall credit such proceeds 
against the cost of the work covered by the contract, or shall otherwise 
reimburse the Government, as directed by the Contracting Officer. The 
loss, destruction or damage and, upon the request of the Constracting 
Officer, shall, at the Government's expense, furnish to the Government 
all reasonable assistance and cooperation (including assistance in the 
prosecution of suit and the execution of instruments of assignment in 
favor of the Government) in obtaining recovery. In addition, where a 
subcontractor has not been relieved from liability for any loss or 
destruction of or damage to Government property, the Contractor shall 
enforce the liability of the subcontractor for such loss or destruction 
of or damage to the Government property for the benefit of the 
Government.
    (f) Disposition of Government property.
    (1) During the period of performance of this contract, the 
Contractor shall promptly and regularly report to the Contracting 
Officer, in such form and manner as the Contracting Officer may direct, 
concerning the status of Government property under the contract, 
including all Government property in the Contractor's possession which 
is not in use or which is excess to the needs of the contract. The 
Contractor shall make such disposition of Government property as the 
Contracting Officer may direct. The Contractor shall in no way be 
relieved of responsibility for Government property without the prior 
written approval of the Contracting Officer.
    (2) Upon completion or expiration of this contract, or at such 
earlier date as may be fixed by the Contracting Officer, the Contractor 
shall render an accounting, as prescribed by the Contracting Officer, of 
all

[[Page 187]]

Government property which had come into the possession or custody of the 
Contractor under this contract. Such accounting shall include inventory 
schedules covering all items of Government property not consumed in the 
performance of this contract, or not theretofore delivered to the 
Government, or for which the Contractor has not otherwise been relieved 
of responsibility. The Contractor shall deliver or make such other 
disposition of Government property covered in such inventory schedules 
as the Contracting Officer may direct.
    (3) The net proceeds of any disposition of Government property, in 
accordance with (1) and (2) above, shall be credited to the cost of the 
work covered by the contract or shall be paid in such manner as the 
Contracting Officer may direct.
    (g) Restoration of premises. Unless otherwise provided herein, the 
Government shall not be under any duty or obligation to restore or 
rehabilitate, or to pay the costs of the restoration or rehabilitation 
of the Contractor's facility or any portion thereof which is affected by 
removal of any Government property.

                             (End of clause)

                    Clause No. 13--Changes (JUN 1977)

    The Contracting Officer may at any time, with the consent of the 
Contractor, by a written order, and without notice to the sureties, if 
any, make changes, within the general scope of this contract, in any one 
or more of the following: (a) Drawings, designs, or specifications; (b) 
method of shipment or packing; (c) place of inspection, delivery, or 
acceptance; and (d) the amount of Government furnished property. If any 
such change causes an increase or decrease in the estimated cost of, or 
the time required for performance of this contract, or otherwise affects 
any other provisions of this contract, whether changed or not by any 
such order, an equitable adjustment shall be made (a) in the estimated 
cost or delivery schedule, or both, and (b) in such other provisions of 
the contract as may be so affected, and the contract shall be modified 
in writing accordingly. Any claim by the Contractor for adjustment under 
this clause must be asserted within thirty (30) days from the date of 
receipt by the Contractor of the notification of change: Provided, 
however, That the Contracting Officer, if he/she decides that the facts 
justify such action, may receive and act upon any such claim asserted at 
any time prior to final payment under this contract. Where the cost of 
property made obsolete or excess as a result of a change is included in 
the Contractor's claim for adjustment, the Contracting Officer shall 
have the right to prescribe the manner of disposition of such property. 
Failure to agree to any adjustment shall be a dispute concerning a 
question of fact within the meaning of the clause of this contract 
entitled ``Disputes.'' However, nothing in this clause shall excuse the 
Contractor from proceeding with the contract as changed.

                             (End of clause)

      Clause No. 14--Notice to the Government of Delays (JUN 1977)

    Whenever the Contractor has knowledge that any actual or potential 
situation, including, but not limited to, labor disputes, is delaying or 
threatens to delay the timely performance of the work under this 
contract, the Contractor shall immediately give written notice thereof, 
including all relevant information with respect thereto, to the 
Contracting Officer.

                             (End of clause)

                 Clause No. 15--Retrocession (JUN 1977)

    (a) The Indian Tribe that initially requested this contract may also 
request its retrocession, notwithstanding the fact that the Contractor 
may be a tribal organization other than the Tribe.
    (b) Should the Tribe request retrocession of the contract and the 
Contractor is other than the Tribe, the Contracting Officer will notify 
the Contractor of the request and in consultation with the Tribe and the 
Contractor establish the effective date of the retrocession. The 
retrocession will become effective no later than 120 days after the 
Contracting Officer receives the Tribe's request unless the Tribe and 
the Contracting Officer mutually agree on a later date.
    (c) Immediately after receipt of the request for retrocession and 
where applicable notifying the Contractor, the Contracting Officer will 
meet with the Contractor and, where applicable, the tribal governing 
body or bodies, mutually agree to:
    (1) A plan for the orderly transfer of responsibilities;
    (2) A plan for inventorying materials and supplies on hand;
    (3) An accounting for funds, including but not limited to current 
and anticipated obligations;
    (4) The cost of operation until retrocession; and,
    (5) The identification of all records relating to the contract and 
the contracted function.

                             (End of clause)

  Clause No. 16--Assumption and Reassumption of Contract Programs (JUN 
                                  1977)

    (a) When the Director or his/her delegate determines that the 
performance of a Contractor under these regulations involves (1)

[[Page 188]]

the violation of the rights or endangerment of the health, safety, or 
welfare of any persons, or (2) gross negligence or the mismanagement in 
the handling or use of funds under the contract, he/she will, in 
writing, notify the contractor of such determinations and will request 
that the Contractor take such corrective action within such period of 
time as the Director or his/her delegate may prescribe.
    (b) When the Director or his/her delegate determines that a 
Contractor has not taken corrective action (as prescribed by him/her 
under paragraph (a) of this section) to his/her satisfaction, he/she 
may, after the Contractor has been provided an opportunity for a hearing 
in accordance with paragraph (c) of this section, rescind the contract 
in whole or in part and, if he/she deems it appropriate, assume or 
resume control or operation of the program, activity, or service 
involved.
    (c)(1) When the Director or his/her delegate has made a 
determination described in paragraph (b) of this section, he/she shall 
in writing notify the Contractor of such determination and of the 
Contractor's right to request a review of such determination and of the 
determination described in paragraph (a) of this section. Such 
notification by the Director or his/her delegate shall set forth the 
reasons for the determination in sufficient detail to enable the 
Contractor to respond and shall inform the Contractor of its right to a 
hearing on the record before a Contract Appeals Board described in 
paragraph (d) of this section. Upon the request of the Contractor for a 
hearing, the Board, established pursuant to paragraph (d) of this 
section shall in writing within 10 days of the establishment notify the 
Contractor of the time, place and date of the hearing which will be held 
not later than 45 days after the request for a hearing.
    (2) Where the Director or his/her delegate determines that a 
Contractor's performance under a contract awarded under this subpart 
poses an immediate threat to the safety of any person, he/she may 
immediately rescind the contract in whole or in part and, if he/she 
deems it appropriate, assume or resume control or operation of the 
program, activity, or service involved. Upon such a decision he/she will 
immediately notify the Contractor of such action and the basis therefor; 
and offer the Contractor an opportunity for a hearing on the record 
before the Contract Appeals Board established pursuant to paragraph (d) 
of this section to be held within 10 days of each action.
    (d)(1) The Contract Appeals Board shall be composed of 3 persons 
appointed by the Director, Indian Health Service. Such persons may not 
be selected from the immediate office of any person participating in the 
determination at issue. The Board shall afford the Contractor the right:
    (i) To notice of the issues to be considered;
    (ii) To be represented by counsel;
    (iii) To present witnesses on Contractor's behalf;
    (iv) To cross-examine other witnesses either orally or through 
written interrogatories; and
    (v) To compel the appearance of Indian Health Service personnel or 
to take depositions of such persons at reasonable times and places.
    (2) The Contract Appeals Board shall make an initial written 
decision which shall become final within 20 days unless the Director, 
Indian Health Service or his/her representative modifies or reverses the 
decision. Any such decision by the Director of the Indian Health Service 
or his/her representative shall be in writing, shall be specific as to 
the reasons for such decision, and shall be considered final.
    (3) Where the Board is considering issues arising under paragraph 
(2) of this section, the Board shall within 25 days after the conclusion 
of the hearing, notify all parties in writing of its decision.
    (c) In any case where the officer has rescinded a contract under 
paragraph (b) or (c) of this section, he/she may decline to enter into a 
new contract agreement with the Contractor until such time as he/she is 
satisfied that the basis for the recision has been corrected.
    Nothing in this section shall be construed as contravening the 
Occupational Safety and Health Act of 1970 (84 Stat. 1590), as amended 
(29 U.S.C. 651).

                             (End of clause)

                 Clause No. 17--Key Personnel (JUN 1977)

    Where ``key personnel'' have been identified in this contract, it 
has been determined that such named personnel are necessary for the 
successful performance of the work under this contract; and the 
Contractor agrees to assign such personnel to the performance of the 
work under this contract, and shall not reassign or remove any of them 
without the consent of the Contracting Officer. Whenever, for any 
reason, one or more of the aforementioned personnel is unavailable for 
assignment for work under the contract, the Contractor shall immediately 
notify the Contracting Officer to that effect and shall, subject to the 
approval of the Contracting Officer without formal modification to the 
contract, replace such personnel with personnel of substantially equal 
ability and qualifications.

                             (End of clause)

             Clause No. 18--Litigation and Claims (JUN 1977)

    The Contractor shall give the Contracting Officer immediate notice 
in writing of (a)

[[Page 189]]

any action, including any proceeding before an administrative agency, 
filed against the Contractor arising out of the performance of this 
contract, including, but not limited to, the performance of any 
subcontract hereunder; and (b) any claim against the Contractor the cost 
and expense of which is allowable under the clause entitled ``Allowable 
Cost,'' except as otherwise directed by the Contracting Officer, the 
Contractor shall furnish immediately to the Contracting Officer copies 
of all pertinent papers received by the Contractor with respect to such 
action or claim. To the extent not in conflict with any applicable 
policy of insurance, the Contractor may, with the Contracting Officer's 
approval, settle any such action or claim. If required by the 
Contracting Officer, the Contractor shall (a) effect an assignment and 
subrogation in favor of the Government of all the Contractor's rights 
and claims (except those against the Government) arising out of any such 
action or claim against the Contractor; and (b) authorize 
representatives of the Government to settle or defend any such action or 
claim and to represent the Contractor in, or to take charge of, any 
action. If the settlement or defense of an action or claim is undertaken 
by the Government, the Contractor shall furnish all reasonable 
assistance in effecting a settlement or asserting a defense. Where an 
action against the Contractor is not covered by a policy of insurance, 
the Contractor shall, with the approval of the Contracting Officer, 
proceed with the defense of the action in good faith. The Government 
shall not be liable for the expense of defending any action or for any 
cost resulting from the loss thereof to the extent that the Contractor 
would have been compensated by insurance which was required by law or 
regulation or by written direction of the Contracting Officer, but which 
the Contractor failed to secure through its own fault or negligence.
    In any event, unless otherwise expressly provided in this contract, 
the Contractor shall not be reimbursed or indemnified by the Government 
for any liability loss, cost or expense, which the Contractor may incur 
or be subject to by reason of any loss, injury, or damage, to the person 
or to real or personal property of any third parties as may accrue 
during, or arise from, the performance of this contract.

                             (End of clause)

            Clause No. 19--Indemnity and Insurance (JUN 1977)

    (a) The Contractor shall indemnify and save and keep harmless the 
Government against any or all loss, cost, damage, claim, expense or 
liability whatsoever, because of accident or injury to persons or 
property or others occurring in connection with any program included as 
a part of this contract, by providing where applicable, the insurance 
described below:
    (b) The Contractor shall secure, pay the premium for, and keep in 
force until the expiration of this contract, or any renewal period 
thereof, insurance as provided below. Such insurance policies shall 
specifically include a provision stating the liability assumed by the 
Contractor under this contract.
    (1) Workman's compensation insurance as required by laws of the 
state.
    (2) Owner's, landlord's, and tenant's bodily injury liability 
insurance with limits of not less than $50,000 for each person and 
$500,000 for each accident.
    (3) Property damage liability insurance with limits of not less than 
$25,000 for each accident.
    (4) Automobile bodily injury liability insurance with limits of not 
less than $50,000 for each person, and $500,000 for each accident and 
property damage liability insurance with a limit of not less than $5,000 
for each accident.
    (5) Food products liability insurance with limits of not less than 
$50,000 for each person and $500,000 for each accident.
    (6) Professional malpractice insurance where medical, dental and 
other health professional services are involved.
    (7) Other liability insurance not specifically mentioned when 
required.
    (c) Each policy of insurance shall contain an endorsement providing 
that cancellation by the insurance company shall not be effective unless 
a copy of the cancellation is mailed (registered) to the Contracting 
Officer 30 days prior to the effective date of cancellation.
    (d) A certificate of each policy of insurance, and any change 
therein, shall be furnished to the Contracting Officer immediately upon 
receipt from the insurance company.
    (e) Insurance companies of the Contractor shall be satisfactory to 
the Contracting Officer. When in his/her opinion an insurance company is 
not satisfactory for reasons that will be stated, the Contractor shall 
provide insurance through companies that are satisfactory to the 
Contracting Officer.
    (f) Each policy of insurance shall contain a provision that the 
insurance carrier waives any rights it may have to raise as a defense 
the tribe's sovereign immunity from suit, but such waivers shall extend 
only to claims the amount and nature of which are within the coverage 
and limits of the policy of insurance. The policy shall contain no 
provision, either expressed or implied, that will serve to authorize or 
empower the insurance carrier to waive or otherwise limit the tribe's 
sovereign immunity outside or beyond the coverage and limits of the 
policy insurance.

[[Page 190]]

                             (End of clause)

                   Clause No. 20--Overtime (JUN 1977)

    Except as provided in this contract, the Contractor shall not 
perform overtime work under or in connection with this contract for 
which premium compensation is required to be paid, without specific 
written approval from the Contracting Officer.

                             (End of clause)

                Clause No. 21--Foreign Travel (JUN 1977)

    Foreign travel shall not be performed without the prior written 
approval of the Contracting Officer. As used in this clause ``Foreign 
Travel'' means travel outside the United States, its Territories and 
Possessions, and Canada.

                             (End of clause)

           Clause No. 22--Questionnaire and Surveys (JUN 1977)

    In the event the performance of this contract involves the 
collection of information upon identical items from 10 or more persons, 
other than Federal employees, the Contractor shall obtain written 
approval from the Contracting Officer, prior to the use thereof, of any 
forms, schedules, questionnaires, survey plans or other documents, and 
any revisions thereto, intended to be used in such collection.

                             (End of clause)

                   Clause No. 23--Printing (JUN 1977)

    Unless otherwise specified in this contract, the Contractor shall 
not engage in, nor subcontract for, any printing (as that term is 
defined in Title I of the Government Printing and Binding Regulations in 
effect on the effective date of this contract) in connection with the 
performance of work under this contract; Provided, however, That 
performance of a requirement under this contract involving the 
reproduction of less than 5,000 production units of any one page or less 
than 25,000 production units in the aggregate of multiple pages, will 
not be deemed to be printing. A production unit is defined as one sheet, 
size 8 by 10 and \1/2\ inches, one side only, one color.

                             (End of clause)

            Clause No. 24--Services of Consultants (JUN 1977)

    Except as otherwise expressly provided elsewhere in this contract, 
and notwithstanding the provisions of the clause of this contract 
entitled ``Subcontracting,'' the prior written approval of the 
Contracting Officer shall be required:
    (a) Whenever any employee of the Contractor is to be reimbursed as a 
``consultant'' under this contract; and
    (b) For the utilization of the services of any consultant under this 
contract exceeding the daily rate set forth elsewhere in this contract 
or, if no amount is set forth, $100, exclusive of travel costs or where 
the services of any consultant under this contract will exceed 10 days 
in any calendar year. Whenever Contracting Officer approval is required, 
the Contractor will obtain and furnish to the Contracting Officer 
information concerning the need for such consultant services and the 
reasonableness of the fees to be paid, including but not limited to, 
whether fees to be paid to any consultant exceed the lowest fee charged 
by such consultant to others for performing consultant services of a 
similar nature.

                             (End of clause)

             Clause No. 25--Assignment of Claims (JUN 1977)

    (a) Pursuant to the provisions of the Assignment of Claims Act of 
1940, as amended (31 U.S.C. 203, 41 U.S.C. 15), if this contract 
provides for payments aggregating $1,000 or more, claims for moneys due 
or to become due the Contractor from the Government under this contract 
may be assigned to a bank, trust company, or other financing 
institution, including any Federal lending agency, and may thereafter be 
further assigned and reassigned to any such institution. Any such 
assignment or reassignment shall cover all amounts payable under this 
contract and not already paid, and shall not be made to more than one 
party, except that any such assignment or reassignment may be made to 
one party as agent or trustee for two or more parties participating in 
such financing. Unless otherwise provided in this contract, payment to 
assignee of any moneys due or to become due under this contract shall 
not, to the extent provided in said Act, as amended, be subject to 
reduction or setoff. (The preceding sentence applies only if this 
contract is made in time of war or national emergency as defined in said 
Act and is with the Department of Defense, the General Services 
Administration, the Atomic Energy Commission, the National Aeronautics 
and Space Administration, the Federal Aviation Agency or any other 
department or agency of the United States designated by the President 
pursuant to Clause 4 of the proviso of section 1 of the Assignment of 
Claims Act of 1940, as amended by the Act of May 15, 1951, 65 Stat. 41.)
    (b) In no event shall copies of this contract or of any plans, 
specifications, or other similar documents relating to work under this 
contract, if marked ``Top Secret,'' ``Secret,''

[[Page 191]]

or ``Confidential,'' be furnished to any assignee of any claim arising 
under this contract or to any other person not entitled to receive the 
same. However, a copy of any part or all of this contract so marked may 
be furnished, or any information contained therein may be disclosed, to 
such assignee upon the prior written authorization of the Contracting 
Officer.

                             (End of clause)

  Clause No. 26--Contract Work Hours and Safety Standard Act--Overtime 
                         Compensation (JUN 1977)

    This contract, to the extent that it is of a character specified in 
the Contract Work Hours and Safety Standards Act (40 U.S.C. 327-330), is 
subject to the following provisions and to all other applicable 
provisions and exceptions of such Act and the regulations of the 
Secretary of Labor thereunder.
    (a) Overtime requirements. No Contractor or subcontractor 
contracting for any part of the contract work which may require or 
involve the employment of laborers or mechanics shall require or permit 
any laborer or mechanic in any workweek in which he/she is employed on 
such work to work in excess of eight hours in any calendar day or in 
excess of forty hours in such workweek on work subject to the provisions 
of the Contract Work Hours Standards Act unless such laborer or mechanic 
receives compensation at a rate not less than one and one-half times 
his/her basic rate of pay for all such hours worked in excess of eight 
hours in any calendar day or in excess of forty hours in such workweek, 
whichever is the greater number of overtime hours.
    (b) Violation; liability for unpaid wages; liquidated damages. In 
the event of any violation of the provisions of paragraph (a), the 
Contractor and any subcontractor responsible therefor shall be liable to 
any affected employee for his/her unpaid wages. In addition, such 
Contractor and subcontractor shall be liable to the United States for 
liquidated damages. Such liquidated damages shall be computed with 
respect to each individual laborer or mechanic employed in violation of 
the provisions of paragraph (a) in the sum of $10 for each calendar day 
on which such employee was required or permitted to be employed on such 
work in excess of eight hours or in excess of the standard workweek of 
forty hours without payment of the overtime wages required by paragraph 
(a).
    (c) Withholding for unpaid wages and liquidated damages. The 
Contracting Officer may withhold from the Government Prime Contractor, 
from any moneys payable on account of work performed by the Contractor 
or subcontractor, such sums as may administratively be determined to be 
necessary to satisfy any liabilities of such Contractor or subcontractor 
for unpaid wages and liquidated damages as provided in the provisions of 
paragraph (b).
    (d) Subcontracts. The Contractor shall insert paragraphs (a) through 
(d) of this clause in all subcontracts, and shall require their 
inclusion in all subcontracts for any tier.
    (e) Records. The Contractor shall maintain payroll records 
containing the information specified in 29 CFR 516.2(a). Such records 
shall be preserved for three years from the completion of the contract. 
This requirement does not apply where the tribal contractor is the 
governing body of the tribe and the work is being performed by the 
tribal contractor or the tribe with its regular employees.

                             (End of clause)

       Clause No. 27--Walsh-Healey Public Contracts Act (JUN 1977)

    If this contract is for the manufacture or furnishing of materials, 
supplies, articles, or equipment in an amount which exceeds or may 
exceed $10,000 and is otherwise subject to the Walsh-Healey Public 
Contracts Act, as amended (41 U.S. Code 35-45), there are hereby 
incorporated by reference all representations and stipulations required 
by said Act and regulations issued thereunder by the Secretary of Labor, 
such representations and stipulations being subject to all applicable 
rulings and interpretations of the Secretary of Labor which are now or 
may hereafter be in effect. This requirement does not apply where the 
tribal contractor is the governing body of the tribe and the work is 
being performed by the tribal contractor or the tribe with its regular 
employees.

                             (End of clause)

               Clause No. 28--Equal Opportunity (JUN 1977)

    Subject to the Indian preference in training and employment of 
Clause 29 during the performance of this contract, the Contractor agrees 
as follows:
    (a) The Contractor will not discriminate against any employee or 
applicant for employment because of race, creed, color, or national 
origin. The Contractor will take affirmative action to ensure that 
applicants are employed, and that employees are treated during 
employment, without regard to their race, creed, color, or national 
origin. Such action shall include, but not be limited to, the following: 
Employment, upgrading, demotion, or transfer; recruitment or recruitment 
advertising; layoff or termination; rates of pay or other forms of 
compensation; and selection for training, including apprenticeship. The 
Contractor agrees to post in conspicuous places, available to employees 
and applicants for employment, notices to be

[[Page 192]]

provided by the Contracting Officer setting forth the provisions of this 
Equal Opportunity clause.
    (b) The Contractor will, in all solicitations or advertisements for 
employees placed by or on behalf of the Contractor, state that all 
qualified applicants will receive consideration for employment without 
regard to race, creed, color, or national origin.
    (c) The Contractor will send to each labor union or representative 
of workers with which it has a collective bargaining agreement or other 
contract or understanding, a notice, to be provided by the agency 
Contracting Officer, advising the labor union or workers' representative 
of the Contractor's commitments under this Equal Opportunity clause, and 
shall post copies of the notice in conspicuous places available to 
employees and applicants for employment.
    (d) The Contractor will comply with all provisions of Executive 
Order No. 11246 of September 24, 1965, and the rules, regulations, and 
relevant orders of the Secretary of Labor.
    (e) The Contractor will furnish all information and reports required 
by Executive Order No. 11246 of September 24, 1965, and by the rules, 
regulations, and orders of the Secretary of Labor, or pursuant thereto, 
and will permit access to its books, records, and accounts by the 
contracting agency and the Secretary of Labor for purposes of 
investigation to ascertain compliance with such rules, regulations, and 
orders.
    (f) In the event of the Contractor's noncompliance with the Equal 
Opportunity clause of this contract or with any of the said rules, 
regulations, or orders, this contract may be cancelled, terminated, or 
suspended, in whole or in part, and the Contractor may be declared 
ineligible for further Government contracts in accordance with 
procedures authorized in Executive Order No. 11246 of September 24, 
1965, and such other sanctions may be imposed and remedies invoked as 
provided in Executive Order No. 11246 of September 24, 1965, or by rule, 
regulation, or order of the Secretary of Labor, or as otherwise provided 
by law.
    (g) The Contractor will include the provisions of paragraphs (a) 
through (g) in every subcontract or purchase order unless exempted by 
rules, regulations, or orders of the Secretary of Labor issued pursuant 
to section 204 of Executive Order No. 11246 of September 24, 1965, so 
that such provisions will be binding upon each subcontractor or vendor. 
The Contractor will take such action with respect to any subcontract or 
purchase order as the contracting agency may direct as a means of 
enforcing such provisions, including sanctions for noncompliance: 
Provided, however, That in the event the Contractor becomes involved in, 
or is threatened with, litigation with a subcontractor or vendor as a 
result of such direction by the contracting agency, the Contractor may 
request the United States to enter into such litigation to protect the 
interests of the United States.

                             (End of clause)

 Clause No. 29--Indian Preference in Training and Employment (JUN 1977)

    (a) The Contractor shall give preference in employment for all work 
performed under the contract, including subcontracts thereunder, to 
qualified Indians0 regardless of age, religion, or sex, and to the 
extent feasible consistent with the efficient performance of the 
contract, provide employment and training opportunities to Indians, 
regardless of age, religion, or sex, that are not fully qualified to 
perform under the contract. The Contractor shall comply with any Indian 
preference requirements established by the Tribe receiving services 
under the contract to the extent that such requirements are consistent 
with the purpose and intent of this paragraph.
    (b) If the Contractor or any of its subcontractors is unable to fill 
its employment openings after giving full consideration to Indians as 
required in paragraph (a) above, these employment openings may then be 
filled by other than Indians under the conditions set forth in the Equal 
Opportunity clause of this contract.
    (c) The Contractor agrees to include this clause or one similar 
thereto in all subcontracts issued under the contract.

                             (End of clause)

    Clause No. 30--Certificate of Nonsegregated Facilities (JUN 1977)

    By signing the contract the Contractor certifies that it does not 
maintain or provide for its employees any segregated facilities at any 
of its establishments, and that it does not permit its employees to 
perform their services at any location, under its control, where 
segregated facilities are maintained. It certifies further that it will 
not maintain or provide for its employees any segregated facilities at 
any of its establishments, and that it will not permit its employees to 
perform their services at any location, under its control, where 
segregated facilities are maintained. The Contractor agrees that a 
breach of this certification is a violation of the Equal Opportunity 
clause in this contract. As used in this certification, the term 
``segregated facilities'' means any waiting rooms, work areas, rest 
rooms, and wash rooms, restaurants and other eating areas, time clocks, 
locker rooms and other storage or dressing areas, parking lots, drinking 
fountains, recreation or entertainment areas, transportation, and 
housing facilities provided for employees which are segregated

[[Page 193]]

by explicit directive or are in fact segregated on the basis of race, 
color, religion, or national origin, because of habit, local custom or 
otherwise. It further agrees that (except where it has obtained 
identical certifications from proposed subcontractors for specific time 
periods) it will obtain identical certifications from proposed 
subcontractors prior to the award of subcontracts exceeding $10,000 
which are not exempt from the provisions of the Equal Opportunity 
clause; that it will retain such certifications in its files; and that 
it will forward the following notice to such proposed subcontractors 
(except where the proposed subcontractors have submitted identical 
certifications for specific time periods):
    Notice to prospective subcontractors of requirement for 
certifications of nonsegregated facilities. A certificate of 
Nonsegregated Facilities must be submitted prior to the award of a 
subcontract exceeding $10,000 which is not exempt from the provisions of 
the Equal Opportunity clause. The certification may be submitted either 
for each subcontract or for all subcontracts during a period (i.e., 
quarterly, semiannually, or annually).

                             (End of clause)

                 Clause No. 31--Convict Labor (JUN 1977)

    In connection with the performance of work under this contract, the 
Contractor agrees not to employ any person undergoing sentence of 
imprisonment at hard labor, except as provided by Public Law 89-176, 
September 10, 1965 (18 U.S.C. 4082(c)(2)), and Executive Order No. 
11755, December 29, 1973.

                             (End of clause)

           Clause No. 32--Officials Not To Benefit (JUN 1977)

    No member of or delegate to Congress, or resident commissioner, 
shall be admitted to any share or part of this contract, or to any 
benefit that may arise therefrom; but this provision shall not be 
construed to extend to this contract if made with a corporation for its 
general benefit.

                             (End of clause)

 Clause No. 33--Buy American Act for Supply and Service Contracts (JUN 
                                  1977)

    (a) In acquiring end products, the Buy American Act (41 U.S. Code 
10a-d) provides that the Government give preference to domestic source 
end products. For the purpose of this clause:
    (i) ``Components'' means those articles, materials, and supplies 
which are directly incorporated in the end products;
    (ii) ``End products'' means those articles, materials, and supplies 
which are to be acquired under this contract for public use; and
    (iii) A ``domestic source end product'' means (A) an unmanufactured 
end product which has been mined or produced in the United States and 
(B) an end product manufactured in the United States if the cost of the 
components thereof which are mined, produced, or manufactured in the 
United States exceeds 50 percent of the cost of all its components. For 
the purpose of this (a)(iii) (B), components of foreign origin of the 
same type or kind as the products referred to in (b) (ii) or (iii) of 
this clause shall be treated as components mined, produced or 
manufactured in the United States.
    (b) The Contractor agrees that there will be delivered under this 
contract only domestic source end products, except end products:
    (i) Which are for use outside the United States;
    (ii) Which the Government determines are not mined, produced, or 
manufactured in the United States in sufficient and reasonably available 
commercial quantities and of a satisfactory quality;
    (iii) As to which the Secretary determines the domestic preference 
to be inconsistent with the public interest; or
    (iv) As to which the Secretary determines the cost to the Government 
to be unreasonable.
    (The foregoing requirements are administered in accordance with 
Executive Order No. 10582, dated December 17, 1954).

                             (End of clause)

               Clause No. 34--Anti-Kickback Act (JUN 1977)

    (a) Public Law 86-695, September 2, 1960 (41 U.S.C. 51-54) among 
other things prohibits the payment, directly or indirectly, by or on 
behalf of a subcontractor in any tier under any Government negotiated 
contract of any fee, gift or gratuity to the prime contractor or any 
higher tier subcontractor or any officer, agent, partner or employee 
thereof, as an inducement or acknowledgment for the award of a 
subcontact or order.
    (b) The provisions of Public Law 86-695 are applicable to this 
contract and any subcontracts entered into under the contract.

                             (End of clause)

        Clause No. 35--Use of Indian Business Concerns (JUN 1977)

    (a) As used in this clause, the term ``Indian business concern'' 
means Indian organizations or an Indian-owned economic enterprise as 
defined in 42 FR 36.204(i).
    (b) The contractor agrees to give preference to qualified Indian 
business concerns in the awarding of any subcontracts entered

[[Page 194]]

into under the contract consistent with the efficient performance of the 
contract. The contractor shall comply with any preference requirements 
regarding Indian business concerns established by the Tribe(s) receiving 
services under the contract to the extent that such requirements are 
consistent with the purpose and intent of this paragraph.
    (c) If no Indian business concerns are available under the 
conditions in paragraph (b) above, the Contractor agrees to accomplish 
the maximum amount of subcontracting, as the Contractor determines is 
consistent with its efficient performance of the contract, with small 
business concerns, labor surplus area concerns or minority business 
enterprises, the definitions for which are contained in Subparts 1-1.7, 
1-1.8, and 1-1.13 of the Federal Procurement Regulations. The Contractor 
is not, however, required to establish a small business, labor surplus, 
or minority business subcontracting program as described in sections 1-
1.710-3(b), 1-1.805-3(b), and 1-1.1310-2(b), respectively, of the 
Federal Procurement Regulations (41 CFR chapter 1).

                             (End of clause)

  Clause No. 36--Payment of Interest on Contractor's Claims (JUN 1977)

    (a) If an appeal is filed by the Contractor from a final decision of 
the Contracting Officer under the Disputes clause of this contract, 
denying a claim arising under the contract, simple interest on the 
amount of the claim finally determined owed by the Government shall be 
payable to the Contractor. Such interest shall be at the rate determined 
by the Secretary of the Treasury pursuant to P.L. 92-41, 85 Stat. 97, 
from the date the Contractor furnished to the Contracting Officer his 
written appeal under the Disputes clause of this contract, to the date 
of (1) a final judgment by a court of competent jurisdiction, or (2) 
mailing to the Contractor of a supplemental agreement for execution 
either confirming completed negotiations between the parties or carrying 
out a decision of a board of contract appeals.
    (b) Notwithstanding (a), above, (1) interest shall be applied only 
from the date payment was due, if such date is later than the filing of 
appeals, and (2) interest shall not be paid for any period of time that 
the Contracting Officer determines the Contractor has unduly delayed in 
pursuing its remedies before a board of contract appeals or a court of 
competent jurisdiction.
    The Contractor further agrees to comply with any rules, regulations 
and reporting requirements which may be imposed by the HHS Office for 
Civil Rights for purposes of insuring the proper exercise of this 
authority. The Contractor agrees to insert this clause in all 
subcontract(s) under this contract.

                             (End of clause)

   Clause No. 37--Fair and Equal Treatment of Indian People (JUN 1977)

    (a) The Contractor agrees consistent with medical needs to make no 
discriminatory distinctions among Indian patients or beneficiaries of 
this contract. For the purpose of this contract discriminatory 
distinctions include but are not limited to the following:
    (i) denying a patient any service or benefit or availability of a 
facility;
    (ii) providing any service or benefit to a patient which is 
different, or is provided in a different manner or at a different time 
from that provided to other patients under this contract; subjecting a 
patient to segregation or separate treatment in any manner related to 
his/her receipt of any service; restricting a patient in any way in the 
enjoyment of any advantage or privilege enjoyed by others receiving any 
service or benefit; treating a patient differently from others in 
determining whether he/she satisfies any admission, enrollment, quota, 
eligibility membership, or other requirements of condition which 
individuals must meet in order to be provided any service or benefit; 
the assignment of times or places for the provision of services on the 
basis of discriminatory distinctions which may be made of the patients 
to be served.
    (b) The Government reserves the right to reassume this contract in 
whole or in part whenever the Contractor fails to comply with the 
requirements of this clause.

                             (End of clause)

    Clause No. 38--Price Reduction for Defective Cost or Pricing Data

    The following clause applies to all contracts where cost and pricing 
data is required in accordance with P.L. 87-653.

      Price Reduction for Defective Cost or Pricing Data (JUN 1977)

    (a) If the Contracting Officer determines that any price negotiated 
in connection with this contract or any cost reimbursable under this 
contract was increased by any significant sums because the Contractor, 
or any subcontractor pursuant to the Clause of this contract entitled 
``Subcontractor Cost or Pricing Data'' or ``Subcontractor Cost or 
Pricing Data-Price Adjustments,'' or any subcontract clause therein 
required, furnished incomplete or inaccurate cost or pricing data or 
data not current as certified in its Contractor's Certificate of Current 
Cost or Pricing Data, then such price or cost shall be reduced 
accordingly and the contract shall be modified in writing to reflect 
such reduction.

[[Page 195]]

    (b) Failure to agree on a reduction shall be a dispute concerning a 
question of fact within the meaning of the ``Disputes'' clause of this 
contract.

    Note: Since this contract is subject to reduction under this clause 
by reason of defective cost or pricing data submitted in connection with 
certain subcontracts, it is expected that the Contractor may wish to 
include a clause in each such subcontract requiring the subcontractor to 
appropriately indemnify the Contractor. It is also expected that any 
subcontractor subject to such indemnification will generally require 
substantially similar indemnification for defective cost or pricing data 
required to be submitted by its lower tier subcontractors.)

                             (End of clause)

           Clause No. 39--Subcontractor Cost and Pricing Data

    The following clauses should be included in all contracts, when the 
subcontracts of the type and size described therein are contemplated.

             Subcontractor Cost and Pricing Data (JUN 1977)

    (a) The Contractor shall require subcontractors hereunder to submit 
in writing cost or pricing data under the following circumstances:
    (1) Prior to award of any cost-reimbursed type, time and material, 
labor-hour, incentive, or price redeterminable subcontract the price of 
which is expected to exceed $100,000; and
    (2) Prior to the award of any other subcontract, the price of which 
is expected to exceed $100,000, or to the pricing of any subcontract 
change or other modification of which the price adjustment is expected 
to exceed $100,000, where the price or price adjustment is not based on 
adequate price competition, established catalog or market price or 
commercial items sold in substantial quantities to the general public, 
or prices set by law or regulation.
    (b) The Contractor shall require subcontractors to certify, 
substantially the same form as that used in the certificate by the Prime 
Contractor to the Government, that, to the best of their knowledge and 
belief, the cost and pricing data submitted under (a) above are 
accurate, complete, and current as of the date of the execution, which 
date shall be as close as possible to the date of agreement on the 
negotiated price of the subcontract or subcontract change or 
modification.
    (c) The Contractor shall insert the substance of this clause 
including this paragraph (c) in each of its cost-reimbursement type, 
time and material, labor-hour, price redeterminable, or incentive 
subcontracts hereunder, and in any other subcontract hereunder which 
exceeds $100,000 unless the price thereof is based on adequate price 
competition, established catalog or market prices of commercial items 
sold in substantial quantities to the general public, or prices set by 
law or regulation. In each such expected subcontract hereunder which 
exceeds $100,000, the Contractor shall insert the substance of the 
following clauses:

         Subcontractor Cost and Pricing Data--Price Adjustments

    (a) Paragraphs (b) and (c) of this clause shall become operative 
only with respect to any change or other modification made pursuant to 
one or more provisions of this contract which involves a price 
adjustment in excess of $100,000. The requirements of this clause shall 
be limited to such price adjustments.
    (b) The Contractor shall require subcontractors hereunder to submit 
cost or pricing data under the following circumstances:
    (1) Prior to award of any cost-reimbursement type, time and 
material, labor-hour, incentive, or price redeterminable subcontract, 
the price of which is expected to exceed $100,000; and
    (2) Prior to award of any other subcontract, the price of which is 
expected to exceed $100,000, or to the pricing of any subcontract change 
or other modification for which the price adjustment is expected to 
exceed $100,000, where the price or price adjustment is not based on 
adequate price competition, established catalog or market prices of 
commercial items sold in substantial quantities to the general public, 
or prices set by law or regulation.
    (c) The Contractor shall require subcontractors to certify, in 
substantially the same form as that used in the Certificate by the Prime 
Contractor to the Government, that, to the best of their knowledge and 
belief, the cost and pricing data submitted under (b) above are 
accurate, complete, and current as of the date of the execution, which 
date shall be as close as possible to the date of agreement on the 
negotiated price of the contract modification.
    (d) The Contractor shall insert the substance of this clause 
including this paragraph (d) in each subcontract hereunder which exceeds 
$100,000.

                             (End of clause)

                   Clause No. 40--Penalties (JUN 1977)

    (a) Any officer, director, agent, employee or such other person 
connected in any capacity with this contract or any subcontract 
thereunder that embezzles, willfully misapplies, steals or obtains by 
fraud any of the money, funds, assets or property provided through the 
contract shall be fined not

[[Page 196]]

more than $10,000 or imprisoned for more than two years, or both; 
Provided, That if the amount embezzled, misapplied, stolen, or obtained 
by fraud does not exceed $100, such person shall be fined not more than 
$1,000 or imprisoned not more than one year, or both.
    (b) The Contractor agrees to insert the clause in all subcontracts.

                             (End of clause)

           Clause No. 41--Effect on Existing Rights (JUN 1977)

    (a) Nothing in this contract shall be construed as:
    (1) Affecting, modifying, diminishing, or otherwise impairing the 
sovereign immunity for suit enjoyed by an Indian tribe; or,
    (2) Authorizing or requiring the termination of any existing trust 
responsibility of the United States with respect to the Indian people.

                             (End of clause)

   Clause No. 42--General Services Administration (GSA) Supply Sources

    Indian tribal organizations which are awarded cost-reimbursement 
type contracts under the Indian Self-Determination Act, may be 
authorized to utilize GSA supply sources. The following clause will be 
inserted in all cost-reimbursement type contracts under which the 
Contractor may be authorized to acquire items for the account of the 
Government from GSA supply sources:

       General Services Administration Supply Sources (June 1977)

    The Contracting Officer may issue the Contractor an authorization to 
utilize General Services Administration supply sources for property to 
be used in the performance of this contract. Title to all property 
acquired by the Contractor under such an authorization shall vest in the 
Government, (1) unless otherwise specifically provided in the contract, 
(2) unless otherwise provided in the Government Property clause of this 
contract, or (3) in the absence of both the conditions in (1) and (2) of 
the clause. However, such property shall not be considered to be 
``Government-furnished property.''

                             (End of clause)

    (b) Insert the following clauses in fixed price contracts awarded 
under the Indian Self-Determination Act as described in Subpart PHS 
380.4:

                  Clause No. 1--Definitions (JUN 1977)

    As used throughout this contract, the following terms shall have the 
meanings set forth below:
    (a) The term ``Secretary'' means the Secretary, the Under Secretary, 
or any Assistant Secretary of the Department of Health and Human 
Services and the term ``his/her duly authorized representative'' means 
any person or persons or board (other than the Contracting Officer) 
authorized to act for the Secretary.
    (b) The term ``Contracting Officer'' means the person executing this 
contract on behalf of the Government, and any other officer or employee 
who is properly designated Contracting Officer; and the term includes, 
except as otherwise provided in this contract, the authorized 
representative of the Contracting Officer acting within the limits of 
his/her authority.
    (c) The term ``Department'' means the Department of Health and Human 
Services (HHS).
    (d) The term ``constituent agency'' means the agency of the 
Department responsible for the administration of this contract.
    (e) Except as otherwise provided in this contract, the term 
``subcontract'' includes purchase orders under this contract.
    (f) The term ``Project Officer'' means the person representing the 
Government for the purpose of technical direction of contract 
performance. The Project Officer is not authorized to issue any 
instructions or directions which effect any increase or decrease in the 
cost of this contract or which change the period of this contract.

                             (End of clause)

                    Clause No. 2--Disputes (JUN 1977)

    (a) Except as otherwise provided in this contract, any dispute 
concerning a question of fact arising under this contract which is not 
disposed of by agreement shall be decided by the Contracting Officer, 
who shall reduce his/her decision to writing and mail or otherwise 
furnish a copy thereof to the Contractor. The decision of the 
Contracting Officer shall be final and conclusive unless, within 30 days 
from the date of receipt of such copy, the Contractor mails or otherwise 
furnishes to the Contracting Officer a written appeal addressed to the 
Secretary. The decision of the Secretary or his/her duly authorized 
representative for the determination of such appeals shall be final and 
conclusive unless determined by a court of competent jurisdiction to 
have been fraudulent, or capricious, or arbitrary, or so grossly 
erroneous as necessarily to imply bad faith, or not supported by 
substantial evidence. In connection with any appeal proceeding under 
this clause, the Contractor shall be afforded an opportunity to be heard 
and to offer evidence in support of its appeal. Pending final decision 
of a dispute hereunder, the Contractor shall proceed diligently with the 
performance of the contract and in accordance with the Contracting 
Officer's decision.

[[Page 197]]

    (b) This ``Disputes'' clause does not preclude consideration of law 
questions in connection with decisions provided for in paragraph (a) 
above; Provided, That nothing in this contract shall be construed as 
making final the decision of any administrative official, 
representative, or board on a question of law.

                             (End of clause)

  Clause No. 3--Contract Work Hours and Safety Standard Act--Overtime 
                         Compensation (JUN 1977)

    This contract, to the extent it is of a character specified in the 
Contract Work Hours and Safety Standards Act (40 U.S.C. 327-330), is 
subject to the following provisions and exceptions of such Act and the 
regulations of the Secretary of Labor thereunder.
    (a) Overtime requirements. No Contractor or subcontractor 
contracting for any part of the contract work which may require or 
involve the employment of laborers or mechanics shall require or permit 
any laborer or mechanic in any workweek in which he/she is employed on 
such work to work in excess of eight hours in any calendar day or in 
excess of forty hours in such workweek on work subject to the provisions 
of the Contract Work Hours Standard Act unless such laborer or mechanic 
receives compensation at a rate not less than one and one-half times 
his/her basic rate of pay for all such hours worked in excess of eight 
hours in any calendar day or in excess of forty hours in such workweek, 
whichever is the greater numbers of overtime hours.
    (b) Violation; liability for unpaid wages; liquidated damages. In 
the event of any violation of the provisions of paragraph (a), the 
Contractor and any subcontractor responsible therefor shall be liable to 
any affected employee for his/her unpaid wages. In addition, such 
Contractor and subcontractor shall be liable to the United States for 
liquidated damages. Such liquidated damages shall be computed with 
respect to each individual laborer or mechanic employed in violation of 
the provisions of paragraph (a) at the sum of $10 for each calendar day 
on which such employee was required or permitted to be employed on such 
work in excess of eight hours or in excess of the standard workweek of 
forty hours without payment of the overtime wages required by paragraph 
(a).
    (c) Withholding for unpaid wages and liquidated damages. The 
Contracting Officer may withhold from the Government Prime Contractor, 
from any moneys payable on account of work performed by the Contractor 
or subcontractor, such sums as may administratively be determined to be 
necessary to satisfy any liabilities of such Contractor or subcontractor 
for unpaid wages and liquidated damages as provided in the provisions of 
paragraph (b).
    (d) Subcontracts. The Contractor shall insert paragraphs (a) through 
(d) of this clause in all subcontracts, and shall require their 
inclusion in all subcontracts of any tier.
    (e) Records. The Contractor shall maintain payroll records 
containing the information specified in 29 CFR 516.2(a). Such records 
shall be preserved for three years from the completion of the contract. 
This requirement does not apply where the tribal contractor is the 
governing body of the Tribe and the work is being performed by the 
tribal organization or Tribe with its own regular employees.

                             (End of clause)

       Clause No. 4--Walsh-Healey Public Contracts Act (JUN 1977)

    If this contract is for the manufacture or furnishing of materials, 
supplies, articles, or equipment in an amount which exceeds or may 
exceed $10,000 and is otherwise subject to the Walsh-Healey Public 
Contracts Act, as amended (41 U.S. Code 34-45), there are hereby 
incorporated by reference all representations and stipulations required 
by the Secretary of Labor, such representations and stipulations being 
subject to all applicable rulings and interpretations of the Secretary 
of Labor which are now or may hereafter be in effect. This requirement 
does not apply where the tribal contractor is the governing body of the 
Tribe and the work is being performed by the tribal organization or 
Tribe with its own regular employees.

                             (End of clause)

                 Clause No. 5--Convict Labor (JUN 1977)

    In connection with the performance of work under this contract, the 
Contractor agrees not to employ any person undergoing sentence of 
imprisonment at hard labor except as provided by Public Law 89-176, 
September 10, 1965 (18 U.S.C. 4082(c)(2) and Executive Order No. 11755, 
December 29, 1973.

                             (End of clause)

       Clause No. 6--Notice to the Government of Delays (JUN 1977)

    Whenever the Contractor has knowledge that any actual or potential 
situation is delaying or threatens to delay the timely performance of 
this contract, the Contractor shall within ten days give notice thereof, 
including all relevant information with respect thereto, to the 
Contracting Officer.

[[Page 198]]

                             (End of clause)

              Clause No. 7--Assignment of Claims (JUN 1977)

    (a) Pursuant to the provisions of the Assignment of Claims Act of 
1940, as amended (31 U.S.C. 203, 41 U.S.C. 15), if this contract 
provides for payment aggregating $1,000 or more, claims for moneys due 
or to become due the Contractor from the Government under this contract 
may be assigned to a bank, trust company, or other financing 
institution, including any Federal lending agency, and may thereafter be 
further assigned and reassigned to any such institution. Any such 
assignment or reassignment shall cover all amounts payable under this 
contract and not already paid, and shall not be made to more than one 
party, except that any such assignment or reassignment may be made to 
one party as agent or trustee for two or more parties participating in 
such financing. Unless otherwise provided in this contract payments to 
assignee of any moneys due or due to become due under this contract 
shall not, to the extent provided in said Act, as amended, be subject to 
reduction or setoff. (The preceding sentence applies only if this 
contract is made in time of war or national emergency as defined in said 
Act and is with the Department of Defense, the General Services 
Administration, the Atomic Energy Commission, the National Aeronautics 
and Space Administration, the Federal Aviation Agency, or any other 
department or agency of the United States designated by the President 
pursuant to Clause 4 of the proviso of section 1 of the Assignment of 
Claims Act of 1940, as amended by the Act of May 15, 1951, 65 Stat. 41).
    (b) In no event shall copies of this contract or of any plans, 
specifications, or other similar documents relating to work under this 
contract, if marked ``Top Secret,'' ``Secret,'' or ``Confidential,'' be 
furnished to any assignee of any claim arising under this contract or to 
any other person not entitled to receive the same. However, a copy of 
any part or all of this contract so marked may be furnished, or any 
information contained therein may be disclosed, to such assignee upon 
the prior written authorization of the Contracting Officer.

                             (End of clause)

            Clause No. 8--Officials Not To Benefit (JUN 1977)

    No member of or delegate to Congress, or resident commissioner, 
shall be admitted to any share or part of this contract, or to any 
benefit that may arise therefrom; but this provision shall not be 
construed to extend to this contract if made with a corporation for its 
general benefit.

                             (End of clause)

               Clause No. 9--Anti-Kickback Act (JUN 1977)

    (a) Public Law 86-695, September 2, 1960 (41 U.S.C. 51-54) among 
other things, prohibits the payment, directly or indirectly, by or on 
behalf of a subcontractor in any tier under any Government negotiated 
contract of any fee, gift, or gratuity to the prime contractor or any 
officer, agent, partner or employee thereof, as an inducement or 
acknowledgement for the award of a subcontract or order.
    (b) The provisions of Public Law 86-695 are applicable this contract 
and any subcontracts entered into under the contract.

                             (End of clause)

                   Clause No. 10--Penalties (JUN 1977)

    Any officer, director, agent, employee or such other person 
connected in any capacity with this contract or any subcontract 
thereunder that embezzles, willfully misapplies, steals or obtains by 
fraud any of the money, funds, assets or property provided through the 
contract shall be fined not more than $10,000 or imprisoned for not more 
than two years, or both; Provided, That if the amount embezzled, 
misapplied, stolen, or obtained by fraud does not exceed $100, such 
person shall be fined not more than $1,000 or imprisoned not more than 
one year, or both.
    (b) The Contractor agrees to insert this clause in all subcontracts.

                             (End of clause)

               Clause No. 11--Buy American Act (JUN 1977)

    (a) In acquiring end products, the Buy American Act (41 U.S. Code 
10a-d) provides that the Government give preference to domestic source 
end products. For the purpose of this clause:
    (i) ``Components'' means those articles, materials, and supplies, 
which are directly incorporated in the end products;
    (ii) ``End products'' means those articles, materials, and supplies, 
which are to be acquired under this contract for public use; and
    (iii) ``A domestic source end product'' means (A) an unmanufactured 
end product which has been mined or produced in the United States and 
(B) an end product manufactured in the United States if the cost of the 
components thereof which are mined, produced, or manufactured in the 
United States exceeds 50 percent of the cost of all its components. For 
the purposes of this (a)(iii)(B), components of foreign origin of the 
same type or kind as the products referred to in (b) (ii) or (iii) of 
this clause shall be treated as components mined, produced, or 
manufactured in the United States.

[[Page 199]]

    (b) The Contractor agrees that there will be delivered under this 
contract only domestic source end products, except end products:
    (i) Which are for use outside the United States;
    (ii) Which the Government determines are not mined, produced, or 
manufactured in the United States in sufficient and reasonably available 
commercial quantities and of a satisfactory quality;
    (iii) As to which the Secretary determines the domestic preference 
to be inconsistent with the the public interest; or
    (iv) As to which the Secretary determines the cost to the Government 
to be unreasonable. (The foregoing requirements are administered in 
accordance with Executive Order No. 10582, dated December 17, 1954).

                             (End of clause)

               Clause No. 12--Equal Opportunity (JUN 1977)

    Subject to the Indian preference requirements of Clause 17, during 
the performance of this contract the Contractor agrees as follows:
    (a) The Contractor will not discriminate against any employee or 
applicant for employment because of race, creed, color, or national 
origin. The Contractor will take affirmative action to ensure that 
applicants are employed, and that employees are treated during 
employment, without regard to their race, creed, color, or national 
origin. Such action shall include, but not be limited to, the following: 
Employment, upgrading, demotion, or transfer; recruitment or recruitment 
advertising; layoff or termination, rates of pay or other forms of 
compensation; and selection for training, including apprenticeship. The 
Contractor agrees to post in conspicuous places, available to employees 
and applicants for employment, notices to be provided by the Contracting 
Officer setting forth the provisions of this Equal Opportunity clause.
    (b) The Contractor will, in all solicitations or advertisement for 
employees placed by or on behalf of the Contractor, state that all 
qualified applicants will receive consideration for employment without 
regard to race, creed, color, or national origin.
    (c) The Contractor will send to each labor union or representative 
of workers with which it has a collective bargaining agreement or other 
contract or understanding, a notice, to be provided by the agency 
Contracting Officer, advising the labor union or workers representative 
of the Contractor's commitments under this Equal Opportunity clause, and 
shall post copies of the notice in conspicuous places available to 
employees and applicants for employment.
    (d) The Contractor will comply with all provisions of Executive 
Order No. 11246 of September 24, 1965, and of the rules, regulations and 
relevant orders of the Secretary of Labor.
    (e) The Contrator will furnish all information and reports required 
by executive Order No. 11246 of September 24, 1965, and by the rules, 
regulations, and orders of the Secretary of Labor, or pursuant thereto, 
and will permit access to its books, records, and accounts by the 
contracting agency and the secretary of Labor for purposes of 
investigation to ascertain compliance with such rules, regulations, and 
orders.
    (f) In the event of the Contractor's noncompliance with the Equal 
Opportunity clause of this contract or with any of the said rules, 
regulations, or orders, this contract may be cancelled, terminated, or 
suspended, in whole or in part, and the Contractor may be declared 
ineligible for further Government contracts in accordance with 
procedures authorized in Executive Order No. 11246 of September 24, 
1965, and such other sanctions may be imposed and remedies invoked as 
provided in Executive Order No. 11246 of September 24, 1965, or by rule, 
regulation, or order of the Secretary of Labor, or as otherwise provided 
by law.
    (g) The Contractor will include the provisions of paragraphs (a) 
through (g) in every subcontract or purchase order unless exempted by 
rules, regulations, or orders of the Secretary of Labor issued pursuant 
to section 204 of Executive Order No. 11246 of September 24, 1965, so 
that such provisions will be binding upon each subcontractor or vendor. 
The Contractor will take such action with respect to any subcontract or 
purchase order as the contracting agency may direct as a means of 
enforcing such provisions, including sanctions for noncompliance: 
Provided, however, That in the event the Contractor becomes involved in, 
or is threatened with, litigation with a subcontractor or vendor as a 
result of such direction by the contracting agency, the Contractor may 
request the United States to enter into such litigation to protect the 
interests of the United States.

                             (End of clause)

    Clause No. 13--Certificate of Nonsegregated Facilities (JUN 1977)

    By signing the contract the Contractor certifies that it does not 
maintain or provide for its employees any segregated facilities at any 
of its establishments, and that it does not permit its employees to 
perform their services at any location, under its control, where 
segregated facilities are maintained. It certifies further that it will 
not maintain or provide for its employees any segregated facilities at 
any of its establishments, and that it will not permit its employees to 
perform their services at any location, under its control, where 
segregated facilities are maintained. The Contractor agrees that a

[[Page 200]]

breach of this certification is a violation of the Equal Opportunity 
clause in this contract. As used in this certification, the term 
``Segregated facilities'' means any waiting rooms, work areas, rest 
rooms and wash rooms, restaurants and other eating areas, time clocks, 
locker rooms and other storage or dressing areas, parking lots, drinking 
fountains, recreation or entertainment areas, transportation, and 
housing facilities provided for employees which are segregated by 
explicit directive or are in fact segregated on the basis of race, 
color, religion, or national origin, because of habit, local custom, or 
otherwise. It futher agrees that (except where it has obtained identical 
certification from proposed subcontractors for specific time periods) it 
will obtain identical certifications from proposed subcontractors prior 
to the award of subcontracts exceeding $10,000 which are not exempt from 
the provisions of the Equal Opportunity clause; that it will retain such 
certifications in its files; and that it will forward the following 
notice to such proposed subcontractors (except where the proposed 
subcontractors have submitted identical certifications for specific time 
periods):
    Notice to prospective subcontractors of requirement for 
certifications of nonsegregated facilities. A certification of 
Nonsegregated Facilities must be submitted prior to the award of a 
subcontract exceeding $10,000 which is not exempt from the provisions of 
the Equal Opportunity clause. The certification may be submitted either 
for each subcontract or all subcontracts during a period (i.e., 
quarterly, semiannually, or annually).

                             (End of clause)

                Clause No. 14--Subcontracting (JUN 1977)

    The Contractor shall not enter into subcontracts for any of the work 
contemplated under this contract without obtaining the prior written 
approval of the Contracting Officer and subject to such conditions and 
provisions as he/she may deem necessary, in his/her discretion, to 
protect the interests of the Government: Provided, however, That 
notwithstanding the foregoing, unless otherwise provided herein, such 
prior written approval shall not be required for the purchase by the 
Contractor of articles, supplies, equipment and services which are both 
necessary for and merely incidental to the performance of the 
requirements under this contract; Provided, further, however, That the 
aforesaid right of Contractor to engage such services shall in no event 
be construed to permit the Contractor to subcontract with a third-party 
for the performance of any major function contemplated under this 
contract to be performed by the Contractor, and Provided, further, 
however, That no provision of this clause and no such approval by the 
Contracting Officer of any subcontract shall be deemed in any event or 
in any manner to provide for the incurrence of any obligation of the 
Government in addition to the total contract price.

                             (End of clause)

         Clause No. 15--Competition in Subcontracting (JUN 1977)

    The Contractor agrees to select subcontractors on a competitive 
basis to the maximum practical consistent with the objectives and 
requirements of this contract.

                             (End of clause)

        Clause No. 16--Use of Indian Business Concerns (JUN 1977)

    (a) As used in this clause, the term, ``Indian business concern'' 
means Indian organizations or an Indian-owned economic enterprise as 
defined in 42 CFR 36.204(i).
    (b) The Contractor agrees to give preference to qualified Indian 
business concerns in the awarding of any subcontracts entered into under 
the contract consistent with efficient performance of the contract. The 
Contractor shall comply with any preference requirements regarding 
Indian business concerns established by the tribe(s) receiving services 
under the contract to the extent that such requirements are consistent 
with the purpose and intent of this paragraph.
    (c) If no Indian business concerns are available under the 
conditions in paragraph (b) above, the Contractor agrees to accomplish 
the maximum amount of subcontracting, as the Contractor determines is 
consistent with its efficient performance of the contract, with small 
business concerns, labor surplus area concerns or minority business 
enterprises, the definitions for which are contained in Subparts 1-1.7, 
1-1.8, and 1-1.13 of the Federal Procurement Regulations. The Contractor 
is not, however, required to establish a small business, labor surplus, 
or minority business subcontracting program as described in sections 1-
1.710-3(b), 1-1.805-3(b), and 1-1.1310-2(b), respectively of the Federal 
Procurement Regulations (41 CFR chapter 1).

                             (End of clause)

 Clause No. 17--Indian Preference in Training and Employment (JUN 1977)

    (a) The Contractor shall give preference in employment for all work 
performed under the contract, including subcontracts thereunder, to 
qualified Indians regardless of age, religion, or sex, and to the extent 
feasible consistent with the efficient performance of the contract, 
provide employment and training opportunities to Indians, regardless of

[[Page 201]]

age, religion, or sex, that are not fully qualified to perform under the 
contract. The Contractor shall comply with any Indian preference 
requirements established by the tribe receiving services under the 
contract to the extent that such requirements are consistent with the 
purpose and intent of this paragraph.
    (b) If the Contractor or any of its subcontractors is unable to fill 
its employment openings after giving full consideration to Indians as 
required in paragraph (a) above, these employment openings may then be 
filled by other than Indians under the conditions set forth in the Equal 
Opportunity clause of this contract.
    (c) The Contractor agrees to include this clause or one similar 
thereto in all subcontracts issued under this contract.

                             (End of clause)

                  Clause No. 18--Inspection (JUN 1977)

    The Government, through any authorized representatives, has the 
right, at all reasonable times, to inspect, or otherwise evaluate the 
work performed or being performed hereunder and the premises in which it 
is being performed. If any inspection, or evaluation is made by the 
Government on the premises of the Contractor or a subcontractor, the 
Contractor shall provide and shall require its subcontractors to provide 
all reasonable facilities and assistance for the safety and convenience 
of the Government representatives in the performance of their duties. 
All inspections and evaluations shall be performed in such a manner as 
will not unduly delay the work.

                             (End of clause)

                    Clause No. 19--Changes (JUN 1977)

    The Contracting Officer may at any time, with the consent of the 
Contractor, by a written order, and without notice to the sureties, if 
any, make changes, within the general scope of this contract, in any one 
or more of the following (i) drawings, designs, or specifications, (ii) 
place of inspection, delivery, or acceptance, and (iii) the amount of 
Government-furnished property. If any such change causes an increase or 
decrease in the cost of, or the time required for performance of, this 
contract, or otherwise affects any other provisions of this contract, 
whether changed or not changed by any such order, an equitable 
adjustment shall be made (i) in the contract price or time of 
performance, or both, and (ii) in such provisions of the contract as may 
be so affected, and the contract shall be modified in writing 
accordingly. Any claim by the Contractor for adjustment under this 
clause must be asserted within thirty (30) days from the date of receipt 
by the Contractor of the notification of change; Provided, however, That 
the Contracting Officer, if he/she decides that the facts justify such 
action, may receive and act upon any such claim asserted at any time 
prior to final payment under this contract. Where the cost of property 
made obsolete or excess as a result of a change is included in the 
Contractor's claim for adjustment, the Contracting Officer shall have 
the right to prescribe the manner of disposition of such property. 
Failure to agree to any adjustment shall be a dispute concerning a 
question of fact within the meaning of the clause of this contract 
entitled ``Disputes.'' However, nothing in this clause shall excuse the 
Contractor from proceeding with the contract as changed.

                             (End of clause)

                 Clause No. 20--Retrocession (JUN 1977)

    (a) The Indian tribe that initially requested this contract may also 
request its retrocession, notwithstanding the fact that the Contractor 
may be a tribal organization other than the Tribe.
    (b) Should the Tribe request retrocession of the contract and the 
Contractor is other than the Tribe, the Contracting Officer will notify 
the Contractor of the request and in consultation with the Tribe and the 
Contractor establish the effective date of the retrocession. The 
retrocession will become effective no later than 120 days after the 
Contracting Officer receives the Tribe's request unless the Tribe and 
the Contracting Officer mutually agree on a later date.
    (c) Immediately after receipt of the request for retrocession and 
where applicable notifying the Contractor, the Contracting Officer will 
meet with the Contractor and, where applicable, the tribal governing 
body or bodies mutually agree to:
    (1) A plan for the orderly transfer of responsibilities;
    (2) A plan for inventorying materials and supplies on hand;
    (3) An accounting for funds, including but not limited to current 
and anticipated obligations;
    (4) The cost of operation until retrocession; and,
    (5) The identification of all records relating to the contract and 
the contracted function.

                             (End of clause)

  Clause No. 21--Assumption and Reassumption of Contract Programs (JUN 
                                  1977)

    (a) When the Contracting Officer determines that the performance of 
a Contractor under these regulations involves (1) the violation of the 
rights or endangerment of the health, safety, or welfare of any person, 
or (2) gross negligence or the mismanagement

[[Page 202]]

in the handling or use of funds under the contract, the Contracting 
Officer will, in writing, notify the Contractor of such determination 
and will request that the Contractor take such corrective action within 
such period of time as the Secretary may prescribe.
    (b) When the Director or his/her delegate determines that a 
Contractor has not taken corrective action (as prescribed by him/her 
under paragraph (a) of this section) to his/her satisfaction, he/she 
may, after the Contractor has been provided an opportunity for a hearing 
in accordance with paragraph (c) of this section, rescind the contract 
in whole or in part and, if he/she deems it appropriate, assume or 
resume control or operation of the program, activity, or service 
involved.
    (c)(1) When the Director or his/her delegate has made a 
determination described in paragraph (b) of this section, he/she shall 
in writing notify the Contractor of such determination and of the 
Contractor's right to request a review of such determination and of the 
determination described in paragraph (a) of this section. Such 
notification by the Director or his/her delegate shall set forth the 
reasons for the determination in sufficient detail to enable the 
Contractor to respond and shall inform the Contractor of its rights to a 
hearing on the record before a Contract Appeals Board described in 
paragraph (d) of this section. Upon the request of the Contractor for a 
hearing, the Board, established pursuant to paragraph (d) of this 
section, shall in writing within 10 days of the establishment notify the 
Contractor of the time, place and date of the hearing which will be held 
not later than 45 days after the request for a hearing.
    (2) Where the Director or his/her delegate determines that a 
Contractor's performance under a contract awarded under this subpart 
poses an immediate threat to the safety of any person, he/she may 
immediately rescind the contract in whole or in part and, if he/she 
deems it appropriate, assume or resume control or operation of the 
program, activity, or service involved. Upon such a decision he/she will 
immediately notify the Contractor of such action and the basis therefor; 
and offer the Contractor an opportunity for a hearing on the record 
before the Contract Appeals Board established pursuant to paragraph (d) 
of this section to be held within 10 days of each action.
    (d)(1) The Contract Appeals Board shall be composed of 3 persons 
appointed by the Director, Indian Health Service. Such persons may not 
be selected from the immediate office of any person participating in the 
determinations at issue. The Board shall afford the Contractor the 
right:
    (i) To notice of the issues to be considered;
    (ii) To be represented by counsel;
    (iii) To present witnesses on contractor's behalf;
    (iv) To cross-examine other witnesses either orally or through 
written interrogation; and
    (v) To compel the appearance of Indian Health Service personnel or 
to take depositions of such persons at reasonable times and places.
    (2) The Contract Appeals Board shall make an initial written 
decision which shall become final within 20 days unless the Director, 
Indian Health Service or his/her representative modifies or reverses the 
decision. Any such decision by the Director of the Indian Health Service 
or his/her representative shall be in writing, shall be specific as to 
the reasons for such decision, and shall be considered final.
    (3) Where Board is considering issues arising under paragraph (2) of 
this section, the Board shall within 25 days after the conclusion of the 
hearing, notify all parties in writing of its decision.
    (e) In any case where the officer has rescinded a contract under 
paragraphs (b) or (c) of this section, he/she may decline to enter into 
a new contract agreement with the Contractor until such time as he/she 
is satisfied that the basis for the rescission has been corrected.
    Nothing in this section shall be construed as contravening the 
Occupational Safety and Health Act of 1970 (84 Stat. 1590), as amended 
(29 U.S.C. 651).

                             (End of clause)

  Clause No. 22--Payment of Interest on Contractors' Claims (JUN 1977)

    (a) If an appeal is filed by the Contractor from a final decision of 
the Contracting Officer under the Disputes clause of this contract, 
denying a claim arising under the contract, simple interest on the 
amount of the claim finally determined owed by the Government shall be 
payable to the Contractor. Such interest shall be at the rate determined 
by the Secretary of the Treasury pursuant to Public Law 92-41, 85 Stat. 
97, from the date the Contractor furnished to the Contracting Officer 
his written appeal under the Disputes clause of this contract, to the 
date of (1) a final judgment by a court of competent jurisdiction, or 
(2) mailing to the Contractor of a supplemental agreement for execution 
either confirming completed negotiations between the parties or carrying 
out a decision of a board of contract appeals.
    (b) Notwithstanding (a), above, (1) interest shall be applied only 
from the date payment was due, if such date is later than the filing of 
appeal, and (2) interest shall not be paid for any period of time that 
the Contracting Officer determines the Contractor has unduly delayed in 
pursuing its remedies before a board of contract appeals or a court of 
competent jurisdiction.

[[Page 203]]

                             (End of clause)

         Clause No. 23--Government-Furnished Property (JUN 1977)

    (a) The Government shall deliver to the Contractor, for use in 
connection with and under the terms of this contract, the property 
described elsewhere in this contract, together with such related data 
and information as the Contractor may request and as may reasonably be 
required for the intended use of such property (hereinafter referred to 
as ``Government-Furnished Property''). The delivery or performance dates 
for the supplies or services to be furnished by the Contractor under 
this contract are based upon the expectation that Government-Furnished 
Property suitable for use will be delivered to the Contractor at the 
times stated elsewhere in this contract or, if not so stated, in 
sufficient time to enable the Contractor by such time or times, to meet 
such delivery or performance dates. In the event that Government-
Furnished Property is not delivered to the Contractor to meet such 
delivery or performance dates, the Contracting Officer shall, upon 
timely written request made by the Contractor, make a determination of 
the delay occasioned the Contractor and shall equitably adjust the 
delivery or performance dates, or the contract price, or both, and any 
other contractual provision affected by the delay. In the event that 
Government-Furnished Property is received by the Contractor in a 
condition not suitable for its intended use, the Contractor shall, upon 
receipt thereof, notify the Contracting Officer of such fact and, as 
directed by the Contracting Officer, either (1) return such property at 
the Government's expense or otherwise dispose of such property, or (2) 
effect repairs or modifications. Upon completion of (1) or (2) above, 
the Contracting Officer upon timely written request of the Contractor 
shall equitably adjust the delivery or performance dates of the contract 
price, or both, and any other contractual provision effected by the 
return, disposition, repair, or modification. The foregoing provisions 
for adjustment are exclusive and the Government shall not be liable to 
suit for breach of contract by reason of any delay in delivery of 
Government-Furnished Property or delivery of such property in a 
condition not suitable for its intended use.
    (b) By notice in writing the Contracting Officer may decrease the 
property furnished or to be furnished by the Government under this 
contract. In any such case, the Contracting Officer upon timely written 
request of the Contractor shall equitably adjust the delivery or 
performance date or the contract price, or both, and any other 
contractual provisions affected by the decrease.
    (c) Title to the Government-Furnished Property shall remain in the 
Government. Title to Government-Furnished Property shall not be affected 
by the incorporation or attachment thereof to any property not owned by 
the Government, nor shall such Government-Furnished Property, or any 
part thereof, be or become a fixture or lose its identity as personality 
by reason of affixation to any realty.
    (d) The Government-Furnished Property, unless otherwise specifically 
provided herein, and except as otherwise approved or directed by the 
Contracting Officer in writing, shall be used exclusively for the 
performance of this contract.
    (e) The Contractor shall maintain and administer, in accordance with 
sound business practice, a program for the maintenance, repair, 
protection and preservation of Government-Furnished Property, until 
disposed of by the Contractor in accordance with this clause. In the 
event that any damage occurs to Government-Furnished Property the risk 
of which has been assumed by the Government under this contract, the 
Government shall replace such items or the Contractor shall make such 
repair of the property, as the Government directs; Provided, however, 
That if the Contractor cannot effect such repair within the time 
required, the Contractor may reject such property. The contract price 
includes no compensation to the Contractor for the performance of any 
repair or replacement for which the Government is responsible; and an 
equitable adjustment will be made in the contract price for any such 
repair or replacement of Government-Furnished Property made at the 
direction of the Government. Any repair or replacement for which the 
Contractor is responsible under the provisions of this contract shall be 
accomplished by the Contractor at its own expense.
    (f) The Contractor also agrees to maintain and administer, in 
accordance with sound business practice, a property control system which 
will provide the following: Contract number; nomenclature of item; 
quantity received; issued; and balance on hand; posting reference to 
include date received, issued unit price and location; marking or 
identification of item; adequate maintenance, storage, and security of 
Government-Furnished Property, until disposed of by the Contractor in 
accordance with this clause. The Contractor further agrees to receipt 
promptly for all Government property in a form and manner as prescribed 
by the Contracting Officer.
    (g) The Contractor agrees to make available to authorized 
representatives of the Contracting Officer at all reasonable times at 
the office of the Contractor all of its property records under this 
contract, and access to any premises where any of the Government-
Furnished Property is located.
    (h) (i) The Contractor shall not be liable for any loss or damage to 
the Government-

[[Page 204]]

Furnished Property, or for expenses incidental to such loss or damage 
except that the Contractor shall be liable for any such loss or damage 
(including expenses incidental thereto):
    (A) Which results from willful misconduct r lack of good faith on 
the part of any of the Contractor's directors or officers, or on the 
part of any of its managers, superintendents, or other equivalent 
representatives who have supervision or direction of all or 
substantially all of the Contractor's business, or all or substantially 
all of the Contractor's operations at any one plant, laboratory, or 
separate location in which this contract is being performed; or
    (B) Which results from a failure on the part of the Contractor, due 
to the willful misconduct or lack of good faith on the part of any of 
its directors, officers, or other representatives mentioned in 
subparagraph (A) above, to maintain and administer, in accordance with 
sound business practice, the program for maintenance, repair, protection 
and preservation of Government-Furnished Property as required by 
subparagraph (e) above; or
    (C) For which the Contractor is otherwise responsible under the 
express terms of the clause or clauses designated in this contract; or
    (D) Which results from a risk expressly required to be insured under 
some other provision of this contract, or of the schedules or task 
orders thereunder, but only to the extent of the insurance so required 
to be procured and maintained or to the extent of insurance actually 
procured and maintained, whichever is greater; or
    (E) Which results from a risk which is in fact covered by insurance 
or for which the Contractor is otherwise reimbursed but only to the 
extent of such insurance or reimbursement; Provided, That, if more than 
one of the above exceptions shall be applicable in any case, the 
Contractor's liability under any one exception shall not be limited by 
any other exception.
    (ii) The Contractor represents that it is not including the price 
hereunder, and agrees that it will not hereafter include in any price to 
the Government, any charge or reserve for insurance (including self-
insurance funds or reserves) covering loss or destruction of or damage 
to the Government-Furnished Property, except the extent that the risk of 
loss is imposed on the Contractor under (i)(C) above, or insurance has 
been required under (i)(D) above.
    (iii) Upon the happening of loss or destruction of or damage to any 
Government-Furnished Property, the Contractor shall notify the 
Contracting Officer thereof and shall take all reasonable steps to 
protect the Government-Furnished Property from further damage, separate 
the damaged and undamaged Government-Furnished Property in the best 
possible order, and furnish to the Contracting Officer a statement of:
    (A) The lost, destroyed and damaged Government-Furnished Property;
    (B) The time and origin of the loss, destruction or damage;
    (C) All known interest in commingled property of which the 
Government-Furnished Property is a part; and
    (D) The insurance, if any, covering any part of or interest in such 
commingled property.
    The Contractor shall be reimbursed for the expenditures made by it 
in performing its obligations under the subparagraph (iii), to the 
extent approved by the Contracting Officer and set forth in a 
supplemental agreement or amendment to this contract.
    (iv) With the prior written approval of the Contracting Officer 
after loss or destruction of or damage to Government-Furnished Property, 
and subject to such conditions and limitations as may be imposed by the 
Contracting Officer, the Contractor may, in order to minimize the loss 
to the Government or in order to permit resumption of business or the 
like, sell for the account of the Government any item of Government-
Furnished Property which has been damaged beyond practicable repair, or 
which is so commingled or combined with property of other, including the 
Contractor, that separation is impracticable.
    (v) Except to the extent of any loss or destruction of or damage to 
Government-Furnished Property for which the Contractor is relieved of 
liability under the foregoing provisions of this clause, and except for 
reasonable wear and tear or depreciation, or the utilization of the 
Government-Furnished Property in accordance with the provisions of this 
contract, the Government-Furnished Property (other than property 
permitted to be sold) shall be returned to the Government in as good 
condition as when received by the Contractor in connection with this 
contract, or as repaired under paragraph (e) above.
    (vi) In the event the Contractor is reimbursed or compensated for 
any loss or destruction of or damage to the Government-Furnished 
Property, it shall equitably reimburse the Government. The Contractor 
shall do nothing to prejudice the Government's rights to recover against 
third parties for any such loss, destruction or damage and, upon the 
request of the Contracting Officer shall at the Government's expense, 
furnish to the Government all reasonable assistance and cooperation 
(including assistance in the prosecution of suit and the execution of 
instruments of assignment in favor of the Government) in obtaining 
recovery.
    (i) Upon completion or expiration of this contract, any Government 
property which has not been consumed in the performance of this contract 
or which has not been previously disposed of in accordance with the

[[Page 205]]

provisions of this clause, or for which the Contractor has not otherwise 
been relieved of responsibility, shall be disposed of as the Contracting 
Officer may direct. The Contractor shall in no way be relieved of 
responsibility for Government property without the prior written 
approval of the Contracting Officer.
    (j) If the Contracting Officer determines that the interests of the 
Government require removal of any Government-Furnished Property, or if 
the Contractor determines any Government-Furnished Property to be in 
excess of its need under this contract such Government-Furnished 
Property shall be disposed of in the same manner as covered by paragraph 
(i) above. In the event that the Contracting Officer requires the 
removal of any Government-Furnished Property under this paragraph (j) or 
paragraph (i) above, upon timely written request of the Contractor, an 
equitable adjustment shall be made in the contract price to cover the 
direct cost to the Contractor of such removal and of any property damage 
occasioned thereby.

                             (End of clause)

 Clause No. 24--Examination of Records by the Comptroller General (JUN 
                                  1977)

    (a) The Contractor agrees that the Comptroller General of the United 
States or any of his/her duly authorized representatives shall, until 
expiration of 3 years after final payment under this contract, or of the 
time periods for the particular records specified in Part 1-20 of the 
Federal Procurement Regulations (41 CFR part 1-20), whichever expires 
earlier, have access to and the right to examine any directly pertinent 
books, documents, papers, and records of the Contractor involving 
transactions related to this contract.
    (b) The Contractor further agrees to include in all its subcontracts 
hereunder a provision to the effect that the subcontractor agrees that 
the Comptroller General of the United States or any of his/her duly 
authorized representatives shall, until expiration of 3 years after 
final payment under the subcontract, or of the time periods for the 
particular records specified in Part 1-20 of the Federal Procurement 
Regulations (41 CFR part 1-20), whichever expires earlier, have access 
to and the right to examine any directly pertinent books, documents, 
papers, and records of such subcontractor, involving transactions 
related to the subcontract. The term ``subcontract'' as used in this 
clause excludes (1) purchase orders not exceeding $2,500 and (2) 
subcontracts or purchase orders for public utility services at rates 
established for uniform applicability to the general public.

                             (End of clause)

            Clause No. 25--Indemnity and Insurance (JUN 1977)

    (a) The Contractor shall indemnify and save and keep harmless the 
Government against any or all loss, cost, damage, claim, expense or 
liability whatsoever, because of accident or injury to persons or 
property or others occurring in connection with any program including as 
a part of this contract, by providing where applicable, the insurance 
described below:
    (b) The Contractor shall secure, pay the premium for, and keep in 
force until the expiration of this contract, or any renewal period 
thereof, insurance as provided below. Such insurance policies shall 
specifically include a provision stating the liability assumed by the 
Contractor under this contract.
    (1) Workman's compensation insurance as required by laws of the 
state.
    (2) Owner's, landlord's, and tenant's bodily injury liability 
insurance with limits of not less than $50,000 for each person and 
$500,000 for each accident.
    (3) Property damage liability insurance with limits of not less than 
$25,000 for each accident.
    (4) Automobile bodily injury liability insurance with limits of not 
less than $50,000 for each person, and $500,000 for each accident and 
property damage liability insurance with a limit of not less than $5,000 
for each accident.
    (5) Food products liability insurance with limits of not less than 
$50,000 for each person and $500,000 for each accident.
    (6) Professional malpractice insurance where medical, dental, or 
other health professional services are involved.
    (7) Other liability insurance not specifically mentioned when 
required.
    (c) Each policy of insurance shall contain an endorsement providing 
that cancellation by the insurance company shall not be effective unless 
a copy of the cancellation is mailed (registered) to the Contracting 
Officer 30 days prior to the effective date of cancellation.
    (d) A certificate of each policy of insurance, and any change 
therein, shall be furnished to the Contracting Officer immediately upon 
receipt from the insurance company.
    (e) Insurance companies of the Contractor shall be satisfactory to 
the Contracting Officer. When in his/her opinion an insurance company is 
not satisfactory for reasons that will be stated, the Contractor shall 
provide insurance through companies that are satisfactory to the 
Contracting Officer.
    (f) Each policy of insurance shall contain a provision that the 
insurance carrier waives any rights it may have to raise as a defense

[[Page 206]]

the tribe's sovereign immunity from suit, but such waiver shall extend 
only to claims the amount and nature of which are within the coverage 
and limits of the policy of insurance. The policy shall contain no 
provision, either expressed or implied, that will serve to authorize or 
empower the insurance carrier to waive or otherwise limit the tribe's 
sovereign immunity outside or beyond the coverage and limits of the 
policy or insurance.

                             (End of clause)

   Clause No. 26--Fair and Equal Treatment of Indian People (JUN 1977)

    (a) The Contractor agrees to make no discriminatory distinctions 
among Indian patients or beneficiaries of this contract. For the purpose 
of this contract discriminatory distinctions include but are not limited 
to the following:
    (i) Denying a patient any service or benefit or availability of a 
facility;
    (ii) Providing any service or benefit to a patient which is 
different, or is provided in a different manner or at a different time 
from that provided to other patients under this contract; subjecting a 
patient to segregation or separate treatment in any manner related to 
his/her receipt of any service; restricting a patient in any way in the 
enjoyment of any advantage or privilege enjoyed by others receiving any 
service or benefit; treating a patient differently from others in 
determining whether he/she satisfies any admission, enrollment, quota, 
eligibility membership, or other requirements or conditions which 
individuals must meet in order to be provided any service or benefit; 
the assignment of times or places for the provision of services on the 
basis of discriminatory distinctions which may be made of the patients 
to be served.
    (b) The Government reserves the right to terminate this contract in 
whole or in part whenever the Contractor fails to comply with the 
requirements of this clause.

                             (End of clause)

  Clause No. 27--Reports to the Indian People and Annual Reports (JUN 
                                  1977)

    (a) The Contractor, as a recipient of Federal financial assistance, 
shall make reports and information available to the Indian people 
serviced or represented by the Contractor. Such reports will reflect how 
the Federal assistance funds were utilized to the benefit of the Indian 
people served or represented as follows: (specific reporting 
requirements, formats and methods of distribution to the Indian people 
will be prescribed in the scope of the contract.)
    (b) Annual reports.
    (1) For each fiscal year during which a tribal organization receives 
or expends funds pursuant to the contract under this part, the tribe 
which requested the contract must submit a report to the Contracting 
Officer. The report shall include, but not be limited to, an accounting 
of the amounts and purposes for which the contract funds were expended 
and information on the conduct of the program or services involved. The 
report shall include any other information requested by the Contracting 
Officer and may be submitted as follows:
    (i) When the contract is with the governing body of an Indian tribe, 
the tribe shall submit the reports to the Contracting Officer.
    (ii) When the contract is with a tribal organization other than the 
governing body of the tribe, the tribe has the option of having the 
tribal organization prepare the report and submit it to the tribe for 
review and approval before the tribe submits it to the Contracting 
Officer.
    (iii) When the contract benefits more than one tribe, the tribal 
organization shall prepare and submit the report to each of the tribes 
benefiting under the contract. Each tribe shall endorse the report 
before submitting it to the Contracting Officer.
    (2) The annual report shall be submitted to the Contracting Officer 
within 90 days of the end of the fiscal year in which the contract was 
performed. However, the period for submitting the report may be extended 
if there is just cause for such extension.
    (3) In addition to the yearly reporting requirement given in 
paragraphs (a) and (b) of this section, the tribal contractor shall 
furnish other reports when and as required by the Secretary.

                             (End of clause)

          Clause No. 28--Questionnaires and Surveys (JUN 1977)

    In the event the performance of this contract involves the 
collection of information upon identical items from 10 or more persons, 
other than Federal employees, the Contractor shall obtain written 
approval from the Contracting Officer, prior to the use thereof, of any 
forms, schedules, questionnaires, survey plans or other documents, and 
any revisions thereto, intended to be used in such collection.

                             (End of clause)

                   Clause No. 29--Printing (JUN 1977)

    Unless otherwise specified in this contract, the Contractor shall 
not engage in, nor subcontract for, any printing (as that term is 
defined in Title I of the Government Printing and Binding Regulations in 
effect on the effective date of this contract) in connection with the 
performance of work under this

[[Page 207]]

contract: Provided, however, That performance of a requirement under 
this contract involvingthe reproduction of less than 5,000 production 
units of any one page, or less than 25,000 production units in the 
aggregate of multiple pages, will not be deemed to be printing. A 
production unit is defined as one sheet, size 8 by 10 and \1/2\ inches, 
one side only, one color.

                             (End of clause)

      Clause No. 30--Price Reduction for Defective Cost or Pricing

    The following clause applies to all contracts where cost and pricing 
data is required in accordance with P.L. 87-653.

     Price Reduction for Defective Cost or Pricing Data (June 1977)

    (a) If the Contracting Officer determines that any price negotiated 
in connection with this contract or any cost reimbursable under this 
contract was increased by any significant sums because the Contractor, 
or any subcontractor pursuant to the clause of this contract entitled 
``Subcontractor Cost, or Pricing Data'' or ``Subcontractor Cost or 
Pricing Data--Price Adjustments,'' or any subcontract clause therein 
required, furnished incomplete or inaccurate cost or pricing data or 
data not current as certified in its Contractor's Certificate of Current 
Cost or Pricing Data, then such price or cost shall be reduced 
accordingly and the contract shall be modified in writing to reflect 
such reduction.
    (b) Failure to agree on a reduction shall be a dispute concerning a 
question of fact within the meaning of the ``Disputes'' clause of this 
contract.

    (Note: Since the contract is subject to reduction under this clause 
by reason of defective cost or pricing data submitted in connection with 
certain subcontracts, it is expected that the Contractor may wish to 
include a clause in each such subcontract requiring the subcontractor to 
appropriately indemnify the Contractor. It is also expected that any 
subcontractor subject to such indemnification will generally require 
substantially similar indemnification for defective cost or pricing data 
required to be submitted by its lower tier subcontractors).

                             (End of clause)

           Clause No. 31--Subcontractor Cost and Pricing Data

    The following clause should be included in all contracts when the 
subcontracts of the type and size described therein are contemplated.

             Subcontractor Cost and Pricing Data (JUN 1977)

    (a) The Contractor shall require subcontractors hereunder to submit 
in writing cost or pricing data under the following circumstances:
    (1) Prior to award of any cost-reimbursed type, time and material, 
labor-hour, incentive, or price redeterminable subcontract the price of 
which is expected to exceed $100,000; and
    (2) Prior to the award of any other subcontract, the price of which 
is expected to exceed $100,000, or to the pricing of any subcontract 
change or other modification for which the price adjustment is expected 
to exceed $100,000, where the price or price adjustment is not based on 
adequate price competition, established catalog or market prices of 
commercial items sold in substantial quantities to the general public, 
or prices set by law or regulation.
    (b) The Contractor shall require subcontractors to certify, 
substantially the same form as that used in the certificate by the Prime 
Contractor to the Government, that, to the best of their knowledge and 
belief, the cost and pricing data submitted under (a) above are 
accurate, complete, and current as of the date of the execution, which 
date shall be as close as possible to the date of agreement on the 
negotiated price of the subcontract or subcontract change or 
modification.
    (c) The contractor shall insert the substance of this clause 
including this paragraph (c) in each of its cost-reimbursement type, 
time and material, labor-hour, price redeterminable, or incentive 
subcontracts hereunder, and in any other subcontract hereunder which 
exceeds $100,000 unless the price thereof is based on adequate price 
competition, established catalog or market prices of commercial items 
sold in substantial quantities to the general public, or prices set by 
law or regulation. In each such excepted subcontract hereunder which 
exceeds $100,000, the Contractor shall insert the substance of the 
following clause:

          Subcontractor Cost and Pricing Data--Price Adjustment

    (a) Paragraphs (b) and (c) of this clause shall become operative 
only with respect to any change or other modification made pursuant to 
one or more provisions of this contract which involves a price 
adjustment in excess of $100,000. The requirements of this clause shall 
be limited to such price adjustments.
    (b) The Contractor shall require subcontractors hereunder to submit 
cost or pricing data under the following circumstances:
    (1) Prior to award of any cost-reimbursement type, time and 
material, labor-hour,

[[Page 208]]

incentive, or price redeterminable subcontract, the price of which is 
expected to exceed $100,000; and
    (2) Prior to award of any other subcontract, the price of which is 
expected to exceed $100,000, or to the pricing of any subcontract change 
or other modification for which the price adjustment is expected to 
exceed $100,000, where the price or price adjustment is not based on 
adequate price competition, established catalog or market prices of 
commercial items sold in substantial quantities to the general public, 
or prices set by law or regulation.
    (c) The Contractor shall require subcontractors to certify, in 
substantially the same form as that used in the Certificate by the Prime 
Contractor to the Government, that, to the best of their knowledge and 
belief, the cost and pricing data submitted under (b) above are 
accurate, complete, and current as of the date of the execution, which 
date shall be as close as possible to the date of agreement on the 
negotiated price of the contract modification.
    (d) The Contractor shall insert the substance of this clause 
including this paragraph (d) in each subcontract hereunder which exceeds 
$100,000.

                             (End of clause)

                Clause No. 32--Advance Payment (JUN 1977)

    (a) Amount of Advance. At the request of the Contractor, and subject 
to the conditions hereinafter set forth, the Government shall make an 
advance payment, or advance payments from time to time, to the 
Contractor. No advance payment shall be made (1) without the approval of 
the office administering advance payments (hereinafter called the 
``Administering Office'' and designated in paragraph (k)(4) hereof) as 
with all advance payments theretofore made, shall exceed the amount 
stated in paragraph (k)(1) hereof; and (3) without a properly certified 
invoice or invoices.
    (b) Special Bank Account. Until all advance payments made hereunder 
are liquidated and the Administering Office approves in writing the 
release of any funds due and payable to the Contractor, all advance 
payments and all other payments under the contract shall be made by 
check payable to the Contractor, and be marked for deposit only in a 
Special Bank Account with the bank designated in paragraph (k)(2) 
hereof. No part of the funds in the Special Bank Account shall be 
mingled with other funds of the Contractor prior to withdrawal thereof 
from the Special Bank Account as hereinafter provided. Except as 
hereinafter provided, each withdrawal shall be made only by check of the 
Contractor countersigned on behalf of the Government by the Contracting 
Officer or such other person or persons as he/she may designate in 
writing (hereinafter called the ``Countersigning Agent''). Until 
otherwise determined by the Administering Office, countersignature on 
behalf of the Government will not be required.
    (c) Use of Funds. The funds in the Special Bank Account may be 
withdrawn by the Contractor solely for the purpose of making payments 
for items of allowable cost or to reimburse the Contractor for such 
items of allowable cost, and or such other purposes as the Administering 
Office may approve in writing. Any interpretation required as to the 
proper use of funds shall be made in writing by the Administering 
Office.
    (d) Return of Funds. The Contractor may at any time repay all or any 
part of the funds advanced hereunder. Whenever so requested in writing 
by the Administering Office, the Contractor shall repay to the 
Government such part of the unliquidated balance of advance payments as 
shall in the opinion of the Administering Office be in excess of current 
requirements, or (when added to total advance previously made and 
liquidated) in excess of the amount specified in paragraph (k)(1) 
hereof. In the event the Contractor fails to repay such part of the 
unliquidated balance of advance payments when so requested by the 
Administering Office, all or any part thereof may be withdrawn from the 
Special Bank Account by checks payable to the Treasurer of the United 
States signed solely by the Countersigning Agent and applied in 
reduction of advance payments then outstanding hereunder.
    (e) Liquidation. If not otherwise liquidated, the advance payments 
made hereunder shall be liquidated as herein provided. When the sum of 
all payments under this contract, other than advance payments, plus the 
unliquidated amount of advance payments are equal to the total estimated 
cost for the work under this contract or such lesser amount to which the 
total estimated cost under this contract may have been reduced, plus 
increases, if any, in this total estimated cost not exceeding, in the 
aggregate (including, without limitation, reimbursable costs incident to 
termination for cause and retrocession as estimated by the Contracting 
Officer), the Government shall thereafter withhold further payments to 
the Contractor and apply the amounts withheld against the Contractor's 
obligation to repay such advance payments until such advance payments 
shall have been fully liquidated. If upon completion, termination, or 
retrocession of the contract all advance payments have not been fully 
liquidated, the balances therefor shall be deducted from any sums 
otherwise due or which may become due to the Contractor from the 
Government, and any deficiency shall be paid by the Contractor to the 
government upon demand.
    (f) Bank Agreement. Before an advance payment is made hereunder, the 
Contractor shall transmit to the Administering Office,

[[Page 209]]

in the form prescribed by such office, an Agreement in triplicate from 
the bank in which the Special Bank Account is established, clearly 
setting forth the special character of the account and the 
responsibilities of the bank thereunder. Wherever possible, such bank 
shall be a member bank of the Federal Reserve System, or an ``insured'' 
bank within the meaning of the Act creating the Federal Deposit 
Insurance Corporation Act of August 23, 1935, 49 Stat. 685, as amended 
(12 U.S.C. 264).
    (g) Lien on Special Bank Account. The Government shall have a lien 
upon any balance in the Special Bank Account paramount to all other 
items, which lien shall secure the repayment or any advance payments 
made hereunder.
    (h) Lien on Property under Contract. Any and all advance payments 
made under this contract shall be secured, when made, by a lien in favor 
of the Government, paramount to all other liens, upon the supplies or 
other things covered by this contract and on all material and other 
property acquired for or allocated to the performance of this contract, 
except to the extent that the Government by virtue of any other 
provision of this contract, or otherwise, shall have valid title to such 
supplies, materials, or other property as against other creditors of the 
Contractor. The Contractor shall identify, by marking or segregation, 
all property which is subject to a lien in favor of the Government by 
virtue of any provision of this contract in such a way as to indicate 
that it is subject to such lien and that it has been acquired for or 
allocated to the performance of this contract. If for any reason such 
supplies, materials, or other property are not identified by marking or 
segregation, the Government shall be deemed to have a lien to the extent 
of the Government's interest under this contract on any mass of property 
with which such supplies, materials, or other property are commingled. 
The Contractor shall maintain adequate accounting control over such 
property on its books and records. If at any time during the progress of 
the work on the contract it becomes necessary to deliver any item or 
items and materials upon which the Government has a lien as aforesaid to 
a third person, the Contractor shall notify such third person of the 
lien herein provided and shall obtain from such third person a receipt, 
in duplicate, acknowledging, inter alia the existence of such lien. A 
copy of each receipt shall be delivered by the Contractor to the 
Contracting Officer. If this contract is terminated in whole or in part 
and the Contractor is authorized to sell or retain termination inventory 
acquired for or allocated to this contract, such sale or retention shall 
be made only if approved by the Contracting Officer, which approval 
shall constitute a release of the Government's lien hereunder to the 
extent that such termination inventory is sold or retained, and to the 
extent that the proceeds of the sale, or the credit allowed for such 
retention on the Contractor's termination claim, is applied in reduction 
of advance payments then outstanding hereunder.
    (i) Insurance. The Contractor represents and warrants that it is now 
maintaining with responsible insurance carriers, (1) insurance upon its 
own plant and equipment against fire and other hazards to the extent 
that like properties are usually insured by other operating plants and 
properties of similar character in the same general locality; (2) 
adequate insurance against liability on account of damage to persons or 
property; and (3) adequate insurance under all applicable workmen's 
compensation laws. The Contractor agrees that, until work under this 
contract has been completed and all advance payments made hereunder have 
been liquidated, it will (i) maintain such insurance; (ii) maintain 
adequate insurance upon any materials, parts, assemblies, subassemblies, 
supplies, equipment and other property acquired for or allocable to this 
contract and subject to the Government lien hereunder; and (iii) furnish 
such certificates with respect to its insurance as the Administering 
Office may from time to time require.
    (j) Prohibition against Assignment. Notwithstanding any other 
provision of this contract, the Contractor shall not transfer, pledge, 
or otherwise assign this contract, or any interest therein, or any claim 
arising thereunder, to any party or parties, bank, trust company, or 
other financing institution.
    (k) Designations and Determinations. (1) Amount. The amount of 
advance payments at any time outstanding hereunder shall not exceed 
$______.
    (2) Depository. The bank designated for the deposit of payments made 
hereunder shall be:
    (3) Interest Charge. No interest shall be charged for advance 
payments made hereunder. The Contractor shall charge interest at the 
rate of 6 percent per annum on subadvances or down payments to 
subcontractors, and such interest will be credited to the account of the 
Government. However, interest need not be charged on subadvances on 
nonprofit subcontracts with nonprofit educational or research 
institutions for experimental, research or development work.
    (4) Administering Office. The office administering advance payments 
shall be the office designated as having responsibility for awarding the 
contract.
    (l) Other Security. The terms of this contract shall be considered 
adequate security for advance payments hereunder, except that if at any 
time the administering office deems the security furnished by the 
Contractor to be inadequate, the Contractor shall furnish

[[Page 210]]

such additional security as may be satisfactory to the administering 
office, to the extent that such additional security is available.

                             (End of clause)

           Clause No. 33--Effect on Existing Rights (JUN 1977)

    (a) Nothing in this contract shall be construed as:
    (1) Affecting, modifying, diminishing, or otherwise impairing the 
sovereign immunity for suit enjoyed by an Indian tribe; or
    (2) Authorizing or requiring the termination of any existing trust 
responsibility of the United States with respect to the Indian people.

                             (End of clause)

        Clause No. 34--Federal, State, and Local Taxes (JUN 1977)

    (a) Except as may be otherwise provided in this contract, the 
contract price includes all applicable Federal, State, and local taxes 
and duties.
    (b) Nevertheless, with respect to any Federal excise tax or duty on 
the transactions or property covered by this contract, if a statute, 
court decision, written ruling, or regulation takes effect after the 
contract date, and (1) Results in the Contractor being required to pay 
or bear the burden of any such Federal excise tax or duty or increase in 
the rate thereof which would not otherwise have been payable on such 
transactions or property, the contract price shall be increased by the 
amount of such tax or duty or rate increase; Provided, That the 
Contractor if requested by the Contracting Officer, warrants in writing 
that no amount for such newly imposed Federal excise tax or duty or rate 
increase was included in the contract price as a contingency reserve or 
otherwise; or
    (2) Results in the Contractor not being required to pay or bear the 
burden of, or in its obtaining a refund or drawback of, any such Federal 
excise tax or duty which would otherwise have been payable on such 
transactions or property or which was the basis of an increase in the 
contract price, the contract price shall be decreased by the amount of 
the relief, refund, or drawback, or the amount shall be paid to the 
Government, as directed by the Contracting Officer. The contract price 
shall be similarly decreased if the Contractor, through its fault or 
negligence or its failure to follow instructions of the Contracting 
Officer, is required to pay or bear the burden of, or does not obtain, a 
refund or drawback of, any such Federal excise tax or duty.
    (c) No adjustment pursuant to paragraph (b) above will be made under 
this contract unless the aggregate amount thereof is or may reasonably 
be expected to be over $100.
    (d) As used in paragraph (b) above, the term ``contract date'' means 
the date set for the bid opening, or if this is a negotiated contract, 
the date of this contract. As to additional supplies or services 
procured by modification to this contract, the term ``contract date'' 
means the date of such modification.
    (e) Unless there does not exist any reasonable basis to sustain an 
exemption, the Government, upon request of the Contractor, without 
further liability, agrees, except as otherwise provided in this 
contract, to furnish evidence appropriate to establish exemption from 
any tax which the Contractor warrants in writing was excluded from the 
contract price. In addition, the Contracting Officer may furnish 
evidence to establish exemption from any tax that may, pursuant to this 
clause, give rise to either an increase or decrease in the contract 
price. Except as otherwise provided in this contract, evidence 
appropriate to establish exemption from duties will be furnished only at 
the direction of the Contracting Officer.
    (f) The Contractor shall promptly notify the Contracting Officer of 
matters which will result in either an increase or decrease in the 
contract price, and shall take action with respect thereto as directed 
by the Contracting Officer.

                             (End of clause)

[49 FR 36242, Sept. 14, 1984, as amended at 51 FR 20491, June 5, 1986]



PHS 352.280-6  Demurrage charge provisions for reusable cylinders and containers.

    The clause set forth below shall be inserted in solicitations and 
resultant contracts when delivery of the items may be in contractor-
furnished reusable gas cylinders or other containers.

 Demurrage Charge Provisions for Reusable Cylinders and Containers (APR 
                                  1984)

    (a) Reusable gas cylinders or other containers identified below by 
offereors shall remain the property of the Contractor (except as 
provided in (c) below), and will be loaned without charge to the 
Government for the period stipulated below. In computing the period 
involved, such free loan period shall commence on the first day after 
date of delivery of each container to the herein specified f.o.b. 
point(s). Offerors who specify less than ________ days (to be determined 
by the Contracting Officer in accordance with trade custom), shall have 
their offers increased for

[[Page 211]]

evaluation purposes only by an amount arrived at by multiplying the 
number of days less than the established free loan period by the daily 
rental charge. In the event the offeror does not specify a free loan 
period, such period shall be ________ days (insert the same number of 
days as the established free loan period). Beginning with the first day 
after expiration of the free loan period to and including the date the 
containers are delivered to the Contractor's designated carrier, the 
Government shall pay the Contractor demurrage (rental) in the amount 
specified below. No demurrage shall accrue to the Contractor in excess 
of the herein specified container's replacement value. For each 
container lost or damaged beyond repair while in the Government's 
possession, the Government shall pay to the Contractor the herein 
specified replacement value less allocable demurrage paid therefor. Such 
lost or damaged containers paid for by the Government shall become the 
property of the Government.
    (b) Empty containers will be delivered to the Contractor's 
designated carrier (offeror to identify applicable carrier below) f.o.b. 
points of original delivery specified in this solicitation/contract.

                 Offerors Shall Furnish the Following Information, as Applicable, for Containers
----------------------------------------------------------------------------------------------------------------
                                                                                               Demurrage charges
       Applicable item No.         Type and size of        Quantity        Free loan period       per day per
                                       container                                                   cylinder
----------------------------------------------------------------------------------------------------------------
 
 
 
----------------------------------------------------------------------------------------------------------------


------------------------------------------------------------------------
                                          Identification and location of
  Replacement value for each container   offeror's carrier for return of
                                                 empty container
------------------------------------------------------------------------
 
------------------------------------------------------------------------

    (c) When the offeror indicates that containers have a replacement 
value of less than $10, the Government shall have the option to purchase 
containers and add the cost to the offered price. When purchase option 
is exercised, offers shall be evaluated accordingly. In this event, the 
container shall become the property of the Government.

                             (End of clause)



            Subpart PHS 352.3--Provision and Clause Matrices



PHS 352.380-4  Contract clauses for contracts awarded under the Indian Self-Determination Act.

    (a) PHS Acquisition Regulations (PHSAR) Clauses for Cost-
Reimbursement Contracts Awarded under the Indian Self-Determination Act.

         Number, PHSAR Clause No., and Title and Date of Clause

1. 352.280-4(a)(1)  Definitions. (June 1977)
2. 352.280-4(a)(2)  Disputes. (June 1977)
3. 352.280-4(a)(3)  Limitation of Cost. (June 1977)
4. 352.280-4(a)(4)  Allowable Cost. (June 1977)
5. 352.280-4(a)(5)  Negotiated Overhead Rates. (June 1977)
6. 352.280-4(a)(6)  Payment (June 1977)
7. 352.280-4(a)(7)  Advance Payment. (June 1977)
8. 352.280-4(a)(8)  Examination of Records. (June 1977)
9. 352.280-4(a)(9)  Inspection and Reports. (June 1977)
10. 352.280-4(a)(10)  Subcontracting. (June 1977)
11. 352.280-4(a)(11)  Accounts, Audit, and Records. (June 1977)
12. 352.280-4(a)(12)  Government Property. (June 1977)
13. 352.280-4(a)(13)  Changes. (June 1977)
14. 352.280-4(a)(14)  Notice to the Government of Delays. (June 1977)
15. 352.280-4(a)(15)  Retrocession. (June 1977)
16. 352.280-4(a)(16)  Reassumption of Programs. (June 1977)
17. 352.280-4(a)(17)  Key Personnel. (June 1977)
18. 352.280-4(a)(18)  Litigation and Claims. (June 1977)
19. 352.280-4(a)(19)  Indemnity and Insurance. (June 1977)
20. 352.280-4(a)(20)  Overtime. (June 1977)
21. 352.280-4(a)(21)  Foreign Travel. (June 1977)
22. 352.280-4(a)(22)  Questionnaires and Surveys. (June 1977)
23. 352.280-4(a)(23)  Printing. (June 1977)
24. 352.280-4(a)(24)  Services of Consultants. (June 1977)
25. 352.280-4(a)(25)  Assignment of Claims. (June 1977)
26. 352.280-4(a)(26)  Contract Work Hours and Safety Standards Act-
Overtime Compensation. (June 1977)
27. 352.280-4(a)(27)  Walsh-Healey Public Contracts Act. (June 1977)
28. 352.280-4(a)(28)  Equal Opportunity. (June 1977)
29. 352.280-4(a)(29)  Indian Preference in Training and Employment. 
(June 1977)
30. 352.280-4(a)(30)  Certificate of Nonsegregated Facilities. (June 
1977)
31. 352.280-4(a)(31)  Convict Labor. (June 1977)
32. 352.280-4(a)(32)  Officials not to Benefit. (June 1977)
33. 352.280-4(a)(33)  Buy American Act Supply and Service contracts. 
(June 1977)
34. 352.280-4(a)(34)  Anti-Kickback Act. (June 1977)

[[Page 212]]

35. 352.280-4(a)(35)  Use of Indian Business Concerns. (June 1977)
36. 352.280-4(a)(36)  Payment of Interest on Contractors' Claims. (June 
1977)
37. 352.280-4(a)(37)  Fair and Equal Treatment of Indian People. (June 
1977)
38. 352.280-4(a)(38)  Price Reduction for Defective Cost or Pricing 
Data. (June 1977)
39. 352.280-4(a)(39)  Subcontractor Cost and Pricing Data. (June 1977)
40. 352.280-4(a)(40)  Penalties. (June 1977)
41. 352.280-4(a)(41)  Effect on Existing Rights. (June 1977)
42. 352.280-4(a)(42)  General Services Administration Supply Sources. 
(June 1977)

    (b) PHSAR Clauses for Fixed-Price Contracts Awarded under the Indian 
Self-Determination Act.

          Number, PHSAR Clause No. and Title and Date of Clause

1. 352.280-4(b)(1)  Definitions. (June 1977)
2. 352.280-4(b)(2)  Disputes. (June 1977)
3. 352.280-4(b)(3)  Contract Work Hours and Safety Standards Act-
Overtime Compensation. (June 1977)
4. 352.280-4(b)(4)  Walsh-Healey Public Contracts Act. (June 1977)
5. 352.280-4(b)(5)  Convict Labor. (June 1977)
6. 352.280-4(b)(6)  Notice to the Government of Delays. (June 1977)
7. 352.280-4(b)(7)  Assignment of Claims. (June 1977)
8. 352.280-4(b)(8)  Officials not to Benefit. (June 1977)
9. 352.280-4(b)(9)  Anti-Kickback Act. (June 1977)
10. 352.280-4(b)(10)  Penalties. (June 1977)
11. 352.280-4(b)(11)  Buy American Act. (June 1977)
12. 352.280-4(b)(12)  Equal Opportunity. (June 1977)
13. 352.280-4(b)(13)  Certificate of Nonsegregated Facilities. (June 
1977)
14. 352.280-4(b)(14)  Subcontracting. (June 1977)
15. 352.280-4(b)(15)  Competition in Subcontracting. (June 1977)
16. 352.280-4(b)(16)  Use of Indian Business Concerns. (June 1977)
17. 352.280-4(b)(17)  Indian Preference in Training and Employment. 
(June 1977)
18. 352.280-4(b)(18)  Inspection. (June 1977)
19. 352.280-4(b)(19)  Changes. (June 1977)
20. 352.280-4(b)(20)  Retrocession. (June 1977)
21. 352.280-4(b)(21)  Assumption and Reassumption of Contract Programs. 
(June 1977)
22. 352.280-4(b)(22)  Payment of Interest on Contractor's Claims. (June 
1977)
23. 352.280-4(b)(23)  Government-Furnished Property. (June 1977)
24. 352.280-4(b)(24)  Examination of Records by the Comptroller General. 
(June 1977)
25. 352.280-4(b)(25)  Indemnity and Insurance. (June 1977)
26. 352.280-4(b)(26)  Fair and Equal Treatment of Indian People. (June 
1977)
27. 352.280-4(b)(27)  Reports to the Indian People and Annual Reports. 
(June 1977)
28. 352.280-4(b)(28)  Questionnaires and Surveys. (June 1977)
29. 352.280-4(b)(29)  Printing. (June 1977)
30. 352.280-4(b)(30)  Price Reduction for Defective Cost or Pricing. 
(June 1977)
31. 352.280-4(b)(31)  Subcontractor Cost and Pricing Data. (June 1977)
32. 352.280-4(b)(32)  Advance Payment. (June 1977)
33. 352.280-4(b)(33)  Effect on Existing Rights. (June 1977)
34. 352.280-4(b)(34)  Federal, State, and Local Taxes. (June 1977)

[[Page 213]]



                   SUBCHAPTER T--PHS SUPPLEMENTATIONS





PART PHS 380--SPECIAL PROGRAM REQUIREMENTS AFFECTING PHS ACQUISITIONS--Table of Contents




        Subpart PHS 380.1--Acquisitions Involving Human Subjects

Sec.
PHS 380.101  Applicability.
PHS 380.102  Policy.
PHS 380.103  Assurances.
PHS 380.104  Notice to offerors.
PHS 380.105  Contract clause.

 Subpart PHS 380.2--Acquisitions Involving the Use of Laboratory Animals

PHS 380.201  Scope of subpart.
PHS 380.202  Definitions.
PHS 380.203  Policy.
PHS 380.204  Applicability.
PHS 380.205  Contractor implementation.
PHS 380.206  Public Health Service implementation.

      Subpart PHS 380.3--Acquisition of Drugs and Medical Supplies

PHS 380.301  Scope of subpart.
PHS 380.302  Acquisition of drugs.
PHS 380.302-1  Policy.
PHS 380.302-2  Solicitation and contract requirements.
PHS 380.303  Acquisition of controlled drugs.
PHS 380.304  Effectiveness of drug products.
PHS 380.304-1  General.
PHS 380.304-2  Policy.
PHS 380.304-3  Procedures.
PHS 380.304-4  Distribution of information.
PHS 380.305  Maximum allowable cost for drugs.
PHS 380.305-1  General.
PHS 380.305-2  Applicability.
PHS 380.305-3  Responsibilities.
PHS 380.305-4  Solicitation notification.
PHS 380.305-5  Contract requirements.
PHS 380.306  Acquisition of tax free and specially denatured alcohol.

  Subpart PHS 380.4--Contracts Under the Indian Self-Determination Act

PHS 380.400  Scope of subpart.
PHS 380.401  Applicability of regulations.
PHS 380.402  Waivers.
PHS 380.403  Negotiating authority.
PHS 380.404  Definitions.
PHS 380.405  Types of contracts.
PHS 380.406  Term of contract.
PHS 380.407  Exemption from bonds.
PHS 380.408  Acquisition of construction and architect-engineering 
          service contracts.
PHS 380.409  Performance of personal services.
PHS 380.410  Special provisions of Indian Self-Determination contracts.
PHS 380.411  General provisions.

        Subpart PHS 380.5--Acquisitions Under the Buy Indian Act

PHS 380.500  Scope of subpart.
PHS 380.501  Policy.
PHS 380.502  Definitions.
PHS 380.502-1  Indian.
PHS 380.502-2  Indian firm.
PHS 380.502-3  Product of Indian industry.
PHS 380.502-4  Buy Indian contract.
PHS 380.502-5  Buy Indian restricted advertising.
PHS 380.503  Requirements.
PHS 380.504  Competition.
PHS 380.505  Responsibility determinations.

    Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

    Source: 49 FR 36263, Sept. 14, 1984, unless otherwise noted.



        Subpart PHS 380.1--Acquisitions Involving Human Subjects

    Source: 51 FR 20491, June 5 1986, unless otherwise noted.



PHS 380.101  Applicability.

    This subpart applies to all research and development contracts 
involving human subjects except those that are exempt by Secretarial 
waiver under 45 CFR 46.101(e) or exempt under 45 CFR 46.101(b).



PHS 380.102  Policy.

    (a) Safeguarding the rights and welfare of human subjects in 
activities under Public Health Service (PHS) research and development 
contracts is the responsibility of each institution that receives or is 
accountable to PHS for funds awarded for the conduct of that activity. 
To assure that this institutional responsibility is met, PHS shall not 
permit a nonexempt research activity involving human subjects to be 
undertaken unless the institution has an assurance on file with the 
Office for Protection from Research Risks (OPRR), NIH/PHS, and has filed 
a certification that an institutional review board (IRB) has reviewed 
and approved

[[Page 214]]

the activity in accordance with 45 CFR Part 46.
    (b) Contracts involving human subjects will not be awarded to an 
individual unless he/she is affiliated with or sponsored by an 
institution which can and will assume responsibility for safeguarding 
the human subjects involved.



PHS 380.103  Assurances.

    In accordance with 45 CFR 46.103, OPRR is responsible for 
negotiation of assurances covering all PHS-supported research activities 
involving human subjects. Consultation with OPRR (telephone: 301-496-
7041) is recommended on issues regarding assurances, certification of 
IRB review and approval, and interpretation of the regulations for the 
protection of human subjects in 45 CFR Part 46.



PHS 380.104  Notice to offerors.

    Solicitations shall contain the notice to offerors set forth in PHS 
352-280-1(a) whenever contract performance is expected to involve human 
subjects.



PHS 380.105  Contract clause.

    The clause set forth in PHS 352.280-1(b) shall be inserted in all 
contracts involving human subjects.



 Subpart PHS 380.2--Acquisitions Involving the Use of Laboratory Animals

    Source: 51 FR 20492, June 5 1986, unless otherwise noted.



PHS 380.201  Scope of subpart.

    This subpart describes Public Health Service (PHS) contracts for 
projects or activities involving animals, and the responsibilities of 
the PHS agencies and subordinate elements for implementing policies and 
procedures described herein.



PHS 380.202  Definitions.

    (a) Animal. Any live, vertebrate animal used or intended for use in 
research, research training, experimentation or biological testing or 
for related purposes.
    (b) Animal facility. Any building, room, area, enclosure, or 
vehicle, including satellite facility, used for animal confinement, 
transport, maintenance, breeding or experiments of surgical 
manipulation. A satellite facility is any containment outside of a core 
facility or centrally designated or managed area in which animals are 
housed for more than 24 hours.
    (c) Animal Welfare Act. Pub. L. 89-544, 1966, as amended (Pub. L. 
91-579 and Pub. L. 94-279) 7 U.S.C. 2131 et seq. Implementing 
regulations are published in the Code of Federal Regulations (CFR), 
Title 9, Subchapter A, Parts 1, 2, 3, and 4, and are administered by the 
U.S. Department of Agriculture.
    (d) Animal Welfare Assurance or Assurance. The documentation from an 
awardee or a prospective awardee institution assuring institutional 
compliance with this policy.
    (e) Guide. Guide for the Care and Use of Laboratory Animals, NIH 
Pub. No. 85-23, 1985 edition or succeeding revised editions.
    (f) Institution. Any public or private organization, business, or 
agency (including components of Federal, State and local governments).
    (g) Institutional official. An individual who has the authority to 
sign the institution's Assurance, making a commitment on behalf of the 
institution that the requirement of this subpart will be met.
    (h) Public Health Service. The Public Health Service includes the 
Office of the Assistant Secretary for Health; the Alcohol, Drug Abuse, 
and Mental Health Administration; the Centers for Disease Control; the 
Food and Drug Administration; the Health Resources and Services 
Administration; and the National Institutes of Health.
    (i) Quorum. A majority of the members of the Institutional Animal 
Care and Use Committee.



PHS 380.203  Policy.

    It is the policy of PHS to require institutions to establish and 
maintain proper measures to ensure the appropriate care and use of all 
animals involved in research, research training and biological testing 
(hereinafter referred to as activities) supported by PHS. PHS endorses 
the ``U.S. Government Principles for the Utilization and Care of 
Vertebrate Animals Used in

[[Page 215]]

Testing, Research and Training'' developed by the Interagency Research 
Animal Committee (IRAC). This policy is intended to implement and 
supplement those Principles.



PHS 380.204  Applicability.

    (a) This policy is applicable to all PHS-supported activities 
involving animals, whether the activities are performed at an awardee 
institution, or any other institution, in the United States, the 
Commonwealth of Puerto Rico, or any territory or possession of the 
United States. Institutions in foreign countries receiving PHS support 
for activities involving animals shall comply with this policy, or 
provide evidence to PHS that acceptable standards for the humane care 
and use of the animals in PHS-supported activities will be met.
    (b) No PHS support for an activity involving animals will be 
provided to an individual unless that individual is affiliated with or 
sponsored by an institution which can and does assume responsibility for 
compliance with this policy for PHS-supported activities, or unless the 
individual makes other arrangements with PHS.
    (c) This policy does not supercede or preempt applicable State or 
local laws or regulations which impose more stringent standards for the 
care and use of laboratory animals. All institutions are required to 
comply, as applicable, with the Animal Welfare Act, and other Federal 
statutes and regulations relating to animals.



PHS 380.205  Contractor implementation.

    (a) Animal Welfare Assurance. No activity involving animals will be 
supported by PHS until the institution conducting the activity has 
provided a written Assurance acceptable to PHS, setting forth compliance 
with the policy in this subpart for PHS-supported activities. Assurances 
shall be submitted to OPRR, Office of the Director, National Institutes 
of Health, 9000 Rockville Pike, Building 31, Room 4B09, Bethesda, 
Maryland 20892. The Assurance shall be typed on the institution's 
letterhead and signed by an institutional official. OPRR will provide 
the applicant institution with necessary instructions and an example of 
an acceptable Assurance. All Assurances submitted to PHS in accordance 
with the policy will be evaluated by OPRR to determine the adequacy of 
the institution's proposed program for the care and use of animals in 
PHS-supported activities. On the basis of this evaluation, OPRR may 
approve or disapprove the Assurance, or negotiate an acceptable 
Assurance with the institution. Approval of an Assurance will be for a 
specified period of time (no longer than five years) after which time 
the institution must submit a new Assurance to OPRR. OPRR may limit the 
period during which any particular approved Assurance shall remain 
effective or otherwise condition, restrict, or withdraw approval. 
Without an applicable PHS approved Assurance, no PHS-supported activity 
involving animals at the institution will be permitted to continue.
    (1) Institutional program for animal care and use. The Assurance 
shall fully describe the institution's program for the care and use of 
animals in PHS-supported activities. PHS requires institutions to use 
the Guide for the Care and Use of Laboratory Animals (Guide) as a basis 
for developing and implementing an institutional program for activities 
involving animals. The program description must include the following:
    (i) A list of every branch and major component of the institution, 
as well as a list of every branch and major component of any institution 
which is to be included under the Assurance;
    (ii) The lines of authority and responsibility for administering the 
program and ensuring compliance with this policy;
    (iii) The qualifications, authority and responsibility of the 
veterinarian(s) who will participate in the program;
    (iv) The membership list of the Institutional Animal Care and Use 
Committee(s) (IACUC) \1\ established in accordance with the requirements 
set forth in this subpart;
---------------------------------------------------------------------------

    \1\ The name Institutional Animal Care and Use Committee (IACUC) as 
used in this policy is intended as a generic term for a committee whose 
function is to ensure that the care and use of animals in PHS-supported 
activities is appropriate and humane in accordance with this policy. 
However, each institution may identify the committee by whatever name it 
chooses. Membership and responsibilities of the IACUC are set forth in 
PHS 380.205(d).

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

[[Page 216]]

    (v) The procedures which the IACUC will follow to fulfill the 
requirements set forth in this subpart;
    (vi) The health program for personnel who work in laboratory animal 
facilities or have frequent contact with animals;
    (vii) The gross square footage of each animal facility (including 
satellite facilities), the species housed therein and the average daily 
inventory, by species, of animals in each facility; and
    (viii) Any other pertinent information requested by OPRR.
    (2) Institutional status. Each institution must assure that its 
program and facilities are in one of the following categories:
    (i) Category 1-- Accredited by the American Association for the 
Accreditation of Laboratory Animal Care (AAALAC). All of the 
institution's programs and facilities (including satellite facilities) 
for activities involving animals have been evaluated and accredited by 
AAALAC, or another accrediting body recognized by PHS.\2\
---------------------------------------------------------------------------

    \2\ As of the issuance date of this policy the only accrediting body 
recognized by PHS is the American Association for Accredidation of 
Laboratory Animal Care (AAALAC).
---------------------------------------------------------------------------

    (ii) Category 2-- Evaluated by the Institution. All of the 
institution's programs and facilities (including satellite facilities) 
for activities involving animals have been evaluated by the IACUC and 
will be reevaluated by the IACUC at least once each year. The IACUC 
shall use the Guide as a basis for evaluating the institution's program 
and facilities.

A report of the IACUC evaluation shall be submitted to the institutional 
official and updated on an annual basis.\3\ The initial report shall be 
submitted to OPRR with the Assurance. Annual reports of the IACUC 
evaluation shall be maintained by the institution and made available to 
OPRR upon request. The report must contain a description of the nature 
and extent of the institution's adherence to the Guide and this 
policy.\4\ The report must identify specifically any departures from 
provisions of the Guide and this policy, and state the reasons for each 
departure. If program or facility deficiencies are noted, the report 
must contain a reasonable and specific plan and schedule for correcting 
each deficiency. The report must distinguish significant deficiencies 
from minor deficiencies. A significant deficiency is one which, in the 
judgment of the IACUC and the institutional official, is or may be a 
threat to the health or safety of the animals. Failure of the IACUC to 
conduct an annual evaluation and submit the required report to the 
institutional official may result in PHS withdrawal of its approval of 
the Assurance.
---------------------------------------------------------------------------

    \3\ The IACUC may, at its discretion, determine the best means of 
conducting an evaluation of the institution's programs and facilities. 
The IACUC may invite ad hoc consultants to conduct or assist in 
conducting the evaluation. However, the IACUC remains responsible for 
the evaluation and report.
    \4\ If some of the institution's facilities are accredited by AAALAC 
or other accrediting body recognized by PHS, the report should identify 
those facilities and need not contain any further information about 
evaulation of those facilities.
---------------------------------------------------------------------------

    (3) Institutional Animal Care and Use Committee (IACUC). (i) Each 
institution shall appoint an Institutional Animal Care and Use Committee 
(IACUC), qualified through experience and expertise of its members, to 
oversee the institution's animal program, facilities and procedures.
    (ii) The Assurance must include the names, position titles and 
credentials of the IACUC chairperson and the members. The committee 
shall consist of not less than five members, and shall include at least:
    (A) One Doctor of Veterinary Medicine, with training or experience 
in laboratory animal science and medicine, who has direct or delegated 
program responsibility for activities involving animals at the 
institution;
    (B) One practicing scientist experienced in research involving 
animals;
    (C) One member whose primary concerns are in a nonscientific area 
(for example, ethicist, lawyer, member of the clergy); and
    (D) One individual who is not affiliated with the institution in any 
way

[[Page 217]]

other than as a member of the IACUC, and is not a member of the 
immediate family of a person who is affiliated with the institution.
    (iii) An individual who meets the requirements of more than one of 
the categories detailed in PHS 380.205(d)(2)(i)-(iv) above, may fulfill 
more than one requirement. However, no committee may consist of less 
than five members.
    (b) Functions of the Institutional Animal Care and Use Committee. As 
an agent of the institution, the IACUC shall, will respect to PHS-
supported activities:
    (1) Review at least annually the institution's program for humane 
care and use of animals;
    (2) Inspect at least annually all of the institution's animal 
facilities, including satellite facilities;
    (3) Review concerns involving the care and use of animals at the 
institution;
    (4) Make recommendations to the institutional official regarding any 
aspect of the institution's animal program, facilities or personnel 
training;
    (5) Review and approve, require modifications in (to secure 
approval), or withhold approval of those sections of PHS applications or 
proposals related to the care and use of animals, as specified in PHS 
380.205(f) of this subpart;
    (6) Review and approve, require modifications in (to secure 
approval), or withhold approval of proposed significant changes 
regarding the use of animals in ongoing activities; and
    (7) Be authorized to suspend an activity involving animals in accord 
with specifications set forth in this subpart.
    (c) Review of applications and proposals. In order to approve 
applications and proposals or proposed changes in ongoing activities, 
the IACUC shall conduct a review of those sections related to the care 
and use of animals and determine that the proposed activities are in 
accordance with this policy. In making this determination, the IACUC 
shall confirm that the activity will be conducted in accordance with the 
Animal Welfare Act insofar as it applies to the activity, and that the 
activity is consistent with the Guide, unless the IACUC determines that 
acceptable justification for a departure is presented. Furthermore, the 
IACUC shall determine that the activity conforms with the institution's 
Assurance and meets the following requirements:
    (1) Procedures with animals will avoid or minimize discomfort, 
distress and pain to the animals, consistent with sound research design.
    (2) Procedures that may cause more than momentary or slight pain or 
distress to the animals will be performed with appropriate sedation, 
analgesia, or anesthesia, unless the procedure is justified for 
scientific reasons in writing by the investigator.
    (3) Animals that would otherwise experience severe or chronic pain 
or distress that cannot be relieved will be painlessly sacrificed at the 
end of the procedure or, if appropriate, during the procedure.
    (4) The living conditions of animals will be appropriate for their 
species and contribute to their health and comfort. The housing, feeding 
and nonmedical care of the animals will be directed by a veterinarian or 
a scientist trained and experienced in the proper care, handling and use 
of the species being maintained or studied.
    (5) Medical care for animals will be available and provided as 
necessary by a qualified veterinarian.
    (6) Personnel conducting procedures on the species being maintained 
or studies will be appropriately qualified and trained in those 
procedures.
    (7) Methods of euthanasia used will be consistent with the 
recommendations of the American Veterinary Medical Association (AVMA) 
Panel of Euthanasia \5\, unless a deviation is justified for scientific 
reasons in writing by the investigator.
---------------------------------------------------------------------------

    \5\ Journal of the American Veterinary Association (JAVMA), 1978, 
Vol. 143, No. 1, pp. 59-72, or succeeding revised editions.
---------------------------------------------------------------------------



PHS 380.206  Public Health Service implementation.

    (a) Responsibility of the Office for Protection from Research Risks 
(OPRR). OPRR is responsible for the general administration and 
coordination of this policy and will:
    (1) Request and negotiate, approve or disapprove, and, as necessary, 
withdraw approval of Assurances;

[[Page 218]]

    (2) Distribute to executive secretaries of initial review and 
technical evaluation groups, and to PHS contracting offices, lists of 
institutions that have an approved Assurance;
    (3) Advise contracting offices and awardee institutions concerning 
the implementation of this policy;
    (4) Evaluate allegations of noncompliance with this subpart;
    (5) Have the authority to review and approve or disapprove waivers 
of this subpart (see paragraph (d) of this section); and
    (6) With other PHS officials, conduct site visits to selected 
institutions.
    (b) Responsibilities of PHS contracting offices. PHS contracting 
offices shall not make an award for an activity involving animals unless 
the institution submitting the application or proposal is on the list of 
institutions that have an approved Assurance of file with OPRR, and the 
institutional official has provided verification of approval by the 
IACUC of those sections of the application or proposal related to the 
care and use of animals. If an institution is not listed, the 
contracting office shall ask OPRR to negotiate an Assurance with the 
institution before an award is made. No award shall be made until the 
Assurance has been submitted by the institution, approved by OPRR, and 
the institution has provided verification of approval by the IACUC of 
those sections of the application or proposal related to the care and 
use of animals in PHS-supported activities.
    (c) Conduct of special reviews/site visits. Each awardee institution 
is subject to review at any time by PHS staff and advisors, which may 
include a site visit, to assess the adequacy of the institution's 
compliance with this policy.
    (d) Waiver. Institutions may request a waiver of a provision of this 
policy by submitting a request to OPRR. No waiver will be granted unless 
sufficient justification is provided, and the waiver is approved in 
writing by OPRR.



      Subpart PHS 380.3--Acquisition of Drugs and Medical Supplies



PHS 380.301  Scope of subpart.

    This subpart provides policies and procedures pertaining to the 
acquisition of drug products and medical supplies by PHS or PHS's 
contractors.



PHS 380.302  Acquisition of drugs.



PHS 380.302-1  Policy.

    (a) Drugs shall be acquired at the lowest possible price consistent 
with acceptable standards of identity, strength, quality, purity, safety 
and effectiveness, and with due regard for the welfare of the patient 
and the professional judgment of the prescriber.
    (b) Contracting activities shall ensure that drugs are acquired by 
generic name on a competitive basis whenever it is possible to obtain 
therapeutically effective drugs of established quality. However, the 
professional judgment of the prescriber to request drugs by brand name 
or house designation must be recognized when the best interest of the 
patient requires it. Similarly, scientific investigators have the 
prerogative to request drugs having end-product characteristics 
considered necessary for the conduct of research or investigations.
    (c) Prior to taking any acquisition action, the contracting officer 
shall ensure that the requested drug products are not available from 
mandatory sources such as Federal Supply Schedules. Part 103-26 of the 
HHS Material Management Manual describes sources of supply for drugs.



PHS 380.302-2  Solicitation and contract requirements.

    The contracting officer should consider including statements similar 
to the following in solicitations and resultant contracts pertaining to 
drug products:
    (a) The offeror (contractor) guarantees that all requirements 
established by the Food and Drug Administration, HHS, have been met. 
These requirements include: plant sanitation, manufacturing, packaging, 
labeling, identification, strength, quality, purity, safety, and 
effectiveness.

    Note: The contracting officer may want to cite the applicable 
reference(s) pertaining to the FDA requirements.


[[Page 219]]


    (b) The offeror (contractor), by signing this document, guarantees/
warrants that any applicable shelf-life requirements have been met and 
the furnished drugs are free from defects.
    (c) The Government reserves the right to inspect the manufacturer's 
plant and premises during normal operating hours.

    Note: FDA will normally conduct the inspection when requested, but 
may request to be reimbursed for the services.

    (d) The offeror (contractor) agrees to submit either a 
comprehensive, certified analysis on each lot of drugs at the time of 
delivery of the drugs, or a comprehensive list of specifications met by 
the drugs along with a certificate of analysis, or other suitable 
documentation, verifying that the drugs meet the appropriate standards.
    (e) The offeror (contractor) claims it is not currently listed as a 
disqualified bidder or offeror for drugs by any Federal agency or 
department.
    (f) The offeror must set forth full, accurate, and complete 
information as required by this solicitation (including attachments). 
The penalty for making false statements in offers is prescribed in 18 
U.S.C. 1001.
    (g) If the offeror (prime contractor) plans to use (or uses) a 
subcontractor or secondary manufacturer for the furnishing of any or all 
the drug products under the resultant contract, the name and address of 
the subcontractor or secondary manufacturer is to be furnished the 
contracting officer, along with the drug lots affected. The prime 
contractor shall ensure that the subcontractor or secondary manufacturer 
complies with the above stated requirements.



PHS 380.303  Acquisition of controlled drugs.

    (a) Controlled drugs include narcotics and dangerous drugs 
identified by the Drug Enforcement Administration (DEA), Department of 
Justice, in the regulations implementing the Comprehensive Drug Abuse 
Prevention and Control Act of 1970 (Title 21 CFR Chapter II).
    (b) The DEA issues a Controlled Substances Inventory List which 
provides general information pertaining to the ordering of controlled 
drug products and the use of specific order forms. The local DEA 
regional office should be contacted to receive the list and instructions 
regarding registering and ordering forms, as well as other matters 
concerning the handling and processing of controlled drugs. Sections 
103-27.6204(a)(2) and 103-27.6302(b) of the HHS Material Management 
Manual provide information on issuing, shipping, and safeguarding 
controlled drugs.
    (c) Contracting officers shall ensure that requests for contracts or 
purchase requests are supported by the required DEA form prior to 
initiation of any action.



PHS 380.304  Effectiveness of drug products.



PHS 380.304-1  General.

    (a) The National Academy of Sciences National Research Council (NAS-
NRC) has established effectiveness classifications for the indication of 
drug products, based upon the following criteria:
    (1) Factual information that is freely available in scientific 
literature;
    (2) Factual information that is available from the Food and Drug 
Administration, the manufacturer, or other sources; and
    (3) Experience and informed judgment of the members of NAS-NRC 
panels.
    (b) The indications mentioned in the following categories refer to 
``the effect the drug purports or is represented to have under the 
conditions of use prescribed, recommended, or suggested in the proposed 
labeling.'' That is, the indications are the claims noted in the 
labeling of a given drug product.
    (1) Category A--Effective. For the presented indication, the drug is 
effective on the basis of the criteria cited in PHS 380.304-1(a) above.
    (2) Category B--Probably Effective. For the indication presented, 
effectiveness of the drug is probable on the basis of the criteria cited 
in PHS 380.304-1(a) but additional evidence is required before it can be 
assigned to Category A.
    (3) Category C--Possibly Effective. In relation to the indication in 
question, there is little evidence of effectiveness under any of the 
criteria cited in PHS

[[Page 220]]

380.304-1(a). The possibility that additional supporting evidence might 
be developed should not be ruled out, however.
    (4) Category D--Ineffective. In relation to the indication in 
question, there is no acceptable evidence under any of the criteria 
cited in PHS 380.304-1(a) to support a claim of effectiveness.



PHS 380.304-2  Policy.

    (a) It is PHS policy to not acquire drug products classified 
``ineffective'' or ``possibly effective'' for use in its direct care 
programs. However, there are two exceptions to this policy:
    (1) Drug products categorized as ``ineffective'' and ``possibly 
effective'' may be acquired for use in the pursuit of approved clinical 
research products.
    (2) Drug products categorized as ``possibly effective'' may be 
acquired when no alternate means of therapy with drug products in the 
``probably effective'' or ``effective'' categories are available.
    (b) This policy applies to similar drug products marketed by the 
same or other firms.



PHS 380.304-3  Procedures.

    (a) The contracting officer, prior to initiating action on a 
purchase request or request for contract for drug products, shall ensure 
that the items are screened against current lists of products identified 
by the Pharmacy Liaison Officer, Public Health Service, to determine 
whether acquisition of the items is prohibited, and that the individual 
actually performing the screening has annotated and initialed the 
request.
    (b) When the request is received for a drug product which is 
allowable under the exceptions stated in PHS 380.304-2, the contracting 
officer shall ensure that the appropriate justification is provided, 
that it is signed by the responsible program official, and that it is 
included in the contract or purchase request file.
    (c) When the request for a restricted drug product cannot be 
resolved by the substitution of another item, the contracting officer 
shall consider the request as a deviation and process it in accordance 
with Subpart 301.4.



PHS 380.304-4  Distribution of information.

    (a) The Pharmacy Liaison Officer, Public Health Service, has 
responsibility for distributing information on the effectiveness of drug 
products to the principal official responsible for acquisition. The 
principal official responsible for acquisition will be advised by 
telephone of drug products classified as ``ineffective'' or ``possibly 
effective'' prior to publication in the Federal Register, and will be 
provided a monthly list of these drug products following publication in 
the Federal Register.
    (b) The principal official responsible for acquisition shall 
establish procedures for the distribution of information on the 
effectiveness of drug products and implement other controls necessary to 
assure compliance with the policy set forth in PHS 380.304-2.



PHS 380.305  Maximum allowable cost for drugs.



PHS 380.305-1  General.

    (a) The regulation entitled ``Limitation on Payment or Reimbursement 
for Drugs,'' also known as the Maximum Allowable Cost or MAC regulation, 
is set forth in Part 19 to Subtitle A of Title 45 of the Code of Federal 
Regulations.
    (b) The MAC regulation established departmental policies and 
procedures for determining allowable drug costs and, where applicable, 
dispensing fees to be used to establish:
    (1) Reimbursement to providers and health maintenance organizations 
under the Medicare program;
    (2) Reimbursement to States under State administered health, 
welfare, and social service programs; and
    (3) Allowable costs under projects for health services.



PHS 380.305-2  Applicability.

    (a) This regulation implements the MAC regulation by establishing 
acquisition procedures consistent with the purpose and intent of the MAC 
regulation.
    (b) This regulation applies to the direct acquistion of drugs by PHS 
and the acquisition or supply of drugs by PHS contractors.

[[Page 221]]

    (c) This regulation does not apply to the acquisition of drugs for 
research programs made by PHS and its contractors.



PHS 380.305-3  Responsibilities.

    (a) The program office which initiates the requirement is 
responsible for advising the contracting office as to the applicability 
of the MAC regulation to the proposed acquisition.
    (b) The Pharmacy Liaison Officer, PHS, is responsible for 
distributing to the principal official responsible for acquisition of 
the MAC determination or data concerning the acquisition cost of drugs. 
The MAC determination should be furnished within thirty days after 
publication as a final rule in the Federal Register. Acquisition cost 
data should be furnished within thirty days after the effective date.
    (c) The principal official responsible for acquisition shall 
establish procedures for disseminating MAC determinations and 
acquisition cost data and may initiate other actions necessary to ensure 
compliance with the requirements of this regulation.



PHS 380.305-4  Solicitation notification.

    (a) The contracting officer shall ensure that all requests for 
proposals and invitations for bids which are subject to the provisions 
of the MAC regulation contain a notice worded substantially as follows:

    This acquisition is subject to the Maximum Allowable Cost (MAC) 
regulation set forth in part 19 to subtitle A of title 45 of the Code of 
Federal Regulations.

    (b) The contracting officer shall include the applicable MAC 
determination or acquisition cost data in the RFP or IFB.
    (c) The referenced solicitation notice, or a notice worded similarly 
to it, is required to be included in all applicable solicitations issued 
by the contractor or its subcontractors.



PHS 380.305-5  Contract requirements.

    (a) The contracting officer shall include a clause entitled 
``Maximum Allowable Cost for Drugs,'' reading substantially as the 
clause cited in PHS 352.280-3, in all contracts subject to the 
provisions of the MAC regulation.
    (b) The contracting officer shall incorporate in all contracts 
subject to the provisions of the MAC regulation the applicable MAC 
determination or acquisition cost data furnished in the solicitation.
    (c) The clause cited in PHS 352.280-3, or a clause worded 
substantially as that cluase, is required to be included in all 
applicable contracts awarded by the contractor or its subcontractors.



PHS 380.306  Acquisition of tax free and specially denatured alcohol.

    (a) All orders for tax free and specially denatured alcohol shall be 
placed with the HRSA Supply Service Center, Perry Point, MD. Orders 
shall be placed in accordance with the ordering instructions contained 
in the HRSA Medical Supply Catalog.



  Subpart PHS 380.4--Contracts Under the Indian Self-Determination Act



PHS 380.400  Scope of subpart.

    This subpart prescribes procedures for contracting by the Public 
Health Service (PHS) under the Indian Self-Determination Act (25 U.S.C. 
450f).



PHS 380.401  Applicability of regulations.

    Contracts with tribal organizations resulting from the submission of 
Indian Self-Determination Contract Proposals as authorized in Public Law 
93-638 shall be in accordance with 41 CFR Chapters 1 and 3, except as 
otherwise provided herein. If this subpart conflicts with any of the 
other provisions of 41 CFR Chapters 1 or 3, the provisions of this 
subpart govern.



PHS 380.402  Waivers.

    (a) The Secretary of Health and Human Services (HHS) waives Federal 
contract clauses that are normally contained in the General provisions 
of a contract to the extent that they are omitted from the General 
provisions prescribed for such contracts in this subpart.
    (b) The Secretary may waive for the purpose of a specific contract 
other provisions of Federal contracting laws

[[Page 222]]

or regulations as determined not appropriate in view of, or are 
inconsistent with, the provisions of the Indian Self-Determination and 
Education Assistance Act (25 U.S.C. 450 et seq.). Requests for such 
waivers shall be in accordance with 42 CFR 36.216.
    (c) Although it is PHS's policy to obtain competition whenever 
possible, any contract award to a tribal organization resulting from the 
submission of an Indian Self-Determination Contract Proposal will be 
effected without competition.
    (d) Proposed contracts under section 103 of the Indian Self-
Determination Act are exempted from the synopsis requirements of 41 CFR 
1-1.1003. Although subcontracts are subject under section 7(b) of that 
act to a preference to Indian organizations and to Indian-owned economic 
enterprises, opportunities to so subcontract may be publicized by 
contracting officers as provided for in 41 CFR 1-1.1003-4.



PHS 380.403  Negotiating authority.

    Contracts entered into pursuant to section 103 of the Indian Self-
Determination Act (25 U.S.C. 450g) will cite as the negotiating 
authority 41 U.S.C. 252(c)(15) and 25 U.S.C. 450g.



PHS 380.404  Definitions.

    The definitions prescribed in 42 CFR 36.204 are applicable to this 
supbart.



PHS 380.405  Types of contracts.

    (a) Cost-reimbursement contracts will be used for all contracts made 
pursuant to this subpart between PHS and an Indian tribe or tribal 
organization. In addition to other provisions as the Secretary may from 
time to time require, the cost-reimbursement contracts shall contain the 
terms set out in PHS 352.280-4(a).
    (b) Fixed-price contracts may be used in only these instances where 
costs can be precisely established. In addition to other provisions as 
the Secretary may from time to time require, the fixed-price contracts 
shall contain the terms set out in PHS 352.280-4(b).
    (c) Cost sharing contracts may be used where the tribe contributes 
to the cost of a program and may specify a percentage of cost or fixed 
amount to be funded by the Government.



PHS 380.406  Term of contract.

    (a) The term of contracts awarded under the Act shall not exceed one 
year except that contracts may be made for a longer term up to three 
years subject to the availability of appropriations under the following 
circumstances:
    (1) The services provided under the contract can reasonably be 
expected to be continuing in nature and, as a result, a longer contract 
term would be advantageous.
    (2) The Indian tribe or tribes to be served by the contract request 
that the term be more than one year. The tribal organizational will 
indicate the desired term of the contract in the Self-Determination 
Contract Proposal.
    (b) Contract made for a term of more than one year may be 
renegotiated annually to reflect factors which include, but need not be 
limited to, cost increases beyond the control of the tribal contractor. 
Proposed changes in the services provided under the contract which 
reflect changes in program emphasis may be considered during the annual 
renegotiation if the changes fall within the general scope of the 
contract.



PHS 380.407  Exemption from bonds.

    A tribal organization is not required to furnish performance and 
payment bonds before carrying out a contract under this subpart for the 
construction of public buildings or works as required by the Miller Act 
of August 24, 1935 (49 Stat. 793), as amended. However, the tribal 
organization shall require each of its subcontractors other than tribal 
organizations, to furnish both performance and payment bonds as follows:
    (a) A performance bond with a surety or sureties satisfactory to the 
approving official, and in an amount he/she deems adequate, for the 
protection of the United States.
    (b) A payment bond with a surety or sureties satisfactory to the 
approving official for the protection of all persons supplying labor and 
material in the prosecution of the work provided for in the contract. 
Whenever the total amount payable by the terms of the contract is not 
more than $1,000,000, the payment bond shall be one-half the total 
amount payable by the terms of the contract. Whenever the total

[[Page 223]]

amount payable by the terms of the contract is more than $1,000,000 but 
not more than $5,000,000, the payment bond shall be 40 percent of the 
total amount payable by the terms of the contract. Whenever the total 
amount payable by the terms of the contract is more than $5,000,000, the 
payment bond shall be $2,500,000.



PHS 380.408  Acquisition of construction and architect-engineering service contracts.

    (a) This section sets forth procedures and requirements peculiar to 
construction and architect-engineering service contracts. The terms and 
conditions of these contracts when negotiated with an Indian tribe or 
tribal organization pursuant to the Act shall, to the extent applicable, 
be in accordance with the requirements set forth in 41 CFR Part 1-18 and 
Subpart 1-4.10. However, if there is a conflict between 41 CFR Part 1-18 
and Subpart 1-4.10, and any provision of the Act or 42 CFR Part 36, the 
Act or 42 CFR Part 36 shall govern. In addition these contracts shall 
include the special provisions identified in PHS 380.410.
    (b) Exceptions. (1) Subpart 1-18.10 of this title is not applicable.
    (2) The contract clauses required by 1-18.703-1 of this title shall 
be inserted in construction contracts with an Indian tribe or tribal 
organization which serves as a governmental instrumentality of an Indian 
tribe, but shall be prefaced by the provision contained in 1-18.702-3 of 
this title.
    (3) In all cases, the contracting officer shall obtain and insert 
the Wage Determination Decision issued by the Secretary of Labor in the 
contract prior to award of any contract for construction that falls 
within the purview of the Davis-Bacon Act. The Wage Determination 
Decision should be furnished sufficiently in advance of the contract 
award date to permit full consideration by the tribal organization and 
any prospective subcontractors.



PHS 380.409  Performance of personal services.

    Any contract made under this subpart may include provisions for the 
performance of personal services which would otherwise be performed by 
Federal employees. Such services include, but are not limited to, 
performing the following functions in connection with the contract and 
applicable rules and regulations:
    (a) Determining the eligibility of applicants for assistance, 
benefits, or services.
    (b) Determining the extent or amount of assistance, benefits, or 
services to be provided.
    (c) Providing such assistance, benefits, or services.



PHS 380.410  Special provisions of Indian Self-Determination contracts.

    Contracts entered into pursuant to Section 103 of the Indian Self-
Determination Act must incorporate special clauses which are consistent 
with those prescribed in Subpart I of Part 36 of 42 CFR on the following 
subjects:
    (a) Fair and equal treatment of Indian people.
    (b) Use of Indian business concerns.
    (c) Indian preference in training and employment.
    (d) Indemnity and insurance.
    (e) Reports to the Indian people.
    (f) Penalties.
    (g) Retrocession.
    (h) Assumption and reassumption of contract programs.



PHS 380.411  General provisions.

    General provisions are published in these regulations (see PHS 
352.280-4 for text of clauses) in order to respond to the expressed 
desire of the Indian people, to have published in one place, all of the 
terms and conditions applicable to contracts awarded under the Act. 
These general provisions incorporate the special clauses whose titles 
are listed in PHS 380.410, above, as well as applicable standard 
contract clauses.



        Subpart PHS 380.5--Acquisitions Under the Buy Indian Act



PHS 380.500  Scope of subpart.

    This subpart sets forth the policy on preferential acquisition from 
Indians under the negotiation authority of the Bay Indian Act. 
Applicability of this subpart is limited to acquisitions made by or on 
behalf of the Indian Health Service of the Public Health Service.

[[Page 224]]



PHS 380.501  Policy.

    (a) The Indian Health Service will utilize the negotiation authority 
of the Buy Indian Act to give preference to Indians whenever the use of 
that authority is authorized and is practicable. The Buy Indian Act was 
enacted as a proviso to Section 23 of the Act of June 25, 1910, Chapter 
431, Pub. L. 313, 61st Congress, 36 Stat. 861,and prescribes the 
application of the advertising requirements of section 3709 of the 
Revised Statutes to the acquisition of Indian supplies. As set out in 25 
U.S.C. 47, the Buy Indian Act provides as follows:

    So far as may be practicable Indian labor shall be employed, and 
purchases of the products of Indian industry may be made in open market 
in the discretion of the Secretary of the Interior.

    (b) The functions, responsibilities, authorities, and duties of the 
Secretary of the Interior for maintenance and operation of hospital and 
health facilities for Indians and for the conservation of the health of 
Indians were transferred to the Secretary of Health, Education, and 
Welfare, on July 1, 1955 by Pub. L. 568, 83rd Congress, 42 U.S.C. 2001 
et seq. Accordingly, the Secretary of Health and Human Services is 
authorized to use the Buy Indian Act in the acquisition of products of 
Indian industry in connection with the maintenance and operation of 
hospital and health facilities for Indians and for the conservation of 
the health of Indians. This authority has been delegated exclusively to 
the Indian Health Service and is not available for use by any other HHS 
component (unless that component is making an acquisition on behalf of 
the Indian Health Service).
    (c) Use of the Buy Indian Act negotiation authority has been 
emphasized in subsequent legislation, particularly Pub. L. 94-437 and 
Pub. L. 96-537.



PHS 380.502  Definitions.



PHS 380.502-1  Indian.

    Indian means a member of any tribe, pueblo, band, group, village or 
community that is recognized by the Secretary of the Interior as being 
Indian or any individual or group of individuals that is recognized by 
the Secretary of the Interior or the Secretary of Health and Human 
Services. The Secretary of Health and Human Services in making such 
determinations may take into account the determination of the tribe with 
which affiliation is claimed.



PHS 380.502-2  Indian firm.

    Indian firm means a sole enterprise, partnership, corporation, or 
other type of business organization owned, controlled, and operated by 
one or more Indians (including, for the purpose of sections 301 and 302 
of Pub. L. 94-437, former or currently federally recognized Indian 
tribes in the State of New York) or by an Indian firm; or a nonprofit 
firm organized for the benefit of Indians and controlled by Indians (see 
PHS 380.503(a)).



PHS 380.502-3  Product of Indian industry.

    Product of Indian industry means anything produced by Indians 
through physical labor or by intellectual effort involving the use and 
application of skills by them.



PHS 380.502-4  Buy Indian contract.

    Buy Indian contract means any contract involving activities covered 
by the Buy Indian Act that is negotiated under the provisions of 41 
U.S.C. 252(c)(15) and 25 U.S.C. 47 between an Indian firm and a 
contracting officer representing the Indian Health Service.



PHS 380.502-5  Buy Indian restricted advertising.

    Buy Indian restricted advertising is a special method of negotiated 
acquisition conducted in the same manner as a formally advertised 
acquisition, except that competition and award are restricted to Indian 
firms (see FAR 19.101). Thus, a Buy Indian acquisition may be considered 
an acquisition set-aside for Indian firms in the manner that some 
acquisitions are set-aside for small business concerns (see FAR 19.101). 
Set-aside acquisitions are, technically, negotiated acquisitions but 
should be conducted as if they were formally advertised acquisitions in 
instances where the formal advertising method would be used if the set-
aside was not in effect.

[[Page 225]]



PHS 380.503  Requirements.

    (a) Indian ownership. The degree of ownership that is called for by 
PHS 380.502-2 shall be 100 percent during the period covered by a Buy 
Indian contract unless a deviation from that 100 percent requirement is 
approved on an individual basis by the cognizant Area or Program Office 
Director of the Indian Health Service. Such a deviation, which may be to 
not less than 51 percent, must be accompanied by an appropriate 
justification for the deviation.
    (b) Joint ventures. An Indian firm may enter into a joint venture 
with other entities for specific projects as long as the Indian firm is 
the managing partner. However, the joint venture must be approved by the 
contracting officer prior to the award of a contract under the Buy 
Indian Act.
    (c) Bonds. In the case of contracts for the construction, 
alteration, or repair of public buildings or pubic works, performance 
and payment bonds are required by the Miller Act (40 U.S.C. 270a) and 
Part 28 of the Federal Acquisition Regulation (48 CFR Ch. 1). In the 
case of contracts with Indian tribes or public nonprofit organizations 
serving as governmental instrumentalities of an Indian tribe, bonds are 
not required. However, bonds are required when dealing with private 
business entities which are owned by an Indian tribe or members of an 
Indian tribe. Bonds may be required of private business entities which 
are joint ventures with, or subcontractors of, an Indian tribe or a 
public nonprofit organization serving as a governmental instrumentality 
of an Indian tribe. A bid guarantee or bid bond is required only when a 
performance or payment bond is required.
    (d) Indian preference in employment, training and subcontracting. 
Contracts awarded under the Buy Indian Act are subject to the 
requirements of section 7(b) of the Indian Self-Determination and 
Education Assistance Act (Pub. L. 93-638), which requires that 
preference be given to Indians in employment, training, and 
subcontracting. Subpart 370.2 and the contract clauses in 352.270-2 and 
352.270-3 represent the Department's implementation of section 7(b). The 
Indian Preference clause set forth in 352.270-2 shall be included in all 
Buy Indian solicitations and resultant contracts. The Indian Preference 
Program clause set forth in 352.270-3 shall be used as specified in 
370.202(b). All requirements set forth in Subpart 370.2 which are 
applicable to the instant Buy Indian acquisition shall be followed by 
the contracting officer, e.g., sections 370.204 and 370.205.
    (e) Subcontracting. Not more than 50 percent of the work to be 
performed under a prime contract awarded pursuant to the Buy Indian Act 
shall be subcontracted to other than Indian firms. For this purpose, 
work to be performed does not include the provision of materials, 
supplies, or equipment.
    (f) Wage rates. A determination of the minimum wage rates by the 
Secretary of Labor as required by the Davis-Bacon Act (40 U.S.C. 276a-5) 
shall be included in all contracts awarded under the Buy Indian Act for 
over $2,000 for construction, alteration, or repair, including painting 
and decorating, of public buildings and public works, except contracts 
with Indian tribes or public nonprofit organizations serving as 
governmental instrumentalities of an Indian tribe. The wage rate 
determination is to be included in contracts with private business 
entities even if they are owned by an Indian tribe or members of an 
Indian tribe and in connection with joint ventures with, or 
subcontractors of, an Indian tribe or a public nonprofit organization 
serving as a governmental instrumentality of an Indian tribe.



PHS 380.504  Competition.

    (a) Contracts to be awarded under the Buy Indian Act shall be 
subject to competition among Indians or Indian concerns to the maximum 
extent that competition is determined by the contracting officer to be 
practicable, pursuant to FAR 14.101 and FAR 15.105. When competition is 
determined not to be practicable, a Justification for Noncompetitive 
Acquisition shall be prepared in accordance with 315.7105 and 
subsequently retained in the contract file.
    (b) Notwithstanding the provisions of Subpart 315.71, a request for 
approval of noncompetitive acquisitions to be negotiated under the Buy 
Indian Act may, if $25,000 or less, be approved by

[[Page 226]]

the chief of the contracting office,or, if over $25,000, by the 
cognizant Area or Program Office Director. Approval shall be in the form 
of a Justification for Noncompetitive Acquisition.
    (c) Solicitations must be synopsized and publicized in the Commerce 
Business Daily (see FAR 5.2 and Subpart 305.2) and copies of the 
synopses sent to the tribal office of the Indian tribal government 
directly concerned with the proposed acquisition as well as to Indian 
concerns and others having a legitimate interest. The synopsis should 
state that the acquisition is restricted to Indian firms under the Buy 
Indian Act.



PHS 380.505  Responsibility determinations.

    (a) A contract may be awarded under the Buy Indian Act only if it is 
first determined that the project or function to be contracted for is 
likely to be satisfactorily performed under such a contract and that the 
project or function is likely to be properly completed or maintained 
under that contract.
    (b) The determination called for by paragraph (a), to be made prior 
to the award of a contract, will be made in writing by the contracting 
officer reflecting an analysis of the standards set forth in FAR 9.104-
1, 309.104-1 of this chapter and PHS 380.502-2.

[[Page 227]]



                  CHAPTER 4--DEPARTMENT OF AGRICULTURE




                           (Parts 400 to 499)

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

                          SUBCHAPTER A--GENERAL
Part                                                                Page
401             Agriculture Acquisition Regulation System...         229
402             Definitions of words and terms..............         233
403             Improper business practices and personal 
                    conflicts of interest...................         234
404             Administrative matters......................         236
           SUBCHAPTER B--COMPETITION AND ACQUISITION PLANNING
405             Publicizing contract actions................         238
406             Competition requirements....................         238
407             Acquisition planning........................         239
408             Required sources of supplies and services...         240
409             Contractor qualifications...................         242
410             [Reserved]

411             Describing agency needs.....................         244
412             Acquisition of commercial items.............         245
          SUBCHAPTER C--CONTRACTING METHODS AND CONTRACT TYPES
413             Simplified acquisition procedures (Eff. 10-
                    22-99)..................................         246
414             Sealed bidding..............................         246
415             Contracting by negotiation (Eff. 11-29-99)..         247
416             Types of contracts..........................         253
417             Special contracting methods.................         253
418             [Reserved]

                  SUBCHAPTER D--SOCIOECONOMIC PROGRAMS
419             Small business programs.....................         254
420-421         [Reserved]

422             Application of labor laws to Government 
                    acquisitions............................         255
423             Environment, conservation, occupational 
                    safety, and drug-free workplace.........         257
424             Protection of privacy and freedom of 
                    information.............................         260
425             Foreign acquisition.........................         260

[[Page 228]]

426             Other socioeconomic programs................         262
             SUBCHAPTER E--GENERAL CONTRACTING REQUIREMENTS
427             Patents, data, and copyrights...............         264
428             Bonds and insurance.........................         264
429             [Reserved]

430             Cost Accounting Standards Administration....         265
431             Contract cost principles and procedures.....         266
432             Contract financing..........................         266
433             Protests, disputes and appeals..............         270
             SUBCHAPTER F--SPECIAL CATEGORIES OF CONTRACTING
434             Major system acquisition....................         272
435             Research and development contracting........         273
436             Construction and architect-engineer 
                    contracts...............................         273
437             Service contracting.........................         276
438-440         [Reserved]

441             Acquisition of utility services.............         277
                    SUBCHAPTER G--CONTRACT MANAGEMENT
442             Contract administration.....................         279
443-444         [Reserved]

445             Government property.........................         279
446             Quality assurance...........................         280
447             Transportation..............................         280
448             [Reserved]

449             Termination of contracts....................         281
450             Extraordinary contractual actions...........         281
451             [Reserved]

                     SUBCHAPTER H--CLAUSES AND FORMS
452             Solicitation provisions and contract clauses         283
453             Forms.......................................         295

[[Page 229]]



                          SUBCHAPTER A--GENERAL





PART 401--AGRICULTURE ACQUISITION REGULATION SYSTEM--Table of Contents




Sec.
401.000  Scope of part.

               Subpart 401.1--Purpose, Authority, Issuance

401.101  Purpose.
401.103  Authority.
401.104  Applicability.
401.105  Issuance.
401.105-1  Publication and code arrangement.
401.105-2  Arrangement of regulations.
401.105-3  Copies.
401.106  OMB approval under the Paperwork Reduction Act.
401.170  Electronic access to regulatory information.

                      Subpart 401.2--Administration

401.201  Maintenance of the FAR.
401.201-1  The two councils.

              Subpart 401.3--Agency Acquisition Regulations

401.301  Policy.
401.304  Agency control and compliance procedures.
401.370  Exclusions.
401.371  AGAR Advisories.
401.372  Departmental directives.

             Subpart 401.4--Deviations From the FAR and AGAR

401.402  Policy.
401.403  Individual deviations.
401.404  Class deviations.

        Subpart 401.6--Contracting Authority and Responsibilities

401.601  General.
401.602  Contracting officers.
401.602-3  Ratification of unauthorized commitments.
401.603  Selection, appointment, and termination of appointment.
401.603-1  General.

    Authority: 5 U.S.C. 301 and 40 U.S.C. 486(c).

    Source: 61 FR 53646, Oct. 15, 1996, unless otherwise noted.



401.000  Scope of part.

    This part presents basic policies and general information about the 
Department of Agriculture's (USDA) Acquisition Regulation, subsequently 
referred to as the AGAR. The AGAR is an integral part of the Federal 
Acquisition Regulations System.



               Subpart 401.1--Purpose, Authority, Issuance



401.101  Purpose.

    (a) The AGAR provides for the codification and publication of 
uniform policies and procedures for acquisitions by contracting 
activities within USDA.
    (b) The purpose of the AGAR is to implement the Federal Acquisition 
Regulation (FAR), where further implementation is needed, and to 
supplement the FAR when coverage is needed for subject matter not 
covered in the FAR. The AGAR is not by itself a complete document, as it 
must be used in conjunction with the FAR.



401.103  Authority.

    The AGAR and amendments thereto are issued under 5 U.S.C. 301 and 40 
U.S.C. 486(c). The Senior Procurement Executive (SPE) has the delegated 
authority to promulgate Departmental acquisition regulations.



401.104  Applicability.

    The FAR and AGAR apply to all USDA acquisitions of supplies and 
services (including construction) which obligate appropriated funds, 
unless otherwise specified in this chapter or excepted by law.



401.105  Issuance.



401.105-1  Publication and code arrangement.

    (a) The AGAR is codified in the Code of Federal Regulations (CFR) as 
Chapter 4 of Title 48, Federal Acquisition Regulations System, to 
implement and supplement Chapter 1 which constitutes the FAR. Parts 400 
through 499 have been assigned to USDA by the Office of the Federal 
Register.
    (b) The AGAR and its subsequent changes are published in:

[[Page 230]]

    (1) Daily issues of the Federal Register,
    (2) Cumulative form in the CFR, and
    (3) Loose-leaf form for distribution within USDA.
    (c) Section 553(a)(2) of the Administrative Procedure Act, 5 U.S.C. 
553, provides an exception from the standard public rulemaking 
procedures to the extent that the rule involves a matter relating to 
agency management or personnel or to public property, loans, grants, 
benefits, or contracts. OFPP Policy Letter 83-2 requires rulemaking for 
substantive acquisition rules but allows discretion in the matter for 
other than significant issues meeting the stated criteria. The AGAR has 
been promulgated and may be revised from time to time in accordance with 
the rulemaking procedures of the Administrative Procedure Act and OFPP 
Policy Letter 83-2.



401.105-2  Arrangement of regulations.

    AGAR coverage parallels the FAR in format, arrangement, and 
numbering system. However, subdivisions below the section and subsection 
levels may not always correlate directly to FAR designated paragraphs 
and subparagraphs.



401.105-3  Copies.

    Copies of the AGAR published in CFR form may be purchased from the 
Superintendent of Documents, Government Printing Office, Washington, 
D.C. 20402. Requests should reference Chapter 4 of Title 48 CFR.



401.106  OMB approval under the Paperwork Reduction Act.

    The following OMB control numbers apply to USDA solicitations and 
specified information collections within the AGAR:

------------------------------------------------------------------------
                                                             OMB Control
                        AGAR segment                             No.
------------------------------------------------------------------------
411.170....................................................    0505-0014
415.2......................................................    0505-0013
436.575....................................................    0505-0011
437.110....................................................    0505-0015
437.270....................................................    0505-0016
452.211-1..................................................    0505-0014
452.215-71.................................................    0505-0013
452.236-75.................................................    0505-0011
452.237-74.................................................    0505-0015
452.237-76.................................................    0505-0016
------------------------------------------------------------------------


[61 FR 53646, Oct. 15, 1996, as amended at 64 FR 52674, Sept. 30, 1999]

    Effective Date Note: At 64 FR 52674, Sept. 30, 1999, Sec. 401.106 
was amended by removing ``415.4'' and replacing it with ``415.2'', 
effective Nov. 29, 1999.



401.170  Electronic access to regulatory information.

    The USDA Departmental Administration Procurement Homepage provides 
access to the AGAR, AGAR amendments (circulars), AGAR Advisories, and 
other USDA procurement policy and guidance in electronic form. The 
Internet address for the Procurement Homepage is URL http://
www.usda.gov/da/procure.html.

[63 FR 26994, May 15, 1998]



                      Subpart 401.2--Administration



401.201  Maintenance of the FAR.



401.201-1  The two councils.

    (a) USDA's representative on the Civilian Agency Acquisition Council 
is designated by the SPE.
    (b) The Procurement Policy Division will coordinate proposed FAR 
revisions with interested contracting activities.



              Subpart 401.3--Agency Acquisition Regulations



401.301  Policy.

    (a) The SPE, subject to the authorities in 401.103 and FAR 1.301, 
may issue and publish Departmental regulations, that together with the 
FAR, constitute Department-wide policies, procedures, solicitation 
provisions, and contract clauses governing the contracting process or 
otherwise controlling the relationship between USDA (including any of 
its contracting activities) and contractors or prospective contractors.
    (b) Each designated head of a contracting activity (HCA) is 
authorized to issue or authorize the issuance of, at any organizational 
level, internal guidance which does not have a significant effect beyond 
the internal operating procedures of the activity, or a significant cost 
or administrative impact on offerors or contractors. Internal guidance 
issued by contracting activities will not be published in the Federal

[[Page 231]]

Register. HCA's shall ensure that the guidance, procedures, or 
instructions issued--
    (1) Are consistent with the policies and procedures contained in 
this chapter;
    (2) Follow the format, arrangement, and numbering system of this 
chapter to the extent practicable;
    (3) Contain no material which duplicates, paraphrases, or is 
inconsistent with this chapter; and
    (4) Are numbered and identified by use of alphabetical suffixes to 
the chapter number as follows:

4A [Reserved]
4B Agricultural Research Service.
4C Farm Service Agency.
4D Rural Development (mission area).
4E Food Safety and Inspection Service.
4F [Reserved]
4G Forest Service.
4H [Reserved]
4I Natural Resources Conservation Service.
4J [Reserved]
4K Food and Consumer Service.
4L Animal and Plant Health Inspection Service.
4M [Reserved]
4N Office of Operations.
4O-4P [Reserved]
4R Office of Inspector General.
4S [Reserved]



401.304  Agency control and compliance procedures.

    (a) The AGAR System is under the direct oversight and control of the 
SPE, who is responsible for review and issuance of all Department-wide 
acquisition regulations published in the Federal Register to assure 
compliance with FAR part 1.
    (b) The SPE is also responsible for review and issuance of 
unpublished, Department-wide internal guidance under the AGAR System.
    (c) HCA's are responsible for establishment and implementation of 
formal procedures for oversight and control of unpublished internal 
guidance issued within the contracting activity to implement FAR or AGAR 
requirements. These procedures shall be subject to the review and 
approval by the SPE.
    (d) The SPE is responsible for evaluating coverage under the AGAR 
System to determine applicability to other agencies and for recommending 
coverage to the FAR Secretariat for inclusion in the FAR.
    (e) Recommendations for revision of existing FAR coverage or new FAR 
coverage shall be submitted by the HCA to the SPE for further action.



401.370  Exclusions.

    Subject to the policies of FAR subpart 1.3, certain USDA acquisition 
policies and procedures may be excluded from the AGAR under 
appropriately justified circumstances, such as:
    (a) Subject matter which is effective for a period less than 12 
months.
    (b) Subject matter which is instituted on an experimental basis for 
a reasonable period.
    (c) Acquisition procedures instituted on an interim basis to comply 
with the requirements of statute, regulation, Executive Order, OMB 
Circular, or OFPP Policy Letter.



401.371  AGAR Advisories.

    The SPE may issue AGAR Advisories, consistent with the policies of 
the FAR and the AGAR, for the following purposes:
    (a) To communicate Department-wide policy and/or procedural guidance 
to contracting activities;
    (b) To delegate to procurement officials authority to make 
determinations or to take action to implement the policies of the FAR or 
the AGAR; and,
    (c) To establish internal policy and procedures on an interim basis, 
prior to incorporation in the AGAR or in a Departmental Directive.



401.372  Departmental directives.

    Subject to the policies of FAR 1.3, USDA from time to time may issue 
internal directives to establish procedures, standards, guidance, or 
methods of performing duties, functions, or operations. Such directives 
include Departmental Regulations (DR's), Departmental Notices, and 
Secretary's Memoranda.

[[Page 232]]



             Subpart 401.4--Deviations From the FAR and AGAR



401.402  Policy.

    Requests for authority to deviate from the provisions of the FAR or 
the AGAR shall be submitted in writing as far in advance as the 
exigencies of the situation will permit. Each request for deviation 
shall contain the following:
    (a) A statement of the deviation desired, including identification 
of the specific paragraph number(s) of the FAR and AGAR;
    (b) The reason why the deviation is considered necessary or would be 
in the best interest of the Government;
    (c) If applicable, the name of the contractor and identification of 
the contract affected;
    (d) A statement as to whether the deviation has been requested 
previously and, if so, circumstances of the previous request;
    (e) A description of the intended effect of the deviation;
    (f) A statement of the period of time for which the deviation is 
needed; and
    (g) Any pertinent background information which will contribute to a 
full understanding of the desired deviation.



401.403  Individual deviations.

    In individual cases, deviations from either the FAR or the AGAR will 
be authorized only when essential to effect a necessary acquisition or 
where special circumstances make such deviations clearly in the best 
interest of the Government. Except for cost principles, HCA's may 
approve individual deviations from the AGAR, after coordinating with the 
General Counsel and the SPE. No deviations from the FAR or AGAR may be 
authorized at the contracting office level. A copy of each deviation and 
its supporting documentation shall be provided to the SPE. Deviations 
from the FAR shall not be made unless such action is authorized by the 
SPE after consultation with the Office of the General Counsel and any 
other appropriate office, on the basis of a written justification 
stating clearly the special circumstances involved.



401.404  Class deviations.

    Where deviations from the FAR or AGAR are considered necessary for 
classes of contracts, requests for authority to deviate shall be 
submitted in writing to the SPE for approval. The SPE may authorize 
class deviations from the FAR without consulting the Chairperson of the 
Civilian Agency Acquisition Council where urgency precludes 
consultation. The SPE shall subsequently inform the Chairperson of the 
Civilian Agency Acquisition Council of the deviation including the 
circumstances under which it was required.



        Subpart 401.6--Contracting Authority and Responsibilities



401.601  General.

    (a) The authority and responsibility vested in the Secretary to 
manage USDA's acquisition function is delegated through the Assistant 
Secretary for Administration to the SPE. This broad authority includes, 
but is not limited to, the following responsibilities:
    (1) Prescribing and publishing Departmental acquisition policies, 
regulations, and procedures.
    (2) Taking any necessary actions consistent with policies, 
regulations, and procedures with respect to purchases, contracts, 
leases, and other transactions.
    (3) Designating contracting officers.
    (4) Establishing clear lines of contracting authority.
    (5) Evaluating and monitoring the performance of USDA's acquisition 
system.
    (6) Managing and enhancing career development of the contracting 
work force.
    (7) Participating in the development of Government-wide acquisition 
policies, regulations, and standards; and determining specific areas 
where government-wide performance standards should be established and 
applied.
    (8) Determining areas of Department-unique standards and developing 
unique Department-wide standards.
    (9) Certifying to the Secretary that the acquisition system meets 
approved standards.

[[Page 233]]

    (b) The SPE may delegate contracting authority to the Heads of 
Contracting Activities (HCA's) and the responsibility to manage their 
acquisition function.
    (c) Unless prohibited by the FAR, the AGAR, or by other applicable 
statutes and regulations, the SPE may redelegate to HCA's the authority 
to make determinations as the agency head in order to implement the 
policies and procedures of the FAR. Such delegations shall be in 
writing, but need not be published.
    (d) Unless prohibited by the FAR, the AGAR, or by other applicable 
statutes or regulations, each HCA may designate one individual from the 
contracting activity to carry out the functions of the HCA (HCAD). The 
HCAD may exercise all authority delegated to the HCA.



401.602  Contracting officers.



401.602-3  Ratification of unauthorized commitments.

    (a) Definitions. Ratification, as used in this section, means the 
signed, documented action taken by an authorized official to approve and 
sanction a previously unauthorized commitment.
    Unauthorized commitment, as used in this section, means an agreement 
made by a Government representative who lacked the authority to enter 
into a contract on behalf of the Government.
    (b) Policy. The HCA may delegate ratification authority to the chief 
of the contracting office.
    (c) Procedure. Whenever an official of the cognizant contracting 
activity who is authorized to ratify unauthorized commitments learns 
that a person or firm has assumed work as a result of an unauthorized 
commitment, that official shall take the following actions:
    (1) Immediately inform any person who is performing work as a result 
of an unauthorized commitment that the work is being performed at that 
person's risk;
    (2) Inform the individual who made the unauthorized commitment of 
the seriousness of the act and the possible consequences;
    (3) Ensure that the individual who made the unauthorized commitment 
furnishes all records and documents concerning the commitment and a 
complete, written statement of facts, including, but not limited to: a 
statement as to why a contracting officer was not used; why the vendor 
was selected and a list of sources considered; a description of work to 
be performed or products to be furnished; the estimated or agreed price; 
whether an appropriation is available for the work; and whether 
performance has begun. Under exceptional circumstances, such as when the 
individual who made the unauthorized commitment is no longer available 
to attest to the circumstances of the unauthorized commitment, the 
ratifying official may waive these requirements; and
    (4) Decide whether ratification is proper and proceed as follows:
    (i) If ratification is not justifiable, provide the cognizant 
program office, contracting office, and the unauthorized contractor with 
an explanation of the decision not to ratify.
    (ii) If ratification appears adequately justified, ratify the action 
and retain or assign the contract to a successor contracting officer if 
necessary.
    (iii) Maintain related approval, decisional, and background 
documents in the contract file for audit purposes.
    (iv) Notify the cognizant program supervisor or line officer about 
the final disposition of the case; the notification may include a 
recommendation that the unauthorized commitment should be further 
considered a violation of USDA's employee conduct regulations.



401.603  Selection, appointment, and termination of appointment.



401.603-1  General.

    An HCA may delegate contracting authority to the extent authorized 
by the SPE in a general delegation of acquisition authority, by 
appointing qualified individuals as contracting officers, in accordance 
with the USDA Contracting Officer Warrant System, Departmental 
Regulation 5001-1.



PART 402--DEFINITIONS OF WORDS AND TERMS--Table of Contents




Sec.
402.000  Scope of part.

[[Page 234]]

                       Subpart 402.1--Definitions

402.101  Definitions.

    Authority: 5 U.S.C. 301 and 40 U.S.C. 486(c).

    Source: 61 FR 53646, Oct. 15, 1996, unless otherwise noted.



402.000  Scope of part.

    As used throughout this chapter, the following words and terms are 
used as defined in this subpart unless the context in which they are 
used clearly requires a different meaning, or a different definition is 
prescribed for a particular part or portion of a part.



                       Subpart 402.1--Definitions



402.101  Definitions.

    Acquisition official means an individual who has been delegated 
authority to manage or to exercise acquisition functions and 
responsibilities.
    Agency head or Head of the Agency means the Secretary of 
Agriculture, Deputy Secretary, or the Assistant Secretary for 
Administration.
    Head of the contracting activity (HCA) means the official who has 
overall responsibility for managing the contracting activity (i.e., 
Chief, Forest Service; Administrator, Agricultural Research Service; 
etc.), or the individual designated by such an official to carry out the 
functions of the HCA.
    Senior Procurement Executive (SPE) means the agency official 
appointed as such by the head of the agency pursuant to Executive Order 
12931. The Director, Office of Procurement and Property Management, has 
been designated as the USDA SPE.

[61 FR 53646, Oct. 15, 1996, as amended at 63 FR 26994, May 15, 1998]



PART 403--IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST--Table of Contents




                        Subpart 403.1--Safeguards

Sec.
403.101  Standards of conduct.
403.101-3  Agency regulations.
403.104  Procurement integrity.
403.104-5  [Reserved]
403.104-10  Violations or possible violations.

      Subpart 403.2--Contractor Gratuities to Government Personnel

403.203  Reporting suspected violations of the gratuities clause.
403.204  Treatment of violations.

        Subpart 403.3--Reports of Suspected Antitrust Violations

403.303  Reporting suspected antitrust violations.

                     Subpart 403.4--Contingent Fees

403.409  Misrepresentations or violations of the Covenant Against 
          Contingent Fees.

            Subpart 403.5--Other Improper Business Practices

403.502  Subcontractor kickbacks.

  Subpart 403.6--Contracts With Government Employees or Organizations 
                       Owned or Controlled by Them

403.602  Exceptions.
403.603  Responsibilities of the contracting officer.

 Subpart 403.8--Limitation on the Payment of Funds to Influence Federal 
                              Transactions

403.806  Processing suspected violations

    Authority: 5 U.S.C. 301 and 40 U.S.C. 486(c).

    Source: 61 FR 53646, Oct. 15, 1996, unless otherwise noted.



                        Subpart 403.1--Safeguards



403.101  Standards of conduct.



403.101-3  Agency regulations.

    (a) The standards of conduct for USDA procurement officials are the 
uniform standards established by the Office of Government Ethics in 5 
CFR Part 2635, Standards of Ethical Conduct for Employees of the 
Executive Branch, and FAR 3.104, Procurement integrity.
    (b) Procurement officials and other employees who require advice 
concerning the application of standards of conduct to any acquisition 
issue shall obtain ethics advisory opinions from ethics advisory 
officials in their agency personnel offices.

[[Page 235]]



403.104  Procurement integrity.



403.104-5  [Reserved]



403.104-10  Violations or possible violations.

    (a) The contracting officer shall forward information concerning any 
violation or possible violation of the Procurement Integrity Act (41 
U.S.C. 423) to the chief of the contracting office.
    (b) Heads of contracting activities (HCA's) or their designees who 
receive information concerning any violation or possible violation of 
the Act shall take action in accordance with FAR 3.104-10(b).

[61 FR 53646, Oct. 15, 1996, as amended at 63 FR 26995, May 15, 1998]



      Subpart 403.2--Contractor Gratuities to Government Personnel



403.203  Reporting suspected violations of the gratuities clause.

    A suspected violation of the contract clause, FAR 52.203-3, 
Gratuities, shall be reported immediately to the cognizant contracting 
officer in writing, stating the circumstances surrounding the 
incident(s), the date(s), and names of all parties involved. The 
contracting officer shall review the report for completeness, add any 
additional information deemed necessary and a recommendation for action, 
and submit the report to the HCA.



403.204  Treatment of violations.

    The HCA shall review the report and consult with the Offices of 
General Counsel and Inspector General to determine whether further 
action should be pursued. If it is found that the facts and 
circumstances warrant further action, the HCA shall give the contractor 
a formal written notice which summarizes the reported violation and 
affords the contractor the opportunity to make a written or oral 
response within a reasonable, specified period after receipt of the 
notice. The notice shall be sent by certified mail with return receipt 
requested. Oral presentations shall follow the procedures outlined in 
FAR 3.204(b). The HCA shall furnish copies of any adverse determination 
to the contracting officer and the Department Debarring Officer for 
their subsequent considerations under FAR 3.204(c)(1) and (2), 
respectively.



        Subpart 403.3--Reports of Suspected Antitrust Violations



403.303  Reporting suspected antitrust violations.

    Contracting officers shall report the circumstances of suspected 
violations of antitrust laws to the Office of Inspector General in 
accordance with procedures in Departmental Regulations (1700 series).



                     Subpart 403.4--Contingent Fees



403.409  Misrepresentations or violations of the Covenant Against Contingent Fees.

    (a) A suspected misrepresentation or violation of the Covenant 
Against Contingent Fees shall be documented in writing by the 
contracting officer and reported immediately to the chief of the 
contracting office. The chief of the contracting office shall determine 
if a violation has occurred and report any violation to the Office of 
Inspector General. The chief of the contracting office shall take action 
in accordance with FAR 3.409(b).
    (b) If the chief of the contracting office decides to refer the case 
to the Department of Justice, it should be referred through the Office 
of Inspector General with a copy of the report and referral submitted 
through the HCA to the Senior Procurement Executive.



            Subpart 403.5--Other Improper Business Practices



403.502  Subcontractor kickbacks.

    Contracting officers shall report the circumstances of suspected 
violations of the Anti-Kickback Act (41 U.S.C. 51-54) to the Office of 
Inspector General in accordance with procedures in Departmental 
Regulations (1700 series).

[[Page 236]]



  Subpart 403.6--Contracts With Government Employees or Organizations 
                       Owned or Controlled by Them



403.602  Exceptions.

    The HCA is authorized to accept a contract from the policy in FAR 
3.601.



403.603  Responsibilities of the contracting officer.

    The contracting officer, when requesting authorization under 
403.602, shall prepare a written determination and findings for the 
signature of the HCA. The determination shall document compliance with 
FAR 3.603, specifying the compelling reason(s) for award, and shall be 
placed in the contract file.



 Subpart 403.8--Limitation on the Payment of Funds to Influence Federal 
                              Transactions



403.806  Processing suspected violations.

    Suspected violations of the requirements of 31 U.S.C. 1352 shall be 
referred to the Office of Inspector General in accordance with 
procedures in Departmental Regulations (1700 series).



PART 404--ADMINISTRATIVE MATTERS--Table of Contents




   Subpart 404.4--Safeguarding Classified Information Within Industry

Sec.
404.403  Responsibilities of contracting officers.

                    Subpart 404.6--Contract Reporting

404.601  Record requirements.
404.602  Federal Procurement Data System.

                      Subpart 404.8--Contract Files

404.870  Document numbering system.
404.870-1  Purchase order/delivery order numbering system.
404.870-2  Contract numbering system.

                   Subpart 404.70--Precontract Notices

404.7001  Solicitation provision.

    Authority: 5 U.S.C. 301 and 40 U.S.C. 486(c).

    Source: 61 FR 53646, Oct. 15, 1996, unless otherwise noted.



   Subpart 404.4--Safeguarding Classified Information Within Industry



404.403  Responsibilities of contracting officers.

    When a proposed solicitation is likely to require access to 
information classified by USDA, the contracting officer shall consult 
with the Director of Human Resources Management within the Policy 
Analysis and Coordination Center of the Office of Assistant Secretary 
for Administration, regarding the procedures that must be followed.



                    Subpart 404.6--Contract Reporting



404.601  Record requirements.

    The Senior Procurement Executive (SPE) manages an automated 
procurement reporting system for USDA. This system provides the Federal 
Procurement Data System with all required contracting information.



404.602  Federal Procurement Data System.

    Contracting activities shall report contract actions into the USDA 
Procurement Reporting System in accordance with the instructions issued 
or distributed by the SPE.



                      Subpart 404.8--Contract Files



404.870  Document numbering system.



404.870-1  Purchase order/delivery order numbering system.

    USDA purchasing activities shall number their purchase/delivery 
orders in accordance with NFC Procedures Manual, ``Purchase Orders,'' 
Title II, Section 5.1.



404.870-2  Contract numbering system.

    Contracting offices shall assign an 8 to 12-digit number to all 
contracts. Contract numbers will be divided into four data elements and 
formatted as follows:

(1)                                    (2)       (3)                 (4)
------------------------------------------------------------------------

[[Page 237]]

 
                   Transaction Ordering Fiscal Control
Code                                Office      Year              Number
------------------------------------------------------------------------
XX                                    XXXX         X          X to XXXXX
------------------------------------------------------------------------
 

    (a) Transaction code. This two-position code identifies the contract 
as being one of the following types:

    (1) Code 50--construction contract;
    (2) Code 51--[Reserved]
    (3) Code 52--tree planting/thinning contract;
    (4) Code 53--service contract;
    (5) Code 54--supply contract;
    (6) Code 55--aircraft rental (for fire-fighting purposes only) 
contract;
    (7) Code 56--personal equipment rental (rental of vehicular 
equipment for firefighting purposes only) contract;
    (8) Code 57--leasehold interest in real property contract.

    (b) Ordering office. This four-position code corresponds to the last 
four characters of the contracting office's GSA assigned FEDSTRIP 
requisitioner number.
    (c) Fiscal year. This one-position code corresponds to the last 
digit of the fiscal year in which the contract becomes effective.
    (d) Control number. This up-to-five position code (from one to five 
characters may be used) will be assigned by the contracting office. 
While contracts will generally be numbered consecutively (1 through 
99999), contracting offices may assign codes in any manner of their 
choosing. Codes may not be repeated, however, unless one of the 
preceding data elements (transaction code, ordering office, or fiscal 
year) changes. Alpha characters as well as numerals may be used in any 
one or more of the five positions.



                   Subpart 404.70--Precontract Notices



404.7001  Solicitation provision.

    The contracting officer shall insert the provision at 452.204-70, 
Inquiries, in all solicitations.

[[Page 238]]



           SUBCHAPTER B--COMPETITION AND ACQUISITION PLANNING





PART 405--PUBLICIZING CONTRACT ACTIONS--Table of Contents




               Subpart 405.3--Synopses of Contract Awards

Sec.
405.303  Announcement of contract awards.

                  Subpart 405.4--Release of Information

405.403  Requests from Members of Congress.
405.404  Release of long-range acquisition estimates.
405.404-1  Release procedures.

                   Subpart 405.5--Paid Advertisements

405.502  Authority.

    Authority: 5 U.S.C. 301 and 40 U.S.C. 486(c).

    Source: 61 FR 53646, Oct. 15, 1996, unless otherwise noted.



               Subpart 405.3--Synopses of Contract Awards



405.303  Announcement of contract awards.

    Contracting officers shall make information available on any 
contract award with an estimated total value over $1 million (including 
options) to their agency congressional liaison office in sufficient time 
for the agency to announce it by 5:00 p.m. Washington, DC time on the 
day of award. The agency congressional liaison office shall, concurrent 
with the public announcement, provide the award announcement information 
to the USDA Congressional Relations Office.



                  Subpart 405.4--Release of Information



405.403  Requests from Members of Congress.

    The head of the contracting activity (HCA) is the agency head 
designee pursuant to FAR 5.403(a).



405.404  Release of long-range acquisition estimates.



405.404-1  Release procedures.

    (a) HCA's shall establish written procedures to control the release 
of long-range acquisition estimates, as authorized under FAR 5.404-1.
    (b) Classified information shall not be released without the 
approval of the USDA Security Officer, Policy Analysis and Coordination 
Center--Human Resources Management. Departmental Manual and Regulation 
(3400 series) contain guidance on classified information.



                   Subpart 405.5--Paid Advertisements



405.502  Authority.

    (a) The authority vested in the agency head to authorize publication 
of paid advertisements in newspapers (44 U.S.C. 3702) is delegated, with 
power of redelegation, to HCA's. HCA redelegation of this authority 
shall be in writing.
    (b) Policies and procedures regarding prior authorization required 
for media other than newspapers are contained in USDA Departmental 
Regulations 1400 series.



PART 406--COMPETITION REQUIREMENTS--Table of Contents




   Subpart 406.2--Full and Open Competition After Exclusion of Sources

Sec.
406.202  Establishing or maintaining alternative sources.

           Subpart 406.3--Other Than Full and Open Competition

406.302  Circumstances permitting other than full and open competition.
406.302-70  Otherwise authorized by law.

                  Subpart 406.5--Competition Advocates

406.501  Requirements.

    Authority: 5 U.S.C. and 40 U.S.C. 486(c).

[[Page 239]]


    Source: 61 FR 53646, Oct. 15, 1996, unless otherwise noted.



   Subpart 406.2--Full and Open Competition After Exclusion of Sources



406.202  Establishing or maintaining alternative sources.

    The Senior Procurement Executive is authorized to make 
determinations pursuant to FAR 6.202(a) and sign the determination and 
findings required by FAR 6.202(b).



           Subpart 406.3--Other Than Full and Open Competition



406.302  Circumstances permitting other than full and open competition.



406.302-70  Otherwise authorized by law.

    (a) Authority. Section 1472 of the National Agricultural Research, 
Extension, and Teaching Policy Act of 1977 (7 U.S.C. 3318) (the Act) 
authorizes the Secretary of Agriculture to award contracts, without 
competition, to further research, extension, or teaching programs in the 
food and agricultural sciences.
    (b) Limitations. The use of this authority is limited to those 
instances where it can be determined that contracting without full and 
open competition is in the best interest of the Government and necessary 
to the accomplishment of the research, extension, or teaching program. 
Therefore:
    (1) Contracts under the authority of the Act shall be awarded on a 
competitive basis to the maximum practicable extent.
    (2) When full and open competition is not deemed appropriate, the 
contracting officer shall make a written justification on a case-by-case 
basis in accordance with procedures in FAR 6.303 and 6.304.



                  Subpart 406.5--Competition Advocates



406.501  Requirements.

    (a) The Chief, Procurement Policy Division, Procurement and Property 
Management, Policy Analysis and Coordination Center, has been designated 
as the Competition Advocate for USDA.
    (b) Each HCA shall designate a competition advocate for the 
contracting activity.



PART 407--ACQUISITION PLANNING--Table of Contents




                    Subpart 407.1--Acquisition Plans

Sec.
407.103  Agency-head responsibilities.
407.170  Advance acquisition plans.

         Subpart 407.3--Contractor Versus Government Performance

407.302  General.

            Subpart 407.5--Inherently Governmental Functions

407.503  Policy.

    Authority: 5 U.S.C. 301 and 40 U.S.C.

    Source: 61 FR 53646, Oct. 15, 1996, unless otherwise noted.



                    Subpart 407.1--Acquisition Plans



407.103  Agency-head responsibilities.

    Heads of Contracting Activities (HCA's) shall develop procedures to 
comply with FAR 7.103.



407.170  Advance acquisition plans.

    Each HCA shall implement an advance acquisition planning system in 
accordance with procedures in Departmental Directives (5000 series).



         Subpart 407.3--Contractor Versus Government Performance



407.302  General.

    The requirements of FAR subpart 7.3 and OMB Circular A-76 are 
implemented by Departmental Directives (2100 series).



            Subpart 407.5--Inherently Governmental Functions



407.503  Policy.

    (a) HCA's shall establish procedures to ensure that requesting 
activities

[[Page 240]]

provide the written determination required by FAR 7.503(e), when 
submitting requests for procurement of services.
    (b) In the event of a disagreement as to whether the functions to be 
performed are inherently governmental, the HCA may refer the matter to 
the Senior Procurement Executive (SPE) for resolution. When submitting 
disagreements to the SPE for resolution the HCA shall provide a summary 
of the areas of disagreement, supported by the following:
    (1) The HCA's assessment of whether the services are ``inherently 
governmental'';
    (2) The basis for that assessment (include references to the 
definition and policy in FAR subpart 7.5 and/or Office of Federal 
Procurement Policy letter 92-1);
    (3) A copy of the statement of work; and,
    (4) The requesting activity's written determination in accordance 
with FAR 7.503(e).
    (c) Such disagreements shall be resolved prior to issuance of the 
solicitation.

[61 FR 53646, Oct. 15, 1996, as amended at 63 FR 26995, May 15, 1998]



PART 408--REQUIRED SOURCES OF SUPPLIES AND SERVICES--Table of Contents




                 Subpart 408.4--Federal Supply Schedules

Sec.
408.404  Using schedules.
408.404-3  Requests for waivers.

Subpart 408.7--Acquisition From Nonprofit Agencies Employing People Who 
                     Are Blind or Severely Disabled

408.701  Definitions.
408.705  Procedures.
408.705-2  Direct order process.
408.705-3  Allocation process.
408.705-4  Compliance with orders.
408.706  Purchase exemptions.
408.707  Prices.
408.711  Quality complaints.
408.712  Specification changes.
408.714  Communications with the central nonprofit agencies and the 
          Committee.

       Subpart 408.8--Acquisition of Printing and Related Supplies

408.802  Policy.

                Subpart 408.11--Leasing of Motor Vehicles

408.1103  Contract requirements.

    Authority: 5 U.S.C. 301 and 40 U.S.C. 486(c).

    Source: 61 FR 53646, Oct. 15, 1996, unless otherwise noted.



                 Subpart 408.4--Federal Supply Schedules



408.404  Using schedules.



408.404-3  Requests for waivers.

    A copy of the request for a waiver and the approval shall be placed 
in the contract file to support the acquisition of items off schedule.



Subpart 408.7--Acquisition From Nonprofit Agencies Employing People Who 
                     Are Blind or Severely Disabled



408.701  Definitions.

    Committee Member is the Presidential appointee representing USDA as 
a member of the Committee for Purchase from People Who Are Blind or 
Severely Disabled.
    Organization head is the head of the contracting activity (HCA), the 
head of a USDA corporation (as described in 31 U.S.C. 9101), or the head 
of a USDA staff office.



408.705  Procedures.

    (a) The organization head shall appoint one person as Javits-Wagner-
O'Day Act (JWOD) Advocate to represent the organization and to 
coordinate the organization's actions with the Committee Member.
    (b) JWOD advocates may represent more than one organization. 
Advocates need not be acquisition officials.
    (c) The organization head shall issue and maintain an action plan to 
promote and enhance the organization's acquisitions from JWOD 
participating nonprofit agencies.
    (d) The action plan shall:
    (1) Announce the organization's support for the JWOD Act;
    (2) Establish a promotion program for the products and services 
provided by the JWOD participating nonprofit agencies;

[[Page 241]]

    (3) Provide for the JWOD Advocate's role in acquisition planning;
    (4) Establish measurable program goals for growth or other 
accomplishment in the organization's JWOD program actions; and
    (5) Establish an awards program for successful participation in the 
JWOD program.



408.705-2  Direct order process.

    (a) The chief of a contracting office may apply to a central 
nonprofit agency for authorization to order specific supplies or 
services directly from a JWOD participating nonprofit agency.
    (b) A copy of the application should be provided to the JWOD 
Advocate who will inform the USDA Committee Member.



408.705-3  Allocation process.

    (a) The chief of a contracting office may apply to a central 
nonprofit agency for a production allocation of specific supplies or 
services to a JWOD participating nonprofit agency.
    (b) A copy of the application should be provided to the JWOD 
Advocate who will inform the USDA Committee Member.



408.705-4  Compliance with orders.

    Prior to attempting to resolve a failure to perform by a 
participating nonprofit agency with the Committee, the chief of the 
contracting office should provide advance notice to the JWOD Advocate 
who will inform the USDA Committee Member.



408.706  Purchase exemptions.

    Prior to applying to the Committee for a purchase exemption, the 
chief of the contracting office should provide advance notice to the 
JWOD Advocate who will inform the USDA Committee Member.



408.707  Prices.

    Prior to applying for a price revision, the chief of the contracting 
office should provide advance notice to the JWOD Advocate who will 
inform the USDA Committee Member.



408.711  Quality complaints.

    Prior to attempting to resolve a complaint regarding the quality of 
goods or services provided by participating nonprofit agency with the 
Committee, the chief of the contracting office should provide advance 
notice to the JWOD Advocate who will inform the USDA Committee Member.



408.712  Specification changes.

    Prior to providing 90-days advance notification to the Committee on 
actions that affect supplies and services on the Procurement List, the 
chief of the contracting office should provide advance notice to the 
JWOD Advocate who will inform the USDA Committee Member.



408.714  Communications with the central nonprofit agencies and the Committee.

    Any matter requiring referral to the Committee shall be provided to 
the JWOD Advocate who will coordinate the matter with the Committee 
Member.



       Subpart 408.8--Acquisition of Printing and Related Supplies



408.802  Policy.

    (a) The Director, Office of Communications (OC) has been designated 
as the central printing authority in USDA, with the authority to 
represent the USDA before the Joint Committee on Printing (JCP), the 
Government Printing Office, and other Federal and State agencies on all 
matters related to printing.
    (b) Prior to contracting for any of the items defined in FAR 8.801, 
the contracting officer shall verify that the requisite approval has 
been received by the publication liaison officer or requisitioner.
    (c) The approval from OC or the approval authority designated by OC 
shall be maintained in the contract file.



                Subpart 408.11--Leasing of Motor Vehicles



408.1103  Contract requirements.

    If the requirement includes the need for the vendor to provide 
operational maintenance such as oil and other fluid

[[Page 242]]

changes or replenishment, the contracting officer shall include in the 
contract (1) a requirement for fluids containing the maximum available 
amounts of recovered materials; and (2) a preference for either 
retreaded tires meeting the Federal retread specifications or retreading 
services for the tires on the vehicle.



PART 409--CONTRACTOR QUALIFICATIONS--Table of Contents




         Subpart 409.4--Debarment, Suspension and Ineligibility

Sec.
409.403  Definitions.
409.404  List of parties excluded from Federal procurement and 
          nonprocurement programs.
409.405  Effect of listing.
409.405-1  Continuation of current contracts.
409.405-2  Restrictions on subcontracting.
409.406  Debarment.
409.406-3  Procedures.
409.407  Suspension.
409.407-3  Procedures.
409.470  Appeals.

   Subpart 409.5--Organizational and Consultant Conflicts of Interest

409.503  Waiver.

    Authority: 5 U.S.C. 301 and 40 U.S.C. 486(c).

    Source: 61 FR 53646, Oct. 15, 1996, unless otherwise noted.



         Subpart 409.4--Debarment, Suspension and Ineligibility



409.403  Definitions.

    Debarring official. Pursuant to the Secretary's delegations of 
authority in 7 CFR 2.24, the Senior Procurement Executive (SPE) is 
designated as the debarring official (Department Debarring Officer) with 
the following exceptions:
    (a) For commodity contracts awarded on behalf of the Commodity 
Credit Corporation (CCC), the Executive Vice President, CCC, or his 
designee is designated as the debarring official pursuant to 7 CFR part 
1407.
    (b) For contracts awarded under the School Lunch and Surplus Removal 
Programs (42 U.S.C. 1755 and 7 U.S.C. 612c), the Department Debarring 
Officer has delegated debarring authority to the Agricultural Marketing 
Service (AMS).

[63 FR 26995, May 15, 1998]



409.404  List of parties excluded from Federal procurement and nonprocurement programs.

    The Department Debarring Officer is USDA's single point of contact 
with GSA for debarment and suspension actions taken under this subpart. 
The debarring official for AMS shall notify the Department Debarring 
Officer of each debarment and suspension action by promptly submitting a 
copy of the debarment or suspension notice and any later changes to the 
debarment or suspension status. The Department Debarring Officer will 
forward a copy of each notice to GSA for inclusion in the Government-
wide list.



409.405  Effect of listing.

    Compelling reasons are considered to be present where failure to 
contract with the debarred or suspended contractor would seriously harm 
the agency's programs and prevent accomplishment of mission 
requirements. The SPE is authorized to make the determinations under FAR 
9.405. Requests for such determinations shall be submitted through the 
head of the contracting activity (HCA) to the SPE.



409.405-1  Continuation of current contracts.

    The HCA is authorized to make the determinations under FAR 9.405-1.



409.405-2  Restrictions on subcontracting.

    The HCA is authorized to approve subcontracts with debarred or 
suspended subcontractors under FAR 9.405-2.



409.406  Debarment.



409.406-3  Procedures.

    (a) Investigation and referral. When a contracting officer becomes 
aware of possible irregularities or any information which may be 
sufficient cause for debarment, the case shall be immediately referred 
through the HCA to the debarring official. The case must be accompanied 
by a complete statement of the facts (including a copy of

[[Page 243]]

any criminal indictments, if applicable) along with a recommendation for 
action. Where the statement of facts indicates the irregularities to be 
possible criminal offenses, or for any other reason further 
investigation is considered necessary, the matter shall be referred to 
the HCA who should consult with the Office of Inspector General to 
determine if further investigation is required prior to referring to the 
debarring official.
    (b) Decision-making process. If, after reviewing the recommendations 
and consulting with the Office of Inspector General and Office of the 
General Counsel, as appropriate, the debarring official determines 
debarment is justified, the debarring official shall initiate the 
proposed debarment in accordance with FAR 9.406-3(c) and notify the HCA 
of the action taken.
    (c) Fact-finding proceeding. For actions listed under FAR 9.406-
3(b)(2), the contractor shall be given the opportunity to appear at an 
informal hearing. The hearing should be held at a location and time that 
is convenient to the parties concerned, if at all possible. The 
contractor and any specifically named affiliates may be represented by 
counsel or any duly authorized representative. Witnesses may be called 
by either party. The proceedings shall be conducted expeditiously and in 
such a manner that each party will have an opportunity to present all 
information considered pertinent to the proposed debarment. The 
contractor shall be provided a copy of a transcript of the proceedings 
under the conditions established in FAR 9.406-3(b)(2)(ii).



409.407  Suspension.



409.407-3  Procedures.

    (a) Investigation and referral. When a contracting officer becomes 
aware of possible irregularities or any information which may be 
sufficient cause for suspension, the case shall be immediately referred 
through the HCA to the debarring official. The case must be accompanied 
by a complete statement of the facts along with a recommendation for 
action. Where the statement of facts indicates the irregularities to be 
possible criminal offenses, or for any other reason further 
investigation is considered necessary, the matter shall be referred to 
the HCA who should consult with the Office of Inspector General to 
determine if further investigation is required prior to referring it to 
the debarring official.
    (b) Decision-making process. If, after reviewing the recommendations 
and consulting with the Office of Inspector General and Office of the 
General Counsel, as appropriate, the debarring official determines 
suspension is justified, the debarring official shall initiate the 
proposed suspension in accordance with FAR 9.407-3(c) and notify the HCA 
of the action taken.
    (c) Fact-finding proceedings. For actions listed under FAR 9.407-
3(b)(2), the contractor shall be given the opportunity to appear at an 
informal hearing, similar in nature to the hearing for debarments as 
discussed in 409.406-3(c).



409.470  Appeals.

    A debarred or suspended contractor may appeal the debarring 
official's decision by mailing or otherwise furnishing a written notice 
within 90 days from the date of the decision to the U.S. Department of 
Agriculture Board of Contract Appeals, Washington, DC 20250. A copy of 
the notice of appeal shall be furnished to the debarring officer from 
whose decision the appeal is taken. Appeals under subpart 409.4 shall be 
governed by the rules and procedures of the U.S. Department of 
Agriculture Board of Contract Appeals set forth in 7 CFR part 24.



   Subpart 409.5--Organizational and Consultant Conflicts of Interest



409.503  Waiver.

    (a) The HCA, on a non-delegable basis, is authorized to waive any 
general rule or procedure in FAR 9.5 when in the Government's interest.
    (b) Each request for waiver shall include:
    (1) The general rule or procedure proposed to be waived;
    (2) An analysis of the potential conflict, including the benefits 
and detriments to the Government and prospective contractors;

[[Page 244]]

    (3) A discussion of why the conflict cannot be avoided, neutralized, 
or mitigated; and
    (4) Advice of counsel obtained under FAR 9.504(b).

                           PART 410 [RESERVED]



PART 411--DESCRIBING AGENCY NEEDS--Table of Contents




     Subpart 411.1--Selecting and Developing Requirements Documents

Sec.
411.103  Market acceptance.
411.105  Purchase descriptions for service contracts.
411.170  Brand name or equal.
411.171  Solicitation provisions and contract clauses.

       Subpart 411.2--Using and Maintaining Requirements Documents

411.202  Maintenance of standardization documents.

            Subpart 411.4--Delivery or Performance Schedules

411.404  Contract clauses.

                Subpart 411.6--Priorities and Allocations

411.600  Scope of subpart.

    Authority: 5 U.S.C. 301 and 40 U.S.C. 486(c).

    Source: 61 FR 53646, Oct. 15, 1996, unless otherwise noted.



     Subpart 411.1--Selecting and Developing Requirements Documents



411.103  Market acceptance.

    (a) The head of the contracting activity (HCA) may determine that 
offerors must demonstrate, in accordance with FAR 11.103(a), the market 
acceptability of their items to be offered.
    (b) The contracting officer shall place a copy of this 
determination, signed by the HCA, in the solicitation file.



411.105  Purchase descriptions for service contracts.

    When contract personnel are to be used, the requiring official shall 
record on the requisition his or her determination whether harm to the 
Government might occur should contractor personnel fail to identify 
themselves as non-Government officials.



411.170  Brand name or equal.

    (a) A ``brand name or equal'' purchase description shall include the 
following type of information:
    (1) Identification of the item by generic description.
    (2) Make, model number, catalog designation, or other description, 
and identification of a commercial catalog where it is listed.
    (3) Name of manufacturer, producer, or distributor of the item and 
complete address.
    (4) All salient characteristics of the ``brand name or equal'' 
product or products which have been determined by the requisitioner to 
be essential to the Government's minimum requirements.
    (b) [Reserved]



411.171  Solicitation provisions and contract clauses.

    (a) Contracting officers shall insert the provision at 452.211-70, 
Brand Name or Equal, in solicitations, other than those for 
construction, where ``brand name or equal'' purchase descriptions are 
used.
    (b) Contracting officers shall insert the clause at 452.211-71, 
Equal Products Offered, in solicitations, other than those for 
construction, where the provision at 452.211-70 is included.
    (c) Contracting officers shall insert the clause at 452.211-72, 
Statement of Work/Specifications, when the description (statement of 
work) or specification(s) is included in Section J of the solicitation.
    (d) Contracting officers shall insert the clause at 452.211-73, 
Attachment to Statement of Work/Specifications, when there are 
attachments to the description (statement of work) or specifications.

[63 FR 26995, May 15, 1998]

[[Page 245]]



       Subpart 411.2--Using and Maintaining Requirements Documents



411.202  Maintenance of standardization documents.

    Recommendations for changes to standardization documents are to be 
submitted through the Senior Procurement Executive, who will coordinate 
the submission of these recommendations to the cognizant preparing 
activity.



            Subpart 411.4--Delivery or Performance Schedules



411.404  Contract clauses.

    (a) The contracting officer shall insert the clause at 452.211-74, 
Period of Performance, when it is necessary to specify a period of 
performance, beginning on the date of award, date of receipt of notice 
of award, or a specified date.
    (b) The contracting officer shall insert the clause at 452.211-75, 
Effective Period of the Contract, when it is necessary to specify the 
effective period of the contract.

[63 FR 26995, May 15, 1998]



                Subpart 411.6--Priorities and Allocations



411.600  Scope of subpart.

    The Defense Priorities and Allocation System (DPAS) excludes USDA 
activities (see 15 CFR 700.18(b)). USDA Contracting Officers are not 
authorized to place rated orders under DPAS.



PART 412--ACQUISITION OF COMMERCIAL ITEMS--Table of Contents




    Authority: 5 U.S.C. 301 and 40 U.S.C. 486(c).



  Subpart 412.3--Solicitation Provisions and Contract Clauses for the 
                     Acquisition of Commercial Items



412.302  Tailoring of provisions and clauses for the acquisition of commercial items.

    The head of the contracting activity is authorized to approve 
waivers in accordance with FAR 12.302(c). The approved waiver may be 
either for an individual contract or for a class of contracts for the 
specific item. The approved waiver and supporting documentation shall be 
incorporated into the contract file.

[61 FR 53646, Oct. 15, 1996]

[[Page 246]]



          SUBCHAPTER C--CONTRACTING METHODS AND CONTRACT TYPES





PART 413--SIMPLIFIED ACQUISITION PROCEDURES (Eff. 10-22-99)--Table of Contents




              Subpart 413.3--Simplified Acquisition Methods

Sec.
413.301  Governmentwide commercial purchase card.
413.306  SF 44, Purchase Order-Invoice-Voucher.
413.307  Forms.

    Authority: 5 U.S.C. 301 and 40 U.S.C. 486(c).

    Source: 64 FR 45895, Aug. 23, 1999, unless otherwise noted.

    Effective Date Note: At 64 FR 45895, Aug. 23, 1999, part 413 was 
revised, effective Oct. 22, 1999. For the convenience of the user, part 
413 remaining in effect until Oct. 22, 1999, follows the text of this 
new part.



              Subpart 413.3--Simplified Acquisition Methods



413.301  Governmentwide commercial purchase card.

    USDA policy and procedures on use of the Governmentwide commercial 
purchase card are established in Departmental Regulation Series 5000.



413.306  SF 44, Purchase Order-Invoice-Voucher.

    The Standard Form 44 (and the previously prescribed USDA Form AD-
744) is not authorized for use within USDA.



413.307  Forms.

    Form AD-838, Purchase Order, is prescribed for use by USDA in lieu 
of Optional Forms 347 and 348.

    Effective Date Note: At 64 FR 45895, Aug. 23, 1999, part 413 was 
revised, effective Oct. 22, 1999. For the convenience of the user, the 
text remaining in effect until Oct. 22, 1999, is set forth as follows:



PART 413--SIMPLIFIED ACQUISITION PROCEDURES

                         Subpart 413.1--General

Sec.
413.103  Policy.

                       Subpart 413.4--Imprest Fund

413.401  General.

                     Subpart 413.5--Purchase Orders

413.505  Purchase order and related forms.

    Authority: 5 U.S.C. 301 and 40 U.S.C. 486(c).

    Source: 61 FR 53646, Oct. 15, 1996, unless otherwise noted.

                         Subpart 413.1--General

413.103  Policy.

    USDA policy and procedures on use of the Governmentwide commercial 
purchase card are established in Departmental Regulation Series 5000.

                       Subpart 413.4--Imprest Fund

413.401  General.

    Departmental Regulation 2000 series sets policies and guidelines for 
the use of imprest funds within USDA. Departmental Regulation 5000 
series establishes policies and procedures for the use of the Third 
Party Draft System in USDA.

                     Subpart 413.5--Purchase Orders

413.505  Purchase order and related forms.

    (a) Form AD-838, Purchase Order, is prescribed for use by USDA in 
lieu of Optional Forms 347 and 348.
    (b) The Standard Form 44 (and the previously prescribed USDA Form 
AD-744) is not authorized for use within USDA.



PART 414--SEALED BIDDING--Table of Contents




                   Subpart 414.2--Solicitation of Bids

Sec.
414.201  Preparation of invitations for bids.
414.201-6  Solicitation provision.

          Subpart 414.4--Opening of Bids and Award of Contract

414.404  Rejection of bids.
414.404-1  Cancellation of invitations after opening.
414.407  Mistakes in bids.
414.407-3  Other mistakes disclosed before award.
414.407-4  Mistakes after award.
414.409  Information to bidders.
414.409-2  Award of classified contracts.


[[Page 247]]


    Authority: 5 U.S.C. 301 and 40 U.S.C. 486(c).

    Source: 61 FR 53646, Oct. 15, 1996, unless otherwise noted.



                   Subpart 414.2--Solicitation of Bids



414.201  Preparation of invitations for bids.



414.201-6  Solicitation provision.

    The contracting officer shall insert the provision 452.214-70, Award 
by Lot, when multiple items are segregated into clearly identifiable 
lots and the contracting officer wants to reserve the right to award by 
item within a lot, if award in that manner would be advantageous to the 
Government.



          Subpart 414.4--Opening of Bids and Award of Contract



414.404  Rejection of bids.



414.404-1  Cancellation of invitations after opening.

    An acquisition official at a level above the contracting officer is 
authorized to make the determinations under FAR 14.404-1(c) and (e)(1).



414.407  Mistakes in bids.



414.407-3  Other mistakes disclosed before award.

    The authority to make the determinations under FAR 14.407-3(a), (b), 
and (d) is delegated, without power of redelegation, to the head of the 
contracting activity. The authority to make the determination under FAR 
14.407-3(c) is delegated to the contracting officer. Each determination 
pursuant to FAR 14.407-3 shall have the concurrence of the Office of the 
General Counsel (OGC).



414.407-4  Mistakes after award.

    If a mistake in bid is disclosed after award, the contracting 
officer shall make a final determination in accordance with the 
provisions of FAR 14.407-4 (b) and (c) and shall coordinate each 
proposed determination with OGC. Such coordination shall, at a minimum, 
consist of the contracting officer providing the proposed determination 
and the case file to OGC for comment.



414.409  Information to bidders.



414.409-2  Award of classified contracts.

    Disposition of classified information shall be in accordance with 
Departmental Regulation and Manual (3400 Series) and in accordance with 
direction issued by the USDA Security Officer, Policy Analysis and 
Coordination Center--Human Resources Management.



PART 415--CONTRACTING BY NEGOTIATION (Eff. 11-29-99)--Table of Contents




  Subpart 415.2--Solicitation and Receipt of Proposals and Information

Sec.
415.204  Contract format.
415.207  Handling proposals and information.
415.209  Solicitation provisions and contract clauses.

                     Subpart 415.3--Source Selection

415.303  Responsibilities.
415.305  Proposal evaluation.

                     Subpart 415.4--Contract Pricing

415.404-4  Profit.

 Subpart 415.5--Preaward, Award, and Postaward Notifications, Protests 
                              and Mistakes

415.570  Post-award conference.

                  Subpart 415.6--Unsolicited Proposals

415.604  Agency points of contact.
415.606  Agency procedures.

    Authority: 5 U.S.C. 301 and 40 U.S.C. 486(c).

    Source: 64 FR 52674, Sept. 30, 1999, unless otherwise noted.

    Effective Date Note: At 64 FR 52674, Sept. 30, 1999, part 415 was 
revised, effective Nov. 29, 1999. For the convenience of the user, part 
415 remaining in effect until Nov. 29, 1999, follows the text of this 
new part.

[[Page 248]]



  Subpart 415.2--Solicitation and Receipt of Proposals and Information



415.204  Contract format.

    The Senior Procurement Executive is authorized to exempt contracts 
from the uniform contract format.



415.207  Handling proposals and information.

    (a) Throughout the source selection process, agency personnel and 
non-Government evaluators with access to proposal information shall 
disclose neither the number of offerors nor their identity except as 
authorized by FAR subpart 15.5. (See also FAR 5.403.)
    (b) The contracting officer shall obtain the following written 
agreement from the non-Government evaluator prior to the release of any 
proposal to that evaluator.

         AGREEMENT GOVERNING THE USE AND DISCLOSURE OF PROPOSALS

RFP_____________________________________________________________________
Offeror_________________________________________________________________
    1. To the best of my knowledge and belief, no conflict of interest 
exists that may diminish my capacity to perform an impartial and 
objective review of the offeror's proposal, or may otherwise result in a 
biased opinion or an unfair advantage. If a potential conflict of 
interest arises or if I identify such a conflict, I agree to notify the 
Government promptly concerning the potential conflict. In determining 
whether any potential conflict of interest exists, I agree to review 
whether my or my employer's relationships with other persons or 
entities, including, but not limited to, ownership of stocks, bonds, 
other outstanding financial interests or commitments, employment 
arrangements (past, present, or under consideration), and, to the extent 
known by me, all financial interests and employment arrangements of my 
spouse, minor children, and other members of my immediate household, may 
place me in a position of conflict, real or apparent, with the 
evaluation proceedings.
    2. I agree to use proposal information only for evaluation purposes. 
I understand that any authorized restriction on disclosure placed upon 
the proposal by the prospective contractor or subcontractor or by the 
Government shall be applied to any reproduction or abstracted 
information of the proposal. I agree to use my best effort to safeguard 
such information physically, and not to disclose the contents of, or 
release any information relating to, the proposal(s) to anyone outside 
of the Source Evaluation Board or other panel assembled for this 
acquisition, the Contracting Officer, or other individuals designated by 
the Contracting Officer.
    3. I agree to return to the Government all copies of proposals, as 
well as any abstracts, upon completion of the evaluation.
_______________________________________________________________________
(Name and Organization)
_______________________________________________________________________
(Date)

                           (End of provision)

    (c) The release of a proposal to a non-Government evaluator for 
evaluation does not constitute the release of information for purposes 
of the Freedom of Information Act (5 U.S.C. 552).
    (d) The contracting officer shall attach a cover page bearing the 
following notice: GOVERNMENT NOTICE FOR HANDLING PROPOSALS--This 
proposal shall be used and disclosed for evaluation purposes only. 
Attach a copy of this Government notice to every reproduction or 
abstract of the proposal. Any authorized restrictive notices which the 
submitter places on this proposal shall be strictly complied with. 
Disclosure of this proposal outside the Government for evaluation 
purposes shall be made only to the extent authorized by, and in 
accordance with, FAR 3.104-5, FAR 15.207, and AGAR 415.207.

[64 FR 52674, Sept. 30, 1999; 64 FR 54963, Oct. 8, 1999]



415.209  Solicitation provisions and contract clauses.

    (a) The provision at 452.215-71, Instructions for the Preparation of 
Technical and Business Proposals, may be used when offerors will be 
required to submit technical and business proposals. Contracting 
officers should tailor the clause to reflect the degree of information 
required for the specific acquisition.
    (b) The contracting officer shall insert the provision at 452.215-
72, Amendments to Proposals, in solicitations which require the 
submittal of lengthy, complex technical proposals.

[[Page 249]]



                     Subpart 415.3--Source Selection



415.303  Responsibilities.

    The head of the contracting activity (HCA) is authorized to appoint 
an individual other than the contracting officer as the source selection 
authority.



415.305  Proposal evaluation.

    HCAs are responsible for establishing procedures regarding the 
release of cost information to the members of the technical evaluation 
team.



                     Subpart 415.4--Contract Pricing



415.404-4  Profit.

    (a)(1) USDA will use a structured approach to determine the profit 
or fee prenegotiation objective in acquisition actions when price 
negotiation is based on cost analysis.
    (2) The following types of acquisitions are exempt from the 
requirements of the structured approach, but the contracting officer 
shall comply with FAR 15.404-4(d) when analyzing profit for these 
contracts or actions:
    (i) Architect-engineer contracts;
    (ii) Construction contracts;
    (iii) Contracts primarily requiring delivery of material supplied by 
subcontractors;
    (iv) Termination settlements; and
    (v) Cost-plus-award-fee contracts;
    (b) Unless otherwise restricted by contracting activity procedures, 
the Contracting Officer may use another Federal agency's structured 
approach if that approach has been formalized and is maintained as part 
of that Agency's acquisition regulations (i.e., included in that 
Agency's assigned chapter of Title 48 of the Code of Federal 
Regulations).
    (c) The HCA is responsible for establishing procedures to ensure 
compliance with this subpart.



 Subpart 415.5--Preaward, Award, and Postaward Notifications, Protests 
                              and Mistakes



415.570  Post-award conference.

    If a postaward conference is necessary, the contracting officer 
shall insert clause 452.215-73, Post-Award Conference.



                  Subpart 415.6--Unsolicited Proposals



415.604  Agency points of contact.

    HCAs are responsible for establishing procedures to ensure 
compliance with the requirements of FAR 15.604.



415.606  Agency procedures.

    HCAs are responsible for establishing the procedures for control of 
unsolicited proposals required by FAR 15.606(a) and for identifying the 
contact points as required by FAR 15.606(b).

    Effective Date Note: At 64 FR 52674, Sept. 30, 1999, part 415 was 
revised, effective Nov. 29, 1999. For the convenience of the user, the 
rext remaining in effect until Nov. 29, 1999, is set forth as follows:



PART 415--CONTRACTING BY NEGOTIATION

           Subpart 415.1--General Requirements for Negotiation

Sec.
415.103  Converting from sealed bidding to negotiation procedures.

   Subpart 415.4--Solicitation and Receipt of Proposals and Quotations

415.406  Preparing requests for proposals (RFP's) and requests for 
          quotations (RFQ's).
415.406-1  Uniform contract format.
415.407  Solicitation provisions.
415.408  Issuing solicitations.
415.411  Receipt of proposals and quotations.
415.413  Disclosure and use of information before award.
415.413-2  Alternate II.

                  Subpart 415.5--Unsolicited Proposals

415.504  Advance guidance.
415.506  Agency procedures.

                     Subpart 415.6--Source Selection

415.607  Disclosure of mistakes before award.
415.608  Proposal evaluation.
415.612  Formal source selection.

                          Subpart 415.9--Profit

415.902  Policy.

 Subpart 415.10--Preaward, Award, and Postaward Notifications, Protests 
                              and Mistakes

415.1070  Post-award conference.

    Authority: 5 U.S.C. 301 and 40 U.S.C. 486(c).

    Source: 61 FR 53646, Oct. 15, 1996, unless otherwise noted.

[[Page 250]]

           Subpart 415.1--General Requirements for Negotiation

415.103  Converting from sealed bidding to negotiation procedures.

    An acquisition official at a level above the contracting officer is 
authorized to make the determination to permit the use of negotiation to 
complete an acquisition following the cancellation of an invitation for 
bids.

   Subpart 415.4--Solicitation and Receipt of Proposals and Quotations

415.406  Preparing requests for proposals (RFP's) and requests for 
          quotations (RFQ's).

415.406-1  Uniform contract format.

    The Senior Procurement Executive is authorized to exempt contracts 
from the uniform contract format.

415.407  Solicitation provisions.

    (a) The provision at 452.215-71, Instructions for the Preparation of 
Technical and Business Proposals, may be used when offerors will be 
required to submit technical and business proposals. Contracting 
officers should tailor the clause to reflect the degree of information 
required for the specific acquisition.
    (b) The contracting officer shall insert the provision at 452.215-
72, Amendments to Proposals, in solicitations which require the 
submittal of lengthy, complex technical proposals.

415.408  Issuing solicitations.

    Departmental Regulation and Manual (Series 3400), establishes policy 
and procedures regarding classification, declassification and 
safeguarding of classified information.

415.411  Receipt of proposals and quotations.

    Departmental Regulation and Manual (Series 3400), contains guidance 
on classification, declassification and safeguarding of classified 
information.

415.413  Disclosure and use of information before award.

    Contracting officers shall use the Alternate II procedures in FAR 
15.413-2 and subsection 415.413-2 when releasing proposals outside the 
Government for evaluation purposes.

415.413-2  Alternate II.

    (a) The head of the contracting activity (HCA) is authorized to 
approve the release of proposals outside the Government for evaluation 
purposes. Each such decision shall be supported by a written 
justification that shows in sufficient detail the special needs or 
circumstances requiring the services of individuals outside the 
Government.
    (b) During the preaward period, only the contracting officer, the 
chief of the contracting office, or others specifically authorized by 
either of them may communicate technical or other information to, or 
conduct discussions with, offerors. Information shall not be furnished 
to an offeror if, alone or together with other information, it may 
afford the offeror an advantage over other offerors. However, general 
information that is not prejudicial to other offerors may be furnished.
    (c) Agency personnel and non-Government evaluators having authorized 
access to information contained in proposals shall disclose neither the 
number of offerors nor their identity to the public or to anyone in 
Government except as authorized in accordance with FAR 3.104 (See also 
FAR 5.403).
    (d) The contracting officer shall obtain the following written 
agreement from the non-Government evaluator prior to the release of any 
proposal to that evaluator.

       ``AGREEMENT GOVERNING THE USE AND DISCLOSURE OF PROPOSALS''

RFP#____________________________________________________________________
Offeror_________________________________________________________________

    1. To the best of my knowledge and belief, no conflict of interest 
exists that may diminish my capacity to perform an impartial and 
objective review of the offeror's proposal, or may otherwise result in a 
biased opinion or an unfair advantage. If a potential conflict of 
interest arises or if I identify such a conflict, I agree to notify the 
Government promptly concerning the potential conflict. In determining 
whether any potential conflict of interest exists, I agree to review 
whether me or my employer's relationships with other persons or 
entities, including, but not limited to, ownership of stocks, bonds, 
other outstanding financial interests or commitments, employment 
arrangements (past, present, or under consideration), and, to the extent 
known by me, all financial interests and employment arrangements of my 
spouse, minor children, and other members of my immediate household, may 
place me in a position of conflict, real or apparent, with the 
evaluation proceedings.
    2. I agree to use proposal information only for evaluation purposes. 
I understand that any authorized restriction on disclosure placed upon 
the proposal by the prospective contractor or subcontractor or by the 
Government shall be applied to any reproduction or abstracted 
information of the proposal. I agree to use my best effort to safeguard 
such information physically, and not to disclose the contents of, or 
release any information relating to, the proposal(s) to anyone outside 
of the Source Evaluation Board or other panel assembled for this 
acquisition, the

[[Page 251]]

Contracting Officer, or other individuals designated by the Contracting 
Officer.
    3. I agree to return to the Government all copies of proposals, as 
well as any abstracts, upon completion of the evaluation.
_______________________________________________________________________
(Name and Organization)
_______________________________________________________________________
(Date)

                           (End of provision)

    (e) The release of a proposal outside the Government for evaluation 
does not constitute the release of information for purposes of the 
Freedom of Information Act (5 U.S.C. 552).
    (f) The contracting officer shall attach a cover page bearing the 
GOVERNMENT NOTICE FOR HANDLING PROPOSALS, as set forth in FAR 15.413-
2(e), to each proposal upon receipt. The last sentence of the notice 
shall cite 48 CFR 415.413 as the agency implementing regulation.

                  Subpart 415.5--Unsolicited Proposals

415.504  Advance guidance.

    HCA's are responsible for establishing procedures to ensure 
compliance with the requirements of FAR 15.504.

415.506  Agency procedures.

    HCA's are responsible for establishing the procedures for control of 
unsolicited proposals required by FAR 15.506(a) and for identifying the 
contact points as required by FAR 15.506(b).

                     Subpart 415.6--Source Selection

415.607  Disclosure of mistakes before award.

    The HCA with the concurrence of the Office of the General Counsel is 
authorized to make the determination permitting proposal correction as 
required by FAR 15.607(c)(3).

415.608  Proposal evaluation.

    An acquisition official above the level of the contracting officer 
is authorized to make the determination to reject all proposals under 
the circumstances listed in FAR 15.608(b).

415.612  Formal source selection.

    The HCA shall determine when a formal source selection process will 
be used and establish procedures for implementing the requirements of 
FAR 15.612.

                          Subpart 415.9--Profit

415.902  Policy.

    (a)(1) USDA will use a structured approach to determine the profit 
or fee prenegotiation objective in acquisition actions when price 
negotiation is based on cost analysis.
    (2) The following types of acquisitions are exempt from the 
requirements of the structured approach, but the contracting officer 
shall comply with FAR 15.905-1 when analyzing profit for these contracts 
or actions:
    (i) Architect-engineer contracts;
    (ii) Construction contracts;
    (iii) Contracts primarily requiring delivery of material supplied by 
subcontractors;
    (iv) Termination settlements; and
    (v) Cost-plus-award-fee contracts;
    (b) Unless otherwise restricted by contracting activity procedures, 
the Contracting Officer may use another Federal agency's structured 
approach if that approach has been formalized and is maintained as part 
of that Agency's acquisition regulations (i.e., included in that 
Agency's assigned chapter of Title 48 of the Code of Federal 
Regulations).
    (c) The HCA is responsible for establishing procedures to ensure 
compliance with this subpart.

 Subpart 415.10--Preaward, Award, and Postaward Notifications, Protests 
                              and Mistakes

415.1070  Post-award Conference.

    If a postaward conference is necessary, the contracting officer 
shall insert clause 452.215-73, Post-Award Conference.



PART 416--TYPES OF CONTRACTS--Table of Contents




Sec.
416.000  Scope of part.

                  Subpart 416.2--Fixed-Price Contracts

416.203  Fixed-price contracts with economic price adjustment.
416.203-4  Contract clauses.

                   Subpart 416.4--Incentive Contracts

416.405  Cost-reimbursement incentive contracts.
416.405-2  Cost-plus-award-fee contracts.
416.406  Contract clauses.
416.470  Solicitation provision.

              Subpart 416.5--Indefinite-Delivery Contracts

416.505  Ordering.
416.506  Solicitation provision and contract clauses.

   Subpart 416.6--Time-and-Materials, Labor-Hour, and Letter Contracts

416.603  Letter contracts.
416.603-2  Application.
416.603-4  Contract clauses.
416.670  Contract clauses.

[[Page 252]]

                        Subpart 416.7--Agreements

416.702  Basic agreements.

    Authority: 5 U.S.C. 301 and 40 U.S.C. 486(c).

    Source: 61 FR 53646, Oct. 15, 1996, unless otherwise noted.



416.000  Scope of part.

    Heads of contracting activities (HCA's) are authorized to establish 
written procedures allowing the use of any contract type described in 
FAR part 16 for acquisitions made under simplified acquisition 
procedures in FAR part 13.



                  Subpart 416.2--Fixed-Price Contracts



416.203  Fixed-price contracts with economic price adjustment.



416.203-4  Contract clauses.

    An economic price adjustment clause based on cost indexes of labor 
or material may be used under the conditions listed in FAR 16.203-4(d) 
after approval by the HCA and consultation with the Office of the 
General Counsel.



                   Subpart 416.4--Incentive Contracts



416.405  Cost-reimbursement incentive contracts.



416.405-2  Cost-plus-award-fee contracts.

    The HCA may designate an acquisition official other than the 
contracting officer as the fee determination official (FDO) to make the 
final determination of the award fee. The designated official must have 
warranted contracting authority at the same level as the contracting 
officer or higher, and shall not have participated in preparing the 
contractor performance evaluation. If the HCA does not designate an FDO, 
the chief of the contracting office shall act as the FDO.

[61 FR 53646, Oct. 15, 1996. Redesignated at 63 FR 26995, May 15, 1998.]



416.406  Contract clauses.

    The contracting officer shall insert a clause substantially the same 
as the clause at 452.216-70, Award Fee, in solicitations and contracts 
which contemplate the award of cost-plus-award-fee contracts.

[61 FR 53646, Oct. 15, 1996. Redesignated at 63 FR 26995, May 15, 1998.]



416.470  Solicitation provision.

    The contracting officer shall insert the provision at 452.216-71, 
Base Fee and Award Fee Proposal, in solicitations which contemplate the 
award of a cost-plus-award-fee contract.



              Subpart 416.5--Indefinite-Delivery Contracts



416.505  Ordering.

    (a) The Chief, Procurement Policy Division, Procurement and Property 
Management, Policy Analysis and Coordination Center, has been designated 
as the Departmental Task Order Ombudsman.
    (b) The Departmental Task Order Ombudsman shall designate a task 
order ombudsman for each contracting activity. Contracting activity 
ombudsmen shall review and resolve complaints from contractors 
concerning task or delivery orders placed by the contracting activity.
    (c) Any contractor who is not satisfied with the resolution of a 
complaint by a contracting activity ombudsman may request the 
Departmental Task Order Ombudsman to review the complaint.



416.506  Solicitation provision and contract clauses.

    (a) The contracting officer shall insert a provision substantially 
the same as the provision at 452.216-72, Evaluation Quantities-
Indefinite-Delivery Contract, in solicitations which contemplate the 
award of indefinite-quantity or requirements contracts to establish the 
basis on which offers will be evaluated.
    (b) The contracting officer shall insert the clause at 452.216-73, 
Minimum and Maximum Contract Amounts, in indefinite-delivery, 
indefinite-quantity contracts when the clause at FAR 52.216-18 is used.

[[Page 253]]



   Subpart 416.6--Time-and-Materials, Labor-Hour, and Letter Contracts



416.603  Letter contracts.



416.603-2  Application.

    The HCA is authorized to extend the period for defining a letter 
contract required by FAR 16.603-2(c) in extreme cases where it is 
determined in writing that such action is in the best interest of the 
Government.



416.603-4  Contract clauses.

    The contracting officer shall insert the clause at 452.216-75, 
Letter Contract, in a definitive contract superseding a letter contract.



416.670  Contract clauses.

    The contracting officer shall limit the Government's obligation 
under a time-and-materials or labor-hour contract by inserting the 
clause at 452.216-74, Ceiling Price.



                        Subpart 416.7--Agreements



416.702  Basic agreements.

    Promptly after execution by the Government, the HCA shall furnish to 
the Senior Procurement Executive a copy of each basic agreement 
negotiated with contractors in accordance with FAR 16.702.



PART 417--SPECIAL CONTRACTING METHODS--Table of Contents




    Authority: 5 U.S.C. 301 and 40 U.S.C. 486(c).



                         Subpart 417.2--Options



417.204  Contracts.

    The head of the contracting activity is authorized to approve 
contracts which exceed the 5 year limitation in FAR 17.204(e).

[61 FR 53646, Oct. 15, 1996]

                           PART 418 [RESERVED]

[[Page 254]]



                  SUBCHAPTER D--SOCIOECONOMIC PROGRAMS





PART 419--SMALL BUSINESS PROGRAMS--Table of Contents




                         Subpart 419.2--Policies

Sec.
419.201  General policy.
419.201-70  Office of Small and Disadvantaged Business Utilization 
          (OSDBU).
419.201-71  Small business coordinators.
419.201-73  Reports.

              Subpart 419.5--Set-Asides for Small Business

419.508  Solicitation provisions.

    Subpart 419.6--Certificates of Competency and Determinations of 
                               Eligibility

419.602  Procedures.
419.602-1  Referral.
419.602-3  Resolving differences between the agency and the Small 
          Business Administration.

    Authority: 5 U.S.C. 301 and 40 U.S.C. 486(c).

    Source: 61 FR 53646, Oct. 15, 1996, unless otherwise noted.



                         Subpart 419.2--Policies



419.201  General policy.

    It is the policy of USDA to provide a fair portion of its 
contracting and subcontracting opportunities to small, disadvantaged, 
minority, and women-owned businesses.



419.201-70  Office of Small and Disadvantaged Business Utilization (OSDBU).

    The Office of Small and Disadvantaged Business Utilization (OSDBU) 
develops rules, policy, procedures and guidelines for the effective 
administration of USDA's small and disadvantaged business procurement 
preference program to include minority and women-owned business.



419.201-71  Small business coordinators.

    The head of the contracting activity (HCA) or a representative of 
the HCA shall designate in writing a small business coordinator in each 
contracting office. Supervisors of small business coordinators are 
encouraged to provide sufficient time for the coordinators to carry out 
their small business program duties. Coordinators' duties shall include, 
but not be limited to, the following:
    (a) Review each proposed acquisition expected to exceed the 
simplified acquisition threshold prior to its solicitation. The 
coordinator shall:
    (1) Recommend section 8(a) action and identify potential 
contractors, or
    (2) Identify available minority and women-owned businesses to be 
solicited by competitive procedures. Coordinators shall document the 
contract file with recommendations made and actions taken.
    (b) Participate in goal-setting procedures and planning activities 
and establish aggressive minority and women-owned business goals based 
on the annual review of advance acquisition plans.
    (c) Participate in the review of those contracts which require the 
successful offeror to submit written plans for the utilization of small 
and small disadvantaged businesses as subcontractors.
    (d) Ensure that purchases exceeding $2,500 and not exceeding the 
simplified acquisition threshold are reserved exclusively for small 
businesses, including minority and women-owned businesses. This policy 
shall be implemented unless the contracting officer is unable to obtain 
offers from two or more small business concerns that are competitive 
with market prices and in terms of quality and delivery of the goods or 
services being purchased.
    (e) Maintain comprehensive source listings of small businesses.
    (f) Upon written request, provide small, minority and women-owned 
businesses the bidders mailing lists of individuals receiving 
solicitations which will contain the subcontracting clause entitled 
``Utilization of Small Business Concerns and Small Disadvantaged 
Business Concerns.'' These lists may be limited to those supplies or 
services of major interest to the requesting firms.

[[Page 255]]

    (g) Develop a program of contacts with local, small, minority, and 
women-owned trade, business, and professional associations and 
organizations and Indian tribal councils to apprise them of USDA's 
program needs and recurring contract requirements.
    (h) Periodically meet with program managers to discuss requirements 
of the small business preference program, explore the feasibility of 
breaking large complex requirements into smaller lots suitable for 
participation by small firms, and encourage program managers to meet 
with these firms so that their capabilities can be demonstrated.
    (i) Establish internal operating procedures which implement the 
requirements of the regulations as set forth in this part 419. Compile 
data and prepare all reports pertaining to the small, minority and 
women-owned business activities. Ensure that these reports are accurate, 
complete and up-to-date.
    (j) Assist and counsel small business firms and especially those 
found to be nonresponsive or nonresponsible to help qualify them for 
future awards.
    (k) Review proposed large contract requirements to determine the 
potential for breaking out components suitable for purchase from small 
business firms.
    (l) Ensure that the SBA Resident Procurement Center Representative 
(PCR) is provided an opportunity and reasonable time to review any 
solicitation that meets the dollar threshold for small business and 
small disadvantaged business subcontracting plans.



419.201-73  Reports.

    (a) The Director, OSDBU, shall be responsible for submitting reports 
concerning USDA's progress and achievements in the procurement 
preference program.
    (b) The following dates must be adhered to in regard to the 
reporting of subcontract award data.

SF-294 Reports
    Frequency: Twice a Year.
    Cut-off date (Reporting Period Ending): March 31.
    Date Due at Contracting Activity: April 30.
    Cut-off date (Reporting Period Ending): September 30.
    Date Due at Contracting Activity: October 30.
SF-295 Reports
    Frequency: Once a Year.
    Cut-off date (12 Month-Period Ending): September 30.
    Date Due at OSDBU: October 30.

[61 FR 53646, Oct. 15, 1996, as amended at 63 FR 26995, May 15, 1998]



              Subpart 419.5--Set-Asides for Small Business



419.508  Solicitation provisions.

    The contracting officer shall insert the provision at 452.219-70, 
Size Standard and SIC Code Information, in solicitations that are set 
aside for small businesses.



    Subpart 419.6--Certificates of Competency and Determinations of 
                               Eligibility



419.602  Procedures.



419.602-1  Referral.

    Contracting officers shall refer determinations of non-
responsibility regarding small businesses directly to the SBA Regional 
Office servicing the location where the contractor's office (home) is 
located.



419.602-3  Resolving differences between the agency and the Small Business Administration.

    The HCA is authorized to appeal the issuance of a COC to SBA 
Headquarters as provided by FAR 19.602-3(a).

[63 FR 26995, May 15, 1998]

                        PARTS 420-421 [RESERVED]



PART 422--APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS--Table of Contents




                   Subpart 422.1--Basic Labor Policies

Sec.
422.103  Overtime.
422.103-4  Approvals.

       Subpart 422.3--Contract Work Hours and Safety Standards Act

422.302  Liquidated damages and overtime pay.

[[Page 256]]

   Subpart 422.4--Labor Standards for Contracts Involving Construction

422.404  Davis-Bacon Act wage determinations.
422.404-6  Modifications of wage determinations.
422.406  Administration and enforcement.
422.406-8  Investigations.

            Subpart 422.6--Walsh-Healey Public Contracts Act

422.604  Exemptions.
422.604-2  Regulatory exemptions.
422.608  [Reserved]

               Subpart 422.8--Equal Employment Opportunity

422.803  Responsibilities.
422.804  Affirmative action programs.
422.804-2  Construction.
422.807  Exemptions.

        Subpart 422.13--Special Disabled and Vietnam Era Veterans

422.1303  Waivers.
422.1306  Complaint procedures.

              Subpart 422.14--Employment of the Handicapped

422.1403  Waivers.
422.1406  Complaint procedures.

    Authority: 5 U.S.C. 301 and 40 U.S.C. 486(c).

    Source: 61 FR 53646, Oct. 15, 1996, unless otherwise noted.



                   Subpart 422.1--Basic Labor Policies



422.103  Overtime.



422.103-4  Approvals.

    Requests for the use of overtime shall be approved by an acquisition 
official at a level above the contracting officer in accordance with the 
procedures in FAR 22.103-4 (a) and (b).



       Subpart 422.3--Contract Work Hours and Safety Standards Act



422.302  Liquidated damages and overtime pay.

    Heads of contracting activities (HCA's) are authorized to review 
determinations of liquidated damages due under section 104(c) of the 
Contract Work Hours and Safety Standards Act, and to take remedial 
action, if appropriate, in accordance with FAR 22.302(c). Contractors or 
subcontractors may request review of administrative determinations of 
liquidated damages by written notice to the contracting officer. The 
contracting officer shall promptly forward appeals of liquidated damages 
determinations to the HCA.



   Subpart 422.4--Labor Standards for Contracts Involving Construction



422.404  Davis-Bacon Act wage determinations.



422.404-6  Modifications of wage determinations.

    HCA's are authorized to request extension of the 90 day period for 
award after bid opening as provided in FAR 22.404-6(b)(6).



422.406  Administration and enforcement.



422.406.8  Investigations.

    Reports of violations shall be forwarded to the HCA, who shall 
process such reports in accordance with FAR 22.406-8(d).



            Subpart 422.6--Walsh-Healey Public Contracts Act



422.604  Exemptions.



422.604-2  Regulatory exemptions.

    The Assistant Secretary for Administration can request the Secretary 
of labor to exempt contracts from the Walsh-Healey Public Contracts Act 
pursuant to FAR 22.604-2(c). A written finding justifying the request 
for exemption shall be prepared for the Assistant Secretary's signature 
and submitted by the HCA to the Senior Procurement Executive (SPE) for 
referral to the Assistant Secretary.



422.608  [Reserved]



               Subpart 422.8--Equal Employment Opportunity



422.803  Responsibilities.

    The contracting office shall submit questions involving the 
applicability of

[[Page 257]]

Executive Order 11246 and FAR subpart 22.8 through the HCA to the SPE 
for resolution.



422.804  Affirmative action programs.



422.804-2  Construction.

    The HCA shall ensure that each contracting office, awarding 
nonexempt construction contracts, maintains a current listing of covered 
geographical areas subject to affirmative action requirements specifying 
goals for minorities and women in covered construction trades.



422.807  Exemptions.

    (a) The Assistant Secretary for Administration is authorized to make 
the determination in FAR 22.807(a)(1) that a contract is essential to 
the national security.
    (b) The contracting officer shall submit requests for exemptions 
under FAR 22.807(a)(1), (a)(2), and (b)(5) through the HCA to the SPE 
for determination by the Assistant Secretary of Administration or 
referral to the Director, Office of Federal Contract Compliance Programs 
(OFCCP), as appropriate.



        Subpart 422.13--Special Disabled and Vietnam Era Veterans



422.1303  Waivers.

    (a) The Assistant Secretary for Administration is authorized to make 
the waiver determinations under FAR 22.1303(a) and FAR 22.1303(b) with 
concurrence of the Director, OFCCP.
    (b) The contracting office shall submit requests for waivers through 
the HCA to the SPE for determination by the Assistant Secretary for 
Administration.



422.1306  Complaint procedures.

    The contracting officer shall forward complaints received about the 
administration of the Vietnam Era Veterans Readjustment Assistance Act 
directly to the Department of Labor (DoL) as prescribed in FAR 22.1306.



              Subpart 422.14--Employment of the Handicapped



422.1403  Waivers.

    (a) The Assistant Secretary for Administration is authorized to make 
the waiver determinations under FAR 22.1403(a) and (b) with concurrence 
of the Director, OFCCP.
    (b) The contracting officer shall submit requests for waivers 
through the HCA to the SPE for determination by the Assistant Secretary 
for Administration.



422.1406  Complaint procedures.

    The contracting officer shall forward complaints received about the 
administration of Section 503 of the Rehabilitation Act of 1973, as 
amended, directly to the OFCCP as prescribed in FAR 22.1406.



PART 423--ENVIRONMENT, CONSERVATION, OCCUPATIONAL SAFETY, AND DRUG-FREE WORKPLACE--Table of Contents




        Subpart 423.1--Pollution Control and Clean Air and Water

Sec.
423.101  Applicability.
423.103  Policy.
423.104  Exemptions.
423.106  Delaying award.
423.107  Compliance responsibilities.

                   Subpart 423.2--Energy Conservation

423.203  Policy.

                Subpart 423.4--Use of Recovered Materials

423.400  Scope of subpart.
423.402  Definitions.
423.404  Procedures.
423.404-70  Acquisition, Recycling, and Waste Prevention Program 
          (AR&WPP).

                   Subpart 423.5--Drug-Free Workplace

423.506  Suspension of payments, termination of contract, and debarment 
          and suspension actions.

              Subpart 423.6--Notice of Radioactive Material

423.601  Requirements.

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  Subpart 423.7--Contracting for Environmentally Preferable and Energy-
                     Efficient Products and Services

423.704  Policy.

    Authority: 5 U.S.C. 301 and 40 U.S.C. 486(c).

    Source: 61 FR 53646, Oct. 15, 1996, unless otherwise noted.



        Subpart 423.1--Pollution Control and Clean Air and Water



423.101  Applicability.

    In addition to the requirement in FAR 23.101, this subpart applies 
to indefinite-delivery contracts, other than those for commercial items, 
when the contracting officer estimates that the contract will exceed 
$100.000.



423.103  Policy.

    The head of the contracting activity (HCA) shall establish a system 
of instructions to make available to each contracting officer the EPA 
List of Violating Facilities and to ensure the contracting officer 
reviews the list prior to each proposed award.



423.104  Exemptions.

    (a) The Assistant Secretary for Administration is authorized to 
grant an exemption described in FAR 23.104.
    (b) The Senior Procurement Executive (SPE) is authorized to consult 
with the EPA Administrator regarding a proposed class exemption.



423.106  Delaying award.

    Prior to notifying EPA, the contracting officer shall advise the SPE 
of the need to award before the requested time period expires.



423.107  Compliance responsibilities.

    The HCA is authorized to notify the Administrator of EPA of known or 
suspected noncompliance with clean air or water standards in facilities 
used in performing nonexempt contracts. A copy of the notification is to 
be provided to the SPE.



                   Subpart 423.2--Energy Conservation



423.203  Policy.

    In the acquisition of products and services, USDA will give 
preference to those that are more energy-efficient.



                Subpart 423.4--Use of Recovered Materials



423.400  Scope of subpart.

    This subpart implements and supplements FAR policies and procedures 
for acquiring products and services when preference is given to offers 
of products containing recovered materials. This subpart further 
supplements FAR subpart 23.4 by providing guidance for recycling and 
waste prevention programs in accordance with Executive Order 12873 and 
42 U.S.C. 6962.



423.402  Definitions.

    Mission areas are USDA organizational elements headed by an 
Undersecretary or an Assistant Secretary.
    USDA Acquisition, Recycling, and Waste Prevention Program, issued by 
the USDA Environmental Executive, provides implementing guidance for 
Departmental affirmative procurement, recycling, and waste reduction.
    The USDA Environmental Executive is the Deputy Assistant Secretary 
for Administration.



423.404  Procedures.

    (a) The dollar thresholds described in FAR 23.404(a) apply to USDA 
as a whole.
    (b) EPA designated items. The officials identified as Acquisition, 
Recycling, and Waste Prevention Program (AR&WPP) Coordinators are 
authorized to approve determinations to buy EPA designated items which 
do not meet EPA or USDA minimum recovered material content standards.
    (c) Agency designated items. The USDA Environmental Executive may, 
without further publication in this chapter, designate items or classes 
of items containing recovered material to be acquired under the 
procedures in FAR 23.4 and this subpart.

[[Page 259]]



423.404-70  Acquisition, Recycling, and Waste Prevention Program (AR&WPP).

    (a) Applicability. The AR&WPP applies to all USDA organizations; 
i.e., USDA mission areas, USDA corporations (as described in 31 U.S.C. 
9101), and USDA staff offices not included within a mission area.
    (b) Authority. The AR&WPP has been established to comply with the 
requirements of Executive Order 12873 to coordinate all environmental 
programs in the areas of procurement and acquisition, standards and 
specification review, facilities management, waste prevention and 
recycling, and logistics.
    (c) Responsibilities. (1) Each USDA organization will identify one 
or more AR&WPP Coordinators in writing to represent the mission area, 
serve on the Council of Coordinators, and work in conjunction with the 
USDA Environmental Executive.
    (2) Each USDA organization periodically will conduct an audit 
(survey or inventory) of the waste stream generated by the organization. 
The goals of the audit are:
    (i) To identify and measure the elements of waste generated in its 
operations;
    (ii) To identify processes, equipment, techniques, or materials 
which generate waste in energy or materials;
    (iii) To identify actions which can be taken to reduce and to 
recycle or recover the wastes generated; and
    (iv) To assign time frames to accomplish those actions.
    (3) Each USDA organization will implement an avoidance or recovery 
or recycling program based on the results of the waste stream audit.
    (4) Each USDA organization will implement a plan to install on-going 
waste prevention techniques.
    (5) Each USDA organization will ensure that responsibility for 
preparation, implementation, and monitoring of its affirmative 
procurement program is shared between program personnel and procurement 
personnel.
    (6) Each USDA organization will establish measurable goals by which 
the effectiveness of its participation in AR&WPP can be assessed on an 
annual basis.
    (7) Each USDA organization will sponsor annual awards to recognize 
the most innovative environmental program of the year.
    (d) Acquisition and administration. (1) Each USDA organization will 
annually review its product descriptions to enhance the use of recovered 
materials and environmentally preferable products and services by 
eliminating from the product description:
    (i) Any exclusion of recovered materials, and
    (ii) Any requirement that items be manufactured from virgin 
materials.
    (2) Each USDA organization will create a promotion program to 
internally and externally promote its desire to buy recycled products.
    (3) Each USDA organization will implement the USDA electronic 
acquisition system to reduce waste by eliminating unnecessary paper 
transactions and to foster accurate data collection and reporting of 
acquisitions.
    (4) Each USDA organization will establish an affirmative procurement 
program specifically for the needs and requirements of its own 
organization, to maximize environmental benefits, consistent with price, 
performance, and availability considerations.
    (5) Each USDA organization will ensure that the on-going inspection 
and production surveillance systems in place will monitor the production 
or the testing of goods and services to verify the recovered material 
contents reported.
    (6) Each USDA organization will include
    (i) Requirements in contracts for contractor operation of 
Government-owned or leased facilities to provide for waste prevention 
activities and the recycling of materials and
    (ii) Environmental and recycling factors in the selection process 
for the acquisition and management of real property.



                   Subpart 423.5--Drug-Free Workplace



423.506  Suspension of payments, termination of contract, and debarment and suspension actions.

    (a) The contracting officer may recommend waiver of the 
determination

[[Page 260]]

to suspend payments, to terminate a contract, or to debar or to suspend 
a contractor.
    (b) The recommendation shall be submitted through the HCA to the SPE 
and shall include a full description of the disruption of USDA 
operations should the determination not be waived.
    (c) The SPE will submit the request for a waiver to the Secretary 
with a recommendation for action.



              Subpart 423.6--Notice of Radioactive Material



423.601  Requirements.

    The HCA shall establish a system of instructions to identify the 
installation/facility radiation protection officer.



  Subpart 423.7--Contracting for Environmentally Preferable and Energy-
                     Efficient Products and Services



423.704  Policy.

    In its acquisitions, USDA will give preference to environmentally 
preferable and energy-efficient products and services.



PART 424--PROTECTION OF PRIVACY AND FREEDOM OF INFORMATION--Table of Contents




             Subpart 424.1--Protection of Individual Privacy

Sec.
424.103  Procedures.
424.104  Contract clauses.

                Subpart 424.2--Freedom of Information Act

424.203  Policy.

    Authority: 5 U.S.C. 301 and 40 U.S.C. 486(c).

    Source: 61 FR 53646, Oct. 15, 1996, unless otherwise noted.



             Subpart 424.1--Protection of Individual Privacy



424.103  Procedures.

    USDA regulations implementing the Privacy Act are found in 7 CFR, 
subtitle A, part 1, subpart G. Contracting officers shall follow these 
regulations when responding to requests for information or awarding 
contracts that will involve the design, development, or operation of a 
system of records on individuals to accomplish agency functions.



424.104  Contract clauses.

    When applicable, the contracting officer shall insert the clause at 
452.224-70, Confidentiality of Information, in contracts involving 
confidential information.



                Subpart 424.2--Freedom of Information Act



424.203  Policy.

    USDA regulations implementing the Freedom of Information Act are 
found in 7 CFR, subtitle A, part 1, subpart A. Contracting officers 
shall follow these regulations when responding to requests for 
information or awarding contracts that will involve the design, 
development, or operation of a system of records on individuals to 
accomplish agency functions.

[61 FR 53646, Oct. 15, 1996. Redesignated at 63 FR 26995, May 15, 1998.]



PART 425--FOREIGN ACQUISITION--Table of Contents




                Subpart 425.1--Buy American Act--Supplies

Sec.
425.102  Policy.
425.105  Evaluating offers.
425.108  Expected articles, materials, and supplies.

         Subpart 425.2--Buy American Act--Construction Materials

425.202  Policy.
425.203-425.204  [Reserved]

               Subpart 425.3--Balance of Payments Program

425.302  Policy.
425.304  Excess and near-excess foreign currencies.

                     Subpart 425.4--Trade Agreements

425.402  Policy.

[[Page 261]]

          Subpart 425.9--Additional Foreign Acquisition Clauses

425.901  Omission of audit clause.

   Subpart 425.10--Implementation of Sanctions Against Countries That 
 Discriminate Against United States Products or Services in Government 
                               Procurement

425.1002  Trade sanctions.

    Authority: 5 U.S.C. 301 and 40 U.S.C. 486(c).

    Source: 61 FR 53646, Oct. 15, 1996, unless otherwise noted.



                Subpart 425.1--Buy American Act--Supplies



425.102  Policy.

    The Senior Procurement Executive (SPE) shall make the determination 
prescribed in FAR 25.102(a)(3).



425.105  Evaluating offers.

    The SPE shall make the determinations prescribed in FAR 25.105. 
Requests for SPE approval shall be submitted by the HCA, in writing, and 
shall provide a detailed justification supporting why the proposed award 
is in the best interest of the Government.



425.108  Excepted articles, materials, and supplies.

    (a) Copies of determinations of nonavailability in accordance with 
FAR 25.102(a)(4) or 25.202(a)(3), for articles, material or supplies not 
listed in FAR 25.108, shall be submitted to the SPE for submission to 
the FAR Council.
    (b) Information required by FAR 25.108(c) shall be submitted to the 
SPE for submission to the FAR Council.



         Subpart 425.2--Buy American Act--Construction Materials



425.202  Policy.

    (a) The SPE shall make the determination prescribed in FAR 
25.202(a)(3).
    (b) If a contracting officer proposes that the use of a particular 
domestic construction material should be waived for a contract on the 
grounds that its use would be impracticable, the contracting officer 
shall submit a proposed determination with supporting information 
through the HCA to the SPE for approval or disapproval.

[63 FR 26995, May 15, 1998]



425.203-425.204  [Reserved]



               Subpart 425.3--Balance of Payments Program



425.302  Policy.

    The HCA shall make the determinations prescribed in FAR 25.302(b)(2) 
and (3) and may authorize differentials greater than 50 percent as 
prescribed in FAR 25.302(c).



425.304  Excess and near-excess foreign currencies.

    HCA's shall make the determinations as to the feasibility of using 
excess or near-excess currency.



                     Subpart 425.4--Trade Agreements



425.402  Policy.

    Whenever the U.S. Trade Representative publishes a redetermination 
of the dollar threshold at which the Trade Agreements Act applies, that 
dollar threshold will be published in a Departmental Notice, 5025 
series.



          Subpart 425.9--Additional Foreign Acquisition Clauses



425.901  Omission of audit clause.

    The SPE shall make the determination under FAR 25.901(c)(1).



   Subpart 425.10--Implementation of Sanctions Against Countries That 
 Discriminate Against United States Products or Services in Government 
                               Procurement



425.1002  Trade sanctions.

    The Secretary, without power of redelegation, has the authority to 
make the necessary determination(s) and authorize award(s) of 
contract(s) in accordance with FAR 25.1002(c).

[[Page 262]]



PART 426--OTHER SOCIOECONOMIC PROGRAMS--Table of Contents






        Subpart 426.70--Preference for Selected Biobased Products

Sec.
426.7000  Scope of subpart.
426.7001  Applicability.
426.7002  Authority.
426.7003  Policy.
426.7004  Definitions.
426.7005  Preference list.
426.7006  Use of a set-aside or a price preference.
426.7007  Use of a technical evaluation preference.
426.7008  Identification of preferred products.
426.7009  Contract provisions.

    Authority: 5 U.S.C. 301; 7 U.S.C. 5909; 40 U.S.C. 486(c).

    Source: 63 FR 26997, May 15, 1998, unless otherwise noted.



        Subpart 426.70--Preference for Selected Biobased Products



426.7000  Scope of subpart.

    This subpart supplements the FAR to implement the set-asides and 
preferences described in section 1665 of the Food, Agriculture, 
Conservation and Trade Act of 1990 (7 U.S.C. 5909).



426.7001  Applicability.

    This subpart applies to USDA and all of its components, including 
corporations.



426.7002  Authority.

    Section 1665 of the Food, Agriculture, Conservation and Trade Act of 
1990 (7 U.S.C. 5909) authorizes USDA to establish set-asides and other 
preferences for products that have been assisted by the Alternative 
Agricultural Research and Commercialization Corporation (AARCC).



426.7003  Policy.

    (a) AARCC provides financial assistance to private companies and 
other parties to commercialize nonfood, nonfeed products made from 
agricultural and forestry materials and animal by-products (biobased 
products). Biobased products by their nature are environmentally 
friendly, and, in many instances, use agricultural material that 
otherwise would be waste. It is the policy of USDA to acquire AARCC 
products to the maximum extent practicable. This policy applies to all 
acquisitions of products regardless of dollar value.
    (b) USDA shall satisfy its requirements for products the same or 
essentially the same as AARCC products by applying the preferences or 
set-asides described by this subpart.



426.7004  Definitions.

    As used in this subpart--