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  <FMTR>
    <TITLEPG>
      <CODE>CODE OF FEDERAL REGULATIONS</CODE>
      <PRTPAGE P="1"/>
      <TITLENUM>48</TITLENUM>
      <PARTS>Chapter 2 (Parts 201 to 299)</PARTS>
      <REVISED>Revised as of October 1, 2002</REVISED>
      <SUBJECT>Federal Acquisition Regulations System</SUBJECT>
      <CONTAINS>Containing a codification of documents of general applicability and future effect</CONTAINS>
      <DATE>As of October 1, 2002</DATE>
      <ANCIL>With Ancillaries</ANCIL>
      <PUB>
        <P>Published by</P>
        <P>Office of the Federal Register</P>
        <P>National Archives and Records</P>
        <P>Administration</P>
      </PUB>
      <SPECED>A Special Edition of the Federal Register</SPECED>
    </TITLEPG>
    <BTITLE>
      <PRTPAGE P="?ii"/>
      <GPO>U.S. GOVERNMENT PRINTING OFFICE</GPO>
      <CITY>WASHINGTON : 2002</CITY>
      <FORSALE>
        <P>For sale by the Superintendent of Documents, U.S. Government Printing Office</P>
        <P>Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800, DC area (202) 512-1800</P>
        <P>Fax: (202) 512-2250 Mail: Stoop SSOP, Washington, DC 20402-0001</P>
      </FORSALE>
    </BTITLE>
    <TOC>
      <PRTPAGE P="iii"/>
      <HD SOURCE="HED">Table of Contents</HD>
      <PGHD>Page</PGHD>
      <EXPL>
        <SUBJECT>Explanation</SUBJECT>
        <PG>v</PG>
      </EXPL>
      <TITLENO>
        <HD SOURCE="HED">Title 48:</HD>
        <CHAPTI>
          <SUBJECT>Chapter 2—Department of Defense</SUBJECT>
          <PG>3</PG>
        </CHAPTI>
      </TITLENO>
      <FAIDS>
        <HD SOURCE="HED">Finding Aids:</HD>
        <SUBJECT>Table of CFR Titles and Chapters</SUBJECT>
        <PG>669</PG>
        <SUBJECT>Alphabetical List of Agencies Appearing in the CFR</SUBJECT>
        <PG>687</PG>
        <SUBJECT>List of CFR Sections Affected</SUBJECT>
        <PG>697</PG>
      </FAIDS>
    </TOC>
    <CITE>
      <PRTPAGE P="iv"/>
      <P>Cite this Code:<E T="01">CFR</E>
      </P>

      <CITEP>To cite the regulations in this volume use title, part and section number. Thus, <E T="01">48 CFR 201.104</E> refers to title 48, part 201, section 104.</CITEP>
    </CITE>
    <EXPLA>
      <PRTPAGE P="v"/>
      <HD SOURCE="HED">Explanation</HD>
      <P>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.</P>
      <P>Each volume of the Code is revised at least once each calendar year and issued on a quarterly basis approximately as follows:</P>
      <IPAR>
        <P SOURCE="P1">Title 1 through Title 16 </P>
        <STUB>as of January 1</STUB>
        <P SOURCE="P1">Title 17 through Title 27 </P>
        <STUB>as of April 1</STUB>
        <P SOURCE="P1">Title 28 through Title 41 </P>
        <STUB>as of July 1</STUB>
        <P SOURCE="P1">Title 42 through Title 50 </P>
        <STUB>as of October 1</STUB>
      </IPAR>
      <P>The appropriate revision date is printed on the cover of each volume.</P>
      <SIDEHED>
        <HD SOURCE="HED">LEGAL STATUS</HD>
        <P>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).</P>
      </SIDEHED>
      <SIDEHED>
        <HD SOURCE="HED">HOW TO USE THE CODE OF FEDERAL REGULATIONS</HD>
        <P>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.</P>
        <P>To determine whether a Code volume has been amended since its revision date (in this case, October 1, 2002), 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.</P>
      </SIDEHED>
      <SIDEHED>
        <HD SOURCE="HED">EFFECTIVE AND EXPIRATION DATES</HD>
        <P>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.</P>
      </SIDEHED>
      <SIDEHED>
        <HD SOURCE="HED">OMB CONTROL NUMBERS</HD>

        <P>The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires Federal agencies to display an OMB control number with their information collection request. <PRTPAGE P="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.</P>
      </SIDEHED>
      <SIDEHED>
        <HD SOURCE="HED">OBSOLETE PROVISIONS</HD>
        <P>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, 2001, consult either the List of CFR Sections Affected, 1949-1963, 1964-1972, 1973-1985, or 1986-2000, published in 11 separate volumes. For the period beginning January 1, 2001, a “List of CFR Sections Affected” is published at the end of each CFR volume.</P>
      </SIDEHED>
      <SIDEHED>
        <HD SOURCE="HED">CFR INDEXES AND TABULAR GUIDES</HD>

        <P>A subject index to the Code of Federal Regulations is contained in a separate volume, revised annually as of January 1, entitled CFR <E T="04">Index and Finding Aids.</E> This volume contains the Parallel Table of Statutory Authorities and Agency Rules (Table I). A list of CFR titles, chapters, and parts and an alphabetical list of agencies publishing in the CFR are also included in this volume.</P>
        <P>An index to the text of “Title 3—The President” is carried within that volume.</P>
        <P>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.</P>
        <P>A List of CFR Sections Affected (LSA) is published monthly, keyed to the revision dates of the 50 CFR titles.</P>
      </SIDEHED>
      <SIDEHED>
        <HD SOURCE="HED">REPUBLICATION OF MATERIAL</HD>
        <P>There are no restrictions on the republication of material appearing in the Code of Federal Regulations.</P>
      </SIDEHED>
      <SIDEHED>
        <HD SOURCE="HED">INQUIRIES</HD>
        <P>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.</P>
        <P>For inquiries concerning CFR reference assistance, call 202-741-6000 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.</P>
      </SIDEHED>
      <SIDEHED>
        <HD SOURCE="HED">SALES</HD>
        <P>The Government Printing Office (GPO) processes all sales and distribution of the CFR. For payment by credit card, call toll free, 866-512-1800, or DC area, 202-512-1800, M-F 8 a.m. to 4 p.m. e.s.t. or fax your order to 202-512-2250, 24 hours a day. For payment by check, write to the Superintendent of Documents, Attn: New Orders, P.O. Box 371954, Pittsburgh, PA 15250-7954. For GPO Customer Service call 202-512-1803.</P>
      </SIDEHED>
      <SIDEHED>
        <HD SOURCE="HED">ELECTRONIC SERVICES</HD>

        <P>The full text of the Code of Federal Regulations, the LSA (List of CFR Sections Affected), The United States Government Manual, the Federal Register, Public Laws, Public Papers, 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.<PRTPAGE P="vii"/>
        </P>
        <P>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 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.</P>
      </SIDEHED>
      <SIG>
        <NAME>Raymond A. Mosley,</NAME>
        <POSITION>Director,</POSITION>
        <OFFICE>Office of the Federal Register.</OFFICE>
      </SIG>
      <DATE>October 1, 2002.</DATE>
    </EXPLA>
    <THISTITL>
      <PRTPAGE P="ix"/>
      <HD SOURCE="HED">THIS TITLE</HD>
      <P>Title 48—<E T="04">Federal Acquisition Regulations System</E> 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, 2002.</P>

      <P>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 <E T="03">implementing</E> 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 <E T="03">supplementing</E> the Federal acquisition regulations.</P>
      <P>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).</P>
      <P>The first volume, containing chapter 1 (parts 1 to 51), includes an index to the Federal acquisition regulations.</P>
      <GPH DEEP="532" SPAN="1">
        <PRTPAGE P="x"/>
        <GID>CFRORDR.FRM</GID>
      </GPH>
    </THISTITL>
  </FMTR>
  <TITLE>
    <LRH>48 CFR Ch. 2 (10-1-02 Edition)</LRH>
    <RRH>Department of Defense</RRH>
    <CFRTITLE>
      <TITLEHD>
        <PRTPAGE P="1"/>
        <HD SOURCE="HED">Title 48—Federal Acquisition Regulations System</HD>
        <P>(This book contains chapter 2, parts 201 to 299)</P>
      </TITLEHD>
      <CFRTOC>
        <PTHD>Part</PTHD>
        <CHAPTI>
          <SUBJECT>
            <E T="04">chapter 2</E>—Department of Defense</SUBJECT>
          <PG>201</PG>
        </CHAPTI>
      </CFRTOC>
    </CFRTITLE>
    <CHAPTER>
      <TOC>
        <TOCHD>
          <PRTPAGE P="3"/>
          <HD SOURCE="HED">CHAPTER 2—DEPARTMENT OF DEFENSE</HD>
        </TOCHD>
        <SUBCHAP>
          <HD SOURCE="HED">SUBCHAPTER A—GENERAL</HD>
        </SUBCHAP>
        <PTHD>Part</PTHD>
        <PGHD>Page</PGHD>
        <CHAPTI>
          <PT>201</PT>
          <SUBJECT>Federal Acquisition Regulations System</SUBJECT>
          <PG>7</PG>
          <PT>202</PT>
          <SUBJECT>Definitions of words and terms</SUBJECT>
          <PG>12</PG>
          <PT>203</PT>
          <SUBJECT>Improper business practices and personal conflicts of interest</SUBJECT>
          <PG>14</PG>
          <PT>204</PT>
          <SUBJECT>Administrative matters</SUBJECT>
          <PG>17</PG>
        </CHAPTI>
        <SUBCHAP>
          <HD SOURCE="HED">SUBCHAPTER B—ACQUISITION PLANNING</HD>
        </SUBCHAP>
        <CHAPTI>
          <PT>205</PT>
          <SUBJECT>Publicizing contract actions</SUBJECT>
          <PG>44</PG>
          <PT>206</PT>
          <SUBJECT>Competition requirements</SUBJECT>
          <PG>46</PG>
          <PT>207</PT>
          <SUBJECT>Acquisition planning</SUBJECT>
          <PG>49</PG>
          <PT>208</PT>
          <SUBJECT>Required sources of supplies and services</SUBJECT>
          <PG>53</PG>
          <PT>209</PT>
          <SUBJECT>Contractor qualifications</SUBJECT>
          <PG>66</PG>
          <PT>210</PT>
          <SUBJECT>Market research</SUBJECT>
          <PG>74</PG>
          <PT>211</PT>
          <SUBJECT>Describing agency needs</SUBJECT>
          <PG>74</PG>
          <PT>212</PT>
          <SUBJECT>Acquisition of commercial items</SUBJECT>
          <PG>77</PG>
        </CHAPTI>
        <SUBCHAP>
          <HD SOURCE="HED">SUBCHAPTER C—CONTRACTING METHODS AND CONTRACT TYPES</HD>
        </SUBCHAP>
        <CHAPTI>
          <PT>213</PT>
          <SUBJECT>Simplified acquisition procedures</SUBJECT>
          <PG>81</PG>
          <PT>214</PT>
          <SUBJECT>Sealed bidding</SUBJECT>
          <PG>85</PG>
          <PT>215</PT>
          <SUBJECT>Contracting by negotiation</SUBJECT>
          <PG>86</PG>
          <PT>216</PT>
          <SUBJECT>Types of contracts</SUBJECT>
          <PG>105</PG>
          <PT>217</PT>
          <SUBJECT>Special contracting methods</SUBJECT>
          <PG>116</PG>
        </CHAPTI>
        <SUBCHAP>
          <HD SOURCE="HED">SUBCHAPTER D—SOCIOECONOMIC PROGRAMS</HD>
        </SUBCHAP>
        <CHAPTI>
          <PT>219</PT>
          <SUBJECT>Small business programs</SUBJECT>
          <PG>133</PG>
          <PT>222</PT>
          <SUBJECT>Application of labor laws to government acquisitions</SUBJECT>
          <PG>145</PG>
          <PT>223</PT>
          <SUBJECT>Environment, conservation, occupational safety, and drug-free workplace</SUBJECT>
          <PG>158</PG>
          <PT>224</PT>
          <SUBJECT>Protection of privacy and freedom of information</SUBJECT>
          <PG>163</PG>
          <PT>225</PT>
          <SUBJECT>Foreign acquisition</SUBJECT>
          <PG>164</PG>
          <PT>226</PT>
          <SUBJECT>Other socioeconomic programs</SUBJECT>
          <PG>206</PG>
        </CHAPTI>
        <SUBCHAP>
          <HD SOURCE="HED">SUBCHAPTER E—GENERAL CONTRACTING REQUIREMENTS</HD>
        </SUBCHAP>
        <CHAPTI>
          <PT>227</PT>
          <SUBJECT>Patents, data, and copyrights</SUBJECT>
          <PG>211<PRTPAGE P="4"/>
          </PG>
          <PT>228</PT>
          <SUBJECT>Bonds and insurance</SUBJECT>
          <PG>252</PG>
          <PT>229</PT>
          <SUBJECT>Taxes</SUBJECT>
          <PG>255</PG>
          <PT>230</PT>
          <SUBJECT>Cost accounting standards administration</SUBJECT>
          <PG>259</PG>
          <PT>231</PT>
          <SUBJECT>Contract cost principles and procedures</SUBJECT>
          <PG>262</PG>
          <PT>232</PT>
          <SUBJECT>Contract financing</SUBJECT>
          <PG>267</PG>
          <PT>233</PT>
          <SUBJECT>Protests, disputes, and appeals</SUBJECT>
          <PG>279</PG>
        </CHAPTI>
        <SUBCHAP>
          <HD SOURCE="HED">SUBCHAPTER F—SPECIAL CATEGORIES OF CONTRACTING</HD>
        </SUBCHAP>
        <CHAPTI>
          <PT>234</PT>
          <SUBJECT>Major system acquisition</SUBJECT>
          <PG>280</PG>
          <PT>235</PT>
          <SUBJECT>Research and development contracting</SUBJECT>
          <PG>280</PG>
          <PT>236</PT>
          <SUBJECT>Construction and architect-engineer contracts</SUBJECT>
          <PG>285</PG>
          <PT>237</PT>
          <SUBJECT>Service contracting</SUBJECT>
          <PG>291</PG>
          <PT>239</PT>
          <SUBJECT>Acquisition of information technology</SUBJECT>
          <PG>302</PG>
          <PT>241</PT>
          <SUBJECT>Acquisition of utility services</SUBJECT>
          <PG>311</PG>
        </CHAPTI>
        <SUBCHAP>
          <HD SOURCE="HED">SUBCHAPTER G—CONTRACT MANAGEMENT</HD>
        </SUBCHAP>
        <CHAPTI>
          <PT>242</PT>
          <SUBJECT>Contract administration and audit services</SUBJECT>
          <PG>314</PG>
          <PT>243</PT>
          <SUBJECT>Contract modifications</SUBJECT>
          <PG>329</PG>
          <PT>244</PT>
          <SUBJECT>Subcontracting policies and procedures</SUBJECT>
          <PG>331</PG>
          <PT>245</PT>
          <SUBJECT>Government property</SUBJECT>
          <PG>332</PG>
          <PT>246</PT>
          <SUBJECT>Quality assurance</SUBJECT>
          <PG>354</PG>
          <PT>247</PT>
          <SUBJECT>Transportation</SUBJECT>
          <PG>362</PG>
          <PT>249</PT>
          <SUBJECT>Termination of contracts</SUBJECT>
          <PG>371</PG>
          <PT>250</PT>
          <SUBJECT>Extraordinary contractual actions</SUBJECT>
          <PG>378</PG>
          <PT>251</PT>
          <SUBJECT>Use of government sources by contractors</SUBJECT>
          <PG>383</PG>
        </CHAPTI>
        <SUBCHAP>
          <HD SOURCE="HED">SUBCHAPTER H—CLAUSES AND FORMS</HD>
        </SUBCHAP>
        <CHAPTI>
          <PT>252</PT>
          <SUBJECT>Solicitation provisions and contract clauses</SUBJECT>
          <PG>385</PG>
          <PT>253</PT>
          <SUBJECT>Forms</SUBJECT>
          <PG>536<PRTPAGE P="5"/>
          </PG>
        </CHAPTI>
        <SUBCHAP>
          <HD SOURCE="HED">SUBCHAPTER I—AGENCY SUPPLEMENTARY REGULATIONS</HD>
        </SUBCHAP>
        <CHAPTI>
          <PT/>
          <SUBJECT>Appendix A—Armed Services Board of Contract Appeals</SUBJECT>
          <PG>568</PG>
          <PT/>
          <SUBJECT>Appendix B—Coordinated Acquisition Assignments</SUBJECT>
          <PG>577</PG>
          <PT/>
          <RESERVED>Appendix C [Reserved]</RESERVED>
          <PT/>
          <SUBJECT>Appendix D—Component Breakout</SUBJECT>
          <PG>587</PG>
          <PT/>
          <SUBJECT>Appendix E—DoD Spare Parts Breakout Program</SUBJECT>
          <PG>589</PG>
          <PT/>
          <SUBJECT>Appendix F—Material Inspection and Receiving Report</SUBJECT>
          <PG>609</PG>
          <PT/>
          <SUBJECT>Appendix G—Activity Address Numbers</SUBJECT>
          <PG>624</PG>
          <PT/>
          <SUBJECT>Appendix H—Debarment and Suspension Procedures</SUBJECT>
          <PG>657</PG>
          <PT/>
          <SUBJECT>Appendix I—Policy and Procedures for the DOD Pilot Mentor-Protege Program</SUBJECT>
          <PG>658</PG>
        </CHAPTI>
        <NOTE>
          <HD SOURCE="HED">Note:</HD>
          <P>Although the text of Manuals and Supplements to the Defense FAR Supplement are not published in the Code of Federal Regulations, they were listed for the convenience of the user. All of the Supplements have been deleted. The only manuals which remain in effect are: Armed Services Pricing Manual (1986) and Armed Services Pricing Manual, Volume 2, Price Analysis (1987).</P>
        </NOTE>
      </TOC>
      <SUBCHAP TYPE="N">
        <PRTPAGE P="7"/>
        <HD SOURCE="HED">SUBCHAPTER A—GENERAL</HD>
        <PART>
          <EAR>Pt. 201</EAR>
          <HD SOURCE="HED">PART 201—FEDERAL ACQUISITION REGULATIONS SYSTEM</HD>
          <CONTENTS>
            <SUBPART>
              <HD SOURCE="HED">Subpart 201.1—Purpose, Authority, Issuance</HD>
              <SECHD>Sec.</SECHD>
              <SECTNO>201.104</SECTNO>
              <SUBJECT>Applicability.</SUBJECT>
              <SECTNO>201.105</SECTNO>
              <SUBJECT>Issuance.</SUBJECT>
              <SECTNO>201.105-3</SECTNO>
              <SUBJECT>Copies.</SUBJECT>
              <SECTNO>201.107</SECTNO>
              <SUBJECT>Certifications.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 201.2—Administration</HD>
              <SECTNO>201.201</SECTNO>
              <SUBJECT>Maintenance of the FAR.</SUBJECT>
              <SECTNO>201.201-1</SECTNO>
              <SUBJECT>The two councils.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 201.3—Agency Acquisition Regulations</HD>
              <SECTNO>201.301</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>201.303</SECTNO>
              <SUBJECT>Publication and codification.</SUBJECT>
              <SECTNO>201.304</SECTNO>
              <SUBJECT>Agency control and compliance procedures.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 201.4—Deviations From the FAR</HD>
              <SECTNO>201.402</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>201.403</SECTNO>
              <SUBJECT>Individual deviations.</SUBJECT>
              <SECTNO>201.404</SECTNO>
              <SUBJECT>Class deviations.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 201.6—Contracting Authority and Responsibilities</HD>
              <SECTNO>201.602</SECTNO>
              <SUBJECT>Contracting officers.</SUBJECT>
              <SECTNO>201.602-2</SECTNO>
              <SUBJECT>Responsibilities.</SUBJECT>
              <SECTNO>201.602-70</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <SECTNO>201.603</SECTNO>
              <SUBJECT>Selection, appointment, and termination of appointment.</SUBJECT>
              <SECTNO>201.603-2</SECTNO>
              <SUBJECT>Selection.</SUBJECT>
              <SECTNO>201.603-3</SECTNO>
              <SUBJECT>Appointment.</SUBJECT>
            </SUBPART>
          </CONTENTS>
          <AUTH>
            <HD SOURCE="HED">Authority:</HD>
            <P>41 U.S.C. 421 and 48 CFR chapter 1.</P>
          </AUTH>
          <SOURCE>
            <HD SOURCE="HED">Source:</HD>
            <P>56 FR 36284, July 31, 1991, unless otherwise noted.</P>
          </SOURCE>
          <SUBPART>
            <HD SOURCE="HED">Subpart 201.1—Purpose, Authority, Issuance</HD>
            <SECTION>
              <SECTNO>201.104</SECTNO>
              <SUBJECT>Applicability.</SUBJECT>
              <P>The FAR and the Defense Federal Acquisition Regulation Supplement (DFARS) also apply to purchases and contracts by DoD contracting activities made in support of foreign military sales or North Atlantic Treaty Organization cooperative projects without regard to the nature or sources of funds obligated, unless otherwise specified in this regulation.</P>
              <CITA>[56 FR 36284, July 31, 1991. Redesignated at 64 FR 39430, July 22, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>201.105</SECTNO>
              <SUBJECT>Issuance.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>201.105-3</SECTNO>
              <SUBJECT>Copies.</SUBJECT>
              <P>The DFARS is available electronically via the World Wide Web at http://www.acq.osd.mil/dp/dars/dfars.html.</P>
              <CITA>[64 FR 39430, July 22, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>201.107</SECTNO>
              <SUBJECT>Certifications.</SUBJECT>
              <P>In accordance with Section 29 of the Office of Federal Procurement Policy Act (41 U.S.C. 425), a new requirement for a certification by a contractor or offeror may not be included in the DFARS unless—</P>
              <P>(1) The certification requirement is specifically imposed by statute; or</P>
              <P>(2) Written justification for such certification is provided to the Secretary of Defense by the Under Secretary of Defense (Acquisition, Technology, and Logistics), and the Secretary of Defense approves in writing the inclusion of such certification requirement.</P>
              <CITA>[63 FR 11528, Mar. 9, 1998, as amended at 65 FR 39704, June 27, 2000]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 201.2—Administration</HD>
            <SECTION>
              <SECTNO>201.201</SECTNO>
              <SUBJECT>Maintenance of the FAR.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>201.201-1</SECTNO>
              <SUBJECT>The two councils.</SUBJECT>
              <P>(c) The composition and operation of the DAR Council is prescribed in DoDI 5000.63, Defense Acquisition Regulations (DAR) System.</P>

              <P>(d)(i) Departments and agencies process proposed revisions of FAR or DFARS through channels to the Director of the DAR Council. Process the proposed revision as a memorandum in the following format, addressed to the Director, DAR Council, OUSD(AT&amp;L), 3062 Defense Pentagon, Washington, DC 20301-3062; datafax (703) 602-0350:
              </P>
              <EXTRACT>

                <P>I. PROBLEM: Succinctly state the problem created by current FAR and/or DFARS coverage and describe the factual and/or legal reasons necessitating the change to the regulation.<PRTPAGE P="8"/>
                </P>
                <P>II. Recommendation: Identify the FAR and/or DFARS citations to be revised. Attach as TAB A a copy of the text of the existing coverage, conformed to include the proposed additions and deletions. Indicate deleted coverage with dashed lines through the current words being deleted and insert proposed language in brackets at the appropriate locations within the existing coverage. If the proposed deleted portion is extensive, it may be outlined by lines forming a box with diagonal lines drawn connecting the corners.</P>
                <P>III. Discussion: Include a complete, convincing explanation of why the change is necessary and how the recommended revision will solve the problem. Address advantages and disadvantages of the proposed revision, as well as any cost or administrative impact on Government activities and contractors. Identify any potential impact of the change on automated systems, e.g., automated financial and procurement systems. Provide any other background information that would be helpful in explaining the issue.</P>
                <P>IV. Collaterals: Address the need for public comment (FAR 1.301(b) and subpart 1.5), the Paperwork Reduction Act, and the Regulatory Flexibility Act (FAR 1.301(c)).</P>
                <P>V. Deviations: If a recommended revision of DFARS is a FAR deviation, identify the deviation and include under separate TAB a justification for the deviation that addresses the requirements of 201.402(2). The justification should be in the form of a memorandum for the Director of Defense Procurement, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics).</P>
              </EXTRACT>
              
              <P>(ii) The public may offer proposed revisions of FAR or DFARS by submission of a memorandum, in the format (including all of the information) prescribed in paragraph (d)(i) of this subsection, to the Director of the DAR Council.</P>
              <CITA>[56 FR 36284, July 31, 1991, as amended at 60 FR 61591, Nov. 30, 1995; 61 FR 50451, Sept. 26, 1996; 63 FR 11528, Mar. 9, 1998; 65 FR 6552, Feb. 10, 2000]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 201.3—Agency Acquisition Regulations</HD>
            <SECTION>
              <SECTNO>201.301</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>(a) DoD implementation and supplementation of the FAR is issued in the Defense Federal Acquisition Regulation Supplement (DFARS) under authorization and subject to the authority, direction, and control of the Secretary of Defense.</P>
              <P>(b) When <E T="04">Federal Register</E> publication is required for any policy, procedure, clause, or form, the department or agency requesting Under Secretary of Defense (Acquisition, Technology, and Logistics) (USD (AT&amp;L)) approval for use of the policy, procedure, clause, or form (see 201.304(1)) must include an analysis of the public comments in the request for approval.</P>
              <CITA>[56 FR 36284, July 31, 1991, as amended at 60 FR 61591, Nov. 30, 1995; 65 FR 6552, Feb. 10, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>201.303</SECTNO>
              <SUBJECT>Publication and codification.</SUBJECT>
              <P>(a)(i) The DFARS is codified under chapter 2 in title 48, Code of Federal Regulations.</P>
              <P>(ii) To the extent possible, all DFARS text (whether implemental or supplemental) is numbered as if it were implemental. Supplemental numbering is used only when the text cannot be integrated intelligibly with its FAR counterpart.</P>

              <P>(A) Implemental numbering is the same as its FAR counterpart, except when the text exceeds one paragraph, the subdivisions are numbered by skipping a unit in the FAR 1.105-2(b)(2) prescribed numbering sequence. For example, three paragraphs implementing FAR 19.501 would be numbered 219.501 (1), (2), and (3) rather than (a), (b), and (c). Three paragraphs implementing FAR 19.501(a) would be numbered 219.501(a) (i), (ii), and (iii) rather than (a) (1), (2), and (3). Further subdivision of the paragraphs follows the prescribed numbering sequence, e.g., 219.501(1)(i)(A)(<E T="03">1</E>)(<E T="03">i</E>).</P>

              <P>(B) Supplemental numbering is the same as its FAR counterpart, with the addition of a number of 70 and up or (S-70) and up. Parts, subparts, sections, or subsections are supplemented by the addition of a number of 70 and up. Lower divisions are supplemented by the addition of a number of (S-70) and up. When text exceeds one paragraph, the subdivisions are numbered using the FAR 1.105-2(b)(2) prescribed sequence, without skipping a unit. For example, DFARS text supplementing FAR 19.501 would be numbered 219.501-70. Its subdivisions would be numbered 219.501-70 (a), (b), and (c).<PRTPAGE P="9"/>
              </P>
              <P>(C) Subdivision numbering below the 4th level does not repeat the numbering sequence. It uses italicized Arabic numbers and then italicized lower case Roman numerals.</P>
              <P>(D) An example of DFARS numbering is in Table 1-1, DFARS Numbering.</P>
              <P>(iii) Department/agency and component supplements must parallel the FAR and DFARS numbering, except department/agency supplemental numbering uses subsection numbering of 90 and up, instead of 70 and up.</P>
              <GPOTABLE CDEF="xl10,xl10,xl10" COLS="3" OPTS="L2">
                <TTITLE>Table 1-1—DFARS Numbering</TTITLE>
                <BOXHD>
                  <CHED H="1">FAR</CHED>
                  <CHED H="1">Is implemented as</CHED>
                  <CHED H="1">Is supplemented as</CHED>
                </BOXHD>
                <ROW>
                  <ENT I="01">19</ENT>
                  <ENT>219</ENT>
                  <ENT>219.70</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">19.5</ENT>
                  <ENT>219.5</ENT>
                  <ENT>219.570</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">19.501</ENT>
                  <ENT>219.501</ENT>
                  <ENT>219.501-70</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">19.501-1</ENT>
                  <ENT>219.501-1</ENT>
                  <ENT>219.501-1-70</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">19.501-1(a)</ENT>
                  <ENT>219.501-1(a)</ENT>
                  <ENT>219.501-1(a)(S-70)</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">19.501-1(a)(1)</ENT>
                  <ENT>219.501-1(a)(1)</ENT>
                  <ENT>219.501-1(a)(1)(S-70)</ENT>
                </ROW>
              </GPOTABLE>
              <CITA>[56 FR 36284, July 31, 1991, as amended at 64 FR 51074, Sept. 21, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>201.304</SECTNO>
              <SUBJECT>Agency control and compliance procedures.</SUBJECT>
              <P>Departments and agencies and their component organizations may issue acquisition regulations as necessary to implement or supplement the FAR or DFARS.</P>
              <P>(1)(i) Approval of the USD (AT&amp;L) is required before including in a department/agency or component supplement, or any other contracting regulation document such as a policy letter or clause book, any policy, procedure, clause, or form that—</P>
              <P>(A) Has a significant effect beyond the internal operating procedures of the agency; or</P>
              <P>(B) Has a significant cost or administrative impact on contractors or offerors.</P>
              <P>(ii) Except as provided in paragraph (2) of this section, the USD(AT&amp;L) has delegated authority to the Director of Defense Procurement (USD(AT&amp;L)DP) to approve or disapprove the policies, procedures, clauses, and forms subject to paragraph (1)(i) of this section.</P>
              <P>(2) In accordance with Section 29 of the Office of Federal Procurement Policy Act (41 U.S.C. 425), a new requirement for a certification by a contractor or offeror may not be included in a department/agency or component procurement regulation unless—</P>
              <P>(i) The certification requirement is specifically imposed by statute; or</P>
              <P>(ii) Written justification for such certification is provided to the Secretary of Defense by USD(AT&amp;L), and the Secretary of Defense approves in writing the inclusion of such certification requirement.</P>
              <P>(3) Contracting activities must obtain the appropriate approval (see 201.404) for any class deviation (as defined in FAR subpart 1.4) from the FAR or DFARS, before its inclusion in a department/agency or component supplement or any other contracting regulation document such as a policy letter or clause book.</P>
              <P>(4) Each department and agency must develop and, upon approval by USD(AT&amp;L)DP, implement, maintain, and comply with a plan for controlling the use of clauses other than those prescribed by FAR or DFARS.</P>
              <P>(5) Departments and agencies must submit requests for the Secretary of Defense, USD(AT&amp;L), and USD(AT&amp;L)DP approvals required by this section through the Director of the DAR Council.</P>
              <CITA>[56 FR 36284, July 31, 1991, as amended at 60 FR 61591, Nov. 30, 1995; 63 FR 11528, Mar. 9, 1998; 64 FR 39430, July 22, 1999; 65 FR 6552, Feb. 10, 2000]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 201.4—Deviations From the FAR</HD>
            <SECTION>
              <SECTNO>201.402</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>(1) The Director of Defense Procurement, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics) (USD(AT&amp;L)DP), is the approval authority within DoD for any individual or class deviation from—</P>
              <P>(i) FAR 3.104, Procurement Integrity, or DFARS 203.104, Procurement Integrity;</P>
              <P>(ii) FAR Subpart 27.4, Rights in Data and Copyrights, or DFARS Subpart 227.4, Rights in Data and Copyrights;</P>
              <P>(iii) FAR part 30, Cost Accounting Standards Administration, or DFARS part 230, Cost Accounting Standards Administration;</P>

              <P>(iv) FAR subpart 31.1, Applicability, or DFARS subpart 231.1, Applicability (contract cost principles);<PRTPAGE P="10"/>
              </P>
              <P>(v) FAR subpart 31.2, Contracts with Commercial Organizations, or DFARS subpart 231.2, Contracts with Commercial Organizations; or</P>
              <P>(vi) FAR part 32, Contract Financing (except subparts 32.7 and 32.8 and the payment clauses prescribed by subpart 32.1), or DFARS part 232, Contract Financing (except subparts 232.7 and 232.8).</P>
              <P>(2) Submit requests for deviation approval through department/agency channels to the approval authority in paragraph (1) of this section, 201.403, or 201.404, as appropriate. Submit deviations that require USD(AT&amp;L)DP approval through the Director of the DAR Council. At a minimum, each request must—</P>
              <P>(i) Identify the department/agency, and component if applicable, requesting the deviation;</P>
              <P>(ii) Identify the FAR or DFARS citation from which a deviation is needed, state what is required by that citation, and indicate whether an individual or class deviation is requested;</P>
              <P>(iii) Describe the deviation and indicate which of paragraphs (a) through (f) of FAR 1.401 best categorizes the deviation;</P>
              <P>(iv) State whether the deviation will have a significant effect beyond the internal operating procedures of the agency and/or a significant cost or administrative impact on contractors or offerors, and give reasons to support the statement;</P>
              <P>(v) State the period of time for which the deviation is required;</P>
              <P>(vi) State whether approval for the same deviation has been received previously, and if so, when;</P>

              <P>(vii) State whether the proposed deviation was published (see FAR subpart 1.5 for publication requirements) in the <E T="04">Federal Register</E> and provide analysis of comments;</P>
              <P>(viii) State whether the request for deviation has been reviewed by legal counsel, and if so, state results; and</P>
              <P>(ix) Give detailed rationale for the request. State what problem or situation will be avoided, corrected, or improved if request is approved.</P>
              <CITA>[56 FR 36284, July 31, 1991, as amended at 60 FR 61591, Nov. 30, 1995; 61 FR 50451, Sept. 26, 1996; 64 FR 8727, Feb. 23, 1999; 65 FR 6552, Feb. 10, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>201.403</SECTNO>
              <SUBJECT>Individual deviations.</SUBJECT>
              <P>(1) Individual deviations, except those described in 201.402(1) and paragraph (2) of this section, must be approved in accordance with the department/agency plan prescribed by 201.304(4).</P>
              <P>(2) Contracting officers outside the United States may deviate from prescribed nonstatutory FAR and DFARS clauses when—</P>
              <P>(i) Contracting for support services, supplies, or construction, with the governments of North Atlantic Treaty Organization (NATO) countries or other allies (as described in 10 U.S.C. 2341(2)), or with United Nations or NATO organizations; and</P>
              <P>(ii) Such governments or organizations will not agree to the standard clauses.</P>
              <CITA>[65 FR 6552, Feb. 10, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>201.404</SECTNO>
              <SUBJECT>Class deviations.</SUBJECT>
              <P>(b)(i) Except as provided in paragraph (b)(ii) of this section, USD(AT&amp;L)DP is the approval authority within DoD for any class deviation.</P>
              <P>(ii) The senior procurement executives for the Army, Navy, and Air Force, and the Directors of the Defense Commissary Agency, the Defense Contract Management Agency, and the Defense Logistics Agency, may approve any class deviation, other than those described in 201.402(1), that does not—</P>
              <P>(A) Have a significant effect beyond the internal operating procedures of the department or agency;</P>
              <P>(B) Have a significant cost or administrative impact on contractors or offerors;</P>
              <P>(C) Diminish any preference given small business concerns by the FAR or DFARS; or</P>

              <P>(D) Extend to requirements imposed by statute or by regulations of other agencies such as the Small Business <PRTPAGE P="11"/>Administration and the Department of Labor.</P>
              <CITA>[65 FR 6552, Feb. 10, 2000, as amended at 65 FR 52951, Aug. 31, 2000]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 201.6—Contracting Authority and Responsibilities</HD>
            <SECTION>
              <SECTNO>201.602</SECTNO>
              <SUBJECT>Contracting officers.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>201.602-2</SECTNO>
              <SUBJECT>Responsibilities.</SUBJECT>
              <P>Contracting officers may designate qualified personnel as their authorized representatives to assist in the technical monitoring or administration of a contract. A contracting officer's representative (COR)—</P>
              <P>(1) Must be a Government employee, unless otherwise authorized in agency regulations.</P>
              <P>(2) Must be qualified by training and experience commensurate with the responsibilities to be delegated in accordance with department/agency guidelines.</P>
              <P>(3) May not be delegated responsibility to perform functions at a contractor's location that have been delegated under FAR 42.202(a) to a contract administration office.</P>
              <P>(4) May not be delegated authority to make any commitments or changes that affect price, quality, quantity, delivery, or other terms and conditions of the contract.</P>
              <P>(5) Must be designated in writing, and a copy furnished the contractor and the contract administration office,—</P>
              <P>(i) Specifying the extent of the COR's authority to act on behalf of the contracting officer;</P>
              <P>(ii) Identifying the limitations on the COR's authority;</P>
              <P>(iii) Specifying the period covered by the designation;</P>
              <P>(iv) Stating the authority is not redelegable; and</P>
              <P>(v) Stating that the COR may be personally liable for unauthorized acts.</P>
              <P>(6) Must maintain a file for each contract assigned. This file must include, as a minimum—</P>
              <P>(i) A copy of the contracting officer's letter of designation and other documentation describing the COR's duties and responsibilities; and</P>
              <P>(ii) Documentation of actions taken in accordance with the delegation of authority.</P>
            </SECTION>
            <SECTION>
              <SECTNO>201.602-70</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <P>Use the clause at 252.201-7000, Contracting Officer's Representative, in solicitations and contracts when appointment of a contracting officer's representative is anticipated.</P>
            </SECTION>
            <SECTION>
              <SECTNO>201.603</SECTNO>
              <SUBJECT>Selection, appointment, and termination of appointment.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>201.603-2</SECTNO>
              <SUBJECT>Selection.</SUBJECT>
              <P>(1) Pursuant to 10 U.S.C. 1724, in order to qualify to serve as a contracting officer with authority to award or administer contracts for amounts above the simplified acquisition threshold, a person must—</P>
              <P>(i) Have completed all mandatory contracting courses required for a contracting officer at the grade level, or in the position within the grade of the General Schedule in which the person is serving;</P>
              <P>(ii) Have at least two years experience in a contracting position;</P>
              <P>(iii) Have—</P>
              <P>(A) Received a baccalaureate degree from an accredited educational institution;</P>
              <P>(B) Completed at least 24 semester credit hours, or equivalent, of study from an accredited institution of higher education in any of the following disciplines: Accounting, business finance, law, contracts, purchasing, economics, industrial management, marketing, quantitative methods, and organization and management; or</P>
              <P>(C) Passed an examination considered to demonstrate skills, knowledge, or abilities comparable to that of an individual who has completed at least 24 semester credit hours, or equivalent, of study from an accredited institution of higher education in any of the disciplines in paragraph (1)(iii)(B) of this subsection; and</P>
              <P>(iv) Meet such additional requirements, based on the dollar value and complexity of the contracts awarded or administered in the position as may be established by the Secretary of Defense.</P>

              <P>(2) The requirements in 201.603-2(1)(iii) do not apply to any employee who, as of October 1, 1991, had at least 10 years experience in acquisition positions, in comparable positions in other government agencies or the private <PRTPAGE P="12"/>sector, or in similar positions in which the individual obtained experience directly relevant to the field of contracting.</P>
              <P>(3) The requirements in 201.603-2(1) do not apply to any employee for purposes of qualifying to serve in the position in which the employee is serving on October 1, 1993, or any other position in the same grade and involving the same level of responsibilities as the position in which the employee is serving on that date.</P>
              <P>(4) Waivers may be authorized. Information on waivers is contained in DoD Manual 5000.52-M, Career Development Program for Acquisition Personnel.</P>
              <CITA>[58 FR 28463, May 13, 1993, as amended at 62 FR 34121, June 24, 1997]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>201.603-3</SECTNO>
              <SUBJECT>Appointment.</SUBJECT>
              <P>(a) Certificates of Appointment executed under the Armed Services Procurement Regulation or the Defense Acquisition Regulation have the same effect as if they had been issued under FAR.</P>
              <P>(b) Agency heads may delegate the purchase authority in 213.301 to DoD civilian employees and members of the U.S. Armed Forces.</P>
              <CITA>[56 FR 36284, July 31, 1991, as amended at 64 FR 56705, Oct. 21, 1999]</CITA>
            </SECTION>
          </SUBPART>
        </PART>
        <PART>
          <EAR>Pt. 202</EAR>
          <HD SOURCE="HED">PART 202—DEFINITIONS OF WORDS AND TERMS</HD>
          <AUTH>
            <HD SOURCE="HED">Authority:</HD>
            <P>41 U.S.C. 421 and 48 CFR chapter 1.</P>
          </AUTH>
          <SUBPART>
            <HD SOURCE="HED">Subpart 202.1—Definitions</HD>
            <SECTION>
              <SECTNO>202.101</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <P>
                <E T="03">Congressional defense committees</E> means—</P>
              <P>(1) The Committee on Armed Services of the Senate;</P>
              <P>(2) The Subcommittee on Defense of the Committee on Appropriations of the Senate;</P>
              <P>(3) The Committee on Armed Services of the House of Representatives; and</P>
              <P>(4) The Subcommittee on Defense of the Committee on Appropriations of the House of Representatives.</P>
              <P>
                <E T="03">Contract administration office</E> also means a contract management office of the Defense Contract Management Agency.</P>
              <P>
                <E T="03">Contracting activity</E> for DoD also means elements designated by the director of a defense agency which has been delegated contracting authority through its agency charter. DoD contracting activities are—</P>
              <HD SOURCE="HD1">Department of Defense</HD>
              
              <EXTRACT>
                <FP SOURCE="FP-1">Department of Defense Education Activity</FP>
                <FP SOURCE="FP-1">TRICARE Management Activity</FP>
                <FP SOURCE="FP-1">Real Estate and Facilities Directorate, Washington Headquarter Services</FP>
                <HD SOURCE="HD1">Army</HD>
                <FP SOURCE="FP-1">Contract Support Agency</FP>
                <FP SOURCE="FP-1">Office of the Deputy Chief of Staff for Research, Development and Acquisition, Headquarters, U.S. Army Materiel Command</FP>
                <FP SOURCE="FP-1">Aviation and Missile Command</FP>
                <FP SOURCE="FP-1">Industrial Operations Command</FP>
                <FP SOURCE="FP-1">Communications-Electronics Command</FP>
                <FP SOURCE="FP-1">Tank-Automotive and Armaments Command</FP>
                <FP SOURCE="FP-1">Training and Doctrine Command</FP>
                <FP SOURCE="FP-1">Forces Command</FP>
                <FP SOURCE="FP-1">Health Services Command</FP>
                <FP SOURCE="FP-1">Military District of Washington</FP>
                <FP SOURCE="FP-1">U.S. Army, Europe</FP>
                <FP SOURCE="FP-1">National Guard Bureau</FP>
                <FP SOURCE="FP-1">Corps of Engineers</FP>
                <FP SOURCE="FP-1">Information Systems Command</FP>
                <FP SOURCE="FP-1">Medical Research and Development Command</FP>
                <FP SOURCE="FP-1">U.S. Army, Pacific</FP>
                <FP SOURCE="FP-1">Military Traffic Management Command</FP>
                <FP SOURCE="FP-1">Space and Strategic Defense Command</FP>
                <FP SOURCE="FP-1">Eighth U.S. Army</FP>
                <FP SOURCE="FP-1">Intelligence and Security Command</FP>
                <FP SOURCE="FP-1">U.S. Army, South</FP>
                <FP SOURCE="FP-1">Defense Supply Service-Washington</FP>
                <FP SOURCE="FP-1">Directorate of Information Systems for Command, Control, Communications and Computers, Office of the Secretary of the Army</FP>
                <FP SOURCE="FP-1">U.S. Army Special Operations Command</FP>
                <HD SOURCE="HD1">Navy</HD>
                <FP SOURCE="FP-1">Deputy, Acquisition and Business Management, Office of the Assistant Secretary of the Navy (Research, Development, and Acquisition)</FP>
                <FP SOURCE="FP-1">Naval Air Systems Command</FP>
                <FP SOURCE="FP-1">Space and Naval Warfare Systems Command</FP>
                <FP SOURCE="FP-1">Naval Facilities Engineering Command</FP>
                <FP SOURCE="FP-1">Naval Inventory Control Point</FP>
                <FP SOURCE="FP-1">Naval Sea Systems Command</FP>
                <FP SOURCE="FP-1">Naval Supply Systems Command</FP>
                <FP SOURCE="FP-1">Office of Naval Research</FP>
                <FP SOURCE="FP-1">Military Sealift Command</FP>
                <FP SOURCE="FP-1">Strategic Systems Programs</FP>
                <FP SOURCE="FP-1">Marine Corps Materiel Command<PRTPAGE P="13"/>
                </FP>
                <FP SOURCE="FP-1">Installations and Logistics, Headquarters, U.S. Marine Corps</FP>
                <HD SOURCE="HD1">Air Force</HD>
                <FP SOURCE="FP-1">Office of the Assistant Secretary of the Air Force (Acquisition)</FP>
                <FP SOURCE="FP-1">Office of the Deputy Assistant Secretary (Contracting)</FP>
                <FP SOURCE="FP-1">Air Force Materiel Command</FP>
                <FP SOURCE="FP-1">Air Combat Command</FP>
                <FP SOURCE="FP-1">Air Mobility Command</FP>
                <FP SOURCE="FP-1">Air Education and Training Command</FP>
                <FP SOURCE="FP-1">Pacific Air Forces</FP>
                <FP SOURCE="FP-1">United States Air Forces in Europe</FP>
                <FP SOURCE="FP-1">Air Force Space Command</FP>
                <HD SOURCE="HD1">Defense Advanced Research Projects Agency</HD>
                <FP SOURCE="FP-1">Office of the Deputy Director, Management</FP>
                <HD SOURCE="HD1">Defense Contract Management Agency</HD>
                <FP SOURCE="FP-1">Office of the Director, Defense Contract Management Agency</FP>
                <HD SOURCE="HD1">Defense Finance and Accounting Service</HD>
                <FP SOURCE="FP-1">External Services, Defense Finance and Accounting Service</FP>
                <HD SOURCE="HD1">Defense Information Systems Agency</HD>
                <FP SOURCE="FP-1">Defense Information Technology Contracting Organization</FP>
                <HD SOURCE="HD1">Defense Intelligence Agency</HD>
                <FP SOURCE="FP-1">Office of Procurement</FP>
                <HD SOURCE="HD1">Defense Logistics Agency</HD>
                <FP SOURCE="FP-1">Office of the Executive Director, Logistics Policy and Acquisition Management</FP>
                <FP SOURCE="FP-1">Defense Supply Centers</FP>
                <FP SOURCE="FP-1">Defense Energy Support Center</FP>
                <HD SOURCE="HD1">National Imagery and Mapping Agency</HD>
                <FP SOURCE="FP-1">Procurement and Contracting Office</FP>
                <HD SOURCE="HD1">Defense Threat Reduction Agency</HD>
                <FP SOURCE="FP-1">Acquisition Management Office</FP>
                <HD SOURCE="HD1">National Security Agency</HD>
                <FP SOURCE="FP-1">Headquarters, National Security Agency</FP>
                <HD SOURCE="HD1">Ballistic Missile Defense Organization</HD>
                <FP SOURCE="FP-1">Headquarters, Ballistic Missile Defense Organization</FP>
                <HD SOURCE="HD1">United States Special Operations Command</HD>
                <FP SOURCE="FP-1">Headquarters, United States Special Operations Command</FP>
              </EXTRACT>
              
              <P>
                <E T="03">Contracting officer's representative</E> means an individual designated and authorized in writing by the contracting officer to perform specific technical or administrative functions.</P>
              <P>
                <E T="03">Departments and agencies,</E> as used in DFARS, means the military departments and the defense agencies. The military departments are the Departments of the Army, Navy, and Air Force (the Marine Corps is a part of the Department of the Navy). The defense agencies are the Defense Advanced Research Projects Agency, the Defense Commissary Agency, the Defense Contract Management Agency, the Defense Finance and Accounting Service, the Defense Information Systems Agency, the Defense Intelligence Agency, the Defense Security Service, the Defense Logistics Agency, the National Imagery and Mapping Agency, the Defense Threat Reduction Agency, the National Security Agency, the Ballistic Missile Defense Organization, and the United States Special Operations Command.</P>
              <P>
                <E T="03">Department of Defense (DoD),</E> as used in DFARS, means the Department of Defense, the military departments, and the defense agencies.</P>
              <P>
                <E T="03">Executive agency</E> means for DoD, the Department of Defense, the Department of the Army, the Department of the Navy, and the Department of the Air Force.</P>
              <P>
                <E T="03">Head of the agency</E> means, for DoD, the Secretary of Defense, the Secretary of the Army, the Secretary of the Navy, and the Secretary of the Air Force. Subject to the direction of the Secretary of Defense, the Under Secretary of Defense (Acquisition, Technology, and Logistics), and the Director of Defense Procurement, the directors of the defense agencies have been delegated authority to act as head of the agency for their respective agencies (i.e., to perform functions under the FAR or DFARS reserved to a head of agency or agency head), except for such actions that by terms of statute, or any delegation, must be exercised within the Office of the Secretary of Defense.</P>
              <P>
                <E T="03">Senior procurement executive</E> means, for DoD—</P>
              <P>Department of Defense (including the defense agencies)—Under Secretary of Defense (Acquisition, Technology, and Logistics);</P>

              <P>Department of the Army—Assistant Secretary of the Army (Research, Development and Acquisition);<PRTPAGE P="14"/>
              </P>
              <P>Department of the Navy—Assistant Secretary of the Navy (Research, Development and Acquisition);</P>
              <P>Department of the Air Force—Assistant Secretary of the Air Force (Acquisition).</P>
              <P>The directors of the defense agencies have been delegated authority to act as senior procurement executive for their respective agencies, except for such actions that by terms of statute, or any delegation, must be exercised by the Under Secretary of Defense (Acquisition, Technology, and Logistics).</P>
              <CITA>[56 FR 36287, July 31, 1991]</CITA>
              <EDNOTE>
                <HD SOURCE="HED">Editorial Note:</HD>
                <P>For <E T="04">Federal Register</E> citations affecting section 202.101, see the List of CFR Sections Affected, which appears in the Finding Aids section of the printed volume and on GPO Access.</P>
              </EDNOTE>
            </SECTION>
          </SUBPART>
        </PART>
        <PART>
          <EAR>Pt. 203</EAR>
          <HD SOURCE="HED">PART 203—IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST</HD>
          <CONTENTS>
            <SUBPART>
              <HD SOURCE="HED">Subpart 203.1—Safeguards</HD>
              <SECHD>Sec.</SECHD>
              <SECTNO>203.103</SECTNO>
              <SUBJECT>Independent pricing.</SUBJECT>
              <SECTNO>203.103-2</SECTNO>
              <SUBJECT>Evaluating the certification.</SUBJECT>
              <SECTNO>203.104</SECTNO>
              <SUBJECT>Procurement integrity.</SUBJECT>
              <SECTNO>203.104-5</SECTNO>
              <SUBJECT>Disclosure of proprietary and source selection information.</SUBJECT>
              <SECTNO>203.104-10</SECTNO>
              <SUBJECT>Violations or possible violations.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 203.2—Contractor Gratuities to Government Personnel</HD>
              <SECTNO>203.203</SECTNO>
              <SUBJECT>Reporting suspected violations of the Gratuities clause.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 203.3—Reports of Suspected Antitrust Violations</HD>
              <SECTNO>203.301</SECTNO>
              <SUBJECT>General.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 203.4—Contingent Fees</HD>
              <SECTNO>203.405</SECTNO>
              <SUBJECT>Misrepresentations or violations of the Covenant Against Contingent Fees.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 203.5—Other Improper Business Practices</HD>
              <SECTNO>203.502</SECTNO>
              <SUBJECT>Subcontractor kickbacks.</SUBJECT>
              <SECTNO>203.502-2</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <SECTNO>203.570</SECTNO>
              <SUBJECT>Prohibition on persons convicted of frauds or other defense-contract-related felonies.</SUBJECT>
              <SECTNO>203.570-1</SECTNO>
              <SUBJECT>Scope.</SUBJECT>
              <SECTNO>203.570-2</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>203.570-3</SECTNO>
              <SUBJECT>Waiver.</SUBJECT>
              <SECTNO>203.570-4</SECTNO>
              <SUBJECT>Reporting.</SUBJECT>
              <SECTNO>203.570-5</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 203.7—Voiding and Rescinding Contracts</HD>
              <SECTNO>203.703</SECTNO>
              <SUBJECT>Authority.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 203.70—Contractor Standards of Conduct</HD>
              <SECTNO>203.7000</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>203.7001</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <SECTNO>203.7002</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
            </SUBPART>
          </CONTENTS>
          <AUTH>
            <HD SOURCE="HED">Authority:</HD>
            <P>41 U.S.C. 421 and 48 CFR chapter 1.</P>
          </AUTH>
          <SOURCE>
            <HD SOURCE="HED">Source:</HD>
            <P>56 FR 36288, July 31, 1991, unless otherwise noted.</P>
          </SOURCE>
          <SUBPART>
            <HD SOURCE="HED">Subpart 203.1—Safeguards</HD>
            <SECTION>
              <SECTNO>203.103</SECTNO>
              <SUBJECT>Independent pricing.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>203.103-2</SECTNO>
              <SUBJECT>Evaluating the certification.</SUBJECT>
              <P>(b)(3) Report the matter in accordance with 209.406-3 or 209.407-3, and DoDD 7050.5, Coordination of Remedies for Fraud and Corruption Related to Procurement Activities.</P>
              <CITA>[64 FR 62984, Nov. 18, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>203.104</SECTNO>
              <SUBJECT>Procurement integrity.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>203.104-5</SECTNO>
              <SUBJECT>Disclosure of proprietary and source selection information.</SUBJECT>
              <P>(d)(4) For purposes of FAR 3.104-5(d)(4) only, DoD follows the notification procedures in FAR 27.404(h). However, the first sentence in FAR 27.404(h) does not apply to DoD.</P>
              <CITA>[56 FR 36288, July 31, 1991, as amended at 62 FR 2612, Jan. 17, 1997]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>203.104-10</SECTNO>
              <SUBJECT>Violations or possible violations.</SUBJECT>
              <P>(d)(3) When referring a violation to the agency debarring and suspending official, use the procedures at 209.406-3 or 209.407-3, and DoDD 7050.5, Coordination of Remedies for Fraud and Corruption Related to Procurement Activities.</P>
              <CITA>[64 FR 62984, Nov. 18, 1999; 65 FR 4864, Feb. 1, 2000]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 203.2—Contractor Gratuities to Government Personnel</HD>
            <SECTION>
              <SECTNO>203.203</SECTNO>
              <SUBJECT>Reporting suspected violations of the Gratuities clause.</SUBJECT>

              <P>Report suspected violations of the Gratuities clause in accordance with <PRTPAGE P="15"/>209.406-3 or 209.407-3, and DoDD 7050.5, Coordination of Remedies for Fraud and Corruption Related to Procurement Activities.</P>
              <CITA>[56 FR 36288, July 31, 1991, as amended at 64 FR 62984, Nov. 18, 1999]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 203.3—Reports of Suspected Antitrust Violations</HD>
            <SECTION>
              <SECTNO>203.301</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <P>(b) Report suspected antitrust violations in accordance with 209.406-3 or 209.407-3, and DoDD 7050.5, Coordination of Remedies for Fraud and Corruption Related to Procurement Activities.</P>
              <CITA>[56 FR 36288, July 31, 1991, as amended at 64 FR 62984, Nov. 18, 1999]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 203.4—Contingent Fees</HD>
            <SECTION>
              <SECTNO>203.405</SECTNO>
              <SUBJECT>Misrepresentations or violations of the Covenant Against Contingent Fees.</SUBJECT>
              <P>(b) Report suspected fraud or other criminal conduct in accordance with 209.406-3 or 209.407-3, and DoDD 7050.5, Coordination of Remedies for Fraud and Corruption Related to Procurement Activities.</P>
              <CITA>[56 FR 36288, July 31, 1991. Redesignated at 62 FR 34121, June 24, 1997, as amended at 64 FR 62984, Nov. 18, 1999]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 203.5—Other Improper Business Practices</HD>
            <SECTION>
              <SECTNO>203.502</SECTNO>
              <SUBJECT>Subcontractor kickbacks.</SUBJECT>
              <P>Report suspected violations of the Anti-Kickback Act in accordance with 209.406-3 or 209.407-3, and DoDD 7050.5, Coordination of Remedies for Fraud and Corruption Related to Procurement Activities.</P>
              <CITA>[56 FR 36288, July 31, 1991, as amended at 64 FR 62984, Nov. 18, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>203.502-2</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <P>(h) The DoD Inspector General has designated Special Agents of the following investigative organizations as representatives for conducting inspections and audits under the Anti-Kickback Act of 1986:</P>
              <P>(i) U.S. Army Criminal Investigation Command.</P>
              <P>(ii) Naval Criminal Investigative Service.</P>
              <P>(iii) Air Force Office of Special Investigations.</P>
              <P>(iv) Defense Criminal Investigative Service.</P>
              <CITA>[56 FR 36288, July 31, 1991, as amended at 60 FR 29497, June 5, 1995]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>203.570</SECTNO>
              <SUBJECT>Prohibition on persons convicted of frauds or other defense-contract-related felonies.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>203.570-1</SECTNO>
              <SUBJECT>Scope.</SUBJECT>
              <P>This subpart prescribes policies and procedures to implement 10 U.S.C. 2408.</P>
            </SECTION>
            <SECTION>
              <SECTNO>203.570-2</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>(a) A contractor or subcontractor shall not knowingly allow a person, convicted after September 29, 1988, of fraud or any other felony arising out of a contract with the DoD, to serve—</P>
              <P>(1) In a management or supervisory capacity on any DoD contract or first-tier subcontract;</P>
              <P>(2) On its board of directors;</P>
              <P>(3) As a consultant, agent, or representative; or</P>
              <P>(4) In any capacity with the authority to influence, advise, or control the decisions of any DoD contractor or subcontractor with regard to any DoD contract or first-tier subcontract.</P>
              <P>(b) DoD has sole responsibility for determining the period of the prohibition described in paragraph (a) of this subsection. The prohibition period—</P>
              <P>(1) Shall not be less than 5 years from the date of conviction unless the agency head or a designee grants a waiver in the interest of national security; and</P>
              <P>(2) May be more than 5 years from the date of conviction if the agency head or a designee makes a written determination of the need for the longer period. The agency shall provide a copy of the determination to the Bureau of Justice Assistance, U.S. Department of Justice, 810 Seventh Street, NW, Washington, DC 20531.</P>
              <CITA>[64 FR 14398, Mar. 25, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>203.570-3</SECTNO>
              <SUBJECT>Waiver.</SUBJECT>
              <P>(a) The contracting officer shall—</P>
              <P>(1) Review any request for waiver; and<PRTPAGE P="16"/>
              </P>
              <P>(2) Deny the request if the contracting officer decides the waiver is not required in the interests of national security; or</P>
              <P>(3) Forward the request to the head of the agency or designee for approval if the contracting officer decides the waiver may be in the interest of national security.</P>
              <P>(b) The head of the agency or designee shall report all waivers granted, and the reasons for granting the waiver, to the Under Secretary of Defense (Acquisition, Technology, and Logistics), who will forward the report to Congress as required by 10 U.S.C. 2408(a)(3).</P>
              <CITA>[56 FR 36288, July 31, 1991, as amended at 65 FR 39074, June 27, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>203.570-4</SECTNO>
              <SUBJECT>Reporting.</SUBJECT>
              <P>When a defense contractor or first-tier subcontractor is found in violation of the prohibition in 203.570-2, report the matter in accordance with 209.406-3 or 209.407-3, and DoDD 7050.5, Coordination of Remedies for Fraud and Corruption Related to Procurement Activities.</P>
              <CITA>[64 FR 62984, Nov. 18, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>203.570-5</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <P>Use the clause at 252.203-7001, Prohibition on Persons Convicted of Fraud or Other Defense-Contract-Related Felonies, in all solicitations and contracts exceeding the simplified acquisition threshold, except solicitations and contracts for commercial items.</P>
              <CITA>[64 FR 14398, Mar. 25, 1999]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 203.7—Voiding and Rescinding Contracts</HD>
            <SECTION>
              <SECTNO>203.703</SECTNO>
              <SUBJECT>Authority.</SUBJECT>
              <P>The authority to act for the agency head under this subpart is limited to a level no lower than an official who is appointed by and with the advice of the Senate, without power of redelegation. For the defense agencies, for purposes of this subpart, the agency head designee is the Under Secretary of Defense (Acquisition, Technology, and Logistics).</P>
              <CITA>[56 FR 36288, July 31, 1991, as amended at 60 FR 61592, Nov. 30, 1995; 65 FR 39704, June 27, 2000]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 203.70—Contractor Standards of Conduct</HD>
            <SECTION>
              <SECTNO>203.7000</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>Government contractors must conduct themselves with the highest degree of integrity and honesty. Contractors should have standards of conduct and internal control systems that—</P>
              <P>(1) Are suitable to the size of the company and the extent of their involvement in Government contracting,</P>
              <P>(2) Promote such standards,</P>
              <P>(3) Facilitate timely discovery and disclosure of improper conduct in connection with Government contracts, and</P>
              <P>(4) Ensure corrective measures are promptly instituted and carried out.</P>
            </SECTION>
            <SECTION>
              <SECTNO>203.7001</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <P>(a) A contractor's system of management controls should provide for—</P>
              <P>(1) A written code of business ethics and conduct and an ethics training program for all employees;</P>
              <P>(2) Periodic reviews of company business practices, procedures, policies, and internal controls for compliance with standards of conduct and the special requirements of Government contracting;</P>
              <P>(3) A mechanism, such as a hotline, by which employees may report suspected instances of improper conduct, and instructions that encourage employees to make such reports;</P>
              <P>(4) Internal and/or external audits, as appropriate;</P>
              <P>(5) Disciplinary action for improper conduct;</P>
              <P>(6) Timely reporting to appropriate Government officials of any suspected or possible violation of law in connection with Government contracts or any other irregularities in connection with such contracts; and</P>

              <P>(7) Full cooperation with any Government agencies responsible for either investigation or corrective actions.<PRTPAGE P="17"/>
              </P>
              <P>(b) Contractors who are awarded a DoD contract of $5 million or more must display DoD Hotline Posters prepared by the DoD Office of the Inspector General unless—</P>
              <P>(1) The contract will be performed in a foreign country; or</P>
              <P>(2) The contractor has established an internal reporting mechanism and program, as described in paragraph (a) of this section.</P>
            </SECTION>
            <SECTION>
              <SECTNO>203.7002</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <P>Use the clause at 252.203-7002, Display of DoD Hotline Poster, in solicitations and contracts expected to exceed $5 million, except when performance will take place in a foreign country.</P>
            </SECTION>
          </SUBPART>
        </PART>
        <PART>
          <EAR>Pt. 204</EAR>
          <HD SOURCE="HED">PART 204—ADMINISTRATIVE MATTERS</HD>
          <CONTENTS>
            <SUBPART>
              <HD SOURCE="HED">Subpart 204.1—Contract Execution</HD>
              <SECHD>Sec.</SECHD>
              <SECTNO>204.101</SECTNO>
              <SUBJECT>Contracting officer's signature.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 204.2—Contract Distribution</HD>
              <SECTNO>204.201</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <SECTNO>204.202</SECTNO>
              <SUBJECT>Agency distribution requirements.</SUBJECT>
              <SECTNO>204.203</SECTNO>
              <SUBJECT>Taxpayer identification information.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 204.4—Safeguarding Classified Information Within Industry</HD>
              <SECTNO>204.402</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <SECTNO>204.404</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <SECTNO>204.404-70</SECTNO>
              <SUBJECT>Additional contract clauses.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 204.6—Contract Reporting</HD>
              <SECTNO>204.600</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <SECTNO>204.601</SECTNO>
              <SUBJECT>Record requirements.</SUBJECT>
              <SECTNO>204.602</SECTNO>
              <SUBJECT>Federal Procurement Data System.</SUBJECT>
              <SECTNO>204.603</SECTNO>
              <SUBJECT>Solicitation provisions.</SUBJECT>
              <SECTNO>204.670</SECTNO>
              <SUBJECT>Defense Contract Action Data System (DCADS).</SUBJECT>
              <SECTNO>204.670-1</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <SECTNO>204.670-2</SECTNO>
              <SUBJECT>Reportable contracting actions.</SUBJECT>
              <SECTNO>204.670-3</SECTNO>
              <SUBJECT>Contracting office responsibilities.</SUBJECT>
              <SECTNO>204.670-4</SECTNO>
              <SUBJECT>Contract administration office responsibilities.</SUBJECT>
              <SECTNO>204.670-5</SECTNO>
              <SUBJECT>Departmental data collection point responsibilities.</SUBJECT>
              <SECTNO>204.670-6</SECTNO>
              <SUBJECT>Types of DD Form 350 reports.</SUBJECT>
              <SECTNO>204.670-7</SECTNO>
              <SUBJECT>Security classification.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 204.8—Contract Files</HD>
              <SECTNO>204.802</SECTNO>
              <SUBJECT>Contract files.</SUBJECT>
              <SECTNO>204.804</SECTNO>
              <SUBJECT>Closeout of contract files.</SUBJECT>
              <SECTNO>204.804-1</SECTNO>
              <SUBJECT>Closeout by the office administering the contract.</SUBJECT>
              <SECTNO>204.804-2</SECTNO>
              <SUBJECT>Closeout of the contracting office files if another office administers the contract.</SUBJECT>
              <SECTNO>204.805</SECTNO>
              <SUBJECT>Disposal of contract files.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 204.9—Taxpayer Identification Number Information</HD>
              <SECTNO>204.902</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <SECTNO>204.904</SECTNO>
              <SUBJECT>Reporting payment information to the IRS.</SUBJECT>
              <SECTNO>204.905</SECTNO>
              <SUBJECT>Solicitation provision.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 204.70—Uniform Procurement Instrument Identification Numbers</HD>
              <SECTNO>204.7000</SECTNO>
              <SUBJECT>Scope.</SUBJECT>
              <SECTNO>204.7001</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>204.7002</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <SECTNO>204.7003</SECTNO>
              <SUBJECT>Basic PII number.</SUBJECT>
              <SECTNO>204.7004</SECTNO>
              <SUBJECT>Supplementary PII numbers.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 204.71—Uniform Contract Line Item Numbering System</HD>
              <SECTNO>204.7100</SECTNO>
              <SUBJECT>Scope.</SUBJECT>
              <SECTNO>204.7101</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <SECTNO>204.7102</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>204.7103</SECTNO>
              <SUBJECT>Contract line items.</SUBJECT>
              <SECTNO>204.7103-1</SECTNO>
              <SUBJECT>Criteria for establishing.</SUBJECT>
              <SECTNO>204.7103-2</SECTNO>
              <SUBJECT>Numbering procedures.</SUBJECT>
              <SECTNO>204.7104</SECTNO>
              <SUBJECT>Contract subline items.</SUBJECT>
              <SECTNO>204.7104-1</SECTNO>
              <SUBJECT>Criteria for establishing.</SUBJECT>
              <SECTNO>204.7104-2</SECTNO>
              <SUBJECT>Numbering procedures.</SUBJECT>
              <SECTNO>204.7105</SECTNO>
              <SUBJECT>Contract exhibits and attachments.</SUBJECT>
              <SECTNO>204.7106</SECTNO>
              <SUBJECT>Contract modifications.</SUBJECT>
              <SECTNO>204.7107</SECTNO>
              <SUBJECT>Contract accounting classification reference number (ACRN).</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 204.72—Contractor Identification</HD>
              <SECTNO>204.7200</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <SECTNO>204.7201</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <SECTNO>204.7202</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <SECTNO>204.7202-1</SECTNO>
              <SUBJECT>CAGE codes.</SUBJECT>
              <SECTNO>204.7202-2</SECTNO>
              <SUBJECT>DUNS numbers.</SUBJECT>
              <SECTNO>204.7202-3</SECTNO>
              <SUBJECT> TINs.</SUBJECT>
              <SECTNO>204.7203</SECTNO>
              <SUBJECT>Responsibilities of contracting officers.</SUBJECT>
              <SECTNO>204.7204</SECTNO>
              <SUBJECT>Maintenance of the CAGE file.</SUBJECT>
              <SECTNO>204.7205</SECTNO>
              <SUBJECT>Novation agreements, mergers and sales of assets.</SUBJECT>
              <SECTNO>204.7206</SECTNO>
              <SUBJECT>Using CAGE codes to identify agents and brokers.</SUBJECT>
              <SECTNO>204.7207</SECTNO>
              <SUBJECT>Solicitation provision.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 204.73—Central Contractor Registration</HD>
              <SECTNO>204.7300</SECTNO>
              <SUBJECT>Scope.</SUBJECT>
              <SECTNO>204.7301</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <SECTNO>204.7302</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>204.7303</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <SECTNO>204.7304</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
            </SUBPART>
          </CONTENTS>
          <AUTH>
            <HD SOURCE="HED">Authority:</HD>
            <P>41 U.S.C. 421 and 48 CFR chapter 1.</P>
          </AUTH>
          <SOURCE>
            <PRTPAGE P="18"/>
            <HD SOURCE="HED">Source:</HD>
            <P>56 FR 36289, July 31, 1991, unless otherwise noted.</P>
          </SOURCE>
          <SUBPART>
            <HD SOURCE="HED">Subpart 204.1—Contract Execution</HD>
            <SECTION>
              <SECTNO>204.101</SECTNO>
              <SUBJECT>Contracting officer's signature.</SUBJECT>
              <P>(a)(i) Include the contracting officer's telephone number and, when available, e-mail/Internet address on contracts and modifications.</P>
              <P>(ii) The contracting officer may sign bilateral modifications of a letter contract before signature by the contractor.</P>
              <CITA>[56 FR 36289, July 31, 1991, as amended at 63 FR 69006, Dec. 15, 1998]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 204.2—Contract Distribution</HD>
            <SECTION>
              <SECTNO>204.201</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <P>(1) The procuring contracting officer (PCO) retains the original signed contract for the official contract file. Administrative contracting officers and termination contracting officers provide the original of each modification to the PCO for retention in the official contract file. Unless otherwise directed by department/agency procedures, the office issuing the orders maintains the original of orders under basic ordering agreements and the original of provisioning orders.</P>
              <P>(2) Ensure that distribution of contracts and modifications is consistent with security directives.</P>
              <P>(c) Distribute one copy to each Defense Finance and Accounting Service (DFAS) accounting station cited in the contract, in addition to the copy provided to each DFAS funding office.</P>
              <P>(e)(i) Distribute one copy of each of the following types of contracts or modifications to the appropriate Defense Contract Audit Agency (DCAA) field audit office (listed in DCAAP 5100.1, Directory of DCAA Offices, available on the World Wide Web, Internet address http://www.deskbook.osd.mil, under reference library documents)—</P>
              <P>(A) Cost reimbursement;</P>
              <P>(B) Time-and-materials;</P>
              <P>(C) Labor-hour;</P>
              <P>(D) Fixed-price contracts with provisions for redetermination, cost incentives, economic price adjustment based on cost, or cost allowability; and</P>
              <P>(E) Any other contract that requires audit service.</P>
              <P>(ii) If there is a question as to the appropriate DCAA field audit office, request the assistance of the DCAA procurement liaison auditor or the nearest DCAA field audit office.</P>
              <P>(f) Provide two copies to offices performing contract administration support functions.</P>
              <CITA>[56 FR 36289, July 31, 1991, as amended at 59 FR 27668, May 27, 1994; 63 FR 31935, June 11, 1998; 64 FR 51075, Sept. 21, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>204.202</SECTNO>
              <SUBJECT>Agency distribution requirements.</SUBJECT>
              <P>(1) Distribute copies of contracts as follows—</P>
              <P>(i) Four copies to the contract administration office (send simultaneously with the copy furnished under FAR 4.201(b));</P>
              <P>(ii) One copy to each consignee indicated in the contract. A transshipping terminal is not a consignee.</P>
              <P>(A) Inventory control points that have an automated uniform inventory control point data base that interfaces with consignees may use their automated procedure rather than sending a written copy of the contract. However, when inspection is required at destination, send a written copy to the consignee.</P>
              <P>(B) The Defense Logistics Agency is authorized to prescribe alternate procedures for distribution of contract documents in Defense Supply Center Philadelphia European Region;</P>
              <P>(iii) Two copies to the military interdepartmental purchase request requiring activity in the case of coordinated acquisition;</P>
              <P>(iv) One copy to the contract administration office (CAO) automatic data processing point, except when the DoDAAD code is the same as that of either the CAO or the payment office (see the Federal Directory of Contract Administration Services Components); and</P>

              <P>(v) One copy, or an extract of the pertinent information, to the cognizant Defense Security Service office listed in DoD 5100.76-M, Physical Security of <PRTPAGE P="19"/>Sensitive Conventional Arms, Ammunition, and Explosives, when the clause at 252.223-7007, Safeguarding Sensitive Conventional Arms, Ammunition, and Explosives, is included in the contract.</P>
              <P>(2) The activity executing a contract modification shall furnish a copy of the basic contract and all modifications to—</P>
              <P>(i) The new and old payment office when adding or changing a payment office;</P>
              <P>(ii) The new contract administration office, a new consignee or other activity, based on the extent to which each activity is concerned with the basic contract and modifications.</P>
              <P>(3) Distribution of modifications issued to provide initial or amended shipping instructions under 204.7004(c)(3)(iii) and 204.7004(f) may be limited to the following—</P>
              <P>(i) Contractor, one copy;</P>
              <P>(ii) Receiving activity, one copy each;</P>
              <P>(iii) Contract administration office, one copy;</P>
              <P>(iv) Payment office, one copy; and</P>
              <P>(v) Contract administration office automatic data processing point, one copy.</P>
              <P>(4) Distribution of modifications generated by automated means (computer programs) may be limited to the following—</P>
              <P>(i) Contractor, one copy;</P>
              <P>(ii) Contract administration office, one copy;</P>
              <P>(iii) New payment office, one copy;</P>
              <P>(iv) Procuring contracting office, one copy;</P>
              <P>(v) Funding activities, one copy to each; and</P>
              <P>(vi) Consignee, one copy to each.</P>
              <CITA>[56 FR 36289, July 31, 1991, as amended at 61 FR 7742, Feb. 29, 1996; 63 FR 31935, June 11, 1998; 64 FR 51075, Sept. 21, 1999; 64 FR 61028, Nov. 9, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>204.203</SECTNO>
              <SUBJECT>Taxpayer identification information.</SUBJECT>
              

              <P>(1) The procedures at FAR 4.203(a) and (b) do not apply to contracts that include the clause at 252.204-7004, Required Central Contractor Registration.
              </P>

              <P>(2) For a DoD basic ordering agreement or indefinite-delivery contract that requires the contractor to register in the Central Contractor Registration (CCR) database (see subpart 207.73)—
              </P>
              <P>(i) The contracting officer issuing the agreement or contract need not provide a copy of the completed solicitation provision at FAR 52.204-3 or 52.212-3(b) to DoD contracting officers placing orders under the agreement or contract; and</P>

              <P>(ii) A DoD contracting officer placing an order under the agreement or contract need not provide the TIN or type of organization information to the payment office.
              </P>

              <P>(3) For a non-DoD basic ordering agreement or indefinite-delivery contract, a DoD contracting officer placing an order under the agreement or contract must use the procedures at 204.7303(a)(2) to determine if the contractor is registered in the CCR database.
              </P>

              <P>(i) If the contractor is registered, the contracting officer need not provide the TIN or type of organization information to the payment office.
              </P>
              <P>(ii) If the contractor is not registered, the contracting officer must follow the procedures at 204.7303(b).</P>
              <CITA>[64 FR 43099, Aug. 9, 1999]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 204.4—Safeguarding Classified Information Within Industry</HD>
            <SECTION>
              <SECTNO>204.402</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <P>(1) Subpart 239.74 contains policy and procedures for securing telecommunications between Government agencies and contractors and subcontractors.</P>

              <P>(2) Pursuant to section 808 of Pub. L. 102-190, DoD employees or members of the Armed Forces who are assigned to or visiting a contractor facility and are engaged in oversight of an acquisition program will retain control of their work product. Classified work products of DoD employees or members of the Armed Forces shall be handled in accordance with DoD 5220.22-M, National Industrial Security Program Operating Manual, and DoD 5220.22-R, Industrial Security Regulation. Contractor procedures for protecting against unauthorized disclosure of information shall not require DoD employees or members of the Armed Forces to relinquish control <PRTPAGE P="20"/>of their work products, whether classified or not, to a contractor.</P>
              <CITA>[57 FR 14992, Apr. 23, 1992, as amended at 64 FR 51075, Sept. 21, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>204.404</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>204.404-70</SECTNO>
              <SUBJECT>Additional contract clauses.</SUBJECT>
              <P>(a) Use the clause at 252.204-7000, Disclosure of Information, in solicitations and contracts when the contractor will have access to or generate unclassified information that may be sensitive and inappropriate for release to the public.</P>
              <P>(b) Use the clause at 252.204-7003, Control of Government Personnel Work Product, in all solicitations and contracts.</P>
              <P>(c) Use the clause at 252.204-7005, Oral Attestation of Security Responsibilities, in solicitations and contracts that include the clause at FAR 52.204-2, Security Requirements.</P>
              <CITA>[57 FR 14992, Apr. 23, 1992, as amended at 64 FR 45197, Aug. 19, 1999]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 204.6—Contract Reporting</HD>
            <SECTION>
              <SECTNO>204.600</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <P>The Defense Contract Action Data System (DCADS) (see 204.670) is the DoD reporting system that supports the uniform reporting requirements for—</P>
              <P>(1) DD Form 350, Individual Contracting Action Report; and</P>
              <P>(2) DD Form 1057, Monthly Summary of Contracting Actions.</P>
              <CITA>[65 FR 39708, June 27, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>204.601</SECTNO>
              <SUBJECT>Record requirements.</SUBJECT>
              <P>(a) The DCADS meets FAR Subpart 4.6 record retention requirements.</P>
              <P>(d) The Directorate for Information, Operation, and Reports (DIOR), of the Washington Headquarters Services (WHS) transmits required DoD information to the Federal Procurement Data System.</P>
              <CITA>[65 FR 39708, June 27, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>204.602</SECTNO>
              <SUBJECT>Federal Procurement Data System.</SUBJECT>
              <P>(c) DoD uses the DD Form 350, Individual Contracting Action Report, instead of the SF 279, Federal Procurement Data System (FPDS) Individual Contract Action Report. DoD uses the DD Form 1057, Monthly Summary of Contracting Actions, instead of the SF 281, FPDS Summary Contract Action Report ($25,000 or Less).</P>
              <CITA>[65 FR 39708, June 27, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>204.603</SECTNO>
              <SUBJECT>Solicitation provisions.</SUBJECT>
              <P>Use the provision at FAR 52.204-6, Data Universal Numbering System (DUNS) Number, in solicitations that'</P>
              <P>(1) Have an estimated value exceeding $25,000; or</P>
              <P>(2) Have an estimated value of $25,000 or less and include the clause at 252.204-7004, Required Central Contractor Registration.</P>
              <CITA>[66 FR 47096, Sept. 11, 2001]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>204.670</SECTNO>
              <SUBJECT>Defense Contract Action Data System (DCADS).</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>204.670-1</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <P>As used in this section and 253.204-70 and 253.204-71—</P>
              <P>(a) <E T="03">Contract administration office</E> means an office, other than the contracting office, which awards or executes contracting actions on behalf of the contracting office, including actions relating to the settlement of terminated contracts.</P>
              <P>(b) <E T="03">Contracting action</E> means any action related to the purchasing, renting, or leasing of supplies, services, or construction. The term does not include grants, cooperative agreements, or training authorizations. The term includes, but is not limited to, the following:</P>
              <P>(1) Definitive contracts, including notices of award.</P>
              <P>(2) Letter contracts.</P>
              <P>(3) Purchase orders.</P>
              <P>(4) Purchases made using the Governmentwide commercial purchase card.</P>
              <P>(5) Actions for purchase of land or rental or lease of real property.</P>
              <P>(6) Orders under existing contracts or agreements, <E T="03">e.g.</E>—</P>
              <P>(i) Orders against basic ordering agreements, including service orders issued on DD Form 1164, Service Order for Personal Property, by installation transportation offices;</P>
              <P>(ii) Calls against blanket purchase agreements;</P>
              <P>(iii) Job orders;</P>
              <P>(iv) Task orders;<PRTPAGE P="21"/>
              </P>
              <P>(v) Delivery orders;</P>
              <P>(vi) Communication services authorizations; and</P>
              <P>(vii) Notices of termination or cancellation.</P>
              <P>(7) Contract modifications, <E T="03">e.g.</E>—</P>
              <P>(i) Change orders;</P>
              <P>(ii) Supplemental agreements;</P>
              <P>(iii) Funding actions; and</P>
              <P>(iv) Option exercises.</P>
              <P>(c) <E T="03">Departmental data collection points</E> means—</P>
              <P>(1) For the Army (including Corps of Engineers Civil Works): Department of the Army, ATTN: SAAL-PA, 5109 Leesburg Pike, Suite 302, Falls Church, VA 22041-3201.</P>
              <P>(2) For the Navy: Fleet Industrial Supply Center, Norfolk Detachment Washington, DC, ATTN: PMRS, Code 02W4.A, 1014 N Street SE, Suite 400, Washington Navy Yard, Washington, DC 20374-5014.</P>
              <P>(3) For the Air Force: SAF/AQCX, 1060 Air Force Pentagon, Washington, DC 20330-1060.</P>
              <P>(4) For the Defense Logistics Agency: Headquarters, Defense Logistics Agency, ATTN: Procurement Management Directorate (Acquisition Programs Team),8725 John J. Kingman Road, Suite 3147, Fort Belvoir, VA 22060-6221.</P>
              <P>(5) For the Defense Contract Management Agency (excluding contract administration office responsibilities in 204.670-4): Defense Contract Management Agency, ATTN: DCMA-DSP, 6350 Walker Lane, Suite 300, Alexandria, VA 22310-3226.</P>
              <P>(6) For other DoD contracting activities: Department of the Army, ATTN: SAAL-PA, 5109 Leesburg Pike, Suite 302, Falls Church, VA 22041-3201.</P>
              <P>(d) <E T="03">United States and outlying areas</E> is defined in Federal Information Processing Standard Publication (FIPS PUB) 55, Guideline: Codes for Named Populated Places, Primary County Divisions, and Other Locational Entities of the United States and Outlying Areas. Outlying areas are—</P>
              <P>(1) American Samoa;</P>
              <P>(2) The Federated States of Micronesia;</P>
              <P>(3) Guam;</P>
              <P>(4) The Marshall Islands;</P>
              <P>(5) Northern Mariana Islands;</P>
              <P>(6) The Trust Territory of Palau;</P>
              <P>(7) Puerto Rico;</P>
              <P>(8) The U.S. Minor Outlying Islands; and</P>
              <P>(9) The U.S. Virgin Islands.</P>
              <CITA>[56 FR 36289, July 31, 1991, as amended at 60 FR 61592, Nov. 30, 1995; 61 FR 51030, Sept. 30, 1996; 62 FR 34121, June 24, 1997; 64 FR 51075, Sept. 21, 1999; 65 FR 39708, June 27, 2000; 66 FR 47096, Sept. 11, 2001; 67  FR 46113, July 12, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>204.670-2</SECTNO>
              <SUBJECT>Reportable contracting actions.</SUBJECT>
              <P>(a) Except as provided in paragraph (c) of this subsection, complete a DD Form 350 for the following types of contracting actions in accordance with the instructions in 253.204-70:</P>
              <P>(1) Actions that obligate or deobligate more than $25,000, except actions summarized on DD Form 1057 in accordance with paragraph (b)(2) or (3) of this subsection.</P>
              <P>(2) Actions that obligate or deobligate $25,000 or less and are—</P>
              <P>(i) Under a very small business set-aside (see FAR Subpart 19.9);</P>
              <P>(ii) Requirements that DoD is processing for a non-DoD Federal agency;</P>
              <P>(iii) Multiple reports required by 204.670-6(c)(1) to separate foreign military sales (FMS) requirements from non-FMS requirements; or</P>
              <P>(iv) In a designated industry group under the Small Business Competitiveness Demonstration Program (see FAR Subpart 19.10), except for—</P>
              <P>(A) Foreign military sales;</P>
              <P>(B) Orders or modifications under Federal schedules;</P>
              <P>(C) Actions with government agencies;</P>
              <P>(D) Actions with non-U.S. business firms; and</P>
              <P>(E) Actions where the place of performance is other than the United States and its outlying areas.</P>
              <P>(3) Actions that establish an indefinite-delivery contract not reported under other paragraphs of this subsection.</P>
              <P>(4) Actions of any dollar value that the contracting office chooses to report on a DD Form 350.</P>

              <P>(b) Except as provided in paragraph (c) of this subsection, summarize the following types of contracting actions on the monthly DD Form 1057 in accordance with the instructions in 253.204-71:<PRTPAGE P="22"/>
              </P>
              <P>(1) Actions that obligate or deobligate $25,000 or less, except actions reported on DD Form 350 in accordance with paragraph (a)(2), (3), or (4) of this subsection.</P>
              <P>(2) Actions that obligate or deobligate more than $25,000, but not more than $200,000, and support—</P>
              <P>(i) A contingency operation as defined in 10 U.S.C. 101(a)(13); or</P>
              <P>(ii) A humanitarian or peacekeeping operation as defined in 10 U.S.C. 2302(8).</P>
              <P>(3) Actions that obligate or deobligate more than $25,000, but not more than $200,000, and are placed by a contracting officer on a Navy vessel.</P>
              <P>(c) Do not report the following types of contracting action on either the DD Form 350 or DD Form 1057:</P>
              <P>(1) Imprest fund transactions, SF 44 purchases, and micro-purchases obtained through use of the Government-wide commercial purchase card.</P>
              <P>(2) Transactions that cite only nonappropriated funds (Treat funds held in trust accounts for foreign governments as appropriated funds).</P>
              <P>(3) Transactions for purchase of land, or rental or lease of real property, when the General Services Administration (GSA) executes the action.</P>
              <P>(4) Orders from GSA stock and the GSA Consolidated Purchase Program.</P>
              <P>(5) Transactions that involve Government bills of lading or transportation requests, except orders placed under Regional Storage Management Office basic ordering agreements.</P>
              <P>(6) Requisitions transferring supplies within or among the departments or agencies.</P>
              <P>(7) Pursuant to 204.670-6(b), orders placed by other contracting activities against indefinite-delivery contracts awarded by the—</P>
              <P>(i) Military Traffic Management Command;</P>
              <P>(ii) Defense Energy Support Center for petroleum and petroleum products; or</P>
              <P>(iii) Defense Supply Center, Richmond, for petroleum products</P>
              <CITA>[64 FR 45197, Aug. 19, 1999; 64 FR 52670, Sept. 30, 1999, as amended at 65 FR 39708, June 27, 2000; 66 FR 47097, Sept. 11, 2001; 67 FR 46113, July 12, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>204.670-3</SECTNO>
              <SUBJECT>Contracting office responsibilities.</SUBJECT>
              <P>(a) For DD Form 350, contracting offices—</P>
              <P>(1) Prepare the appropriate type of DD Form 350 (see 204.670-6) in accordance with the instructions in 253.204-70, for all reportable contracting actions (see 204.670-2(a)), including actions accomplished by contract administration offices on behalf of the contracting office.</P>
              <P>(2) Complete the DD Form 350 when funds are obligated or deobligated or when an indefinite-delivery contract is established with no initial obligation of funds. For actions accomplished by a contract administration office, complete the DD Form 350 upon receipt of the contractual instrument annotated “DD FORM 350 REPORTING COPY.”</P>
              <P>(3) Submit all DD Forms 350 for the calendar month to the departmental data collection point (see 204.670-1(c)) in accordance with departmental or agency procedures.</P>
              <P>(4) Prepare and submit a corrected or canceling DD Form 350 as required in accordance with departmental data collection point instructions.</P>
              <P>(5) Establish a control system for assigning report numbers to DD Forms 350 (Line A2 of the DD Form 350). The number must have six positions and may be any combination of alpha or numeric characters. If more than one activity within a contracting office uses the same reporting office code, the contracting office must assign separate blocks of numbers to each activity to prevent duplication of report numbers.</P>
              <P>(6) Maintain the DD Form 350 in the contract file in any medium, in accordance with departmental or agency procedures.</P>
              <P>(b) For DD Form 1057, contracting offices—</P>

              <P>(1) Prepare a DD Form 1057, in accordance with the instructions in 253.204-71, covering reportable contracting actions (see 204.670-2(b)), including actions accomplished by contract administration offices on behalf of the contracting office. An installation, base, or other activity may have more than one contracting office code to separate the various types of acquisitions, such as base and central contracting, or RDT&amp;E and non-RDT&amp;E <PRTPAGE P="23"/>acquisition. Each contracting office with a separate code must submit its own DD Form 1057.</P>
              <P>(2) Complete the DD Form 1057 within three working days after the cutoff of the reporting month. Contracting offices may not cut off the reporting month before the 25th calendar day. The cutoff date for September is September 30. Submit the DD Form 1057 to the departmental data collection point in accordance with departmental or agency procedures.</P>
              <P>(3) Unless otherwise instructed by the departmental data collection point, do not submit revised DD Form 1057 reports. Include any required corrections or adjustments in following month's report.</P>
              <CITA>[65 FR 39708, June 27, 2000, as amended at 66 FR 47097, Sept. 11, 2001; 67 FR 46113, July 12, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>204.670-4</SECTNO>
              <SUBJECT>Contract administration office responsibilities.</SUBJECT>
              <P>Contract administration offices executing actions subject to DD Form 350 or DD Form 1057 reporting must submit an annotated copy of the contractual instrument to the contracting office so that the contracting office can submit the required report.</P>
              <P>(a) For DD Form 350, annotate in the heading of the contractual instrument in large block letters “DD FORM 350 REPORTING COPY.” Send the annotated copy to the contracting office within one working day after the action date.</P>
              <P>(b) For DD Form 1057, annotate in the heading of the contractual instrument in large block letters “DD FORM 1057 REPORTING COPY.” Send the annotated copy with the normal distribution.</P>
              <CITA>[65 FR 39709, June 27, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>204.670-5</SECTNO>
              <SUBJECT>Departmental data collection point responsibilities.</SUBJECT>
              <P>Departmental data collection points—</P>
              <P>(a) Collect DD Forms 350 and 1057 data provided by their contracting offices;</P>
              <P>(b) Electronically record the data in accordance with the instructions for recording and editing developed by WHS-DIOR with the majority agreement of the departments and agencies and prescribed by the Director of Defense Procurement; and</P>
              <P>(c) Submit monthly reports (noncumulative) to Washington Headquarters Services, ATTN: DIOR, within 18 days after the close of the reporting period, except the due date for September may be extended for no more than ten days. Report Control Symbol DD-AT&amp;L(M)1014 applies to reports for DD Form 350 actions, and Report Control Symbol DD-AT&amp;L(M)1015 applies to reports for DD Form 1057 actions.</P>
              <CITA>[65 FR 39709, June 27, 2000, as amended at 66 FR 47097, Sept. 11, 2001]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>204.670-6</SECTNO>
              <SUBJECT>Types of DD Form 350 reports.</SUBJECT>
              <P>There are three types of reports—single, consolidated, and multiple.</P>
              <P>(a) A single report is one DD Form 350 report per action.</P>
              <P>(b) A consolidated report combines several actions.</P>
              <P>(1) Prepare consolidated reports for—</P>
              <P>(i) Military Traffic Management Command awards of indefinite-delivery contracts for ocean transportation. The Command reports at the beginning of each fiscal year the estimated value of the orders for that fiscal year on one DD Form 350.</P>
              <P>(ii) Defense Energy Support Center or Defense Supply Center, Richmond, indefinite-delivery contracts for petroleum or petroleum supplies. The Centers, at the time of award, report the estimated value of the orders to be placed against the contract on one DD Form 350.</P>
              <P>(iii) Orders placed by the Defense Commissary Agency (DeCA) for resale items over $25,000. DeCA consolidates the orders monthly and reports the cumulative dollar amounts and actions on one DD Form 350.</P>

              <P>(iv) Vouchers processed by the U.S. Army Contracting Command, Europe (USACCE), for the purchase of utilities from municipalities (<E T="03">e.g.,</E> gas, electricity, water, sewage, steam, snow removal, and garbage collection). USACCE consolidates these transactions monthly and reports the cumulative dollar amounts and actions on one DD Form 350.</P>

              <P>(2) Consolidated reports may be prepared in accordance with departmental or agency procedures for orders under <PRTPAGE P="24"/>communications service agreements for local dial tone services.</P>
              <P>(c) A multiple report is more than one DD Form 350 per contracting action. Prepare multiple reports if—</P>
              <P>(1) The action includes FMS requirements in addition to non-FMS requirements (Line B9 on the DD Form 350). Submit one DD Form 350 report for the FMS requirements and another DD Form 350 report for the non-FMS requirements.</P>
              <P>(2) The action includes more than one type of contract (Line C5 on the DD Form 350) and the type with the least dollar value exceeds $500,000. Prepare a separate DD Form 350 for each contract type.</P>
              <P>(3) The action includes non-DoD Federal agency requirements and DoD requirements. Submit one DD Form 350 for the non-DoD requirements and another DD Form 350 for the DoD requirements. </P>
              <CITA>[65 FR 39709, June 27, 2000, as amended at 66 FR 47097, Sept. 11, 2001; 67 FR 46113, July 12, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>204.670-7</SECTNO>
              <SUBJECT>Security classification.</SUBJECT>
              <P>Submit DD Forms 350 as unclassified documents. Classified contracts are not exempt from reporting solely because the contract is classified. Contact the appropriate departmental data collection points for special instructions if it is necessary for security reasons to modify coding of any information on the DD Form 350. If contact cannot be made for security reasons, obtain instructions from the Director of Security, Office of the Assistant Secretary of Defense (Command, Control, Communications, and Intelligence), (703) 614-0578, or DSN 224-0578.</P>
              <CITA>[65 FR 39709, June 27, 2000]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 204.8—Contract Files</HD>
            <SECTION>
              <SECTNO>204.802</SECTNO>
              <SUBJECT>Contract files.</SUBJECT>
              <P>Official contract files shall consist of—</P>
              <P>(1) Only original, authenticated or conformed copies of contractual instruments—</P>
              <P>(i) <E T="03">Authenticated copies</E> means copies that are shown to be genuine in one of two ways—</P>
              <P>(A) Certification as true copy by signature of an authorized person; or</P>
              <P>(B) Official seal.</P>
              <P>(ii) <E T="03">Conformed copies</E> means copies that are complete and accurate, including the date signed and the names and titles of the parties who signed them.</P>
              <P>(2) Signed or official record copies of correspondence, memoranda, and other documents.</P>
            </SECTION>
            <SECTION>
              <SECTNO>204.804</SECTNO>
              <SUBJECT>Closeout of contract files.</SUBJECT>
              <P>Normally, the closeout date for contract files is the date in Block 9d on the DD Form 1594, Contract Completion Statement, or in columns 59-65 on the PK9. If the contracting office must do a major closeout action that will take longer than three months after the date shown in Block 9d of the DD Form 1594, or in columns 59-65 of the PK9—</P>
              <P>(1) The closeout date for file purposes will be the date in Block 10e of the DD Form 1594 or the date of the closeout statement executed when the MILSCAP PK9 is received.</P>
              <P>(2) The contracting office shall notify the contract administration office of the revised closeout date by either sending a copy of the completed DD Form 1594 or by preparing a MILSCAP Format Identifier PKZ, Contract Closeout Extension.</P>
            </SECTION>
            <SECTION>
              <SECTNO>204.804-1</SECTNO>
              <SUBJECT>Closeout by the office administering the contract.</SUBJECT>
              <P>(1) For contracting offices administering their own contracts, locally developed forms or statement of completion may be used instead of the DD Form 1594, Contract Completion Statement. Whichever method is used, the form shall be retained in the official contract file.</P>
              <P>(2) For contracts valued above the simplified acquisition threshold, prepare a DD Form 1597, Contract Closeout Check List, (or agency equivalent) to ensure that all required contract actions have been satisfactorily accomplished.</P>
              <CITA>[56 FR 36289, July 31, 1991, as amended at 64 FR 2596, Jan. 15, 1999]</CITA>
            </SECTION>
            <SECTION>
              <PRTPAGE P="25"/>
              <SECTNO>204.804-2</SECTNO>
              <SUBJECT>Closeout of the contracting office files if another office administers the contract.</SUBJECT>
              <P>(1) When an office, other than the contracting office, administers the contract, it shall—</P>
              <P>(i) Provide the contracting office an interim contract completion statement when the contract is physically completed and accepted. This notice may be in the form of either a DD Form 1594, Contract Completion Statement, or a MILSCAP Format Identifier Interim PK9, Contract Physical Completion. When the DD Form 1594 is used, the contracting officer—</P>
              <P>(A) Annotates Block 8, Remarks, with—</P>
              <P>(<E T="03">1</E>) “Notice of Physical Completion;”</P>
              <P>(<E T="03">2</E>) Final acceptance date;</P>
              <P>(<E T="03">3</E>) Signature of a responsible official; and</P>
              <P>(<E T="03">4</E>) Date signed.</P>
              <P>(B) Does not complete Blocks 9 (b), (c), and (d) at this time;</P>
              <P>(ii) Prepare a DD Form 1597, Contract Closeout Check List, if necessary, to determine that all the required actions have been done;</P>
              <P>(iii) Initiate DD Form 1593, Contract Administration Completion Record, if necessary to obtain statements from other organizational elements that they have completed the actions they are responsible for; and</P>
              <P>(iv) Upon final payment—</P>
              <P>(A) Process the DD Form 1594 with Blocks 1 through 9 completed or the MILSCAP Format Identifier PK9 verifying that all contract administration office actions have been done; and</P>
              <P>(B) Send the original of the DD Form 1594 or the MILSCAP Format Identifier PK9 to the contracting office, and file a copy in the official contract file.</P>
              <P>(2) If the administrative contracting officer (ACO) cannot closeout a contract within the specified time period (see FAR 4.804-1), the ACO must notify the procuring contracting officer (PCO) within 45 days after the expiration of the time period of—</P>
              <P>(i) The reasons for the delay; and</P>
              <P>(ii) New target date for closeout. If MILSCAP procedures apply, the ACO shall use the MILSCAP Format Identifier PKX, Unclosed Contract Status, to provide this notice to the PCO.</P>
              <P>(3) If the contract still is not closed out by the new target date, the ACO shall again notify the PCO with the reasons for delay and new target date. If MILSCAP procedures apply, continue to use the MILSCAP Format Identifier PKX, Unclosed Contract Status, to provide this notice.</P>
            </SECTION>
            <SECTION>
              <SECTNO>204.805</SECTNO>
              <SUBJECT>Disposal of contract files.</SUBJECT>
              <P>(1) The sources of the period for which official contract files must be retained are General Records Schedule 3 (Procurement, Supply, and Grant Records) and General Records Schedule 6 (Accountable Officers’ Accounts Records). Copies of the General Records Schedule may be obtained from the National Archives and Records Administration, Washington, DC 20408.</P>
              <P>(2) Deviations from the periods cannot be granted by the Defense Acquisition Regulatory Council. Forward requests for deviations to both the General Accounting Office and the National Archives and Records Administration.</P>
              <P>(3) Hold completed contract files in the office responsible for maintaining them for a period of 12 months after completion. After the initial 12 month period, send the records to the local records holding or staging area until they are eligible for destruction. If no space is available locally, transfer the files to the General Services Administration Federal Records Center that services the area.</P>
              <P>(4) Duplicate or working contract files should contain no originals of materials that properly belong in the official files. Destroy working files as soon as practicable once they are no longer needed.</P>
              <P>(5) Retain pricing review files, containing documents related to reviews of the contractor's price proposals, subject to cost or pricing data (see FAR 15.403-4), for six years. If it is impossible to determine the final payment date in order to measure the six year period, retain the files for nine years.</P>
              <CITA>[56 FR 36289, July 31, 1991, as amended at 62 FR 40472, July 29, 1997; 63 FR 11528, Mar. 9, 1998]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <PRTPAGE P="26"/>
            <HD SOURCE="HED">Subpart 204.9—Taxpayer Identification Number Information</HD>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>64 FR 43099, Aug. 9, 1999, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>204.902</SECTNO>
              <SUBJECT>General.</SUBJECT>
              
              <P>(b) DoD uses DD Form 350, Individual Contracting Action Report, (see 204.670) to meet these reporting requirements.</P>
              <CITA>[64 FR 43099, Aug. 9, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>204.904</SECTNO>
              <SUBJECT>Reporting payment information to the IRS.</SUBJECT>
              

              <P>(1) 26 U.S.C. 6041 and 6041A and 26 CFR 1.6041 require Government payors to report to the IRS, on IRS Form 1099, payments of an annual cumulative value of $600 or more provided to a contractor, except payments for—
              </P>

              <P>(i) Supplies, unless the supplies are incidental to the furnishing of services;
              </P>

              <P>(ii) Telegram, telephone, freight, storage, or similar charges;
              </P>
              <P>(iii) Income that the payor must report on IRS Form W-2 (e.g., payments to employees or payments under contracts for personal services);</P>
              <P>(iv) Any contract with a Federal agency;
              </P>

              <P>(v) Any contract with a State, the District of Columbia, or a possession of the United States; or a political subdivision, agency, or instrumentality of any of the foregoing;
              </P>

              <P>(vi) Any contract with an organization exempted from taxation by 26 U.S.C. 501(a). Such organizations may include charitable, social welfare, labor, agricultural, veterans', and political organizations; business leagues; social clubs; fraternal societies; and employees' associations. Contracting officers may obtain additional information to assist in determining an organization's tax-exempt status via the Internet at http://www.irs.ustreas.gov/prod/bus_info/eo/eo-types.html;
              </P>

              <P>(vii) Any contract with a foreign government or a political subdivision of a foreign government;
              </P>

              <P>(viii) Any contract with an international organization listed in 22 U.S.C. 288;
              </P>

              <P>(ix) Any classified contract excepted by 26 U.S.C. 6050M. As used in this section only, a contract is classified if—
              </P>

              <P>(A) DoD designates the existence of the contract or the contract subject matter as classified (i.e., the contract requires a specific degree of protection against unauthorized disclosure for reasons of national security); or
              </P>

              <P>(B) The head of the agency determines that filing IRS Form 1099 would interfere with the effective conduct of a confidential law enforcement or foreign intelligence activity; or
              </P>

              <P>(x) Such other services as the IRS may specify in regulations.
              </P>

              <P>(2) Unless an exception in paragraph (1) of this section applies, the contracting officer must provide, as the last page of the copy of the contract sent to the payment office—
              </P>

              <P>(i) A statement that the contractor is providing services subject to Form 1099 payment information reporting to the IRS, as required by 26 U.S.C. 6041 and 6041A; and
              </P>
              <P>(ii) The contractor's Taxpayer Identification Number and type of organization, if the contract does not include the clause at 252.204-7004, Required Central Contractor Registration.</P>
            </SECTION>
            <SECTION>
              <SECTNO>204.905</SECTNO>
              <SUBJECT>Solicitation provision.</SUBJECT>
              
              <P>Do not use the provision at FAR 52.204-3, Taxpayer Identification, in solicitations that include the clause at 252.204-7004, Required Central Contractor Registration.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 204.70—Uniform Procurement Instrument Identification Numbers</HD>
            <SECTION>
              <SECTNO>204.7000</SECTNO>
              <SUBJECT>Scope.</SUBJECT>
              <P>This subpart prescribes policies and procedures for assigning numbers to all solicitations, contracts, and related instruments. This subpart—</P>
              <P>(a) Does not apply to solicitations or contracts issued by the Defense Commercial Communications Office of the Defense Information Systems Agency; and</P>
              <P>(b) Is optional for solicitations and contracts that will be completely administered by the purchasing office or the consignee, except that—</P>

              <P>(1) The procurement instrument identification (PII) number, including supplemental modification numbers, shall <PRTPAGE P="27"/>not exceed 19 characters (excluding hyphens); and</P>
              <P>(2) The number shall begin with the purchasing office identifier and the fiscal year in accordance with 204.7003(a) (1) and (2) and appendix G.</P>
              <CITA>[56 FR 36289, July 31, 1991, as amended at 56 FR 67212, Dec. 30, 1991]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>204.7001</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>(a) Use the uniform PII numbering system prescribed by this subpart for the solicitation/contract instruments described in 204.7003 and 204.7004.</P>
              <P>(b) Retain the basic PII number unchanged for the life of the instrument.</P>
            </SECTION>
            <SECTION>
              <SECTNO>204.7002</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <P>(a) In assigning PII numbers—</P>
              <P>(1) Use only the alpha-numeric characters, as prescribed in this subpart; and</P>
              <P>(2) Do not use the letter “I” or “O”.</P>
              <P>(b) If department/agency procedures require other identification on the solicitation, contract, or other related instrument forms, enter it in such a location so as to separate it clearly from the PII number.</P>
              <P>(c) Enter the basic PII number, including Federal supply contract numbers and any supplementary numbers, in the spaces provided on the solicitation, contract, or related instrument forms. Separate the major elements by dashes, e.g., N00023-90-D-0009. If there is no space provided on the form, enter the number in the upper right corner of the form and identify what it is (e.g., Supplementary Number N00023-90-F-0120).</P>
              <CITA>[56 FR 36289, July 31, 1991, as amended at 65 FR 14398, Mar. 16, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>204.7003</SECTNO>
              <SUBJECT>Basic PII number.</SUBJECT>
              <P>(a) <E T="03">Elements of a number.</E> The number consists of 13 alpha-numeric characters grouped to convey certain information.</P>
              <P>(1) <E T="03">Positions 1 through 6.</E> The first of the six positions, in upper case letters, identify the department/agency and office issuing the instrument.</P>
              <P>(i) Department/agency identification:</P>
              <GPOTABLE CDEF="s40,xs36" COLS="2" OPTS="L0,7/8,g1,t1,i1">
                <ROW>
                  <ENT I="01">(A) Department of the Army</ENT>
                  <ENT>DA</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">(B) Department of the Navy (except Marine Corps)</ENT>
                  <ENT>N</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">(C) Department of the Air Force</ENT>
                  <ENT>F</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">(D) Defense Information Systems Agency</ENT>
                  <ENT>DCA</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">(E) Defense Logistics Agency</ENT>
                  <ENT>S</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">(F) Defense Threat Reduction Agency</ENT>
                  <ENT>DTRA</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">(G) National Imagery and Mapping Agency</ENT>
                  <ENT>NMA</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">(H) Miscellaneous Defense Activities</ENT>
                  <ENT>MDA</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">(I) Marine Corps</ENT>
                  <ENT>M</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">(J) Ballistic Missile Defense Organization</ENT>
                  <ENT>HQ0006 and H95001</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">(K) Defense Commissary Agency</ENT>
                  <ENT>DECA</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">(L) United States Special Operations Command</ENT>
                  <ENT>USZA</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">(M) Defense Microelectronics Activity</ENT>
                  <ENT>DMEA</ENT>
                </ROW>
              </GPOTABLE>
              
              <P>(ii) Issuing office identification. The remaining positions are the alpha-numeric characters that identify the issuing office. These characters are in appendix G.</P>
              <P>(iii) Use all six positions. If necessary, enter zeros between the department/agency identifier and the issuing office identifier.</P>
              <P>(2) <E T="03">Positions 7 through 8.</E> The seventh and eighth positions are the last two digits of the fiscal year in which the PII number was assigned.</P>
              <P>(3) <E T="03">Position 9.</E> Indicate the type of instrument by entering one of the following upper case letters in position nine—
              </P>
              <P>(i) Blanket purchase agreements—A</P>
              <P>(ii) Invitations for bids—B</P>
              <P>(iii) Contracts of all types except indefinite delivery contracts, facilities contracts, sales contracts, and contracts placed with or through other Government departments or agencies or against contracts placed by such departments or agencies outside the DoD—C</P>
              <P>(iv) Indefinite delivery contracts—D</P>
              <P>(v) Facilities contracts—E</P>
              <P>(vi) Contracting actions placed with or through other Government departments or agencies or against contracts placed by such departments or agencies outside the DoD (including actions with the National Industries for the Blind (NIB), the National Industries for the Severely Handicapped (NISH), and the Federal Prison Industries (UNICOR))—F</P>
              <P>(vii) Basic ordering agreements—G</P>

              <P>(viii) Agreements, including basic agreements and loan agreements, but <PRTPAGE P="28"/>excluding blanket purchase agreements, basic ordering agreements, and leases—H</P>
              <P>(ix) Do not use—I</P>
              <P>(x) Reserved—J</P>
              <P>(xi) Short form research contract—K</P>
              <P>(xii) Lease agreement—L</P>
              <P>(xiii) Purchase orders—manual (assign W when numbering capacity of M is exhausted during the fiscal year)—M</P>
              <P>(xiv) Notice of intent to purchase—N</P>
              <P>(xv) Do not use—O</P>
              <P>(xvi) Purchase order—automated (assign V when numbering capacity of P is exhausted during a fiscal year)—P</P>
              <P>(xvii) Request for quotation—manual—Q</P>
              <P>(xviii) Request for proposal—R</P>
              <P>(xix) Sales contract—S</P>
              <P>(xx) Request for quotation—automated (assign U when numbering capacity of T is exhausted during a fiscal year)—T</P>
              <P>(xxi) See T—U</P>
              <P>(xxii) See P—V</P>
              <P>(xxiii) See M—W</P>
              <P>(xxiv) Reserved for departmental use—X</P>
              <P>(xxv) Imprest fund—Y</P>
              <P>(xxvi) Reserved for departmental use—Z</P>
              <P>(4) <E T="03">Position 10 through 13.</E> Enter the serial number of the instrument in these positions. A separate series of serial numbers may be used for any type of instrument listed in paragraph (a)(3) of this section. Activities shall assign such series of PII numbers sequentially. An activity may reserve blocks of numbers or alpha-numeric numbers for use by its various components.</P>
              <P>(b) <E T="03">Illustration of PII number.</E> The following illustrates a properly configured PII number—</P>
              <GPH DEEP="162" SPAN="2">
                <GID>EC01FE91.052</GID>
              </GPH>
              <CITA TYPE="W">[56 FR 36289, July 31, 1991, as amended at 56 FR 67212, Dec. 30, 1991; 59 FR 27668, May 27, 1994; 60 FR 61592, Nov. 30, 1995; 61 FR 50451, Sept. 26, 1996; 62 FR 34121, June 24, 1997; 64 FR 51075, Sept. 21, 1999; 65 FR 14398, Mar. 16, 2000; 65 FR 39704, June 27, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>204.7004</SECTNO>
              <SUBJECT>Supplementary PII numbers.</SUBJECT>
              <P>(a) <E T="03">Uses of the supplementary number.</E> Use supplementary numbers with the basic PII number, to identify—</P>
              <P>(1) Amendments to solicitations;</P>
              <P>(2) Modifications to contracts and agreements, including provisioned item orders; and</P>
              <P>(3) Calls or orders under contracts, basic ordering agreements, or blanket purchase agreements, issued by the contracting office or by a DoD activity other than the contracting office, including DoD orders against Federal supply schedules.</P>
              <P>(b) <E T="03">Amendments to solicitations.</E> Number amendments to solicitations sequentially using a four position numeric serial number added to the basic <PRTPAGE P="29"/>PII number and beginning with 0001, e.g., N00062-91-R-1234-0001.</P>
              <P>(c) <E T="03">Modifications to contracts and agreements.</E> (1) Number modifications to contracts and agreements using a six position alpha-numeric added to the basic PII number.</P>
              <P>(2) <E T="03">Position 1.</E> Identify the office issuing the modification—</P>
              <P>(i) Contract administration office—A</P>
              <P>(ii) Contracting office—P</P>
              <P>(3) <E T="03">Positions 2 through 3.</E> These are the first two digits in a serial number. They may be either alpha or numeric. Use the letters K, L, M, N, P, Q, S, T, U, V, W, X, Y, or Z only in the second position and only in the following circumstances—</P>
              <P>(i) Use K, L, M, N, P, and Q in the second position only if the modification is issued by the Air Force and is a provisioned item order.</P>
              <P>(ii) Use S, and only S, in the second position to identify modifications issued to provide initial or amended shipping instructions when—</P>
              <P>(A) The contract has either FOB origin or destination delivery terms; and</P>
              <P>(B) The price changes.</P>
              <P>(iii) Use T, U, V, W, X, or Y, and only those characters, in the second position to identify modifications issued to provide initial or amended shipping instructions when—</P>
              <P>(A) The contract has FOB origin delivery terms; and</P>
              <P>(B) The price does not change.</P>
              <P>(iv) Only use Z in the second position to identify a modification which definitizes a letter contract.</P>
              <P>(4) <E T="03">Positions 4 through 6.</E> These positions are always numeric. Use a separate series of serial numbers for each type of modification listed in paragraph (c)(3) of this section. Examples of proper numbering for positions 2-6 (the first position will be either “A” or “P”) are as follows:</P>
              <GPOTABLE CDEF="s25,xls48,xls48" COLS="3" OPTS="L2,i1">
                <BOXHD>
                  <CHED H="1">Normal modification</CHED>
                  <CHED H="1">Provisioned items order (reserved for exclusive use by the Air Force only)</CHED>
                  <CHED H="1">Shipping instructions</CHED>
                </BOXHD>
                <ROW>
                  <ENT I="01">00001-99999</ENT>
                  <ENT>K0001-K9999</ENT>
                  <ENT>S0001-S9999</ENT>
                </ROW>
                <ROW>
                  <ENT I="02">then</ENT>
                  <ENT>KA001-KZ999</ENT>
                  <ENT>SA001-SZ999</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">A0001-A9999</ENT>
                  <ENT>L0001-L9999</ENT>
                  <ENT>T0001-T9999</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">B0001-B9999</ENT>
                  <ENT>LA001-LZ999</ENT>
                  <ENT>TA001-TZ999</ENT>
                </ROW>
                <ROW>
                  <ENT I="02">and so on to</ENT>
                  <ENT>M0001-M9999</ENT>
                  <ENT>U0001-U9999</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">H0001-H9999</ENT>
                  <ENT>MA001-MZ999</ENT>
                  <ENT>UA001-UZ999</ENT>
                </ROW>
                <ROW>
                  <ENT I="02">then</ENT>
                  <ENT>N0001-N9999</ENT>
                  <ENT>V0001-V9999</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">J0001-J9999</ENT>
                  <ENT>NA001-NZ999</ENT>
                  <ENT>VA001-VZ999</ENT>
                </ROW>
                <ROW>
                  <ENT I="02">then</ENT>
                  <ENT>P0001-P9999</ENT>
                  <ENT>W0001-W9999</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">R0001-R9999</ENT>
                  <ENT>PA001-PZ999</ENT>
                  <ENT>WA001-WZ999</ENT>
                </ROW>
                <ROW>
                  <ENT I="02">then</ENT>
                  <ENT>Q0001-Q9999</ENT>
                  <ENT>X0001-X9999</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">AA001-HZ999</ENT>
                  <ENT>QA001-QZ999</ENT>
                  <ENT>XA001-XZ999</ENT>
                </ROW>
                <ROW>
                  <ENT I="02">then</ENT>
                  <ENT/>
                  <ENT>Y0001-Y9999</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">JA001-JZ999</ENT>
                  <ENT/>
                  <ENT>YA001-YZ999</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">RA001-RZ999</ENT>
                </ROW>
              </GPOTABLE>
              <P>(5) If the contract administration office is changing the contract administration or disbursement office for the first time and is using computer generated modifications to notify many offices, it uses the six position supplementary number ARZ999. If either office has to be changed again during the life of the contract, the supplementary number will be ARZ998, and on down as needed.</P>
              <P>(6) Each office authorized to issue modifications shall assign the supplementary identification numbers in sequence. Do not assign the numbers until it has been determined that a modification is to be issued.</P>
              <P>(d) <E T="03">Delivery orders under indefinite delivery contracts, orders under basic ordering agreements, and calls under blanket purchase agreements.</E> (1) Calls or orders issued by the office issuing the contract or agreement. Use a four position alpha-numeric call or order serial number added to the basic PII number. These shall be identified by using serial numbers beginning 0001 through 9999. When the numeric identifiers run out, use alpha characters in the third and fourth positions. Never use alpha characters in the first and second positions.</P>
              <P>(2) Orders placed against another activity's contract or agreement.</P>

              <P>(i) If the office placing the order or call is different from the office identified in the basic PII number, assign a serial number to the order or call. The first and second positions contain the call/order code assigned to the ordering office by appendix G. Do not use the letters A or P in the first position. The third and fourth positions are a two position serial number assigned by the ordering office. The series will begin with 01. When the numbers exceed 99, the office will assign a uniform series of identifiers containing alpha and/or <PRTPAGE P="30"/>numeric characters, e.g., Basic #: N00383-91-D-0001 serial #: TU01.</P>
              <P>(ii) If an office is placing calls or orders with NIB, NISH, or UNICOR, the office shall identify the instrument with a 13 position supplementary PII number using an F in the 9th position. Modifications to these calls or orders shall be numbered in accordance with paragraph (c) of this section, e.g., Order #: DLA100-91-F-0001 modification #: A00001.</P>
              <P>(e) <E T="03">Modifications to calls or orders.</E> Use a two position alpha-numeric suffix, known as a call or order modification indicator, to identify a modification to a call or order.</P>
              <P>(1) Modifications to a call or order issued by a purchasing office begin with 01, 02, and so on through 99, then B1 through B9, BA through BZ, C1 through C9, and so on through ZZ.</P>
              <P>(2) Modifications to a call or order issued by a contract administration office begin with 1A, 1B, and so on through 9Z, followed by A1, A2, and so on to A9, then AA, AB, and so on through AZ.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 204.71—Uniform Contract Line Item Numbering System</HD>
            <SECTION>
              <SECTNO>204.7100</SECTNO>
              <SUBJECT>Scope.</SUBJECT>
              <P>This subpart prescribes policies and procedures for assigning contract line item numbers.</P>
            </SECTION>
            <SECTION>
              <SECTNO>204.7101</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <P>
                <E T="03">Accounting classification reference number (ACRN)</E> means a two position alpha or alpha/numeric control code used as a method of relating the accounting classification citation to detailed line item information contained in the schedule.</P>
              <P>
                <E T="03">Attachment</E> means any documentation, appended to a contract or incorporated by reference, which does not establish a requirement for deliverables.</P>
              <P>
                <E T="03">Definitized item,</E> as used in this subpart, means an item for which a firm price has been established in the basic contract or by modification.</P>
              <P>
                <E T="03">Exhibit</E> means a document, referred to in a contract, which is attached and establishes requirements for deliverables. The term shall not be used to refer to any other kind of attachment to a contract. The DD Form 1423, Contract Data Requirements List, is always an exhibit, rather than an attachment.</P>
              <P>
                <E T="03">Nonseverable deliverable,</E> as used in this subpart, means a deliverable item that is a single end product or undertaking, entire in nature, that cannot be feasibly subdivided into discrete elements or phases without losing its identity.</P>
              <P>
                <E T="03">Undefinitized item,</E> as used in this subpart, means an item for which a price has not been established in the basic contract or by modification.</P>
              <CITA>[56 FR 36289, July 31, 1991, as amended at 60 FR 34468, July 3, 1995]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>204.7102</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>(a) The numbering procedures of this subpart shall apply to all—</P>
              <P>(1) Solicitations;</P>
              <P>(2) Solicitation line and subline item numbers, if practicable;</P>
              <P>(3) Contracts as defined in FAR Subpart 2.1;</P>
              <P>(4) Contract line and subline item numbers;</P>
              <P>(5) Exhibits;</P>
              <P>(6) Exhibit line and subline items; and</P>
              <P>(7) Any other document expected to become part of the contract.</P>
              <P>(b) The numbering procedures are mandatory for all contracts where separate contract line item numbers are assigned, unless—</P>
              <P>(1) There are no postaward contract administration functions that the contracting officer will assign to an office listed in the Federal Directory of Contract Administration Services Components;</P>
              <P>(2) The contract is an indefinite delivery type for petroleum products against which posts, camps, and stations issue delivery orders for products to be consumed by them; or</P>
              <P>(3) The contract is a communications service authorization issued by the Defense Information Systems Agency's Defense Information Technology Contracting Organization.</P>
              <CITA>[56 FR 36289, July 31, 1991, as amended at 56 FR 67212, Dec. 30, 1991; 60 FR 34468, July 3, 1995; 64 FR 61028, Nov. 9, 1999]</CITA>
            </SECTION>
            <SECTION>
              <PRTPAGE P="31"/>
              <SECTNO>204.7103</SECTNO>
              <SUBJECT>Contract line items.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>204.7103-1</SECTNO>
              <SUBJECT>Criteria for establishing.</SUBJECT>
              <P>Contracts shall identify the items or services to be acquired as separate contract line items unless it is not feasible to do so.</P>
              <P>(a) Contract line items shall have all four of the following characteristics; however, there are exceptions within the characteristics, which may make establishing a separate contract line item appropriate even though one of the characteristics appears to be missing—</P>
              <P>(1) <E T="03">Single unit price.</E> The item shall have a single unit price or a single total price, except—</P>
              <P>(i) If the item is not separately priced (NSP) but the price is included in the unit price of another contract line item, enter NSP instead of the unit price;</P>
              <P>(ii) When there are associated subline items, established for other than informational reasons, and those subline items are priced in accordance with 204.7104;</P>
              <P>(iii) When the items or services are being acquired on a cost-reimbursement contract;</P>
              <P>(iv) When the contract is for maintenance and repair services (e.g., a labor hour contract) and firm prices have been established for elements of the total price of an item but the actual number and quantity of the elements are not known until performance. The contracting officer may structure these contracts to reflect a firm or estimated total amount for each line item;</P>
              <P>(v) When the contract line item is established to refer to an exhibit or an attachment (if management needs dictate that a unit price be entered, the price shall be set forth in the item description block and enclosed in parentheses); or</P>
              <P>(vi) When the contract is an indefinite delivery type contract and provides that the price of an item shall be determined at the time a delivery order is placed and the price is influenced by such factors as the quantity ordered (e.g., 10-99 @ $1.00, 100-249 @ $.98, 250+ @ $.95), the destination, the FOB point, or the type of packaging required.</P>
              <P>(2) <E T="03">Separately identifiable.</E> A contract line item must be identified separately from any other items or services on the contract.</P>
              <P>(i) Supplies are separately identifiable if they have no more than one—</P>
              <P>(A) National stock number (NSN);</P>
              <P>(B) Item description; or</P>
              <P>(C) Manufacturer's part number.</P>
              <P>(ii) Services are separately identifiable if they have no more than one—</P>
              <P>(A) Scope of work; or</P>
              <P>(B) Description of services.</P>
              <P>(iii) This requirement does not apply if there are associated subline items, established for other than informational reasons, and those subline items include the actual detailed identification in accordance with 204.7104. Where this exception applies, use a general narrative description instead of the contract item description.</P>
              <P>(3) <E T="03">Separate delivery schedule.</E> Each contract line item or service shall have its own delivery schedule, period of performance, or completion date expressly stated (“as required” constitutes an expressly stated delivery term).</P>
              <P>(i) The fact that there is more than one delivery date, destination, performance date, or performance point may be a determining factor in the decision as to whether to establish more than one contract line item.</P>
              <P>(ii) If a contract line item has more than one destination or delivery date, the contracting officer may create individual contract line items for the different destinations or delivery dates, or may specify the different delivery dates for the units by destination in the delivery schedule.</P>
              <P>(4) <E T="03">Single accounting classification citation.</E> (i) Each contract line item shall reference a single accounting classification citation except as provided in paragraph (a)(4)(ii) of this subsection.</P>
              <P>(ii) The use of multiple accounting classification citations for a contract line item is authorized in the following situations:</P>

              <P>(A) A single, nonseverable deliverable to be paid for with R&amp;D or other funds properly incrementally obligated over several fiscal years in accordance with DoD policy;<PRTPAGE P="32"/>
              </P>
              <P>(B) A single, nonseverable deliverable to be paid for with different authorizations or appropriations, such as in the acquisition of a satellite or the modification of production tooling used to produce items being acquired by several activities; or</P>
              <P>(C) A modification to an existing contract line item for a nonseverable deliverable that results in the delivery of a modified item(s) where the item(s) and modification are to be paid for with different accounting classification citations.</P>
              <P>(iii) When the use of multiple accounting classification citations is authorized for a single contract line item, establish informational subline items for each accounting classification citation in accordance with 204.7104-1(a).</P>
              <P>(b) Exhibits may be used as an alternative to putting a long list of contract line items in the schedule. If exhibits are used, create a contract line item citing the exhibit's identifier. See 204.7105(a).</P>
              <P>(c) If the contract involves a test model or a first article which must be approved, establish a separate contract line item or subline item for each item of supply or service which must be approved. If the test model or first article consists of a lot composed of a mixture of items, a single line item or subline item may be used for the lot.</P>
              <P>(d) If a supply or service involves ancillary functions, like packaging and handling, transportation, payment of state or local taxes, or use of reusable containers, and these functions are normally performed by the contractor and the contractor is normally entitled to reimbursement for performing these functions, do not establish a separate contract line item solely to account for these functions. However, do identify the functions in the contract schedule. If the offeror separately prices these functions, contracting officers may establish separate contract line items for the functions; however, the separate line items must conform to the requirements of paragraph (a) of this subsection.</P>
              <CITA>[56 FR 36289, July 31, 1991, as amended at 60 FR 34468, July 3, 1995; 60 FR 43191, Aug. 18, 1995]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>204.7103-2</SECTNO>
              <SUBJECT>Numbering procedures.</SUBJECT>
              <P>(a) Contract line items shall consist of four numeric digits 0001 through 9999. Do not use numbers beyond 9999. Within a given contract, the item numbers shall be sequential but need not be consecutive.</P>
              <P>(b) The contract line item number shall be the same as the solicitation line item number unless there is a valid reason for using different numbers.</P>
              <P>(c) Once a contract line item number has been assigned, it shall not be assigned to another, different, contract line item in the same contract.</P>
            </SECTION>
            <SECTION>
              <SECTNO>204.7104</SECTNO>
              <SUBJECT>Contract subline items.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>204.7104-1</SECTNO>
              <SUBJECT>Criteria for establishing.</SUBJECT>
              <P>Contract subline items provide flexibility to further identify elements within a contract line item for tracking performance or simplifying administration. There are only two kinds of subline items: those which are informational in nature and those which consist of more than one item that requires separate identification.</P>
              <P>(a) <E T="03">Informational subline items.</E> (1) This type of subline item identifies information that relates directly to the contract line item and is an integral part of it (e.g., parts of an assembly or parts of a kit). These subline items shall not be scheduled separately for delivery, identified separately for shipment or performance, or priced separately for payment purposes.</P>
              <P>(2) The informational subline item may include quantities, prices, or amounts, if necessary to satisfy management requirements. However, these elements shall be included within the item description in the supplies/services column and enclosed in parentheses to prevent confusing them with quantities, prices, or amounts that have contractual significance. Do not enter these elements in the quantity and price columns.</P>
              <P>(3) Informational subline items shall be used to identify each accounting classification citation assigned to a single contract line item number when use of multiple citations is authorized (see 204.7103-1(a)(4)(ii)).</P>
              <P>(b) <E T="03">Separately identified subline items.</E> (1) Subline items will be used instead <PRTPAGE P="33"/>of contract line items to facilitate payment, delivery tracking, contract funds accounting, or other management purposes. Such subline items shall be used when items bought under one contract line item number—</P>
              <P>(i) Are to be paid for from more than one accounting classification. A subline item shall be established for the quantity associated with the single accounting classification citation. Establish a line item rather than a subline item if it is likely that a subline item may be assigned additional accounting classification citations at a later date. Identify the funding as described in 204.7104-1(a)(3);</P>
              <P>(ii) Are to be packaged in different sizes, each represented by its own NSN;</P>
              <P>(iii) Have collateral costs, such as packaging costs, but those costs are not a part of the unit price of the contract line item;</P>
              <P>(iv) Have different delivery dates or destinations or requisitions, or a combination of the three; or</P>
              <P>(v) Identify parts of an assembly or kit which—</P>
              <P>(A) Have to be separately identified at the time of shipment or performance; and</P>
              <P>(B) Are separately priced.</P>
              <P>(2) Each separately identified contract subline item shall have its own—</P>
              <P>(i) Delivery schedule, period of performance, or completion date;</P>
              <P>(ii) Unit price or single total price or amount (not separately priced (NSP) is acceptable as an entry for price or amount if the price is included in another subline item or a different contract line item). This requirement does not apply—</P>
              <P>(A) If the subline item was created to refer to an exhibit or an attachment. If management needs dictate that a unit price be entered, the price shall be set forth in the item description block of the schedule and enclosed in parentheses; or</P>
              <P>(B) In the case of indefinite delivery contracts described at 204.7103-1(a)(1)(vi).</P>
              <P>(iii) Identification (e.g., NSN, item description, manufacturer's part number, scope of work, description of services).</P>
              <P>(3) Unit prices and extended amounts.</P>
              <P>(i) The unit price and total amount for all subline items may be entered at the contract line item number level if the unit price for the subline items is identical. If there is any variation, the subline item unit prices shall be entered at the subline item level only.</P>
              <P>(ii) The unit price and extended amounts may be entered at the subline items level.</P>
              <P>(iii) The two methods in paragraphs (b)(3) (i) and (ii) of this subsection shall not be combined in a contract line item.</P>
              <P>(iv) When the price for items not separately priced is included in the price of another subline item or contract line item, it may be necessary to withhold payment on the priced subline item until all the related subline items that are not separately priced have been delivered. In those cases, use the clause at 252.204-7002, Payment for Subline Items Not Separately Priced.</P>
              <CITA>[56 FR 36289, July 31, 1991, as amended at 60 FR 34468, July 3, 1995]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>204.7104-2</SECTNO>
              <SUBJECT>Numbering procedures.</SUBJECT>
              <P>(a) Number subline items by adding either two numeric characters or two alpha characters to the basic contract line item number.</P>
              <P>(1) <E T="03">Information subline item numbers.</E> Use numeric characters only for information subline items, running 01 through 99. Do not use spaces or special characters to separate the subline item number from the contract line item number that is its root. For example, if the contract line item number is 0001, the first three subline items would be 000101, 000102, and 000103. Do not use a designation more than once within a contract line item.</P>
              <P>(2) <E T="03">Separately identified subline items.</E> Use alpha characters only for separately identified subline items, running AA through ZZ. Do not use spaces or special characters to separate the subline item number from the contract line item number that is its root. For example, if the contract line item number is 0001, the first three subline items would be 0001AA, 0001AB, and 0001AC.</P>
              <P>(i) Do not use the letters I or O as alpha characters.</P>

              <P>(ii) Use all 24 available alpha characters in the second position before selecting a different alpha character for <PRTPAGE P="34"/>the first position. For example, AA, AB, AC, through AZ before beginning BA, BB, and BC.</P>
              <P>(b) Within a given contract line item, the subline item numbers shall be sequential but need not be consecutive.</P>
              <P>(c) Exhibits may be used as an alternative to setting forth in the schedule a long list of contract subline items. If exhibits are used, create a contract subline item citing the exhibit's identifier. See 204.7105.</P>
              <P>(d) If a contract line item involves ancillary functions, like packaging and handling, transportation, payment of state or local taxes, or use of reusable containers, and these functions are normally performed by the contractor and the contractor is normally entitled to reimbursement for performing these functions, do not establish a separate subline item solely to account for these functions. However, do identify the functions in the contract schedule. If offeror separately prices these functions, then contracting officers may establish separate subline items for the functions; however, the separate subline items must conform to the requirements of 204.7104-1.</P>
              <P>(e) The following examples illustrate subline items numbering—</P>
              <P>(1) Subline items structured to identify destinations for identical items, identically priced (delivery schedule shall be established for each subline item, not the contract line item).</P>
              <GPOTABLE CDEF="xls40,r10,10,xls20,10,10" COLS="6" OPTS="L2,i1">
                <BOXHD>
                  <CHED H="1">Item No.</CHED>
                  <CHED H="1">Supplies/service</CHED>
                  <CHED H="1">Quantity</CHED>
                  <CHED H="1">Unit</CHED>
                  <CHED H="1">Unit price</CHED>
                  <CHED H="1">Amount</CHED>
                </BOXHD>
                <ROW>
                  <ENT I="01">0001</ENT>
                  <ENT>NSN 1615-00-591-6620 Shim, Aluminum Alloy, Apbl, Rotor, Helicopter PRON A1-9-63821-M1-M1 ACRN:AA</ENT>
                  <ENT/>
                  <ENT/>
                  <ENT/>
                  <ENT/>
                </ROW>
                <ROW>
                  <ENT I="01">0001AA</ENT>
                  <ENT>A3168R-9030-4025 A2537M IPD: 2 RDD: 334 PROJ: 501</ENT>
                  <ENT>10</ENT>
                  <ENT>EA</ENT>
                  <ENT>$100.00</ENT>
                  <ENT>$1,000.00</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">0001AB</ENT>
                  <ENT>A3168R-9030-4026 A51AXBM IPD: 2 RDD: 325 PROJ: 502</ENT>
                  <ENT>10</ENT>
                  <ENT>EA</ENT>
                  <ENT>$100.00</ENT>
                  <ENT>$1,000.00</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">0001AC</ENT>
                  <ENT>A3168R-9030-4027 A67KBCM IPD: 2 RDD: 349 PROJ: 503</ENT>
                  <ENT>15</ENT>
                  <ENT>EA</ENT>
                  <ENT>$100.00</ENT>
                  <ENT>$1,500.00</ENT>
                </ROW>
              </GPOTABLE>
              <P>(2) Subline items structured to identify destinations for identical items, not identically priced (delivery schedule shall be established for each subline item, not the contract line item).</P>
              <GPOTABLE CDEF="xls40,r10,10,xls20,10,10" COLS="6" OPTS="L2,i1">
                <BOXHD>
                  <CHED H="1">Item No.</CHED>
                  <CHED H="1">Supplies/service</CHED>
                  <CHED H="1">Quantity</CHED>
                  <CHED H="1">Unit</CHED>
                  <CHED H="1">Unit price</CHED>
                  <CHED H="1">Amount</CHED>
                </BOXHD>
                <ROW>
                  <ENT I="01">0001</ENT>
                  <ENT>NSN 1615-00-591-6620 Shim, Aluminum Alloy, Apbl, Rotor, Helicopter PRON A1-9-63821-M1-M1 ACRN:AA</ENT>
                  <ENT/>
                  <ENT/>
                  <ENT/>
                  <ENT/>
                </ROW>
                <ROW>
                  <ENT I="01">0001AA</ENT>
                  <ENT>A3168R-9030-4025 A2537M IPD: 2 RDD: 334 PROJ: 501</ENT>
                  <ENT>10</ENT>
                  <ENT>EA</ENT>
                  <ENT>$100.00</ENT>
                  <ENT>$1,000.00</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">0001AB</ENT>
                  <ENT>A3168R-9030-4026 A51AXBM IPD: 2 RDD: 325 PROJ: 502</ENT>
                  <ENT>20</ENT>
                  <ENT>EA</ENT>
                  <ENT>$99.00</ENT>
                  <ENT>$1,980.00</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">0001AC</ENT>
                  <ENT>A3168R-9030-4027 A67KBCM IPD: 2 RDD: 349 PROJ: 503</ENT>
                  <ENT>30</ENT>
                  <ENT>EA</ENT>
                  <ENT>$98.00</ENT>
                  <ENT>$2,940.09</ENT>
                </ROW>
                <TNOTE>
                  <E T="02">Note:</E> Difference in prices for identical items is due to separate destinations for FOB destination delivery.</TNOTE>
              </GPOTABLE>
              <P>(3) Subline items structured to identify different sizes of an item that are identically priced (delivery schedule shall be established for each subline item, not the contract line item).</P>
              <GPOTABLE CDEF="xls40,r10,10,xls20,10,10" COLS="6" OPTS="L2,i1">
                <BOXHD>
                  <CHED H="1">Item No.</CHED>
                  <CHED H="1">Supplies/service</CHED>
                  <CHED H="1">Quantity</CHED>
                  <CHED H="1">Unit</CHED>
                  <CHED H="1">Unit price</CHED>
                  <CHED H="1">Amount</CHED>
                </BOXHD>
                <ROW>
                  <ENT I="01">0013</ENT>
                  <ENT>Boots Insulated, Cold Weather White, Type II, Class 1</ENT>
                  <ENT/>
                  <ENT>PR</ENT>
                  <ENT>$38.35</ENT>
                  <ENT>$13,422.50</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">0013AA</ENT>
                  <ENT>8430-00-655-5541 Size 5N</ENT>
                  <ENT>50</ENT>
                  <ENT/>
                  <ENT/>
                  <ENT/>
                </ROW>
                <ROW>
                  <ENT I="01">0013AB</ENT>
                  <ENT>8430-00-655-5544 Size 8N</ENT>
                  <ENT>70</ENT>
                  <ENT/>
                  <ENT/>
                  <ENT/>
                </ROW>
                <ROW>
                  <ENT I="01">0013AC</ENT>
                  <ENT>8430-00-655-5551 Size 9N</ENT>
                  <ENT>30</ENT>
                  <ENT/>
                  <ENT/>
                  <ENT/>
                </ROW>
                <ROW>
                  <ENT I="01">0013AD</ENT>
                  <ENT>8430-00-655-5535 Size 9R</ENT>
                  <ENT>200</ENT>
                  <ENT/>
                  <ENT/>
                  <ENT/>
                </ROW>
                <TNOTE>
                  <E T="02">Note:</E> Unit price and total amount shown at line item level rather than at subline item level.</TNOTE>
              </GPOTABLE>
              <PRTPAGE P="35"/>
              <P>(4) Subline items structured to identify different sizes of an item that are not identically priced (delivery schedule shall be established for each subline item, not the contract line item).</P>
              <GPOTABLE CDEF="xls40,r10,10,xls20,10,10" COLS="6" OPTS="L2,i1">
                <BOXHD>
                  <CHED H="1">Item No.</CHED>
                  <CHED H="1">Supplies/service</CHED>
                  <CHED H="1">Quantity</CHED>
                  <CHED H="1">Unit</CHED>
                  <CHED H="1">Unit price</CHED>
                  <CHED H="1">Amount</CHED>
                </BOXHD>
                <ROW>
                  <ENT I="01">0002</ENT>
                  <ENT>Body Armor Ground Troops Variable Type Small Arms, Fragmentation Protective Nylon Felt Vest, Front and Back Plates, Ceramic Plate, Type I</ENT>
                  <ENT/>
                  <ENT/>
                  <ENT/>
                  <ENT/>
                </ROW>
                <ROW>
                  <ENT I="01">0002AA</ENT>
                  <ENT>First Article</ENT>
                  <ENT>1</ENT>
                  <ENT>LO</ENT>
                  <ENT>NSP</ENT>
                  <ENT/>
                </ROW>
                <ROW>
                  <ENT I="01">0002AB</ENT>
                  <ENT>8470-00-141-0935, Medium Regular</ENT>
                  <ENT>1936</ENT>
                  <ENT>SE</ENT>
                  <ENT>$331.77</ENT>
                  <ENT>$642,306.72</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">0002AC</ENT>
                  <ENT>8470-00-141-0936, Large Regular</ENT>
                  <ENT>625</ENT>
                  <ENT>SE</ENT>
                  <ENT>355.77</ENT>
                  <ENT>222,356.25</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">0002AD</ENT>
                  <ENT>8470-00-141-0937, Medium Long</ENT>
                  <ENT>1237</ENT>
                  <ENT>SE</ENT>
                  <ENT>346.77</ENT>
                  <ENT>428,954.49</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">0002AE</ENT>
                  <ENT>8470-00-141-0938, Large Long</ENT>
                  <ENT>804</ENT>
                  <ENT>SE</ENT>
                  <ENT>365.77</ENT>
                  <ENT>294,079.08</ENT>
                </ROW>
              </GPOTABLE>
              <P>(5) Subline items structured to provide the capability for relating subordinate separately priced packaging costs to the overall contract line item. (Separate delivery schedules shall be established for the subline item identifying the contractor's product and for the subline item identifying packaging. No schedule will be established for the contract line item.)</P>
              <GPOTABLE CDEF="xls60,r100,10,xs36,12,12" COLS="6" OPTS="L2,i1">
                <BOXHD>
                  <CHED H="1">Item No.</CHED>
                  <CHED H="1">Supplies/service</CHED>
                  <CHED H="1">Quantity</CHED>
                  <CHED H="1">Unit</CHED>
                  <CHED H="1">Unit price</CHED>
                  <CHED H="1">Amount</CHED>
                </BOXHD>
                <ROW>
                  <ENT I="01">0001 </ENT>
                  <ENT O="xl">6105-00-635-6568 50380<LI O="xl">Ref No 63504-WZ Armature</LI>
                  </ENT>
                </ROW>
                <ROW>
                  <ENT I="01">0001AA </ENT>
                  <ENT O="xl">6105-00-635-6568 50380<LI O="xl">Ref No 63504-WZ Armature Motor ACRN:AA</LI>
                  </ENT>
                  <ENT>2</ENT>
                  <ENT>Ea</ENT>
                  <ENT>$2,895.87</ENT>
                  <ENT>$5,791.74</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">0001AB</ENT>
                  <ENT>Packaging ACRN:AA</ENT>
                  <ENT>2</ENT>
                  <ENT>Ea</ENT>
                  <ENT>$289.58</ENT>
                  <ENT>$579.16</ENT>
                </ROW>
              </GPOTABLE>
              <P>(6) Subline items structured to identify different accounting classifications for identical items (delivery schedule shall be established for each subline item, not the contract line item).</P>
              <WIDE>
                <FP SOURCE="FP-1">AJ: 17X150518350315069100000192B000000000000000000</FP>
                <FP SOURCE="FP-1">AK: 17X150518370317569100000192B000000000000000000</FP>
                <FP SOURCE="FP-1">AL: 17X150519350314369100000192B000000000000000000</FP>
              </WIDE>
              <GPOTABLE CDEF="xls40,r10,10,xls20,10,10" COLS="6" OPTS="L2,i1">
                <BOXHD>
                  <CHED H="1">Item no.</CHED>
                  <CHED H="1">Supplies/service</CHED>
                  <CHED H="1">Quantity</CHED>
                  <CHED H="1">Unit</CHED>
                  <CHED H="1">Unit price</CHED>
                  <CHED H="1">Amount</CHED>
                </BOXHD>
                <ROW>
                  <ENT I="01">0002</ENT>
                  <ENT>Pulse Decoder, KY-312/A5Q-19</ENT>
                  <ENT/>
                  <ENT>EA</ENT>
                  <ENT>$3,037.40 </ENT>
                  <ENT O="xl"/>
                </ROW>
                <ROW>
                  <ENT I="01">0002AA</ENT>
                  <ENT>Pulse Decoder, KY-312/A5Q-19 ACRN: AJ</ENT>
                  <ENT>2</ENT>
                  <ENT/>
                  <ENT/>
                  <ENT>6,074.80</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">0002AB</ENT>
                  <ENT>Pulse Decoder, K1Y-312/A5Q-19 ACRN: AK</ENT>
                  <ENT>6</ENT>
                  <ENT/>
                  <ENT/>
                  <ENT>18,224.40</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">0002AC</ENT>
                  <ENT>Pulse Decoder, KY-312/A5Q-19 ACRN: AL</ENT>
                  <ENT>2</ENT>
                  <ENT/>
                  <ENT/>
                  <ENT>$6,074.80</ENT>
                </ROW>
                <TNOTE>
                  <E T="02">Note:</E> Unit price may be shown at line item level and total amounts shown at subline item level.</TNOTE>
              </GPOTABLE>
              <P>(7) Informational subline items established to identify multiple accounting classification citations assigned to a single contract line item.</P>
              <GPOTABLE CDEF="xls40,r10,10,xls20,10,10" COLS="6" OPTS="L2,i1">
                <BOXHD>
                  <CHED H="1">Item No.</CHED>
                  <CHED H="1">Supplies/service</CHED>
                  <CHED H="1">Quantity</CHED>
                  <CHED H="1">Unit</CHED>
                  <CHED H="1">Unit price</CHED>
                  <CHED H="1">Amount</CHED>
                </BOXHD>
                <ROW>
                  <ENT I="01">0001</ENT>
                  <ENT>Air Vehicle</ENT>
                  <ENT>1</ENT>
                  <ENT>Ea</ENT>
                  <ENT>$6,700,000</ENT>
                  <ENT>$6,700,000</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">000101 </ENT>
                  <ENT O="xl">ACRN:AA $3,300,000</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">000102 </ENT>
                  <ENT O="xl">ACRN:AB $2,000,000</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">000103 </ENT>
                  <ENT O="xl">ACRN:AC $1,400,000</ENT>
                </ROW>
              </GPOTABLE>

              <P>(8) Subline items structured to identify parts of an assembly (delivery schedule and price shall be established for each identified part at the subline item level, not for the assembly at the contract line item level).<PRTPAGE P="36"/>
              </P>
              <GPOTABLE CDEF="xls40,r10,10,xls20,10,10" COLS="6" OPTS="L2,i1">
                <BOXHD>
                  <CHED H="1">Item no.</CHED>
                  <CHED H="1">Supplies/service</CHED>
                  <CHED H="1">Quantity</CHED>
                  <CHED H="1">Unit</CHED>
                  <CHED H="1">Unit price</CHED>
                  <CHED H="1">Amount</CHED>
                </BOXHD>
                <ROW>
                  <ENT I="01">0003</ENT>
                  <ENT>Automatic Degausing System Consisting of: (2 ea @ $52,061; $104,122 total)</ENT>
                  <ENT/>
                  <ENT/>
                  <ENT/>
                  <ENT/>
                </ROW>
                <ROW>
                  <ENT I="01">0003AA</ENT>
                  <ENT>Switchboard</ENT>
                  <ENT>2</ENT>
                  <ENT>EA</ENT>
                  <ENT>$52,061.00</ENT>
                  <ENT>$104,122.00</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">0003AB</ENT>
                  <ENT>Remote Control Panel</ENT>
                  <ENT>2</ENT>
                  <ENT>EA</ENT>
                  <ENT>NSP</ENT>
                  <ENT/>
                </ROW>
                <ROW>
                  <ENT I="01">0003AC</ENT>
                  <ENT>Power Supply (M Coil) SSM Type 145 Amps, 220 V DC)</ENT>
                  <ENT>2</ENT>
                  <ENT>EA</ENT>
                  <ENT>NSP</ENT>
                  <ENT/>
                </ROW>
                <ROW>
                  <ENT I="01">0003AF</ENT>
                  <ENT>Power Supply (A Coil) SSM Type (118 Amps, 220 V DC)</ENT>
                  <ENT>2</ENT>
                  <ENT>EA</ENT>
                  <ENT>NSP</ENT>
                  <ENT/>
                </ROW>
              </GPOTABLE>
              <P>(9) Subline items structured to identify parts of a kit (delivery schedule and price shall be established for each identified part at the subline item level, not for the kit at the contract line item level).</P>
              <GPOTABLE CDEF="xls40,r10,10,xls20,10,10" COLS="6" OPTS="L2,i1">
                <BOXHD>
                  <CHED H="1">Item no.</CHED>
                  <CHED H="1">Supplies/service</CHED>
                  <CHED H="1">Quantity</CHED>
                  <CHED H="1">Unit</CHED>
                  <CHED H="1">Unit price</CHED>
                  <CHED H="1">Amount</CHED>
                </BOXHD>
                <ROW>
                  <ENT I="01">0031</ENT>
                  <ENT>Conversion Kit to Convert Torpedo MK 45 Mod 0 to Torpedo MK 45 Mod 1, (50 Kt @ $10,868.52; $543,426 total)</ENT>
                  <ENT/>
                  <ENT/>
                  <ENT/>
                  <ENT/>
                </ROW>
                <ROW>
                  <ENT I="01">0031AA</ENT>
                  <ENT>Integrator Assy LD 620106</ENT>
                  <ENT>50</ENT>
                  <ENT>EA</ENT>
                  <ENT>$10,868.52</ENT>
                  <ENT>$543,426.00</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">0031AB</ENT>
                  <ENT>Pulse Generator Assy LD 587569</ENT>
                  <ENT>50</ENT>
                  <ENT>EA</ENT>
                  <ENT>NSP</ENT>
                  <ENT/>
                </ROW>
                <ROW>
                  <ENT I="01">0031AC</ENT>
                  <ENT>Drive Shaft Assy LD 587559</ENT>
                  <ENT>50</ENT>
                  <ENT>EA</ENT>
                  <ENT>NSP</ENT>
                  <ENT/>
                </ROW>
                <ROW>
                  <ENT I="01">0031BF</ENT>
                  <ENT>Actual Panel Assy LD 542924</ENT>
                  <ENT>50</ENT>
                  <ENT>EA</ENT>
                  <ENT>NSP</ENT>
                  <ENT/>
                </ROW>
                <TNOTE>
                  <E T="02">Note:</E> In this example, the prices of subline items 0031AB through 0031BF are included in the Integrator Assembly.</TNOTE>
              </GPOTABLE>
              <CITA>[56 FR 36289, July 31, 1991, as amended at 60 FR 34468, July 3, 1995]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>204.7105</SECTNO>
              <SUBJECT>Contract exhibits and attachments.</SUBJECT>
              <P>(a) <E T="03">Use of exhibits.</E> (1) Exhibits may be used instead of putting a long list of contract line items or subline items in the contract schedule. Exhibits are particularly useful in buying spare parts.</P>
              <P>(2) When using exhibits, establish a contract line or subline item and refer to the exhibit.</P>
              <P>(3) Identify exhibits individually.</P>
              <P>(4) Each exhibit shall apply to only one contract line item or subline item, except—</P>
              <P>(i) One exhibit may apply to one or more option line item(s) when the data required under the exhibits is identical in all respects except the period during which the option is to be exercised; and</P>
              <P>(ii) An exhibit may apply to more than one contract line item if the exhibit is not separately priced and the exhibit deliverable is identical for all applicable contract line items.</P>
              <P>(5) More than one exhibit may apply to a single contract line item.</P>
              <P>(6) Data items on a DD Form 1423, Contract Data Requirements List, may be either separately priced or not separately priced.</P>
              <P>(i) <E T="03">Separately priced.</E> When data are separately priced, enter the price in only one place in the contract: in either Section B of the contract schedule or on the DD Form 1423. Whichever place, display the price there consistently.</P>
              <P>(A) Section B. If the prices are entered in section B of the schedule, detach Blocks 17 and 18 of the DD Form 1423 and file elsewhere in the contract file. If the prices are entered on the DD Form 1423, do not detach Blocks 17 and 18 of the DD Form 1423.</P>
              <P>(B) DD Form 1423. If the prices are entered on the DD Form 1423, the price of all separately priced deliverable data items attributable to a line item shall be totalled and included, for information purposes, in parentheses, below the supplies services for that line item, in section B of the schedule.</P>
              <P>(ii) <E T="03">NSP.</E> Include prices in a priced contract line item or subline item. Detach Blocks 17 and 18 of the DD Form 1423 and retain them elsewhere as required.</P>
              <P>(7) The contracting officer may append attachments to exhibits, as long as the attachment does not identify a deliverable requirement which has not been established by a contract or exhibit line or subline item.</P>
              <P>(b) <E T="03">Numbering exhibits and attachments.</E> (1) Use alpha characters to identify exhibits. The alpha characters shall be either single or double capital letters. Do not use the letters I or O.<PRTPAGE P="37"/>
              </P>
              <P>(2) Exhibit identifiers need not be either consecutive or sequential.</P>
              <P>(3) Once an identifier has been assigned to an exhibit, do not use it on another exhibit in the same contract.</P>
              <P>(4) The identifier shall always appear in the first or first and second positions of all applicable exhibit line item numbers.</P>
              <P>(5) If the exhibit has more than one page, cite the procurement instrument identification number, exhibit identifier, and applicable contract line or subline item number on each page.</P>
              <P>(6) Use numbers to identify attachments.</P>
              <P>(c) <E T="03">Numbering exhibit line items and subline items</E>—(1) <E T="03">Criteria for establishing.</E> The criteria for establishing exhibit line items and subline items is the same as those for establishing contract line items and subline items (see 204.7103 and 204.7104, respectively).</P>
              <P>(2) <E T="03">Procedures for numbering.</E> (i) Number items in an exhibit in a manner similar to contract line items and subline items.</P>
              <P>(ii) Number line items using a four position number.</P>
              <P>(A) The first position or the first and second position contain the exhibit identifier.</P>
              <P>(B) The third and fourth positions contain the alpha or numeric character serial numbers assigned to the line item.</P>
              <P>(iii) Assign alpha or numeric characters to the line item on the basis of the same criteria outlined in contract subline items at 204.7104.</P>
              <P>(iv) Exhibit line item numbers shall be sequential within the exhibit.</P>
              <P>(3) <E T="03">Examples</E>—(i) <E T="03">Two position serial number for double letter exhibit identifier.</E>
              </P>
              <GPOTABLE CDEF="xs48,r25" COLS="2" OPTS="L2,i1">
                <BOXHD>
                  <CHED H="1">Cumulative No. of line items</CHED>
                  <CHED H="1">Serial number sequence</CHED>
                </BOXHD>
                <ROW>
                  <ENT I="01">1-33</ENT>
                  <ENT>01 thru 09, then OA thru OZ, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">34-67</ENT>
                  <ENT>10 thru 19, then 1A thru 1Z, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">68-101</ENT>
                  <ENT>20 thru 29, then 2A thru 2Z, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">102-135</ENT>
                  <ENT>30 thru 39, then 3A thru 3Z, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">136-169</ENT>
                  <ENT>40 thru 49, then 4A thru 4Z, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">170-203</ENT>
                  <ENT>50 thru 59, then 5A thru 5Z, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">204-237</ENT>
                  <ENT>60 thru 69, then 6A thru 6Z, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">238-271</ENT>
                  <ENT>70 thru 79, then 7A thru 7Z, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">272-305</ENT>
                  <ENT>80 thru 89, then 8A thru 8Z, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">306-339</ENT>
                  <ENT>90 thru 99, then 9A thru 9Z, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">340-373</ENT>
                  <ENT>A0 thru A9, then AA thru AZ, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">374-407</ENT>
                  <ENT>B0 thru B9, then BA thru BZ, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">408-441</ENT>
                  <ENT>C0 thru C9, then CA thru CZ, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">442-475</ENT>
                  <ENT>D0 thru D9, then DA thru DZ, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">476-509</ENT>
                  <ENT>E0 thru E9, then EA thru EZ, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">510-543</ENT>
                  <ENT>F0 thru F9, then FA thru FZ, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">544-577</ENT>
                  <ENT>G0 thru G9, then GA thru GZ, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">578-611</ENT>
                  <ENT>H0 thru H9, then HA thru HZ, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">612-645</ENT>
                  <ENT>J0 thru J9, then JA thru JZ, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">646-679</ENT>
                  <ENT>K0 thru K9, then KA thru KZ, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">680-713</ENT>
                  <ENT>L0 thru L9, then LA thru LZ, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">714-747</ENT>
                  <ENT>M0 thru M9, then MA thru MZ, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">748-781</ENT>
                  <ENT>N0 thru N9, then NA thru NZ, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">782-815</ENT>
                  <ENT>P0 thru P9, then PA thru PZ, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">816-849</ENT>
                  <ENT>Q0 thru Q9, then QA thru QZ, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">850-883</ENT>
                  <ENT>R0 thru R9, then RA thru RZ, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">884-917</ENT>
                  <ENT>S0 thru S9, then SA thru SZ, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">918-951</ENT>
                  <ENT>T0 thru T9, then TA thru TZ, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">952-985</ENT>
                  <ENT>U0 thru U9, then UA thru UZ, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">986-1019</ENT>
                  <ENT>V0 thru V9, then VA thru VZ, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">1020-1053</ENT>
                  <ENT>W0 thru W9, then WA thru WZ, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">1054-1087</ENT>
                  <ENT>X0 thru X9, then XA thru XZ, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">1088-1121</ENT>
                  <ENT>Y0 thru Y9, then YA thru YZ, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">1122-1155</ENT>
                  <ENT>Z0 thru Z9, then ZA thru ZZ</ENT>
                </ROW>
              </GPOTABLE>
              <P>(ii) <E T="03">Three position numbers.</E>
              </P>
              <GPOTABLE CDEF="xs48,r25" COLS="2" OPTS="L2,i1">
                <BOXHD>
                  <CHED H="1">Cumulative No. of line items</CHED>
                  <CHED H="1">Serial number sequence</CHED>
                </BOXHD>
                <ROW>
                  <ENT I="11">(ii) Three position numbers.</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">1-33</ENT>
                  <ENT>001 thru 009, then 00A thru 00Z, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">34-67</ENT>
                  <ENT>010 thru 019, then 01A thru 101Z, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">68-101</ENT>
                  <ENT>020 thru 029, then 02A thru 02Z, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">102-135</ENT>
                  <ENT>030 thru 039, then 03A thru 03Z and so</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">136-305</ENT>
                  <ENT>on to</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">306-339</ENT>
                  <ENT>090 thru 099, then 09A thru 09Z, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">340-373</ENT>
                  <ENT>0A0 thru 0A9, then 0AA thru 0AZ, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">374-407</ENT>
                  <ENT>0B0 thru 0B9, then 0BB thru 0BZ, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">408-441</ENT>
                  <ENT>0C0 thru 0C9, then 0CA thru 0CZ, and</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">442-1121</ENT>
                  <ENT>so on to</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">1122-1155</ENT>
                  <ENT>0Z0 thru 0Z9, then 0ZA thru 0ZZ, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">1156-1189</ENT>
                  <ENT>100 thru 109, then 10A thru 10Z, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">1190-1223</ENT>
                  <ENT>110 thru 119, then 11A thru 11Z, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">1224-1257</ENT>
                  <ENT>120 thru 129, then 12A thru 12Z, and</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">1258-1461</ENT>
                  <ENT>so on to</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">1462-1495</ENT>
                  <ENT>190 thru 199, then 19A thru 19Z, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">1496-1529</ENT>
                  <ENT>1A0 thru 1A9, then 1AA thru 1AZ, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">1530-1563</ENT>
                  <ENT>1B0 thru 1B9, then 1BA thru 1BZ, and</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">1564-2277</ENT>
                  <ENT>so on to</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">2278-2311</ENT>
                  <ENT>1Z0 thru 1Z9, then 1ZA thru 1ZB, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">2312-2345</ENT>
                  <ENT>200 thru 109, then 10A thru 10Z, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">2346-2379</ENT>
                  <ENT>210 thru 219, then 21A thru 21Z, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">2380-2413</ENT>
                  <ENT>220 thru 229, then 22A thru 22Z, and</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">2414-2617</ENT>
                  <ENT>so on to</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">2618-2651</ENT>
                  <ENT>290 thru 299, then 29A thru 29Z, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">2652-2685</ENT>
                  <ENT>2A0 thru 2A9, then 2AA thru 2AZ, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">2686-2719</ENT>
                  <ENT>2B0 thru 2B9, then 2BA thru 2BZ, and</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">2720-3433</ENT>
                  <ENT>so on to</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">3434-3467</ENT>
                  <ENT>2Z0 thru 2Z9, then 2ZA thru 2ZZ, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">3468-3501</ENT>
                  <ENT>300 thru 309, then 30Z thru 30Z, and</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">3502-10403</ENT>
                  <ENT>so on to</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">10404-10437</ENT>
                  <ENT>900 thru 909, then 90A thru 90Z, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">10438-10471</ENT>
                  <ENT>910 thru 919, then 91A thru 91Z, and</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">10472-10709</ENT>
                  <ENT>so on to</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">10710-10743</ENT>
                  <ENT>990 thru 999, then 99A thru 99Z, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">10744-10777</ENT>
                  <ENT>9A0 thru 9A9, then 9AA thru 9AZ, then</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">10778-10811</ENT>
                  <ENT>9B0 thru 9B9, then 9BA thru 9BZ, and</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">10812-11525</ENT>
                  <ENT>so on to</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">11526-11559</ENT>
                  <ENT>9Z0 thru 9Z9, then 9ZA thru 9ZZ</ENT>
                </ROW>
              </GPOTABLE>
            </SECTION>
            <SECTION>
              <SECTNO>204.7106</SECTNO>
              <SUBJECT>Contract modifications.</SUBJECT>

              <P>(a) If new items are added, assign new contract line or subline item numbers <PRTPAGE P="38"/>or exhibit line item numbers, in accordance with the procedures established at 204.7103, 204.7104, and 204.7105.</P>
              <P>(b) Modifications to existing contract line items or exhibit line items. (1) If the modification relates to existing contract line items or exhibit line items, the modification shall refer to those item numbers.</P>
              <P>(2) If the contracting officer decides to assign new identifications to existing contract or exhibit line items, the following rules apply—</P>
              <P>(i) <E T="03">Definitized and undefinitized items.</E> (A) The original line item or subline item number may be used if the modification applies to the total quantity of the original line item or subline.</P>
              <P>(B) The original line item or subline item number may be used if the modification makes only minor changes in the specifications of some of the items ordered on the original line item or subline item and the resulting changes in unit price can be averaged to provide a new single unit price for the total quantity. If the changes in the specifications make the item significantly distinguishable from the original item or the resulting changes in unit price cannot be averaged, create a new line item.</P>
              <P>(C) If the modification affects only a partial quantity of an existing contract or exhibit line item or subline item and the change does not involve either the delivery date or the ship-to/mark-for data, the original contract or exhibit line item or subline item number shall remain with the unchanged quantity. Assign the changed quantity the next available number.</P>
              <P>(ii) <E T="03">Undefinitized items.</E> In addition to the rules in paragraph (b)(2)(i), the following additional rules apply to undefinitized items—</P>
              <P>(A) If the modification is undefinitized and increases the quantity of an existing definitized item, assign the undefinitized quantity the next available number.</P>
              <P>(B) If the modification increases the quantity of an existing undefinitized item, the original contract or exhibit line item or subline item may be used if the unit price for the new quantity is expected to be the same as the price for the original quantity. If the unit prices of the two quantities will be different, assign the new quantity the next available number.</P>
              <P>(C) If the modification both affects only a partial quantity of the existing contract or exhibit line or subline item and definitizes the price for the affected portion, the definitized portion shall retain the original item number. If there is any undefinitized portion of the item, assign it the next available number. However, if the modification definitizes the price for the whole quantity of the line item, and price impact of the changed work can be apportioned equally over the whole to arrive at a new unit price, the quantity with the changes can be added into the quantity of the existing item.</P>
              <P>(D) If the modification affects only a partial quantity of an existing contract or exhibit line or subline item but does not change the delivery schedule or definitize price, the unchanged portion shall retain the original contract or exhibit line or subline item number. Assign the changed portion the next available number.</P>
            </SECTION>
            <SECTION>
              <SECTNO>204.7107</SECTNO>
              <SUBJECT>Contract accounting classification reference number (ACRN).</SUBJECT>
              <P>(a) When a contract contains more than one accounting classification citation, contracting offices shall use ACRNs. Assigning the ACRNs is the responsibility of the contracting office issuing the contract, basic ordering agreement, or blanket purchase agreement. This authority shall not be delegated. If more than one office will use the contract (e.g., ordering officers, other contracting officers), the contract must contain instructions for assigning ACRNs.</P>

              <P>(b) ACRNs are used to process certain contract data through the Military Standard Contract Administration Procedures (MILSCAP) system. The MILSCAP system uses the ACRN to relate certain contract administration records to the accounting classification citation used to obligate funds on the contract. Among these records are the accounting classification trailer record, the supplies schedules data record, and the services line item data record. ACRNs are also used to associate the various record formats of the contract payment notice as described <PRTPAGE P="39"/>in chapter 9 of the MILSCAP Manual, DoD 4000.25-5-M.</P>
              <P>(c) <E T="03">Procedures for establishing ACRNs.</E> ACRNs consist of a two position alpha or alpha/numeric code assigned to each discrete accounting classification citation within each contract. ACRNs shall be established in accordance with the following guidelines:</P>
              <P>(1) Do not use the letters I and O.</P>
              <P>(2) In no case shall an ACRN apply to more than one accounting classification citation, nor shall more than one ACRN be assigned to one accounting classification citation.</P>
              <P>(d) <E T="03">Using the ACRN in the contract.</E> (1) Show the ACRN as a detached prefix to the accounting classification citation in the accounting and appropriation data block or, if there are too many accounting classification citations to fit reasonably in that block, in section G (Contract Administration Data).</P>
              <P>(2) ACRNs need not prefix accounting classification citations if the accounting classification citations are present in the contract only for the transportation officer to cite to Government bills of lading.</P>
              <P>(3) If the contracting officer is making a modification to a contract and using the same accounting classification citations, which have had ACRNs assigned to them, the modification need cite only the ACRNs in the accounting and appropriations data block or on the continuation sheets.</P>
              <P>(e) <E T="03">Showing the ACRN in the contract.</E> If there is more than one ACRN in a contract, all the ACRNs will appear in several places in the schedule (e.g., ACRN:AA).</P>
              <P>(1) <E T="03">Ship-to/mark-for block.</E> Show the ACRN beside the identity code of each activity in the ship-to/mark-for block unless only one accounting classification citation applies to a line item or subline item. Only one ACRN may be assigned to the same ship-to/mark-for within the same contract line or subline item number unless multiple accounting classification citations apply to a single nonseverable deliverable unit such that the item cannot be related to an individual accounting classification citation.</P>
              <P>(2) <E T="03">Supplies/services column.</E> (i) If only one accounting classification citation applies to a line item or a subline item, the ACRN may be shown in the supplies/services column near the item description.</P>
              <P>(ii) If more than one accounting classification citation applies to a single contract line item, identify each assigned ACRN and the amount of associated funds using informational subline items (see 204.7104-1(a)).</P>
              <P>(3) <E T="03">Payment instructions.</E> (i) When a contract line item is funded by multiple accounting classification citations, the contracting officer shall provide adequate instructions in section G (Contract Administration Data), under the heading “Payment Instructions for Multiple Accounting Classification Citations,” to permit the paying office to charge the accounting classification citations assigned to that contract line item (see 204.7104-1(a)) in a manner that reflects the performance of work on the contract. If additional accounting classification citations are subsequently added, the payment instructions must be modified to include the additional accounting classification citations.</P>
              <P>(ii) Payment instructions shall provide a methodology for the paying office to assign payments to the appropriate accounting classification citation(s), based on anticipated contract work performance. The method established should be consistent with the reasons for the establishment of the line items. The payment method may be based upon a unique distribution profile devised to reflect how the funds represented by each of the accounting classification citations support contract performance. Payment methods that direct that payments be made from the earliest available fiscal year funding sources, or that provide for proration across accounting classification citations assigned to the line item, or a combination thereof, may be used if that methodology reasonably reflects how each of the accounting classification citations supports contract performance.</P>
              <CITA>[60 FR 34469, July 3, 1995; 60 FR 43191, Aug. 18, 1995]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <PRTPAGE P="40"/>
            <HD SOURCE="HED">Subpart 204.72—Contractor Identification</HD>
            <SECTION>
              <SECTNO>204.7200</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              
              <P>This subpart prescribes uniform policies and procedures for identification of commercial and Government entities when it is necessary to—</P>

              <P>(a) Exchange data with another contracting activity, including contract administration activities and contract payment activities, or comply with the reporting requirements of subpart 204.6; or
              </P>
              <P>(b) Identify contractors for the purpose of developing computerized acquisition systems or solicitation mailing lists.</P>
              <CITA>[64 FR 43099, Aug. 9, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>204.7201</SECTNO>
              <SUBJECT> Definitions.</SUBJECT>
              
              <P>(a) <E T="03">Commercial and Government Entity (CAGE) code</E> means—
              </P>

              <P>(1) A code assigned by the Defense Logistics Information Service (DLIS) to identify a commercial or Government entity; or
              </P>

              <P>(2) A code assigned by a member of the North Atlantic Treaty Organization (NATO) that DLIS records and maintains in the CAGE master file. This type of code is known as an “NCAGE code.”
              </P>
              <P>(b) <E T="03">Contractor identification code</E> means a code that the contracting office uses to identify an offeror. The three types of contractor identification codes are CAGE codes, Data Universal Numbering System (DUNS) numbers, and Taxpayer Identification Numbers (TINs).</P>
              <CITA>[64 FR 43099, Aug. 9, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>204.7202</SECTNO>
              <SUBJECT> General.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>204.7202-1</SECTNO>
              <SUBJECT> CAGE codes.</SUBJECT>
              
              <P>(a) DLIS assigns or records and maintains CAGE codes to identify commercial and Government entities. DoD 4000.25-5-M, Military Standard Contract Administration Procedures (MILSCAP), and Volume 7 of DoD 4100.39-M, Federal Logistics Information System (FLIS) Procedures Manual, prescribe use of CAGE codes.</P>
              <P>(b)(1) If a prospective contractor must register in the Central Contractor Registration (CCR) database (see subpart 204.73) and does not have a CAGE code, DLIS will assign a CAGE code when the prospective contractor submits its request for registration in the CCR database.</P>
              <P>(2) If registration in the CCR database is not required, the prospective contractor's CAGE code is not already available in the contracting office, and the prospective contractor does not respond to the provision at 252.204-7001, Commercial and Government Entity (CAGE) Code Reporting, use the following procedures:</P>
              <P>(i) To identify the prospective contractor's CAGE code, use—</P>
              <P>(A) The monthly H-series CD ROM that contains the H-4/H-8 CAGE master file issued by DLIS (Their address is: Customer Service, Federal Center, 74 Washington Avenue, North, Battle Creek, MI 49017-3084. Their telephone number is: toll-free 1-888-352-9333);</P>
              <P>(B) The on-line access to the CAGE file through the Defense Logistics Information System;</P>
              <P>(C) The on-line access to the Defense Logistics Agency (DLA) CAGE file through the DLA Network or dial-up capability; or</P>
              <P>(D) The Internet to access the CAGE Lookup Server at http://www.dlis.dla.mil/cageserve.htm.</P>
              <P>(ii) If no CAGE code is identified through use of the procedures in paragraph (b)(2)(i) of this subsection, ask DLIS to assign a CAGE code. Submit a DD Form 2051, Request for Assignment of a Commercial and Government Entity (CAGE) Code, (or electronic equivalent) to the address in paragraph (b)(2)(i)(A) of this subsection, ATTN: DLIS-SBB. The contracting office completes Section A of the DD Form 2051, and the contractor completes Section B. The contracting office must verify Section B before submitting the form.</P>
              <P>(c) Direct questions on obtaining computer tapes, electronic updates, or code assignments to DLIS Customer Service: toll-free (888) 227-2423 or (888) 352-9333; DSN 932-4725; or commercial (616) 961-4725.</P>
              <CITA>[64 FR 43100, Aug. 9, 1999, as amended at 65 FR 63804, Oct. 25, 2000; 67 FR 49252, July 30, 2002]</CITA>
            </SECTION>
            <SECTION>
              <PRTPAGE P="41"/>
              <SECTNO>204.7202-2</SECTNO>
              <SUBJECT> DUNS numbers.</SUBJECT>
              
              <P>Requirements for use of DUNS numbers are in FAR 4.602(d) and 4.603.</P>
              <CITA>[64 FR 43100, Aug. 9, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>204.7202-3</SECTNO>
              <SUBJECT> TINs.</SUBJECT>
              
              <P>Requirements for use of TINs are in FAR subpart 4.9.</P>
              <CITA>[64 FR 43100, Aug. 9, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>204.7203</SECTNO>
              <SUBJECT> Responsibilities of contracting officers.</SUBJECT>
              

              <P>(a) Assist offerors in obtaining the required CAGE codes.
              </P>

              <P>(b) Do not deny a potential offeror a solicitation package because the offeror does not have a contractor identification code.
              </P>
              <P>(c) Consider requesting a CAGE code at the time a potential offeror is sent a solicitation package or added to the mailing list to ensure that a code is assigned in sufficient time to process the DD Form 350, Individual Contracting Action Report, without delay.</P>
              <CITA>[64 FR 43100, Aug. 9, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>204.7204</SECTNO>
              <SUBJECT> Maintenance of the CAGE file.</SUBJECT>
              <P>(a) DLIS will accept written requests for changes to CAGE files, other than name changes, from the following entities:</P>

              <P>(1) The entity identified by the code. The entity must use company letterhead to forward the request.
              </P>
              <P>(2) The contracting office.
              </P>
              <P>(3) The contract administration office.
              </P>
              <P>(b) Submit requests for changes to CAGE files on DD Form 2051, or electronic equivalent, to—Defense Logistics Information Service, DLIS-SBB, Federal Center, 74 Washington Avenue, North, Battle Creek, MI 49017-3084. Telephone Numbers: toll-free (888) 352-9333, DSN 932-4725, commercial (616) 961-4725. Facsimile: (616) 961-4388, 4485.</P>

              <P>(c) The contracting officer responsible for execution of a change-of-name agreement (see FAR subpart 42.12) must submit the agreement to DLIS-SBB. If there are no current contracts, each contracting and contract administration office receiving notification of changes from the commercial entity must forward a copy of the change notice annotated with the CAGE code to DLIS-SBB unless the change notice indicates that DLIS-SBB already has been notified.
              </P>
              <P>(d) Additional guidance for maintaining CAGE codes is in Volume 7 of DoD 4100.39-M, Federal Logistics Information System (FLIS) Procedures Manual.</P>
              <CITA>[64 FR 43100, Aug. 9, 1999; 64 FR 46474, Aug. 25, 1999, as amended at 65 FR 63804, Oct. 25, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>204.7205</SECTNO>
              <SUBJECT>Novation agreements, mergers and sales of assets.</SUBJECT>
              <P>Contracting officers shall process and execute novation agreements in accordance with FAR Subpart 42.12, Novation and Change-of-Name Agreements. These actions are independent of code and name assignments made as a result of the occasion which created the need for the novation agreement. The maintenance activity will determine which entity(s) will retain the existing code(s) and which entities will be assigned new codes. The contracting officer responsible for processing the novation agreement shall provide the maintenance activity with the following information:</P>
              <P>(a) Name(s), address(es), and code(s) of the contractor(s) transferring the original contractual rights and obligations (transferor).</P>
              <P>(b) Name(s), address(es), and code(s) (if any) of the entity who is the successor in interest (transferee).</P>
              <P>(c) Name(s), address(es), and code(s) (if any) of the entity who is retaining or receiving the rights to the technical data.</P>
              <P>(d) Description of the circumstances surrounding the novation agreement and especially the relationship of each entity to the other.</P>
              <CITA>[56 FR 36289, July 31, 1991, as amended at 66 FR 49861, Oct. 1, 2001]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>204.7206</SECTNO>
              <SUBJECT>Using CAGE codes to identify agents and brokers.</SUBJECT>
              <P>Authorized agents and brokers are entities and, as such, may be assigned CAGE codes for identification and processing purposes.</P>

              <P>(a) A single CAGE code will be assigned to the agent/broker establishment in addition to any codes assigned to the entities represented by the <PRTPAGE P="42"/>agent/broker, i.e., only one code will be assigned to a specific agent/broker entity regardless of the number of firms represented by that agent/broker.</P>
              <P>(b) Additional codes may be assigned to an agent/broker if they meet the criteria for assigning additional codes for entities, e.g., different location.</P>
              <P>(c) Codes will not be assigned to an agent/broker in care of the entity being represented or in any way infer that the agent/broker is a separate establishment bearing the name of the entity represented by the agent/broker.</P>
              <CITA>[56 FR 36289, July 31, 1991, as amended at 61 FR 51032, Sept. 30, 1996; 62 FR 48182, Sept. 15, 1997]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>204.7207</SECTNO>
              <SUBJECT> Solicitation provision.</SUBJECT>
              <P>Use the provision at 252.204-7001, Commercial and Government Entity (CAGE) Code Reporting, in solicitations when—</P>
              <P>(a) The solicitation does not include the clause at 252.204-7004, Required Central Contractor Registration; and</P>
              <P>(b) The CAGE codes for the potential offerors are not available to the contracting office.</P>
              <CITA>[66 FR 47097, Sept. 11, 2001]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 204.73—Central Contractor Registration</HD>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>63 FR 15317, Mar. 31, 1998, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>204.7300</SECTNO>
              <SUBJECT>Scope.</SUBJECT>
              <P>This subpart prescribes policies and procedures for requiring contractor registration in the DoD Central Contractor Registration (CCR) database to comply with the Debt Collection Improvement Act of 1996 (31 U.S.C. 3332; 31 U.S.C. 7701), and to increase visibility of vendor sources for specific supplies and services and their geographical locations.</P>
            </SECTION>
            <SECTION>
              <SECTNO>204.7301</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <P>
                <E T="03">Central Contractor Registration (CCR) database, Data Universal Numbering System (DUNS) number, Data Universal Numbering System+4 (DUNS+4) number,</E> and <E T="03">Registered in the CCR database</E> are defined in the clause at 252.204-7004, Required Central Contractor Registration.</P>
            </SECTION>
            <SECTION>
              <SECTNO>204.7302</SECTNO>
              <SUBJECT> Policy.</SUBJECT>
              

              <P>Prospective contractors must be registered in the CCR database prior to award of a contract, basic agreement, basic ordering agreement, or blanket purchase agreement, except for—
              </P>

              <P>(a) Purchases paid for with a Governmentwide commercial purchase card;
              </P>

              <P>(b) Awards made to foreign vendors for work performed outside the United States;
              </P>

              <P>(c) Classified contracts or purchases (see FAR 4.401) when registration in the CCR database, or use of CCR data, could comprise the safeguarding of classified information or national security;
              </P>

              <P>(d) Contracts awarded by deployed contracting officers in the course of military operations, including, but not limited to, contingency operations as defined in 10 U.S.C. 101(a)(13) or humanitarian or peacekeeping operations as defined in 10 U.S.C. 2302(7), or contracts awarded by contracting officers in the conduct of emergency operations, such as responses to natural disasters or national or civil emergencies; and
              </P>
              <P>(e) Purchases to support unusual or compelling needs of the type described in FAR 6.302-2.</P>
              <CITA>[64 FR 43100, Aug. 9, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>204.7303</SECTNO>
              <SUBJECT> Procedures.</SUBJECT>
              <P>(a)(1) Except as provided in 204.7302, the contracting officer must require each offeror to provide a DUNS number (see 204.603(2)) or, if applicable, a DUNS+4 number, with its verbal or written offer, regardless of the dollar amount of the offer.</P>
              <P>(2) Before awarding a contract, basic agreement, basic ordering agreement, or blanket purchase agreement, the contracting officer must verify that the prospective contractor is registered in the CCR database (but see paragraph (b) of this section). The contracting officer may verify registration using the DUNS number or, if applicable, the DUNS+4 number, by calling toll-free: 1-888-227-2423, commercial: (616) 961-5757, or DSN: 932-5757; via the Internet at http://www.ccr.gov; or as otherwise provided by agency procedures.</P>

              <P>(3) The contracting officer need not verify registration before placing an <PRTPAGE P="43"/>order or call under a DoD contract or agreement.</P>
              <P>(4) The contracting officer must verify registration before placing an order or call under a non-DoD contract or agreement. If the contracting is not registered, the contracting officer must follow the procedures in paragraph (b) of this section.</P>
              <P>(5) As part of the annual review of basic agreements, basic ordering agreements, and blanket purchase agreements, contracting officers must modify these agreements to incorporate the clause at 252.204-7004, Required Central Contractor Registration.</P>
              <P>(b) If the contracting officer determines that a prospective contractor is not registered in the CCR database and an exception to the registration requirements for the award does not apply (see 204.7302), the contracting officer must—</P>
              <P>(1) If the needs of the requiring activity allow for a delay, proceed to award after the contractor is registered; or</P>
              <P>(2) If the needs of the requiring activity do not allow for a delay, proceed to award to the next otherwise successful registered offeror, provided that written approval is obtained at one level above the contracting officer.</P>
              <P>(c) Agencies must protect against improper disclosure of contractor CCR information.</P>
              <P>(d) The contracting officer must, on contractual documents transmitted to the payment office, provide either the Commercial and Government Entity code or the DUNS number in accordance with agency procedures.</P>
              <CITA>[64 FR 43100, Aug. 9, 1999; 64 FR 46474, Aug. 25, 1999, as amended at 65 FR 14398, Mar. 16, 2000; 66 FR 55121, Nov. 1, 2001]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>§ 204.7304</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              
              <P>Except as provided in 204.7302, use the clause at 252.204-7004, Required Central Contractor Registration, in solicitations and contracts.</P>
              <CITA>[64 FR 43101, Aug. 9, 1999]</CITA>
            </SECTION>
          </SUBPART>
        </PART>
      </SUBCHAP>
      <SUBCHAP TYPE="P">
        <PRTPAGE P="44"/>
        <HD SOURCE="HED">SUBCHAPTER B—ACQUISITION PLANNING</HD>
        <PART>
          <EAR>Pt. 205</EAR>
          <HD SOURCE="HED">PART 205—PUBLICIZING CONTRACT ACTIONS</HD>
          <CONTENTS>
            <SUBPART>
              <HD SOURCE="HED">Subpart 205.2—Synopses of Proposed Contract Actions</HD>
              <SECHD>Sec.</SECHD>
              <SECTNO>205.203</SECTNO>
              <SUBJECT>Publicizing and response time.</SUBJECT>
              <SECTNO>205.207</SECTNO>
              <SUBJECT>Preparation and transmittal of synopses.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 205.3—Synopses of Contract Awards</HD>
              <SECTNO>205.303</SECTNO>
              <SUBJECT>Announcement of contract awards.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 205.4—Release of Information</HD>
              <SECTNO>205.470</SECTNO>
              <SUBJECT>Contractor information to be provided cooperative agreement holders.</SUBJECT>
              <SECTNO>205.470-1</SECTNO>
              <SUBJECT>Statutory requirement.</SUBJECT>
              <SECTNO>205.470-2</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 205.5—Paid Advertisements</HD>
              <SECTNO>205.502</SECTNO>
              <SUBJECT>Authority.</SUBJECT>
            </SUBPART>
          </CONTENTS>
          <AUTH>
            <HD SOURCE="HED">Authority:</HD>
            <P>41 U.S.C. 421 and 48 CFR chapter 1.</P>
          </AUTH>
          <SOURCE>
            <HD SOURCE="HED">Source:</HD>
            <P>56 FR 36302, July 31, 1991, unless otherwise noted.</P>
          </SOURCE>
          <SUBPART>
            <HD SOURCE="HED">Subpart 205.2—Synopses of Proposed Contract Actions</HD>
            <SECTION>
              <SECTNO>205.203</SECTNO>
              <SUBJECT>Publicizing and response time.</SUBJECT>
              <P>(b) Allow at least 45 days response time when requested by a qualifying or designated country source (as these terms are used in part 225) and the request is consistent with the Government's requirement.</P>
            </SECTION>
            <SECTION>
              <SECTNO>205.207</SECTNO>
              <SUBJECT>Preparation and transmittal of synopses.</SUBJECT>
              <P>(d)(i) For historically black college and university and minority institution set-asides under 226.7003, use CBD Numbered Note 5.</P>

              <P>(ii) For acquisitions being considered for historically black college and university and minority institution set-aside, state:
              </P>
              <EXTRACT>
                <P>This proposed contract is being considered as a 100 percent set-aside for historically black colleges and universities (HBCUs) and minority institutions (MIs), as defined by the clause at 252.226-7000 of the Defense Federal Acquisition Regulation Supplement. Interested HBCUs and MIs should provide the contracting office as early as possible, but not later than 15 days after this notice, evidence of their capability to perform the contract, and a positive statement of their eligibility as an HBCU or MI. If adequate response is not received from HBCUs and MIs, the solicitation will instead be issued, without further notice, as: _______ (indicate if unrestricted, or restricted for small business or small disadvantaged business, etc.). Therefore, replies to this notice are also requested from</P>
                <FP SOURCE="FP-DASH"/>
                <FP>(enter the types of firms to be solicited in the event an HBCU or MI set-aside is not made).”</FP>
              </EXTRACT>
              
              <P>(iii) For broad agency announcement (BAA) (see 235.016) notices, indicate which, if any, portion of the BAA will be set-aside for historically black colleges and universities and minority institutions.</P>
              <P>(e) For acquisitions restricted to domestic sources under the authority of FAR 6.302-3, use CBD Numbered Note 13.</P>
              <CITA>[56 FR 36302, July 31, 1991, as amended at 63 FR 41973, Aug. 6, 1998]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 205.3—Synopses of Contract Awards</HD>
            <SECTION>
              <SECTNO>205.303</SECTNO>
              <SUBJECT>Announcement of contract awards.</SUBJECT>
              <P>(a) <E T="03">Public announcement.</E> (i) The threshold for DoD awards is $5 million. Report all contractual actions, including modifications, that have a face value, excluding unexercised options, of more than $5 million.</P>
              <P>(A) For undefinitized contractual actions, report the not-to-exceed (NTE) amount. Later, if the definitized amount exceeds the NTE amount by more than $5 million, report only the amount exceeding the NTE.</P>

              <P>(B) For indefinite delivery, time and material, labor hour, and similar contracts, report the initial award if the estimated face value, excluding unexercised options, is more than $5 million. Do not report orders up to the estimated value, but after the estimated value is reached, report subsequent modifications and orders that <PRTPAGE P="45"/>have a face value of more than $5 million.</P>
              <P>(C) Do not report the same work twice.</P>
              <P>(ii) Departments and agencies submit the information—</P>
              <P>(A) To the Office of the Assistant Secretary of Defense (Public Affairs);</P>
              <P>(B) By the close of business the day before the date of the proposed award;</P>
              <P>(C) Using report control symbol DD-LA- (AR) 1279;</P>
              <P>(D) Including, as a minimum, the following—</P>
              <P>(<E T="03">1</E>) <E T="03">Contract data.</E> Contract number, modification number, or delivery order number, face value of this action, total cumulative face value of the contract, description of what is being bought, contract type, whether any of the buy was for foreign military sales (FMS) and identification of the FMS customer;</P>
              <P>(<E T="03">2</E>) <E T="03">Competition information.</E> Number of solicitations mailed and number of offers received;</P>
              <P>(<E T="03">3</E>) <E T="03">Contractor data.</E> Name, address, and place of performance (if significant work is performed at a different location);</P>
              <P>(<E T="03">4</E>) <E T="03">Funding data.</E> Type of appropriation and fiscal year of the funds, and whether the contract is multiyear (see FAR Subpart 17.1); and</P>
              <P>(<E T="03">5</E>) <E T="03">Miscellaneous data.</E> Identification of the contracting office, the contracting office point of contact, known congressional interest, and the information release date.</P>
              <P>(iii) Departments and agencies, in accordance with department/agency procedures and concurrent with the public announcement, shall provide information similar to that required by paragraph (a)(ii) of this section to members of Congress in whose state or district the contractor is located and the work is to be performed.</P>
              <CITA>[56 FR 36302, July 31, 1991, as amended at 56 FR 67212, Dec. 30, 1991]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 205.4—Release of Information</HD>
            <SECTION>
              <SECTNO>205.470</SECTNO>
              <SUBJECT>Contractor information to be provided cooperative agreement holders.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>205.470-1</SECTNO>
              <SUBJECT>Statutory requirement.</SUBJECT>
              <P>(a) As required by 10 U.S.C. 2413, the Defense Logistics Agency enters into cooperative agreements—</P>
              <P>(1) With—</P>
              <P>(i) State and local governments;</P>
              <P>(ii) Non-profit organizations;</P>
              <P>(iii) Indian tribal organizations; and</P>
              <P>(iv) Indian-owned economic enterprises</P>
              <P>(2) For the provision of technical assistance to business entities.</P>
              <P>(b) Contractors receiving defense contracts valued at more than $500,000 must provide cooperative agreement holders, at their request, the information specified in the clause at 252.205-7000, Provision of Information to Cooperative Agreement Holders.</P>
            </SECTION>
            <SECTION>
              <SECTNO>205.470-2</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <P>Use the clause at 252.205-7000, Provision of Information to Cooperative Agreement Holders, in solicitations and contracts expected to exceed $500,000.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 205.5—Paid Advertisements</HD>
            <SECTION>
              <SECTNO>205.502</SECTNO>
              <SUBJECT>Authority.</SUBJECT>
              <P>For paid advertisements to recruit civilian personnel, see section 332-1-9 of the Federal Personnel Manual.</P>
              <P>(a) <E T="03">Newspapers.</E> (i) Heads of contracting activities are delegated authority to approve the publication of paid advertisements in newspapers. They may redelegate this authority in accordance with agency procedures.</P>

              <P>(ii) Before advertising in newspapers, the contracting officer must obtain <PRTPAGE P="46"/>written approval from the agency official designated in accordance with paragraph (a)(i) of this section.</P>
              <CITA>[56 FR 36302, July 31, 1991, as amended at 65 FR 2055, Jan. 13, 2000]</CITA>
            </SECTION>
          </SUBPART>
        </PART>
        <PART>
          <EAR>Pt. 206</EAR>
          <HD SOURCE="HED">PART 206—COMPETITION REQUIREMENTS</HD>
          <CONTENTS>
            <SECHD>Sec.</SECHD>
            <SECTNO>206.001</SECTNO>
            <SUBJECT>Applicability.</SUBJECT>
            <SUBPART>
              <HD SOURCE="HED">Subpart 206.2—Full and Open Competition After Exclusion of Sources</HD>
              <SECTNO>206.202</SECTNO>
              <SUBJECT>Establishing or maintaining alternative sources.</SUBJECT>
              <SECTNO>206.203</SECTNO>
              <SUBJECT>Set-asides for small business concerns.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 206.3—Other Than Full and Open Competition</HD>
              <SECTNO>206.302</SECTNO>
              <SUBJECT>Circumstances permitting other than full and open competition.</SUBJECT>
              <SECTNO>206.302-1</SECTNO>
              <SUBJECT>Only one responsible source and no other supplies or services will satisfy agency requirements.</SUBJECT>
              <SECTNO>206.302-2</SECTNO>
              <SUBJECT>Unusual and compelling urgency.</SUBJECT>
              <SECTNO>206.302-3</SECTNO>
              <SUBJECT>Industrial mobilization; or engineering, development, or research capability.</SUBJECT>
              <SECTNO>206.302-3-70</SECTNO>
              <SUBJECT>Solicitation provision.</SUBJECT>
              <SECTNO>206.302-4</SECTNO>
              <SUBJECT>International agreement.</SUBJECT>
              <SECTNO>206.302-5</SECTNO>
              <SUBJECT>Authorized or required by statute.</SUBJECT>
              <SECTNO>206.302-7</SECTNO>
              <SUBJECT>Public interest.</SUBJECT>
              <SECTNO>206.303</SECTNO>
              <SUBJECT>Justifications.</SUBJECT>
              <SECTNO>206.303-1</SECTNO>
              <SUBJECT>Requirements.</SUBJECT>
              <SECTNO>206.303-2</SECTNO>
              <SUBJECT>Content.</SUBJECT>
              <SECTNO>206.304</SECTNO>
              <SUBJECT>Approval of the justification.</SUBJECT>
            </SUBPART>
          </CONTENTS>
          <AUTH>
            <HD SOURCE="HED">Authority:</HD>
            <P>41 U.S.C. 421 and 48 CFR chapter 1.</P>
          </AUTH>
          <SOURCE>
            <HD SOURCE="HED">Source:</HD>
            <P>56 FR 36303, July 31, 1991, unless otherwise noted.</P>
          </SOURCE>
          <SECTION>
            <SECTNO>206.001</SECTNO>
            <SUBJECT>Applicability.</SUBJECT>
            <P>(b) Contracts awarded using the procedures in 237.104(b)(ii) are expressly authorized by 10 U.S.C. 1091.</P>
            <CITA>[60 FR 61592, Nov. 30, 1995]</CITA>
          </SECTION>
          <SUBPART>
            <HD SOURCE="HED">Subpart 206.2—Full and Open Competition After Exclusion of Sources</HD>
            <SECTION>
              <SECTNO>206.202</SECTNO>
              <SUBJECT>Establishing or maintaining alternative sources.</SUBJECT>
              <P>(a) Agencies may use this authority to totally or partially exclude a particular source from a contract action.</P>
              <P>(b) The determination and findings (D&amp;F) and the documentation supporting the D&amp;F must identify the source to be excluded from the contract action.</P>
              <P>(i) Include the following information, as applicable, and any other information that may be pertinent, in the supporting documentation:</P>
              <P>(A) The acquisition history of the supplies or services, including sources, prices, quantities, and dates of award;</P>
              <P>(B) The circumstances which make it necessary to exclude the particular source from the contract action, including—</P>
              <P>(<E T="03">1</E>) The reasons for the lack of or potential loss of alternative sources; e.g., the technical complexity and criticality of the supplies or services; and</P>
              <P>(<E T="03">2</E>) The current annual requirement and projected needs for the supplies or services;</P>
              <P>(C) Whether the existing source must be totally excluded from the contract action or whether a partial exclusion is sufficient;</P>
              <P>(D) The potential effect of exclusion on the excluded source in terms of loss of capability to furnish the supplies or services in the future;</P>
              <P>(E) When FAR 6.202(a)(1) is the authority, the basis for—</P>
              <P>(<E T="03">1</E>) The determination of future competition; and</P>
              <P>(<E T="03">2</E>) The determination of reduced overall costs. Include, as a minimum, a discussion of start-up costs, facility costs, duplicative administration costs, economic order quantities, and life cycle cost considerations; and</P>
              <P>(F) When FAR 6.202(a)(2) is the authority—</P>
              <P>(<E T="03">1</E>) The current annual and mobilization requirements for the supplies or services, citing the source of, or the basis for, the data;</P>
              <P>(<E T="03">2</E>) A comparison of current production capacity with that necessary to meet mobilization requirements;</P>
              <P>(<E T="03">3</E>) An analysis of the risks of relying on the present source; and</P>
              <P>(<E T="03">4</E>) A projection of the time required for a new source to acquire the necessary facilities and achieve the production capacity necessary to meet mobilization requirements.</P>

              <P>(ii) A sample format for Determination and Findings citing the authority <PRTPAGE P="47"/>of FAR 6.202(a) is in Table 6-1, Determinations and Findings.</P>
              <GPOTABLE CDEF="s10" COLS="1" OPTS="L1(,0,),7/8">
                <TTITLE>Table 6-1—Determinations and Findings</TTITLE>
                <ROW>
                  <ENT I="11" O="oi0">Determinations and Findings</ENT>
                </ROW>
                <ROW>
                  <ENT I="11" O="oi0">Authority to Exclude a Source</ENT>
                </ROW>
                <ROW>
                  <ENT I="11">In accordance with 10 U.S.C. 2304(b)(1), it is my determination that the following contract action may be awarded using full and open competition after exclusion of ____<SU>1</SU>:</ENT>
                </ROW>
              </GPOTABLE>
              <P>(Describe requirement.) Findings The exclusion of ____<SU>1</SU>
                <FTREF/>
              </P>
              <FTNT>
                <P>
                  <SU>1</SU> Identify source being excluded.</P>
              </FTNT>
              <P>Alternate 1: will increase or maintain competition for this requirement and is expected to result in a reduction of $___ in overall costs for the present and future acquisition of these supplies or services. (Describe how estimate was derived.)</P>
              <P>Alternate 2: is in the interest of national defense because it will result in having a supplier available for furnishing these supplies or services in case of a national emergency or industrial mobilization. (Explain circumstances requiring exclusion of source.)</P>
              <P>Alternate 3: is in the interest of national defense because it will result in establishment or maintenance of an essential engineering, research or development capability to be provided by an educational or other nonprofit institution or a federally funded research and development center. (Explain circumstances requiring exclusion of source.)</P>
            </SECTION>
            <SECTION>
              <SECTNO>206.203</SECTNO>
              <SUBJECT>Set-asides for small business concerns.</SUBJECT>
              <P>(b) Also no separate justification or determination and findings is required for contract actions processed as historically black college and university and minority institution set-asides (see 226.7003).</P>
              <CITA>[63 FR 41973, Aug. 6, 1998]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 206.3—Other Than Full and Open Competition</HD>
            <SECTION>
              <SECTNO>206.302</SECTNO>
              <SUBJECT>Circumstances permitting other than full and open competition.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>206.302-1</SECTNO>
              <SUBJECT>Only one responsible source and no other supplies or services will satisfy agency requirements.</SUBJECT>
              <P>(a) <E T="03">Authority.</E> (2)(i) Section 8059 of Pub. L. 101-511 and similar sections in subsequent defense appropriations acts prohibit departments and agencies from entering into contracts for studies, analyses, or consulting services (see FAR subpart 37.2) on the basis of an unsolicited proposal without providing for full and open competition, unless—</P>
              <P>(<E T="03">1</E>) The head of the contracting activity, or a designee no lower than chief of the contracting office, determines that—</P>
              <P>(<E T="03">i</E>) Following thorough technical evaluation, only one source is fully qualified to perform the proposed work;</P>
              <P>(<E T="03">ii</E>) The unsolicited proposal offers significant scientific or technological promise, represents the product of original thinking, and was submitted in confidence; or</P>
              <P>(<E T="03">iii</E>) The contract benefits the national defense by taking advantage of a unique and significant industrial accomplishment or by ensuring financial support to a new product or idea;</P>
              <P>(<E T="03">2</E>) A civilian official of the DoD, whose appointment has been confirmed by the Senate, determines the award to be in the interest of national defense; or</P>
              <P>(<E T="03">3</E>) The contract is related to improvement of equipment that is in development or production.</P>
              <P>(b) <E T="03">Application.</E> This authority may be used for acquisitions of test articles and associated support services from a designated foreign source under the DoD Foreign Comparative Testing Program.</P>

              <P>(4) Do not use this authority unless the equipment or parts have been adopted as standard items of supply in <PRTPAGE P="48"/>accordance with DoDI 5000.2, Defense Acquisition Management Policies and Procedures.</P>
              <CITA>[56 FR 36303, July 31, 1991, as amended at 57 FR 14992, Apr. 23, 1992; 58 FR 28463, May 13, 1993]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>206.302-2</SECTNO>
              <SUBJECT>Unusual and compelling urgency.</SUBJECT>
              <P>(b) <E T="03">Application</E>. The circumstances under which use of this authority may be appropriate include, but are not limited to, the following:</P>
              <P>(i) Supplies, services, or construction needed at once because of fire, flood, explosion, or other disaster;</P>
              <P>(ii) Essential equipment or repair needed at once to—</P>
              <P>(A) Comply with orders for a ship;</P>
              <P>(B) Perform the operational mission of an aircraft; or</P>
              <P>(C) Preclude impairment of launch capabilities or mission performance of missiles or missile support equipment.</P>
              <P>(iii) Construction needed at once to preserve a structure or its contents from damage;</P>
              <P>(iv) Purchase requests citing an issue priority designator under DoD 4140.1-R, DoD Materiel Management Regulation, of 4 or higher, or citing “Electronic Warfare QRC Priority.”</P>
              <CITA>[56 FR 36303, July 31, 1991, as amended at 67 FR 61516, Oct. 1, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>206.302-3</SECTNO>
              <SUBJECT>Industrial mobilization; or engineering, development, or research capability.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>206.302-3-70</SECTNO>
              <SUBJECT>Solicitation provision.</SUBJECT>
              <P>Use the provision at 252.206-7000, Domestic Source Restriction, in all solicitations that are restricted to domestic sources under the authority of FAR 6.302-3.</P>
            </SECTION>
            <SECTION>
              <SECTNO>206.302-4</SECTNO>
              <SUBJECT>International agreement.</SUBJECT>
              <P>(c) <E T="03">Limitations.</E> Pursuant to 10 U.S.C. 2304(f)(2)(E), the justifications and approvals described in FAR 6.303 and 6.304 are not required if the head of the contracting activity prepares a document that describes the terms of an agreement or treaty or the written directions, such as a Letter of Offer and Acceptance, that have the effect of requiring the use of other than competitive procedures for the acquisition.</P>
              <CITA>[63 FR 67803, Dec. 9, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>206.302-5</SECTNO>
              <SUBJECT>Authorized or required by statute.</SUBJECT>
              <P>(b) <E T="03">Application.</E> Agencies may use this authority to—</P>
              <P>(i) Acquire supplies and services from military exchange stores outside the United States for use by the armed forces outside the United States in accordance with 10 U.S.C. 2424(a) and subject to the limitations of 10 U.S.C. 2424(b). The limitations of 10 U.S.C. 2424(b) (1) and (2) do not apply to the purchase of soft drinks that are manufactured in the United States. For the purposes of 10 U.S.C. 2424, soft drinks manufactured in the United States are brand name carbonated sodas, manufactured in the United States, as evidenced by product markings.</P>
              <P>(ii) Acquire police, fire protection, airfield operation, or other community services from local governments at military installations to be closed under the circumstances in 237.7401 (Section 2907 of Fiscal Year 1994 Defense Authorization Act (Pub. L. 103-160)).</P>
              <P>(c) <E T="03">Limitations.</E> (i) 10 U.S.C. 2361 precludes use of this exception for awards to colleges or universities for the performance of research and development, or for the construction of any research or other facility, unless—</P>
              <P>(A) The statute authorizing or requiring award specifically—</P>
              <P>(<E T="03">1</E>) States that the statute modifies or supersedes the provisions of 10 U.S.C. 2361,</P>
              <P>(<E T="03">2</E>) Identifies the particular college or university involved, and</P>
              <P>(<E T="03">3</E>) States that award is being made in contravention of 10 U.S.C. 2361(a); and</P>
              <P>(B) The Secretary of Defense provides Congress written notice of intent to award. The contract cannot be awarded until 180 days have elapsed since the date Congress received the notice of intent to award. Contracting activities must submit a draft notice of intent with supporting documentation through channels to the Director of Defense Procurement, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics).</P>

              <P>(ii) The limitation in paragraph (c)(i) of this subsection applies only if the statute authorizing or requiring award was enacted after September 30, 1989.<PRTPAGE P="49"/>
              </P>
              <P>(iii) Subsequent statutes may provide different or additional constraints on the award of contracts to specified colleges and universities. Contracting officers should consult legal counsel on a case-by-case basis.</P>
              <CITA>[56 FR 36303, July 31, 1991, as amended at 57 FR 14992, Apr. 23, 1992; 58 FR 28463, May 13, 1993; 59 FR 36089, July 15, 1994; 60 FR 29497, June 5, 1995; 60 FR 40107, Aug. 7, 1995; 65 FR 39704, June 27, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>206.302-7</SECTNO>
              <SUBJECT>Public interest.</SUBJECT>
              <P>(c) <E T="03">Limitations.</E> For the defense agencies, the written determination to use this authority must be made by the Secretary of Defense.</P>
            </SECTION>
            <SECTION>
              <SECTNO>206.303</SECTNO>
              <SUBJECT>Justifications.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>206.303-1</SECTNO>
              <SUBJECT>Requirements.</SUBJECT>
              <P>(b) Technical and requirements personnel must obtain any review and approval required by department or agency procedures before submission of a recommendation for other than full and open competition to the contracting officer.</P>
              <P>(c) When conditions warrant, a class justification may provide for award of multiple contracts extending across more than one program phase.</P>
              <CITA>[56 FR 36303, July 31, 1991, as amended at 60 FR 61592, Nov. 30, 1995]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>206.303-2</SECTNO>
              <SUBJECT>Content.</SUBJECT>
              <P>(a) Include sufficient information in the justification to permit its approval as a stand-alone document, even though agency procedures may require supplementary documentation.</P>
            </SECTION>
            <SECTION>
              <SECTNO>206.304</SECTNO>
              <SUBJECT>Approval of the justification.</SUBJECT>
              <P>(a)(4) The Under Secretary of Defense (Acquisition, Technology, and Logistics) may delegate this authority to—</P>
              <P>(A) An Assistant Secretary of Defense; or</P>
              <P>(B) For a defense agency, an officer or employee serving in, assigned, or detailed to that agency who—</P>
              <P>
                <E T="03">(1)</E> If a member of the armed forces, is serving in a rank above brigadier general or rear admiral (lower half); or</P>
              <P>
                <E T="03">(2)</E> If a civilian, is serving in a position with a grade under the General Schedule (or any other schedule for civilian officers or employees) that is comparable to or higher than the grade of major general or rear admiral.</P>
              <CITA>[61 FR 10285, Mar. 13, 1995, as amended at 61 FR 50451, Sept. 26, 1996; 65 FR 39704, June 27, 2000]</CITA>
            </SECTION>
          </SUBPART>
        </PART>
        <PART>
          <EAR>Pt. 207</EAR>
          <HD SOURCE="HED">PART 207—ACQUISITION PLANNING</HD>
          <CONTENTS>
            <SUBPART>
              <HD SOURCE="HED">Subpart 207.1—Acquisition Plans</HD>
              <SECHD>Sec.</SECHD>
              <SECTNO>207.102</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>207.103</SECTNO>
              <SUBJECT>Agency-head responsibilities.</SUBJECT>
              <SECTNO>207.104</SECTNO>
              <SUBJECT>General procedures.</SUBJECT>
              <SECTNO>207.105</SECTNO>
              <SUBJECT>Contents of written acquisition plans.</SUBJECT>
              <SECTNO>207.106</SECTNO>
              <SUBJECT> Additional requirements for major systems.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 207.4—Equipment Lease or Purchase</HD>
              <SECTNO>207.401</SECTNO>
              <SUBJECT>Acquisition considerations.</SUBJECT>
              <SECTNO>207.470</SECTNO>
              <SUBJECT>Statutory requirements.</SUBJECT>
              <SECTNO>207.471</SECTNO>
              <SUBJECT>Funding requirements.</SUBJECT>
            </SUBPART>
          </CONTENTS>
          <AUTH>
            <HD SOURCE="HED">Authority:</HD>
            <P>41 U.S.C. 421 and 48 CFR chapter 1.</P>
          </AUTH>
          <SOURCE>
            <HD SOURCE="HED">Source:</HD>
            <P>56 FR 36305, July 31, 1991, unless otherwise noted.</P>
          </SOURCE>
          <SUBPART>
            <HD SOURCE="HED">Subpart 207.1—Acquisition Plans</HD>
            <SECTION>
              <SECTNO>207.102</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>When a class justification for other than full and open competition has been approved, planning for competition shall be accomplished consistent with the terms of that approval.</P>
              <CITA>[60 FR 61592, Nov. 30, 1995]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>207.103</SECTNO>
              <SUBJECT>Agency-head responsibilities.</SUBJECT>
              <P>(d)(i) Prepare written acquisition plans for—</P>
              <P>(A) Acquisitions for development, as defined in FAR 35.001, when the total cost of all contracts for the acquisition program is estimated at $5 million or more;</P>
              <P>(B) Acquisitions for production or services when the total cost of all contracts for the acquisition program is estimated at $30 million or more for all years or $15 million or more for any fiscal year; and</P>
              <P>(C) Any other acquisition considered appropriate by the department or agency.</P>

              <P>(ii) Written plans are not required in acquisitions for a final buy out or one-<PRTPAGE P="50"/>time buy. The terms “final buy out” and “one-time buy” refer to a single contract that covers all known present and future requirements. This exception does not apply to a multiyear contract or a contract with options or phases.</P>
              <P>(e) Prepare written acquisition plans for acquisition programs meeting the thresholds of paragraphs (d)(i) (A) and (B) of this section on a program basis. Other acquisition plans may be written on either a program or an individual contract basis.</P>
              <P>(g) The program manager, or other official responsible for the program, has overall responsibility for acquisition planning.</P>
              <P>(i)(i) Apply design-to-cost principles—</P>
              <P>(A) In all major defense acquisition programs (DoDD 5000.1, Defense Acquisition), unless exempted by the Secretary of Defense; and</P>
              <P>(B) To the acquisition of systems, subsystems, and components below the thresholds for major defense acquisition programs, to the extent prescribed by DoDD 5000.1.</P>
              <P>(ii) Consider life-cycle-cost in all acquisitions of systems and equipment.</P>
              <P>(h) For procurement of conventional ammunition, as defined in DoDD 5160.65, Single Manager for Conventional Ammunition (SMCA)—</P>
              <P>(i) The department or agency—</P>
              <P>(A) Must submit the acquisition plan to the SMCA at the following address: Deputy for Ammunition, Office of the Assistant Secretary of the Army (Acquisition, Logistics and Technology), ATTN: SAAL-ZCA, 5001 Eisenhower Avenue, Alexandria, VA 22333-0001. Telephone: Commercial (703) 617-8001; DSN 767-8001;</P>
              <P>(B) Also must submit an acquisition plan to the SMCA for a new procurement covered by a previously approved acquisition plan, if the SMCA did not review the previously approved acquisition plan; and</P>
              <P>(C) Must not proceed with the procurement until the SMCA provides written concurrence with the acquisition plan.</P>
              <P>(ii) The SMCA—</P>
              <P>(A) Will review the acquisition plan to determine if it is consistent with retaining national technology and industrial base capabilities in accordance with 10 U.S.C. 2304(c)(3) and Section 806 of Public law 105-261; and</P>
              <P>(B) Will notify the department or agency of concurrence or non-concurrence. In the case of a non-concurrence, the SMCA, with assistance from the Army Office of the Executive Director for Conventional Ammunition, will attempt to resolve the matter with the department or agency. If no agreement is reached, the Assistant Secretary of the Army (Acquisition, Logistics and Technology) will make the final decision on the appropriate acquisition approach.</P>
              <CITA>[56 FR 36305, July 31, 1991, as amended at 61 FR 50451, Sept. 26, 1996; 66 FR 47107, Sept. 11, 2001; 67 FR 61516, Oct. 1, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>207.104</SECTNO>
              <SUBJECT>General procedures.</SUBJECT>
              <P>(b) The planner should forward the requirements information to the contract administration organization when assistance in identification of potential sources of supply is necessary, when an existing contract is being modified or resolicited, or when contract administration resource requirements will be affected.</P>
              <CITA>[61 FR 50451, Sept. 26, 1996]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>207.105</SECTNO>
              <SUBJECT>Contents of written acquisition plans.</SUBJECT>
              <P>For acquisitions covered by 207.103(d)(i) (A) and (B), correlate the plan to the DoD Future Years Defense Program, applicable budget submissions, and the decision coordinating paper/program memorandum, as appropriate. It is incumbent upon the planner to coordinate the plan with all those who have a responsibility for the development, management, or administration of the acquisition. The acquisition plan should be provided to the contract administration organization to facilitate resource allocation and planning for the evaluation, identification, and management of contractor performance risk.</P>
              <P>(a) <E T="03">Acquisition background and objectives—</E>(1) <E T="03">Statement of need.</E> Include—</P>

              <P>(A) Applicability of a decision coordinating paper (DCP), acquisition decision memorandum, Defense Acquisition Board (DAB), and/or internal service reviews. Describe the options in the <PRTPAGE P="51"/>DCP/acquisition decision memorandum and delineate which option the acquisition plan supports.</P>
              <P>(B) The date approval for operational use has been or will be obtained. If waivers are requested, describe the need for the waivers.</P>
              <P>(C) A milestone chart depicting the acquisition objectives.</P>
              <P>(D) Milestones for updating the acquisition plan. Indicate when the plan will be updated. Program managers should schedule updates to coincide with DAB reviews and the transition from one phase to another (e.g., engineering and manufacturing development to production and deployment).</P>
              <P>(8) <E T="03">Acquisition streamlining.</E> DoDD 5000.1, Defense Acquisition, and DoD 5000.2-R, Mandatory Procedures for Major Defense Acquisition Programs (MDAPs) and Major Automated Information System (MAIS) Acquisition Programs, contain policy direction on acquisition streamlining. See MIL-HDBK 248, Acquisition Streamlining, for guidance on streamlining performance requirements, the technical package, and the contract strategy.</P>
              <P>(b) <E T="03">Plan of action</E>—(5) <E T="03">Budgeting and funding.</E> Include specific references to budget line items and program elements, where applicable, estimated production unit cost, and the total cost for remaining production.</P>
              <P>(6) <E T="03">Product descriptions.</E> For development acquisitions, describe the market research undertaken to identify commercial items, commercial items with modifications, or nondevelopmental items (see FAR part 10) that could satisfy the acquisition objectives.</P>
              <P>(13) <E T="03">Logistics considerations.</E> (i) Describe the extent of integrated logistics support planning to date, including references to approved plans.</P>
              <P>(ii) Discuss the mission profile, reliability, and maintainability (R&amp;M) program plan, R&amp;M predictions, redundancy, qualified parts lists, parts and material qualification, R&amp;M requirements imposed on vendors, failure analysis, corrective action and feedback, and R&amp;M design reviews and trade-off studies.</P>
              <P>(iv) See DoDD 5000.1, Defense Acquisition, and DoD 5000.2-R, Mandatory Procedures for Major Defense Acquisition Programs (MDAPs) and Major Automated Information System (MAIS) Acquisition Programs, for procedures on standardization and on the DoD Parts Control Program. Also see DoD 4120.24-M, Defense Standardization Program (DSP) Policies and Procedures.</P>
              <P>(S-70) Describe the extent of Computer-Aided Acquisition and Logistics Support (CALS) implementation (see MIL-HDBK 59, Department of Defense Computer-Aided Logistics Support (CALS) Program Guide, and MIL-STD-1840A, Automated Interchange of Technical Information.</P>
              <P>(16) <E T="03">Environmental and energy conservation objectives.</E> Discuss actions taken to ensure either elimination of or authorization to use class I ozone-depleting chemicals and substances (see 211.271).</P>
              <P>(19) <E T="03">Other considerations.</E> (A) National Technology and Industrial Base. For major defense acquisition programs, address the following (Pub. L. 102-484, section 4220)—</P>
              <P>(<E T="03">1</E>) An analysis of the capabilities of the national technology and industrial base to develop, produce, maintain, and support such program, including consideration of the following factors related to foreign dependency (Pub. L. 102-484, section 4219(h))—</P>
              <P>(<E T="03">i</E>) The availability of essential raw materials, special alloys, composite materials, components, tooling, and production test equipment for the sustained production of systems fully capable of meeting the performance objectives established for those systems; the uninterrupted maintenance and repair of such systems; and the sustained operation of such systems.</P>
              <P>(<E T="03">ii</E>) The identification of items specified in paragraph (b)(18)(A)(<E T="03">1)(i</E>) of this section that are available only from sources outside the national technology and industrial base.</P>
              <P>(<E T="03">iii</E>) The availability of alternatives for obtaining such items from within the national technology and industrial base if such items become unavailable from sources outside the national technology industrial base; and an analysis of any military vulnerability that could result from the lack of reasonable alternatives.</P>
              <P>(<E T="03">iv</E>) The effects on the national technology and industrial base that result <PRTPAGE P="52"/>from foreign acquisition of firms in the United States.</P>
              <P>(<E T="03">2</E>) Consideration of requirements for efficient manufacture during the design and production of the systems to be procured under the program.</P>
              <P>(<E T="03">3</E>) The use of advanced manufacturing technology, processes, and systems during the research and development phase and the production phase of the program.</P>
              <P>(<E T="03">4</E>) To the maximum extent practicable, the use of contract solicitations that encourage competing offerors to acquire, for use in the performance of the contract, modern technology, production equipment, and production systems (including hardware and software) that increase the productivity of the offerors and reduce the life-cycle costs.</P>
              <P>(<E T="03">5</E>) Methods to encourage investment by U.S. domestic sources in advanced manufacturing technology production equipment and processes through—</P>
              <P>(<E T="03">i</E>) Recognition of the contractor's investment in advanced manufacturing technology production equipment, processes, and organization of work systems that build on workers’ skill and experience, and work force skill development in the development of the contract objective; and</P>
              <P>(<E T="03">ii</E>) Increased emphasis in source selection on the efficiency of production.</P>
              <P>(<E T="03">6</E>) Expanded use of commercial manufacturing processes rather than processes specified by DoD.</P>
              <P>(<E T="03">7</E>) Elimination of barriers to, and facilitation of, the integrated manufacture of commercial items and items being produced under DoD contracts.</P>
              <P>(<E T="03">8</E>) Expanded use of commercial items, commercial items with modifications, or to the extent commercial items are not available, nondevelopmental items (see FAR part 10).</P>
              <P>(B) <E T="03">Industrial preparedness (IP).</E>
              </P>
              <P>(<E T="03">1</E>) Provide the program's IP strategy that assesses the capability of the U.S. industrial base to achieve identified surge and mobilization goals. If no IP strategy has been developed, provide supporting rationale for this position.</P>
              <P>(<E T="03">2</E>) If in the IP strategy, the development of a detailed IP plan was determined to be applicable, include the plan by text or by reference. If the development of the IP plan was determined not to be applicable, summarize the details of the analysis forming the basis of this decision.</P>
              <P>(<E T="03">3</E>) If the program involves peacetime and wartime hardware configurations which are supported by logistics support plans, identify their impact on the IP plan.</P>
              <P>(C) Ensure compliance with DoD Instruction 4715.4, Pollution Prevention.</P>
              <P>(D) <E T="03">Contract administration.</E> Discuss the level of Government administration anticipated or currently performed and any change proposed by the contract administration office.</P>
              <CITA>[56 FR 36305, July 31, 1991, as amended at 58 FR 28463, May 13, 1993; 58 FR 32061, June 8, 1993; 60 FR 29497, June 5, 1995; 60 FR 61593, Nov. 30, 1995; 61 FR 50451, Sept. 26, 1996; 64 FR 51075, Sept. 21, 1999; 65 FR 14398, Mar. 16, 2000; 65 FR 63804, Oct. 25, 2000; 67 FR 61516, Oct. 1, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>207.106</SECTNO>
              <SUBJECT>Additional requirements for major systems.</SUBJECT>
              <P>(b)(1)(A) The contracting officer is prohibited by 10 U.S.C. 2305(d)(4)(A) from requiring offers for development or production of major systems that would enable the Government to use technical data to competitively reprocure identical items or components of the system if the item or component were developed exclusively at private expense, unless the contracting officer determines that—</P>
              <P>(<E T="03">1</E>) The original supplier of the item or component will be unable to satisfy program schedule or delivery requirements;</P>
              <P>(<E T="03">2</E>) Proposals by the original supplier of the item or component to meet mobilization requirements are insufficient to meet the agency's mobilization needs; or</P>
              <P>(<E T="03">3</E>) The Government is otherwise entitled to unlimited rights in technical data.</P>

              <P>(B) If the contracting officer makes a determination, under paragraphs (b)(1)(A) (<E T="03">1</E>) and (<E T="03">2</E>) of this section, for a competitive solicitation, 10 U.S.C. 2305(d)(4)(B) requires that the evaluation of items developed at private expense be based on an analysis of the total value, in terms of innovative design, life-cycle costs, and other pertinent factors, of incorporating such items in the system.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <PRTPAGE P="53"/>
            <HD SOURCE="HED">Subpart 207.4—Equipment Lease or Purchase</HD>
            <SECTION>
              <SECTNO>207.401</SECTNO>
              <SUBJECT>Acquisition considerations.</SUBJECT>
              <P>If the equipment will be leased for more than 60 days, the requiring activity must prepare and provide the contracting officer with the justification supporting the decision to lease or purchase.</P>
            </SECTION>
            <SECTION>
              <SECTNO>207.470</SECTNO>
              <SUBJECT>Statutory requirements.</SUBJECT>
              <P>(a) <E T="03">Limitation on contracts with terms of 18 months or more.</E> As required by 10 U.S.C. 2401a, the contracting officer shall not enter into any contract for any vessel, aircraft, or vehicle, through a lease, charter, or similar agreement with a term of 18 months or more, or extend or renew any such contract for a term of 18 months or more, unless the head of the contracting activity has—</P>
              <P>(1) Considered all costs of such a contract (including estimated termination liability); and</P>
              <P>(2) Determined in writing that the contract is in the best interest of the Government.</P>
              <P>(b) <E T="03">Leasing of commercial vehicles and associated equipment.</E> Except as provided in paragraph (a) of this section, the contracting officer may use leasing in the acquisition of commercial vehicles and associated equipment whenever the contracting officer determines that leasing of such vehicles is practicable and efficient (10 US.C. 2401a).</P>
              <CITA>[61 FR 16879, Apr. 18, 1996, as amended at 61 FR 50451, Sept. 26, 1996]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>207.471</SECTNO>
              <SUBJECT>Funding requirements.</SUBJECT>
              <P>(a) Fund leases in accordance with DoD Financial Management Regulation (FMR) 7000.14-R, Volume 2A, Chapter 1.</P>
              <P>(b) DoD leases are either capital leases or operating leases. The difference between the two types of leases is described in FMR 7000.14-R, Volume 4, Chapter 7, Section 070207.</P>
              <P>(c) Capital leases are essentially installment purchases of property. Use procurement funds for capital leases.</P>
              <CITA>[64 FR 31732, June 14, 1999, as amended at 66 FR 55121, Nov. 1, 2001]</CITA>
            </SECTION>
          </SUBPART>
        </PART>
        <PART>
          <EAR>Pt. 208</EAR>
          <HD SOURCE="HED">PART 208—REQUIRED SOURCES OF SUPPLIES AND SERVICES</HD>
          <CONTENTS>
            <SECHD>Sec.</SECHD>
            <SECTNO>208.001</SECTNO>
            <SUBJECT>Priorities for use of Government supply sources.</SUBJECT>
            <SECTNO>208.002</SECTNO>
            <SUBJECT>Use of other Government supply sources.</SUBJECT>
            <SUBPART>
              <HD SOURCE="HED">Subpart 208.4—Ordering from Federal Supply Schedules</HD>
              <SECTNO>208.404</SECTNO>
              <SUBJECT>Using schedules.</SUBJECT>
              <SECTNO>208.404-1</SECTNO>
              <SUBJECT>Mandatory use.</SUBJECT>
              <SECTNO>208.404-2</SECTNO>
              <SUBJECT>Optional use.</SUBJECT>
              <SECTNO>208.405</SECTNO>
              <SUBJECT>Ordering office responsibilities.</SUBJECT>
              <SECTNO>208.405-2</SECTNO>
              <SUBJECT>Order placement.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 208.6—Acquisition from Federal Prison Industries, Inc.</HD>
              <SECTNO>208.602</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>208.606</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 208.7—Acquisition from the Blind and Other Severely Handicapped</HD>
              <SECTNO>208.705</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 208.70—Coordinated Acquisition</HD>
              <SECTNO>208.7000</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <SECTNO>208.7001</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <SECTNO>208.7002</SECTNO>
              <SUBJECT>Assignment authority.</SUBJECT>
              <SECTNO>208.7002-1</SECTNO>
              <SUBJECT>Acquiring department responsibilities.</SUBJECT>
              <SECTNO>208.7002-2</SECTNO>
              <SUBJECT>Requiring department responsibilities.</SUBJECT>
              <SECTNO>208.7003</SECTNO>
              <SUBJECT>Applicability.</SUBJECT>
              <SECTNO>208.7003-1</SECTNO>
              <SUBJECT>Assignments under integrated materiel management (IMM).</SUBJECT>
              <SECTNO>208.7003-2</SECTNO>
              <SUBJECT>Assignments under coordinated acquisition.</SUBJECT>
              <SECTNO>208.7004</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <SECTNO>208.7004-1</SECTNO>
              <SUBJECT>Purchase authorization from requiring department.</SUBJECT>
              <SECTNO>208.7004-2</SECTNO>
              <SUBJECT>Acceptance by acquiring department.</SUBJECT>
              <SECTNO>208.7004-3</SECTNO>
              <SUBJECT>Use of advance MIPRs.</SUBJECT>
              <SECTNO>208.7004-4</SECTNO>
              <SUBJECT>Cutoff dates for submission of Category II MIPRs.</SUBJECT>
              <SECTNO>208.7004-5</SECTNO>
              <SUBJECT>Notification of inability to obligate on Category II MIPRs.</SUBJECT>
              <SECTNO>208.7004-6</SECTNO>
              <SUBJECT>Cancellation of requirements.</SUBJECT>
              <SECTNO>208.7004-7</SECTNO>
              <SUBJECT>Termination for default.</SUBJECT>
              <SECTNO>208.7004-8</SECTNO>
              <SUBJECT>Transportation funding.</SUBJECT>
              <SECTNO>208.7004-9</SECTNO>
              <SUBJECT>Status reporting.</SUBJECT>
              <SECTNO>208.7004-10</SECTNO>
              <SUBJECT>Administrative costs.</SUBJECT>
              <SECTNO>208.7005</SECTNO>
              <SUBJECT>MIPRs.</SUBJECT>
              <SECTNO>208.7006</SECTNO>
              <SUBJECT>Coordinated acquisition assignments.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 208.71—Acquisition for National Aeronautics and Space Administration (NASA)</HD>
              <SECTNO>208.7100</SECTNO>
              <SUBJECT>Authorization.<PRTPAGE P="54"/>
              </SUBJECT>
              <SECTNO>208.7101</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>208.7102</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <SECTNO>208.7103</SECTNO>
              <SUBJECT>Purchase request and acceptance.</SUBJECT>
              <SECTNO>208.7104</SECTNO>
              <SUBJECT>Changes in estimated total prices.</SUBJECT>
              <SECTNO>208.7105</SECTNO>
              <SUBJECT>Payments.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 208.72—Industrial Preparedness Production Planning</HD>
              <SECTNO>208.7201</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <SECTNO>208.7202</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <SECTNO>208.7203</SECTNO>
              <SUBJECT>Authority.</SUBJECT>
              <SECTNO>208.7204</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 208.73—Use of Government-Owned Precious Metals</HD>
              <SECTNO>208.7301</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <SECTNO>208.7302</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>208.7303</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <SECTNO>208.7304</SECTNO>
              <SUBJECT>Refined precious metals.</SUBJECT>
              <SECTNO>208.7305</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
            </SUBPART>
          </CONTENTS>
          <AUTH>
            <HD SOURCE="HED">Authority:</HD>
            <P>41 U.S.C. 421 and 48 CFR chapter 1.</P>
          </AUTH>
          <SOURCE>
            <HD SOURCE="HED">Source:</HD>
            <P>56 FR 36306, July 31, 1991, unless otherwise noted.</P>
          </SOURCE>
          <SECTION>
            <SECTNO>208.001</SECTNO>
            <SUBJECT>Priorities for use of Government supply sources.</SUBJECT>
            <P>(a)(1)(v) See subpart 208.70, Coordinated Acquisition.</P>
            <P>(2)(iii) Information on General Services Administration (GSA) schedules for maintenance, repair, and rehabilitation of personal property is in the GSA supply catalog. The types of personal property for which GSA, Federal Supply Service has schedule contracts for maintenance, repair, and/or rehabilitation are—</P>
            <P>(<E T="03">1</E>) Furniture (office, household, quarters, institutional, and hospital type);</P>
            <P>(<E T="03">2</E>) Typewriters (manual, electric, and electronic);</P>
            <P>(<E T="03">3</E>) Repair and maintenance of Government owned vehicles; and</P>
            <P>(<E T="03">4</E>) Tire retreading and repair (except aircraft).</P>
          </SECTION>
          <SECTION>
            <SECTNO>208.002</SECTNO>
            <SUBJECT>Use of other Government supply sources.</SUBJECT>
            <P>(f) Detailed information on strategic and critical materials in excess of national stockpile requirements (e.g., metals, ores, chemicals) is available from the Defense National Stockpile Center, 8725 John J. Kingman Road, Suite 4616, Fort Belvoir, VA 22060-6223.</P>
            <P>(g) Acquire helium (Pub. L. 86-777)—</P>
            <P>(i) In bulk from—</P>
            <P>(A) The Department of Interior (Bureau of Mines); or</P>
            <P>(B) Eligible private helium distributors. A list of eligible private helium distributors is maintained by the Bureau of Mines, Helium Field Operations, 1100 South Fillmore Street, Amarillo, TX 79101.</P>
            <P>(ii) In cylinders or trailers, from—</P>
            <P>(A) The Department of Interior (Bureau of Mines); or</P>
            <P>(B) Through GSA Federal Supply Schedule contracts.</P>
            <CITA>[56 FR 36306, July 31, 1991, as amended at 62 FR 34121, June 24, 1997]</CITA>
          </SECTION>
          <SUBPART>
            <HD SOURCE="HED">Subpart 208.4—Ordering From Federal Supply Schedules</HD>
            <SECTION>
              <SECTNO>208.404</SECTNO>
              <SUBJECT>Using schedules.</SUBJECT>
              <P>(a) When a schedule lists both foreign and domestic items that will meet the needs of the requiring activity, the ordering office must apply the procedures of part 225 and FAR part 25, Foreign Acquisition. When purchase of an item of foreign origin is specifically required, the requiring activity must furnish the ordering office sufficient information to permit the determinations required by part 225 and FAR part 25 to be made.</P>
            </SECTION>
            <SECTION>
              <SECTNO>208.404-1</SECTNO>
              <SUBJECT>Mandatory use.</SUBJECT>
              <P>The DoD will not be a mandatory user of any schedule unless individual DoD activities elect to provide annual requirements estimates to GSA and become mandatory users. Examples of areas where this approach may be applied are:</P>
              <P>(1) Group 68—gases and chemicals;</P>
              <P>(2) Group 26—pneumatic tires and inner tubes;</P>
              <P>(3) Maintenance, repair, and/or rehabilitation of personal property; and</P>
              <P>(4) “Just-in-time” arrangements for delivery of material directly from vendors to users.</P>
            </SECTION>
            <SECTION>
              <SECTNO>208.404-2</SECTNO>
              <SUBJECT>Optional use.</SUBJECT>
              <P>Make maximum use of the schedules. Other procedures may be used if further competition is judged to be in the best interest of the Government in terms of quality, responsiveness, or cost.</P>
            </SECTION>
            <SECTION>
              <PRTPAGE P="55"/>
              <SECTNO>208.405</SECTNO>
              <SUBJECT>Ordering office responsibilities.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>208.405-2</SECTNO>
              <SUBJECT>Order placement.</SUBJECT>
              <P>(1) When ordering from schedules, ordering offices—</P>
              <P>(i) May use DD Form 1155, Order for Supplies or Services, to place orders for—</P>
              <P>(A) Commercial items at or below the simplified acquisition threshold; and</P>
              <P>(B) Other than commercial items at any dollar value (see 213.307);</P>
              <P>(ii) Shall use SF 1449, Solicitation/Contract/Order for Commercial Items, to place orders for commercial items exceeding the simplified acquisition threshold (see FAR 12.204); and</P>
              <P>(iii) May use SF 1449 to place orders for other than commercial items at any dollar value.</P>
              <P>(2) Schedule orders may be placed orally if—</P>
              <P>(i) The contractor agrees to furnish a delivery ticket for each shipment under the order (in the number of copies required by the ordering office). The ticket must include the—</P>
              <P>(A) Contract number;</P>
              <P>(B) Order number under the contract;</P>
              <P>(C) Date of order;</P>
              <P>(D) Name and title of person placing the order;</P>
              <P>(E) Itemized listing of supplies or services furnished; and</P>
              <P>(F) Date of delivery or shipment; and</P>
              <P>(ii) Invoicing procedures are agreed upon. Optional methods of submitting invoices for payment are permitted, such as—</P>
              <P>(A) An individual invoice with a receipted copy of the delivery ticket;</P>
              <P>(B) A summarized monthly invoice covering all oral orders made during the month, with receipted copies of the delivery tickets (this option is preferred if there are many oral orders); or</P>
              <P>(C) A contracting officer statement that the Government has received the supplies.</P>
              <P>(3) For purchases where cash payment is an advantage, the use of imprest funds in accordance with 213.305 is authorized when—</P>
              <P>(i) The order does not exceed the threshold at FAR 13.305-3(a); and</P>
              <P>(ii) The contractor agrees to the procedure.</P>
              <P>(4) If permitted under the schedule contract, use of the Governmentwide commercial purchase card—</P>
              <P>(i) Is mandatory for placement of orders valued at or below the micro-purchase threshold; and</P>
              <P>(ii) Is optional for placement of orders valued above the micro-purchase threshold.</P>
              <CITA>[64 FR 2596, Jan. 15, 1999, as amended at 65 FR 46625, July 31, 2000]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 208.6—Acquisition from Federal Prison Industries, Inc.</HD>
            <SECTION>
              <SECTNO>208.602</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>(a) Before purchasing a product listed in the FPI Schedule, departments and agencies shall conduct market research to determine whether the FPI product is comparable to products available from the private sector that best meet the Government's needs in terms of price, quality, and time of delivery (10 U.S.C. 2410n). This is a unilateral decision made solely at the discretion of the department or agency.</P>
              <P>(i) If the FPI product is comparable, follow the policy at FAR 8.602(a).</P>
              <P>(ii) If the FPI product is not comparable—</P>
              <P>(A) Use competitive procedures to acquire the product; and</P>
              <P>(B) Consider a timely offer from FPI for award in accordance with the specifications and evaluation factors in the solicitation.</P>
              <CITA>[67 FR 20688, Apr. 26, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>208.606</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
              <P>For DoD, FPI clearances also are not required—</P>
              <P>(1) For orders of listed items totaling $250 or less that require delivery within 10 days; or</P>
              <P>(2) If market research shows that the FPI product is not comparable to products available from the private sector that best meet the Government's needs in terms of price, quality, and time of delivery.</P>
              <CITA>[67 FR 20688, Apr. 26, 2002]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <PRTPAGE P="56"/>
            <HD SOURCE="HED">Subpart 208.7—Acquisition From the Blind and Other Severely Handicapped</HD>
            <SECTION>
              <SECTNO>208.705</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <P>Ordering offices may use DD Form 1155, Order for Supplies or Services, to place orders with central nonprofit agencies or workshops.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 208.70—Coordinated Acquisition</HD>
            <SECTION>
              <SECTNO>208.7000</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <P>This subpart prescribes policy and procedures for acquisition of items for which contracting responsibility is assigned to one or more of the departments/agencies or the General Services Administration. Contracting responsibility is assigned through—</P>
              <P>(a) The Coordinated Acquisition Program (commodity assignments are listed in appendix B); or</P>
              <P>(b) The Integrated Materiel Management Program (assignments are in DoD 4140.26-M, Integrated Materiel Management for Consumable Items).</P>
            </SECTION>
            <SECTION>
              <SECTNO>208.7001</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <P>For purposes of this subpart—</P>
              <P>
                <E T="03">Acquiring department</E> means the department, agency, or General Services Administration which has contracting responsibility under the Coordinated Acquisition Program.</P>
              <P>
                <E T="03">Integrated materiel management</E> means assignment of acquisition management responsibility to one department, agency, or the General Services Administration for all of DoD's requirements for the assigned item. Acquisition management normally includes computing requirements, funding, budgeting, storing, issuing, cataloging, standardizing, and contracting functions.</P>
              <P>
                <E T="03">Requiring department</E> means the department or agency which has the requirement for an item.</P>
            </SECTION>
            <SECTION>
              <SECTNO>208.7002</SECTNO>
              <SUBJECT>Assignment authority.</SUBJECT>
              <P>(a) Under the DoD Coordinated Acquisition Program, contracting responsibility for certain commodities is assigned to a single department, agency, or the General Services Administration (GSA). Commodity assignments are made—</P>
              <P>(1) To the departments and agencies, by the Deputy Under Secretary of Defense (Logistics);</P>
              <P>(2) To GSA, through agreement with GSA, by the Deputy Under Secretary of Defense (Logistics);</P>
              <P>(3) Outside the continental United States, by the Unified Commanders; and</P>
              <P>(4) For acquisitions to be made in the United States for commodities not assigned under paragraphs (a) (1), (2), or (3) of this section, by agreement of agency heads (10 U.S.C. 2311).</P>
              <P>(i) Agreement may be on either a one-time or a continuing basis. The submission of a military interdepartmental purchase request (MIPR) by a requiring activity and its acceptance by the contracting activity of another department, even though based on an oral communication, constitutes a one-time agreement.</P>
              <P>(ii) Consider repetitive delegated acquisition responsibilities for coordinated acquisition assignment. If not considered suitable for coordinated acquisition assignment, formalize continuing agreements and distribute them to all activities concerned.</P>
              <P>(b) Under the Integrated Materiel Management Program, assignments are made by the Deputy Under Secretary of Defense (Logistics)—</P>
              <P>(1) To the departments and agencies; and</P>
              <P>(2) To GSA, through agreement with GSA.</P>
              <CITA>[56 FR 36306, July 31, 1991, as amended at 64 FR 51075, Sept. 21, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>208.7002-1</SECTNO>
              <SUBJECT>Acquiring department responsibilities.</SUBJECT>
              <P>The acquiring department generally is responsible under coordinated acquisition for—</P>
              <P>(a) Operational aspects of acquisition planning (Phasing the submission of requirements to contracting, consolidating or dividing requirements, analyzing the market, and determining patterns for the phased placement of orders to avoid unnecessary production fluctuations and meet the needs of requiring departments at the lowest price);</P>
              <P>(b) Purchasing;</P>

              <P>(c) Performing or assigning contract administration, including follow up <PRTPAGE P="57"/>and expediting of inspection and transportation; and</P>
              <P>(d) Obtaining licenses under patents and settling patent infringement claims arising out of the acquisition. (Acquiring departments must obtain approval from the department whose funds are to be charged for obtaining licenses or settling claims.)</P>
            </SECTION>
            <SECTION>
              <SECTNO>208.7002-2</SECTNO>
              <SUBJECT>Requiring department responsibilities.</SUBJECT>
              <P>The requiring department is responsible for—</P>
              <P>(a) Ensuring compliance with the order of priority in FAR 8.001 for use of Government supply sources before submitting a requirement to the acquiring department for contracting action.</P>
              <P>(b) Providing the acquiring department—</P>
              <P>(1) The complete and certified documentation required by FAR 6.303-2(b). A requiring department official, equivalent to the appropriate level in FAR 6.304, must approve the documentation before submission of the military interdepartmental purchase request (MIPR) to the acquiring department;</P>
              <P>(2) Any additional supporting data which the acquiring department contracting officer requests (e.g., the results of any market survey or why none was conducted, and actions the requiring department will take to overcome barriers to competition in the future);</P>
              <P>(3) The executed determination and findings required by FAR 6.302-7(c)(1);</P>
              <P>(4) When a requiring department requests an acquiring department to contract for supplies or services using full and open competition after exclusion of sources, all data required by FAR 6.202(b)(2);</P>
              <P>(5) When the requiring department specifies a foreign end product, any determinations required by part 225 or FAR part 25;</P>
              <P>(6) A complete definition of the requirements, including a list (or copies) of specifications, drawings, and other data required for the acquisition. The requiring department need not furnish Federal, military, departmental, or other specifications or drawings or data which are available to the acquiring department;</P>
              <P>(7) Justification required by FAR 17.205(a) for any option quantities requested;</P>
              <P>(8) A statement as to whether used or reconditioned material, former Government surplus property, or residual inventory will be acceptable, and if so—</P>
              <P>(i) A list of any supplies that need not be new; and</P>
              <P>(ii) The basis for determining the acceptability of such supplies (see FAR 11.302(b));</P>
              <P>(9) A statement as to whether the acquiring department may exceed the total MIPR estimate, and if so, by what amount; and</P>
              <P>(10) Unless otherwise agreed between the departments, an original and six copies of each MIPR and its attachments (except specifications, drawings, and other data).</P>
              <CITA>[56 FR 36306, July 31, 1991, as amended at 65 FR 52951, Aug. 31, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>208.7003</SECTNO>
              <SUBJECT>Applicability.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>208.7003-1</SECTNO>
              <SUBJECT>Assignments under integrated materiel management (IMM).</SUBJECT>
              <P>(a) All items assigned for IMM must be acquired from the IMM manager except—</P>
              <P>(1) Items purchased under circumstances of unusual and compelling urgency as defined in FAR 6.302-2. After such a purchase is made, the requiring activity must send one copy of the contract and a statement of the emergency to the IMM manager;</P>
              <P>(2) Items for which the IMM manager assigns a supply system code for local purchase or otherwise grants authority to purchase locally; or</P>
              <P>(3) When purchase by the requiring activity is in the best interest of the Government in terms of the combination of quality, timeliness, and cost that best meets the requirement. This exception does not apply to items—</P>
              <P>(i) Critical to the safe operation of a weapon system;</P>
              <P>(ii) With special security characteristics; or</P>
              <P>(iii) Which are dangerous (e.g., explosives, munitions).</P>

              <P>(b) When an item assigned for IMM is to be acquired by the requiring activity under paragraph (a)(3) of this subsection, the contracting officer must—<PRTPAGE P="58"/>
              </P>
              <P>(1) Document the contract file with a statement of the specific advantage of local purchase for an acquisition exceeding the micro-purchase threshold in FAR part 2; and</P>

              <P>(2) Ensure that a waiver is obtained from the IMM manager before initiating an acquisition exceeding the simplified acquisition threshold in FAR part 2, if the IMM assignment is to the General Services Administration (GSA), the Defense Logistics Agency (DLA), or the Army Materiel Command (AMC). Submit requests for waiver to—
              </P>
              <FP SOURCE="FP-2">(i) For GSA:</FP>
              <FP SOURCE="FP1-2">Commissioner (F), Federal Supply Service, Washington, DC 20406</FP>
              <FP SOURCE="FP-1">(ii) For DLA:</FP>
              <FP SOURCE="FP-1">Defense Supply Center, Columbus, ATTN: DSCC-BDL, P.O. Box 3990, Columbus, OH 43216-5000</FP>
              <FP SOURCE="FP-1">Defense Energy Support Center, ATTN: DESC-FI, 8725 John J. Kingman Road, Fort Belvoir, VA 22060-6222</FP>
              <FP SOURCE="FP-1">Defense Supply Center, Richmond, ATTN: DSCR-RZO, 8000 Jefferson Davis Highway, Richmond, VA 23297-5000</FP>
              <FP SOURCE="FP-1">Defense Supply Center, Philadelphia, ATTN: DSCP-ILSI (for General and Industrial), DSCP-OCS (for Medical, Clothing, and Textiles), 700 Robbins Avenue, Bldg. 4, Philadelphia, PA 19111-5096</FP>
              
              <P>In addition, forward a copy of each request to:
              </P>
              <FP SOURCE="FP-1">Defense Logistics Support Command, ATTN: DLSC-LS, 8725 John J. Kingman Road, Fort Belvoir, VA 22060-6221.</FP>
              <FP SOURCE="FP-2">(iii) For AMC:</FP>
              <FP SOURCE="FP1-2">Commander, U.S. Army Materiel Command, ATTN: AMCLG-S, 5001 Eisenhower Avenue, Alexandria, VA 22333-0001</FP>
              <CITA>[60 FR 61593, Nov. 30, 1995, as amended at 64 FR 51075, Sept. 21, 1999; 64 FR 61031, Nov. 9, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>208.7003-2</SECTNO>
              <SUBJECT>Assignments under coordinated acquisition.</SUBJECT>
              <P>Requiring departments must submit to the acquiring department all contracting requirements for items assigned for coordinated acquisition, except—</P>
              <P>(a) Items obtained through the sources in FAR 8.001(a)(1) (i) through (vii);</P>
              <P>(b) Items obtained under 208.7003-1(a);</P>
              <P>(c) Requirements not in excess of the simplified acquisition threshold in FAR part 2, when contracting by the requiring department is in the best interest of the Government;</P>
              <P>(d) In an emergency. When an emergency purchase is made, the requiring department must send one copy of the contract and a statement of the emergency to the contracting activity of the acquiring department;</P>
              <P>(e) Requirements for which the acquiring department's contracting activity delegates contracting authority to the requiring department;</P>
              <P>(f) Items in a research and development stage (as described in FAR part 35). Under this exception, the military departments may contract for research and development requirements, including quantities for testing purposes and items undergoing in-service evaluation (not yet in actual production, but beyond prototype). Generally, this exception applies only when research and development funds are used.</P>
              <P>(g) Items peculiar to nuclear ordnance material where design characteristics or test-inspection requirements are controlled by the Department of Energy (DoE) or by DoD to ensure reliability of nuclear weapons.</P>
              <P>(1) This exception applies to all items designed for and peculiar to nuclear ordnance regardless of agency control, or to any item which requires test or inspection conducted or controlled by DoE or DoD.</P>
              <P>(2) This exception does not cover items used for both nuclear ordnance and other purposes if the items are not subject to the special testing procedures.</P>
              <P>(h) Items to be acquired under FAR 6.302-6 (national security requires limitation of sources);</P>
              <P>(i) Items to be acquired under FAR 6.302-1 (supplies available only from the original source for follow-on contract);</P>

              <P>(j) Items directly related to a major system and which are design controlled by and acquired from either the system manufacturer or a manufacturer of a major subsystem;<PRTPAGE P="59"/>
              </P>
              <P>(k) Items subject to rapid design changes, or to continuous redesign or modification during the production and/or operational use phases, which require continual contact between industry and the requiring department to ensure that the item meets the requirements:</P>
              <P>(1) This exception permits the requiring department to contract for items of highly unstable design. For use of this exception, it must be clearly impractical, both technically and contractually, to refer the acquisition to the acquiring department. Anticipation that contracting by negotiation will be appropriate, or that a number of design changes may occur during contract performance is not in itself sufficient reason for using this exception.</P>
              <P>(2) This exception also applies to items requiring compatibility testing, provided such testing requires continual contact between industry and the requiring department;</P>
              <P>(l) Containers acquired only with items for which they are designed;</P>
              <P>(m) One-time buy of a noncataloged item.</P>
              <P>(1) This exception permits the requiring departments to contract for a nonrecurring requirement for a noncataloged item. This exception could cover a part or component for a prototype which may be stock numbered at a later date.</P>
              <P>(2) This exception does not permit acquisitions of recurring requirements for an item, based solely on the fact that the item is not stock numbered, nor may it be used to acquire items which have only slightly different characteristics than previously cataloged items.</P>
              <CITA>[56 FR 36306, July 31, 1991, as amended at 60 FR 61593, Nov. 30, 1995; 64 FR 51075, Sept. 21, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>208.7004</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>208.7004-1</SECTNO>
              <SUBJECT>Purchase authorization from requiring department.</SUBJECT>
              <P>(a) Requiring departments send their requirements to acquiring departments on either a DD Form 448, Military Interdepartmental Purchase Request (MIPR), or a DD Form 416, Requisition for Coal, Coke or Briquettes. A MIPR or a DD Form 416 is the acquiring department's authority to acquire the supplies or services on behalf of the requiring department.</P>
              <P>(b) The acquiring department is authorized to create obligations against the funds cited in a MIPR without further referral to the requiring department. The acquiring department has no responsibility to determine the validity of a stated requirement in an approved MIPR, but it should bring apparent errors in the requirement to the attention of the requiring department.</P>
              <P>(c) Changes that affect the contents of the MIPR must be processed as a MIPR amendment regardless of the status of the MIPR. The requiring department may initially transmit changes electronically or by some other expedited means, but must confirm changes by a MIPR amendment.</P>
              <P>(d) The requiring department must submit requirements for additional line items of supplies or services not provided for in the original MIPR as a new MIPR. The requiring department may use a MIPR amendment for increased quantities only if—</P>
              <P>(1) The original MIPR requirements have not been released for solicitation; and</P>
              <P>(2) The acquiring department agrees.</P>
            </SECTION>
            <SECTION>
              <SECTNO>208.7004-2</SECTNO>
              <SUBJECT>Acceptance by acquiring department.</SUBJECT>
              <P>(a) Acquiring departments formally accept a MIPR by DD Form 448-2, Acceptance of MIPR, as soon as practicable, but no later than 30 days after receipt of the MIPR. If the 30 day time limit cannot be met, the acquiring department must inform the requiring department of the reason for the delay, and the anticipated date the MIPR will be accepted. The acquiring department must accept MIPRs in writing before expiration of the funds.</P>
              <P>(b) The acquiring department in accepting a MIPR will determine whether to use Category I (reimbursable funds citation) or Category II (direct funds citation) methods of funding.</P>
              <P>(1) Category I method of funding is used under the following circumstances and results in citing the funds of the acquiring department in the contract—</P>

              <P>(i) Delivery is from existing inventories of the acquiring department;<PRTPAGE P="60"/>
              </P>
              <P>(ii) Delivery is by diversion from existing contracts of the acquiring department;</P>
              <P>(iii) Production or assembly is through Government work orders in Government-owned plants;</P>
              <P>(iv) Production quantities are allocated among users from one or more contracts, and the identification of specific quantities of the end item to individual contracts is not feasible at the time of MIPR acceptance;</P>
              <P>(v) Acquisition of the end items involves separate acquisition of components to be assembled by the acquiring department;</P>
              <P>(vi) Payments will be made without reference to deliveries of end items (e.g., cost-reimbursement type contracts and fixed price contracts with progress payment clauses); or</P>
              <P>(vii) Category II method of funding is not feasible and economical.</P>
              <P>(2) Category II method of funding is used in circumstances other than those in paragraph (b)(1) of this subsection. Category II funding results in citation of the requiring department's funds and MIPR number in the resultant contract.</P>
              <P>(c) When the acquiring departments accepts a MIPR for Category I funding—</P>
              <P>(1) The DD Form 448-2, Acceptance of MIPR, is the authority for the requiring department to record the obligation of funds;</P>
              <P>(2) The acquiring department will annotate the DD Form 448-2 if contingencies, price revisions, or variations in quantities are anticipated. The acquiring department will periodically advise the requiring department, prior to submission of billings, of any changes in the acceptance figure so that the requiring department may issue an amendment to the MIPR, and the recorded obligation may be adjusted to reflect the current price;</P>
              <P>(3) If the acquiring department does not qualify the acceptance of a MIPR for anticipated contingencies, the price on the acceptance will be final and will be billed at time of delivery;</P>
              <P>(4) Upon receipt of the final billing (SF 1080, Voucher for Transferring Funds), the requiring department may adjust the fiscal records accordingly without authorization from or notice to the acquiring department.</P>
              <P>(d) When the MIPR is accepted for Category II funding, a conformed copy of the contract (see 204.802(1)(ii)) is the authority to record the obligation. When all awards have been placed to satisfy the total MIPR requirement, any unused funds remaining on the MIPR become excess to the acquiring department. The acquiring department will immediately notify the requiring department of the excess funds by submitting an Acceptance of MIPR (DD Form 448-2). This amendment is authorization for the requiring department to withdraw the funds. The acquiring department is prohibited from further use of such excess funds.</P>
              <P>(e) When the acquiring department requires additional funds to complete the contracting action for the requiring department, the request for additional funds must identify the exact items involved, and the reason why additional funds are required. The requiring department shall act quickly to—</P>
              <P>(1) Provide the funds by an amendment of the MIPR; or</P>
              <P>(2) Reduce the requirements.</P>
              <P>(f) The accepting activity of the acquiring department shall remain responsible for the MIPR even though that activity may split the MIPR into segments for action by other contracting activities.</P>
            </SECTION>
            <SECTION>
              <SECTNO>208.7004-3</SECTNO>
              <SUBJECT>Use of advance MIPRs.</SUBJECT>
              <P>(a) An advance MIPR is an unfunded MIPR provided to the acquiring department in advance of the funded MIPR so that initial steps in planning the contract action can begin at an earlier date.</P>
              <P>(b) In order to use an advance MIPR, the acquiring department and the requiring department must agree that its use will be beneficial. The departments may execute a blanket agreement to use advance MIPRs.</P>
              <P>(c) The requiring department shall not release an advance MIPR to the acquiring department without obtaining proper internal approval of the requirement.</P>

              <P>(d) When advance MIPRs are used, mark “ADVANCE MIPR” prominently on the DD Form 448.<PRTPAGE P="61"/>
              </P>
              <P>(e) For urgent requirements, the advance MIPR may be transmitted electronically.</P>
              <P>(f) On the basis of an advance MIPR, the acquiring department may take the initial steps toward awarding a contract, such as obtaining internal coordination and preparing an acquisition plan. Acquiring departments may determine the extent of these initial actions but shall not award contracts on the basis of advance MIPRs.</P>
            </SECTION>
            <SECTION>
              <SECTNO>208.7004-4</SECTNO>
              <SUBJECT>Cutoff dates for submission of Category II MIPRs.</SUBJECT>
              <P>(a) Unless otherwise agreed between the departments, May 31 is the cutoff date for the receipt of MIPRs citing expiring appropriations which must be obligated by September 30 of that fiscal year. If circumstances arise which require the submission of MIPRs citing expiring appropriations after the cutoff date, the requiring department will communicate with the acquiring department before submission to find out whether the acquiring department can execute a contract or otherwise obligate the funds by the end of the fiscal year. Acquiring departments will make every effort to obligate funds for all such MIPRs accepted after the cutoff date. However, acceptance of a late MIPR does not constitute assurance by the acquiring department that all such funds will be obligated.</P>
              <P>(b) Nothing in these instructions is intended to restrict the processing of MIPRs when the acquiring department is capable of executing contracts or otherwise obligating funds before the end of the fiscal year.</P>
              <P>(c) The May 31 cutoff date does not apply to MIPRs citing continuing appropriations.</P>
            </SECTION>
            <SECTION>
              <SECTNO>208.7004-5</SECTNO>
              <SUBJECT>Notification of inability to obligate on Category II MIPRs.</SUBJECT>
              <P>On August 1, the acquiring department will advise the requiring department of any Category II MIPRs on hand citing expiring appropriations they will be unable to obligate prior to the fund expiration date. If an unforeseen situation develops after August 1 which will prevent execution of a contract, the acquiring department will notify the requiring department as quickly as possible and return the MIPR. The letter of transmittal returning the MIPR will authorize purchase by the requiring department and state the reason that the acquisition could not be accomplished.</P>
            </SECTION>
            <SECTION>
              <SECTNO>208.7004-6</SECTNO>
              <SUBJECT>Cancellation of requirements.</SUBJECT>
              <P>(a) <E T="03">Category I MIPRs.</E> The requiring department will notify the acquiring department by electronic or other immediate means when cancelling all or part of the supplies or services requested in the MIPR. Within 30 days, the acquiring department will notify the requiring department of the quantity of items available for termination and the amount of funds in excess of the estimated settlement costs. Upon receipt of this information, the requiring department will issue a MIPR amendment to reduce the quantities and funds accordingly.</P>
              <P>(b) <E T="03">Category II MIPRs.</E> The requiring department will notify the acquiring department electronically or by other immediate means when cancelling all or any part of the supplies or services requested in the MIPR.</P>
              <P>(1) If the acquiring department has not entered into a contract for the supplies or services to be cancelled, the acquiring department will immediately notify the requiring department. Upon receipt of such notification, the requiring department shall initiate a MIPR amendment to revoke the estimated amount shown on the original MIPR for the cancelled items.</P>
              <P>(2) If the items to be cancelled have already been placed under contract—</P>
              <P>(i) As soon as practicable, but in no event more than 45 days after receipt of the cancellation notice from the requiring department, the contracting officer shall issue a termination data letter to the requiring department (original and four copies) containing, as a minimum, the information in Table 8-1, Termination Data Letter.</P>

              <P>(ii) The termination contracting officer (TCO) will review the proceedings at least every 60 days to reassess the Government's probable obligation. If any additional funds are excess to the probable settlement requirements, or if it appears that previous release of excess funds will result in a shortage of the amount which will be required for <PRTPAGE P="62"/>settlement, the TCO will promptly notify the contracting office which will amend the termination data letter. The requiring department will process a MIPR amendment to reflect the reinstatement of funds within 30 days after receiving the amended termination data letter.</P>
              <P>(iii) Upon receipt of a copy of the termination settlement agreement, the requiring department will prepare a MIPR amendment, if required, to remove any remaining excess funds.</P>
              <GPOTABLE CDEF="s10" COLS="1" OPTS="L1(,0,),7/8">
                <TTITLE>Table 8-1, Termination Data Letter</TTITLE>
                <ROW>
                  <ENT I="01" O="xl">SUBJECT: Termination Data Re:</ENT>
                </ROW>
                <ROW>
                  <ENT I="01" O="xl">Contract No. ______</ENT>
                </ROW>
                <ROW>
                  <ENT I="01" O="xl">Termination No. ______</ENT>
                </ROW>
                <ROW>
                  <ENT I="01" O="xl">Contract ______</ENT>
                </ROW>
                <ROW>
                  <ENT I="01" O="xl">(a) As termination action is now in progress on the above contract, the following information is submitted:</ENT>
                </ROW>
                <ROW>
                  <ENT I="01" O="xl">(1) Brief Description of items terminated.</ENT>
                </ROW>
                <ROW>
                  <ENT I="01" O="xl">(2) You are notified that the sum of $____ is available for release under the subject contract. This sum represents the difference between $____, the value of items terminated under the contract, and $____ estimated to be required for settlement of the terminated contract. The estimated amount available for release is allocated by the appropriations cited on the contract as follows:</ENT>
                </ROW>
                <ROW>
                  <ENT I="01" O="xl">MIPR NO. ____ ACCOUNTING CLASSIFICATION ____ AMOUNT ____</ENT>
                </ROW>
                <ROW>
                  <ENT I="01" O="xl">Total available for release at this time $____</ENT>
                </ROW>
                <ROW>
                  <ENT I="01" O="xl">(b) Request you forward an amendment to MIPR ____ on DD Form 448-2 to reflect the reduced quantity and amount of funds available for release.</ENT>
                </ROW>
                <ROW>
                  <ENT I="01" O="xl">(c) Periodic reviews (not less than 60 days) will be made as termination proceedings progress to redetermine the Government's probable obligation.</ENT>
                </ROW>
                <ROW>
                  <ENT I="01" O="xl">____________________</ENT>
                </ROW>
                <ROW>
                  <ENT I="01" O="xl">Contracting Officer</ENT>
                </ROW>
              </GPOTABLE>
            </SECTION>
            <SECTION>
              <SECTNO>208.7004-7</SECTNO>
              <SUBJECT>Termination for default.</SUBJECT>
              <P>(a) When the acquiring department terminates a contract for default, they will ask the requiring department if the supplies or services to be terminated are still required so that repurchase action can be started.</P>
              <P>(b) The requiring department will not deobligate funds on a contract terminated for default until receipt of a settlement modification or other written evidence from the acquiring department authorizing release of funds.</P>
              <P>(c) On the repurchase action, the acquiring department will not exceed the unliquidated funds on the defaulted contract without receiving additional funds from the requiring department.</P>
            </SECTION>
            <SECTION>
              <SECTNO>208.7004-8</SECTNO>
              <SUBJECT>Transportation funding.</SUBJECT>
              <P>The requiring department will advise the acquiring department or the transportation officer in the contract administration office of the fund account to be charged for transportation costs. The requiring department may cite the fund account on each MIPR or provide the funding cite to the transportation officer at the beginning of each fiscal year for use on Government bills of lading. When issuing a Government bill of lading, show the requiring department as the department to be billed and cite the appropriate fund account.</P>
            </SECTION>
            <SECTION>
              <SECTNO>208.7004-9</SECTNO>
              <SUBJECT>Status reporting.</SUBJECT>
              <P>(a) The acquiring department will maintain a system of MIPR follow up to inform the requiring department of the current status of its requests. In addition, the contract administration office will maintain a system of follow up in order to advise the acquiring department on contract performance.</P>
              <P>(b) If requested by the requiring department, the acquiring department will furnish the requiring department a copy of the solicitation when the MIPR is satisfied through Category II funding.</P>
              <P>(c) Any reimbursement billings, shipping document, contractual documents, project orders, or related documentation furnished to the requiring department will identify the requiring department's MIPR number, quantities of items, and funding information.</P>
            </SECTION>
            <SECTION>
              <SECTNO>208.7004-10</SECTNO>
              <SUBJECT>Administrative costs.</SUBJECT>
              <P>The acquiring department bears the administrative costs of acquiring supplies for the requiring department. However, when an acquisition responsibility is transferred to another department, funds appropriated or to be appropriated for administrative costs will transfer to the successor acquiring department. The new acquiring department must assume budget cognizance as soon as possible.</P>
            </SECTION>
            <SECTION>
              <PRTPAGE P="63"/>
              <SECTNO>208.7005</SECTNO>
              <SUBJECT>MIPRs.</SUBJECT>
              <P>Instructions on preparation and use of DD Form 448, Military Interdepartmental Purchase Request, and DD Form 448-2, Acceptance of MIPR, are in 253.208.</P>
            </SECTION>
            <SECTION>
              <SECTNO>208.7006</SECTNO>
              <SUBJECT>Coordinated acquisition assignments.</SUBJECT>
              <P>See appendix B for coordinated acquisition assignments.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 208.71—Acquisition for National Aeronautics and Space Administration (NASA)</HD>
            <SECTION>
              <SECTNO>208.7100</SECTNO>
              <SUBJECT>Authorization.</SUBJECT>
              <P>NASA is authorized by Public Law 85-568 to use the acquisition services, personnel, equipment, and facilities of DoD departments and agencies with their consent, with or without reimbursement, and on a similar basis to cooperate with the departments/agencies in the use of acquisition services, equipment, and facilities.</P>
            </SECTION>
            <SECTION>
              <SECTNO>208.7101</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>Departments and agencies will—</P>
              <P>(a) Cooperate fully with NASA in making acquisition services, equipment, personnel, and facilities available on the basis of mutual agreement.</P>
              <P>(b) Not claim reimbursement for administrative costs incident to acquisitions for NASA, unless agreed otherwise prior to the time services are performed.</P>
            </SECTION>
            <SECTION>
              <SECTNO>208.7102</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <P>(a) When contracting or performing field service functions for NASA, the departments and agencies will use their own methods, except when otherwise required by the terms of the agreement.</P>
              <P>(b) Departments and agencies normally will use their own funds when contracting for or performing services for NASA and will not cite NASA funds on any defense obligation or payment document.</P>
            </SECTION>
            <SECTION>
              <SECTNO>208.7103</SECTNO>
              <SUBJECT>Purchase request and acceptance.</SUBJECT>
              <P>(a) NASA will use NASA Form 523, NASA-Defense Purchase Request, to request acquisition of supplies or services.</P>
              <P>(b) Except as provided in paragraph (d) of this section, departments and agencies will respond within 30 days to a NASA purchase request by forwarding DD Form 448-2, Acceptance of MIPR. Forward each DD Form 448-2 in quadruplicate and indicate action status as well as the name and address of the DoD acquisition activity for future use by the NASA initiator.</P>
              <P>(c) To the extent feasible, all documents related to the NASA action will reference the NASA-Defense Purchase Request number and the item number when appropriate.</P>
              <P>(d) Departments and agencies are not required to accept NASA-Defense Purchase Requests for common-use standard stock items which the supplying department has on hand or on order for prompt delivery at published prices.</P>
            </SECTION>
            <SECTION>
              <SECTNO>208.7104</SECTNO>
              <SUBJECT>Changes in estimated total prices.</SUBJECT>
              <P>When a department or agency determines that the estimated total price (Block 6F, NASA Form 523) for NASA items is not sufficient to cover the required reimbursement, or is in excess of the amount required, the department/agency will forward a request for amendment to the NASA originating office. Indicate in the request a specific dollar amount, rather than a percentage, and include justification for any upward adjustment requested. Upon approval of a request, NASA will forward an amendment of its purchase request to the contracting activity.</P>
            </SECTION>
            <SECTION>
              <SECTNO>208.7105</SECTNO>
              <SUBJECT>Payments.</SUBJECT>
              <P>Departments and agencies will submit SF 1080, Voucher for Transferring Funds, billings to the NASA office designated in Block 9 of the NASA-Defense Purchase Request, except where agreements provide that reimbursement is not required. Departments and agencies will support billings in the same manner as billings between departments and agencies.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 208.72—Industrial Preparedness Production Planning</HD>
            <SECTION>
              <SECTNO>208.7201</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <P>As used in this subpart—<PRTPAGE P="64"/>
              </P>
              <P>
                <E T="03">Industrial base</E> means that part of the total privately-owned and Government-owned industrial production and maintenance capacity of the United States and Canada, which will be available during national emergencies to manufacture and repair items required by the departments.</P>
              <P>
                <E T="03">Industrial preparedness production planning</E> means planning designed to maintain an adequate industrial base to support DoD requirements for selected essential military items in a national emergency.</P>
              <P>
                <E T="03">National emergency</E> means a condition declared by the President or the Congress which authorizes certain emergency action in the national interest, including partial or total mobilization of national resources.</P>
              <P>
                <E T="03">Planned item</E> means any item selected for industrial preparedness planning under the criteria of DoDI 4005.3, Industrial Preparedness Planning.</P>
              <P>
                <E T="03">Planned producer</E> means an industrial firm which has agreed by either non-binding memorandum of understanding or binding contract/contract clause to provide production capacity data, to maintain existing capacity for a negotiated period of time, and to accept contracts for planned items upon the request of the Government.</P>
            </SECTION>
            <SECTION>
              <SECTNO>208.7202</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <P>(a) Under the Industrial Preparedness Production Planning (IPPP) program, DoD components and industry work together to ensure essential military items are available during an emergency.</P>
              <P>(b) Departments and agencies select weapon systems and items for planning in accordance with DoDI 4005.3, Industrial Preparedness Planning. Planning is conducted only with U.S. or Canadian sources.</P>
              <P>(c) The use of privately-owned facilities is preferred to minimize the need for Government investment. Departments and agencies will include Government-owned production facilities in the industrial base only when—</P>
              <P>(1) Private industry is unable to provide the facilities necessary to support DoD requirements; or</P>
              <P>(2) The facilities are necessary—</P>
              <P>(i) For reasons of national security; or</P>
              <P>(ii) To ensure a quick response capability to meet fluctuating demands.</P>
            </SECTION>
            <SECTION>
              <SECTNO>208.7203</SECTNO>
              <SUBJECT>Authority.</SUBJECT>
              <P>Authority under current contracting procedures to accomplish industrial planning actions includes—</P>
              <P>(a) Leasing of Government-owned property to planned emergency producers under the authority of the Military Leasing Act of 1947, 10 U.S.C. 2667;</P>
              <P>(b) Acquisitions in the interest of national defense under FAR 6.202(a)(2), or in case of a national emergency or to achieve industrial mobilization under FAR 6.302-3;</P>
              <P>(c) Acquisition of items restricted under 225.7010 and 225.71;</P>
              <P>(d) Use of multiyear contracting (FAR subpart 17.1);</P>
              <P>(e) Providing Government production and research property to contractors; and</P>
              <P>(f) Use of direct payment for idle facilities or idle capacities reserved for defense mobilization production (FAR 31.205-17(d)).</P>
              <CITA>[56 FR 36306, July 31, 1991, as amended at 57 FR 42629, Sept. 15, 1992; 62 FR 34121, June 24, 1997]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>208.7204</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <P>(a) Except as otherwise provided in FAR or DFARS, solicit planned producers for all acquisitions of their planned items, when the acquisition exceeds the simplified acquisition threshold.</P>
              <P>(b) The contracting officer may contract for industrial planning efforts for selected essential military items. These efforts may include, but are not limited to, the maintenance of Government-owned industrial facilities (real and personal property) or production data packages. These planning efforts may be acquired through an individual service contract or as a line item on a contract for a planned item.</P>
              <CITA>[56 FR 36306, July 31, 1991, as amended at 64 FR 2596, Jan. 15, 1999]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 208.73—Use of Government-Owned Precious Metals</HD>
            <SECTION>
              <SECTNO>208.7301</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <P>As used in this subpart—<PRTPAGE P="65"/>
              </P>
              <P>
                <E T="03">Defense Supply Center, Philadelphia (DSCP)</E> means the Defense Logistics Agency field activity located at 700 Robbins Avenue, Philadelphia, PA 19111-5096, which is the assigned commodity integrated material manager for refined precious metals and is responsible for the storage and issue of such material.</P>
              <P>
                <E T="03">Dual pricing evaluation procedure</E> means a procedure where offerors submit two prices for precious metals bearing items—one based on Government-furnished precious metals and one based on contractor-furnished precious metals. The contracting officer evaluates the prices to determine which is in the Government's best interest.</P>
              <P>
                <E T="03">Precious Metals Indicator Code (PMIC)</E> means a single-digit, alpha-numeric code assigned to national stock numbered items in the Defense Integrated Data System Total Item Record used to indicate the presence or absence of precious metals in the item. PMICs and the content value of corresponding items are listed in DoD 4100.39-M, Federal Logistics Information System (FLIS) Procedures Manual, Volume 10, Chapter 4, Table 160.</P>
              <P>
                <E T="03">Refined precious metal</E> means recovered silver, gold, platinum, palladium, iridium, rhodium, or ruthenium, in bullion, granulation or sponge form, which has been purified to at least .999 percentage of fineness.</P>
              <CITA>[56 FR 36306, July 31, 1991, as amended at 65 FR 14398, Mar. 16, 2000; 65 FR 52951, Aug. 31, 2000; 65 FR 58607 Sept. 29, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>208.7302</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>DoD policy is for maximum participation in the Precious Metals Recovery Program (PMRP). DoD components shall furnish recovered precious metals contained in the DSCP inventory to production contractors rather than use contractor-furnished precious metals whenever the contracting officer determines it to be in the Government's best interest.</P>
              <CITA>[56 FR 36306, July 31, 1991, as amended at 65 FR 52951, Aug. 31, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>208.7303</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <P>(a) Item managers and contracting officers will use the PMIC and/or other relevant data furnished with a purchase request to determine the applicability of this subpart.</P>
              <P>(b) When an offeror advises of a precious metals requirement, the contracting officer shall use the procedures in chapter 11 of DoD 4160.21-M, Defense Materiel Disposition Manual, to determine availability of required precious metal assets and current government-furnished materiel (GFM) unit prices. If the precious metals are available, the contracting officer shall evaluate offers and award the contract on the basis of the offer which is in the best interest of the Government.</P>
              <P>(c) When the clause prescribed by 208.7305 is included in a solicitation, the contracting officer will ensure that section B, Schedule of Supplies or Services and Prices, is structured to—</P>
              <P>(1) Permit insertion of alternate prices for each deliverable contract line item number that uses precious metals; and</P>
              <P>(2) Use dual pricing evaluation procedures.</P>
              <CITA>[56 FR 36306, July 31, 1991, as amended at 65 FR 52952, Aug. 31, 2000; 65 FR 58607, Sept. 29, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>208.7304</SECTNO>
              <SUBJECT>Refined precious metals.</SUBJECT>
              <P>The following refined precious metals are currently managed by DSCP:</P>
              <GPOTABLE CDEF="s25,r25" COLS="2" OPTS="L2,tp0,i1">
                <TTITLE/>
                <BOXHD>
                  <CHED H="1">Precious metal</CHED>
                  <CHED H="1">National stock number (NSN)</CHED>
                </BOXHD>
                <ROW>
                  <ENT I="01">Gold</ENT>
                  <ENT>9660-00-042-7733</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">Silver</ENT>
                  <ENT>9660-00-106-9432</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">Platinum Granules</ENT>
                  <ENT>9660-00-042-7768</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">Platinum Sponge</ENT>
                  <ENT>9660-00-151-4050</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">Palladium Granules</ENT>
                  <ENT>9660-00-042-7765</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">Palladium Sponge</ENT>
                  <ENT>9660-01-039-0320</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">Rhodium</ENT>
                  <ENT>9660-01-010-2625</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">Iridium</ENT>
                  <ENT>9660-00-011-1937</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">Ruthenium</ENT>
                  <ENT>9660-01-039-0313</ENT>
                </ROW>
              </GPOTABLE>
              <CITA>[65 FR 52952, Aug. 31, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>208.7305</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <P>(a) Use the clause at 252.208-7000, Intent to Furnish Precious Metals as Government-Furnished Material, in all solicitations and contracts except—</P>
              <P>(1) When the contracting officer has determined that the required precious metals are not available from DSCP;</P>

              <P>(2) When the contracting officer knows that the items being acquired do not require precious metals in their manufacture; or<PRTPAGE P="66"/>
              </P>
              <P>(3) For acquisitions at or below the simplified acquisition threshold.</P>
              <P>(b) To make the determination in paragraph (a)(1) of this section, the contracting officer shall consult with the end item inventory manager and comply with the procedures in Chapter 11, DoD 4160.21-M, Defense Materiel Disposition Manual.</P>
              <CITA>[56 FR 36306, July 31, 1991, as amended at 64 FR 2596, Jan. 15, 1999; 65 FR 14398, Mar. 16, 2000; 65 FR 52952, Aug. 31, 2000]</CITA>
            </SECTION>
          </SUBPART>
        </PART>
        <PART>
          <EAR>Pt. 209</EAR>
          <HD SOURCE="HED">PART 209—CONTRACTOR QUALIFICATIONS</HD>
          <CONTENTS>
            <SUBPART>
              <HD SOURCE="HED">Subpart 209.1—Responsible Prospective Contractors</HD>
              <SECHD>Sec.</SECHD>
              <SECTNO>209.101</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <SECTNO>209.103</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>209.103-70</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <SECTNO>209.104</SECTNO>
              <SUBJECT>Standards.</SUBJECT>
              <SECTNO>209.104-1</SECTNO>
              <SUBJECT>General standards.</SUBJECT>
              <SECTNO>209.104-4</SECTNO>
              <SUBJECT>Subcontractor responsibility.</SUBJECT>
              <SECTNO>209.104-70</SECTNO>
              <SUBJECT>Solicitation provisions.</SUBJECT>
              <SECTNO>209.105-2</SECTNO>
              <SUBJECT>Determinations and documentation.</SUBJECT>
              <SECTNO>209.106</SECTNO>
              <SUBJECT>Preaward surveys.</SUBJECT>
              <SECTNO>209.106-1</SECTNO>
              <SUBJECT>Conditions for preaward surveys.</SUBJECT>
              <SECTNO>209.106-2</SECTNO>
              <SUBJECT>Requests for preaward surveys.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 209.2—Qualifications Requirements</HD>
              <SECTNO>209.202</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 209.3—First Article Testing and Approval</HD>
              <SECTNO>209.303</SECTNO>
              <SUBJECT>Use.</SUBJECT>
              <SECTNO>209.305</SECTNO>
              <SUBJECT>Risk.</SUBJECT>
              <SECTNO>209.306</SECTNO>
              <SUBJECT>Solicitation requirements.</SUBJECT>
              <SECTNO>209.308</SECTNO>
              <SUBJECT>Contract clauses.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 209.4—Debarment, Suspension, and Ineligibility</HD>
              <SECTNO>209.402</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>209.403</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <SECTNO>209.405</SECTNO>
              <SUBJECT>Effect of listing.</SUBJECT>
              <SECTNO>209.405-1</SECTNO>
              <SUBJECT>Continuation of current contracts.</SUBJECT>
              <SECTNO>209.405-2</SECTNO>
              <SUBJECT>Restrictions on subcontracting.</SUBJECT>
              <SECTNO>209.406</SECTNO>
              <SUBJECT>Debarment.</SUBJECT>
              <SECTNO>209.406-1</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <SECTNO>209.406-2</SECTNO>
              <SUBJECT>Causes for debarment.</SUBJECT>
              <SECTNO>209.406-3</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <SECTNO>209.407</SECTNO>
              <SUBJECT>Suspension.</SUBJECT>
              <SECTNO>209.407-3</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <SECTNO>209.409</SECTNO>
              <SUBJECT>Solicitation provision and contract clause.</SUBJECT>
              <SECTNO>209.470</SECTNO>
              <SUBJECT>Reserve Officer Training Corps and military recruiting on campus.</SUBJECT>
              <SECTNO>209.470-1</SECTNO>
              <SUBJECT>Definition.</SUBJECT>
              <SECTNO>209.470-2</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>209.470-3</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <SECTNO>209.470-4</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <SECTNO>209.471</SECTNO>
              <SUBJECT>Congressional Medal of Honor.</SUBJECT>
            </SUBPART>
          </CONTENTS>
          <AUTH>
            <HD SOURCE="HED">Authority:</HD>
            <P>41 U.S.C. 421 and 48 CFR chapter 1.</P>
          </AUTH>
          <SOURCE>
            <HD SOURCE="HED">Source:</HD>
            <P>56 FR 36313, July 31, 1991, unless otherwise noted.</P>
          </SOURCE>
          <SUBPART>
            <HD SOURCE="HED">Subpart 209.1—Responsible Prospective Contractors</HD>
            <SECTION>
              <SECTNO>209.101</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <P>“Entity controlled by a foreign government,” “foreign government,” and “proscribed information,” are defined in the provision at 252.209-7002, Disclosure of Ownership or Control by a Foreign Government.</P>
              <CITA>[59 FR 51132, Oct. 7, 1994]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>209.103</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>(a)(i) Do not deny award to contractors subject to on-site inspection under the Intermediate-Range Nuclear Forces (INF) Treaty, or similar treaty, due to the actual or potential presence of Soviet inspectors at the contractor's facility unless—</P>
              <P>(A) Necessary for reasons of national security;</P>
              <P>(B) The decision is based on full information, including comment from the potential contractor or subcontractor on the security issues involved; and</P>
              <P>(C) The department or agency acquisition executive reviews the decision and the Under Secretary of Defense (Acquisition, Technology, and Logistics) approves the decision.</P>
              <P>(ii) Make any decision to deny consideration for award under paragraph (a)(i) of this section as early as possible in the acquisition process. Notify the firm in writing of any decision not to consider the firm for award of a contract or subcontract.</P>
              <P>(c) The additional cost of contract administration and audit due to a contractor's performance risk may be considered in evaluating the contractor's price.</P>
              <CITA>[56 FR 36313, July 31, 1991, as amended at 60 FR 29497, June 5, 1995; 61 FR 50452, Sept. 26, 1996; 65 FR 39704, June 27, 2000]</CITA>
            </SECTION>
            <SECTION>
              <PRTPAGE P="67"/>
              <SECTNO>209.103-70</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <P>Use the clause at 252.209-7000, Acquisition from Subcontractors Subject to On-Site Inspection Under the Intermediate-Range Nuclear Forces (INF) Treaty, in all solicitations and contracts exceeding the simplified acquisition threshold, except solicitations and contracts for commercial items.</P>
              <CITA>[60 FR 61593, Nov. 30, 1995, as amended at 61 FR 50452, Sept. 26, 1996]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>209.104</SECTNO>
              <SUBJECT>Standards.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>209.104-1</SECTNO>
              <SUBJECT>General standards.</SUBJECT>
              <P>(e) For cost-reimbursement or incentive type contracts, or contracts which provide for progress payments based on costs or on a percentage or stage of completion, the prospective contractor's accounting system and related internal controls must provide reasonable assurance that—</P>
              <P>(i) Applicable laws and regulations are complied with;</P>
              <P>(ii) The accounting system and cost data are reliable;</P>
              <P>(iii) Risk of misallocations and mischarges are minimized; and</P>
              <P>(iv) Contract allocations and charges are consistent with invoice procedures.</P>
              <P>(g)(i) <E T="03">Ownership or control by the government of a terrorist country.</E> (A) Under 10 U.S.C. 2327(b), a contracting officer shall not award a contract of $100,000 or more to a firm or to a subsidiary of a firm when a foreign government—</P>
              <P>(<E T="03">1</E>) Either directly or indirectly, has a significant interest—</P>
              <P>(<E T="03">i</E>) In the firm; or</P>
              <P>(<E T="03">ii</E>) In the subsidiary or the firm that owns the subsidiary; and</P>
              <P>(<E T="03">2</E>) Has been determined by the Secretary of State under 50 U.S.C. App. 2405(j)(1)(A) to be a government of a country that has repeatedly provided support for acts of international terrorism.</P>
              <P>(B) The Secretary of Defense may waive the prohibition in paragraph (g)(i)(A) of this subsection in accordance with 10 U.S.C. 2327(c). This waiver authority may not be delegated.</P>
              <P>(ii) <E T="03">Ownership or control by a foreign government when access to proscribed information is required to perform the contract.</E> (A) Under 10 U.S.C. 2536(a), no DoD contract under a national security program may be awarded to an entity controlled by a foreign government if that entity requires access to proscribed information to perform the contract.</P>
              <P>(B) Whenever the contracting officer has a question about application of the provision at 252.209-7002, the contracting officer may seek advice from the Director, Defense Security Programs, Office of the Assistant Secretary of Defense for Command, Control, Communications and Intelligence.</P>
              <P>(C) In accordance with 10 U.S.C. 2536(b)(1)(A), the Secretary of Defense may waive the prohibition in paragraph (g)(ii)(A) of this subsection upon determining that the waiver is essential to the national security interest of the United States. The Secretary has delegated authority to grant this waiver to the Assistant Secretary of Defense Command, Control, Communications and Intelligence. Waiver requests, prepared by the requiring activity in coordination with the contracting officer, shall be processed through the Director of Defense Procurement, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics), and shall include a proposed national interest determination. The proposed national interest determination, prepared by the requiring activity in coordination with the contracting officer, shall include:</P>
              <P>(<E T="03">1</E>) Identification of the proposed awardee, with a synopsis of its foreign ownership (include solicitation and other reference numbers to identify the action);</P>
              <P>(<E T="03">2</E>) General description of the acquisition and performance requirements;</P>
              <P>(<E T="03">3</E>) Identification of the national security interests involved and the ways award of the contract helps advance those interests;</P>
              <P>(<E T="03">4</E>) The availability of another entity with the capacity, capability and technical expertise to satisfy defense acquisition, technology base, or industrial base requirements; and</P>
              <P>(<E T="03">5</E>) A description of any alternate means available to satisfy the requirement, e.g., use of substitute products or technology or alternate approaches to accomplish the program objectives.</P>

              <P>(D) In accordance with 10 U.S.C. 2536(b)(1)(B), the Secretary of Defense may, in the case of a contract awarded <PRTPAGE P="68"/>for environmental restoration, remediation, or waste management at a DoD facility, waive the prohibition in paragraph (g)(ii)(A) of this subsection upon—</P>
              <P>(<E T="03">1</E>) Determining that—</P>
              <P>(<E T="03">i</E>) The waiver will advance the environmental restoration, remediation, or waste management objectives of DoD and will not harm the national security interests of the United States; and</P>
              <P>(<E T="03">ii</E>) The entity to which the contract is awarded is controlled by a foreign government with which the Secretary is authorized to exchange Restricted Data under section 144c. of the Atomic Energy Act of 1954 (42 U.S.C. 2164(c)); and</P>
              <P>(<E T="03">2</E>) Notifying Congress of the decision to grant the waiver. The contract may be awarded only after the end of the 45-day period beginning on the date the notification is received by the appropriate Congressional committees.</P>
              <CITA>[58 FR 28464, May 13, 1993, as amended at 59 FR 51131, 51132, Oct. 7, 1994; 60 FR 29497, June 5, 1995; 62 FR 34121, June 24, 1997; 63 FR 11851, Mar. 11, 1998; 63 FR 14837, Mar. 27, 1998; 65 FR 39704, June 27, 2000; 67 FR 4208, Jan. 29, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>209.104-4</SECTNO>
              <SUBJECT>Subcontractor responsibility.</SUBJECT>
              <P>Generally, the Canadian Commercial Corporation's (CCC) proposal of a firm as its subcontractor is sufficient basis for an affirmative determination of responsibility. However, when the CCC determination of responsibility is not consistent with other information available to the contracting officer, the contracting officer shall request from CCC and any other sources whatever additional information is necessary to make the responsibility determination.</P>
            </SECTION>
            <SECTION>
              <SECTNO>209.104-70</SECTNO>
              <SUBJECT>Solicitation provisions.</SUBJECT>
              <P>(a) Use the provision at 252.209-7001, Disclosure of Ownership or Control by the Government of a Terrorist Country, in all solicitations expected to result in contracts of $100,000 or more. Any disclosure that the government of a terrorist country has a significant interest in an offeror or a subsidiary of an offeror shall be forwarded through the head of the agency to the Director of Defense Procurement, ATTN: OUSD(AT&amp;L) DP/FC, 3060 Defense Pentagon, Washington, DC 20101-3060.</P>
              <P>(b) Use the provision at 252.209-7002, Disclosure of Ownership or Control by a Foreign Government, in all solicitations, including those subject to the procedures in FAR part 13, when access to proscribed information is necessary to perform a DoD contract under a national security program.</P>
              <CITA>[58 FR 28464, May 13, 1993, as amended at 59 FR 51131, Oct. 7, 1994; 62 FR 34122, June 24, 1997; 63 FR 11851, Mar. 11, 1998; 63 FR 14837, Mar. 27, 1998; 65 FR 39704, June 27, 2000; 67 FR 4208, Jan. 29, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>209.105-2</SECTNO>
              <SUBJECT>Determinations and documentation.</SUBJECT>
              <P>(a) When the contracting officer considers such action appropriate, the contracting officer must submit a copy of the determination to the appropriate debarring and suspending official (see 209.403).</P>
              <CITA>[64 FR 62985, Nov. 18, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>209.106</SECTNO>
              <SUBJECT>Preaward surveys.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>209.106-1</SECTNO>
              <SUBJECT>Conditions for preaward surveys.</SUBJECT>
              <P>(a) If a preaward survey is requested, include the rationale in block 23 of the SF 1403, Preaward Survey of Prospective Contractor (General).</P>
              <CITA>[60 FR 61593, Nov. 30, 1995]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>209.106-2</SECTNO>
              <SUBJECT>Requests for preaward surveys.</SUBJECT>
              <P>(1) The surveying activity is the cognizant contract administration office as listed in the Federal Directory of Contract Administration Services Components. When information is required as part of the survey on the adequacy of the contractor's accounting system or its suitability for administration of the proposed type of contract, the surveying activity will obtain the information from the auditor.</P>
              <P>(2) Limited information may be requested by telephone.</P>

              <P>(3) The contracting officer may request a formal survey by telephone but must confirm immediately with SF 1403, Preaward Survey of Prospective Contractor (General). For a formal survey, send original and three copies of SF 1403, including necessary drawings and specifications.<PRTPAGE P="69"/>
              </P>
              <P>(a) List additional factors in item H, section III of the SF 1403 and explain them in block 23. For example—</P>
              <P>(i) Information needed to determine a prospective contractor's eligibility under the Walsh-Healey Public Contracts Act. (Note that the Walsh-Healey Public Contracts Act, block 12 of section I, only indicates what the contractor has represented its classification to be under Walsh-Healey.)</P>
              <P>(ii) Evaluation of a contractor as a planned producer when the offered item is or may appear on the Industrial Preparedness Planning List (IPPL). When the preaward survey results in a recommendation for award, ask the office responsible for industrial preparedness planning to consider designating the prospective contractor as a planned producer. If the item is already on the IPPL or the prospective contractor is already a planned producer, note the information in block 23.</P>
              <P>(iii) Evaluation of the prospective contractor's performance against small business subcontracting plans.</P>
              <P>(c) On base level preaward surveys, technical personnel from the requiring installation should participate when there is concern about the ability of a prospective contractor to perform a base level service or construction contract.</P>
              <P>(d) Allow more time for—</P>
              <P>(i) Complex items;</P>
              <P>(ii) New or inexperienced DoD contractors; and</P>
              <P>(iii) Surveys with time-consuming requirements, e.g., secondary survey, accounting system review, financial capability analysis, or purchasing office participation.</P>
              <P>(e) Only request those factors essential to the determination of responsibility. See 253.209-1(a) for an explanation of the factors in section III, blocks 19 and 20 of the SF 1403.</P>
              <CITA>[56 FR 36313, July 31, 1991, as amended at 58 FR 28464, May 13, 1993; 65 FR 54969, Sept. 12, 2000]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 209.2—Qualifications Requirements</HD>
            <SECTION>
              <SECTNO>209.202</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>(a)(1) The inclusion of qualification requirements in specifications for products that are to be included on a Qualified Products List, or manufactured by business firms included on a Qualified Manufacturers List, requires approval by the departmental standardization office in accordance with DoD 4120.24-M, Defense Standardization Program (DSP) Policies and Procedures. The inclusion of other qualification requirements in an acquisition or group of acquisitions requires approval by the chief of the contracting office.</P>
              <CITA>[60 FR 61593, Nov. 30, 1995, as amended at 65 FR 63804, Oct. 25, 2000]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 209.3—First Article Testing and Approval</HD>
            <SECTION>
              <SECTNO>209.303</SECTNO>
              <SUBJECT>Use.</SUBJECT>
              <P>(d) The contracting officer may require that first articles be manufactured using the same facilities, production processes, methods, and materials to be used for production units under the contract.</P>
            </SECTION>
            <SECTION>
              <SECTNO>209.305</SECTNO>
              <SUBJECT>Risk.</SUBJECT>
              <P>The contracting officer may give this authorization to a contractor only after approval by a level higher than the contracting officer.</P>
            </SECTION>
            <SECTION>
              <SECTNO>209.306</SECTNO>
              <SUBJECT>Solicitation requirements.</SUBJECT>
              <P>(a)(1) To be sure that the contractor and the Government clearly understand and interpret contract terms and conditions in the same manner, avoid describing first article requirements exclusively in general terms such as “visual,” “dimensional,” “workmanship,” or “specification compliance.”</P>
            </SECTION>
            <SECTION>
              <SECTNO>209.308</SECTNO>
              <SUBJECT>Contract clauses.</SUBJECT>
              <P>Alternate I of the clauses at FAR 52.209-3, First Article Approval—Contractor Testing, or 52.209-4, First Article Approval—Government Testing, as appropriate, may be used when—</P>
              <P>(1) The form, fit, or function of the product would be adversely affected by contractor changes in the production facilities, processes, methods, or materials subsequent to first article approval; and</P>

              <P>(2) The Government has relied upon first article testing in the absence of complete design specifications to supplement a performance specification; or<PRTPAGE P="70"/>
              </P>
              <P>(3) It is essential to have an approved first article to serve as a manufacturing standard.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 209.4—Debarment, Suspension, and Ineligibility</HD>
            <SECTION>
              <SECTNO>209.402</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>(d) The uniform suspension and debarment procedures to be followed by all debarring and suspending officials are set out in appendix H to this chapter.</P>
              <P>(e) The department or agency shall provide a copy of the Debarment and Suspension Procedures at DFARS appendix H to this chapter to contractors at the time of their suspension or when they are proposed for debarment, and upon request to other interested parties.</P>
              <CITA>[59 FR 27668, May 27, 1994]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>209.403</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <P>
                <E T="03">Debarring and suspending official.</E> (1) For DoD, the designees are—
              </P>
              <EXTRACT>
                <FP SOURCE="FP-1">Army—Commander, U.S. Army Legal Services Agency</FP>
                <FP SOURCE="FP-1">Navy—The General Counsel of the Department of the Navy</FP>
                <FP SOURCE="FP-1">Air Force—Deputy General Counsel (Contractor Responsibility)</FP>
                <FP SOURCE="FP-1">Defense Advanced Research Projects Agency—The Director</FP>
                <FP SOURCE="FP-1">Defense Information Systems Agency—The General Counsel</FP>
                <FP SOURCE="FP-1">Defense Logistics Agency—The Special Assistant for Contracting Integrity</FP>
                <FP SOURCE="FP-1">National Imagery and Mapping Agency—The General Counsel</FP>
                <FP SOURCE="FP-1">Defense Threat Reduction Agency—The Director</FP>
                <FP SOURCE="FP-1">National Security Agency—The Director</FP>
                <FP SOURCE="FP-1">Ballistic Missile Defense Organization—The General Counsel</FP>
                <FP SOURCE="FP-1">Overseas installations—as designated by the agency head</FP>
              </EXTRACT>
              
              <P>(2) Overseas debarring and suspending officials—</P>
              <P>(i) Are authorized to debar or suspend contractors located within the official's geographic area of responsibility under any delegation of authority they receive from their agency head.</P>
              <P>(ii) Debar or suspend in accordance with the procedures in FAR subpart 9.4 or under modified procedures approved by the agency head based on consideration of the laws or customs of the foreign countries concerned.</P>
              <P>(iii) In addition to the bases for debarment in FAR 9.406-2, may consider the following additional bases—</P>
              <P>(A) The foreign country concerned determines that a contractor has engaged in bid-rigging, price-fixing, or other anti-competitive behavior; or</P>
              <P>(B) The foreign country concerned declares the contractor to be formally debarred, suspended, or otherwise ineligible to contract with that foreign government or its instrumentalities.</P>
              <P>(3) The Defense Logistics Agency Special Assistant for Contracting Integrity is the exclusive representative of the Secretary of Defense to suspend and debar contractors from the purchase of Federal personal property under the Federal Property Management Regulations (41 CFR 101-45.6) and the Defense Materiel Disposition Manual (DoD 4160.21-M).</P>
              <CITA>[56 FR 36313, July 31, 1991, as amended at 56 FR 67212, Dec. 30, 1991; 59 FR 27669, May 27, 1994; 60 FR 61593, Nov. 30, 1995; 61 FR 50452, Sept. 26, 1996; 63 FR 11528, Mar. 9, 1998; 64 FR 51075, Sept. 21, 1999; 64 FR 62985, Nov. 18, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>209.405</SECTNO>
              <SUBJECT>Effect of listing.</SUBJECT>
              <P>(a) Under 10 U.S.C. 2393(b), when a department or agency determines that a compelling reason exists for it to conduct business with a contractor that is debarred or suspended from procurement programs, it must provide written notice of the determination to the General Services Administration, Office of Acquisition Policy. Examples of compelling Reasons are—</P>
              <P>(i) Only a debarred or suspended contractor can provide the supplies or services;</P>
              <P>(ii) Urgency requires contracting with a debarred or suspended contractor;</P>
              <P>(iii) The contractor and a department or agency have an agreement covering the same events that resulted in the debarment or suspension and the agreement includes the department or agency decision not to debar or suspend the contractor; or</P>
              <P>(iv) The national defense requires continued business dealings with the debarred or suspended contractor.</P>

              <P>(b)(i) The Procurement Cause and Treatment Code “H” annotation in the GSA List of Parties Excluded from <PRTPAGE P="71"/>Federal Procurement and Nonprocurement Programs identifies contractors that are declared ineligible for award of a contract or subcontract because of a violation of the Clean Air Act (42 U.S.C. 7606) or the Clean Water Act (33 U.S.C. 1368).</P>
              <P>(ii) Under the authority of 40 CFR 32.215(b), the agency head may grant an exception permitting award to a Code “H” ineligible contractor if it is in the paramount interest of the United States.</P>
              <P>(A) The agency head may delegate this exception authority to a level no lower than a general or flag officer or a member of the Senior Executive Service.</P>
              <P>(B) The official granting the exception must provide written notice to the Environmental Protection Agency debarring official.</P>
              <CITA>[65 FR 52955, Aug. 31, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>209.405-1</SECTNO>
              <SUBJECT>Continuation of current contracts.</SUBJECT>
              <P>(b) Unless the agency head makes a written determination that a compelling reason exists to do so, ordering activities shall not—</P>
              <P>(i) Place orders exceeding the guaranteed minimum under indefinite quantity contracts: or</P>
              <P>(ii) When the agency is an optional user, place orders against Federal Supply Schedule contracts.</P>
              <P>(c) This includes exercise of options.</P>
              <CITA>[60 FR 29497, June 5, 1995, as amended at 60 FR 61593, Nov. 30, 1995]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>209.405-2</SECTNO>
              <SUBJECT>Restrictions on subcontracting.</SUBJECT>
              <P>(a) The contracting officer shall not consent to any subcontract with a firm, or a subsidiary of a firm, that is identified by the Secretary of Defense as being owned or controlled by the government of a terrorist country unless the agency head states in writing the compelling reasons for the subcontract.</P>
              <CITA>[63 FR 14837, Mar. 27, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>209.406</SECTNO>
              <SUBJECT>Debarment.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>209.406-1</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <P>(a)(i) When the debarring official decides that debarment is not necessary, the official may require the contractor to enter into a written agreement which includes—</P>
              <P>(A) A requirement for the contractor to establish, if not already established, and to maintain the standards of conduct and internal control systems prescribed by subpart 203.70; and</P>
              <P>(B) Other requirements the debarring official considers appropriate.</P>
              <P>(ii) Before the debarring official decides not to suspend or debar in the case of an indictment or conviction for a felony, the debarring official must determine that the contractor has addressed adequately the circumstances that gave rise to the misconduct, and that appropriate standards of ethics and integrity are in place and are working.</P>
              <CITA>[57 FR 14992, Apr. 23, 1992]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>209.406-2</SECTNO>
              <SUBJECT>Causes for debarment.</SUBJECT>
              <P>(a) Any person shall be considered for debarment if criminally convicted of intentionally affixing a label bearing a “Made in America” inscription to any product sold in or shipped to the United States that was not made in America (10 U.S.C. 2410f).</P>
              <P>(i) The debarring official will make a determination concerning debarment not later than 90 days after determining that a person has been so convicted.</P>
              <P>(ii) In cases where the debarring official decides not to debar, the debarring official will report that decision to the Director of Defense Procurement who will notify Congress within 30 days after the decision is made.</P>
              <CITA>[58 FR 28464, May 13, 1993]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>209.406-3</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <P>(a) <E T="03">Investigation and referral.</E>
              </P>
              <P>(i) Refer all matters appropriate for consideration by an agency debarring and suspending official as soon as practicable to the appropriate debarring and suspending official identified in 209.403. Any person may refer a matter to the debarring and suspending official.</P>

              <P>(ii) Use the following format when referring a matter to the agency debarring and suspending official for consideration. To the extent practicable, provide all specified information.<PRTPAGE P="72"/>
              </P>
              <P>(A) Name, address, and telephone number of the point of contact for the activity making the report.</P>
              <P>(B) Name, contractor and Government entity (CAGE) code, and address of the contractor.</P>
              <P>(C) Name and addresses of the members of the board, principal officers, partners, owners, and managers.</P>
              <P>(D) Name and addresses of all known affiliates, subsidiaries, or parent firms, and the nature of the business relationship.</P>
              <P>(E) For each contract affected by the conduct being reported—</P>
              <P>(<E T="03">1</E>) The contract number;</P>
              <P>(<E T="03">2</E>) All office identifying numbers or symbols;</P>
              <P>(<E T="03">3</E>) Description of supplies or services;</P>
              <P>(<E T="03">4</E>) The amount;</P>
              <P>(<E T="03">5</E>) The percentage of completion;</P>
              <P>(<E T="03">6</E>) The amount paid the contractor;</P>
              <P>(<E T="03">7</E>) Whether the contract is assigned under the Assignment of Claims Act and, if so, to whom; and</P>
              <P>(<E T="03">8</E>) The amount due the contractor.</P>
              <P>(F) For any other contracts outstanding with the contractor or any of its affiliates—</P>
              <P>(<E T="03">1</E>) The contract number;</P>
              <P>(<E T="03">2</E>) The amount;</P>
              <P>(<E T="03">3</E>) The amounts paid the contractor;</P>
              <P>(<E T="03">4</E>) Whether the contract is assigned under the Assignment of Claims Act and, if so, to whom; and</P>
              <P>(<E T="03">5</E>) The amount due the contractor.</P>
              <P>(G) A complete summary of all pertinent evidence and the status of any legal proceedings involving the contractor.</P>
              <P>(H) An estimate of any damages sustained by the Government as a result of the contractor's action (explain how the estimate was calculated).</P>
              <P>(I) If a contracting office initiates the report, the comments and recommendations of the contracting officer and of each higher-level contracting review authority regarding—</P>
              <P>(<E T="03">1</E>) Whether to suspend or debar the contractor;</P>
              <P>(<E T="03">2</E>) Whether to apply limitations to the suspension or debarment;</P>
              <P>(<E T="03">3</E>) The period of any recommended debarment; and</P>
              <P>(<E T="03">4</E>) Whether to continue any current contracts with the contractor (or explain why a recommendation regarding current contracts is not included).</P>
              <P>(J) When appropriate, as an enclosure to the report—</P>
              <P>(<E T="03">1</E>) A copy or pertinent extracts of each pertinent contract;</P>
              <P>(<E T="03">2</E>) Witness statements or affidavits;</P>
              <P>(<E T="03">3</E>) Copies of investigative reports when authorized by the investigative agency;</P>
              <P>(<E T="03">4</E>) Certified copies of indictments, judgments, and sentencing actions;</P>
              <P>(<E T="03">5</E>) A copy of any available determinations of nonresponsibility in accordance with FAR 9.105-2(a)(1); and</P>
              <P>(<E T="03">6</E>) Any other appropriate exhibits or documentation.</P>
              <P>(iii) Send three copies of each report, including enclosures, to the appropriate debarring and suspending official.</P>
              <P>(iv) If a referral lacks sufficient evidence of a cause for debarment, the debarring and suspending official may initiate a review or investigation, as appropriate, by reporting the referral to the appropriate Government entity, e.g., contracting activity, inspector general, or criminal investigative agency.</P>
              <P>(b) <E T="03">Decisionmaking process.</E>
              </P>
              <P>(i) The agency debarring and suspending official may initiate the debarment process by issuing a notice of proposed debarment in accordance with FAR 9.406-3(c) when the debarring and suspending official finds that the administrative record contains sufficient evidence of one or more of the causes for debarment stated in FAR 9.406-2 or 209.406-2.</P>
              <P>(A) The absence of a referral in accordance with paragraph (a)(i) of this subsection, or the absence of any information specified in the report format in paragraph (a)(ii) of this subsection, will not preclude the debarring and suspending official from making such a finding.</P>
              <P>(B) The signature of the debarring and suspending official on the notice of proposed debarment is sufficient evidence that the debarring and suspending official has made such a finding.</P>

              <P>(ii) The agency debarring and suspending official must use the decisionmaking process stated in FAR 9.406-3(b), DFARS Appendix H, and any agency-specific procedures that were <PRTPAGE P="73"/>provided to the contractor in advance of the decision.</P>
              <P>(d) <E T="03">Debarring official's decision.</E> The absence of a referral in accordance with paragraph (a)(i) of this subsection, or the absence of any information specified in the report format in paragraph (a)(ii) of this subsection, will not preclude the debarring and suspending official from making a decision.</P>
              <CITA>[64 FR 62985, Nov. 18, 1999; 65 FR 4864, Feb. 1, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>209.407</SECTNO>
              <SUBJECT>Suspension.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>209.407-3</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <P>(a) <E T="03">Investigation and referral.</E>
              </P>
              <P>(i) Refer all matters appropriate for consideration by an agency debarring and suspending official as soon as practicable to the appropriate debarring and suspending official identified in 209.403. Any person may refer a matter to the debarring and suspending official.</P>
              <P>(ii) Use the format at 209.406-3(a)(ii) when referring a matter to the agency debarring and suspending official for consideration. To the extent practicable, provide all information specified in the format.</P>
              <P>(iii) If a referral lacks sufficient evidence of a cause for suspension, the debarring and suspending official may initiate a review or investigation, as appropriate, by reporting the referral to the appropriate Government entity, e.g., contracting activity, inspector general, or criminal investigative agency.</P>
              <P>(b) <E T="03">Decisionmaking process.</E>
              </P>
              <P>(i) The agency debarring and suspending official may initiate the suspension process by issuing a notice of suspension in accordance with FAR 9.407-3(c) when the debarring and suspending official finds that the administrative record contains sufficient evidence of one or more of the causes for suspension stated in FAR 9.407-2.</P>
              <P>(A) The absence of a referral in accordance with paragraph (a)(i) of this subsection, or the absence of any information specified in the report format at 209.406-3(a)(ii), will not preclude the debarring and suspending official from making such a finding.</P>
              <P>(B) The signature of the debarring and suspending official on the notice of suspension is sufficient evidence that the debarring and suspending official has made such a finding.</P>
              <P>(ii) In deciding whether to terminate a suspension following a submission of matters in opposition, the agency debarring and suspending official must use the decisionmaking process stated in FAR 9.407-3(b), DFARS Appendix H, and any agency-specific procedures that were provided to the contractor in advance of the decision.</P>
              <P>(d) <E T="03">Suspending official's decision.</E> The absence of a referral in accordance with paragraph (a)(i) of this subsection, or the absence of any information specified in the report format at 209.406-3(a)(ii), will not preclude the debarring and suspending official from making a decision.</P>
              <CITA>[64 FR 62985, Nov. 18, 1999; 65 FR 4864, Feb. 1, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>209.409</SECTNO>
              <SUBJECT>Solicitation provision and contract clause.</SUBJECT>
              <P>Use the clause at 252.209-7004, Subcontracting with Firms That Are Owned or Controlled by the Government of a Terrorist Country, in solicitations and contracts with a value of $100,000 or more.</P>
              <CITA>[63 FR 14837, Mar. 27, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>209.470</SECTNO>
              <SUBJECT>Reserve Officer Training Corps and military recruiting on campus.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>209.470-1</SECTNO>
              <SUBJECT>Definition.</SUBJECT>
              <P>
                <E T="03">Institution of higher education,</E> as used in this section, means an institution that meets the requirements of 20 U.S.C. 1001 and includes all subelements of such an institution.</P>
              <CITA>[65 FR 2056, Jan. 13, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>209.470-2</SECTNO>
              <SUBJECT>Policy.</SUBJECT>

              <P>(a) Except as provided in paragraph (b) of this subsection, 10 U.S.C. 983 prohibits DoD from providing funds by contract or grant to an institution of higher education if the Secretary of Defense determines that the institution has a policy or practice that prohibits or in effect prevents—<PRTPAGE P="74"/>
              </P>
              <P>(1) The Secretary of a military department from maintaining, establishing, or operating a unit of the Senior Reserve Officer Training Corps (ROTC) at that institution;</P>
              <P>(2) A student at that institution from enrolling in a unit of the senior ROTC at another institution of higher education;</P>
              <P>(3) The Secretary of a military department or the Secretary of Transportation from gaining entry to campuses, or access to students on campuses, for purposes of military recruiting; or</P>
              <P>(4) Military recruiters from accessing certain information pertaining to students enrolled at that institution.</P>
              <P>(b) The prohibition in paragraph (a) of this subsection does not apply to an institution of higher education if the Secretary of Defense determines that—</P>
              <P>(1) The institution has ceased the policy or practice described in paragraph (a) of this subsection; or</P>
              <P>(2) The institution has a long-standing policy of pacifism based on historical religious affiliation.</P>
              <CITA>[65 FR 2056, Jan. 13, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>209.470-3</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <P>If the Secretary of Defense determines that an institution of higher education is ineligible to receive DoD funds because of a policy or practice described in 209.470-2(a)—</P>
              <P>(a) The Secretary of Defense will list the institution on the List of Parties Excluded from Federal Procurement and Nonprocurement Programs published by General Services Administration (also see FAR 9.404 and 32 CFR part 216); and</P>
              <P>(b) DoD components—</P>
              <P>(1) Shall not solicit offers from, award contracts to, or consent to subcontracts with the institution;</P>
              <P>(2) Shall make no further payments under existing contracts with the institution; and</P>
              <P>(3) Shall terminate existing contracts with the institution.</P>
              <CITA>[65 FR 2057, Jan. 13, 2000, as amended at 67 FR 49254, July 30, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>209.470-4</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <P>Use the clause at 252.209-7005, Reserve Officer Training Corps and Military Recruiting on Campus, in all solicitations and contracts with institutions of higher education.</P>
              <CITA>[65 FR 2057, Jan. 13, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>209.471</SECTNO>
              <SUBJECT>Congressional Medal of Honor.</SUBJECT>
              <P>In accordance with Section 8118 of Pub. L. 105-262, do not award a contract to, extend a contract with, or approve the award of a subcontract to any entity that, within the preceding 15 years, has been convicted under 18 U.S.C. 704 of the unlawful manufacture or sale of the Congressional Medal of Honor. Any entity so convicted will be listed as ineligible on the List of Parties Excluded from Federal Procurement and Nonprocurement Programs published by the General Services Administration.</P>
              <CITA>[64 FR 31733, June 14, 1999]</CITA>
            </SECTION>
          </SUBPART>
        </PART>
        <PART>
          <EAR>Pt. 210</EAR>
          <HD SOURCE="HED">PART 210—MARKET RESEARCH</HD>
          <AUTH>
            <HD SOURCE="HED">Authority:</HD>
            <P>41 U.S.C. 421 and 48 CFR Chapter 1.</P>
          </AUTH>
          <SOURCE>
            <HD SOURCE="HED">Source:</HD>
            <P>67 FR 20688, Apr. 26, 2002, unless otherwise noted.</P>
          </SOURCE>
          <SECTION>
            <SECTNO>210.001</SECTNO>
            <SUBJECT>Policy.</SUBJECT>
            <P>(a) Also conduct market research before purchasing a product listed in the Federal Prison Industries (FPI) Schedule. Use the results to determine whether the FPI product is comparable to products available from the private sector that best meet the Government's needs in terms of price, quality, and time of delivery. (See subpart 208.6.)</P>
          </SECTION>
        </PART>
        <PART>
          <EAR>Pt. 211</EAR>
          <HD SOURCE="HED">PART 211—DESCRIBING AGENCY NEEDS</HD>
          <CONTENTS>
            <SECHD>Sec.</SECHD>
            <SECTNO>211.002</SECTNO>
            <SUBJECT>Policy.</SUBJECT>
            <SECTNO>211.002-70</SECTNO>
            <SUBJECT>Contract clause.</SUBJECT>
            <SUBPART>
              <HD SOURCE="HED">Subpart 211.1—Selecting and Developing Requirements Documents</HD>
              <SECTNO>211.107</SECTNO>
              <SUBJECT>Solicitation provision.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 211.2—Using and Maintaining Requirements Documents</HD>
              <SECTNO>211.201</SECTNO>
              <SUBJECT>Identification and availability of specifications.</SUBJECT>
              <SECTNO>211.204</SECTNO>
              <SUBJECT>Solicitation provisions and contract clauses.</SUBJECT>
              <SECTNO>211.270</SECTNO>
              <SUBJECT>[Reserved]<PRTPAGE P="75"/>
              </SUBJECT>
              <SECTNO>211.271</SECTNO>
              <SUBJECT>Elimination of use of class I ozone-depleting substances.</SUBJECT>
              <SECTNO>211.272</SECTNO>
              <SUBJECT>Alternate preservation, packaging, and packing.</SUBJECT>
              <SECTNO>211.273</SECTNO>
              <SUBJECT>Substitutions for military or Federal specifications and standards.</SUBJECT>
              <SECTNO>211.273-1</SECTNO>
              <SUBJECT>Definition.</SUBJECT>
              <SECTNO>211.273-2</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>211.273-3</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <SECTNO>211.273-4</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 211.5—Liquidated Damages</HD>
              <SECTNO>211.503</SECTNO>
              <SUBJECT>Contract clauses.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 211.6—Priorities and Allocations</HD>
              <SECTNO>211.602</SECTNO>
              <SUBJECT>General.</SUBJECT>
            </SUBPART>
          </CONTENTS>
          <AUTH>
            <HD SOURCE="HED">Authority:</HD>
            <P>41 U.S.C. 421 and 48 CFR Chapter 1.</P>
          </AUTH>
          <SOURCE>
            <HD SOURCE="HED">Source:</HD>
            <P>60 FR 61594, Nov. 30, 1995, unless otherwise noted.</P>
          </SOURCE>
          <SECTION>
            <SECTNO>211.002</SECTNO>
            <SUBJECT>Policy.</SUBJECT>
            <P>All systems acquisition programs in the DoD are subject to the acquisition streamlining policies and procedures in DoDI 5000.2, Defense Acquisition Management Policies and Procedures.</P>
          </SECTION>
          <SECTION>
            <SECTNO>211.002-70</SECTNO>
            <SUBJECT>Contract clause.</SUBJECT>
            <P>Use the clause at 252.211-7000, Acquisition Streamlining, in all</P>
          </SECTION>
          <SUBPART>
            <HD SOURCE="HED">Subpart 211.1—Selecting and Developing Requirements Documents</HD>
            <SECTION>
              <SECTNO>211.107</SECTNO>
              <SUBJECT>Solicitation provision.</SUBJECT>
              <P>(b) DoD uses the categorical method of reporting. Do not use the provision at FAR 52.211-7, Alternatives to Government-Unique Standards, in DoD solicitations.</P>
              <CITA>[65 FR 6553, Feb. 10, 2000]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 211.2—Using and Maintaining Requirements Documents</HD>
            <SECTION>
              <SECTNO>211.201</SECTNO>
              <SUBJECT>Identification and availability of specifications.</SUBJECT>
              <P>(a) The DoD index of data item descriptions is DoD 5010.12-L, Acquisition Management Systems and Data Requirements Control List (AMSDL).</P>
              <P>(b) Also, furnish data item descriptions that are not listed in the AMSDL, except when it is not feasible, e.g., documents are bulky or only a limited number of copies are available at the contracting activity.</P>
              <P>(d) The AMSDL, all unclassified specifications and standards listed in the DODISS, and data item descriptions listed in the AMSDL also may be obtained from the Department of Defense Single Stock Point (DoDSSP), Building 4, Section D, 700 Robbins Avenue, Philadelphia, PA 19111-5094; telephone (215) 697-2179; http://assist.daps.mil. Include with the request—</P>
              <P>(i) The requester's customer number; and</P>
              <P>(ii) Complete return mailing address, including any “mark for” instructions.</P>
              <CITA>[60 FR 61594, Nov. 30, 1995, as amended at 64 FR 8727, Feb. 23, 1999; 64 FR 51075, Sept. 21, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>211.204</SECTNO>
              <SUBJECT>Solicitation provisions and contract clauses.</SUBJECT>
              <P>(c) When contract performance requires use of specifications and standards which are not listed in the DODISS and data item descriptions which are not listed in the AMSDL, use provisions, as appropriate, substantially the same as those at 252.211-7001, Availability of Specifications and Standards Not Listed in DODISS, Data Item Descriptions Not Listed in DoD 5010.12-L, and Plans, Drawings, and Other Pertinent Documents, and 252.211-7002, Availability for Examination of Specifications, Standards, Plans, Drawings, Data Item Descriptions, and Other Pertinent Documents.</P>
            </SECTION>
            <SECTION>
              <SECTNO>211.270</SECTNO>
              <RESERVED>[Reserved]</RESERVED>
            </SECTION>
            <SECTION>
              <SECTNO>211.271</SECTNO>
              <SUBJECT>Elimination of use of class I ozone-depleting substances.</SUBJECT>
              <P>(a) <E T="03">Contracts.</E> No DoD contract may include a specification or standard that requires the use of a class I ozone-depleting substance or that can be met only through the use of such a substance unless the inclusion of the specification or standard is specifically authorized at a level no lower than a general or flag officer or member of the Senior Executive Service of the requiring activity in accordance with Section 326, Public Law 102-484 (10 U.S.C. 2301 (repealed) note).</P>
              <P>(b) <E T="03">Modifications.</E> (1) Contracts awarded before June 1, 1993, with a value in excess of $10 million, that are modified <PRTPAGE P="76"/>or extended (including option exercise) and, as a result of the modification or extension will expire more than one year after the effective date of the modification or extension, must be evaluated in accordance with agency procedures for the elimination of ozone-depleting substances.</P>
              <P>(i) The evaluation must be carried out within 60 days after the first modification or extension.</P>
              <P>(ii) No further modification or extension may be made to the contract until the evaluation is complete.</P>
              <P>(2) If, as a result of this evaluation, it is determined that an economically feasible substitute substance or alternative technology is available, the contracting officer shall modify the contract to require the use of the substitute substance or alternative technology.</P>
              <P>(3) If a substitute substance or alternative technology is not available, a written determination shall be made to that effect at a level no lower than a general or flag officer or member of the Senior Executive Service of the requiring activity.</P>
            </SECTION>
            <SECTION>
              <SECTNO>211.272</SECTNO>
              <SUBJECT>Alternate preservation, packaging, and packing.</SUBJECT>
              <P>Use the provision at 252.211-7004, Alternate Preservation, Packaging, and Packing, in solicitations which include military preservation, packaging, or packing specifications when it is feasible to evaluate and award using commercial or industrial preservation, packaging, or packing.</P>
            </SECTION>
            <SECTION>
              <SECTNO> 211.273</SECTNO>
              <SUBJECT>Substitutions for military or Federal specifications and standards.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>211.273-1</SECTNO>
              <SUBJECT>Definition.</SUBJECT>
              <P>
                <E T="03">SPI process,</E> as used in this section, is defined in the clause at 252.211-7005, Substitutions for Military or Federal Specifications and Standards.</P>
              <CITA>[62 FR 44224, Aug. 20, 1997]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>211.273-2</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>(a) Under the Single Process Initiative (SPI), DoD accepts SPI processes in lieu of specific military or Federal specifications or standards that specify a management or manufacturing process.</P>
              <P>(b) DoD acceptance of an SPI process follows the decision of a Management Council, which includes representatives of the contractor, the Defense Contract Management Agency, the Defense Contract Audit Agency, and the military departments.</P>
              <P>(c) In procurements of previously developed items, SPI processes that previously were accepted by the Management Council shall be considered valid replacements for military or Federal specifications or standards, absent a specific determination to the contrary (see 211.273-3(c)).</P>
              <CITA>[62 FR 44224, Aug. 20, 1997, as amended at 64 FR 14399, Mar. 25, 1999; 65 FR 52952, Aug. 31, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>211.273-3</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <P>(a) Solicitations for previously developed items shall encourage offerors to identify SPI processes for use in lieu of military or Federal specifications and standards cited in the solicitation. Use of the clause at 252.211-7005 satisfies this requirement.</P>
              <P>(b) Contracting officers shall ensure that—</P>
              <P>(1) Concurrence of the requiring activity is obtained for any proposed substitutions prior to contract award;</P>
              <P>(2) Any necessary additional information regarding the SPI process identified in the proposal is obtained from the cognizant administrative contracting officer; and</P>
              <P>(3) In competitive procurements, prospective offerors are provided the opportunity to obtain verification that an SPI process is an acceptable replacement for a military or Federal specification or standard for the particular procurement prior to the date specified for receipt of offers.</P>
              <P>(c) Any determination that an SPI process is not acceptable for a specific procurement shall be made prior to contract award at the head of the contracting activity or program executive officer level. This authority may not be delegated.</P>
              <CITA>[64 FR 14399, Mar. 25, 1999]</CITA>
            </SECTION>
            <SECTION>
              <PRTPAGE P="77"/>
              <SECTNO>211.273-4</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <P>Use the clause at 252.211-7005, Substitutions for Military or Federal Specifications and Standards, in solicitations and contracts exceeding the micro-purchase threshold, when procuring previously developed items.</P>
              <CITA>[62 FR 44224, Aug. 20, 1997]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 211.5—Liquidated Damages</HD>
            <SECTION>
              <SECTNO>211.503</SECTNO>
              <SUBJECT>Contract clauses.</SUBJECT>
              <P>(b) Use the clause at FAR 52.211-12, Liquidated Damages—Construction, in all construction contracts exceeding $500,000, except cost-plus-fixed-fee contracts or contracts where the contractor cannot control the pace of the work. Use of the clause in contracts of $500,000 or less is optional.</P>
              <CITA>[60 FR 61594, Nov. 30, 1995. Redesignated at 66 FR 49861, Oct. 1, 2001]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 211.6—Priorities and Allocations</HD>
            <SECTION>
              <SECTNO>211.602</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <P>DoD implementation of the Defense Priorities and Allocations System is in DoDD 4400.1, Defense Production Act Programs.</P>
              <CITA>[64 FR 51075, Sept. 21, 1999]</CITA>
            </SECTION>
          </SUBPART>
        </PART>
        <PART>
          <EAR>Pt. 212</EAR>
          <HD SOURCE="HED">PART 212—ACQUISITION OF COMMERCIAL ITEMS</HD>
          <CONTENTS>
            <SUBPART>
              <HD SOURCE="HED">Subpart 212.1—Acquisition of Commercial Items—General</HD>
              <SECHD>Sec.</SECHD>
              <SECTNO>212.102</SECTNO>
              <SUBJECT>Applicability.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 212.2—Special Requirements for the Acquisition of Commercial Items</HD>
              <SECTNO>212.211</SECTNO>
              <SUBJECT>Technical data.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 212.3—Solicitation Provisions and Contract Clauses for the Acquisition of Commercial Items</HD>
              <SECTNO>212.301</SECTNO>
              <SUBJECT>Solicitation provisions and contract clauses for the acquisition of commercial items.</SUBJECT>
              <SECTNO>212.302</SECTNO>
              <SUBJECT>Tailoring of provisions and clauses for the acquisition of commercial items.</SUBJECT>
              <SECTNO>212.303</SECTNO>
              <SUBJECT>Contract format.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 212.5—Applicability of Certain Laws to the Acquisition of Commercial Items</HD>
              <SECTNO>212.503</SECTNO>
              <SUBJECT>Applicability of certain laws to Executive agency contracts for the acquisition of commercial items.</SUBJECT>
              <SECTNO>212.504</SECTNO>
              <SUBJECT>Applicability of certain laws to subcontracts for the acquisition of commercial items.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 212.6—Streamlined Procedures for Evaluation and Solicitation for Commercial Items</HD>
              <SECTNO>212.602</SECTNO>
              <SUBJECT>Streamlined evaluation of offers.</SUBJECT>
            </SUBPART>
          </CONTENTS>
          <AUTH>
            <HD SOURCE="HED">Authority:</HD>
            <P>41 U.S.C. 421 and 48 CFR Chapter 1.</P>
          </AUTH>
          <SOURCE>
            <HD SOURCE="HED">Source:</HD>
            <P>60 FR 61595, Nov. 30, 1995, unless otherwise noted.</P>
          </SOURCE>
          <SUBPART>
            <HD SOURCE="HED">Subpart 212.1—Acquisition of Commercial Items—General</HD>
            <SECTION>
              <SECTNO>212.102</SECTNO>
              <SUBJECT>Applicability.</SUBJECT>
              <P>(a)(i) In accordance with Section 821 of the National Defense Authorization Act for Fiscal Year 2001 (Public Law 106-398), the contracting officer also may use FAR part 12 for any performance-based contracting for services if the procedures in FAR Subpart 13.5 are not used, and the contract or task order—</P>
              <P>(A) Is entered into on or before October 30, 2003;</P>
              <P>(B) Has a value of $5 million or less;</P>
              <P>(C) Meets the definition of performance-based contracting at FAR 2.101;</P>
              <P>(D) Uses quality assurance surveillance plans;</P>
              <P>(E) Includes performance incentives where appropriate;</P>
              <P>(F) Specifies a firm-fixed price; and</P>
              <P>(G) Is awarded to an entity that provides similar services at the same time to the general public under terms and conditions similar to those in the contract.</P>
              <P>(ii) In exercising the authority specified in paragraph (a)(i) of this section, the contracting officer should modify paragraph (a) of the clause at FAR 52.212-4 as may be necessary to ensure the contract's remedies adequately protect the Government's interests.</P>
              <CITA>[66 FR 63336, Dec. 6, 2001]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <PRTPAGE P="78"/>
            <HD SOURCE="HED">Subpart 212.2—Special Requirements for the Acquisition of Commercial Items</HD>
            <SECTION>
              <SECTNO>212.211</SECTNO>
              <SUBJECT>Technical data.</SUBJECT>
              <P>The DoD policy for acquiring technical data for commercial items is at 227.7102.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 212.3—Solicitation Provisions and Contract Clauses for the Acquisition of Commercial Items</HD>
            <SECTION>
              <SECTNO>212.301</SECTNO>
              <SUBJECT>Solicitation provisions and contract clauses for the acquisition of commercial items.</SUBJECT>
              <P>(b)(2) Paragraph (b) of the provision at FAR 52.212-3 does not apply when the solicitation includes the clause at 252.204-7004, Required Central Contractor Registration.</P>
              <P>(f)(i) Use one of the following provisions as prescribed in part 225:</P>
              <P>(A) 252.225-7000, Buy American Act—Balance of Payments Program Certificate.</P>
              <P>(B) 252.225-7006, Buy American Act—Trade Agreements—Balance of Payments Program Certificate.</P>
              <P>(C) 252.225-7020, Trade Agreements Certificate.</P>
              <P>(D) 252.225-7035, Buy American Act—North American Free Trade Agreement Implementation Act—Balance of Payments Program Certificate.</P>
              <P>(ii) Use the provision at 252.212-7000, Offeror Representations and Certifications—Commercial Items, in all solicitations for commercial items exceeding the simplified acquisition threshold. If an exception to 10 U.S.C. 2410i applies to a solicitation exceeding the simplified acquisition threshold (see 225.770-3), indicate on an addendum that “The certification in paragraph (b) of the provision at 252.212-7000 does not apply to this solicitation.”</P>
              <P>(iii) Use the clause at 252.212-7001, Contract Terms and Conditions Required to Implement Statutes or Executive Orders Applicable to Defense Acquisitions of Commercial Items, in all solicitations and contracts for commercial items, completing paragraphs (a) and (b), as appropriate.</P>
              <P>(iv) Use the clause at 252.204-7004, Required Central Contractor Registration, as prescribed in 204.7304.</P>
              <P>(v) Use the provision at 252.209-7001, Disclosure of Ownership or Control by the Government of a Terrorist Country, as prescribed in 209.104-70(a).</P>
              <P>(vi) Use the provision at 252.225-7017, Prohibition on Award to Companies Owned by the People's Republic of China, as prescribed in 225.771.</P>
              <P>(vii) Use the clause at 252.232-7009, Mandatory Payment by Governmentwide Commercial Purchase Card, as prescribed in 232.1110.</P>
              <P>(3) A contracting officer supporting a contingency operation as defined in 10 U.S.C. 101(a)(13) or a humanitarian or peacekeeping operation as defined in 10 U.S.C. 2302(8) also may use the Governmentwide commercial purchase card to make a purchase that exceeds the micro-purchase threshold but does not exceed the simplified acquisition threshold, if;</P>
              <P>(i) The supplies or services being purchased are immediately available;</P>
              <P>(ii) One delivery and one payment will be made; and</P>
              <P>(iii) The requirements of paragraphs (2)(i) and (ii) of this section are met.</P>
              <CITA>[60 FR 61595, Nov. 30, 1995, as amended at 61 FR 50452, Sept. 26, 1996; 62 FR 34122, June 24, 1997; 63 FR 11528, Mar. 9, 1998; 63 FR 15317, Mar. 31, 1998; 64 FR 8728, Feb. 23, 1999; 64 FR 43101, Aug. 9, 1999; 65 FR 46625, July 31, 2000; 66 FR 49861, Oct. 1, 2001; 66 FR 55122, 55123, Nov. 1, 2001]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>212.302</SECTNO>
              <SUBJECT>Tailoring of provisions and clauses for the acquisition of commercial items.</SUBJECT>
              <P>(c) <E T="03">Tailoring inconsistent with customary commercial practice.</E>
              </P>
              <P>The head of the contracting activity is the approval authority within the DoD for waivers under FAR 12.302(c).</P>
            </SECTION>
            <SECTION>
              <SECTNO>212.303</SECTNO>
              <SUBJECT>Contract format.</SUBJECT>

              <P>Structure awards valued above the micro-purchase threshold (<E T="03">e.g.,</E> contract line items, delivery schedule, and invoice instructions) in a manner that will minimize the generation of invoices valued at or below the micro-purchase threshold.</P>
              <CITA>[65 FR 46625, July 31, 2000]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <PRTPAGE P="79"/>
            <HD SOURCE="HED">Subpart 212.5—Applicability of Certain Laws to the Acquisition of Commercial Items</HD>
            <SECTION>
              <SECTNO>212.503</SECTNO>
              <SUBJECT>Applicability of certain laws to Executive agency contracts for the acquisition of commercial items.</SUBJECT>
              <P>(a) The following laws are not applicable to contracts for the acquisition of commercial items:</P>
              <P>(i) Section 806, Public Law 102-190 (10 U.S.C. 2301 (repealed) note), Payment Protections for Subcontractors and Suppliers.</P>
              <P>(ii) 10 U.S.C. 2306(b), Prohibition on Contingent Fees.</P>
              <P>(iii) 10 U.S.C. 2324, Allowable Costs Under Defense Contracts.</P>
              <P>(iv) 10 U.S.C. 2384(b), Requirement to Identify Suppliers.</P>
              <P>(v) 10 U.S.C. 2397(a)(1), Reports by Employees or Former Employees of Defense Contractors.</P>
              <P>(vi) 10 U.S.C. 2397b(f), Limits on Employment for Former DoD Officials.</P>
              <P>(vii) 10 U.S.C. 2397c, Defense Contractor Requirements Concerning Former DoD Officials.</P>
              <P>(viii) 10 U.S.C. 2408(a), Prohibition on Persons Convicted of Defense Related Felonies.</P>
              <P>(ix) 10 U.S.C. 2410b, Contractor Inventory Accounting System Standards (see 252.242-7004).</P>
              <P>(x) 107 Stat 1720 (Section 843(a), Public Law 103-160), Reporting Requirement Regarding Dealings with Terrorist Countries.</P>
              <P>(xi) Domestic Content Restrictions in the National Defense Appropriations Acts for Fiscal Years 1996 and Subsequent Years, unless the restriction specifically applies to commercial items. For the restriction that specifically applies to commercial ball or roller bearings as end items, see 225.7019-2(b) (Section 8064 of Public Law 106-259).</P>
              <P>(c) The applicability of the following laws has been modified in regard to contracts for the acquisition of commercial items:</P>
              <P>(i) 10 U.S.C. 2402, Prohibition on Limiting Subcontractor Direct Sales to the United States (see FAR 3.503 and 52.203-6).</P>
              <P>(ii) 10 U.S.C. 2306a, Truth in Negotiations Act (see FAR 15.403-4).</P>
              <CITA>[60 FR 61595, Nov. 30, 1995, as amended at 63 FR 11851, Mar. 11, 1998; 63 FR 55040, Oct. 14, 1998; 65 FR 77828, Dec. 13, 2000; 67 FR 4208, Jan. 29, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>212.504</SECTNO>
              <SUBJECT>Applicability of certain laws to subcontracts for the acquisition of commercial items.</SUBJECT>
              <P>(a) The following laws are not applicable to subcontracts at any tier for the acquisition of commercial items or commercial components:</P>
              <P>(i) [Reserved]</P>
              <P>(ii) Section 806, Public Law 102-190 (10 U.S.C. 2301 (repealed) note), Payment Protections for Subcontractors and Suppliers.</P>
              <P>(iii) 10 U.S.C. 2306(b) Prohibition on Contingent Fees.</P>
              <P>(iv) 10 U.S.C. 2313(c), Examination of Records of a Contractor.</P>
              <P>(v) 10 U.S.C. 2320, Rights in Technical Data.</P>
              <P>(vi) 10 U.S.C. 2321, Validation of Proprietary Data Restrictions.</P>
              <P>(vii) 10 U.S.C. 2324, Allowable Costs Under Defense Contracts.</P>
              <P>(viii) 10 U.S.C. 2327, Reporting Requirement Regarding Dealings with Terrorist Countries.</P>
              <P>(ix) 10 U.S.C. 2384(b), Requirement to Identify Suppliers.</P>
              <P>(x) 10 U.S.C. 2391 note, Notification of Substantial Impact on Employment.</P>
              <P>(xi) 10 U.S.C. 2393, Prohibition Against Doing Business with Certain Offerors or Contractors.</P>
              <P>(xii) 10 U.S.C. 2397(a)(1), Reports by Employees or Former Employees of Defense Contractors.</P>
              <P>(xiii) 10 U.S.C. 2397b(f), Limits on Employment for Former DoD Officials.</P>
              <P>(xiv) 10 U.S.C. 2397c, Defense Contractor Requirements Concerning Former DoD Officials.</P>
              <P>(xv) 10 U.S.C. 2408(a) Prohibition on Persons Convicted of Defense Related Felonies.</P>
              <P>(xvi) 10 U.S.C. 2410b, Contractor Inventory Accounting System Standards.</P>
              <P>(xvii) 10 U.S.C. 2501 note, Notification of Proposed Program Termination.</P>
              <P>(xviii) 10 U.S.C. 2534, Miscellaneous Limitations on the Procurement of Goods Other Than United States Goods.</P>
              <P>(xix)-(xxi) [Reserved]<PRTPAGE P="80"/>
              </P>
              <P>(xxii) 10 U.S.C. 2631, Transportation of Supplies by Sea (except as provided in the clause at 252.247-7023, Transportation of Supplies by Sea).</P>
              <P>(xxiii) 19 U.S.C. 2512, Trade Agreements Act.</P>
              <P>(xxiv) 41 U.S.C. 10, Buy American Act.</P>
              <P>(xxv) Domestic Content Restrictions in the National Defense Appropriations Acts for Fiscal Years 1996 and Subsequent Years, unless the restriction specifically applies to commercial items. For the restriction that specifically applies to commercial ball or roller bearings as end items, see 225.7019-2(b) (Section 8064 of Public Law 106-259).</P>
              <P>(b) Certain requirements of the following laws have been eliminated for subcontracts at any tier for the acquisition of commercial items or commercial components:</P>
              <P>(i) 10 U.S.C. 2393(d), Subcontractor Reports Under Prohibition Against Doing Business with Certain Offerors (see FAR 52.209-6).</P>
              <P>(ii) 10 U.S.C. 2402, Prohibition on Limiting Subcontractor Direct Sales to the United States (see FAR 3.503 and 52.203-6).</P>
              <CITA>[60 FR 61595, Nov. 30, 1995, as amended at 61 FR 58488, Nov. 15, 1996; 62 FR 5780, Feb. 7, 1997; 65 FR 14401, Mar. 16, 2000; 65 FR 39704, June 27, 2000; 65 FR 77828, Dec. 13, 2000]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 212.6—Streamlined Procedures for Evaluation and Solicitation for Commercial Items</HD>
            <SECTION>
              <SECTNO>212.602</SECTNO>
              <SUBJECT>Streamlined evaluation of offers.</SUBJECT>
              <P>(b)(i) For the acquisition of transportation and transportation-related services, also consider evaluating offers in accordance with the criteria at 247.206(1).</P>
              <P>(ii) For the acquisition of transportation in supply contracts that will include a significant requirement for transportation of items outside the continental United States, also evaluate offers in accordance with the criterion at 247.301-71.</P>
              <P>(iii) For the direct purchase of ocean transportation services, also evaluate offers in accordance with the criterion at 247.572-2(c)(2).</P>
              <CITA>[65 FR 50143, Aug. 17, 2000]</CITA>
            </SECTION>
          </SUBPART>
        </PART>
      </SUBCHAP>
      <SUBCHAP TYPE="P">
        <PRTPAGE P="81"/>
        <HD SOURCE="HED">SUBCHAPTER C—CONTRACTING METHODS AND CONTRACT TYPES</HD>
        <PART>
          <EAR>Pt. 213</EAR>
          <HD SOURCE="HED">PART 213—SIMPLIFIED ACQUISITION PROCEDURES</HD>
          <CONTENTS>
            <SUBPART>
              <HD SOURCE="HED">Subpart 213.1—Procedures</HD>
              <SECHD>Sec.</SECHD>
              <SECTNO>213.101</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <SECTNO>213.106-3</SECTNO>
              <SUBJECT>Award and documentation.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 213.2—Actions at or Below the Micro-Purchase Threshold</HD>
              <SECTNO>213.270</SECTNO>
              <SUBJECT>Use of the Governmentwide commercial purchase card.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 213.3—Simplified Acquisition Methods</HD>
              <SECTNO>213.301</SECTNO>
              <SUBJECT>Governmentwide commercial purchase card.</SUBJECT>
              <SECTNO>213.302</SECTNO>
              <SUBJECT>Purchase orders.</SUBJECT>
              <SECTNO>213.302-3</SECTNO>
              <SUBJECT>Obtaining contractor acceptance and modifying purchase orders.</SUBJECT>
              <SECTNO>213.302-5</SECTNO>
              <SUBJECT>Clauses.</SUBJECT>
              <SECTNO>213.303</SECTNO>
              <SUBJECT>Blanket purchase agreements (BPAs).</SUBJECT>
              <SECTNO>213.303-5</SECTNO>
              <SUBJECT>Purchases under BPAs.</SUBJECT>
              <SECTNO>213.305</SECTNO>
              <SUBJECT>Imprest funds and third party drafts.</SUBJECT>
              <SECTNO>213.305-1</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <SECTNO>213.305-3</SECTNO>
              <SUBJECT>Conditions for use.</SUBJECT>
              <SECTNO>213.306</SECTNO>
              <SUBJECT>SF 44, Purchase Order-Invoice-Voucher.</SUBJECT>
              <SECTNO>213.307</SECTNO>
              <SUBJECT>Forms.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 213.4—Fast Payment Procedure</HD>
              <SECTNO>213.402</SECTNO>
              <SUBJECT>Conditions for use.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 213.70—Simplified Acquisition Procedures Under the 8(a) Program</HD>
              <SECTNO>213.7001</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>213.7002</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <SECTNO>213.7003</SECTNO>
              <SUBJECT>Purchase orders.</SUBJECT>
              <SECTNO>213.7003-1</SECTNO>
              <SUBJECT>Obtaining contractor acceptance and modifying purchase orders.</SUBJECT>
              <SECTNO>213.7003-2</SECTNO>
              <SUBJECT>Contract clauses.</SUBJECT>
            </SUBPART>
          </CONTENTS>
          <AUTH>
            <HD SOURCE="HED">Authority:</HD>
            <P>48 U.S.C. 421 and 48 CFR Chapter 1.</P>
          </AUTH>
          <SOURCE>
            <HD SOURCE="HED">Source:</HD>
            <P>64 FR 2596, Jan. 15, 1999, unless otherwise noted.</P>
          </SOURCE>
          <SUBPART>
            <HD SOURCE="HED">Subpart 213.1—Procedures</HD>
            <SECTION>
              <SECTNO>213.101</SECTNO>
              <SUBJECT>General.</SUBJECT>

              <P>Structure awards valued above the micro-purchase threshold (<E T="03">e.g.,</E> contract line items, delivery schedule, and invoice instructions) in a manner that will minimize the generation of invoices valued at or below the micro-purchase threshold.</P>
              <CITA>[65 FR 46625, July 31, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>§ 213.106-3</SECTNO>
              <SUBJECT>Award and documentation.</SUBJECT>
              <P>(e) The procedures at FAR 13.106-3(e) do not apply when the contract includes the clause at 252.204-7004, Required Central Contractor Registration.</P>
              <CITA>[64 FR 43101, Aug. 9, 1999]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 213.2—Actions at or Below the Micro-Purchase Threshold</HD>
            <SECTION>
              <SECTNO>213.270</SECTNO>
              <SUBJECT>Use of the Governmentwide commercial purchase card.</SUBJECT>
              <P>Use the Governmentwide commercial purchase card as the method of purchase and/or method of payment for purchases valued at or below the micro-purchase threshold. This policy applies to all types of contract actions authorized by the FAR unless—</P>
              <P>(a) The Deputy Secretary of Defense has approved an exception for an electronic commerce/electronic data interchange system or operational requirement that results in a more cost-effective payment process;</P>
              <P>(b)(1) A general or flag officer or a member of the Senior Executive Service (SES) makes a written determination that—</P>
              <P>(i) The source or sources available for the supply or service do not accept the purchase card; and</P>
              <P>(ii) The contracting office is seeking a source that accepts the purchase card.</P>
              <P>(2) To prevent mission delays, if an activity does not have a resident general or flag officer of SES member, delegation of this authority to the level of the senior local commander or director is permitted; or</P>
              <P>(c) The purchase or payment meets one or more of the following criteria:</P>

              <P>(1) The place of performance is entirely outside of any State, territory, or possession of the United States, the <PRTPAGE P="82"/>District of Columbia, and the Commonwealth of Puerto Rico.</P>
              <P>(2) The purchase is a Standard Form 44 purchase for aviation fuel or oil.</P>
              <P>(3) The purchase is an overseas transaction by a contracting officer in support of a contingency operation as defined in 10 U.S.C. 101(a)(13) or a humanitarian or peacekeeping operation as defined in 10 U.S.C. 2302(8).</P>
              <P>(4) The purchase is a transaction in support of intelligence or other specialized activities addressed by Part 2.7 of Executive Order 12333.</P>
              <P>(5) The purchase is for training exercises in preparation for overseas contingency, humanitarian, or peacekeeping operations.</P>
              <P>(6) The payment is made with an accommodation check.</P>
              <P>(7) The payment is for a transportation bill.</P>
              <P>(8) The purchase is under a Federal Supply Schedule contract that does not permit use of the Governmentwide commercial purchase card.</P>
              <P>(9) The purchase is for medical services and—</P>
              <P>(i) It involves a controlled substance or narcotic;</P>
              <P>(ii) It requires the submission of a Health Care Summary Record to document the nature of the care purchased;</P>
              <P>(iii) The ultimate price of the medical care is subject to an independent determination that changes the price paid based on application of a mandatory CHAMPUS Maximum Allowable Charge determination that reduces the Government liability below billed charges;</P>
              <P>(iv) The Government already has entered into a contract to pay for the services without the use of a purchase card;</P>
              <P>(v) The purchaser is a beneficiary seeking medical care; or</P>
              <P>(vi) The senior local commander or director of a hospital or laboratory determines that use of the purchase card is not appropriate or cost-effective. The Medical Prime Vendor Program and the DoD Medical Electronic Catalog Program are two examples where use of the purchase card may not be cost-effective.</P>
              <CITA>[65 FR 46626, July 31, 2000]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 213.3—Simplified Acquisition Methods</HD>
            <SECTION>
              <SECTNO>213.301</SECTNO>
              <SUBJECT> Governmentwide commercial purchase card.</SUBJECT>
              <P>(1) “United States,” as used in this section, means the 50 States and the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, the Commonwealth of the Northern Mariana Islands, Guam, American Samoa, Wake Island, Johnston Island, Canton Island, the outer Continental Shelf lands, and any other place subject to the jurisdiction of the United States (but not including leased bases).</P>
              <P>(2) An individual appointed in accordance with 201.603-3(b) also may use the Governmentwide commercial purchase card to make a purchase that exceeds the micro-purchase threshold but does not exceed $25,000, if—</P>
              <P>(i) The purchase—</P>
              <P>(A) Is made outside the United States for use outside the United States; and</P>
              <P>(B) Is for a commercial item; but</P>
              <P>(C) Is not for work to be performed by employees recruited within the United States;</P>
              <P>(D) Is not for supplies or services originating from, or transported from or through, sources identified in FAR Subpart 25.7;</P>
              <P>(E) Is not for ball or roller bearings as end items;</P>
              <P>(F) Does not require access to classified or Privacy Act information; and</P>
              <P>(G) Does not require transportation of supplies by sea; and</P>
              <P>(ii) The individual making the purchase—</P>
              <P>(A) Is authorized and trained in accordance with agency procedures;</P>
              <P>(B) Complies with the requirements of FAR 8.001 in making the purchase; and</P>
              <P>(C) Seeks maximum practicable competition for the purchase in accordance with FAR 13.104(b).</P>

              <P>(3) A contracting officer supporting a contingency operation as defined in 10 U.S.C. 101(a)(13) or a humanitarian or peacekeeping operation as defined in 10 U.S.C. 2302(8) also may use the Governmentwide commercial purchase card to make a purchase that exceeds the micro-purchase threshold but does not exceed the simplified acquisition threshold, if—<PRTPAGE P="83"/>
              </P>
              <P>(i) The supplies or services being purchased are immediately available;</P>
              <P>(ii) One delivery and one payment will be made; and</P>
              <P>(iii) The requirements of paragraphs (2)(i) and (ii) of this section are met.</P>
              <CITA>[64 FR 56705, Oct. 21, 1999; 64 FR 63380, Nov. 19, 1999, as amended at 66 FR 55123, Nov. 1, 2001; 66 FR 56902, Nov. 13, 2001; 67 FR 38021, May 31, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>213.302</SECTNO>
              <SUBJECT>Purchase orders.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>213.302-3</SECTNO>
              <SUBJECT>Obtaining contractor acceptance and modifying purchase orders.</SUBJECT>
              <P>(1) Require written acceptance of purchase orders for classified acquisitions.</P>
              <P>(2) Generally, use unilateral modifications (see FAR 43.103) for—</P>
              <P>(i) No-cost amended shipping instructions if—</P>
              <P>(A) The amended shipping instructions modify a unilateral purchase order; and</P>
              <P>(B) The contractor agrees orally or in writing; and</P>
              <P>(ii) Any change made before work begins if—</P>
              <P>(A) The change is within the scope of the original order;</P>
              <P>(B) The contractor agrees;</P>
              <P>(C) The modification references the contractor's oral or written agreement; and</P>
              <P>(D) Block 13D of Standard Form 30, Amendment of Solicitation/Modification of Contract, is annotated to reflect the authority for issuance of the modification.</P>
              <P>(3) A supplemental agreement converts a unilateral purchase order to a bilateral agreement. If not previously included in the purchase order, incorporate the clause at 252.243-7001, Pricing of Contract Modifications, in the Standard Form 30, and obtain the contractor's acceptance by signature on the Standard Form 30.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 213.302-5</SECTNO>
              <SUBJECT>Clauses.</SUBJECT>
              <P>(a) Use the clause at 252.243-7001, Pricing of Contract Modifications, in all bilateral purchase orders.</P>
              <P>(d) When using the clause at FAR 52.213-4, delete the reference to the clause at FAR 52.225-1, buy American Act-Balance of Payments Program-Supplies. Instead, if the Buy American Act applies to the acquisition, use the clause at—</P>
              <P>(i) 252.225-7001, Buy American Act and Balance of Payments Program, as prescribed at 225.1101(2); or</P>
              <P>(ii) 252.225-7036, Buy American Act-North American Free Trade Agreement Implementation Act-Balance of Payments Program, as prescribed at 225.1101(13).</P>
              <CITA>[64 FR 24528, May 7, 1999, as amended at 65 FR 19850, Apr. 13, 2000; 65 FR 39704, June 27, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>213.303</SECTNO>
              <SUBJECT>Blanket purchase agreements (BPAs).</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>213.303-5</SECTNO>
              <SUBJECT>Purchases under BPAs.</SUBJECT>
              <P>(b) Individual purchases for subsistence may be made at any dollar value; however, the contracting officer must satisfy the competition requirements of FAR Part 6 for any action not using simplified acquisition procedures.</P>
            </SECTION>
            <SECTION>
              <SECTNO>213.305</SECTNO>
              <SUBJECT>Imprest funds and third party drafts.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>213.305-1</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <P>(1) As a matter of policy, DoD does not support the use of cash payments from imprest funds. This policy is based, in part, on the mandatory electronic funds transfer requirements of the Debt Collection Improvement Act of 1996 (Pub. L. 104-134).</P>
              <P>(2) On a very limited basis, installation commanders and commanders of other activities with contracting authority may be granted authority to establish imprest funds and third party draft (accommodation check) accounts.</P>
              <P>(3) Third party draft accounts, when established in accordance with DoD 7000.14-R, DoD Financial Management Regulation, Volume 5, Disbursing Policy and Procedures—</P>
              <P>(i) Provide an alternative to cash and U.S. Treasury checks when the use of Government purchase or travel cards is not feasible;</P>
              <P>(ii) Eliminate the need for cash on hand for imprest fund transactions; and</P>
              <P>(iii) Give issuing activities the flexibility to issue low-volume and low-dollar value payment on site.</P>
            </SECTION>
            <SECTION>
              <PRTPAGE P="84"/>
              <SECTNO>213.305-3</SECTNO>
              <SUBJECT>Conditions for use.</SUBJECT>
              <P>(d)(i) Use of imprest funds—</P>
              <P>(A) Must comply with the conditions stated in—</P>
              <P>
                <E T="03">(1)</E> DoD 7000.14-R, DoD Financial Management Regulation, Volume 5, Disbursing Policy and Procedures; and</P>
              <P>
                <E T="03">(2)</E> The Treasury Financial Manual, Part 4, Chapter 3000, Section 3020; and</P>
              <P>(B) Except as provided in paragraph (d)(ii) of this subsection, requires approval by the Director for Financial Commerce, Office of the Deputy Chief Financial Officer, Office of the Under Secretary of Defense (Comptroller).</P>
              <P>(ii) Imprest funds are authorized for use without further approval for—</P>
              <P>(A) Overseas transactions at or below the micro-purchase threshold in support of a contingency operation as defined in 10 U.S.C. 101(a)(13) or a humanitarian or peacekeeping operation as defined in 10 U.S.C. 2302(7); and</P>
              <P>(B) Classified transactions.</P>
            </SECTION>
            <SECTION>
              <SECTNO>213.306</SECTNO>
              <SUBJECT>SF 44, Purchase Order-Invoice-Voucher.</SUBJECT>
              <P>(a)(1) The micro-purchase limitation applies to all purchases, except that purchases not exceeding the simplified acquisition threshold may be made for—</P>
              <P>(A) Aviation fuel and oil;</P>
              <P>(B) Overseas transactions by contracting officers in support of a contingency operation as defined in 10 U.S.C. 101(a)(13) or a humanitarian or peacekeeping operation as defined in 10 U.S.C. 2302(7); and</P>
              <P>(C) Transactions in support of intelligence and other specialized activities addressed by Part 2.7 of Executive Order 12333.</P>
            </SECTION>
            <SECTION>
              <SECTNO>213.307</SECTNO>
              <SUBJECT>Forms.</SUBJECT>
              <P>(a) If SF 1449 is not used, use DD Form 1155 in accordance with paragraph (b)(i) of this section.</P>
              <P>(b)(i) Use DD Form 1155, Order for Supplies or Services, for purchases made using simplified acquisition procedures.</P>
              <P>(A) The DD Form 1155 serves as a—</P>
              <P>
                <E T="03">(1)</E> Purchase order or blanket purchase agreement;</P>
              <P>
                <E T="03">(2)</E> Delivery order or task order;</P>
              <P>
                <E T="03">(3)</E> Receiving and inspection report;</P>
              <P>
                <E T="03">(4)</E> Property voucher;</P>
              <P>
                <E T="03">(5)</E> Document for acceptance by the supplier; and</P>
              <P>
                <E T="03">(6)</E> Public voucher, when used as—</P>
              <P>
                <E T="03">(i)</E> A delivery order;</P>
              <P>
                <E T="03">(ii)</E> The basis for payment of an invoice against blanket purchase agreements or basic ordering agreements when a firm-fixed-price has been established; or</P>
              <P>
                <E T="03">(iii)</E> A purchase order for acquisitions using simplified acquisition procedures.</P>
              <P>(B) The DD Form 1155 is also authorized for use for—</P>
              <P>
                <E T="03">(1)</E> Orders placed in accordance with FAR Subparts 8.4, 8.6, 8.7, and 16.5; and</P>
              <P>
                <E T="03">(2)</E> Classified acquisition when the purchase is made within the United States, its possessions, and Puerto Rico. Attach the DD Form 254, Contract Security Classification Specification, to the purchase order.</P>
              <P>(ii) Do not use Optional Form 347, Order for Supplies or Services, or Optional Form 348, Order for Supplies or Services Schedule—Continuation.</P>
              <P>(iii) Use Standard Form 30, Amendment of Solicitation/Modification of Contract, to—</P>
              <P>(A) Modify a purchase order; or</P>
              <P>(B) Cancel a unilateral purchase order.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 213.4—Fast Payment Procedure</HD>
            <SECTION>
              <SECTNO>213.402</SECTNO>
              <SUBJECT>Conditions for use.</SUBJECT>
              <P>(a) Individual orders may exceed the simplified acquisition threshold for—</P>
              <P>(i) Brand-name commissary resale subsistence; and</P>
              <P>(ii) Medical supplies for direct shipment overseas.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 213.70—Simplified Acquisition Procedures Under the 8(a) Program</HD>
            <SECTION>
              <SECTNO>213.7001</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>For sole source acquisitions under the 8(a) Program, contracting officers may use the procedures established in the Memorandum of Understanding cited in 219.800.</P>
            </SECTION>
            <SECTION>
              <PRTPAGE P="85"/>
              <SECTNO>213.7002</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <P>For acquisitions that are otherwise appropriate to be conducted using procedures set forth in this part, and also eligible for the 8(a) Program, contracting officers may use—</P>
              <P>(a)(1) For sole source purchase orders not exceeding the simplified acquisition threshold, the procedures in 219.804-2(2); or</P>
              <P>(2) For other types of acquisitions, the procedures in Subpart 219.8, excluding the procedures in 219.804-2(2); or</P>
              <P>(b) The procedures for award to the Small Business Administration in FAR Subpart 19.8.</P>
            </SECTION>
            <SECTION>
              <SECTNO>213.7003</SECTNO>
              <SUBJECT>Purchase orders.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>213.7003-1</SECTNO>
              <SUBJECT>Obtaining contractor acceptance and modifying purchase orders.</SUBJECT>
              <P>The contracting officer need not obtain a contractor's written acceptance of a purchase order or modification of a purchase order for an acquisition under the 8(a) Program pursuant to 219.804-2(2).</P>
            </SECTION>
            <SECTION>
              <SECTNO>213.7003-2</SECTNO>
              <SUBJECT>Contract clauses.</SUBJECT>
              <P>Use the clauses prescribed in 219.811-3 (1) and (3) for purchase orders under the 8(a) Program pursuant to the Memorandum of Understanding cited in 219.800.</P>
            </SECTION>
          </SUBPART>
        </PART>
        <PART>
          <EAR>Pt. 214</EAR>
          <HD SOURCE="HED">PART 214—SEALED BIDDING</HD>
          <CONTENTS>
            <SUBPART>
              <HD SOURCE="HED">Subpart 214.2—Solicitation of Bids</HD>
              <SECHD>Sec.</SECHD>
              <SECTNO>214.201-1</SECTNO>
              <SUBJECT>Uniform contract format.</SUBJECT>
              <SECTNO>214.202</SECTNO>
              <SUBJECT>General rules for solicitation of bids.</SUBJECT>
              <SECTNO>214.202-5</SECTNO>
              <SUBJECT>Descriptive literature.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 214.4—Opening of Bids and Award of Contract</HD>
              <SECTNO>214.404</SECTNO>
              <SUBJECT>Rejection of bids.</SUBJECT>
              <SECTNO>214.404-1</SECTNO>
              <SUBJECT>Cancellation of invitations after opening.</SUBJECT>
              <SECTNO>214.407</SECTNO>
              <SUBJECT>Mistakes in bids.</SUBJECT>
              <SECTNO>214.407-3</SECTNO>
              <SUBJECT>Other mistakes disclosed before award.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 214.5—Two-Step Sealed Bidding</HD>
              <SECTNO>214.503</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <SECTNO>214.503-1</SECTNO>
              <SUBJECT>Step one.</SUBJECT>
            </SUBPART>
          </CONTENTS>
          <AUTH>
            <HD SOURCE="HED">Authority:</HD>
            <P>41 U.S.C. 421 and 48 CFR chapter 1.</P>
          </AUTH>
          <SOURCE>
            <HD SOURCE="HED">Source:</HD>
            <P>56 FR 36326, July 31, 1991, unless otherwise noted.</P>
          </SOURCE>
          <SUBPART>
            <HD SOURCE="HED">Subpart 214.2—Solicitation of Bids</HD>
            <SECTION>
              <SECTNO>214.201-1</SECTNO>
              <SUBJECT>Uniform contract format.</SUBJECT>

              <P>Structure awards valued above the micro-purchase threshold (<E T="03">e.g.,</E> contract line items, delivery schedule, and invoice instructions) in a manner that will minimize the generation of invoices valued at or below the micro-purchase threshold.</P>
              <CITA>[65 FR 46626, July 31, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>214.202</SECTNO>
              <SUBJECT>General rules for solicitation of bids.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>214.202-5</SECTNO>
              <SUBJECT>Descriptive literature.</SUBJECT>
              <P>(d) <E T="03">Requirements of invitation for bids.</E> When brand name or equal purchase descriptions are used, use of the provision at FAR 52.211-6, Brand Name or Equal, satisfies this requirement.</P>
              <CITA>[56 FR 36326, July 31, 1991, as amended at 63 FR 11528, Mar. 9, 1998; 64 FR 55633, Oct. 14, 1999]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 214.4—Opening of Bids and Award of Contract</HD>
            <SECTION>
              <SECTNO>214.404</SECTNO>
              <SUBJECT>Rejection of bids.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>214.404-1</SECTNO>
              <SUBJECT>Cancellation of invitations after opening.</SUBJECT>
              <P>The contracting officer shall make the written determinations required by FAR 14.404-1 (c) and (e).</P>
            </SECTION>
            <SECTION>
              <SECTNO>214.407</SECTNO>
              <SUBJECT>Mistakes in bids.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>214.407-3</SECTNO>
              <SUBJECT>Other mistakes disclosed before award.</SUBJECT>
              <P>(e) Authority for making a determination under FAR 14.407-3(a), (b) and (d) is delegated for the defense agencies, without power of redelegation, as follows:</P>
              <P>(i) Defense Advanced Research Projects Agency: General Counsel, DARPA.</P>
              <P>(ii) Defense Information Systems Agency: General Counsel, DISA.</P>
              <P>(iii) Defense Intelligence Agency: Principal Assistant for Acquisition.</P>
              <P>(iv) Defense Logistics Agency:</P>
              <P>(A) General Counsel, DLA; and</P>
              <P>(B) Associate General Counsel, DLA.<PRTPAGE P="86"/>
              </P>
              <P>(v) National Imagery and Mapping Agency: General Counsel, NIMA.</P>
              <P>(vi) Defense Threat Reduction Agency: General Counsel, DTRA.</P>
              <P>(vii) National Security Agency: Director of Procurement, NSA.</P>
              <P>(viii) Ballistic Missile Defense Organization: General Counsel, BMDO.</P>
              <P>(h) Send a signed copy of the document authorizing correction of the bid to the appropriate finance center with its copy of the contract.</P>
              <CITA>[57 FR 42629, Sept. 15, 1992, as amended at 59 FR 27669, May 27, 1994; 61 FR 50452, Sept. 26, 1996. Redesignated and amended at 62 FR 34122, June 24, 1997; 64 FR 51076, Sept. 21, 1999]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 214.5—Two-Step Sealed Bidding</HD>
            <SECTION>
              <SECTNO>214.503</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>214.503-1</SECTNO>
              <SUBJECT>Step one.</SUBJECT>
              <P>(a) Requests for technical proposals may be in the form of a letter.</P>
              <CITA>[56 FR 36326, July 31, 1991, as amended at 57 FR 53599, Nov. 12, 1992]</CITA>
            </SECTION>
          </SUBPART>
        </PART>
        <PART>
          <EAR>Pt. 215</EAR>
          <HD SOURCE="HED">PART 215—CONTRACTING BY NEGOTIATION</HD>
          <CONTENTS>
            <SECHD>Sec.</SECHD>
            <SECTNO>215.000</SECTNO>
            <SUBJECT>Scope of part.</SUBJECT>
            <SUBPART>
              <HD SOURCE="HED">Subpart 215.2—Solicitation and Receipt of Proposals and Information</HD>
              <SECTNO>215.204-1</SECTNO>
              <SUBJECT>Uniform contract format.</SUBJECT>
              <SECTNO>215.204-2</SECTNO>
              <SUBJECT>Part I—The Schedule.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 215.3—Source Selection</HD>
              <SECTNO>215.303</SECTNO>
              <SUBJECT>Responsibilities.</SUBJECT>
              <SECTNO>215.304</SECTNO>
              <SUBJECT>Evaluation factors and significant subfactors.</SUBJECT>
              <SECTNO>215.305</SECTNO>
              <SUBJECT>Proposal evaluation.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 215.4—Contract Pricing</HD>
              <SECTNO>215.403</SECTNO>
              <SUBJECT>Obtaining cost or pricing data.</SUBJECT>
              <SECTNO>215.403-1</SECTNO>
              <SUBJECT>Prohibition on obtaining cost or pricing data.</SUBJECT>
              <SECTNO>215.403-5</SECTNO>
              <SUBJECT>Instructions for submission of cost or pricing data or information other than cost or pricing data.</SUBJECT>
              <SECTNO>215.404</SECTNO>
              <SUBJECT>Proposal analysis.</SUBJECT>
              <SECTNO>215.404-1</SECTNO>
              <SUBJECT>Proposal analysis techniques.</SUBJECT>
              <SECTNO>215.404-2</SECTNO>
              <SUBJECT>Information to support proposal analysis.</SUBJECT>
              <SECTNO>215.404-3</SECTNO>
              <SUBJECT>Subcontract pricing considerations.</SUBJECT>
              <SECTNO>215.404-4</SECTNO>
              <SUBJECT>Profit.</SUBJECT>
              <SECTNO>215.404-70</SECTNO>
              <SUBJECT>DD Form 1547, Record of Weighted Guidelines Method Application.</SUBJECT>
              <SECTNO>215.404-71</SECTNO>
              <SUBJECT>Weighted guidelines method.</SUBJECT>
              <SECTNO>215.404-71-1</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <SECTNO>215.404-71-2</SECTNO>
              <SUBJECT>Performance risk.</SUBJECT>
              <SECTNO>215.404-71-3</SECTNO>
              <SUBJECT>Contract type risk and working capital adjustment.</SUBJECT>
              <SECTNO>215.404-71-4</SECTNO>
              <SUBJECT>Facilities capital employed.</SUBJECT>
              <SECTNO>215.404-71-5</SECTNO>
              <SUBJECT>Cost efficiency factor.</SUBJECT>
              <SECTNO>215.404-72</SECTNO>
              <SUBJECT>Modified weighted guidelines method for nonprofit organizations other than FFRDCs.</SUBJECT>
              <SECTNO>215.404-73</SECTNO>
              <SUBJECT>Alternate structure approaches.</SUBJECT>
              <SECTNO>215.404-74</SECTNO>
              <SUBJECT>Fee requirements for cost-plus-award-fee contracts.</SUBJECT>
              <SECTNO>215.404-75</SECTNO>
              <SUBJECT>Fee requirements for FFRDCs.</SUBJECT>
              <SECTNO>215.404-76</SECTNO>
              <SUBJECT>Reporting profit and fee statistics.</SUBJECT>
              <SECTNO>215.406-1</SECTNO>
              <SUBJECT>Prenegotiation objectives.</SUBJECT>
              <SECTNO>215.406-3</SECTNO>
              <SUBJECT>Documenting the negotiation.</SUBJECT>
              <SECTNO>215.407-2</SECTNO>
              <SUBJECT>Make-or-buy programs.</SUBJECT>
              <SECTNO>215.407-3</SECTNO>
              <SUBJECT>Forward pricing rate agreements.</SUBJECT>
              <SECTNO>215.407-4</SECTNO>
              <SUBJECT>Should-cost review.</SUBJECT>
              <SECTNO>215.407-5</SECTNO>
              <SUBJECT>Estimating systems.</SUBJECT>
              <SECTNO>215.407-5-70</SECTNO>
              <SUBJECT>Disclosure, maintenance, and review requirements.</SUBJECT>
              <SECTNO>215.408</SECTNO>
              <SUBJECT>Slicitation provisions and contract clauses.</SUBJECT>
              <SECTNO>215.470</SECTNO>
              <SUBJECT>Estimated data prices.</SUBJECT>
            </SUBPART>
          </CONTENTS>
          <AUTH>
            <HD SOURCE="HED">Authority:</HD>
            <P>41 U.S.C. 421 and 48 CFR Chapter 1.</P>
          </AUTH>
          <SOURCE>
            <HD SOURCE="HED">Source:</HD>
            <P>63 FR 55040, Oct. 14, 1998, unless otherwise noted.</P>
          </SOURCE>
          <SECTION>
            <SECTNO>215.000</SECTNO>
            <SUBJECT>Scope of part.</SUBJECT>
            <P>See 225.872 for additional guidance on procedures for purchasing form qualifying countries.</P>
          </SECTION>
          <SUBPART>
            <HD SOURCE="HED">Subpart 215.2—Solicitation and Receipt of Proposals and Information</HD>
            <SECTION>
              <SECTNO>215.204-1</SECTNO>
              <SUBJECT>Uniform contract format.</SUBJECT>

              <P>Structure awards valued above the micro-purchase threshold (<E T="03">e.g.,</E> contract line items, delivery schedule, and invoice instructions) in a manner that will minimize the generation of invoices valued at or below the micro-purchase threshold.</P>
              <CITA>[65 FR 46626, July 31, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>215.204-2</SECTNO>
              <SUBJECT>Part I—The Schedule.</SUBJECT>

              <P>(g) When a contract contains both fixed-priced and cost-reimbursement line items or subline items, the contracting officer shall provide, in Section B, Supplies or Services and Prices/Costs, an identification of contract type specified for each contract line <PRTPAGE P="87"/>item or subline item to facilitate appropriate payment.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 215.3—Source Selection</HD>
            <SECTION>
              <SECTNO>215.303</SECTNO>
              <SUBJECT>Responsibilities.</SUBJECT>
              <P>(b)(2) For high-dollar value and other acquisitions, as prescribed by agency procedures, the source selection authority (SSA) shall approve a source selection plan (SSP) before the solicitation is issued. The SSP—</P>
              <P>(A) Shall be prepared and maintained by a person designated by the SSA or as prescribed by agency procedures;</P>
              <P>(B) Shall be coordinated with the contracting officer and senior advisory group, if any, within the source selection organization; and</P>
              <P>(C) Shall include, as a minimum—</P>
              <P>
                <E T="03">(1)</E> The organization, membership, and responsibilities of the source selection team;</P>
              <P>
                <E T="03">(2)</E> A statement of the proposed evaluation factors and any significant subfactors and their relative importance;</P>
              <P>
                <E T="03">(3)</E> A description of the evaluation process, including specific procedures and techniques to be used in evaluating proposals; and</P>
              <P>
                <E T="03">(4)</E> A schedule of significant events in the source selection process, including documentation of the source selection decision and announcement of the source selection decision.</P>
            </SECTION>
            <SECTION>
              <SECTNO>215.304</SECTNO>
              <SUBJECT>Evaluation factors and significant subfactors.</SUBJECT>
              <P>(c)(i) In acquisitions that require use of the clause at FAR 52.219-9, Small, Small Disadvantaged and Women-Owned Small Business Subcontracting Plan, other than those based on the lowest price technically acceptable source selection process (see FAR 15.101-2), the extent of participation of small businesses and historically black colleges or universities and minority institutions in performance of the contract shall be addressed in source selection. The contracting officer shall evaluate the extent to which offerors identify and commit to small business and historically black college or university and minority institution performance of the contract, whether as a joint venture, teaming arrangement, or subcontractor.</P>
              <P>(A) Evaluation factors may include—</P>
              <P>
                <E T="03">(1)</E> The extent to which such firms are specifically identified in proposals;</P>
              <P>
                <E T="03">(2)</E> The extent of commitment to use such firms (for example, enforceable commitments are to be weighted more heavily than non-enforceable ones);</P>
              <P>
                <E T="03">(3)</E> The complexity and variety of the work small firms are to perform;</P>
              <P>
                <E T="03">(4)</E> The realism of the proposal;</P>
              <P>
                <E T="03">(5)</E> Past performance of the offerors in complying with requirements of the clauses at FAR 52.219-8, Utilization of Small, Small Disadvantaged and Women-Owned Small Business Concerns, and 52.219-9, Small, Small Disadvantaged and Women-Owned Small Business Subcontracting Plan; and</P>
              <P>
                <E T="03">(6)</E> The extent of participation of such firms in terms of the value of the total acquisition.</P>
              <P>(B) Proposals addressing the extent of small business and historically black college or university and minority institution performance may be separate from subcontracting plans submitted pursuant to the clause at FAR 52.219-9 and should be structured to allow for consideration of offers from small businesses.</P>

              <P>(C) When an evaluation includes the factor in paragraph (c)(i)(A)<E T="03">(1)</E> of this section, the small businesses, historically black colleges or universities and minority institutions, and women-owned small businesses considered in the evaluation shall be listed in any subcontracting plan submitted pursuant to FAR 52.219-9 to facilitate compliance with 252.219-7003(g).</P>
              <P>(ii) The costs or savings related to contract administration and audit may be considered when the offeror's past performance or performance risk indicates the likelihood of significant costs or savings.</P>
              <CITA>[63 FR 64428, Nov. 20, 1998, as amended at 64 FR 51076, Sept. 21, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>§ 215.305</SECTNO>
              <SUBJECT>Proposal evaluation.</SUBJECT>
              <P>(a)(2) <E T="03">Past performance evaluation.</E> When a past performance evaluation is required by FAR 15.304, and the solicitation includes the clause at FAR 52.219-8, Utilization of Small, Small Disadvantaged and Women-Owned Small Business Concerns, the evaluation factors shall include the past performance of offerors in complying with requirements of that clause. When a <PRTPAGE P="88"/>past performance evaluation is required by FAR 15.304, and the solicitation includes the clause at FAR 52.219-9, Small, Small Disadvantaged and Women-Owned Small Business Subcontracting Plan, the evaluation factors shall include the past performance of offerors in complying with requirements of that clause.</P>
              <P>(b) Any determination to reject a proposal based on a violation or possible violation of Section 27 of the OFPP Act shall be made as specified in FAR 3.104.</P>
              <CITA>[63 FR 55040, Oct. 14, 1998, as amended at 65 FR 39722, June 27, 2000]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 215.4—Contract Pricing</HD>
            <SECTION>
              <SECTNO>215.403</SECTNO>
              <SUBJECT>Obtaining cost or pricing data.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>§ 215.403-1</SECTNO>
              <SUBJECT>Prohibition on obtaining cost or pricing data.</SUBJECT>
              <P>(c) <E T="03">Standards for exceptions from cost or pricing data requirements—</E>(1) <E T="03">Adequate price competition.</E> For acquisitions under dual or multiple source programs:</P>
              <P>(A) The determination of adequate price competition must be made on a case-by-case basis. Even when adequate price competition exists, in certain cases it may be appropriate to obtain additional information to assist in price analysis.</P>
              <P>(B) Adequate price competition normally exists when—</P>
              <P>
                <E T="03">(i)</E> Prices are solicited across a full range of step quantities, normally including a 0-100 percent split, from at least two offerors that are individually capable of producing the full quantity; and</P>
              <P>
                <E T="03">(ii)</E> The reasonableness of all prices awarded is clearly established on the basis of price analysis (see FAR 15.404-1(b)).</P>
              <P>(4) <E T="03">Waivers.</E> (A) DoD has waived the requirement for submission of cost or pricing data for the Canadian Commercial Corporation and its subcontractors.</P>
              <P>(B) DoD has waived cost or pricing data requirements for nonprofit organizations (including education institutions) on cost-reimbursement-no-fee contracts. The contracting officer shall require—</P>
              <P>
                <E T="03">(1)</E> Submission of information other than cost or pricing data to the extent necessary to determine reasonableness and cost realism; and</P>
              <P>
                <E T="03">(2)</E> Cost or pricing data from subcontractors that are not nonprofit organizations when the subcontractor's proposal exceeds the cost or pricing data threshold at FAR 15.403-4(a)(1).</P>
            </SECTION>
            <SECTION>
              <SECTNO>215.403-5</SECTNO>
              <SUBJECT>Instructions for submission of cost or pricing data or information other than cost or pricing data.</SUBJECT>
              <P>(b) When the solicitation requires contractor compliance with the Contractors Cost Data Reporting (CCDR) System (Army—AMCP 715-8, Navy—NAV PUB P-5241, and Air Force—AFMCP 800-15), require the contractor to submit DD Form 1921 or 1921-1 with its pricing proposal.</P>
            </SECTION>
            <SECTION>
              <SECTNO>215.404</SECTNO>
              <SUBJECT>Proposal analysis.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>215.404-1</SECTNO>
              <SUBJECT>Proposal analysis techniques.</SUBJECT>
              <P>(a) <E T="03">General.</E> For spare parts or support equipment, perform an analysis of—</P>
              <P>(i) Those line items where the proposed price exceeds by 25 percent or more the lowest price the Government has paid within the most recent 12-month period based on reasonably available information;</P>
              <P>(ii) Those line items where a comparison of the item description and the proposal price indicates a potential for overpricing;</P>
              <P>(iii) Significant high-dollar-value items. If there are no obvious high-dollar-value items, include an analysis of a random sample of items; and</P>
              <P>(iv) A random sample of the remaining low-dollar value items. Sample size may be determined by subjective judgment, e.g., experience with the offeror and the reliability of its estimating and accounting systems.</P>
              <P>(d) <E T="03">Cost realism analysis.</E> The contracting officer should determine what information other than cost or pricing data is necessary for the cost realism analysis during acquisition planning and development of the solicitation. Unless such information is available from sources other than the offerors (see FAR 15.402(a)(2)), the contracting officer will need to request data from the offerors. The contracting officer—<PRTPAGE P="89"/>
              </P>
              <P>(i) Shall request only necessary data; and</P>
              <P>(ii) May not request submission of cost or pricing data.</P>
            </SECTION>
            <SECTION>
              <SECTNO>215.404-2</SECTNO>
              <SUBJECT>Information to support proposal analysis.</SUBJECT>
              <P>(a) <E T="03">Field pricing assistance.</E> (i) The contracting officer should consider requesting field pricing assistance for—</P>
              <P>(A) Fixed-price proposals exceeding the cost or pricing data threshold;</P>
              <P>(B) Cost-type proposals exceeding the cost or pricing data threshold from offerors with significant estimating system deficiencies (see 215.407-5-70(a)(4) and (c)(2)(i)); or</P>
              <P>(C) Cost-type proposals exceeding $10 million from offerors without significant estimating system deficiencies.</P>
              <P>(ii) The contracting officer should not request field pricing support for proposed contracts or modifications in an amount less than that specified in paragraph (a)(i) of this subsection. An exception may be made when a reasonable pricing result cannot be established because of—</P>
              <P>(A) A lack of knowledge of the particular offeror; or</P>
              <P>(B) Sensitive conditions (e.g., a change in, or unusual problems with, an offeror's internal systems).</P>
              <P>(c) <E T="03">Audit assistance for prime contracts or subcontracts.</E> (i) If, in the opinion of the contracting officer or auditor, the review of a prime contractor's proposal requires further review of subcontractors’ cost estimates at the subcontractors’ plants (after due consideration of reviews performed by the prime contractor), the contracting officer should inform the administrative contracting officer (ACO) having cognizance of the prime contractor before the review is initiated.</P>
              <P>(ii) Notify the appropriate contract administration activities when extensive, special, or expedited field pricing assistance will be needed to review and evaluate subcontractors’ proposals under a major weapon system acquisition. If audit reports are received on contracting actions that are subsequently cancelled, notify the cognizant auditor in writing.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 215.404-3</SECTNO>
              <SUBJECT>Subcontract pricing considerations.</SUBJECT>
              <P>(a)(i) When obtaining field pricing assistance on a prime contractor's proposal, the contracting officer should request audit or field pricing assistance to analyze and evaluate the proposal of a subcontractor at any tier (notwithstanding availability of data or analyses performed by the prime contractor) if the contracting officer believes that such assistance is necessary to ensure the reasonableness of the total proposed price. Such assistance may be appropriate when, for example—</P>
              <P>(A) There is a business relationship between the contractor and the subcontractor not conducive to independence and objectivity;</P>
              <P>(B) The contractor is a sole source supplier and the subcontract costs represent a substantial part of the contract cost;</P>
              <P>(C) The contractor has been denied access to the subcontractor's records;</P>
              <P>(D) The contracting officer determines that, because of factors such as the size of the proposed subcontract price, audit or field pricing assistance for a subcontract at any tier is critical to a fully detailed analysis of the prime contractor's proposal;</P>
              <P>(E) The contractor or higher-tier subcontractor has been cited for having significant estimating system deficiencies in the area of subcontract pricing, especially the failure to perform adequate cost analyses of proposed subcontract costs or to perform subcontract analyses prior to negotiation of the prime contract with the Government; or</P>
              <P>(F) A lower-tier subcontractor has been cited as having significant estimating system deficiencies.</P>

              <P>(ii) It may be appropriate for the contracting officer or the ACO to provide assistance to a contractor or subcontractor at any tier, when the contractor or higher-tier subcontractor has been denied access to a subcontractor's records in carrying out the responsibilities at FAR 15.404-3 to conduct price or cost analysis to determine the reasonableness of proposed subcontract prices. Under these circumstances, the contracting officer or <PRTPAGE P="90"/>the ACO should consider whether providing audit or field pricing assistance will serve a valid Government interest.</P>
              <P>(iii) When DoD performs the subcontract analysis, DoD shall furnish to the prime contractor or higher-tier subcontractor, with the consent of the subcontractor reviewed, a summary of the analysis performed in determining any unacceptable costs included in the subcontract proposal. If the subcontractor withholds consent, DoD shall furnish a range of unacceptable costs for each element in such a way as to prevent disclosure of subcontractor proprietary data.</P>
              <P>(iv) Price redeterminable or fixed-price incentive contracts may include subcontracts placed on the same basis. When the contracting officer wants to reprice the prime contract even though the contractor has not yet established final prices for the subcontracts, the contracting officer may negotiate a firm contract price—</P>
              <P>(A) If cost or pricing data on the subcontracts show the amounts to be reasonable and realistic; or</P>
              <P>(B) If cost or pricing data on the subcontracts are too indefinite to determine whether the amounts are reasonable and realistic, but—</P>
              <P>
                <E T="03">(1)</E> Circumstances require prompt negotiation; and</P>
              <P>
                <E T="03">(2)</E> A statement substantially as follows is included in the repricing modification of the prime contract:
              </P>
              <EXTRACT>
                <P>As soon as the Contractor establishes firm prices for each subcontract listed below, the Contractor shall submit (in the format and with the level of detail specified by the Contracting Officer) to the Contracting Officer the subcontractor's cost incurred in performing the subcontract and the final subcontract price. The Contractor and Contracting Officer shall negotiate an equitable adjustment in the total amount paid or to be paid under this contract to reflect the final subcontract price.</P>
              </EXTRACT>
              
              <P>(v) If the selection of the subcontractor is based on a trade-off among cost or price and other non-cost factors rather than lowest price, the analysis supporting subcontractor selection should include a discussion of the factors considered in the selection (also see FAR 15.101 and 15.304 and 215.304). If the contractor's analysis is not adequate, return it for correction of deficiencies.</P>
              <P>(vi) The contracting officer shall make every effort to ensure that fees negotiated by contractors for cost-plus-fixed-fee subcontracts do not exceed the fee limitations in FAR 15.404-4(c)(4).</P>
            </SECTION>
            <SECTION>
              <SECTNO>215.404-4</SECTNO>
              <SUBJECT>Profit.</SUBJECT>
              <P>(b) <E T="03">Policy.</E> (1) Departments and agencies must use a structured approach for developing a prenegotiation profit or fee objective on any negotiated contract action when cost or pricing data is obtained, except for cost-plus-award-fee contracts (see 215.404-74) or contracts with Federally Funded Research and Development Centers (FFRDCs) (see 215.404-75). There are three structured approaches—</P>
              <P>(A) The weighted guidelines method;</P>
              <P>(B) The modified weighted guidelines method; and</P>
              <P>(C) An alternate structured approach.</P>
              <P>(c) <E T="03">Contracting officer responsibilities.</E> (1) Also, do not perform a profit analysis when assessing cost realism in competitive acquisitions.</P>
              <P>(2) When using a structured approach, the contracting officer—</P>
              <P>(A) Shall use the weighted guidelines method (see 215.404-71), except as provided in paragraphs (c)(2)(B) and (c)(2)(C) of this subsection.</P>
              <P>(B) Shall use the modified weighted guidelines method (see 215.404-72) on contract actions with nonprofit organizations other than FFRDCs.</P>
              <P>(C) May use an alternate structured approach (see 215.404-73) when—</P>
              <P>
                <E T="03">(1)</E> The contract action is—</P>
              <P>
                <E T="03">(i)</E> At or below the cost or pricing data threshold (see FAR 15.403-4(a)(1));</P>
              <P>
                <E T="03">(ii)</E> For architect-engineer or construction work;</P>
              <P>
                <E T="03">(iii)</E> Primarily for delivery of material from subcontractors; or</P>
              <P>
                <E T="03">(iv)</E> A termination settlement; or</P>
              <P>
                <E T="03">(2)</E> The weighted guidelines method does not produce a reasonable overall profit objective and the head of the contracting activity approves use of the alternate approach in writing.</P>

              <P>(D) Shall use the weighted guidelines method to establish a basic profit rate under a formula-type pricing agreement, and may then use the basic rate on all actions under the agreement, provided that conditions affecting profit do not change.<PRTPAGE P="91"/>
              </P>
              <P>(E) Shall document the profit analysis in the contract file.</P>
              <P>(5) Although specific agreement on the applied weights or values for individual profit factors shall not be attempted, the contracting officer may encourage the contractor to—</P>
              <P>(A) Present the details of its proposed profit amounts in the weighted guidelines format or similar structured approached; and</P>
              <P>(B) Use the weighted guidelines method in developing profit objectives for negotiated subcontracts.</P>
              <P>(6) The contracting officer must also verify that relevant variables have not materially changed (e.g., performance risk, interest rates, progress payment rates, distribution of facilities capital).</P>
              <P>(d) Profit-analysis factors.—(1) <E T="03">Common factors.</E> The common factors are embodied in the DoD structured approaches and need not be further considered by the contracting officer.</P>
              <CITA>[63 FR 55040, Oct. 14, 1998, as amended at 63 FR 63799, Nov. 17, 1998; 65 FR 77829, Dec. 13, 2000; 66 FR 49863, Oct. 1, 2001]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>§ 215.404-70</SECTNO>
              <SUBJECT>DD Form 1547, Record of Weighted Guidelines Method Application.</SUBJECT>
              <P>(a) The DD Form 1547—</P>
              <P>(1) Provides a vehicle for performing the analysis necessary to develop of profit objectives;</P>
              <P>(2) Provides a format for summarizing profit amounts subsequently negotiated as part of the contract price; and</P>
              <P>(3) Serves as the principal source documents for reporting profit statistics to DoD's management information system.</P>
              <P>(b) The military departments are responsible for establishing policies and procedures for feeding the DoD-wide management information system on profit and fee statistics (see 215.404-75).</P>
              <P>(c) The contracting officer shall—</P>
              <P>(1) Use and prepare a DD Form 1547 whenever a structured approach to profit analysis is required by 215.404-4(b) (see 215.404-71, 215.404-72, and 215.404-73 for guidance on using the structured approaches). Administrative instructions for completing the form are in 253.215.-70.</P>
              <P>(2) Ensure that the DD Form 1547 is accurately completed. The contracting officer is responsible for the correction any errors detected by the management system auditing process.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 215.404-71</SECTNO>
              <SUBJECT>Weighted guidelines method.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>215.404-71-1</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <P>(a) The weighted guidelines method focuses on four profit factors—</P>
              <P>(1) Performance risk;</P>
              <P>(2) Contract type risk;</P>
              <P>(3) Facilities capital employed; and</P>
              <P>(4) Cost efficiency.</P>
              <P>(b) The contracting officer assigns values to each profit factor; the value multiplied by the base results in the profit objective for that factor. Except for the cost efficiency special factor, each profit factor has a normal value and a designated range of values. The normal value is representative of average conditions on the prospective contract when compared to all goods and services acquired by DoD. The designated range provides values based on above normal or below normal conditions. In the price negotiation documentation, the contracting officer need not explain assignment of the normal value, but should address conditions that justify assignment of other than the normal value. The cost efficiency special factor has no normal value. The contracting officer shall exercise sound business judgment in selecting a value when this special factor is used (see 215.404-71-5).</P>
              <CITA>[67 FR 20689, Apr. 26, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>215.404-71-2</SECTNO>
              <SUBJECT>Performance risk.</SUBJECT>
              <P>(a) <E T="03">Description.</E> This profit factor addresses the contractor's degree of risk in fulfilling the contract requirements. The factor consists of two parts:</P>
              <P>(1) Technical—the technical uncertainties of performance.</P>
              <P>(2) Management/cost control—the degree of management effort necessary—</P>
              <P>(i) To ensure that contract requirements are met; and</P>
              <P>(ii) To reduce and control costs.</P>
              <P>(b) <E T="03">Determination.</E> The following extract from the DD Form 1547 is annotated to describe the process.<PRTPAGE P="92"/>
              </P>
              <GPOTABLE CDEF="xs10,r30,12,12,12,12" COLS="6" OPTS="L2,tp0,i1">
                <BOXHD>
                  <CHED H="1">Item</CHED>
                  <CHED H="1">Contractor risk factors</CHED>
                  <CHED H="1">Assigned weighting</CHED>
                  <CHED H="1">Assigned value</CHED>
                  <CHED H="1">Base (item 20)</CHED>
                  <CHED H="1">Profit objective</CHED>
                </BOXHD>
                <ROW>
                  <ENT I="01">21</ENT>
                  <ENT>Technical</ENT>
                  <ENT>(1)</ENT>
                  <ENT>(2)</ENT>
                  <ENT>N/A</ENT>
                  <ENT>N/A</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">22</ENT>
                  <ENT>Management/Cost Control</ENT>
                  <ENT>(1)</ENT>
                  <ENT>(2)</ENT>
                  <ENT>N/A</ENT>
                  <ENT>N/A</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">23</ENT>
                  <ENT>Performance Risk (Composite)</ENT>
                  <ENT>N/A</ENT>
                  <ENT>(3)</ENT>
                  <ENT>(4)</ENT>
                  <ENT>(5)</ENT>
                </ROW>
              </GPOTABLE>
              <P>(1) Assign a weight (percentage) to each element according to its input to the total performance risk. The total of the two weights equals 100 percent.</P>
              <P>(2) Select a value for each element from the list in paragraph (c) of this subsection using the evaluation criteria in paragraphs (d) and (e) of this subsection.</P>
              <P>(3) Compute the composite as shown in the following example:</P>
              <GPOTABLE CDEF="s50,10,10,10" COLS="4" OPTS="L2,tp0,i1">
                <BOXHD>
                  <CHED H="1"/>
                  <CHED H="1">Assigned weighting<LI>(percent)</LI>
                  </CHED>
                  <CHED H="1">Assigned<LI>value</LI>
                    <LI>(percent)</LI>
                  </CHED>
                  <CHED H="1">Weighted<LI>value</LI>
                    <LI>(percent)</LI>
                  </CHED>
                </BOXHD>
                <ROW>
                  <ENT I="01">Technical</ENT>
                  <ENT>60</ENT>
                  <ENT>5.0</ENT>
                  <ENT>3.0</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">Management/Cost Control</ENT>
                  <ENT>40</ENT>
                  <ENT>4.0</ENT>
                  <ENT>1.6</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">Composite Value</ENT>
                  <ENT>100</ENT>
                  <ENT/>
                  <ENT>4.6</ENT>
                </ROW>
              </GPOTABLE>
              <P>(4) Insert the amount from Block 20 of the DD Form 1547. Block 20 is total contract costs, excluding facilities capital cost of money.</P>
              <P>(5) Multiply (3) by (4).</P>
              <P>(c) Values: Normal and designated ranges.</P>
              <GPOTABLE CDEF="s25,10,xs40" COLS="3" OPTS="L2,tp0,i1">
                <BOXHD>
                  <CHED H="1"/>
                  <CHED H="1">Normal<LI>value</LI>
                    <LI>(percent)</LI>
                  </CHED>
                  <CHED H="1">Designated<LI>range</LI>
                  </CHED>
                </BOXHD>
                <ROW>
                  <ENT I="01">Standard</ENT>
                  <ENT>5</ENT>
                  <ENT>3% to 7%</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">Technology Incentive</ENT>
                  <ENT>9</ENT>
                  <ENT>7% to 11%</ENT>
                </ROW>
              </GPOTABLE>
              <P>(1) <E T="03">Standard.</E> The standard designated range should apply to most contracts.</P>
              <P>(2) <E T="03">Technology incentive.</E> For the technical factor only, contracting officers may use the technology incentive range for acquisitions that include development, production, or application of innovative new technologies. The technology incentive range does not apply to efforts restricted to studies, analyses, or demonstrations that have a technical report as their primary deliverable.</P>
              <P>(d) <E T="03">Evaluation criteria for technical.</E>
              </P>
              <P>(1) Review the contract requirements and focus on the critical performance elements in the statement of work or specifications. Factors to consider include—</P>
              <P>(i) Technology being applied or developed by the contractor;</P>
              <P>(ii) Technical complexity;</P>
              <P>(iii) Program maturity;</P>
              <P>(iv) Performance specifications and tolerances;</P>
              <P>(v) Delivery schedule; and</P>
              <P>(vi) Extent of a warranty or guarantee.</P>
              <P>(2) <E T="03">Above normal conditions.</E>
              </P>
              <P>(i) The contracting officer may assign a higher than normal value in those cases where there is a substantial technical risk. Indicators are—</P>
              <P>(A) Items are being manufactured using specifications with stringent tolerance limits;</P>
              <P>(B) The efforts require highly skilled personnel or require the use of state-of-the-art machinery;</P>
              <P>(C) The services and analytical efforts are extremely important to the Government and must be performed to exacting standards;</P>
              <P>(D) The contractor's independent development and investment has reduced the Government's risk or cost;</P>
              <P>(E) The contractor has accepted an accelerated delivery schedule to meet DoD requirements; or</P>
              <P>(F) The contractor has assumed additional risk through warranty provisions.</P>
              <P>(ii) Extremely complex, vital efforts to overcome difficult technical obstacles that require personnel with exceptional abilities, experience, and professional credentials may justify a value significantly above normal.</P>

              <P>(iii) The following may justify a maximum value—<PRTPAGE P="93"/>
              </P>
              <P>(A) Development or initial production of a new item, particularly if performance or quality specifications are tight; or</P>
              <P>(B) A high degree of development or production concurrency.</P>
              <P>(3) <E T="03">Below normal conditions.</E>
              </P>
              <P>(i) The contracting officer may assign a lower than normal value in those cases where the technical risk is low. Indicators are—</P>
              <P>(A) Requirements are relatively simple;</P>
              <P>(B) Technology is not complex;</P>
              <P>(C) Efforts do not require highly skilled personnel;</P>
              <P>(D) Efforts are routine;</P>
              <P>(E) Programs are mature; or</P>
              <P>(F) Acquisition is a follow-on effort or a repetitive type acquisition.</P>
              <P>(ii) The contracting officer may assign a value significantly below normal for—</P>
              <P>(A) Routine services;</P>
              <P>(B) Production of simple items;</P>
              <P>(C) Rote entry or routine integration of Government-furnished information; or</P>
              <P>(D) Simple operations with Government-furnished property.</P>
              <P>(4) <E T="03">Technology incentive range.</E>
              </P>
              <P>(i) The contracting officer may assign values within the technology incentive range when contract performance includes the introduction of new, significant technological innovation. Use the technology incentive range only for the most innovative contract efforts. Innovation may be in the form of—</P>
              <P>(A) Development or application of new technology that fundamentally changes the characteristics of an existing product or system and that results in increased technical performance, improved reliability, or reduced costs; or</P>
              <P>(B) New products or systems that contain significant technological advances over the products or systems they are replacing.</P>
              <P>(ii) When selecting a value within the technology incentive range, the contracting officer should consider the relative value of the proposed innovation to the acquisition as a whole. When the innovation represents a minor benefit, the contracting officer should consider using values less than the norm. For innovative efforts that will have a major positive impact on the product or program, the contracting officer may use values above the norm.</P>
              <P>(e) <E T="03">Evaluation criteria for management/cost control.</E>
              </P>
              <P>(1) The contracting officer should evaluate—</P>
              <P>(i) The contractor's management and internal control systems using contracting office information and reviews made by field contract administration offices or other DoD field offices;</P>
              <P>(ii) The management involvement expected on the prospective contract action;</P>
              <P>(iii) The degree of cost mix as an indication of the types of resources applied and value added by the contractor;</P>
              <P>(iv) The contractor's support of Federal socioeconomic programs;</P>
              <P>(v) The expected reliability of the contractor's cost estimates (including the contractor's cost estimating system);</P>
              <P>(vi) The adequacy of the contractor's management approach to controlling cost and schedule; and</P>
              <P>(vii) Any other factors that affect the contractor's ability to meet the cost targets (e.g., foreign currency exchange rates and inflation rates).</P>
              <P>(2) <E T="03">Above normal conditions.</E>
              </P>
              <P>(i) The contracting officer may assign a higher than normal value when there is a high degree of management effort. Indicators of this are—</P>
              <P>(A) The contractor's value added is both considerable and reasonably difficult;</P>
              <P>(B) The effort involves a high degree of integration or coordination;</P>
              <P>(C) The contractor has a good record of past performance;</P>
              <P>(D) The contractor has a substantial record of active participation in Federal socioeconomic programs;</P>
              <P>(E) The contractor provides fully documented and reliable cost estimates;</P>
              <P>(F) The contractor makes appropriate make-or-buy decisions; or</P>
              <P>(G) The contractor has a proven record of cost tracking and control.</P>
              <P>(ii) The contracting officer may justify a maximum value when the effort—</P>

              <P>(A) Requires large scale integration of the most complex nature;<PRTPAGE P="94"/>
              </P>
              <P>(B) Involves major international activities with significant management coordination (e.g., offsets with foreign vendors); or</P>
              <P>(C) Has critically important milestones.</P>
              <P>(3) <E T="03">Below normal conditions.</E>
              </P>
              <P>(i) The contracting officer may assign a lower than normal value when the management effort is minimal. Indicators of this are—</P>
              <P>(A) The program is mature and many end item deliveries have been made;</P>
              <P>(B) The contractor adds minimal value to an item;</P>
              <P>(C) The efforts are routine and require minimal supervision;</P>
              <P>(D) The contractor provides poor quality, untimely proposals;</P>
              <P>(E) The contractor fails to provide an adequate analysis of subcontractor costs;</P>
              <P>(F) The contractor does not cooperate in the evaluation and negotiation of the proposal;</P>
              <P>(G) The contractor's cost estimating system is marginal;</P>
              <P>(H) The contractor has made minimal effort to initiate cost reduction programs;</P>
              <P>(I) The contractor's cost proposal is inadequate;</P>
              <P>(J) The contractor has a record of cost overruns or another indication of unreliable cost estimates and lack of cost control; or</P>
              <P>(K) The contractor has a poor record of past performance.</P>
              <P>(ii) The following may justify a value significantly below normal—</P>
              <P>(A) Reviews performed by the field contract administration offices disclose unsatisfactory management and internal control systems (e.g., quality assurance, property control, safety, security); or</P>
              <P>(B) The effort requires an unusually low degree of management involvement.</P>
              <CITA>[67 FR 20689, Apr. 26, 2002, as amended at 67 FR 49254, July 30, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>§ 215.404-71-3</SECTNO>
              <SUBJECT>Contract type risk and working capital adjustment.</SUBJECT>
              <P>(a) <E T="03">Description.</E> The contract type risk factor focuses on the degree of cost risk accepted by the contractor under varying contract types. The working capital adjustment is an adjustment added to the profit objective for contract type risk. It only applies to fixed-price contracts that provide for progress payments. Though it uses a formula approach, it is not intended to be an exact calculation of the cost of working capital. Its purpose is to give general recognition to the contractor's cost of working capital under varying contract circumstances, financing policies, and the economic environment.</P>
              <P>(b) <E T="03">Determination.</E> The following extract from the DD 1547 is annotated to explain the process.</P>
              <GPOTABLE CDEF="xs40,r50,xls50,xls50,xls50,xls50" COLS="6" OPTS="L2,i1">
                <BOXHD>
                  <CHED H="1">Item</CHED>
                  <CHED H="1">Contractor risk factors</CHED>
                  <CHED H="1"/>
                  <CHED H="1">Assigned value</CHED>
                  <CHED H="1">Base (item 20)</CHED>
                  <CHED H="1">Profit objective</CHED>
                </BOXHD>
                <ROW>
                  <ENT I="01">24.</ENT>
                  <ENT>CONTRACT type risk</ENT>
                  <ENT/>
                  <ENT>(1)</ENT>
                  <ENT>(2)</ENT>
                  <ENT>(3)</ENT>
                </ROW>
                <ROW>
                  <ENT I="22"/>
                  <ENT O="xl"/>
                  <ENT>Cost financed</ENT>
                  <ENT>Length factor</ENT>
                  <ENT>Interest rate</ENT>
                  <ENT/>
                </ROW>
                <ROW>
                  <ENT I="01">25.</ENT>
                  <ENT>WORKING capital (4)</ENT>
                  <ENT>(5)</ENT>
                  <ENT>(6)</ENT>
                  <ENT>(7)</ENT>
                  <ENT>(8)</ENT>
                </ROW>
              </GPOTABLE>
              <P>(1) Select a value from the list of contract types in paragraph (c) of this subsection using the evaluation criteria in paragraph (d) of this subsection.</P>
              <P>(2) Insert the amount from Block 20, i.e., the total allowable costs excluding facilities capital cost of money.</P>
              <P>(3) Multiply (1) by (2).</P>
              <P>(4) Only complete this block when the prospective contract is a fixed-price contract containing provisions for progress payments.</P>
              <P>(5) Insert the amount computed per paragraph (e) of this subsection.</P>
              <P>(6) Insert the appropriate figure from paragraph (f) of this subsection.</P>
              <P>(7) Use the interest rate established by the Secretary of the Treasury (see 230.7101-1(a)). Do not use any other interest rate.</P>
              <P>(8) Multiply (5) by (6) by (7). This is the working capital adjustment. It shall not exceed 4 percent of the contract costs in Block 20.</P>
              <P>(c) <E T="03">Values: Normal and designated ranges.</E>
                <PRTPAGE P="95"/>
              </P>
              <GPOTABLE CDEF="s150,10,10,12" COLS="4" OPTS="L2,i1">
                <BOXHD>
                  <CHED H="1">Contract type</CHED>
                  <CHED H="1">Notes</CHED>
                  <CHED H="1">Normal value<LI>(percent)</LI>
                  </CHED>
                  <CHED H="1">Designated range<LI>(percent)</LI>
                  </CHED>
                </BOXHD>
                <ROW>
                  <ENT I="01">Firm-fixed-price, no financing</ENT>
                  <ENT>(1)</ENT>
                  <ENT>5.0</ENT>
                  <ENT>4 to 6.</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">Firm-fixed-price, with performance-based payments</ENT>
                  <ENT>(6)</ENT>
                  <ENT>4.0</ENT>
                  <ENT>2.5 to 5.5</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">Firm-fixed-price, with progress payments</ENT>
                  <ENT>(2)</ENT>
                  <ENT>3.0</ENT>
                  <ENT>2 to 4.</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">Fixed-price incentive, no financing</ENT>
                  <ENT>(1)</ENT>
                  <ENT>3.0</ENT>
                  <ENT>2 to 4.</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">Fixed-price incentive, with performance-based payments</ENT>
                  <ENT>(6)</ENT>
                  <ENT>2.0</ENT>
                  <ENT>0.5 to 3.5.</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">Fixed-price with redetermination provision</ENT>
                  <ENT>(3)</ENT>
                  <ENT/>
                  <ENT/>
                </ROW>
                <ROW>
                  <ENT I="01">Fixed-price incentive, with progress payments</ENT>
                  <ENT>(2)</ENT>
                  <ENT>1.0</ENT>
                  <ENT>0 to 2.</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">Cost-plus-incentive-free</ENT>
                  <ENT>(4)</ENT>
                  <ENT>1.0</ENT>
                  <ENT>0 to 2.</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">Cost-plus-fixed-fee</ENT>
                  <ENT>(4)</ENT>
                  <ENT>0.5</ENT>
                  <ENT>0 to 1.</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">Time-and-materials (including overhaul contracts priced on time-and-materials basis)</ENT>
                  <ENT>(5)</ENT>
                  <ENT>0.5</ENT>
                  <ENT>0 to 1.</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">Labor-hour</ENT>
                  <ENT>(5)</ENT>
                  <ENT>0.5</ENT>
                  <ENT>0 to 1.</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">Firm-fixed-price, level-of-effort</ENT>
                  <ENT>(5)</ENT>
                  <ENT>0.5</ENT>
                  <ENT>0 to 1.</ENT>
                </ROW>
              </GPOTABLE>
              <P>(1) “No financing” means either that the contract does not provide progress payments or performance-based payments, or that the contract provides them only on a limited basis, such as financing of first articles. Do not compute a working capital adjustment.</P>
              <P>(2) When the contract contains provisions for progress payments, compute a working capital adjustment (Block 25).</P>
              <P>(3) For the purposes of assigning profit values, treat a fixed-price contract with redetermination provisions as if it were a fixed-price incentive contract with below normal conditions.</P>
              <P>(4) Cost-plus contracts shall not receive the working capital adjustment.</P>
              <P>(5) These types of contracts are considered cost-plus-fixed-fee contracts for the purposes of assigning profit values. They shall not receive the working capital adjustment in Block 25. However, they may receive higher than normal values within the designated range to the extent that portions of cost are fixed.</P>
              <P>(6) When the contract contains provisions for performance-based payments, do not compute a working capital adjustment.</P>
              <P>(d) <E T="03">Evaluation criteria.</E>
              </P>
              <P>(1) <E T="03">General.</E> The contracting officer should consider elements that affect contract type risk such as—</P>
              <P>(i) Length of contract;</P>
              <P>(ii) Adequacy of cost data for projections;</P>
              <P>(iii) Economic environment;</P>
              <P>(iv) Nature and extent of subcontracted activity;</P>
              <P>(v) Protection provided to the contractor under contract provisions (e.g., economic price adjustment clauses);</P>
              <P>(vi) The ceilings and share lines contained in incentive provisions;</P>
              <P>(vii) Risks associated with contracts for foreign military sales (FMS) that are not funded by U.S. appropriations; and</P>
              <P>(viii) When the contract contains provisions for performance-based payments—</P>
              <P>(A) The frequency of payments;</P>
              <P>(B) The total amount of payments compared to the maximum allowable amount specified at FAR 32.1004(b)(2); and</P>
              <P>(C) The risk of the payment schedule to the contractor.</P>
              <P>(2) <E T="03">Mandatory.</E> The contracting officer shall assess the extent to which costs have been incurred prior to the definitization of the contract action (also see 217.7404-6(a)). The assessment shall include any reduced contractor risk on both the contract before definitization and the remaining portion of the contract. When costs have been incurred prior to definitization, generally regard the contract type risk to be in the low end of the designated range. If a substantial portion of the costs have been incurred prior to definitization, the contracting officer may assign a value as low as 0 percent, regardless of contract type.</P>
              <P>(3) <E T="03">Above normal conditions.</E> The contracting officer may assign a higher than normal value when there is substantial contract type risk. Indicators of this are—</P>
              <P>(i) Efforts where there is minimal cost history;</P>

              <P>(ii) Long-term contracts without provisions protecting the contractor, particularly when there is considerable economic uncertainty;<PRTPAGE P="96"/>
              </P>
              <P>(iii) Incentive provisions (e.g., cost and performance incentives) that place a high degree of risk on the contractor;</P>
              <P>(iv) FMS sales (other than those under DoD cooperative logistics support arrangements or those made from U.S. Government inventories or stocks) where the contractor can demonstrate that there are substantial risks above those normally present in DoD contracts for similar items; or</P>
              <P>(v) An aggressive performance-based payment schedule that increases risk.</P>
              <P>(4) <E T="03">Below normal conditions.</E> The contracting officer may assign a lower than normal value when the contract type risk is low. Indicators of this are—</P>
              <P>(i) Very mature product line with extensive cost history;</P>
              <P>(ii) Relative short-term contracts;</P>
              <P>(iii) Contractual provisions that substantially reduce the contractor's risk;</P>
              <P>(iv) Incentive provisions that place a low degree of risk on the contractor;</P>
              <P>(v) Performance-based payments totaling the maximum allowable amount(s) specified at FAR 32.1004(b)(2); or</P>
              <P>(vi) A performance-based payment schedule that is routine with minimal risk.</P>
              <P>(e) <E T="03">Costs financed.</E>
              </P>
              <P>(1) Costs financed equal total costs multiplied by the portion (percent) of costs financed by the contractor.</P>
              <P>(2) Total costs equal Block 20 (i.e., all allowable costs excluding facilities capital cost of money), reduced as appropriate when—</P>
              <P>(i) The contractor has little cash investment (e.g., subcontractor progress payments liquidated late in period of performance);</P>
              <P>(ii) Some costs are covered by special financing provisions, such as advance payments; or</P>
              <P>(iii) The contract is multiyear and there are special funding arrangements.</P>
              <P>(3) The portion that the contractor finances is generally the portion not covered by progress payments, i.e., 100 percent minus the customary progress payment rate (see FAR 32.501). For example, if a contractor receives progress payments at 80 percent, the portion that the contractor finances is 20 percent. On contracts that provide progress payments to small businesses, use the customary progress payment rate for large businesses.</P>
              <P>(f) <E T="03">Contract length factor.</E> (1) This is the period of time that the contractor has a working capital investment in the contract. It—</P>
              <P>(i) Is based on the time necessary for the contractor to complete the substantive portion of the work;</P>
              <P>(ii) Is not necessarily the period of time between contract award and final delivery (or final payment), as periods of minimal effort should be excluded;</P>
              <P>(iii) Should not include periods of performance contained in option provisions; and</P>
              <P>(iv) Should not, for multiyear contracts, include periods of performance beyond that required to complete the initial program year's requirements.</P>
              <P>(2) The contracting officer—</P>
              <P>(i) Should use the following table to select the contract length factor;</P>
              <P>(ii) Should develop a weighted average contract length when the contract has multiple deliveries; and</P>
              <P>(iii) May use sampling techniques provided they produce a representative result.</P>
              <GPOTABLE CDEF="s50,10.2" COLS="2" OPTS="L2,i1">
                <TTITLE>Table</TTITLE>
                <BOXHD>
                  <CHED H="1">Period to perform substantive portion (in months)</CHED>
                  <CHED H="1">Contract length factor</CHED>
                </BOXHD>
                <ROW>
                  <ENT I="01">21 or less</ENT>
                  <ENT>.40</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">22 to 27</ENT>
                  <ENT>.65</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">28 to 33</ENT>
                  <ENT>.90</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">34 to 39</ENT>
                  <ENT>1.15</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">40 to 45</ENT>
                  <ENT>1.40</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">46 to 51</ENT>
                  <ENT>1.65</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">52 to 57</ENT>
                  <ENT>1.90</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">58 to 63</ENT>
                  <ENT>2.15</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">64 to 69</ENT>
                  <ENT>2.40</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">70 to 75</ENT>
                  <ENT>2.65</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">76 or more</ENT>
                  <ENT>2.90</ENT>
                </ROW>
              </GPOTABLE>
              <P>(3) Example: A prospective contract has a performance period of 40 months with end items being delivered in the 34th, 36th, 38th, and 40th months of the contract. The average period is 37 months and the contract length factor is 1.15.</P>
              <CITA>[63 FR 55040, Oct. 14, 1998, as amended at 64 FR 61032, Nov. 9, 1999; 66 FR 63335, Dec. 6, 2001; 67 FR 20691, Apr. 26, 2002; 67 FR 49255, July 30, 2002]</CITA>
            </SECTION>
            <SECTION>
              <PRTPAGE P="97"/>
              <SECTNO>215.404-71-4</SECTNO>
              <SUBJECT>Facilities capital employed.</SUBJECT>
              <P>(a) <E T="03">Description.</E> This factor focuses on encouraging and rewarding capital investment in facilities that benefit DoD. It recognizes both the facilities capital that the contractor will employ in contract performance and the contractor's commitment to improving productivity.</P>
              <P>(b) <E T="03">Determination.</E> The following extract from the DD Form 1547 has been annotated to explain the process.</P>
              <GPOTABLE CDEF="xs36,r50,12,12,12" COLS="5" OPTS="L2,tp0,i1">
                <BOXHD>
                  <CHED H="1">Item</CHED>
                  <CHED H="1">Contractor facilities capital employed</CHED>
                  <CHED H="1">Assigned value</CHED>
                  <CHED H="1">Amount employed</CHED>
                  <CHED H="1">Profit objective</CHED>
                </BOXHD>
                <ROW>
                  <ENT I="01">26</ENT>
                  <ENT>Land</ENT>
                  <ENT>N/A</ENT>
                  <ENT>(2)</ENT>
                  <ENT>N/A</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">27</ENT>
                  <ENT>Buildings</ENT>
                  <ENT>N/A</ENT>
                  <ENT>(2)</ENT>
                  <ENT>N/A</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">28</ENT>
                  <ENT>Equipment</ENT>
                  <ENT>(1)</ENT>
                  <ENT>(2)</ENT>
                  <ENT>(3)</ENT>
                </ROW>
              </GPOTABLE>
              <P>(1) Select a value from the list in paragraph (c) of this subsection using the evaluation criteria in paragraph (d) of this subsection.</P>
              <P>(2) Use the allocated facilities capital attributable to land, buildings, and equipment, as derived in DD Form 1861, Contract Facilities Capital Cost of Money (see 230,7001).</P>
              <P>(i) In addition to the net book value of facilities capital employed, consider facilities capital that is part of a formal investment plan if the contractor submits reasonable evidence that—</P>
              <P>(A) Achievable benefits to DoD will result from the investment; and</P>
              <P>(B) The benefits of the investment are included in the forward pricing structure.</P>
              <P>(ii) If the value of intracompany transfers has been included in Block 20 at cost (i.e., excluding general and administrative (G&amp;A) expenses and profit), add to the contractor's allocated facilities capital, the allocated facilities capital attributable to the buildings and equipment of those corporate divisions supplying the intracompany transfers. Do not make this addition if the value of intracompany transfers has been included in Block 20 at price (i.e., including G&amp;A expenses and profit).</P>
              <P>(3) Multiply (1) by (2).</P>
              <P>(c) <E T="03">Values: Normal and designated ranges.</E> These are the normal values and ranges. They apply to all situations.</P>
              <GPOTABLE CDEF="s25,10,xs40" COLS="3" OPTS="L2,tp0,i1">
                <BOXHD>
                  <CHED H="1">Asset type</CHED>
                  <CHED H="1">Normal<LI>value</LI>
                    <LI>(percent)</LI>
                  </CHED>
                  <CHED H="1">Designated<LI>range</LI>
                  </CHED>
                </BOXHD>
                <ROW>
                  <ENT I="01">Land</ENT>
                  <ENT>0</ENT>
                  <ENT>N/A</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">Buildings</ENT>
                  <ENT>0</ENT>
                  <ENT>N/A</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">Equipment</ENT>
                  <ENT>17.5</ENT>
                  <ENT>10 to 25</ENT>
                </ROW>
              </GPOTABLE>
              <P>(d) <E T="03">Evaluation criteria.</E> (1) In evaluating facilities capital employed, the contracting officer—</P>
              <P>(i) Should relate the usefulness of the facilities capital to the goods or services being acquired under the prospective contract;</P>
              <P>(ii) Should analyze the productivity improvements and other anticipated industrial base enhancing benefits resulting from the facilities capital investment, including—</P>
              <P>(A) The economic value of the facilities capital, such as physical age, undepreciated value, idleness, and expected contribution to future defense needs; and</P>
              <P>(B) The contractor's level of investment in defense related facilities as compared with the portion of the contractor's total business that is derived from DoD; and</P>
              <P>(iii) Should consider any contractual provisions that reduce the contractor's risk of investment recovery, such as termination protection clauses and capital investment indemnification.</P>
              <P>(2) <E T="03">Above normal conditions.</E>
              </P>
              <P>(i) The contracting officer may assign a higher than normal value if the facilities capital investment has direct, identifiable, and exceptional benefits. Indicators are—</P>
              <P>(A) New investments in state-of-the-art technology that reduce acquisition cost or yield other tangible benefits such as improved product quality or accelerated deliveries; or</P>
              <P>(B) Investments in new equipment for research and development applications.</P>

              <P>(ii) The contracting officer may assign a value significantly above normal when there are direct and measurable benefits in efficiency and significantly <PRTPAGE P="98"/>reduced acquisition costs on the effort being priced. Maximum values apply only to those cases where the benefits of the facilities capital investment are substantially above normal.</P>
              <P>(3) <E T="03">Below normal conditions.</E>
              </P>
              <P>(i) The contracting officer may assign a lower than normal value if the facilities capital investment has little benefit to DoD. Indicators are—</P>
              <P>(A) Allocations of capital apply predominantly to commercial item lines;</P>
              <P>(B) Investments are for such things as furniture and fixtures, home or group level administrative offices, corporate aircraft and hangars, gymnasiums; or</P>
              <P>(C) Facilities are old or extensively idle.</P>
              <P>(ii) The contracting officer may assign a value significantly below normal when a significant portion of defense manufacturing is done in an environment characterized by outdated, inefficient, and labor-intensive capital equipment.</P>
              <CITA>[63 FR 55040, Oct. 14, 1998, as amended at 67 FR 20691, Apr. 26, 2002; 67 FR 49255, July 30, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>215.404-71-5</SECTNO>
              <SUBJECT>Cost efficiency factor.</SUBJECT>
              <P>(a) This special factor provides an incentive for contractors to reduce costs. To the extent that the contractor can demonstrate cost reduction efforts that benefit the pending contract, the contracting officer may increase the prenegotiation profit objective by an amount not to exceed 4 percent of total objective cost (Block 20 of the DD Form 1547) to recognize these efforts (Block 29).</P>
              <P>(b) To determine if using this factor is appropriate, the contracting officer shall consider criteria, such as the following, to evaluate the benefit the contractor's cost reduction efforts will have on the pending contract:</P>
              <P>(1) The contractor's participation in Single Process Initiative improvements;</P>
              <P>(2) Actual cost reductions achieved on prior contracts;</P>
              <P>(3) Reduction or elimination of excess or idle facilities;</P>
              <P>(4) The contractor's cost reduction initiatives (e.g., competition advocacy programs, technical insertion programs, obsolete parts control programs, spare parts pricing reform, value engineering, outsourcing of functions such as information technology). Metrics developed by the contractor such as fully loaded labor hours (i.e., cost per labor hour, including all direct and indirect costs) or other productivity measures may provide the basis for assessing the effectiveness of the contractor's cost reduction initiatives over time;</P>
              <P>(5) The contractor's adoption of process improvements to reduce costs;</P>
              <P>(6) Subcontractor cost reduction efforts;</P>
              <P>(7) The contractor's effective incorporation of commercial items and processes; or</P>
              <P>(8) The contractor's investment in new facilities when such investments contribute to better asset utilization or improved productivity.</P>
              <P>(c) When selecting the percentage to use for this special factor, the contracting officer has maximum flexibility in determining the best way to evaluate the benefit the contractor's cost reduction efforts will have on the pending contract. However, the contracting officer shall consider the impact that quantity differences, learning, changes in scope, and economic factors such as inflation and deflation will have on cost reduction.</P>
              <CITA>[67 FR 20692, Apr. 26, 2002, as amended at 67 FR 49255, July 30, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>215.404-72</SECTNO>
              <SUBJECT>Modified weighted guidelines method for nonprofit organizations other than FFRDCs.</SUBJECT>
              <P>(a) <E T="03">Definition.</E> As used in this subpart, a nonprofit organization is a business entity—</P>
              <P>(1) That operates exclusively for charitable, scientific, or educational purposes;</P>
              <P>(2) Whose earnings do not benefit any private shareholder or individual;</P>
              <P>(3) Whose activities do not involve influencing legislation or political campaigning for any candidate for public office; and</P>
              <P>(4) That is exempted from Federal income taxation under section 501 of the Internal Revenue Code.</P>

              <P>(b) For nonprofit organizations that are entities that have been identified by the Secretary of Defense or a Secretary of a Department as receiving <PRTPAGE P="99"/>sustaining support on a cost-plus-fixed-fee basis from a particular DoD department or agency, compute a fee objective for covered actions using the weighted guidelines method in 215.404-71, with the following modifications:</P>
              <P>(1) <E T="03">Modifications to performance risk (Blocks 21-23 of the DD Form 1547).</E> (i) If the contracting officer assigns a value from the standard designated range (see 215.404-71-2(c)), reduce the fee objective by an amount equal to 1 percent of the costs in Block 20 of the DD Form 1547. Show the net (reduced) amount on the DD Form 1547.</P>
              <P>(ii) Do not assign a value from the technology incentive designated range.</P>
              <P>(2) <E T="03">Modifications to contract type risk (Block 24 of the DD Form 1547).</E> Use a designated range of −1 percent to 0 percent instead of the values in 215.404-71-3. There is no normal value.</P>
              <P>(c) For all other nonprofit organizations except FFRDCs, compute a fee objective for covered actions using the weighted guidelines method in 215.404-71, modified as described in paragraph (b)(1) of this subsection.</P>
              <CITA>[63 FR 63799, Nov. 17, 1998, as amended at 65 FR 77831, Dec. 13, 2000; 67 FR 20692, Apr. 26, 2002; 67 FR 49255, July 30, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>215.404-73</SECTNO>
              <SUBJECT>Alternate structured approaches.</SUBJECT>
              <P>(a) The contracting officer may use an alternate structured approach under 215.404-4(c).</P>
              <P>(b) The contracting officer may design the structure of the alternate, but it shall include—</P>
              <P>(1) Consideration of the three basic components of profit—performance risk, contract type risk (including working capital), and facilities capital employed. However, the contracting officer is not required to complete Blocks 21 through 30 of the DD Form 1547.</P>
              <P>(2) Offset for facilities capital cost of money.</P>
              <P>(i) The contracting officer shall reduce the overall prenegotiation profit objective by the amount of facilities capital cost of money.The profit amount in the negotiation summary of the DD Form 1547 must be net of the offset.</P>
              <P>(ii) This adjustment is needed for the following reason: The values of the profit factors used in the weighted guidelines method were adjusted to recognize the shift in facilities capital cost of money from an element of profit to an element of contract cost (see FAR 31.205-10) and reductions were made directly to the profit factors for performance risk. In order to ensure that this policy is applied to all DoD contracts that allow facilities capital cost of money, similar adjustments shall be made to contracts that use alternate structured approaches.</P>
              <CITA>[63 FR 55040, Oct. 14, 1998, as amended at 67 FR 20692, Apr. 26, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>215.404-74</SECTNO>
              <SUBJECT>Fee requirements for cost-plus-award-fee contracts.</SUBJECT>
              <P>In developing a fee objective for cost-plus-award-fee contracts, the contracting officer shall—</P>
              <P>(a) Follow the guidance in FAR 16.405-2 and 216.405-2;</P>
              <P>(b) Not use the weighted guidelines method or alternate structured approach;</P>
              <P>(c) Apply the offset policy in 215.404-73(b)(2) for facilities capital cost of money, i.e., reduce the base fee by the amount of facilities capital cost of money; and</P>
              <P>(d) Not complete a DD Form 1547.</P>
              <CITA>[63 FR 55040, Oct. 14, 1998, as amended at 67 FR 20692, Apr. 26, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>215.404-75</SECTNO>
              <SUBJECT>Fee requirements for FFRDCs.</SUBJECT>
              <P>For nonprofit organizations that are FFRDCs, the contracting officer—</P>
              <P>(a) Should consider whether any fee is appropriate. Considerations shall include the FFRDC's—</P>
              <P>(1) Proportion of retained earnings (as established under generally accepted accounting methods) that relates to DoD contracted effort;</P>
              <P>(2) Facilities capital acquisition plans;</P>
              <P>(3) Working capital funding as assessed on operating cycle cash needs; and</P>
              <P>(4) Provision for funding unreimbursed costs deemed ordinary and necessary to the FFRDC.</P>

              <P>(b) Shall, when a fee is considered appropriate, establish the fee objective in accordance with FFRDC fee policies in the DoD FFRDC Management Plan.<PRTPAGE P="100"/>
              </P>
              <P>(c) Shall not use the weighted guidelines method or an alternate structured approach.</P>
              <CITA>[63 FR 63800, Nov. 17, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>215.404-76</SECTNO>
              <SUBJECT>Reporting profit and fee statistics.</SUBJECT>
              <P>(a) Contracting officers in contracting offices that participate in the management information system for profit and fee statistics must send completed DD Forms 1547 on actions that exceed the cost or pricing data threshold, where the contracting officer used the weighted guidelines method, an alternate structured approach, or the modified weighted guidelines method, to their designated office within 30 days after contract award.</P>
              <P>(b) Participating contracting offices and their designated offices are—</P>
              <GPOTABLE CDEF="s40,r40" COLS="2" OPTS="L2,tp0,i1">
                <BOXHD>
                  <CHED H="1">Contracting office</CHED>
                  <CHED H="1">Designated office</CHED>
                </BOXHD>
                <ROW EXPSTB="01" RUL="s">
                  <ENT I="21">ARMY</ENT>
                </ROW>
                <ROW EXPSTB="00" RUL="s">
                  <ENT I="01">All</ENT>
                  <ENT>Headquarters, Department of the Army, ATTN: SAAL-PA, Skyline 6, Suite 302, 5109 Leesburg Pike, Falls Church, VA 22041-3201.</ENT>
                </ROW>
                <ROW EXPSTB="01" RUL="s">
                  <ENT I="21">NAVY</ENT>
                </ROW>
                <ROW EXPSTB="00" RUL="s">
                  <ENT I="01">All</ENT>
                  <ENT>Commander, Fleet and Industrial Supply Center, Norfolk, Washington Detachment, Code 402, Washington Navy Yard, Washington, DC 20374-5000.</ENT>
                </ROW>
                <ROW EXPSTB="01" RUL="s">
                  <ENT I="21">AIR FORCE</ENT>
                </ROW>
                <ROW EXPSTB="00">
                  <ENT I="01">Air Force Materiel Command (all field offices)</ENT>
                  <ENT>Air Force Materiel Command, 645 CCSG/SCOS, ATTN: J010 Clerk, 2721 Sacramento Street, Wright-Patterson Air Force Base, OH 45433-5006.</ENT>
                </ROW>
              </GPOTABLE>
              <P>(c) When the contracting officer delegates negotiation of a contract action that exceeds the cost or pricing data threshold to another agency (e.g., to an ACO), that agency must ensure that a copy of the DD Form 1547 is provided to the delegating office for reporting purposes within 30 days after negotiation of the contract action.</P>
              <P>(d) Contracting offices outside the United States, its possessions, and Puerto Rico are exempt from reporting.</P>

              <P>(e) Designated offices send a quarterly (non-cumulative) report of DD Form 1547 data to—
              </P>
              <EXTRACT>
                <P>Washington Headquarters Services, Directorate for Information Operations and Reports, (WHS/DIOR), 1215 Jefferson Davis Highway, Suite 1204, Arlington, VA 22202-4302</P>
              </EXTRACT>
              
              <P>(f) In preparing and sending the quarterly report, designated offices—</P>
              <P>(1) Perform the necessary audits to ensure information accuracy;</P>
              <P>(2) Do not enter classified information;</P>
              <P>(3) Transmit the report via computer magnetic tape using the procedures, format, and editing process issued by the Director of Defense Procurement; and</P>
              <P>(4) Send the reports not later than the 30th day after the close of the quarterly reporting periods.</P>
              <P>(g) These reporting requirements have been assigned Report Control Symbol DD-AT&amp;L(Q) 1751.</P>
              <CITA>[63 FR 55040, Oct. 14, 1998. Redesignated at 63 FR 63800, Nov. 17, 1998, as amended at 65 FR 52952, Aug. 31, 2000; 65 FR 58607, Sept. 29, 2000; 66 FR 49863, Oct. 1, 2001; 66 FR 63335, Dec. 6, 2001; 67 FR 4208, Jan. 29, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>215.406-1</SECTNO>
              <SUBJECT>Prenegotiation objectives.</SUBJECT>
              <P>(a) Also consider—</P>
              <P>(i) Data resulting from application of work measurement systems in developing prenegotiation objectives; and</P>
              <P>(ii) Field pricing assistance personnel participation in planned prenegotiation and negotiation activities.</P>
              <P>(b) Prenegotiation objectives, including objectives related to disposition of findings and recommendations contained in preaward and postward contract audit and other advisory reports, shall be documented an reviewed in accordance with Departmental procedures.</P>
            </SECTION>
            <SECTION>
              <SECTNO>215.406-3</SECTNO>
              <SUBJECT> Documenting the negotiation.</SUBJECT>
              <P>(a)(7) Include the principal factors related to the disposition of findings and recommendation contained in preaward and postaward contract audit and other advisory reports.</P>
              <P>(10) The documentation—</P>

              <P>(A) Must address significant deviations from the prenegotiation profit objective;<PRTPAGE P="101"/>
              </P>
              <P>(B) Should include the DD Form 1547, Record of Weighted Guidelines Application (see 215.404-70), if used, with supporting rationale; and</P>
              <P>(C) Must address the rationale for not using the weighted guidelines method when its use would otherwise be required by 215.404-70.</P>
            </SECTION>
            <SECTION>
              <SECTNO>215.407-2</SECTNO>
              <SUBJECT> Make-or-buy programs.</SUBJECT>
              <P>(e) <E T="03">Program requirements—</E>(1) <E T="03">Items and work included.</E> The minimum dollar amount is $1 million.</P>
            </SECTION>
            <SECTION>
              <SECTNO>215.407-3</SECTNO>
              <SUBJECT>Forward pricing rate agreements.</SUBJECT>
              <P>(b)(i) Use forward pricing rate agreement (FPRA) rates when such rates are available, unless waived on a case-by-case basis by the head of the contracting activity.</P>
              <P>(ii) Advise the ACO of each case waived.</P>
              <P>(iii) Contact the ACO for questions on FPRAs or recommended rates.</P>
            </SECTION>
            <SECTION>
              <SECTNO>215.407-4</SECTNO>
              <SUBJECT> Should-cost review.</SUBJECT>
              <P>(b) <E T="03">Program should-cost review.</E> (2) DoD contracting activities should consider performing a program should-cost review before award of a definitive contract for a major system as defined by DoDI 5000.2. See DoDI 5000.2 regarding industry participation.</P>
              <P>(c) <E T="03">Overhead should-cost review.</E> (1) Contact the Defense Contract Management Agency (DCMA) (http://www.dcmc.hq.dla.mil/) for questions on overhead should-cost analysis.</P>
              <P>(2)(A) DCMA or the military department responsible for performing contact administration functions (e.g., Navy SUPSHIP) should consider, based on risk assessment, performing an overhead should-cost review of a contractor business unit (as defined in FAR 2.101) when all of the following conditions exist:</P>
              <P>(<E T="03">1</E>) Projected annual sales to DoD exceed $1 billion;</P>
              <P>(<E T="03">2</E>) Projected DoD versus total business exceeds 30 percent;</P>
              <P>(<E T="03">3</E>) Level of sole source DoD contracts is high;</P>
              <P>(<E T="03">4</E>) Significant volume of proposal activity is anticipated;</P>
              <P>(<E T="03">5</E>) Production or development of a major weapon system or program is anticipated; and</P>
              <P>(<E T="03">6</E>) Contractor cost control/reduction initiatives appear inadequate.</P>
              <P>(B) The head of the contracting activity may request an overhead should-cost review for a business unit that does not meet the criteria in paragraph (c)(2)(A) of this subsection.</P>
              <P>(C) Overhead should-cost reviews are labor intensive. These reviews generally involve participation by the contracting, contract administration, and contract audit elements. The extent of availability of military department, contract administration, and contract audit resources to support DCMA-led teams should be considered when determining whether a review will be conducted. Overhead should-cost reviews generally shall not be conducted at a contractor business segment more frequently than every 3 years.</P>
              <CITA>[63 FR 55040, Oct. 14, 1998, as amended at 65 FR 52952, Aug. 31, 2000; 65 FR 58607, Sept. 29, 2000; 67 FR 49252, 49255, July 30, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>215.407-5</SECTNO>
              <SUBJECT>Estimating systems.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>215.407-5-70</SECTNO>
              <SUBJECT>Disclosure, maintenance, and review requirements.</SUBJECT>
              <P>(a) <E T="03">Definitions.</E>
              </P>
              <P>(1) <E T="03">Acceptable estimating system</E> means an estimating system that—</P>
              <P>(i) Is established, maintained, reliable, and consistently applied; and</P>
              <P>(ii) Produces verifiable, supportable, and documented cost estimates.</P>
              <P>(2) <E T="03">Contractor</E> means a business unit as defined in FAR 2.101.</P>
              <P>(3) <E T="03">Estimating system</E> is as defined in the clause at 252.215-7002, Cost Estimating System Requirements.</P>
              <P>(4) <E T="03">Significant estimating system deficiency</E> means a shortcoming in the estimating system that is likely to consistently result in proposal estimates for total cost or a major cost element(s) that do not provide an acceptable basis for negotiation of fair and reasonable prices.</P>
              <P>(b) <E T="03">Applicability.</E> (1) DoD policy is that all contractors have estimating systems that—</P>
              <P>(i) Are acceptable;</P>

              <P>(ii) Consistently produce well-supported proposals that are acceptable as a basis for negotiation of fair and reasonable prices;<PRTPAGE P="102"/>
              </P>
              <P>(iii) Are consistent with and integrated with the contractor's related management systems; and</P>
              <P>(iv) Are subject to applicable financial control systems.</P>
              <P>(2) A large business contractor is subject to estimating system disclosure, maintenance, and review requirements if—</P>
              <P>(i) In its preceding fiscal year, the contractor received DoD prime contracts or subcontracts totaling $50 million or more for which cost or pricing data were required; or</P>
              <P>(ii) In its preceding fiscal year, the contractor received DoD prime contracts or subcontracts totaling $10 million or more (but less than $50 million) for which cost or pricing data were required and the contracting officer, with concurrence or at the request of the ACO, determines it to be in the best interest of the Government (e.g., significant estimating problems are believed to exist or the contractor's sales are predominantly Government).</P>
              <P>(c) <E T="03">Responsibilities.</E> (1) The contracting officer shall—</P>
              <P>(i) Through use of the clause at 252.215-7002, Cost Estimating System Requirements, apply the disclosure, maintenance, and review requirements to large business contractors meeting the criteria in paragraph (b)(2)(i) of this subsection;</P>
              <P>(ii) Consider whether to apply the disclosure, maintenance, and review requirements to large business contractors under paragraph (b)(2)(ii) of this subsection; and</P>
              <P>(iii) Not apply the disclosure, maintenance, and review requirements to other than large business contractors.</P>
              <P>(2) The cognizant ACO, for contractors subject to paragraph (b)(2) of this subsection, shall—</P>
              <P>(i) Determine the acceptability of the disclosure and system; and</P>
              <P>(ii) Pursue correction of any deficiencies.</P>
              <P>(3) The cognizant auditor, on behalf of the ACO, serves as team leader in conducting estimating system reviews.</P>
              <P>(4) A contractor subject to estimating system disclosure, maintenance, and review requirements shall—</P>
              <P>(i) Maintain an acceptable system;</P>
              <P>(ii) Describe its system to the ACO:</P>
              <P>(iii) Provide timely notice of changes in the system; and</P>
              <P>(iv) Correct system deficiencies identified by the ACO.</P>
              <P>(d) <E T="03">Characteristics of an acceptable estimating system—</E>(1) <E T="03">General.</E> An acceptable system should provide for the use of appropriate source data, utilize sound estimating techniques and good judgment, maintain a consistent approach, and adhere to established policies and procedures.</P>
              <P>(2) <E T="03">Evaluation.</E> In evaluating the acceptability of a contractor's estimating system, the ACO should consider whether the contractor's estimating system, for example—</P>
              <P>(i) Establishes clear responsibility for preparation, review, and approval of cost estimates;</P>
              <P>(ii) Provides a written description of the organization and duties of the personnel responsible for preparing, reviewing, and approving cost estimates;</P>
              <P>(iii) Assures that relevant personnel have sufficient training, experience, and guidance to perform estimating tasks in accordance with the contractor's established procedures;</P>
              <P>(iv) Identifies the sources of data and the estimating methods and rationale used in developing cost estimates;</P>
              <P>(v) Provides for appropriate supervision throughout the estimating process;</P>
              <P>(vi) Provides for consistent application of estimating techniques;</P>
              <P>(vii) Provides for detection and timely correction of errors;</P>
              <P>(viii) Protects against cost duplication and omissions;</P>
              <P>(ix) Provides for the use of historical experience, including historical vendor pricing information, where appropriate;</P>
              <P>(x) Requires use of appropriate analytical methods;</P>
              <P>(xi) Integrates information available from other management systems, where appropriate;</P>

              <P>(xii) Requires management review including verification that the company's estimating policies, procedures, and practices comply with this regulation;<PRTPAGE P="103"/>
              </P>
              <P>(xiii) Provides for internal review of and accountability for the acceptability of the estimating system, including the comparison of projected results to actual results and an analysis of any differences;</P>
              <P>(xiv) Provides procedures to update cost estimates in a timely manner throughout the negotiation process; and</P>
              <P>(xv) Addresses responsibility for review and analysis of the reasonableness of subcontract prices.</P>
              <P>(3) <E T="03">Indicators of potentially significant estimating deficiencies.</E> The following examples indicate conditions that may produce or lead to significant estimating deficiencies—</P>
              <P>(i) Failure to ensure that historical experience is available to and utilized by cost estimators, where appropriate;</P>
              <P>(ii) Continuing failure to analyze material costs or failure to perform subcontractor cost reviews as required;</P>
              <P>(iii) Consistent absence of analytical support for significant proposed cost amounts;</P>
              <P>(iv) Excessive reliance on individual personal judgments where historical experience or commonly utilized standards are available;</P>
              <P>(v) Recurring significant defective pricing findings within the same cost element(s);</P>
              <P>(vi) Failure to integrate relevant parts of other management systems (e.g., production control or cost accounting) with the estimating system so that the ability to generate reliable cost estimates is impaired; and</P>
              <P>(vii) Failure to provide established policies, procedures, and practices to persons responsible for preparing and supporting estimates.</P>
              <P>(e) <E T="03">Review procedures.</E> Cognizant audit and contract administration activities shall—</P>
              <P>(1) Establish and manage regular programs for reviewing selected contractors’ estimating systems.</P>
              <P>(2) Conduct reviews as a team effort.</P>
              <P>(i) The contract auditor will be the team leader.</P>
              <P>(ii) The team leader will—</P>
              <P>(A) Coordinate with the ACO to ensure that team membership includes qualified contract administration technical specialists.</P>
              <P>(B) Advise the ACO and the contractor of significant findings during the conduct of the review and during the exit conference.</P>
              <P>(C) Prepare a team report.</P>
              <P>
                <E T="03">(1)</E> The ACO or a representative should—</P>
              <P>
                <E T="03">(i)</E> Coordinate the contract administration activity's review;</P>
              <P>
                <E T="03">(ii)</E> Consolidate findings and recommendations; and</P>
              <P>
                <E T="03">(iii)</E> When appropriate, prepare a comprehensive written report for submission to the auditor.</P>
              <P>
                <E T="03">(2)</E> The contract auditor will attach the ACO's report to the team report.</P>
              <P>(3) Tailor reviews to take full advantage of the day-to-day work done by both organizations.</P>
              <P>(4) Conduct a review, every 3 years, of contractors subject to the disclosure requirements. The ACO and the auditor may lengthen or shorten the 3-year period based on their joint risk assessment of the contractor's past experience and current vulnerability.</P>
              <P>(f) <E T="03">Disposition of survey team findings</E>—(1) <E T="03">Reporting of survey team findings.</E> The auditor will document the findings and recommendations of the survey team in a report to the ACO. If there are significant estimating deficiencies, the auditor will recommend disapproval of all or portions of the estimating system.</P>
              <P>(2) <E T="03">Initial notification to the contractor.</E> The ACO will provide a copy of the team report to the contractor and, unless there are no deficiencies mentioned in the report, will ask the contractor to submit a written response in 30 days, or a reasonable extension.</P>
              <P>(i) If the contractor agrees with the report, the contractor has 60 days from the date of initial notification to correct any identified deficiencies or submit a corrective action plan showing milestones and actions to eliminate the deficiencies.</P>
              <P>(ii) If the contractor disagrees, the contractor should provide rationale in its written response.</P>
              <P>(3) <E T="03">Evaluation of contractor's response.</E> The ACO, in consultation with the auditor, will evaluate the contractor's response to determine whether—</P>

              <P>(i) The estimating system contains deficiencies that need correction;<PRTPAGE P="104"/>
              </P>
              <P>(ii) The deficiencies are significant estimating deficiencies that would result in disapproval of all or a portion of the contractor's estimating system; or</P>
              <P>(iii) The contractor's proposed corrective actions are adequate to eliminate the deficiency.</P>
              <P>(4) <E T="03">Notification of ACO determination.</E> The ACO will notify the contractor and the auditor of the determination and, if appropriate, of the Government's intent to disapprove all or selected portions of the system. The notice shall—</P>
              <P>(i) List the cost elements covered;</P>
              <P>(ii) Identify any deficiencies requiring correction; and</P>
              <P>(iii) Require the contractor to correct the deficiencies within 45 days or submit an action plan showing milestones and actions to eliminate the deficiencies.</P>
              <P>(5) <E T="03">Notice of disapproval.</E> If the contractor has neither submitted an acceptable corrective action plan nor corrected significant deficiencies within 45 days, the ACO shall disapprove all or selected portions of the contractor's estimating system. The notice of disapproval must—</P>
              <P>(i) Identify the cost elements covered;</P>
              <P>(ii) List the deficiencies that prompted the disapproval; and</P>
              <P>(iii) Be sent to the cognizant auditor, and each contracting and contract administration officer having substantial business with the contractor.</P>
              <P>(6) <E T="03">Monitoring contractor's corrective action.</E> The auditor and the ACO will monitor the contractor's progress in correcting deficiencies. If the contractor fails to make adequate progress, the ACO shall take whatever action is necessary to ensure that the contractor corrects the deficiencies. Examples of actions the ACO can take are: bringing the issue to the attention of higher level management, reducing or suspending progress payments (see FAR 32.503-6), and recommending nonaward of potential contracts.</P>
              <P>(7) <E T="03">Withdrawal of estimating system disapproval.</E> The ACO will withdraw the disapproval when the ACO determines that the contractor has corrected the significant system deficiencies. The ACO will notify the contractor, the auditor, and affected contracting and contract administration activities of the withdrawal.</P>
              <P>(g) <E T="03">Impact of estimating system deficiencies on specific proposals.</E> (1) Field pricing teams will discuss identified estimating system deficiencies and their impact in all reports on contractor proposals until the deficiencies are resolved.</P>
              <P>(2) The contracting officer responsible for negotiation of a proposal generated by an estimating system with an identified deficiency shall evaluate whether the deficiency impacts the negotiations. If it does not, the contracting officer should proceed with negotiations. If it does, the contracting officer should consider other alternatives, e.g.—</P>
              <P>(i) Allowing the contractor additional time to correct the estimating system deficiency and submit a corrected proposal;</P>
              <P>(ii) Considering another type of contract, e.g., FPIF instead of FFP;</P>
              <P>(iii) Using additional cost analysis techniques to determine the reasonableness of the cost elements affected by the system's deficiency;</P>
              <P>(iv) Segregating the questionable areas as a cost reimbursable line item;</P>
              <P>(v) Reducing the negotiation objective for profit or fee; or</P>
              <P>(vi) Including a contract (reopener) clause that provides for adjustment of the contract amount after award.</P>
              <P>(3) The contracting officer who incorporates a reopener clause into the contract is responsible for negotiating price adjustments required by the clause. Any reopener clause necessitated by an estimating deficiency should—</P>
              <P>(i) Clearly identify the amounts and items that are in question at the time of negotiation;</P>
              <P>(ii) Indicate a specific time or subsequent event by which the contractor will submit a supplemental proposal, including cost or pricing data, identifying the cost impact adjustment necessitated by the deficient estimating system;</P>
              <P>(iii) Provide for the contracting officer to unilaterally adjust the contract price if the contractor fails to submit the supplemental proposal; and</P>

              <P>(iv) Provide that failure of the Government and the contractor to agree to <PRTPAGE P="105"/>the price adjustment shall be a dispute under the Disputes clause.</P>
              <CITA>[63 FR 55040, Oct. 14, 1998, as amended at 67 FR 49252, July 30, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>215.408</SECTNO>
              <SUBJECT>Solicitation provisions and contract clauses.</SUBJECT>
              <P>(1) Use the clause at 252.215-7000, Pricing Adjustments, in solicitations and contracts that contain the clause at—</P>
              <P>(i) FAR 52.215-11, Price Reduction for Defective Cost or Pricing Data—Modifications;</P>
              <P>(ii) FAR 52.215-12, Subcontractor Cost or Pricing Data; or</P>
              <P>(iii) FAR 52.215-13, Subcontractor Cost or Pricing Data—Modifications.</P>
              <P>(2) Use the clause at 252.215-7002, Cost Estimating System requirements, in all solicitations and contracts to be award on the basis of cost or pricing data.</P>
            </SECTION>
            <SECTION>
              <SECTNO>215.470</SECTNO>
              <SUBJECT>Estimated data prices.</SUBJECT>
              <P>(a) DoD requires estimates of the prices of data in order to evaluate the cost to the Government of data items in terms of their management, product, or engineering value.</P>
              <P>(b) When data are required to be delivered under a contract, the solicitation will include DD Form 1423, Contract Data Requirements List. The form and the provision included in the solicitation request the offeror to state what portion of the total price is estimated to be attributable to the production or development of the listed data for the Government (not to the sale of rights in the data). However, offerors’ estimated prices may not reflect all such costs; and different offerors may reflect these costs in a different manner, for the following reasons—</P>
              <P>(1) Differences in business practices in competitive situations;</P>
              <P>(2) Differences in accounting systems among offerors;</P>
              <P>(3) Use of factors or rates on some portions of the data;</P>
              <P>(4) Application of common effort to two or more data items; and</P>
              <P>(5) differences in data preparation methods among offerors.</P>
              <P>(c) Data price estimates should not be used for contract pricing purposes without further analysis.</P>
              <P>(d) The contracting officer shall ensure that the contract does not include a requirement for data that the contractor has delivered or is obligated to deliver to the government under another contract or subcontract, and that the successful offeror identifies any such data required by the solicitation. However, where duplicate data are desired, the contract price shall include the costs of duplication, but not of preparation, of such data.</P>
            </SECTION>
          </SUBPART>
        </PART>
        <PART>
          <EAR>Pt. 216</EAR>
          <HD SOURCE="HED">PART 216—TYPES OF CONTRACTS</HD>
          <CONTENTS>
            <SUBPART>
              <HD SOURCE="HED">Subpart 216.1—Selecting Contract Types</HD>
              <SECHD>Sec.</SECHD>
              <SECTNO>216.104</SECTNO>
              <SUBJECT>Factors in selecting contract types.</SUBJECT>
              <SECTNO>216.104-70</SECTNO>
              <SUBJECT>Research and development.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 216.2—Fixed-Price Contracts</HD>
              <SECTNO>216.203</SECTNO>
              <SUBJECT>Fixed-price contracts with economic price adjustment.</SUBJECT>
              <SECTNO>216.203-4</SECTNO>
              <SUBJECT>Contract clauses.</SUBJECT>
              <SECTNO>216.203-4</SECTNO>
              <SUBJECT>-70Additional clauses.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 216.3—Cost-Reimbursement Contracts</HD>
              <SECTNO>216.306</SECTNO>
              <SUBJECT>Cost-plus-fixed-fee contracts.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 216.4—Incentive Contracts</HD>
              <SECTNO>216.402</SECTNO>
              <SUBJECT>Application of predetermined, formula-type incentives.</SUBJECT>
              <SECTNO>216.402-2</SECTNO>
              <SUBJECT>Technical performance incentives.</SUBJECT>
              <SECTNO>216.403</SECTNO>
              <SUBJECT>Fixed-price incentive contracts.</SUBJECT>
              <SECTNO>216.403-2</SECTNO>
              <SUBJECT>Fixed-price incentive (successive targets) contracts.</SUBJECT>
              <SECTNO>216.404</SECTNO>
              <SUBJECT>Fixed-price contracts with award fees.</SUBJECT>
              <SECTNO>216.405</SECTNO>
              <SUBJECT>Cost-reimbursement incentive contracts.</SUBJECT>
              <SECTNO>216.405-1</SECTNO>
              <SUBJECT>Cost-plus-incentive-fee contracts.</SUBJECT>
              <SECTNO>216.405-2</SECTNO>
              <SUBJECT>Cost-plus-award-fee contracts.</SUBJECT>
              <SECTNO>216.470</SECTNO>
              <SUBJECT>Other applications of award fees.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 216.5—Indefinite-Delivery Contracts</HD>
              <SECTNO>216.501</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <SECTNO>216.505</SECTNO>
              <SUBJECT>Ordering.</SUBJECT>
              <SECTNO>216.506</SECTNO>
              <SUBJECT>Solicitation provisions and contract clauses.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 216.6—Time-and-Materials, Labor-Hour, and Letter Contracts</HD>
              <SECTNO>216.603</SECTNO>
              <SUBJECT>Letter contracts.</SUBJECT>
              <SECTNO>216.603-3</SECTNO>
              <SUBJECT>Limitations.</SUBJECT>
              <SECTNO>216.603-4</SECTNO>
              <SUBJECT>Contract clauses.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <PRTPAGE P="106"/>
              <HD SOURCE="HED">Subpart 216.7—Agreements</HD>
              <SECTNO>216.703</SECTNO>
              <SUBJECT>Basic ordering agreements.</SUBJECT>
            </SUBPART>
          </CONTENTS>
          <AUTH>
            <HD SOURCE="HED">Authority:</HD>
            <P>41 U.S.C. 421 and 48 CFR chapter 1.</P>
          </AUTH>
          <SOURCE>
            <HD SOURCE="HED">Source:</HD>
            <P>56 FR 36340, July 31, 1991, unless otherwise noted.</P>
          </SOURCE>
          <SUBPART>
            <HD SOURCE="HED">Subpart 216.1—Selecting Contract Types</HD>
            <SECTION>
              <SECTNO>216.104</SECTNO>
              <SUBJECT>Factors in selecting contract types.</SUBJECT>
              <P>(d) Design stability should also be considered.</P>
            </SECTION>
            <SECTION>
              <SECTNO>216.104-70</SECTNO>
              <SUBJECT>Research and development.</SUBJECT>
              <P>(a) <E T="03">General.</E> There are several categories of research and development (R&amp;D) contracts: research, exploratory development, advanced development, engineering development, and operational systems development (see 235.001 for definitions). Each category has a primary technical or functional objective. Different parts of a project may fit several categories. The contract type must fit the work required, not just the classification of the overall program.</P>
              <P>(b) <E T="03">Research and exploratory development.</E> (1) Price is not necessarily the primary factor in determining the contract type.</P>
              <P>(2) The nature of the work to be performed will usually result in a cost-plus award fee, cost-plus fixed fee term, cost-no-fee, or cost-sharing contract.</P>
              <P>(3) If the Government and the contractor can identify and agree upon the level of contractor effort required, the contracting officer may select a firm fixed-price level-of-effort contract, except see 235.006.</P>
              <P>(4) If the Government and the contractor agree that an incentive arrangement is desirable and capable of being evaluated after completion of the work, the contracting officer may use an incentive type contract.</P>
              <P>(c) <E T="03">Advanced development.</E> (1) The nature of the work to be performed often results in a cost-plus fixed fee completion type contract.</P>
              <P>(2) Contracting officers may select incentive contracts if—</P>
              <P>(i) Realistic and measurable targets are identified; and</P>
              <P>(ii) Achievement of those targets is predictable with a reasonable degree of accuracy.</P>
              <P>(3) Contracting officers should not use contracts with only cost incentives where—</P>
              <P>(i) There will be a large number of major technical changes; or</P>
              <P>(ii) Actions beyond the control of the contractor may influence the contractor's achievement of cost targets.</P>
              <P>(d) <E T="03">Engineering development and operational systems development.</E> (1) When selecting contract types, also consider—</P>
              <P>(i) The degree to which the project is clearly defined, which in turn affects the contractor's ability to provide accurate cost estimates;</P>
              <P>(ii) The need for effort that will overlap that of earlier stages;</P>
              <P>(iii) The need for firm technical direction by the Government; and</P>
              <P>(iv) The degree of configuration control the Government will exercise.</P>
              <P>(2) For development efforts, particularly for major defense systems, the preferred contract type is cost reimbursement.</P>
              <P>(3) Contracting officers should use fixed-price type contracts when risk has been reduced to the extent that realistic pricing can occur; e.g., when a program has reached the final stages of development and technical risks are minimal, except see 235.006.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 216.2—Fixed-Price Contracts</HD>
            <SECTION>
              <SECTNO>216.203</SECTNO>
              <SUBJECT>Fixed-price contracts with economic price adjustment.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>216.203-4</SECTNO>
              <SUBJECT>Contract clauses.</SUBJECT>
              <P>(a) <E T="03">Adjustment based on established prices-standard supplies.</E> Generally, use the clause at FAR 52.216-2, Economic Price Adjustment-Standard Supplies, only when—</P>
              <P>(i) The total contract price exceeds the simplified acquisition threshold; and</P>
              <P>(ii) Delivery will not be completed within 6 months after the contract date.</P>
              <P>(b) <E T="03">Adjustment based on established prices-semistandard supplies.</E> Generally, use the clause at FAR 52.216-3, Economic Price Adjustment-Semistandard Supplies, only when—<PRTPAGE P="107"/>
              </P>
              <P>(i) The total contract price exceeds the simplified acquisition threshold; and</P>
              <P>(ii) Delivery will not be completed within 6 months after the contract date.</P>
              <P>(c) <E T="03">Adjustments based on actual cost of labor or material.</E>
              </P>
              <P>(2) Limit use of the clause at FAR 52.216-4, Economic Price Adjustment-Labor and Material, to contracts in which the price exceeds $50,000 and the period of performance exceeds 6 months, unless otherwise approved by the chief of the contracting office. Use an appropriate modification of the clause in sealed bidding.</P>
              <P>(4) Apply the full amount of the decrease in the labor rates and fringe benefits or unit prices for materials.</P>
              <P>(d) <E T="03">Adjustments based on cost indexes of labor or material.</E> Use the following guidelines—</P>
              <P>(i) Do not make the clause unnecessarily complex.</P>
              <P>(ii) Normally, the clause should not provide either a ceiling or a floor for adjustment unless adjustment is based on indices below the four digit level of the Bureau of Labor Statistics—</P>
              <P>(A) Producer Price Index;</P>
              <P>(B) Employment Cost Index for wages and salaries, benefits, and compensation costs for aerospace industries; or</P>
              <P>(C) Wage and Income Series by Standard Industrial Classification (Labor).</P>
              <P>(iii) Normally, the clause should cover all potential economic fluctuations within the original contract period of performance.</P>
              <P>(iv) The clause must accurately identify the index(es) upon which adjustments will be based.</P>
              <P>(A) It must provide for a means to adjust for appropriate economic fluctuation in the event publication of the movement of the designated index is discontinued. This might include the substitution of another index if the time remaining would justify doing so and an appropriate index is reasonably available, or some other method for repricing the remaining portion of work to be performed.</P>
              <P>(B) Normally, there should be no need to make an adjustment if computation of the identified index is altered. However, it may be appropriate to provide for adjustment of the economic fluctuation computations in the event there is such a substantial alteration in the method of computing the index that the original intent of the parties is negated.</P>
              <P>(C) When an index to be used is subject to revision (e.g., the Bureau of Labor Statistics Producer Price Indexes), the economic price adjustment clause must specify that any economic price adjustment will be based on a revised index and must identify which revision to the index will be used.</P>
              <P>(v) Construct the index to encompass a large sample of relevant items while still bearing a logical relationship to the type of contract costs being measured. The basis of the index should not be so large and diverse that it is significantly affected by fluctuations not relevant to contract performance, but it must be broad enough to minimize the effect of any single company, including the anticipated contractor(s).</P>
              <P>(vi) Construction of an index is largely dependent upon three general series published by the U.S. Department of Labor, Bureau of Labor Statistics (BLS). These are the—</P>
              <P>(A) Industrial Commodities portion of the Producer Price Index;</P>
              <P>(B) Employment Cost Index for wages and salaries, benefits, and compensation costs for aerospace industries; and</P>
              <P>(C) Wage and Income Series by Standard Industrial Classification (Labor). Since there is no BLS published series currently available that relates directly to total prices of delivered DoD aircraft, ships, missiles, electronics, etc., it will be necessary to construct composite indices from major portions of the three series identified.</P>
              <P>(vii) Normally, do not use more than two indices, i.e., one for labor (direct and indirect) and one for material (direct and indirect).</P>

              <P>(viii) The clause must establish and properly identify a base period comparable to the contract periods for which adjustments are to be made as a reference point for application of an index.<PRTPAGE P="108"/>
              </P>
              <P>(ix) The clause should not provide for an adjustment beyond the original contract performance period, including options. The start date for the adjustment may be the beginning of the contract or a later time, as appropriate, based on the projected rate of expenditures.</P>
              <P>(x) The expenditure profile for both labor and material should be based on a predetermined rate of expenditure (expressed as the percentage of material or labor usage as it relates to the total contract price) in lieu of actual cost incurred.</P>
              <P>(A) If the clause is to be used in a competitive acquisition, determine the labor and material allocations, with regard to both mix of labor and material and rate of expenditure by percentage, in a manner which will, as nearly as possible, approximate the average expenditure profile of all companies to be solicited so that all companies may compete on an equal basis.</P>
              <P>(B) If the clause is to be used in a noncompetitive acquisition, the labor and material allocations may be subject to negotiation and agreement.</P>
              <P>(C) For multiyear contracts, establish predetermined expenditure profile tables for each of the annual increments in the multiyear buy. Each of the second and subsequent year tables must be cumulative to reflect the total expenditures for all increments funded through the latest multiyear funding.</P>
              <P>(xi) The clause should state the percentage of the contract price subject to price adjustment.</P>
              <P>(A) Normally, do not apply adjustments to the profit portion of the contract.</P>
              <P>(B) Examine the labor and material portions of the contract to exclude any areas that do not require adjustment. For example, it may be possible to exclude—</P>
              <P>(<E T="03">1</E>) Subcontracting for short periods of time during the early life of the contract which could be covered by firm-fixed-priced subcontracting;</P>
              <P>(<E T="03">2</E>) Certain areas of overhead, e.g., depreciation charges, prepaid insurance costs, rental costs, leases, certain taxes, and utility charges;</P>
              <P>(<E T="03">3</E>) Labor costs for which a definitive union agreement exists; and</P>
              <P>(<E T="03">4</E>) Those costs not likely to be affected by fluctuation in the economy.</P>
              <P>(C) Allocate that part of the contract price subject to adjustment to specific periods of time (e.g., quarterly, semiannually, etc.) based on the most probable expenditure or commitment basis (expenditure profile).</P>
              <P>(xii) The clause should provide for definite times or events that trigger price adjustments. Adjustments should be frequent enough to afford the contractor appropriate economic protection without creating a burdensome administrative effort. The adjustment period should normally range from quarterly to annually.</P>
              <P>(xiii) When the contract contains cost incentives, any sums paid to the contractor on account of economic price adjustment provisions must be subtracted from the total of the contractor's allowable costs for the purpose of establishing the total costs to which the cost incentive provisions apply. If the incentive arrangement is cited in percentage ranges, rather than dollar ranges, above and below target costs, structure the economic price adjustment clause to maintain the original contract incentive range in dollars.</P>
              <P>(xiv) The economic price adjustment clause should provide that once the labor and material allocations and the portion of the contract price subject to price adjustment have been established, they remain fixed through the life of the contract and shall not be modified except in the event of significant changes in the scope of the contract. The clause should state that pricing actions pursuant to the Changes clause or other provisions of the contract will be priced as though there were no provisions for economic price adjustment. However, subsequent modifications may include a change to the delivery schedule or significantly change the amount of, or mix of, labor or material for the contract. In such cases, it may be appropriate to prospectively apply economic price adjustment coverage. This may be accomplished by—</P>

              <P>(A) Using an economic price adjustment (EPA) clause that applies only to the effort covered by the modification;<PRTPAGE P="109"/>
              </P>
              <P>(B) Revising the baseline data or period in the EPA clause for the basic contract to include the new work; or</P>
              <P>(C) Using an entirely new EPA clause for the entire contract, including the new work.</P>
              <P>(xv) Consistent with the factors in paragraphs (d)(i) through (xiv) of this subsection, it may also be appropriate to provide in the prime contract for similar economic price adjustment arrangements between the prime contractor and affected subcontractors to allocate risks properly and ensure that those subcontractors are provided similar economic protection.</P>
              <P>(xvi) When economic price adjustment clauses are included in contracts that do not require submission of cost or pricing data as provided for in FAR 15.403-1, the contracting officer must obtain adequate information to establish the baseline from which adjustments will be made. The contracting officer may require verification of the data submitted to the extent necessary to permit reliance upon the data as a reasonable baseline.</P>
              <CITA>[56 FR 36340, July 31, 1991, as amended at 62 FR 40472, July 29, 1997; 63 FR 11529, Mar. 9, 1998; 64 FR 2597, Jan. 15, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>216.203-4-70</SECTNO>
              <SUBJECT>Additional clauses.</SUBJECT>
              <P>(a) <E T="03">Price adjustment for basic steel, aluminum, brass, bronze, or copper mill products.</E>
              </P>
              <P>(1) The price adjustment clause at 252.216-7000, Economic Price Adjustment—Basic Steel, Aluminum, Brass, Bronze, or Copper Mill Products, may be used in fixed-price supply contracts for basic steel, aluminum, brass, bronze, or copper mill products, such as sheets, plates, and bars, when an established catalog or market price exists for the particular product being acquired.</P>
              <P>(2) The 10 percent figure in paragraph (d)(1) of the clause shall not be exceeded unless approval is obtained at a level above the contracting officer.</P>
              <P>(b) <E T="03">Price adjustment for nonstandard steel items.</E> (1) The price adjustment clause at 252.216-7001, Economic Price Adjustment—Nonstandard Steel Items, may be used in fixed-price supply contracts when—</P>
              <P>(i) The contractor is a steel producer and actually manufacture the standard steel mill item referred to in the “base steel index” definition of the clause; and</P>
              <P>(ii) The items being acquired are nonstandard steel items made wholly or in part of standard steel mill items.</P>
              <P>(2) When this clause is included in invitations for bids, omit Note 6 of the clause and all references to Note 6.</P>
              <P>(3) Solicitations shall instruct offerors to complete all blanks in accordance with the applicable notes.</P>
              <P>(4) When the clause is to provide for adjustment on a basis other than “established price” (see Note 6 of the clause), that price must be verified.</P>
              <P>(5) The ten percent figure in paragraph (e)(4) of the clause shall not be exceeded unless approval is obtained at a level above the contracting officer.</P>
              <P>(c) <E T="03">Price adjustment for wage rates or material prices controlled by a foreign government.</E> (1) The price adjustment clause at 252.216-7003, Economic Price Adjustment—Wage Rates or Material Prices Controlled by a Foreign Government, may be used in fixed-price supply and service contracts when—</P>
              <P>(i) The contract is to be performed wholly or in part in a foreign country; and</P>
              <P>(ii) A foreign government controls wage rates or material prices and may, during contract performance, impose a mandatory change in wages or prices of material.</P>
              <P>(2) Verify the base wage rates and material prices prior to contract award and prior to making any adjustment in the contract price.</P>
              <CITA>[56 FR 36340, July 31, 1991, as amended at 62 FR 34122, June 24, 1997; 62 FR 40472, July 29, 1997]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 216.3—Cost-Reimbursement Contracts</HD>
            <SECTION>
              <SECTNO>216.306</SECTNO>
              <SUBJECT>Cost-plus-fixed-fee contracts.</SUBJECT>
              <P>(c) <E T="03">Limitations.</E>
              </P>
              <P>(i) Except as provided in paragraph (c)(ii) of this section, annual military construction appropriations acts prohibit the use of cost-plus-fixed-fee contracts that—</P>
              <P>(A) Are funded by a military construction appropriations act;</P>
              <P>(B) Are estimated to exceed $25,000; and<PRTPAGE P="110"/>
              </P>
              <P>(C) Will be performed within the United States, except Alaska.</P>
              <P>(ii) The prohibition in paragraph (c)(i) of this section does not apply—</P>
              <P>(A) To contracts for environmental restoration at an installation that is being closed or realigned where payments are made from a Base Realignment and Closure Account; or</P>
              <P>(B) To contracts specifically approved in writing, setting forth the reasons therefor, in accordance with the following:</P>
              <P>
                <E T="03">(1)</E> The Secretaries of the military departments are authorized to approve such contracts that are for environmental work only, provided the environmental work is not classified as construction, as defined by 10 U.S.C. 2801.</P>
              <P>
                <E T="03">(2)</E> The Secretary of Defense or designee must approve such contracts that are not for environmental work only or are for environmental work classified as construction.</P>
              <CITA>[62 FR 1058, Jan. 8, 1997; 62 FR 1817, Jan. 13, 1997; 62 FR 49305, Sept. 19, 1997]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 216.4—Incentive Contracts</HD>
            <SECTION>
              <SECTNO>216.402</SECTNO>
              <SUBJECT>Application of predetermined, formula-type incentives.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>216.402-2</SECTNO>
              <SUBJECT>Technical performance incentives.</SUBJECT>
              <P>Contractor performance incentives should relate to specific performance areas of milestones, such as delivery or test schedules, quality controls, maintenance requirements, and reliability standards.</P>
            </SECTION>
            <SECTION>
              <SECTNO>216.403</SECTNO>
              <SUBJECT>Fixed-price incentive contracts.</SUBJECT>
              <P>(b) <E T="03">Application.</E>
              </P>
              <P>(3) Individual line items may have separate incentive provisions; e.g., when dissimilar work calls for separate formulas.</P>
            </SECTION>
            <SECTION>
              <SECTNO>216.403-2</SECTNO>
              <SUBJECT>Fixed-price incentive (successive targets) contracts.</SUBJECT>
              <P>(a) <E T="03">Description.</E> (1)(iii) The formula does not apply for the life of the contract. It is used to fix the firm target profit for the contract. To provide an incentive consistent with the circumstances, the formula should reflect the relative risk involved in establishing an incentive arrangement where cost and pricing information were not sufficient to permit the negotiation of firm targets at the outset.</P>
            </SECTION>
            <SECTION>
              <SECTNO>216.404</SECTNO>
              <SUBJECT>Fixed-price contracts with award fees.</SUBJECT>
              <P>Award-fee provisions may be used in fixed-price contracts as provided in 216.470</P>
              <CITA>[63 FR 11529, Mar. 9, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>216.405</SECTNO>
              <SUBJECT>Cost-reimbursement incentive contracts.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>216.405-1</SECTNO>
              <SUBJECT>Cost-plus-incentive-fee contracts.</SUBJECT>
              <P>(b) <E T="03">Application.</E>
              </P>
              <P>(3) Give appropriate weight to basic acquisition objectives in negotiating the range of fee and the fee adjustment formula. For example—</P>
              <P>(A) In an initial product development contract, it may be appropriate to provide for relatively small adjustments in fee tied to the cost incentive feature, but provide for significant adjustments if the contractor meets or surpasses performance targets.</P>
              <P>(B) In subsequent development and test contracts, it may be appropriate to negotiate an incentive formula tied primarily to the contractor's success in controlling costs.</P>
              <CITA>[56 FR 36340, July 31, 1991. Redesignated at 63 FR 11529, Mar. 9, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>216.405-2</SECTNO>
              <SUBJECT>Cost-plus-award-fee contracts.</SUBJECT>
              <P>(a) <E T="03">Description.</E> (i) Normally, award fee is not earned when the fee-determining official has determined that contractor performance has been submarginal or unsatisfactory.</P>
              <P>(ii) The basis for all award fee determinations shall be documented in the contract file.</P>
              <P>(b) <E T="03">Application.</E> (1) The cost-plus-award-fee (CPAF) contract is also suitable for level of effort contracts where mission feasibility is established but measurement of achievement must be by subjective evaluation rather than objective measurement. See Table 16-1, Performance Evaluation Criteria, for sample performance evaluation criteria <PRTPAGE P="111"/>and Table 16-2, Contractor Performance Evaluation Report, for a sample evaluation report.</P>
              <P>(2) The contracting activity may—</P>
              <P>(A) Establish a board to—</P>
              <P>(<E T="03">1</E>) Evaluate the contractor's performance; and</P>
              <P>(<E T="03">2</E>) Determine the amount of the award or recommend an amount to the contracting officer.</P>
              <P>(B) Afford the contractor an opportunity to present information on its own behalf.</P>
              <P>(c) <E T="03">Limitations.</E> The CPAF contract shall not be used—</P>
              <P>(i) To avoid—</P>
              <P>(A) Establishing CPFF contracts when the criteria for CPFF contracts apply, or</P>
              <P>(B) Developing objective targets so a CPIF contract can be used.</P>
              <P>(ii) For either engineering development or operational system development acquisitions which have specifications suitable for simultaneous research and development and production, except a CPAF contract may be used for individual engineering development or operational system development acquisitions ancillary to the development of a major weapon system or equipment, where—</P>
              <P>(A) It is more advantageous; and</P>
              <P>(B) The purpose of the acquisition is clearly to determine or solve specific problems associated with the major weapon system or equipment.</P>
              <P>(2)(A) Do not apply the weighted guidelines method to CPAF contracts for either the base (fixed) fee or the award fee.</P>
              <P>(B) The base fee shall not exceed three percent of the estimated cost of the contract exclusive of the fee.</P>
              <CITA>[56 FR 36340, July 31, 1991. Redesignated at 63 FR 11529, Mar. 9, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>216.470</SECTNO>
              <SUBJECT>Other applications of award fees.</SUBJECT>
              <P>The “award amount” portion of the fee may be used in other types of contracts under the following conditions—</P>
              <P>(1) The Government wishes to motivate and reward a contractor for management performance in areas which cannot be measured objectively and where normal incentive provisions cannot be used. For example, logistics support, quality, timeliness, ingenuity, and cost effectiveness are areas under the control of management which may be susceptible only to subjective measurement and evaluation.</P>
              <P>(2) The “base fee” (fixed amount portion) is not used.</P>
              <P>(3) The chief of the contracting office approves the use of the “award amount.”</P>
              <P>(4) An award review board and procedures are established for conduct of the evaluation.</P>
              <P>(5) The administrative costs of evaluation do not exceed the expected benefits.</P>
              <GPOTABLE CDEF="s20,r25,r20,r20,r20,r20,r20" COLS="7" OPTS="L2,i1">
                <TTITLE>Table 16-1—Performance Evaluation Criteria</TTITLE>
                <BOXHD>
                  <CHED H="1"/>
                  <CHED H="1"/>
                  <CHED H="1">Submarginal</CHED>
                  <CHED H="1">Marginal</CHED>
                  <CHED H="1">Good</CHED>
                  <CHED H="1">Very good</CHED>
                  <CHED H="1">Excellent</CHED>
                </BOXHD>
                <ROW>
                  <ENT I="01">A—Time of Delivery</ENT>
                  <ENT>(A-1) Adherence to plan schedule</ENT>
                  <ENT>Consistently late on 20% of plans</ENT>
                  <ENT>Late on 10% plans w/o prior agreement</ENT>
                  <ENT>Occasional plan late w/o justification</ENT>
                  <ENT>Meets plan schedule</ENT>
                  <ENT>Delivers all plans on schedule &amp; meets prod. change requirements on schedule.</ENT>
                </ROW>
                <ROW>
                  <ENT I="22"/>
                  <ENT>(A-2) Action on Anticipated delays</ENT>
                  <ENT>Does not expose changes or resolve them as soon as recognized</ENT>
                  <ENT>Exposes changes but is dilatory in resolution on plans</ENT>
                  <ENT>Anticipates changes, advise Shipyard but misses completion of design plans 10%</ENT>
                  <ENT>Keeps Yard posted on delays, resolves independently on plans</ENT>
                  <ENT>Anticipates in good time, advises Shipyard, resolves independently and meets production schedule.</ENT>
                </ROW>
                <ROW>
                  <PRTPAGE P="112"/>
                  <ENT I="22"/>
                  <ENT>(A-3) Plan Maintenance</ENT>
                  <ENT>Does not complete interrelated systems studies concurrently</ENT>
                  <ENT>System studies completed but constr. plan changes delayed</ENT>
                  <ENT>Major work plans coordinated in time to meet production schedules</ENT>
                  <ENT>Design changes from studies and interrelated plans issued in time to meet product schedules</ENT>
                  <ENT>Design changes, studies resolved and test data issued ahead of production requirements.</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">B—Quality of Work</ENT>
                  <ENT>(B-1) Work Appearance</ENT>
                  <ENT>25% dwgs. not compatible with Shipyard repro. processes and use</ENT>
                  <ENT>20% not compatible with Shipyard repro. processes and use</ENT>
                  <ENT>10% not compatible with Shipyard repro. processes and use</ENT>
                  <ENT>0% dwgs. prepared by Des. agent not compatible with Shipyard repro. processes and use</ENT>
                  <ENT>0% dwgs. presented incl. Des. agent, vendors, subcontr. not compatible with Shipyard repro. processes and use.</ENT>
                </ROW>
                <ROW>
                  <ENT I="22"/>
                  <ENT>(B-2) Thoroughness and Accuracy of Work</ENT>
                  <ENT>Is brief on plans tending to leave questionable situations for Shipyard to resolve</ENT>
                  <ENT>Has followed guidance, type and standard dwgs</ENT>
                  <ENT>Has followed guidance, type and standard dwgs. questioning and resolving doubtful areas</ENT>
                  <ENT>Work complete with notes and thorough explanations for anticipated questionable areas</ENT>
                  <ENT>Work of highest caliber incorporating all pertinent data required including related activities.</ENT>
                </ROW>
                <ROW>
                  <ENT I="22"/>
                  <ENT>(B-3) Engineering Competence</ENT>
                  <ENT>Tendency to follow past practice with no variation to meet reqmts. job in hand</ENT>
                  <ENT>Adequate engrg. to use &amp; adapt existing designs to suit job on hand for routine work</ENT>
                  <ENT>Engineered to satisfy specs., guidance plans and material provided</ENT>
                  <ENT>Displays excellent knowledge of constr. reqmts. considering systems aspect, cost, shop capabilities and procurement problems</ENT>
                  <ENT>Exceptional knowledge of Naval shipwork &amp; adaptability to work process incorporating knowledge of future planning in Design.</ENT>
                </ROW>
                <ROW>
                  <ENT I="22"/>
                  <ENT>(B-4) Liaison Effectiveness</ENT>
                  <ENT>Indifferent to requirements of associated activities, related systems, and Shipyard advice</ENT>
                  <ENT>Satisfactory but dependent on Shipyard to force resolution of problems without constructive recommendations to subcontr. or vendors</ENT>
                  <ENT>Maintains normal contact with associated activities depending on Shipyard for problems requiring military resolution</ENT>
                  <ENT>Maintains independent contact with all associated activities, keeping them informed to produce compatible design with little assistance for Yard</ENT>
                  <ENT>Maintains expert contact, keeping Yard informed, obtaining info from equip., supplies- w/o prompting by Shipyard.</ENT>
                </ROW>
                <ROW>
                  <ENT I="22"/>
                  <ENT>(B-5) Independence and Initiative</ENT>
                  <ENT>Constant surveillance req'd to keep job from slipping—assign to low priority to satisfy needs</ENT>
                  <ENT>Requires occasional prodding to stay on schedule &amp; expects Shipyard resolution of most problems</ENT>
                  <ENT>Normal interest and desire to provide workable plans with average assistance &amp; direction by Shipyard</ENT>
                  <ENT>Complete &amp; accurate job. Free of incompatibilities with little or no direction by Shipyard</ENT>
                  <ENT>Develops complete and accurate plans, seeks out problem areas and resolves with assoc. act. ahead of schedule.</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">C—Effectiveness in Controlling and/or Reducing Costs</ENT>
                  <ENT>(C-1) Utilization of Personnel</ENT>
                  <ENT>Planning of work left to designers on drafting boards</ENT>
                  <ENT>Supervision sets &amp; reviews goals for designers</ENT>
                  <ENT>System planning by supervisory, personnel, studies checked by engineers</ENT>
                  <ENT>Design parameters established by system engineers &amp; held in design plans</ENT>
                  <ENT>Mods. to design plans limited to less than 5% as result lack engrg. system correlation.</ENT>
                </ROW>
                <ROW>
                  <PRTPAGE P="113"/>
                  <ENT I="22"/>
                  <ENT>(C-2) Control Direct Charges (Except Labor)</ENT>
                  <ENT>Expenditures not controlled for services</ENT>
                  <ENT>Expenditures reviewed occasionally by supervision</ENT>
                  <ENT>Direct charges set &amp; accounted for on each work package</ENT>
                  <ENT>Provides services as part of normal design function- w/o extra charges</ENT>
                  <ENT>No cost overruns on original estimates absorbs service demands by Shipyard.</ENT>
                </ROW>
                <ROW>
                  <ENT I="22"/>
                  <ENT>(C-3) Performance to Cost Estimate</ENT>
                  <ENT>Does not meet cost estimate for original work or changes 30% time</ENT>
                  <ENT>Does not meet cost estimate for original work or changes 20% time</ENT>
                  <ENT>Exceeds original est. on change orders 10% time and meets original design costs</ENT>
                  <ENT>Exceeds original est. on change orders 5% time</ENT>
                  <ENT>Never exceeds estimates of original package or change orders.</ENT>
                </ROW>
              </GPOTABLE>
              <PRTPAGE P="114"/>
              <GPOTABLE CDEF="xls32,r100,xls40,2,10,2,xls40,2,10,2,xls40" COLS="11" OPTS="L1,i1">
                <TTITLE>Table 16-2.—Contractor Performance Evaluation Report</TTITLE>
                <BOXHD>
                  <CHED H="1">Category</CHED>
                  <CHED H="1">Criteria</CHED>
                  <CHED H="1">Rating</CHED>
                  <CHED H="1"/>
                  <CHED H="1">Item factor</CHED>
                  <CHED H="1"/>
                  <CHED H="1">Evaluation rating</CHED>
                  <CHED H="1"/>
                  <CHED H="1">Category factor</CHED>
                  <CHED H="1"/>
                  <CHED H="1">Efficiency rating</CHED>
                </BOXHD>
                <ROW>
                  <ENT I="01">A</ENT>
                  <ENT>TIME OF DELIVERY</ENT>
                </ROW>
                <ROW>
                  <ENT I="22"/>
                  <ENT>A-1 Adherence to Plan Schedule </ENT>
                  <ENT O="oi0">___ </ENT>
                  <ENT O="oi0">×</ENT>
                  <ENT>.40 </ENT>
                  <ENT O="oi0">= </ENT>
                  <ENT O="oi0">___</ENT>
                </ROW>
                <ROW>
                  <ENT I="22"/>
                  <ENT>A-2 Action on Anticipated Delays </ENT>
                  <ENT O="oi0">___ </ENT>
                  <ENT O="oi0">×</ENT>
                  <ENT>.30 </ENT>
                  <ENT O="oi0">= </ENT>
                  <ENT O="oi0">___</ENT>
                </ROW>
                <ROW>
                  <ENT I="22"/>
                  <ENT>A-3 Plan Maintenance </ENT>
                  <ENT O="oi0">___ </ENT>
                  <ENT O="oi0">×</ENT>
                  <ENT>.30 </ENT>
                  <ENT O="oi0">= </ENT>
                  <ENT O="oi0">___</ENT>
                </ROW>
                <ROW>
                  <ENT I="22"/>
                  <ENT>Total Item Weighed Rating</ENT>
                  <ENT/>
                  <ENT/>
                  <ENT/>
                  <ENT/>
                  <ENT O="oi0">___ </ENT>
                  <ENT O="oi0">×</ENT>
                  <ENT>.30 </ENT>
                  <ENT O="oi0">= </ENT>
                  <ENT O="oi0">___</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">B</ENT>
                  <ENT>QUALITY OF WORK</ENT>
                </ROW>
                <ROW>
                  <ENT I="22"/>
                  <ENT>B-1 Work Appearance </ENT>
                  <ENT O="oi0">___ </ENT>
                  <ENT O="oi0">×</ENT>
                  <ENT>.15 </ENT>
                  <ENT O="oi0">= </ENT>
                  <ENT O="oi0">___</ENT>
                </ROW>
                <ROW>
                  <ENT I="22"/>
                  <ENT>B-2 Thoroughness and Accuracy of Work </ENT>
                  <ENT O="oi0">___ </ENT>
                  <ENT O="oi0">×</ENT>
                  <ENT>.30 </ENT>
                  <ENT O="oi0">= </ENT>
                  <ENT O="oi0">___</ENT>
                </ROW>
                <ROW>
                  <ENT I="22"/>
                  <ENT>B-3 Engineering Competence </ENT>
                  <ENT O="oi0">___ </ENT>
                  <ENT O="oi0">×</ENT>
                  <ENT>.20 </ENT>
                  <ENT O="oi0">= </ENT>
                  <ENT O="oi0">___</ENT>
                </ROW>
                <ROW>
                  <ENT I="22"/>
                  <ENT>B-4 Liaison Effectiveness </ENT>
                  <ENT O="oi0">___ </ENT>
                  <ENT O="oi0">×</ENT>
                  <ENT>.15 </ENT>
                  <ENT O="oi0">= </ENT>
                  <ENT O="oi0">___</ENT>
                </ROW>
                <ROW>
                  <ENT I="22"/>
                  <ENT>B-5 Independence and Initiative </ENT>
                  <ENT O="oi0">___ </ENT>
                  <ENT O="oi0">×</ENT>
                  <ENT>.20 </ENT>
                  <ENT O="oi0">= </ENT>
                  <ENT O="oi0">___</ENT>
                </ROW>
                <ROW>
                  <ENT I="22"/>
                  <ENT>Total Item Weighed Rating</ENT>
                  <ENT/>
                  <ENT/>
                  <ENT/>
                  <ENT/>
                  <ENT O="oi0">___ </ENT>
                  <ENT O="oi0">×</ENT>
                  <ENT>.40 </ENT>
                  <ENT O="oi0">= </ENT>
                  <ENT O="oi0">___</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">C</ENT>
                  <ENT>EFFECTIVENESS IN CONTROLLING AND/OR REDUCING COSTS</ENT>
                </ROW>
                <ROW>
                  <ENT I="22"/>
                  <ENT>C-1 Utilization of Personnel </ENT>
                  <ENT O="oi0">___</ENT>
                  <ENT O="oi0">×</ENT>
                  <ENT>.30 </ENT>
                  <ENT O="oi0">= </ENT>
                  <ENT O="oi0">___</ENT>
                </ROW>
                <ROW>
                  <ENT I="22"/>
                  <ENT>C-2 Control of all Direct Charges Other than Labor </ENT>
                  <ENT O="oi0">___ </ENT>
                  <ENT O="oi0">×</ENT>
                  <ENT>.30 </ENT>
                  <ENT O="oi0">= </ENT>
                  <ENT O="oi0">___</ENT>
                </ROW>
                <ROW>
                  <ENT I="22"/>
                  <ENT>C-3 Performance to Cost Estimate </ENT>
                  <ENT O="oi0">___ </ENT>
                  <ENT O="oi0">×</ENT>
                  <ENT>.40 </ENT>
                  <ENT O="oi0">= </ENT>
                  <ENT O="oi0">___</ENT>
                </ROW>
                <ROW>
                  <ENT I="22"/>
                  <ENT>Total Item Weighed Rating</ENT>
                  <ENT/>
                  <ENT/>
                  <ENT/>
                  <ENT/>
                  <ENT O="oi0">___ </ENT>
                  <ENT O="oi0">×</ENT>
                  <ENT>.30 </ENT>
                  <ENT O="oi0">= </ENT>
                  <ENT O="oi0">___</ENT>
                </ROW>
                <ROW EXPSTB="10">
                  <ENT I="11">TOTAL WEIGHED RATING:</ENT>
                </ROW>
                <ROW EXPSTB="10">
                  <ENT I="11">Rated by:</ENT>
                </ROW>
                <ROW EXPSTB="10">
                  <ENT I="11">Signature(s):−−s0</ENT>
                </ROW>
                <TNOTE>Ratings—Excellent; Very good; Good; Marginal; Submarginal;</TNOTE>
                <TNOTE>Period of19</TNOTE>
                <TNOTE>Contract Number</TNOTE>
                <TNOTE>Contractor</TNOTE>
                <TNOTE>Date of Report</TNOTE>
                <TNOTE>PNS Techical Monitor/s</TNOTE>
                <TNOTE>
                  <E T="02">Note:</E> Provide supporting data and/or justification for below average or outstanding item ratings.</TNOTE>
              </GPOTABLE>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <PRTPAGE P="115"/>
            <HD SOURCE="HED">Subpart 216.5—Indefinite-Delivery Contracts</HD>
            <SECTION>
              <SECTNO>216.501</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <P>(a)(i) For items with a shelf-life of less than 6 months, consider the use of indefinite-delivery type contracts with orders to be placed either—</P>
              <P>(A) Directly by the users; or</P>
              <P>(B) By central purchasing offices with deliveries direct to users.</P>
              <P>(ii) Whenever an indefinite-delivery contract is issued, the issuing office must furnish all ordering offices sufficient information for the ordering office to complete its contract reporting responsibilities under 204.670-2. This data must be furnished to the ordering activity in sufficient time for the activity to prepare its report for the action within 3 working days of the order.</P>
              <CITA>[56 FR 36340, July 31, 1991, as amended at 57 FR 42630, Sept. 15, 1992; 63 FR 11529, Mar. 9, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>216.505</SECTNO>
              <SUBJECT>Ordering.</SUBJECT>
              <P>Orders placed under indefinite-delivery contracts may be issued on DD Form 1155, Order for Supplies or Services.</P>
              <CITA>[63 FR 11529, Mar. 9, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>216.506</SECTNO>
              <SUBJECT>Solicitation provisions and contract clauses.</SUBJECT>
              <P>(d) If the contract is for the preparation of personal property for shipment or storage (see 247.271-4), substitute paragraph (f) at 252.247-7015, Requirements, for paragraph (f) of the clause at FAR 52.216-21, Requirements.</P>
              <CITA>[63 FR 11529, Mar. 9, 1998]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 216.6—Time-And-Materials, Labor-Hour, and Letter Contracts</HD>
            <SECTION>
              <SECTNO>216.603</SECTNO>
              <SUBJECT>Letter contracts.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>216.603-3</SECTNO>
              <SUBJECT>Limitations.</SUBJECT>
              <P>See subpart 217.74 for additional limitations on the use of letter contracts.</P>
            </SECTION>
            <SECTION>
              <SECTNO>216.603-4</SECTNO>
              <SUBJECT>Contract clauses.</SUBJECT>
              <P>(b)(2) See 217.7406(a) for additional guidance regarding use of the clause at FAR 52.216-24, Limitation of Government Liability.</P>
              <P>(3) Use the clause at 252.217-7027, Contract Definitization, in accordance with its prescription at 217.7406(b), instead of the clause at FAR 52.216-25, Contract Definitization.</P>
              <CITA>[61 FR 7743, Feb. 29, 1996]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 216.7—Agreements</HD>
            <SECTION>
              <SECTNO>216.703</SECTNO>
              <SUBJECT>Basic ordering agreements.</SUBJECT>
              <P>(c) <E T="03">Limitations.</E> The period during which orders may be placed against a basic ordering agreement may not exceed three years. The contracting officer, with the approval of the chief of the contracting office, may grant extensions for up to two years. No single extension shall exceed one year. See subpart 217.74 for additional limitations on the use of undefinitized orders under basic ordering agreements.</P>
              <P>(d) <E T="03">Orders.</E> (i) The contracting officer issuing an order under a basic ordering agreement shall be responsible for ensuring compliance with the provisions and limitations of this section.</P>
              <P>(ii) Individual orders under a basic ordering agreement shall be individually closed following completion of the orders (see FAR 4.804).</P>
              <P>(1)(iii) The office issuing the agreement shall furnish all authorized ordering offices sufficient information for the ordering office to complete its contract reporting responsibilities under 204.670-2 or, in the case of civilian agencies, the Federal Procurement Data System reporting requirement. Data furnished to civilian agencies must contain uncoded information about the data elements and the meanings of the codes to permit these users to translate the data into the federal format. This data must be furnished to the ordering activity in sufficient time for the activity to prepare its report for the action within 3 working days of the order.</P>

              <P>(2)(i) Any activity listed in the agreement may issue orders on DD Form 1155, Order for Supplies or Services, or Standard Form 26, Award/Contract.<PRTPAGE P="116"/>
              </P>
              <P>(3) Incentive provisions consistent with this part are permitted.</P>
              <CITA>[56 FR 36340, July 31, 1991, as amended at 61 FR 7743, Feb. 29, 1996; 61 FR 18195, Apr. 24, 1996]</CITA>
            </SECTION>
          </SUBPART>
        </PART>
        <PART>
          <EAR>Pt. 217</EAR>
          <HD SOURCE="HED">PART 217—SPECIAL CONTRACTING METHODS</HD>
          <CONTENTS>
            <SUBPART>
              <HD SOURCE="HED">Subpart 217.1—Multiyear Contracting</HD>
              <SECHD>Sec.</SECHD>
              <SECTNO>217.103</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <SECTNO>217.170</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <SECTNO>217.171</SECTNO>
              <SUBJECT>Multiyear contracts for services.</SUBJECT>
              <SECTNO>217.172</SECTNO>
              <SUBJECT>Multiyear contracts for supplies.</SUBJECT>
              <SECTNO>217.173</SECTNO>
              <SUBJECT>Multiyear contracts for weapon systems.</SUBJECT>
              <SECTNO>217.174</SECTNO>
              <SUBJECT>Mulityear contracts that employ economic order quantity procurement.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 217.2—Options</HD>
              <SECTNO>217.202</SECTNO>
              <SUBJECT>Use of options.</SUBJECT>
              <SECTNO>217.208</SECTNO>
              <SUBJECT>Solicitation provisions and contract clauses.</SUBJECT>
              <SECTNO>217.208-70</SECTNO>
              <SUBJECT>Additional clauses.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 217.4—Leader Company Contracting</HD>
              <SECTNO>217.401</SECTNO>
              <SUBJECT>General.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 217.5—Interagency Acquisitions Under the Economy Act</HD>
              <SECTNO>217.500</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <SECTNO>217.503</SECTNO>
              <SUBJECT>Determinations and findings requirements.</SUBJECT>
              <SECTNO>217.504</SECTNO>
              <SUBJECT>Ordering procedures.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 217.6—Management and Operating Contracts</HD>
              <SECTNO>217.600</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 217.70—Exchange of Personal Property</HD>
              <SECTNO>217.7000</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <SECTNO>217.7001</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <SECTNO>217.7002</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>217.7003</SECTNO>
              <SUBJECT>Purchase request.</SUBJECT>
              <SECTNO>217.7004</SECTNO>
              <SUBJECT>Solicitation and award.</SUBJECT>
              <SECTNO>217.7005</SECTNO>
              <SUBJECT>Solicitation provision.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 217.71—Master Agreement for Repair and Alteration of Vessels</HD>
              <SECTNO>217.7100</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <SECTNO>217.7101</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <SECTNO>217.7102</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <SECTNO>217.7103</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <SECTNO>217.7103-1</SECTNO>
              <SUBJECT>Content and format.</SUBJECT>
              <SECTNO>217.7103-2</SECTNO>
              <SUBJECT>Period of agreement.</SUBJECT>
              <SECTNO>217.7103-3</SECTNO>
              <SUBJECT>Solicitations for job orders.</SUBJECT>
              <SECTNO>217.7103-4</SECTNO>
              <SUBJECT>Award of a job order.</SUBJECT>
              <SECTNO>217.7103-5</SECTNO>
              <SUBJECT>Emergency work.</SUBJECT>
              <SECTNO>217.7103-6</SECTNO>
              <SUBJECT>Repair costs not readily ascertainable.</SUBJECT>
              <SECTNO>217.7103-7</SECTNO>
              <SUBJECT>Modification of master agreements.</SUBJECT>
              <SECTNO>217.7104</SECTNO>
              <SUBJECT>Contract clauses.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 217.72—Bakery and Dairy Products</HD>
              <SECTNO>217.7200</SECTNO>
              <SUBJECT>Scope.</SUBJECT>
              <SECTNO>217.7201</SECTNO>
              <SUBJECT>Contract requirements for dairy products.</SUBJECT>
              <SECTNO>217.7202</SECTNO>
              <SUBJECT>Contract type.</SUBJECT>
              <SECTNO>217.7203</SECTNO>
              <SUBJECT>Contract clauses.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 217.73—Identification of Sources of Supply</HD>
              <SECTNO>217.7300</SECTNO>
              <SUBJECT>Scope.</SUBJECT>
              <SECTNO>217.7301</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>217.7302</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <SECTNO>217.7303</SECTNO>
              <SUBJECT>Solicitation provision.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 217.74—Undefinitized Contract Actions</HD>
              <SECTNO>217.7400</SECTNO>
              <SUBJECT>Scope.</SUBJECT>
              <SECTNO>217.7401</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <SECTNO>217.7402</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
              <SECTNO>217.7403</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>217.7404</SECTNO>
              <SUBJECT>Limitations.</SUBJECT>
              <SECTNO>217.7404-1</SECTNO>
              <SUBJECT>Authorization.</SUBJECT>
              <SECTNO>217.7404-2</SECTNO>
              <SUBJECT>Price ceiling.</SUBJECT>
              <SECTNO>217.7404-3</SECTNO>
              <SUBJECT>Definitization schedule.</SUBJECT>
              <SECTNO>217.7404-4</SECTNO>
              <SUBJECT>Limitations on obligations.</SUBJECT>
              <SECTNO>217.7404-5</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
              <SECTNO>217.7404-6</SECTNO>
              <SUBJECT>Allowable profit.</SUBJECT>
              <SECTNO>217.7405</SECTNO>
              <SUBJECT>Definitizations.</SUBJECT>
              <SECTNO>217.7406</SECTNO>
              <SUBJECT>Contract clauses.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 217.75—Acquisition of Replenishment Parts</HD>
              <SECTNO>217.7500</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <SECTNO>217.7501</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <SECTNO>217.7502</SECTNO>
              <SUBJECT>Spares acquisition integrated with production (SAIP).</SUBJECT>
              <SECTNO>217.7503</SECTNO>
              <SUBJECT>Acquisition of parts when data is not available.</SUBJECT>
              <SECTNO>217.7504</SECTNO>
              <SUBJECT>Limitations on price increases.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 217.76—Contracts with Provisioning Requirements</HD>
              <SECTNO>217.7600</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <SECTNO>217.7601</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <SECTNO>217.7602</SECTNO>
              <SUBJECT>Contracting requirements.</SUBJECT>
              <SECTNO>217.7602-1</SECTNO>
              <SUBJECT>Contractual provisions.</SUBJECT>
              <SECTNO>217.7602-2</SECTNO>
              <SUBJECT>Issuance of provisioned items orders.</SUBJECT>
              <SECTNO>217.7603</SECTNO>
              <SUBJECT>Contract administration requirements.</SUBJECT>
              <SECTNO>217.7603-1</SECTNO>
              <SUBJECT>Provisioning conferences.</SUBJECT>
              <SECTNO>217.7603-2</SECTNO>

              <SUBJECT>Contract administration office monitoring.<PRTPAGE P="117"/>
              </SUBJECT>
              <SECTNO>217.7603-3</SECTNO>
              <SUBJECT>Negotiating and executing supplemental agreements.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 217.77—Over and Above Work</HD>
              <SECTNO>217.7700</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <SECTNO>217.7701</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <SECTNO>217.7702</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
            </SUBPART>
          </CONTENTS>
          <AUTH>
            <HD SOURCE="HED">Authority:</HD>
            <P>41 U.S.C. 421 and 48 CFR chapter 1.</P>
          </AUTH>
          <SOURCE>
            <HD SOURCE="HED">Source:</HD>
            <P>56 FR 36345, July 31, 1991, unless otherwise noted.</P>
          </SOURCE>
          <SUBPART>
            <HD SOURCE="HED">Subpart 217.1—Mulityear Contracting</HD>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>63 FR 11529, Mar. 9, 1998, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>217.103</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <P>
                <E T="03">Advance procurement,</E> as used in this subpart, means an exception to the full funding policy that allows acquisition of long lead time items (advance long lead acquisition) or economic order quantities (EOQ) of items (advance EOQ acquisition) in a fiscal year in advance of that in which the related end item is to be acquired. Advance procurements may include materials, parts, components, and effort that must be funded in advance to maintain a planned production schedule.</P>
            </SECTION>
            <SECTION>
              <SECTNO>217.170</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <P>(a) Before awarding a multiyear contract, the head of the agency must compare the cost of that contract to the cost of an annual procurement approach, using a present value analysis. Do not award the multiyear contract unless the analysis shows that the multiyear contract will result in the lower cost (10 U.S.C. 2306b(l)(7); Section 8008(a) of Public Law 105-56 and similar sections in subsequent DoD appropriations acts).</P>
              <P>(b) The head of the agency must provide written notice to the congressional defense committees at least 10 days before termination of any multiyear contract (10 U.S.C. 2306b(l)(6); 10 U.S.C. 2306c(d)(3); Section 8008(a) of Public Law 105-56 and similar sections in subsequent DoD appropriations acts).</P>
              <P>(c) Every multiyear contract must comply with FAR 17.104(c), unless an exception is approved through the budget process in coordination with the cognizant comptroller.</P>
              <P>(d)(1) DoD must receive authorization from, or provide notification to, Congress before entering into a multiyear contract for certain procurements, including those expected to—</P>
              <P>(i) Exceed $500 million (see 217.171(a)(5); 217.172(c); and 217.173(b)(4));</P>
              <P>(ii) Employ economic order quantity procurement in excess of $20 million in any one year (see 217.174(a)(1));</P>
              <P>(iii) Employ an unfunded contingent liability in excess of $20 million (see 217.171(a)(4)(i) and 217.172(d)(1));</P>
              <P>(iv) Involve a contract for advance procurement leading to a multiyear contract that employs economic order quantity procurement in excess of $20 million in any one year (see 217.174(a)(2)); or</P>
              <P>(v) Include a cancellation ceiling in excess of $100 million (see 217.171(a)(4)(ii) and 217.172(d)(2)).</P>
              <P>(2) A DoD component must submit a request for authority to enter into multiyear contracts described in paragraphs (d)(1)(i) through (iv) of this section as part of the component's budget submission for the fiscal year in which the multiyear contract will be initiated. DoD will include the request, for each candidate it supports, as part of the President's Budget for that year and in the Appendix to that budget as part of proposed legislative language for the appropriations bill for that year (Section 8008(b) of Public Law 105-56).</P>
              <P>(3) If the advisability of using a multiyear contract becomes apparent too late to satisfy the requirements in paragraph (d)(2) of this section, the request for authority to enter into a multiyear contract must be—</P>
              <P>(i) Formally submitted by the President as a budget amendment; or</P>
              <P>(ii) Made by the Secretary of Defense, in writing, to the congressional defense committees. (Section 8008(b) of Public Law 105-56)</P>

              <P>(4) Agencies must establish reporting procedures to meet the congressional notification requirements of paragraph (d)(1) of this section. The head of the agency must submit a copy of each notice to the Director of Defense Procurement, Office of the Under Secretary of Defense (Acquisition, Technology, and <PRTPAGE P="118"/>Logistics) (OUSD (AT&amp;L) DP), and to the Deputy Under Secretary of Defense (Comptroller) (Program/Budget) (OUSD (C) (P/B)).</P>
              <CITA>[66 FR 63337, Dec. 6, 2001]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>217.171</SECTNO>
              <SUBJECT>Multiyear contracts for services.</SUBJECT>
              <P>(a) <E T="03">10 U.S.C. 2306c.</E> (1) The head of the agency may enter into a multiyear contract for a period of not more than 5 years for the following types of services (and items of supply relating to such services), even though funds are limited by statute to obligation only during the fiscal year for which they were appropriated:</P>
              <P>(i) Operation, maintenance, and support of facilities and installations.</P>
              <P>(ii) Maintenance or modification of aircraft, ships, vehicles, and other highly complex military equipment.</P>

              <P>(iii) Specialized training requiring high quality instructor skills (<E T="03">e.g.,</E> training for pilots and aircrew members or foreign language training).</P>
              <P>(iv) Base services (<E T="03">e.g.,</E> ground maintenance, in-plane refueling, bus transportation, and refuse collection and disposal).</P>
              <P>(2) The head of the agency must be guided by the following principles when entering into a multiyear contract for services:</P>
              <P>(i) The portion of the cost of any plant or equipment amortized as a cost of contract performance should not exceed the ratio between the period of contract performance and the anticipated useful commercial life of the plant or equipment. As used in this section, “useful commercial life” means the commercial utility of the facilities rather than the physical life, with due consideration given to such factors as the location, specialized nature, and obsolescence of the facilities.</P>
              <P>(ii) Consider the desirability of obtaining an option to extend the term of the contract for a reasonable period not to exceed 3 years at prices that do not include charges for plant, equipment, or other nonrecurring costs already amortized.</P>
              <P>(iii) Consider the desirability of reserving the right to take title, under the appropriate circumstances, to the plant or equipment upon payment of the unamortized portion of the cost.</P>
              <P>(3) Before entering into a multiyear contract for services, the head of the agency must make a written determination that—</P>
              <P>(i) There will be a continuing requirement for the services consistent with current plans for the proposed contract period;</P>
              <P>(ii) Furnishing the services will require—</P>
              <P>(A) A substantial initial investment in plant or equipment; or</P>
              <P>(B) The incurrence of substantial contingent liabilities for the assembly, training, or transportation of a specialized work force; and</P>
              <P>(iii) Using a multiyear contract will promote the best interests of the United States by encouraging effective competition and promoting economies in operations.</P>
              <P>(4) The head of the agency must provide written notice to the congressional defense committees at least 30 days before award of a multiyear contract for services that include—</P>
              <P>(i) An unfunded contingent liability in excess of $20 million (Section 8008(a) of Public Law 105-56 and similar sections in subsequent DoD appropriations acts); or</P>
              <P>(ii) A cancellation ceiling in excess of $100 million.</P>
              <P>(5) The head of the agency must not initiate a multiyear contract for services exceeding $500 million unless a law specifically provides authority for the contract.</P>
              <P>(b) <E T="03">10 U.S.C. 2829.</E> (1) The head of the agency may enter into multiyear contracts for supplies and services required for management, maintenance, and operation of military family housing and may pay the costs of such contracts for each year from annual appropriations for that year.</P>
              <P>(2) The head of the agency may use this authority only if the term of the contract does not exceed 4 years.</P>
              <CITA>[66 FR 63337, Dec. 6, 2001]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>217.172</SECTNO>
              <SUBJECT>Multiyear contracts for supplies.</SUBJECT>

              <P>(a) This section applies to all multiyear contracts for supplies, including weapon systems. For policies that apply only to multiyear contracts for weapon systems, see 217.173.<PRTPAGE P="119"/>
              </P>
              <P>(b) The head of the agency may enter into a multiyear contract for supplies if, in addition to the conditions listed in FAR 17.105-1(b), the use of such a contract will promote the national security of the United States.</P>
              <P>(c) The head of the agency must not enter into or extend a multiyear contract that exceeds $500 million (when entered into or when extended) until the Secretary of Defense identifies the contract and any extension in a report submitted to the congressional defense committees (10 U.S.C. 2306b(l)(5)).</P>
              <P>(d) The head of the agency must provide written notice to the congressional defense committees at least 30 days before award of a multiyear contract that includes—</P>
              <P>(1) An unfunded contingent liability in excess of $20 million (10 U.S.C. 2306b(l)(1); Section 8008(a) of Public Law 105-56 and similar sections in subsequent DoD appropriations acts); or</P>
              <P>(2) A cancellation ceiling in excess of $100 million (10 U.S.C. 2306b(g)).</P>
              <P>(e) The Secretary of Defense may instruct the head of the agency proposing a multiyear contract to include in that contract negotiated priced options for varying the quantities of end items to be procured over the life of the contract (10 U.S.C. 2306b(j)).</P>
              <CITA>[66 FR 63338, Dec. 6, 2001]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>217.173</SECTNO>
              <SUBJECT>Multiyear contracts for weapon systems.</SUBJECT>
              <P>(a) As authorized by 10 U.S.C. 2306b(h) and subject to the conditions in paragraph (b) of this section, the head of the agency may enter into a multiyear contract for—</P>
              <P>(1) A weapon system and associated items, services, and logistics support for a weapon system; and</P>
              <P>(2) Advance procurement of components, parts, and materials necessary to manufacture a weapon system, including advance procurement to achieve economic lot purchases or more efficient production rates (see 217.174 regarding economic order quantity procurement).</P>

              <P>(b) The head of the agency must ensure that the following conditions are satisfied before awarding a multiyear contract under the authority described in paragraph (a) of this section:
              </P>

              <P>(1) The multiyear exhibits required by DoD 7000.14-R, Financial Management Regulation, are included in the agency's budget estimate submission and the President's budget request.
              </P>

              <P>(2) The Secretary of Defense certifies to Congress that the current 5-year defense program fully funds the support costs associated with the multiyear program (10 U.S.C. 2306b(i)(1)(A)). The head of the agency must submit information supporting this certification to USD(C) (P/B) for transmission to Congress through the Secretary of Defense.
              </P>

              <P>(3) The proposed multiyear contract provides for production at not less than minimum economic rates, given the existing tooling and facilities (10 U.S.C. 2306b(i)(1)(B)). The head of the agency must submit to USD(C) (P/B) information supporting the agency's determination that this requirement has been met.
              </P>

              <P>(4) If the value of a multiyear contract for a particular system or component exceeds $500 million, use of a multiyear contract is specifically authorized by—
              </P>

              <P>(i) An appropriations act (10 U.S.C. 2306b(l)(3)); and
              </P>

              <P>(ii) A law other than an appropriations act (10 U.S.C. 2306b(i)(3)).
              </P>

              <P>(5) All other requirements of law are met and there are no other statutory restrictions on using a multiyear contract for the specific system or component (10 U.S.C. 2306b(i)(2)). One such restriction may be the achievement of specified cost savings. If the agency finds, after negotiations with the contractor(s), that the specified savings cannot be achieved, the head of the agency must assess the savings that, nevertheless, could be achieved by using a multiyear contract. If the savings are substantial, the head of the agency may request relief from the law's specific savings requirement. The request must—
              </P>
              <P>(i) Quantify the savings that can be achieved;
              </P>

              <P>(ii) Explain any other benefits to the Government of using the multiyear contract;
              </P>

              <P>(iii) Include details regarding the negotiated contract terms and conditions; and
                <PRTPAGE P="120"/>
              </P>
              <P>(iv) Be submitted to OUSD (AT&amp;L) DP for transmission to Congress via the Secretary of Defense and the President.</P>
              <CITA>[64 FR 43097, Aug. 9, 1999, as amended at 65 FR 39704, June 27, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>217.174</SECTNO>
              <SUBJECT>Multiyear contracts that employ economic order quantity procurement.</SUBJECT>
              <P>(a) The head of the agency must provide written notice to the congressional defense committees at least 30 days before awarding—</P>
              <P>(1) A multiyear contract providing for economic order quantity procurement in excess of $20 million in any one year; or</P>
              <P>(2) A contract for advance procurement leading to a multiyear contract that employs economic order quantity procurement in excess of $20 million in any one year. (10 U.S.C. 2306b(l)(1); Section 8008(a) of Public Law 105-56 and similar sections in subsequent DoD appropriations acts)</P>
              <P>(b) Before initiating an advance procurement, the contracting officer must verify that it is consistent with DoD policy (e.g., Chapter 2 of DoD 5000.2-R, Mandatory Procedures for Major Defense Acquisition Programs (MDAPs) and Major Automated Information System (MAIS) Acquisition Programs, and the full funding policy in Volume 2A, Chapter 1, of DoD 7000.14-R, Financial Management Regulation).</P>
              <CITA>[66 FR 63338, Dec. 6, 2001]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 217.2—Options</HD>
            <SECTION>
              <SECTNO>217.202</SECTNO>
              <SUBJECT>Use of options.</SUBJECT>
              <P>(1) Options may be used for foreign military sales requirements.</P>
              <P>(2) Consider use of surge options to support the Industrial Preparedness Production Planning program (see subpart 208.72). A surge option allows the Government, prior to final delivery, to—</P>
              <P>(i) Accelerate the contractor's production rate in accordance with a surge production plan or a delivery schedule provided by the contractor under the terms of the contract; and</P>
              <P>(ii) Purchase additional quantities of supplies or services.</P>
              <P>(3) See subpart 217.74 for limitations on the use of undefinitized options.</P>
              <CITA>[56 FR 36345, July 31, 1991, as amended at 61 FR 7743, Feb. 29, 1996]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>217.208</SECTNO>
              <SUBJECT>Solicitation provisions and contract clauses.</SUBJECT>
              <P>Sealed bid solicitations shall not include provisions for evaluations of options unless the contracting officer determines that there is a reasonable likelihood that the options will be exercised (10 U.S.C. 2301(a)(7)). This limitation also applies to sealed bid solicitations for the contracts excluded by FAR 17.200.</P>
            </SECTION>
            <SECTION>
              <SECTNO>217.208-70</SECTNO>
              <SUBJECT>Additional clauses.</SUBJECT>
              <P>(a) Use the clause at 252.217-7000, Exercise of Option to Fulfill Foreign Military Sales Commitments, when an option may be used for foreign military sale requirements.</P>
              <P>(1) Use Alternate I when the foreign military sale country is not known at the time of solicitation or award.</P>
              <P>(2) Do not use this clause in contracts for establishment or replenishment of DoD inventories or stocks, or acquisitions made under DoD cooperative logistics support arrangements.</P>
              <P>(b) When a surge option is needed in support of industrial preparedness production planning (see subpart 208.72), use the clause at 252.217-7001, Surge Option, in solicitations and contracts.</P>
              <P>(1) Insert the percentage of increase the option represents in paragraph (a) of the clause.</P>
              <P>(2) Change 30 days in paragraphs (b)(2) and (d)(1) to longer periods, if appropriate.</P>
              <P>(3) Change the 24-month period in paragraph (c)(3), if appropriate.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 217.4—Leader Company Contracting</HD>
            <SECTION>
              <SECTNO>217.401</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <P>(1) When leader company contracting is to be considered, take special effort to select a small disadvantaged business (SDB) concern as the follower company if—</P>

              <P>(i) The follower company will be a subcontractor and the North American Industry Classification System <PRTPAGE P="121"/>(NAICS) Industry Subsector of the acquisition is one in which use of an evaluation factor or subfactor for participation of SDB concerns is currently authorized (see FAR 19.201(b)); or</P>
              <P>(ii) The follower company will be a prime contractor and the NAICS Industry Subsector of the acquisition is one in which use of a price evaluation adjustment is currently authorized (see FAR 19.201(b)).</P>
              <P>(2) If special effort is required by paragraph (1) of this section and an SDB is not selected as the follower company, the contracting officer shall document the contract file to reflect—</P>
              <P>(i) The extent of actions taken to identify SDB concerns for participation in the acquisition; and</P>
              <P>(ii) The rationale for selection of a non-SDB as the follower company.</P>
              <CITA>[63 FR 64429, Nov. 20, 1998, as amended at 65 FR 50148, Aug. 17, 2000]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 217.5—Interagency Acquisitions Under the Economy Act</HD>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>63 FR 11530, Mar. 9, 1998, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>217.500</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <P>(b) Unless more specific statutory authority exists, the procedures in FAR Subpart 17.5, this subpart, and DODI 4000.19 apply to all purchases, except micro-purchases, made for DoD by another agency. This includes orders under a task or delivery order contract entered into by the other agency. (Pub. L. 105-261, Section 814.)</P>
              <CITA>[64 FR 14400, Mar. 25, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>217.503</SECTNO>
              <SUBJECT>Determinations and findings requirements.</SUBJECT>
              <P>(c) If requested, the contracting officer who normally would contract for the requesting activity should advise in the determination process.</P>
            </SECTION>
            <SECTION>
              <SECTNO>217.504</SECTNO>
              <SUBJECT>Ordering procedures.</SUBJECT>
              <P>(a) When the requesting agency is within DoD, a copy of the executed D&amp;F shall be furnished to the servicing agency as an attachment to the order. When a DoD contracting office is acting as the servicing agency, a copy of the executed D&amp;F shall be obtained from the requesting agency and placed in the contract file for the Economy Act order.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 217.6—Management and Operating Contracts</HD>
            <SECTION>
              <SECTNO>217.600</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <P>FAR subpart 17.6 does not apply to DoD.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 217.70—Exchange of Personal Property</HD>
            <SECTION>
              <SECTNO>217.7000</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <P>This subpart prescribes policy and procedures for exchange of nonexcess personal property concurrent with an acquisition. Section 201(c) of the Federal Property and Administrative Services Act of 1949, 63 Stat. 384, as amended (40 U.S.C. 481(c)) permits exchange of personal property and application of the exchange allowance to the acquisition of similar property. This subpart does not authorize the sale of nonexcess personal property.</P>
            </SECTION>
            <SECTION>
              <SECTNO>217.7001</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <P>As used in this subpart—</P>
              <P>(a) <E T="03">Exchange (trade-in) property</E> means property which—</P>
              <P>(1) Is not excess but is eligible for replacement (because of obsolescence, unserviceability, or other reason); and</P>
              <P>(2) Is applied as whole or partial payment toward the acquisition of similar items (i.e., items designed and constructed for the same purpose).</P>
              <P>(b) <E T="03">Property</E> means items that fall within one of the generic categories listed in DoD 4140.1-R, DoD Materiel Management Regulation, Chapter 6.2, Exchange or Sale of Nonexcess Personal Property.</P>
              <CITA>[56 FR 36345, July 31, 1991, as amended at 65 FR 39705, June 27, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>217.7002</SECTNO>
              <SUBJECT>Policy.</SUBJECT>

              <P>DoD policy is to exchange, rather than replace, eligible nonexcess property whenever exchange promotes economical and efficient program accomplishment. Exchange policy, authority, and applicability are governed by—<PRTPAGE P="122"/>
              </P>
              <P>(a) The Federal Property Management Regulations issued by the Administrator of the General Services Administration; and</P>
              <P>(b) DoD 4140.1-R, Chapter 6.2.</P>
              <CITA>[56 FR 36345, July 31, 1991, as amended at 65 FR 39705, June 27, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>217.7003</SECTNO>
              <SUBJECT>Purchase request.</SUBJECT>
              <P>Ensure that the requiring activity provides all of the following in support of the purchase request—</P>
              <P>(a) A certification that the property is eligible for exchange and complies with all conditions and limitations of DoD 4140.1-R, Chapter 6.2.</P>
              <P>(b) A written determination of economic advantage indicating—</P>
              <P>(1) The anticipated economic advantage to the Government from use of the exchange authority;</P>
              <P>(2) That exchange allowances shall be applied toward, or in partial payment of, the items to be acquired; and</P>
              <P>(3) That, if required, the exchange property has been rendered safe or innocuous or has been demilitarized;</P>
              <P>(c) All applicable approvals for the exchange; and</P>
              <P>(d) A description of the property available for exchange (e.g., nomenclature, location, serial number, estimated travel value).</P>
              <CITA>[56 FR 36345, July 31, 1991, as amended at 65 FR 39705, June 27, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>217.7004</SECTNO>
              <SUBJECT>Solicitation and award.</SUBJECT>
              <P>(a) Solicitations shall include a request for offerors to state prices—</P>
              <P>(1) For the new items being acquired without any exchange; and</P>
              <P>(2) For the new items with the exchange (trade-in allowance) for the exchange property listed.</P>
              <P>(b) The contracting officer is not obligated to award on an exchange basis. If the lowest evaluated offer is an offer for the new items without any exchange, the contracting officer may award on that basis and forgo the exchange.</P>
              <P>(c) Exchanges may be made only with the successful offeror. When the successful offer includes an exchange, award one contract for both the acquisition of the new property and the trade-in of the exchange property. The only exception is when the items must be acquired against a mandatory Federal supply schedule contract, in which case, award a separate contract for the exchange.</P>
            </SECTION>
            <SECTION>
              <SECTNO>217.7005</SECTNO>
              <SUBJECT>Solicitation provision.</SUBJECT>
              <P>Use the provision at 252.217-7002, Offering Property for Exchange, when offering nonexcess personal property for exchange. Allow a minimum of 14 calendar days for the inspection period in paragraph (b) of the clause if the exchange property is in the continental United States. Allow at least 21 calendar days outside the United States.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 217.71—Master Agreement for Repair and Alteration of Vessels</HD>
            <SECTION>
              <SECTNO>217.7100</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <P>This subpart contains acquisition policies and procedures for master agreements for repair and alteration of vessels.</P>
            </SECTION>
            <SECTION>
              <SECTNO>217.7101</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <P>(a) <E T="03">Master agreement for repair and alteration of vessels</E>—</P>
              <P>(1) Is a written instrument of understanding, negotiated between a contracting activity and a contractor that—</P>
              <P>(A) Contains contract clauses, terms, and conditions applying to future contracts for repairs, alterations, and/or additions to vessels; and</P>
              <P>(B) Contemplates separate future contracts that will incorporate by reference or attachment the required and applicable clauses agreed upon in the master agreement.</P>
              <P>(2) Is not a contract.</P>
              <P>(b) <E T="03">Job order</E>—</P>
              <P>(1) Is a fixed price contract incorporating, by reference or attachment, a master agreement for repair and alteration of vessels;</P>
              <P>(2) May include clauses pertaining to subjects not covered by the master agreement; but applicable to the job order being awarded; and</P>
              <P>(3) Applies to a specific acquisition and sets forth the scope of work, price, delivery date, and other appropriate terms that apply to the particular job order.</P>
            </SECTION>
            <SECTION>
              <PRTPAGE P="123"/>
              <SECTNO>217.7102</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <P>(a) Activities shall enter into master agreements for repair and alteration of vessels with all prospective contractors located within the United States, its possessions, or Puerto Rico, which—</P>
              <P>(1) Request ship repair work; and</P>
              <P>(2) Which possess the organization and facilities to perform the work satisfactorily. (Issuance of a master agreement does not indicate approval of the contractor's facility for any particular acquisition and is not an affirmative determination of responsibility under FAR subpart 9.1 for any particular acquisition.)</P>
              <P>(b) Activities may use master agreements in work with prospective contractors located outside the United States, its possessions, or Puerto Rico.</P>
              <P>(c) Activities may issue job orders under master agreements to effect repairs, alterations, and/or additions to vessels belonging to foreign governments.</P>
              <P>(1) Contractors shall treat vessels of a foreign government as if they were vessels of the U.S. Government whenever requested to do so by the contracting officer.</P>
              <P>(2) Identify the vessel and the foreign government in the solicitation and job order.</P>
            </SECTION>
            <SECTION>
              <SECTNO>217.7103</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>217.7103-1</SECTNO>
              <SUBJECT>Content and format.</SUBJECT>
              <P>(a) A Master agreement shall contain all clauses required by 217.7104(a), statute and executive order.</P>
              <P>(b) The following format may be adapted to fit specific circumstances:</P>
              <EXTRACT>
                <HD SOURCE="HD1">Master Agreement for Repair and Alteration of Vessels</HD>
                <P>(1) This agreement is entered into this ___ day of _____ 19__, by the United States of America (the “Government”:) represented by ______, the Contracting Officer, and, ______ a corporation organized and existing under the laws of the State of ______ (the “Contractor”).</P>
                <P>(2) The clauses in this agreement, shall be incorporated, by reference or attachment, in job orders issued under this agreement to effect repairs, alterations, and/or additions to vessels.</P>
                <P>(3) By giving 30 days written notice, either party to this agreement has the right to cancel it without affecting the rights and liabilities under any job order existing at the time of cancellation. The Contractor shall perform, under the terms of this agreement, all work covered by any job order awarded before the effective date of the cancellation.</P>
                <P>(4) This agreement may be modified only by mutual agreement of the parties. A modification of this agreement shall not affect any job order in existence at the time of modification, unless the parties agree otherwise.</P>
                <P>(5) The rights and obligations of the parties to this agreement are set forth in this agreement and the clauses of any job orders issued under this agreement. In the event there is an inconsistency between this agreement and any job order, the provisions of this agreement shall govern.</P>

                <P>(6) This agreement shall remain in effect until canceled by either party.
                </P>
                <FP>THE UNITED STATES OF AMERICA</FP>
                <FP SOURCE="FP-DASH">by</FP>
                <FP>(Contracting Officer)</FP>
                <FP SOURCE="FP-DASH"/>
                <FP>(Contractor)</FP>
                <FP SOURCE="FP-DASH">by</FP>
                <FP>(Authorized Individual)</FP>
                <FP SOURCE="FP-DASH"/>
                <FP>(Title)</FP>
              </EXTRACT>
            </SECTION>
            <SECTION>
              <SECTNO>217.7103-2</SECTNO>
              <SUBJECT>Period of agreement.</SUBJECT>
              <P>(a) Master agreements remain in effect until canceled by either the contractor or the contracting officer.</P>
              <P>(b) Master agreements can be canceled by either the contractor or the contracting officer by giving 30 days written notice to the other.</P>
              <P>(c) Cancellation of a master agreement does not affect the rights and liabilities under any job order existing at the time of cancellation. The contractor must continue to perform all work covered by any job order issued before the effective date of cancellation of the master agreement.</P>
            </SECTION>
            <SECTION>
              <SECTNO>217.7103-3</SECTNO>
              <SUBJECT>Solicitations for job orders.</SUBJECT>
              <P>(a) When a requirement arises within the United States, its possessions, or Puerto Rico for the type of work covered by the master agreement, solicit offers from prospective contractors that—</P>
              <P>(1) Previously executed a master agreement; or</P>

              <P>(2) Have not previously executed a master agreement, but possess the necessary qualifications to perform the work and agree to execute a master agreement before award of a job order.<PRTPAGE P="124"/>
              </P>
              <P>(b) Prepare the solicitation in the uniform contract format and in accordance with FAR Subpart 14.2 or 15.2, as applicable.</P>
              <P>(c) Include in the solicitation—</P>
              <P>(1) The nature of the work to be performed;</P>
              <P>(2) The date the vessel will be available to the contractor;</P>
              <P>(3) The date the work is to be completed; and</P>
              <P>(4) Whether bulk ammunition is aboard the vessel.</P>
              <P>(d) Unless the solicitation states otherwise, offers are to be based on performance at the contractor's site.</P>
              <P>(e) Solicitations processed under negotiated acquisition procedures shall require offerors to include a breakdown of the price with reasonable supporting detail in whatever format and detail the contracting officer may request.</P>
              <P>(f) Where practicable, afford potential offerors an opportunity to inspect the item needing repair or alteration.</P>
              <CITA>[56 FR 36345, July 31, 1991, as amended at 63 FR 55052, Oct. 14, 1998; 63 FR 56290, Oct. 21, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>217.7103-4</SECTNO>
              <SUBJECT>Award of a job order.</SUBJECT>
              <P>Award job orders in accordance with FAR Subpart 14.4 or 15.5.</P>
              <CITA>[64 FR 55052, Oct. 14, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>217.7103-5</SECTNO>
              <SUBJECT>Emergency work.</SUBJECT>
              <P>(a) The contracting officer, without soliciting offers, may issue a written job order to a contractor that has previously executed a master agreement when—</P>
              <P>(i) Delay in the performance of necessary repair work would endanger a vessel, its cargo or stores; or</P>
              <P>(ii) Military necessity requires immediate work on a vessel.</P>
              <P>(b) Process this type of undefinitized contract action in accordance with subpart 217.74.</P>
              <P>(c) Negotiate a price as soon as practicable after the issuance of an undefinitized order and definitize the job order upon completing negotiations.</P>
            </SECTION>
            <SECTION>
              <SECTNO>217.7103-6</SECTNO>
              <SUBJECT>Repair costs not readily ascertainable.</SUBJECT>
              <P>If the nature of any repairs is such that their extent and probable cost cannot be ascertained readily, the solicitation should—</P>
              <P>(a) Solicit offers for determining the nature and extent of the repairs;</P>
              <P>(b) Provide that upon determination by the contracting officer of what work is necessary, the contractor, if requested by the contracting officer, shall negotiate prices for performance of the repairs; and</P>
              <P>(c) Provide that prices for the repairs, if ordered, will be set forth in a modification of the job order.</P>
            </SECTION>
            <SECTION>
              <SECTNO>217.7103-7</SECTNO>
              <SUBJECT>Modification of master agreements.</SUBJECT>
              <P>(a) Review each master agreement at least annually before the anniversary of its effective date and revise it as necessary to conform to the requirements of the FAR and DFARS. Statutory or other mandatory changes may require review and revision earlier than one year.</P>
              <P>(b) A master agreement shall be changed only by modifying the master agreement itself. It shall not be changed through a job order.</P>
              <P>(c) A modification to a master agreement shall not affect job orders issued before the effective date of the modification.</P>
            </SECTION>
            <SECTION>
              <SECTNO>217.7104</SECTNO>
              <SUBJECT>Contract clauses.</SUBJECT>
              <P>(a) Use the following clauses in solicitations for, and in, master agreements for repair and alteration of vessels:</P>
              <P>(1) 252.217-7003, Changes.</P>
              <P>(2) 252.217-7004, Job Orders and Compensation.</P>
              <P>(3) 252.217-7005, Inspection and Manner of Doing Work.</P>
              <P>(4) 252.217-7006, Title.</P>
              <P>(5) 252.217-7007, Payments.</P>
              <P>(6) 252.217-7008, Bonds.</P>
              <P>(7) 252.217-7009, Default.</P>
              <P>(8) 252.217-7010, Performance.</P>
              <P>(9) 252.217-7011, Access to Vessel.</P>
              <P>(10) 252.217-7012, Liability and Insurance.</P>
              <P>(11) 252.217-7013, Guarantees.</P>
              <P>(12) 252.217-7014, Discharge of Liens.</P>
              <P>(13) 252.217-7015, Safety and Health.</P>
              <P>(14) 252.217-7016, Plant Protection, as applicable.</P>

              <P>(b)(1) Incorporate in solicitations for, and in, job orders, the clauses in the master agreement, and any other <PRTPAGE P="125"/>clauses on subjects not covered by the master agreement, but applicable to the job order to be awarded.</P>
              <P>(2) Use the clause at 252.217-7016, Plant Protection, in job orders where performance is to occur at the contractor's facility.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 217.72—Bakery and Dairy Products</HD>
            <SECTION>
              <SECTNO>217.7200</SECTNO>
              <SUBJECT>Scope.</SUBJECT>
              <P>This subpart provides special policies and requirements for acquisition of perishable bakery and dairy products.</P>
            </SECTION>
            <SECTION>
              <SECTNO>217.7201</SECTNO>
              <SUBJECT>Contract requirements for dairy products.</SUBJECT>
              <P>(a) Include the following chemical and microbiological requirements in solicitations and resulting contracts for milk, milk products, and cultured products (as defined in the Veterinary/Medical Wholesomeness Assurance Program for Fresh and Cultured Dairy Products and Frozen Desserts (AR-40-70/NAVSUPINST 4355.6/AFR 161-46/MCO 10110.44)):</P>
              <P>(1) <E T="03">Chemical requirements</E>. Products shall meet the chemical requirements for each specification cited in the contract on the date of award.</P>
              <P>(2) <E T="03">Microbiological requirements</E>. Products shall meet microbiological requirements stated in Public Health Service Publication 229, Grade A Pasteurized Milk Ordnance, in effect on the date of award. In the event of conflict between these requirements and individual product specifications, the requirements of Public Health Service Publication 229 take precedence.</P>
              <P>(b) When the contractor is required to furnish its own cabinets for dispensing milk from bulk containers—</P>
              <P>(1) Include the following information in the solicitation—</P>
              <P>(i) The number (or estimated number) of dispenser cabinets required;</P>
              <P>(ii) Whether metal stands for the cabinets are required;</P>
              <P>(iii) The number of cabinets required with a capacity of two containers each; and</P>
              <P>(iv) The number required with a capacity of three containers each.</P>
              <P>(2) Include the contractor's list of cabinet equipment in the schedule of the contract.</P>
              <P>(c) The contracting officer shall notify the Government quality assurance representative of code changes approved under the clause at 252.217-7022, Code Dating.</P>
            </SECTION>
            <SECTION>
              <SECTNO>217.7202</SECTNO>
              <SUBJECT>Contract type.</SUBJECT>
              <P>Normally use requirements contracts for bakery and dairy products. Other indefinite delivery contracts and other contract types may be used as appropriate.</P>
            </SECTION>
            <SECTION>
              <SECTNO>217.7203</SECTNO>
              <SUBJECT>Contract clauses.</SUBJECT>
              <P>(a) Use the following additional clauses in solicitations and contracts for perishable bakery and dairy products—</P>
              <P>(1) 252.217-7017, Time of Delivery. Use Alternate I when the contract is other than a requirements contract. Insert the number of hours in paragraph (c) of Alternate I.</P>
              <P>(2) 252.217-7018, Change in Plant Location.</P>
              <P>(3) 252.217-7019, Sanitary Conditions. Use Alternate I when the contract is other than a requirements contract.</P>
              <P>(4) 252.217-7022, Code Dating. Use this clause only when the schedule or a specification requires labels showing the date of pasteurization, manufacture, production, or processing.</P>
              <P>(5) 252.217-7023, Marking. Do not use this clause when MIL-STD-129, Marking for Shipment and Storage, is required.</P>
              <P>(6) 252.217-7024, Responsibility for Containers and Equipment. Use when contractor is required to provide reusable containers and equipment.</P>
              <P>(b) Use the following additional clauses in solicitations and contracts for perishable dairy products—</P>
              <P>(1) 252.217-7020, Examination and Testing. Use Alternate I when the contract is an indefinite quantity contract.</P>
              <P>(2) 252.217-7021, Deficiency Adjustment.</P>
              <P>(3) 252.217-7025, Containers and Equipment.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 217.73—Identification of Sources of Supply</HD>
            <SECTION>
              <SECTNO>217.7300</SECTNO>
              <SUBJECT>Scope.</SUBJECT>

              <P>This subpart implements 10 U.S.C. 2384. It contains policy and procedures <PRTPAGE P="126"/>for requiring contractors to identify the actual manufacturer of supplies furnished to DoD.</P>
            </SECTION>
            <SECTION>
              <SECTNO>217.7301</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>Contractors shall identify their sources of supply in contracts for supplies. Contractor identification of sources of supply enables solicitation, in subsequent acquisitions, of actual manufacturers or other suppliers of items. This enhances competition and potentially avoids payment of additional costs for no significant added value.</P>
            </SECTION>
            <SECTION>
              <SECTNO>217.7302</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <P>(a) Whenever practicable, include a requirement for contractor identification of sources of supply in all contracts for the delivery of supplies. The identification shall include—</P>
              <P>(1) The item's actual manufacturer or producer, or all the contractor's sources for the item;</P>
              <P>(2) The item's national stock number (if there is one);</P>
              <P>(3) The item identification number used by—</P>
              <P>(i) The actual manufacturer or producer of the item; or</P>
              <P>(ii) Each of the contractor's sources for the item; and</P>
              <P>(4) The source of any technical data delivered under the contract.</P>
              <P>(b) The requirement in paragraph (a) of this section does not apply to contracts that are—</P>
              <P>(1) For commercial items; or</P>
              <P>(2) Valued at or below the simplified acquisition threshold.</P>
              <CITA>[56 FR 36345, July 31, 1991, as amended at 64 FR 2597, Jan. 15, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>217.7303</SECTNO>
              <SUBJECT>Solicitation provision.</SUBJECT>
              <P>(a) Use the provision at 252.217-7026, Identification of Sources of Supply, or one substantially the same, in all solicitations for supplies when the acquisition is being conducted under other than full and open competition, except when—</P>
              <P>(1) Using FAR 6.302-5;</P>
              <P>(2) The contracting officer already has the information required by the provision (e.g., the information was obtained under other acquisitions);</P>
              <P>(3) The contract is for subsistence, clothing or textiles, fuels, or supplies purchased and used outside the United States;</P>
              <P>(4) The contracting officer determines that it would not be practicable to require offerors/contractors to provide the information, e.g., nonrepetitive local purchases; or</P>
              <P>(5) The contracting officer determines that the exception at 217.7302(b) applies to all items under the solicitation.</P>
              <P>(b) If appropriate, use the provision at 252.217-7026, Identification of Sources of Supply, or one substantially the same, in service contracts requiring the delivery of supplies.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 217.74—Undefinitized Contract Actions</HD>
            <SECTION>
              <SECTNO>217.7400</SECTNO>
              <SUBJECT>Scope.</SUBJECT>
              <P>This subpart prescribes policies and procedures implementing 10 U.S.C. 2326.</P>
            </SECTION>
            <SECTION>
              <SECTNO>217.7401</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <P>As used in this subpart—</P>
              <P>(a) <E T="03">Contract action</E> means an action which results in a contract.</P>
              <P>(1) It includes contract modifications for additional supplies or services.</P>
              <P>(2) It does not include change orders, administrative changes, funding modifications, or any other contract modifications that are within the scope and under the terms of the contract, e.g., engineering change proposals, value engineering change proposals, and over and above work requests as described in subpart 217.77.</P>
              <P>(b) <E T="03">Definitization</E> means the agreement on, or determination of, contract terms, specifications, and price, which converts the undefinitized contract action to a definitive contract.</P>
              <P>(c) <E T="03">Qualifying proposal</E> means a proposal containing sufficient information for the DoD to do complete and meaningful analyses and audits of the—</P>
              <P>(1) Information in the proposal; and</P>
              <P>(2) Any other information that the contracting officer has determined DoD needs to review in connection with the contract.</P>
              <P>(d) <E T="03">Undefinitized contract action</E> means any contract action for which the contract terms, specifications, or price are not agreed upon before performance is begun under the action. Examples are <PRTPAGE P="127"/>letter contracts, orders under basic ordering agreements, and provisioned item orders, for which the price has not been agreed upon before performance has begun.</P>
            </SECTION>
            <SECTION>
              <SECTNO>217.7402</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
              <P>The following undefinitized contract actions (UCAs) are not subject to this subpart, but the contracting officer should apply the policy to them (and to changes under the Changes clause) to the maximum extent practicable—</P>
              <P>(a) UCAs for foreign military sales;</P>
              <P>(b) Purchases at or below the simplified acquisition threshold;</P>
              <P>(c) Special access programs;</P>
              <P>(d) Congressionally mandated long-lead procurement contracts.</P>
              <CITA>[56 FR 36345, July 31, 1991, as amended at 61 FR 7743, Feb. 29, 1996]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>217.7403</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>DoD policy is that undefinitized contract actions shall—</P>
              <P>(a) Be used only when—</P>
              <P>(1) The negotiation of a definitive contract action is not possible in sufficient time to meet the Government's requirements; and</P>
              <P>(2) The Government's interest demands that the contractor be given a binding commitment so that contract performance can begin immediately.</P>
              <P>(b) Be as complete and definite as practicable under the particular circumstances.</P>
            </SECTION>
            <SECTION>
              <SECTNO>217.7404</SECTNO>
              <SUBJECT>Limitations.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>217.7404-1</SECTNO>
              <SUBJECT>Authorization.</SUBJECT>
              <P>The contracting officer shall obtain approval from the head of the contracting activity before—</P>
              <P>(a) Entering into a UCA. The request for approval must fully explain the need to begin performance before definitization, including the adverse impact on agency requirements resulting from delays in beginning performance.</P>
              <P>(b) Including requirements for non-urgent spare parts and support equipment in a UCA. The request should show that inclusion of the non-urgent items is consistent with good business practices and in the best interest of the United States.</P>
              <P>(c) Modifying the scope of a UCA when performance has already begun. The request should show that the modification is consistent with good business practices and in the best interests of the United States.</P>
            </SECTION>
            <SECTION>
              <SECTNO>217.7404-2</SECTNO>
              <SUBJECT>Price ceiling.</SUBJECT>
              <P>UCAs shall include a not-to-exceed price.</P>
            </SECTION>
            <SECTION>
              <SECTNO>217.7404-3</SECTNO>
              <SUBJECT>Definitization schedule.</SUBJECT>
              <P>(a) UCAs shall contain definitization schedules that provide for definitization by the earlier of—</P>
              <P>(1) The date that is 180 days after issuance of the action (this date may be extended but may not exceed the date that is 180 days after the contractor submits a qualifying proposal); or</P>
              <P>(2) The date on which the amount of funds obligated under the contract action is equal to more than 50 percent of the not-to-exceed price.</P>
              <P>(b) Submission of a qualifying proposal in accordance with the definitization schedule is a material element of the contract. If the contractor does not submit a timely qualifying proposal, the contracting officer may suspend or reduce progress payments under FAR 32.503-6, or take other appropriate action.</P>
              <CITA>[56 FR 36345, July 31, 1991, as amended at 60 FR 29498, June 5, 1995; 63 FR 67803, Dec. 9, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>217.7404-4</SECTNO>
              <SUBJECT>Limitations on obligations.</SUBJECT>
              <P>The Government shall not obligate more than 50 percent of the not-to-exceed price before definitization. However, if a contractor submits a qualifying proposal before 50 percent of the not-to-exceed price has been obligated by the Government, then the limitation on obligations before definitization may be increased to no more than 75 percent (see 232.102-70 for coverage on provisional delivery payments).</P>
              <CITA>[60 FR 29498, June 5, 1995]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>217.7404-5</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>

              <P>(a) The limitations in 217.7404-2, 217.7404-3, and 217.7404-4 do not apply to UCAs for the purchase of initial spares.<PRTPAGE P="128"/>
              </P>
              <P>(b) The head of an agency may waive the limitations in 217.7404-2, 217.7404-3, and 217.7404-4 for UCAs if the head of the agency determines that the waiver is necessary to support—</P>
              <P>(1) A contingency operation as defined in 10 U.S.C. 101(a)(13); or</P>
              <P>(2) A humanitarian or peacekeeping operation as defined in 10 U.S.C. 2302(7).</P>
              <CITA>[60 FR 29498, June 5, 1995, as amended at 63 FR 67804, Dec. 9, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>217.7404-6</SECTNO>
              <SUBJECT>Allowable profit.</SUBJECT>
              <P>When the final price of a UCA is negotiated after a substantial portion of the required performance has been completed, the head of the agency shall ensure the profit allowed reflects—</P>
              <P>(a) Any reduced cost risk to the contractor for costs incurred during contract performance before negotiation of the final price; and</P>
              <P>(b) The contractor's reduced cost risk for costs incurred during performance of the remainder of the contract.</P>
            </SECTION>
            <SECTION>
              <SECTNO>217.7405</SECTNO>
              <SUBJECT>Definitizations.</SUBJECT>
              <P>For each definitization modification, the contracting officer shall include all data required by 243.171.</P>
              <CITA>[60 FR 34470, July 3, 1995]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>217.7406</SECTNO>
              <SUBJECT>Contract clauses.</SUBJECT>
              <P>(a) Use the clause at FAR 52.216-24, Limitation of Government Liability, in all UCAs, solicitations associated with UCAs, basic ordering agreements, indefinite delivery contracts, and any other type of contract providing for the use of UCAs.</P>
              <P>(b) Use the clause at 252.217-7027, Contract Definitization, in all UCAs, solicitations associated with UCAs, basic ordering agreements, indefinite delivery contracts, and any other type of contract providing for the use of UCAs. Insert the applicable information in paragraphs (a), (b), and (d) of the clause. If, at the time of entering into the UCA, the contracting officer knows that the definitive contract action will meet the criteria of FAR 15.403-1, 15.403-2, or 15.403-3 for not requiring submission of cost or pricing data, the words “and cost or pricing data” may be deleted from paragraph (a) of the clause.</P>
              <CITA>[61 FR 7743, Feb. 29, 1996, as amended at 63 FR 55052, Oct. 14, 1998]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 217.75—Acquisition of Replenishment Parts</HD>
            <SECTION>
              <SECTNO>217.7500</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <P>This subpart provides guidance on additional requirements related to acquisition of replenishment parts (as defined in appendix E).</P>
            </SECTION>
            <SECTION>
              <SECTNO>217.7501</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <P>Departments and agencies—</P>
              <P>(a) May acquire replenishment parts concurrently with production of the end item.</P>
              <P>(b) Shall provide for full and open competition when fully adequate drawings and any other needed data are available with the right to use for acquisition purposes (see part 227). However—</P>
              <P>(1) When data is not available for a competitive acquisition, use one of the procedures in 217.7503.</P>
              <P>(2) Replenishment parts must be acquired so as to ensure the safe, dependable, and effective operation of the equipment. Where this assurance is not possible with new sources, competition may be limited to the original manufacturer of the equipment or other sources that have previously manufactured or furnished the parts as long as the action is justified.</P>
              <P>(c) Shall follow the limitations on price increases in 217.7504.</P>
            </SECTION>
            <SECTION>
              <SECTNO>217.7502</SECTNO>
              <SUBJECT>Spares acquisition integrated with production (SAIP).</SUBJECT>
              <P>(a) Spares acquisition integrated with production (SAIP) is a technique used to acquire replenishment parts concurrently with parts being produced for the end item.</P>
              <P>(b) Include appropriately tailored provisions in the contract when SAIP is used.</P>
              <CITA>[56 FR 36345, July 31, 1991, as amended at 65 FR 39705, June 27, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>217.7503</SECTNO>
              <SUBJECT>Acquisition of parts when data is not available.</SUBJECT>

              <P>When acquiring a part for which the Government does not have necessary <PRTPAGE P="129"/>data with rights to use in a specification or drawing for competitive acquisition, use one of the following procedures in order of preference—</P>
              <P>(a) When items of identical design are not required, the acquisition may still be conducted through full and open competition by using a performance specification or other similar technical requirement or purchase description that does not contain data with restricted rights. Two methods are—</P>
              <P>(1) Two-step sealed bidding; and</P>
              <P>(2) Brand name or equal purchase descriptions.</P>
              <P>(b) When other than full and open competition is authorized under FAR part 6, acquire the part from the firm which developed or designed the item or process, or its licensees, provided productive capacity and quality are adequate and the price is fair and reasonable.</P>
              <P>(c) When additional sources are needed and the procedures in paragraph (a) of this section are not practicable, consider the following alternatives—</P>
              <P>(1) Encourage the developer to license others to manufacture the parts;</P>
              <P>(2) Acquire the necessary rights in data;</P>
              <P>(3) Use a leader company acquisition technique (FAR subpart 17.4) when complex technical equipment is involved and establishing satisfactory additional sources will require technical assistance as well as data; or</P>
              <P>(4) Incorporate a priced option in the contract which allows the Government to require the contractor to establish a second source.</P>
              <P>(d) As a last alternative, the contracting activity may develop a design specification for competitive acquisition through reverse engineering. Contracting activities shall not do reverse engineering unless—</P>
              <P>(1) Significant cost savings can be demonstrated; and</P>
              <P>(2) The action is authorized by the head of the contracting activity.</P>
            </SECTION>
            <SECTION>
              <SECTNO>217.7504</SECTNO>
              <SUBJECT>Limitations on price increases.</SUBJECT>
              <P>This section provides implementing guidance for section 1215 of Public Law 98-94 (10 U.S.C. 2452 note).</P>
              <P>(a) The contracting officer shall not award, on a sole source basis, a contract for any centrally managed replenishment part when the price of the part has increased by 25 percent or more over the most recent 12-month period.</P>
              <P>(1) Before computing the percentage difference between the current price and the prior price, adjust for quantity, escalation, and other factors necessary to achieve comparability.</P>
              <P>(2) Departments and agencies may specify an alternate percentage or percentages for contracts at or below the simplified acquisition threshold.</P>
              <P>(b) The contracting officer may award a contract for a part, the price of which exceeds the limitation in paragraph (a) of this section, if the contracting officer certifies in writing to the head of the contracting activity before award that—</P>
              <P>(1) The contracting officer has evaluated the price of the part and concluded that the price increase is fair and reasonable; or</P>
              <P>(2) The national security interests of the United States require purchase of the part despite the price increase.</P>
              <P>(c) The fact that a particular price has not exceeded the limitation in paragraph (a) of this section does not relieve the contracting officer of the responsibility for obtaining a fair and reasonable price.</P>
              <P>(d) Contracting officers may include a provision in sole source solicitations requiring that the offeror supply with its proposal, price and quantity data on any government orders for the replenishment part issued within the most recent 12 months.</P>
              <CITA>[56 FR 36345, July 31, 1991, as amended at 64 FR 2598, Jan. 15, 1999]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 217.76—Contracts with Provisioning Requirements</HD>
            <SECTION>
              <SECTNO>217.7600</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>

              <P>This subpart contains contract requirements and procedures for items to be provisioned. For technical requirements of provisioning, see DoD 4140.1-<PRTPAGE P="130"/>R, DoD Materiel Management Regulation, Chapter 1. For breakout requirements, see appendix E.</P>
              <CITA>[56 FR 36345, July 31, 1991, as amended at 67 FR 61516, Oct. 1, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>217.7601</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <P>As used in this subpart,</P>
              <P>(a) <E T="03">Provisioning</E> means the process of determining and acquiring the range and quantity of spare and repair parts, and support and test equipment required to operate and maintain an end item for an initial period of service.</P>
              <P>(b) <E T="03">Provisioned item</E> means any item selected under provisioning procedures.</P>
              <P>(c) <E T="03">Provisioned items order</E> (PIO) means an undefinitized order issued under a contract which includes the Government's requirements for provisioned items. (Provisioned items with firm prices are acquired by supplemental agreement or by separate contract.)</P>
              <P>(d) <E T="03">Provisioning activity</E> means the organization responsible for selecting and determining requirements for provisioned items.</P>
              <P>(e) <E T="03">Provisioning requirements statement</E> means the contractual document listing the specific provisioning requirements for that contract. The statement normally includes:</P>
              <P>(1) Instructions, such as the provisioning method to be used;</P>
              <P>(2) The extent of provisioning technical documentation and data needed (including administrative requirements for submission and distribution);</P>
              <P>(3) The type and location of provisioning conferences;</P>
              <P>(4) Sample article requirements;</P>
              <P>(5) The delivery schedule;</P>
              <P>(6) Packaging and marking requirements for provisioned items; and</P>
              <P>(7) Requirements for provisioning screening.</P>
              <P>(f) <E T="03">Provisioning technical documentation</E> means the data needed for the identification, selection, determination of initial requirements, and cataloging of support items to be acquired through the provisioning process. It includes such things as provisioning lists and logistics support analysis summaries. Descriptive data such as drawings and photographs are referred to as <E T="03">supplementary provisioning technical documentation.</E>
              </P>
            </SECTION>
            <SECTION>
              <SECTNO>217.7602</SECTNO>
              <SUBJECT>Contracting requirements.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>217.7602-1</SECTNO>
              <SUBJECT>Contractual provisions.</SUBJECT>
              <P>Contracts containing provisioning requirements shall—</P>
              <P>(a) List the provisioning functions to be performed and who will perform them;</P>
              <P>(b) Include a provisioning requirements statement or specify a time limit for its incorporation into the contract by modification (revisions to the provisioning requirements statement shall also be incorporated by contract modification);</P>
              <P>(c) Include on the DD Form 1423, Contract Data Requirements List, a schedule for delivery of provisioning technical documentation, or provide for the schedule to be incorporated later by contract modification;</P>
              <P>(d) Require flowdown of the appropriate provisioning technical documentation requirement when the subcontractor prepares the documentation;</P>
              <P>(e) Specify any applicable procedures for interim release by the contractor of long lead time items, and include ordering and funding instructions for such items. As a minimum, the instructions shall require the contractor to advise the contracting officer or provisioning activity at least 30 days before release of the items, their estimated costs, and the effective date of release;</P>
              <P>(f) Specify the activity designated to issue provisioned items orders, i.e., contracting officer, provisioning activity, or administrative contracting officer. When it is expected that more than one activity will place provisioned items orders against the contract, state the requirements for provisioned items of each activity as separate contract line items;</P>
              <P>(g) Provide a definitization schedule (normally 120 days after receipt of the contractor's proposal), and a timeframe for the contractor to furnish price proposals for provisioned items orders (normally 60 days after order issuance);</P>

              <P>(h) Specify exhibit identifiers applicable to the contract line/subline items; and<PRTPAGE P="131"/>
              </P>
              <P>(i) Include procedures for processing changes (including cancellations) in quantities of items ordered.</P>
            </SECTION>
            <SECTION>
              <SECTNO>217.7602-2</SECTNO>
              <SUBJECT>Issuance of provisioned items orders.</SUBJECT>
              <P>(a) Use the Standard Form 30, Amendment of Solicitation/Modification of Contract, to—</P>
              <P>(1) Issue provisioned items orders;</P>
              <P>(2) Decrease or cancel quantities of items ordered; and</P>
              <P>(3) Cover the contractor's interim release of long lead items when the contracting officer approves the release (if the release is not approved, the contracting officer shall notify the contractor to cancel the items).</P>
              <P>(b) Include in Block 14 of the Standard Form 30—</P>
              <P>(1) The term PROVISIONED ITEMS ORDER in capital letters and underlined; and</P>
              <P>(2) The appropriate exhibit identifier(s) for all attached exhibits.</P>
              <P>(c) Obligate funds to cover the estimated price of the items being ordered. Show individual estimated prices for each exhibit line item on the accounting and payment office copies.</P>
              <P>(d) Distribution is the same as for the basic contract (see FAR 4.2). However, if the exhibits are voluminous, the contracting officer may restrict distribution of the exhibits to the contract administration office.</P>
              <P>(e) See subpart 217.74 for additional guidance and limitations on the use of undefinitized contract actions.</P>
            </SECTION>
            <SECTION>
              <SECTNO>217.7603</SECTNO>
              <SUBJECT>Contract administration requirements.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>217.7603-1</SECTNO>
              <SUBJECT>Provisioning conferences.</SUBJECT>
              <P>When requested by the contracting officer or provisioning activity, the contract administration office shall assist the contracting officer or provisioning activity in scheduling and determining the types of provisioning conferences required, e.g., guidance meetings, long lead time items conferences, source coding meetings.</P>
            </SECTION>
            <SECTION>
              <SECTNO>217.7603-2</SECTNO>
              <SUBJECT>Contract administration office monitoring.</SUBJECT>
              <P>The contract administration office (CAO) shall monitor contracts containing provisioning requirements. As a minimum the CAO shall—</P>
              <P>(a) Ensure that the contractor understands the provisioning requirements;</P>
              <P>(b) Review contractor progress in the preparation of provisioning technical documentation and, if requested by the contracting officer or provisioning activity, inspect it for format and content;</P>
              <P>(c) Ensure the prime contractor flows-down provisioning requirements to any subcontractor charged with preparation of documentation;</P>
              <P>(d) Advise the contracting office or provisioning activity of delays in delivery of provisioning technical documentation or other related problems (see FAR subpart 42.11);</P>
              <P>(e) Ensure contractor compliance with contract requirements concerning the assignment of national stock numbers; and</P>
              <P>(f) Ensure that the contractor complies with contractual criteria for release of long lead time items.</P>
            </SECTION>
            <SECTION>
              <SECTNO>217.7603-3</SECTNO>
              <SUBJECT>Negotiating and executing supplemental agreements.</SUBJECT>
              <P>(a) The administrative contracting officer (ACO) shall definitize provisioned items orders within the prescribed schedule.</P>
              <P>(b) If the provisioned items order does not contain a delivery date, or the contractor cannot meet the date, the ACO shall coordinate the negotiated schedule with the contracting officer or provisioning activity before execution of the supplemental agreement.</P>
              <P>(c) The ACO shall maintain records of provisioned items orders showing—</P>
              <P>(1) The adequacy of obligated funds;</P>
              <P>(2) Due dates for price proposals; and</P>
              <P>(3) Actions taken to obtain additional funds or to deobligate excess funds.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 217.77—Over and Above Work</HD>
            <SECTION>
              <SECTNO>217.7700</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <P>This subpart prescribes policies and procedures for acquisition of over and above work.</P>
            </SECTION>
            <SECTION>
              <SECTNO>217.7701</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>

              <P>(a) Contracts for the performance of maintenance, overhaul, modification, <PRTPAGE P="132"/>and repair of various items (e.g., aircraft, engines, ground support equipment, ships) generally contain over and above work requirements. When they do, the contracting officer shall establish a separate contract line item for the over and above work.</P>
              <P>(b) Over and above requirements task the contractor to identify needed repairs and recommend corrective action during contract performance. The contractor submits a work request to identify the over and above work and, as appropriate, the Government authorizes the contractor to proceed.</P>
              <P>(c) The clause at 252.217-7028, Over and Above Work, requires the contractor and the contracting officer responsible for administering the contract to negotiate specific procedures for Government administration and contractor performance of over and above work requests.</P>
              <P>(d) The contracting officer may issue a blanket work request authorization describing the manner in which individual over and above work requests will be administered and setting forth a dollar limitation for all over and above work under the contract. The blanket work request authorization may be in the form of a letter or contract modification (Standard Form 30).</P>
              <P>(e) Over and above work requests are within the scope of the contract. Therefore, procedures in subpart 217.74, Undefinitized Contractual Actions, do not apply.</P>
              <P>(f) To the maximum extent practical, over and above work shall be negotiated prior to performance of the work.</P>
            </SECTION>
            <SECTION>
              <SECTNO>217.7702</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <P>Use the clause at 252.217-7028, Over and Above Work, in solicitations and contracts containing requirements for over and above work, except as provided for in subpart 217.71.</P>
            </SECTION>
          </SUBPART>
        </PART>
      </SUBCHAP>
      <SUBCHAP TYPE="P">
        <PRTPAGE P="133"/>
        <HD SOURCE="HED">SUBCHAPTER D—SOCIOECONOMIC PROGRAMS</HD>
        <PART>
          <EAR>Pt. 219</EAR>
          <HD SOURCE="HED">PART 219—SMALL BUSINESS PROGRAMS</HD>
          <CONTENTS>
            <SECHD>Sec.</SECHD>
            <SECTNO>219.000</SECTNO>
            <SUBJECT>Scope of part.</SUBJECT>
            <SECTNO>219.001</SECTNO>
            <SUBJECT>Definitions.</SUBJECT>
            <SUBPART>
              <HD SOURCE="HED">Subpart 219.2—Policies</HD>
              <SECTNO>219.201</SECTNO>
              <SUBJECT>General policy.</SUBJECT>
              <SECTNO>219.202</SECTNO>
              <SUBJECT>Specific policies.</SUBJECT>
              <SECTNO>219.202-1</SECTNO>
              <SUBJECT>Encouraging small business participation in acquisitions.</SUBJECT>
              <SECTNO>219.202-5</SECTNO>
              <SUBJECT>Data collection and reporting requirements.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 219.4—Cooperation With the Small Business Administration</HD>
              <SECTNO>219.401</SECTNO>
              <SUBJECT>General.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 219.5—Set-Asides for Small Business</HD>
              <SECTNO>219.502</SECTNO>
              <SUBJECT>Setting aside acquisitions.</SUBJECT>
              <SECTNO>219.502-1</SECTNO>
              <SUBJECT>Requirements for setting aside acquisitions.</SUBJECT>
              <SECTNO>219.502-2</SECTNO>
              <SUBJECT>Total set-asides.</SUBJECT>
              <SECTNO>219.502-3</SECTNO>
              <SUBJECT>Partial set-asides.</SUBJECT>
              <SECTNO>219.505</SECTNO>
              <SUBJECT>Rejecting Small Business Administration recommendations.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 219.6—Certificates of Competency</HD>
              <SECTNO>219.602</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <SECTNO>219.602-1</SECTNO>
              <SUBJECT>Referral.</SUBJECT>
              <SECTNO>219.602-3</SECTNO>
              <SUBJECT>Resolving differences between the agency and the Small Business Administration.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 219.7—Subcontracting with Small Business, Small Disadvantaged Business and Women-Owned Small Business Concerns</HD>
              <SECTNO>219.702</SECTNO>
              <SUBJECT>Statutory requirements.</SUBJECT>
              <SECTNO>219.703</SECTNO>
              <SUBJECT>Eligibility requirements for participating in the program.</SUBJECT>
              <SECTNO>219.704</SECTNO>
              <SUBJECT>Subcontracting plan requirements.</SUBJECT>
              <SECTNO>219.705</SECTNO>
              <SUBJECT>Responsibilities of the contracting officer under the subcontracting assistance program.</SUBJECT>
              <SECTNO>219.705-2</SECTNO>
              <SUBJECT>Determining the need for a subcontracting plan.</SUBJECT>
              <SECTNO>219.705-4</SECTNO>
              <SUBJECT>Reviewing the subcontracting plan.</SUBJECT>
              <SECTNO>219.706</SECTNO>
              <SUBJECT>Responsibilities of the cognizant administrative contracting officer.</SUBJECT>
              <SECTNO>219.708</SECTNO>
              <SUBJECT>Solicitation provisions and contract clauses.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 219.8—Contracting With the Small Business Administration (The 8(a) Program)</HD>
              <SECTNO>219.800</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <SECTNO>219.803</SECTNO>
              <SUBJECT>Selecting acquisitions for the 8(a) Program.</SUBJECT>
              <SECTNO>219.804</SECTNO>
              <SUBJECT>Evaluation, offering, and acceptance.</SUBJECT>
              <SECTNO>219.804-1</SECTNO>
              <SUBJECT>Agency evaluation.</SUBJECT>
              <SECTNO>219.804-2</SECTNO>
              <SUBJECT>Agency offering.</SUBJECT>
              <SECTNO>219.804-3</SECTNO>
              <SUBJECT>SBA acceptance.</SUBJECT>
              <SECTNO>219.805</SECTNO>
              <SUBJECT>Competitive 8(a).</SUBJECT>
              <SECTNO>219.805-2</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <SECTNO>219.806</SECTNO>
              <SUBJECT>Pricing the 8(a) contract.</SUBJECT>
              <SECTNO>219.808</SECTNO>
              <SUBJECT>Contract negotiations.</SUBJECT>
              <SECTNO>219.808-1</SECTNO>
              <SUBJECT>Sole source.</SUBJECT>
              <SECTNO>219.811</SECTNO>
              <SUBJECT>Preparing the contracts.</SUBJECT>
              <SECTNO>219.811-1</SECTNO>
              <SUBJECT>Sole source.</SUBJECT>
              <SECTNO>219.811-2</SECTNO>
              <SUBJECT>Competitive.</SUBJECT>
              <SECTNO>219.811-3</SECTNO>
              <SUBJECT>Contract clauses.</SUBJECT>
              <SECTNO>219.812</SECTNO>
              <SUBJECT>Contract administration.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 219.10—Small Business Competitiveness Demonstration Program</HD>
              <SECTNO>219.1005</SECTNO>
              <SUBJECT>Applicability.</SUBJECT>
              <SECTNO>219.1007 </SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 219.11—Price Evaluation Adjustments for Small Disadvantaged Business Concerns</HD>
              <SECTNO>219.1102</SECTNO>
              <SUBJECT>Applicability.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 219.12—Small Disadvantaged Business Participation Program</HD>
              <SECTNO>219.1203</SECTNO>
              <SUBJECT>Incentive subcontracting with small disadvantaged business concerns.</SUBJECT>
              <SECTNO>219.1204</SECTNO>
              <SUBJECT>Solicitation provisions and contract clauses.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <RESERVED>Subpart 219.70 [Reserved]</RESERVED>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 219.71—Pilot Mentor-Protege Program</HD>
              <SECTNO>219.7100</SECTNO>
              <SUBJECT>Scope.</SUBJECT>
              <SECTNO>219.7101</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>219.7102</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <SECTNO>219.7103</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <SECTNO>219.7103-1</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <SECTNO>219.7103-2</SECTNO>
              <SUBJECT>Contracting officer responsibilities.</SUBJECT>
              <SECTNO>219.7104</SECTNO>
              <SUBJECT>Developmental assistance costs eligible for reimbursement or credit.</SUBJECT>
              <SECTNO>219.7105</SECTNO>
              <SUBJECT>Reporting.</SUBJECT>
              <SECTNO>219.7106</SECTNO>
              <SUBJECT>Performance reviews.</SUBJECT>
            </SUBPART>
          </CONTENTS>
          <AUTH>
            <HD SOURCE="HED">Authority:</HD>
            <P>41 U.S.C. 421 and 48 CFR chapter 1.</P>
          </AUTH>
          <SOURCE>
            <HD SOURCE="HED">Source:</HD>
            <P>56 FR 36353, July 31, 1991, unless otherwise noted.</P>
          </SOURCE>
          <SECTION>
            <PRTPAGE P="134"/>
            <SECTNO>219.000</SECTNO>
            <SUBJECT>Scope of part.</SUBJECT>
            <P>This part also implements 10 U.S.C. 2323, which sets a goal for DoD for each of fiscal years 1987 through 2003 to—</P>
            <P>(1) Award five percent of contract and subcontract dollars to small disadvantaged business (SDB) concerns, historically black colleges and universities (HBCUs), and minority institutions (MIs) (See part 226 for policy/procedures on HBCU/MIs); and</P>
            <P>(2) Maximize the number of such entities in DoD contracting and subcontracting.</P>
            <CITA>[56 FR 36353, July 31, 1991, as amended at 59 FR 27670, May 27, 1994; 64 FR 62987, Nov. 18, 1999]</CITA>
          </SECTION>
          <SECTION>
            <SECTNO>219.001</SECTNO>
            <SUBJECT>Definitions.</SUBJECT>
            <P>
              <E T="03">Small disadvantaged business concern</E> is defined:</P>
            <P>(1) At FAR 52.219-23(a) (i.e., a firm is considered a small disadvantaged business (SDB) concern by receiving certification by the Small Business Administration and meeting the other listed criteria), except as specified in paragraph (2) of this definition.</P>
            <P>(2) At FAR 52.219-23(a) or 52.219-1(b)(2) for the following purposes (i.e., a firm is considered an SDB concern by either receiving certification by the Small Business Administration and meeting the other listed criteria or self-representing its status for general statistical purposes):</P>
            <P>(i) A higher customary progress payment rate for SDB concerns (see 232.501-1(a)(i) and 252.232-7004(c)).</P>
            <P>(ii) A lower threshold for inclusion of customary progress payments in contracts with SDB concerns (see 232.502-1).</P>
            <P>(iii) The prompt payment policy for SDB concerns in 232. 903 and 232.905(2).</P>
            <P>(iv) Reporting contract actions with SDB concerns (“Type of Business” on the DD Form 350, Individual Contracting Action Report (see 253.204-70(d)(5)(i)(A)) or “Small Disadvantaged Business (SDB) Actions” on the DD Form 1057, Monthly Contracting Summary of Actions $25,000 or Less (see 253.204-71(g)(2)).</P>
            <CITA>[63 FR 64429, Nov. 20, 1999]</CITA>
          </SECTION>
          <SUBPART>
            <HD SOURCE="HED">Subpart 219.2—Policies</HD>
            <SECTION>
              <SECTNO>219.201</SECTNO>
              <SUBJECT>General policy.</SUBJECT>
              <P>(a) The DoD will use the Section 8(a) program, small disadvantaged business evaluation preferences, advance payments, outreach, and technical assistance to meet its five percent goal for contract and subcontract awards to small disadvantaged businesses.</P>
              <P>(d) For the defense agencies, the director of the Office of Small and Disadvantaged Business Utilization must be appointed by, be responsible to, and report directly to the director or deputy director of the defense agency.</P>
              <P>(8) The responsibility for assigning small business technical advisors is delegated to the head of the contracting activity.</P>
              <P>(10) Contracting activity small business specialists perform this function by—</P>
              <P>(A) Reviewing and making recommendations for all acquisitions over $10,000;</P>
              <P>(B) Making the review before issue of the solicitation or contract modification and documenting it on DD Form 2579, Small Business Coordination Record; and</P>
              <P>(C) Referring recommendations that have been rejected by the contracting officer to the Small Business Administration (SBA) procurement center representative. However, if an SBA representative is not assigned or available, the specialist refers the matter to the specialist's appointing authority.</P>
              <P>(e) Contracting and contract administration activities appoint small business specialists as directed by DoDD 4205.1, DoD Small Business and Small Disadvantaged Business Utilization Programs. Specialists—</P>
              <P>(i) Report directly and are responsible only to their appointing authority;</P>
              <P>(ii) Make sure that the contracting activity takes the necessary actions to implement small business, historically black college and university/minority institution, and labor surplus area programs;</P>

              <P>(iii) Advise and assist contracting, program manager, and requirements personnel on all matters which affect small businesses, historically black colleges and universities or minority <PRTPAGE P="135"/>institutions, and labor surplus area concerns;</P>
              <P>(iv) Aid, counsel, and assist small business, small disadvantaged business, historically black colleges and universities, and minority institutions by providing—</P>
              <P>(A) Advice concerning acquisition procedures;</P>
              <P>(B) Information regarding proposed acquisitions; and</P>
              <P>(C) Instructions on preparation of proposals in the interpretation of standard clauses, representations, and certifications;</P>
              <P>(v) Maintain an outreach program (including participation in Government-industry conferences and regional interagency small business councils) designed to locate and develop information on the technical competence of small business, small disadvantaged business concerns, historically black colleges and universities, and minority institutions;</P>
              <P>(vi) Ensure that financial assistance, available under existing regulations, is offered and also assist small business concerns in obtaining payments under their contracts, late payment, interest penalties, or information on contractual payment provisions;</P>
              <P>(vii) Provide assistance to contracting officers in determining the need for and acceptability of subcontracting plans and assist administrative contracting officers (see 219.706(a)(ii)) in evaluating, monitoring, reviewing, and documenting contract performance to determine compliance with subcontracting plans; and</P>
              <P>(viii) Recommend to the appointing authority the activity's small and disadvantaged business program goals, including goal assignments to subordinate contracting offices; monitor the activity's performance against these goals; and recommend action to correct reporting errors/deficiencies.</P>
              <P>(f) The Directors, Office of Small and Disadvantaged Business Utilization, of the military departments and defense agencies are responsible for determining whether use of the price evaluation adjustment to achieve a small disadvantaged business goal has caused non-SDB firms in a particular North American Industry Classification System Industry Subsector to bear an undue burden or other inappropriate effect. A copy of each determination shall be forwarded to the Office of Small and Disadvantaged Business Utilization, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics), simultaneously with submittal to the Office of Federal Procurement Policy.</P>
              <CITA>[56 FR 36353, July 31, 1991, as amended at 63 FR 41973, Aug. 6, 1998; 64 FR 2598, Jan. 15, 1999; 65 FR 39705, June 27, 2000; 65 FR 50149, Aug. 17, 2000; 65 FR 63807, Oct. 25, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>219.202</SECTNO>
              <SUBJECT>Specific policies.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>219.202-1</SECTNO>
              <SUBJECT>Encouraging small business participation in acquisitions.</SUBJECT>
              <P>The DoD will maximize the use of small business concerns as planned producers in the Industrial Readiness Planning Program.</P>
            </SECTION>
            <SECTION>
              <SECTNO>219.202-5</SECTNO>
              <SUBJECT>Data collection and reporting requirements.</SUBJECT>
              <P>Determine the premium percentage to be entered in Item D4C of the Individual Contracting Action Report (DD Form 350), (see 253.204-70), as follows:</P>
              <P>(1) For small disadvantaged business or historically black college and university/minority institution set-asides, divide the difference between the fair market price and the award price by the fair market price.</P>
              <P>(2) For price evaluation adjustment awards (see FAR Subpart 19.11), divide the difference between the low responsive offer and the award price by the low responsive offer.</P>
              <P>(3) For partial small business set-asides with preferential consideration for small disadvantaged business concerns, divide the difference between the award price on the non-set-aside portion and the award price on the set-aside portion by the award price on the non-set-aside portion.</P>
              <P>(b) Within 60 days after the end of each fiscal year, departments and agencies shall submit the report to the Secretary of Defense, who will report to the SBA on behalf of all DoD departments and agencies. Reports must include—</P>

              <P>(i) Justification for failure to meet goals established by the Office of the Secretary of Defense; and<PRTPAGE P="136"/>
              </P>
              <P>(ii) Planned actions for increasing participation by such firms in future contract awards.</P>
              <CITA>[56 FR 36353, July 31, 1991, as amended at 63 FR 41973, Aug. 6, 1998; 65 FR 63804, Oct. 25, 2000]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 219.4—Cooperation With the Small Business Administration</HD>
            <SECTION>
              <SECTNO>219.401</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <P>(b) The contracting activity small business specialist is the primary activity focal point for interface with the SBA.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 219.5—Set-Asides for Small Business</HD>
            <SECTION>
              <SECTNO>219.502</SECTNO>
              <SUBJECT>Setting aside acquisitions.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>219.502-1</SECTNO>
              <SUBJECT>Requirements for setting aside acquisitions.</SUBJECT>
              <P>Do not set aside acquisitions for—</P>
              <P>(1) Supplies which were developed and financed, in whole or in part, by Canadian sources under the U.S.-Canadian Defense Development Sharing Program; or</P>
              <P>(2) Architect-engineer services for military construction or family housing projects of $85,000 or more (10 U.S.C. 2855), including indefinite delivery and indefinite quantity contracts if the value of all anticipated orders is expected to total $85,000 or more.</P>
              <CITA>[58 FR 28465, May 13, 1993]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>219.502-2</SECTNO>
              <SUBJECT>Total set-asides.</SUBJECT>
              <P>(a) Unless the contracting officer determines that the criteria for set-aside cannot be met, set aside for small business concerns acquisitions for—</P>
              <P>(i) Construction, including maintenance and repairs, under $2 million;</P>
              <P>(ii) Dredging under $1 million; and</P>
              <P>(iii) Architect-engineer services for military construction or family housing projects of under $85,000.</P>
              <CITA>[58 FR 28465, May 13, 1993]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>219.502-3</SECTNO>
              <SUBJECT>Partial set-asides.</SUBJECT>

              <P>(c)(1) If the North American Industry Classification System Industry Subsector of the acquisition is one in which use of a price evaluation adjustment for small disadvantaged business concerns is currently authorized (<E T="03">see</E> FAR 19.201(b)), apply the adjustment to the non-set-aside portion.</P>
              <CITA>[65 FR 50149, Aug. 17, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>219.505</SECTNO>
              <SUBJECT>Rejecting Small Business Administration recommendations.</SUBJECT>
              <P>(b) The designee shall be at a level no lower than chief of the contracting office.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 219.6—Certificates of Competency</HD>
            <SECTION>
              <SECTNO>219.602</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>219.602-1</SECTNO>
              <SUBJECT>Referral.</SUBJECT>
              <P>When making a nonresponsibility determination on a small business concern, the contracting officer shall notify the contracting activity's small business specialist.</P>
              <CITA>[58 FR 28465, May 13, 1993, as amended at 60 FR 40107, Aug. 7, 1995]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>219.602-3</SECTNO>
              <SUBJECT>Resolving differences between the agency and the Small Business Administration.</SUBJECT>
              <P>(c)(i) If the contracting officer believes the agency should appeal, the contracting officer shall immediately inform the departmental director of the Office of Small and Disadvantaged Business Utilization, and send the director, through departmental channels—</P>
              <P>(A) A request for appeal, summarizing the issues. The request must be sent to arrive within five working days after receipt of the SBA Headquarters' written position.</P>
              <P>(B) An appeal file, documenting the contracting activity's position. The file must be sent to arrive within five working days after transmission of the request.</P>
              <P>(ii) The departmental director will determine whether the agency will appeal and will notify the SBA of the agency's intent.</P>
              <CITA>[56 FR 36353, July 31, 1991, as amended at 62 FR 34122, June 24, 1997]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <PRTPAGE P="137"/>
            <HD SOURCE="HED">Subpart 219.7—Subcontracting with Small Business, Small Disadvantaged Business and Women-Owned Small Business Concerns</HD>
            <SECTION>
              <SECTNO>219.702</SECTNO>
              <SUBJECT>Statutory requirements.</SUBJECT>
              <P>(a) Section 834 of Public Law 101-189, as amended, requires DoD to establish a test program to determine whether comprehensive subcontracting plans on a corporate, division, or plant-wide basis will reduce administrative burdens while enhancing subcontracting opportunities for small and small disadvantaged business concerns.</P>
              <P>(i) The test program—</P>
              <P>(A) Will be conducted—</P>
              <P>(<E T="03">1</E>) From October 1, 1990, through September 30, 2005;</P>
              <P>(<E T="03">2</E>) In accordance with the DoD test plan, “Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans”; and</P>
              <P>(<E T="03">3</E>) By the military departments and defense agencies through specifically designated contracting activities; and</P>
              <P>(B) Permits contractors selected for participation in the test program by the designated contracting activities to—</P>
              <P>(<E T="03">1</E>) Negotiate plant, division, or company-wide comprehensive subcontracting plans instead of individual contract subcontracting plans; and</P>
              <P>(<E T="03">2</E>) Use the comprehensive plans when performing any DoD contract or subcontract that requires a subcontracting plan.</P>
              <P>(ii) During the test period, comprehensive subcontracting plans will—</P>
              <P>(A) Be negotiated on an annual basis by the designated contracting activities;</P>
              <P>(B) Be incorporated by the contractors’ cognizant contract administration activity into all of the contractors’ active DoD contracts that require a plan;</P>
              <P>(C) Be accepted for use by contractors participating in the test, whether performing at the prime or subcontract level; and</P>
              <P>(D) Not be subject to application of liquidated damages during the period of the test program (Section 402, Pub. L. 101-574).</P>
              <CITA>[56 FR 36353, July 31, 1991, as amended at 60 FR 35668, July 10, 1995; 61 FR 39900, July 31, 1996; 63 FR 14640, Mar. 26, 1998; 64 FR 62987, Nov. 18, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>219.703</SECTNO>
              <SUBJECT>Eligibility requirements for participating in the program.</SUBJECT>
              <P>(a) Qualified nonprofit agencies for the blind and other severely disabled, that have been approved by the Committee for Purchase from People Who Are Blind or Severely Disabled under the Javits-Wagner-O’Day Act (41 U.S.C. 46-48), are eligible to participate in the program as a result of 10 U.S.C. 2410d and Section 9077 of Pub. L. 102-396 and similar sections in subsequent Defense appropriations acts. Under this authority, subcontracts awarded to such entities may be counted toward the prime contractor's small business subcontracting goal.</P>
              <P>(2)(A) To be eligible as an SDB subcontractor, a concern must meet the definition in 219.001.</P>
              <P>(B) To be eligible as a historically black college or university or minority institution subcontractor, such entity must meet the definition in the clause at 252.219-7003, Small, Small Disadvantaged and Women-Owned Small Business Subcontracting Plan (DoD Contracts).</P>
              <P>(b) A contractor may also rely on the written representation as to status of—</P>
              <P>(i) A historically black college or university or minority institution; or</P>
              <P>(ii) A qualified nonprofit agency for the blind or other severely disabled approved by the Committee for Purchase from People Who Are Blind or Severely Disabled.</P>
              <CITA>[57 FR 42630, Sept. 15, 1992, as amended at 58 FR 28465, May 13, 1993; 60 FR 13075, Mar. 10, 1995; 60 FR 41157, Aug. 11, 1995; 60 FR 61596, Nov. 30, 1995; 61 FR 50535, Sept. 26, 1996; 63 FR 11530, Mar. 9, 1998; 63 FR 41974, Aug. 6, 1998; 64 FR 51076, Sept. 21, 1999; 64 FR 62986, Nov. 18, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>219.704</SECTNO>
              <SUBJECT>Subcontracting plan requirements.</SUBJECT>

              <P>(a)(1) The goal for use of small disadvantaged business concerns shall include subcontracts with historically black colleges and universities and minority institutions (see subpart 226.70), <PRTPAGE P="138"/>in addition to subcontracts with small disadvantaged business concerns. Subcontracts with historically black colleges and universities and minority institutions do not have to be included in the small disadvantaged business goal in commercial items subcontracting plans.</P>
              <P>(4) In those subcontracting plans which specifically identify small, small disadvantaged, and women-owned small businesses, prime contractors shall notify the administrative contracting officer of any substitutions of firms that are not small, small disadvantaged, or women-owned small businesses for the firms listed in the subcontracting plan. Notifications shall be in writing and shall occur within a reasonable period of time after award of the subcontract. Contractor-specified formats shall be acceptable.</P>
              <CITA>[60 FR 61596, Nov. 30, 1995, as amended at 61 FR 18687, Apr. 29, 1996]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>219.705</SECTNO>
              <SUBJECT>Responsibilities of the contracting officer under the subcontracting assistance program.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>219.705-2</SECTNO>
              <SUBJECT>Determining the need for a subcontracting plan.</SUBJECT>
              <P>(d) See 215.304 for unique DoD requirements.</P>
              <CITA>[59 FR 27670, May 27, 1994, as amended at 64 FR 51076, Sept. 21, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>219.705-4</SECTNO>
              <SUBJECT>Reviewing the subcontracting plan.</SUBJECT>
              <P>(d) Challenge any subcontracting plan that does not contain positive goals and consider the extent to which an offeror plans to use competition restricted to historically black colleges and universities or minority institutions. A small disadvantaged business goal of less than five percent must be approved two levels above the contracting officer.</P>
              <CITA>[56 FR 36353, July 31, 1991, as amended at 63 FR 41974, Aug. 6, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>219.706</SECTNO>
              <SUBJECT>Responsibilities of the cognizant administrative contracting officer.</SUBJECT>
              <P>(a)(i) The contract administration office also is responsible for reviewing, evaluating, and approving master subcontracting plans.</P>
              <P>(ii) The small business specialist supports the administrative contracting officer in evaluating a contractor's performance and compliance with its subcontracting plan.</P>
            </SECTION>
            <SECTION>
              <SECTNO>219.708</SECTNO>
              <SUBJECT>Solicitation provisions and contract clauses.</SUBJECT>
              <P>(b)(1)(A) Use the clause at 252.219-7003, Small, Small Disadvantaged and Women-Owned Small Business Subcontracting Plan (DoD Contracts), in solicitations and contracts that contain the clause at FAR 52.219-9, Small Business Subcontracting Plan.</P>
              <P>(B) In contracts with contractors which have comprehensive subcontracting plans approved under the test program described in 219.702(a), use the clause at 252.219-7004, Small, Small Disadvantaged and Women-Owned Small Business Subcontracting Plan (Test Program), instead of the clauses at 252.219-7003, Small, Small Disadvantaged and Women-Owned Small Business Subcontracting Plan (DoD Contracts), and FAR 52.219-9, Small Business Subcontracting Plan.</P>
              <P>(2) In contracts with contractors that have comprehensive subcontracting plans approved under the test program described in 219.702(a), do not use the clause at FAR 52.219-16, Liquidated Damages—Subcontracting Plan.</P>
              <P>(c)(1) Do not use the clause at FAR 52.219-10, Incentive Subcontracting Program, in contracts with contractors that have comprehensive subcontracting plans approved under the test program described in 219.702(a).</P>
              <CITA>[56 FR 36353, July 31, 1991, as amended at 56 FR 67213, Dec. 30, 1991; 61 FR 39901, July 31, 1996; 63 FR 64429, Nov. 20, 1998; 65 FR 52952, Aug. 31, 2000; 67 FR 49252, July 30, 2002]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 219.8—Contracting With the Small Business Administration (The 8(a) Program)</HD>
            <SECTION>
              <SECTNO>219.800</SECTNO>
              <SUBJECT>General.</SUBJECT>

              <P>(a) By Partnership Agreement (PA) dated February 1, 2002, between the Small Business Administration (SBA) and the Department of Defense (DoD), the SBA delegated to the Under Secretary of Defense (Acquisition, Technology, and Logistics) its authority under paragraph 8(a)(1)(A) of the Small Business Act (15 U.S.C. 637(a)) to enter <PRTPAGE P="139"/>into 8(a) prime contracts, and its authority under 8(a)(1)(B) of the Small Business Act to award the performance of those contracts to eligible 8(a) Program participants. However, the SBA remains the prime contractor on all 8(a) contracts, continues to determine eligibility of concerns for contract award, and retains appeal rights under FAR 19.810. The SBA delegates only the authority to sign contracts on its behalf. Consistent with the provisions of this subpart, this authority is hereby redelegated to DoD contracting officers within the United States, its territories and possessions, Puerto Rico, the Trust Territory of the Pacific Islands, and the District of Columbia, to the extent that it is consistent with any dollar or other restrictions established in individual warrants. This authority expires on September 30, 2004.</P>
              <P>(b) Contracts awarded under the PA may be awarded directly to the 8(a) participant on either a sole source or competitive basis. An SBA signature on the contract is not required.</P>
              <P>(c) Notwithstanding the PA, the contracting officer may elect to award a contract pursuant to the provisions of FAR Subpart 19.8.</P>
              <CITA>[67 FR 11436, Mar. 14, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>219.803</SECTNO>
              <SUBJECT>Selecting acquisitions for the 8(a) Program.</SUBJECT>
              <P>(b) Contracting activities should respond to SBA requests for contract support within 30 calendar days after receipt.</P>
              <P>(c) Before considering a small business set-aside, review the acquisition for offering under the 8(a) Program.</P>
              <CITA>[56 FR 36353, July 31, 1991, as amended at 63 FR 41974, Aug. 6, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>219.804</SECTNO>
              <SUBJECT>Evaluation, offering, and acceptance.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>219.804-1</SECTNO>
              <SUBJECT>Agency evaluation.</SUBJECT>
              <P>(f) The 8(a) firms should be offered the opportunity to give a technical presentation.</P>
              <CITA>[63 FR 41974, Aug. 6, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>219.804-2</SECTNO>
              <SUBJECT>Agency offering.</SUBJECT>
              <P>(1) For requirements processed under the PA cited in 219.800 (but see paragraph (2) of this subsection for procedures related to purchase orders that do not exceed the simplified acquisition threshold), the notification to the SBA shall clearly indicate that the requirement is being processed under the PA. All notifications should be submitted in writing, using facsimile or electronic mail, when possible, and shall specify that—</P>
              <P>(i) Under the PA, an SBA acceptance or rejection of the offering is required within 5 working days of receipt of the offering; and</P>
              <P>(ii)(A) For sole source requirements, an SBA acceptance shall include a size verification and a determination of the 8(a) firm's program eligibility, and, upon acceptance, the contracting officer will solicit a proposal, conduct negotiations, and make award directly to the 8(a) firm; or</P>
              <P>(B) For competitive requirements, upon acceptance, the contracting officer will solicit offers, conduct source selection, and, upon receipt of an eligibility verification, award a contract directly to the selected 8(a) firm.</P>
              <P>(2) Under the PA cited in 219.800, no separate agency offering or SBA acceptance is needed for requirements that are issued under purchase orders that do not exceed the simplified acquisition threshold. After an 8(a) contractor has been identified, the contracting officer shall establish the prices, terms, and conditions with the 8(a) contractor and shall prepare a purchase order consistent with the procedures in Part 213 and FAR Part 13, including the applicable clauses required by this subpart. No later than the day that the purchase order is provided to the 8(a) contractor, the contracting officer shall provide to the cognizant SBA Business Opportunity Specialist, using facsimile, electronic mail, or any other means acceptable to the SBA district office—</P>
              <P>(i) A copy of the signed purchase order; and</P>

              <P>(ii) A notice stating that the purchase order is being processed under the PA. The notice also shall indicate that the 8(a) contractor will be deemed eligible for award and will automatically begin work under the purchase order unless, within 2 working days after SBA's receipt of the purchase <PRTPAGE P="140"/>order, the 8(a) contractor and the contracting officer are notified that the 8(a) contractor is ineligible for award.</P>
              <P>(3) The notification to SBA shall identify any joint venture proposed for performance of the contract. SBA shall approve a joint venture before award of an 8(a) contract involving the joint venture.</P>
              <P>(4) For competitive requirements for construction to be performed overseas, submit the notification to SBA Headquarters.</P>
              <CITA>[67 FR 11437, Mar. 14, 2002, as amended at 67 FR 49256, July 30, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>219.804-3</SECTNO>
              <SUBJECT>SBA acceptance.</SUBJECT>
              <P>For requirements processed under the PA cited in 219.800, SBA's acceptance is required within 5 working days (but see 219.804-2(2) for purchase orders that do not exceed the simplified acquisition threshold).</P>
              <CITA>[63 FR 33587, June 19, 1998, as amended at 67 FR 11436, Mar. 14, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>219.805</SECTNO>
              <SUBJECT>Competitive 8(a).</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>219.805-2</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <P>(c) For requirements processed under the PA cited in 219.800—</P>
              <P>(i) For sealed bid and negotiated acquisitions, the SBA will determine the eligibility of the firms and will advise the contracting officer within 2 working days after its receipt of a request for an eligibility determination; and</P>
              <P>(ii) For negotiated acquisitions, the contracting officer may submit a request for an eligibility determination on all firms in the competitive range if discussions are to be conducted, or on all firms with a realistic chance of award if no discussions are to be conducted.</P>
              <CITA>[63 FR 33588, June 19, 1998, as amended at 67 FR 11436, Mar. 14, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>219.806</SECTNO>
              <SUBJECT>Pricing the 8(a) contract.</SUBJECT>
              <P>For requirements processed under the PA cited in 219.800—</P>
              <P>(1) The contracting officer shall obtain cost or pricing data from the 8(a) contractor, if required by FAR subpart 15.4; and</P>
              <P>(2) SBA concurrence in the negotiated price is not required. However, except for purchase orders not exceeding the simplified acquisition threshold, the contracting officer shall notify the SBA prior to withdrawing a requirement from the 8(a) Program due to failure to agree on price or other terms and conditions.</P>
              <CITA>[63 FR 33588, June 19, 1998, as amended at 67 FR 11437, Mar. 14, 2002; 67 FR 49256, July 30, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>219.808</SECTNO>
              <SUBJECT>Contract negotiations.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>219.808-1</SECTNO>
              <SUBJECT>Sole source.</SUBJECT>
              <P>For requirements processed under the PA cited in 219.800—</P>
              <P>(1) The agency may negotiate directly with the 8(a) contractor. The contracting officer is responsible for initiating negotiations;</P>
              <P>(2) The 8(a) contractor is responsible for negotiating within the time established by the contracting officer;</P>
              <P>(3) If the 8(a) contractor does not negotiate within the established time and the agency cannot allow additional time, the contracting officer may, after notifying the SBA, proceed with the acquisition from other sources;</P>
              <P>(4) If requested by the 8(a) contractor, the SBA may participate in negotiations; and</P>
              <P>(5) SBA approval of the contract is not required.</P>
              <CITA>[63 FR 33588, June 19, 1998, as amended at 67 FR 11437, Mar. 14, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>219.811</SECTNO>
              <SUBJECT>Preparing the contracts.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>219.811-1</SECTNO>
              <SUBJECT>Sole source.</SUBJECT>
              <P>(a) Awards under the PA cited in 219.800 may be made directly to the 8(a) contractor and, except as provided in paragraph (b) of this subsection and in 219.811-3, award documents shall be prepared in accordance with procedures established for non-8(a) contracts, using any otherwise authorized award forms. The “Issued by” block shall identify the awarding DoD contracting office. The contractor's name and address shall be that of the 8(a) participant.</P>
              <P>(b) Use the following alternative procedures for direct awards made under the PA cited in 219.800:</P>

              <P>(i) Cite 10 U.S.C. 2304(c)(5) as the authority for use of other than full and open competition;<PRTPAGE P="141"/>
              </P>
              <P>(ii) Include the clause at 252.219-7009, which allows for direct award to the 8(a) contractor, and identify the cognizant SBA district office for the 8(a) contractor;</P>
              <P>(iii) No SBA contract number is required; and</P>
              <P>(iv) Do not require an SBA signature on the award document.</P>
              <CITA>[63 FR 33588, June 19, 1998, as amended at 67 FR 11437, Mar. 14, 2002; 67 FR 49256, July 30, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>219.811-2</SECTNO>
              <SUBJECT>Competitive.</SUBJECT>
              <P>Awards made under the PA cited in 219.800 shall be prepared in accordance with 219.811-1.</P>
              <CITA>[63 FR 33588, June 19, 1998, as amended at 67 FR 11437, Mar. 14, 2002; 67 FR 49256, July 30, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>219.811-3</SECTNO>
              <SUBJECT>Contract clauses.</SUBJECT>
              <P>(1) Use the clause at 252.219-7009, Section 8(a) Direct Award, instead of the clauses at FAR 52.219-11, Special 8(a) Contract Conditions, FAR 52.219-12, Special 8(a) Subcontract Conditions, and FAR 52.219-17, Section 8(a) Award, in solicitations and contracts processed in accordance with the PA cited in 219.800.</P>
              <P>(2) Use the clause at FAR 52.219-18, Notification of Competition Limited to Eligible 8(a) Concerns, with 252.219-7010, Alternate A, in solicitations and contracts processed in accordance with the PA cited in 219.800.</P>
              <P>(3) Use the clause at 252.219-7011, Notification to Delay Performance, in solicitations and purchase orders issued in accordance with 219.804-2(2).</P>
              <CITA>[63 FR 33588, June 19, 1998, as amended at 67 FR 11437, Mar. 14, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>219.812</SECTNO>
              <SUBJECT>Contract administration.</SUBJECT>
              <P>(d) Awards under the PA cited in 219.800 are subject to Section 407 of Pub. L. 100-656. These contracts include the clause at 252.219-7009, Section 8(a) Direct Award, which requires the 8(a) contractor to notify the SBA and the contracting officer when ownership of the firm is being transferred.</P>
              <CITA>[63 FR 33588, June 19, 1998, as amended at 67 FR 11437, Mar. 14, 2002]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 219.10—Small Business Competitiveness Demonstration Program</HD>
            <SECTION>
              <SECTNO>219.1005</SECTNO>
              <SUBJECT>Applicability.</SUBJECT>
              <P>(a)(i) Architect-engineering services in support of military construction projects or military family housing projects are exempt from the Small Business Competitiveness Demonstration Program, except for the emerging small business (ESB) set-aside requirements. Accordingly, these shall—</P>
              <P>(A) Be reviewed for possible award under the 8(a) Program regardless of dollar value.</P>
              <P>(B) Not be set aside for small business if the estimated value is $85,000 or more (including indefinite delivery-indefinite quantity contracts if the value of all anticipated orders exceeds $85,000).</P>
              <P>(C) Be considered for ESB set-aside if the estimated value is both less than the emerging small business reserve amount and less than $85,000.</P>
              <P>(D) Be considered for small business set-aside if the estimated value is less than $85,000, regardless of whether small business set-asides for other architect-engineer services are prohibited under the Small Business Competitiveness Demonstration Program, when an ESB set-aside is not appropriate.</P>
              <P>(ii) All requirements of the Small Business Competitiveness Demonstration Program apply to architect-engineer services in support of other than military construction projects or military housing objects, which otherwise meet criteria in FAR subpart 19.10.</P>
              <P>(b) The targeted industry categories for DoD are:</P>
              <GPOTABLE CDEF="s50,8" COLS="2" OPTS="L2,tp0,p7,7/8,g1,t1,i1">
                <TTITLE/>
                <BOXHD>
                  <CHED H="1">North American Industry Classification System (NAICS) Description</CHED>
                  <CHED H="1">NAICS Code</CHED>
                </BOXHD>
                <ROW>
                  <ENT I="01">(1) Pharmaceutical Preparation Manufacturing</ENT>
                  <ENT>325412</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">(2) Ammunition (except Small Arms) Manufacturing</ENT>
                  <ENT>332993</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">(3) Other Ordnance and Accessories Manufacturing</ENT>
                  <ENT>332995</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">(4) Turbine and Turbine Generator Set Unit Manufacturing</ENT>
                  <ENT>333611</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">(5)(i) Aircraft Engine and Engine Parts Manufacturing</ENT>
                  <ENT>336412</ENT>
                </ROW>
                <ROW>
                  <PRTPAGE P="142"/>
                  <ENT I="03">(ii) Research and Development in the Physical, Engineering, and Life Sciences (Aircraft Engines and Engine Parts only)</ENT>
                  <ENT>54171</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">(6)(i) Guided Missile and Space Vehicle Manufacturing</ENT>
                  <ENT>336414</ENT>
                </ROW>
                <ROW>
                  <ENT I="03">(ii) Research and Development in the Physical, Engineering, and Life Sciences (Guided Missiles and Space Vehicles only)</ENT>
                  <ENT>54171</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">(7)(i) Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing</ENT>
                  <ENT>336419</ENT>
                </ROW>
                <ROW>
                  <ENT I="03">(ii) Research and Development in the Physical, Engineering, and Life Sciences (Guided Missile and Space Vehicle Parts and Auxiliary Equipment only)</ENT>
                  <ENT>54171</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">(8) Military Armored Vehicle, Tank and Tank Component Manufacturing</ENT>
                  <ENT>336992</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">(9) Search and Navigation System and Instrument Manufacturing</ENT>
                  <ENT>334511</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">(10)(i) Cellular and Other Wireless Telecommunications</ENT>
                  <ENT>513322</ENT>
                </ROW>
                <ROW>
                  <ENT I="03">(ii) Satellite Telecommunications</ENT>
                  <ENT>51334</ENT>
                </ROW>
                <ROW>
                  <ENT I="03">(iii) Other Telecommunications</ENT>
                  <ENT>51339</ENT>
                </ROW>
              </GPOTABLE>
              <CITA>[56 FR 36353, July 31, 1991, as amended at 59 FR 27670, May 27, 1994; 62 FR 34122, June 24, 1997; 63 FR 41974, Aug. 6, 1998; 65 FR 50149, Aug. 17, 2000; 66 FR 49861, Oct. 1, 2001]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>219.1007</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <P>(b)(1) The Director, Small and Disadvantaged Business Utilization, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics) (OUSD(AT&amp;L)), will determine whether reinstatement of small business set-asides is necessary to meet the agency goal and will recommend reinstatement to the Director of Defense Procurement (OUSD(AT&amp;L)). Military departments and defense agencies shall not reinstate small business set-asides unless directed by the Director of Defense Procurement.</P>
              <P>(d) Reporting requirements are at 204.670-2.</P>
              <CITA>[65 FR 39705, June 27, 2000]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 219.11—Price Evaluation Adjustment for Small Disadvantaged Business Concerns</HD>
            <SECTION>
              <SECTNO>219.1102</SECTNO>
              <SUBJECT>Applicability.</SUBJECT>
              <P>(b) The price evaluation adjustment also shall not be used in acquisitions that are for commissary or exchange resale.</P>
              <CITA>[63 FR 41974, Aug. 6, 1998]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 219.12—Small Disadvantaged Business Participation Program</HD>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>63 FR 64429, Nov. 20, 1998, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>219.1203</SECTNO>
              <SUBJECT>Incentive subcontracting with small disadvantaged business concerns.</SUBJECT>

              <P>The contracting officer shall encourage increased subcontracting opportunities for SDB concerns in negotiated acquisitions by providing monetary incentives in the North American Industry Classification System Industry Subsectors for which use of an evaluation factor or subfactor for participation of SDB concerns is currently authorized (see FAR 19.201(b)). Incentives for exceeding SDB subcontracting targets shall be paid only if an SDB subcontracting target was exceeded as a result of actual subcontract awards to SDBs, and not a result of developmental assistance credit under the Pilot Mentor-Prote<AC T="1"/>ge<AC T="1"/> Program (see Subpart 219.71).</P>
              <CITA>[63 FR 64429, Nov. 20, 1998, as amended at 65 FR 50149, Aug. 17, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>219.1204</SECTNO>
              <SUBJECT>Solicitation provisions and contract clauses.</SUBJECT>

              <P>(c) The contracting officer shall, when contracting by negotiation, insert in solicitations and contracts containing the clause at FAR 52.219-25, Small Disadvantaged Business Participation Program-Disadvantaged Status and Reporting, a clause substantially the same as the clause at FAR 52.219-26, Small Disadvantaged Business Participation Program-Incentive Subcontracting, when authorized (see FAR <PRTPAGE P="143"/>19.1203). The contracting officer may include an award fee provision in lieu of the incentive; in such cases, however, the contracting officer shall not use the clause at FAR 52.219-26. Do not use award fee provisions in contracts with contractors that have comprehensive subcontracting plans approved under the test program described in 219.702(a).</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <RESERVED>Subpart 219.70 [Reserved]</RESERVED>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 219.71—Pilot Mentor-Protege Program</HD>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>65 FR 6555, Feb. 10, 2000, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>219.7100</SECTNO>
              <SUBJECT>Scope.</SUBJECT>
              <P>This subpart implements the Pilot Mentor-Protege Program established under Section 831 of the National Defense Authorization Act for Fiscal Year 1991 (Public Law 101-510; 10 U.S.C. 2302 note). The purpose of the Program is to provide incentives for DoD contractors to assist protege firms in enhancing their capabilities and to increase participation of such firms in Government and commercial contracts.</P>
              <CITA>[66 FR 47108, Sept. 11, 2001]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>219.7101</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>DoD policy and procedures for implementation of the Program are contained in Appendix I, Policy and Procedures for the DoD Pilot Mentor-Protege Program.</P>
            </SECTION>
            <SECTION>
              <SECTNO>219.7102</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <P>The Program includes—</P>
              <P>(a) Mentor firms that are prime contractors with at least one active subcontracting plan negotiated under FAR Subpart 19.7.</P>
              <P>(b) Protege firms that are—</P>
              <P>(1)(i) small disadvantaged business concerns as defined at 219.001(1);</P>
              <P>(ii) Business entities owned and controlled by an Indian tribe;</P>
              <P>(iii) business entities owned and controlled by a Native Hawaiian Organization;</P>
              <P>(iv) Qualified organizations employing the severely disabled; or</P>
              <P>(v) Women-owned small business concerns;</P>
              <P>(2) Eligible for receipt of Federal contracts; and</P>
              <P>(3) Selected by the mentor firm.</P>
              <P>(c) Mentor-protege agreements that establish a developmental assistance program for a protege firm.</P>
              <P>(d) Incentives that DoD may provide to mentor firms, including:</P>
              <P>(1) Reimbursement for developmental assistance costs through—</P>
              <P>(i) A separately priced contract line item on a DoD contract; or</P>
              <P>(ii) A separate contract, upon written determination by the Director, Small and Disadvantaged Business Utilization, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics) (SADBU, OUSD (AT&amp;L)), that unusual circumstances justify reimbursement using a separate contract; or</P>
              <P>(2) Credit toward applicable subcontracting goals, established under a subcontracting plan negotiated under FAR Subpart 19.7, for developmental assistance costs that are not reimbursed.</P>
              <CITA>[65 FR 6555, Feb. 10, 2000; 65 FR 30191, May 10, 2000, as amended at 66 FR 47108, Sept. 11, 2001]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>219.7103</SECTNO>
              <RESERVED>Procedures.</RESERVED>
            </SECTION>
            <SECTION>
              <SECTNO>219.7103-1</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <P>The procedures for application, acceptance, and participation in the Program are in Appendix I, Policy and Procedures for the DoD Pilot Mentor-Protege Program. The Director, SADBU, OUSD (AT&amp;L), approves contractors as mentor firms, approves mentor-protege agreements, and forwards approved mentor-protege agreements to the contracting officer when program funding is available through a DoD program manager.</P>
            </SECTION>
            <SECTION>
              <SECTNO>219.7103-2</SECTNO>
              <SUBJECT>Contracting officer responsibilities.</SUBJECT>
              <P>Contracting officers must—</P>
              <P>(a) Negotiate an advance agreement on the treatment of developmental assistance costs for either credit or reimbursement if the mentor firm proposes such an agreement, or delegate authority to negotiate to the administrative contracting officer (see FAR 31.109).</P>

              <P>(b) Modify (without consideration) applicable contract(s) to incorporate <PRTPAGE P="144"/>the clause at 252.232-7005, Reimbursement of Subcontractor Advance Payments—DoD Pilot Mentor-Protege Program, when a mentor firm provides advance payments to a protege firm under the Program and the mentor firm requests reimbursement of advance payments.</P>
              <P>(c) Modify (without consideration) applicable contract(s) to incorporate other than customary progress payments for protege firms in accordance with FAR 32.504(c) if a mentor firm provides such payments to a protege firm and the mentor firm requests reimbursement.</P>
              <P>(d) Modify applicable contract(s) to establish a contract line item for reimbursement of developmental assistance costs if—</P>
              <P>(1) A DoD program manager has made funds available for that purpose; and</P>
              <P>(2) The contractor has an approved mentor-protege agreement.</P>
              <P>(e) Negotiate and award a separate contract for reimbursement of developmental assistance costs only if—</P>
              <P>(1) A DoD program manager has made funds available for that purpose;</P>
              <P>(2) The contractor has an approved mentor-protege agreement; and</P>
              <P>(3) The Director, SADBU, OUSD (AT&amp;L), has made a determination in accordance with 219.7102(d)(1)(ii).</P>
              <P>(f) Not authorize reimbursement for costs of assistance furnished to a protege firm in excess of $1,000,000 in a fiscal year unless a written determination from the Director, SADBU, OUSD (AT&amp;L), is obtained.</P>
              <P>(g) Advise contractors of reporting requirements in Appendix I.</P>
              <P>(h) Provide a copy of the approved Mentor-Protege agreement to the Defense Contract Management Agency administrative contracting officer responsible for conducting the annual performance review (see appendix I, section I-112).</P>
              <CITA>[65 FR 6555, Feb. 10, 2000; 65 FR 30191, May 10, 2000, as amended at 65 FR 50150, Aug. 17, 2000; 66 FR 47109, Sept. 11, 2001]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>219.7104</SECTNO>
              <SUBJECT>Developmental assistance costs eligible for reimbursement or credit.</SUBJECT>
              <P>(a) Developmental assistance provided under an approved mentor-protege agreement is distinct from, and must not duplicate, any effort that is the normal and expected product of the award and administration of the mentor firm's subcontracts. The mentor firm must accumulate and charge costs associated with the latter in accordance with its approved accounting practices. Mentor firm costs that are eligible for reimbursement are set forth in appendix I.</P>
              <P>(b) Before incurring any costs under the Program, mentor firms must establish the accounting treatment of developmental assistance costs eligible for reimbursement or credit. Advance agreements are encouraged. To be eligible for reimbursement under the Program, the mentor firm must incur the costs before October 1, 2005.</P>
              <P>(c) If the mentor firm is suspended or debarred while performing under an approved mentor-protege agreement, the mentor firm may not be reimbursed or credited for developmental assistance costs incurred more than 30 days after the imposition of the suspension or debarment.</P>
              <P>(d) Developmental assistance costs incurred by a mentor firm before October 1, 2005, that are eligible for crediting under the Program, may be credited toward subcontracting plan goals as set forth in appendix I.</P>
              <CITA>[65 FR 6555, Feb. 10, 2000; 65 FR 30191, May 10, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>219.7105</SECTNO>
              <SUBJECT>Reporting.</SUBJECT>
              <P>Mentor and protege firms must report on the progress made under mentor-protege agreements as indicated in appendix I, section I-111.</P>
            </SECTION>
            <SECTION>
              <SECTNO>219.7106</SECTNO>
              <SUBJECT>Performance reviews.</SUBJECT>
              <P>The Defense Contract Management Agency will conduct annual performance reviews of all mentor-protege agreements as indicated in appendix I, section I-112. The determinations made in these reviews should be a major factor in determinations of amounts of reimbursement, if any, that the mentor firm is eligible to receive in the remaining years of the Program participation term under the agreement.</P>
              <CITA>[65 FR 50150, Aug. 17, 2000]</CITA>
            </SECTION>
          </SUBPART>
        </PART>
        <PART>
          <PRTPAGE P="145"/>
          <EAR>Pt. 222</EAR>
          <HD SOURCE="HED">PART 222—APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS</HD>
          <CONTENTS>
            <SECHD>Sec.</SECHD>
            <SECTNO>222.001</SECTNO>
            <SUBJECT>Definition.</SUBJECT>
            <SUBPART>
              <HD SOURCE="HED">Subpart 222.1—Basic Labor Policies</HD>
              <SECTNO>222.101</SECTNO>
              <SUBJECT>Labor relations.</SUBJECT>
              <SECTNO>222.101-1</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <SECTNO>222.101-3</SECTNO>
              <SUBJECT>Reporting labor disputes.</SUBJECT>
              <SECTNO>222.101-3-70</SECTNO>
              <SUBJECT>Impact of labor disputes on defense programs.</SUBJECT>
              <SECTNO>222.101-4</SECTNO>
              <SUBJECT>Removal of items from contractors’ facilities affected by work stoppages.</SUBJECT>
              <SECTNO>222.101-70</SECTNO>
              <SUBJECT>Acquisition of stevedoring services during labor disputes.</SUBJECT>
              <SECTNO>222.102</SECTNO>
              <SUBJECT>Federal and State labor requirements.</SUBJECT>
              <SECTNO>222.102-1</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>222.103</SECTNO>
              <SUBJECT>Overtime.</SUBJECT>
              <SECTNO>222.103-4</SECTNO>
              <SUBJECT>Approvals.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 222.3—Contract Work Hours and Safety Standards Act</HD>
              <SECTNO>222.302</SECTNO>
              <SUBJECT>Liquidated damages and overtime pay.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 222.4—Labor Standards for Contracts Involving Construction</HD>
              <SECTNO>222.402</SECTNO>
              <SUBJECT>Applicability.</SUBJECT>
              <SECTNO>222.402-70</SECTNO>
              <SUBJECT>Installation support contracts.</SUBJECT>
              <SECTNO>222.403</SECTNO>
              <SUBJECT>Statutory and regulatory requirements.</SUBJECT>
              <SECTNO>222.403-4</SECTNO>
              <SUBJECT>Department of Labor regulations.</SUBJECT>
              <SECTNO>222.404</SECTNO>
              <SUBJECT>Davis-Bacon Act wage determinations.</SUBJECT>
              <SECTNO>222.404-2</SECTNO>
              <SUBJECT>General requirements.</SUBJECT>
              <SECTNO>222.404-3</SECTNO>
              <SUBJECT>Procedures for requesting wage determinations.</SUBJECT>
              <SECTNO>222.404-11</SECTNO>
              <SUBJECT>Wage determination appeals.</SUBJECT>
              <SECTNO>222.406</SECTNO>
              <SUBJECT>Administration and enforcement.</SUBJECT>
              <SECTNO>222.406-1</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>222.406-6</SECTNO>
              <SUBJECT>Payrolls and statements.</SUBJECT>
              <SECTNO>222.406-8</SECTNO>
              <SUBJECT>Investigations.</SUBJECT>
              <SECTNO>222.406-9</SECTNO>
              <SUBJECT>Withholding from or suspension of contract payments.</SUBJECT>
              <SECTNO>222.406-10</SECTNO>
              <SUBJECT>Disposition of disputes concerning construction contract labor standards enforcement.</SUBJECT>
              <SECTNO>222.406-13</SECTNO>
              <SUBJECT>Semiannual enforcement reports.</SUBJECT>
              <SECTNO>222.407</SECTNO>
              <SUBJECT>Contract clauses.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 222.6—Walsh-Healey Public Contracts Act</HD>
              <SECTNO>222.604</SECTNO>
              <SUBJECT>Exemptions.</SUBJECT>
              <SECTNO>222.604-2</SECTNO>
              <SUBJECT>Regulatory exemptions.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 222.8—Equal Employment Opportunity</HD>
              <SECTNO>222.804</SECTNO>
              <SUBJECT>Affirmative action programs.</SUBJECT>
              <SECTNO>222.804-2</SECTNO>
              <SUBJECT>Construction.</SUBJECT>
              <SECTNO>222.805</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <SECTNO>222.806</SECTNO>
              <SUBJECT>Inquiries.</SUBJECT>
              <SECTNO>222.807</SECTNO>
              <SUBJECT>Exemptions.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 222.10—Service Contract Act of 1965, as Amended</HD>
              <SECTNO>222.1003</SECTNO>
              <SUBJECT>Applicability.</SUBJECT>
              <SECTNO>222.1003-1</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <SECTNO>222.1003-7</SECTNO>
              <SUBJECT>Questions concerning applicability of the Act.</SUBJECT>
              <SECTNO>222.1008</SECTNO>
              <SUBJECT>Procedures for preparing and submitting Notice (SF 98/98a).</SUBJECT>
              <SECTNO>222.1008-2</SECTNO>
              <SUBJECT>Preparation of SF 98a.</SUBJECT>
              <SECTNO>222.1008-7</SECTNO>
              <SUBJECT>Required time of submission of notice.</SUBJECT>
              <SECTNO>222.1014</SECTNO>
              <SUBJECT>Delay of acquisition dates over 60 days.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 222.13—Special Disabled and Vietnam Era Veterans</HD>
              <SECTNO>222.1303</SECTNO>
              <SUBJECT>Waivers.</SUBJECT>
              <SECTNO>222.1306</SECTNO>
              <SUBJECT>Complaint procedures.</SUBJECT>
              <SECTNO>222.1308</SECTNO>
              <SUBJECT>Contract clauses.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 222.14—Employment of the Handicapped</HD>
              <SECTNO>222.1403</SECTNO>
              <SUBJECT>Waivers.</SUBJECT>
              <SECTNO>222.1406</SECTNO>
              <SUBJECT>Complaint procedures.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 222.70—Restrictions on the Employment of Personnel for Work on Construction and Service Contracts in Noncontiguous States</HD>
              <SECTNO>222.7000</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <SECTNO>222.7001</SECTNO>
              <SUBJECT>Definition.</SUBJECT>
              <SECTNO>222.7002</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <SECTNO>222.7003</SECTNO>
              <SUBJECT>Waivers.</SUBJECT>
              <SECTNO>222.7004</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 222.71—Right of First Refusal of Employment</HD>
              <SECTNO>222.7100</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <SECTNO>222.7101</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>222.7102</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <HD SOURCE="HED">Subpart 222.72—Compliance with Labor Laws of Foreign Governments</HD>
              <SECTNO>222.7200</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <SECTNO>222.7201</SECTNO>
              <SUBJECT>Contract clauses.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 222.73—Limitations Applicable to Contracts Performed on Guam</HD>
              <SECTNO>222.7300</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <SECTNO>222.7301</SECTNO>
              <SUBJECT>Prohibition on use of nonimmigrant aliens.</SUBJECT>
              <SECTNO>222.7302</SECTNO>
              <SUBJECT>Exception.</SUBJECT>
              <SECTNO>222.7303</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
            </SUBPART>
          </CONTENTS>
          <AUTH>
            <HD SOURCE="HED">Authority:</HD>
            <P>41 U.S.C. 421 and 48 CFR chapter 1.</P>
          </AUTH>
          <SOURCE>
            <PRTPAGE P="146"/>
            <HD SOURCE="HED">Source:</HD>
            <P>56 FR 36358, July 31, 1991, unless otherwise noted.</P>
          </SOURCE>
          <SECTION>
            <SECTNO>222.001</SECTNO>
            <SUBJECT>Definition.</SUBJECT>
            <P>
              <E T="03">Labor advisor,</E> as used in this part, means the departmental or agency headquarters labor advisor.</P>
          </SECTION>
          <SUBPART>
            <HD SOURCE="HED">Subpart 222.1—Basic Labor Policies</HD>
            <SECTION>
              <SECTNO>222.101</SECTNO>
              <SUBJECT>Labor relations.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>222.101-1</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <P>(a) Contracting offices shall—</P>
              <P>(i) Obtain departmental approval before contacting a national office of a labor organization, a Government agency headquarters, or any other organization on a labor relations matter;</P>
              <P>(ii) Notify departmental headquarters as required in departmental procedures when contacted by the national office of any labor organization or Government agency headquarters;</P>
              <P>(iii) Obtain the approval of the agency head on major policy decisions regarding labor relations matters such as recommendations for plant seizure or injunctive action relating to potential or actual work stoppages; and</P>
              <P>(iv) Submit questions involving FAR part 22 or other contractor labor relations matters to the labor advisor.</P>
            </SECTION>
            <SECTION>
              <SECTNO>222.101-3</SECTNO>
              <SUBJECT>Reporting labor disputes.</SUBJECT>
              <P>The contract administration office shall—</P>
              <P>(1) Notify the labor advisor, the contracting officer, and the head of the contracting activity when interference is likely; and</P>
              <P>(2) Disseminate information on labor disputes in accordance with departmental procedures.</P>
              <CITA>[64 FR 28109, May 25, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>222.101-3-70</SECTNO>
              <SUBJECT>Impact of labor disputes on defense programs.</SUBJECT>
              <P>(a) Each department and agency shall determine the degree of impact of potential or actual labor disputes on its own programs and requirements. In making these determinations, consider, for example—</P>
              <P>(1) Whether the dispute involves a product, project (including construction), or service which must be obtained in order to meet schedules for urgently needed military programs or requirements; and</P>
              <P>(2) Whether alternative sources of supply for the product, project, or service are reasonably available to fulfill the requirement or program in time to maintain essential military schedules.</P>
              <P>(b) Each contracting activity involved shall obtain and develop data reflecting the impact of a labor dispute on its requirements and programs. Upon determining the impact, the head of the contracting activity shall submit a report of findings and recommendations to the labor advisor. This reporting requirement is assigned Report Control Symbol DD-AT&amp;L(AR)1153. The report must be in narrative form and must include—</P>
              <P>(1) Location of dispute and name of contractor or subcontractor involved;</P>
              <P>(2) A description of the impact, including how the specific items or services affect the specific programs or requirements;</P>
              <P>(3) Identity of alternate sources available to furnish the supply or service within the time required; and</P>
              <P>(4) A description of any action taken to reduce the impact.</P>
              <P>(c) The head of the contracting activity shall submit impact reports to the agency head when—</P>
              <P>(1) Specifically requested; or</P>
              <P>(2) The department or agency considers the impact to be of sufficient urgency to warrant the attention of the agency head.</P>
              <P>(d) The labor advisor will expand the report submitted under paragraph (c) of this subsection by addressing the following, as appropriate—</P>
              <P>(1) <E T="03">Description of military program, project, or service.</E> Identify item, project, or service which will be or is being affected by the work stoppage. Describe its normal use and current functions in combat, combat support, or deterrent operations. For components or raw materials, identify the end item(s) for which they are used.</P>
              <P>(2) <E T="03">Requirements and assets.</E> Identify requirements and assets in appropriate detail in terms commonly used by the DoD component.</P>

              <P>(i) For production programs, include requirements for each using military <PRTPAGE P="147"/>service. Where applicable, state in detail production schedule, inventory objectives, assets against these objectives, and critical shortages. For spares and highly expendable items, such as ground and air ammunition, show usage (consumption) rates and assets in absolute terms and in terms of daily, weekly, or monthly supplies. For components, include requirements for spares.</P>
              <P>(ii) For projects, describe the potential adverse effects of a delay in meeting schedules, and its impact on the national security.</P>
              <P>(iii) For services, describe how a loss or interruption affects the ability to support Defense operations in terms of traffic requirements, assets, testing programs, etc.</P>
              <P>(3) <E T="03">Possible measures to minimize strike impact.</E> Describe—</P>
              <P>(i) Capabilities, if any, to substitute items or to use alternate sources and indicate the number of other facilities available and the relative capabilities of such facilities in meeting total requirements;</P>
              <P>(ii) How much time would be required to replace the loss of the facilities or service affected by a work stoppage; and</P>
              <P>(iii) The feasibility of transferring assets from theater to theater to relieve deficits in some areas of urgency.</P>
              <P>(4) <E T="03">Conclusion.</E> (i) Describe the impact on operations of a 15-30, 30-60, and a 60-90 day work stoppage.</P>
              <P>(ii) Project the degree of criticality of a program, project, or service resulting from a work stoppage on a calendar basis, indicating the increased impact, if any, as the stoppage lengthens. Criticality is measured by the number of days required for the work stoppage to have an effect on operational capability. This time must be stated in terms of days.</P>
              <CITA>[56 FR 36358, July 31, 1991, as amended at 64 FR 28109, May 25, 1999; 65 FR 52952, Aug. 31, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>222.101-4</SECTNO>
              <SUBJECT>Removal of items from contractors’ facilities affected by work stoppages.</SUBJECT>
              <P>(a) When a contractor is unable to deliver urgent and critical items because of a work stoppage at its facility, the contracting officer, before removing any items from the facility, shall—</P>
              <P>(i) Before initiating any action, contact the labor advisor to obtain the opinion of the national office of the Federal Mediation and Conciliation Service or other mediation agency regarding the effect movement of the items would have on labor negotiations. Normally removals will not be made if they will adversely affect labor negotiations.</P>
              <P>(ii) Upon the recommendation of the labor advisor, provide a written request for removal of the material to the cognizant contract administration office. Include the following information in the request—</P>
              <P>(A) Contract number;</P>
              <P>(B) A statement as to the urgency and criticality of the item needed;</P>
              <P>(C) A description of the items to be moved (nature of the item, amount, approximate weight and cubic feet, item number, etc.);</P>
              <P>(D) Mode of transportation by which the items are to be moved, if different than in the contract, and whether by Government or commercial bill of lading; and</P>
              <P>(E) Destination of the material, if different from that specified in the contract.</P>
              <P>(iii) With the assistance of the labor advisor or the commander of the contract administration office, attempt to have both the management and the labor representatives involved agree to shipment of the material by normal means.</P>
              <P>(iv) If agreement for removal of the needed items cannot be reached following the procedures in paragraphs (a) (i) through (iii) of this subsection, the commander of the contract administration office, after obtaining approval from the labor advisor, may seek the concurrence of the parties to the dispute to permit movement of the material by military vehicles with military personnel. On receipt of such concurrences, the commander may proceed to make necessary arrangements to move the material.</P>

              <P>(v) If agreement for removal of the needed items cannot be reached following any of the procedures in paragraphs (a) (i) through (iv) of this subsection, refer the matter to the labor <PRTPAGE P="148"/>advisor with the information required by 222.101-3-70(b). If the labor advisor is unsuccessful in obtaining concurrence of the parties for the movement of the material and further action to obtain the material is deemed necessary, refer the matter to the agency head. Upon review and verification that the items are urgently or critically needed and cannot be moved with the consent of the parties, the agency head, on a nondelegable basis, may order removal of the items from the facility.</P>
            </SECTION>
            <SECTION>
              <SECTNO>222.101-70</SECTNO>
              <SUBJECT>Acquisition of stevedoring services during labor disputes.</SUBJECT>
              <P>(a) Use the following procedures only in the order listed when a labor dispute delays performance of a contract for stevedoring services which are urgently needed.</P>
              <P>(1) Attempt to have management and labor voluntarily agree to exempt military supplies from the labor dispute by continuing the movement of such material.</P>
              <P>(2) Divert vessels to alternate ports able to provide necessary stevedoring services.</P>
              <P>(3) Consider contracting with reliable alternative sources of supply within the stevedoring industry.</P>
              <P>(4) Utilize civil service stevedores to perform the work performed by contract stevedores.</P>
              <P>(5) Utilize military personnel to handle the cargo which was being handled by contract stevedores prior to the labor dispute.</P>
              <P>(b) Notify the labor advisor when a deviation from the procedures in paragraph (a) of this subsection is required.</P>
            </SECTION>
            <SECTION>
              <SECTNO>222.102</SECTNO>
              <SUBJECT>Federal and State labor requirements.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>222.102-1</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>(1) The Department of Labor is responsible for the administration and enforcement of the Occupational Safety and Health Act (OSHA). Contracting officers shall—</P>
              <P>(i) Direct all inquiries from contractors or contractor employees regarding the applicability or interpretation of the OSHA regulations to the Department of Labor; and</P>
              <P>(ii) Upon request, provide the address of the appropriate field office of the Occupational Safety and Health Administration of the Department of Labor.</P>
              <P>(2) Do not initiate any application for the suspension or relaxation of labor requirements without prior coordination with the labor advisor.</P>
            </SECTION>
            <SECTION>
              <SECTNO>222.103</SECTNO>
              <SUBJECT>Overtime.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>222.103-4</SECTNO>
              <SUBJECT>Approvals.</SUBJECT>
              <P>(a) The department/agency approving official shall—</P>
              <P>(i) Obtain the concurrence of other appropriate approving officials; and</P>
              <P>(ii) Seek agreement as to the contracts under which overtime premiums will be approved when—</P>
              <P>(A) Two or more contracting offices have current contracts at the same contractor facility; and</P>
              <P>(B) The approval of overtime by one contracting office will affect the performance or cost of contracts of another office. In the absence of evidence to the contrary, a contracting officer may rely on a contractor's statement that approval of overtime premium pay for one contract will not affect performance or payments under any other contract.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 222.3—Contract Work Hours and Safety Standards Act</HD>
            <SECTION>
              <SECTNO>222.302</SECTNO>
              <SUBJECT>Liquidated damages and overtime pay.</SUBJECT>
              <P>Upon receipt of notification of Contract Work Hours and Safety Standards Act violations, the contracting officer shall—</P>
              <P>(1) Immediately withhold such funds as are available;</P>
              <P>(2) Give the contractor written notification of the withholding and a statement of the basis for the liquidated damages assessment. The written notification shall also inform the contractor of its 60 days right to appeal the assessment, through the contracting officer, to the agency official responsible for acting on such appeals; and</P>

              <P>(3) If funds available for withholding are insufficient to cover liquidated damages, ask the contractor to pay voluntarily such funds as are necessary to cover the total liquidated damage assessment.<PRTPAGE P="149"/>
              </P>
              <P>(d)(i) The assessment shall become the final administrative determination of contractor liability for liquidated damages when—</P>
              <P>(A) The contractor fails to appeal to the contracting agency within 60 days from the date of the withholding of funds;</P>
              <P>(B) The department agency, following the contractor's appeals, issues a final order which affirms the assessment of liquidated damages or waives damages of $500 or less; or</P>
              <P>(C) The Secretary of Labor takes final action on a recommendation of the agency head to waive or adjust liquidated damages in excess of $500.</P>
              <P>(ii) Upon final administrative determination of the contractor's liability for liquidated damages, the contracting officer shall transmit withheld or collected funds determined to be owed the Government as liquidated damages to the servicing finance and accounting officer for crediting to the appropriate Government Treasury account. The contracting officer shall return any excess withheld funds to the contractor.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 222.4—Labor Standards for Contracts Involving Construction</HD>
            <SECTION>
              <SECTNO>222.402</SECTNO>
              <SUBJECT>Applicability.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>222.402-70</SECTNO>
              <SUBJECT>Installation support contracts.</SUBJECT>
              <P>(a) Apply both the Service Contract Act (SCA) and the Davis-Bacon Act (DBA) to installation support contracts if—</P>
              <P>(1) The contract is principally for services but also requires a substantial and segregable amount of construction, alteration, renovation, painting, or repair work; and</P>
              <P>(2) The aggregate dollar value of such construction work exceeds or is expected to exceed $2,000.</P>
              <P>(b) SCA coverage under the contract. Contract installation support requirements, such as plant operation and installation services (i.e., custodial, snow removal, etc.) are subject to the SCA. Apply SCA clauses and minimum wage and fringe benefit requirements to all contract service calls or orders for such maintenance and support work.</P>
              <P>(c) DBA coverage under the contract. Contract construction, alteration, renovation, painting, and repair requirements (i.e., roof shingling, building structural repair, paving repairs, etc.) are subject to the DBA. Apply DBA clauses and minimum wage requirements to all contract service calls or orders for construction, alteration, renovation, painting, or repairs to buildings or other works.</P>
              <P>(d) Repairs versus maintenance. Some contract work may be characterized as either DBA painting/repairs or SCA maintenance. For example, replacing broken windows, spot painting, or minor patching of a wall could be covered by either the DBA or the SCA. In those instances where a contract service call or order requires construction trade skills (i.e., carpenter, plumber, painter, etc.), but it is unclear whether the work required is SCA maintenance or DBA painting/repairs, apply the following rules—</P>
              <P>(1) Individual service calls or orders which will require a total of 32 or more work-hours to perform shall be considered to be repair work subject to the DBA.</P>
              <P>(2) Individual service calls or orders which will require less than 32 work-hours to perform shall be considered to be maintenance subject to the SCA.</P>
              <P>(3) Painting work of 200 square feet or more to be performed under an individual service call or order shall be considered to be subject to the DBA regardless of the total work-hours required.</P>
              <P>(e) The determination of labor standards application shall be made at the time the solicitation is prepared in those cases where requirements can be identified. Otherwise, the determination shall be made at the time the service call or order is placed against the contract. The service call or order shall identify the labor standards law and contract wage determination which will apply to the work required.</P>
              <P>(f) Contracting officers may not avoid application of the DBA by splitting individual tasks between orders or contracts.</P>
            </SECTION>
            <SECTION>
              <PRTPAGE P="150"/>
              <SECTNO>222.403</SECTNO>
              <SUBJECT>Statutory and regulatory requirements.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>222.403-4</SECTNO>
              <SUBJECT>Department of Labor regulations.</SUBJECT>
              <P>Direct all questions regarding Department of Labor regulations to the labor advisor.</P>
            </SECTION>
            <SECTION>
              <SECTNO>222.404</SECTNO>
              <SUBJECT>Davis-Bacon Act wage determinations.</SUBJECT>
              <P>Not later than April 1 of each year, each department and agency shall furnish the Administrator, Wage and Hour Division, with a general outline of its proposed construction program for the coming fiscal year. The Department of Labor uses this information to determine where general wage determination surveys will be conducted.</P>
              <P>(1) Indicate by individual project of $500,000 or more—</P>
              <P>(i) The anticipated type of construction;</P>
              <P>(ii) The estimated dollar value; and</P>
              <P>(iii) The location in which the work is to be performed (city, town, village, county, or other civil subdivision of the state).</P>
              <P>(2) The report format is contained in Department of Labor All Agency Memo 144, December 27, 1985.</P>
              <P>(3) The report control number is 1671-DOL-AN.</P>
            </SECTION>
            <SECTION>
              <SECTNO>222.404-2</SECTNO>
              <SUBJECT>General requirements.</SUBJECT>
              <P>(c)(5) Information concerning the proper application of wage rate schedules to the type or types of construction involved shall be obtained from the appropriate district commander, Corps of Engineers, for the Army; from the cognizant Naval Facilities Engineering Command division for the Navy; from the appropriate Regional Industrial Relations Office for the Air Force; and from the appropriate Defense Contract Management District, ATTN: Industrial Labor Relations Office, for the Defense Logistics Agency.</P>
            </SECTION>
            <SECTION>
              <SECTNO>222.404-3</SECTNO>
              <SUBJECT>Procedures for requesting wage determinations.</SUBJECT>
              <P>(b) <E T="03">Requests for project wage determinations.</E> Submit requests for project wage determinations directly to the Department of Labor.</P>
            </SECTION>
            <SECTION>
              <SECTNO>222.404-11</SECTNO>
              <SUBJECT>Wage determination appeals.</SUBJECT>
              <P>Send a copy of a petition for review filed by the contracting agency to the labor advisor.</P>
            </SECTION>
            <SECTION>
              <SECTNO>222.406</SECTNO>
              <SUBJECT>Administration and enforcement.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>222.406-1</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>(a) <E T="03">General.</E> The program shall also include—</P>
              <P>(i) Training appropriate contract administration, labor relations, inspection, and other labor standards enforcement personnel in their responsibilities; and</P>
              <P>(ii) Periodic review of field enforcement activities to ensure compliance with applicable regulations and instructions.</P>
              <P>(b) <E T="03">Preconstruction letters and conferences.</E> (1) Promptly after award of the contract, the contracting officer shall provide a preconstruction letter to the prime contractor. This letter should accomplish the following, as appropriate—</P>
              <P>(A) Indicate that the labor standards requirements contained in the contract are based on the following statutes and regulations—</P>
              <P>(<E T="03">1</E>) Davis-Bacon Act;</P>
              <P>(<E T="03">2</E>) Contract Work Hours and Safety Standards Act;</P>
              <P>(<E T="03">3</E>) Copeland (Anti-Kickback) Act;</P>
              <P>(<E T="03">4</E>) Parts 3 and 5 of the Secretary of Labor's Regulations (parts 3 and 5, subtitle A, title 29, CFR); and</P>
              <P>(<E T="03">5</E>) Executive Order 11246 (Equal Employment Opportunity);</P>
              <P>(B) Call attention to the labor standards requirements in the contract which relate to—</P>
              <P>(<E T="03">1</E>) Employment of foremen, laborers, mechanics, and others;</P>
              <P>(<E T="03">2</E>) Wages and fringe benefits payments, payrolls, and statements;</P>
              <P>(<E T="03">3</E>) Differentiation between subcontractors and suppliers;</P>
              <P>(<E T="03">4</E>) Additional classifications;</P>
              <P>(<E T="03">5</E>) Benefits to be realized by contractors and subcontractors in keeping complete work records;</P>
              <P>(<E T="03">6</E>) Penalties and sanctions for violations of the labor standards provisions; and</P>
              <P>(<E T="03">7</E>) The applicable provisions of FAR 22.403; and<PRTPAGE P="151"/>
              </P>
              <P>(C) Ensure that the contractor sends a copy of the preconstruction letter to each subcontractor.</P>
              <P>(2) Before construction begins, the contracting officer shall confer with the prime contractor and any subcontractor designated by the prime to emphasize their labor standards obligations under the contract when—</P>
              <P>(A) The prime contractor has not performed previous Government contracts;</P>
              <P>(B) The prime contractor experienced difficulty in complying with labor standards requirements on previous contracts; or</P>
              <P>(C) It is necessary to determine whether the contractor and its subcontractors intend to pay any required fringe benefits in the manner specified in the wage determination or to elect a different method of payment. If the latter, inform the contractor of the requirements of FAR 22.406-2.</P>
            </SECTION>
            <SECTION>
              <SECTNO>222.406-6</SECTNO>
              <SUBJECT>Payrolls and statements.</SUBJECT>
              <P>(a) <E T="03">Submission.</E> Contractors who do not use Department of Labor Form WH 347 or its equivalent must submit a DD Form 879, Statement of Compliance, with each payroll report.</P>
            </SECTION>
            <SECTION>
              <SECTNO>222.406-8</SECTNO>
              <SUBJECT>Investigations.</SUBJECT>

              <P>(a) The following guidance and procedures apply to investigations conducted by the contracting activity. (i) <E T="03">Beginning of the investigation.</E> The investigator shall—</P>
              <P>(A) Inform the contractor of the investigation in advance;</P>
              <P>(B) Verify the exact legal name of the contractor, its address, and the names and titles of its principal officers;</P>
              <P>(C) Outline the general scope of the investigation and that it includes examining pertinent records and interviewing employees; and</P>
              <P>(D) Inform the contractor that the names of the employees to be interviewed will not be divulged to the contractor;</P>
              <P>(E) When requested, provide a letter from the contracting officer verifying the investigator's authority.</P>
              <P>(ii) <E T="03">Conduct of the investigation—</E>(A) <E T="03">Review of the contract.</E>
              </P>
              <P>(<E T="03">1</E>) Verify that all required labor standards and clauses and the wage determination are included in the contract.</P>
              <P>(<E T="03">2</E>) Review the following items in the contract file, if applicable—</P>
              <P>(<E T="03">i</E>) List of subcontractors;</P>
              <P>(<E T="03">ii</E>) Payroll statements for the contractor and subcontractors;</P>
              <P>(<E T="03">iii</E>) Approvals of additional classifications;</P>
              <P>(<E T="03">iv</E>) Data regarding apprentices and trainees as required by FAR 22.406-4;</P>
              <P>(<E T="03">v</E>) Daily inspector's report or other inspection reports;</P>
              <P>(<E T="03">vi</E>) Employee interview statements; and</P>
              <P>(<E T="03">vii</E>) SF 1413, Statement and Acknowledgement.</P>
              <P>(B) <E T="03">Interview of the complainant.</E> Interview the complainant except when this is impractical. The interview shall cover all aspects of the complaint to ensure that all pertinent information is obtained. Whenever an investigation does not include an interview of the complainant, explain such omission in the investigator's report.</P>
              <P>(C) <E T="03">Interview of employees and former employees. (1</E>) Interview a sufficient number of employees or former employees, who represent all classifications, to develop information regarding the method and amount of payments, deductions, hours worked, and the type of work performed.</P>
              <P>(<E T="03">2</E>) Interview employees at the job site if the interviews can be conducted privately and in such a manner so as to cause the least inconvenience to the employer and employees.</P>
              <P>(<E T="03">3</E>) Former employees may be interviewed elsewhere.</P>
              <P>(<E T="03">4</E>) Do not disclose to any employee any information, finding, recommendation, or conclusion relating to the investigation except to the extent necessary to obtain required information.</P>
              <P>(<E T="03">5</E>) Do not disclose any employee's statement to anyone, except a Government representative working on the case, without the employee's written permission.</P>
              <P>(<E T="03">6</E>) Obtain information by mail when personal interviews are impractical.</P>
              <P>(<E T="03">7</E>) Use SF 1445, Labor Standards Interview, for employee interviews.</P>
              <P>(<E T="03">8</E>) Request employees to sign their statements and to initial any changes.</P>
              <P>(<E T="03">9</E>) Provide an evaluation of each employee's credibility.<PRTPAGE P="152"/>
              </P>
              <P>(D) <E T="03">Interview of foremen.</E> Interview foremen to obtain information concerning the contractor's compliance with the labor standards provisions with respect to employees under the foreman's supervision and the correctness of the foreman's classification as a supervisory employee. All procedures established for the conduct of employee interviews, and the recording and use of information obtained, apply to foremen interviews.</P>
              <P>(E) <E T="03">Interview of the contractor.</E> (<E T="03">1</E>) Interview the contractor whenever the investigation indicates the possibility of a violation.</P>
              <P>(<E T="03">2</E>) Inform the contractor that—</P>
              <P>(<E T="03">i</E>) The interview does not mean that a violation has been found or that a requirement for corrective action exists; and</P>
              <P>(<E T="03">ii</E>) The purpose of the interview is to obtain only such data as the contractor may desire to present in connection with the investigation.</P>
              <P>(<E T="03">3</E>) Do not disclose the identity of any individual who filed a complaint or was interviewed.</P>
              <P>(F) <E T="03">Review of contractor and subcontractor records.</E> (<E T="03">1</E>) Review contractor and subcontractor records such as basic time cards, books, cancelled payroll checks, fringe benefits, and payment records. Compare them with submitted payrolls. When discrepancies are found, include pertinent excerpts or copies of the records in the investigation report with a statement of the discrepancy and any explanation the investigator obtains. When wages include contributions or anticipated costs for fringe payments requiring approval of the Secretary of Labor, examine the contractor records to ensure such approval has been obtained and that any requirements specified in the approval have been met. (See FAR 22.406-2(a)(3)).</P>
              <P>(<E T="03">2</E>) Review contractor's and subcontractor's weekly payrolls and payroll statements for completeness and accuracy regarding the following—</P>
              <P>(<E T="03">i</E>) Identification of employees, payroll amount, the contract, contractor, subcontractor, and payroll period;</P>
              <P>(<E T="03">ii</E>) Inclusion of only job classifications and wage rates specified in the contract specifications, or otherwise established for the contract or subcontract;</P>
              <P>(<E T="03">iii</E>) Computation of daily and weekly hours;</P>
              <P>(<E T="03">iv</E>) Computation of time-and-one half for work in excess of 40 hours per week in accordance with FAR 22.406-2(c);</P>
              <P>(<E T="03">v</E>) Gross weekly wages;</P>
              <P>(<E T="03">vi</E>) Deductions;</P>
              <P>(<E T="03">vii</E>) Computation of net weekly wages paid to each employee;</P>
              <P>(<E T="03">viii</E>) Ratio of helpers, apprentices, and trainees to laborers and mechanics;</P>
              <P>(<E T="03">ix</E>) Apprenticeship and trainee registration and ratios; and</P>
              <P>(<E T="03">x</E>) Computation of fringe benefits payments.</P>
              <P>(<E T="03">3</E>) Transcribe the contractor's records whenever they contain information at variance with payrolls or other submitted documents.</P>
              <P>(<E T="03">i</E>) Make the transcriptions in sufficient detail to permit them to be used to check computations of restitution and to determine amounts to be withheld from the contractor.</P>
              <P>(<E T="03">ii</E>) Follow the form used by the contractor.</P>
              <P>(<E T="03">iii</E>) Place comments or explanations concerning the transcriptions on separate memoranda or in the narrative report.</P>
              <P>(<E T="03">iv</E>) Determine whether the wage determination, any modifications of the determination, and any additional classifications are posted as required.</P>
              <P>(iii) <E T="03">Submission of the report of investigation.</E> The investigator shall submit a report of the investigation in accordance with agency procedures. Each report shall include at least the—</P>
              <P>(A) Basis for the investigation, including the name of the complainant;</P>
              <P>(B) Names and addresses of prime contractors and subcontractors involved, and names and titles of their principal officers;</P>
              <P>(C) Contract number, date, dollar value of prime contract, and date and number of wage determination included in the contract;</P>
              <P>(D) Description of the contract and subcontract work involved;</P>
              <P>(E) Summary of the findings with respect to each of the items listed in 222.406-8(a)(ii);</P>
              <P>(F) Concluding statement concerning—<PRTPAGE P="153"/>
              </P>
              <P>(<E T="03">1</E>) The types of violations, including the amount of kickbacks under the Copeland Act, underpayments of basic hourly rates and fringe benefits under the Davis-Bacon Act, or underpayments and liquidated damages under the Contract Work Hours and Safety Standards Act;</P>
              <P>(<E T="03">2</E>) Whether violations are considered to be willful or due to the negligence of the contractor or its agent;</P>
              <P>(<E T="03">3</E>) The amount of funds withheld from the contractor; and</P>
              <P>(<E T="03">4</E>) Other violations found.</P>
              <P>(G) Exhibits indexed and appropriately tabbed, including copies of the following, when applicable—</P>
              <P>(<E T="03">1</E>) Complaint letter;</P>
              <P>(<E T="03">2</E>) Contract wage determination;</P>
              <P>(<E T="03">3</E>) Preconstruction letter and memorandum of preconstruction conference;</P>
              <P>(<E T="03">4</E>) Payrolls and statements indicating violations;</P>
              <P>(<E T="03">5</E>) Transcripts of pertinent records of the contractor, and approvals of fringe benefit payments;</P>
              <P>(<E T="03">6</E>) Employee interview statements;</P>
              <P>(<E T="03">7</E>) Foreman interview statements;</P>
              <P>(<E T="03">8</E>) Statements of others interviewed, including Government personnel;</P>
              <P>(<E T="03">9</E>) Detailed computations showing kickbacks, underpayments, and liquidated damages;</P>
              <P>(<E T="03">10</E>) Summary of all payments due to each employee or to a fund plan or program, and liquidated damages; and</P>
              <P>(<E T="03">11</E>) Receipts and cancelled checks.</P>
              <P>(c) <E T="03">Notification to the contractor.</E>
              </P>
              <P>(4)(A) Notify the contractor by certified mail of any finding that it is liable for liquidated damages under the Contract Work Hours and Safety Standards Act (CWHSSA). The notification shall inform the contractor that—</P>
              <P>(<E T="03">1</E>) It has 60 days after receipt of the notice to appeal the assessment of liquidated damages; and</P>
              <P>(<E T="03">2</E>) The appeal must demonstrate either that the alleged violations did not occur at all, occurred inadvertently notwithstanding the exercise of due care, or the assessment was computed improperly.</P>
              <P>(B) If an appeal is received, the contracting officer shall process the appeal in accordance with department or agency regulations.</P>
              <P>(d) <E T="03">Contracting officer's report.</E> (1) In accordance with agency procedures, the contracting officer shall forward a detailed enforcement report or summary report in duplicate. These reports shall include at least the following—</P>
              <P>(A) SF 1446, Labor Standards Investigation Summary Sheet;</P>
              <P>(B) Contracting officer's findings;</P>
              <P>(C) Statement as to the disposition of any contractor rebuttal to the findings;</P>
              <P>(D) Statement as to whether the contractor has accepted the findings and has paid any restitution or liquidated damages;</P>
              <P>(E) Statement as to the disposition of funds available;</P>
              <P>(F) Recommendations as to disposition or further handling of the case (when appropriate, include recommendations as to the reduction, waiver, or assessment of liquidated damages, whether the contractor should be debarred, and whether the file should be referred for possible criminal prosecution); and</P>
              <P>(G) When applicable the following exhibits—</P>
              <P>(<E T="03">1</E>) Investigator's report;</P>
              <P>(<E T="03">2</E>) Copy of the contractor's written rebuttal or a summary of the contractor's oral rebuttal of the contracting officer's findings;</P>
              <P>(<E T="03">3</E>) Copies of correspondence between the contractor and contracting officer, including a statement of specific violations found, corrective action requested, and the contractor's letter of acceptance or rejection;</P>
              <P>(<E T="03">4</E>) Evidence of the contractor's payment of restitution or liquidated damages. (Copies of receipts, canceled checks, or supplemental payrolls); and</P>
              <P>(<E T="03">5</E>) Letter from the contractor requesting relief from the liquidated damage provisions of the CWHSSA.</P>
            </SECTION>
            <SECTION>
              <SECTNO>222.406-9</SECTNO>
              <SUBJECT>Withholding from or suspension of contract payments.</SUBJECT>
              <P>(a) <E T="03">Withholding from contract payments.</E> The contracting officer shall contact the labor advisor for assistance when payments due a contractor are not available to satisfy that contractor's liability for Davis-Bacon or CWHSSA wage underpayments or liquidated damages.<PRTPAGE P="154"/>
              </P>
              <P>(c) <E T="03">Disposition of contract payments withheld or suspended.</E>
              </P>
              <P>(3) <E T="03">Limitation on forwarding or returning funds.</E> When disposition of withheld funds remains the final action necessary to close out a contract, the Department of Labor has given blanket approval to forward withheld funds to the Comptroller General pending completion of an investigation or other administrative proceedings.</P>
              <P>(4) <E T="03">Liquidated damages.</E>
              </P>
              <P>(A) The agency head may adjust liquidated damages of $500 or less when the amount assessed is incorrect or waive the assessment when the violations—</P>
              <P>(<E T="03">1</E>) Were nonwillful or inadvertent; and</P>
              <P>(<E T="03">2</E>) Occurred notwithstanding the exercise of due care by the contractor, its subcontractor, or their agents.</P>
              <P>(B) The agency head may recommend to the Administrator, Wage and Hour Division, that the liquidated damages over $500 be adjusted because the amount assessed is incorrect. The agency head may also recommend the assessment be waived when the violations—</P>
              <P>(<E T="03">1</E>) Were nonwillful or inadvertent; and</P>
              <P>(<E T="03">2</E>) Occurred notwithstanding the exercise of due care by the contractor, the subcontractor, or their agents.</P>
            </SECTION>
            <SECTION>
              <SECTNO>222.406-10</SECTNO>
              <SUBJECT>Disposition of disputes concerning construction contract labor standards enforcement.</SUBJECT>
              <P>(d) Forward the contracting officer's findings and the contractor's statement through the labor advisor.</P>
            </SECTION>
            <SECTION>
              <SECTNO>222.406-13</SECTNO>
              <SUBJECT>Semiannual enforcement reports.</SUBJECT>
              <P>Forward these reports through the head of the contracting activity to the labor advisor within 15 days following the end of the reporting period. These reports shall not include information from investigations conducted by the Department of Labor. These reports shall contain the following information, as applicable, for construction work subject to the Davis-Bacon Act and the CWHSSA—</P>
              <P>(1) Period covered;</P>
              <P>(2) Number of prime contracts awarded;</P>
              <P>(3) Total dollar amount of prime contracts awarded;</P>
              <P>(4) Number of contractors/subcontractors against whom complaints were received;</P>
              <P>(5) Number of investigations conducted;</P>
              <P>(6) Number of contractors/subcontractors found in violation;</P>
              <P>(7) Amount of wage restitution found due under—</P>
              <P>(i) Davis-Bacon Act</P>
              <P>(ii) CWHSSA;</P>
              <P>(8) Number of employees due wage restitution under—</P>
              <P>(i) Davis-Bacon Act</P>
              <P>(ii) CWHSSA;</P>
              <P>(9) Amount of liquidated damages assessed under the CWHSSA—</P>
              <P>(i) Total amount</P>
              <P>(ii) Number of contracts involved;</P>
              <P>(10) Number of employees and amount paid/withheld under—</P>
              <P>(i) Davis-Bacon Act</P>
              <P>(ii) CWHSSA</P>
              <P>(iii) Copeland Act; and</P>
              <P>(11) Preconstruction activities—</P>
              <P>(i) Number of compliance checks performed</P>
              <P>(ii) Preconstruction letters sent.</P>
            </SECTION>
            <SECTION>
              <SECTNO>222.407</SECTNO>
              <SUBJECT>Contract clauses.</SUBJECT>

              <P>In contracts with a State or political subdivision, use the contract clauses prescribed in FAR 22.407, but preface these clauses with the following—
              </P>
              <EXTRACT>
                <P>The Contractor agrees to comply with the requirements of the Contract Work Hours and Safety Standards Act and to insert the following clauses in all subcontracts under this contract with private persons or firms.</P>
              </EXTRACT>
              
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 222.6—Walsh-Healey Public Contracts Act</HD>
            <SECTION>
              <SECTNO>222.604</SECTNO>
              <SUBJECT>Exemptions.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>222.604-2</SECTNO>
              <SUBJECT>Regulatory exemptions.</SUBJECT>
              <P>(b) Submit all applications for such exemptions through contracting channels to the labor advisor.</P>
              <CITA>[56 FR 36358, July 31, 1991, as amended at 65 FR 14398, Mar. 16, 2000]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <PRTPAGE P="155"/>
            <HD SOURCE="HED">Subpart 222.8—Equal Employment Opportunity</HD>
            <SECTION>
              <SECTNO>222.804</SECTNO>
              <SUBJECT>Affirmative action programs.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>222.804-2</SECTNO>
              <SUBJECT>Construction.</SUBJECT>
              <P>(b) Contracting officers forward requests for instructions directly to the servicing Office of Federal Contract Compliance Programs (OFCCP) regional office (see FAR 22.609).</P>
            </SECTION>
            <SECTION>
              <SECTNO>222.805</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <P>(a)(2) See FAR 22.609 for a list of OFCCP regional offices.</P>
            </SECTION>
            <SECTION>
              <SECTNO>222.806</SECTNO>
              <SUBJECT>Inquiries.</SUBJECT>
              <P>(b) Refer inquiries through the labor advisor.</P>
            </SECTION>
            <SECTION>
              <SECTNO>222.807</SECTNO>
              <SUBJECT>Exemptions.</SUBJECT>
              <P>(c) Submit the request for exemption with a justification through contracting channels to the labor advisor who will forward them to the agency head. If the request is submitted under FAR 22.807(a)(1), the agency head shall act on the request. If the exemption is granted, the agency head shall notify the Director, OFCCP of such action within 30 days. If the request is submitted under FAR 22.807(a)(2) or (b)(5), the agency head will forward it to the Director, OFCCP for action.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 222.10—Service Contract Act of 1965, as Amended</HD>
            <SECTION>
              <SECTNO>222.1003</SECTNO>
              <SUBJECT>Applicability.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>222.1003-1</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <P>For contracts having a substantial amount of construction, alteration, renovation, painting, or repair work, see 222.402-70.</P>
            </SECTION>
            <SECTION>
              <SECTNO>222.1003-7</SECTNO>
              <SUBJECT>Questions concerning applicability of the Act.</SUBJECT>
              <P>Contracting officers may contact the labor advisor by telephone for informal advice. Submit requests for formal determinations as to the Act's applicability to the labor advisor in writing through appropriate channels.</P>
            </SECTION>
            <SECTION>
              <SECTNO>222.1008</SECTNO>
              <SUBJECT>Procedures for preparing and submitting Notice (SF 98/98a).</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>222.1008-2</SECTNO>
              <SUBJECT>Preparation of SF 98a.</SUBJECT>
              <P>(b)(1) The contracting officer shall secure the assistance of cognizant customer/technical personnel to ensure maximum use of the Service Contract Act Directory of Occupations (Directory) and incorporation of all service employee classes (Directory and nondirectory) expected to be utilized.</P>
              <P>(2)(A) When the statement of work job title, for which there is a Directory equivalent, differs from the Directory job title, make a written cross-reference either directly on the SF 98a file copy or on an attached sheet to the SF 98a file copy.</P>
              <P>(B) Include and note as such any classifications and minimum hourly wage rates conformed under any predecessor contract. Where a previously conformed classification is not included in the Directory, attach the job description to the SF 98a.</P>
            </SECTION>
            <SECTION>
              <SECTNO>222.1008-7</SECTNO>
              <SUBJECT>Required time of submission of notice.</SUBJECT>
              <P>(d) Submit requests for immediate wage determination responses for emergency acquisitions through the labor advisor. If the request is justified, the labor advisor will contact Department of Labor headquarters officials.</P>
            </SECTION>
            <SECTION>
              <SECTNO>222.1014</SECTNO>
              <SUBJECT>Delay of acquisition dates over 60 days.</SUBJECT>
              <P>Send update requests in writing directly to the Wage and Hour Division and provide a copy to the labor advisor. The update request shall—</P>
              <P>(1) State that one or more dates on the original notice have been delayed more than 60 days;</P>
              <P>(2) List the new dates; and</P>
              <P>(3) Include a copy of the original notice and SF 98a as enclosures.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 222.13—Special Disabled and Vietnam Era Veterans</HD>
            <SECTION>
              <SECTNO>222.1303</SECTNO>
              <SUBJECT>Waivers.</SUBJECT>

              <P>(c) The contracting officer shall submit a waiver request through contracting channels to the labor advisor. <PRTPAGE P="156"/>If the request is justified, the labor advisor will endorse the request and forward it for action to—</P>
              <P>(i) The agency head for waivers under FAR 22.1303(a); or</P>
              <P>(ii) The Secretary of Defense, without the power of redelegation, for waivers under FAR 22.1303(b).</P>
            </SECTION>
            <SECTION>
              <SECTNO>222.1306</SECTNO>
              <SUBJECT>Complaint procedures.</SUBJECT>
              <P>The contracting officer shall—</P>
              <P>(1) Forward each complaint received as indicated in FAR 22.1306; and</P>
              <P>(2) Notify the complainant of the referral. The contractor in question shall not be advised in any manner or for any reason of the complainant's name, the nature of the complaint, or the fact that the complaint was received.</P>
            </SECTION>
            <SECTION>
              <SECTNO>222.1308</SECTNO>
              <SUBJECT>Contract clauses.</SUBJECT>
              <P>(a)(1) Use of the clause at FAR 52.222-35, Affirmative Action for Special Disabled and Vietnam Era Veterans, with its paragraph (c), Listing Openings, also satisfies the requirement of 10 U.S.C. 2410d.</P>
              <CITA>[58 FR 28466, May 13, 1993]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 222.14—Employment of the Handicapped</HD>
            <SECTION>
              <SECTNO>222.1403</SECTNO>
              <SUBJECT>Waivers.</SUBJECT>
              <P>(c) The contracting officer shall submit a waiver request through contracting channels to the labor advisor. If the request is justified, the labor advisor will endorse the request and forward it for action to—</P>
              <P>(i) The agency head for waivers under FAR 22.1403(a). For the defense agencies, waivers must be approved by the Under Secretary of Defense for Acquisition.</P>
              <P>(ii) The Secretary of Defense, without the power of redelegation, for waivers under FAR 22.1403(b).</P>
            </SECTION>
            <SECTION>
              <SECTNO>222.1406</SECTNO>
              <SUBJECT>Complaint procedures.</SUBJECT>
              <P>The contracting officer shall—</P>
              <P>(1) Forward each complaint received as indicated in FAR 22.1406 (see FAR 22.609 for a listing of Department of Labor regional/area offices); and</P>
              <P>(2) Notify the complainant of such referral. The contractor in question shall not be advised in any manner or for any reason of the complainant's name, the nature of the complaint, or the fact that the complaint was received.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 222.70—Restrictions on the Employment of Personnel for Work on Construction and Service Contracts in Noncontiguous States</HD>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>65 FR 14403, Mar. 16, 2000, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>222.7000</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <P>(a) This subpart implements Section 8071 of the Fiscal Year 2000 Defense Appropriations Act, Public Law 106-79, and similar sections in subsequent Defense Appropriations Acts.</P>
              <P>(b) This subpart applies only—</P>
              <P>(1) To construction and service contracts to be performed in whole or in part within a noncontiguous State; and</P>
              <P>(2) When the unemployment rate in the noncontiguous State is in excess of the national average rate of unemployment as determined by the Secretary of Labor.</P>
            </SECTION>
            <SECTION>
              <SECTNO>222.7001</SECTNO>
              <SUBJECT>Definition.</SUBJECT>
              <P>“Noncontiguous State,” as used in this subpart, means Alaska, Hawaii, Puerto Rico, the Northern Mariana Islands, American Samoa, Guam, the U.S. Virgin Islands, Baker Island, Howland Island, Jarvis Island, Johnston Atoll, Kingman Reef, Midway Islands, Navassa Island, Palmyra Atoll, and Wake Island.</P>
              <CITA>[65 FR 50151, Aug. 17, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>222.7002</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <P>A contractor awarded a contract subject to this subpart must employ, for the purpose of performing that portion of the contract work within the noncontiguous State, individuals who are residents of that noncontiguous State and who, in the case of any craft or trade, possess or would be able to acquire promptly the necessary skills to perform this contract.</P>
            </SECTION>
            <SECTION>
              <SECTNO>222.7003</SECTNO>
              <SUBJECT>Waivers.</SUBJECT>

              <P>The head of the agency may waive the requirements of 222.7002 on a case-<PRTPAGE P="157"/>by-case basis in the interest of national security.</P>
              <CITA>[65 FR 50151, Aug. 17, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>222.7004</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <P>Use the clause at 252.222-7000, Restrictions on Employment of Personnel, in all solicitations and contracts subject to this subpart. Insert the name of the appropriate noncontiguous State in paragraph (a) of the clause.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 222.71—Right of First Refusal of Employment</HD>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>57 FR 52593, Nov. 4, 1992, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>222.7100</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <P>This subpart prescribes policies and procedures for use in acquisitions arising from closure of military installations.</P>
            </SECTION>
            <SECTION>
              <SECTNO>222.7101</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>(a) DoD policy is to minimize the adverse impact on civil service employees affected by the closure of military installations. One means of implementing this policy is to give employees adversely affected by closure of a military installation the right of first refusal for jobs created by award of contracts arising from the closure effort that the employee is qualified to fill.</P>
              <P>(b) Closure efforts include the acquisitions for preparing the installation for closure (such as environmental restoration and utilities modification) and maintaining the property after closure (such as security and fire prevention services).</P>
            </SECTION>
            <SECTION>
              <SECTNO>222.7102</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <P>Use the clause at 252.222-7001, Right of First Refusal of Employment—Closure of Military Installations, in all solicitations and contracts arising from the closure of the military installation where the contract will be performed.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 222.72—Compliance with Labor Laws of Foreign Governments</HD>
            <SECTION>
              <SECTNO>222.7200</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <P>This subpart prescribes contract clauses, with respect to labor laws of foreign governments, for use when contracting for services or construction within a foreign country.</P>
              <CITA>[62 FR 34122, June 24, 1997]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>222.7201</SECTNO>
              <SUBJECT>Contract clauses.</SUBJECT>
              <P>(a) Use the clause at 252.222-7002, Compliance with Local Labor Laws (Overseas), in solicitations and contracts for services or construction to be performed outside the United States, its possessions, and Puerto Rico.</P>
              <P>(b) Use the clause at 252.222-7003, Permit from Italian Inspectorate of Labor, in solicitations and contracts for porter, janitorial, or ordinary facility and equipment maintenance services to be performed in Italy.</P>
              <P>(c) Use the clause at 252.222-7004, Compliance with Spanish Social Security Laws and Regulations, in solicitations and contracts for services or construction to be performed in Spain.</P>
              <CITA>[62 FR 34122, June 24, 1997]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 222.73—Limitations Applicable to Contracts Performed on Guam</HD>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>64 FR 52672, Sept. 30, 1999, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>222.7300</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <P>(a) This subpart implements—</P>
              <P>(1) 10 U.S.C. 2864; and</P>
              <P>(2) Section 390 of the National Defense Authorization Act for Fiscal Year 1998 (Public Law 105-85).</P>
              <P>(b) This subpart applies to—</P>
              <P>(1) Contracts for military construction projects on Guam; and</P>
              <P>(2) Contracts for base operations support on Guam that—</P>

              <P>(i) Are awarded as a result of a competition conducted under OMB Circular A-76; and<PRTPAGE P="158"/>
              </P>
              <P>(ii) Are entered into or modified on or after November 18, 1997.</P>
            </SECTION>
            <SECTION>
              <SECTNO>222.7301</SECTNO>
              <SUBJECT>Prohibition on use of nonimmigrant aliens.</SUBJECT>
              <P>(a) Any alien who is issued a visa or otherwise provided nonimmigrant status under Section 101(a)(15)(H)(ii) of the Immigration and Nationality Act (8 U.S.C. 1101(a)(15)(H)(ii)) is prohibited from performing work under a contract for—</P>
              <P>(1) A military construction project on Guam; or</P>
              <P>(2) Base operations support on Guam.</P>
              <P>(b) Lawfully admitted citizens of the freely associated states of the Republic of the Marshall Islands, the Federated States of Micronesia, or the Republic of Palau are not subject to the prohibition in paragraph (a) of this section.</P>
            </SECTION>
            <SECTION>
              <SECTNO>222.7302</SECTNO>
              <SUBJECT>Exception.</SUBJECT>
              <P>The prohibition in 222.7301(a)(1) does not apply to a military construction project if—</P>
              <P>(a) There is no acceptable offer in response to a solicitation for the project;</P>
              <P>(b) The Secretary concerned makes a determination that the prohibition is a significant deterrent to obtaining offers on the project; and</P>
              <P>(c) Another solicitation is issued for the project.</P>
            </SECTION>
            <SECTION>
              <SECTNO>222.7303</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <P>Use the clause at 252.222-7005, Prohibition on Use of Nonimmigrant Aliens-Guam, in solicitations and contracts subject to this subpart, except those issued in accordance with 222.7302.</P>
            </SECTION>
          </SUBPART>
        </PART>
        <PART>
          <EAR>Pt. 223</EAR>
          <HD SOURCE="HED">PART 223—ENVIRONMENT, CONSERVATION, OCCUPATIONAL SAFETY, AND DRUG-FREE WORKPLACE</HD>
          <CONTENTS>
            <SUBPART>
              <HD SOURCE="HED">Subpart 223.3—Hazardous Material Identification and Material Safety Data</HD>
              <SECTNO>223.300</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <SECTNO>223.302</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <SECTNO>223.303</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <SECTNO>223.370</SECTNO>
              <SUBJECT>Safety precautions for ammunition and explosives.</SUBJECT>
              <SECTNO>223.370-1</SECTNO>
              <SUBJECT>Scope.</SUBJECT>
              <SECTNO>223.370-2</SECTNO>
              <SUBJECT>Definition.</SUBJECT>
              <SECTNO>223.370-3</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>223.370-4</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <SECTNO>223.370-5</SECTNO>
              <SUBJECT>Contract clauses.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 223.4—Use of Recovered Materials</HD>
              <SECTNO>223.405</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 223.5—Drug-Free Workplace</HD>
              <SECTNO>223.570</SECTNO>
              <SUBJECT>Drug-free work force.</SUBJECT>
              <SECTNO>223.570-1</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <SECTNO>223.570-2</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>223.570-3</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <SECTNO>223.570-4</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 223.8—Ozone-Depleting Substances</HD>
              <SECTNO>223.803</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <RESERVED>Subpart 223.70 [Reserved]</RESERVED>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 223.71—Storage and Disposal of Toxic and Hazardous Materials</HD>
              <SECTNO>223.7100</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>223.7101</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <SECTNO>223.7102</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
              <SECTNO>223.7103</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 223.72—Safeguarding Sensitive Conventional Arms, Ammunition, and Explosives</HD>
              <SECTNO>223.7200</SECTNO>
              <SUBJECT>Definition.</SUBJECT>
              <SECTNO>223.7201</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>223.7202</SECTNO>
              <SUBJECT>Preaward responsibilities.</SUBJECT>
              <SECTNO>223.7203</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
            </SUBPART>
          </CONTENTS>
          <AUTH>
            <HD SOURCE="HED">Authority:</HD>
            <P>41 U.S.C. 421 and 48 CFR chapter 1.</P>
          </AUTH>
          <SOURCE>
            <HD SOURCE="HED">Source:</HD>
            <P>56 FR 36365, July 31, 1991, unless otherwise noted.</P>
          </SOURCE>
          <SUBPART>
            <HD SOURCE="HED">Subpart 223.3—Hazardous Material Identification and Material Safety Data</HD>
            <SECTION>
              <SECTNO>223.300</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <P>DoD procedures for use in acquisitions involving ammunition and explosives are in 223.370.</P>
            </SECTION>
            <SECTION>
              <SECTNO>223.302</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <P>(b) Successful offerors are also required to submit hazard warning labels under the clause at 252.223-7001, Hazard Warning Labels.</P>
              <P>(e) The contracting officer shall also provide hazard warning labels received from apparent successful offerors to the cognizant safety officer or other designated official in order to facilitate—</P>

              <P>(i) Inclusion of relevant data in the department/agency's material safety <PRTPAGE P="159"/>data sheet information system or label information system; and</P>
              <P>(ii) Other control, safety, or information purposes.</P>
              <CITA>[56 FR 67215, Dec. 30, 1991]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>223.303</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <P>Use the clause at 252.223-7001, Hazard Warning Labels, in solicitations and contracts which require submission of hazardous material data sheets (see FAR 23.302(c)).</P>
              <CITA>[56 FR 67215, Dec. 30, 1991]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>223.370</SECTNO>
              <SUBJECT>Safety precautions for ammunition and explosives.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>223.370-1</SECTNO>
              <SUBJECT>Scope.</SUBJECT>
              <P>(a) This section applies to all acquisitions involving the use of ammunition and explosives, including acquisitions for—</P>
              <P>(1) Development;</P>
              <P>(2) Testing;</P>
              <P>(3) Research;</P>
              <P>(4) Manufacturing;</P>
              <P>(5) Handling or loading;</P>
              <P>(6) Assembling;</P>
              <P>(7) Packaging;</P>
              <P>(8) Storage;</P>
              <P>(9) Transportation;</P>
              <P>(10) Renovation;</P>
              <P>(11) Demilitarization;</P>
              <P>(12) Modification;</P>
              <P>(13) Repair;</P>
              <P>(14) Disposal;</P>
              <P>(15) Inspection; or</P>
              <P>(16) Any other use, including acquisitions requiring the use or the incorporation of materials listed in paragraph (b) of this subsection for initiation, propulsion, or detonation as an integral or component part of an explosive, an ammunition, or explosive end item or weapon system.</P>
              <P>(b) This section does not apply to acquisitions solely for—</P>
              <P>(1) Inert components containing no explosives, propellants, or pyrotechnics;</P>
              <P>(2) Flammable liquids;</P>
              <P>(3) Acids;</P>
              <P>(4) Oxidizers;</P>
              <P>(5) Powdered metals; or</P>
              <P>(6) Other materials having fire or explosive characteristics.</P>
            </SECTION>
            <SECTION>
              <SECTNO>223.370-2</SECTNO>
              <SUBJECT>Definition.</SUBJECT>
              <P>
                <E T="03">Ammunition and explosives,</E> as used in this section, is defined in the clause at 252.223-7002, Safety Precautions for Ammunition and Explosives.</P>
            </SECTION>
            <SECTION>
              <SECTNO>223.370-3</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>(a) DoD policy is to ensure that its contractors take reasonable precautions in handling ammunition and explosives so as to minimize the potential for mishaps that could—</P>
              <P>(1) Interrupt DoD operations;</P>
              <P>(2) Delay project or product completion dates;</P>
              <P>(3) Adversely impact DoD mission readiness, production base, or production capabilities;</P>
              <P>(4) Damage or destroy DoD property; or</P>
              <P>(5) Cause injury to DoD personnel.</P>
              <P>(b) This policy is implemented by DoD Manual 4145.26-M, DoD Contractors’ Safety Manual for Ammunition and Explosives, which is incorporated into contracts under which ammunition and explosives are handled. The manual contains mandatory safety requirements for contractors. When work is to be performed on a Government-owned installation, the contracting officer may use the ammunition and explosives regulation of the DoD component or installation as a substitute for, or supplement to, DoD Manual 4145.26-M, as long as the contract cites these regulations.</P>
            </SECTION>
            <SECTION>
              <SECTNO>223.370-4</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <P>(a) <E T="03">Preaward phase</E>—(1) <E T="03">Waiver of the mandatory requirements.</E> (i) Before either omitting the clause at 252.223-7002, Safety Precautions for Ammunition and Explosives, from solicitations and contracts or waiving the mandatory requirements of the manual, obtain approval of—</P>
              <P>(A) The safety personnel responsible for ammunition and explosives safety; and</P>
              <P>(B) The head of the contracting activity.</P>

              <P>(ii) If the contracting officer decides to waive the mandatory requirements before award, the contracting officer shall set forth in the solicitation, or in an amendment of the solicitation, the specific requirements to be waived.<PRTPAGE P="160"/>
              </P>
              <P>(iii) If the head of the contracting activity declines to approve a request for waiver, but the prospective contractor agrees to take corrective action to bring the operation into compliance, make the corrective action a part of the resulting contract.</P>
              <P>(2) <E T="03">Transportation considerations</E>—If shipment of ammunition and explosives is involved in the contract, address in the schedule of the contract the applicable Department of Transportation or Military Traffic Management Command requirements and any other requirements for transportation, packaging, marking, and labeling.</P>
              <P>(3) <E T="03">Disposition of excess</E>—Include instructions within the contract concerning final disposition of excess Government furnished material containing ammunition and explosives, including defective or rejected supplies.</P>
              <P>(4) <E T="03">Preaward survey</E>—Before awarding any contract, including purchase orders, involving ammunition and explosives, obtain a preaward ammunition and explosives safety survey. If the prospective contractor proposes subcontracting any ammunitions or explosive work, include a review of the subcontractor's facility in the preaward survey.</P>
              <P>(b) <E T="03">Postaward phase</E>—(1) <E T="03">Contract administration office responsibility</E>. (i) The contract administration office is responsible for verifying that the safety requirements of the clause at 252.223-7002, Safety Precautions for Ammunition and Explosives, are being implemented in a manner that will reduce, to the maximum extent practicable, or eliminate the probability of a mishap occurring.</P>
              <P>(ii) The clause at 252.223-7002, Safety Precautions for Ammunition and Explosives, requires the contractor to submit to the administrative contracting officer (ACO) any postaward requests for a waiver of the contract safety standards, a site plan modification, or a construction review. The ACO shall review any request and make recommendations to the contracting officer. The contracting officer shall make a decision after considering recommendations of the ACO and safety personnel responsible for ammunition and explosive safety.</P>
              <P>(A) If the request arrives at the contracting office without evidence that the ACO has seen it, immediately send it to the ACO for review and recommendations.</P>
              <P>(B) When the contracting officer has made a determination approving or disapproving the contractor's request, send the determination to the ACO for transmission to the contractor.</P>
              <P>(2) <E T="03">Subcontracts</E>—(i) The clause at 252.223-7002, Safety Precautions for Ammunition and Explosives, requires the contractor to notify the contracting officer when placing a subcontract for ammunition and explosives. The contracting officer should coordinate with the safety personnel and request supporting contract administration in accordance with FAR 42.202(e). If the contracting officer believes the nature of the subcontract work poses a potential danger to Government property, Government personnel, production capability, or contract completion, request supporting contract administration.</P>
              <P>(ii) If the preaward safety survey identified areas in which a subcontractor was not complying with the manual, and the subcontractor was supposed to correct the deficiencies before start-up, the contracting officer shall require a preoperations survey to verify that the corrections were made.</P>
              <P>(iii) When postaward safety reviews by the Government uncover any safety deficiencies in the subcontractor's operation, the review team shall inform the ACO cognizant of the subcontractor, who shall immediately notify the ACO cognizant of the prime contractor. The ACO cognizant of the prime shall inform the prime contractor of deficiencies requiring correction. The notifications shall be made by the most expeditious means appropriate to the circumstance. If a critical safety deficiency poses an imminent danger, the ACO cognizant of the prime shall make the notifications by the most expeditious means available.</P>
              <CITA>[56 FR 36365, July 31, 1991, as amended at 59 FR 27671, May 27, 1994; 64 FR 51076, Sept. 21, 1999]</CITA>
            </SECTION>
            <SECTION>
              <PRTPAGE P="161"/>
              <SECTNO>223.370-5</SECTNO>
              <SUBJECT>Contract clauses.</SUBJECT>
              <P>Use the clauses at 252.223-7002, Safety Precautions for Ammunition and Explosives, and 252.223-7003, Change in Place of Performance—Ammunition and Explosives, in all solicitations and contracts for acquisition to which this section applies.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 223.4—Use of Recovered Materials</HD>
            <SECTION>
              <SECTNO>223.405</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <P>(d) Departments and agencies must centrally collect information submitted in accordance with the clause at FAR 52.223-9 for reporting to the Office of the Deputy Under Secretary of Defense (Environmental Security).</P>
              <CITA>[66 FR 49864, Oct. 1, 2001]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 223.5—Drug-Free Workplace</HD>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>57 FR 32737, July 23, 1992, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>223.570</SECTNO>
              <SUBJECT>Drug-free work force.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>223.570-1</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <P>
                <E T="03">Employee in a sensitive position</E> and <E T="03">illegal drugs,</E> as used in this section, are defined in the clause at 252.223-7004, Drug-Free Work Force.</P>
            </SECTION>
            <SECTION>
              <SECTNO>223.570-2</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>DoD policy is to ensure that its contractors maintain a program for achieving a drug-free work force.</P>
            </SECTION>
            <SECTION>
              <SECTNO>223.570-3</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <P>(a) The use of illegal drugs is inconsistent with the law-abiding behavior expected of all citizens. Employees who use illegal drugs tend to be less productive, less reliable, and prone to greater absenteeism. The use of illegal drugs by contractor employees results in the potential for increased cost, delay, and risk in the performance of a Government contract.</P>
              <P>(b) If a contractor's employees use illegal drugs at any time, it can—</P>
              <P>(1) Impair their ability to perform tasks that are critical to proper contract performance;</P>
              <P>(2) Increase the potential for accidents and for failures that can pose a serious threat to the national security, health, and safety;</P>
              <P>(3) Cause less than the complete reliability, stability, and good judgment required of an individual who has access to sensitive information;</P>
              <P>(4) Create the possibility of coercion, influence, and irresponsible action under pressure that may post a serious risk to national security, health, and safety.</P>
            </SECTION>
            <SECTION>
              <SECTNO>223.570-4</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <P>(a) Use the clause at 252.223-7004, Drug-Free Work Force, in all solicitations and contracts—</P>
              <P>(1) That involve access to classified information; or</P>
              <P>(2) When the contracting officer determines that the clause is necessary for reasons of national security or for the purpose of protecting the health or safety of those using or affected by the product of, or performance of, the contract.</P>
              <P>(b) Do not use the clause in solicitations and contracts—</P>
              <P>(1) For commercial items;</P>
              <P>(2) When performance or partial performance will be outside the United States, its territories, and possessions, unless the contracting officer determines such inclusion to be in the best interest of the Government; or</P>
              <P>(3) When the value of the acquisition is at or below the simplified acquisition threshold.</P>
              <CITA>[57 FR 32737, July 23, 1992, as amended at 64 FR 2598, Jan. 15, 1999]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 223.8—Ozone-Depleting Substances</HD>
            <SECTION>
              <SECTNO>223.803</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>Section 211.271, Elimination of use of class I ozone-depleting substances, places restrictions on award or modification of DoD contracts requiring the use of class I ozone-depleting substances. These restrictions are in addition to any imposed by the Clean Air Act and apply after June 1, 1993, to all DoD contracts, regardless of place of performance.</P>
              <CITA>[61 FR 50452, Sept. 26, 1996]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <PRTPAGE P="162"/>
            <RESERVED>Subpart 223.70 [Reserved]</RESERVED>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 223.71—Storage and Disposal of Toxic and Hazardous Materials</HD>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>58 FR 28466, May 13, 1993, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>223.7100</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>10 U.S.C. 2692 prohibits storage or disposal of non-DoD-owned toxic or hazardous materials on DoD installations, except as provided in 223.7102. DoD Instruction 4715.6, Environmental Compliance, implements 10 U.S.C. 2692.</P>
              <CITA>[58 FR 28466, May 13, 1993, as amended at 67 FR 61516, Oct. 1, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>223.7101</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <P>(a) If the contracting officer is uncertain as to whether particular activities are prohibited or fall under one of the exceptions in 223.7102, the contracting officer should seek advice from the cognizant office of counsel.</P>
              <P>(b) When storage, treatment, or disposal of non-DoD-owned toxic or hazardous materials is authorized in accordance with this subpart, the contract or authorization should specify the types, conditions, and quantities of toxic or hazardous materials that may be temporarily stored, treated, or disposed of in connection with the contract or as a result of the authorized commercial use of a DoD industrial-type facility.</P>
              <CITA>[60 FR 61597, Nov. 30, 1995]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>223.7102</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
              <P>(a) The prohibition of 10 U.S.C. 2692 does not apply to—</P>
              <P>(1) The storage of strategic and critical materials in the National Defense Stockpile under an agreement for such storage with the Administrator of General Services Administration;</P>
              <P>(2) The temporary storage or disposal of explosives in order to protect the public or to assist agencies responsible for Federal law enforcement in storing or disposing of explosives when no alternative solution is available, if such storage or disposal is made in accordance with an agreement between the Secretary of Defense and the head of the Federal agency concerned;</P>
              <P>(3) The temporary storage or disposal of explosives in order to provide emergency lifesaving assistance to civil authorities;</P>
              <P>(4) The disposal of excess explosives produced under a DoD contract, if the head of the military department concerned determines, in each case, that an alternative feasible means of disposal is not available to the contractor, taking into consideration public safety, available resources of the contractor, and national defense production requirements;</P>
              <P>(5) The temporary storage of nuclear materials or nonnuclear classified materials in accordance with an agreement with the Secretary of Energy;</P>
              <P>(6) The storage of materials that constitute military resources intended to be used during peacetime civil emergencies in accordance with applicable DoD regulations;</P>
              <P>(7) The temporary storage of materials of other Federal agencies in order to provide assistance and refuge for commercial carriers of such material during a transportation emergency;</P>
              <P>(8) The storage of any material that is not owned by DoD, if the Secretary of the military department concerned determines that the material is required or generated by a private person in connection with the authorized and compatible use by that person of an industrial-type DoD facility; or</P>
              <P>(9) The treatment and disposal of any non-DoD-owned material if the Secretary of the military department concerned—</P>
              <P>(i) Determines that the material is required or generated by a private person in connection with the authorized and compatible commercial use by that person of an industrial-type facility of that military department; and</P>
              <P>(ii) Enters into a contract with that person that—</P>
              <P>(A) Is consistent with the best interest of national defense and environmental security; and</P>
              <P>(B) Provides for that person's continued financial and environmental responsibility and liability with regard to the material.</P>

              <P>(b) The Secretary of Defense, where DoD Instruction 4715.6 applies, may <PRTPAGE P="163"/>grant exceptions to the prohibition of 10 U.S.C. 2692 when essential to protect the health and safety of the public from imminent danger.</P>
              <CITA>[58 FR 28466, May 13, 1993, as amended at 60 FR 13076, Mar. 10, 1995; 60 FR 61597, Nov. 30, 1995; 67 FR 61516, Oct. 1, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>223.7103</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <P>(a) Use the clause at 252.223-7006, Prohibition on Storage and Disposal of Toxic and Hazardous Materials, in all solicitations and contracts which require, may require, or permit contractor performance on a DoD installation.</P>
              <P>(b) Use the clause at 252.223-7006 with its Alternate I, when the Secretary of the military department issues a determination under the exception at 223.7102(a)(9).</P>
              <CITA>[60 FR 13076, Mar. 10, 1995]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 223.72—Safeguarding Sensitive Conventional Arms, Ammunition, and Explosives</HD>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>61 FR 7743, Feb. 29, 1996, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>223.7200</SECTNO>
              <SUBJECT>Definition.</SUBJECT>
              <P>“Arms, ammunition, and explosives (AA&amp;E),” as used in this subpart, means those items within the scope (chapter 1, paragraph B) of DoD 5100.76-M, Physical Security of Sensitive Conventional Arms, Ammunition, and Explosives.</P>
            </SECTION>
            <SECTION>
              <SECTNO>223.7201</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>(a) The requirements of DoD 5100.76-M, Physical Security of Sensitive Conventional Arms, Ammunition, and Explosives, shall be applied to contracts when—</P>
              <P>(1) AA&amp;E will be provided to the contractor or subcontractor as Government-furnished property; or</P>
              <P>(2) The principal development, production, manufacture, or purchase of AA&amp;E is for DoD use.</P>
              <P>(b) The requirements of DoD 5100.76-M need not be applied to contracts when—</P>
              <P>(1) The AA&amp;E to be acquired under the contract is a commercial item within the meaning of FAR 2.101; or</P>
              <P>(2) The contract will be performed in a Government-owned contractor-operated ammunition production facility. However, if subcontracts issued under such a contract will meet the criteria of paragraph (a) of this section, the requirements of DoD 5100.76-M shall apply.</P>
            </SECTION>
            <SECTION>
              <SECTNO>223.7202</SECTNO>
              <SUBJECT>Preaward responsibilities.</SUBJECT>
              <P>When an acquisition involves AA&amp;E, technical or requirements personnel shall specify in the purchase request—</P>
              <P>(a) That AA&amp;E is involved; and</P>
              <P>(b) Which physical security requirements of DoD 5100.76-M apply.</P>
            </SECTION>
            <SECTION>
              <SECTNO>223.7203</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <P>Use the clause at 252.223-7007, Safeguarding Sensitive Conventional Arms, Ammunition, and Explosives, in all solicitations and contracts to which DoD 5100.76-M applies, in accordance with the policy at 223.7201. Complete paragraph (b) of the clause based on information provided by cognizant technical or requirements personnel.</P>
              <CITA>[61 FR 7743, Feb. 29, 1996; 61 FR 18195, Apr. 24, 1996]</CITA>
            </SECTION>
          </SUBPART>
        </PART>
        <PART>
          <EAR>Pt. 224</EAR>
          <HD SOURCE="HED">PART 224—PROTECTION OF PRIVACY AND FREEDOM OF INFORMATION</HD>
          <CONTENTS>
            <SUBPART>
              <HD SOURCE="HED">Subpart 224.1—Protection of Individual Privacy</HD>
              <SECHD>Sec.</SECHD>
              <SECTNO>224.102</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <SECTNO>224.103</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 224.2—Freedom of Information Act</HD>
              <SECTNO>224.203</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
            </SUBPART>
          </CONTENTS>
          <AUTH>
            <HD SOURCE="HED">Authority:</HD>
            <P>41 U.S.C. 421 and 48 CFR chapter 1.</P>
          </AUTH>
          <SOURCE>
            <HD SOURCE="HED">Source:</HD>
            <P>56 FR 36367, July 31, 1991, unless otherwise noted.</P>
          </SOURCE>
          <SUBPART>
            <HD SOURCE="HED">Subpart 224.1—Protection of Individual Privacy</HD>
            <SECTION>
              <SECTNO>224.102</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <P>The Act does not apply to—</P>
              <P>(1) Systems of records the contractor maintains on its employees; or</P>

              <P>(2) The records generated by a State or private educational organization under a contract with the Government <PRTPAGE P="164"/>to provide training, when the records (admission forms, grade reports) are similar to and commingled with those maintained on other students.</P>
            </SECTION>
            <SECTION>
              <SECTNO>224.103</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <P>(b)(2) DoD rules and regulations are contained in DoDD 5400.11, Department of Defense Privacy Program, and DoD 5400.11-R, Department of Defense Privacy Program.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 224.2—Freedom of Information Act</HD>
            <SECTION>
              <SECTNO>224.203</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>(a) DoD implementation is in DoDD 5400.7, DoD Freedom of Information Act Program, and DoD 5400.7-R, DoD Freedom of Information Act Program.</P>
              <CITA>[56 FR 36367, July 31, 1991. Redesignated at 62 FR 34122, June 24, 1997]</CITA>
            </SECTION>
          </SUBPART>
        </PART>
        <PART>
          <EAR>Pt. 225</EAR>
          <HD SOURCE="HED">PART 225—FOREIGN ACQUISITION</HD>
          <CONTENTS>
            <SECHD>Sec.</SECHD>
            <SECTNO>225.000</SECTNO>
            <SUBJECT>Scope of part.</SUBJECT>
            <SECTNO>225.001</SECTNO>
            <SUBJECT>General.</SUBJECT>
            <SECTNO>225.003</SECTNO>
            <SUBJECT>Definitions.</SUBJECT>
            <SUBPART>
              <HD SOURCE="HED">Subpart 225.1—Buy American Act—Supplies</HD>
              <SECTNO>225.103</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
              <SECTNO>225.104</SECTNO>
              <SUBJECT>Nonavailable articles.</SUBJECT>
              <SECTNO>225.170</SECTNO>
              <SUBJECT>Acquisition from or through other Government agencies.</SUBJECT>
              <SECTNO>225.171</SECTNO>
              <SUBJECT>Solicitations.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 225.2—Buy American Act—Construction Materials</HD>
              <SECTNO>225.202</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
              <SECTNO>225.206</SECTNO>
              <SUBJECT>Noncompliance.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 225.4—Trade Agreements</HD>
              <SECTNO>225.401</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
              <SECTNO>225.401-70</SECTNO>
              <SUBJECT>Products subject to trade agreement acts.</SUBJECT>
              <SECTNO>225.402</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <SECTNO>225.403</SECTNO>
              <SUBJECT>Trade Agreements Act.</SUBJECT>
              <SECTNO>225.408</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 225.5—Evaluating Foreign Offers—Supply Contracts</HD>
              <SECTNO>225.502</SECTNO>
              <SUBJECT>Application.</SUBJECT>
              <SECTNO>225.504</SECTNO>
              <SUBJECT>Evaluation examples.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 225.7—Prohibited Sources</HD>
              <SECTNO>225.701</SECTNO>
              <SUBJECT>Restrictions.</SUBJECT>
              <SECTNO>225.770</SECTNO>
              <SUBJECT>Secondary Arab boycott of Israel.</SUBJECT>
              <SECTNO>225.770-1</SECTNO>
              <SUBJECT>Restriction.</SUBJECT>
              <SECTNO>225.770-2</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <SECTNO>225.770-3</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
              <SECTNO>225.770-4</SECTNO>
              <SUBJECT>Waivers.</SUBJECT>
              <SECTNO>225.770-5</SECTNO>
              <SUBJECT>Solicitation provision and contract clause.</SUBJECT>
              <SECTNO>225.771</SECTNO>
              <SUBJECT>Prohibition on acquisition from the People's Republic of China.</SUBJECT>
              <SECTNO>225.771-1</SECTNO>
              <SUBJECT>Definition.</SUBJECT>
              <SECTNO>225.771-2</SECTNO>
              <SUBJECT>Legal authority.</SUBJECT>
              <SECTNO>225.771-3</SECTNO>
              <SUBJECT>Prohibition on contract award.</SUBJECT>
              <SECTNO>225.771-4</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <SECTNO>225.771-5</SECTNO>
              <SUBJECT>Solicitation provision.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 225.8—Other International Agreements and Coordination</HD>
              <SECTNO>225.801</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <SECTNO>225.802</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <SECTNO>225.802-70</SECTNO>
              <SUBJECT>Contracts for performance outside the United States and Canada.</SUBJECT>
              <SECTNO>225.802-71</SECTNO>
              <SUBJECT>End user certificates.</SUBJECT>
              <SECTNO>225.870</SECTNO>
              <SUBJECT>Contracting with Canadian contractors.</SUBJECT>
              <SECTNO>225.870-1</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <SECTNO>225.870-2</SECTNO>
              <SUBJECT>Solicitation of Canadian contractors.</SUBJECT>
              <SECTNO>225.870-3</SECTNO>
              <SUBJECT>Submission of offers.</SUBJECT>
              <SECTNO>225.870-4</SECTNO>
              <SUBJECT>Contracting procedures.</SUBJECT>
              <SECTNO>225.870-5</SECTNO>
              <SUBJECT>Contract administration.</SUBJECT>
              <SECTNO>225.870-6</SECTNO>
              <SUBJECT>Termination procedures.</SUBJECT>
              <SECTNO>225.870-7</SECTNO>
              <SUBJECT>Acceptance of Canadian supplies.</SUBJECT>
              <SECTNO>225.870-8</SECTNO>
              <SUBJECT>Industrial security.</SUBJECT>
              <SECTNO>225.871</SECTNO>
              <SUBJECT>North Atlantic Treaty Organization (NATO) cooperative projects.</SUBJECT>
              <SECTNO>225.871-1</SECTNO>
              <SUBJECT>Scope.</SUBJECT>
              <SECTNO>225.871-2</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <SECTNO>225.871-3</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <SECTNO>225.871-4</SECTNO>
              <SUBJECT>Statutory waivers.</SUBJECT>
              <SECTNO>225.871-5</SECTNO>
              <SUBJECT>Directed subcontracting.</SUBJECT>
              <SECTNO>225.871-6</SECTNO>
              <SUBJECT>Disposal of property.</SUBJECT>
              <SECTNO>225.871-7</SECTNO>
              <SUBJECT>Congressional notification.</SUBJECT>
              <SECTNO>225.872</SECTNO>
              <SUBJECT>Contracting with qualifying country sources.</SUBJECT>
              <SECTNO>225.872-1</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <SECTNO>225.872-2</SECTNO>
              <SUBJECT>Applicability.</SUBJECT>
              <SECTNO>225.872-3</SECTNO>
              <SUBJECT>Solicitation procedures.</SUBJECT>
              <SECTNO>225.872-4</SECTNO>
              <SUBJECT>Evaluation of offers.</SUBJECT>
              <SECTNO>225.872-5</SECTNO>
              <SUBJECT>Contract administration.</SUBJECT>
              <SECTNO>225.872-6</SECTNO>
              <SUBJECT>Audit.</SUBJECT>
              <SECTNO>225.872-7</SECTNO>
              <SUBJECT>Industrial security for qualifying countries.</SUBJECT>
              <SECTNO>225.872-8</SECTNO>
              <SUBJECT>Subcontracting with qualifying country sources.</SUBJECT>
              <SECTNO>225.873</SECTNO>
              <SUBJECT>Waiver of United Kingdom commercial exploitation levies.</SUBJECT>
              <SECTNO>225.873-1</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>225.873-2</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <SECTNO>225.873-3</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 225.9—Customs and Duties</HD>
              <SECTNO>225.901</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>225.902</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <SECTNO>225.903</SECTNO>
              <SUBJECT>Exempted supplies.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <PRTPAGE P="165"/>
              <HD SOURCE="HED">Subpart 225.10—Additional Foreign Acquisition Regulations</HD>
              <SECTNO>225.1070</SECTNO>
              <SUBJECT>Clause deviations in overseas contracts.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 225.11—Solicitation Provisions and Contract Clauses</HD>
              <SECTNO>225.1101</SECTNO>
              <SUBJECT>Acquisition of supplies.</SUBJECT>
              <SECTNO>225.1103 </SECTNO>
              <SUBJECT>Other provisions and clauses.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 225.70—Authorization Acts, Appropriations Acts, and Other Statutory Restrictions on Foreign Acquisition</HD>
              <SECTNO>225.7000</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <SECTNO>225.7001</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <SECTNO>225.7002-1</SECTNO>
              <SUBJECT>Restrictions.</SUBJECT>
              <SECTNO>225.7002-2</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
              <SECTNO>225.7002-3</SECTNO>
              <SUBJECT>Contract clauses.</SUBJECT>
              <SECTNO>225.7003</SECTNO>
              <SUBJECT>Restriction on overseas military construction.</SUBJECT>
              <SECTNO>225.7004</SECTNO>
              <SUBJECT>Restriction on overseas architect-engineer services.</SUBJECT>
              <SECTNO>225.7005</SECTNO>
              <SUBJECT>Waiver of certain restrictions.</SUBJECT>
              <SECTNO>225.7006</SECTNO>
              <SUBJECT>Restrictions on construction or repair of vessels in foreign shipyards.</SUBJECT>
              <SECTNO>225.7007</SECTNO>
              <SUBJECT>Restriction on acquisition of foreign buses.</SUBJECT>
              <SECTNO>225.7007-1</SECTNO>
              <SUBJECT>Restriction.</SUBJECT>
              <SECTNO>225.7007-2</SECTNO>
              <SUBJECT>Applicability.</SUBJECT>
              <SECTNO>225.7007-3</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
              <SECTNO>225.7007-4</SECTNO>
              <SUBJECT>Waiver.</SUBJECT>
              <SECTNO>225.7008</SECTNO>
              <SUBJECT>Restriction on research and development.</SUBJECT>
              <SECTNO>225.7009</SECTNO>
              <SUBJECT>[Reserved]</SUBJECT>
              <SECTNO>225.7010</SECTNO>
              <SUBJECT>Restriction on certain chemical weapons antidote.</SUBJECT>
              <SECTNO>225.7010-1</SECTNO>
              <SUBJECT>Restriction.</SUBJECT>
              <SECTNO>225.7010-2</SECTNO>
              <SUBJECT>Exception.</SUBJECT>
              <SECTNO>225.7010-3</SECTNO>
              <SUBJECT>Waiver.</SUBJECT>
              <SECTNO>225.7011</SECTNO>
              <SUBJECT>Restriction on Ballistic Missile Defense research, development, test, and evaluation.</SUBJECT>
              <SECTNO>225.7011-1</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <SECTNO>225.7011-2</SECTNO>
              <SUBJECT>Restriction.</SUBJECT>
              <SECTNO>225.7011-3</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
              <SECTNO>225.7011-4</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <SECTNO>225.7011-5</SECTNO>
              <SUBJECT>Solicitation provision.</SUBJECT>
              <SECTNO>225.7012</SECTNO>
              <SUBJECT>Restrictions on anchor and mooring chain.</SUBJECT>
              <SECTNO>225.7012-1</SECTNO>
              <SUBJECT>Restrictions.</SUBJECT>
              <SECTNO>225.7012-2</SECTNO>
              <SUBJECT>Waiver.</SUBJECT>
              <SECTNO>225.7012-3</SECTNO>
              <SUBJECT>Contract clauses.</SUBJECT>
              <SECTNO>225.7013-225.7014</SECTNO>
              <SUBJECT>[Reserved]</SUBJECT>
              <SECTNO>225.7015</SECTNO>
              <SUBJECT>Restriction on night vision image intensifier tubes and devices.</SUBJECT>
              <SECTNO>225.7015-1</SECTNO>
              <SUBJECT>Restriction.</SUBJECT>
              <SECTNO>225.7015-2</SECTNO>
              <SUBJECT>Exception.</SUBJECT>
              <SECTNO>225.7015-3</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <SECTNO>225.7016</SECTNO>
              <SUBJECT>Restriction on air circuit breakers for naval vessels.</SUBJECT>
              <SECTNO>225.7016-1</SECTNO>
              <SUBJECT>Restriction.</SUBJECT>
              <SECTNO>225.7016-2</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
              <SECTNO>225.7016-3</SECTNO>
              <SUBJECT>Waiver.</SUBJECT>
              <SECTNO>225.7016-4</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <SECTNO>225.7017</SECTNO>
              <SUBJECT>Restriction on carbon, alloy, and armor steel plate.</SUBJECT>
              <SECTNO>225.7017-1</SECTNO>
              <SUBJECT>Restriction.</SUBJECT>
              <SECTNO>225.7017-2</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
              <SECTNO>225.7017-3</SECTNO>
              <SUBJECT>Waiver.</SUBJECT>
              <SECTNO>225.7017-4</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <SECTNO>225.7018</SECTNO>
              <SUBJECT>Restriction on four ton dolly jacks.</SUBJECT>
              <SECTNO>225.7018-1</SECTNO>
              <SUBJECT>Restriction.</SUBJECT>
              <SECTNO>225.7018-2</SECTNO>
              <SUBJECT>Waiver.</SUBJECT>
              <SECTNO>225.7018-3</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <SECTNO>225.7019</SECTNO>
              <SUBJECT>Restrictions on ball and roller bearings.</SUBJECT>
              <SECTNO>225.7019-1</SECTNO>
              <SUBJECT>Restrictions.</SUBJECT>
              <SECTNO>225.7019-2</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
              <SECTNO>225.7019-3</SECTNO>
              <SUBJECT>Waiver.</SUBJECT>
              <SECTNO>225.7019-4</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <SECTNO>225.7020</SECTNO>
              <SUBJECT>Restriction on vessel propellers.</SUBJECT>
              <SECTNO>225.7020-1</SECTNO>
              <SUBJECT>Restriction.</SUBJECT>
              <SECTNO>225.7020-2</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
              <SECTNO>225.7020-3</SECTNO>
              <SUBJECT>Waiver.</SUBJECT>
              <SECTNO>225.7020-4</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <SECTNO>225.7021</SECTNO>
              <SUBJECT>Restriction on aircraft fuel cells.</SUBJECT>
              <SECTNO>225.7021-1</SECTNO>
              <SUBJECT>Restriction.</SUBJECT>
              <SECTNO>225.7021-2</SECTNO>
              <SUBJECT>Waiver.</SUBJECT>
              <SECTNO>225.7021-3</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <SECTNO>225.7022</SECTNO>
              <SUBJECT>Restrictions on totally enclosed lifeboat survival systems.</SUBJECT>
              <SECTNO>225.7022-1</SECTNO>
              <SUBJECT>Restrictions.</SUBJECT>
              <SECTNO>225.7022-2</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
              <SECTNO>225.7022-3</SECTNO>
              <SUBJECT>Waiver.</SUBJECT>
              <SECTNO>225.7022-4</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <SECTNO>225.7023</SECTNO>
              <SUBJECT>Restriction on supercomputers.</SUBJECT>
              <SECTNO>225.7023-1</SECTNO>
              <SUBJECT>Restriction.</SUBJECT>
              <SECTNO>225.7023-2</SECTNO>
              <SUBJECT>Waiver.</SUBJECT>
              <SECTNO>225.7023-3</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 225.71—Other Restrictions on Foreign Acquisition</HD>
              <SECTNO>225.7100</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <SECTNO>225.7101</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <SECTNO>225.7102</SECTNO>
              <SUBJECT>Forgings.</SUBJECT>
              <SECTNO>225.7102-1</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>225.7102-2</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
              <SECTNO>225.7102-3</SECTNO>
              <SUBJECT>Waiver.</SUBJECT>
              <SECTNO>225.7102-4</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <SECTNO>225.7103</SECTNO>
              <SUBJECT>Polyacrylonitrile (PAN) carbon fiber.</SUBJECT>
              <SECTNO>225.7103-1</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>225.7103-2</SECTNO>
              <SUBJECT>Waivers.</SUBJECT>
              <SECTNO>225.7103-3</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 225.72—Reporting Contract Performance Outside the United States</HD>
              <SECTNO>225.7200</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <SECTNO>225.7201</SECTNO>
              <SUBJECT>Exception.</SUBJECT>
              <SECTNO>225.7202</SECTNO>
              <SUBJECT>Distribution of reports.</SUBJECT>
              <SECTNO>225.7203</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 225.73—Acquisitions for Foreign Military Sales</HD>
              <SECTNO>225.7300</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <SECTNO>225.7301</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <SECTNO>225.7302</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <SECTNO>225.7303</SECTNO>
              <SUBJECT>Pricing acquisitions for FMS.<PRTPAGE P="166"/>
              </SUBJECT>
              <SECTNO>225.7303-1</SECTNO>
              <SUBJECT>Contractor sales to other foreign customers.</SUBJECT>
              <SECTNO>225.7303-2</SECTNO>
              <SUBJECT>Cost of doing business with a foreign government or an international organization.</SUBJECT>
              <SECTNO>225.7303-3</SECTNO>
              <SUBJECT>Government-to-government agreements.</SUBJECT>
              <SECTNO>225.7303-4</SECTNO>
              <SUBJECT>Contingent fees.</SUBJECT>
              <SECTNO>225.7303-5</SECTNO>
              <SUBJECT>Acquisitions wholly paid for from nonrepayable funds.</SUBJECT>
              <SECTNO>225.7304</SECTNO>
              <SUBJECT>Source selection.</SUBJECT>
              <SECTNO>225.7305</SECTNO>
              <SUBJECT>Limitation of liability.</SUBJECT>
              <SECTNO>225.7306</SECTNO>
              <SUBJECT>Exercise of options for FMS.</SUBJECT>
              <SECTNO>225.7307</SECTNO>
              <SUBJECT>Offset arrangements.</SUBJECT>
              <SECTNO>225.7308</SECTNO>
              <SUBJECT>Contract clauses.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 225.74—Antiterrorism/Force Protection Policy for Defense Contractors Outside the United States</HD>
              <SECTNO>225.7400</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <SECTNO>225.7401</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <SECTNO>225.7402</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart 225.75—Balance of Payments Program</HD>
              <SECTNO>225.7500</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <SECTNO>225.7501</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>225.7502</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <SECTNO>225.7503</SECTNO>
              <SUBJECT>Contract clauses.</SUBJECT>
            </SUBPART>
          </CONTENTS>
          <AUTH>
            <HD SOURCE="HED">Authority:</HD>
            <P>41 U.S.C. 421 and 48 CFR chapter 1.</P>
          </AUTH>
          <SOURCE>
            <HD SOURCE="HED">Source:</HD>
            <P>56 FR 36367, July 31, 1991, unless otherwise noted.</P>
          </SOURCE>
          <SECTION>
            <SECTNO>225.000</SECTNO>
            <SUBJECT>Scope of part.</SUBJECT>
            <P>This part also provides policy and procedures for—</P>
            <P>(1) Purchasing foreign defense supplies, services, and construction materials;</P>
            <P>(2) Foreign military sale acquisitions;</P>
            <P>(3) Coordinating acquisitions involving work to be performed in foreign countries;</P>
            <P>(4) Cooperative programs.</P>
          </SECTION>
          <SECTION>
            <SECTNO>225.001</SECTNO>
            <SUBJECT>General.</SUBJECT>
            <P>To apply the policies and procedures of this part, analyze and evaluate offers of foreign end products generally as follows:</P>
            <P>(1) <E T="03">Statutory or policy restrictions.</E>
            </P>
            <P>(i) Determine whether the product is restricted by—</P>
            <P>(A) Defense authorization or appropriations acts (see subpart 225.70); or</P>
            <P>(B) DoD policy (see subpart 225.71 and FAR 6.302-3).</P>
            <P>(ii) Where an exception to or waiver of a restriction would result in award of a foreign end product, apply the policies and procedures of the Buy American Act or the Balance of Payments Program, and, if applicable the trade agreements.</P>
            <P>(2) <E T="03">Memoranda of understanding or other international agreements.</E>
            </P>
            <P>(i) Determine whether the offered product is the product of one of the countries (qualifying country), listed in 225.872-1.</P>
            <P>(ii) If the product is the product of a qualifying country, evaluate the offer under subpart 225.5 and 225.872-4.</P>
            <P>(3) <E T="03">Trade agreements.</E>
            </P>
            <P>(i) Determine whether the product is covered by the Trade Agreements Act or the North American Free Trade Agreement Implementation Act (see subpart 225.4).</P>
            <P>(ii) If the product is an eligible product under subpart 225.4,evaluate the offer under subpart 225.5.</P>
            <P>(iii) If the product is not an eligible product, a qualifying country end product, or a U.S. made end product, purchase of the foreign end product may be prohibited (see FAR 25.403(c) and 225.403(c).</P>
            <P>(4) <E T="03">Contractors controlled by terrorist nations.</E>
            </P>
            <P>(i) Determine whether the contractor is controlled by a terrorist nation.</P>
            <P>(ii) If the contractor is controlled by a terrorist nation, comply with 209.104-1(g).</P>
            <P>(5) <E T="03">Buy American Act and Balance of Payments Program.</E> See the evaluation procedures in subpart 225.5.</P>
            <CITA>[65 FR 19850, Apr. 13, 2000]</CITA>
          </SECTION>
          <SECTION>
            <SECTNO>225.003</SECTNO>
            <SUBJECT>Definitions.</SUBJECT>
            <P>As used in this part—</P>
            <P>(1) “Caribbean Basin country end product” includes petroleum or any product derived from petroleum.</P>
            <P>(2) “Defense equipment” means any equipment, item of supply, component, or end product purchased by the DoD.</P>
            <P>(3) “Domestic concern” means—</P>

            <P>(i) A concern incorporated in the United States (including a subsidiary that is incorporated in the United States, even if the parent corporation is a foreign concern); or<PRTPAGE P="167"/>
            </P>
            <P>(ii) An unincorporated concern having its principal place of business in the United States.</P>
            <P>(4) “Domestic end product” has the meaning given in the clauses at 252.225-7001, Buy American Act and Balance of Payments Program; 252.225-7007, Buy American Act—Trade Agreements—Balance of Payments Program; and 252.225-7036, Buy American Act—North American Free Trade Agreement Implementation Act—Balance of Payments Program, instead of the meaning in FAR 25.003.</P>
            <P>(5) “Eligible product” means, instead of the definition at FAR 25.003, a designated, NAFTA, or Caribbean Basin country end product in the categories listed in 225.401-70.</P>
            <P>(6) “Foreign concern” means any concern other than a domestic concern.</P>
            <P>(7) “Nondesignated country end product” means any end product which is not a U.S. made end product or a designated country end product.</P>
            <P>(8) “Nonqualifying country” means a country other than the United States or a qualifying country.</P>
            <P>(9) “Nonqualifying country end product” means an end product which is neither a domestic nor qualifying country end product.</P>
            <P>(10) “Nonqualifying country offer” means an offer of a nonqualifying country end products, including the price of transportation to destination.</P>
            <P>(11) “Qualifying country’ is a term used to describe certain countries with memoranda of understanding or international agreements with the United States. These countries are listed in 225.872-1.</P>
            <P>(12) “Qualifying country component” and “qualifying country end product” are defined in the clauses at 252.225-7001, Buy American Act and Balance of Payments Program; 252.225-7007. Buy Americn Act—Trade Agreements—Balance of Payments Program; and 252.225-7036, Buy American Act—North American Free Trade Agreement Implementation Act—Balance of Payments Program. “Qualifying country end product” is also defined in the clause at 252.225-7021, Trade Agreements.</P>
            <P>(13) “Qualifying country offer” means an offer of a qualifying country end product, including the price of transportation to destination.</P>
            <P>(14) “Source” when restricted by such words as foreign, domestic, qualifying country, etc., refers to the actual manufacturer or producer of the end product or component.</P>
            <CITA>[65 FR 19850, Apr. 13, 2000, as amended at 67 FR 20694, Apr. 26, 2002]</CITA>
          </SECTION>
          <SUBPART>
            <HD SOURCE="HED">Subpart 225.1—Buy American Act—Supplies</HD>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>65 FR 19850, Apr. 13, 2000, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>225.103</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
              <P>(a)(1)(A) Specific public interest exceptions for DoD for certain countries are in 225.872.</P>
              <P>(B) The Under Secretary of Defense (Acquisition, Technology, and Logistics) has determined that, for procurements subject to the Trade Agreements Act, it is inconsistent with the public interest to apply the Buy American Act to information technology products in Federal Supply Group 70 or 74 that are substantially transformed in the United States.</P>
              <P>(ii)(A) Normally, use the evaluation procedures in subpart 225.5, but consider recommending a public interest exception where the purposes of the Buy American Act are not served, or in order to meet a need set forth in 10 U.S.C. 2533. For example, a public interest exception may be appropriate—</P>
              <P>
                <E T="03">(1)</E> If accepting the low domestic offer will involve substantial foreign expenditures, or accepting the low foreign offer will involve substantial domestic expenditures;</P>
              <P>
                <E T="03">(2)</E> To ensure access to advanced state-of-the-art commercial technology; or</P>
              <P>
                <E T="03">(3)</E> To maintain the same source of supply for spare and replacement parts (also see paragraph (b)(iii)(B) of this section)—</P>
              <P>
                <E T="03">(i)</E> For an end item that qualifies as an American good; or</P>
              <P>
                <E T="03">(ii)</E> In order not to impair intergration of the military and commerical industrial base.</P>

              <P>(B) A determination whether to grant a public interest exception shall be <PRTPAGE P="168"/>made after consideration of the factors in 10 U.S.C. 2533—</P>
              <P>
                <E T="03">(1)</E> At a level above the contracting officer for acquisitions valued at less than $100,000;</P>
              <P>
                <E T="03">(2)</E> By the head of the contracting activity for acquisitions valued at $100,000 or more but less than $1,000,000; or</P>
              <P>
                <E T="03">(3)</E> By the agency head for acquisitions valued at $1,000,000 or more.</P>
              <P>(b)(i) A determination that an article, material, or supply is not reasonably available is required where no domestic offer is received or when domestic offers are insufficient to meet the requirement and award is to be made on a nonqualifying country end product.</P>
              <P>(ii) Except as provided in FAR 25.103(b)(3), the determination must be approved—</P>
              <P>(A) At a level above the contracting officer, if the acquisition is estimated not to exceed $25,000;</P>
              <P>(B) By the chief of the contracting officer if the acquisition is estimated not to exceed $250,000;</P>
              <P>(C) By the head of the contracting activity (HCA) or immediate deputy if the acquisition is estimated not to exceed $2 million; or</P>
              <P>(D) By the head of the agency, or designee at a level no lower than an HCA, if the acquisition is estimated to exceed $2 million.</P>
              <P>(iii) A determination as to whether an article, material, or supply is reasonably available is not required for—</P>
              <P>(A) End products or components listed in 225.104(a)(iii) or FAR 25.104(a);</P>
              <P>(B) Acquisitions for spare/replacement parts when the acquisition is restricted to the original manufacturer or supplier; or</P>
              <P>(C) Acquisition of foreign drugs by the Defense Supply Center, Philadelphia, when the Director, Pharmaceuticals Group, Directorate of Medical Materiel, determines that only the requested foreign drug will fulfill the requirements.</P>
              <P>(iv) Under coordinated acquisition (see Subpart 208.70), the determination is the responsibility of the requiring department when the requiring department specifies acquisition of a foreign end product.</P>
              <P>(c) The cost of a domestic end product is unreasonable if it is not the low evaluated offer when evaluated under Subpart 225.5.</P>
              <CITA>[65 FR 19850, Apr. 13, 2000, as amended at 65 FR 39705, June 27, 2000; 67 FR 49252, July 30, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.104</SECTNO>
              <SUBJECT>Nonavailable articles.</SUBJECT>
              <P>(a)(i) DoD has determined that the articles, materials, and supplies listed in FAR 25.104(a) and in paragraph (a)(iii) of this section, when purchased as end items or components, are not mined, produced, or manufactured in the United States in sufficient and reasonably available commercial quantities of a satisfactory quality. Regard these items or components as being of domestic origin when incorporated in—</P>
              <P>(A) An end product or construction material manufactured in the United States; or</P>
              <P>(B) A qualifying country end product or construction material. (For construction material, see FAR Subpart 25.2.)</P>
              <P>(ii) Scrap is domestic in origin if generated in, collected in, and prepared for processing in the United States.</P>
              <P>(iii)(A) Aluminum clad steel wire.</P>
              <P>(B) Sperm oil.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.170</SECTNO>
              <SUBJECT>Acquisition from or through other Government agencies.</SUBJECT>
              <P>Contracting activities must apply the evaluation procedures in subpart 225.5 when using Federal supply schedules.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.171</SECTNO>
              <SUBJECT>Solicitations.</SUBJECT>
              <P>(a) For oral solicitations, inform prospective vendors that only domestic and qualifying country end products are acceptable, except nonqualifying country end products are acceptable if—</P>
              <P>(1) The items are excepted either on a blanket or an individual basis; or</P>
              <P>(2) The price of the nonqualifying country end product is the low offer under the evaluation procedures in subpart 225.5.</P>
              <P>(b) When only domestic end products are acceptable, the solicitation must make a statement to that effect.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <PRTPAGE P="169"/>
            <HD SOURCE="HED">Subpart 225.2—Buy American Act—Construction Materials</HD>
            <SECTION>
              <SECTNO>225.202</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
              <P>(a)(2) A nonavailability determination is not required for construction materials listed in FAR 25.104(a) or in 225.104(a)(iii). For other materials, a nonavailability determination must be approved at the levels specified in 225.103(b)(ii). Use the estimated value of the construction materials to determine the approval level.</P>
              <CITA>[65 FR 19851, Apr. 13, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.206</SECTNO>
              <SUBJECT>Noncompliance.</SUBJECT>
              <P>(c)(4) Prepare any report of noncompliance in accordance with the procedures at 209.406-3 or 209.407-3.</P>
              <CITA>[64 FR 62986, Nov. 18, 1999]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 225.4—Trade Agreements</HD>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>65 FR 19852, Apr. 13, 2000, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>225.401</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
              <P>(b)(i) If a department or agency considers an individual acquisition of a product to be indispensable for national security or national defense purposes and appropriate for exclusion from the provisions of FAR subpart 25.4, it may submit a request with supporting rationale to the Director of Defense Procurement (USD (AT&amp;L) DP).</P>
              <P>(ii) The following national security/national defense exceptions do not require approval by USD (AT&amp;L) DP:</P>
              <P>(A) Where purchase from foreign sources is restricted by the DoD annual appropriations or authorization acts (see subpart 225.70) or by the establishment of required sources of supplies and services under FAR part 8.</P>
              <P>(B) Where competition from foreign sources is restricted under the authority of FAR 6.302-3(a)(2)(i). Provide USD (AT&amp;L) DP a copy of the justification for restricting competition (see FAR 6.303-1(d)).</P>
              <P>(C) Where competition from foreign sources is restricted under subpart 225.71.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.401-70</SECTNO>
              <SUBJECT>Products subject to trade agreement acts.</SUBJECT>
              <P>Foreign end products subject to the Trade Agreements Act and NAFTA are those in the following Federal supply groups (FSG). If a product is not in one of the listed groups, the Trade Agreements Act and NAFTA do not apply. The definition of Caribbean Basin country end products in FAR 25.003 excludes those end products that are not eligible for duty-free treatment under 19 U.S.C. 2703(b). However, 225.003 expands the definition of Caribbean Basin country end products to include petroleum and any product derived from petroleum. The list of products has been annotated to indicate those products that are eligible for designated and NAFTA countries, but are not presently eligible for Caribbean Basin countries.</P>
              <GPOTABLE CDEF="xls20,r25" COLS="2" OPTS="L0,p7,7/8,g1,t1,i1">
                <BOXHD>
                  <CHED H="1">FSG</CHED>
                  <CHED H="1">Category/Description</CHED>
                </BOXHD>
                <ROW>
                  <ENT I="01">22</ENT>
                  <ENT>Railway equipment</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">23</ENT>
                  <ENT>Motor vehicles, trailers, and cycles (except 2350 and buses under 2310)</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">24</ENT>
                  <ENT>Tractors</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">25</ENT>
                  <ENT>Vehicular equipment components</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">26</ENT>
                  <ENT>Tires and tubes</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">29</ENT>
                  <ENT>Engine accessories</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">30</ENT>
                  <ENT>Mechanical power transmission equipment</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">32</ENT>
                  <ENT>Woodworking machinery and equipment</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">34</ENT>
                  <ENT>Metalworking machinery</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">35</ENT>
                  <ENT>Service and trade equipment</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">36</ENT>
                  <ENT>Special industry machinery (except 3690)</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">37</ENT>
                  <ENT>Agricultural machinery and equipment</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">38</ENT>
                  <ENT>Construction, mining, excavating, and highway maintenance equipment</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">39</ENT>
                  <ENT>Materials handling equipment</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">40</ENT>
                  <ENT>Rope, cable, chain and fittings</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">41</ENT>
                  <ENT>Refrigeration and air conditioning equipment</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">42</ENT>
                  <ENT>Fire fighting, rescue and safety equipment</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">43</ENT>
                  <ENT>Pumps and compressors</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">44</ENT>
                  <ENT>Furnace, steam plant and drying equipment (except 4470)</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">45</ENT>
                  <ENT>Plumbing, heating, and sanitation equipment</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">46</ENT>
                  <ENT>Water purification and sewage treatment equipment</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">47</ENT>
                  <ENT>Piping, tubing, hose, and fitting</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">48</ENT>
                  <ENT>Valves</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">49</ENT>
                  <ENT>Maintenance and repair shop equipment (except 4920-4927, 4931-4935, 4960)</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">53</ENT>
                  <ENT>Hardware and abrasives</ENT>
                </ROW>
                <ROW>
                  <PRTPAGE P="170"/>
                  <ENT I="01">54</ENT>
                  <ENT>Prefabricated structures and scaffolding</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">55</ENT>
                  <ENT>Lumber, millwork, plywood, and veneer</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">56</ENT>
                  <ENT>Construction and building materials</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">61</ENT>
                  <ENT>Electric wire, and power and distribution equipment</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">62</ENT>
                  <ENT>Lighting fixtures and lamps</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">63</ENT>
                  <ENT>Alarm and signal systems</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">65</ENT>
                  <ENT>Medical, dental, and veterinary equipment and supplies</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">66</ENT>
                  <ENT>Instruments and laboratory equipment (except aircraft clocks under 6645)—See FAR 25.003 exclusion of certain watches and watch parts for certain Caribbean Basin countries</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">67</ENT>
                  <ENT>Photographic equipment</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">68</ENT>
                  <ENT>Chemicals and chemical products</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">69</ENT>
                  <ENT>Training aids and devices</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">70</ENT>
                  <ENT>General purpose ADPE, software, supplies, and support equipment</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">71</ENT>
                  <ENT>Furniture</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">72</ENT>
                  <ENT>Household and commercial furnishings and appliances</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">73</ENT>
                  <ENT>Food preparation and serving equipment</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">74</ENT>
                  <ENT>Office machines, visible record equipment and ADP equipment</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">75</ENT>
                  <ENT>Office supplies and devices</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">76</ENT>
                  <ENT>Books, maps, and other publications</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">77</ENT>
                  <ENT>Musical instruments, phonographs, and home type radios</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">78</ENT>
                  <ENT>Recreational and athletic equipment</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">79</ENT>
                  <ENT>Cleaning equipment and supplies</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">80</ENT>
                  <ENT>Brushes, paints, sealers, and adhesives</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">81</ENT>
                  <ENT>Containers, packaging and packing supplies (except 8140)</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">84</ENT>
                  <ENT>Luggage (only 8460)—See FAR 25.003 for exclusion of luggage for Caribbean Basin countries</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">85</ENT>
                  <ENT>Toiletries</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">87</ENT>
                  <ENT>Agricultural supplies</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">88</ENT>
                  <ENT>Live animals</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">91</ENT>
                  <ENT>Fuels, oils, and waxes</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">93</ENT>
                  <ENT>Nonmetallic fabricated materials</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">94</ENT>
                  <ENT>Nonmetallic crude materials</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">96</ENT>
                  <ENT>Ores, minerals, and their primary products</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">99</ENT>
                  <ENT>Miscellaneous</ENT>
                </ROW>
              </GPOTABLE>
            </SECTION>
            <SECTION>
              <SECTNO>225.402</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <P>(1) To estimate the value of the acquisition, use the total estimated value of end products subject to trade agreement acts (see 225.401-70).</P>
              <P>(2) See subpart 225.5 for evaluation of eligible products and U.S. made end products, except when acquiring information technology end products in Federal Supply Group 70 or 74 that are subject to the Trade Agreements Act.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.403</SECTNO>
              <SUBJECT>Trade Agreements Act.</SUBJECT>
              <P>(c)(i) Except as provided in paragraphs (c)(ii) and (iii) of this section, do not purchase nondesignated country end products subject to the Trade Agreements Act unless they are NAFTA, Caribbean Basin, or qualifying country end products (see 225.872-1).</P>
              <P>(ii) The prohibition in paragraph (c)(i) of this section does not apply when the contracting officer determines that offers of U.S. made, qualifying country, or eligible products from responsive, responsible offerors are either—</P>
              <P>(A) Not received; or</P>

              <P>(B) Insufficient to fill the Government's requirements.
              </P>
              <FP>In these cases, accept all responsive, responsible offers of U.S. made, qualifying country, and eligible products before accepting any other offers.</FP>
              <P>(iii) National interest waivers under section 302(b)(2) of the Trade Agreements Act are approved on a case-by-case basis. Except as delegated in paragraphs (c)(iii)(A) and (B) of this section, a request for a national interest waiver shall include supporting rationale and be submitted under department/agency procedures to the Director of Defense Procurement.</P>
              <P>(A) The head of the contracting activity may approve a national interest waiver for a purchase by an overseas purchasing activity of products critical to the support of U.S. forces stationed abroad. The waiver must be supported by a written statement from the requiring activity stating that the requirement is critical for the support of U.S. forces stationed abroad.</P>
              <P>(B) The Commander, Defense Energy Support Center, may approve national interest waivers for purchases of fuel for use by U.S. forces overseas.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 225.408</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <P>(a)(4) The requirements of FAR 25.408(a)(4) do not apply to offshore acquisitions or to Defense Energy Support Center post, camp, or station overseas requirements.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <PRTPAGE P="171"/>
            <HD SOURCE="HED">Subpart 225.5—Evaluating Foreign Offers—Supply Contracts</HD>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>65 FR 19853, Apr. 13, 2000, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>§ 225.502</SECTNO>
              <SUBJECT>Application.</SUBJECT>
              <P>Use the following procedures instead of those in FAR 25.502. These procedures do not apply to acquisitions of information technology end products in Federal Supply Group 70 or 74 that are subject to the Trade Agreements Act.</P>
              <P>(1) Treat offers of eligible end products under acquisitions subject to the Trade Agreements Act or NAFTA as if they were qualifying country offers. As used in this section, the term “nonqualifying country offer” may also apply to an offer that is not an eligible offer under a trade agreement (see 225.504(4)).</P>
              <P>(2) Except as provided in paragraph (3) of this section, evaluate offers by adding a 50 percent factor to the price (including duty) of each nonqualifying country offer (see 225.504 (1)).</P>
              <P>(i) Nonqualifying country offers include duty in the offered price. When applying the factor, evaluate based on the inclusion of duty, whether or not duty is to be exempted. If award is made on the nonqualifying country offer and duty is to be exempted through inclusion of the clause at FAR 52.225-8, Duty-Free Entry, award at the offered price minus the amount of duty identified in the provision at 252.225-7003, Information for Duty-Free Entry Evaluation (see 225.504(1)(ii)).</P>
              <P>(ii) When a nonqualifying country offer includes more than one line item, apply the 50 percent factor—</P>
              <P>(A) On an item-by-item basis; or</P>
              <P>(B) On a group of items, if the solicitation specifically provides for award on a group basis.</P>

              <P>(3) When application of the factor would not result in the award of a domestic end product, <E T="03">i.e.,</E> when no domestic offers are received (see 225.504(3)) or when a qualifying country offer is lower than the domestic offer (see 225.504(2)), evaluate nonqualifying country offers without the 50 percent factor.</P>
              <P>(i) If duty is to be exempted through inclusion of the clause at FAR 52.225-8, Duty-Free Entry, evaluate the nonqualifying country offer exclusive of duty by reducing the offered price by the amount of duty identified in the clause at 252.225-7003, Information for Duty-Free Entry Evaluation (see 225.504(2)(ii) and (3)(ii)). If award is made on the nonqualifying country offer, award at the offered price minus duty.</P>
              <P>(ii) If duty is not to be exempted, evaluate the nonqualifying country offer inclusive of duty (see 225.504(2)(i) and (3)(i)).</P>
              <P>(4) If these evaluation procedures result in a tie between a nonqualifying country offer and a domestic offer, make award on the domestic offer.</P>
              <P>(5)(i) There are two tests that must be met to determine whether a manufactured item is a domestic end product—</P>
              <P>(A) The end product must have been manufactured in the United States; and</P>
              <P>(B) The cost of its U.S. and qualifying country components must exceed 50 percent of the cost of all of its components. This test is applied to end products only, and not to individual components.</P>
              <P>(ii) Because of the component test, the definition of “domestic end production” is more restrictive than the definition for—</P>
              <P>(A) “U.S. made end product” under trade agreements;</P>
              <P>(B) “Domestically produced or manufactured products” under small business set-asides or small business reservations; and</P>
              <P>(C) Products of small businesses under FAR Part 19.</P>
              <P>(iii) If an offer is for a “U.S. made end product,” “domestically produced end product,” or the product of a small business, but is not a “domestic end product” as defined in the clause at 252.225-7001, Buy American Act and Balance of Payments Program, treat the offer as a nonqualifying country offer (see 225.504(4)).</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.504</SECTNO>
              <SUBJECT>Evaluation examples.</SUBJECT>
              <P>(1) Example 1.</P>
              <P>(i) Alternate I: Duty Not Exempted for Nonqualifying Country Offers:</P>
              <GPOTABLE CDEF="s25,8" COLS="2" OPTS="L0,tp0,p0,7/8,g1,t1,i1">
                <BOXHD>
                  <CHED H="1"/>
                  <CHED H="1"/>
                </BOXHD>
                <ROW>
                  <ENT I="03">Nonqualifying Country Offer (including $100 duty)</ENT>
                  <ENT>$6,000 </ENT>
                </ROW>
                <ROW>
                  <PRTPAGE P="172"/>
                  <ENT I="03">Domestic Offer</ENT>
                  <ENT>8,900</ENT>
                </ROW>
                <ROW>
                  <ENT I="03">Qualifying Country Offer</ENT>
                  <ENT>9,100</ENT>
                </ROW>
              </GPOTABLE>
              <FP>Award on Domestic Offer. The 50% evaluation factor is added to the nonqualifying country offer, inclusive of duty, yielding an evaluated price of $9,000.</FP>
              <P>(ii) Alternate II: Duty Exempted:</P>
              <GPOTABLE CDEF="s25,8" COLS="2" OPTS="L0,tp0,p0,7/8,g1,t1,i1">
                <BOXHD>
                  <CHED H="1"/>
                  <CHED H="1"/>
                </BOXHD>
                <ROW>
                  <ENT I="03">Nonqualifying Country Offer (including $,1000 duty</ENT>
                  <ENT>$600,000</ENT>
                </ROW>
                <ROW>
                  <ENT I="03">Domestic Offer</ENT>
                  <ENT>910,000</ENT>
                </ROW>
                <ROW>
                  <ENT I="03">Qualifying Country Offer</ENT>
                  <ENT>920,000</ENT>
                </ROW>
              </GPOTABLE>
              <FP>Award on Nonqualifying Country Offer. The addition of the evaluation factor yields an evaluated price of $900,000. Since duty is being exempted for nonqualifying country offers, the duty is subtracted from the offered price, which is awarded at $599,000.</FP>
              <P>(2) Example 2.</P>
              <P>(i) Alternate I: Duty Not Exempted for Nonqualifying Country Offers:</P>
              <GPOTABLE CDEF="s25,8" COLS="2" OPTS="L0,tp0,p0,7/8,g1,t1,i1">
                <BOXHD>
                  <CHED H="1"/>
                  <CHED H="1"/>
                </BOXHD>
                <ROW>
                  <ENT I="03">Nonqualifying Country Offer (including $100 duty</ENT>
                  <ENT>$6,000</ENT>
                </ROW>
                <ROW>
                  <ENT I="03">Domestic Offer</ENT>
                  <ENT>8,500</ENT>
                </ROW>
                <ROW>
                  <ENT I="03">Qualifying Country Offer</ENT>
                  <ENT>7,800</ENT>
                </ROW>
              </GPOTABLE>
              <FP>Award on Nonqualifying Country Offer. Since the qualifying country offer is lower than the domestic offer, the nonqualifying country offer is evaluated without the factor. Since duty is not being exempted for nonqualifying country offers, the offer is evaluated and award is made at the price inclusive of duty ($6,000).</FP>
              <P>(ii) Alternate II: Duty Exempted:</P>
              <GPOTABLE CDEF="s25,8" COLS="2" OPTS="L0,tp0,p0,7/8,g1,t1,i1">
                <BOXHD>
                  <CHED H="1"/>
                  <CHED H="1"/>
                </BOXHD>
                <ROW>
                  <ENT I="03">Nonqualifying Country Offer (including $1,000 duty</ENT>
                  <ENT>$880,500</ENT>
                </ROW>
                <ROW>
                  <ENT I="03">Domestic Offer</ENT>
                  <ENT>950,000</ENT>
                </ROW>
                <ROW>
                  <ENT I="03">Qualifying Country Offer</ENT>
                  <ENT>880,000</ENT>
                </ROW>
              </GPOTABLE>
              <FP>Award on Nonqualifying Country Offer. Again, the qualifying country offer is lower than the domestic offer. The nonqualifying country offer is, therefore, evaluated without the factor. Since duty is being exempted for nonqualifying country offers, the duty identified by the offeror is subtracted from the offered price, which is evaluated and awarded at $879,500.</FP>
              <P>(3) Example 3.</P>
              <P>(i) Alternate I: Duty Not Exempted for Nonqualifying Country Offers:</P>
              <GPOTABLE CDEF="s25,8" COLS="2" OPTS="L0,tp0,p0,7/8,g1,t1,i1">
                <BOXHD>
                  <CHED H="1"/>
                  <CHED H="1"/>
                </BOXHD>
                <ROW>
                  <ENT I="03">Nonqualifying Country Offer (including $150 duty</ENT>
                  <ENT>$9,600</ENT>
                </ROW>
                <ROW>
                  <ENT I="03">Qualifying Country Offer</ENT>
                  <ENT>9,500</ENT>
                </ROW>
              </GPOTABLE>
              <FP>Award on Qualifying Country Offer. Since no domestic offers are received, the nonqualifying country offer is evaluated without the evaluation factor. Since duty is not being exempted and would be paid by the Government, the nonqualifying country offer is evaluated inclusive of duty.</FP>
              <P>(ii) Alternate II: Duty Exempted:</P>
              <GPOTABLE CDEF="s25,8" COLS="2" OPTS="L0,tp0,p0,7/8,g1,t1,i1">
                <BOXHD>
                  <CHED H="1"/>
                  <CHED H="1"/>
                </BOXHD>
                <ROW>
                  <ENT I="03">Nonqualifying Country Offer (including $1,000 duty</ENT>
                  <ENT>$880,500</ENT>
                </ROW>
                <ROW>
                  <ENT I="03">Qualifying Country Offer</ENT>
                  <ENT>880,000</ENT>
                </ROW>
              </GPOTABLE>
              <FP>Award on Nonqualifying Country Offer. Since no domestic offers are received, the nonqualifying country offer is evaluated without the evaluation factor. Since duty is being exempted, duty is subtracted from the nonqualifying country offer, which is evaluated and awarded at $879,500.</FP>
              <P>(4) Example 4.</P>
              <P>(i) Alternate I:</P>
              <GPOTABLE CDEF="s25,8" COLS="2" OPTS="L0,tp0,p0,7/8,g1,t1,i1">
                <BOXHD>
                  <CHED H="1"/>
                  <CHED H="1"/>
                </BOXHD>
                <ROW>
                  <ENT I="03">Offer of U.S. Made End Product which is not a Domestic Offer</ENT>
                  <ENT>$800,000</ENT>
                </ROW>
                <ROW>
                  <ENT I="03">Domestic Offer</ENT>
                  <ENT>820,000</ENT>
                </ROW>
                <ROW>
                  <ENT I="03">Eligible Product</ENT>
                  <ENT>830,000</ENT>
                </ROW>
              </GPOTABLE>
              <FP>Award on Domestic End Product. U.S. made end products which are not also domestic end products are evaluated the same as nonqualifying country end products. Adding the 50% evaluation factor yields an evaluated price of $1,200,000.</FP>
              <P>(ii) Alternate II:</P>
              <GPOTABLE CDEF="s25,8" COLS="2" OPTS="L0,tp0,p0,7/8,g1,t1,i1">
                <BOXHD>
                  <CHED H="1"/>
                  <CHED H="1"/>
                </BOXHD>
                <ROW>
                  <ENT I="03">Offer of U.S. Made End Product which is not a Domestic Offer</ENT>
                  <ENT>$800,000</ENT>
                </ROW>
                <ROW>
                  <ENT I="03">Eligible Product</ENT>
                  <ENT>820,000</ENT>
                </ROW>
                <ROW>
                  <ENT I="03">Domestic Offer</ENT>
                  <ENT>830,000</ENT>
                </ROW>
              </GPOTABLE>
              <FP>Award on U.S. Made End Product. Adding the 50% evaluation factor to the U.S. made end product would not result in the award of a domestic end product since the eligible product, which is evaluated the same as a qualifying country offer, is lower. All offers are evaluated without the factor.</FP>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 225.7—Prohibited Sources</HD>
            <SECTION>
              <SECTNO>225.701</SECTNO>
              <SUBJECT>Restrictions.</SUBJECT>

              <P>See 209.104-1(g)(i) for restrictions on contracting with firms owned or controlled by foreign governments that support terrorism. See 209.104-1(g)(ii) <PRTPAGE P="173"/>for prohibition on award of a DoD contract under a national security program to an entity controlled by a foreign government when access to proscribed information is required to perform the contract.</P>
              <CITA>[59 FR 51133, Oct. 7, 1994. Redesignated at 65 FR 19854, Apr. 13, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.770</SECTNO>
              <SUBJECT>Secondary Arab boycott of Israel.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>225.770-1</SECTNO>
              <SUBJECT>Restriction.</SUBJECT>
              <P>In accordance with 10 U.S.C. 2410i, do not enter into a prime contract with a foreign person, company, or entity unless it has certified that it does not comply with the secondary Arab boycott of Israel.</P>
              <CITA>[58 FR 28467, May 13, 1993]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.770-2</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <P>For contracts awarded to the Canadian Commercial Corporation (CCC), the CCC will submit a certification from its proposed subcontractor with the other required precontractual material (see 225.870).</P>
              <CITA>[57 FR 53599, Nov. 12, 1992]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.770-3</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
              <P>The restriction does not apply to—</P>
              <P>(a) Purchases at or below the simplified acquisition threshold;</P>
              <P>(b) Contracts for consumable supplies, provisions, or services for the support of the United States or of allied forces in a foreign country; or</P>
              <P>(c) Contracts pertaining to any equipment, technology, data, or services for intelligence or classified purposes, or the acquisition or lease thereof in the interest of national security.</P>
              <CITA>[57 FR 53599, Nov. 12, 1992, as amended at 64 FR 2598, Jan. 15, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.770-4</SECTNO>
              <SUBJECT>Waivers.</SUBJECT>
              <P>The Secretary of Defense may waive the restriction on the basis of national security interests. Waiver requests should be forwarded to the Director of Defense Procurement, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics).</P>
              <CITA>[57 FR 53599, Nov. 12, 1992, as amended at 60 FR 61597, Nov. 30, 1995; 65 FR 39705, June 27, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.770-5</SECTNO>
              <SUBJECT>Solicitation provision and contract clause.</SUBJECT>
              <P>Unless an exception applies or a waiver has been granted, use the clause at 252.225-7031, Secondary Arab Boycott of Israel, in all solicitations and contracts.</P>
              <CITA>[57 FR 53599, Nov. 12, 1992]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.771</SECTNO>
              <SUBJECT>Prohibition on acquisition from the People's Republic of China.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>225.771-1</SECTNO>
              <SUBJECT>Definition.</SUBJECT>
              <P>“People's Republic of China” is defined in the provision at 252.225-7017, Prohibition on Award to Companies Owned by the People's Republic of China.</P>
              <CITA>[64 FR 8728, Feb. 23, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.771-2</SECTNO>
              <SUBJECT>Legal authority.</SUBJECT>
              <P>This section implements Section 8120 of the DoD Appropriations Act for fiscal year 1999 (Pub. L. 105-262), as amended by Section 144 of Title I, Division C, of the Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999 (Pub. L. 105-277).</P>
              <CITA>[65 FR 6554, Feb. 10, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.771-3</SECTNO>
              <SUBJECT>Prohibition on contract award.</SUBJECT>
              <P>If using fiscal year 1999 funds made available by Title III (Procurement) or Title IV (Research, Development, Test and Evaluation) of Pub. L. 105-262, do not award or renew a contract with any company in which the Director of Defense Procurement has determined that the People's Republic of China or the People's Liberation Army of the People's Republic of China owns more than 50 percent interest.</P>
              <CITA>[65 FR 6554, Feb. 10, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.771-4</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>

              <P>(a) Forward any information that the People's Republic of China or the People's Liberation Army of the People's Republic of China owns more than 50 percent interest in a company, through the head of the agency, to the Director, Defense Procurement, ATTN: OUSD (AT&amp;L) DP/FC, 3060 Defense Pentagon, Washington, DC 20301-3060.<PRTPAGE P="174"/>
              </P>
              <P>(b) Upon verification of the information, the Director of Defense Procurement will ask the General Services Administration to list the company as ineligible on the List of Parties Excluded from Federal Procurement and Nonprocurement Programs.</P>
              <CITA>[65 FR 6554, Feb. 10, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.771-5</SECTNO>
              <SUBJECT>Solicitation provision.</SUBJECT>
              <P>Use the provision at 252.225-7017, Prohibition on Award to Companies Owned by the People's Republic of China, in solicitations for contracts that will use fiscal year 1999 funds made available by Title III or IV of Pub. L. 105-262.</P>
              <CITA>[65 FR 6554, Feb. 10, 2000]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 225.8—Other International Agreements and Coordination</HD>
            <SECTION>
              <SECTNO>225.801</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <P>(1) Treaties and agreements between the U.S. and foreign governments affect both—</P>
              <P>(i) The way offers from foreign contractors are evaluated in DoD acquisitions; and</P>
              <P>(ii) Performance of DoD contracts in foreign countries.</P>
              <P>(2) This subpart covers acquisition policy and procedures based on treaties and international agreements.</P>
              <P>(3) Information on specific agreements is available as follows—</P>
              <P>(i) Memoranda of understanding (MOU) and other international agreements between the United States and the countries listed in 225.872-1 are maintained in the Office of the Deputy Assistant Secretary of Defense (Procurement) (Foreign Contracting) (703) 697-9351, DSN 227-9351).</P>
              <P>(ii) Military Assistance Advisory Groups, Naval Missions, and Joint U.S. Military Aid Groups normally have copies of the agreements applicable to the countries concerned.</P>
              <P>(iii) Copies of international agreements covering existing agreements in the United Kingdom of Great Britain and Northern Ireland, Western European countries, North Africa, and in the Middle East are filed with the U.S. European Command (EUCOM).</P>
              <P>(iv) Agreements with countries in the Pacific and Far East are filed with the U.S. Pacific Command (CINCPAC).</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.802</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>225.802-70</SECTNO>
              <SUBJECT>Contracts for performance outside the United States and Canada.</SUBJECT>
              <P>(a) When a purchasing activity anticipates placement of a contract for performance outside the United States or Canada and the contracting activity is not under the command jurisdiction of a unified or specified command for the country involved, the purchasing activity shall maintain liaison with the cognizant contract administration office (CAO) during preaward negotiations and postaward administration. The CAO will provide pertinent information for contract negotiations, effect appropriate coordination, and obtain required approvals for the performance of the contract.</P>
              <P>(b) Where the acquisition requires the performance of work in the foreign country by U.S. personnel or a third country contractor, or where the acquisition will require logistics support for contract employees, source inspection, or additional Government employees—</P>
              <P>(1) The contracting activity must coordinate with the cognizant contract administration office before contract award.</P>
              <P>(2) The contracting officer shall request the following information from the contract administration office—</P>
              <P>(i) The applicability of any international agreements to the acquisition;</P>
              <P>(ii) Security requirements applicable to the area;</P>
              <P>(iii) The standards of conduct required to be observed by the prospective contractor and its employees, and any action that may be taken in the event required standards are not maintained;</P>
              <P>(iv) Requirements for use of foreign currencies, including applicability of U.S. holdings of excess foreign currencies;</P>
              <P>(v) Availability of logistics support for contractor employees; and</P>
              <P>(vi) Information on taxes and duties from which the Government may be exempt.</P>

              <P>(3) The contracting officer shall furnish the following information to the contract administration office—<PRTPAGE P="175"/>
              </P>
              <P>(i) A synopsis of the work to be performed and, if practical, a copy of the solicitation;</P>
              <P>(ii) Any contractor logistical support desired in support of U.S. or foreign military sale requirements;</P>
              <P>(iii) Contract performance period and estimated contract value;</P>
              <P>(iv) Number and nationality of contractor employees and date of planned arrival of contractor personnel;</P>
              <P>(v) Contract security requirements; and</P>
              <P>(vi) Other pertinent information to effect complete coordination and cooperation.</P>
              <CITA>[56 FR 36367, July 31, 1991, as amended at 65 FR 52952, Aug. 31, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.802-71</SECTNO>
              <SUBJECT>End user certificates.</SUBJECT>
              <P>Contracting officers considering the purchase of an item from a foreign source may encounter a request for the signing of a certificate to the effect that the Armed Forces of the United States is the end user of the equipment, and that it will not be transferred to third parties without authorization from the Government of the country selling the item. When encountering this situation, refer to DoD Directive 2040.3, End User Certificates, for guidance.</P>
              <CITA>[57 FR 42630, Sept. 15, 1992]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.870</SECTNO>
              <SUBJECT>Contracting with Canadian contractors.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>225.870-1</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <P>(a) The Canadian Government guarantees to the U.S. Government all commitments, obligations, and covenants of the Canadian Commercial Corporation under any contract or order issued to the Corporation by any contracting activity of the U.S. Government. The Canadian Government has waived notice of any change or modification which may be made, from time to time, in these commitments, obligations, or covenants.</P>
              <P>(b) For production planning purposes, Canada is considered to be part of the defense industrial base (see 225.870-2(b)).</P>
              <P>(c) Contracts with contractors located in Canada should be awarded to and administered by the Canadian Commercial Corporation, except for—</P>
              <P>(1) Negotiated purchases for experimental, developmental, or research work unless the contract is for a project under the Defense Development Sharing Program;</P>
              <P>(2) Purchases of unusual or compelling urgency;</P>
              <P>(3) Small purchases; or</P>
              <P>(4) Purchases made by DoD activities located in Canada.</P>
              <P>(d) The Canadian Commercial Corporation, in placing contracts with Canadian or U.S. concerns, uses provisions in the contracts that give DoD the same production rights, data, and information that DoD would obtain in contracts with U.S. concerns.</P>
              <P>(e) When contracts are placed with the Canadian Commercial Corporation, the government of Canada will provide the following services, without charge to DoD departments and agencies—</P>
              <P>(1) <E T="03">Contract administration services</E>, including—</P>
              <P>(i) Cost and pricing analysis;</P>
              <P>(ii) Industrial security;</P>
              <P>(iii) Accountability and disposal of Government property;</P>
              <P>(iv) Production expediting;</P>
              <P>(v) Compliance with Canadian labor laws;</P>
              <P>(vi) Processing termination claims and disposing of termination inventory;</P>
              <P>(vii) Customs documentation;</P>
              <P>(viii) Processing of disputes and appeals; and</P>
              <P>(ix) Such other related contract administration functions as may be required with respect to the Canadian Commercial Corporation contract with the Canadian supplier; and</P>
              <P>(2) <E T="03">Audits</E>. When required, audits are performed by the Audit Service Group, Supply and Services Canada. Requests for audit on non-Canadian Commercial Corporation contracts should be routed through the cognizant contract management office of the Defense Contract Management Agency.</P>
              <P>(3) <E T="03">Inspection</E>. The Department of National Defence (Canada) provides inspection personnel, services, and facilities, at no charge to DoD departments and agencies (see 225.870-7).</P>
              <CITA>[56 FR 36367, July 31, 1991, as amended at 65 FR 52952, Aug. 31, 2000]</CITA>
            </SECTION>
            <SECTION>
              <PRTPAGE P="176"/>
              <SECTNO>225.870-2</SECTNO>
              <SUBJECT>Solicitation of Canadian contractors.</SUBJECT>
              <P>(a) Except for the acquisitions in 225.870-1(c) (1) through (4), include Canadian firms on bidders mailing lists and comparable source lists only at the request of the Canadian Commercial Corporation.</P>
              <P>(b) Include Canadian planned producers under the Industrial Readiness Planning Program on bidders mailing lists for their planned items (see FAR 14.205-1).</P>
              <P>(c) Send solicitations directly to Canadian firms appearing on the appropriate bidders mailing lists. Send a complete copy of the solicitation and a listing of Canadian firms solicited to the Canadian Commercial Corporation, 11th Floor, 50 O'Connor Street, Ottawa, Ontario, K1A-0S6, Canada.</P>
              <P>(d) Furnish a solicitation, if requested, to the Canadian Commercial Corporation even if no Canadian firm is solicited.</P>
              <P>(e) Handle small purchases (see FAR part 13) directly with Canadian firms and not through the Canadian Commercial Corporation.</P>
              <CITA>[56 FR 36367, July 31, 1991, as amended at 57 FR 42630, Sept. 15, 1992]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.870-3</SECTNO>
              <SUBJECT>Submission of offers.</SUBJECT>
              <P>(a) As indicated in 225.870-4, the Canadian Commercial Corporation is the prime contractor. To indicate acceptance of offers by individual Canadian companies, the Canadian Commercial Corporation issues a letter, supporting the Canadian offer, containing the following information—</P>
              <P>(1) Name of the Canadian offeror;</P>
              <P>(2) Confirmation and endorsement of the offer in the name of the Canadian Commercial Corporation; and</P>
              <P>(3) A statement that the Corporation shall subcontract 100 percent with the offeror.</P>
              <P>(b) When a Canadian offer cannot be processed through the Canadian Commercial Corporation in time to meet the bid-opening requirement or the closing date for receipt of proposals, the Corporation may permit Canadian firms to submit offers directly. The Canadian Commercial Corporation's endorsement of award, however, must be received by the contracting officer before contract award.</P>
              <P>(c) All sealed bids will be submitted by the Canadian Commercial Corporation in terms of U.S. currency. Do not adjust contracts awarded under sealed bidding for losses or gains from fluctuation in exchange rates.</P>
              <P>(d) Except for sealed bids, all offers and quotations submitted by the Canadian Commercial Corporation are normally in terms of Canadian currency. The Corporation may, at the time of submitting an offer, elect to quote and receive payment in terms of U.S. currency, in which case the contract shall—</P>
              <P>(1) Provide for payment in U.S. currency; and</P>
              <P>(2) Shall not be adjusted for losses or gains from fluctuation in exchange rates.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.870-4</SECTNO>
              <SUBJECT>Contracting procedures.</SUBJECT>
              <P>(a) Award individual contracts covering purchases from suppliers located in Canada, except for those in 225.870-1(c)(1) through (4), to the Canadian Commercial Corporation, 11th Floor, 50 O'Connor Street, Ontario, Canada, K1A-0S6.</P>
              <P>(b) Direct communication with the Canadian supplier is authorized and encouraged in connection with all technical aspects of the contract; provided, that the Corporation's approval is obtained on any matters involving changes to the contract.</P>
              <P>(c) Identify in the contract, the type of currency, i.e., U.S. or Canadian. Contracts that provide for payment in Canadian currency shall quote the contract price in terms of Canadian dollars and shall identify the amount by the initials CN; e.g., $1,647.23CN. The contract shall clearly indicate on its face the U.S./Canadian conversion rate at the time of award and the U.S. dollar equivalent of the Canadian dollar contract amount.</P>
              <CITA>[56 FR 36367, July 31, 1991, as amended at 57 FR 42630, Sept. 15, 1992]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.870-5</SECTNO>
              <SUBJECT>Contract administration.</SUBJECT>

              <P>(a) Assign contract administration in accordance with part 242. When contract administration is performed in Canada by the cognizant contract management office of the Defense Contract <PRTPAGE P="177"/>Management Agency, the paying office to be named in the contract for disbursement of DoD funds (DoD Department Code: 17-Navy; 21-Army; 57-Air Force; 97-all other DoD components), whether payment is in Canadian or U.S. dollars, shall be: DFAS-Columbus Center, DFAS-CO/New Dominion Division, PO Box 182041, Columbus, OH 43218-2041.</P>
              <P>(b) For cost-reimbursement type contracts—</P>
              <P>(1) Audits on contracts with the Canadian Commercial Corporation (CCC) are automatically arranged by the Department of Supplies and Services (DSS), Canada. Audit reports are furnished to DSS. Upon advice from DSS, the CCC will certify the invoice and forward it with SF 1034, Public Voucher, to the administrative contracting officer for further processing and transmittal to the disbursing office.</P>
              <P>(2) On contracts placed directly with Canadian firms, the administrative contracting officer requests audits from the Audit Services Bureau (ASB), Ottawa, Ontario, Canada.</P>
              <P>(i) Invoices are approved by the ASB/DSS auditor on a provisional basis pending completion of the contract and final audit.</P>
              <P>(ii) The ASB/DSS forwards these invoices, accompanied by SF 1034, Public Voucher, to the administrative contracting officer for further processing and transmittal to the disbursing officer.</P>
              <P>(iii) ASB/DSS furnishes periodic advisory audit reports directly to the administrative contracting officer.</P>
              <CITA>[56 FR 36367, July 31, 1991, as amended at 65 FR 52952, Aug. 31, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.870-6</SECTNO>
              <SUBJECT>Termination procedures.</SUBJECT>
              <P>(a) The Canadian Commercial Corporation will continue administering contracts that may be terminated by the U.S. contracting officer.</P>
              <P>(b) The Corporation will settle all Canadian subcontracts in accordance with the policies, practices, and procedures of the Canadian Government.</P>
              <P>(c) The U.S. agency administering the contract with the Canadian Commercial Corporation shall provide any services required by the Canadian Commercial Corporation, including disposal of inventory, for settlement of any subcontracts placed in the United States. Settlement of such U.S. subcontracts is made under this regulation.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.870-7</SECTNO>
              <SUBJECT>Acceptance of Canadian supplies.</SUBJECT>
              <P>(a) When contracts placed in Canada, either with the Canadian Commercial Corporation or directly with Canadian suppliers, require contract quality assurance (CQA) and/or acceptance before shipment, CQA and/or acceptance, as applicable, will be performed by the Department of National Defence (Canada), under paragraph 6 of the Letter of Agreement.</P>
              <P>(b) Signature by the Department of National Defence (Canada) quality assurance representative on the DoD inspection and acceptance form is satisfactory evidence of acceptance for payment purposes.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.870-8</SECTNO>
              <SUBJECT>Industrial security.</SUBJECT>
              <P>Industrial security for Canada shall be in accordance with the U.S.-Canada Industrial Security Agreement of March 31, 1952, as amended.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.871</SECTNO>
              <SUBJECT>North Atlantic Treaty Organization (NATO) cooperative projects.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>225.871-1</SECTNO>
              <SUBJECT>Scope.</SUBJECT>
              <P>(a) This section provides guidance on awarding contracts based on NATO cooperative projects.</P>
              <P>(b) The authority is 22 U.S.C. 2767 and 10 U.S.C. 2350b.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.871-2</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <P>(a) <E T="03">Cooperative project</E> means a jointly managed arrangement—</P>
              <P>(1) Described in a written agreement between the parties;</P>
              <P>(2) Undertaken to further the objectives of standardization, rationalization, and interoperability of the armed forces of North Atlantic Treaty Organization member countries; and</P>
              <P>(3) Providing for—</P>
              <P>(i) One or more of the other participants to share with the United States the cost of research and development, testing, evaluation, or joint production (including follow-on support) of certain defense articles;</P>

              <P>(ii) Concurrent production in the United States and in another member <PRTPAGE P="178"/>country of a defense article jointly developed; or</P>
              <P>(iii) Acquisition by the United States of a defense article or defense service from another member country.</P>
              <P>(b) <E T="03">Other participant</E> means a cooperative project participant other than the United States.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.871-3</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <P>(a) Cooperative project authority. (1) Departments or agencies, that have authority to do so, may enter into a cooperative project agreement with NATO or with one or more member countries of that organization under DoD Directive 5530.3, International Agreements.</P>
              <P>(2) Under laws and regulations governing the negotiation and implementation of cooperative project agreements, departments and agencies may enter into contracts, or incur other obligations, on behalf of other participants without charge to any appropriation or contract authorization.</P>
              <P>(3) Agency heads have authority to solicit and award contracts to implement cooperative projects.</P>
              <P>(b) Contracts implementing cooperative projects shall comply with all applicable laws relating to Government acquisition, unless a waiver is granted under 225.871-4. A waiver of certain laws and regulations may be obtained if—</P>
              <P>(1) Required by the terms of a written cooperative project agreement;</P>
              <P>(2) It will significantly further NATO standardization, rationalization, and interoperability; and</P>
              <P>(3) It is approved by the appropriate DoD official.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.871-4</SECTNO>
              <SUBJECT>Statutory waivers.</SUBJECT>
              <P>(a) The Deputy Secretary of Defense may waive for contracts or subcontracts placed outside the United States any provision of law that specifically prescribes—</P>
              <P>(1) Procedures for the formation of contracts;</P>
              <P>(2) Terms and conditions for inclusion in contracts;</P>
              <P>(3) Requirements for, or preferences to be given—</P>
              <P>(i) To goods grown, produced, or manufactured in the United States or in U.S. Government-owned facilities; or</P>
              <P>(ii) For services to be performed in the United States; or</P>
              <P>(4) Requirements regulating the performance of contracts.</P>
              <P>(b) There is no authority for waiver of—</P>
              <P>(1) Any provision of the Arms Export Control Act (22 U.S.C. 2751);</P>
              <P>(2) Any provision of 10 U.S.C. 2304;</P>
              <P>(3) The cargo preference laws of the United States, including the Military Cargo Preference Act of 1904 (10 U.S.C. 2631) and the Cargo Preference Act of 1954 (46 U.S.C. 1241(b)); or</P>
              <P>(4) Any of the financial management responsibilities administered by the Secretary of the Treasury.</P>
              <P>(c) If a waiver is contemplated under the terms of a cooperative project agreement, forward a request for the waiver to the Deputy Secretary of Defense, through the Director of Defense Procurement. The waiver request must include a draft Determination and Findings for signature by the Deputy Secretary of Defense establishing that the waiver is necessary to significantly further NATO standardization, rationalization, and interoperability.</P>
              <P>(d) The approval of the Deputy Secretary of Defense must be obtained before committing to make waivers in an agreement or an amendment to an agreement or contract.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.871-5</SECTNO>
              <SUBJECT>Directed subcontracting.</SUBJECT>
              <P>(a) The Director of Defense Procurement may authorize the direct placement of subcontracts with particular subcontractors. Directed subcontracting is not authorized unless specifically addressed in the cooperative project agreement.</P>
              <P>(b) In some instances, it may not be feasible to name specific subcontractors at the time the agreement is concluded. The general provisions for work sharing at the prime and subcontractor level, however, must be clearly delineated in the agreement. This will provide the authority necessary to implement such arrangements during the acquisition phase.</P>

              <P>(c) The agreement is the authority necessary for including a contractual provision requiring the prime contractor to place certain subcontracts <PRTPAGE P="179"/>with particular subcontractors. No separate justification and approval during the acquisition process is required.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.871-6</SECTNO>
              <SUBJECT>Disposal of property.</SUBJECT>
              <P>Dispose of property that is jointly acquired by the members of a cooperative project under the procedures established in the agreement or in a manner consistent with the terms of the agreement.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.871-7</SECTNO>
              <SUBJECT>Congressional notification.</SUBJECT>
              <P>(a) Congress must be notified whenever DoD determines to award a prime contract or subcontract to a particular contractor if the determination was not part of the certification made under Section 27(f) of the Arms Export Control Act before finalizing the cooperative agreement.</P>
              <P>(1) Departments and agencies must provide a proposed Congressional notice to the Director of Defense Procurement, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics), in sufficient time to forward to Congress before the time of contract award.</P>
              <P>(2) The proposed notice shall include the reason why the authority to designate a particular contractor or subcontractor should be used.</P>
              <P>(b) Congressional notification is also required each time a statutory waiver is exercised under 225.871-4, if such information was not provided in the certification to Congress before finalizing the cooperative agreement. Exercise of the waiver means a contract award or modification which provides for a statutory exception.</P>
              <CITA>[56 FR 36367, July 31, 1991, as amended at 60 FR 61597, Nov. 30, 1995; 65 FR 39705, June 27, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.872</SECTNO>
              <SUBJECT>Contracting with qualifying country sources.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>225.872-1</SECTNO>
              <SUBJECT>General.</SUBJECT>

              <P>(a) As a result of memoranda of understanding and other international agreements, the DoD has determined it inconsistent with the public interest to apply restrictions of the Buy American Act/Balance of Payments Program to the acquisition of defense equipment which is mined, produced, or manufactured in any of the following countries (referred to in this part as “qualifying countries”)—
              </P>
              <EXTRACT>
                <FP SOURCE="FP1-2">Australia</FP>
                <FP SOURCE="FP1-2">Belgium</FP>
                <FP SOURCE="FP1-2">Canada</FP>
                <FP SOURCE="FP1-2">Denmark</FP>
                <FP SOURCE="FP1-2">Egypt</FP>
                <FP SOURCE="FP1-2">Federal Republic of Germany</FP>
                <FP SOURCE="FP1-2">France</FP>
                <FP SOURCE="FP1-2">Greece</FP>
                <FP SOURCE="FP1-2">Israel</FP>
                <FP SOURCE="FP1-2">Italy</FP>
                <FP SOURCE="FP1-2">Luxembourg</FP>
                <FP SOURCE="FP1-2">Netherlands</FP>
                <FP SOURCE="FP1-2">Norway</FP>
                <FP SOURCE="FP1-2">Portugal</FP>
                <FP SOURCE="FP1-2">Spain</FP>
                <FP SOURCE="FP1-2">Switzerland</FP>
                <FP SOURCE="FP1-2">Turkey</FP>
                <FP SOURCE="FP1-2">United Kingdom of Great Britain and Northern Ireland</FP>
              </EXTRACT>
              

              <P>(b) Individual acquisitions for products of the following qualifying countries may, on a purchase-by-purchase basis, be exempted from application of the Buy American Act and Balance of Payments Program as inconsistent with the public interest—
              </P>
              <EXTRACT>
                <FP SOURCE="FP1-2">Austria</FP>
                <FP SOURCE="FP1-2">Finland</FP>
                <FP SOURCE="FP1-2">Sweden</FP>
              </EXTRACT>
              
              <P>(c) The determination in paragraph (a) of this subsection does not limit the authority of the cognizant Secretary to restrict acquisitions to domestic sources or reject an otherwise acceptable offer from a qualifying country source in instances where considered necessary for national defense reasons.</P>
              <CITA>[56 FR 36367, July 31, 1991, as amended at 57 FR 53599, Nov. 12, 1992; 60 FR 61597, Nov. 30, 1995; 62 FR 34122, June 24, 1997; 63 FR 5745, Feb. 4, 1998; 67 FR 4209, Jan. 29, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.872-2</SECTNO>
              <SUBJECT>Applicability.</SUBJECT>
              <P>(a) This section applies to all acquisitions of supplies except where restricted by—</P>
              <P>(1) Provision of U.S. National Disclosure Policy (NDP), DOD Directive 5230.11, Disclosure of Classified Military Information to Foreign Governments and International Organizations;</P>

              <P>(2) U.S. defense mobilization base requirements purchased under the authority of FAR 6.302-3(a)(2)(i) except for quantities in excess of that required to maintain the defense mobilization base. This restriction does not apply to Canadian planned producers—<PRTPAGE P="180"/>
              </P>
              <P>(i) Review individual solicitations to determine whether this restriction applies.</P>
              <P>(ii) Information concerning restricted items may be obtained from the Deputy Under Secretary of Defense (Industrial Affairs);</P>
              <P>(3) Other U.S. laws or regulations (e.g., the annual defense appropriations act); and</P>
              <P>(4) U.S. industrial security requirements.</P>
              <P>(b) This section does not apply to construction contracts.</P>
              <CITA>[56 FR 36367, July 31, 1991, as amended at 60 FR 61597, Nov. 30, 1995; 62 FR 34123, June 24, 1997; 65 FR 39705, June 27, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.872-3</SECTNO>
              <SUBJECT>Solicitation procedures.</SUBJECT>
              <P>(a) Include qualifying country sources on bidders mailing lists and comparable source lists upon their request (see FAR 14.205).</P>
              <P>(b) Except for items developed under the U.S./Canadian Development Sharing Program, use the criteria for soliciting and making awards under FAR part 19 for small business concerns without regard to whether there are potential qualifying country sources for the end product. Do not consider an offer of a qualifying country end product if the solicitation is identified for the exclusive participation of small business firms.</P>
              <P>(c) Send solicitations directly to qualifying country sources. Solicit Canadian sources through the Canadian Commercial Corporation in accordance with 225.870.</P>
              <P>(d) Use international air mail if solicitation destinations are outside the United States and security classification permits such use (see FAR 14.202 and FAR 14.203).</P>
              <P>(e) If unusual technical or security requirements preclude the acquisition of otherwise acceptable defense equipment from qualifying country sources, review the need for such requirements. Do not impose unusual technical or security requirements solely for the purpose of precluding the acquisition of defense equipment from qualifying countries.</P>
              <P>(f) Do not automatically exclude qualifying country sources from submitting offers because their supplies have not been tested and evaluated by the department/agency.</P>
              <P>(1) Consider the adequacy of qualifying country service testing on a case-by-case basis. Departments or agencies that must limit solicitations to sources whose items have been service tested and evaluated by the department/agency shall consider supplies from qualifying country sources that have been tested and accepted by the qualifying country for service use.</P>
              <P>(2) The department/agency may perform a confirmatory test, if necessary.</P>
              <P>(3) Apply U.S. test and evaluation standards, policies, and procedures when the department/agency decides that confirmatory tests of qualifying country end products are necessary.</P>
              <P>(4) Where it appears that these provisions might adversely delay service programs, obtain the concurrence of the DoD Acquisition Executive, Under Secretary of Defense (Acquisition, Technology, and Logistics), before excluding the qualifying country source from consideration.</P>
              <P>(g) Permit industry representatives from a qualifying country to attend symposia, program briefings, prebid conferences (see FAR 14.207 and 15.201(c)), and similar meetings that address U.S. defense equipment needs and requirements. When practical, structure these meetings to allow attendance by representatives of qualifying country concerns.</P>
              <CITA>[56 FR 36367, July 31, 1991, as amended at 60 FR 61597, Nov. 30, 1995; 63 FR 55052, Oct. 14, 1998; 65 FR 39705, June 27, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.872-4</SECTNO>
              <SUBJECT>Evaluation of offers.</SUBJECT>
              <P>(a) Qualifying country sources competing for DoD requirements must be responsive to the terms and conditions of DoD solicitations.</P>
              <P>(b) Evaluate offers of end products from the qualifying country sources in 225.872-1(a) without application of the 50 percent Buy American Act or Balance of Payments Program evaluation factor, in accordance with 225.304 and 225.502.</P>

              <P>(c) Evaluate offers of end products from the qualifying country sources in 225.872-1(b) without application of the 50 percent Buy American Act or Balance of Payments Program evaluation factor. If the offer, as evaluated, is low <PRTPAGE P="181"/>or otherwise eligible for award, the contracting officer shall request an exemption of the Buy American Act/Balance of Payments Program as inconsistent with the public interest, unless another exception such as the Trade Agreements Act applies.</P>
              <P>(1) To obtain an exemption, process a Determination and Findings for signature—</P>
              <P>(i) At a level above the contracting officer, for acquisitions of $25,000 or less;</P>
              <P>(ii) By the chief of the contracting office, for acquisitions of $250,000 or less;</P>
              <P>(iii) By the head of the contracting activity (HCA), for acquisitions of $2 million or less; or</P>
              <P>(iv) By the head of the agency, or designee at a level no lower than an HCA, for acquisitions over $2 million.</P>
              <P>(2) The Determination and Findings shall be substantially as follows for end items, or modified as necessary for components—</P>
              <EXTRACT>
                <HD SOURCE="HD1">Service or Agency</HD>
                <HD SOURCE="HD3">Exemption of the Buy American Act/Balance of Payments Program</HD>
                <HD SOURCE="HD3">Determination and Findings</HD>

                <P>Upon the basis of the following findings and determination which I hereby make in accordance with the provisions of FAR 25.102, acquisition of (<E T="03">qualifying country—identify country</E>) (<E T="03">describe item</E>) may be made as provided below.</P>
                <HD SOURCE="HD3">Findings</HD>
                <P>1. The (<E T="03">contracting activity</E>) proposes to purchase under contract number, ______, mined, produced, or manufactured in (<E T="03">country of origin</E>). The total estimated cost of this acquisition is ______.</P>
                <P>2. The United States Government and the Government of ______ have agreed to remove barriers to procurement at the prime and subcontract level for defense equipment produced in each other's countries insofar as laws and regulations permit.</P>

                <P>3. The agreement provides that competitive offers of (<E T="03">qualifying country</E>) end products will be evaluated by the Department of Defense without imposing any price differential under the Buy American Act or Balance of Payments Program and without taking applicable U.S. customs and duties into consideration so that (<E T="03">qualifying country</E>) items may better compete for sales of defense equipment to the Department of Defense. In addition, the Agreement stipulates that acquisitions of (<E T="03">qualifying country</E>) items must fully satisfy Department of Defense requirements for performance, quality, and delivery and shall cost the Department of Defense no more than would comparable U.S. source or other foreign source defense equipment eligible for award.</P>

                <P>4. To achieve the above objectives, the solicitation contained the (<E T="03">title and number of the Buy American Act clause contained in the contract</E>). Offers were solicited from other sources and the offer received for (<E T="03">qualifying country end item</E>) is found to be otherwise eligible for award.</P>
                <HD SOURCE="HD3">Determination</HD>
                <P>Pursuant to the Buy American Act and Balance of Payments Program, I hereby determine that it is inconsistent with the public interest to apply the restrictions of the Buy American Act or the Balance of Payments Program to the proposed offer.</P>
                <FP SOURCE="FP-DASH"/>
                
                <P>(Date)</P>
              </EXTRACT>
              <CITA>[56 FR 36367, July 31, 1991, as amended at 57 FR 42630, Sept. 15, 1992; 63 FR 11534, Mar. 9, 1998; 65 FR 39705, June 27, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.872-5</SECTNO>
              <SUBJECT>Contract administration.</SUBJECT>
              <P>(a) Arrangements exist with some qualifying countries to provide reciprocal contract administration services. Some arrangements are at no cost to either government. To determine whether such an arrangement has been negotiated and what contract administration functions are covered, contact the Deputy Director of Defense Procurement (Foreign Contracting), ((703) 697-9351, DSN 227-9351).</P>
              <P>(b) When contract administration services are required on contracts to be performed in qualifying countries, direct the request to the cognizant activity under DLAH 4105.4, section II, part 2 (DoD Directory of Contract Administration Services Components). Contract administration services for DoD subcontracts placed by qualifying country sources in the United States will be arranged by the cognizant activity under DLAH 4105.4, section II, part 2.</P>

              <P>(c) The contract administration activity receiving a delegation or secondary delegation shall review the delegation to determine whether any portion of the delegation are covered by memoranda of understanding annexes, and delegate those functions to the appropriate organization in the qualifying country's government.<PRTPAGE P="182"/>
              </P>
              <P>(d) Information on quality assurance delegations to foreign governments is in subpart 246.4, Government Contract Quality Assurance.</P>
              <CITA>[56 FR 36367, July 31, 1991, as amended at 60 FR 29498, June 5, 1995]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.872-6</SECTNO>
              <SUBJECT>Audit.</SUBJECT>
              <P>(a) Memoranda of understanding with some qualifying countries contain annexes that provide for reciprocal “no-cost” audits of contracts and subcontracts (pre- and post-award).</P>
              <P>(b) To determine if such an annex is applicable to a particular qualifying country, contact the Deputy Director of Defense Procurement (Foreign Contracting), ((703) 697-9351/2/3, DSN 227-9351/2/3).</P>
              <P>(c) Handle requests for audits in qualifying countries under 215.404-2(c).</P>
              <P>(1) Except for the United Kingdom (UK), send the request to the administrative contracting officer at the cognizant activity listed in Section 2B of the Federal Directory of Contract Administration Services Components. Send the request for audit from the UK directly to their Ministry of Defence.</P>
              <P>(2) Send an advance copy of the request to the focal point identified by the Foreign Contracting Directorate, Office of the Director of Defense Procurement.</P>
              <CITA>[56 FR 36367, July 31, 1991, as amended at 60 FR 29498, June 5, 1995; 63 FR 55052, Oct. 14, 1998; 64 FR 61028, Nov. 9, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.872-7</SECTNO>
              <SUBJECT>Industrial security for qualifying countries.</SUBJECT>
              <P>The required procedures for safeguarding classified defense information necessary for the performance of contracts awarded to qualifying country sources are in the DoD Industrial Security Regulation DoD 5220.22-R (implemented for the Army by AR 380-49; for the Navy by SECNAV Instruction 5510.1H; for the Air Force by AFI 31-601; for the Defense Information Systems Agency by DCA Instruction 240-110-8; and for the National Imagery and Mapping Agency by NIMA Instruction 5220.22).</P>
              <CITA>[56 FR 36367, July 31, 1991, as amended at 56 FR 67215, Dec. 30, 1991; 64 FR 51076, Sept. 21, 1999; 64 FR 61029, Nov. 9, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.872-8</SECTNO>
              <SUBJECT>Subcontracting with qualifying country sources.</SUBJECT>
              <P>In reviewing contractor subcontracting procedures, the contracting officer shall ensure that the prime contract does not preclude qualifying country sources from competing for subcontracts, except when restricted by national security interest reasons, mobilization base considerations, or applicable U.S. laws or regulations. (See the clause at 252.225-7002, Qualifying Country Sources as Subcontractors.)</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.873</SECTNO>
              <SUBJECT>Waiver of United Kingdom commercial exploitation levies.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>225.873-1</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>DoD and the Government of the United Kingdom (U.K.) have agreed to waive U.K. commercial exploitation levies and U.S. nonrecurring cost recoupment charges on a reciprocal basis. In order for U.K. levies to be waived, they must be identified and a waiver must be requested before award of the contract or subcontract under which the levies are charged.</P>
              <CITA>[57 FR 53599, Nov. 12, 1992]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.873-2</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <P>(a) Waiver of U.K. levies must be approved by the Government of the U.K. When an offeror or contractor identifies a levy included in an offered or contract price, the contracting officer shall provide written notification to the Defense Security Cooperation Agency, Attn: PSD-PMD, 1111 Jefferson Davis Highway, Arlington, VA 22202-4306, telephone (703) 601-3864. The Defense Security Cooperation Agency will request a waiver of the levy from the Government of the U.K. The notification shall include—</P>
              <P>(1) Name of the U.K. firm;</P>
              <P>(2) Prime contract number;</P>
              <P>(3) Description of item for which waiver is being sought;</P>
              <P>(4) Quantity being acquired; and</P>
              <P>(5) Amount of levy.</P>

              <P>(b) Waiver may occur after contract award. Where levies are waived before contract award, the offer will be evaluated without the levy. Where levies are <PRTPAGE P="183"/>identified but not waived before contract award, the offer will be evaluated inclusive of the levies.</P>
              <CITA>[57 FR 53599, Nov. 12, 1992, as amended at 64 FR 51076, Sept. 21, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.873-3</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <P>Use the clause at 252.225-7032, Waiver of United Kingdom Levies, in all solicitations and contracts for supplies—</P>
              <P>(a) Where U.K. firms are expected to participate as offerors/prime contractors; or</P>
              <P>(b) If a subcontract over $1 million with a U.K. firm is anticipated.</P>
              <CITA>[57 FR 53599, Nov. 12, 1992]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 225.9—Customs and Duties</HD>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>65 FR 19855, Apr. 13, 2000, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>225.901</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>(1) Section XXII, Chapter 98, Subchapter VIII, Item 9808.00.30 of the Harmonized Tariff Schedule of the United States authorizes duty-free importation of defense supplies.</P>
              <P>(2) 19 U.S.C. 1309 authorizes duty-free importation of certain supplies (not including equipment) for vessels or aircraft operated by the United States (see FAR 25.903(b)).</P>

              <P>(3) Unless the supplies are entitled to duty-free treatment under a special category in the Harmonized Tariff Schedule of the United States (<E T="03">e.g.,</E> the Caribbean Basin Economic Recovery Act or NAFTA), or unless the supplies already have entered into the customs territory of the United States and duty already has been paid, DoD will issue duty-free entry certificates for—</P>
              <P>(i) Qualifying country supplies (end products and components) on all defense contracts;</P>
              <P>(ii) Eligible products (end products but not components) on defense contracts subject to the Trade Agreement Act or NAFTA; and</P>
              <P>(iii) Other foreign supplies, if there is reasonable assurance that the administrative and other costs of processing and controlling the certificates will not exceed the amount of duty that would be paid.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.902</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <P>(1) <E T="03">General.</E>
              </P>
              <P>(i) <E T="03">Preaward.</E>
              </P>
              <P>(A) Unless duty was paid prior to submission of the offer, an offer of domestic end products with no nonqualifying country components, an offer of qualifying country end products, or an offer of eligible products under the Trade Agreements Act or NAFTA, should not include duty.</P>
              <P>(B) Offers of U.S. made end products with nonqualifying country components, and offers that are neither qualifying country offers nor offers of eligible products under a trade agreement, should contain applicable duty.</P>
              <P>(c) Exclude from the evaluation of domestic end products, or information technology end products in Federal Supply Group 70 or 74 in acquisitions subject to the Trade Agreements Act, any duty for nonqualifying country components listed in the provision at 252.225-7003, Information for Duty-Free Entry Evaluation, for which duty-free entry will be granted.</P>
              <P>(D) Except for acquisitions of information technology end products in Federal Supply Group 70 or 74 subject to the Trade Agreements Act, apply the evaluation procedures for the Buy American Act in accordance with 225.502.</P>
              <P>(ii) <E T="03">Award.</E> Exclude duty from the contract price for supplies (end products or components) that are to be accorded duty-free entry. If duty-free entry is granted to the successful offeror in accordance with the clause at FAR 52.225-8, Duty-Free Entry, and the clause at 252.225-7003, Information for Duty-Free Entry Evaluation, request that the offeror provide the list of foreign supplies that are subject to such duty-free entry, and list such supplies in the contract clause at 252.225-7008, Supplies to be Accorded Duty-Free Entry.</P>
              <P>(iii) <E T="03">Postaward.</E>
              </P>

              <P>(A) Issue duty-free entry certificates for all qualifying country supplies in accordance with the policy at 225.901(3)(i) and the clause at 252.225-7009, Duty-Free Entry—Qualifying Country Supplies (End Products and Components); for all eligible products subject to trade agreements in accordance with the policy at 225.901(3)(ii) and <PRTPAGE P="184"/>the clause at 252.225-7037, Duty-Free Entry—Eligible End Products; and for other foreign supplies in accordance with the policy at 225.901(3)(iii) on contracts containing the clause at FAR 52.225-8, Duty-Free Entry; or (following to the extent practicable the procedures required by the clause at FAR 52.225-8, Duty-Free Entry, and the clause at 252.225-7010, Duty-Free Entry—Additional Provisions) on other contracts—</P>
              <P>
                <E T="03">(1)</E> That fall within one of the following categories:</P>
              <P>
                <E T="03">(i)</E> Direct purchases of foreign supplies under a DoD prime contract, whether title passes at point of origin or at destination in the United States, provided the contract states that the final price is exclusive of duty.</P>
              <P>
                <E T="03">(ii)</E> Purchases of foreign supplies by a domestic prime contractor under a cost-reimbursement type contract or by a cost-reimbursement type subcontractor (where no fixed-price prime or fixed-price subcontract intervenes between the purchaser and the Government), whether title passes at point of origin or at destination in the United States. If a fixed-price prime or fixed-price subcontract intervenes, follow the criteria stated in paragraph (a)(iii)(A)<E T="03">(1)(iii)</E> of this section.</P>
              <P>
                <E T="03">(iii)</E> Purchases of foreign supplies by a fixed-price domestic prime contractor, a fixed-price subcontractor, or a cost-type subcontractor where a fixed-price prime contract or fixed-price subcontract intervenes, provided the fixed-price prime contract and, where applicable, fixed-price subcontract prices are, or are amended to be, exclusive of duty;</P>
              <P>
                <E T="03">(2)</E> For which the supplies so purchased will be delivered to the Government or incorporated in Government-owned property or in an end product to be furnished to the Government, and for which duty will be paid if such supplies or any portion are used for other than the performance of the Government contract or disposed of other than for the benefit of the Government in accordance with the contract terms; and</P>
              <P>
                <E T="03">(3)</E> For which such acquisition abroad is authorized by the terms of the contract or subcontract or by the contracting officer.</P>
              <P>(B) Under a fixed-price contract, negotiate an equitable reduction in the contract price if duty-free entry is granted for any nonqualifying country component not listed in the Schedule as duty-free, even if contract award was based on furnishing a domestic component or a qualifying country component.</P>
              <P>(2) <E T="03">Formal entry and release.</E>
              </P>
              <P>(i) The administrative contracting officer must—</P>
              <P>(A) Ensure that prime contractors are aware of and understand any Duty-Free Entry clause requirements. Contractors should understand that failure by them or their subcontractors to include the data required by the clause will result in treatment of the shipment as without benefit of free entry under Section XXII, Chapter 98, Subchapter VIII, Item 9808.00.30 of the Harmonized Tariff Schedule of the United States.</P>
              <P>(B) Upon receipt of the required notice of purchase of foreign supplies from the contractor or any tier subcontractor—</P>
              <P>
                <E T="03">(1)</E> Verify the duty-free entitlement of goods entering under the contract; and</P>
              <P>
                <E T="03">(2)</E> Review the prime contract to ensure that performance of the contract requires the foreign supplies (quantity and price) identified in the notice.</P>
              <P>(C) Upon receipt of notification from the contractor that it is placing a foreign purchase that was not identified at the time of contract award—</P>
              <P>
                <E T="03">(1)</E> Determine whether a reduction in the contract price is required under the clause at FAR 52.225-8, Duty-Free Entry;</P>
              <P>
                <E T="03">(2)</E> If so, make an equitable adjustment in the contract price, unless the procuring contracting officer waives this adjustment;</P>
              <P>
                <E T="03">(3)</E> Determine the price of the foreign supplies exclusive of duty, and advise the contractor that that amount will be the maximum dollar value of supplies for which duty-free entry certificates will be issued.</P>

              <P>(D) Within 20 days after receiving the notification of purchase of foreign supplies, forward the following information in the format indicated to the Commander, DCM New York, ATTN: Customs Team, DCMDE-GNIC, 207 New <PRTPAGE P="185"/>York Avenue, Building 120, Staten Island, NY 10305-5013: 
              </P>
              <FP SOURCE="FP-1">We have received a contractor notification of the purchase of foreign supplies. I have verified that foreign supplies are required for the performance of the contract. If required, the prime contract price has been or will be adjusted.</FP>
              <EXTRACT>
                <P SOURCE="P-2">Prime Contractor Name and Address:</P>
                <P SOURCE="P-2">Prime Contractor CAGE Code:</P>
                <P SOURCE="P-2">Prime Contract Number plus Delivery Order Number, if applicable:</P>
                <P SOURCE="P-2">Total Dollar Value of the Prime Contract or Delivery Order:</P>
                <P SOURCE="P-2">Expiration Date of the Prime Contract or Delivery Order:</P>
                <P SOURCE="P-2">Foreign Supplier Name and Address:</P>
                <P SOURCE="P-2">Number of Subcontract/Purchase Order for Foreign Supplies:</P>
                <P SOURCE="P-2">Total Dollar Value of the Subcontract for Foreign Supplies:</P>
                <P SOURCE="P-2">Expiration Date of the Subcontract for Foreign Supplies:</P>
                <P SOURCE="P-2">CAO Activity Address Number:</P>
                <P SOURCE="P-2">ACO Name and Telephone Number:</P>
                <P SOURCE="P-2">ACO Code:</P>
                <P SOURCE="P-2">Signature:</P>
                <P SOURCE="P-2">Title:</P>
                
              </EXTRACT>
              <P>(E) If a contract modification results in a change to any data verifying duty-free entitlement previously furnished, forward a revised notification including the changed data to DCM New York.</P>
              <P>(ii) The responsibility for issuing duty-free entry certificates for foreign supplies purchased under a DoD contract or subcontract rests with the Customs Team, DCMDE-GNIC, DCM New York. Upon receipt of import documentation for incoming shipments from the contractor, its agent, or the U.S. Customs Service, DCM New York will verify the duty-free entitlement and execute the duty-free entry certificate.</P>
              <P>(iii) Upon arrival of foreign supplies at ports of entry, the consignee, generally the contractor or its agent (import broker) for shipments to other than a military installation, will file U.S. Customs Form 7501, 7501A, or 7506, with the District Director of Customs.</P>
              <P>(3) <E T="03">Immediate entry and release.</E> Importations made in the name of a DoD military facility or being shipped directly to a military facility are entitled to release under the immediate delivery procedure.</P>
              <P>(i) A DoD immediate delivery application has been approved and is on file at Customs Headquarters.</P>
              <P>(ii) The application is for an indefinite period and is good for all Customs districts, areas, and ports.</P>
              <CITA>[65 FR 19855, Apr. 13, 2000, as amended at 65 FR 52952, Aug. 31, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.903</SECTNO>
              <SUBJECT>Exempted supplies.</SUBJECT>
              <P>(b)(i) The term “supplies”—</P>
              <P>(A) Includes articles known as “stores,” such as food, medicines, and toiletries, as well as all consumable articles necessary and appropriate for the propulsion, operation, and maintenance of the vessel or aircraft, such as fuel, oil, gasoline, grease, paint, cleansing compounds, solvents, wiping rags, and polishes.</P>
              <P>(B) Does not include portable articles necessary and appropriate for the navigation, operation, or maintenance of vessel or aircraft and for the comfort and safety of the persons on board, such as rope, bolts and nuts, bedding, china and cutlery, which are included in the term “equipment.”</P>

              <P>(ii) The duty-free certificate shall be printed, stamped, or typed on the face of Customs Form 7501, or attached, and shall be executed by a duly designated officer or civilian official of the appropriate department or agency in the following form:
              </P>
              <EXTRACT>
                <FP SOURCE="FP-DASH">(Date) </FP>
                
                <FP SOURCE="FP-1">I certify that the acquisition of this material constituted a purchase of supplies by the United States for vessels or aircraft operated by the United States, and is admissible free of duty pursuant to 19 U.S.C. 1309. </FP>
                
                <FP SOURCE="FP-DASH">(Name)</FP>
                <FP SOURCE="FP-DASH">(Title)</FP>
                <FP SOURCE="FP-DASH">(Organization</FP>
              </EXTRACT>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 225.10—Additional Foreign Acquisition Regulations</HD>
            <SECTION>
              <SECTNO>225.1070</SECTNO>
              <SUBJECT>Clause deviations in overseas contracts.</SUBJECT>
              <P>See 201.403(2) for approval authority for clause deviations in overseas contracts with governments of North Atlantic Treaty Organization (NATO) countries or other allies or with United Nations or NATO organizations. </P>
              <CITA>[65 FR 19856, Apr. 13, 2000]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <PRTPAGE P="186"/>
            <HD SOURCE="HED">Subpart 225.11—Solicitation Provisions and Contract Clauses</HD>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>65 FR 19856, Apr. 13, 2000, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>225.1101</SECTNO>
              <SUBJECT>Acquisition of supplies.</SUBJECT>
              <P>(1) Use the provision at 252.225-7000, Buy American Act—Balance of Payments Program Certificate, instead of the provision at FAR 52.225-2, Buy American Act Certificate. Use the provision in any solicitation that includes the clause at 252.225-7001, Buy American Act and Balance of Payments Program.</P>
              <P>(2) Use the clause at 252.225-7001, Buy American Act and Balance of Payments Program, instead of the clause at FAR 52.225-1, Buy American Act—Supplies, in solicitations and contracts for supplies or services that require the furnishing of supplies.</P>
              <P>(i) Do not use the clause if an exception to the Buy American Act or Balance of Payments Program is known to apply or if using the clause at 252.225-7007, Buy American Act—Trade Agreements—Balance of Payments Program; 252.225-7021, Trade Agreements; or 252.225-7036, Buy American Act—North American Free Trade Agreement Implementation Act—Balance of Payments Program.</P>
              <P>(ii) The clause need not be used if nonqualifying country end products are ineligible for award, including—</P>
              <P>(A) End products restricted to domestic or domestic and qualifying country sources under appropriations and authorization act restrictions (see subpart 225.70);</P>
              <P>(B) End products restricted to domestic or domestic and Canadian sources (see subpart 225.71); and</P>
              <P>(C) End products restricted under the authority of FAR 6.302-3.</P>
              <P>(iii) The clause may be used if the contracting officer anticipates a waiver of the restriction in paragraph (2)(ii)(A) or (B) of this section.</P>
              <P>(3) Use the clause at 252.225-7002, Qualifying Country Sources as Subcontractors, in solicitations and contracts that include one of the following clauses:</P>
              <P>(i) 252.225-7001, Buy American Act and Balance of Payments Program.</P>
              <P>(ii) 252.225-7007, Buy American Act—Trade Agreements—Balance of Payments Program.</P>
              <P>(iii) 252.225-7021, Trade Agreements.</P>
              <P>(iv) 252.225-7036, Buy American Act—North American Free Trade Agreement Implementation Act—Balance of Payment Program.</P>
              <P>(4) Use the provision at 252.225-7003, Information for Duty-Free Entry Evaluation, in solicitations that include the clause at FAR 52.225-8, Duty-Free Entry. Use the provision with its Alternate I when the clause at 252.225-7021, Trade Agreements, is used.</P>
              <P>(5) Use the provision at 252.225-7006, Buy American Act—Trade Agreements—Balance of Payments Program Certificate, instead of the provision at FAR 52.225-6, Trade Agreements Certificate, in all solicitations that include the clause at 252.225-7007, Buy American Act—Trade Agreements—Balance of Payments Program.</P>
              <P>(6) Except as provided in paragraph (11) of this section, use the clause at 252.225-7007, Buy American Act—Trade Agreements—Balance of Payments Program, instead of the clause at FAR 52.225-5, Trade Agreements. The clause need not be used where purchase from foreign sources is restricted (see 225.401(b)(ii)). The clause may be used where the contracting officer anticipates a waiver of the restriction.</P>
              <P>(7) Use the clause at 252.225-7008, Supplies to be Accorded Duty-Free Entry, in solicitations and contracts that provide for duty-free entry and that include the clause at FAR 52.225-8, Duty-Free Entry.</P>
              <P>(8) Use the clause at 252.225-7009, Duty-Free Entry—Qualifying Country Supplies (End Products and Components), in solicitations and contracts for supplies and in solicitations and contracts for supplies for exclusive use outside the United States.</P>
              <P>(9) Use the clause at 252.225-7010, Duty-Free Entry—Additional Provisions, in solicitations and contracts that include the clause at FAR 52.225-8, Duty-Free Entry.</P>
              <P>(10) Use the provision at 252.225-7020, Trade Agreements Certificate, in all solicitations that include the clause at 252.225-7021, Trade Agreements.</P>

              <P>(11) Use the clause at 252.225-7021, Trade Agreements, instead of the <PRTPAGE P="187"/>clause at FAR 52.225-5, Trade Agreements, when acquiring information technology products in Federal Supply Group 70 or 74.</P>
              <P>(12) Use the provision at 252.225-7035, Buy American Act—North American Free Trade Agreement Implementation Act—Balance of Payments Program Certificate, instead of the provision at FAR 52.225-4, Buy American Act—North American Free Trade Agreement—Israeli Trade Act Certificate, in all solicitations that include the clause at 252.225-7036, Buy American Act-North American Free Trade Agreement Implementation Act—Balance of Payments Program.</P>
              <P>(i) Use the basic provision when the basic clause at 252.225-7036 is used.</P>
              <P>(ii) Use the provision with its Alternate I when the clause at 252.225-7036 is used with its Alternate I.</P>
              <P>(13) Use the clause at 252.225-7036, Buy American Act—North American Free Trade Agreement Implementation Act—Balance of Payments Program, instead of the clause at FAR 52.225-3, Buy American Act—North American Free Trade Agreement—Israeli Trade Act. The clause need not be used where purchase from foreign sources is restricted (see 225.401 (b)(ii)). The clause may be used where the contracting officer anticipates a waiver of the restriction.</P>
              <P>(i)(A) Use the clause in all solicitations and contracts for the items listed at 225.401-70, when the estimated value is $56,190 or more and the Trade Agreements Act does not apply. Include the clause in solicitations for multiple line items if any line item is subject to NAFTA.</P>
              <P>(B) Use the clause with its Alternate I when the estimated value is between $25,000 and $56,190.</P>
              <P>(ii) Application of the procedures in 225.402 and the acquisition of noneligible and eligible products under the same solicitation may result in the application of the North American Free Trade Agreement Implementation Act to only some of the items solicited. In such case, indicate in the Schedule those items covered by the Act.</P>
              <P>(14) Use the clause at 252.225-7037, Duty-Free Entry—Eligible End Products, in solicitations and contracts for supplies and services when the clause at 252.225-7007, Buy American Act—Trade Agreements—Balance of Payments Program; 252.225-7021, Trade Agreements; or 252.225-7036, Buy American Act—North American Free Trade Agreement Implementation Act—Balance of Payments Program, is used.</P>
              <CITA>[65 FR 19856, Apr. 13, 2000, as amended at 65 FR 36034, June 6, 2000; 67 FR 20693, 20694, Apr. 26, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.1103</SECTNO>
              <SUBJECT>Other provisions and clauses.</SUBJECT>
              <P>(1) Unless the contracting officer knows that the prospective contractor is not a domestic concern, use the clause at 252.225-7005, Identification of Expenditures in the United States, in solicitations and contracts that—</P>
              <P>(i) Exceed the simplified acquisition threshold; and</P>
              <P>(ii) Are for the acquisition of—</P>
              <P>(A) Supplies for use outside the United States;</P>
              <P>(B) Construction to be performed outside the United States; or</P>
              <P>(C) Services to be performed primarily outside the United States.</P>
              <P>(2) Use the clause at 252.225-7041, Correspondence in English, in solicitations and contracts when contract performance will be wholly or in part in a foreign country.</P>
              <P>(3) Use the clause at 252.225-7042, Authorization to Perform, in solicitations and contracts when contract performance will be wholly or in part in a foreign country.</P>
              <CITA>[65 FR 19856, Apr. 13, 2000, as amended at 67 FR 20694, Apr. 26, 2002]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 225.70—Authorization Acts, Appropriations Acts, and Other Statutory Restrictions on Foreign Acquisition</HD>
            <SECTION>
              <SECTNO>225.7000</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <P>(a) This subpart contains restrictions on the acquisition of foreign products and services, imposed by Defense appropriations and authorization acts and other statutes. Refer to the acts to verify current applicability of the restrictions.</P>
              <P>(b) Nothing in this subpart affects the applicability of the Buy American Act or Balance of Payments Program.</P>
              <CITA>[56 FR 36367, July 31, 1991, as amended at 62 FR 2856, Jan. 17, 1997]</CITA>
            </SECTION>
            <SECTION>
              <PRTPAGE P="188"/>
              <SECTNO>225.7001</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <P>As used in this subpart—</P>
              <P>(a) <E T="03">Bearing components</E> and <E T="03">miniature and instrument ball bearings</E> are defined in the clause at 252.225-7016, Restriction on Acquisition of Ball and Roller Bearings.</P>
              <P>(b) <E T="03">Component</E> and <E T="03">end product</E> are defined in the clause at 252.225-7012, Preference for Certain Domestic Commodities.</P>
              <P>(c) <E T="03">Hand or measuring tools</E> means those tools listed in Federal supply classifications 51 and 52, respectively.</P>
              <P>(d) <E T="03">Specialty metals</E> is defined in the clause at 252.225-7014, Preference for Domestic Specialty Metals.</P>
              <CITA>[61 FR 10899, Mar. 18, 1996, as amended at 61 FR 50453, Sept. 26, 1996; 67 FR 20697, Apr. 26, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7002-1</SECTNO>
              <SUBJECT>Restrictions.</SUBJECT>
              <P>The following restrictions implement 10 U.S.C. 2533a. Except as provided in subsection 225.7002-2, do not acquire—</P>
              <P>(a) Any of the following items, either as end products or components, unless the items have been grown, reprocessed, reused, or produced in the United States:</P>
              <P>(1) Food.</P>
              <P>(2) Clothing.</P>
              <P>(3) Tents, tarpaulins, or covers.</P>
              <P>(4) Cotton and other natural fiber products.</P>
              <P>(5) Woven silk or woven silk blends.</P>
              <P>(6) Spun silk yarn for cartridge cloth.</P>
              <P>(7) Synthetic fabric or coated synthetic fabric, including all textile fibers and yarns that are for use in such fabrics.</P>
              <P>(8) Canvas products.</P>
              <P>(9) Wool (whether in the form of fiber or yarn or contained in fabrics, materials, or manufactured articles).</P>
              <P>(10) Any item of individual equipment (Federal Supply Class 8465) manufactured from or containing any of the fibers, yarns, fabrics, or materials listed in this paragraph (a).</P>
              <P>(b) Specialty metals, including stainless steel flatware, unless the metals were melted in steel manufacturing facilities located within the United States.</P>
              <P>(c) Hand or measuring tools, unless the tools were produced in the United States.</P>
              <CITA>[67 FR 20697, Apr. 26, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7002-2</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
              <P>Acquisitions in the following categories are not subject to the restrictions in 225.7002-1:</P>
              <P>(a) Acquisitions at or below the simplified acquisition threshold.</P>
              <P>(b) Acquisitions of any of the items in 225.7002-1(a) or (b), if the Secretary concerned determines that items grown, reprocessed, reused, or produced in the United States cannot be acquired as and when needed in a satisfactory quality and sufficient quantity at U.S. market prices.</P>
              <P>(c) Acquisitions of items listed in FAR 25.104(a), unless the items are hand or measuring tools.</P>
              <P>(d) Acquisitions outside the United States in support of combat operations.</P>
              <P>(e) Acquisitions of perishable foods by activities located outside the United States for personnel of those activities.</P>
              <P>(f) Emergency acquisitions by activities located outside the United States for personnel of those activities.</P>
              <P>(g) Acquisitions by vessels in foreign waters.</P>
              <P>(h) Acquisitions of items specifically for commissary resale.</P>
              <P>(i) Acquisitions of end products incidentally incorporating cotton, other natural fibers, or wool, for which the estimated value of the cotton, other natural fibers, or wool—</P>
              <P>(1) Is not more than 10 percent of the total price of the end product; and</P>
              <P>(2) Does not exceed the simplified acquisition threshold.</P>
              <P>(j) Acquisitions of foods manufactured or processed in the United States, regardless of where the foods (and any component if applicable) were grown or produced.</P>
              <P>(k) Purchases of specialty metals by subcontractors at any tier for programs other than—</P>
              <P>(1) Aircraft;</P>
              <P>(2) Missile and space systems;</P>
              <P>(3) Ships;</P>
              <P>(4) Tank-automotive;</P>
              <P>(5) Weapons; and</P>
              <P>(6) Ammunition.<PRTPAGE P="189"/>
              </P>
              <P>(l) Acquisitions of specialty metals and chemical warfare protective clothing when the acquisition furthers an agreement with a qualifying country (see 225.872).</P>
              <P>(m) Acquisitions of fibers and yarns that are for use in synthetic fabric or coated synthetic fabric (but not the purchase of the synthetic or coated synthetic fabric itself), if—</P>
              <P>(1) The fabric is to be used as a component of an end product that is not a textile product. Examples of textile products, made in whole or in part of fabric, include—</P>
              <P>(i) Draperies, floor coverings, furnishings, and bedding (Federal Supply Group 72, Household and Commercial Furnishings and Appliances);</P>
              <P>(ii) Items made in whole or in part of fabric in Federal Supply Group 83, Textile/leather/furs/apparel/findings/tents/flags, or Federal Supply Group 84, Clothing, Individual Equipment and Insignia;</P>
              <P>(iii) Upholstered seats (whether for household, office, or other use); and</P>
              <P>(iv) Parachutes (Federal Supply Class 1670); or</P>
              <P>(2) The fibers and yarns are para-aramid fibers and yarns manufactured in—</P>
              <P>(i) The Netherlands; or</P>
              <P>(ii) Another qualifying country (see 225.872) if the Under Secretary of Defense (Acquisition, Technology, and Logistics) makes a determination in accordance with Section 807 of Public Law 105-261 that—</P>
              <P>(A) Procuring articles that contain only para-aramid fibers and yarns manufactured from suppliers within the United States would result in sole source contracts or subcontracts for the supply of such para-aramid fibers and yarns;</P>
              <P>(B) Such sole source contracts or subcontracts would not be in the best interest of the Government or consistent with the objectives of the Competition in Contracting Act (10 U.S.C. 2304); and</P>
              <P>(C) The qualifying country permits U.S. firms that manufacture para-aramid fibers and yarns to compete with foreign firms for the sale of para-aramid fibers and yarns in that country.</P>
              <CITA>[67 FR 20697, Apr. 26, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7002-3</SECTNO>
              <SUBJECT>Contract clauses.</SUBJECT>
              <P>Unless an exception applies—</P>
              <P>(a) Use the clause at 252.225-7012, Preference for Certain Domestic Commodities, in solicitations and contracts exceeding the simplified acquisition threshold.</P>
              <P>(b)(1) Use the clause at 252.225-7014, Preference for Domestic Specialty Metals, in solicitations and contracts exceeding the simplified acquisition threshold that require delivery of an article containing specialty metals.</P>
              <P>(2) Use the clause with its Alternate I in solicitations and contracts exceeding the simplified acquisition threshold requiring delivery, for one of the following major programs, of an article containing specialty metals:</P>
              <P>(i) Aircraft.</P>
              <P>(ii) Missile and space systems.</P>
              <P>(iii) Ships.</P>
              <P>(iv) Tank-automotive.</P>
              <P>(v) Weapons.</P>
              <P>(vi) Ammunition.</P>
              <P>(c) Use the clause at 252.225-7015, Preference for Domestic Hand or Measuring Tools, in all solicitations and contracts over the simplified acquisition threshold calling for delivery of hand or measuring tools.</P>
              <CITA>[61 FR 50453, Sept. 26, 1996, as amended at 67 FR 20698, Apr. 26, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7003</SECTNO>
              <SUBJECT>Restriction on overseas military construction.</SUBJECT>
              <P>For restriction on award of military construction contracts to be performed in the United States territories and possessions in the Pacific and on Kwajalein Atoll, or in countries bordering the Arabian Gulf, see 236.274(a).</P>
              <CITA>[62 FR 2856, Jan. 17, 1997]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7004</SECTNO>
              <SUBJECT>Restriction on overseas architect-engineer services.</SUBJECT>
              <P>For restriction on award of architect-engineer contracts to be performed in Japan, in any North Atlantic Treaty Organization member country, or in countries bordering the Arabian Gulf, see 236.602-70.</P>
              <CITA>[62 FR 2857, Jan. 17, 1997]</CITA>
            </SECTION>
            <SECTION>
              <PRTPAGE P="190"/>
              <SECTNO>225.7005</SECTNO>
              <SUBJECT>Waiver of certain restrictions.</SUBJECT>
              <P>(a) Where provided for elsewhere in this subpart, the restrictions on certain foreign purchases under 10 U.S.C. 2534(a) may be waived as follows:</P>
              <P>(1)(i) The Under Secretary of Defense (Acquisition, Technology, and Logistics), without power of delegation, may waive the restriction for a particular item for a particular foreign country upon determination that—</P>
              <P>(A) United States producers of the item would not be jeopardized by competition from a foreign country, and that country does not discriminate against defense items produced in the United States to a greater degree than the United States discriminates against defense items produced in that country; or</P>
              <P>(B) Application of the restriction would impede cooperative programs entered into between DoD and a foreign country, or would impede the reciprocal procurement of defense items under a memorandum of understanding providing for reciprocal procurement of defense items under 225.872, and that country does not discriminate against defense items produced in the United States to a greater degree than the United States discriminates against defense items produced in that country.</P>

              <P>(ii) A notice of determination to exercise the waiver authority must be published in the <E T="04">Federal Register</E> and submitted to the congressional defense committees at least 15 days before the effective date of the waiver.</P>
              <P>(iii) Such waiver shall be in effect for a period not greater than 1 year.</P>
              <P>(iv) For contracts entered into prior to the effective date of a waiver, provided adequate consideration is received to modify the contract, such waiver shall be applied as directed or authorized in the waiver to—</P>
              <P>(A) Subcontracts entered into on or after the effective date of the waiver; and</P>
              <P>(B) Options for the procurement of items that are exercised after the effective date of the waiver, if the option prices are adjusted for any reason other than the application of the waiver.</P>
              <P>(2) The head of the contracting activity may waive the restriction on a case-by-case basis upon execution of a determination and findings that any of the following applies:</P>
              <P>(i) The restriction would cause unreasonable delays.</P>
              <P>(ii) Satisfactory quality items manufactured in the United States or Canada are not available.</P>
              <P>(iii) Application of the restriction would result in the existence of only one source for the item in the United States or Canada.</P>
              <P>(iv) Application of the restriction is not in the national security interests of the United States.</P>
              <P>(v) Application of the restriction would adversely affect a U.S. company.</P>
              <P>(3) The restriction is waived when it would cause unreasonable costs. The cost of the item of U.S. or Canadian origin is unreasonable if it exceeds 150 percent of the offered price, inclusive of duty, of items which are not of U.S. or Canadian origin.</P>
              <P>(b) In accordance with the provisions of paragraphs (a)(1)(i) through (a)(1)(iii) of this section, the Under Secretary of Defense (Acquisition, Technology, and Logistics) has waived the restrictions of 10 U.S.C. 2534(a) for certain items manufactured in the United Kingdom, including air circuit breakers for naval vessels and totally enclosed lifeboats (see 225.7016 and 225.7022). This waiver applies to—</P>
              <P>(1) Procurements under solicitations issued on or after August 4, 1998; and</P>
              <P>(2) Subcontracts and options under contracts entered into prior to August 4, 1998, under the conditions described in paragraphs (a)(1)(iv) of this section.</P>
              <CITA>[63 FR 5745, Feb. 4, 1998, as amended at 63 FR 28284, May 22, 1998; 63 FR 43888, Aug. 17, 1998; 65 FR 39705, June 27, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7006</SECTNO>
              <SUBJECT>Restrictions on construction or repair of vessels in foreign shipyards.</SUBJECT>
              <P>10 U.S.C. 7309 restricts constructing or repairing vessels in foreign shipyards.</P>
              <P>(a) Do not award a contract to construct either of the following in a foreign shipyard—</P>
              <P>(1) A vessel constructed for any of the armed forces; or</P>

              <P>(2) A major component of the hull or superstructure of any such vessel.<PRTPAGE P="191"/>
              </P>
              <P>(b) Do not overhaul, repair, or maintain in a foreign shipyard, a naval vessel (or any other vessel under the jurisdiction of the Secretary of the Navy) homeported in the United States. This restriction does not apply to voyage repairs.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.7007</SECTNO>
              <SUBJECT>Restriction on acquisition of foreign buses.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>225.7007-1</SECTNO>
              <SUBJECT>Restriction.</SUBJECT>
              <P>In accordance with 10 U.S.C. 2534, do not acquire a multipassenger motor vehicle (bus) unless it is manufactured in the United States or Canada.</P>
              <CITA>[63 FR 5745, Feb. 4, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7007-2</SECTNO>
              <SUBJECT>Applicability.</SUBJECT>
              <P>Apply this restriction if the buses are purchased, leased, rented, or made available under contracts for transportation services.</P>
              <CITA>[60 FR 19533, Apr. 19, 1995]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7007-3</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
              <P>This restriction does not apply in any of the following circumstances:</P>
              <P>(a) Buses manufactured outside the United States and Canada are needed for temporary use because buses manufactured in the United States or Canada are not available to satisfy requirements that cannot be postponed. Such use may not, however, exceed the lead time required for acquisition and delivery of buses manufactured in the United States or Canada.</P>
              <P>(b) The requirement for buses is temporary in nature. For example, to meet a special, nonrecurring requirement or a sporadic and infrequent recurring requirement, buses manufactured outside the United States and Canada may be used for temporary periods of time. Such use may not, however, exceed the period of time needed to meet the special requirement.</P>
              <P>(c) Buses manufactured outside the United States and Canada are available at no cost to the U.S. Government.</P>
              <P>(d) The acquisition is for an amount that does not exceed the simplified acquisition threshold.</P>
              <CITA>[63 FR 5745, Feb. 4, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7007-4</SECTNO>
              <SUBJECT>Waiver.</SUBJECT>
              <P>The waiver criteria at 225.7005(a) apply to this restriction.</P>
              <CITA>[63 FR 43888, Aug. 17, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7008</SECTNO>
              <SUBJECT>Restriction on research and development.</SUBJECT>
              <P>(a) Public Law 92-570 precludes use of DoD appropriations for award to any foreign corporation, organization, person, or entity for research and development in connection with any weapon system or other military equipment if there is a U.S. corporation, organization, person, or entity—</P>
              <P>(1) Equally competent; and</P>
              <P>(2) Willing to perform at a lower cost.</P>
              <P>(b) The statutory restriction in paragraph (a) of this section does not change the rules for selecting research and development contractors in FAR part 35. However, when a U.S. source and a foreign source are equally competent, award to the source that will provide the services at the lower cost.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.7009</SECTNO>
              <RESERVED>[Reserved]</RESERVED>
            </SECTION>
            <SECTION>
              <SECTNO>225.7010</SECTNO>
              <SUBJECT>Restriction on certain chemical weapons antidote.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>225.7010-1</SECTNO>
              <SUBJECT>Restriction.</SUBJECT>
              <P>In accordance with 10 U.S.C. 2534 and defense industrial mobilization requirements (see subpart 208.72), do not acquire chemical weapons antidote contained in automatic injectors, or the components for such injectors, unless the chemical weapons antidote or component is manufactured in the United States or Canada by a company that—</P>
              <P>(a) Is a producer under the industrial preparedness program at the time of contract award;</P>
              <P>(b) Has received all required regulatory approvals; and</P>
              <P>(c) Has the plant, equipment, and personnel to perform the contract in the United States or Canada at the time of contract award.</P>
              <CITA>[60 FR 19533, Apr. 19, 1995, as amended at 62 FR 34123, June 24, 1997; 63 FR 5745, Feb. 4, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7010-2</SECTNO>
              <SUBJECT>Exception.</SUBJECT>

              <P>The restriction of 225.7010-1 does not apply if—the acquisition is for an <PRTPAGE P="192"/>amount that does not exceed the simplified acquisition threshold.</P>
              <CITA>[63 FR 5745, Feb. 4, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7010-3</SECTNO>
              <SUBJECT>Waiver.</SUBJECT>
              <P>The waiver criteria at 225.7005(a) apply to this restriction.</P>
              <CITA>[63 FR 43888, Aug. 17, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7011</SECTNO>
              <SUBJECT>Restriction on Ballistic Missile Defense research, development, test, and evaluation.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>225.7011-1</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <P>Competent, foreign firm, and U.S. firm have the meanings given in the provision at 252.225-7018, Notice of Prohibition of Certain Contracts with Foreign Entities for the Conduct of Ballistic Missile Defense RDT&amp;E.</P>
              <CITA>[56 FR 36367, July 31, 1991, as amended at 59 FR 27672, May 27, 1994]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7011-2</SECTNO>
              <SUBJECT>Restriction.</SUBJECT>
              <P>(a) Section 222 of the Defense Authorization Act for FY1988 and 1989 (Pub. L. 100-180) prohibits the award of certain contracts for the conduct of Ballistic Missile Defense (BMD) Program research, development, test, and evaluation (RDT&amp;E), to foreign governments or firms unless the Secretary of Defense certifies to Congress in writing at any time during the applicable fiscal year that work cannot be competently performed by a U.S. firm at a price equal to or less than the price of the foreign government or firm.</P>
              <P>(b) For purposes of implementing this section, heads of contracting activities are authorized to make this certification (see 225.7011-3(b)).</P>
              <P>(c) Except as provided in 225.7011-3, do not use any funds appropriated to, or for the use of, DoD to enter into or carry out any contract, including any contract awarded as a result of a broad agency announcement, with a foreign government or firm if the contract provides for the conduct of RDT&amp;E in connection with the BMD.</P>
              <P>(d) This prohibition is not intended to deny access to foreign expertise when contract performance requires a level of competency unavailable in the United States.</P>
              <CITA>[56 FR 36367, July 31, 1991, as amended at 59 FR 27672, May 27, 1994]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7011-3</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
              <P>This prohibition shall not apply—</P>
              <P>(a) To contracts awarded to a foreign government or firm if the contracting officer determines that—</P>
              <P>(1) The contract will be performed within the United States;</P>
              <P>(2) The contract is exclusively for RDT&amp;E in connection with antitactical ballistic missile systems; or</P>
              <P>(3) The foreign government or foreign firm agrees to share a substantial portion of the total contract cost. Consider the foreign share as substantial if it is equitable with respect to the relative benefits to be derived from the contract by the United States and the foreign parties. For example, if the contract is more beneficial to the foreign party, its share of the cost should be correspondingly higher; or</P>
              <P>(b) If the head of the contracting activity certifies in writing, before contract award, that a contract for research, development, testing, or evaluation (other than for RDT&amp;E described in paragraph (a)(2) of this subsection) cannot be competently performed by a U.S. firm at a price equal to or less than the price at which the RDT&amp;E would be performed by a foreign government or firm.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.7011-4</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <P>(a) When awarding a prime contract to a foreign government or firm under 225.7011-3(b), the contracting officer or source selection authority, as applicable, shall make a determination that will be the basis for the certification.</P>
              <P>(1) The determination must—</P>
              <P>(i) Describe the contract effort;</P>
              <P>(ii) State the number of proposals solicited and received from both U.S. and foreign firms;</P>
              <P>(iii) Identify the proposed awardee and the amount of the contract;</P>
              <P>(iv) State that selection of the contractor was based on the evaluation factors contained in the solicitation, or the criteria contained in the broad agency announcement; and</P>

              <P>(v) State that the effort cannot be competently performed by a U.S. firm at a price equal to, or less than, the price at which it would be performed by the foreign awardee.<PRTPAGE P="193"/>
              </P>
              <P>(2) When either a broad agency announcement (BAA) or program research and development announcement (PRDA) is used, or when the determination is otherwise not based on direct competition between foreign and domestic proposals, the determination must not be merely conclusory.</P>
              <P>(i) The determination must specifically explain its basis, include a description of the method used to determine the competency of U.S. firms, and describe the cost or price analysis performed.</P>
              <P>(ii) Alternately, the determination may contain—</P>
              <P>(A) A finding, including the basis for such finding, that the proposal was submitted solely in response to the terms of a BAA or PRDA, or other solicitation document without any technical guidance from the program office; and</P>
              <P>(B) A finding, including the basis for such finding, that disclosure of the information in the proposal for the purpose of conducting a competitive acquisition is prohibited.</P>
              <P>(b) Forward a copy of the certification (from 225.7011-3(b)) and, as appropriate, the determination or justification and approval (J&amp;A) within 30 days of contract award to the Ballistic Missile Defense Organization, Attn: BMDO/DRI, 7100 Defense Pentagon, Washington, DC 20301-7100, if award is based on—</P>
              <P>(1) A determination under paragraph (a) of this subsection;</P>
              <P>(2) Other than full and open competition under FAR subpart 6.3; or</P>
              <P>(3) An unsolicited proposal under FAR subpart 15.6.</P>
              <CITA>[56 FR 36367, July 31, 1991, as amended at 59 FR 27672, May 27, 1994; 61 FR 50453, Sept. 26, 1996; 63 FR 11534, Mar. 9, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7011-5</SECTNO>
              <SUBJECT>Solicitation provision.</SUBJECT>
              <P>Use the provision at 252.225-7018, Notice of Prohibition of Certain Contracts With Foreign Entities for the Conduct of Ballistic Missile Defense RDT&amp;E, in all competitively negotiated BMD solicitations for research, development, test, and evaluation, unless foreign participation is otherwise excluded.</P>
              <CITA>[56 FR 36367, July 31, 1991, as amended at 59 FR 27672, May 27, 1994]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7012</SECTNO>
              <SUBJECT>Restrictions on anchor and mooring chain.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>225.7012-1</SECTNO>
              <SUBJECT>Restrictions.</SUBJECT>
              <P>(a) Under Public Law 101-511, Section 8041, and similar sections in subsequent Defense appropriations acts, DoD appropriations for fiscal years 1991 and after may not be used to acquire welded shipboard anchor and mooring chain, four inches in diameter and under, unless—</P>
              <P>(1) It is manufactured in the United States, including cutting, heat treating, quality control, testing, and welding (both forging and shot blasting process); and</P>
              <P>(2) The cost of the components manufactured in the United States exceeds 50 percent of the total cost of components.</P>
              <P>(b) Acquisition of welded shipboard anchor and mooring chain, four inches in diameter and under, when used as a component of a naval vessel, is also restricted under 10 U.S.C. 2534(a)(3)(ii). However, the more stringent restriction under 225.7012-1(a) takes precedence.</P>
              <CITA>[61 FR 13107, Mar. 26, 1996]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7012-2</SECTNO>
              <SUBJECT>Waiver.</SUBJECT>
              <P>The restriction in 225.7012-1(a) may be waived by the Secretary of the Department responsible for acquisition, on a case-by-case basis, where sufficient domestic suppliers are not available to meet DoD requirements on a timely basis and the acquisition is necessary to acquire capability for national security purposes.</P>
              <P>(a) Document the waive in a written D&amp;F containing—</P>
              <P>(1) The factors supporting the waiver; and</P>
              <P>(2) A certification that the acquisition must be made in order to acquire capability for national security purposes.</P>
              <P>(b) Provide a copy of the D&amp;F to the House and Senate Committees on Appropriations.</P>
              <CITA>[61 FR 13107, Mar. 26, 1996]</CITA>
            </SECTION>
            <SECTION>
              <PRTPAGE P="194"/>
              <SECTNO>225.7012-3</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <P>Use the clause at 252.225-7019, Restriction on Acquisition of Foreign Anchor and Mooring Chain, in all solicitations and contracts—</P>
              <P>(a) Using fiscal year 1991 or later funds; and</P>
              <P>(b) Requiring welded shipboard anchor or mooring chain of four inches in diameter or less.</P>
              <CITA>[61 FR 13107, Mar. 26, 1996, as amended at 61 FR 50453, Sept. 26, 1996]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7013-225.7014</SECTNO>
              <RESERVED>[Reserved]</RESERVED>
            </SECTION>
            <SECTION>
              <SECTNO>225.7015</SECTNO>
              <SUBJECT>Restriction on night vision image intensifier tubes and devices.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>225.7015-1</SECTNO>
              <SUBJECT>Restriction.</SUBJECT>
              <P>In accordance with Pub. L. 101-165 and 101-511, fiscal years 1990 and 1991 funds may not be used to acquire second and third generation night vision image intensifier tubes and devices unless they are manufactured in the United States or Canada.</P>
              <CITA>[58 FR 28467, May 13, 1993]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7015-2</SECTNO>
              <SUBJECT>Exception.</SUBJECT>
              <P>Second and third generation night vision image intensifier tubes and devices manufactured outside the United States or Canada may be acquired if—</P>
              <P>(a) Adequate domestic supplies are not available to meet DoD requirements on a timely basis; and</P>
              <P>(b) The Secretary of the Department responsible for the acquisition certifies to the House and Senate Committees on Appropriations that the acquisition of tubes and devices manufactured outside the United States or Canada is necessary in order to acquire capability for national security purposes.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.7015-3</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <P>Use the clause at 252.225-7024, Restriction on Acquisition of Night Vision Image Intensifier Tubes and Devices, in all solicitations and contracts which—</P>
              <P>(a) Use fiscal year 1990 or 1991 funds; and</P>
              <P>(b) Require second and third generation night vision image intensifier tubes and devices.</P>
              <CITA>[58 FR 28467, May 13, 1993]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7016</SECTNO>
              <SUBJECT>Restriction on air circuit breakers for naval vessels.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>225.7016-1</SECTNO>
              <SUBJECT>Restriction.</SUBJECT>
              <P>In accordance with 10 U.S.C. 2534 and 225.7005(b), do not acquire air circuit breakers for naval vessels unless they are manufactured in the United States, Canada, or the United Kingdom.</P>
              <CITA>[63 FR 43888, Aug. 17, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7016-2</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
              <P>This restriction does not apply if—</P>
              <P>(a) The acquisition is for an amount that does not exceed the simplified acquisition threshold; or</P>
              <P>(b) Spare or repair parts are needed to support air circuit breakers manufactured outside the United States. Support includes the purchase of spare air circuit breakers where those from alternate sources are not interchangeable.</P>
              <CITA>[62 FR 34124, June 24, 1997, as amended at 63 FR 5746, Feb. 4, 1998; 63 FR 43888, Aug. 17, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7016-3</SECTNO>
              <SUBJECT>Waiver.</SUBJECT>
              <P>The waiver criteria at 225.7005(a) apply to this restriction.</P>
              <CITA>[63 FR 43888, Aug. 17, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7016-4</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <P>Use the clause at 252.225-7029, Preference for United States or Canadian Air Circuit Breakers, in all solicitations and contracts requiring air circuit breakers for naval vessels, unless—</P>
              <P>(a) An exception under 225.7016-2 is known to apply; or</P>
              <P>(b) A waiver has been granted in accordance with 225.7016-3.</P>
              <CITA>[60 FR 19534, Apr. 19, 1995]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7017</SECTNO>
              <SUBJECT>Restriction on carbon, alloy, and armor steel plate.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>225.7017-1</SECTNO>
              <SUBJECT>Restriction.</SUBJECT>

              <P>In accordance with section 8111 of Pub. L. 102-172, and similar sections in subsequent appropriations acts, all carbon, alloy, and armor steel plate in Federal stock class 9515 or described by American Society for Testing Materials (ASTM) or American Iron and Steel Institute (AISI) specifications, <PRTPAGE P="195"/>purchased by the Government or a contractor for use in a Government-owned facility or in a facility controlled (e.g., leased) by DoD, shall be melted and rolled in the United States or Canada.</P>
              <CITA>[58 FR 28468, May 13, 1993]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7017-2</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
              <P>This restriction does not apply to—</P>
              <P>(a) Contracts in effect as of November 26, 1991;</P>
              <P>(b) Direct purchases by DoD using other than fiscal year 1992 or subsequent year funds; or</P>
              <P>(c) Purchases by contractors unless the prime contract uses fiscal year 1992 or subsequent year funds.</P>
              <CITA>[58 FR 28468, May 13, 1993]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7017-3</SECTNO>
              <SUBJECT>Waiver.</SUBJECT>
              <P>The restriction may be waived by the Secretary of the department responsible for acquisition, on a case-by-case, by certifying to the House and Senate Committees on Appropriations that—</P>
              <P>(a) Adequate U.S. or Canadian supplies are not available to meet DoD requirements on a timely basis; and</P>
              <P>(b) The acquisition must be made in order to acquire capability for national security purposes.</P>
              <CITA>[57 FR 14994, Apr. 23, 1992]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7017-4</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <P>Unless an exception under 225.7017-2 is known to apply or a waiver has been granted in accordance with 225.7017-3, use the clause at 252.225-7030, Restriction on Acquisition of Carbon, Alloy, and Armor Steel Plate, in all solicitations and contracts which—</P>
              <P>(a) Require the delivery to the Government of carbon, alloy, or armor steel plate which will be used in a facility owned by the Government or under the control of DoD; or</P>
              <P>(b) Require contractors operating in a Government-owned facility or a facility under the control of DoD to purchase carbon, alloy, or armor steel plate.</P>
              <CITA>[57 FR 14994, Apr. 23, 1992, as amended at 57 FR 53600, Nov. 12, 1992]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7018</SECTNO>
              <SUBJECT>Restriction on four ton dolly jacks.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>225.7018-1</SECTNO>
              <SUBJECT>Restriction.</SUBJECT>
              <P>In accordance with section 9108 of Public Law 102-396, no fiscal year 1993 funds shall be used to procure four ton dolly jacks manufactured outside the United States.</P>
              <CITA>[59 FR 27672, May 27, 1994]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7018-2</SECTNO>
              <SUBJECT>Waiver.</SUBJECT>
              <P>The restriction is 225.7018-1 may be waived on a case-by-case basis where the Secretary of the Military Department or the Under Secretary of Defense (Acquisition, Technology, and Logistics) certifies to the Committees on Appropriations of the House and Senate that—</P>
              <P>(a) Adequate domestic supplies are available to meet requirements on a timely basis; and</P>
              <P>(b) The acquisition must be made in order to acquire capability for national security purposes.</P>
              <CITA>[58 FR 28468, May 13, 1993, as amended at 60 FR 61597, Nov. 30, 1995; 65 FR 39705, June 27, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7018-3</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <P>Use the clause at section 252.225-7033, Restriction on Acquisition of Four Ton Dolly Jacks, in solicitations and contracts that use fiscal year 1993 funds for the acquisition of four ton dolly jacks.</P>
              <CITA>[59 FR 27672, May 27, 1994]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7019</SECTNO>
              <SUBJECT>Restrictions on ball and roller bearings.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>225.7019-1</SECTNO>
              <SUBJECT>Restrictions.</SUBJECT>
              <P>(a) In accordance with 10 U.S.C. 2534 and 225.7019-3(b)(5), through fiscal year 2005, do not acquire ball and roller bearings or bearing components that are not manufactured in the United States, Canada, or the United Kingdom.</P>

              <P>(b) In accordance with Section 8099 of Public Law 104-61 and similar sections in subsequent Defense appropriations acts, do not use fiscal year 1996 or subsequently appropriated funds to acquire ball and roller bearings other than those produced by a domestic source and of domestic origin, i.e., <PRTPAGE P="196"/>bearings and bearing components manufactured in the United States or Canada.</P>
              <CITA>[61 FR 10900, Mar. 18, 1996, as amended at 61 FR 58489, Nov. 15, 1996; 62 FR 34124, June 24, 1997; 63 FR 43888, Aug. 17, 1998; 65 FR 77828, Dec. 13, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7019-2</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
              <P>(a) The restriction in 225.7019-1(a) does not apply to—</P>
              <P>(1) Acquisitions using simplified acquisition procedures, unless ball or roller bearings or bearing components are the end items being purchased;</P>
              <P>(2) Purchases of commercial items incorporating ball or roller bearings;</P>
              <P>(3) Miniature and instrument ball bearings when necessary to meet urgent military requirements;</P>
              <P>(4) Items acquired overseas for use overseas; or</P>
              <P>(5) Ball and roller bearings or bearing components or items containing bearings for use in a cooperative or co-production project under an international agreement. This exception does not apply to miniature and instrument ball bearings.</P>
              <P>(b) The restriction in 225.7019-1(b) does not apply to contracts or subcontracts for acquisition of commercial items, except for commercial ball and roller bearings acquired as end items.</P>
              <CITA>[61 FR 50453, Sept. 26, 1996, as amended at 65 FR 52952, Aug. 31, 2000; 65 FR 58607, Sept. 29, 2000; 65 FR 77828, Dec. 13, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7019-3</SECTNO>
              <SUBJECT>Waiver.</SUBJECT>
              <P>(a) The head of the contracting activity may waive the restriction in 225.7019-1(a)—</P>
              <P>(1) Upon execution of a determination and findings that—</P>
              <P>(i) No domestic (U.S. or Canadian) bearing manufacturer meets the requirement;</P>
              <P>(ii) It is not in the best interests of the United States to qualify a domestic bearing to replace a qualified nondomestic bearing. This determination must be based on a finding that the qualification of a domestically manufactured bearing would cause unreasonable costs or delay. A finding that a cost is unreasonable should take into consideration DoD policy to assist the domestic industrial mobilization base. Contracts should be awarded to domestic bearing manufacturers to increase their capability to reinvest and become more competitive;</P>
              <P>(iii) Application of the restriction would result in the existence of only one source for the item in the United States or Canada;</P>
              <P>(iv) Application of the restriction is not in the national security interests of the United States; or</P>
              <P>(v) Application of the restriction would adversely affect a U.S. company.</P>
              <P>(2) If the acquisition is for an amount less than the simplified acquisition threshold and simplified acquisition procedures are being used.</P>
              <P>(3) For multiyear contracts or contracts exceeding 12 months, except those for miniature and instrument ball bearings, only if—</P>
              <P>(i) The head of the contracting activity executes a determination and findings in accordance with paragraph (a) of this subsection;</P>
              <P>(ii) The contractor submits a written plan for transitioning from the use of nondomestic to domestically manufactured bearings;</P>
              <P>(iii) The plan—</P>
              <P>(A) States whether a domestically manufactured bearing can be qualified, at a reasonable cost, for use during the course of the contract period;</P>
              <P>(B) Identifies any bearings that are not domestically manufactured, their application, and source of supply; and</P>
              <P>(C) Describes, including cost and timetable, the transition to a domestically manufactured bearing. (The timetable for the transition should normally take no longer than 24 months from the date the waiver is granted); and</P>
              <P>(iv) The contracting officer accepts the plan and incorporates it in the contract.</P>
              <P>(4) For miniature and instrument ball bearings, only if the contractor agrees to acquire a like quantity and type of domestic manufacture for nongovernmental use.</P>

              <P>(b)(1) The Under Secretary of Defense (Acquisition, Technology, and Logistics), without power of delegation, may waive the restriction in 225.7019-1(a) for a particular foreign country upon determination that—<PRTPAGE P="197"/>
              </P>
              <P>(i) United States producers of the item would not be jeopardized by competition from a foreign country, and that country does not discriminate against defense items produced in the United States to a greater degree than the United States discriminates against defense items produced in that country; or</P>
              <P>(ii) Application of the restriction would impede cooperative programs entered into between DoD and a foreign country, or would impede the reciprocal procurement of defense items under a memorandum of understanding providing for reciprocal procurement of defense items under 225.872, and that country does not discriminate against defense items produced in the United States to a greater degree than the United States discriminates against defense items produced in that country.</P>

              <P>(2) A notice of the determination to exercise the waiver authority must be published in the <E T="04">Federal Register</E> and submitted to the congressional defense committees at least 15 days before the effective date of the waiver.</P>
              <P>(3) Such waiver shall be in effect for a period not greater than 1 year.</P>
              <P>(4) For contracts entered into prior to the effective date of a waiver, provided adequate consideration is received to modify the contract, such waiver shall be applied as directed or authorized in the waiver to—</P>
              <P>(i) Subcontracts entered into on or after the effective date of the waiver; and</P>
              <P>(ii) Options for the procurement of items that are exercised after the effective date of the waiver, if the option prices are adjusted for any reason other than the application of the waiver.</P>
              <P>(5) In accordance with the provisions of paragraphs (b)(1) through (b)(3) of this subsection, the Under Secretary of Defense (Acquisition, Technology, and Logistics) has waived the restrictions of 10 U.S.C. 2534(a)(5) for ball and roller bearings manufactured in the United Kingdom. This waiver applies to—</P>
              <P>(i) Procurements under solicitations issued on or after August 4, 1998; and</P>
              <P>(ii) Subcontracts and options under contracts entered into prior to August 4, 1998, under the conditions described in paragraph (b)(4) of this subsection.</P>
              <P>(c) The Secretary of the department responsible for the acquisition may waive the restriction in 225.7019-1(b) on a case-by-case basis, by certifying to the House and Senate Committees on Appropriations that—</P>
              <P>(1) Adequate domestic supplies are not available to meet DoD requirements on a timely basis; and</P>
              <P>(2) The acquisition must be made in order to acquire capability for national security purposes.</P>
              <CITA>[61 FR 10900, Mar. 18, 1996, as amended at 61 FR 50453, Sept. 26, 1996; 62 FR 34124, June 24, 1997; 63 FR 5746, Feb. 4, 1998; 63 FR 28285, May 22, 1998; 63 FR 43888, Aug. 17, 1998; 65 FR 39705, June 27, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7019-4</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <P>(a) Use the clause at 252.225-7016, Restriction on Acquisition of Ball and Roller Bearings, in solicitations and contracts, unless—</P>
              <P>(1) The restrictions in 225.7019-1 do not apply or a waiver has been granted; or</P>
              <P>(2) The contracting officer knows that the items being acquired do not contain ball or roller bearings.</P>
              <P>(b) In solicitations and contracts that use simplified acquisition procedures, use the clause with its Alternate I.</P>
              <CITA>[65 FR 77828, Dec. 13, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7020</SECTNO>
              <SUBJECT>Restriction on vessel propellers.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>225.7020-1</SECTNO>
              <SUBJECT>Restriction.</SUBJECT>

              <P>In accordance with Section 8064 of the National Defense Appropriations Act for Fiscal Year 2001 (Public Law 106-259), do not use fiscal year 2000 or 2001 funds to acquire vessel propellers other than those produced by a domestic source of domestic origin, <E T="03">i.e.</E>, vessel propellers—</P>
              <P>(a) Manufactured in the United States or Canada; and</P>
              <P>(b) For which all component castings were poured and finished in the United States or Canada.</P>
              <CITA>[65 FR 77828, Dec. 13, 2000]</CITA>
            </SECTION>
            <SECTION>
              <PRTPAGE P="198"/>
              <SECTNO>225.7020-2</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
              <P>This restriction does not apply to contracts or subcontracts for acquisition of commercial items.</P>
              <CITA>[65 FR 77828, Dec. 13, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7020-3</SECTNO>
              <SUBJECT>Waiver.</SUBJECT>
              <P>The Secretary of the department responsible for acquisition may waive this restriction on a case-by-case basis, by certifying to the House and Senate Committees on Appropriations that—</P>
              <P>(a) Adequate domestic supplies are not available to meet DoD requirements on a timely basis; and</P>
              <P>(b) The acquisition must be made in order to acquire capability for national security purposes.</P>
              <CITA>[65 FR 77828, Dec. 13, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7020-4</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <P>Use the clause at 252.225-7023, Restriction on Acquisition of Vessel Propellers, in solicitations and contracts that use fiscal year 2000 or 2001 funds for the acquisition of vessels or vessel propellers, unless—</P>
              <P>(a) An exception under 225.7020-2 is known to apply or a waiver has been granted in accordance with 225.7020-3; or</P>
              <P>(b) The vessels being acquired do not contain vessel propellers.</P>
              <CITA>[65 FR 77828, Dec. 13, 2000, as amended at 67 FR 11437, Mar. 14, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7021</SECTNO>
              <SUBJECT>Restriction on aircraft fuel cells.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>225.7021-1</SECTNO>
              <SUBJECT>Restriction.</SUBJECT>
              <P>In accordance with section 8090 of the Fiscal Year 1994 Defense Appropriations Act (Pub. L. 103-139) and section 8075 of the Fiscal Year 1995 Defense Appropriations Act (Pub. L. 103-335), do not purchase aircraft fuel cells unless they are produced or manufactured in the United States by a domestic-operated entity.</P>
              <CITA>[60 FR 29498, June 5, 1995]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7021-2</SECTNO>
              <SUBJECT>Waiver.</SUBJECT>
              <P>The restriction may be waived by the Secretary of the department responsible for the acquisition, on a case-by-case basis, by certifying to the House and Senate Committees on Appropriations that—</P>
              <P>(a) Adequate U.S. supplies are not available to meet requirements on a timely basis; and</P>
              <P>(b) The acquisition must be made in order to acquire capability for national security purposes.</P>
              <CITA>[59 FR 11729, Mar. 14, 1994]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7021-3</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <P>Unless a waiver has been granted in accordance with 225.7021-2, use the clause at 252.225-7038, Restriction on Acquisition of Aircraft Fuel Cells, in all solicitations and contracts which—</P>
              <P>(a) Use fiscal year 1994 or 1995 funds; and</P>
              <P>(b) Require delivery of aircraft fuel cells.</P>
              <CITA>[60 FR 29498, June 5, 1995]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7022</SECTNO>
              <SUBJECT>Restrictions on totally enclosed lifeboat survival systems.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>225.7022-1</SECTNO>
              <SUBJECT>Restrictions.</SUBJECT>
              <P>(a) In accordance with Section 8124 of the Fiscal Year 1994 Defense Appropriations Act (Public Law 103-139) and Section 8093 of the Fiscal Year 1995 Defense Appropriations Act (Public Law 103-335), do not purchase a totally enclosed lifeboat survival system, which consists of the lifeboat and associated davits and winches, unless 50 percent or more of the components are manufactured in the United States, and 50 percent or more of the labor in the final manufacture and assembly of the entire system is performed in the United States.</P>

              <P>(b) In accordance with 10 U.S.C. 2534(a)(3)(B) and 225.7005(b), do not purchase a totally enclosed lifeboat that is a component of a naval vessel, unless it is manufactured in the United States, Canada, or the United Kingdom.In accordance with 10 U.S.C. 2534(h), this restriction may not be implemented through the use of a contract clause or certification. Implementation shall be effected through management and oversight techniques that achieve the <PRTPAGE P="199"/>objective of the restriction without imposing a significant management burden on the Government or the contractor involved.</P>
              <CITA>[61 FR 13107, Mar. 26, 1996, as amended at 62 FR 34124, June 24, 1997; 63 FR 43888, Aug. 17, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7022-2</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
              <P>The restriction in 225.7022-1(b) does not apply if—</P>
              <P>(a) The acquisition is for an amount that does not exceed the simplified acquisition threshold; or</P>
              <P>(b) Spare or repair parts are needed to support totally enclosed lifeboats manufactured outside the United States.</P>
              <CITA>[62 FR 34124, June 24, 1997, as amended at 63 FR 5746, Feb. 4, 1998; 63 FR 43888, Aug. 17, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7022-3</SECTNO>
              <SUBJECT>Waiver.</SUBJECT>
              <P>The waiver criteria at 225.7005(a) apply only to the restriction of 225.7022-1(b).</P>
              <CITA>[63 FR 43888, Aug. 17, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7022-4</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <P>Use the clause at 252.225-7039, Restriction on Acquisition of Totally Enclosed Lifeboat Survival Systems, in all solicitations and contracts which require delivery of totally enclosed lifeboat survival systems.</P>
              <CITA>[61 FR 13107, Mar. 26, 1996]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7023</SECTNO>
              <SUBJECT>Restriction on supercomputers.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>225.7023-1</SECTNO>
              <SUBJECT>Restriction.</SUBJECT>
              <P>In accordance with section 8112 of Pub. L. 100-202, and similar sections in subsequent Defense Appropriations Acts, do not purchase any supercomputer that is not manufactured in the United States.</P>
              <CITA>[60 FR 34471, July 3, 1995, as amended at 60 FR 61597, Nov. 30, 1995]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7023-2</SECTNO>
              <SUBJECT>Waiver.</SUBJECT>
              <P>The restriction in 225.7023-1 may be waived by the Secretary of Defense on a case-by-case basis, after the Secretary of Defense certifies to the Armed Services and Appropriations Committees of Congress that—</P>
              <P>(a) Adequate U.S. supplies are not available to meet requirements on a timely basis; and</P>
              <P>(b) The acquisition must be made in order to acquire capability for national security purposes.</P>
              <CITA>[60 FR 34471, July 3, 1995]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7023-3</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <P>Use the clause at 252.225-7011, Restriction on Acquisition of Supercomputers, in solicitations and contracts for the acquisition of supercomputers.</P>
              <CITA>[60 FR 34471, July 3, 1995, as amended at 60 FR 61597, Nov. 30, 1995]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 225.71—Other Restrictions on Foreign Acquisition</HD>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>62 FR 34124, June 24, 1997, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>225.7100</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <P>This subpart contains foreign product restrictions which are based on policies designed to protect the defense industrial base.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.7101</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <P>Relevant definitions are in the clause at 252.225-7025, Restriction on Acquisition of Forgings.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.7102</SECTNO>
              <SUBJECT>Forgings.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>225.7102-1</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>DoD requirements for the following forging items, whether as end items or components, shall be acquired from domestic sources (as described in the clause at 252.225-7025) to the maximum extent practicable—</P>
              <GPOTABLE CDEF="s25,r25" COLS="2" OPTS="L2,i1">
                <BOXHD>
                  <CHED H="1">Items</CHED>
                  <CHED H="1">Categories</CHED>
                </BOXHD>
                <ROW>
                  <ENT I="01">Ship propulsion shafts</ENT>
                  <ENT>Excludes service and landing craft shafts.</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">Periscope tubes</ENT>
                  <ENT>All.</ENT>
                </ROW>
                <ROW>
                  <ENT I="01">Ring forgings for bull gears</ENT>
                  <ENT>All greater than 120 inches in diameter.</ENT>
                </ROW>
              </GPOTABLE>
            </SECTION>
            <SECTION>
              <SECTNO>225.7102-2</SECTNO>
              <SUBJECT>Exceptions.</SUBJECT>
              <P>The policy in 225.7102-1 does not apply to acquisitions—</P>
              <P>(a) Using simplified acquisition procedures, unless the restricted item is the end item being purchased;</P>
              <P>(b) Overseas for overseas use; or<PRTPAGE P="200"/>
              </P>
              <P>(c) When the quantity acquired exceeds the amount needed to maintain the U.S. defense mobilization base (provided such quantity is an economical purchase quantity). The restriction to domestic sources does not apply to the quantity above that required to maintain the base, in which case, qualifying country sources may compete.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.7102-3</SECTNO>
              <SUBJECT>Waiver.</SUBJECT>
              <P>Upon request from a prime contractor, the contracting officer may waive the requirement for domestic manufacture of the items covered by the policy in 225.7102-1.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.7102-4</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <P>(a) Use the clause at 252.225-7025, Restriction on Acquisition of Forgings, in solicitations and contracts, except for acquisitions—</P>
              <P>(1) Excepted in 225.7102-2; or</P>
              <P>(2) Where the contracting officer knows that the supplies being acquired do not contain the restricted items.</P>
              <P>(b) If an exception under 225.7102-2 applies to any portion of the acquisition, specify the exception in the solicitation and contract.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.7103</SECTNO>
              <SUBJECT>Polyacrylonitrile (PAN) carbon fiber.</SUBJECT>
            </SECTION>
            <SECTION>
              <SECTNO>225.7103-1</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>DoD has imposed restrictions on the acquisitions of PAN carbon fiber from foreign sources. DoD is phasing out the restrictions over the 5-year period ending May 31, 2005. Contractors with contracts that contain the clause at 252.225-7022 must use U.S. or Canadian manufacturers or producers for all PAN carbon fiber requirements.</P>
              <CITA>[65 FR 77832, Dec. 13, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7103-2</SECTNO>
              <SUBJECT>Waivers.</SUBJECT>
              <P>Contracting officers may, with the approval of the chief of the contracting office, waive, in whole or in part, the requirement of the clause at 252.225-7022. For example, a waiver may be justified if a qualified U.S. or Canadian source cannot meet scheduling requirements.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.7103-3</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <P>Use the clause at 252.225-7022, Restriction on Acquisition of Polyacrylonitrile (PAN) Carbon Fiber, in solicitations and contracts for major systems as follows:</P>
              <P>(a) In solicitations and contracts issued on or before May 31, 2003, if—</P>
              <P>(1) The system is not yet in production (milestone III as defined in DoD 5000.2-R, Mandatory Procedures for Major Defense Acquisition Programs (MDAPS) and Major Automated Information System (MAIS) Acquisition Programs); or</P>
              <P>(2) The clause was used in prior program contracts.</P>
              <P>(b) In solicitations and contracts issued during the period beginning June 1, 2003, and ending May 31, 2005, if the system is not yet in engineering and manufacturing development (milestone II as defined in DoD 5000.2-R).</P>
              <CITA>[65 FR 77832, Dec. 13, 2000]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 225.72—Reporting Contract Performance Outside the United States</HD>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>58 FR 28469, May 13, 1993, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>225.7200</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <P>This subpart prescribes procedures for contractor reporting and DoD monitoring of the volume, type, and nature of contract performance outside the United States, to include subcontracts, purchases, and intracompany transfers. It implements 10 U.S.C. 2410g which requires advance notification of contract performance outside the United States and Canada when the contract could have been performed inside the United States or Canada.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.7201</SECTNO>
              <SUBJECT>Exception.</SUBJECT>
              <P>This subpart does not apply to contracts for commercial items, construction, ores, natural gas, utilities, petroleum products and crudes, timber (logs), or subsistence.</P>
              <CITA>[60 FR 61597, Nov. 30, 1995]</CITA>
            </SECTION>
            <SECTION>
              <PRTPAGE P="201"/>
              <SECTNO>225.7202</SECTNO>
              <SUBJECT>Distribution of reports.</SUBJECT>
              <P>The contracting officer shall forward a copy of reports submitted by successful offerors as required by the clause at 252.225-7026, Reporting of Contract Performance Outside the United States, to the Deputy Director of Defense Procurement (Foreign Contracting), OUSD(AT&amp;L)DP(FC), Washington, DC 20301-3060. This is necessary to satisfy the requirement of 10 U.S.C. 2410g that the notifications (or copies) be maintained in compiled form for five years after the date of submission.</P>
              <CITA>[58 FR 28469, May 13, 1993, as amended at 60 FR 29499, June 5, 1995; 65 FR 39705, June 27, 2000]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7203</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <P>Except for acquisitions in 225.7201, use the clause at 252.225-7026, Reporting of Contract Performance Outside the United States, in all solicitations and contracts with an estimated or actual value exceeding $500,000, including those modified to exceed $500,000.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 225.73—Acquisitions for Foreign Military Sales</HD>
            <SECTION>
              <SECTNO>225.7300</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <P>(a) This subpart contains policies and procedures for acquisitions for foreign military sales (FMS) under the Arms Export Control Act (22 U.S.C. Chapter 39). Section 22 of the Arms Export Control Act (22 U.S.C. 2762) authorizes DoD to enter into contracts for resale to foreign countries or international organizations.</P>
              <P>(b) This subpart does not apply to—</P>
              <P>(1) FMS made from inventories or stocks;</P>
              <P>(2) Acquisitions for replenishment of inventories or stocks; or</P>
              <P>(3) Acquisitions made under DoD cooperative logistic supply support arrangements.</P>
              <CITA>[63 FR 43889, Aug. 17, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7301</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <P>(a) The U.S. Government sells defense articles and services to foreign governments or international organizations through FMS agreements. The agreement is documented in a Letter of Offer and Acceptance (LOA) (see DoD 5105.38-M, Security Assistance Management Manual). The LOA—</P>
              <P>(1) Lists the items and services, estimated costs, and terms and conditions of the sale;</P>
              <P>(2) Is presented to the foreign customer; and</P>
              <P>(3) Provides for signature of the foreign customer to indicate acceptance.</P>
              <P>(b) Acquisitions for FMS are conducted under the same acquisition and contract management procedures as other defense acquisitions.</P>
              <P>(c) Solicitations shall separately identify known FMS requirements and the FMS customer.</P>
              <P>(d) Contracts for known FMS requirements shall clearly be marked “FMS requirement” on the face of the contract along with the FMS customer and the case identifier code.</P>
              <CITA>[56 FR 36367, July 31, 1991, as amended at 63 FR 43889, Aug. 17, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7302</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <P>On FMS programs that will require an acquisition, the contracting officer assists the departmental/agency activity responsible for preparing the LOA by—</P>
              <P>(a) Working with prospective contractors to—</P>
              <P>(1) Identify, in advance of the LOA, any unusual provisions or deviations.</P>
              <P>(2) Advise the contractor if the departmental/agency activity expands, modifies, or does not accept any requirements proposed by the contractor;</P>
              <P>(3) Identify any logistics support necessary to perform the contract; and</P>
              <P>(4) For acquisitions over $10,000 that are to be awarded noncompetitively, asking the prospective contractor(s) for information on price, delivery, and other relevant factors. The request for information must identify the fact that the information is for a potential foreign military sale and must identify the foreign customer.</P>
              <P>(b) Working with the departmental/agency activity responsible for preparing the LOA to—</P>
              <P>(1) Assist, as necessary, in preparation of the LOA;</P>

              <P>(2) Identify and explain all unusual contractual requirements or requests for deviations; and<PRTPAGE P="202"/>
              </P>
              <P>(3) Assist in preparing the price and availability data.</P>
              <CITA>[56 FR 36367, July 31, 1991, as amended at 62 FR 2617, Jan. 17, 1997; 63 FR 43889, Aug. 17, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7303</SECTNO>
              <SUBJECT>Pricing acquisitions for FMS.</SUBJECT>
              <P>(a) Price FMS contracts using the same principles as are used in pricing other defense contracts. Application of the pricing principles in FAR parts 15 and 31 to an FMS contract may result in prices that differ from other defense contract prices for the same item due to the considerations in this section.</P>
              <P>(b) If the foreign government has conducted a competition resulting in adequate price competition (see FAR 15.403-1(b)(1)), the contracting officer must not require the submission of cost or pricing data. The contracting officer should consult with the foreign government through security assistance personnel to determine if adequate price competition has occurred.</P>
              <CITA>[64 FR 49683, Sept. 14, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7303-1</SECTNO>
              <SUBJECT>Contractor sales to other foreign customers.</SUBJECT>
              <P>If the contractor has made sales of the item required for the foreign military sale to foreign customers under comparable conditions, including quantity and delivery, price the FMS contract in accordance with FAR part 15.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.7303-2</SECTNO>
              <SUBJECT>Cost of doing business with a foreign government or an international organization.</SUBJECT>
              <P>(a) In pricing FMS contracts where non-U.S. Government prices as described in 225.7303-1 do not exist, except as provided in 225.7303-5, recognize the reasonable and allocable costs of doing business with a foreign government or international organization, even though such costs might not be recognized in the same amounts in pricing other defense contracts. Examples of such costs include, but are not limited to—</P>
              <P>(1) Selling expenses (not otherwise limited by FAR part 31), e.g.—</P>
              <P>(i) Maintaining international sales and service organizations;</P>
              <P>(ii) Sales commissions and fees in accordance with FAR subpart 3.4;</P>
              <P>(iii) Sales promotions, demonstrations, and related travel for sales to foreign governments. Paragraph 126.8 of the International Traffic in Arms Regulations (ITAR) (22 CFR part 121) may require Government approval for these costs to be allowable. If Government approval is required for promotion or demonstration costs to be allowable, the approval must be obtained.</P>
              <P>(iv) Configuration studies and related technical services undertaken as a direct selling effort to a foreign country.</P>
              <P>(2) Product support and post-delivery service expenses, such as—</P>
              <P>(i) Operations or maintenance training, training or tactics films, manuals, or other related data; and</P>
              <P>(ii) Technical field services provided in a foreign country related to accident investigations, weapon system problems, operations/tactics enhancement, and related travel to foreign countries.</P>
              <P>(3) Offset costs.</P>
              <P>(i) A U.S. defense contractor may recover all costs incurred for offset agreements with a foreign government or international organization if the LOA is financed wholly with customer cash or repayable foreign military finance credits.</P>
              <P>(ii) The U.S. Government assumes no obligation to satisfy or administer the offset requirement or to bear any of the associated costs.</P>
              <P>(4) Costs that are the subject of advance agreement under the appropriate provisions of FAR part 31; or where the advance understanding places a limit on the amounts of cost that will be recognized as allowable in defense contract pricing, and the agreement contemplated that it will apply only to DoD contracts for the U.S. Government's own requirement (as distinguished from contracts for FMS).</P>
              <P>(b) Costs not allowable under FAR part 31 are not allowable in pricing FMS contracts, except as noted in paragraph (c) of this subsection.</P>

              <P>(c) The cost limitations for major contractors on independent research and development and bid and proposal (IR&amp;D/B&amp;P) costs for projects that are of potential interest to DoD, in 231.205-18(c)(iii), do not apply to FMS contracts, except as provided in 225.7303-5. Therefore, the cost limitations on independent research and development and bid and proposal (IR&amp;D/B&amp;P) costs in <PRTPAGE P="203"/>FAR 31.205-18 do not apply to such contracts, except as provided in 225.7303-5. The allowability of IR&amp;D/B&amp;P costs on contracts for FMS not wholly paid for from funds made available on a nonrepayable basis shall be limited to the contract's allocable share of the contractor's total IR&amp;D/B&amp;P expenditures. In pricing contracts for such FMS—</P>
              <P>(1) Use the best estimate of reasonable costs in forward pricing.</P>
              <P>(2) Use actual expenditures, to the extent that they are reasonable, in determining final cost.</P>
              <P>(d) Under paragraph (e)(1)(A) of Section 21 of the Arms Export Control Act (22 U.S.C. 2761), the United States must charge for administrative services to recover the estimated cost of administration of sales made under the Army Export Control Act.</P>
              <CITA>[56 FR 36367, July 31, 1991, as amended at 56 FR 67216, Dec. 30, 1991; 57 FR 42631, Sept. 15, 1992; 57 FR 53600, Nov. 12, 1992; 59 FR 50511, Oct. 4, 1994; 61 FR 7744, Feb. 29, 1996; 61 FR 18987, Apr. 30, 1996; 63 FR 43889, Aug. 17, 1998; 64 FR 8729, Feb. 23, 1999; 64 FR 49684, Sept. 14, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7303-3</SECTNO>
              <SUBJECT>Government-to-government agreements.</SUBJECT>
              <P>If a government-to-government agreement between the United States and a foreign government for the sale, coproduction, or cooperative logistic support of a specifically defined weapon system, major end item, or support item, contains language in conflict with the provisions of this section, the language of the government-to-government agreement prevails.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.7303-4</SECTNO>
              <SUBJECT>Contingent fees.</SUBJECT>
              <P>(a) Except as provided in paragraph (b) of this subsection, contingent fees are generally allowable under DoD contracts, provided the fees are determined by the contracting officer to be fair and reasonable and are paid to a bona fide employee or a bona fide established commercial or selling agency maintained by the prospective contractor for the purpose of securing business (see FAR Part 31 and FAR Subpart 3.4).</P>
              <P>(b)(1) Under DoD 5105.38-M, LOAs for requirements for the governments of Australia, Taiwan, Egypt, Greece, Israel, Japan, Jordan, Republic of Korea, Kuwait, Pakistan, Philippines, Saudi Arabia, Turkey, Thailand, or Venezuela (Air Force) must provide that all U.S. Government contacts resulting from the LOAs prohibit the reimbursement of contingent fees as an allowable cost under the contract, unless the payments have been identified and approved in writing by the foreign customer before contract award (see 225.7308(a)).</P>
              <P>(2) For FMS to countries not listed in paragraph (b)(1) of this subsection, contingent fees exceeding $50,000 per FMS case shall be unallowable under DoD contracts, unless payment has been identified and approved in writing by the foreign customer before contract award.</P>
              <CITA>[63 FR 11534, Mar. 9, 1998, as amended at 63 FR 43890, Aug. 17, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7303-5</SECTNO>
              <SUBJECT>Aquisitions wholly paid for from nonrepayable funds.</SUBJECT>
              <P>(a) In accordance with 22 U.S.C. 2762(d), FMS wholly paid for from funds made available on a nonrepayable basis shall be priced on the same costing basis with regard to profit, overhead, IR&amp;D/B&amp;P, and other costing elements, as is applicable to acquisitions of like items purchased by DoD for its own use.</P>
              <P>(b) Direct costs associated with meeting a foreign customer's additional or unique requirements will be allowable under such contracts. Indirect burden rates applicable to such direct costs shall be permitted at the same rates applicable to acquisitions of like items purchased by DoD for its own use.</P>
              <P>(c) A U.S. defense contractor may not recover costs incurred for offset agreements with a foreign government or international organization if the LOA is financed with funds made available on a nonrepayable basis.</P>
              <CITA>[61 FR 18988, Apr. 30, 1996; 61 FR 49531, Sept. 20, 1996, as amended at 63 FR 43890, Aug. 17, 1998; 64 FR 49684, Sept. 14, 1999]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7304</SECTNO>
              <SUBJECT>Source selection.</SUBJECT>

              <P>(a) FMS customers may request that a defense article or defense service be obtained from a particular contractor. In such cases, FAR 6.302-4 provides authority to contract without full-and-open competition. The FMS customer may also request that a subcontract be <PRTPAGE P="204"/>placed with a particular firm. The contracting officer shall honor such requests from the FMS customer only if the LOA or other written direction sufficiently fulfills the requirements of FAR subpart 6.3.</P>
              <P>(b) Do not allow representatives of the FMS customer to—</P>
              <P>(1) Direct the deletion of names of firms from bidders mailing lists or slates of proposed architect-engineer firms. (They may suggest the inclusion of certain firms);</P>
              <P>(2) Interfere with a contractor's placement of subcontracts; or</P>
              <P>(3) Participate in the price negotiations between the U.S. Government and the contractor.</P>
              <P>(c) Do not accept directions from the FMS customer on source selection decisions or contract terms (except that, upon timely notice, the contracting officer may attempt to obtain any special contract provisions and warranties requested by the FMS customer).</P>
              <P>(d) Do not honor any requests by the FMS customer to reject any bid or proposal.</P>
              <CITA>[56 FR 36367, July 31, 1991, as amended at 63 FR 43890, Aug. 17, 1998]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7305</SECTNO>
              <SUBJECT>Limitation of liability.</SUBJECT>
              <P>The contracting officer must advise the contractor whenever the foreign customer will assume the risk for loss or damage under the appropriate limitation of liability clause(s) (see FAR subpart 46.8). Consider the costs of necessary insurance, if any, obtained by the contractor to cover the risk of loss or damage in establishing the FMS contract price.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.7306</SECTNO>
              <SUBJECT>Exercise of options for FMS.</SUBJECT>
              <P>Consider changes to cost and profit attributable to pricing differences between U.S. and FMS requirements when exercising an option to satisfy an FMS requirement. Also consider such changes if the option is already identified for FMS, but it is exercised for country B requirements instead of the country A requirements for which it was priced.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.7307</SECTNO>
              <SUBJECT>Offset arrangements.</SUBJECT>
              <P>In accordance with the Presidential policy statement of April 16, 1990, DoD does not encourage, enter into, or commit U.S. firms to FMS offset arrangements. The decision whether to engage in offsets, and the responsibility for negotiating and implementing offset arrangements, resides with the companies involved.</P>
              <CITA>[62 FR 34125, June 24, 1997]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>225.7308</SECTNO>
              <SUBJECT>Contract clauses.</SUBJECT>
              <P>(a) Use the clause at 252.225-7027, Restriction on Contingent Fees for Foreign Military Sales, in all solicitations and contracts for FMS.</P>
              <P>(b) Use the clause at 252.225-7028, Exclusionary Policies and Practices of Foreign Governments, in all solicitations and contracts for the purchase of goods and services for international military education training and FMS.</P>
              <CITA>[56 FR 36367, July 31, 1991, as amended at 62 FR 2617, Jan. 17, 1997; 63 FR 43890, Aug. 17, 1998]</CITA>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 225.74—Antiterrorism/Force Protection Policy for Defense Contractors Outside the United States</HD>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>63 FR 31937, June 11, 1998, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>225.7400</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <P>This subpart pertains to antiterrorism/force protection policy for contracts that require performance or travel outside the United States.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.7401</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <P>Information and guidance pertaining to DoD antiterrorism/force protection can be obtained from the following offices:</P>
              <P>(a) For Navy contracts: Naval Criminal Investigative Service (NCIS), Code 24; telephone, DSN 228-9113 or commercial (202) 433-9113.</P>
              <P>(b) For Army contracts: HQDA (DAMO-ODL)/ODCSOP; telephone, DSN 225-8491 or commercial (703) 695-8491.</P>
              <P>(c) For Marine Corps contracts: CMC Code POS-10; telephone, DSN 224-4177 or commercial (703) 614-4177.</P>
              <P>(d) For Air Force contracts: HQ AFSFC/SFPT; telephone, DSN 473-0927/0928 or commercial (210) 671-0927/0928.</P>

              <P>(e) For Combatant Command contracts: The appropriate Antiterrorism <PRTPAGE P="205"/>Force Protection Office at the Command Headquarters.</P>
              <P>(f) For Defense Agencies: The appropriate agency security office.</P>
              <P>(g) For additional information: Assistant Secretary of Defense for Special Operations and Low Intensity Conflict, ASD (SOLIC); telephone, DSN 255-0044 or commercial (703) 695-0044.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.7402</SECTNO>
              <SUBJECT>Contract clause.</SUBJECT>
              <P>Use the clause at 252.225-7043, Antiterrorism/Force Protection Policy for Defense Contractors Outside the United States, in solicitations and contracts that require performance or travel outside the United States, except for contracts with—</P>
              <P>(a) Foreign governments;</P>
              <P>(b) Representatives of foreign governments; or</P>
              <P>(c) Foreign corporations wholly owned by foreign governments.</P>
            </SECTION>
          </SUBPART>
          <SUBPART>
            <HD SOURCE="HED">Subpart 225.75—Balance of Payments Program</HD>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>67 FR 20694, Apr. 26, 2002, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>225.7500</SECTNO>
              <SUBJECT>Scope of subpart.</SUBJECT>
              <P>This subpart provides policies and procedures implementing the Balance of Payments Program. It applies to contracts for the acquisition of—</P>
              <P>(a) Supplies for use outside the United States; and</P>
              <P>(b) Construction to be performed outside the United States.</P>
            </SECTION>
            <SECTION>
              <SECTNO>225.7501</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>Acquire only domestic end products for use outside the United States, and use only domestic construction material for construction to be performed outside the United States, including end products and construction material for foreign military sales, unless—</P>
              <P>(a) Before issuing the solicitation—</P>
              <P>(1) The estimated cost of the acquisition or the value of a particular construction material is at or below the simplified acquisition threshold;</P>
              <P>(2) The end product or particular construction material is—</P>
              <P>(i) Listed in FAR 25.104 or 225.104(a)(iii);</P>
              <P>(ii) A petroleum product;</P>
              <P>(iii) A spare part for foreign-manufactured vehicles, equipment, machinery, or systems, provided the