Sept. 15, 2008 CODE OF FEDERAL REGULATIONS 48 Chapter 2 (Parts 201 to 299) Revised as of October 1, 2008 Federal Acquisition Regulations System Containing a codification of documents of general applicability and future effect As of October 1, 2008 With Ancillaries

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 Table of Contents Page Explanation v Title 48: Chapter 2—Defense Acquisition Regulations System, Department of Defense 3 Finding Aids: Table of CFR Titles and Chapters 523 Alphabetical List of Agencies Appearing in the CFR 543 List of CFR Sections Affected 553

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To cite the regulations in this volume use title, part and section number. Thus, 48 CFR 201.104 refers to title 48, part 201, section 104. Explanation

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 OBSOLETE PROVISIONS

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

 INCORPORATION BY REFERENCE

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What is a proper incorporation by reference? The Director of the Federal Register will approve an incorporation by reference only when the requirements of 1 CFR part 51 are met. Some of the elements on which approval is based are:

(a) The incorporation will substantially reduce the volume of material published in the Federal Register.

(b) The matter incorporated is in fact available to the extent necessary to afford fairness and uniformity in the administrative process.

(c) The incorporating document is drafted and submitted for publication in accordance with 1 CFR part 51.

Properly approved incorporations by reference in this volume are listed in the Finding Aids at the end of this volume.

What if the material incorporated by reference cannot be found? If you have any problem locating or obtaining a copy of material listed in the Finding Aids of this volume as an approved incorporation by reference, please contact the agency that issued the regulation containing that incorporation. If, after contacting the agency, you find the material is not available, please notify the Director of the Federal Register, National Archives and Records Administration, Washington DC 20408, or call 202-741-6010.

 CFR INDEXES AND TABULAR GUIDES

A subject index to the Code of Federal Regulations is contained in a separate volume, revised annually as of January 1, entitled CFR Index and Finding Aids. This volume contains the Parallel Table of Statutory Authorities and Agency Rules (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.

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Raymond A. Mosley,

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October 1, 2008.

THIS TITLE

Title 48—Federal Acquisition Regulations System is composed of seven volumes. The chapters in these volumes are arranged as follows: Chapter 1 (parts 1 to 51), chapter 1 (parts 52 to 99), chapter 2 (parts 201 to 299), chapters 3 to 6, chapters 7 to 14, chapters 15 to 28 and chapter 29 to end. The contents of these volumes represent all current regulations codified under this title of the CFR as of October 1, 2008.

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

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

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

For this volume, Jonn V. Lilyea was Chief Editor. The Code of Federal Regulations publication program is under the direction of Michael L. White, assisted by Ann Worley.

 <LRH>48 CFR Ch. 2 (10-1-08 Edition)</LRH> <RRH>Defense Acquisition Regulations System, DOD</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>—Defense Acquisition Regulations System, Department of Defense</SUBJECT> <PG>201</PG> </CHAPTI> </CFRTOC> </CFRTITLE> <CHAPTER> <TOC> <TOCHD> <PRTPAGE P="3"/> <HD SOURCE="HED">CHAPTER 2—DEFENSE ACQUISITION REGULATIONS SYSTEM, 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>15</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>33</PG> <PT>206</PT> <SUBJECT>Competition requirements</SUBJECT> <PG>34</PG> <PT>207</PT> <SUBJECT>Acquisition planning</SUBJECT> <PG>37</PG> <PT>208</PT> <SUBJECT>Required sources of supplies and services</SUBJECT> <PG>42</PG> <PT>209</PT> <SUBJECT>Contractor qualifications</SUBJECT> <PG>48</PG> <PT>210</PT> <SUBJECT>Market research</SUBJECT> <PG>55</PG> <PT>211</PT> <SUBJECT>Describing agency needs</SUBJECT> <PG>55</PG> <PT>212</PT> <SUBJECT>Acquisition of commercial items</SUBJECT> <PG>60</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>66</PG> <PT>214</PT> <SUBJECT>Sealed bidding</SUBJECT> <PG>69</PG> <PT>215</PT> <SUBJECT>Contracting by negotiation</SUBJECT> <PG>70</PG> <PT>216</PT> <SUBJECT>Types of contracts</SUBJECT> <PG>87</PG> <PT>217</PT> <SUBJECT>Special contracting methods</SUBJECT> <PG>91</PG> <PT>218</PT> <SUBJECT>Emergency Acquisitions</SUBJECT> <PG>105</PG> </CHAPTI> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER D—SOCIOECONOMIC PROGRAMS</HD> </SUBCHAP> <CHAPTI> <PT>219</PT> <SUBJECT>Small business programs</SUBJECT> <PG>109</PG> <PT>222</PT> <SUBJECT>Application of labor laws to government acquisitions</SUBJECT> <PG>118</PG> <PT>223</PT> <SUBJECT>Environment, energy and water efficiency, renewable energy technologies, occupational safety, and drug-free workplace</SUBJECT> <PG>127<PRTPAGE P="4"/> </PG> <PT>224</PT> <SUBJECT>Protection of privacy and freedom of information</SUBJECT> <PG>131</PG> <PT>225</PT> <SUBJECT>Foreign acquisition</SUBJECT> <PG>131</PG> <PT>226</PT> <SUBJECT>Other socioeconomic programs</SUBJECT> <PG>168</PG> </CHAPTI> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER E—GENERAL CONTRACTING REQUIREMENTS</HD> </SUBCHAP> <CHAPTI> <PT>227</PT> <SUBJECT>Patents, data, and copyrights</SUBJECT> <PG>171</PG> <PT>228</PT> <SUBJECT>Bonds and insurance</SUBJECT> <PG>212</PG> <PT>229</PT> <SUBJECT>Taxes</SUBJECT> <PG>215</PG> <PT>230</PT> <SUBJECT>Cost accounting standards administration</SUBJECT> <PG>216</PG> <PT>231</PT> <SUBJECT>Contract cost principles and procedures</SUBJECT> <PG>217</PG> <PT>232</PT> <SUBJECT>Contract financing</SUBJECT> <PG>221</PG> <PT>233</PT> <SUBJECT>Protests, disputes, and appeals</SUBJECT> <PG>233</PG> </CHAPTI> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER F—SPECIAL CATEGORIES OF CONTRACTING</HD> </SUBCHAP> <CHAPTI> <PT>234</PT> <SUBJECT>Major system acquisition</SUBJECT> <PG>235</PG> <PT>235</PT> <SUBJECT>Research and development contracting</SUBJECT> <PG>237</PG> <PT>236</PT> <SUBJECT>Construction and architect-engineer contracts</SUBJECT> <PG>240</PG> <PT>237</PT> <SUBJECT>Service contracting</SUBJECT> <PG>245</PG> <PT>239</PT> <SUBJECT>Acquisition of information technology</SUBJECT> <PG>257</PG> <PT>241</PT> <SUBJECT>Acquisition of utility services</SUBJECT> <PG>262</PG> </CHAPTI> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER G—CONTRACT MANAGEMENT</HD> </SUBCHAP> <CHAPTI> <PT>242</PT> <SUBJECT>Contract administration and audit services</SUBJECT> <PG>265</PG> <PT>243</PT> <SUBJECT>Contract modifications</SUBJECT> <PG>275</PG> <PT>244</PT> <SUBJECT>Subcontracting policies and procedures</SUBJECT> <PG>275</PG> <PT>245</PT> <SUBJECT>Government property</SUBJECT> <PG>276</PG> <PT>246</PT> <SUBJECT>Quality assurance</SUBJECT> <PG>278</PG> <PT>247</PT> <SUBJECT>Transportation</SUBJECT> <PG>300</PG> <PT>249</PT> <SUBJECT>Termination of contracts</SUBJECT> <PG>316</PG> <PT>250</PT> <SUBJECT>Extraordinary contractual actions and the safety act</SUBJECT> <PG>319</PG> <PT>251</PT> <SUBJECT>Use of government sources by contractors</SUBJECT> <PG>320</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>322</PG> <PT>253</PT> <SUBJECT>Forms</SUBJECT> <PG>486</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>489</PG> <PT/> <RESERVED>Appendixes B-E [Reserved]</RESERVED> <PT/> <SUBJECT>Appendix F—Material Inspection and Receiving Report</SUBJECT> <PG>498</PG> <PT/> <RESERVED>Appendix G [Reserved]</RESERVED> <PT/> <SUBJECT>Appendix H—Debarment and Suspension Procedures</SUBJECT> <PG>511<PRTPAGE P="5"/> </PG> <PT/> <SUBJECT>Appendix I—Policy and Procedures for the DOD Pilot Mentor-Protege Program</SUBJECT> <PG>512</PG> </CHAPTI> </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> <SECTNO>201.109</SECTNO> <SUBJECT>Statutory acquisition-related dollar thresholds-adjustment for inflation.</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> <SECTNO>201.201-70</SECTNO> <SUBJECT>Maintenance of Procedures, Guidance, and Information.</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—Career Development, 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 and the DFARS Procedures, Guidance, and Information (PGI) are available electronically via the World Wide Web at <E T="03">http://www.acq.osd.mil/dpap/dars/index.htm.</E> </P> <CITA>[69 FR 63326, Nov. 1, 2004]</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> <SECTION> <SECTNO>201.109</SECTNO> <SUBJECT>Statutory acquisition-related dollar thresholds-adjustment for inflation.</SUBJECT> <P>(d) A matrix showing the most recent escalation adjustments of statutory acquisition-related dollar thresholds is available at PGI 201.109.</P> <CITA>[71 FR 75892, Dec. 19, 2006]</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.<PRTPAGE P="8"/> </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&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.</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 and Acquisition Policy, 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; 68 FR 7439, Feb. 14, 2003]</CITA> </SECTION> <SECTION> <SECTNO>201.201-70</SECTNO> <SUBJECT>Maintenance of Procedures, Guidance, and Information.</SUBJECT> <P>The DAR Council is also responsible for maintenance of the DFARS Procedures, Guidance, and Information (PGI).</P> <CITA>[69 FR 63326, Nov. 1, 2004]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 201.3—Agency Acquisition Regulations</HD> <SECTION> <SECTNO>201.301</SECTNO> <SUBJECT>Policy.</SUBJECT> <P>(a)(1) 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. The DFARS contains—</P> <P>(i) Requirements of law;</P> <P>(ii) DoD-wide policies;</P> <P>(iii) Delegations of FAR authorities;</P> <P>(iv) Deviations from FAR requirements; and</P> <P>(v) Policies/procedures that have a significant effect beyond the internal operating procedures of DoD or a significant cost or administrative impact on contractors or offerors.</P> <P>(2) Relevant procedures, guidance, and information that do not meet the criteria in paragraph (a)(1) of this section are issued in the DFARS Procedures, Guidance, and Information (PGI).</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&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; 69 FR 63326, Nov. 1, 2004]</CITA> </SECTION> <SECTION> <PRTPAGE P="9"/> <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).</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&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&L) has delegated authority to the Director of Defense Procurement and Acquisition Policy (OUSD(AT&L)DPAP) 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&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 <PRTPAGE P="10"/>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 OUSD(AT&L)DPAP, 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&L), and OUSD(AT&L)DPAP 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; 68 FR 7439, Feb. 14, 2003]</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 and Acquisition Policy, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics) (OUSD(AT&L)DPAP), 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);</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 OUSD(AT&L)DPAP 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; 68 FR 7439, Feb. 14, 2003]</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).<PRTPAGE P="11"/> </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, OUSD(AT&L)DPAP 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 Administration and the Department of Labor.</P> <CITA>[65 FR 6552, Feb. 10, 2000, as amended at 65 FR 52951, Aug. 31, 2000; 68 FR 7439, Feb. 14, 2003]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 201.6—Career Development, 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>(1) Follow the procedures at PGI 201.602-2 regarding designation of a contracting officer's representative (COR).</P> <P>(2) A COR—</P> <P>(i) Must be a Government employee, unless otherwise authorized in agency regulations;</P> <P>(ii) Must be qualified by training and experience commensurate with the responsibilities to be delegated in accordance with department/agency guidelines;</P> <P>(iii) 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>(iv) Has no authority to make any commitments or changes that affect price, quality, quantity, delivery, or other terms and conditions of the contract; and</P> <P>(v) Must be designated in writing, and a copy furnished the contractor and the contract administration office—</P> <P>(A) Specifying the extent of the COR's authority to act on behalf of the contracting officer;</P> <P>(B) Identifying the limitations on the COR's authority;</P> <P>(C) Specifying the period covered by the designation;</P> <P>(D) Stating the authority is not redelegable; and</P> <P>(E) Stating that the COR may be personally liable for unauthorized acts.</P> <CITA>[71 FR 69489, Dec. 1, 2006]</CITA> </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) In accordance with 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 contracting courses required for a contracting officer to serve in the grade in which the <PRTPAGE P="12"/>employee or member of the armed forces will serve;</P> <P>(ii) Have at least 2 years experience in a contracting position;</P> <P>(iii) Have—</P> <P>(A) Received a baccalaureate degree from an accredited educational institution; and</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; 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 qualification requirements in paragraph (1)(iii) of this subsection do not apply to a DoD employee or member of the armed forces who—</P> <P>(i) On or before September 30, 2000, occupied—</P> <P>(A) A contracting officer position with authority to award or administer contracts above the simplified acquisition threshold; or</P> <P>(B) A position either as an employee in the GS-1102 occupational series or a member of the armed forces in an occupational specialty similar to the GS-1102 series;</P> <P>(ii) Is in a contingency contracting force; or</P> <P>(iii) Is an individual appointed to a 3-year developmental position. Information on developmental opportunities is contained in DoD Instruction 5000.66, Operation of the Defense Acquisition, Technology, and Logistics Workforce Education, Training, and Career Development Program.</P> <P>(3) Waivers to the requirements in paragraph (1) of this subsection may be authorized. Information on waivers is contained in DoD Instruction 5000.66.</P> <CITA>[67 FR 65509, Oct. 25, 2002, as amended at 73 FR 21844, Apr. 23, 2008]</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">Commercially available off-the-shelf item</E>—</P> <P>(1) Means any item of supply that is—</P> <P>(i) A commercial item (as defined in FAR 2.101);</P> <P>(ii) Sold in substantial quantities in the commercial marketplace; and</P> <P>(iii) Offered to the Government, without modification, in the same form in which it is sold in the commercial marketplace; and</P> <P>(2) Does not include bulk cargo, as defined in Section 3 of the Shipping Act of 1984 (46 U.S.C. App. 1702), such as agricultural products and petroleum products.</P> <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 <PRTPAGE P="13"/>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">Acquisition and Procurement Office, Washington Headquarters Services</FP> <HD SOURCE="HD1">Army</HD> <FP SOURCE="FP-1">Headquarters, U.S. Army Contracting Agency</FP> <FP SOURCE="FP-1">Joint Contracting Command—Iraq/Afghanistan</FP> <FP SOURCE="FP-1">National Guard Bureau</FP> <FP SOURCE="FP-1">Program Executive Office for Simulation, Training, and Instrumentation</FP> <FP SOURCE="FP-1">U.S. Army Aviation and Missile Command</FP> <FP SOURCE="FP-1">U.S. Army Communications-Electronics Command</FP> <FP SOURCE="FP-1">U.S. Army Corps of Engineers</FP> <FP SOURCE="FP-1">U.S. Army Intelligence and Security Command</FP> <FP SOURCE="FP-1">U.S. Army Joint Munitions and Lethality Life Cycle Management Command</FP> <FP SOURCE="FP-1">U.S. Army Materiel Command, Office of Command Contracting</FP> <FP SOURCE="FP-1">U.S. Army Medical Command</FP> <FP SOURCE="FP-1">U.S. Army Medical Research and Materiel Command</FP> <FP SOURCE="FP-1">U.S. Army Military Surface Deployment and Distribution Command</FP> <FP SOURCE="FP-1">U.S. Army Research, Development, and Engineering Command</FP> <FP SOURCE="FP-1">U.S. Army Space and Missile Defense Command</FP> <FP SOURCE="FP-1">U.S. Army Sustainment Command</FP> <FP SOURCE="FP-1">U.S. Army Tank-Automotive and Armaments Command</FP> <HD SOURCE="HD1">Navy</HD> <FP SOURCE="FP-1">Office of the Deputy Assistant Secretary of the Navy (Acquisition & Logistics Management)</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 Systems Command</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 District of Washington</FP> <FP SOURCE="FP-1">Air Force Operational Test & Evaluation Center</FP> <FP SOURCE="FP-1">Air Force Special Operations Command</FP> <FP SOURCE="FP-1">United States Air Force Academy</FP> <FP SOURCE="FP-1">Air Force Materiel Command</FP> <FP SOURCE="FP-1">Air Force Reserve 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> <FP SOURCE="FP-1">Program Executive Office for Aircraft Systems</FP> <FP SOURCE="FP-1">Program Executive Office for Command and Control & Combat Support Systems</FP> <FP SOURCE="FP-1">Program Executive Office for Combat and Mission Support</FP> <FP SOURCE="FP-1">Program Executive Office for F/A-22 Programs</FP> <FP SOURCE="FP-1">Program Executive Office for Joint Strike Fighter</FP> <FP SOURCE="FP-1">Program Executive Office for Weapons</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">Acquisition Management Directorate</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">Missile Defense Agency</HD> <FP SOURCE="FP-1">Headquarters, Missile Defense Agency</FP> <HD SOURCE="HD1">United States Special Operations Command</HD> <FP SOURCE="FP-1">Headquarters, United States Special Operations Command<PRTPAGE P="14"/> </FP> <HD SOURCE="HD1">United States Transportation Command</HD> <FP SOURCE="FP-1">Directorate of Acquisition</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 Missile Defense Agency, 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 and Acquisition Policy, 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">Procedures, Guidance, and Information (PGI)</E> means a companion resource to the DFARS that—</P> <P>(1) Contains mandatory internal DoD procedures. The DFARS will direct compliance with mandatory procedures using imperative language such as “Follow the procedures at * * *” or similar directive language;</P> <P>(2) Contains non-mandatory internal DoD procedures and guidance and supplemental information to be used at the discretion of the contracting officer. The DFARS will point to non-mandatory procedures, guidance, and information using permissive language such as “The contracting officer may use * * *” or “Additional information is available at * * *” or other similar language;</P> <P>(3) Is numbered similarly to the DFARS, except that each PGI numerical designation is preceded by the letters “PGI”; and</P> <P>(4) Is available electronically at <E T="03">http://www.acq.osd.mil/dpap/dars/index.htm.</E> </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 (Acquisition, Logistics and Technology);</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> <P> <E T="03">Tiered evaluation of offers</E>, also known as <E T="03">cascading evaluation of offers</E>, means a procedure used in negotiated acquisitions, when market research is inconclusive for justifying limiting competition to small business concerns, whereby the contracting officer—</P> <P>(1) Solicits and receives offers from both small and other than small business concerns;<PRTPAGE P="15"/> </P> <P>(2) Establishes a tiered or cascading order of precedence for evaluating offers that is specified in the solicitation; and</P> <P>(3) If no award can be made at the first tier, evaluates offers at the next lower tier, until award can be made.</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> <SECHD>Sec.</SECHD> <SECTNO>203.070</SECTNO> <SUBJECT>Reporting of violations and suspected violations.</SUBJECT> <SUBPART> <HD SOURCE="HED">Subpart 203.1—Safeguards</HD> <SECTNO>203.104</SECTNO> <SUBJECT>Procurement integrity.</SUBJECT> <SECTNO>203.104-5</SECTNO> <SUBJECT>Disclosure of proprietary and source selection information.</SUBJECT> <SECTNO>203.170</SECTNO> <SUBJECT>Business practices.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 203.5—Other Improper Business Practices</HD> <SECTNO>203.502-2</SECTNO> <SUBJECT>Subcontractor kickbacks.</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>Prohibition period.</SUBJECT> <SECTNO>203.570-3</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 203.10—Contractor Code of Business Ethics and Conduct</HD> <SECTNO>203.1004</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 36288, July 31, 1991, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 203.070</SECTNO> <SUBJECT>Reporting of violations and suspected violations.</SUBJECT> <P>Report violations and suspected violations of the following requirements 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> <P>(a) Certificate of Independent Price Determination (FAR 3.103).</P> <P>(b) Procurement integrity (FAR 3.104).</P> <P>(c) Gratuities clause (FAR 3.203).</P> <P>(d) Antitrust laws (FAR 3.303).</P> <P>(e) Covenant Against Contingent Fees (FAR 3.405).</P> <P>(f) Anti-kickback Act (FAR 3.502).</P> <P>(g) Prohibitions on persons convicted of defense-related contract felonies (203.570).</P> <CITA>[69 FR 74990, Dec. 15, 2004]</CITA> </SECTION> <SUBPART> <HD SOURCE="HED">Subpart 203.1—Safeguards</HD> <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>203.170</SECTNO> <SUBJECT>Business practices.</SUBJECT> <P>To ensure the separation of functions for oversight, source selection, contract negotiation, and contract award, departments and agencies shall adhere to the following best practice policies:</P> <P>(a) Senior leaders shall not perform multiple roles in source selection for a major weapon system or major service acquisition.</P> <P>(b) Vacant acquisition positions shall be filled on an “acting” basis from below until a permanent appointment is made. To provide promising professionals an opportunity to gain experience by temporarily filling higher positions, these oversight duties shall not be accrued at the top.</P> <P>(c) Acquisition process reviews of the military departments shall be conducted to assess and improve acquisition and management processes, roles, and structures. The scope of the reviews should include—</P> <P>(1) Distribution of acquisition roles and responsibilities among personnel;</P> <P>(2) Processes for reporting concerns about unusual or inappropriate actions; and<PRTPAGE P="16"/> </P> <P>(3) Application of DoD Instruction 5000.2, Operation of the Defense Acquisition System, and the disciplines in the Defense Acquisition Guidebook.</P> <P>(d) Source selection processes shall be—</P> <P>(1) Reviewed and approved by cognizant organizations responsible for oversight;</P> <P>(2) Documented by the head of the contracting activity or at the agency level; and</P> <P>(3) Periodically reviewed by outside officials independent of that office or agency.</P> <P>(e) Legal review of documentation of major acquisition system source selection shall be conducted prior to contract award, including the supporting documentation of the source selection evaluation board, source selection advisory council, and source selection authority.</P> <P>(f) Procurement management reviews shall determine whether clearance threshold authorities are clear and that independent review is provided for acquisitions exceeding the simplified acquisition threshold.</P> <CITA>[72 FR 20757, Apr. 26, 2007]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 203.5—Other Improper Business Practices</HD> <SECTION> <SECTNO>203.502-2</SECTNO> <SUBJECT>Subcontractor kickbacks.</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 implements 10 U.S.C. 2408. For information on 10 U.S.C. 2408, see PGI 203.570-1.</P> <CITA>[71 FR 14100, Mar. 21, 2006]</CITA> </SECTION> <SECTION> <SECTNO>203.570-2</SECTNO> <SUBJECT>Prohibition period.</SUBJECT> <P>DoD has sole responsibility for determining the period of the prohibition described in paragraph (b) of the clause at 252.203-7001, Prohibition on Persons Convicted of Fraud or Other Defense-Contract-Related Felonies. The prohibition period—</P> <P>(a) 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. Follow the waiver procedures at PGI 203.570-2(a); and</P> <P>(b) 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 address at PGI 203.570-2(b).</P> <CITA>[69 FR 74990, Dec. 15, 2004]</CITA> </SECTION> <SECTION> <SECTNO>203.570-3</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. Redesignated at 69 FR 74990, Dec. 15, 2004]</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 <PRTPAGE P="17"/>(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 203.10—Contractor Code of Business Ethics and Conduct</HD> <SECTION> <SECTNO>203.1004</SECTNO> <SUBJECT>Contract clauses.</SUBJECT> <P>(b)(2)(ii) Insert the following address in paragraph (b)(3) of the clause at FAR 52.203-14, Display of Hotline Poster(s): DoD Inspector General, ATTN: Defense Hotline, 400 Army Navy Drive, Washington, DC 22202-2884.</P> <CITA>[73 FR 46815, Aug. 12, 2008]</CITA> </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>204.203</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>204.670</SECTNO> <SUBJECT>Contract action reporting requirements.</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>204.805</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> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 204.11—Central Contractor Registration</HD> <SECTNO>204.1103</SECTNO> <SUBJECT>Procedures.</SUBJECT> <SECTNO>204.1104</SECTNO> <SUBJECT>Solicitation provision and contract clauses.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 204.12—Annual Representations and Certifications</HD> <SECTNO>204.1202</SECTNO> <SUBJECT>Solicitation provision and contract clause.</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> <SECTNO>204.7005</SECTNO> <SUBJECT>Assignment of order codes.</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> <SECTNO>204.7108</SECTNO> <SUBJECT>Payment instructions.</SUBJECT> <SECTNO>204.7109</SECTNO> <SUBJECT>Contract clause.</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—Export-Controlled Items</HD> <SECTNO>204.7300</SECTNO> <SUBJECT>Scope of subpart.</SUBJECT> <SECTNO>204.7301</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>204.7302</SECTNO> <SUBJECT>General.</SUBJECT> <SECTNO>204.7303</SECTNO> <SUBJECT>Policy.</SUBJECT> <SECTNO>204.7304</SECTNO> <SUBJECT>Procedures.</SUBJECT> <SECTNO>204.7305</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 36289, July 31, 1991, unless otherwise noted.</P> </SOURCE> <SUBPART> <PRTPAGE P="18"/> <HD SOURCE="HED">Subpart 204.1—Contract Execution</HD> <SECTION> <SECTNO>204.101</SECTNO> <SUBJECT>Contracting officer's signature.</SUBJECT> <P>Follow the procedures at PGI 204.101 for signature of contract documents.</P> <CITA>[71 FR 9268, Feb. 23, 2006]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 204.2—Contract Distribution</HD> <SECTION> <SECTNO>204.201</SECTNO> <SUBJECT>Procedures.</SUBJECT> <P>Follow the procedures at PGI 204.201 for the distribution of contracts and modifications.</P> <CITA>[70 FR 58982, Oct. 11, 2005]</CITA> </SECTION> <SECTION> <SECTNO>204.203</SECTNO> <SUBJECT>Taxpayer identification information.</SUBJECT> <P>(b) The procedure at FAR 4.203(b) does not apply to contracts that include the clause at FAR 52.204-7, Central Contractor Registration. The payment office obtains the taxpayer identification number and the type of organization from the Central Contractor Registration database.</P> <CITA>[68 FR 64558, Nov. 14, 2003]</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>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 products, both classified and unclassified.</P> <CITA>[71 FR 9268, Feb. 23, 2006]</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>204.670</SECTNO> <SUBJECT>Contract action reporting requirements.</SUBJECT> <P>Departments and agencies shall report contracting actions in accordance with the requirements at PGI 204.670.</P> <CITA>[71 FR 44926, Aug. 8, 2006]</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>Contracting officers shall close out contracts in accordance with the procedures at PGI 204.804. The closeout date for file purposes shall be determined and documented by the procuring contracting officer.</P> <CITA>[73 FR 4114, Jan. 24, 2008]</CITA> </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 <PRTPAGE P="19"/>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 Government Accountability 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; 71 FR 53044, Sept. 8, 2006]</CITA> </SECTION> </SUBPART> <SUBPART> <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, to meet these reporting requirements.</P> <CITA>[64 FR 43099, Aug. 9, 1999, as amended at 71 FR 9268, Feb. 23, 2006]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 204.11—Central Contractor Registration</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>68 FR 64558, Nov. 14, 2003, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>204.1103</SECTNO> <SUBJECT>Procedures.</SUBJECT> </SECTION> <AMDPAR>(e) On contractual documents transmitted to the payment office, provide the Commercial and Government Entity code, instead of the DUNS number or DUNS+4 number, in accordance with agency procedures.</AMDPAR> <CITA>[70 FR 57188, Sept. 30, 2005]</CITA> <SECTION> <SECTNO>204.1104</SECTNO> <SUBJECT>Solicitation provision and contract clauses.</SUBJECT> <P>When using the clause at FAR 52.204-7, Central Contractor Registration, use the clause with 252.204-7004, Alternate A.</P> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 204.12—Annual Representations and Certifications</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>73 FR 1823, Jan. 10, 2008, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>204.1202</SECTNO> <SUBJECT>Solicitation provision and contract clause.</SUBJECT> <P>When using the provision at FAR 52.204-8, Annual Representations and Certifications—</P> <P>(1) Use the provision with 252.204-7007, Alternate A, Annual Representations and Certifications; and</P> <P>(2) Do not include the following representations and certifications:</P> <P>(i) 252.209-7005, Reserve Officer Training Corps and Military Recruiting on Campus.</P> <P>(ii) 252.212-7000, Offeror Representations and Certifications—Commercial Items.</P> <P>(iii) 252.216-7003, Economic Price Adjustment—Wage Rates or Material Prices Controlled by a Foreign Government.</P> <P>(iv) 252.225-7000, Buy American Act—Balance of Payments Program Certificate.</P> <P>(v) 252.225-7020, Trade Agreements Certificate.</P> <P>(vi) 252.225-7031, Secondary Arab Boycott of Israel.</P> <P>(vii) 252.225-7035, Buy American Act—Free Trade Agreements—Balance of Payments Program Certificate.<PRTPAGE P="20"/> </P> <P>(viii) 252.225-7042, Authorization to Perform.</P> <P>(ix) 252.229-7003, Tax Exemptions (Italy).</P> <P>(x) 252.229-7005, Tax Exemptions (Spain).</P> <P>(xi) 252.239-7011, Special Construction and Equipment Charges.</P> <P>(xii) 252.247-7022, Representation of Extent of Transportation by Sea.</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—</P> <P>(a) Prescribes policies and procedures for assigning numbers to all solicitations, contracts, and related instruments; and</P> <P>(b) Does not apply to solicitations or orders for communication service authorizations issued by the Defense Information Technology Contracting Organization of the Defense Information Systems Agency in accordance with 239.7407-2.</P> <CITA>[68 FR 64556, Nov. 14, 2003]</CITA> </SECTION> <SECTION> <SECTNO>204.7001</SECTNO> <SUBJECT>Policy.</SUBJECT> <P>(a) Use the uniform procurement instrument identification (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 unless the conditions in paragraph (c) of this section exist.</P> <P>(c)(1) If continued performance under a contract number is not possible or is not in the Government's best interest solely for administrative reasons (<E T="03">e.g.</E>, when the supplementary PII serial numbering system is exhausted or for lengthy major systems contracts with multiple options), the contracting officer may assign an additional PII number by issuing a separate continued contract to permit continued contract performance.</P> <P>(2) A continued contract—</P> <P>(i) Does not constitute a new procurement;</P> <P>(ii) Incorporates all prices, terms, and conditions of the predecessor contract effective at the time of issuance of the continued contract;</P> <P>(iii) Operates as a separate contract independent of the predecessor contract once issued; and</P> <P>(iv) Shall not evade competition, expand the scope of work, or extend the period of performance beyond that of the predecessor contract.</P> <P>(3) When issuing a continued contract, the contracting officer shall—</P> <P>(i) Issue an administrative modification to the predecessor contract to clearly state that—</P> <P>(A) Any future awards provided for under the terms of the predecessor contract (<E T="03">e.g.</E>, issuance of orders or exercise of options) will be accomplished under the continued contract; and</P> <P>(B) Supplies and services already acquired under the predecessor contract shall remain solely under that contract for purposes of Government inspection, acceptance, payment, and closeout; and</P> <P>(ii) Follow the procedures at PGI 204.7001(c).</P> <CITA>[71 FR 27640, May 12, 2006]</CITA> </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 (not necessary in electronic transmission). 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; 68 FR 64556, Nov. 14, 2003]</CITA> </SECTION> <SECTION> <PRTPAGE P="21"/> <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 six positions identify the department/agency and office issuing the instrument. Use the DoD Activity Address Code (DoDAAC) assigned to the issuing office. DoDAACs can be found at <E T="03">https://day2k1.daas.dla.mil/daasinq/.</E> </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 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"> <PRTPAGE P="22"/> <GID>EC01FE91.052</GID> </GPH> <CITA>[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; 68 FR 7439, Feb. 14, 2003; 68 FR 64557, Nov. 14, 2003; 69 FR 63327, Nov. 1, 2004]</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 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:<PRTPAGE P="23"/> </P> <GPOTABLE CDEF="s25,xls48,xls48" COLS="3" OPTS="L2"> <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 in accordance with 204.7005. 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 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> <CITA>[64 FR 43099, Aug. 9, 1999, as amended at 68 FR 64557, Nov. 14, 2003]</CITA> </SECTION> <SECTION> <SECTNO>204.7005</SECTNO> <SUBJECT>Assignment of order codes.</SUBJECT> <P>(a) The Defense Logistics Agency, Acquisition Policy Branch (J71), Fort Belvoir, VA 22060-6221, is the executive agent for maintenance of code assignments for use in the first two positions of an order number when an activity places an order against another activity's contract or agreement (see 204.7004(d)(2)). The executive agent distributes blocks of two-character order codes to department/agency monitors for further assignment.</P> <P>(b) Contracting activities submit requests for assignment of or changes in two-character order codes to their respective monitors in accordance with department/agency procedures. Order code monitors—</P> <P>(1) Approve requests for additions, deletions, or changes; and<PRTPAGE P="24"/> </P> <P>(2) Provide notification of additions, deletions, or changes to—</P> <P>(i) The executive agent; and</P> <P>(ii) The executive editor, Defense Acquisition Regulations, OUSD(AT&L)DPAP(DAR), 3062 Defense Pentagon, Washington, DC 20301-3062.</P> <P>(c) Order code monitors are— </P> <EXTRACT> <FP SOURCE="FP-1">Army: Army Contracting Agency, Attn: SFCA-IT, 5109 Leesburg Pike, Suite 302, Falls Church, VA 22041-3201</FP> <FP SOURCE="FP-1">Navy and Marine Corps: Office of the Assistant Secretary of the Navy (RD&A), 1000 Navy Pentagon, Room BF992, Washington, DC 20350-1000</FP> <FP SOURCE="FP-1">Air Force: SAF/AQCI, 1060 Air Force Pentagon, Washington, DC 20330-1060</FP> <FP SOURCE="FP-1">Defense Logistics Agency: Defense Logistics Agency, Acquisition Policy Branch (J-3311), John J. Kingman Road, Fort Belvoir, VA 22060-6221</FP> <FP SOURCE="FP-1">Other Defense Agencies: Army Contracting Agency, Attn: SFCA-IT 5109 Leesburg Pike, Suite 302, Falls Church, VA 22041-3201</FP> </EXTRACT> <P>(d) Order code assignments can be found at <E T="03">http://www.acq.osd.mil/dpap/dars/order_code_assignments.html</E>. </P> <CITA>[68 FR 64557, Nov. 14, 2003, as amended at 69 FR 63327, Nov. 1, 2004; 72 FR 42313, Aug. 2, 2007; 73 FR 4113, Jan. 24, 2008; 73 FR 27464, May 13, 2008]</CITA> </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 any combination of a two position alpha/numeric 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; 70 FR 58982, Oct. 11, 2005]</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;</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) 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>(2) The contract is a communications service authorization issued by the Defense Information Systems Agency's Defense Information Technology Contracting Organization.</P> <CITA>[71 FR 9269, Feb. 23, 2006]</CITA> </SECTION> <SECTION> <PRTPAGE P="25"/> <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&D or other funds properly incrementally obligated over several fiscal years in accordance with DoD policy;<PRTPAGE P="26"/> </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) All subline items and exhibit line items under one contract line item shall be the same contract type as the contract line item.</P> <P>(c) For a contract that contains a combination of fixed-price line items, time-and-materials/labor-hour line items, and/or cost-reimbursement line items, identify the contract type for each contract line item in Section B, Supplies or Services and Prices/Costs, to facilitate appropriate payment.</P> <P>(d) 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>(e) 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>(f) 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; 70 FR 58982, Oct. 11, 2005]</CITA> </SECTION> <SECTION> <SECTNO>204.7103-2</SECTNO> <SUBJECT>Numbering procedures.</SUBJECT> <P>Follow the procedures at PGI 204.7103-2 for numbering contract line items.</P> <CITA>[70 FR 58983, Oct. 11, 2005]</CITA> </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="27"/>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; 68 FR 75200, Dec. 30, 2003]</CITA> </SECTION> <SECTION> <SECTNO>204.7104-2</SECTNO> <SUBJECT>Numbering procedures.</SUBJECT> <P>Follow the procedures at PGI 204.7104-2 for numbering contract subline items.</P> <CITA>[70 FR 58983, Oct. 11, 2005]</CITA> </SECTION> <SECTION> <SECTNO>204.7105</SECTNO> <SUBJECT>Contract exhibits and attachments.</SUBJECT> <P>Follow the procedures at PGI 204.7105 for use and numbering of contract exhibits and attachments.</P> <CITA>[71 FR 9269, Feb. 23, 2006]</CITA> </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 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—<PRTPAGE P="28"/> </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> <P>(3) If the modification will decrease the amount obligated—</P> <P>(i) There shall be coordination between the administrative and procuring contracting offices before issuance of the modification; and</P> <P>(ii) The contracting officer shall not issue the modification unless sufficient unliquidated obligation exists or the purpose is to recover monies owed to the Government.</P> <CITA>[56 FR 36289, July 31, 1991, as amended at 70 FR 58983, Oct. 11, 2005]</CITA> </SECTION> <SECTION> <SECTNO>204.7107</SECTNO> <SUBJECT>Contract accounting classification reference number (ACRN).</SUBJECT> <P>Follow the procedures at PGI 204.7107 for assigning ACRNs.</P> <CITA>[70 FR 58983, Oct. 11, 2005]</CITA> </SECTION> <SECTION> <SECTNO>204.7108</SECTNO> <SUBJECT>Payment instructions.</SUBJECT> <P>Follow the procedures at PGI 204.7108 for inclusion of payment instructions in contracts.</P> <CITA>[70 FR 58983, Oct. 11, 2005]</CITA> </SECTION> <SECTION> <SECTNO>204.7109</SECTNO> <SUBJECT>Contract clause.</SUBJECT> <P>Use the clause at 252.204-7006, Billing Instructions, in solicitations and contracts if Section G includes—</P> <P>(a) Any of the standard payment instructions at PGI 204.7108(d)(1) through (6); or</P> <P>(b) Other payment instructions, in accordance with PGI 204.7108(d)(12), that require contractor identification of the contract line item(s) on the payment request.</P> <CITA>[70 FR 58983, Oct. 11, 2005]</CITA> </SECTION> </SUBPART> <SUBPART> <PRTPAGE P="29"/> <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 located in the United States must register in the Central Contractor Registration (CCR) database (<E T="03">see</E> FAR Subpart 4.11) 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. Foreign registrants must obtain a North Atlantic Treaty Organization CAGE (NCAGE) code in order to register in the CCR database. NCAGE codes may be obtained from the Codification Bureau in the foreign registrant's country. Additional information on obtaining NCAGE codes is available at <E T="03">http://www.dlis.dla.mil/Forms/Form_AC135.asp.</E> </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 <E T="03">http://www.dlis.dla.mil/cage_welcome.asp.</E> </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 <PRTPAGE P="30"/>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; 68 FR 15380, Mar. 31, 2003; 68 FR 64558, Nov. 14, 2003]</CITA> </SECTION> <SECTION> <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> <PRTPAGE P="31"/> <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 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 FAR 52.204-7, 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, as amended at 68 FR 64558, Nov. 14, 2003]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 204.73—Export-Controlled Items</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>73 FR 42278, July 21, 2008, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>204.7300</SECTNO> <SUBJECT>Scope of subpart.</SUBJECT> <P>This subpart implements Section 890(a) of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181).</P> </SECTION> <SECTION> <SECTNO>204.7301</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this subpart—</P> <P> <E T="03">Applied research</E> means the effort that—</P> <P>(1) Normally follows basic research, but may not be severable from the related basic research;</P> <P>(2) Attempts to determine and exploit the potential of scientific discoveries or improvements in technology, materials, processes, methods, devices, or techniques; and</P> <P>(3) Attempts to advance the state of the art.</P> <P> <E T="03">Export-controlled items</E> is defined in the clauses at 252.204-7008 and 252.204-7009.</P> <P> <E T="03">Fundamental research</E>, as defined by National Security Decision Directive (NSDD) 189, means basic and applied research in science and engineering, the results of which ordinarily are published and shared broadly within the scientific community. This is distinguished from proprietary research and from industrial development, design, production, and product utilization, the results of which ordinarily are restricted for proprietary or national security reasons.</P> </SECTION> <SECTION> <SECTNO>204.7302</SECTNO> <SUBJECT>General.</SUBJECT> <P>Export control laws and regulations restrict the transfer, by any means, of certain types of items to unauthorized persons. The International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations (EAR) establish these restrictions. See PGI 204.7302 for additional information.</P> </SECTION> <SECTION> <SECTNO>204.7303</SECTNO> <SUBJECT>Policy.</SUBJECT> <P>(a) It is in the interest of both the Government and the contractor to have a common understanding of export-controlled items expected to be involved in contract performance.</P> <P>(b) The requiring activity shall review each acquisition to determine if, during performance of the contemplated contract, the contractor is expected to generate or require access to export-controlled items.</P> </SECTION> <SECTION> <SECTNO>204.7304</SECTNO> <SUBJECT>Procedures.</SUBJECT> <P>(a) Prior to issuance of a solicitation for research and development, the requiring activity shall notify the contracting officer in writing when—</P> <P>(1) Export-controlled items are expected to be involved; or<PRTPAGE P="32"/> </P> <P>(2) The work is fundamental research only, and export-controlled items are not expected to be involved.</P> <P>(b) Prior to issuance of a solicitation for supplies or services, the requiring activity shall notify the contracting officer in writing when—</P> <P>(1) Export-controlled items are expected to be involved; or</P> <P>(2) The requiring activity is unable to determine that export-controlled items will not be involved. See PGI 204.7304 for guidance regarding this notification requirement.</P> </SECTION> <SECTION> <SECTNO>204.7305</SECTNO> <SUBJECT>Contract clauses.</SUBJECT> <P>(a) Use the clause at 252.204-7008, Requirements for Contracts Involving Export-Controlled Items, in solicitations and contracts when the requiring activity provides the notification at 204.7304(a)(1) or (b)(1), indicating that export-controlled items are expected to be involved in the performance of the contract.</P> <P>(b) Use the clause at 252.204-7009, Requirements Regarding Potential Access to Export-Controlled Items, in solicitations and contracts—</P> <P>(1) For research and development, except when the clause at 252.204-7008 will be included; or</P> <P>(2) For supplies and services, when the requiring activity provides the notification at 204.7304(b)(2).</P> </SECTION> </SUBPART> </PART> </SUBCHAP> <SUBCHAP TYPE="P"> <PRTPAGE P="33"/> <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>205.301</SECTNO> <SUBJECT>General.</SUBJECT> <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>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 acquisitions being considered for historically black college and university and minority institution set-asides under 226.370—</P> <P>(A) Cite the appropriate Numbered Note; and</P> <P>(B) Include the notice at PGI 205.207(d)(i).</P> <P>(ii) For broad agency announcement notices, see 235.016.</P> <CITA>[69 FR 63328, Nov. 1, 2004, as amended at 70 FR 73149, Dec. 9, 2005]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 205.3—Synopses of Contract Awards</HD> <SECTION> <SECTNO>205.301</SECTNO> <SUBJECT>General.</SUBJECT> <P>(a)(S-70) <E T="03">Synopsis of exceptions to domestic source requirements.</E> </P> <P>(i) In accordance with 10 U.S.C. 2533a(k), contracting officers also must synopsize through the GPE, awards exceeding the simplified acquisition threshold that are for the acquisition of any clothing, fiber, yarn, or fabric items described in 225.7002-1(a)(2) through (10), if—</P> <P>(A) The Secretary concerned has determined that domestic items are not available, in accordance with 225.7002-2(b); or</P> <P>(B) The acquisition is for chemical warfare protective clothing, and the contracting officer has determined that an exception to domestic source requirements applies because the acquisition furthers an agreement with a qualifying country, in accordance with 225.7002-2(p).</P> <P>(ii) The synopsis must be submitted in sufficient time to permit its publication not later than 7 days after contract award.</P> <P>(iii) In addition to the information otherwise required in a synopsis of contract award, the synopsis must include one of the following statements as applicable:</P> <P>(A) “The exception at DFARS 225.7002-2(b) applies to this acquisition, because the Secretary concerned has determined that items grown, reprocessed, reused, or produced in the United States cannot be acquired as and when needed in satisfactory quality and sufficient quantity at U.S. market prices.”</P> <P>(B) “The exception at DFARS 225.7002-2(p) applies to this acquisition, because the contracting officer has determined that this acquisition of chemical warfare protective clothing furthers an agreement with a qualifying country identified in DFARS 225.872.”</P> <CITA>[71 FR 58536, Oct. 4, 2006]</CITA> </SECTION> <SECTION> <PRTPAGE P="34"/> <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 $5.5 million. Report all contractual actions, including modifications, that have a face value, excluding unexercised options, of more than $5.5 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 $5.5 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 $5.5 million. Do not report orders up to the estimated value, but after the estimated value is reached, report subsequent modifications and orders that have a face value of more than $5.5 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; 71 FR 75892, Dec. 19, 2006]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 205.4—Release of Information</HD> <SECTION> <SECTNO>205.470</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 $100,000,000. This clause implements 10 U.S.C. 2416.</P> <CITA>[69 FR 63328, Nov. 1, 2004, as amended at 70 FR 8537, Feb. 22, 2005]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 205.5—Paid Advertisements</HD> <SECTION> <SECTNO>205.502</SECTNO> <SUBJECT>Authority.</SUBJECT> <P>(a) <E T="03">Newspapers.</E> Heads of contracting activities are delegated authority to approve the publication of paid advertisements in newspapers.</P> <CITA>[69 FR 63328, Nov. 1, 2004]</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.<PRTPAGE P="35"/> </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>206.303-70</SECTNO> <SUBJECT>Acquisitions in support of operations in Iraq or Afghanistan.</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) As authorized by 10 U.S.C. 1091, contracts awarded to individuals using the procedures at 237.104(b)(ii) are exempt from the competitive requirements of FAR part 6.</P> <P>(S-70) Also excepted from this part are follow-on production contracts for products developed pursuant to the “other transactions” authority of 10 U.S.C. 2371 for prototype projects when—</P> <P>(1) The other transaction agreement includes provisions for a follow-on production contract;</P> <P>(2) The contracting officer receives sufficient information from the agreements officer and the project manager for the prototype other transaction agreement, which documents that the conditions set forth in 10 U.S.C. 2371 note, subsections (f)(2) (A) and (B) (<E T="03">see</E> 32 CFR 3.9(d)), have been met; and</P> <P>(3) The contracting officer establishes quantities and prices for the follow-on production contract that do not exceed the quantities and target prices established in the other transaction agreement.</P> <CITA>[70 FR 2361, Jan. 13, 2005]</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&F) and the documentation supporting the D&F shall identify the source to be excluded from the contract action. Include the information at PGI 206.202(b), as applicable, and any other information that may be pertinent, in the supporting documentation.</P> <CITA>[69 FR 74991, Dec. 15, 2004]</CITA> </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 <PRTPAGE P="36"/>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> <CITA>[56 FR 36303, July 31, 1991, as amended at 57 FR 14992, Apr. 23, 1992; 58 FR 28463, May 13, 1993; 69 FR 74991, Dec. 15, 2004]</CITA> </SECTION> <SECTION> <SECTNO>206.302-2</SECTNO> <SUBJECT>Unusual and compelling urgency.</SUBJECT> <P>(b) <E T="03">Application.</E> For guidance on circumstances under which use of this authority may be appropriate, see PGI 206.302-2(b).</P> <CITA>[69 FR 74991, Dec. 15, 2004]</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 and Acquisition Policy, 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.</P> <P>(iii) Subsequent statutes may provide different or additional constraints on <PRTPAGE P="37"/>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; 68 FR 7439, Feb. 14, 2003]</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>206.303-70</SECTNO> <SUBJECT>Acquisitions in support of operations in Iraq or Afghanistan.</SUBJECT> <P>The justification and approval addressed in FAR 6.303 is not required for acquisitions conducted using a procedure specified in 225.7703-1(a).</P> <CITA>[73 FR 53152, Sept. 15, 2008]</CITA> </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>207.105</SECTNO> <SUBJECT>Contents of written acquisition plans.</SUBJECT> <SECTNO>207.106</SECTNO> <SUBJECT> Additional requirements for major systems.</SUBJECT> <SECTNO>207.170</SECTNO> <SUBJECT>Consolidation of contract requirements.</SUBJECT> <SECTNO>207.170-1</SECTNO> <SUBJECT>Scope.</SUBJECT> <SECTNO>207.170-2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>207.170-3</SECTNO> <SUBJECT>Policy and procedures.</SUBJECT> <SECTNO>207.171</SECTNO> <SUBJECT>Component breakout.</SUBJECT> <SECTNO>207.171-1</SECTNO> <SUBJECT>Scope.</SUBJECT> <SECTNO>207.171-2</SECTNO> <SUBJECT>Definition.</SUBJECT> <SECTNO>207.171-3</SECTNO> <SUBJECT>Policy.</SUBJECT> <SECTNO>207.171-4</SECTNO> <SUBJECT>Procedures.</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> <SUBPART> <HD SOURCE="HED">Subpart 207.5—Inherently Governmental Functions</HD> <SECTNO>207.500</SECTNO> <SUBJECT>Scope of subpart.</SUBJECT> <SECTNO>207.503</SECTNO> <SUBJECT>Policy.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 207.70—Buy-to-Budget—Additional Quantities of End Items</HD> <SECTNO>207.7001</SECTNO> <SUBJECT>Definition.</SUBJECT> <SECTNO>207.7002</SECTNO> <SUBJECT>Authority to acquire additional quantities of end items.</SUBJECT> <SECTNO>207.7003</SECTNO> <SUBJECT>Limitation.</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>(a)(1) See 212.102 regarding requirements for a written determination that the commercial item definition has been met when using FAR Part 12 procedures.</P> <CITA>[73 FR 4114, Jan. 24, 2008]</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 $10 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 $50 million or more for all years or $25 million or more for any fiscal year; and<PRTPAGE P="38"/> </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-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>(h) For procurement of conventional ammunition, as defined in DoDD 5160.65, Single Manager for Conventional Ammunition (SMCA), the SMCA 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. The department or agency—</P> <P>(i) Shall submit the acquisition plan to the address in PGI 207.103(h); and</P> <P>(ii) Shall not proceed with the procurement until the SMCA provides written concurrence with the acquisition plan. In the case of a non-concurrence, the SMCA will resolve issues with the Army Office of the Executive Director for Conventional Ammunition.</P> <CITA>[71 FR 53045, Sept. 8, 2006, as amended at 71 FR 58537, Oct. 4, 2006]</CITA> </SECTION> <SECTION> <SECTNO>207.105</SECTNO> <SUBJECT>Contents of written acquisition plans.</SUBJECT> <P>In addition to the requirements of FAR 7.105, planners shall follow the procedures at PGI 207.105.</P> <CITA>[71 FR 53045, Sept. 8, 2006]</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> <P>(S-70)(1) In accordance with Section 802(a) of the National Defense Authorization Act for Fiscal Year 2007 (Pub. L. 109-364) and DoD policy requirements, acquisition plans for major weapon systems and subsystems of major weapon systems shall—</P> <P>(i) Assess the long-term technical data and computer software needs of those systems and subsystems; and</P> <P>(ii) Establish acquisition strategies that provide for the technical data deliverables and associated license rights needed to sustain those systems and subsystems over their life cycle. The strategy may include—</P> <P>(A) The development of maintenance capabilities within DoD; or</P> <P>(B) Competition for contracts for sustainment of the systems or subsystems.</P> <P>(2) Assessments and corresponding acquisition strategies developed under this section shall—</P> <P>(i) Be developed before issuance of a solicitation for the weapon system or subsystem;<PRTPAGE P="39"/> </P> <P>(ii) Address the merits of including a priced contract option for the future delivery of technical data and computer software, and associated license rights, that were not acquired upon initial contract award;</P> <P>(iii) Address the potential for changes in the sustainment plan over the life cycle of the weapon system or subsystem; and</P> <P>(iv) Apply to weapon systems and subsystems that are to be supported by performance-based logistics arrangements as well as to weapon systems and subsystems that are to be supported by other sustainment approaches.</P> <P>(S-71)See 209.570 for policy applicable to acquisition strategies that consider the use of lead system integrators.</P> <CITA>[56 FR 36305, July 31, 1991, as amended at 72 FR 51188, Sept. 6, 2007; 73 FR 1824, Jan. 10, 2008]</CITA> </SECTION> <SECTION> <SECTNO>207.170</SECTNO> <SUBJECT>Consolidation of contract requirements.</SUBJECT> </SECTION> <SECTION> <SECTNO>207.170-1</SECTNO> <SUBJECT>Scope.</SUBJECT> <P>This section implements 10 U.S.C. 2382.</P> <CITA>[69 FR 55987, Sept. 17, 2004]</CITA> </SECTION> <SECTION> <SECTNO>207.170-2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this section—</P> <P> <E T="03">Consolidation of contract requirements</E> means the use of a solicitation to obtain offers for a single contract or a multiple award contract to satisfy two or more requirements of a department, agency, or activity for supplies or services that previously have been provided to, or performed for, that department, agency, or activity under two or more separate contracts.</P> <P> <E T="03">Multiple award contract</E> means-</P> <P>(1) Orders placed using a multiple award schedule issued by the General Services Administration as described in FAR Subpart 8.4;</P> <P>(2) A multiple award task order or delivery order contract issued in accordance with FAR Subpart 16.5; or</P> <P>(3) Any other indefinite-delivery, indefinite-quantity contract that an agency enters into with two or more sources for the same line item under the same solicitation.</P> <CITA>[71 FR 14106, Mar. 21, 2006]</CITA> </SECTION> <SECTION> <SECTNO>207.170-3</SECTNO> <SUBJECT>Policy and procedures.</SUBJECT> <P>(a) Agencies shall not consolidate contract requirements with an estimated total value exceeding $5.5 million unless the acquisition strategy includes—</P> <P>(1) The results of market research;</P> <P>(2) Identification of any alternative contracting approaches that would involve a lesser degree of consolidation; and</P> <P>(3) A determination by the senior procurement executive that the consolidation is necessary and justified.</P> <P>(i) Market research may indicate that consolidation of contract requirements is necessary and justified if the benefits of the acquisition strategy substantially exceed the benefits of each of the possible alternative contracting approaches. Benefits may include costs and, regardless of whether quantifiable in dollar amounts—</P> <P>(A) Quality;</P> <P>(B) Acquisition cycle;</P> <P>(C) Terms and conditions; and</P> <P>(D) Any other benefit.</P> <P>(ii) Savings in administrative or personnel costs alone do not constitute a sufficient justification for a consolidation of contract requirements unless the total amount of the cost savings is expected to be substantial in relation to the total cost of the procurement.</P> <P>(b) Include the determination made in accordance with paragraph (a)(3) of this section in the contract file.</P> <CITA>[69 FR 55987, Sept. 17, 2004, as amended at 71 FR 14106, Mar. 21, 2006; 71 FR 75892, Dec. 19, 2006]</CITA> </SECTION> <SECTION> <SECTNO>207.171</SECTNO> <SUBJECT>Component breakout.</SUBJECT> </SECTION> <SECTION> <SECTNO>207.171-1</SECTNO> <SUBJECT>Scope.</SUBJECT> <P>(a) This section provides policy for breaking out components of end items for future acquisitions so that the Government can purchase the components directly from the manufacturer or supplier and furnish them to the end item manufacturer as Government-furnished material.</P> <P>(b) This section does not apply to—<PRTPAGE P="40"/> </P> <P>(1) The initial decisions on Government-furnished equipment or contractor-furnished equipment that are made at the inception of an acquisition program; or</P> <P>(2) Breakout of parts for replenishment (see Appendix E).</P> <CITA>[71 FR 14102, Mar. 21, 2006]</CITA> </SECTION> <SECTION> <SECTNO>207.171-2</SECTNO> <SUBJECT>Definition.</SUBJECT> <P> <E T="03">Component,</E> as used in this section, includes subsystems, assemblies, subassemblies, and other major elements of an end item; it does not include elements of relatively small annual acquisition value.</P> <CITA>[71 FR 14102, Mar. 21, 2006]</CITA> </SECTION> <SECTION> <SECTNO>207.171-3</SECTNO> <SUBJECT>Policy.</SUBJECT> <P>DoD policy is to break out components of weapons systems or other major end items under certain circumstances.</P> <P>(a) When it is anticipated that a prime contract will be awarded without adequate price competition, and the prime contractor is expected to acquire any component without adequate price competition, the agency shall break out that component if—</P> <P>(1) Substantial net cost savings probably will be achieved; and</P> <P>(2) Breakout action will not jeopardize the quality, reliability, performance, or timely delivery of the end item.</P> <P>(b) Even when either or both the prime contract and the component will be acquired with adequate price competition, the agency shall consider breakout of the component if substantial net cost savings will result from—</P> <P>(1) Greater quantity acquisitions; or</P> <P>(2) Such factors as improved logistics support (through reduction in varieties of spare parts) and economies in operations and training (through standardization of design).</P> <P>(c) Breakout normally is not justified for a component that is not expected to exceed $1 million for the current year's requirement.</P> <CITA>[71 FR 14102, Mar. 21, 2006]</CITA> </SECTION> <SECTION> <SECTNO>207.171-4</SECTNO> <SUBJECT>Procedures.</SUBJECT> <P>Agencies shall follow the procedures at PGI 207.171-4 for component breakout.</P> <CITA>[71 FR 14102, Mar. 21, 2006]</CITA> </SECTION> </SUBPART> <SUBPART> <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. See FMR 7000.14-R, Volume 4, Chapter 7, Section 070207.<PRTPAGE P="41"/> </P> <P>(c) Use procurement funds for capital leases, as these are essentially installment purchases of property.</P> <CITA>[64 FR 31732, June 14, 1999, as amended at 66 FR 55121, Nov. 1, 2001; 71 FR 53045, Sept. 8, 2006]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 207.5—Inherently Governmental Functions</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>70 FR 14573, Mar. 23, 2005, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>207.500</SECTNO> <SUBJECT>Scope of subpart.</SUBJECT> <P>This subpart also implements 10 U.S.C. 2383.</P> </SECTION> <SECTION> <SECTNO>207.503</SECTNO> <SUBJECT>Policy.</SUBJECT> <P>(e) The written determination required by FAR 7.503(e), that none of the functions to be performed by contract are inherently governmental—</P> <P>(i) Shall be prepared using DoD Instruction 1100.22, Guidance for Determining Workforce Mix; and</P> <P>(ii) Shall include a determination that none of the functions to be performed are exempt from private sector performance, as addressed in DoD Instruction 1100.22.</P> <P>(S-70) <E T="03">Contracts for acquisition functions.</E> </P> <P>(1) In accordance with 10 U.S.C. 2383, the head of an agency may enter into a contract for performance of the acquisition functions closely associated with inherently governmental functions that are listed at FAR 7.503(d) only if—</P> <P>(i) The contracting officer determines that appropriate military or civilian DoD personnel—</P> <P>(A) Cannot reasonably be made available to perform the functions;</P> <P>(B) Will oversee contractor performance of the contract; and</P> <P>(C) Will perform all inherently governmental functions associated with the functions to be performed under the contract; and</P> <P>(ii) The contracting officer ensures that the agency addresses any potential organizational conflict of interest of the contractor in the performance of the functions under the contract (see FAR Subpart 9.5).</P> <P>(2) See related information at PGI 207.503(S-70).</P> <CITA>[70 FR 14573, Mar. 23, 2005, as amended at 71 FR 14101, Mar. 21, 2006; 73 FR 1826, Jan. 10, 2008]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 207.70—Buy-to-Budget—Additional Quantities of End Items</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>68 FR 43331, July 22, 2003, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>207.7001</SECTNO> <SUBJECT>Definition.</SUBJECT> <P> <E T="03">End item,</E> as used in this subpart, means a production product assembled, completed, and ready for issue or deployment.</P> </SECTION> <SECTION> <SECTNO>207.7002</SECTNO> <SUBJECT>Authority to acquire additional quantities of end items.</SUBJECT> <P>10 U.S.C. 2308 authorizes DoD to use funds available for the acquisition of an end item to acquire a higher quantity of the end item than the quantity specified in a law providing for the funding of that acquisition, if the head of an agency determines that—</P> <P>(a) The agency has an established requirement for the end item that is expected to remain substantially unchanged throughout the period of the acquisition;</P> <P>(b) It is possible to acquire the higher quantity of the end item without additional funding because of production efficiencies or other cost reductions;</P> <P>(c) The amount of funds used for the acquisition of the higher quantity of the end item will not exceed the amount provided under that law for the acquisition of the end item; and</P> <P>(d) The amount provided under that law for the acquisition of the end item is sufficient to ensure that each unit of the end item acquired within the higher quantity is fully funded as a complete end item.</P> </SECTION> <SECTION> <SECTNO>207.7003</SECTNO> <SUBJECT>Limitation.</SUBJECT> <P>For noncompetitive acquisitions, the acquisition of additional quantities is limited to not more than 10 percent of the quantity approved in the justification and approval prepared in accordance with FAR part 6 for the acquisition of the end item.</P> </SECTION> </SUBPART> </PART> <PART> <PRTPAGE P="42"/> <EAR>Pt. 208</EAR> <HD SOURCE="HED">PART 208—REQUIRED SOURCES OF SUPPLIES AND SERVICES</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>208.002</SECTNO> <SUBJECT>Priorities for use of Government supply sources.</SUBJECT> <SUBPART> <HD SOURCE="HED">Subpart 208.4—Federal Supply Schedules</HD> <SECTNO>208.404</SECTNO> <SUBJECT>Use of Federal Supply Schedules.</SUBJECT> <SECTNO>208.405-70</SECTNO> <SUBJECT>Additional ordering procedures.</SUBJECT> <SECTNO>208.406</SECTNO> <SUBJECT>Ordering activity responsibilities.</SUBJECT> <SECTNO>208.406-1</SECTNO> <SUBJECT>Order placement.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 208.6—Acquisition From Federal Prison Industries, Inc.</HD> <SECTNO>208.602-70</SECTNO> <SUBJECT>Acquisition of items for which FPI has a significant market share.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 208.7—Acquisition From Nonprofit Agencies Employing People Who Are Blind or Severely Disabled</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>208.7005</SECTNO> <SUBJECT>Military interdepartmental purchase requests.</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.</SUBJECT> <SECTNO>208.7101</SECTNO> <SUBJECT>Policy.</SUBJECT> <SECTNO>208.7102</SECTNO> <SUBJECT>Procedures.</SUBJECT> </SUBPART> <SUBPART> <RESERVED>Subpart 208.72 [Reserved]</RESERVED> <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> <SUBPART> <HD SOURCE="HED">Subpart 208.74—Enterprise Software Agreements</HD> <SECTNO>208.7400</SECTNO> <SUBJECT>Scope of subpart.</SUBJECT> <SECTNO>208.7401</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>208.7402</SECTNO> <SUBJECT>General.</SUBJECT> <SECTNO>208.7403</SECTNO> <SUBJECT>Acquisition procedures.</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>208.002</SECTNO> <SUBJECT>Priorities for use of Government supply sources.</SUBJECT> <P>(a)(1)(v) See Subpart 208.70, Coordinated Acquisition, and Subpart 208.74, Enterprise Software Agreements.</P> <CITA>[71 FR 39004, July 11, 2006]</CITA> </SECTION> <SUBPART> <HD SOURCE="HED">Subpart 208.4—Federal Supply Schedules</HD> <SECTION> <SECTNO>208.404</SECTNO> <SUBJECT>Use of Federal Supply Schedules.</SUBJECT> <P>(a)(i) Departments and agencies shall comply with the review, approval, and reporting requirements established in accordance with subpart 217.78 when placing orders for supplies or services in amounts exceeding the simplified acquisition threshold.</P> <P>(ii) 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> <CITA>[56 FR 36306, July 31, 1991, as amended at 67 FR 65508, Oct. 25, 2002; 69 FR 63327, Nov. 1, 2004; 70 FR 29642, May 24, 2005; 71 FR 14103, 14107, Mar. 21, 2006]</CITA> </SECTION> <SECTION> <SECTNO>208.405-70</SECTNO> <SUBJECT>Additional ordering procedures.</SUBJECT> <P>(a) This subsection—</P> <P>(1) Implements Section 803 of the National Defense Authorization Act for Fiscal Year 2002 (Pub. L. 107-107) for <PRTPAGE P="43"/>the acquisition of services, and establishes similar policy for the acquisition of supplies;</P> <P>(2) Applies to orders for supplies or services under Federal Supply Schedules, including orders under blanket purchase agreements established under Federal Supply Schedules; and</P> <P>(3) Also applies to orders placed by non-DoD agencies on behalf of DoD.</P> <P>(b) Each order exceeding $100,000 shall be placed on a competitive basis in accordance with paragraph (c) of this subsection, unless this requirement is waived on the basis of a justification that is prepared and approved in accordance with FAR 8.405-6 and includes a written determination that—</P> <P>(1) A statute expressly authorizes or requires that the purchase be made from a specified source; or</P> <P>(2) One of the circumstances described at FAR 16.505(b)(2)(i) through (iii) applies to the order. Follow the procedures at PGI 216.505-70 if FAR 16.505(b)(2)(ii) or (iii) is deemed to apply.</P> <P>(c) An order exceeding $100,000 is placed on a competitive basis only if the contracting officer provides a fair notice of the intent to make the purchase, including a description of the supplies to be delivered or the services to be performed and the basis upon which the contracting officer will make the selection, to—</P> <P>(1) As many schedule contractors as practicable, consistent with market research appropriate to the circumstances, to reasonably ensure that offers will be received from at least three contractors that can fulfill the requirements, and the contracting officer—</P> <P>(i)(A) Receives offers from at least three contractors that can fulfill the requirements; or</P> <P>(B) Determines in writing that no additional contractors that can fulfill the requirements could be identified despite reasonable efforts to do so (documentation should clearly explain efforts made to obtain offers from at least three contractors); and</P> <P>(ii) Ensures all offers received are fairly considered; or</P> <P>(2) All contractors offering the required supplies or services under the applicable multiple award schedule, and affords all contractors responding to the notice a fair opportunity to submit an offer and have that offer fairly considered.</P> <P>(d) See PGI 208.405-70 for additional information regarding fair notice to contractors and requirements relating to the establishment of blanket purchase agreements under Federal Supply Schedules.</P> <CITA>[71 FR 14107, Mar. 21, 2006]</CITA> </SECTION> <SECTION> <SECTNO>§ 208.406</SECTNO> <SUBJECT>Ordering activity responsibilities.</SUBJECT> </SECTION> <SECTION> <SECTNO>§ 208.406-1</SECTNO> <SUBJECT>Order placement.</SUBJECT> <P>Follow the procedures at PGI 208.406-1 when ordering from schedules.</P> <CITA>[71 FR 14107, Mar. 21, 2006]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 208.6—Acquisition From Federal Prison Industries, Inc.</HD> <SECTION> <SECTNO>208.602-70</SECTNO> <SUBJECT>Acquisition of items for which FPI has a significant market share.</SUBJECT> <P>(a) <E T="03">Scope</E>. This subsection implements Section 827 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181).</P> <P>(b) <E T="03">Definition. Item for which FPI has a significant market share</E>, as used in this subsection, means an item for which FPI's share of the DoD market for the federal supply class including that item is greater than 5 percent, as determined by DoD in consultation with the Office of Federal Procurement Policy. A list of the federal supply classes of items for which FPI has a significant market share is maintained at <E T="03">http://www.acq.osd.mil/dpap/cpic/cp/specific_policy_areas.html#federal_prison</E>.</P> <P>(c) <E T="03">Policy</E>. (1) When acquiring an item for which FPI has a significant market share—</P> <P>(i) Acquire the item using—</P> <P>(A) Competitive procedures (e.g., the procedures in FAR 6.102, the set-aside procedures in FAR Subpart 19.5, or competition conducted in accordance with FAR Part 13); or</P> <P>(B) The fair opportunity procedures in FAR 16.505, if placing an order under a multiple award delivery-order contract; and<PRTPAGE P="44"/> </P> <P>(ii) Include FPI in the solicitation process, consider a timely offer from FPI, and make an award in accordance with the policy at FAR 8.602(a)(4)(ii) through (v).</P> <P>(2) When acquiring an item for which FPI does not have a significant market share, acquire the item in accordance with the policy at FAR 8.602.</P> <CITA>[73 FR 46817, Aug. 12, 2008]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 208.7—Acquisition From Nonprofit Agencies Employing People Who Are Blind or Severely Disabled</HD> <SECTION> <SECTNO>208.705</SECTNO> <SUBJECT>Procedures.</SUBJECT> <P>Follow the procedures at PGI 208.705 when placing orders with central nonprofit agencies.</P> <CITA>[71 FR 39004, July 11, 2006]</CITA> </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 PGI 208.7006); or</P> <P>(b) The Integrated Materiel Management Program (assignments are in DoD 4140.26-M, Defense Integrated Materiel Management Manual for Consumable Items).</P> <CITA>[56 FR 36306, July 31, 1991, as amended at 67 FR 77936, Dec. 20, 2002; 71 FR 39004, July 11, 2006]</CITA> </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 contiguous United States, by the Unified Commanders; and</P> <P>(4) For acquisitions to be made in the contiguous 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; 70 FR 35544, June 21, 2005]</CITA> </SECTION> <SECTION> <PRTPAGE P="45"/> <SECTNO>208.7002-1</SECTNO> <SUBJECT>Acquiring department responsibilities.</SUBJECT> <P>See PGI 208.7002-1 for the acquiring department's responsibilities.</P> <CITA>[71 FR 39004, July 11, 2006]</CITA> </SECTION> <SECTION> <SECTNO>208.7002-2</SECTNO> <SUBJECT>Requiring department responsibilities.</SUBJECT> <P>See PGI 208.7002-2 for the requiring department's responsibilities.</P> <CITA>[71 FR 39004, July 11, 2006]</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) Acquire all items assigned for IMM 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) Follow the procedures at PGI 208.7003-1(b) when an item assigned for IMM is to be acquired by the requiring department in accordance with paragraph (a)(3) of this subsection.</P> <CITA>[60 FR 61593, Nov. 30, 1995, as amended at 64 FR 51075, Sept. 21, 1999; 64 FR 61031, Nov. 9, 1999; 71 FR 39004, July 11, 2006]</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 8.002(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="46"/> </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; 71 FR 69489, Dec. 1, 2006]</CITA> </SECTION> <SECTION> <SECTNO>208.7004</SECTNO> <SUBJECT>Procedures.</SUBJECT> <P>Follow the procedures at PGI 208.7004 for processing coordinated acquisition requirements.</P> <CITA>[71 FR 39005, July 11, 2006]</CITA> </SECTION> <SECTION> <SECTNO>208.7005</SECTNO> <SUBJECT>Military interdepartmental purchase requests.</SUBJECT> <P>Follow the procedures at—</P> <P>(a) PGI 253.208-1 when using DD Form 448, Military Interdepartmental Purchase Request; and</P> <P>(b) PGI 253.208-2 when using DD Form 448-2, Acceptance of MIPR.</P> <CITA>[71 FR 39005, July 11, 2006]</CITA> </SECTION> <SECTION> <SECTNO>208.7006</SECTNO> <SUBJECT>Coordinated acquisition assignments.</SUBJECT> <P>See PGI 208.7006 for coordinated acquisition assignments.</P> <CITA>[71 FR 39005, July 11, 2006]</CITA> </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 shall cooperate fully with NASA in making acquisition services, equipment, personnel, and facilities available on the basis of mutual agreement.</P> <CITA>[71 FR 39005, July 11, 2006]</CITA> </SECTION> <SECTION> <SECTNO>208.7102</SECTNO> <SUBJECT>Procedures.</SUBJECT> <P>Follow the procedures at PGI 208.7102 when contracting or performing services for NASA.</P> <CITA>[71 FR 39005, July 11, 2006]</CITA> </SECTION> </SUBPART> <SUBPART> <RESERVED>Subpart 208.72 [Reserved]</RESERVED> </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—</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 <PRTPAGE P="47"/>for refined precious metals and is responsible for the storage and issue of such material.</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; 71 FR 39005, July 11, 2006]</CITA> </SECTION> <SECTION> <SECTNO>208.7302</SECTNO> <SUBJECT>Policy.</SUBJECT> <P>DoD policy is for maximum participation in the Precious Metals Recovery Program. 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; 71 FR 39005, July 11, 2006]</CITA> </SECTION> <SECTION> <SECTNO>208.7303</SECTNO> <SUBJECT>Procedures.</SUBJECT> <P>Follow the procedures at PGI 208.7303 for use of the Precious Metals Recovery Program.</P> <CITA>[71 FR 39005, July 11, 2006]</CITA> </SECTION> <SECTION> <SECTNO>208.7304</SECTNO> <SUBJECT>Refined precious metals.</SUBJECT> <P>See PGI 208.7304 for a list of refined precious metals managed by DSCP.</P> <CITA>[71 FR 39005, July 11, 2006]</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</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> <SUBPART> <HD SOURCE="HED">Subpart 208.74—Enterprise Software Agreements</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>67 FR 65511, Oct. 25, 2002, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>208.7400</SECTNO> <SUBJECT>Scope of subpart.</SUBJECT> <P>This subpart prescribes policy and procedures for acquisition of commercial software and software maintenance, including software and software maintenance that is acquired—</P> <P>(a) As part of a system or system upgrade, where practicable;</P> <P>(b) Under a service contract;</P> <P>(c) Under a contract or agreement administered by another agency (<E T="03">e.g.,</E> under an interagency agreement);</P> <P>(d) Under a Federal Supply Schedule contract or blanket purchase agreement established in accordance with FAR 8.405 and 208.405-70; or</P> <P>(e) By a contractor that is authorized to order From a Government supply source pursuant to FAR 51.101.</P> <CITA>[67 FR 65511, Oct. 25, 2002, as amended at 71 FR 62559, Oct. 26, 2006]</CITA> </SECTION> <SECTION> <SECTNO>208.7401</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this subpart—</P> <P> <E T="03">Enterprise software agreement</E> means an agreement or a contract that is used to acquire designated commercial software or related services such as software maintenance.</P> <P> <E T="03">Enterprise Software Initiative</E> means an initiative led by the DoD Chief Information Officer to develop processes for DoD-wide software asset management.</P> <P> <E T="03">Software maintenance</E> means services normally provided by a software company as standard services at established catalog or market prices, <E T="03">e.g.,</E> the right to receive and use upgraded versions of software, updates, and revisions.</P> <CITA>[67 FR 65511, Oct. 25, 2002, as amended at 71 FR 39005, July 11, 2006]</CITA> </SECTION> <SECTION> <PRTPAGE P="48"/> <SECTNO>208.7402</SECTNO> <SUBJECT>General.</SUBJECT> <P>Departments and agencies shall fulfill requirements for commercial software and related services, such as software maintenance, in accordance with the DoD Enterprise Software Initiative (ESI) (see Web site at <E T="03">http://www.don-imit.navy.mil/esi).</E> ESI promotes the use of enterprise software agreements (ESAs) with contractors that allow DoD to obtain favorable terms and pricing for commercial software and related services. ESI does not dictate the products or services to be acquired.</P> </SECTION> <SECTION> <SECTNO>208.7403</SECTNO> <SUBJECT>Acquisition procedures.</SUBJECT> <P>Follow the procedures at PGI 208.7403 when acquiring commercial software and related services.</P> <CITA>[71 FR 39005, July 11, 2006]</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>209.104</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>209.105-1</SECTNO> <SUBJECT>Obtaining information.</SUBJECT> <SECTNO>209.105-2</SECTNO> <SUBJECT>Determinations and documentation.</SUBJECT> <SECTNO>209.106</SECTNO> <SUBJECT>Preaward surveys.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 209.2—Qualifications Requirements</HD> <SECTNO>209.202</SECTNO> <SUBJECT>Policy.</SUBJECT> <SECTNO>209.270</SECTNO> <SUBJECT>Aviation critical safety items.</SUBJECT> <SECTNO>209.270-1</SECTNO> <SUBJECT>Scope.</SUBJECT> <SECTNO>209.270-2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>209.270-3</SECTNO> <SUBJECT>Policy.</SUBJECT> <SECTNO>209.270-4</SECTNO> <SUBJECT>Procedures.</SUBJECT> </SUBPART> <SUBPART> <RESERVED>Subpart 209.3 [Reserved]</RESERVED> </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> <SUBPART> <HD SOURCE="HED">Subpart 209.5—Organizational and Consultant Conflicts of Interest</HD> <SECTNO>209.570</SECTNO> <SUBJECT>Limitations on contractors acting as lead system integrators.</SUBJECT> <SECTNO>209.570-1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>209.570-2</SECTNO> <SUBJECT>Policy.</SUBJECT> <SECTNO>209.570-3</SECTNO> <SUBJECT>Procedures.</SUBJECT> <SECTNO>209.570-4</SECTNO> <SUBJECT>Solicitation provision and 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 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>209.104</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 <PRTPAGE P="49"/>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 and Acquisition Policy, 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 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; 68 FR 7439, Feb. 14, 2003]</CITA> </SECTION> <SECTION> <SECTNO>209.104-4</SECTNO> <SUBJECT>Subcontractor responsibility.</SUBJECT> <P>Generally, the Canadian Commercial Corporation's (CCC) proposal of a firm <PRTPAGE P="50"/>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 and Acquisition Policy, ATTN: OUSD(AT&L)DPAP/(CPIC), 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; 68 FR 7439, Feb. 14, 2003; 72 FR 30278, May 31, 2007]</CITA> </SECTION> <SECTION> <SECTNO>209.105-1</SECTNO> <SUBJECT>Obtaining information.</SUBJECT> <P>For guidance on using the Excluded Parties List System, see PGI 209.105-1.</P> <CITA>[71 FR 14100, Mar. 21, 2006]</CITA> </SECTION> <SECTION> <SECTNO>209.105-2</SECTNO> <SUBJECT>Determinations and documentation.</SUBJECT> <P>(a) The contracting officer shall submit a copy of a determination of nonresponsibility to the appropriate debarring and suspending official listed in 209.403.</P> <CITA>[71 FR 62559, Oct. 26, 2006]</CITA> </SECTION> <SECTION> <SECTNO>209.106</SECTNO> <SUBJECT>Preaward surveys.</SUBJECT> <P>When requesting a preawared survey, follow the procedures at PGI 209.106.</P> <CITA>[69 FR 65089, Nov. 10, 2004]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 209.2—Qualifications Requirements</HD> <SECTION> <SECTNO>209.202</SECTNO> <SUBJECT>Policy.</SUBJECT> <P>(a)(1) Except for aviation or ship critical safety items, obtain approval in accordance with PGI 209.202(a)(1) when establishing qualification requirements. See 209.270 for approval of qualification requirements for aviation or ship critical safety items.</P> <CITA>[73 FR 1827, Jan. 10, 2008]</CITA> </SECTION> <SECTION> <SECTNO>209.270</SECTNO> <SUBJECT>Aviation and ship critical safety items.</SUBJECT> </SECTION> <SECTION> <SECTNO>209.270-1</SECTNO> <SUBJECT>Scope.</SUBJECT> <P>This section—</P> <P>(a) Implements—</P> <P>(1) Section 802 of the National Defense Authorization Act for Fiscal Year 2004 (Pub. L. 108-136); and</P> <P>(2) Section 130 of the National Defense Authorization Act for Fiscal Year 2007 (Pub. L. 109-364); and</P> <P>(b) Prescribes policy and procedures for qualification requirements in the procurement of aviation and ship critical safety items and the modification, repair, and overhaul of those items.</P> <CITA>[73 FR 1827, Jan. 10, 2008]</CITA> </SECTION> <SECTION> <SECTNO>209.270-2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this section—</P> <P> <E T="03">Aviation critical safety item</E> means a part, an assembly, installation equipment, launch equipment, recovery equipment, or support equipment for an aircraft or aviation weapon system if the part, assembly, or equipment contains a characteristic any failure, malfunction, or absence of which could cause—</P> <P>(1) A catastrophic or critical failure resulting in the loss of or serious damage to the aircraft or weapon system;</P> <P>(2) An unacceptable risk of personal injury or loss of life; or</P> <P>(3) An uncommanded engine shutdown that jeopardizes safety.</P> <P> <E T="03">Design control activity</E>—(1) With respect to an aviation critical safety <PRTPAGE P="51"/>item, means the systems command of a military department that is specifically responsible for ensuring the air worthiness of an aviation system or equipment in which an aviation critical safety item is to be used; and</P> <P>(2) With respect to a ship critical safety item, means the systems command of a military department that is specifically responsible for ensuring the seaworthiness of a ship or ship equipment in which a ship critical safety item is to be used.</P> <P> <E T="03">Ship critical safety item</E> means any ship part, assembly, or support equipment containing a characteristic the failure, malfunction, or absence of which could cause—</P> <P>(1) A catastrophic or critical failure resulting in loss of or serious damage to the ship; or</P> <P>(2) An unacceptable risk of personal injury or loss of life.</P> <CITA>[69 FR 55988, Sept. 17, 2004, as amended at 73 FR 1827, Jan. 10, 2008]</CITA> </SECTION> <SECTION> <SECTNO>209.270-3</SECTNO> <SUBJECT>Policy.</SUBJECT> <P>(a) The head of the contracting activity responsible for procuring an aviation or ship critical safety item may enter into a contract for the procurement, modification, repair, or overhaul of such an item only with a source approved by the head of the design control activity.</P> <P>(b) The approval authorities specified in this section apply instead of those otherwise specified in FAR 9.202(a)(1), 9.202(c), or 9.206-1(c), for the procurement, modification, repair, and overhaul of aviation or ship critical safety items.</P> <CITA>[73 FR 1827, Jan. 10, 2008]</CITA> </SECTION> <SECTION> <SECTNO>209.270-4</SECTNO> <SUBJECT>Procedures.</SUBJECT> <P>(a) The head of the design control activity shall—</P> <P>(1) Identify items that meet the criteria for designation as aviation or ship critical safety items. See additional information at PGI 209.270-4;</P> <P>(2) Approve qualification requirements in accordance with procedures established by the design control activity; and</P> <P>(3) Qualify and identify aviation and ship critical safety item suppliers and products.</P> <P>(b) The contracting officer shall—</P> <P>(1) Ensure that the head of the design control activity has determined that a prospective contractor or its product meets or can meet the established qualification standards before the date specified for award of the contract;</P> <P>(2) Refer any offers received from an unapproved source to the head of the design control activity for approval. The head of the design control activity will determine whether the offeror or its product meets or can meet the established qualification standards before the date specified for award of the contract; and</P> <P>(3) Refer any requests for qualification to the design control activity.</P> <P>(c) See 246.407 (S-70) and 246.504 for quality assurance requirements.</P> <CITA>[69 FR 55988, Sept. 17, 2004, as amended at 70 FR 57190, Sept. 30, 2005; 73 FR 1827, Jan. 10, 2008]</CITA> </SECTION> </SUBPART> <SUBPART> <RESERVED>Subpart 209.3 [Reserved]</RESERVED> </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<PRTPAGE P="52"/> </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 Senior Acquisition Executive</FP> <FP SOURCE="FP-1">Missile Defense Agency—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; 68 FR 7439, Feb. 14, 2003; 70 FR 14573, Mar. 23, 2005]</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 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<PRTPAGE P="53"/> </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 or its outlying areas that was not made in the United States or its outlying areas (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 and Acquisition Policy who will notify Congress within 30 days after the decision is made.</P> <CITA>[58 FR 28464, May 13, 1993, as amended at 68 FR 7439, Feb. 14, 2003; 70 FR 35544, June 21, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 209.406-3</SECTNO> <SUBJECT>Procedures.</SUBJECT> <P>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. Follow the procedures at PGI 209.406-3.</P> <CITA>[69 FR 74990, Dec. 15, 2004]</CITA> </SECTION> <SECTION> <SECTNO>209.407</SECTNO> <SUBJECT>Suspension.</SUBJECT> </SECTION> <SECTION> <SECTNO>§ 209.407-3</SECTNO> <SUBJECT>Procedures.</SUBJECT> <P>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. Follow the procedures at PGI 209.407-3.</P> <CITA>[69 FR 74990, Dec. 15, 2004]</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 <PRTPAGE P="54"/>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—</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> <SUBPART> <HD SOURCE="HED">Subpart 209.5—Organizational and Consultant Conflicts of Interest</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>73 FR 1824, Jan. 10, 2008, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>209.570</SECTNO> <SUBJECT>Limitations on contractors acting as lead system integrators.</SUBJECT> </SECTION> <SECTION> <SECTNO>209.570-1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P> <E T="03">Lead system integrator,</E> as used in this section, is defined in the clause at 252.209-7007, Prohibited Financial Interests for Lead System Integrators. See PGI 209.570-1 for additional information.</P> </SECTION> <SECTION> <SECTNO>209.570-2</SECTNO> <SUBJECT>Policy.</SUBJECT> <P>(a) Except as provided in paragraph (b) of this subsection, 10 U.S.C. 2410p prohibits any entity performing lead <PRTPAGE P="55"/>system integrator functions in the acquisition of a major system by DoD from having any direct financial interest in the development or construction of any individual system or element of any system of systems.</P> <P>(b) The prohibition in paragraph (a) of this subsection does not apply if—</P> <P>(1) The Secretary of Defense certifies to the Committees on Armed Services of the Senate and the House of Representatives that—</P> <P>(i) The entity was selected by DoD as a contractor to develop or construct the system or element concerned through the use of competitive procedures; and</P> <P>(ii) DoD took appropriate steps to prevent any organizational conflict of interest in the selection process; or</P> <P>(2) The entity was selected by a subcontractor to serve as a lower-tier subcontractor, through a process over which the entity exercised no control.</P> </SECTION> <SECTION> <SECTNO>209.570-3</SECTNO> <SUBJECT>Procedures.</SUBJECT> <P>In making a responsibility determination before awarding a contract for the acquisition of a major system, the contracting officer shall—</P> <P>(a) Determine whether the prospective contractor meets the definition of “lead system integrator”;</P> <P>(b) Consider all information regarding the prospective contractor's direct financial interests in view of the prohibition at 209.570-2(a); and</P> <P>(c) Follow the procedures at PGI 209.570-3.</P> </SECTION> <SECTION> <SECTNO>209.570-4</SECTNO> <SUBJECT>Solicitation provision and contract clause.</SUBJECT> <P>(a) Use the provision at 252.209-7006, Limitations on Contractors Acting as Lead System Integrators, in solicitations for the acquisition of a major system when the acquisition strategy envisions the use of a lead system integrator.</P> <P>(b) Use the clause at 252.209-7007, Prohibited Financial Interests for Lead System Integrators—</P> <P>(1) In solicitations that include the provision at 252.209-7006; and</P> <P>(2) In contracts when the contractor will fill the role of a lead system integrator for the acquisition of a major system.</P> </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> <SECTION> <SECTNO>210.001</SECTNO> <SUBJECT>Policy.</SUBJECT> <P>(a) In addition to the requirements of FAR 10.001(a), agencies shall—</P> <P>(i) Conduct market research appropriate to the circumstances before—</P> <P>(A) Soliciting offers for acquisitions that could lead to a consolidation of contract requirements as defined in 207.170-2; or</P> <P>(B) Issuing a solicitation with tiered evaluation of offers (Section 816 of Public Law 109-163); and</P> <P>(ii) Use the results of market research to determine—</P> <P>(A) Whether consolidation of contract requirements is necessary and justified in accordance with § 207.170-3; or</P> <P>(B) Whether the criteria in FAR part 19 are met for setting aside the acquisition for small business or, for a task or delivery order, whether there are a sufficient number of qualified small business concerns available to justify limiting competition under the terms of the contract. If the contracting officer cannot determine whether the criteria are met, the contracting officer shall include a written explanation in the contract file as to why such a determination could not be made (Section 816 of Public Law 109-163).</P> <CITA>[71 FR 53043, Sept. 8, 2006]</CITA> </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>211.105</SECTNO> <SUBJECT>Items peculiar to one manufacturer.</SUBJECT> <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="56"/> </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> <SECTNO>211.274</SECTNO> <SUBJECT>Item identification and valuation requirements.</SUBJECT> <SECTNO>211.274-1</SECTNO> <SUBJECT>General.</SUBJECT> <SECTNO>211.274-2</SECTNO> <SUBJECT>Policy for unique item identification.</SUBJECT> <SECTNO>211.274-3</SECTNO> <SUBJECT>Policy for valuation.</SUBJECT> <SECTNO>211.274-4</SECTNO> <SUBJECT>Policy for item unique identification of Government property.</SUBJECT> <SECTNO>211.274-5</SECTNO> <SUBJECT>Contract clauses.</SUBJECT> <SECTNO>211.275</SECTNO> <SUBJECT>Radio frequency identification.</SUBJECT> <SECTNO>211.275-1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>211.275-2</SECTNO> <SUBJECT>Policy.</SUBJECT> <SECTNO>211.275-3</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 defense technology and acquisition programs in DoD are subject to the policies and procedures in DoDD 5000.1, The Defense Acquisition System, and DoDI 5000.2, Operation of the Defense Acquisition System.</P> <CITA>[71 FR 27641, May 12, 2006]</CITA> </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>211.105</SECTNO> <SUBJECT>Items peculiar to one manufacturer.</SUBJECT> <P>Follow the publication requirements at PGI 211.105.</P> <CITA>[70 FR 23804, May 5, 2005]</CITA> </SECTION> <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>Follow the procedures at PGI 211.201 for use of specifications, standards, and data item descriptions.</P> <CITA>[71 FR 27641, May 12, 2006]</CITA> </SECTION> <SECTION> <SECTNO>211.204</SECTNO> <SUBJECT>Solicitation provisions and contract clauses.</SUBJECT> <P>(c) When contract performance requires use of specifications, standards, and data item descriptions that are not listed in the Acquisition Streamlining and Standardization Information System database, use provisions, as appropriate, substantially the same as those at—</P> <P>(i) 252.211-7001, Availability of Specifications, Standards, and Data Item Descriptions Not Listed in the Acquisition Streamlining and Standardization Information System (ASSIST), and Plans, Drawings, and Other Pertinent Documents; and</P> <P>(ii) 252.211-7002, Availability for Examination of Specifications, Standards, Plans, Drawings, Data Item Descriptions, and Other Pertinent Documents.</P> <CITA>[71 FR 27641, May 12, 2006]</CITA> </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>See subpart 223.8 for restrictions on contracting for ozone-depleting substances.</P> <CITA>[70 FR 73150, Dec. 9, 2005]</CITA> </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 <PRTPAGE P="57"/>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.</P> <CITA>[62 FR 44224, Aug. 20, 1997, as amended at 64 FR 14399, Mar. 25, 1999; 65 FR 52952, Aug. 31, 2000; 71 FR 27641, May 12, 2006]</CITA> </SECTION> <SECTION> <SECTNO>211.273-3</SECTNO> <SUBJECT>Procedures.</SUBJECT> <P>Follow the procedures at PGI 211.273-3 for encouraging the use of SPI processes instead of military or Federal specifications and standards.</P> <CITA>[71 FR 27641, May 12, 2006]</CITA> </SECTION> <SECTION> <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> <SECTION> <SECTNO>211.274</SECTNO> <SUBJECT>Item identification and valuation requirements.</SUBJECT> </SECTION> <SECTION> <SECTNO>211.274-1</SECTNO> <SUBJECT>General.</SUBJECT> <P>Unique item identification and valuation is a system of marking and valuing items delivered to DoD that will enhance logistics, contracting, and financial business transactions supporting the United States and coalition troops. Through unique item identification policy, which capitalizes on leading practices and embraces open standards, DoD can—</P> <P>(a) Achieve lower life-cycle cost of item management and improve life-cycle property management;</P> <P>(b) Improve operational readiness;</P> <P>(c) Provide reliable accountability of property and asset visibility throughout the life cycle; and</P> <P>(d) Reduce the burden on the workforce through increased productivity and efficiency.</P> <CITA>[70 FR 20836, Apr. 22, 2005]</CITA> </SECTION> <SECTION> <SECTNO>211.274-2</SECTNO> <SUBJECT>Policy for unique item identification.</SUBJECT> <P>(a) It is DoD policy that DoD unique item identification, or a DoD recognized unique identification equivalent, is required for-</P> <P>(1) All delivered items for which the Government's unit acquisition cost is $5,000 or more;</P> <P>(2) Items for which the Government's unit acquisition cost is less than $5,000, when identified by the requiring activity as serially managed, mission essential, or controlled inventory;</P> <P>(3) Items for which the Government's unit acquisition cost is less than $5,000, when the requiring activity determines that permanent identification is required; and</P> <P>(4) Regardless of value—</P> <P>(i) Any DoD serially managed subassembly, component, or part embedded within a delivered item; and</P> <P>(ii) The parent item (as defined in 252.211-7003(a)) that contains the embedded subassembly, component, or part.</P> <P>(b) <E T="03">Exceptions</E>. The Contractor will not be required to provide DoD unique item identification if—</P> <P>(1) The items, as determined by the head of the agency, are to be used to support a contingency operation or to <PRTPAGE P="58"/>facilitate defense against or recovery from nuclear, biological, chemical, or radiological attack; or</P> <P>(2) A determination and findings has been executed concluding that it is more cost effective for the Government requiring activity to assign, mark, and register the unique item identification after delivery of an item acquired from a small business concern or a commercial item acquired under FAR Part 12 or Part 8.</P> <P>(i) The determination and findings shall be executed by—</P> <P>(A) The Component Acquisition Executive for an acquisition category (ACAT) I program; or</P> <P>(B) The head of the contracting activity for all other programs.</P> <P>(ii) The DoD Unique Item Identification Program Office must receive a copy of the determination and findings required by paragraph (b)(2)(i) of this subsection. Send the copy to DPAP, SPEC ASST, 3060 Defense Pentagon, 3E1044, Washington, DC 20301-3060; or by facsimile to (703) 695-7596.</P> <CITA>[70 FR 20836, Apr. 22, 2005]</CITA> </SECTION> <SECTION> <SECTNO>211.274-3</SECTNO> <SUBJECT>Policy for valuation.</SUBJECT> <P>(a) It is DoD policy that contractors shall be required to identify the Government's unit acquisition cost (as defined in 252.211-7003(a)) for all items delivered, even if none of the criteria for placing a unique item identification mark applies.</P> <P>(b) The Government's unit acquisition cost is—</P> <P>(1) For fixed-price type line, subline, or exhibit line items, the unit price identified in the contract at the time of delivery;</P> <P>(2) For cost-type or undefinitized line, subline, or exhibit line items, the contractor's estimated fully burdened unit cost to the Government at the time of delivery; and</P> <P>(3) For items delivered under a time-and-materials contract, the contractor's estimated fully burdened unit cost to the Government at the time of delivery.</P> <P>(c) The Government's unit acquisition cost of subassemblies, components, and parts embedded in delivered items need not be separately identified.</P> <CITA>[70 FR 20836, Apr. 22, 2005]</CITA> </SECTION> <SECTION> <SECTNO>211.274-4</SECTNO> <SUBJECT>Policy for item unique identification of Government property.</SUBJECT> <P>(a) It is DoD policy that DoD item unique identification, or a DoD-recognized unique identification equivalent, is required for tangible personal property in accordance with 211.274-2, for items—</P> <P>(1) In the possession of the Government and furnished to a contractor for the performance of a contract; or</P> <P>(2) Directly acquired by the Government and subsequently furnished to a contractor for the performance of a contract.</P> <P>(b) The policy in paragraph (a) of this subsection does not apply to—</P> <P>(1) Property under any statutory leasing authority;</P> <P>(2) Property to which the Government has acquired a lien or title solely because of partial, advance, progress, or performance-based payments;</P> <P>(3) Software and intellectual property; or</P> <P>(4) Real property.</P> <CITA>[72 FR 52297, Sept. 13, 2007]</CITA> </SECTION> <SECTION> <SECTNO>211.274-5</SECTNO> <SUBJECT>Contract clauses.</SUBJECT> <P>(a)(1) Use the clause at 252.211-7003, Item Identification and Valuation, in solicitations and contracts that—</P> <P>(i) Require item identification or valuation, or both, in accordance with 211.274-2 and 211.274-3; or</P> <P>(ii) Contain the clause at 252.211-7007.</P> <P>(2) Complete paragraph (c)(1)(ii) of the clause with the contract line, subline, or exhibit line item number and description of any item(s) below $5,000 in unit acquisition cost for which DoD unique item identification or a DoD recognized unique identification equivalent is required in accordance with 211.274-2(a)(2) or (3).</P> <P>(3) Complete paragraph (c)(1)(iii) of the clause with the applicable attachment number, when DoD unique item identification or a DoD recognized unique identification equivalent is required in accordance with 211.274-2(a)(4) for DoD serially managed subassemblies, components, or parts embedded within deliverable items.</P> <P>(4) Use the clause with its Alternate I if—</P> <P>(i) An exception in 211.274-2(b) applies; or<PRTPAGE P="59"/> </P> <P>(ii) Items are to be delivered to the Government and none of the criteria for placing a unique item identification mark applies.</P> <P>(b)(1) Use the clause at 252.211-7007, Item Unique Identification of Government Property, in solicitations and contracts that contain the clause at—</P> <P>(i) FAR 52.245-1, Government Property; or</P> <P>(ii) FAR 52.245-2, Government Property Installation Operation Services.</P> <P>(2) Complete paragraph (b)(2)(ii) of the clause as applicable.</P> <CITA>[72 FR 52298, Sept. 13, 2007]</CITA> </SECTION> <SECTION> <SECTNO>211.275</SECTNO> <SUBJECT>Radio frequency identification.</SUBJECT> </SECTION> <SECTION> <SECTNO>211.275-1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P> <E T="03">Bulk commodities, case, palletized unit load, passive RFID tag, and radio frequency identification</E> are defined in the clause at 252.211-7006, Radio Frequency Identification.</P> <CITA>[70 FR 53968, Sept. 13, 2005]</CITA> </SECTION> <SECTION> <SECTNO> 211.275-2</SECTNO> <SUBJECT>Policy.</SUBJECT> <P>(a) Except as provided in paragraph (b) of this subsection, radio frequency identification (RFID), in the form of a passive RFID tag, is required for individual cases and palletized unit loads that—</P> <P>(1) Contain items in any of the following classes of supply, as defined in DoD 4140.1-R, DoD Supply Chain Materiel Management Regulation, AP1.1.11:</P> <P>(i) Subclass of Class I—Packaged operational rations.</P> <P>(ii) Class II—Clothing, individual equipment, tentage, organizational tool kits, hand tools, and administrative and housekeeping supplies and equipment.</P> <P>(iii) Class IIIP—Packaged petroleum, lubricants, oils, preservatives, chemicals, and additives.</P> <P>(iv) Class IV—Construction and barrier materials.</P> <P>(v) Class VI—Personal demand items (non-military sales items).</P> <P>(vi) Subclass of Class VIII—Medical materials (excluding pharmaceuticals, biologicals, and reagents—suppliers should limit the mixing of excluded and non-excluded materials).</P> <P>(vii) Class IX—Repair parts and components including kits, assemblies and subassemblies, reparable and consumable items required for maintenance support of all equipment, excluding medical-peculiar repair parts; and</P> <P>(2) Will be shipped to one of the following locations:</P> <P>(i) Defense Distribution Depot, Susquehanna, PA: DoDAAC W25G1U or SW3124.</P> <P>(ii) Defense Distribution Depot, San Joaquin, CA: DoDAAC W62G2T or SW3224.</P> <P>(iii) Defense Distribution Depot, Albany, GA: DoDAAC SW3121.</P> <P>(iv) Defense Distribution Depot, Anniston, AL: DoDAAC W31G1Z or SW3120.</P> <P>(v) Defense Distribution Depot, Barstow, CA: DoDAAC SW3215.</P> <P>(vi) Defense Distribution Depot, Cherry Point, NC: DoDAAC SW3113.</P> <P>(vii) Defense Distribution Depot, Columbus, OH: DoDAAC SW0700.</P> <P>(viii) Defense Distribution Depot, Corpus Christi, TX: DoDAAC W45H08 or SW3222.</P> <P>(ix) Defense Distribution Depot, Hill, UT: DoDAAC SW3210.</P> <P>(x) Defense Distribution Depot, Jacksonville, FL: DoDAAC SW3122.</P> <P>(xi) Defense Distribution Depot, Oklahoma City, OK: DoDAAC SW3211.</P> <P>(xii) Defense Distribution Depot, Norfolk, VA: DoDAAC SW3117.</P> <P>(xiii) Defense Distribution Depot, Puget Sound, WA: DoDAAC SW3216.</P> <P>(xiv) Defense Distribution Depot, Red River, TX: DoDAAC W45G19 or SW3227.</P> <P>(xv) Defense Distribution Depot, Richmond, VA: DoDAAC SW0400.</P> <P>(xvi) Defense Distribution Depot, San Diego, CA: DoDAAC SW3218.</P> <P>(xvii) Defense Distribution Depot, Tobyhanna, PA: DoDAAC W25G1W or SW3114.</P> <P>(xviii) Defense Distribution Depot, Warner Robins, GA: DoDAAC SW3119.</P> <P>(xix) Air Mobility Command Terminal, Charleston Air Force Base, Charleston, SC: Air Terminal Identifier Code CHS.</P> <P>(xx) Air Mobility Command Terminal, Naval Air Station, Norfolk, VA: Air Terminal Identifier Code NGU.</P> <P>(xxi) Air Mobility Command Terminal, Travis Air Force Base, Fairfield, CA: Air Terminal Identifier Code SUU.</P> <P>(xxii) A location outside the contiguous United States when the shipment <PRTPAGE P="60"/>has been assigned Transportation Priority 1.</P> <P>(b) The following are excluded from the requirements of paragraph (a) of this subsection:</P> <P>(1) Shipments of bulk commodities.</P> <P>(2) Shipments to locations other than Defense Distribution Depots when the contract includes the clause at FAR 52.213-1, Fast Payment Procedures.</P> <CITA>[72 FR 6483, Feb. 12, 2007]</CITA> </SECTION> <SECTION> <SECTNO>211.275-3</SECTNO> <SUBJECT>Contract clause.</SUBJECT> <P>Use the clause at 252.211-7006, Radio Frequency Identification, in solicitations and contracts that will require shipment of items meeting the criteria at 211.275-2.</P> <CITA>[70 FR 53968, Sept. 13, 2005]</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 $550,000, 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 $550,000 or less is optional.</P> <CITA>[60 FR 61594, Nov. 30, 1995. Redesignated at 66 FR 49861, Oct. 1, 2001; 71 FR 75892, Dec. 19, 2006]</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> <SECTNO>212.212</SECTNO> <SUBJECT>Computer software.</SUBJECT> <SECTNO>212.270</SECTNO> <SUBJECT>Major weapon systems as commercial items.</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> </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> <SECTNO>212.570</SECTNO> <SUBJECT>Applicability of certain laws to contracts and subcontracts for the acquisition of commercially available off-the-shelf 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> <SUBPART> <HD SOURCE="HED">Subpart 212.70—Pilot Program for Transition to Follow-On Contracting After Use of Other Transaction Authority</HD> <SECTNO>212.7000</SECTNO> <SUBJECT>Scope.</SUBJECT> <SECTNO>212.7001</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>212.7002</SECTNO> <SUBJECT>Pilot program.</SUBJECT> <SECTNO>212.7002-1</SECTNO> <SUBJECT>Contracts under the program.</SUBJECT> <SECTNO>212.7002-2</SECTNO> <SUBJECT>Subcontracts under the program.</SUBJECT> <SECTNO>212.7003</SECTNO> <SUBJECT>Technical data and computer software.</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> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>73 FR 4114, Jan. 24, 2008, unless otherwise noted.</P> </SOURCE> <SECTION> <PRTPAGE P="61"/> <SECTNO>212.102</SECTNO> <SUBJECT>Applicability.</SUBJECT> <P>(a)(i) When using FAR Part 12 procedures for acquisitions exceeding $1 million in value, the contracting officer shall—</P> <P>(A) Determine in writing that the acquisition meets the commercial item definition in FAR 2.101; and</P> <P>(B) Include the written determination in the contract file.</P> <P>(ii) Follow the procedures at PGI 212.102(a) regarding file documentation.</P> </SECTION> </SUBPART> <SUBPART> <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> <SECTION> <SECTNO>212.212</SECTNO> <SUBJECT>Computer software.</SUBJECT> <P>The DoD policy for acquiring commercial computer software is at 227.7202.</P> <CITA>[69 FR 63330, Nov. 1, 2004]</CITA> </SECTION> <SECTION> <SECTNO>212.270</SECTNO> <SUBJECT>Major weapon systems as commercial items.</SUBJECT> <P>The DoD policy for acquiring major weapon systems as commercial items is in Subpart 234.70.</P> <CITA>[71 FR 58538, Oct. 4, 2006]</CITA> </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>(f) The following additional provisions and clauses apply to DoD solicitations and contracts for the acquisition of commercial items. If the offeror has completed the provisions listed in paragraph (f)(i) or (ii) of this section electronically as part of its annual representations and certifications at <E T="03">https://orca.bpn.gov</E>, the contracting officer may consider this information instead of requiring the offeror to complete these provisions for a particular solicitation.</P> <P>(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) 252.225-7020, Trade Agreements Certificate.</P> <P>(C) 252.225-7035, Buy American Act—Free Trade Agreements—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 225.7603), 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 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>(v) Use the clause at 252.232-7009, Mandatory Payment by Governmentwide Commercial Purchase Card, as prescribed in 232.1110.</P> <P>(vi) Use the clause at 252.211-7003, Item Identification, as prescribed at 211.274-4.</P> <P>(vii) Use the clause at 252.225-7040, Contractor Personnel Authorized to Accompany U.S. Armed Forces Deployed Outside the United States, as prescribed in 225.7402-4.</P> <P>(viii) Use the clause at 252.225-7043, Antiterrorism/Force Protection Policy for Defense Contractors Outside the United States, in solicitations and contracts that include the clause at 252.225-7040.</P> <P>(ix) Use the clause at 252.211-7006, Radio Frequency Identification, as prescribed in 211.275-3.</P> <P>(x) Use the clause at 252.232-7010, Levies on Contract Payments, as prescribed in 232.7102.<PRTPAGE P="62"/> </P> <P>(xi) Use the clause at 252.246-7003, Notification of Potential Safety Issues, as prescribed in 246.371.</P> <P>(xii) Use the provision at 252.247-7026, Evaluation Preference for Use of Domestic Shipyards—Applicable to Acquisition of Carriage by Vessel for DoD Cargo in the Coastwise or Noncontiguous Trade, as prescribed in 247.574(e).</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; 68 FR 7439, Feb. 14, 2003; 68 FR 15618, Mar. 31, 2003; 68 FR 58633, Oct. 10, 2003; 68 FR 75200, Dec. 30, 2003; 68 FR 64558, Nov. 14, 2003; 69 FR 1927, Jan. 13, 2004; 70 FR 20836, Apr. 22, 2005; 70 FR 23801, May 5, 2005; 70 FR 53968, Sept. 13, 2005; 71 FR 9269, Feb. 23, 2006; 71 FR 34828, June 16, 2006; 71 FR 39006, July 11, 2006; 71 FR 62563, Oct. 26, 2006; 71 FR 69492, Dec. 1, 2006; 72 FR 2636, Jan. 22, 2007; 72 FR 49205, Aug. 28, 2007; 73 FR 1823, Jan. 10, 2008; 73 FR 4115, Jan. 24, 2008]</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> The head of the contracting activity is the approval authority within the DoD for waivers under FAR 12.302(c).</P> </SECTION> </SUBPART> <SUBPART> <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 15.403-1(b)(3)).</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; 69 FR 65089, Nov. 10, 2004]</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.<PRTPAGE P="63"/> </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]</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) 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 225.7009-2(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; 69 FR 63331, Nov. 1, 2004]</CITA> </SECTION> <SECTION> <SECTNO>212.570</SECTNO> <SUBJECT>Applicability of certain laws to contracts and subcontracts for the acquisition of commercially available off-the-shelf items.</SUBJECT> <P>Paragraph (a)(1) of 10 U.S.C. 2533b, Requirement to buy strategic materials critical to national security from American sources, is not applicable to contracts and subcontracts for the acquisition of commercially available off-the-shelf items.</P> <CITA>[72 FR 63123, Nov. 8, 2007]</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 contiguous 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 criteria at 247.573-2(c).</P> <CITA>[65 FR 50143, Aug. 17, 2000, as amended at 70 FR 35544, June 21, 2005; 72 FR 49205, Aug. 28, 2007]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 212.70—Pilot Program for Transition to Follow-On Contracting After Use of Other Transaction Authority</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>69 FR 63330, Nov. 1, 2004, unless otherwise noted.</P> </SOURCE> <SECTION> <PRTPAGE P="64"/> <SECTNO>212.7000</SECTNO> <SUBJECT>Scope.</SUBJECT> <P>This subpart establishes the pilot program authorized by Section 847 of the National Defense Authorization Act for Fiscal Year 2004 (Pub. L. 108-136).</P> </SECTION> <SECTION> <SECTNO>212.7001</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this subpart—</P> <P> <E T="03">Nontraditional defense contractor</E> means a business unit that—</P> <P>(1) Has entered into an other transaction agreement with DoD; and</P> <P>(2) Has not, for a period of at least 1 year prior to the date of the other transaction agreement, entered into or performed on—</P> <P>(i) Any contract that is subject to full coverage under the cost accounting standards described in FAR Part 30; or</P> <P>(ii) Any other contract exceeding $500,000 to carry out prototype projects or to perform basic, applied, or advanced research projects for a Federal agency that is subject to the FAR.</P> <P> <E T="03">Other transaction</E> means a transaction that—</P> <P>(1) Is other than a contract, grant, or cooperative agreement;</P> <P>(2) Is not subject to the FAR or its supplements; and</P> <P>(3) Is entered into in accordance with 32 CFR part 3.</P> </SECTION> <SECTION> <SECTNO>212.7002</SECTNO> <SUBJECT>Pilot program.</SUBJECT> </SECTION> <SECTION> <SECTNO>212.7002-1</SECTNO> <SUBJECT>Contracts under the program.</SUBJECT> <P>(a) The contracting officer may use FAR part 12 procedures to award a contract for an item or process that does not meet the definition of “commercial item,” if the contract—</P> <P>(1) Is awarded to a nontraditional defense contractor;</P> <P>(2) Is a follow-on contract for the production of an item or process begun as a prototype project under an other transaction agreement;</P> <P>(3) Does not exceed $50,000,000;</P> <P>(4) Is awarded on or before September 30, 2013; and</P> <P>(5) Is either—</P> <P>(i) A firm-fixed-price contract; or</P> <P>(ii) A fixed-price contract with economic price adjustment.</P> <P>(b) See 212.7003 for special procedures pertaining to technical data and computer software.</P> <CITA>[69 FR 63330, Nov. 1, 2004, as amended at 71 FR 18669, Apr. 12, 2006; 73 FR 21845, Apr. 23, 2008]</CITA> </SECTION> <SECTION> <SECTNO>212.7002-2</SECTNO> <SUBJECT>Subcontracts under the program.</SUBJECT> <P>(a) A subcontract for an item or process that does not meet the definition of “commercial item” may be treated as a subcontract for a commercial item, if the subcontract—</P> <P>(1) Is for the production of an item or process begun as a prototype project under an other transaction agreement;</P> <P>(2) Does not exceed $50,000,000;</P> <P>(3) Is awarded on or before September 30, 2013;</P> <P>(4) Is awarded to a nontraditional defense contractor; and</P> <P>(5) Is either—</P> <P>(i) A firm-fixed-price subcontract; or</P> <P>(ii) A fixed-price subcontract with economic price adjustment.</P> <P>(b) See 212.7003 for special procedures pertaining to technical data and computer software.</P> <CITA>[71 FR 18669, Apr. 12, 2006, as amended at 73 FR 21845, Apr. 23, 2008]</CITA> </SECTION> <SECTION> <SECTNO>212.7003</SECTNO> <SUBJECT>Technical data and computer software.</SUBJECT> <P>For purposes of establishing delivery requirements and license rights for technical data under 227.7102 and for computer software under 227.7202, there shall be a rebuttable presumption that items or processes acquired under a contract or subcontract awarded in accordance with 212.7002 were developed in part with Federal funds and in part at private expense (i.e., mixed funding).</P> <P>(a) <E T="03">Delivery requirements.</E> Acquire only the technical data and computer software that are necessary to satisfy agency needs. Follow the requirements at 227.7103-1 and 227.7103-2 for technical data, and 227.7203-1 and 227.7203-2 for computer software.</P> <P>(b) <E T="03">License rights.</E> Acquire only the license rights in technical data and computer software that are necessary to satisfy agency needs.</P> <P>(1) For technical data, use the clauses at 252.227-7013, Rights in Technical Data—Noncommercial Items, and <PRTPAGE P="65"/>252.227-7037, Validation of Restrictive Markings on Technical Data.</P> <P>(2) For computer software, use the clauses at 252.227-7014, Rights in Noncommercial Computer Software and Noncommercial Computer Software Documentation, and 252.227-7019, Validation of Asserted Restrictions—Computer Software.</P> <P>(3) Require the contractor to include the clauses prescribed by paragraphs (b)(1) and (2) of this section in subcontracts awarded in accordance with 212.7002-2.</P> <P>(4) When the standard license rights for items or processes developed with mixed funding do not provide the minimum rights necessary to satisfy agency needs, negotiate for special license rights in accordance with 227.7103-5(d) and 227.7203-5(d).</P> <CITA>[71 FR 18669, Apr. 12, 2006]</CITA> </SECTION> </SUBPART> </PART> </SUBCHAP> <SUBCHAP TYPE="P"> <PRTPAGE P="66"/> <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>213.106-1-70</SECTNO> <SUBJECT>Soliciting competition—tiered evaluation of offers.</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>213.305-3</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>Procedures.</SUBJECT> <SECTNO>213.7002</SECTNO> <SUBJECT>Purchase orders.</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>213.106-1-70</SECTNO> <SUBJECT>Soliciting competition—tiered evaluation of offers.</SUBJECT> <P>See limitations on the use of tiered evaluation of offers at 215.203-70.</P> <CITA>[72 FR 42314, Aug. 2, 2007]</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 the United States and its outlying areas.</P> <P>(2) The purchase is a Standard Form 44 purchase for aviation fuel or oil.<PRTPAGE P="67"/> </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, as amended at 70 FR 35544, June 21, 2005]</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 8.002 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="68"/> </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> <P>(4) Guidance on DoD purchase, travel, and fuel card programs is available at <E T="03">http://www.acq.osd.mil/dpap/pcard/pcardguidebook.htm.</E> Additional guidance on the fuel card programs is available at <E T="03">http://www.desc.dla.mil.</E> </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; 68 FR 56561, Oct. 1, 2003; 70 FR 75411, Dec. 20, 2005; 72 FR 6484, Feb. 12, 2007]</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) See PGI 213.302-3 for guidance on the use of unilateral modifications.</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> <CITA>[64 FR 2596, Jan. 15, 1999, as amended at 71 FR 3413, Jan. 23, 2006]</CITA> </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-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—Free Trade Agreements—Balance of Payments Program, as prescribed at 225.1101(10).</P> <CITA>[64 FR 24528, May 7, 1999, as amended at 65 FR 19850, Apr. 13, 2000; 65 FR 39704, June 27, 2000; 68 FR 56561, Oct. 1, 2003; 69 FR 1927, Jan. 13, 2004]</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>213.305-3</SECTNO> <SUBJECT>Conditions for use.</SUBJECT> <P>(d)(i) 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. Use of imprest funds and third party drafts must comply with—</P> <P>(A) DoD 7000.14-R, DoD Financial Management Regulation, Volume 5, Disbursing Policy and Procedures; and</P> <P>(B) The Treasury Financial Manual, Volume I, Part 4, Chapter 3000.</P> <P>(ii) Use of imprest funds requires approval by the Director for Financial Commerce, Office of the Deputy Chief Financial Officer, Office of the Under Secretary of Defense (Comptroller), except as provided in paragraph (d)(iii) of this subsection.</P> <P>(iii) 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(8); and</P> <P>(B) Classified transactions.</P> <CITA>[71 FR 3413, Jan. 23, 2006]</CITA> </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 <PRTPAGE P="69"/>acquisition threshold may be made for—</P> <P>(A) Aviation fuel and oil. The Aviation Into-plane Reimbursement (AIR) card may be used instead of an SF 44 for aviation fuel and oil (see <E T="03">http://www.desc.dla.mil</E>);</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(8); and</P> <P>(C) Transactions in support of intelligence and other specialized activities addressed by Part 2.7 of Executive Order 12333.</P> <CITA>[64 FR 2596, Jan. 15, 1999, as amended at 71 FR 3413, Jan. 23, 2006; 72 FR 6484, Feb. 12, 2007]</CITA> </SECTION> <SECTION> <SECTNO>213.307</SECTNO> <SUBJECT>Forms.</SUBJECT> <P>See PGI 213.307 for procedures on use of forms for purchases made using simplified acquisition procedures.</P> <CITA>[71 FR 3413, Jan. 23, 2006]</CITA> </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>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> <CITA>[64 FR 2596, Jan. 15, 1999. Redesignated at 71 FR 3413, Jan. 23, 2006]</CITA> </SECTION> <SECTION> <SECTNO>213.7002</SECTNO> <SUBJECT>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> <CITA>[71 FR 3413, Jan. 23, 2006]</CITA> </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>214.202</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> </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>214.202</SECTNO> <SUBJECT>General rules for solicitation of bids.</SUBJECT> </SECTION> <SECTION> <SECTNO>214.202-5</SECTNO> <SUBJECT>Descriptive literature.</SUBJECT> <P>(c) <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; 69 FR 65090, Nov. 10, 2004]</CITA> </SECTION> </SUBPART> <SUBPART> <PRTPAGE P="70"/> <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.</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) Missile Defense Agency: General Counsel, MDA.</P> <P>(ix) Defense Contract Management Agency: General Counsel, DCMA.</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; 68 FR 7439, Feb. 14, 2003; 69 FR 65090, Nov. 10, 2004]</CITA> </SECTION> </SUBPART> </PART> <PART> <EAR>Pt. 215</EAR> <HD SOURCE="HED">PART 215—CONTRACTING BY NEGOTIATION</HD> <CONTENTS> <SUBPART> <HD SOURCE="HED">Subpart 215.2—Solicitation and Receipt of Proposals and Information.</HD> <SECHD>Sec.</SECHD> <SECTNO>215.203-70</SECTNO> <SUBJECT>Requests for proposals—tiered evaluation of offers.</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>215.402</SECTNO> <SUBJECT>Pricing policy.</SUBJECT> <SECTNO>215.403</SECTNO> <SUBJECT>Obtaining cost or pricing data.</SUBJECT> <SECTNO>215.403-1</SECTNO> <SUBJECT>Prohibition on obtaining cost or pricing data (10 U.S.C. 2306a and 41 U.S.C. 254b).</SUBJECT> <SECTNO>215.403-3</SECTNO> <SUBJECT>Requiring information other than 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> <SUBPART> <HD SOURCE="HED">Subpart 215.2—Solicitation and Receipt of Proposals and Information</HD> <SECTION> <SECTNO>215.203-70</SECTNO> <SUBJECT>Requests for proposals—tiered evaluation of offers.</SUBJECT> <P>(a) The tiered or cascading order of precedence used for tiered evaluation <PRTPAGE P="71"/>of offers shall be consistent with FAR part 19.</P> <P>(b) Consideration shall be given to the tiers of small businesses (<E T="03">e.g.</E>, 8(a), HUBZone small business, service-disabled veteran-owned small business, small business) before evaluating offers from other than small business concerns.</P> <P>(c) The contracting officer is prohibited from issuing a solicitation with a tiered evaluation of offers unless—</P> <P>(1) The contracting officer conducts market research, in accordance with FAR Part 10 and Part 210, to determine—</P> <P>(i) Whether the criteria in FAR part 19 are met for setting aside the acquisition for small business; or</P> <P>(ii) For a task or delivery order, whether there are a sufficient number of qualified small business concerns available to justify limiting competition under the terms of the contract; and</P> <P>(2) If the contracting officer cannot determine whether the criteria in paragraph (c)(1) of this section are met, the contracting officer includes a written explanation in the contract file as to why such a determination could not be made (Section 816 of Public Law 109-163).</P> <CITA>[71 FR 53043, Sept. 8, 2006, as amended at 72 FR 42314, Aug. 2, 2007]</CITA> </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 shall approve a source selection plan before the solicitation is issued. Follow the procedures at PGI 215.303(b)(2) for preparation of the source selection plan.</P> <CITA>[71 FR 3414, Jan. 23, 2006]</CITA> </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 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) See PGI 215.304(c)(i)(A) for examples of evaluation factors.</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 assesses the extent that small businesses and historically black colleges or universities and minority institutions are specifically identified in proposals, the small businesses and historically black colleges or universities and minority institutions 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) In accordance with 10 U.S.C. 2436, consider the purchase of capital assets (including machine tools) manufactured in the United States, in source selections for all major defense acquisition programs as defined in 10 U.S.C. 2430.</P> <P>(iii) See 247.573-2(c) for additional evaluation factors required in solicitations for the direct purchase of ocean transportation services.</P> <CITA>[71 FR 3414, Jan. 23, 2006, as amended at 71 FR 14109, Mar. 21, 2006; 72 FR 49205, Aug. 28, 2007]</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 Business Concerns, the evaluation factors shall include the past performance of <PRTPAGE P="72"/>offerors in complying with requirements of that clause. When a past performance evaluation is required by FAR 15.304, and the solicitation includes the clause at FAR 52.219-9, Small Business Subcontracting Plan, the evaluation factors shall include the past performance of offerors in complying with requirements of that clause.</P> <CITA>[71 FR 3414, Jan. 23, 2006]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 215.4—Contract Pricing</HD> <SECTION> <SECTNO>215.402</SECTNO> <SUBJECT>Pricing policy.</SUBJECT> <P>Follow the procedures at PGI 215.402 when conducting cost or price analysis, particularly with regard to acquisitions for sole source commercial items.</P> <CITA>[72 FR 30278, May 31, 2007]</CITA> </SECTION> <SECTION> <SECTNO>215.403</SECTNO> <SUBJECT>Obtaining cost or price data.</SUBJECT> </SECTION> <SECTION> <SECTNO>215.403-1</SECTNO> <SUBJECT>Prohibition on obtaining cost or pricing data (10 U.S.C. 2306a and 41 U.S.C. 254b).</SUBJECT> <P>(b) <E T="03">Exceptions to cost or pricing data requirements.</E> Follow the procedures at PGI 215.403-1(b).</P> <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>(3) <E T="03">Commercial items.</E> (A) Follow the procedures at PGI 215.403-1(c)(3)(A) for pricing commercial items.</P> <P>(B) By November 30th of each year, departments and agencies shall provide a report to the Director, Defense Procurement and Acquisition Policy (DPAP), ATTN: DPAP/CPF, of all contracting officer determinations that commercial item exceptions apply under FAR 15.403-1(b)(3), during the previous fiscal year, for any contract, subcontract, or modification expected to have a value of $15,000,000 or more. See PGI 215.403-1(c)(3)(B) for the format and guidance for the report. The Director, DPAP, will submit a consolidated report to the congressional defense committees.</P> <P>(4) <E T="03">Waivers.</E> (A) The head of the contracting activity may, without power of delegation, apply the exceptional circumstances authority when a determination is made that—</P> <P>(<E T="03">1</E>) The property or services cannot reasonably be obtained under the contract, subcontract, or modification, without the granting of the waiver;</P> <P>(<E T="03">2</E>) The price can be determined to be fair and reasonable without the submission of certified cost or pricing data; and</P> <P>(<E T="03">3</E>) There are demonstrated benefits to granting the waiver. Follow the procedures at PGI 215.403-1(c)(4)(A) for determining when an exceptional case waiver is appropriate, for approval of such waivers, for partial waivers, and for waivers applicable to unpriced supplies or services.</P> <P>(B) By November 30th of each year, departments and agencies shall provide a report to the Director, DPAP, ATTN: DPAP/CPF, of all waivers granted under FAR 15.403-1(b)(4), during the previous fiscal year, for any contract, subcontract, or modification expected to have a value of $15,000,000 or more. See PGI 215.403-1(c)(4)(B) for the format and guidance for the report. The Director, DPAP, will submit a consolidated report to the congressional defense committees.</P> <P>(C) DoD has waived the requirement for submission of cost or pricing data for the Canadian Commercial Corporation and its subcontractors.</P> <P>(D) 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—<PRTPAGE P="73"/> </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> <CITA>[63 FR 55040, Oct. 14, 1998, as amended at 71 FR 69493, Dec. 1, 2006; 72 FR 30278, May 31, 2007]</CITA> </SECTION> <SECTION> <SECTNO>215.403-3</SECTNO> <SUBJECT>Requiring information other than cost or pricing data.</SUBJECT> <P>Follow the procedures at PGI 215.403-3.</P> <CITA>[72 FR 30278, May 31, 2007]</CITA> </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>When the solicitation requires contractor compliance with the Contractor Cost Data Reporting System, follow the procedures at PGI 215.403-5.</P> <CITA>[71 FR 69494, Dec. 1, 2006]</CITA> </SECTION> <SECTION> <SECTNO>215.404</SECTNO> <SUBJECT>Proposal analysis.</SUBJECT> </SECTION> <SECTION> <SECTNO>215.404-1</SECTNO> <SUBJECT>Proposal analysis techniques.</SUBJECT> <P>(1) Follow the procedures at PGI 215.404-1 for proposal analysis.</P> <P>(2) 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> <CITA>[63 FR 55040, Oct. 14, 1998, as amended at 71 FR 69494, Dec. 1, 2006; 72 FR 30278, May 31, 2007]</CITA> </SECTION> <SECTION> <SECTNO>215.404-2</SECTNO> <SUBJECT>Information to support proposal analysis.</SUBJECT> <P>See PGI 215.404-2 for guidance on obtaining field pricing or audit assistance.</P> <CITA>[71 FR 69494, Dec. 1, 2006]</CITA> </SECTION> <SECTION> <SECTNO>215.404-3</SECTNO> <SUBJECT>Subcontract pricing considerations.</SUBJECT> <P>Follow the procedures at PGI 215.404-3 when reviewing a subcontractor's proposal.</P> <CITA>[71 FR 69494, Dec. 1, 2006]</CITA> </SECTION> <SECTION> <SECTNO>215.404-4</SECTNO> <SUBJECT>Profit.</SUBJECT> <P>(b) <E T="03">Policy.</E> (1) Contracting officers shall 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, 216.405-2, and FAR 16.405-2) 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;<PRTPAGE P="74"/> </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.</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) <E T="03">Profit-analysis factors</E>—(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; 71 FR 69494, Dec. 1, 2006]</CITA> </SECTION> <SECTION> <SECTNO>215.404-70</SECTNO> <SUBJECT>DD Form 1547, Record of Weighted Guidelines Method Application.</SUBJECT> <P>Follow the procedures at PGI 215.404-70 for use of DD Form 1547 whenever a structured approach to profit analysis is required.</P> <CITA>[71 FR 69494, Dec. 1, 2006]</CITA> </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.</P> <GPOTABLE CDEF="xs10,r30,12,12,12,12" COLS="6" OPTS="L2"> <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> <PRTPAGE P="75"/> <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"> <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"> <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> (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> (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—</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> (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;<PRTPAGE P="76"/> </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> (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> (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> (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;</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> (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;<PRTPAGE P="77"/> </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"> <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> </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 <E T="03">http://www.treasurydirect.gov/govt/rates/tcir/tcir_opdirsemi.htm</E>). 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> </P> <GPOTABLE CDEF="s150,10,10,12" COLS="4" OPTS="L2"> <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> <PRTPAGE P="78"/> <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>—(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;</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 <PRTPAGE P="79"/>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> (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"> <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; 72 FR 14239, Mar. 27, 2007]</CITA> </SECTION> <SECTION> <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.<PRTPAGE P="80"/> </P> <P>(b) <E T="03">Contract facilities capital estimates.</E> The contracting officer shall estimate the facilities capital cost of money and capital employed using—</P> <P>(1) An analysis of the appropriate Forms CASB-CMF and cost of money factors (48 CFR 9904.414 and FAR 31.205-10); and</P> <P>(2) DD Form 1861, Contract Facilities Capital Cost of Money.</P> <P>(c) <E T="03">Use of DD Form 1861.</E> See PGI 215.404-71-4(c) for obtaining field pricing support for preparing DD Form 1861.</P> <P>(1) <E T="03">Purpose.</E> The DD Form 1861 provides a means of linking the Form CASB-CMF and DD Form 1547, Record of Weighted Guidelines Application. It—</P> <P>(i) Enables the contracting officer to differentiate profit objectives for various types of assets (land, buildings, equipment). The procedure is similar to applying overhead rates to appropriate overhead allocation bases to determine contract overhead costs.</P> <P>(ii) Is designed to record and compute the contract facilities capital cost of money and capital employed which is carried forward to DD Form 1547.</P> <P>(2) <E T="03">Completion instructions.</E> Complete a DD Form 1861 only after evaluating the contractor's cost proposal, establishing cost of money factors, and establishing a prenegotiation objective on cost. Complete the form as follows:</P> <P>(i) List overhead pools and direct-charging service centers (if used) in the same structure as they appear on the contractor's cost proposal and Form CASB-CMF. The structure and allocation base units-of-measure must be compatible on all three displays.</P> <P>(ii) Extract appropriate contract overhead allocation base data, by year, from the evaluated cost breakdown or prenegotiation cost objective and list against each overhead pool and direct-charging service center.</P> <P>(iii) Multiply each allocation base by its corresponding cost of money factor to get the facilities capital cost of money estimated to be incurred each year. The sum of these products represents the estimated contract facilities capital cost of money for the year's effort.</P> <P>(iv) Total contract facilities cost of money is the sum of the yearly amounts.</P> <P>(v) Since the facilities capital cost of money factors reflect the applicable cost of money rate in Column 1 of Form CASB-CMF, divide the contract cost of money by that same rate to determine the contract facilities capital employed.</P> <P>(d) <E T="03">Preaward facilities capital applications.</E> To establish cost and price objectives, apply the facilities capital cost of money and capital employed as follows:</P> <P>(1) <E T="03">Cost of Money.</E> (i) <E T="03">Cost Objective.</E> Use the imputed facilities capital cost of money, with normal, booked costs, to establish a cost objective or the target cost when structuring an incentive type contract. Do not adjust target costs established at the outset even though actual cost of money rates become available during the period of contract performance.</P> <P>(ii) <E T="03">Profit Objective.</E> When measuring the contractor's effort for the purpose of establishing a prenegotiation profit objective, restrict the cost base to normal, booked costs. Do not include cost of money as part of the cost base.</P> <P>(2) <E T="03">Facilities Capital Employed.</E> Assess and weight the profit objective for risk associated with facilities capital employed in accordance with the profit guidelines at 215.404-71-4.</P> <P>(e) <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"> <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.<PRTPAGE P="81"/> </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.</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&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&A expenses and profit).</P> <P>(3) Multiply (1) by (2).</P> <P>(f) <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"> <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>(g) <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> (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 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> (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; 71 FR 69494, Dec. 1, 2006; 72 FR 14239, Mar. 27, 2007]</CITA> </SECTION> <SECTION> <PRTPAGE P="82"/> <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 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-<PRTPAGE P="83"/>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 under Cost Accounting Standard (CAS) 414, Cost of Money as an Element of the Cost of Facilities Capital (48 CFR 9904.414). Cost of money under CAS 417, Cost of Money as an Element of the Cost of Capital Assets Under Construction (48 CFR 9904.417), should not be used to reduce the overall prenegotiation profit objective. 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; 71 FR 69494, Dec. 1, 2006]</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.</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>Follow the procedures at PGI 215.404-76 for reporting profit and fee statistics.</P> <CITA>[71 FR 69494, Dec. 1, 2006]</CITA> </SECTION> <SECTION> <PRTPAGE P="84"/> <SECTNO>215.406-1</SECTNO> <SUBJECT>Prenegotiation objectives.</SUBJECT> <P>Follow the procedures at PGI 215.406-1 for establishing prenegotiation objectives.</P> <CITA>[71 FR 69494, Dec. 1, 2006]</CITA> </SECTION> <SECTION> <SECTNO>215.406-3</SECTNO> <SUBJECT>Documenting the negotiation.</SUBJECT> <P>Follow the procedures at PGI 215.406-3 for documenting the negotiation.</P> <CITA>[71 FR 69494, Dec. 1, 2006]</CITA> </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>See PGI 215.407-4 for guidance on determining whether to perform a program or overhead should-cost review.</P> <CITA>[71 FR 69495, Dec. 1, 2006]</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> (1) <E T="03">Acceptable estimating system</E> is defined in the clause at 252.215-7002, Cost Estimating System Requirements.</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 acceptable estimating systems that consistently produce well-supported proposals that are acceptable as a basis for negotiation of fair and reasonable prices.</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<PRTPAGE P="85"/> </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;</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> Follow the procedures at PGI 215.407-5-70(e) for establishing and conducting estimating system reviews.</P> <P>(f) <E T="03">Disposition of survey team findings.</E> Follow the procedures at PGI 215.407-5-70(f) for disposition of the survey team findings.</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 <PRTPAGE P="86"/>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 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; 71 FR 69495, Dec. 1, 2006]</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> <P>(3) Use the provision at 252.215-7003, Excessive Pass-Through Charges—Identification of Subcontract Effort, in solicitations (including task or delivery orders)—</P> <P>(i) With a total value that exceeds the threshold for obtaining cost or pricing data in accordance with FAR 15.403-4, except when the resulting contract is expected to be—</P> <P>(A) A firm-fixed-price contract awarded on the basis of adequate price competition;</P> <P>(B) A fixed-price contract with economic price adjustment, awarded on the basis of adequate price competition;</P> <P>(C) A firm-fixed-price contract for the acquisition of a commercial item; or</P> <P>(D) A fixed-price contract with economic price adjustment, for the acquisition of a commercial item; or</P> <P>(ii) With a total value at or below the threshold for obtaining cost or pricing data in accordance with FAR 15.403-4, when the contracting officer determines that inclusion of the provision is appropriate.</P> <P>(4)(i) Use the clause at 252.215-7004, Excessive Pass-Through Charges, in solicitations and contracts (including task or delivery orders)—</P> <P>(A) With a total value that exceeds the threshold for obtaining cost or pricing data in accordance with FAR 15.403-4, except for—</P> <P> <E T="03">(1)</E> Firm-fixed-price contracts awarded on the basis of adequate price competition;</P> <P> <E T="03">(2)</E> Fixed-price contracts with economic price adjustment, awarded on the basis of adequate price competition;</P> <P> <E T="03">(3)</E> Firm-fixed-price contracts for the acquisition of a commercial item; or<PRTPAGE P="87"/> </P> <P> <E T="03">(4)</E> Fixed-price contracts with economic price adjustment, for the acquisition of a commercial item; or</P> <P>(B) With a total value at or below the threshold for obtaining cost or pricing data in accordance with FAR 15.403-4, when the contracting officer determines that inclusion of the clause is appropriate.</P> <P>(ii) Use the clause with its Alternate I when the contracting officer determines that the prospective contractor has demonstrated that its functions provide added value to the contracting effort and there are no excessive pass-through charges.</P> <CITA>[63 FR 55040, Oct. 14, 1998, as amended at 72 FR 20760, Apr. 26, 2007; 73 FR 27472, May 13, 2008]</CITA> </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, include DD Form 1423, Contract Data Requirements List, in the solicitation. See PGI 215.470(b) for guidance on the use of DD Form 1423.</P> <P>(c) 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> <CITA>[63 FR 55040, Oct. 14, 1998, as amended at 71 FR 69495, Dec. 1, 2006]</CITA> </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>216.104-70</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>216.203-4-70</SECTNO> <SUBJECT>Additional 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>216.405</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>216.501-1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>216.501-2</SECTNO> <SUBJECT>General.</SUBJECT> <SECTNO>216.505</SECTNO> <SUBJECT>Ordering.</SUBJECT> <SECTNO>216.505-70</SECTNO> <SUBJECT>Orders under multiple award contracts.</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>216.601</SECTNO> <SUBJECT>Time-and-materials contracts.</SUBJECT> <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> <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>§ 216.104-70</SECTNO> <SUBJECT>Research and development.</SUBJECT> <P>Follow the procedures at PGI 216.104-70 for selecting the appropriate research and development contract type.</P> <CITA>[71 FR 39007, July 11, 2006]</CITA> </SECTION> </SUBPART> <SUBPART> <PRTPAGE P="88"/> <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>(1) Generally, use the clauses at FAR 52.216-2, Economic Price Adjustment—Standard Supplies, FAR 52.216-3, Economic Price Adjustment—Semistandard Supplies, and FAR 52.216-4, Economic Price Adjustment—Labor and Material, only when—</P> <P>(i) The total contract price exceeds the simplified acquisition threshold; and</P> <P>(ii) Delivery or performance will not be completed within 6 months after contract award.</P> <P>(2) Follow the procedures at PGI 216.203-4 when using an economic price adjustment clause based on cost indexes of labor or material.</P> <CITA>[71 FR 39007, July 11, 2006]</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> (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> (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</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 to contracts specifically approved in writing, setting forth the reasons therefor, in accordance with the following:<PRTPAGE P="89"/> </P> <P>(A) 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>(B) 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; 71 FR 39007, July 11, 2006]</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>See PGI 216.402-2 for guidance on establishing performance incentives.</P> <CITA>[71 FR 39007, July 11, 2006]</CITA> </SECTION> <SECTION> <SECTNO>216.403</SECTNO> <SUBJECT>Fixed-price incentive contracts.</SUBJECT> </SECTION> <SECTION> <SECTNO>216.403-2</SECTNO> <SUBJECT>Fixed-price incentive (successive targets) contracts.</SUBJECT> <P>See PGI 216.403-2 for guidance on the use of fixed-price incentive (successive targets) contracts.</P> <CITA>[71 FR 39007, July 11, 2006]</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>See PGI 216.405-1 for guidance on the use of cost-plus-incentive-fee contracts.</P> <CITA>[71 FR 39007, July 11, 2006]</CITA> </SECTION> <SECTION> <SECTNO>216.405-2</SECTNO> <SUBJECT>Cost-plus-award-fee contracts.</SUBJECT> <P>(b) <E T="03">Application.</E> The cost-plus-award-fee (CPAF) contract may include provisional award fee payments. A provisional award fee payment is a payment made within an evaluation period prior to a final evaluation for that period. The contracting officer may include provisional award fee payments in a CPAF contract on a case-by-case basis, provided those payments—</P> <P>(i) Are made no more frequently than monthly;</P> <P>(ii) Are limited to no more than—</P> <P>(A) For the initial award fee evaluation period, 50 percent of the award fee available for that period; and</P> <P>(B) For subsequent award fee evaluation periods, 80 percent of the evaluation score for the prior evaluation period times the award fee available for the current period, e.g., if the contractor received 90 percent of the award fee available for the prior evaluation period, provisional payments for the current period shall not exceed 72 percent (90 percent x 80 percent) of the award fee available for the current period;</P> <P>(iii) Are superseded by an interim or final award fee evaluation for the applicable evaluation period. If provisional payments have exceeded the payment determined by the evaluation score for the applicable period, the contracting officer shall collect the debt in accordance with FAR 32.606; and</P> <P>(iv) May be discontinued, or reduced in such amounts deemed appropriate by the contracting officer, when the contracting officer determines that the contractor will not achieve a level of performance commensurate with the provisional payment. The contracting officer shall notify the contractor in writing of any discontinuance or reduction in provisional award fee payments.</P> <P>(c) <E T="03">Limitations.</E> </P> <P>(i) The CPAF contract shall not be used—</P> <P>(A) To avoid—</P> <P>(<E T="03">1</E>) Establishing cost-plus-fixed-fee contracts when the criteria for cost-plus-fixed-fee contracts apply; or</P> <P>(<E T="03">2</E>) Developing objective targets so a cost-plus-incentive-fee contract can be used; or</P> <P>(B) For either engineering development or operational system development acquisitions that 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—<PRTPAGE P="90"/> </P> <P>(<E T="03">1</E>) It is more advantageous; and</P> <P>(<E T="03">2</E>) The purpose of the acquisition is clearly to determine or solve specific problems associated with the major weapon system or equipment.</P> <P>(ii) Do not apply the weighted guidelines method to CPAF contracts for either the base (fixed) fee or the award fee.</P> <P>(iii) The base fee shall not exceed 3 percent of the estimated cost of the contract exclusive of the fee.</P> <P>(S-70) See PGI 216.405-2 for guidance on the use of CPAF contracts.</P> <CITA>[71 FR 39007, July 11, 2006]</CITA> </SECTION> <SECTION> <SECTNO>216.470</SECTNO> <SUBJECT>Other applications of award fees.</SUBJECT> <P>See PGI 216.470 for guidance on other applications of award fees.</P> <CITA>[71 FR 39008, July 11, 2006]</CITA> </SECTION> </SUBPART> <SUBPART> <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>216.501-1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P> <E T="03">Multiple award contract,</E> as used in this subpart, means—</P> <P>(1) A multiple award task order contract entered into in accordance with FAR 16.504(c); or</P> <P>(2) Any other indefinite-delivery, indefinite-quantity contract that an agency enters into with two or more sources under the same solicitation.</P> <CITA>[67 FR 56608, Oct. 25, 2002]</CITA> </SECTION> <SECTION> <SECTNO>216.501-2</SECTNO> <SUBJECT>General.</SUBJECT> <P>(a) <E T="03">See</E> 217.204(e) for limitations on the period for task order or delivery order contracts awarded by DoD pursuant to 10 U.S.C. 2304a.</P> <CITA>[69 FR 13478, Mar. 23, 2004]</CITA> </SECTION> <SECTION> <SECTNO>216.505</SECTNO> <SUBJECT>Ordering.</SUBJECT> <P>(1) Departments and agencies shall comply with the review, approval, and reporting requirements established in accordance with Subpart 217.78 when placing orders under non-DoD contracts in amounts exceeding the simplified acquisition threshold.</P> <P>(2) 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, as amended at 70 FR 29642, May 24, 2005; 71 FR 14103, Mar. 21, 2006]</CITA> </SECTION> <SECTION> <SECTNO>§ 216.505-70</SECTNO> <SUBJECT>Orders under multiple award contracts.</SUBJECT> <P>(a) This subsection—</P> <P>(1) Implements Section 803 of the National Defense Authorization Act for Fiscal Year 2002 (Pub. L. 107-107) for the acquisition of services, and establishes similar policy for the acquisition of supplies;</P> <P>(2) Applies to orders for supplies or services exceeding $100,000 placed under multiple award contracts;</P> <P>(3) Also applies to orders placed by non-DoD agencies on behalf of DoD; and</P> <P>(4) Does not apply to orders for architect-engineer services, which shall be placed in accordance with the procedures in FAR Subpart 36.6.</P> <P>(b) Each order exceeding $100,000 shall be placed on a competitive basis in accordance with paragraph (c) of this subsection, unless this requirement is waived on the basis of a justification that is prepared and approved in accordance with FAR 8.405-6 and includes a written determination that—</P> <P>(1) A statute expressly authorizes or requires that the purchase be made from a specified source; or<PRTPAGE P="91"/> </P> <P>(2) One of the circumstances described at FAR 16.505(b)(2)(i) through (iv) applies to the order. Follow the procedures at PGI 216.505-70 if FAR 16.505(b)(2)(ii) or (iii) is deemed to apply.</P> <P>(c) An order exceeding $100,000 is placed on a competitive basis only if the contracting officer—</P> <P>(1) Provides a fair notice of the intent to make the purchase, including a description of the supplies to be delivered or the services to be performed and the basis upon which the contracting officer will make the selection, to all contractors offering the required supplies or services under the multiple award contract; and</P> <P>(2) Affords all contractors responding to the notice a fair opportunity to submit an offer and have that offer fairly considered.</P> <P>(d) When using the procedures in this subsection—</P> <P>(1) The contracting officer should keep contractor submission requirements to a minimum;</P> <P>(2) The contracting officer may use streamlined procedures, including oral presentations;</P> <P>(3) The competition requirements in FAR part 6 and the policies in FAR Subpart 15.3 do not apply to the ordering process, but the contracting officer shall consider price or cost under each order as one of the factors in the selection decision; and</P> <P>(4) The contracting officer should consider past performance on earlier orders under the contract, including quality, timeliness, and cost control.</P> <CITA>[71 FR 14108, Mar. 21, 2006]</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>216.601</SECTNO> <SUBJECT>Time-and-materials contracts.</SUBJECT> <P>(e) <E T="03">Solicitation provisions.</E> Use the provision at FAR 52.216-29, Time-and-Materials/Labor-Hour Proposal Requirements—Non-Commercial Item Acquisition with Adequate Price Competition, with 252.216-7002, Alternate A, in solicitations contemplating the use of a time-and-materials or labor-hour contract type for non-commercial items if the price is expected to be based on adequate competition.</P> <CITA>[71 FR 74471, Dec. 12, 2006]</CITA> </SECTION> <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 217.7405(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 217.7405(b), instead of the clause at FAR 52.216-25, Contract Definitization.</P> <CITA>[61 FR 7743, Feb. 29, 1996, as amended at 71 FR 58537, Oct. 4, 2006; 72 FR 69159, Dec. 7, 2007]</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 5 years.</P> <P>(d) <E T="03">Orders.</E> Follow the procedures at PGI 216.703(d) for issuing orders under basic ordering agreements.</P> <CITA>[71 FR 39008, July 11, 2006]</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.<PRTPAGE P="92"/> </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>217.204</SECTNO> <SUBJECT>Contracts.</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 217.5—Interagency Acquisitions Under the Economy Act</HD> <SECTNO>217.500</SECTNO> <SUBJECT>Scope of subpart.</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>Master agreements and job orders.</SUBJECT> <SECTNO>217.7103-1</SECTNO> <SUBJECT>Content and format of master agreements.</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>Emergency work.</SUBJECT> <SECTNO>217.7103-5</SECTNO> <SUBJECT>Repair costs not readily ascertainable.</SUBJECT> <SECTNO>217.7103-6</SECTNO> <SUBJECT>Modification of master agreements.</SUBJECT> <SECTNO>217.7104</SECTNO> <SUBJECT>Contract clauses.</SUBJECT> </SUBPART> <SUBPART> <RESERVED>Subpart 217.72 [Reserved]</RESERVED> </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>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>Definition.</SUBJECT> <SECTNO>217.7502</SECTNO> <SUBJECT>General.</SUBJECT> <SECTNO>217.7503</SECTNO> <SUBJECT>Spares acquisition integrated with production.</SUBJECT> <SECTNO>217.7504</SECTNO> <SUBJECT>Acquisition of parts when data is not available.</SUBJECT> <SECTNO>217.7505</SECTNO> <SUBJECT>Limitations on price increases.</SUBJECT> <SECTNO>217.7506</SECTNO> <SUBJECT>Spare parts breakout program.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 217.76—Contracts with Provisioning Requirements</HD> <SECTNO>217.7601</SECTNO> <SUBJECT>Provisioning.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 217.77—Over and Above Work</HD> <SECTNO>217.7701</SECTNO> <SUBJECT>Procedures.</SUBJECT> <SECTNO>217.7702</SECTNO> <SUBJECT>Contract clause.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 217.78—Contracts or Delivery Orders Issued by a Non-DoD Agency</HD> <SECTNO>217.7800</SECTNO> <SUBJECT>Scope of subpart.</SUBJECT> <SECTNO>217.7801</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>217.7802</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 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>As used in this subpart—</P> <P> <E T="03">Advance procurement</E> 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 <PRTPAGE P="93"/>materials, parts, components, and effort that must be funded in advance to maintain a planned production schedule.</P> <P> <E T="03">Military installation</E> means a base, camp, post, station, yard, center, or other activity under the jurisdiction of the Secretary of a military department or, in the case of an activity in a foreign country, under the operational control of the Secretary of a military department or the Secretary of Defense (10 U.S.C. 2801(c)(2)).</P> <CITA>[68 FR 43332, July 22, 2003]</CITA> </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 for supplies (see 217.172(c) and 217.172(e)(4)) or $572.5 million for services (see 217.171(a)(6));</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 and Acquisition Policy, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics) (OUSD(AT&L)DPAP), and to the Deputy Under Secretary of Defense (Comptroller) (Program/Budget) (OUSD (C) (P/B)).</P> <CITA>[66 FR 63337, Dec. 6, 2001, as amended at 68 FR 7439, Feb. 14, 2003; 70 FR 24324, May 9, 2005; 71 FR 75892, Dec. 19, 2006]</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 <PRTPAGE P="94"/>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>(v) Environmental remediation services for—</P> <P>(A) An active military installation;</P> <P>(B) A military installation being closed or realigned under a base closure law as defined in 10 U.S.C. 2667(h)(2); or</P> <P>(C) A site formerly used by DoD.</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) If the budget for a contract that contains a cancellation ceiling in excess of $100 million does not include proposed funding for the costs of contract cancellation up to the cancellation ceiling established in the contract—</P> <P>(i) The notification required by paragraph (a)(4) of this section shall include—</P> <P>(A) The cancellation ceiling amounts planned for each program year in the proposed multiyear contract, together with the reasons for the amounts planned;</P> <P>(B) The extent to which costs of contract cancellation are not included in the budget for the contract; and</P> <P>(C) A financial risk assessment of not including budgeting for costs of contract cancellation (10 U.S.C. 2306c(d)); and</P> <P>(ii) The head of the agency shall provide copies of the notification to the Office of Management and Budget at least 14 days before contract award in accordance with the procedures at PGI 217.1.</P> <P>(6) The head of the agency must not initiate a multiyear contract for services exceeding $572.5 million unless a law specifically provides authority for the contract.<PRTPAGE P="95"/> </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, as amended at 68 FR 43333, July 22, 2003; 70 FR 24324, May 9, 2005; 71 FR 75892, Dec. 19, 2006]</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 and other multiyear acquisitions specifically authorized by law. For additional policies that apply only to multiyear contracts for weapon systems, see 217.173.</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 (10 U.S.C. 2306b(a)(6)).</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)(B)(i)(II); 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 head of the agency shall ensure that the following conditions are satisfied before awarding a multiyear contract under the authority described in paragraph (b) 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)).</P> <P>(i) The head of the agency shall submit information supporting this certification to USD(C)(P/B) for transmission to Congress through the Secretary of Defense.</P> <P>(ii) In the case of a contract with a cancellation ceiling in excess of $100 million, if the budget for the contract does not include proposed funding for the costs of contract cancellation up to the cancellation ceiling established in the contract—</P> <P>(A) The head of the agency shall, as part of this certification, give written notification to the congressional defense committees of—</P> <P>(<E T="03">1</E>) The cancellation ceiling amounts planned for each program year in the proposed multiyear contract, together with the reasons for the amounts planned;</P> <P>(<E T="03">2</E>) The extent to which costs of contract cancellation are not included in the budget for the contract; and</P> <P>(<E T="03">3</E>) A financial risk assessment of not including the budgeting for costs of contract cancellation (10 U.S.C. 2306b(g)); and</P> <P>(B) The head of the agency shall provide copies of the notification to the Office of Management and Budget at least 14 days before contract award in accordance with the procedures at PGI 217.1.</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 shall 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<PRTPAGE P="96"/> </P> <P>(ii) A law other than an appropriations act (10 U.S.C. 2306b(i)(3)).</P> <P>(5) The contract is for the procurement of a complete and usable end item (10 U.S.C. 2306b(i)(4)(A)).</P> <P>(6) Funds appropriated for any fiscal year for advance procurement are obligated only for the procurement of those long-lead items that are necessary in order to meet a planned delivery schedule for complete major end items that are programmed under the contract to be acquired with funds appropriated for a subsequent fiscal year (including an economic order quantity of such long-lead items when authorized by law (10 U.S.C. 2306b(i)(4)(b)).</P> <P>(7) 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 shall 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 shall—</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</P> <P>(iv) Be submitted to OUSD (AT&L) DPAP for transmission to Congress via the Secretary of Defense and the President.</P> <P>(f) 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> <P>(g) The head of an agency shall not award a multiyear contract using fiscal year 2005 appropriated funds unless—</P> <P>(1) The Secretary of Defense has submitted to Congress a budget request for full funding of units to be procured through the contract;</P> <P>(2) Cancellation provisions in the contract do not include consideration of recurring manufacturing costs of the contractor associated with the production of unfunded units to be delivered under the contract; and</P> <P>(3) The contract provides that payments to the contractor under the contract shall not be made in advance of incurred costs on funded units (Section 8008 of Pub. L. 108-287).</P> <P>(h) Do not award a multiyear contract using fiscal year 2005 appropriated funds that provides for a price adjustment based on a failure to award a follow-on contract (Section 8008 of Public Law 108-287).</P> <CITA>[66 FR 63338, Dec. 6, 2001, as amended at 68 FR 50475, Aug. 21, 2003; 70 FR 24324, May 9, 2005]</CITA> </SECTION> <SECTION> <SECTNO>217.173</SECTNO> <SUBJECT>Multiyear contracts for weapon systems.</SUBJECT> <P>As authorized by 10 U.S.C. 2306b(h) and subject to the conditions in 217.172(e), the head of the agency may enter into a multiyear contract for—</P> <P>(a) A weapon system and associated items, services, and logistics support for a weapon system; and</P> <P>(b) 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> <CITA>[70 FR 24325, May 9, 2005]</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 (10 U.S.C. 2306b(l)(1)(B)(i)(I)); 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. <PRTPAGE P="97"/>2306b(l)(1)(B)(ii); 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> <P>(c) See 217.172(e)(6) for additional provisions regarding procurement of economic order quantities of long-lead items.</P> <CITA>[66 FR 63338, Dec. 6, 2001, as amended at 68 FR 50475, Aug. 21, 2003; 70 FR 24325, May 9, 2005]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 217.2—Options</HD> <SECTION> <SECTNO>217.202</SECTNO> <SUBJECT>Use of options.</SUBJECT> <P>See PGI 217.202 for guidance on the use of options.</P> <CITA>[71 FR 27642, May 12, 2006]</CITA> </SECTION> <SECTION> <SECTNO>217.204</SECTNO> <SUBJECT>Contracts.</SUBJECT> <P>(e)(i) Notwithstanding FAR 17.204(e), the ordering period of a task order or delivery order contract (including a contract for information technology) awarded by DoD pursuant to 10 U.S.C. 2304a—</P> <P>(A) May be for any period up to 5 years;</P> <P>(B) May be subsequently extended for one or more successive periods in accordance with an option provided in the contract or a modification of the contract; and</P> <P>(C) Shall not exceed 10 years unless the head of the agency determines in writing that exceptional circumstances require a longer ordering period.</P> <P>(ii) DoD must submit a report to Congress, annually through fiscal year 2009, when an ordering period is extended beyond 10 years in accordance with paragraph (e)(i)(C) of this section. Follow the procedures at PGI 217.204(e) for reporting requirements.</P> <P>(iii) Paragraph (e)(i) of this section does not apply to the following:</P> <P>(A) Contracts, including task or delivery order contracts, awarded under other statutory authority.</P> <P>(B) Advisory and assistance service task order contracts (authorized by 10 U.S.C. 2304b that are limited by statute to 5 years, with the authority to extend an additional 6 months (see FAR 16.505(c)).</P> <P>(C) Definite-quantity contracts.</P> <P>(D) GSA schedule contracts.</P> <P>(E) Multi-agency contracts awarded by agencies other than NASA, DoD, or the Coast Guard.</P> <P>(iv) Obtain approval from the senior procurement executive before issuing an order against a task or delivery order contract subject to paragraph (e)(i) of this section, if performance under the order is expected to extend more than 1 year beyond the 10-year limit or extended limit described in paragraph (e)(i)(C) of this section (see FAR 37.106 for funding and term of service contracts).</P> <CITA>[70 FR 73152, Dec. 9, 2005]</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. 2305(a)(5)). This limitation also applies to sealed bid solicitations for the contracts excluded by FAR 17.200.</P> <CITA>[63 FR 11529, Mar. 9, 1998, as amended at 71 FR 27642, May 12, 2006]</CITA> </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 capability production planning, use the clause at 252.217-<PRTPAGE P="98"/>7001, Surge Option, in solicitations and contracts.</P> <P>(1) Insert the percentage of increase the option represents in paragraph (a) of the clause to ensure adequate quantities are available to meet item requirements.</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> <CITA>[63 FR 11529, Mar. 9, 1998, as amended at 71 FR 27642, May 12, 2006]</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>217.504</SECTNO> <SUBJECT>Ordering procedures.</SUBJECT> <P>(a) When the requesting agency is within DoD, a copy of the executed D&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&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—</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 <PRTPAGE P="99"/>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 contiguous United States. Allow at least 21 calendar days outside the contiguous United States.</P> <CITA>[70 FR 35544, June 21, 2005]</CITA> </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> <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 or its outlying areas, which—</P> <P>(1) Request ship repair work; and</P> <P>(2) Possess the organization and facilities to perform the work satisfactorily. (Issuance of a master agreement <PRTPAGE P="100"/>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 and its outlying areas.</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> <CITA>[56 FR 36345, July 31, 1991, as amended at 70 FR 35544, June 21, 2005]</CITA> </SECTION> <SECTION> <SECTNO>217.7103</SECTNO> <SUBJECT>Master agreements and job orders.</SUBJECT> </SECTION> <SECTION> <SECTNO>217.7103-1</SECTNO> <SUBJECT>Content and format of master agreements.</SUBJECT> <P>Follow the procedures at PGI 217.7103-1 for preparation of master agreements.</P> <CITA>[71 FR 27642, May 12, 2006]</CITA> </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 or its outlying areas 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.</P> <P>(b) Follow the procedures at PGI 217.7103-3 when preparing solicitations for job orders.</P> <CITA>[56 FR 36345, July 31, 1991, as amended at 63 FR 55052, Oct. 14, 1998; 63 FR 56290, Oct. 21, 1998; 70 FR 35545, June 21, 2005; 71 FR 27642, May 12, 2006]</CITA> </SECTION> <SECTION> <SECTNO>217.7103-4</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) Follow the procedures at PGI 217.7103-4 when processing this type of undefinitized contract action.</P> <CITA>[56 FR 36345, July 31, 1991. Redesignated and amended at 71 FR 27643, May 12, 2006]</CITA> </SECTION> <SECTION> <SECTNO>217.7103-5</SECTNO> <SUBJECT>Repair costs not readily ascertainable.</SUBJECT> <P>Follow the procedures at PGI 217.7103-5 if the nature of any repairs is such that their extent and probable cost cannot be ascertained readily.</P> <CITA>[71 FR 27643, May 12, 2006]</CITA> </SECTION> <SECTION> <SECTNO>217.7103-6</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 <PRTPAGE P="101"/>before the effective date of the modification.</P> <CITA>[63 FR 11529, Mar. 9, 1998. Redesignated at 71 FR 27643, May 12, 2006]</CITA> </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 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> <RESERVED>Subpart 217.72 [Reserved]</RESERVED> </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 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.<PRTPAGE P="102"/> </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 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> <PRTPAGE P="103"/> <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.</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; or</P> <P>(2) A humanitarian or peacekeeping operation.</P> <CITA>[60 FR 29498, June 5, 1995, as amended at 63 FR 67804, Dec. 9, 1998; 71 FR 27643, May 12, 2006]</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 contracting activity 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> <CITA>[56 FR 36345, July 31, 1991, as amended at 71 FR 27643, May 12, 2006]</CITA> </SECTION> <SECTION> <SECTNO>217.7405</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. Redesignated at 71 FR 27643, May 12, 2006]</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.</P> <CITA>[56 FR 36345, July 31, 1991, as amended at 71 FR 27643, May 12, 2006]</CITA> </SECTION> <SECTION> <PRTPAGE P="104"/> <SECTNO>217.7501</SECTNO> <SUBJECT>Definition.</SUBJECT> <P> <E T="03">Replenishment parts,</E> as used in this subpart, means repairable or consumable parts acquired after the initial provisioning process.</P> <CITA>[71 FR 27643, May 12, 2006]</CITA> </SECTION> <SECTION> <SECTNO>217.7502</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 PGI 217.7504.</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. See 209.270 for requirements applicable to replenishment parts for aviation or ship critical safety items.</P> <P>(c) Shall follow the limitations on price increases in 217.7505.</P> <CITA>[56 FR 36345, July 31, 1991, as amended at 69 FR 55989, Sept. 17, 2004. Redesignated and amended at 71 FR 27643, May 12, 2006; 73 FR 1827, Jan. 10, 2008]</CITA> </SECTION> <SECTION> <SECTNO>217.7503</SECTNO> <SUBJECT>Spares acquisition integrated with production.</SUBJECT> <P>Follow the procedures at PGI 217.7503 for acquiring spare parts concurrently with the end item.</P> <CITA>[71 FR 27643, May 12, 2006]</CITA> </SECTION> <SECTION> <SECTNO>217.7504</SECTNO> <SUBJECT>Acquisition of parts when data is not available.</SUBJECT> <P>Follow the procedures at PGI 217.7504 when acquiring parts for which the Government does not have the necessary data.</P> <CITA>[71 FR 27643, May 12, 2006]</CITA> </SECTION> <SECTION> <SECTNO>217.7505</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. Redesignated at 71 FR 27643, May 12, 2006]</CITA> </SECTION> <SECTION> <SECTNO>217.7506</SECTNO> <SUBJECT>Spare parts breakout program.</SUBJECT> <P>See PGI 217.7506 and DoD 4140.1-R, DoD Supply Chain Materiel Management Regulation, Chapter 8, Section <PRTPAGE P="105"/>C8.3, for spare parts breakout requirements.</P> <CITA>[71 FR 27643, May 12, 2006]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 217.76—Contracts with Provisioning Requirements</HD> <SECTION> <SECTNO>217.7601</SECTNO> <SUBJECT>Provisioning.</SUBJECT> <P>(a) Follow the procedures at PGI 217.7601 for contracts with provisioning requirements.</P> <P>(b) For technical requirements of provisioning, see DoD 4140.1-R, DoD Supply Chain Materiel Management Regulation, Chapter 2, Section C2.2.</P> <CITA>[71 FR 27643, May 12, 2006]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 217.77—Over and Above Work</HD> <SECTION> <SECTNO>217.7701</SECTNO> <SUBJECT>Procedures.</SUBJECT> <P>Follow the procedures at PGI 217.7701 when acquiring over and above work.</P> <CITA>[71 FR 27643, May 12, 2006]</CITA> </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> <SUBPART> <HD SOURCE="HED">Subpart 217.78—Contracts or Delivery Orders Issued by a Non-DoD Agency</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>70 FR 29642, May 24, 2005, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>217.7800</SECTNO> <SUBJECT>Scope of subpart.</SUBJECT> <P>This subpart—</P> <P>(a) Implements Section 854 of the National Defense Authorization Act for Fiscal Year 2005 (Public Law 108-375); and</P> <P>(b) Prescribes policy for the acquisition of supplies and services through the use of contracts or orders issued by non-DoD agencies.</P> </SECTION> <SECTION> <SECTNO>217.7801</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this subpart—</P> <P> <E T="03">Assisted acquisition</E> means a contract awarded or a task or delivery order placed on behalf of DoD by a non-DoD agency.</P> <P> <E T="03">Direct acquisition</E> means a task or delivery order placed by a DoD official under a contract awarded by a non-DoD agency.</P> </SECTION> <SECTION> <SECTNO>217.7802</SECTNO> <SUBJECT>Policy.</SUBJECT> <P>Departments and agencies shall establish and maintain procedures for reviewing and approving orders placed for supplies and services under non-DoD contracts, whether through direct acquisition or assisted acquisition, when the amount of the order exceeds the simplified acquisition threshold. These procedures shall include—</P> <P>(a) Evaluating whether using a non-DoD contract for the acquisition is in the best interest of DoD. Factors to be considered include—</P> <P>(1) Satisfying customer requirements;</P> <P>(2) Schedule;</P> <P>(3) Cost effectiveness (taking into account discounts and fees); and</P> <P>(4) Contract administration (including oversight);</P> <P>(b) Determining that the tasks to be accomplished or supplies to be provided are within the scope of the contract to be used;</P> <P>(c) Reviewing funding to ensure that it is used in accordance with appropriation limitations;</P> <P>(d) Providing unique terms, conditions, and requirements to the assisting agency for incorporation into the order or contract as appropriate to comply with all applicable DoD-unique statutes, regulations, directives, and other requirements; and</P> <P>(e) Collecting and reporting data on the use of assisted acquisition for analysis. Follow the reporting requirements at PGI 217.7802.</P> <CITA>[70 FR 29642, May 24, 2005, as amended at 71 FR 14104, Mar. 21, 2006]</CITA> </SECTION> </SUBPART> </PART> <PART> <EAR>Pt. 218</EAR> <HD SOURCE="HED">PART 218—EMERGENCY ACQUISITIONS</HD> <CONTENTS> <SUBPART> <HD SOURCE="HED">Subpart 218.1—Available Acquisition Flexibilities</HD> <SECHD>Sec.</SECHD> <SECTNO>218.170</SECTNO> <SUBJECT>Additional acquisition flexibilities.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 218.2—Emergency Acquisition Flexibilities</HD> <SECTNO>218.201</SECTNO> <SUBJECT>Contingency operation.<PRTPAGE P="106"/> </SUBJECT> <SECTNO>218.202</SECTNO> <SUBJECT>Defense or recovery from certain attacks.</SUBJECT> <SECTNO>218.203</SECTNO> <SUBJECT>Incidents of national significance, emergency declaration, or major disaster declaration.</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>72 FR 2632, Jan. 22, 2007, unless otherwise noted.</P> </SOURCE> <SUBPART> <HD SOURCE="HED">Subpart 218.1—Available Acquisition Flexibilities</HD> <SECTION> <SECTNO>218.170</SECTNO> <SUBJECT>Additional acquisition flexibilities.</SUBJECT> <P>Additional acquisition flexibilities available to DoD are as follows:</P> <P>(a) <E T="03">Circumstances permitting other than full and open competition.</E> Use of the authority at FAR 6.302-2, Unusual and compelling urgency, may be appropriate under certain circumstances. See PGI 206.302-2.</P> <P>(b) <E T="03">Use of advance Military Interdepartmental Purchase Request (MIPR).</E> For urgent requirements, the advance MIPR may be transmitted electronically. See PGI 208.7004-3.</P> <P>(c) <E T="03">Use of the Governmentwide commercial purchase card.</E> Governmentwide commercial purchase cards do not have to be used for purchases valued at or below the micro-purchase threshold if the place of performance is entirely outside the United States. See 213.270(c)(1).</P> <P>(d) <E T="03">Master agreement for repair and alteration of vessels.</E> The contracting officer, without soliciting offers, may issue a written job order for emergency work to a contractor that has previously executed a master agreement, when delay would endanger a vessel, its cargo or stores, or when military necessity requires immediate work on a vessel. See 217.7103-4, 252.217-7010, and PGI 217.7103-4.</P> <P>(e) <E T="03">Spare parts breakout program.</E> An urgent immediate buy need not be delayed if an evaluation of the additional information cannot be completed in time to meet the required delivery date. See PGI 217.7506, paragraph 1-105(e).</P> <P>(f) <E T="03">Storage and disposal of toxic and hazardous materials.</E> Under certain emergency situations, exceptions apply with regard to the prohibition on storage or disposal of non-DoD-owned toxic or hazardous materials on DoD installations. See 223.7102(a)(3) and (7).</P> <P>(g) <E T="03">Authorization Acts, Appropriations Acts, and other statutory restrictions on foreign acquisition.</E> Acquisitions in the following categories are not subject to the restrictions of 225.7002, Restrictions on food, clothing, fabrics, specialty metals, and hand or measuring tools: (1) Acquisitions at or below the simplified acquisition threshold; (2) Acquisitions outside the United States in support of combat operations; (3) Acquisitions of perishable foods by or for activities located outside the United States for personnel of those activities; (4) Acquisitions of food, specialty metals, or hand or measuring tools in support of contingency operations, or for which the use of other than competitive procedures has been approved on the basis of unusual and compelling urgency in accordance with FAR 6.302-2; (5) Emergency acquisitions by activities located outside the United States for personnel of those activities; and (6) Acquisitions by vessels in foreign waters. See 225.7002-2.</P> <P>(h) <E T="03">Rights in technical data.</E> The agency head may notify a person asserting a restriction that urgent or compelling circumstances (e.g., emergency repair or overhaul) do not permit the Government to continue to respect the asserted restriction. See 227.7102-2; 227.7103-5; 227.7103-13; 227.7104; 227.7203-13; 252.227-7013; 252.227-7014; 252.227-7015; 252.227-7018; and 252.227-7037.</P> <P>(i) <E T="03">Tax exemption in Spain.</E> If copies of a contract are not available and duty-free import of equipment or materials is urgent, the contracting officer may send the Joint United States Military Group copies of the Letter of Intent or a similar document indicating the pending award. See PGI 229.7001.</P> <P>(j) <E T="03">Electronic submission and processing of payment requests.</E> Contractors do not have to submit payment requests in electronic form for awards made to foreign vendors for work performed outside the United States or for purchases to support unusual or compelling needs of the type described in FAR 6.302-2. See 232.7002(a)(2) and (5).</P> <P>(k) <E T="03">Mortuary services.</E> In an epidemic or other emergency, the contracting activity may obtain services beyond <PRTPAGE P="107"/>the capacity of the contractor's facilities from other sources. See 237.7003(b) and 252.237-7003.</P> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 218.2—Emergency Acquisition Flexibilities</HD> <SECTION> <SECTNO>218.201</SECTNO> <SUBJECT>Contingency operation.</SUBJECT> <P>(1) <E T="03">Selection, appointment, and termination of appointment.</E> Contracting officer qualification requirements pertaining to a baccalaureate degree and 24 semester credit hours of business related courses do not apply to DoD employees or members of the armed forces who are in a contingency contracting force. See 201.603-2(2).</P> <P>(2) <E T="03">Policy for unique item identification.</E> Contractors will not be required to provide DoD unique item identification if the items, as determined by the head of the agency, are to be used to support a contingency operation. See 211.274-2(b).</P> <P>(3) <E T="03">Use of the Governmentwide commercial purchase card.</E> Governmentwide commercial purchase cards do not have to be used for purchases valued at or below the micro-purchase threshold if the purchase or payment is for an overseas transaction by a contracting officer in support of a contingency operation, or for training exercises in preparation for overseas contingency, humanitarian, or peacekeeping operations. See 213.270(c)(3) and (5).</P> <P>(4) <E T="03">Governmentwide commercial purchase card.</E> A contracting office supporting a contingency operation or a humanitarian or peacekeeping operation 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 certain conditions are met. See 213.301(3).</P> <P>(5) <E T="03">Imprest funds and third party drafts.</E> Imprest funds are authorized for use without further approval for overseas transactions at or below the micro-purchase threshold in support of a contingency operation or a humanitarian or peacekeeping operation. See 213.305-3(d)(iii)(A).</P> <P>(6) <E T="03">Standard Form (SF) 44, Purchase Order-Invoice-Voucher.</E> SF 44s may be used for purchases not exceeding the simplified acquisition threshold for overseas transactions by contracting officers in support of a contingency operation or a humanitarian or peacekeeping operation. See 213.306(a)(1)(B).</P> <P>(7) <E T="03">Undefinitized contract actions.</E> The head of the agency may waive certain limitations for undefinitized contract actions if the head of the agency determines that the waiver is necessary to support a contingency operation or a humanitarian or peacekeeping operation. See 217.7404-5(b).</P> <P>(8) <E T="03">Prohibited sources.</E> DoD personnel are authorized to make emergency acquisitions in direct support of U.S. or allied forces deployed in military contingency, humanitarian, or peacekeeping operations in a country or region subject to economic sanctions administered by the Department of the Treasury, Office of Foreign Assets Control. See 225.701-70.</P> <P>(9) <E T="03">Authorization Acts, Appropriations Acts, and other statutory restrictions on foreign acquisition.</E> Acquisitions in the following categories are not subject to the restrictions of 225.7002, Restrictions on food, clothing, fabrics, specialty metals, and hand or measuring tools: (1) Acquisitions at or below the simplified acquisition threshold; (2) Acquisitions outside the United States in support of combat operations; (3) Acquisitions of perishable foods by or for activities located outside the United States for personnel of those activities; (4) Acquisitions of food, specialty metals, or hand or measuring tools in support of contingency operations, or for which the use of other than competitive procedures has been approved on the basis of unusual and compelling urgency in accordance with FAR 6.302-2; (5) Emergency acquisitions by activities located outside the United States for personnel of those activities; and (6) Acquisitions by vessels in foreign waters. See 225.7002-2.</P> <P>(10) <E T="03">Electronic submission and processing of payment requests.</E> Contractors do not have to submit payment requests in electronic form for contracts awarded by deployed contracting officers in the course of military operations, including contingency operations or humanitarian or peacekeeping operations. See 232.7002(a)(4).</P> </SECTION> <SECTION> <PRTPAGE P="108"/> <SECTNO>218.202</SECTNO> <SUBJECT>Defense or recovery from certain attacks.</SUBJECT> <P> <E T="03">Policy for unique item identification.</E> Contractors will not be required to provide DoD unique item identification if the items, as determined by the head of the agency, are to be used to facilitate defense against or recovery from nuclear, biological, chemical, or radiological attack. See 211.274-2(b).</P> </SECTION> <SECTION> <SECTNO>218.203</SECTNO> <SUBJECT>Incidents of national significance, emergency declaration, or major disaster declaration.</SUBJECT> <P>(1) <E T="03">Establishing or maintaining alternative sources.</E> PGI contains a sample format for Determination and Findings citing the authority of FAR 6.202(a), regarding exclusion of a particular source in order to establish or maintain an alternative source or sources. Alternate 2 of the sample format addresses having a supplier available for furnishing supplies or services in case of a national emergency. See PGI 206.202.</P> <P>(2) <E T="03">Electronic submission and processing of payment requests.</E> Contractors do not have to submit payment requests in electronic form for contracts awarded by contracting officers in the conduct of emergency operations, such as responses to natural disasters or national or civil emergencies. See 232.7002(a)(4).</P> </SECTION> </SUBPART> </PART> </SUBCHAP> <SUBCHAP TYPE="P"> <PRTPAGE P="109"/> <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>219.202-5</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 and Determinations of Responsibility</HD> <SECTNO>219.602</SECTNO> <SUBJECT>Procedures.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 219.7—The Small Business Subcontracting Program</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>219.705-4</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>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>219.805</SECTNO> <SUBJECT>Competitive 8(a).</SUBJECT> <SECTNO>219.805-1</SECTNO> <SUBJECT>General.</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>219.811-3</SECTNO> <SUBJECT>Contract clauses.</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>219.1101</SECTNO> <SUBJECT>General.</SUBJECT> <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> <HD SOURCE="HED">Subpart 219.13—Historically Underutilized Business Zone (HUBZone) Program</HD> <SECTNO>219.1307</SECTNO> <SUBJECT>Price evaluation preference for HUBZone small business concerns.</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> <SECTNO>219.000</SECTNO> <SUBJECT>Scope of part.</SUBJECT> <P>This part also implements 10 U.S.C. 2323, which—</P> <P>(1) Is applicable to DoD through fiscal year 2009; and<PRTPAGE P="110"/> </P> <P>(2) Establishes goals for awards to small disadvantaged business (SDB) concerns, historically black colleges and universities (HBCUs), and minority institutions (MIs). See 226.370 for policy on contracting with HBCU/MIs.</P> <CITA>[72 FR 20762, Apr. 26, 2007]</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>(d) For the defense agencies, the director of the Office of Small Business Programs 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 (including orders placed against Federal Supply Schedule contracts) over $10,000, except those under $100,000 that are totally set aside for small business concerns in accordance with FAR 19.502-2. Follow the procedures at PGI 219.201(d)(10) regarding such reviews;</P> <P>(B) Making the review before issuance 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. If an SBA procurement center representative is not assigned, see FAR 19.402(a).</P> <P>(11) Also conduct annual reviews to assess—</P> <P>(A) The extent of consolidation of contract requirements that has occurred (see 207.170); and</P> <P>(B) The impact of those consolidations on the availability of small business concerns to participate in procurements as both contractors and subcontractors.</P> <P>(e) For information on the appointment and functions of small business specialists, see PGI 219.201(e).</P> <P>(f) The Directors, Office of Small Business Programs, 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 Business Programs, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics), simultaneously with submittal to <PRTPAGE P="111"/>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; 69 FR 55987, Sept. 17, 2004; 71 FR 44927, Aug. 8, 2006; 73 FR 46813, Aug. 12, 2008]</CITA> </SECTION> <SECTION> <SECTNO>219.202</SECTNO> <SUBJECT>Specific policies.</SUBJECT> </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</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 $300,000 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 $300,000 or more.</P> <CITA>[58 FR 28465, May 13, 1993, as amended at 69 FR 31909, June 8, 2004]</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 $2.5 million;</P> <P>(ii) Dredging under $1 million; and</P> <P>(iii) Architect-engineer services for military construction or family housing projects of under $300,000.</P> <CITA>[58 FR 28465, May 13, 1993, as amended at 69 FR 31909, June 8, 2004; 71 FR 75892, Dec. 19, 2006]</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> <PRTPAGE P="112"/> <HD SOURCE="HED">Subpart 219.6—Certificates of Competency and Determinations of Responsibility</HD> <SECTION> <SECTNO>219.602</SECTNO> <SUBJECT>Procedures.</SUBJECT> <P>When making a nonresponsibility determination for a small business concern, follow the procedures at PGI 219.602.</P> <CITA>[72 FR 20762, Apr. 26, 2007]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 219.7—The Small Business Subcontracting Program</HD> <SECTION> <SECTNO>219.702</SECTNO> <SUBJECT>Statutory requirements.</SUBJECT> <P>(1) Section 834 of Public Law 101-189, as amended (15 U.S.C. 637 note), 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. See PGI 219.702 for the requirements of the test program.</P> <P>(2) Comprehensive subcontracting plans shall not be subject to application of liquidated damages during the period of the test program (Section 402, Pub. L. 101-574).</P> <CITA>[72 FR 20762, Apr. 26, 2007]</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 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; 72 FR 20762, Apr. 26, 2007]</CITA> </SECTION> <SECTION> <SECTNO>219.704</SECTNO> <SUBJECT>Subcontracting plan requirements.</SUBJECT> <P>(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), 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>(2) In those subcontracting plans which specifically identify small businesses, prime contractors shall notify the administrative contracting officer of any substitutions of firms that are not small business firms, for the small business firms specifically identified 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> <P>(3) See 215.304 for evaluation of offers in acquisitions that require a subcontracting plan.</P> <CITA>[72 FR 20762, Apr. 26, 2007]</CITA> </SECTION> <SECTION> <PRTPAGE P="113"/> <SECTNO>219.705</SECTNO> <SUBJECT>Responsibilities of the contracting officer under the subcontracting assistance program.</SUBJECT> </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 one level above the contracting officer.</P> <CITA>[56 FR 36353, July 31, 1991, as amended at 63 FR 41974, Aug. 6, 1998; 69 FR 67855, Nov. 22, 2004]</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>Contract clauses.</SUBJECT> <P>(b)(1)(A) Use the clause at 252.219-7003, 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 that have comprehensive subcontracting plans approved under the test program described in 219.702, use the clause at 252.219-7004, Small Business Subcontracting Plan (Test Program), instead of the clauses at 252.219-7003, 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; 72 FR 20762, Apr. 26, 2007]</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) between the Small Business Administration (SBA) and the Department of Defense (DoD), the SBA has 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 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 the PA, this authority is hereby redelegated to DoD contracting officers. A copy of the PA, which includes the PA's expiration date, is available at PGI 219.800.</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, as amended at 72 FR 20762, Apr. 26, 2007]</CITA> </SECTION> <SECTION> <SECTNO>219.803</SECTNO> <SUBJECT>Selecting acquisitions for the 8(a) Program.</SUBJECT> <P>When selecting acquisitions for the 8(a) Program, follow the procedures at PGI 219.803.</P> <CITA>[72 FR 20762, Apr. 26, 2007]</CITA> </SECTION> <SECTION> <PRTPAGE P="114"/> <SECTNO>219.804</SECTNO> <SUBJECT>Evaluation, offering, and acceptance.</SUBJECT> <P>When processing requirements under the PA, follow the procedures at PGI 219.804.</P> <CITA>[72 FR 20762, Apr. 26, 2007]</CITA> </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>219.805</SECTNO> <SUBJECT>Competitive 8(a).</SUBJECT> </SECTION> <SECTION> <SECTNO>219.805-1</SECTNO> <SUBJECT>General.</SUBJECT> <P>(b)(2)(A) For acquisitions that exceed the competitive threshold, the SBA also may accept the requirement for a sole source 8(a) award on behalf of a small business concern owned by a Native Hawaiian Organization (Section 8020 of Pub. L. 109-148).</P> <P>(B) <E T="03">Native Hawaiian Organization</E>, as used in this subsection and as defined by 15 U.S.C. 637(a)(15) and 13 CFR 124.3, means any community service organization serving Native Hawaiians in the State of Hawaii—</P> <P>(<E T="03">1</E>) That is a not-for-profit organization chartered by the State of Hawaii;</P> <P>(<E T="03">2</E>) That is controlled by Native Hawaiians; and</P> <P>(<E T="03">3</E>) Whose business activities will principally benefit such Native Hawaiians.</P> <CITA>[70 FR 43073, July 26, 2005, as amended at 71 FR 34832, June 16, 2006]</CITA> </SECTION> <SECTION> <SECTNO>219.805-2</SECTNO> <SUBJECT>Procedures.</SUBJECT> <P>When processing requirements under the PA, follow the procedures at PGI 219.805-2 for requesting eligibility determinations.</P> <CITA>[72 FR 20762, Apr. 26, 2007]</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 sole source requirements processed under the PA, follow the procedures at PGI 219.808-1.</P> <CITA>[72 FR 20762, Apr. 26, 2007]</CITA> </SECTION> <SECTION> <SECTNO>219.811</SECTNO> <SUBJECT>Preparing the contracts.</SUBJECT> <P>When preparing awards under the PA, follow the procedures at PGI 219.811.</P> <CITA>[72 FR 20762, Apr. 26, 2007]</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 under the PA cited in 219.800.</P> <CITA>[63 FR 33588, June 19, 1998, as amended at 67 FR 11437, Mar. 14, 2002; 72 FR 20762, Apr. 26, 2007]</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 <PRTPAGE P="115"/>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 $300,000 or more (including indefinite delivery-indefinite quantity contracts if the value of all anticipated orders exceeds $300,000).</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 $300,000.</P> <P>(D) Be considered for small business set-aside if the estimated value is less than $300,000, 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"> <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) Aircraft Engine and Engine Parts Manufacturing (including Research and Development)</ENT> <ENT>336412</ENT> </ROW> <ROW> <ENT I="01">(6) Guided Missile and Space Vehicle Manufacturing (including Research and Development)</ENT> <ENT>336414</ENT> </ROW> <ROW> <ENT I="01">(7) Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing (including Research and Development)</ENT> <ENT>336419</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>517212</ENT> </ROW> <ROW> <ENT I="03">(ii) Satellite Telecommunications</ENT> <ENT>517410</ENT> </ROW> <ROW> <ENT I="03">(iii) Other Telecommunications</ENT> <ENT>517910</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; 68 FR 50476, Aug. 21, 2003; 69 FR 31909, June 8, 2004]</CITA> </SECTION> <SECTION> <SECTNO>219.1007</SECTNO> <SUBJECT>Procedures.</SUBJECT> <P>(a)(2) When it is not practical to mark the face page of an award document, alternative means may be used to identify the contract as an award under the Small Business Competitiveness Demonstration Program.</P> <P>(b)(1) The Director, Small Business Programs, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics) (OUSD(AT&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 and Acquisition Policy (OUSD(AT&L)). Military departments and defense agencies shall not reinstate small business set-asides unless directed by the Director of Defense Procurement and Acquisition Policy.</P> <P>(d) Reporting requirements are at 204.670-2.</P> <CITA>[65 FR 39705, June 27, 2000, as amended at 68 FR 7439, Feb. 14, 2003; 70 FR 6374, Feb. 7, 2005; 73 FR 46813, Aug. 12, 2008]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 219.11—Price Evaluation Adjustment for Small Disadvantaged Business Concerns</HD> <SECTION> <SECTNO>219.1101</SECTNO> <SUBJECT>General.</SUBJECT> <P>The determination to use or suspend the price evaluation adjustment for DoD acquisitions can be found at <E T="03">http://www.acq.osd.mil/dpap/dars/classdev/index.htm</E>.</P> <CITA>[72 FR 20763, Apr. 26, 2007]</CITA> </SECTION> <SECTION> <PRTPAGE P="116"/> <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> <P>(c) Also, do not use the price evaluation adjustment in acquisitions that use tiered evaluation of offers, until a tier is reached that considers offers from other than small business concerns.</P> <CITA>[63 FR 41974, Aug. 6, 1998, as amended at 71 FR 53043, Sept. 8, 2006]</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-Protégé 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 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> <HD SOURCE="HED">Subpart 219.13—Historically Underutilized Business Zone (HUBZone) Program</HD> <SECTION> <SECTNO>219.1307</SECTNO> <SUBJECT>Price evaluation preference for HUBZone small business concerns.</SUBJECT> <P>(a) Also, do not use the price evaluation preference in acquisitions that use tiered evaluation of offers, until a tier is reached that considers offers from other than small business concerns.</P> <CITA>[71 FR 53043, Sept. 8, 2006]</CITA> </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-Protégé Program (hereafter referred to as the “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, as amended at 69 FR 74995, Dec. 15, 2004]</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> <PRTPAGE P="117"/> <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 or under the DoD Comprehensive Subcontracting Test Program.</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;</P> <P>(v) Women-owned small business concerns;</P> <P>(vi) Service-disabled veteran-owned small business concerns; or</P> <P>(vii) HUBZone 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 cognizant Component Director, Small Business Programs (SBP), 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 or under the DoD Comprehensive Subcontracting Test Program, 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; 69 FR 74995, Dec. 15, 2004; 70 FR 29645, May 24, 2005; 73 FR 46813, Aug. 12, 2008]</CITA> </SECTION> <SECTION> <SECTNO>219.7103</SECTNO> <SUBJECT>Procedures.</SUBJECT> </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-Protégé Program. The Director, SBP, of each military department or defense agency has the authority to approve contractors as mentor firms, approve mentor-protégé agreements, and forward approved mentor-protégé agreements to the contracting officer when funding is available.</P> <CITA>[69 FR 74995, Dec. 15, 2004, as amended by 73 FR 46813, Aug. 12, 2008]</CITA> </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 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 or the cognizant Component Director, SBP, has made funds available for that purpose; and</P> <P>(2) The contractor has an approved mentor-protégé agreement.</P> <P>(e) Negotiate and award a separate contract for reimbursement of developmental assistance costs only if—</P> <P>(1) Funds are available for that purpose;</P> <P>(2) The contractor has an approved mentor-protégé agreement; and<PRTPAGE P="118"/> </P> <P>(3) The cognizant Component Director, SBP, 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 protégé firm in excess of $1,000,000 in a fiscal year unless a written determination from the cognizant Component Director, SBP, 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-113).</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; 69 FR 74995, Dec. 15, 2004; 73 FR 46814, Aug. 12, 2008]</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, 2013.</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, 2013, 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, as amended at 67 FR 77937, Dec. 20, 2002; 70 FR 29645, May 24, 2005]</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-112.</P> <CITA>[65 FR 6555, Feb. 10, 2000, as amended at 69 FR 74996, Dec. 15, 2004]</CITA> </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-113. 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, as amended at 69 FR 74996, Dec. 15, 2004]</CITA> </SECTION> </SUBPART> </PART> <PART> <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>Definitions.</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> <PRTPAGE P="119"/> <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>222.406</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> </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>222.806</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>222.1008</SECTNO> <SUBJECT>Procedures for obtaining wage determinations. </SUBJECT> <SECTNO>222.1008-1</SECTNO> <SUBJECT>Obtaining wage determinations.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 222.13—Special Disabled Veterans, Veterans of the Vietnam Era, and Other Eligible Veterans</HD> <SECTNO>222.1305</SECTNO> <SUBJECT>Waivers.</SUBJECT> <SECTNO>222.1308</SECTNO> <SUBJECT>Complaint procedures.</SUBJECT> <SECTNO>222.1310</SECTNO> <SUBJECT>Solicitation provision and 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 222.17—Combating Trafficking in Persons</HD> <SECTNO>222.1703</SECTNO> <SUBJECT>Policy.</SUBJECT> <SECTNO>222.1704</SECTNO> <SUBJECT>Violations and remedies.</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>222.7101</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>222.7201</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>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 36358, July 31, 1991, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>222.001</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P> <E T="03">Labor advisor,</E> as used in this part, means the departmental or agency headquarters labor advisor.</P> <CITA>[56 FR 36358, July 31, 1991, as amended at 72 FR 20763, Apr. 26, 2007]</CITA> </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>Follow the procedures at PGI 222.101-1 for referral of labor relations matters to the appropriate authorities.</P> <CITA>[71 FR 18670, Apr. 12, 2006]</CITA> </SECTION> <SECTION> <SECTNO>222.101-3</SECTNO> <SUBJECT>Reporting labor disputes.</SUBJECT> <P>Follow the procedures at PGI 222.101-3 for reporting labor disputes.</P> <CITA>[71 FR 18670, Apr. 12, 2006]</CITA> </SECTION> <SECTION> <PRTPAGE P="120"/> <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. For guidance on determining the degree of impact, see PGI 222.101-3-70(a).</P> <P>(b) Each contracting activity shall obtain and develop data reflecting the impact of a labor dispute on its requirements and programs. Upon determining that the impact of the labor dispute is significant, the head of the contracting activity shall submit a report of findings and recommendations to the labor advisor in accordance with departmental procedures. This reporting requirement is assigned Report Control Symbol DD-AT&L(AR)1153 and must include the information specified at PGI 222.101-3-70(b).</P> <CITA>[71 FR 18670, Apr. 12, 2006]</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 in the request the information specified at PGI 222.101-4(a)(ii).</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 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> <CITA>[56 FR 36358, July 31, 1991, as amended at 71 FR 18670, Apr. 12, 2006]</CITA> </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> <PRTPAGE P="121"/> <SECTNO>222.102</SECTNO> <SUBJECT>Federal and State labor requirements.</SUBJECT> </SECTION> <SECTION> <SECTNO>222.102-1</SECTNO> <SUBJECT>Policy.</SUBJECT> <P>(1) Direct all inquiries from contractors or contractor employees regarding the applicability or interpretation of Occupational Safety and Health Act (OSHA) regulations to the Department of Labor.</P> <P>(2) Upon request, provide the address of the appropriate field office of the Occupational Safety and Health Administration of the Department of Labor.</P> <P>(3) Do not initiate any application for the suspension or relaxation of labor requirements without prior coordination with the labor advisor. Any requests for variances or alternative means of compliance with OSHA requirements must be approved by the Occupational Safety and Health Administration of the Department of Labor.</P> <CITA>[71 FR 18670, Apr. 12, 2006]</CITA> </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.</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> <PRTPAGE P="122"/> <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> <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> <PRTPAGE P="123"/> <SECTNO>222.404-2</SECTNO> <SUBJECT>General requirements.</SUBJECT> <P>(c)(5) Follow the procedures at PGI 222.404-2(c)(5) when seeking clarification of the proper application of construction wage rate schedules.</P> <CITA>[72 FR 20764, Apr. 26, 2007]</CITA> </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</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) Before beginning an investigation, the investigator shall inform the contractor of the general scope of the investigation, and that the investigation will include examining pertinent records and interviewing employees. In conducting the investigation, follow the procedures at PGI 222.406-8(a).</P> <P>(c) <E T="03">Contractor notification.</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 <PRTPAGE P="124"/>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> Forward a detailed enforcement report or summary report to the agency head in accordance with agency procedures. Include in the report, as a minimum, the information specified at PGI 222.406-8(d).</P> <CITA>[56 FR 36358, July 31, 1991, as amended at 71 FR 18670, Apr. 12, 2006]</CITA> </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.</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> (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> </SUBPART> <SUBPART> <PRTPAGE P="125"/> <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> <HD SOURCE="HED">Subpart 222.8—Equal Employment Opportunity</HD> <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) Follow the procedures at PGI 222.807(c) when submitting a request for an exemption.</P> <CITA>[71 FR 18670, Apr. 12, 2006]</CITA> </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>222.1008</SECTNO> <SUBJECT>Procedures for obtaining wage determinations.</SUBJECT> </SECTION> <SECTION> <SECTNO>222.1008-1</SECTNO> <SUBJECT>Obtaining wage determinations.</SUBJECT> <P>Follow the procedures at PGI 222.1008-1 regarding use of the Service Contract Act Directory of Occupations when preparing the e98.</P> <CITA>[72 FR 20764, Apr. 26, 2007]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 222.13—Special Disabled Veterans, Veterans of the Vietnam Era, and Other Eligible Veterans</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>71 FR 18670, Apr. 12, 2006, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>222.1305</SECTNO> <SUBJECT>Waivers.</SUBJECT> <P>(c) Follow the procedures at PGI 222.1305(c) for submission of waiver requests.</P> </SECTION> <SECTION> <SECTNO>222.1308</SECTNO> <SUBJECT>Complaint procedures.</SUBJECT> <P>The contracting officer shall—</P> <P>(1) Forward each complaint received as indicated in FAR 22.1308; 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>222.1310</SECTNO> <SUBJECT>Solicitation provision and contract clauses.</SUBJECT> <P>(a)(1) Use of the clause at FAR 52.222-35, Equal Opportunity for Special Disabled Veterans, Veterans of the Vietnam Era, and Other Eligible Veterans, with its paragraph (c), Listing Openings, also satisfies the requirement of 10 U.S.C. 2410k.</P> </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 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> <CITA>[71 FR 18671, Apr. 12, 2006]</CITA> </SECTION> </SUBPART> <SUBPART> <PRTPAGE P="126"/> <HD SOURCE="HED">Subpart 222.17—Combating Trafficking in Persons</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>71 FR 62563, Oct. 26, 2006, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>222.1703</SECTNO> <SUBJECT>Policy.</SUBJECT> <P>See PGI 222.1703 for additional information regarding DoD policy for combating trafficking in persons outside the United States.</P> <CITA>[73 FR 4115, Jan. 24, 2008]</CITA> </SECTION> <SECTION> <SECTNO>222.1704</SECTNO> <SUBJECT>Violations and remedies.</SUBJECT> <P>Follow the procedures at PGI 222.1704 for notifying the Combatant Commander if a violation occurs.</P> <CITA>[73 FR 4115, Jan. 24, 2008]</CITA> </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-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>222.7101</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> <PRTPAGE P="127"/> <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>222.7201</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 and its outlying areas.</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, as amended at 70 FR 35545, June 21, 2005]</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>This subpart—</P> <P>(a) Implements Section 390 of the National Defense Authorization Act for Fiscal Year 1998 (Pub. L. 105-85); and</P> <P>(b) Applies to contracts for base operations support on Guam that—</P> <P>(1) Are awarded as a result of a competition conducted under OMB Circular A-76; and</P> <P>(2) Are entered into or modified on or after November 18, 1997.</P> <CITA>[72 FR 20764, Apr. 26, 2007]</CITA> </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 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> <CITA>[64 FR 52672, Sept. 30, 1999, as amended at 72 FR 20764, Apr. 26, 2007]</CITA> </SECTION> <SECTION> <SECTNO>222.7302</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.</P> <CITA>[72 FR 20764, Apr. 26, 2007]</CITA> </SECTION> </SUBPART> </PART> <PART> <EAR>Pt. 223</EAR> <HD SOURCE="HED">PART 223—ENVIRONMENT, ENERGY AND WATER EFFICIENCY, RENEWABLE ENERGY TECHNOLOGIES, OCCUPATIONAL SAFETY, AND DRUG-FREE WORKPLACE</HD> <CONTENTS> <SUBPART> <HD SOURCE="HED">Subpart 223.3—Hazardous Material Identification and Material Safety Data</HD> <SECHD>Sec.</SECHD> <SECTNO>223.302</SECTNO> <SUBJECT>Policy.</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>Policy.</SUBJECT> <SECTNO>223.570-2</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> <PRTPAGE P="128"/> <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>223.302</SECTNO> <SUBJECT>Policy.</SUBJECT> <P>(e) The contracting officer shall also provide hazard warning labels, that are received from apparent successful offerors, to the cognizant safety officer.</P> <CITA>[70 FR 73150, Dec. 9, 2005]</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.</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> <CITA>[56 FR 36365, July 31, 1991, as amended at 70 FR 73150, Dec. 9, 2005]</CITA> </SECTION> <SECTION> <PRTPAGE P="129"/> <SECTNO>223.370-4</SECTNO> <SUBJECT>Procedures.</SUBJECT> <P>Follow the procedures at PGI 223.370-4.</P> <CITA>[70 FR 73151, Dec. 9, 2005]</CITA> </SECTION> <SECTION> <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>Follow the procedures at PGI 223.405.</P> <CITA>[70 FR 73151, Dec. 9, 2005]</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>Policy.</SUBJECT> <P>DoD policy is to ensure that its contractors maintain a program for achieving a drug-free work force.</P> <CITA>[57 FR 32737, July 23, 1992. Redesignated at 70 FR 73151, Dec. 9, 2005]</CITA> </SECTION> <SECTION> <SECTNO>223.570-2</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 and its outlying areas, 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; 70 FR 35545, June 21, 2005. Redesignated at 70 FR 73151, Dec. 9, 2005]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 223.8—Ozone-Depleting Substances</HD> <SECTION> <SECTNO>223.803</SECTNO> <SUBJECT>Policy.</SUBJECT> <P>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 a 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). This restriction is in addition to any imposed by the Clean Air Act and applies after June 1, 1993, to all DoD contracts, regardless of place of performance.</P> <CITA>[71 FR 75892, Dec. 19, 2006]</CITA> </SECTION> </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> <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 <PRTPAGE P="130"/>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 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> <PRTPAGE P="131"/> <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&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&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&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&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&E, technical or requirements personnel shall specify in the purchase request—</P> <P>(a) That AA&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>224.103</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>224.103</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>225.001</SECTNO> <SUBJECT>General.</SUBJECT> <SECTNO>225.003</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>225.004</SECTNO> <SUBJECT>Reporting of acquisition of end products manufactured outside the United States.</SUBJECT> <SUBPART> <HD SOURCE="HED">Subpart 225.1—Buy American Act—Supplies</HD> <SECTNO>225.101</SECTNO> <SUBJECT>General.</SUBJECT> <SECTNO>225.103</SECTNO> <SUBJECT>Exceptions.<PRTPAGE P="132"/> </SUBJECT> <SECTNO>225.104</SECTNO> <SUBJECT>Nonavailable articles.</SUBJECT> <SECTNO>225.105</SECTNO> <SUBJECT>Determining reasonableness of cost.</SUBJECT> <SECTNO>225.170</SECTNO> <SUBJECT>Acquisition from or through other Government agencies.</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 225.3—Contracts Performed Outside the United States</HD> <SECTNO>225.301</SECTNO> <SUBJECT>Contractor personnel in a designated operational area or supporting a diplomatic or consular mission outside the United States.</SUBJECT> <SECTNO>225.301-1</SECTNO> <SUBJECT>Scope.</SUBJECT> <SECTNO>225.301-4</SECTNO> <SUBJECT>Contract clause.</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>End products subject to trade agreements.</SUBJECT> <SECTNO>225.401-71</SECTNO> <SUBJECT>Products or services in support of operations in Iraq or Afghanistan.</SUBJECT> <SECTNO>225.402</SECTNO> <SUBJECT>General.</SUBJECT> <SECTNO>225.403</SECTNO> <SUBJECT>World Trade Organization Government Procurement Agreement and Free Trade Agreements.</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>225.503</SECTNO> <SUBJECT>Group offers.</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>225.701-70</SECTNO> <SUBJECT>Exception.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 225.8—Other International Agreements and Coordination</HD> <SECTNO>225.770</SECTNO> <SUBJECT>Prohibition on acquisition of United States Munitions List items from Communist Chinese military companies.</SUBJECT> <SECTNO>225.770-1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>225.770-2</SECTNO> <SUBJECT>Prohibition.</SUBJECT> <SECTNO>225.770-3</SECTNO> <SUBJECT>Exceptions.</SUBJECT> <SECTNO>225.770-4</SECTNO> <SUBJECT>Identifying USML items.</SUBJECT> <SECTNO>225.770-5</SECTNO> <SUBJECT>Waiver of prohibition.</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 use 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>Individual determinations.</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> </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> <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>225.1100</SECTNO> <SUBJECT>Scope of subpart.</SUBJECT> <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>Waiver of restrictions of 10 U.S.C. 2534.</SUBJECT> <SECTNO>225.7004</SECTNO> <SUBJECT>Restriction on acquisition of foreign buses.</SUBJECT> <SECTNO>225.7004-1</SECTNO> <SUBJECT>Restriction.</SUBJECT> <SECTNO>225.7004-2</SECTNO> <SUBJECT>Applicability.</SUBJECT> <SECTNO>225.7004-3</SECTNO> <SUBJECT>Exceptions.</SUBJECT> <SECTNO>225.7004-4</SECTNO> <SUBJECT>Waiver.</SUBJECT> <SECTNO>225.7005</SECTNO> <SUBJECT>Restriction on certain chemical weapons antidote.<PRTPAGE P="133"/> </SUBJECT> <SECTNO>225.7005-1</SECTNO> <SUBJECT>Restriction.</SUBJECT> <SECTNO>225.7005-2</SECTNO> <SUBJECT>Exception.</SUBJECT> <SECTNO>225.7005-3</SECTNO> <SUBJECT>Waiver.</SUBJECT> <SECTNO>225.7006</SECTNO> <SUBJECT>Restrictions on air circuit breakers for naval vessels.</SUBJECT> <SECTNO>225.7006-1</SECTNO> <SUBJECT>Restriction.</SUBJECT> <SECTNO>225.7006-2</SECTNO> <SUBJECT>Exceptions.</SUBJECT> <SECTNO>225.7006-3</SECTNO> <SUBJECT>Waiver.</SUBJECT> <SECTNO>225.7006-4</SECTNO> <SUBJECT>Solicitation provision and contract clause.</SUBJECT> <SECTNO>225.7007</SECTNO> <SUBJECT>Restrictions on anchor and mooring chain.</SUBJECT> <SECTNO>225.7007-1</SECTNO> <SUBJECT>Restrictions.</SUBJECT> <SECTNO>225.7007-2</SECTNO> <SUBJECT>Waiver.</SUBJECT> <SECTNO>225.7007-3</SECTNO> <SUBJECT>Contract clause.</SUBJECT> <SECTNO>225.7008</SECTNO> <SUBJECT>[Reserved]</SUBJECT> <SECTNO>225.7009</SECTNO> <SUBJECT>Restriction on ball and roller bearings.</SUBJECT> <SECTNO>225.7009-1</SECTNO> <SUBJECT>Scope.</SUBJECT> <SECTNO>225.7009-2</SECTNO> <SUBJECT>Restriction.</SUBJECT> <SECTNO>225.7009-3</SECTNO> <SUBJECT>Exception.</SUBJECT> <SECTNO>225.7009-4</SECTNO> <SUBJECT>Waiver.</SUBJECT> <SECTNO>225.7009-5</SECTNO> <SUBJECT>Contract clause.</SUBJECT> <SECTNO>225.7010</SECTNO> <SUBJECT>[Reserved]</SUBJECT> <SECTNO>225.7011</SECTNO> <SUBJECT>Restriction on carbon, alloy, and armor steel plate.</SUBJECT> <SECTNO>225.7011-1</SECTNO> <SUBJECT>Restriction.</SUBJECT> <SECTNO>225.7011-2</SECTNO> <SUBJECT>Waiver.</SUBJECT> <SECTNO>225.7011-3</SECTNO> <SUBJECT>Contract clause.</SUBJECT> <SECTNO>225.7012</SECTNO> <SUBJECT>Restriction on supercomputers.</SUBJECT> <SECTNO>225.7012-1</SECTNO> <SUBJECT>Restriction.</SUBJECT> <SECTNO>225.7012-2</SECTNO> <SUBJECT>Waiver.</SUBJECT> <SECTNO>225.7012-3</SECTNO> <SUBJECT>Contract clause.</SUBJECT> <SECTNO>225.7013</SECTNO> <SUBJECT>Restrictions on construction or repair of vessels in foreign shipyards.</SUBJECT> <SECTNO>225.7014</SECTNO> <SUBJECT>Restriction on overseas military construction.</SUBJECT> <SECTNO>225.7015</SECTNO> <SUBJECT>Restriction on overseas architect-engineer services.</SUBJECT> <SECTNO>225.7016</SECTNO> <SUBJECT>Restriction on research and development.</SUBJECT> <SECTNO>225.7017</SECTNO> <SUBJECT>Restriction on Ballistic Missile Defense research, development, test, and evaluation.</SUBJECT> <SECTNO>225.7017-1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>225.7017-2</SECTNO> <SUBJECT>Restriction.</SUBJECT> <SECTNO>225.7017-3</SECTNO> <SUBJECT>Exceptions.</SUBJECT> <SECTNO>225.7017-4</SECTNO> <SUBJECT>Solicitation provision.</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> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 225.72—Reporting Contract Performance Outside the United States</HD> <SECTNO>225.7201</SECTNO> <SUBJECT>Policy.</SUBJECT> <SECTNO>225.7202</SECTNO> <SUBJECT>Exception.</SUBJECT> <SECTNO>225.7203</SECTNO> <SUBJECT>Contracting officer distribution of reports.</SUBJECT> <SECTNO>225.7204</SECTNO> <SUBJECT>Solicitation provision and contract clauses.</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>Guidance.</SUBJECT> <SECTNO>225.7303</SECTNO> <SUBJECT>Pricing acquisitions for FMS.</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>FMS customer involvement.</SUBJECT> <SECTNO>225.7305</SECTNO> <SUBJECT>Limitation of liability.</SUBJECT> <SECTNO>225.7306</SECTNO> <SUBJECT>Offset arrangements.</SUBJECT> <SECTNO>225.7307</SECTNO> <SUBJECT>Contract clauses.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 225.74—Defense Contractors Outside the United States</HD> <SECTNO>225.7401</SECTNO> <SUBJECT>Contracts requiring performance or delivery in a foreign country.</SUBJECT> <SECTNO>225.7402</SECTNO> <SUBJECT>Contractor personnel authorized to accompany U.S. Armed Forces deployed outside the United States.</SUBJECT> <SECTNO>225.7402-1</SECTNO> <SUBJECT>Scope.</SUBJECT> <SECTNO>225.7402-2</SECTNO> <SUBJECT>Definition.</SUBJECT> <SECTNO>225.7402-3</SECTNO> <SUBJECT>Government support.</SUBJECT> <SECTNO>225.7402-4</SECTNO> <SUBJECT>Contract clauses.</SUBJECT> <SECTNO>225.7403</SECTNO> <SUBJECT>Antiterrorism/force protection.</SUBJECT> <SECTNO>225.7403-1</SECTNO> <SUBJECT>General.</SUBJECT> <SECTNO>225.7403-2</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> <SUBPART> <HD SOURCE="HED">Subpart 225.76—Secondary Arab Boycott of Israel</HD> <SECTNO>225.7601</SECTNO> <SUBJECT>Restriction.</SUBJECT> <SECTNO>225.7602</SECTNO> <SUBJECT>Procedures.</SUBJECT> <SECTNO>225.7603</SECTNO> <SUBJECT>Exceptions.</SUBJECT> <SECTNO>225.7604</SECTNO> <SUBJECT>Waivers.</SUBJECT> <SECTNO>225.7605</SECTNO> <SUBJECT>Solicitation provision.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 225.77—Acquisitions in Support of Operations in Iraq or Afghanistan</HD> <SECTNO>225.7700</SECTNO> <SUBJECT>Scope.</SUBJECT> <SECTNO>225.7701</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>225.7702</SECTNO> <SUBJECT>Acquisition of small arms.</SUBJECT> <SECTNO>225.7703</SECTNO> <SUBJECT>Acquisition of products or services other than small arms.</SUBJECT> <SECTNO>225.7703-1</SECTNO> <SUBJECT>Acquisition procedures.<PRTPAGE P="134"/> </SUBJECT> <SECTNO>225.7703-2</SECTNO> <SUBJECT>Determination requirements.</SUBJECT> <SECTNO>225.7703-3</SECTNO> <SUBJECT>Evaluating offers.</SUBJECT> <SECTNO>225.7703-4</SECTNO> <SUBJECT>Reporting requirement.</SUBJECT> <SECTNO>225.7703-5</SECTNO> <SUBJECT>Solicitation provisions and 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>225.001</SECTNO> <SUBJECT>General.</SUBJECT> <P>For guidance on evaluating offers of foreign end products, see PGI 225.001.</P> <CITA>[70 FR 73154, Dec. 9, 2005]</CITA> </SECTION> <SECTION> <SECTNO>225.003</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this part—</P> <P>(1) <E T="03">Caribbean Basin country end product</E> includes petroleum or any product derived from petroleum.</P> <P>(2) <E T="03">Defense equipment</E> means any equipment, item of supply, component, or end product purchased by DoD.</P> <P>(3) <E T="03">Domestic concern</E> 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</P> <P>(ii) An unincorporated concern having its principal place of business in the United States.</P> <P>(4) <E T="03">Domestic end product</E> has the meaning given in the clauses at 252.225-7001, Buy American Act and Balance of Payments Program; and 252.225-7036, Buy American Act—Free Trade Agreements—Balance of Payments Program, instead of the meaning in FAR 25.003.</P> <P>(5) <E T="03">Eligible product</E> means, instead of the definition in FAR 25.003—</P> <P>(i) A foreign end product that—</P> <P>(A) Is in a category listed in 225.401-70; and</P> <P>(B) Is not subject to discriminatory treatment, due to the applicability of a trade agreement to a particular acquisition;</P> <P>(ii) A foreign construction material that is not subject to discriminatory treatment, due to the applicability of a trade agreement to a particular acquisition; or</P> <P>(iii) A foreign service that is not subject to discriminatory treatment, due to the applicability of a trade agreement to a particular acquisition.</P> <P>(6) <E T="03">Foreign concern</E> means any concern other than a domestic concern.</P> <P>(7) <E T="03">Nonqualifying country</E> means a country other than the United States or a qualifying country.</P> <P>(8) <E T="03">Nonqualifying country component</E> means a component mined, produced, or manufactured in a nonqualifying country.</P> <P>(9) <E T="03">Qualifying country</E> means a country with a memorandum of understanding or international agreement with the United States. Qualifying countries are listed in 225.872-1.</P> <P>(10) <E T="03">Qualifying country component</E> and <E T="03">qualifying country end product</E> are defined in the clauses at 252.225-7001, Buy American Act and Balance of Payments Program; and 252.225-7036, Buy American Act—Free Trade Agreements—Balance of Payments Program. <E T="03">Qualifying country end product</E> is also defined in the clause at 252.225-7021, Trade Agreements.</P> <P>(11) <E T="03">Qualifying country offer</E> means an offer of a qualifying country end product, including the price of transportation to destination.</P> <P>(12) <E T="03">Source,</E> when restricted by words such as foreign, domestic, or qualifying country, means the actual manufacturer or producer of the end product or component.</P> <CITA>[68 FR 15618, Mar. 31, 2003, as amended at 69 FR 1927, Jan. 13, 2004; 70 FR 73153, Dec. 9, 2005]</CITA> </SECTION> <SECTION> <SECTNO>225.004</SECTNO> <SUBJECT>Reporting of acquisition of end products manufactured outside the United States.</SUBJECT> <P>Follow the procedures at PGI 225.004 for entering the data upon which the report required by FAR 25.004 will be based.</P> <CITA>[71 FR 62559, Oct. 26, 2006]</CITA> </SECTION> <SUBPART> <HD SOURCE="HED">Subpart 225.1—Buy American Act—Supplies</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>68 FR 15618, Mar. 31, 2003, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>225.101</SECTNO> <SUBJECT>General.</SUBJECT> <P>(a) For DoD, the following two-part test determines whether a manufactured end product is a domestic end product:</P> <P>(i) The end product is manufactured in the United States; and<PRTPAGE P="135"/> </P> <P>(ii) The cost of its U.S. and qualifying country components exceeds 50 percent of the cost of all its components. This test is applied to end products only and not to individual components.</P> <P>(c) Additional exceptions that allow the purchase of foreign end products are listed at 225.103.</P> </SECTION> <SECTION> <SECTNO>225.103</SECTNO> <SUBJECT>Exceptions.</SUBJECT> <P>(a)(i)(A) Public interest exceptions for certain countries are in 225.872.</P> <P>(B) For procurements covered by the World Trade Organization Government Procurement Agreement, the Under Secretary of Defense (Acquisition, Technology, and Logistics) has determined that it is inconsistent with the public interest to apply the Buy American Act to end products 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 if 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 a domestic end product; or</P> <P>(<E T="03">ii</E>) In order not to impair integration of the military and commercial industrial base.</P> <P>(B) Except as provided in PGI 225.872-4, process a determination for a public interest exception 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 or below the simplified acquisition threshold;</P> <P>(<E T="03">2</E>) By the head of the contracting activity for acquisitions with a value greater than the simplified acquisition threshold 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 when domestic offers are insufficient to meet the requirement and award is to be made on other than a qualifying country or eligible end product.</P> <P>(ii) Except as provided in FAR 25.103(b)(3), the determination shall be approved—</P> <P>(A) At a level above the contracting officer for acquisitions valued at or below the simplified acquisition threshold;</P> <P>(B) By the chief of the contracting office for acquisitions with a value greater than the simplified acquisition threshold but less than $1,000,000; or</P> <P>(C) By the head of the contracting activity or immediate deputy for acquisitions valued at $1,000,000 or more.</P> <P>(iii) A separate determination as to whether an article is reasonably available is not required for the following articles. DoD has already determined that these articles are not reasonably available from domestic sources:</P> <P>(A) End products or components listed in 225.104(a).</P> <P>(B) Spare or replacement parts that must be acquired from the original foreign manufacturer or supplier.</P> <P>(C) Foreign drugs acquired 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>[68 FR 15618, Mar. 31, 2003, as amended at 70 FR 2362, Jan. 13, 2005; 73 FR 4113, Jan. 24, 2008]</CITA> </SECTION> <SECTION> <PRTPAGE P="136"/> <SECTNO>225.104</SECTNO> <SUBJECT>Nonavailable articles.</SUBJECT> <P>(a) DoD has determined that the following articles also are nonavailable in accordance with FAR 25.103(b):</P> <P>(i) Aluminum clad steel wire.</P> <P>(ii) Sperm oil.</P> </SECTION> <SECTION> <SECTNO>225.105</SECTNO> <SUBJECT>Determining reasonableness of cost.</SUBJECT> <P>(b) Use an evaluation factor of 50 percent instead of the factors specified in FAR 25.105(b).</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> </SUBPART> <SUBPART> <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). For other materials, a nonavailability determination shall 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, as amended at 68 FR 15619, Mar. 31, 2003]</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 225.3—Contracts Performed Outside the United States</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>73 FR 16774, Mar. 31, 2008, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>225.301</SECTNO> <SUBJECT>Contractor personnel in a designated operational area or supporting a diplomatic or consular mission outside the United States.</SUBJECT> </SECTION> <SECTION> <SECTNO>225.301-1</SECTNO> <SUBJECT>Scope.</SUBJECT> <P>(a) <E T="03">Performance in a designated operational area</E>, as used in this section, means performance of a service or construction, as required by the contract. For supply contracts, the term includes services associated with the acquisition of supplies (e.g., installation or maintenance), but does not include production of the supplies or associated overhead functions.</P> <P>(c) For DoD, this section also applies to all personal services contracts.</P> </SECTION> <SECTION> <SECTNO>225.301-4</SECTNO> <SUBJECT>Contract clause.</SUBJECT> <P>(1) Use the clause at FAR 52.225-19, Contractor Personnel in a Designated Operational Area or Supporting a Diplomatic or Consular Mission Outside the United States, in accordance with the prescription at FAR 25.301-4, except that—</P> <P>(i) The clause shall also be used in personal services contracts with individuals; and</P> <P>(ii) The clause shall not be used when all contractor personnel performing outside the United States will be covered by the clause at 252.225-7040.</P> <P>(2) When using the clause at FAR 52.225-19, the contracting officer shall inform the contractor that the Synchronized Predeployment and Operational Tracker (SPOT) is the appropriate automated system to use for the list of contractor personnel required by paragraph (g) of the clause. Information on the SPOT system is available at <E T="03">http://www.dod.mil/bta/products/spot.html</E>.</P> </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>(a)(2) 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 and Acquisition Policy (OUSD(AT&L)DPAP). Approval by OUSD(AT&L)DPAP is not required if—</P> <P>(A) Purchase from foreign sources is restricted by statute (see Subpart 225.70);<PRTPAGE P="137"/> </P> <P>(B) Another exception in FAR 25.401 applies to the acquisition; or</P> <P>(C) Competition from foreign sources is restricted under Subpart 225.71.</P> <CITA>[68 FR 15619, Mar. 31, 2003]</CITA> </SECTION> <SECTION> <SECTNO>225.401-70</SECTNO> <SUBJECT>End products subject to trade agreements.</SUBJECT> <P>Acquisitions of end products in the following Federal supply groups (FSG) are covered by trade agreements if the value of the acquisition is at or above the applicable trade agreement threshold and no exception applies. If an end product is not in one of the listed groups, the trade agreements 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). Therefore certain watches, watch parts, and luggage from certain Caribbean Basin countries are not eligible products. However, 225.003 expands the definition of Caribbean Basin country end products to include petroleum and any product derived from petroleum, in accordance with Section 8094 of Pub. L. 103-139.</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> <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">83</ENT> <ENT>Pins, needles, and sewing kits (only part of 8315) and flag staffs, flagpoles, and flagstaff trucks (only part of 8345)</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">89</ENT> <ENT>Tobacco products (only 8975)</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> <PRTPAGE P="138"/> <CITA>[65 FR 19852, Apr. 13, 2000, as amended at 68 FR 15619, Mar. 31, 2003; 69 FR 1927, Jan. 13, 2004; 70 FR 2363, Jan. 13, 2005; 70 FR 73154, Dec. 9, 2005; 71 FR 9270, Feb. 23, 2006]</CITA> </SECTION> <SECTION> <SECTNO>225.401-71</SECTNO> <SUBJECT>Products or services in support of operations in Iraq or Afghanistan.</SUBJECT> <P>When acquiring products or services, other than small arms, in support of operations in Iraq or Afghanistan using a procedure specified in 225.7703-1(a), the purchase restriction at FAR 25.403(c) does not apply with regard to products or services from Iraq.</P> <CITA>[73 FR 53152, Sept. 15, 2008]</CITA> </SECTION> <SECTION> <SECTNO>225.402</SECTNO> <SUBJECT>General.</SUBJECT> <P>To estimate the value of the acquisition, use the total estimated value of end products covered by trade agreements (<E T="03">see</E> 225.401-70).</P> <CITA>[70 FR 2363, Jan. 13, 2005]</CITA> </SECTION> <SECTION> <SECTNO>225.403</SECTNO> <SUBJECT>World Trade Organization Government Procurement Agreement and Free Trade Agreements.</SUBJECT> <P>(c) For acquisitions of supplies covered by the World Trade Organization Government Procurement Agreement, acquire only U.S.-made, qualifying country, or designated country end products unless—</P> <P>(i) The contracting officer determines that offers of U.S.-made, qualifying country, or designated country end products from responsive, responsible offerors are either—</P> <P>(A) Not received; or</P> <P>(B) Insufficient to fill the Government's requirements. In this case, accept all responsive, responsible offers of U.S.-made, qualifying country, and eligible products before accepting any other offers; or</P> <P>(ii) A national interest waiver under 19 U.S.C. 2512(b)(2) is granted on a case-by-case basis. Except as delegated in paragraphs (c)(i)(A) and (B) of this section, submit any request for a national interest waiver to the Director of Defense Procurement and Acquisition Policy in accordance with department or agency procedures. Include supporting rationale with the request.</P> <P>(A) The head of the contracting activity may approve a national interest waiver for a purchase by an overseas purchasing activity, if the waiver is supported by a written statement from the requiring activity that the products being acquired are critical for the support of U.S. forces stationed abroad.</P> <P>(B) The Commander or Director, Defense Energy Support Center, may approve national interest waivers for purchases of fuel for use by U.S. forces overseas.</P> <CITA>[68 FR 15619, Mar. 31, 2003, as amended at 70 FR 2363, Jan. 13, 2005]</CITA> </SECTION> <SECTION> <SECTNO>225.408</SECTNO> <SUBJECT>Procedures.</SUBJECT> <P>(a)(4) The requirements of FAR 25.408(a)(4), on submission of offers in U.S. dollars, do not apply to overseas acquisitions or to Defense Energy Support Center post, camp, or station overseas requirements.</P> <CITA>[70 FR 73154, Dec. 9, 2005]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 225.5—Evaluating Foreign Offers—Supply Contracts</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>68 FR 15620, Mar. 31, 2003, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>225.502</SECTNO> <SUBJECT>Application.</SUBJECT> <P>(b) Use the following procedures instead of the procedures in FAR 25.502(b) for acquisitions subject to the World Trade Organization Government Procurement Agreement:</P> <P>(i) Consider only offers of U.S.-made, qualifying country, or designated country end products, except as permitted by 225.403 or 225.7703-1. </P> <P>(ii) If price is the determining factor, award on the low offer.</P> <P>(c) Use the following procedures instead of those in FAR 25.502(c) for acquisitions subject to the Buy American Act or the Balance of Payments Program:</P> <P>(i)(A) If the acquisition is subject only to the Buy American Act or the Balance of Payments Program, then only qualifying country end products are exempt from application of the Buy American Act or Balance of Payments Program evaluation factor.</P> <P>(B) If the acquisition is also subject to a Free Trade Agreement, then eligible products of the applicable Free Trade Agreement country are also exempt from application of the Buy American Act or Balance of Payments Program evaluation factor.<PRTPAGE P="139"/> </P> <P>(ii) If price is the determining factor, use the following procedures:</P> <P>(A) If the low offer is a domestic offer, award on that offer.</P> <P>(B) If there are no domestic offers, award on the low offer (see example in 225.504(1)).</P> <P>(C) If the low offer is a foreign offer that is exempt from application of the Buy American Act or Balance of Payments Program evaluation factor, award on that offer. (If the low offer is a qualifying country offer from a country listed at 225.872-1(b), execute a determination in accordance with 225.872-4.)</P> <P>(D) If the low offer is a foreign offer that is not exempt from application of the Buy American Act or Balance of Payments Program evaluation factor, and there is another foreign offer that is exempt and is lower than the lowest domestic offer, award on the low foreign offer (see example in 225.504(2)).</P> <P>(E) Otherwise, apply the 50 percent evaluation factor to the low foreign offer.</P> <P>(<E T="03">1</E>) If the price of the low domestic offer is less than the evaluated price of the low foreign offer, award on the low domestic offer (see example in 225.504(3)).</P> <P>(<E T="03">2</E>) If the evaluated price of the low foreign offer remains less than the low domestic offer, award on the low foreign offer (see example in 225.504(4)).</P> <P>(iii) If price is not the determining factor, use the following procedures:</P> <P>(A) If there are domestic offers, apply the 50 percent Buy American Act or Balance of Payments Program evaluation factor to all foreign offers unless an exemption applies.</P> <P>(B) Evaluate in accordance with the criteria of the solicitation.</P> <P>(C) If these procedures will not result in award on a domestic offer, reevaluate offers without the 50 percent factor. If this will result in award on an offer to which the Buy American Act or Balance of Payments Program applies, but evaluation in accordance with paragraph (c)(ii) of this section would result in award on a domestic offer, proceed with award only after execution of a determination in accordance with 225.103(a)(ii)(B), that domestic preference would be inconsistent with the public interest.</P> <P>(iv) If the solicitation includes the provision at 252.225-7023, Preference for Products or Services from Iraq or Afghanistan, use the evaluation procedures at 225.7703-3.</P> <CITA>[68 FR 15620, Mar. 31, 2003, as amended at 69 FR 1928, Jan. 13, 2004; 69 FR 74992, Dec. 15, 2004; 70 FR 2363, Jan. 13, 2005; 73 FR 53152, Sept. 15, 2008]</CITA> </SECTION> <SECTION> <SECTNO>225.503</SECTNO> <SUBJECT>Group offers.</SUBJECT> <P>Evaluate group offers in accordance with FAR 25.503, but apply the evaluation procedures of 225.502.</P> </SECTION> <SECTION> <SECTNO>225.504</SECTNO> <SUBJECT>Evaluation examples.</SUBJECT> <P>For examples that illustrate the evaluation procedures in 225.502(c)(ii), see PGI 225.504.</P> <CITA>[70 FR 73154, Dec. 9, 2005]</CITA> </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) for restrictions on contracting with firms owned or controlled by foreign governments.</P> <CITA>[70 FR 73154, Dec. 9, 2005]</CITA> </SECTION> <SECTION> <SECTNO>225.701-70</SECTNO> <SUBJECT>Exception.</SUBJECT> <P>DoD personnel are authorized to make emergency acquisitions in direct support of U.S. or allied forces deployed in military contingency, humanitarian, or peacekeeping operations in a country or region subject to economic sanctions administered by the Department of the Treasury, Office of Foreign Assets Control.</P> <CITA>[68 FR 7441, Feb. 14, 2003]</CITA> </SECTION> <SECTION> <SECTNO>225.770</SECTNO> <SUBJECT>Prohibition on acquisition of United States Munitions List items from Communist Chinese military companies.</SUBJECT> <P>This section implements Section 1211 of the National Defense Authorization Act for Fiscal Year 2006 (Pub. L. 109-163). See PGI 225.770 for additional information relating to this statute, the terms used in this section, and the United States Munitions List.</P> <CITA>[71 FR 53046, Sept. 8, 2006]</CITA> </SECTION> <SECTION> <SECTNO>225.770-1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this section—<PRTPAGE P="140"/> </P> <P>(a) <E T="03">Communist Chinese military company</E> and <E T="03">United States Munitions List</E> are defined in the clause at 252.225-7007, Prohibition on Acquisition of United States Munitions List Items from Communist Chinese Military Companies.</P> <P>(b) <E T="03">Component</E> means an item that is useful only when used in conjunction with an end item (22 CFR 121.8).</P> <P>(c) <E T="03">Part</E> means any single unassembled element of a major or minor component, accessory, or attachment, that is not normally subject to disassembly without the destruction or impairment of design use (22 CFR 121.8).</P> <CITA>[71 FR 53046, Sept. 8, 2006]</CITA> </SECTION> <SECTION> <SECTNO>225.770-2</SECTNO> <SUBJECT>Prohibition.</SUBJECT> <P>Do not acquire supplies or services covered by the United States Munitions List (USML) (22 CFR part 121), through a contract or subcontract at any tier, from any Communist Chinese military company. This prohibition does not apply to components and parts of covered items unless the components and parts are themselves covered by the USML.</P> <CITA>[71 FR 53046, Sept. 8, 2006]</CITA> </SECTION> <SECTION> <SECTNO>225.770-3</SECTNO> <SUBJECT>Exceptions.</SUBJECT> <P>The prohibition in 225.770-2 does not apply to supplies or services acquired—</P> <P>(a) In connection with a visit to the People's Republic of China by a vessel or an aircraft of the U.S. armed forces;</P> <P>(b) For testing purposes; or</P> <P>(c) For the purpose of gathering intelligence.</P> <CITA>[71 FR 53046, Sept. 8, 2006]</CITA> </SECTION> <SECTION> <SECTNO>225.770-4</SECTNO> <SUBJECT>Identifying USML items.</SUBJECT> <P>(a) Before issuance of a solicitation, the requiring activity shall notify the contracting officer in writing whether the items to be acquired are covered by the USML. The notification shall identify any covered item(s) and shall provide the pertinent USML reference(s) from 22 CFR Part 121.</P> <P>(b) The USML includes defense articles and defense services that fall into 21 categories. Since not all USML items are themselves munitions (<E T="03">e.g.</E>, protective personnel equipment, military training equipment), the requiring activity should consult the USML before concluding that an item is or is not covered by the USML.</P> <CITA>[71 FR 53046, Sept. 8, 2006]</CITA> </SECTION> <SECTION> <SECTNO>225.770-5</SECTNO> <SUBJECT>Waiver of prohibition.</SUBJECT> <P>(a) The prohibition in 225.770-2 may be waived, on a case-by-case basis, if an official identified in paragraph (b) of this subsection determines that a waiver is necessary for national security purposes.</P> <P>(b) The following officials are authorized, without power of delegation, to make the determination specified in paragraph (a) of this subsection:</P> <P>(1) The Under Secretary of Defense (Acquisition, Technology, and Logistics).</P> <P>(2) The Secretaries of the military departments.</P> <P>(3) The Component Acquisition Executive of the Defense Logistics Agency.</P> <P>(c) The official granting a waiver shall notify the congressional defense committees within 30 days after the date of the waiver.</P> <CITA>[71 FR 53046, Sept. 8, 2006]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 225.8—Other International Agreements and Coordination</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>68 FR 15621, Mar. 31, 2003, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>225.802</SECTNO> <SUBJECT>Procedures.</SUBJECT> <P>(b) Information on memoranda of understanding and other international agreements is available at PGI 225.802(b).</P> <CITA>[70 FR 73154, Dec. 9, 2005]</CITA> </SECTION> <SECTION> <SECTNO>225.802-70</SECTNO> <SUBJECT>Contracts for performance outside the United States and Canada.</SUBJECT> <P>Follow the procedures at PGI 225.802-70 when placing a contract requiring performance outside the United States and Canada. Also see Subpart 225.74, Defense Contractors Outside the United States.</P> <CITA>[70 FR 23801, May 5, 2005]</CITA> </SECTION> <SECTION> <SECTNO>225.802-71</SECTNO> <SUBJECT>End use 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 indicate that <PRTPAGE P="141"/>the Armed Forces of the United States is the end user of the item, and that the U.S. Government will not transfer the item 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 Use Certificates, for guidance.</P> </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 office of the U.S. Government. The Canadian Government has waived notice of any change or modification that may be made, from time to time, in these commitments, obligations, or covenants.</P> <P>(b) For production planning purposes, Canada is part of the defense industrial base (see 225.870-2(b)).</P> <P>(c) The Canadian Commercial Corporation will award and administer contracts with contractors located in Canada, except for—</P> <P>(1) Negotiated acquisitions for experimental, developmental, or research work under projects other than the Defense Development Sharing Program;</P> <P>(2) Acquisitions of unusual or compelling urgency;</P> <P>(3) Acquisitions at or below the simplified acquisition threshold; or</P> <P>(4) Acquisitions made by DoD activities located in Canada.</P> <P>(d) For additional information on production rights, data, and information; services provided by Canadian Commercial Corporation; audit; and inspection, see PGI 225.870-1(d).</P> <CITA>[68 FR 15621, Mar. 31, 2003, as amended at 70 FR 73154, Dec. 9, 2005]</CITA> </SECTION> <SECTION> <SECTNO>225.870-2</SECTNO> <SUBJECT>Solicitation of Canadian contractors.</SUBJECT> <P>(a) If requested, furnish a solicitation to the Canadian Commercial Corporation even if no Canadian firm is solicited.</P> <P>(b) Handle acquisitions at or below the simplified acquisition threshold directly with Canadian firms and not through the Canadian Commercial Corporation.</P> <CITA>[68 FR 15621, Mar. 31, 2003, as amended at 72 FR 20758, Apr. 26, 2007]</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 and 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.</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 date for receipt of offers, the Corporation may permit Canadian firms to submit offers directly. However, the contracting officer shall receive the Canadian Commercial Corporation's endorsement before contract award.</P> <P>(c) The Canadian Commercial Corporation will submit all sealed bids 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, the Canadian Commercial Corporation normally will submit offers and quotations 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—</P> <P>(1) Shall 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) Except for contracts described in 225.870-1(c)(1) through (4), award individual contracts covering purchases from suppliers located in Canada to the Canadian Commercial Corporation, 11th Floor, 50 O'Connor Street, Ottawa, Ontario, Canada, K1A-0S6.<PRTPAGE P="142"/> </P> <P>(b) Direct communication with the Canadian supplier is authorized and encouraged in connection with all technical aspects of the contract, provided 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, <E T="03">i.e.,</E> U.S. or Canadian. Contracts that provide for payment in Canadian currency shall—</P> <P>(1) Quote the contract price in terms of Canadian dollars and identify the amount by the initials “CN”, <E T="03">e.g.,</E> $1,647.23CN; and</P> <P>(2) Clearly indicate on the face of the contract the U.S./Canadian conversion rate at the time of award and the U.S. dollar equivalent of the Canadian dollar contract amount.</P> </SECTION> <SECTION> <SECTNO>225.870-5</SECTNO> <SUBJECT>Contract administration.</SUBJECT> <P>Follow the contract administration procedures at PGI 225.870-5.</P> <CITA>[70 FR 73155, Dec. 9, 2005]</CITA> </SECTION> <SECTION> <SECTNO>225.870-6</SECTNO> <SUBJECT>Termination procedures.</SUBJECT> <P>When contract termination is necessary, follow the procedures at 249.7000.</P> <CITA>[71 FR 27645, May 12, 2006]</CITA> </SECTION> <SECTION> <SECTNO>225.870-7</SECTNO> <SUBJECT>Acceptance of Canadian supplies.</SUBJECT> <P>For information on the acceptance of Canadian supplies, see PGI 225.870-7.</P> <CITA>[70 FR 73155, Dec. 9, 2005]</CITA> </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>This section implements 22 U.S.C. 2767 and 10 U.S.C. 2350b.</P> <CITA>[70 FR 73155, Dec. 9, 2005]</CITA> </SECTION> <SECTION> <SECTNO>225.871-2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this section—</P> <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 NATO 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 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) <E T="03">Cooperative project authority.</E> (1) Departments and agencies, that have authority to do so, may enter into cooperative project agreements with NATO or with one or more member countries of NATO under DoDD 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 are authorized 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 the waiver—</P> <P>(1) Is required by the terms of a written cooperative project agreement;</P> <P>(2) Will significantly further NATO standardization, rationalization, and interoperability; and</P> <P>(3) Is approved by the appropriate DoD official.</P> </SECTION> <SECTION> <PRTPAGE P="143"/> <SECTNO>225.871-4</SECTNO> <SUBJECT>Statutory waivers.</SUBJECT> <P>(a) For contracts or subcontracts placed outside the United States, the Deputy Secretary of Defense may waive 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 or preferences for—</P> <P>(i) Goods grown, produced, or manufactured in the United States or in U.S. Government-owned facilities; or</P> <P>(ii) 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) To request a waiver under a cooperative project, follow the procedures at PGI 225.871-4.</P> <P>(d) Obtain the approval of the Deputy Secretary of Defense before committing to make a waiver in an agreement or a contract.</P> <CITA>[68 FR 15621, Mar. 31, 2003, as amended at 71 FR 62565, Oct. 26, 2006]</CITA> </SECTION> <SECTION> <SECTNO>225.871-5</SECTNO> <SUBJECT>Directed Subcontracting.</SUBJECT> <P>(a) The Director of Defense Procurement and Acquisition Policy 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. However, the agreement shall clearly state the general provisions for work sharing at the prime and subcontract level. For additional information on cooperative project agreements, see PGI 225.871-5.</P> <CITA>[68 FR 15621, Mar. 31, 2003, as amended at 70 FR 73155, Dec. 9, 2005]</CITA> </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, without regard to any laws of the United States applicable to the disposal of property owned by the United States.</P> <CITA>[70 FR 73155, Dec. 9, 2005]</CITA> </SECTION> <SECTION> <SECTNO>225.871-7</SECTNO> <SUBJECT>Congressional notification.</SUBJECT> <P>(a) Congressional notification is required when DoD makes a determination to award a contract or subcontract to a particular entity, if the determination was not part of the certification made under 22 U.S.C. 2767(f) before finalizing the cooperative agreement.</P> <P>(1) Departments and agencies shall provide a proposed Congressional notice to the Director of Defense Procurement and Acquisition Policy in sufficient time to forward to Congress before the time of contract award.</P> <P>(2) The proposed notice shall include the reason it is necessary to use the authority to designate a particular contractor or subcontractor.</P> <P>(b) Congressional notification is also required each time a statutory waiver under 225.871-4 is incorporated in a contract or a contract modification, if such information was not provided in the certification to Congress before finalizing the cooperative agreement.</P> </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, DoD has determined it inconsistent with the public interest to apply restrictions of the Buy American Act or the Balance of Payments Program to the acquisition of qualifying country end products from the following qualifying countries: </P> <EXTRACT> <FP SOURCE="FP-1">Australia<PRTPAGE P="144"/> </FP> <FP SOURCE="FP-1">Belgium</FP> <FP SOURCE="FP-1">Canada</FP> <FP SOURCE="FP-1">Denmark</FP> <FP SOURCE="FP-1">Egypt</FP> <FP SOURCE="FP-1">Federal Republic of Germany</FP> <FP SOURCE="FP-1">France</FP> <FP SOURCE="FP-1">Greece</FP> <FP SOURCE="FP-1">Israel</FP> <FP SOURCE="FP-1">Italy</FP> <FP SOURCE="FP-1">Luxembourg</FP> <FP SOURCE="FP-1">Netherlands</FP> <FP SOURCE="FP-1">Norway</FP> <FP SOURCE="FP-1">Portugal</FP> <FP SOURCE="FP-1">Spain</FP> <FP SOURCE="FP-1">Sweden</FP> <FP SOURCE="FP-1">Switzerland</FP> <FP SOURCE="FP-1">Turkey</FP> <FP SOURCE="FP-1">United Kingdom of Great Britain and Northern Ireland</FP> </EXTRACT> <P>(b) Individual acquisitions of qualifying country end products from the following qualifying countries may, on a purchase-by-purchase basis (see 225.872-4), be exempted from application of the Buy American Act and the Balance of Payments Program as inconsistent with the public interest: </P> <EXTRACT> <FP SOURCE="FP-1">Austria</FP> <FP SOURCE="FP-1">Finland</FP> </EXTRACT> <P>(c) The determination in paragraph (a) of this subsection does not limit the authority of the Secretary concerned to restrict acquisitions to domestic sources or reject an otherwise acceptable offer from a qualifying country source when considered necessary for national defense reasons.</P> <CITA>[68 FR 15621, Mar. 31, 2003, as amended at 69 FR 8116, Feb. 23, 2004]</CITA> </SECTION> <SECTION> <SECTNO>225.872-2</SECTNO> <SUBJECT>Applicability.</SUBJECT> <P>(a) This section applies to all acquisitions of supplies except those restricted by—</P> <P>(1) U.S. National Disclosure Policy, DoDD 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.</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 T="03">e.g.,</E> the annual DoD appropriations act); and</P> <P>(4) U.S. industrial security requirements.</P> <P>(b) This section does not apply to construction contracts.</P> </SECTION> <SECTION> <SECTNO>225.872-3</SECTNO> <SUBJECT>Solicitation procedures.</SUBJECT> <P>(a) Except for items developed under the U.S./Canadian Development Sharing Program, use the criteria for soliciting and awarding contracts to small business concerns under FAR Part 19 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 concerns.</P> <P>(b) Send solicitations directly to qualifying country sources. Solicit Canadian sources through the Canadian Commercial Corporation in accordance with 225.870.</P> <P>(c) Use international air mail if solicitation destinations are outside the United States and security classification permits such use.</P> <P>(d) 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>(e) Do not automatically exclude qualifying country sources from submitting offers because their supplies have not been tested and evaluated by the department or 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 tested and evaluated by the department or agency shall consider supplies from qualifying country sources that have been tested and accepted by the qualifying country for service use.<PRTPAGE P="145"/> </P> <P>(2) The department or agency may perform a confirmatory test, if necessary.</P> <P>(3) Apply U.S. test and evaluation standards, policies, and procedures when the department or agency decides that confirmatory tests of qualifying country end products are necessary.</P> <P>(4) If it appears that these provisions might adversely delay service programs, obtain the concurrence of the Under Secretary of Defense (Acquisition, Technology, and Logistics), before excluding the qualifying country source from consideration.</P> <P>(f) 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>[68 FR 15621, Mar. 31, 2003, as amended at 72 FR 20758, Apr. 26, 2007]</CITA> </SECTION> <SECTION> <SECTNO>225.872-4</SECTNO> <SUBJECT>Individual determinations.</SUBJECT> <P>If the offer of an end product from a qualifying country source listed in 225.872-1(b), as evaluated, is low or otherwise eligible for award, prepare a determination and findings exempting the acquisition from the Buy American Act and the Balance of Payments Program as inconsistent with the public interest, unless another exception such as the Trade Agreements Act applies. Follow the procedures at PGI 225.872-4.</P> <CITA>[70 FR 73155, Dec. 9, 2005]</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 and Acquisition Policy (Contract Policy and International Contracting), ((703) 697-9351, DSN 227-9351).</P> <P>(b) Follow the contract administration procedures at PGI 225.872-5(b).</P> <P>(c) Information on quality assurance delegations to foreign governments is in Subpart 246.4, Government Contract Quality Assurance.</P> <CITA>[68 FR 15621, Mar. 31, 2003, as amended at 70 FR 73155, Dec. 9, 2005; 72 FR 30278, May 31, 2007]</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 and Acquisition Policy (Contract Policy and International Contracting), ((703) 697-9351, DSN 227-9351).</P> <P>(c) Handle requests for audits in qualifying countries in accordance with 215.404-2(c), but follow the additional procedures at PGI 225.872-6(c).</P> <CITA>[68 FR 15621, Mar. 31, 2003, as amended at 70 FR 73155, Dec. 9, 2005; 72 FR 30278, May 31, 2007]</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> </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 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> <PRTPAGE P="146"/> <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. For U.K. levies to be waived, the offeror or contractor shall identify the levies and the contracting officer shall request a waiver before award of the contract or subcontract under which the levies are charged.</P> </SECTION> <SECTION> <SECTNO>225.873-2</SECTNO> <SUBJECT>Procedures.</SUBJECT> <P>When an offeror or a contractor identifies a levy included in an offered or contract price, follow the procedures at PGI 225.873-2.</P> <CITA>[70 FR 73155, Dec. 9, 2005]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 225.9—Customs and Duties</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>68 FR 15626, Mar. 31, 2003, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>225.901</SECTNO> <SUBJECT>Policy.</SUBJECT> <P>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 a Free Trade Agreement), or unless the supplies already have entered into the customs territory of the United States and the contractor already has paid the duty, DoD will issue duty-free entry certificates for—</P> <P>(1) Qualifying country supplies (end products and components);</P> <P>(2) Eligible products (end products but not components) under contracts covered by the World Trade Organization Government Procurement Agreement or a Free Trade Agreement; and</P> <P>(3) Other foreign supplies for which the contractor estimates that duty will exceed $200 per shipment into the customs territory of the United States.</P> <CITA>[68 FR 15626, Mar. 31, 2003, as amended at 69 FR 1928, Jan. 13, 2004; 70 FR 2363, Jan. 13, 2005]</CITA> </SECTION> <SECTION> <SECTNO>225.902</SECTNO> <SUBJECT>Procedures.</SUBJECT> <P>Follow the entry and release procedures at PGI 225.902.</P> <CITA>[70 FR 73155, Dec. 9, 2005]</CITA> </SECTION> <SECTION> <SECTNO>225.903</SECTNO> <SUBJECT>Exempted supplies.</SUBJECT> <P>(b)(i) For an explanation of the term “supplies,” see PGI 225.903(b)(i).</P> <P>(ii) The duty-free certificate shall be printed, stamped, or typed on the face of, or attached to, Customs Form 7501. A duly designated officer or civilian official of the appropriate department or agency shall execute the certificate in the format provided at PGI 225.903(b)(ii).</P> <CITA>[70 FR 73155, Dec. 9, 2005]</CITA> </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> <HD SOURCE="HED">Subpart 225.11—Solicitation Provisions and Contract Clauses</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>68 FR 16526, Mar. 31, 2003, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>225.1100</SECTNO> <SUBJECT>Scope of subpart.</SUBJECT> <P>This subpart prescribes the clauses that implement Subparts 225.1 through 225.10. The clauses that implement Subparts 225.70 through 225.75 are prescribed within those subparts.</P> </SECTION> <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.<PRTPAGE P="147"/> </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 unless-</P> <P>(i) All line items will be acquired from a particular source or sources under the authority of FAR 6.302-3;</P> <P>(ii) All line items must be domestic or qualifying country end products in accordance with Subpart 225.70. (However, the clause may still be required if Subpart 225.70 requires manufacture of the end product in the United States or in the United States or Canada, without a corresponding requirement for use of domestic components);</P> <P>(iii) An exception to the Buy American Act or Balance of Payments Program applies (see FAR 25.103, 225.103, and 225.7501);</P> <P>(iv) One or both of the following clauses will apply to all line items in the contract:</P> <P>(A) 252.225-7021, Trade Agreements.</P> <P>(B) 252.225-7036, Buy American Act—Free Trade Agreements—Balance of Payments Program; or</P> <P>(v) All line items will be acquired using a procedure specified in 225.7703-1(a).</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) 252.225-7021, Trade Agreements.</P> <P>(iii) 252.225-7036, Buy American Act—Free Trade Agreements—Balance of Payments Program.</P> <P>(4) Use the clause at 252.225-7013, Duty-Free Entry, instead of the clause at FAR 52.225-8. Do not use the clause for acquisitions of supplies that will not enter the customs territory of the United States.</P> <P>(5) Except as provided in paragraph (7) of this section, use the provision at 252.225-7020, Trade Agreements Certificate, instead of the provision at FAR 52.225-6, Trade Agreements Certificate, in solicitations that include the clause at 252.225-7021, Trade Agreements.</P> <P>(6)(i) Use the clause at 252.225-7021, Trade Agreements, instead of the clause at FAR 52.225-5, Trade Agreements, if the Trade Agreements Act applies.</P> <P>(ii) Use the clause with its Alternate I in solicitations and contracts that include the clause at 252.225-7024, Requirement for Products or Services from Iraq or Afghanistan, unless the clause at 252.225-7024 has been modified to provide a preference only for the products of Afghanistan.</P> <P>(iii) Do not use the clause if—</P> <P>(A) Purchase from foreign sources is restricted, unless the contracting officer anticipates a waiver of the restriction; or</P> <P>(B) The clause at 252.225-7026, Acquisition Restricted to Products or Services from Iraq or Afghanistan, is included in the solicitation and contract.</P> <P>(iv) The acquisition of eligible and noneligible products under the same contract may result in the application of trade agreements to only some of the items acquired. In such case, indicate in the Schedule those items covered by the Trade Agreements clause.</P> <P>(7) Use the provision at 252.225-7022, Trade Agreements Certificate—Inclusion of Iraqi End Products, instead of the provision at FAR 52.225-6, Trade Agreements Certificate, in solicitations that include the clause at 252.225-7021, Trade Agreements, with its Alternate I.</P> <P>(8) Use the provision at 252.225-7032, Waiver of United Kingdom Levies-Evaluation of Offers, in solicitations if a U.K. firm is expected to—</P> <P>(i) Submit an offer; or</P> <P>(ii) Receive a subcontract exceeding $1 million.</P> <P>(9) Use the clause at 252.225-7033, Waiver of United Kingdom Levies, in solicitations and contracts if a U.K. firm is expected to—</P> <P>(i) Submit an offer; or</P> <P>(ii) Receive a subcontract exceeding $1 million.</P> <P>(10) Use the provision at 252.225-7035, Buy American Act—Free Trade Agreements—Balance of Payments Program Certificate, instead of the provision at FAR 52.225-4, Buy American Act—Free Trade Agreements—Israeli Trade Act Certificate, in solicitations that include the clause at 252.225-7036, Buy American Act—Free Trade Agreements—Balance of Payments Program. Use the provision with its Alternate I <PRTPAGE P="148"/>when the clause at 252.225-7036 is used with its Alternate I.</P> <P>(11)(i) Except as provided in paragraph (10)(ii) of this section, use the clause at 252.225-7036, Buy American Act—Free Trade Agreements—Balance of Payments Program, instead of the clause at FAR 52.225-3, Buy American Act—Free Trade Agreements—Israeli Trade Act, in solicitations and contracts for the items listed at 225.401-70, when the estimated value equals or exceeds $25,000, but is less than $194,000, and a Free Trade Agreement applies to the acquisition.</P> <P>(A) Use the basic clause when the estimated value equals or exceeds $67,826.</P> <P>(B) Use the clause with its Alternate I when the estimated value equals or exceeds $25,000 but is less than $67,826.</P> <P>(ii) Do not use the clause if—</P> <P>(A) Purchase from foreign sources is restricted (see 225.401(a)(2)), unless the contracting officer anticipates a waiver of the restriction</P> <P>(B) Acquiring information technology that is a commercial item, using fiscal year 2004 or subsequent funds (Section 535 of Division F of the Consolidated Appropriations Act, 2004 (Pub. L. 108-199), and the same provision in subsequent appropriations acts).</P> <P>(iii) The acquisition of eligible and noneligible products under the same contract may result in the application of a Free Trade Agreement to only some of the items acquired. In such case, indicate in the Schedule those items covered by the Buy American Act—Free Trade Agreements—Balance of Payments Program clause; or</P> <P>(C) Using a procedure specified in 225.7703-1(a).</P> <CITA>[68 FR 15626, Mar. 31, 2003; 68 FR 25088, May 9, 2003, as amended at 69 FR 1928, Jan. 13, 2004; 71 FR 9271, Feb. 23, 2006; 71 FR 58540, Oct. 4, 2006; 73 FR 4116, Jan. 24, 2008; 73 FR 53152, Sept. 15, 2008]</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 provision at 252.225-7042, Authorization to Perform, in solicitations when contract performance will be wholly or in part in a foreign country.</P> <P>(4) Unless an exception in 225.770-3 applies, use the clause at 252.225-7007, Prohibition on Acquisition of United States Munitions List Items from Communist Chinese Military Companies, in solicitations and contracts involving the delivery of items covered by the United States Munitions List.</P> <CITA>[68 FR 16526, Mar. 31, 2003, as amended at 71 FR 39006, July 11, 2006; 71 FR 53046, Sept. 8, 2006]</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 DoD 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 the Balance of Payments Program.</P> <CITA>[56 FR 36367, July 31, 1991, as amended at 62 FR 2856, Jan. 17, 1997; 68 FR 15627, Mar. 31, 2003]</CITA> </SECTION> <SECTION> <SECTNO>225.7001</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this subpart—</P> <P>(a) <E T="03">Bearing components</E> is defined in the clause at 252.225-7016, Restriction on Acquisition of Ball and Roller Bearings.</P> <P>(b) <E T="03">Component</E> is defined in the clauses at 252.225-7012, Preference for <PRTPAGE P="149"/>Certain Domestic Commodities, and 252.225-7016, Restriction on Acquisition of Ball and Roller Bearings.</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; 71 FR 14111, Mar. 21, 2006]</CITA> </SECTION> <SECTION> <SECTNO>225.7002-1</SECTNO> <SUBJECT>Restrictions.</SUBJECT> <P>The following restrictions implement 10 U.S.C. 2533a (the “Berry Amendment”). 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 and the materials and components thereof, other than sensors, electronics, or other items added to, and not normally associated with, clothing and the materials and components thereof. Clothing includes items such as outerwear, headwear, underwear, nightwear, footwear, hosiery, handwear, belts, badges, and insignia. For additional guidance and examples, see PGI 225.7002-1(a)(2).</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. (For guidance on dealing with noncompliance with this requirement, see PGI 225.7002-1(b).)</P> <P>(c) Hand or measuring tools, unless the tools were produced in the United States.</P> <CITA>[67 FR 20697, Apr. 26, 2002, as amended at 71 FR 39009, July 11, 2006; 71 FR 58537, Oct. 4, 2006; 72 FR 2638, Jan. 22, 2007]</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. (See the requirement in 205.301 for synopsis within 7 days after contract award when using this exception.)</P> <P>(1) The following officials are authorized, without power of redelegation, to make such a domestic nonavailability determination:</P> <P>(i) The Under Secretary of Defense (Acquisition, Technology, and Logistics).</P> <P>(ii) The Secretary of the Army.</P> <P>(iii) The Secretary of the Navy.</P> <P>(iv) The Secretary of the Air Force.</P> <P>(2) The supporting documentation for the determination shall include—</P> <P>(i) An analysis of alternatives that would not require a domestic nonavailability determination; and</P> <P>(ii) A written certification by the requiring activity, with specificity, why such alternatives are unacceptable.</P> <P>(3) Defense agencies shall follow the procedures at PGI 225.7002-2(b)(3) when submitting a request for a domestic nonavailability determination.</P> <P>(4) If an official listed in paragraph (b)(1)(ii) through (iv) of this subsection makes a domestic nonavailability determination for the acquisition of titanium or a product containing titanium, that official shall—</P> <P>(i) Notify the congressional defense committees at least 10 days before the award of a contract that relies on such a determination; and<PRTPAGE P="150"/> </P> <P>(ii) Provide a copy of the notification and the determination to the Director, Defense Procurement and Acquisition Policy, as specified in PGI 225.7002-2(b)(4).</P> <P>(5) Follow the procedures at PGI 225.7002-2(b)(5) for reciprocal use of domestic nonavailability determinations.</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 or for activities located outside the United States for personnel of those activities.</P> <P>(f) Acquisitions of food, specialty metals, or hand or measuring tools—</P> <P>(1) In support of contingency operations; or</P> <P>(2) For which the use of other than competitive procedures has been approved on the basis of unusual and compelling urgency in accordance with FAR 6.302-2.</P> <P>(g) Emergency acquisitions by activities located outside the United States for personnel of those activities.</P> <P>(h) Acquisitions by vessels in foreign waters.</P> <P>(i) Acquisitions of items specifically for commissary resale.</P> <P>(j) Acquisitions of incidental amounts of cotton, other natural fibers, or wool incorporated in an end product, 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>(k) Acquisitions of waste and byproducts of cotton or wool fiber for use in the production of propellants and explosives.</P> <P>(l) Acquisitions of foods manufactured or processed in the United States, regardless of where the foods (and any component if applicable) were grown or produced. However, in accordance with Section 8118 of the DoD Appropriations Act for Fiscal Year 2005 (Pub. L. 108-287), this exception does not apply to fish, shellfish, or seafood manufactured or processed in the United States or fish, shellfish, or seafood contained in foods manufactured or processed in the United States.</P> <P>(m) 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.</P> <P>(n) Acquisitions of specialty metals when the acquisition furthers an agreement with a qualifying country (see 225.872).</P> <P>(o) 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 <PRTPAGE P="151"/>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> <P>(p) Acquisitions of chemical warfare protective clothing when the acquisition furthers an agreement with a qualifying country. (See 225.872 and the requirement in 205.301 for synopsis within 7 days after contract award when using this exception.)</P> <P>(q) Acquisitions of commercially available off-the-shelf items containing specialty metals. This exception does not apply when the specialty metal (e.g., raw stock) is acquired directly by the Government or by a prime contractor for delivery to the Government as the end item.</P> <CITA>[67 FR 20697, Apr. 26, 2002, as amended at 68 FR 7442, Feb. 14, 2003; 69 FR 26509, May 13, 2004; 69 FR 31910, June 8, 2004; 70 FR 43073, July 26, 2005; 71 FR 34833, June 16, 2006; 71 FR 58537, Oct. 4, 2006; 72 FR 20765, Apr. 26, 2007; 72 FR 63123, Nov. 8, 2007; 73 FR 11356, Mar. 3, 2008]</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, Restriction on Acquisition of Hand or Measuring Tools, in solicitations and contracts exceeding the simplified acquisition threshold that require delivery of hand or measuring tools.</P> <CITA>[61 FR 50453, Sept. 26, 1996, as amended at 67 FR 20698, Apr. 26, 2002; 68 FR 15627, Mar. 31, 2003]</CITA> </SECTION> <SECTION> <SECTNO>225.7003</SECTNO> <SUBJECT>Waiver of restrictions of 10 U.S.C. 2534.</SUBJECT> <P>(a) The waiver procedures of this section apply only if specifically authorized by reference 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 a 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 the determination to exercise the waiver authority shall 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) The effective period of the waiver shall not exceed 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, the waiver shall be applied as directed or authorized in the waiver to—<PRTPAGE P="152"/> </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 a 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) A restriction is waived when it would cause unreasonable costs. The cost of an item of U.S. or Canadian origin is unreasonable if it exceeds 150 percent of the offered price, inclusive of duty, of items that are not of U.S. or Canadian origin.</P> <P>(b) In accordance with the provisions of paragraphs (a)(1)(i) through (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 (see 225.7006). 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 paragraph (a)(1)(iv) of this section.</P> <CITA>[68 FR 15627, Mar. 31, 2003, as amended at 70 FR 73155, Dec. 9, 2005; 71 FR 14111, Mar. 21, 2006]</CITA> </SECTION> <SECTION> <SECTNO>225.7004</SECTNO> <SUBJECT>Restriction on acquisition of foreign buses.</SUBJECT> </SECTION> <SECTION> <SECTNO>225.7004-1</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>[68 FR 15627, Mar. 31, 2003]</CITA> </SECTION> <SECTION> <SECTNO>225.7004-2</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>[68 FR 15627, Mar. 31, 2003]</CITA> </SECTION> <SECTION> <SECTNO>225.7004-3</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 at or below the simplified acquisition threshold.</P> <CITA>[68 FR 15627, Mar. 31, 2003]</CITA> </SECTION> <SECTION> <SECTNO>225.7004-4</SECTNO> <SUBJECT>Waiver.</SUBJECT> <P>The waiver criteria at 225.7003(a) apply to this restriction.</P> <CITA>[68 FR 15627, Mar. 31, 2003]</CITA> </SECTION> <SECTION> <PRTPAGE P="153"/> <SECTNO>225.7005</SECTNO> <SUBJECT>Restriction on certain chemical weapons antidote.</SUBJECT> </SECTION> <SECTION> <SECTNO>225.7005-1</SECTNO> <SUBJECT>Restriction.</SUBJECT> <P>In accordance with 10 U.S.C. 2534 and defense industrial mobilization requirements, 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>[68 FR 15627, Mar. 31, 2003, as amended at 71 FR 39005, July 11, 2006]</CITA> </SECTION> <SECTION> <SECTNO>225.7005-2</SECTNO> <SUBJECT>Exception.</SUBJECT> <P>This restriction does not apply if the acquisition is for an amount at or below the simplified acquisition threshold.</P> <CITA>[68 FR 15627, Mar. 31, 2003]</CITA> </SECTION> <SECTION> <SECTNO>225.7005-3</SECTNO> <SUBJECT>Waiver.</SUBJECT> <P>The waiver criteria at 225.7003(a) apply to this restriction.</P> <CITA>[68 FR 15627, Mar. 31, 2003]</CITA> </SECTION> <SECTION> <SECTNO>225.7006</SECTNO> <SUBJECT>Restriction on air circuit breakers for naval vessels.</SUBJECT> </SECTION> <SECTION> <SECTNO>225.7006-1</SECTNO> <SUBJECT>Restriction.</SUBJECT> <P>In accordance with 10 U.S.C. 2534, do not acquire air circuit breakers for naval vessels unless they are manufactured in the United States or Canada.</P> <CITA>[68 FR 15627, Mar. 31, 2003]</CITA> </SECTION> <SECTION> <SECTNO>225.7006-2</SECTNO> <SUBJECT>Exceptions.</SUBJECT> <P>This restriction does not apply if the acquisition is—</P> <P>(a) For an amount at or below the simplified acquisition threshold; or</P> <P>(b) For spare or repair parts needed to support air circuit breakers manufactured outside the United States. Support includes the purchase of spare air circuit breakers when those from alternate sources are not interchangeable.</P> <CITA>[68 FR 15627, Mar. 31, 2003]</CITA> </SECTION> <SECTION> <SECTNO>225.7006-3</SECTNO> <SUBJECT>Waiver.</SUBJECT> <P>(a) The waiver criteria at 225.7003(a) apply to this restriction.</P> <P>(b) The Under Secretary of Defense (Acquisition, Technology, and Logistics) has waived the restriction for air circuit breakers manufactured in the United Kingdom. See 225.7003(b) for applicability.</P> <CITA>[68 FR 15627, Mar. 31, 2003]</CITA> </SECTION> <SECTION> <SECTNO>225.7006-4</SECTNO> <SUBJECT>Solicitation provision and contract clause.</SUBJECT> <P>(a) Use the provision at 252.225-7037, Evaluation of Offers for Air Circuit Breakers, in solicitations requiring air circuit breakers for naval vessels unless—</P> <P>(1) An exception applies; or</P> <P>(2) A waiver has been granted, other than the waiver for the United Kingdom, which has been incorporated into the provision.</P> <P>(b) Use the clause at 252.225-7038, Restriction on Acquisition of Air Circuit Breakers, in solicitations and contracts requiring air circuit breakers for naval vessels unless—</P> <P>(1) An exception applies; or</P> <P>(2) A waiver has been granted, other than the waiver for the United Kingdom, which has been incorporated into the clause.</P> <CITA>[68 FR 15627, Mar. 31, 2003]</CITA> </SECTION> <SECTION> <SECTNO>225.7007</SECTNO> <SUBJECT>Restrictions on anchor and mooring chain.</SUBJECT> </SECTION> <SECTION> <SECTNO>225.7007-1</SECTNO> <SUBJECT>Restrictions.</SUBJECT> <P>(a) In accordance with Section 8041 of the Fiscal Year 1991 DoD Appropriations Act (Public Law 101-511) and similar sections in subsequent DoD appropriations acts, do not acquire welded shipboard anchor and mooring chain, four inches or less in diameter, 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 <PRTPAGE P="154"/>50 percent of the total cost of components.</P> <P>(b) 10 U.S.C. 2534 also restricts acquisition of welded shipboard anchor and mooring chain, four inches or less in diameter, when used as a component of a naval vessel. However, the Appropriations Act restriction described in paragraph (a) of this subsection takes precedence over the restriction of 10 U.S.C. 2534.</P> <CITA>[68 FR 15627, Mar. 31, 2003]</CITA> </SECTION> <SECTION> <SECTNO>225.7007-2</SECTNO> <SUBJECT>Waiver.</SUBJECT> <P>(a) The Secretary of the department responsible for acquisition may waive the restriction in 225.7007-1(a), on a case-by-case basis, if—</P> <P>(1) Sufficient domestic suppliers are not available to meet DoD requirements on a timely basis; and</P> <P>(2) The acquisition is necessary to acquire capability for national security purposes.</P> <P>(b) Document the waiver in a written determination and findings 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>(c) Provide a copy of the determination and findings to the House and Senate Committees on Appropriations.</P> <CITA>[68 FR 15627, Mar. 31, 2003]</CITA> </SECTION> <SECTION> <SECTNO>225.7007-3</SECTNO> <SUBJECT>Contract clause.</SUBJECT> <P>Unless a waiver has been granted, use the clause at 252.225-7019, Restriction on Acquisition of Anchor and Mooring Chain, in solicitations and contracts requiring welded shipboard anchor or mooring chain four inches or less in diameter.</P> <CITA>[68 FR 15627, Mar. 31, 2003]</CITA> </SECTION> <SECTION> <SECTNO>225.7008</SECTNO> <RESERVED>[Reserved]</RESERVED> </SECTION> <SECTION> <SECTNO>225.7009</SECTNO> <SUBJECT>Restriction on ball and roller bearings.</SUBJECT> </SECTION> <SECTION> <SECTNO>225.7009-1</SECTNO> <SUBJECT>Scope.</SUBJECT> <P>This section implements Section 8065 of the Fiscal Year 2002 DoD Appropriations Act (Pub. L. 107-117) and the same restriction in subsequent DoD appropriations acts.</P> <CITA>[71 FR 14111, Mar. 21, 2006]</CITA> </SECTION> <SECTION> <SECTNO>225.7009-2</SECTNO> <SUBJECT>Restriction.</SUBJECT> <P>Do not acquire ball and roller bearings or bearing components unless the bearings and bearing components are manufactured in the United States or Canada.</P> <CITA>[71 FR 14111, Mar. 21, 2006]</CITA> </SECTION> <SECTION> <SECTNO>225.7009-3</SECTNO> <SUBJECT>Exception.</SUBJECT> <P>The restriction in 225.7009-2 does not apply to contracts or subcontracts for the acquisition of commercial items, except for commercial ball and roller bearings acquired as end items.</P> <CITA>[71 FR 14111, Mar. 21, 2006]</CITA> </SECTION> <SECTION> <SECTNO>225.7009-4</SECTNO> <SUBJECT>Waiver.</SUBJECT> <P>The Secretary of the department responsible for acquisition or, for the Defense Logistics Agency, the Component Acquisition Executive, may waive the restriction in 225.7009-2, 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>[71 FR 14111, Mar. 21, 2006]</CITA> </SECTION> <SECTION> <SECTNO>225.7009-5</SECTNO> <SUBJECT>Contract clause.</SUBJECT> <P>Use the clause at 252.225-7016, Restriction on Acquisition of Ball and Roller Bearings, in solicitations and contracts, unless—</P> <P>(a) The items being acquired are commercial items other than ball or roller bearings acquired as end items;</P> <P>(b) The items being acquired do not contain ball and roller bearings; or</P> <P>(c) A waiver has been granted in accordance with 225.7009-4.</P> <CITA>[71 FR 14112, Mar. 21, 2006]</CITA> </SECTION> <SECTION> <PRTPAGE P="155"/> <SECTNO>225.7010</SECTNO> <RESERVED>[Reserved]</RESERVED> </SECTION> <SECTION> <SECTNO>225.7011</SECTNO> <SUBJECT>Restriction on carbon, alloy, and armor steel plate.</SUBJECT> </SECTION> <SECTION> <SECTNO>225.7011-1</SECTNO> <SUBJECT>Restriction.</SUBJECT> <P>(a) In accordance with Section 8111 of the Fiscal Year 1992 DoD Appropriations Act (Pub. L. 102-172) and similar sections in subsequent DoD appropriations acts, do not acquire any of the following types of carbon, alloy, or armor steel plate for use in a Government-owned facility or a facility under the control of (<E T="03">e.g.</E>, leased by) DoD, unless it is melted and rolled in the United States or Canada:</P> <P>(1) Carbon, alloy, or armor steel plate in Federal Supply Class 9515.</P> <P>(2) Carbon, alloy, or armor steel plate described by specifications of the American Society for Testing Materials or the American Iron and Steel Institute.</P> <P>(b) This restriction—</P> <P>(1) Applies to the acquisition of carbon, alloy, or armor steel plate as a finished steel mill product that may be used “as is” or may be used as an intermediate material for the fabrication of an end product; and</P> <P>(2) Does not apply to the acquisition of an end product (<E T="03">e.g.</E>, a machine tool), to be used in the facility, that contains carbon, alloy, or armor steel plate as a component.</P> <CITA>[71 FR 75894, Dec. 19, 2006]</CITA> </SECTION> <SECTION> <SECTNO>225.7011-2</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 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>[68 FR 15627, Mar. 31, 2003]</CITA> </SECTION> <SECTION> <SECTNO>225.7011-3</SECTNO> <SUBJECT>Contract clause.</SUBJECT> <P>Unless a waiver has been granted, use the clause at 252.225-7030, Restriction on Acquisition of Carbon, Alloy, and Armor Steel Plate, in solicitations and contracts that'</P> <P>(a) Require the delivery to the Government of carbon, alloy, or armor steel plate that will be used in a Government-owned facility or a facility 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>[68 FR 15627, Mar. 31, 2003, as amended at 71 FR 75894, Dec. 19, 2006]</CITA> </SECTION> <SECTION> <SECTNO>225.7012</SECTNO> <SUBJECT>Restriction on supercomputers.</SUBJECT> </SECTION> <SECTION> <SECTNO>225.7012-1</SECTNO> <SUBJECT>Restriction.</SUBJECT> <P>In accordance with Section 8112 of Public Law 100-202, and similar sections in subsequent DoD appropriations acts, do not purchase a supercomputer unless it is manufactured in the United States.</P> <CITA>[68 FR 15627, Mar. 31, 2003]</CITA> </SECTION> <SECTION> <SECTNO>225.7012-2</SECTNO> <SUBJECT>Waiver.</SUBJECT> <P>The Secretary of Defense may waive this restriction, on a case-by-case basis, after certifying 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>[68 FR 15627, Mar. 31, 2003]</CITA> </SECTION> <SECTION> <SECTNO>225.7012-3</SECTNO> <SUBJECT>Contract clause.</SUBJECT> <P>Unless a waiver has been granted, use the clause at 252.225-7011, Restriction on Acquisition of Supercomputers, in solicitations and contracts for the acquisition of supercomputers.</P> <CITA>[68 FR 15627, Mar. 31, 2003]</CITA> </SECTION> <SECTION> <SECTNO>225.7013</SECTNO> <SUBJECT>Restrictions on construction or repair of vessels in foreign shipyards.</SUBJECT> <P>In accordance with 10 U.S.C. 7309 and 7310—</P> <P>(a) Do not award a contract to construct in a foreign shipyard—</P> <P>(1) A vessel for any of the armed forces; or<PRTPAGE P="156"/> </P> <P>(2) A major component of the hull or superstructure of a vessel for any of the armed forces; and</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> <CITA>[68 FR 15627, Mar. 31, 2003, as amended at 71 FR 58537, Oct. 4, 2006]</CITA> </SECTION> <SECTION> <SECTNO>225.7014</SECTNO> <SUBJECT>Restriction on overseas military construction.</SUBJECT> <P>For restriction on award of military construction contracts to be performed in the United States outlying areas in the Pacific and on Kwajalein Atoll, or in countries bordering the Arabian Gulf, see 236.273(a).</P> <CITA>[70 FR 35545, June 21, 2005, as amended at 72 FR 14239, Mar. 27, 2007]</CITA> </SECTION> <SECTION> <SECTNO>225.7015</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>[68 FR 15627, Mar. 31, 2003]</CITA> </SECTION> <SECTION> <SECTNO>225.7016</SECTNO> <SUBJECT>Restriction on research and development.</SUBJECT> <P>(a) In accordance with Public Law 92-570, do not use DoD appropriations to make an 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) This restriction does not affect the requirements of FAR Part 35 for selection of research and development contractors. 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> <CITA>[68 FR 15627, Mar. 31, 2003]</CITA> </SECTION> <SECTION> <SECTNO>225.7017</SECTNO> <SUBJECT>Restriction on Ballistic Missile Defense research, development, test, and evaluation.</SUBJECT> <CITA>[68 FR 15627, Mar. 31, 2003]</CITA> </SECTION> <SECTION> <SECTNO>225.7017-1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P> <E T="03">Competent, foreign firm,</E> and <E T="03">U.S. firm</E> are defined in the provision at 252.225-7018, Notice of Prohibition of Certain Contracts with Foreign Entities for the Conduct of Ballistic Missile Defense Research, Development, Test, and Evaluation.</P> <CITA>[68 FR 15627, Mar. 31, 2003]</CITA> </SECTION> <SECTION> <SECTNO>225.7017-2</SECTNO> <SUBJECT>Restriction.</SUBJECT> <P>In accordance with Section 222 of the DoD Authorization Act for Fiscal Years 1988 and 1989 (Pub. L. 100-180), do not use any funds appropriated to or for the use of DoD to enter into or carry out a contract with a foreign government or firm, including any contract awarded as a result of a broad agency announcement, if the contract provides for the conduct of research, development, test, and evaluation (RDT&E) in connection with the Ballistic Missile Defense Program.</P> <CITA>[68 FR 15627, Mar. 31, 2003]</CITA> </SECTION> <SECTION> <SECTNO>225.7017-3</SECTNO> <SUBJECT>Exceptions.</SUBJECT> <P>This restriction does 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&E in connection with antitactical ballistic missile systems; or</P> <P>(3) The foreign government or 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 that the United States and the foreign parties will derive from the contract. 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 U.S. firm cannot competently perform a contract for RDT&E at a price equal to or less than <PRTPAGE P="157"/>the price at which a foreign government or firm would perform the RDT&E. The contracting officer or source selection authority, as applicable, shall make a determination, in accordance with PGI 225.7017-3(b), that will be the basis for the certification.</P> <CITA>[68 FR 15627, Mar. 31, 2003, as amended at 71 FR 62565, Oct. 26, 2006]</CITA> </SECTION> <SECTION> <SECTNO>225.7017-4</SECTNO> <SUBJECT>Solicitation provision.</SUBJECT> <P>Unless foreign participation is otherwise excluded, use the provision at 252.225-7018, Notice of Prohibition of Certain Contracts With Foreign Entities for the Conduct of Ballistic Missile Defense Research, Development, Test, and Evaluation, in competitively negotiated solicitations for RDT&E in connection with the Ballistic Missile Defense Program.</P> <CITA>[68 FR 15627, Mar. 31, 2003]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 225.71—Other Restrictions on Foreign Acquisition</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>68 FR 15631, Mar. 31, 2003, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>225.7100</SECTNO> <SUBJECT>Scope of subpart.</SUBJECT> <P>This subpart contains foreign product restrictions that are based on policies designed to protect the defense industrial base.</P> </SECTION> <SECTION> <SECTNO>225.7101</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P> <E T="03">Domestic manufacture</E> is defined 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>When acquiring the following forging items, whether as end items or components, acquire items that are of domestic manufacture to the maximum extent practicable:</P> <GPOTABLE CDEF="s50,r50" COLS="2" OPTS="L2"> <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</P> <P>(c) When the quantity acquired exceeds the amount needed to maintain the U.S. defense mobilization base (provided the excess quantity is an economical purchase quantity). The requirement for domestic manufacture 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 contractor, the contracting officer may waive the requirement for domestic manufacture of the items listed in 225.7102-1.</P> </SECTION> <SECTION> <SECTNO>225.7102-4</SECTNO> <SUBJECT>Contract clause.</SUBJECT> <P>Use the clause at 252.225-7025, Restriction on Acquisition of Forgings, in solicitations and contracts, unless—</P> <P>(a) The supplies being acquired do not contain any of the items listed in 225.7102-1; or</P> <P>(b) An exception in 225.7102-2 applies. If an exception applies to only a portion of the acquisition, specify the excepted portion in the solicitation and contract.</P> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 225.72—Reporting Contract Performance Outside the United States</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>70 FR 20839, Apr. 22, 2005, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>225.7201</SECTNO> <SUBJECT>Policy.</SUBJECT> <P>(a) 10 U.S.C. 2410g requires offerors and contractors to notify DoD of any intention to perform a DoD contract outside the United States and Canada when the contract could be performed inside the United States or Canada.</P> <P>(b) DoD requires contractors to report the volume, type, and nature of contract performance outside the United States.</P> </SECTION> <SECTION> <PRTPAGE P="158"/> <SECTNO>225.7202</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> </SECTION> <SECTION> <SECTNO>225.7203</SECTNO> <SUBJECT>Contracting officer distribution of reports.</SUBJECT> <P>Follow the procedures at PGI 225.7203 for distribution of reports submitted with offers in accordance with the provision at 252.225-7003, Report of Intended Performance Outside the United States and Canada—Submission with Offer.</P> </SECTION> <SECTION> <SECTNO>225.7204</SECTNO> <SUBJECT>Solicitation provision and contract clauses.</SUBJECT> <P>Except for acquisitions described in 225.7202—</P> <P>(a) Use the provision at 252.225-7003, Report of Intended Performance Outside the United States and Canada—Submission with Offer, in solicitations with a value exceeding $11.5 million;</P> <P>(b) Use the clause at 252.225-7004, Report of Intended Performance Outside the United States and Canada—Submission after Award, in solicitations and contracts with a value exceeding $11.5 million; and</P> <P>(c) Use the clause at 252.225-7006, Quarterly Reporting of Actual Contract Performance Outside the United States, in solicitations and contracts with a value exceeding $550,000.</P> <CITA>[70 FR 20839, Apr. 22, 2005, as amended at 71 FR 75892, Dec. 19, 2006]</CITA> </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).</P> <P>(b) Conduct FMS acquisitions under the same acquisition and contract management procedures used for other defense acquisitions.</P> <P>(c) Follow the additional procedures at PGI 225.7301(c) for preparation of solicitations and contracts that include FMS requirements.</P> <P>(d) See 229.170 for policy on contracts financed under U.S. assistance programs that involve payment of foreign country value added taxes or customs duties.</P> <CITA>[70 FR 73155, Dec. 9, 2005]</CITA> </SECTION> <SECTION> <SECTNO>225.7302</SECTNO> <SUBJECT>Guidance.</SUBJECT> <P>For guidance on the role of the contracting officer in FMS programs that will require an acquisition, see PGI 225.7302.</P> <CITA>[70 FR 73155, Dec. 9, 2005]</CITA> </SECTION> <SECTION> <SECTNO>225.7303</SECTNO> <SUBJECT>Pricing acquisitions for FMS.</SUBJECT> <P>(a) Price FMS contracts using the same principles used in pricing other defense contracts. However, 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 shall not require the submission of cost or pricing data. The contracting officer <PRTPAGE P="159"/>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, as amended at 68 FR 15632, Mar. 31, 2003]</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, the following:</P> <P>(1) Selling expenses (not otherwise limited by FAR Part 31), such as—</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. Section 126.8 of the International Traffic in Arms Regulations (22 CFR 126.8) may require Government approval for these costs to be allowable, in which case the appropriate Government approval shall be obtained; and</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, or operations/tactics enhancement, and related travel to foreign countries.</P> <P>(3) Offset costs (also see 225.7306).</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 limitations for major contractors on independent research and development and bid and proposal (IR&D/B&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. The allowability of IR&D/B&P costs on contracts for FMS not wholly paid for from funds made available on a nonrepayable basis is limited to the contract's allocable share of the contractor's total IR&D/B&P expenditures. In pricing contracts for such FMS—</P> <P>(1) Use the best estimate of reasonable costs in forward pricing; and</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 <PRTPAGE P="160"/>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; 68 FR 15632, Mar. 31, 2003; 70 FR 73155, Dec. 9, 2005]</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—</P> <P>(1) The fees 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); and</P> <P>(2) The contracting officer determines that the fees are fair and reasonable.</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) shall provide that all U.S. Government contracts resulting from the LOAs prohibit the reimbursement of contingent fees as an allowable cost under the contract, unless the contractor identifies the payments and the foreign customer approves the payments in writing before contract award (see 225.7307(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 are unallowable under DoD contracts, unless the contractor identifies the payment and the foreign customer approves the payment in writing before contract award.</P> <CITA>[68 FR 15633, Mar. 31, 2003, as amended at 70 FR 73155, Dec. 9, 2005]</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), price FMS wholly paid for from funds made available on a nonrepayable basis on the same costing basis with regard to profit, overhead, IR&D/B&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 are allowable under such contracts. Indirect burden rates applicable to such direct costs are 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; 68 FR 15633, Mar. 31, 2003]</CITA> </SECTION> <SECTION> <SECTNO>225.7304</SECTNO> <SUBJECT>FMS customer involvement.</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 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) FMS customers should be encouraged to participate with U.S. Government acquisition personnel in discussions with industry to—</P> <P>(1) Develop technical specifications;</P> <P>(2) Establish delivery schedules;</P> <P>(3) Identify any special warranty provisions or other requirements unique to the FMS customer; and<PRTPAGE P="161"/> </P> <P>(4) Review prices of varying alternatives, quantities, and options needed to make price-performance tradeoffs.</P> <P>(c) Do not disclose to the FMS customer any data, including cost or pricing data, that is contractor proprietary unless the contractor authorizes its release.</P> <P>(d) Except as provided in paragraph (e)(3) of this section, the degree of FMS customer participation in contract negotiations is left to the discretion of the contracting officer after consultation with the contractor. The contracting officer shall provide an explanation to the FMS customer if its participation in negotiations will be limited. Factors that may limit FMS customer participation include situations where—</P> <P>(1) The contract includes requirements for more than one FMS customer;</P> <P>(2) The contract includes unique U.S. requirements; or</P> <P>(3) Contractor proprietary data is a subject of negotiations.</P> <P>(e) Do not allow representatives of the FMS customer to—</P> <P>(1) Direct the exclusion of certain firms from the solicitation process (they may suggest the inclusion of certain firms);</P> <P>(2) Interfere with a contractor's placement of subcontracts; or</P> <P>(3) Observe or participate in negotiations between the U.S. Government and the contractor involving cost or pricing data, unless a deviation is granted in accordance with Subpart 201.4.</P> <P>(f) 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, warranties, or other unique requirements requested by the FMS customer).</P> <P>(g) Do not honor any requests by the FMS customer to reject any bid or proposal.</P> <P>(h) If an FMS customer requests additional information concerning FMS contract prices, the contracting officer shall, after consultation with the contractor, provide sufficient information to demonstrate the reasonableness of the price and reasonable responses to relevant questions concerning contract price. This information—</P> <P>(1) May include tailored responses, top-level pricing summaries, historical prices, or an explanation of any significant differences between the actual contract price and the estimated contract price included in the initial LOA; and</P> <P>(2) May be provided orally, in writing, or by any other method acceptable to the contracting officer.</P> <CITA>[67 FR 70325, Nov. 22, 2002]</CITA> </SECTION> <SECTION> <SECTNO>225.7305</SECTNO> <SUBJECT>Limitation of liability.</SUBJECT> <P>Advise the contractor when 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> <CITA>[56 FR 36367, July 31, 1991, as amended at 68 FR 15633, Mar. 31, 2003]</CITA> </SECTION> <SECTION> <SECTNO>225.7306</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. (Also see 225.7303-2(a)(3).)</P> <CITA>[70 FR 73155, Dec. 9, 2005]</CITA> </SECTION> <SECTION> <SECTNO>225.7307</SECTNO> <SUBJECT>Contract clauses.</SUBJECT> <P>(a) Use the clause at 252.225-7027, Restriction on Contingent Fees for Foreign Military Sales, in solicitations and contracts for FMS. Insert in paragraph (b)(1) of the clause the name(s) of any foreign country customer(s) listed in 225.7303-4(b).</P> <P>(b) Use the clause at 252.225-7028, Exclusionary Policies and Practices of Foreign Governments, in solicitations and contracts for the purchase of supplies and services for international military education training and FMS.</P> <CITA>[68 FR 15633, Mar. 31, 2003. Redesignated at 70 FR 73155, Dec. 9, 2005]</CITA> </SECTION> </SUBPART> <SUBPART> <PRTPAGE P="162"/> <HD SOURCE="HED">Subpart 225.74—Defense Contractors Outside the United States</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>70 FR 23801, May 5, 2005, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>225.7401</SECTNO> <SUBJECT>Contracts requiring performance or delivery in a foreign country.</SUBJECT> <P>(a) If an acquisition requires performance of work in a foreign country by contractor personnel other than host country personnel, or delivery of items to a Unified Combatant Command designated operational area, follow the procedures at PGI 225.7401(a).</P> <P>(b) For work performed in Germany, eligibility for logistics support or base privileges of contractor employees is governed by U.S.-German bilateral agreements. Follow the procedures in Army in Europe Regulation 715-9, available at <E T="03">http://www.per.hqusareur.army.mil/cpd/docper/default.htm.</E> Follow the procedures in Army in Europe Regulation 715-9, available at <E T="03">http://www.per.hqusareur.army.mil/cpd/docper/GermanyDefault.aspx.</E> </P> <P>(c) For work performed in Japan or Korea, see PGI 225.7401(c) for information on bilateral agreements and policy relating to contractor employees in Japan or Korea.</P> <CITA>[70 FR 23801, May 5, 2005, as amended at 71 FR 39009, July 11, 2006; 72 FR 14239, Mar. 27, 2007]</CITA> </SECTION> <SECTION> <SECTNO>225.7402</SECTNO> <SUBJECT>Contractor personnel authorized to accompany U.S. Armed Forces deployed outside the United States.</SUBJECT> <P>For additional information on contractor personnel authorized to accompany the U.S. Armed Forces, see PGI 225.7402.</P> <CITA>[73 FR 16774, Mar. 31, 2008]</CITA> </SECTION> <SECTION> <SECTNO>225.7402-1</SECTNO> <SUBJECT>Scope.</SUBJECT> <P>(a) This section applies to contracts that involve contractor personnel authorized to accompany U.S. Armed Forces deployed outside the United States in—</P> <P>(1) Contingency operations;</P> <P>(2) Humanitarian or peacekeeping operations; or</P> <P>(3) Other military operations or military exercises, when designated by the combatant commander.</P> <P>(b) Any of the types of operations listed in paragraph (a) of this subsection may include stability operations such as—</P> <P>(1) Establishment or maintenance of a safe and secure environment; or</P> <P>(2) Provision of emergency infrastructure reconstruction, humanitarian relief, or essential governmental services (until feasible to transition to local government).</P> <CITA>[73 FR 16774, Mar. 31, 2008]</CITA> </SECTION> <SECTION> <SECTNO>225.7402-2</SECTNO> <SUBJECT>Definition.</SUBJECT> <P>See PGI 225.7402-2 for additional information on designated operational areas.</P> <CITA>[73 FR 16774, Mar. 31, 2008]</CITA> </SECTION> <SECTION> <SECTNO>225.7402-3</SECTNO> <SUBJECT>Government support.</SUBJECT> <P>(a) Government support that may be authorized or required for contractor personnel performing in a designated operational area may include, but is not limited to, the types of support listed in PGI 225.7402-3(a).</P> <P>(b) The agency shall provide logistical or security support only when the appropriate agency official, in accordance with agency guidance, determines in coordination with the combatant commander that—</P> <P>(1) Such Government support is available and is needed to ensure continuation of essential contractor services; and</P> <P>(2) The contractor cannot obtain adequate support from other sources at a reasonable cost.</P> <P>(c) The contracting officer shall specify in the solicitation and contract—</P> <P>(1) Valid terms, approved by the combatant commander, that specify the responsible party, if a party other than the combatant commander is responsible for providing protection to the contractor personnel performing in the designated operational area as specified in 225.7402-1;</P> <P>(2) If medical or dental care is authorized beyond the standard specified in paragraph (c)(2)(i) of the clause at 252.225-7040, Contractor Personnel Authorized to Accompany U.S. Armed <PRTPAGE P="163"/>Forces Deployed Outside the United States; and</P> <P>(3) Any other Government support to be provided, and whether this support will be provided on a reimbursable basis, citing the authority for the reimbursement.</P> <P>(d) The contracting officer shall provide direction to the contractor, if the contractor is required to reimburse the Government for medical treatment or transportation of contractor personnel to a selected civilian facility in accordance with paragraph (c)(2)(ii) of the clause at 252.225-7040.</P> <P>(e) Contractor personnel must have a letter of authorization (LOA) issued by a contracting officer in order to process through a deployment center or to travel to, from, or within the designated operational area. The LOA also will identify any additional authorizations, privileges, or Government support that the contractor personnel are entitled to under the contract. For a sample LOA, see PGI 225.7402-3(e).</P> <CITA>[73 FR 16774, Mar. 31, 2008]</CITA> </SECTION> <SECTION> <SECTNO>225.7402-4</SECTNO> <SUBJECT>Contract clauses.</SUBJECT> <P>(a) Use the clause at 252.225-7040, Contractor Personnel Authorized to Accompany U.S. Armed Forces Deployed Outside the United States, instead of the clause at FAR 52.225-19, Contractor Personnel in a Designated Operational Area or Supporting a Diplomatic or Consular Mission Outside the United States, in solicitations and contracts that authorize contractor personnel to accompany U.S. Armed Forces deployed outside the United States in—</P> <P>(1) Contingency operations;</P> <P>(2) Humanitarian or peacekeeping operations; or</P> <P>(3) Other military operations or military exercises, when designated by the combatant commander.</P> <P>(b) For additional guidance on clauses to consider when using the clause at 252.225-7040, see PGI 225.7402-4(b).</P> <CITA>[73 FR 16774, Mar. 31, 2008]</CITA> </SECTION> <SECTION> <SECTNO>225.7403</SECTNO> <SUBJECT>Antiterrorism/force protection.</SUBJECT> </SECTION> <SECTION> <SECTNO>225.7403-1</SECTNO> <SUBJECT>General.</SUBJECT> <P>Information and guidance pertaining to DoD antiterrorism/force protection policy for contracts that require performance or travel outside the United States can be obtained from the offices listed in PGI 225.7403-1.</P> </SECTION> <SECTION> <SECTNO>225.7403-2</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);<PRTPAGE P="164"/> </P> <P>(ii) A petroleum product;</P> <P>(iii) A spare part for foreign-manufactured vehicles, equipment, machinery, or systems, provided the acquisition is restricted to the original manufacturer or its supplier;</P> <P>(iv) An industrial gas;</P> <P>(v) A brand drug specified by the Defense Medical Materiel Board; or</P> <P>(vi) Information technology that is a commercial item, using fiscal year 2004 or subsequent funds (Section 535 of Division F of the Consolidated Appropriations Act, 2004 (Pub. L. 108-199), and the same provision in subsequent appropriations acts);</P> <P>(3) The acquisition is covered by the World Trade Organization Government Procurement Agreement;</P> <P>(4) The acquisition of foreign end products or construction material is required by a treaty or executive agreement between governments;</P> <P>(5) Use of a procedure specified in 225.7703-1(a) is authorized for an acquisition in support of operations in Iraq or Afghanistan;</P> <P>(6) The end product is acquired for commissary resale; or</P> <P>(7) The contracting officer determines that a requirement can best be filled by a foreign end product or construction material, including determinations that—</P> <P>(i) A subsistence product is perishable and delivery from the United States would significantly impair the quality at the point of consumption;</P> <P>(ii) An end product or construction material, by its nature or as a practical matter, can best be acquired in the geographic area concerned, e.g., ice or books; or bulk material, such as sand, gravel, or other soil material, stone, concrete masonry units, or fired brick;</P> <P>(iii) A particular domestic construction material is not available;</P> <P>(iv) The cost of domestic construction material would exceed the cost of foreign construction material by more than 50 percent, calculated on the basis of—</P> <P>(A) A particular construction material; or</P> <P>(B) The comparative cost of application of the Balance of Payments Program to the total acquisition; or</P> <P>(v) Use of a particular domestic construction material is impracticable;</P> <P>(b) After receipt of offers—</P> <P>(1) The evaluated low offer (<E T="03">see</E> Subpart 225.5) is an offer of an end product that—</P> <P>(i) Is a qualifying country end product;</P> <P>(ii) Is an eligible product; or</P> <P>(iii) Is a nonqualifying country end product, but application of the Balance of Payments Program evaluation factor would not result in award on a domestic offer; or</P> <P>(2) The construction material is an eligible product; or</P> <P>(c) At any time during the acquisition process, the head of the agency determines that it is not in the public interest to apply the restrictions of the Balance of Payments Program to the end product or construction material.</P> <CITA>[67 FR 20694, Apr. 26, 2002, as amended at 67 FR 77939, Dec. 20, 2002; 69 FR 1928, Jan. 13, 2004; 70 FR 2363, Jan. 13, 2005; 70 FR 73155, Dec. 9, 2005; 71 FR 58540, Oct. 4, 2006; 73 FR 53153, Sept. 15, 2008]</CITA> </SECTION> <SECTION> <SECTNO>225.7502</SECTNO> <SUBJECT>Procedures.</SUBJECT> <P>If the Balance of Payments Program applies to the acquisition, follow the procedures at PGI 225.7502.</P> <CITA>[71 FR 62566, Oct. 26, 2006]</CITA> </SECTION> <SECTION> <SECTNO>§ 225.7503</SECTNO> <SUBJECT>Contract clauses.</SUBJECT> <P>Unless the entire acquisition is exempt from the Balance of Payments Program—</P> <P>(a) Use the clause at 252.225-7044, Balance of Payments Program—Construction Material, in solicitations and contracts for construction to be performed outside the United States with a value greater than the simplified acquisition threshold but less than $7,443,000.</P> <P>(b) Use the clause at 252.225-7045, Balance of Payments Program—Construction Material Under Trade Agreements, in solicitations and contracts for construction to be performed outside the United States with a value of $7,443,000 or more. For acquisitions with a value of $7,443,000 or more, but less than $8,817,449, use the clause with its Alternate I.</P> <CITA>[71 FR 9271, Feb. 23, 2006, as amended at 73 FR 4116, Jan. 24, 2008]</CITA> </SECTION> </SUBPART> <SUBPART> <PRTPAGE P="165"/> <HD SOURCE="HED">Subpart 225.76—Secondary Arab Boycott of Israel</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>71 FR 39006, July 11, 2006, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>225.7601</SECTNO> <SUBJECT>Restriction.</SUBJECT> <P>In accordance with 10 U.S.C. 2410i, do not enter into a contract with a foreign entity unless it has certified that it does not comply with the secondary Arab boycott of Israel.</P> </SECTION> <SECTION> <SECTNO>225.7602</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 information (see 225.870).</P> </SECTION> <SECTION> <SECTNO>225.7603</SECTNO> <SUBJECT>Exceptions.</SUBJECT> <P>This 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 United States forces or of allied forces in a foreign country; or</P> <P>(c) Contracts pertaining to the use of any equipment, technology, data, or services for intelligence or classified purposes, or to the acquisition or lease thereof, in the interest of national security.</P> </SECTION> <SECTION> <SECTNO>225.7604</SECTNO> <SUBJECT>Waivers.</SUBJECT> <P>The Secretary of Defense may waive this restriction on the basis of national security interests. To request a waiver, follow the procedures at PGI 225.7604.</P> <CITA>[71 FR 62566, Oct. 26, 2006]</CITA> </SECTION> <SECTION> <SECTNO>225.7605</SECTNO> <SUBJECT>Solicitation provision.</SUBJECT> <P>Unless an exception applies or a waiver has been granted in accordance with 225.7604, use the provision at 252.225-7031, Secondary Arab Boycott of Israel, in all solicitations.</P> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 225.77—Acquisitions in Support of Operations in Iraq or Afghanistan</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>73 FR 53153, Sept. 15, 2008, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>225.7700</SECTNO> <SUBJECT>Scope.</SUBJECT> <P>This subpart implements Section 886 and Section 892 of the National Defense Authorization Act for Fiscal Year 2008 (Public Law 110-181).</P> </SECTION> <SECTION> <SECTNO>225.7701</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this subpart—</P> <P> <E T="03">Product from Iraq or Afghanistan</E> means a product that is mined, produced, or manufactured in Iraq or Afghanistan.</P> <P> <E T="03">Service from Iraq or Afghanistan</E> means a service that is performed in Iraq or Afghanistan predominantly by citizens or permanent resident aliens of Iraq or Afghanistan.</P> <P> <E T="03">Small arms</E> means pistols and other weapons less than 0.50 caliber.</P> <P> <E T="03">Source from Iraq or Afghanistan</E> means a source that—</P> <P>(1) Is located in Iraq or Afghanistan; and</P> <P>(2) Offers products or services from Iraq or Afghanistan.</P> </SECTION> <SECTION> <SECTNO>225.7702</SECTNO> <SUBJECT>Acquisition of small arms.</SUBJECT> <P>(a) Except as provided in paragraph (b) of this section, when acquiring small arms for assistance to the Army of Iraq, the Army of Afghanistan, the Iraqi Police Forces, the Afghani Police Forces, or other Iraqi or Afghani security organizations—</P> <P>(1) Use full and open competition to the maximum extent practicable, consistent with the provisions of 10 U.S.C. 2304;</P> <P>(2) If use of other than full and open competition is justified in accordance with FAR Subpart 6.3, ensure that—</P> <P>(i) No responsible U.S. manufacturer is excluded from competing for the acquisition; and</P> <P>(ii) Products manufactured in the United States are not excluded from the competition; and</P> <P>(3) If the exception at FAR 6.302-2 (unusual and compelling urgency) applies, do not exclude responsible U.S. manufacturers or products manufactured in the United States from the competition for the purpose of administrative expediency. However, such an offer may be rejected if it does not meet delivery schedule requirements.</P> <P>(b) Paragraph (a)(2) of this section does not apply when—<PRTPAGE P="166"/> </P> <P>(1) The exception at FAR 6.302-1 (only one or a limited number of responsible sources) applies, and the only responsible source or sources are not U.S. manufacturers or are not offering products manufactured in the United States; or</P> <P>(2) The exception at FAR 6.302-4 (international agreement) applies, and United States manufacturers or products manufactured in the United States are not the source(s) specified in the written directions of the foreign government reimbursing the agency for the cost of the acquisition of the property or services for such government.</P> </SECTION> <SECTION> <SECTNO>225.7703</SECTNO> <SUBJECT>Acquisition of products or services other than small arms.</SUBJECT> </SECTION> <SECTION> <SECTNO>225.7703-1</SECTNO> <SUBJECT>Acquisition procedures.</SUBJECT> <P>(a) Subject to the requirements of 225.7703-2, a product or service (including construction), other than small arms, in support of operations in Iraq or Afghanistan, may be acquired by—</P> <P>(1) Providing a preference for products or services from Iraq or Afghanistan in accordance with the evaluation procedures at 225.7703-3;</P> <P>(2) Limiting competition to products or services from Iraq or Afghanistan; or</P> <P>(3) Using procedures other than competitive procedures to award a contract to a particular source or sources from Iraq or Afghanistan. When other than competitive procedures are used, the contracting officer shall document the contract file with the rationale for selecting the particular source(s).</P> <P>(b) For acquisitions conducted using a procedure specified in paragraph (a) of this subsection, the justification and approval addressed in FAR Subpart 6.3 is not required.</P> </SECTION> <SECTION> <SECTNO>225.7703-2</SECTNO> <SUBJECT>Determination requirements.</SUBJECT> <P>Before use of a procedure specified in 225.7703-1(a), a written determination must be prepared and executed as follows:</P> <P>(a) For products or services to be used only by the military forces, police, or other security personnel of Iraq or Afghanistan, the contracting officer shall—</P> <P>(1) Determine in writing that the product or service is to be used only by the military forces, police, or other security personnel of Iraq or Afghanistan; and</P> <P>(2) Include the written determination in the contract file.</P> <P>(b) For products or services not limited to use by the military forces, police, or other security personnel of Iraq or Afghanistan, the following requirements apply:</P> <P>(1) The appropriate official specified in paragraph (b)(2) of this subsection must determine in writing that it is in the national security interest of the United States to use a procedure specified in 225.7703-1(a), because—</P> <P>(i) The procedure is necessary to provide a stable source of jobs in Iraq or Afghanistan; and</P> <P>(ii) Use of the procedure will not adversely affect—</P> <P>(A) Operations in Iraq or Afghanistan (including security, transition, reconstruction, and humanitarian relief activities); or</P> <P>(B) The U.S. industrial base. The authorizing official generally may presume that there will not be an adverse effect on the U.S. industrial base. However, when in doubt, the authorizing official should coordinate with the applicable subject matter expert specified in PGI 225.7703-2(b).</P> <P>(2) Determinations may be made for an individual acquisition or a class of acquisitions meeting the criteria in paragraph (b)(1) of this subsection as follows:</P> <P>(i) The head of the contacting activity is authorized to make a determination that applies to an individual acquisition with a value of less than $78.5 million.</P> <P>(ii) The Director, Defense Procurement, Acquisition Policy, and Strategic Sourcing, and the following officials, without power of redelegation, are authorized to make a determination that applies to an individual acquisition with a value of $78.5 million or more or to a class of acquisitions:</P> <P>(A) Defense Logistics Agency Component Acquisition Executive.</P> <P>(B) Army Acquisition Executive.</P> <P>(C) Navy Acquisition Executive.</P> <P>(D) Air Force Acquisition Executive.</P> <P>(3) The contracting officer—<PRTPAGE P="167"/> </P> <P>(i) Shall include the applicable written determination in the contract file; and</P> <P>(ii) Shall ensure that each contract action taken pursuant to the authority of a class determination is within the scope of the class determination, and shall document the contract file for each action accordingly.</P> <P>(c) See PGI 225.7703-2(c) for formats for use in preparation of the determinations required by this subsection.</P> </SECTION> <SECTION> <SECTNO>225.7703-3</SECTNO> <SUBJECT>Evaluating offers.</SUBJECT> <P>(a) Evaluate offers submitted in response to solicitations that include the provision at 252.225-7023, Preference for Products or Services from Iraq or Afghanistan, as follows:</P> <P>(1) If the low offer is an offer of a product or service from Iraq or Afghanistan, award on that offer.</P> <P>(2) If there are no offers of a product or service from Iraq or Afghanistan, award on the low offer.</P> <P>(3) Otherwise, apply the evaluation factor specified in the solicitation to the low offer.</P> <P>(i) If the price of the low offer of a product or service from Iraq or Afghanistan is less than the evaluated price of the low offer, award on the low offer of a product or service from Iraq or Afghanistan.</P> <P>(ii) If the evaluated price of the low offer remains less than the low offer of a product or service from Iraq or Afghanistan, award on the low offer.</P> <P>(b) If the provision at 252.225-7023 is modified to provide a preference exclusively for products or services from Iraq or Afghanistan, also modify the evaluation procedures in paragraph (a) of this subsection to remove “or Afghanistan” or “Iraq or”, respectively, wherever the phrase appears.</P> </SECTION> <SECTION> <SECTNO>225.7703-4</SECTNO> <SUBJECT>Reporting requirement.</SUBJECT> <P>The following organizations shall submit periodic reports to the Deputy Director, Program Acquisition and Contingency Contracting, Defense Procurement, Acquisition Policy, and Strategic Sourcing, in accordance with PGI 225.7703-4, to address the organization's use of the procedures authorized by this section:</P> <P>(a) The Joint Contracting Command (Iraq/Afghanistan).</P> <P>(b) The Department of the Army, except for contract actions reported by the Joint Contracting Command.</P> <P>(c) The Department of the Navy.</P> <P>(d) The Department of the Air Force.</P> <P>(e) The Defense Logistics Agency.</P> <P>(f) The other defense agencies and other DoD components that execute reportable contract actions.</P> </SECTION> <SECTION> <SECTNO>225.7703-5</SECTNO> <SUBJECT>Solicitation provisions and contract clauses.</SUBJECT> <P>(a) Use the provision at 252.225-7023, Preference for Products or Services from Iraq or Afghanistan, in solicitations that provide a preference for products or services from Iraq or Afghanistan in accordance with 225.7703-1(a)(1). The contracting officer—</P> <P>(1) May modify the provision to provide a preference exclusively for products or services from Iraq or exclusively for products or services from Afghanistan by removing “or Afghanistan” or “Iraq or”, respectively, wherever the phrase appears in the provision. If this provision is so modified, the clause at 252.225-7024 shall be modified accordingly; and</P> <P>(2) May modify the 50 percent evaluation factor in accordance with contracting office procedures.</P> <P>(b) Use the clause at 252.225-7024, Requirement for Products or Services from Iraq or Afghanistan, in solicitations that include the provision at 252.225-7023, Preference for Products or Services from Iraq or Afghanistan, and in the resulting contract. If the provision at 252.225-7023 has been modified to provide a preference exclusively for Iraq or exclusively for Afghanistan, in accordance with paragraph (a)(1) of this subsection, the clause at 252.225-7024 shall be modified accordingly.</P> <P>(c)(1) Use the clause at 252.225-7026, Acquisition Restricted to Products or Services from Iraq or Afghanistan, in solicitations and contracts that—</P> <P>(i) Are restricted to the acquisition of products or services from Iraq or Afghanistan in accordance with 225.7703-1(a)(2); or</P> <P>(ii) Will be directed to a particular source or sources from Iraq or Afghanistan in accordance with 225.7703-1(a)(3).</P> <P>(2) The contracting officer may modify the clause to restrict the acquisition to products or services from Iraq, <PRTPAGE P="168"/>or to restrict the acquisition to products or services from Afghanistan, by removing “or Afghanistan” or “Iraq or”, respectively, wherever the phrase appears in the clause.</P> <P>(d) When the Trade Agreements Act applies to the acquisition, use the appropriate clause and provision as prescribed at 225.1101(6) and (7).</P> <P>(e) Do not use any of the following provisions or clauses in solicitations or contracts that include the provision at 252.225-7023, the clause at 252.225-7024, or the clause at 252.225-7026:</P> <P>(1) 252.225-7000, Buy American Act—Balance of Payments Program Certificate.</P> <P>(2) 252.225-7001, Buy American Act and Balance of Payments Program.</P> <P>(3) 252.225-7002, Qualifying Country Sources as Subcontractors.</P> <P>(4) 252.225-7020, Trade Agreements Certificate.</P> <P>(5) 252.225-7035, Buy American Act—Free Trade Agreements—Balance of Payments Program Certificate.</P> <P>(6) 252.225-7036, Buy American Act—Free Trade Agreements—Balance of Payments Program.</P> <P>(7) 252.225-7044, Balance of Payments Program—Construction Material.</P> <P>(8) 252.225-7045, Balance of Payments Program—Construction Material Under Trade Agreements.</P> </SECTION> </SUBPART> </PART> <PART> <EAR>Pt. 226</EAR> <HD SOURCE="HED">PART 226—OTHER SOCIOECONOMIC PROGRAMS</HD> <CONTENTS> <SUBPART> <HD SOURCE="HED">Subpart 226.1—Indian Incentive Program</HD> <SECHD>Sec.</SECHD> <SECTNO>226.103</SECTNO> <SUBJECT>Procedures.</SUBJECT> <SECTNO>226.104</SECTNO> <SUBJECT>Contract clause.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 226.3—Historically Black Colleges and Universities and Minority Institutions</HD> <SECTNO>226.370</SECTNO> <SUBJECT>Contracting with historically black colleges and universities and minority institutions.</SUBJECT> <SECTNO>226.370-1</SECTNO> <SUBJECT>General.</SUBJECT> <SECTNO>226.370-2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>226.370-3</SECTNO> <SUBJECT>Policy.</SUBJECT> <SECTNO>226.370-4</SECTNO> <SUBJECT>Set-aside criteria.</SUBJECT> <SECTNO>226.370-5</SECTNO> <SUBJECT>Set-aside procedures.</SUBJECT> <SECTNO>226.370-6</SECTNO> <SUBJECT>Eligibility for award.</SUBJECT> <SECTNO>226.370-7</SECTNO> <SUBJECT>Protesting a representation.</SUBJECT> <SECTNO>226.370-8</SECTNO> <SUBJECT>Goals and incentives for subcontracting with HBCU/MIs.</SUBJECT> <SECTNO>226.370-9</SECTNO> <SUBJECT>Solicitation provision and contract clause.</SUBJECT> </SUBPART> <SUBPART> <RESERVED>Subpart 226.70 [Reserved]</RESERVED> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 226.71—Preference for Local and Small Businesses</HD> <SECTNO>226.7100</SECTNO> <SUBJECT>Scope of subpart.</SUBJECT> <SECTNO>226.7101</SECTNO> <SUBJECT>Definition.</SUBJECT> <SECTNO>226.7102</SECTNO> <SUBJECT>Policy.</SUBJECT> <SECTNO>226.7103</SECTNO> <SUBJECT>Procedure.</SUBJECT> <SECTNO>226.7104</SECTNO> <SUBJECT>Other considerations.</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 36388, July 31, 1991, unless otherwise noted.</P> </SOURCE> <SUBPART> <HD SOURCE="HED">Subpart 226.1—Indian Incentive Program</HD> <SECTION> <SECTNO>226.103</SECTNO> <SUBJECT>Procedures.</SUBJECT> <P>Follow the procedures at PGI 226.103 when submitting a request for funding of an Indian incentive.</P> <CITA>[70 FR 73149, Dec. 9, 2005]</CITA> </SECTION> <SECTION> <SECTNO>226.104</SECTNO> <SUBJECT>Contract clause.</SUBJECT> <P>Use the clause at 252.226-7001, Utilization of Indian Organizations, Indian-Owned Economic Enterprises, and Native Hawaiian Small Business Concerns, in solicitations and contracts for supplies or services exceeding $500,000 in value.</P> <CITA>[68 FR 56562, Oct. 1, 2003, as amended at 69 FR 55991, Sept. 17, 2004]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 226.3—Historically Black Colleges and Universities and Minority Institutions</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>70 FR 73149, Dec. 9, 2005, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>226.370</SECTNO> <SUBJECT>Contracting with historically black colleges and universities and minority institutions.</SUBJECT> </SECTION> <SECTION> <SECTNO>226.370-1</SECTNO> <SUBJECT>General.</SUBJECT> <P>This section implements the historically black college and university (HBCU) and minority institution (MI) provisions of 10 U.S.C. 2323.</P> </SECTION> <SECTION> <SECTNO>226.370-2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>Definitions of HBCUs and MIs are in the clause at 252.226-7000, Notice of Historically Black College or University and Minority Institution Set-Aside.</P> </SECTION> <SECTION> <PRTPAGE P="169"/> <SECTNO>226.370-3</SECTNO> <SUBJECT>Policy.</SUBJECT> <P>DoD will use outreach efforts, technical assistance programs, advance payments, HBCU/MI set-asides, and evaluation preferences to meet its contract and subcontract goals for use of HBCUs and MIs.</P> </SECTION> <SECTION> <SECTNO>226.370-4</SECTNO> <SUBJECT>Set-aside criteria.</SUBJECT> <P>Set aside acquisitions for exclusive HBCU and MI participation when the acquisition is for research, studies, or services of the type normally acquired from higher educational institutions and there is a reasonable expectation that—</P> <P>(a) Offers will be submitted by at least two responsible HBCUs or MIs that can comply with the subcontracting limitations in the clause at FAR 52.219-14, Limitations on Subcontracting;</P> <P>(b) Award will be made at not more than 10 percent above fair market price; and</P> <P>(c) Scientific or technological talent consistent with the demands of the acquisition will be offered.</P> </SECTION> <SECTION> <SECTNO>226.370-5</SECTNO> <SUBJECT>Set-aside procedures.</SUBJECT> <P>(a) As a general rule, use competitive negotiation for HBCU/MI set-asides.</P> <P>(b) When using a broad agency announcement (FAR 35.016) for basic or applied research, make partial set-asides for HBCU/MIs as explained in 235.016.</P> <P>(c) Follow the special synopsis instructions in 205.207(d). Interested HBCU/MIs must provide evidence of their capability to perform the contract, and a positive statement of their eligibility, within 15 days of publication of the synopsis in order for the acquisition to proceed as an HBCU/MI set-aside.</P> <P>(d) Cancel the set-aside if the low responsible offer exceeds the fair market price (defined in FAR part 19) by more than 10 percent.</P> </SECTION> <SECTION> <SECTNO>226.370-6</SECTNO> <SUBJECT>Eligibility for award.</SUBJECT> <P>(a) To be eligible for award as an HBCU or MI under the preference procedures of this subpart, an offeror must—</P> <P>(1) Be an HBCU or MI, as defined in the clause at 252.226-7000, Notice of Historically Black College or University and Minority Institution Set-Aside, at the time of submission of its initial offer including price; and</P> <P>(2) Provide the contracting officer with evidence of its HBCU or MI status upon request.</P> <P>(b) The contracting officer shall accept an offeror's HBCU or MI status under the provision at FAR 52.226-2, Historically Black College or University and Minority Institution Representation, unless—</P> <P>(1) Another offeror challenges the status; or</P> <P>(2) The contracting officer has reason to question the offeror's HBCU/MI status. (A list of HBCU/MIs is published periodically by the Department of Education.)</P> </SECTION> <SECTION> <SECTNO>226.370-7</SECTNO> <SUBJECT>Protesting a representation.</SUBJECT> <P>Any offeror or other interested party may challenge an offeror's HBCU or MI representation by filing a protest with the contracting officer. The protest must contain specific detailed evidence supporting the basis for the challenge. Such protests are handled in accordance with FAR 33.103 and are decided by the contracting officer.</P> </SECTION> <SECTION> <SECTNO>226.370-8</SECTNO> <SUBJECT>Goals and incentives for subcontracting with HBCU/MIs.</SUBJECT> <P>(a) In reviewing subcontracting plans submitted under the clause at FAR 52.219-9, Small Business Subcontracting Plan, the contracting officer shall—</P> <P>(1) Ensure that the contractor included anticipated awards to HBCU/MIs in the small disadvantaged business goal; and</P> <P>(2) Consider whether subcontracts are contemplated that involve research or studies of the type normally performed by higher educational institutions.</P> <P>(b) The contracting officer may, when contracting by negotiation, use in solicitations and contracts a clause similar to the clause at FAR 52.219-10, Incentive Subcontracting Program, when a subcontracting plan is required and inclusion of a monetary incentive is, in the judgment of the contracting officer, necessary to increase subcontracting opportunities for HBCU/MIs. The clause should include a separate goal for HBCU/MIs.</P> </SECTION> <SECTION> <PRTPAGE P="170"/> <SECTNO>226.370-9</SECTNO> <SUBJECT>Solicitation provision and contract clause.</SUBJECT> <P>(a) Use the clause at 252.226-7000, Notice of Historically Black College or University and Minority Institution Set-Aside, in solicitations and contracts set aside for HBCU/MIs.</P> <P>(b) Use the provision at FAR 52.226-2, Historically Black College or University and Minority Institution Representation, in solicitations set aside for HBCU/MIs.</P> </SECTION> </SUBPART> <SUBPART> <RESERVED>Subpart 226.70 [Reserved]</RESERVED> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 226.71—Preference for Local and Small Businesses</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>59 FR 12192, Mar. 16, 1994, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>226.7100</SECTNO> <SUBJECT>Scope of subpart.</SUBJECT> <P>This subpart implements section 2912 of the Fiscal Year 1994 Defense Authorization Act (Pub. L. 103-160) and section 817 of the Fiscal Year 1995 Defense Authorization Act (Pub. L. 103-337).</P> <CITA>[60 FR 5870, Jan. 31, 1995]</CITA> </SECTION> <SECTION> <SECTNO>226.7101</SECTNO> <SUBJECT>Definition.</SUBJECT> <P> <E T="03">Vicinity,</E> as used in this subpart, means the county or counties in which the military installation to be closed or realigned is located and all adjacent counties, unless otherwise defined by the agency head.</P> <CITA>[60 FR 29499, June 5, 1995]</CITA> </SECTION> <SECTION> <SECTNO>226.7102</SECTNO> <SUBJECT>Policy.</SUBJECT> <P>Businesses located in the vicinity of a military installation that is being closed or realigned under a base closure law, including 10 U.S.C. 2687, and small and small disadvantaged businesses shall be provided maximum practicable opportunity to participate in acquisitions that support the closure or realignment, including acquisitions for environmental restoration and mitigation.</P> </SECTION> <SECTION> <SECTNO>226.7103</SECTNO> <SUBJECT>Procedure.</SUBJECT> <P>In considering acquisitions for award through the section 8(a) program (subpart 219.8 and FAR subpart 19.8) or in making set-aside decisions under subpart 219.5 and FAR subpart 19.5 for acquisitions in support of a base closure or realignment, the contracting officer shall—</P> <P>(a) Determine whether there is a reasonable expectation that offers will be received from responsible business concerns located in the vicinity of the military installation that is being closed or realigned.</P> <P>(b) If offers can not be expected from business concerns in the vicinity, proceed with section 8(a) or set-aside consideration as otherwise indicated in part 219 and FAR part 19.</P> <P>(c) If offers can be expected from business concerns in the vicinity—</P> <P>(1) Consider section 8(a) only if at least one eligible 8(a) contractor is located in the vicinity.</P> <P>(2) Set aside the acquisition for small business only if at least one of the expected offers is from a small business located in the vicinity.</P> <CITA>[60 FR 29499, June 5, 1995, as amended at 63 FR 41974, Aug. 6, 1998; 67 FR 11438, Mar. 14, 2002]</CITA> </SECTION> <SECTION> <SECTNO>226.7104</SECTNO> <SUBJECT>Other considerations.</SUBJECT> <P>When planning for contracts for services related to base closure activities at a military installation affected by a closure or realignment under a base closure law, contracting officers shall consider including, as a factor in source selection, the extent to which offerors specifically identify and commit, in their proposals, to a plan to hire residents of the vicinity of the military installation that is being closed or realigned.</P> <CITA>[60 FR 61598, Nov. 30, 1995]</CITA> </SECTION> </SUBPART> </PART> </SUBCHAP> <SUBCHAP TYPE="P"> <PRTPAGE P="171"/> <HD SOURCE="HED">SUBCHAPTER E—GENERAL CONTRACTING REQUIREMENTS</HD> <PART> <EAR>Pt. 227</EAR> <HD SOURCE="HED">PART 227—PATENTS, DATA, AND COPYRIGHTS</HD> <CONTENTS> <SUBPART> <HD SOURCE="HED">Subpart 227.3—Patent Rights Under Government Contracts</HD> <SECHD>Sec.</SECHD> <SECTNO>227.303</SECTNO> <SUBJECT>Contract clauses.</SUBJECT> <SECTNO>227.304</SECTNO> <SUBJECT>Procedures.</SUBJECT> <SECTNO>227.304-1</SECTNO> <SUBJECT>General.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 227.4—Rights in Data and Copyrights</HD> <SECTNO>227.400</SECTNO> <SUBJECT>Scope of subpart.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 227.6—Foreign License and Technical Assistance Agreements</HD> <SECTNO>227.670</SECTNO> <SUBJECT>Scope.</SUBJECT> <SECTNO>227.671</SECTNO> <SUBJECT>General.</SUBJECT> <SECTNO>227.672</SECTNO> <SUBJECT>Policy.</SUBJECT> <SECTNO>227.673</SECTNO> <SUBJECT>Foreign license and technical assistance agreements between the Government and domestic concerns.</SUBJECT> <SECTNO>227.674</SECTNO> <SUBJECT>Supply contracts between the Government and a foreign government or concern.</SUBJECT> <SECTNO>227.675</SECTNO> <SUBJECT>Foreign license and technical assistance agreements between a domestic concern and a foreign government or concern.</SUBJECT> <SECTNO>227.675-1</SECTNO> <SUBJECT>International Traffic in Arms Regulations.</SUBJECT> <SECTNO>227.675-2</SECTNO> <SUBJECT>Review of agreements.</SUBJECT> <SECTNO>227.676</SECTNO> <SUBJECT>Foreign patent interchange agreements.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 227.70—Infringement Claims, Licenses, and Assignments</HD> <SECTNO>227.7000</SECTNO> <SUBJECT>Scope.</SUBJECT> <SECTNO>227.7001</SECTNO> <SUBJECT>Policy.</SUBJECT> <SECTNO>227.7002</SECTNO> <SUBJECT>Statutes pertaining to administrative claims of infringement.</SUBJECT> <SECTNO>227.7003</SECTNO> <SUBJECT>Claims for copyright infringement.</SUBJECT> <SECTNO>227.7004</SECTNO> <SUBJECT>Requirements for filing an administrative claim for patent infringement.</SUBJECT> <SECTNO>227.7005</SECTNO> <SUBJECT>Indirect notice of patent infringement claims.</SUBJECT> <SECTNO>227.7006</SECTNO> <SUBJECT>Investigation and administrative disposition of claims.</SUBJECT> <SECTNO>227.7007</SECTNO> <SUBJECT>Notification and disclosure to claimants.</SUBJECT> <SECTNO>227.7008</SECTNO> <SUBJECT>Settlement of indemnified claims.</SUBJECT> <SECTNO>227.7009</SECTNO> <SUBJECT>Patent releases, license agreements, and assignments.</SUBJECT> <SECTNO>227.7009-1</SECTNO> <SUBJECT>Required clauses.</SUBJECT> <SECTNO>227.7009-2</SECTNO> <SUBJECT>Clauses to be used when applicable.</SUBJECT> <SECTNO>227.7009-3</SECTNO> <SUBJECT>Additional clauses—contracts except running royalty contracts.</SUBJECT> <SECTNO>227.7009-4</SECTNO> <SUBJECT>Additional clauses—contracts providing for payment of a running royalty.</SUBJECT> <SECTNO>227.7010</SECTNO> <SUBJECT>Assignments.</SUBJECT> <SECTNO>227.7011</SECTNO> <SUBJECT>Procurement of rights in inventions, patents, and copyrights.</SUBJECT> <SECTNO>227.7012</SECTNO> <SUBJECT>Contract format.</SUBJECT> <SECTNO>227.7013</SECTNO> <SUBJECT>Recordation.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 227.71—Rights in Technical Data</HD> <SECTNO>227.7100</SECTNO> <SUBJECT>Scope of subpart.</SUBJECT> <SECTNO>227.7101</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>227.7102</SECTNO> <SUBJECT>Commercial items, components, or processes.</SUBJECT> <SECTNO>227.7102-1</SECTNO> <SUBJECT>Policy.</SUBJECT> <SECTNO>227.7102-2</SECTNO> <SUBJECT>Rights in technical data.</SUBJECT> <SECTNO>227.7102-3</SECTNO> <SUBJECT>Contract clause.</SUBJECT> <SECTNO>227.7103</SECTNO> <SUBJECT>Noncommercial items or processes.</SUBJECT> <SECTNO>227.7103-1</SECTNO> <SUBJECT>Policy.</SUBJECT> <SECTNO>227.7103-2</SECTNO> <SUBJECT>Acquisition of technical data.</SUBJECT> <SECTNO>227.7103-3</SECTNO> <SUBJECT>Early identification of technical data to be furnished to the Government with restrictions on use, reproduction or disclosure.</SUBJECT> <SECTNO>227.7103-4</SECTNO> <SUBJECT>License rights.</SUBJECT> <SECTNO>227.7103-5</SECTNO> <SUBJECT>Government rights.</SUBJECT> <SECTNO>227.7103-6</SECTNO> <SUBJECT>Contract clauses.</SUBJECT> <SECTNO>227.7103-7</SECTNO> <SUBJECT>Use and non-disclosure agreement.</SUBJECT> <SECTNO>227.7103-8</SECTNO> <SUBJECT>Deferred delivery and deferred ordering of technical data.</SUBJECT> <SECTNO>227.7103-9</SECTNO> <SUBJECT>Copyright.</SUBJECT> <SECTNO>227.7103-10</SECTNO> <SUBJECT>Contractor identification and marking of technical data to be furnished with restrictive markings.</SUBJECT> <SECTNO>227.7103-11</SECTNO> <SUBJECT>Contractor procedures and records.</SUBJECT> <SECTNO>227.7103-12</SECTNO> <SUBJECT>Government right to establish conformity of markings.</SUBJECT> <SECTNO>227.7103-13</SECTNO> <SUBJECT>Government right to review, verify, challenge and validate asserted restrictions.</SUBJECT> <SECTNO>227.7103-14</SECTNO> <SUBJECT>Conformity, acceptance, and warranty of technical data.</SUBJECT> <SECTNO>227.7103-15</SECTNO> <SUBJECT>Subcontractor rights in technical data.</SUBJECT> <SECTNO>227.7103-16</SECTNO> <SUBJECT>Providing technical data to foreign governments, foreign contractors, or international organizations.</SUBJECT> <SECTNO>227.7103-17</SECTNO> <SUBJECT>Overseas contracts with foreign sources.</SUBJECT> <SECTNO>227.7104</SECTNO> <SUBJECT>Contracts under the Small Business Innovation Research (SBIR) Program.</SUBJECT> <SECTNO>227.7105</SECTNO> <SUBJECT>Contracts for the acquisition of existing works.</SUBJECT> <SECTNO>227.7105-1</SECTNO> <SUBJECT>General.</SUBJECT> <SECTNO>227.7105-2</SECTNO> <SUBJECT>Acquisition of existing works without modification.</SUBJECT> <SECTNO>227.7105-3</SECTNO> <SUBJECT>Acquisition of modified existing works.</SUBJECT> <SECTNO>227.7106</SECTNO> <SUBJECT>Contracts for special works.</SUBJECT> <SECTNO>227.7107</SECTNO> <SUBJECT>Contracts for architect-engineer services.<PRTPAGE P="172"/> </SUBJECT> <SECTNO>227.7107-1</SECTNO> <SUBJECT>Architectural designs and data clauses for architect-engineer or construction contracts.</SUBJECT> <SECTNO>227.7107-2</SECTNO> <SUBJECT>Contracts for construction supplies and research and development work.</SUBJECT> <SECTNO>227.7107-3</SECTNO> <SUBJECT>Approval of restricted designs.</SUBJECT> <SECTNO>227.7108</SECTNO> <SUBJECT>Contractor data repositories.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 227.72—Rights in Computer Software and Computer Software Documentation</HD> <SECTNO>227.7200</SECTNO> <SUBJECT>Scope of subpart.</SUBJECT> <SECTNO>227.7201</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>227.7202</SECTNO> <SUBJECT>Commercial computer software and commercial computer software documentation.</SUBJECT> <SECTNO>227.7202-1</SECTNO> <SUBJECT>Policy.</SUBJECT> <SECTNO>227.7202-2</SECTNO> <SUBJECT>[Reserved]</SUBJECT> <SECTNO>227.7202-3</SECTNO> <SUBJECT>Rights in commercial computer software or commercial computer software documentation.</SUBJECT> <SECTNO>227.7202-4</SECTNO> <SUBJECT>Contract clause.</SUBJECT> <SECTNO>227.7203</SECTNO> <SUBJECT>Noncommercial computer software and noncommercial computer software documentation.</SUBJECT> <SECTNO>227.7203-1</SECTNO> <SUBJECT>Policy.</SUBJECT> <SECTNO>227.7203-2</SECTNO> <SUBJECT>Acquisition of noncommercial computer software and computer software documentation.</SUBJECT> <SECTNO>227.7203-3</SECTNO> <SUBJECT>Early identification of computer software or computer software documentation to be furnished to the Government with restrictions on use, reproduction or disclosure.</SUBJECT> <SECTNO>227.7203-4</SECTNO> <SUBJECT>License rights.</SUBJECT> <SECTNO>227.7203-5</SECTNO> <SUBJECT>Government rights.</SUBJECT> <SECTNO>227.7203-6</SECTNO> <SUBJECT>Contract clauses.</SUBJECT> <SECTNO>227.7203-7</SECTNO> <SUBJECT>[Reserved]</SUBJECT> <SECTNO>227.7203-8</SECTNO> <SUBJECT>Deferred delivery and deferred ordering of computer software and computer software documentation.</SUBJECT> <SECTNO>227.7203-9</SECTNO> <SUBJECT>Copyright.</SUBJECT> <SECTNO>227.7203-10</SECTNO> <SUBJECT>Contractor identification and marking of computer software or computer software documentation to be furnished with restrictive markings.</SUBJECT> <SECTNO>227.7203-11</SECTNO> <SUBJECT>Contractor procedures and records.</SUBJECT> <SECTNO>227.7203-12</SECTNO> <SUBJECT>Government right to establish conformity of markings.</SUBJECT> <SECTNO>227.7203-13</SECTNO> <SUBJECT>Government right to review, verify, challenge and validate asserted restrictions.</SUBJECT> <SECTNO>227.7203-14</SECTNO> <SUBJECT>Conformity, acceptance, and warranty of computer software and computer software documentation.</SUBJECT> <SECTNO>227.7203-15</SECTNO> <SUBJECT>Subcontractor rights in computer software or computer software documentation.</SUBJECT> <SECTNO>227.7203-16</SECTNO> <SUBJECT>Providing computer software or computer software documentation to foreign governments, foreign contractors, or international organizations.</SUBJECT> <SECTNO>227.7203-17</SECTNO> <SUBJECT>Overseas contracts with foreign sources.</SUBJECT> <SECTNO>227.7204</SECTNO> <SUBJECT>Contracts under the Small Business Innovative Research Program.</SUBJECT> <SECTNO>227.7205</SECTNO> <SUBJECT>Contracts for special works.</SUBJECT> <SECTNO>227.7206</SECTNO> <SUBJECT>Contracts for architect-engineer services.</SUBJECT> <SECTNO>227.7207</SECTNO> <SUBJECT>Contractor data repositories.</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 36389, July 31, 1991, unless otherwise noted.</P> </SOURCE> <SUBPART> <HD SOURCE="HED">Subpart 227.3—Patent Rights Under Government Contracts</HD> <SECTION> <SECTNO>227.303</SECTNO> <SUBJECT>Contract clauses.</SUBJECT> <P>(1) Use the clause at 252.227-7039, Patents—Reporting of Subject Inventions, in solicitations and contracts containing the clause at FAR 52.227-11, Patent Rights—Ownership by the Contractor.</P> <P>(2)(i) Use the clause at 252.227-7038, Patent Rights—Ownership by the Contractor (Large Business), instead of the clause at FAR 52.227-11, in solicitations and contracts for experimental, developmental, or research work if—</P> <P>(A) The contractor is other than a small business concern or nonprofit organization; and</P> <P>(B) No alternative patent rights clause is used in accordance with FAR 27.303(c) or (e).</P> <P>(ii) Use the clause with its Alternate I if—</P> <P>(A) The acquisition of patent rights for the benefit of a foreign government is required under a treaty or executive agreement;</P> <P>(B) The agency head determines at the time of award that it would be in the national interest to acquire the right to sublicense foreign governments or international organizations pursuant to any existing or future treaty or agreement; or</P> <P>(C) Other rights are necessary to effect a treaty or agreement, in which case Alternate I may be appropriately modified.</P> <P>(iii) Use the clause with its Alternate II in long-term contracts if necessary to effect treaty or agreements to be entered into.</P> <CITA>[72 FR 69159, Dec. 7, 2007]</CITA> </SECTION> <SECTION> <PRTPAGE P="173"/> <SECTNO>227.304</SECTNO> <SUBJECT>Procedures.</SUBJECT> </SECTION> <SECTION> <SECTNO>227.304-1</SECTNO> <SUBJECT>General.</SUBJECT> <P>Interim and final invention reports and notification of all subcontracts for experimental, developmental, or research work (FAR 27.304-1(e)(2)(ii)) may be submitted on DD Form 882, Report of Inventions and Subcontracts.</P> <CITA>[56 FR 36389, July 31, 1991, as amended at 57 FR 53600, Nov. 12, 1992]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 227.4—Rights in Data and Copyrights</HD> <SECTION> <SECTNO>227.400</SECTNO> <SUBJECT>Scope of subpart.</SUBJECT> <P>DoD activities shall use the guidance in subparts 227.71 and 227.72 instead of the guidance in FAR subpart 27.4.</P> <CITA>[60 FR 33471, June 28, 1995]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 227.6—Foreign License and Technical Assistance Agreements</HD> <SECTION> <SECTNO>227.670</SECTNO> <SUBJECT>Scope.</SUBJECT> <P>This subpart prescribes policy with respect to foreign license and technical assistance agreements.</P> </SECTION> <SECTION> <SECTNO>227.671</SECTNO> <SUBJECT>General.</SUBJECT> <P>In furtherance of the Military Assistance Program or for other national defense purposes, the Government may undertake to develop or encourage the development of foreign additional sources of supply. The development of such sources may be accomplished by an agreement, often called a foreign licensing agreement or technical assistance agreement, wherein a domestic concern, referred to in this subpart as a “primary source,” agrees to furnish to a foreign concern or government, herein referred to as a “second source;” foreign patent rights; technical assistance in the form of data, know-how, trained personnel of the primary source, instruction and guidance of the personnel of the second source, jigs, dies, fixtures, or other manufacturing aids, or such other assistance, information, rights, or licenses as are needed to enable the second source to produce particular supplies or perform particular services. Agreements calling for one or more of the foregoing may be entered into between the primary source and the Government, a foreign government, or a foreign concern. The consideration for providing such foreign license and technical assistance may be in the form of a lump sum payment, payments for each item manufactured by the second source, an agreement to exchange data and patent rights on improvements made to the article or service, capital stock transactions, or any combination of these. The primary source's bases for computing such consideration may include actual costs; charges for the use of patents, data, or know-how reflecting the primary source's investment in developing and engineering and production techniques; and the primary source's “price” for setting up a second source. Such agreements often refer to the compensation to be paid as a royalty or license fee whether or not patent rights are involved.</P> </SECTION> <SECTION> <SECTNO>227.672</SECTNO> <SUBJECT>Policy.</SUBJECT> <P>It is Government policy not to pay in connection with its contracts, and not to allow to be paid in connection with contracts made with funds derived through the Military Assistance Program or otherwise through the United States Government, charges for use of patents in which it holds a royalty-free license or charges for data which it has a right to use and disclose to others, or which is in the public domain, or which the Government has acquired without restriction upon its use and disclosure to others. This policy shall be applied by the Departments in negotiating contract prices for foreign license technical assistance contracts (227.675) or supply contracts with second sources (227.674); and in commenting on such agreements when they are referred to the Department of Defense by the Department of State pursuant to section 414 of the Mutual Security Act of 1954 as amended (22 U.S.C. 1934) and the International Traffic in Arms Regulations (see 227.675).</P> </SECTION> <SECTION> <SECTNO>227.673</SECTNO> <SUBJECT>Foreign license and technical assistance agreements between the Government and domestic concerns.</SUBJECT> <P>(a) Contracts between the Government and a primary source to provide <PRTPAGE P="174"/>technical assistance or patent rights to a second source for the manufacture of supplies or performance of services shall, to the extent practicable, specify the rights in patents and data and any other rights to be supplied to the second source. Each contract shall provide, in connection with any separate agreement between the primary source and the second source for patent rights or technical assistance relating to the articles or services involved in the contract, that—</P> <P>(1) The primary source and his subcontractors shall not make, on account of any purchases by the Government or by others with funds derived through the Military Assistance Program or otherwise through the Government, any charge to the second source for royalties or amortization for patents or inventions in which the Government holds a royalty-free license; or data which the Government has the right to possess, use, and disclose to others; or any technical assistance provided to the second source for which the Government has paid under a contract between the Government and the primary source; and</P> <P>(2) The separate agreement between the primary and second source shall include a statement referring to the contract between the Government and the primary source, and shall conform to the requirements of the International Traffic in Arms Regulations (see 227.675-1).</P> <P>(b) The following factors, among others, shall be considered in negotiating the price to be paid the primary source under contracts within (a) of this section:</P> <P>(1) The actual cost of providing data, personnel, manufacturing aids, samples, spare parts, and the like;</P> <P>(2) The extent to which the Government has contributed to the development of the supplies or services, and to the methods of manufacture or performance, through past contracts for research and development or for manufacture of the supplies or performance of the services; and</P> <P>(3) The Government's patent rights and rights in data relating to the supplies or services and to the methods of manufacture or of performance.</P> </SECTION> <SECTION> <SECTNO>227.674</SECTNO> <SUBJECT>Supply contracts between the Government and a foreign government or concern.</SUBJECT> <P>In negotiating contract prices with a second source, including the redetermination of contract prices, or in determining the allowability of costs under a cost-reimbursement contract with a second source, the contracting officer:</P> <P>(a) Shall obtain from the second source a detailed statement (see FAR 27.204-1(a)(2)) of royalties, license fees, and other compensation paid or to be paid to a primary source (or any of his subcontractors) for patent rights, rights in data, and other technical assistance provided to the second source, including identification and description of such patents, data, and technical assistance; and</P> <P>(b) Shall not accept or allow charges which in effect are—</P> <P>(1) For royalties or amortization for patents or inventions in which the Government holds a royalty-free license; or</P> <P>(2) For data which the Government has a right to possess, use, and disclose to others; or</P> <P>(3) For any technical assistance provided to the second source for which the Government has paid under a contract between the Government and a primary source.</P> </SECTION> <SECTION> <SECTNO>227.675</SECTNO> <SUBJECT>Foreign license and technical assistance agreements between a domestic concern and a foreign government or concern.</SUBJECT> </SECTION> <SECTION> <SECTNO>227.675-1</SECTNO> <SUBJECT>International Traffic in Arms Regulations.</SUBJECT> <P>Pursuant to section 414 of the Mutual Security Act of 1954, as amended (22 U.S.C. 1934), the Department of State controls the exportation of data relating to articles designated in the United States Munitions List as arms, ammunition, or munitions of war. (The Munitions List and pertinent procedures are set forth in the International Traffic in Arms Regulations, 22 CFR, <E T="03">et seq.</E>) Before authorizing such exportation, the Department of State generally requests comments from the Department of Defense. On request of the Office of the Assistant Secretary of Defense (International Security Affairs), each Department shall submit comments <PRTPAGE P="175"/>thereon as the basis for a Department of Defense reply to the Department of State.</P> </SECTION> <SECTION> <SECTNO>227.675-2</SECTNO> <SUBJECT>Review of agreements.</SUBJECT> <P>(a) In reviewing foreign license and technical assistance agreements between primary and second sources, the Department concerned shall, insofar as its interests are involved, indicate whether the agreement meets the requirements of §§ 124.07-124.10 of the International Traffic in Arms Regulations or in what respects it is deficient. Paragraphs (b) through (g) of this subsection provide general guidance.</P> <P>(b) When it is reasonably anticipated that the Government will purchase from the second source the supplies or services involved in the agreement, or that Military Assistance Program funds will be provided for the procurement of the supplies or services, the following guidance applies.</P> <P>(1) If the agreement specifies a reduction in charges thereunder, with respect to purchases by or for the Government or by others with funds derived through the Military Assistance Program or otherwise through the Government, in recognition of the Government's rights in patents and data, the Department concerned shall evaluate the amount of the reduction to determine whether it is fair and reasonable in the circumstances, before indicating its approval.</P> <P>(2) If the agreement does not specify any reduction in charges or otherwise fails to give recognition to the Government's rights in the patents or data involved, approval shall be conditioned upon amendment of the agreement to reflect a reduction, evaluated by the Department concerned as acceptable to the Government, in any charge thereunder with respect to purchases made by or for the Government or by others with funds derived through the Military Assistance Program or otherwise through the Government, in accordance with § 124.10 of the International Traffic in Arms Regulations.</P> <P>(3) If the agreement provides that no charge is to be made to the second source for data or patent rights to the extent of the Government's rights, the Department concerned shall evaluate the acceptability of the provision before indicating its approval.</P> <P>(4) If time or circumstances do not permit the evaluation called for in (b) (1), (2), or (3) of this subsection, the guidance in (c) of this subsection shall be followed.</P> <P>(c) When it is not reasonably anticipated that the Government will purchase from the second source the supplies or services involved in the agreement nor that Military Assistance Program funds will be provided for the purchase of the supplies or services, then the following guidance applies.</P> <P>(1) If the agreement provides for charges to the second source for data or patent rights, it may suffice to fulfill the requirements of § 124.10 insofar as the Department of Defense is concerned if:</P> <P>(i) The agreement requires the second source to advise the primary source when he has knowledge of any purchase made or to be made from him by or for the Government or by others with funds derived through the Military Assistance Program or otherwise through the Government;</P> <P>(ii) The primary source separately agrees with the Government that upon such advice to him from the second source or from the Government or otherwise as to any such a purchase or prospective purchase, he will negotiate with the Department concerned an appropriate reduction in his charges to the second source in recognition of any Government rights in patents or data; and</P> <P>(iii) The agreement between the primary and second sources further provides that in the event of any such purchase and resulting reduction in charges, the second source shall pass on this reduction to the Government by giving the Government a corresponding reduction in the purchase price of the article or service.</P> <P>(2) If the agreement provides that no charge is to be made to the second source for data or patent rights to the extent to which the Government has rights, the Department concerned shall:</P> <P>(i) Evaluate the acceptability of the provision before indicating its approval; or<PRTPAGE P="176"/> </P> <P>(ii) Explicitly condition its approval on the right to evaluate the acceptability of the provision at a later time.</P> <P>(d) When there is a technical assistance agreement between the primary source and the Government related to the agreement between the primary and second sources that is under review, the latter agreement shall reflect the arrangements contemplated with respect thereto by the Government's technical assistance agreement with the primary source.</P> <P>(e) Every agreement shall provide that any license rights transferred under the agreement are subject to existing rights of the Government.</P> <P>(f) In connection with every agreement referred to in (b) of this section, a request shall be made to the primary source—</P> <P>(1) To identify the patents, data, and other technical assistance to be provided to the second source by the primary source or any of his subcontractors,</P> <P>(2) To identify any such patents and data in which, to the knowledge of the primary source, the Government may have rights, and</P> <P>(3) To segregate the charges made to the second source for each such category or item of patents, data, and other technical assistance.</P> <FP>Reviewing personnel shall verify this information or, where the primary source does not furnish it, obtain such information from Governmental sources so far as practicable.</FP> <P>(g) The Department concerned shall make it clear that its approval of any agreement does not necessarily recognize the propriety of the charges or the amounts thereof, or constitute approval of any of the business arrangements in the agreement, unless the Department expressly intends by its approval to commit itself to the fairness and reasonableness of a particular charge or charges. In any event, a disclaimer should be made to charges or business terms not affecting any purchase made by or for the Government or by others with funds derived through the Military Assistance Program or otherwise through the Government.</P> </SECTION> <SECTION> <SECTNO>227.676</SECTNO> <SUBJECT>Foreign patent interchange agreements.</SUBJECT> <P>(a) Patent interchange agreements between the United States and foreign governments provide for the use of patent rights, compensation, free licenses, and the establishment of committees to review and make recommendations on these matters. The agreements also may exempt the United States from royalty and other payments. The contracting officer shall ensure that royalty payments are consistent with patent interchange agreements.</P> <P>(b) Assistance with patent rights and royalty payments in the United States European Command (USEUCOM) area of responsibility is available from HQ USEUCOM, ATTN: ECLA, Unit 30400, Box 1000, APO AE 09128; Telephone: DSN 430-8001/7263, Commercial 49-0711-680-8001/7263; Telefax: 49-0711-680-5732.</P> <CITA>[62 FR 34125, June 24, 1997, as amended at 63 FR 11534, Mar. 9, 1998]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 227.70—Infringement Claims, Licenses, and Assignments</HD> <SECTION> <SECTNO>227.7000</SECTNO> <SUBJECT>Scope.</SUBJECT> <P>This subpart prescribes policy, procedures, and instructions for use of clauses with respect to processing licenses, assignments, and infringement claims.</P> </SECTION> <SECTION> <SECTNO>227.7001</SECTNO> <SUBJECT>Policy.</SUBJECT> <P>Whenever a claim of infringement of privately owned rights in patented inventions or copyrighted works is asserted against any Department or Agency of the Department of Defense, all necessary steps shall be taken to investigate, and to settle administratively, deny, or otherwise dispose of such claim prior to suit against the United States. This subpart 227.70 does not apply to licenses or assignments acquired by the Department of Defense under the Patent Rights clauses.</P> </SECTION> <SECTION> <SECTNO>227.7002</SECTNO> <SUBJECT>Statutes pertaining to administrative claims of infringement.</SUBJECT> <P>Statutes pertaining to administrative claims of infringement in the Department of Defense include the following: the Foreign Assistance Act of <PRTPAGE P="177"/>1961, 22 U.S.C. 2356 (formerly the Mutual Security Acts of 1951 and 1954); the Invention Secrecy Act, 35 U.S.C. 181-188; 10 U.S.C. 2386; 28 U.S.C. 1498; and 35 U.S.C. 286.</P> </SECTION> <SECTION> <SECTNO>227.7003</SECTNO> <SUBJECT>Claims for copyright infringement.</SUBJECT> <P>The procedures set forth herein will be followed, where applicable, in copyright infringement claims.</P> </SECTION> <SECTION> <SECTNO>227.7004</SECTNO> <SUBJECT>Requirements for filing an administrative claim for patent infringement.</SUBJECT> <P>(a) A patent infringement claim for compensation, asserted against the United States under any of the applicable statutes cited in 227.7002, must be actually communicated to and received by a Department, agency, organization, office, or field establishment within the Department of Defense. Claims must be in writing and should include the following:</P> <P>(1) An allegation of infringement;</P> <P>(2) A request for compensation, either expressed or implied;</P> <P>(3) A citation of the patent or patents alleged to be infringed;</P> <P>(4) A sufficient designation of the alleged infringing item or process to permit identification, giving the military or commercial designation, if known, to the claimant;</P> <P>(5) A designation of at least one claim of each patent alleged to be infringed; or</P> <P>(6) As an alternative to (a) (4) and (5) of this section, a declaration that the claimant has made a bona fide attempt to determine the item or process which is alleged to infringe, but was unable to do so, giving reasons, and stating a reasonable basis for his belief that his patent or patents are being infringed.</P> <P>(b) In addition to the information listed in (a) of this section, the following material and information is generally necessary in the course of processing a claim of patent infringement. Claimants are encouraged to furnish this information at the time of filing a claim to permit the most expeditious processing and settlement of the claim.</P> <P>(1) A copy of the asserted patent(s) and identification of all claims of the patent alleged to be infringed.</P> <P>(2) Identification of all procurements known to claimant which involve the alleged infringing item or process, including the identity of the vendor or contractor and the Government procuring activity.</P> <P>(3) A detailed identification of the accused article or process, particularly where the article or process relates to a component or subcomponent of the item procured, an element by element comparison of the representative claims with the accused article or process. If available, this identification should include documentation and drawings to illustrate the accused article or process in suitable detail to enable verification of the infringement comparison.</P> <P>(4) Names and addresses of all past and present licenses under the patent(s), and copies of all license agreements and releases involving the patent(s).</P> <P>(5) A brief description of all litigation in which the patent(s) has been or is now involved, and the present status thereof.</P> <P>(6) A list of all persons to whom notices of infringement have been sent, including all departments and agencies of the Government, and a statement of the ultimate disposition of each.</P> <P>(7) A description of Government employment or military service, if any, by the inventor and/or patent owner.</P> <P>(8) A list of all Government contracts under which the inventor, patent owner, or anyone in privity with him performed work relating to the patented subject matter.</P> <P>(9) Evidence of title to the patent(s) alleged to be infringed or other right to make the claim.</P> <P>(10) A copy of the Patent Office file of each patent if available to claimant.</P> <P>(11) Pertinent prior art known to claimant, not contained in the Patent Office file, particularly publications and foreign art.</P> <FP>In addition in the foregoing, if claimant can provide a statement that the investigation may be limited to the specifically identified accused articles or processes, or to a specific procurement, it may materially expedite determination of the claim.</FP> <P>(c) Any Department receiving an allegation of patent infringement which <PRTPAGE P="178"/>meets the requirements of this paragraph shall acknowledge the same and supply the other Departments which may have an interest therein with a copy of such communication and the acknowledgement thereof.</P> <P>(1) For the Department of the Army—Chief, Patents, Copyrights, and Trademarks Division, U.S. Army Legal Services Agency;</P> <P>(2) For the Department of the Navy—The Patent Counsel for Navy, Office of Naval Research;</P> <P>(3) For the Department of the Air Force—Chief, Patents Division, Office of The Judge Advocate General;</P> <P>(4) For the Defense Logistics Agency—The Office of Counsel; for the National Security Agency, the General Counsel;</P> <P>(5) For the Defense Information Systems Agency—the Counsel;</P> <P>(6) For the Defense Threat Reduction Agency—The General Counsel; and</P> <P>(7) For the National Imagery and Mapping Agency—The Counsel.</P> <P>(d) If a communication alleging patent infringement is received which does not meet the requirements set forth in paragraph (c) of this section, the sender shall be advised in writing—</P> <P>(1) That his claim for infringement has not been satisfactorily presented, and</P> <P>(2) Of the elements considered necessary to establish a claim.</P> <P>(e) A communication making a proffer of a license in which no infringement is alleged shall not be considered as a claim for infringement.</P> <CITA>[56 FR 36389, July 31, 1991, as amended at 56 FR 67216, Dec. 30, 1991; 61 FR 50454, Sept. 26, 1996; 62 FR 2613, Jan. 17, 1997; 64 FR 51076, Sept. 21, 1999]</CITA> </SECTION> <SECTION> <SECTNO>227.7005</SECTNO> <SUBJECT>Indirect notice of patent infringement claims.</SUBJECT> <P>(a) A communication by a patent owner to a Department of Defense contractor alleging that the contractor has committed acts of infringement in performance of a Government contract shall not be considered a claim within the meaning of 227.7004 until it meets the requirements specified therein.</P> <P>(b) Any Department receiving an allegation of patent infringement which meets the requirements of 227.7004 shall acknowledge the same and supply the other Departments (see 227.7004(c)) which may have an interest therein with a copy of such communication and the acknowledgement thereof.</P> <P>(c) If a communication covering an infringement claim or notice which does not meet the requirements of 227.7004(a) is received from a contractor, the patent owner shall be advised in writing as covered by the instructions of 227.7004(d).</P> </SECTION> <SECTION> <SECTNO>227.7006</SECTNO> <SUBJECT>Investigation and administrative disposition of claims.</SUBJECT> <P>An investigation and administrative determination (denial or settlement) of each claim shall be made in accordance with instructions and procedures established by each Department, subject to the following:</P> <P>(a) When the procurement responsibility for the alleged infringing item or process is assigned to a single Department or only one Department is the purchaser of the alleged infringing item or process, and the funds of that Department only are to be charged in the settlement of the claim, that Department shall have the sole responsibility for the investigation and administrative determination of the claim and for the execution of any agreement in settlement of the claim. Where, however, funds of another Department are to be charged, in whole or in part, the approval of such Department shall be obtained as required by 208.7002. Any agreement in settlement of the claim, approved pursuant to 208.7002 shall be executed by each of the Departments concerned.</P> <P>(b) When two or more Departments are the respective purchasers of alleged infringing items or processes and the funds of those Departments are to be charged in the settlement of the claim, the investigation and administrative determination shall be the responsibility of the Department having the predominant financial interest in the claim or of the Department or Departments as jointly agreed upon by the Departments concerned. The Department responsible for negotiation shall, throughout the negotiation, coordinate with the other Departments concerned and keep them advised of the status of the negotiation. Any agreement in the <PRTPAGE P="179"/>settlement of the claim shall be executed by each Department concerned.</P> </SECTION> <SECTION> <SECTNO>227.7007</SECTNO> <SUBJECT>Notification and disclosure to claimants.</SUBJECT> <P>When a claim is denied, the Department responsible for the administrative determination of the claim shall so notify the claimant or his authorized representative and provide the claimant a reasonable rationale of the basis for denying the claim. Disclosure of information or the rationale referred to above shall be subject to applicable statutes, regulations, and directives pertaining to security, access to official records, and the rights of others.</P> </SECTION> <SECTION> <SECTNO>227.7008</SECTNO> <SUBJECT>Settlement of indemnified claims.</SUBJECT> <P>Settlement of claims involving payment for past infringement shall not be made without the consent of, and equitable contribution by, each indemnifying contractor involved, unless such settlement is determined to be in the best interests of the Government and is coordinated with the Department of Justice with a view to preserving any rights of the Government against the contractors involved. If consent of and equitable contribution by the contractors are obtained, the settlement need not be coordinated with the Department of Justice.</P> </SECTION> <SECTION> <SECTNO>227.7009</SECTNO> <SUBJECT>Patent releases, license agreements, and assignments.</SUBJECT> <P>This section contains clauses for use in patent release and settlement agreements, license agreements, and assignments, executed by the Government, under which the Government acquires rights. Minor modifications of language (e.g., pluralization of “Secretary” or “Contracting Officer”) in multi-departmental agreements may be made if necessary.</P> </SECTION> <SECTION> <SECTNO>227.7009-1</SECTNO> <SUBJECT>Required clauses.</SUBJECT> <P>(a) Covenant Against Contingent Fees. Insert the clause at FAR 52.203-5.</P> <P>(b) Gratuities. Insert the clause at FAR 52.203-3.</P> <P>(c) Assignment of Claims. Insert the clause at FAR 52.232-23.</P> <P>(d) Disputes. Pursuant to FAR 33.014, insert the clause at FAR 52.233-1.</P> <P>(e) Non-Estoppel. Insert the clause at 252.227-7000.</P> <CITA>[56 FR 36389, July 31, 1991, as amended at 61 FR 50454, Sept. 26, 1996]</CITA> </SECTION> <SECTION> <SECTNO>227.7009-2</SECTNO> <SUBJECT>Clauses to be used when applicable.</SUBJECT> <P>(a) <E T="03">Release of past infringement.</E> The clause at 252.227-7001, Release of Past Infringement, is an example which may be modified or omitted as appropriate for particular circumstances, but only upon the advice of cognizant patent or legal counsel. (See footnotes at end of clause.)</P> <P>(b) <E T="03">Readjustment of payments.</E> The clause at 252.227-7002, Readjustment of Payments, shall be inserted in contracts providing for payment of a running royalty.</P> <P>(c) <E T="03">Termination.</E> The clause at 252.227-7003, Termination, is an example for use in contracts providing for the payment of a running royalty. This clause may be modified or omitted as appropriate for particular circumstances, but only upon the advice of cognizant patent or legal counsel (see 227.7004(c)).</P> </SECTION> <SECTION> <SECTNO>227.7009-3</SECTNO> <SUBJECT>Additional clauses—contracts except running royalty contracts.</SUBJECT> <P>The following clauses are examples for use in patent release and settlement agreements, and license agreements not providing for payment by the Government of a running royalty.</P> <P>(a) License Grant. Insert the clause at 252.227-7004.</P> <P>(b) License Term. Insert one of the clauses at 252.227-7005 Alternate I or Alternate II, as appropriate.</P> </SECTION> <SECTION> <SECTNO>227.7009-4</SECTNO> <SUBJECT>Additional clauses—contracts providing for payment of a running royalty.</SUBJECT> <P>The clauses set forth below are examples which may be used in patent release and settlement agreements, and license agreements, when it is desired to cover the subject matter thereof and the contract provides for payment of a running royalty.</P> <P>(a) <E T="03">License grant—running royalty.</E> No Department shall be obligated to pay royalties unless the contract is signed on behalf of such Department. Accordingly, the License Grant clause at 252.227-7006 should be limited to the <PRTPAGE P="180"/>practice of the invention by or for the signatory Department or Departments.</P> <P>(b) <E T="03">License term—running royalty.</E> The clause at 252.227-7007 is a sample form for expressing the license term.</P> <P>(c) <E T="03">Computation of royalties.</E> The clause at 252.227-7008 providing for the computation of royalties, may be of varying scope depending upon the nature of the royalty bearing article, the volume of procurement, and the type of contract pursuant to which the procurement is to be accomplished.</P> <P>(d) <E T="03">Reporting and payment of royalties.</E> (1) The contract should contain a provision specifying the office designated within the specific Department involved to make any necessary reports to the contractor of the extent of use of the licensed subject matter by the entire Department, and such office shall be charged with the responsibility of obtaining from all procuring offices of that Department the information necessary to make the required reports and corresponding vouchers necessary to make the required payments. The clause at 252.227-7009 is a sample for expressing reporting and payment of royalties requirements.</P> <P>(2) Where more than one Department or Government Agency is licensed and there is a ceiling on the royalties payable in any reporting period, the licensing Departments or Agencies shall coordinate with respect to the pro rata share of royalties to be paid by each.</P> <P>(e) <E T="03">License to other government agencies.</E> When it is intended that a license on the same terms and conditions be available to other departments and agencies of the Government, the clause at 252.227-7010 is an example which may be used.</P> </SECTION> <SECTION> <SECTNO>227.7010</SECTNO> <SUBJECT>Assignments.</SUBJECT> <P>(a) The clause at 252.227-7011 is an example which may be used in contracts of assignment of patent rights to the Government.</P> <P>(b) To facilitate proof of contracts of assignments, the acknowledgement of the contractor should be executed before a notary public or other officer authorized to administer oaths (35 U.S.C. 261).</P> </SECTION> <SECTION> <SECTNO>227.7011</SECTNO> <SUBJECT>Procurement of rights in inventions, patents, and copyrights.</SUBJECT> <P>Even though no infringement has occurred or been alleged, it is the policy of the Department of Defense to procure rights under patents, patent applications, and copyrights whenever it is in the Government's interest to do so and the desired rights can be obtained at a fair price. The required and suggested clauses at 252.227-7004 and 252.227-7010 shall be required and suggested clauses, respectively, for license agreements and assignments made under this paragraph. The instructions at 227.7009-3 and 227.7010 concerning the applicability and use of those clauses shall be followed insofar as they are pertinent.</P> </SECTION> <SECTION> <SECTNO>227.7012</SECTNO> <SUBJECT>Contract format.</SUBJECT> <P>The format at 252.227-7012 appropriately modified where necessary, may be used for contracts of release, license, or assignment.</P> </SECTION> <SECTION> <SECTNO>227.7013</SECTNO> <SUBJECT>Recordation.</SUBJECT> <P>Executive Order No. 9424 of 18 February 1944 requires all executive Departments and agencies of the Government to forward through appropriate channels to the Commissioner of Patents and Trademarks, for recording, all Government interests in patents or applications for patents.</P> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 227.71—Rights in Technical Data</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>60 FR 33471, June 28, 1995, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>227.7100</SECTNO> <SUBJECT>Scope of subpart.</SUBJECT> <P>This subpart—</P> <P>(a) Prescribes policies and procedures for the acquisition of technical data and the rights to use, modify, reproduce, release, perform, display, or disclose technical data. It implements requirements in the following laws and Executive Order:</P> <P>(1) 10 U.S.C. 2302(4).</P> <P>(2) 10 U.S.C. 2305 (subsection (d)(4)).</P> <P>(3) 10 U.S.C. 2320.</P> <P>(4) 10 U.S.C. 2321.</P> <P>(5) 10 U.S.C. 2325.</P> <P>(6) Pub. L. 103-355.<PRTPAGE P="181"/> </P> <P>(7) Executive Order 12591 (Subsection 1(b)(6)).</P> <P>(b) Does not apply to computer software or technical data that is computer software documentation (see subpart 227.72).</P> </SECTION> <SECTION> <SECTNO>227.7101</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>(a) As used in this subpart, unless otherwise specifically indicated, the terms “offeror” and “contractor” include an offeror's or contractor's subcontractors, suppliers, or potential subcontractors or suppliers at any tier.</P> <P>(b) Other terms used in this subpart are defined in the clause at 252.227-7013, Rights in Technical Data—Noncommercial Items.</P> <CITA>[56 FR 36389, July 31, 1991, as amended at 60 FR 61598, Nov. 30, 1995]</CITA> </SECTION> <SECTION> <SECTNO>227.7102</SECTNO> <SUBJECT>Commercial items, components, or processes.</SUBJECT> <P>Section 2320(b)(1) of Title 10 U.S.C. establishes a presumption that commercial items are developed at private expense whether or not a contractor submits a justification in response to a challenge notice. Therefore, do not challenge a contractor's assertion that a commercial item, component, or process was developed at private expense unless the Government can demonstrate that it contributed to development of the item, component or process. Follow the procedures in 227.7103-13 and the clause at 252.227-7037, Validation of Restrictive Markings on Technical Data, when information provided by the Department of Defense demonstrates that an item, component, or process was not developed exclusively at private expense. However, when a challenge is warranted, a contractor's or subcontractor's failure to respond to the challenge notice cannot be the sole basis for issuing a final decision denying the validity of an asserted restriction.</P> </SECTION> <SECTION> <SECTNO>227.7102-1</SECTNO> <SUBJECT>Policy.</SUBJECT> <P>(a) DoD shall acquire only the technical data customarily provided to the public with a commercial item or process, except technical data that—</P> <P>(1) Are form, fit, or function data;</P> <P>(2) Are required for repair or maintenance of commercial items or processes, or for the proper installation, operating, or handling of a commercial item, either as a stand alone unit or as a part of a military system, when such data are not customarily provided to commercial users or the data provided to commercial users is not sufficient for military purposes; or</P> <P>(3) Describe the modifications made at Government expense to a commercial item or process in order to meet the requirements of a Government solicitation.</P> <P>(b) To encourage offerors and contractors to offer or use commercial products to satisfy military requirements, offerors, and contractors shall not be required, except for the technical data described in paragraph (a) of this subsection, to—</P> <P>(1) Furnish technical information related to commercial items or processes that is not customarily provided to the public; or</P> <P>(2) Relinquish to, or otherwise provide, the Government rights to use, modify, reproduce, release, perform, display, or disclose technical data pertaining to commercial items or processes except for a transfer of rights mutually agreed upon.</P> </SECTION> <SECTION> <SECTNO>227.7102-2</SECTNO> <SUBJECT>Rights in technical data.</SUBJECT> <P>(a) The clause at 252.227-7015, Technical Data—Commercial Items, provides the Government specific license rights in technical data pertaining to commercial items or processes. DoD may use, modify, reproduce, release, perform, display, or disclose data only within the Government. The data may not be used to manufacture additional quantities of the commercial items and, except for emergency repair or overhaul, may not be released or disclosed to, or used by, third parties without the contractor's written permission. Those restrictions do not apply to the technical data described in 227.7102-1(a).</P> <P>(b) If additional rights are needed, contracting activities must negotiate with the contractor to determine if there are acceptable terms for transferring such rights. The specific additional rights granted to the Government shall be enumerated in a license agreement made part of the contract.</P> </SECTION> <SECTION> <PRTPAGE P="182"/> <SECTNO>227.7102-3</SECTNO> <SUBJECT>Contract clause.</SUBJECT> <P>(a) Except as provided in paragraph (b) of this subsection, use the clause at 252.227-7015, Technical Data—Commercial Items, in all solicitations and contracts when the contractor will be required to deliver technical data pertaining to commercial items, components, or processes. Do not require the contractor to include this clause in its subcontracts.</P> <P>(b) Use the clause at 252.227-7013, Rights in Technical Data—Noncommercial Items, in lieu of the clause at 252.227-7015 if the Government will pay any portion of the development costs. Do not require the contractor to include this clause in its subcontracts for commercial items or commercial components.</P> <P>(c) Use the clause at 252.227-7037, Validation of Restrictive Markings on Technical Data, in all solicitations and contracts for commercial items that include the clause at 252.227-7015 or the clause at 252.227-7013. Do not require the contractor to include this clause in its subcontracts for commercial items or commercial components.</P> <CITA>[56 FR 36389, July 31, 1991, as amended at 60 FR 61598, Nov. 30, 1995]</CITA> </SECTION> <SECTION> <SECTNO>227.7103</SECTNO> <SUBJECT>Noncommercial items or processes.</SUBJECT> </SECTION> <SECTION> <SECTNO>227.7103-1</SECTNO> <SUBJECT>Policy.</SUBJECT> <P>(a) DoD policy is to acquire only the technical data, and the rights in that data, necessary to satisfy agency needs.</P> <P>(b) Solicitations and contracts shall—</P> <P>(1) Specify the technical data to be delivered under a contract and delivery schedules for the data;</P> <P>(2) Establish or reference procedures for determining the acceptability of technical data;</P> <P>(3) Establish separate contract line items, to the extent practicable, for the technical data to be delivered under a contract and require offerors and contractors to price separately each deliverable data item; and</P> <P>(4) Require offerors to identify, to the extent practicable, technical data to be furnished with restrictions on the Government's rights and require contractors to identify technical data to be delivered with such restrictions prior to delivery.</P> <P>(c) Offerors shall not be required, either as a condition of being responsive to a solicitation or as a condition for award, to sell or otherwise relinquish to the Government any rights in technical data related to items, components or processes developed at private expense except for the data identified at 227.7103-5(a)(2) and (a)(4) through (9).</P> <P>(d) Offerors and contractors shall not be prohibited or discouraged from furnishing or offering to furnish items, components, or processes developed at private expense solely because the Government's rights to use, modify, release, reproduce, perform, display, or disclose technical data pertaining to those items may be restricted.</P> <P>(e) As provided in 10 U.S.C. 2305, solicitations for major systems development contracts shall not require offerors to submit proposals that would permit the Government to acquire competitively items identical to items developed at private expense unless a determination is made at a level above the contracting officer that—</P> <P>(1) The offeror will not be able to satisfy program schedule or delivery requirements; or</P> <P>(2) The offeror's proposal to meet mobilization requirements does not satisfy mobilization needs.</P> <P>(f) For acquisitions involving major weapon systems or subsystems of major weapon systems, the acquisition plan shall address acquisition strategies that provide for technical data and the associated license rights in accordance with 207.106(S-70).</P> <CITA>[60 FR 33471, June 28, 1995, as amended at 72 FR 51189, Sept. 6, 2007]</CITA> </SECTION> <SECTION> <SECTNO>227.7103-2</SECTNO> <SUBJECT>Acquisition of technical data.</SUBJECT> <P>(a) Contracting officers shall work closely with data managers and requirements personnel to assure that data requirements included in solicitations are consistent with the policy expressed in 227.7103-1.</P> <P>(b)(1) Data managers or other requirements personnel are responsible for identifying the Government's minimum needs for technical data. Data needs must be established giving consideration to the contractor's economic <PRTPAGE P="183"/>interests in data pertaining to items, components, or processes that have been developed at private expense; the Government's costs to acquire, maintain, store, retrieve, and protect the data; reprocurement needs; repair, maintenance and overhaul philosophies; spare and repair part considerations; and whether procurement of the items, components, or processes can be accomplished on a form, fit, or function basis. When it is anticipated that the Government will obtain unlimited or government purpose rights in technical data that will be required for competitive spare or repair parts procurements, such data should be identified as deliverable data items. Reprocurement needs may not be a sufficient reason to acquire detailed manufacturing or process data when items or components can be acquired using performance specifications, form, fit and function data, or when there are a sufficient number of alternate sources which can reasonably be expected to provide such items on a performance specification or form, fit, or function basis.</P> <P>(2) When reviewing offers received in response to a solicitation or other request for data, data managers must balance the original assessment of the Government's data needs with data prices contained in the offer.</P> <P>(c) Contracting officers are responsible for ensuring that, wherever practicable, solicitations and contracts—</P> <P>(1) Identify the type and quantity of the technical data to be delivered under the contract and the format and media in which the data will be delivered;</P> <P>(2) Establish each deliverable data item as a separate contract line item (this requirement may be satisfied by listing each deliverable data item on an exhibit to the contract);</P> <P>(3) Identify the prices established for each deliverable data item under a fixed-price type contract;</P> <P>(4) Include delivery schedules and acceptance criteria for each deliverable data item; and</P> <P>(5) Specifically identify the place of delivery for each deliverable item of technical data.</P> </SECTION> <SECTION> <SECTNO>227.7103-3</SECTNO> <SUBJECT>Early identification of technical data to be furnished to the Government with restrictions on use, reproduction or disclosure.</SUBJECT> <P>(a) 10 U.S.C. 2320 requires, to the maximum extent practicable, an identification prior to delivery of any technical data to be delivered to the Government with restrictions on use.</P> <P>(b) Use the provision at 252.227-7017, Identification and Assertion of Use, Release, or Disclosure Restrictions, in all solicitations that include the clause at 252.227-7013, Rights in Technical Data—Noncommercial Items. The provision requires offerors to identify any technical data for which restrictions, other than copyright, on use, release, or disclosure are asserted and to attach the identification and assertions to the offer.</P> <P>(c) Subsequent to contract award, the clause at 252.277-7013 permits a contractor, under certain conditions, to make additional assertions of use, release, or disclosure restrictions. The prescription for the use of that clause and its alternate is at 227.7103-6 (a) and (b).</P> </SECTION> <SECTION> <SECTNO>227.7103-4</SECTNO> <SUBJECT>License rights.</SUBJECT> <P>(a) <E T="03">Grant of license.</E> The Government obtains rights in technical data, including a copyright license, under and irrevocable license granted or obtained for the Government by the contractor. The contractor or licensor retains all rights in the data not granted to the Government. For technical data that pertain to items, components, or processes, the scope of the license is generally determined by the source of funds used to develop the item, component, or process. When the technical data do not pertain to items, components, or processes, the scope of the license is determined by the source of funds used to create the data.</P> <P>(1) <E T="03">Techical data pertaining to items, components, or processes.</E> Contractors or licensors may, with some exceptions (see 227.7103-5(a)(2) and (a)(4) through (9)), restrict the Government's rights to use, modify, release, reproduce, perform, display or disclose technical data pertaining to items, components, or processes developed exclusively at private expense (limited rights). They may not restrict the Government's <PRTPAGE P="184"/>rights in items, components, or processes developed exclusively at Government expense (unlimited rights) without the Government's approval. When an item, component, or process is developed with mixed funding, the Government may use, modify, release, reproduce, perform, display or disclose the data pertaining to such items, components, or processes within the Government without restriction but may release or disclose the data outside the Government only for government purposes (government purpose rights).</P> <P>(2) <E T="03">Technical data that do not pertain to items, components, or processes.</E> Technical data may be created during the performance of a contract for a conceptual design or similar effort that does not require the development, manufacture, construction, or production of items, components or processes. The Government generally obtains unlimited rights in such data when the data were created exclusively with Government funds, government purpose rights when the data were created with mixed funding, and limited rights when the data were created exclusively at private expense.</P> <P>(b) <E T="03">Source of funds determination.</E> The determination of the source of development funds for technical data pertaining to items, components, or processes should be made at any practical sub-item or subcomponent level or for any segregable portion of a process. Contractors may assert limited rights in a segregable sub-item, sub-component, or portion of a process which otherwise qualifies for limited rights under the clause at 252.227-7013, Rights in Technical Data—Noncommercial Items.</P> </SECTION> <SECTION> <SECTNO>227.7103-5</SECTNO> <SUBJECT>Government rights.</SUBJECT> <P>The standard license rights that a licensor grants to the Government are unlimited rights, government purpose rights, or limited rights. Those rights are defined in the clause at 252.227-7013, Rights in Technical Data—Noncommercial Items. In unusual situations, the standards rights may not satisfy the Government's needs or the Government may be willing to accept lesser rights in data in return for other consideration. In those cases, a special license may be negotiated. However, the licensor is not obligated to provide the Government greater rights and the contracting officer is not required to accept lesser rights than the rights provided in the standard grant of license. The situations under which a particular grant of license applies are enumerated in paragraphs (a) through (d) of this subsection.</P> <P>(a) <E T="03">Unlimited rights.</E> The Government obtains unlimited rights in technical data that are—</P> <P>(1) Data pertaining to an item, component, or process which has been or will be developed exclusively with Government funds;</P> <P>(2) Studies, analyses, test data, or similar data produced in the performance of a contract when the study, analysis, test, or similar work was specified as an element of performance;</P> <P>(3) Created exclusively with Government funds in the performance of a contract that does not require the development, manufacture, construction, or production of items, components, or processes;</P> <P>(4) Form, fit, and function data;</P> <P>(5) Necessary for installation, operation, maintenance, or training purposes (other than detailed manufacturing or process data);</P> <P>(6) Corrections or changes to technical data furnished to the contractor by the Government;</P> <P>(7) Publicly available or have been released or disclosed by the contractor or subcontractor without restrictions on further use, release or disclosure other than a release or disclosure resulting from the sale, transfer, or other assignment of interest in the software to another party or the sale or transfer of some or all of a business entity or its assets to another party;</P> <P>(8) Data in which the Government has obtained unlimited rights under another Government contract or as a result of negotiations; or</P> <P>(9) Data furnished to the Government, under a Government contract or subcontract thereunder, with—</P> <P>(i) Government purpose license rights or limited rights and the restrictive condition(s) has/have expired; or</P> <P>(ii) Government purpose rights and the contractor's exclusive right to use such data for commercial purposes has expired.<PRTPAGE P="185"/> </P> <P>(b) <E T="03">Government purpose rights.</E> (1) The Government obtains government purpose rights in technical data—</P> <P>(i) That pertain to items, components, or processes developed with mixed funding except when the Government is entitled to unlimited rights as provided in paragraphs (a)(2) and (a)(4) through (9) of this subsection; or</P> <P>(ii) Created with mixed funding in the performance of a contract that does not require the development, manufacture, construction, or production of items, components, or processes.</P> <P>(2) The period during which government purpose rights are effective is negotiable. The clause at 252.227-7013 provides a nominal five-year period. Either party may request a different period. Changes to the government purpose rights period may be made at any time prior to delivery of the technical data without consideration from either party. Longer periods should be negotiated when a five-year period does not provide sufficient time to apply the data for commercial purposes or when necessary to recognize subcontractors' interests in the data.</P> <P>(3) The government purpose rights period commences upon execution of the contract, subcontract, letter contract (or similar contractual instrument), contract modification, or option exercise that required the development. Upon expiration of the Government rights period, the Government has unlimited rights in the data including the right to authorize others to use the data for commercial purposes.</P> <P>(4) During the government purpose rights period, the government may not use, or authorize other persons to use, technical data marked with government purpose rights legends for commercial purposes. The Government shall not release or disclose data in which it has government purpose rights to any person, or authorize others to do so, unless—</P> <P>(i) Prior to release or disclosure, the intended recipient is subject to the use and non-disclosure agreement at 227.7103-7; or</P> <P>(ii) The intended recipient is a Government contractor receiving access to the data for performance of a Government contract that contains the clause at 252.227-7025, Limitations on the Use or Disclosure of Government-Furnished Information Marked with Restrictive Legends.</P> <P>(5) When technical data marked with government purpose rights legends will be released or disclosed to a Government contractor performing a contract that does not include the clause at 252-227-7025, the contract may be modified, prior to release or disclosure, to include that clause in lieu of requiring the contractor to complete a use and non-disclosure agreement.</P> <P>(6) Contracting activities shall establish procedures to assure that technical data marked with government purpose rights legends are released or disclosed, including a release or disclosure through a Government solicitation, only to persons subject to the use and non-disclosure restrictions. Public announcements in the Commerce Business Daily or other publications must provide notice of the use and non-disclosure requirements. Class use and non-disclosure agreements (e.g., agreements covering all solicitations received by the XYZ company within a reasonable period) are authorized and may be obtained at any time prior to release or disclosure of the government purpose rights data. Documents transmitting government purpose rights data to persons under class agreements shall identify the technical data subject to government purpose rights and the class agreement under which such data are provided.</P> <P>(c) <E T="03">Limited rights.</E> (1) The Government obtains limited rights in technical data—</P> <P>(i) That pertain to items, components, or processes developed exclusively at private expense except when the Government is entitled to unlimited rights as provided in paragraphs (a)(2) and (a)(4) through (9) of this subsection; or</P> <P>(ii) Created exclusively at private expense in the performance of a contract that does not require the development, manufacture, construction, or production of items, components, or processes.</P> <P>(2) Data in which the Government has limited rights may not be used, released, or disclosed outside the Government without the permission of the <PRTPAGE P="186"/>contractor asserting the restriction except for a use, release or disclosure that is—</P> <P>(i) Necessary for emergency repair and overhaul; or</P> <P>(ii) To a foreign government, other than detailed manufacturing or process data, when use, release, or disclosure is in the interest of the United States and is required for evaluation or informational purposes.</P> <P>(3) The person asserting limited rights must be notified of the Government's intent to release, disclose, or authorize others to use such data prior to release or disclosure of the data except notification of an intended release, disclosure, or use for emergency repair or overhaul which shall be made as soon as practicable.</P> <P>(4) When the person asserting limited rights permits the Government to release, disclose, or have others use the data subject to restrictions on further use, release, or disclosure, or for a release under paragraph (c)(2)(i) or (ii) of this subsection, the intended recipient must complete the use and non-disclosure agreement at 227.7103-7 prior to release or disclosure of the limited rights data.</P> <P>(d) <E T="03">Specifically negotiated license rights.</E> (1) Negotiate specific licenses when the parties agree to modify the standard license rights granted to the government or when the government wants to obtain rights in data in which it does not have rights. When negotiating to obtain, relinquish, or increase the Government's rights in technical data, consider the acquisition strategy for the item, component, or process, including logistics support and other factors which may have relevance for a particular procurement. The Government may accept lesser rights when it has unlimited or government purpose rights in data but may not accept less than limited rights in such data. The negotiated license rights must stipulate what rights the Government has to release or disclose the data to other persons or to authorize others to use the data. Identify all negotiated rights in a license agreement made part of the contract.</P> <P>(2) When the Government needs additional rights in data acquired with government purpose or limited rights, the contracting officer must negotiate with the contractor to determine whether there are acceptable terms for transferring such rights. Generally, such negotiations should be conducted only when there is a need to disclose the data outside the Government or if the additional rights are required for competitive reprocurement and the anticipated savings expected to be obtained through competition are estimated to exceed the acquisition cost of the additional rights. Prior to negotiating for additional rights in limited rights data, consider alternatives such as—</P> <P>(i) Using performance specifications and form, fit, and function data to acquire or develop functionally equivalent items, components, or processes;</P> <P>(ii) Obtaining a contractor's contractual commitment to qualify additional sources and maintain adequate competition among the sources; or</P> <P>(iii) Reverse engineering, or providing items from Government inventories to contractors who request the items to facilitate the development of equivalent items through reverse engineering.</P> </SECTION> <SECTION> <SECTNO>227.7103-6</SECTNO> <SUBJECT>Contract clauses.</SUBJECT> <P>(a) Use the clause at 252.227-7013, Rights in Technical Data—Noncommercial Items, in solicitations and contracts when the successful offeror(s) will be required to deliver technical data to the Government. Do not use the clause when the only deliverable items are computer software or computer software documentation (see 227.72), commercial items (see 227.7102-3), existing works (see 227.7105), special works (see 227.7106), or when contracting under the Small Business Innovation Research Program (see 227.7104). Except as provided in 227.7107-2, do not use the clause in architect-engineer and construction contracts.</P> <P>(b) Use the clause at 252.227-7013 with its Alternate I in research contracts when the contracting officer determines, in consultation with counsel, that public dissemination by the contractor would be—</P> <P>(1) In the interest of the government; and</P> <P>(2) Facilitated by the Government relinquishing its right to publish the <PRTPAGE P="187"/>work for sale, or to have others publish the work for sale on behalf of the Government.</P> <P>(c) Use the clause at 252.227-7025, Limitations on the Use or Disclosure of Government Furnished Information Marked with Restrictive Legends, in solicitations and contracts when it is anticipated that the Government will provide the contractor, for performance of its contract, technical data marked with another contractor's restrictive legend(s).</P> <P>(d) Use the provision at 252.227-7028, Technical Data or Computer Software Previously Delivered to the Government, in solicitations when the resulting contract will require the contractor to deliver technical data. The provision requires offerors to identify any technical data specified in the solicitations as deliverable data items that are the same or substantially the same as data items the offeror has delivered or is obligated to deliver, either as a contractor or subcontractor, under any other federal agency contract.</P> <P>(e) Use the following clauses in solicitations and contracts that include the clause at 252.227-7013:</P> <P>(1) 252.227-7016, Rights in Bid or Proposal Information;</P> <P>(2) 252.227-7030, Technical Data—Withholding of Payment; and</P> <P>(3) 252.227-7037, Validation of Restrictive Markings on Technical Data (paragraph (e) of the clause contains information that must be included in a challenge).</P> <CITA>[60 FR 33471, June 28, 1995; 60 FR 41157, Aug. 11, 1995; 60 FR 61598, Nov. 30, 1995; 62 FR 2613, Jan. 17, 1997; 69 FR 31911, June 8, 2004]</CITA> </SECTION> <SECTION> <SECTNO>227.7103-7</SECTNO> <SUBJECT>Use and non-disclosure agreement.</SUBJECT> <P>(a) Except as provided in paragraph (b) of this subsection, technical data or computer software delivered to the Government with restrictions on use, modification, reproduction, release, performance, display, or disclosure may not be provided to third parties unless the intended recipient completes and signs the use and non-disclosure agreement at paragraph (c) of this subsection prior to release, or disclosure of the data.</P> <P>(1) The specific conditions under which an intended recipient will be authorized to use, modify, reproduce, release, perform, display, or disclose technical data subject to limited rights or computer software subject to restricted rights must be stipulated in an attachment to the use and non-disclosure agreement.</P> <P>(2) For an intended release, disclosure, or authorized use of technical data or computer software subject to special license rights, modify paragraph (1)(d) of the use and non-disclosure agreement to enter the conditions, consistent with the license requirements, governing the recipient's obligations regarding use, modification, reproduction, release, performance, display or disclosure of the data or software.</P> <P>(b) The requirement for use and non-disclosure agreements does not apply to Government contractors which require access to a third party's data or software for the performance of a Government contract that contains the clause at 252.227-7025, Limitations on the Use or Disclosure of Government-Furnished Information Marked with Restrictive Legends.</P> <P>(c) The prescribed use and non-disclosure agreement is:</P> <EXTRACT> <HD SOURCE="HD3">Use and Non-Disclosure Agreement</HD> <P>The undersigned, ________ (Insert Name) ________, an authorized representative of the ________ (Insert Company Name) ________, (which is hereinafter referred to as the “Recipient”) requests the Government to provide the Recipient with technical data or computer software (hereinafter referred to as “Data”) in which the Government's use, modification, reproduction, release, performance, display or disclosure rights are restricted. Those Data are identified in an attachment to this Agreement. In consideration for receiving such Data, the Recipient agrees to use the Data strictly in accordance with this Agreement:</P> <P>(1) The Recipient shall—</P> <P>(a) Use, modify, reproduce, release, perform, display, or disclose Data marked with government purpose rights or SBIR data rights legends only for government purposes and shall not do so for any commercial purpose. The Recipient shall not release, perform, display, or disclose these Data, without the express written permission of the contractor whose name appears in the restrictive legend (the “Contractor”), to any <PRTPAGE P="188"/>person other than its subcontractors or suppliers, or prospective subcontractors or suppliers, who require these Data to submit offers for, or perform, contracts with the Recipient. The Recipient shall require its subcontractors or suppliers, or prospective subcontractors or suppliers, to sign a use and non-disclosure agreement prior to disclosing or releasing these Data to such persons. Such agreement must be consistent with the terms of this agreement.</P> <P>(b) Use, modify, reproduce, release, perform, display, or disclose technical data marked with limited rights legends only as specified in the attachment to this Agreement. Release, performance, display, or disclosure to other persons is not authorized unless specified in the attachment to this Agreement or expressly permitted in writing by the Contractor. The Recipient shall promptly notify the Contractor of the execution of this Agreement and identify the Contractor's Data that has been or will be provided to the Recipient, the date and place the Data were or will be received, and the name and address of the Government office that has provided or will provide the Data.</P> <P>(c) Use computer software marked with restricted rights legends only in performance of Contract Number ________ (insert contract number(s)) ________. The recipient shall not, for example, enhance, decompile, disassemble, or reverse engineer the software; time share, or use a computer program with more than one computer at a time. The recipient may not release, perform, display, or disclose such software to others unless expressly permitted in writing by the licensor whose name appears in the restrictive legend. The Recipient shall promptly notify the software licensor of the execution of this Agreement and identify the software that has been or will be provided to the Recipient, the date and place the software were or will be received, and the name and address of the Government office that has provided or will provide the software.</P> <P>(d) Use, modify, reproduce, release, perform, display, or disclose Data marked with special license rights legends (To be completed by the contracting officer. See 227.7103-7(a)(2). Omit if none of the Data requested is marked with special license rights legends).</P> <P>(2) The Recipient agrees to adopt or establish operating procedures and physical security measures designed to protect these Data from inadvertent release or disclosure to unauthorized third parties.</P> <P>(3) The Recipient agrees to accept these Data “as is” without any Government representation as to suitability for intended use or warranty whatsoever. This disclaimer does not affect any obligation the Government may have regarding Data specified in a contract for the performance of that contract.</P> <P>(4) The Recipient may enter into any agreement directly with the Contractor with respect to the use, modification, reproduction, release, performance, display, or disclosure of these Data.</P> <P>(5) The Recipient agrees to indemnify and hold harmless the Government, its agents, and employees from every claim or liability, including attorneys fees, court costs, and expenses arising out of, or in any way related to, the misuse or unauthorized modification, reproduction, release, performance, display, or disclosure of Data received from the Government with restrictive legends by the Recipient or any person to whom the Recipient has released or disclosed the Data.</P> <P>(6) The Recipient is executing this Agreement for the benefit of the Contractor. The Contractor is a third party beneficiary of this Agreement who, in addition to any other rights it may have, is intended to have the rights of direct action against the Recipient or any other person to whom the Recipient has released or disclosed the Data, to seek damages from any breach of this Agreement or to otherwise enforce this Agreement.</P> <P>(7) The Recipient agrees to destroy these Data, and all copies of the Data in its possession, no later than 30 days after the date shown in paragraph (8) of this Agreement, to have all persons to whom it released the Data do so by that date, and to notify the Contractor that the Data have been destroyed.</P> <P>(8) This Agreement shall be effective for the period commencing with the Recipient's execution of this Agreement and ending upon ____ (Insert Date) ____. The obligations imposed by this Agreement shall survive the expiration or termination of the Agreement.</P> <FP SOURCE="FP-DASH">Recipient's Business Name</FP> <FP SOURCE="FP-DASH">By</FP> <FP>Authorized Representative</FP> <FP SOURCE="FP-DASH"/> <FP>Date</FP> <FP SOURCE="FP-DASH">Representative's Typed Name</FP> <FP SOURCE="FP-DASH">and Title</FP> </EXTRACT> <HD SOURCE="HD3">(End of use and non-disclosure agreement)</HD> </SECTION> <SECTION> <SECTNO>227.7103-8</SECTNO> <SUBJECT>Deferred delivery and deferred ordering of technical data.</SUBJECT> <P>(a) <E T="03">Deferred delivery.</E> Use the clause at 252.227-7026, Deferred Delivery of Technical Data or Computer Software, when it is in the Government's interests to defer the delivery of technical data. The clause permits the contracting officer to require the delivery of technical data identified as “deferred delivery” data at any time until two years after acceptance by the Government of <PRTPAGE P="189"/>all items (other than technical data or computer software) under the contract or contract termination, whichever is later. The obligation of subcontractors or suppliers to deliver such technical data expires two years after the date the prime contractor accepts the last item from the subcontractor or supplier for use in the performance of the contract. The contract must specify which technical data is subject to deferred delivery. The contracting officer shall notify the contractor sufficiently in advance of the desired delivery date for such data to permit timely delivery.</P> <P>(b) <E T="03">Deferred ordering.</E> Use the clause at 252.227-7027, Deferred Ordering of Technical Data or Computer Software, when a firm requirement for a particular data item(s) has not been established prior to contract award but there is a potential need for the data. Under this clause, the contracting officer may order any data that has been generated in the performance of the contract or any subcontract thereunder at any time until three years after acceptance of all items (other than technical data or computer software) under the contract or contract termination, whichever is later. The obligation of subcontractors to deliver such data expires three years after the date the contractor accepts the last item under the subcontract. When the data are ordered, the delivery dates shall be negotiated and the contractor compensated only for converting the data into the prescribed form, reproduction costs, and delivery costs.</P> </SECTION> <SECTION> <SECTNO>227.7103-9</SECTNO> <SUBJECT>Copyright.</SUBJECT> <P>(a) <E T="03">Copyright license.</E> (1) The clause at 252.227-7013, Rights in Technical Data—Noncommercial Items, requires a contractor to grant or obtain for the Government license rights which permit the Government to reproduce data, distribute copies of the data, publicly perform or display the data or, through the right to modify data, prepare derivative works. The extent to which the Government, and others acting on its behalf, may exercise these rights varies for each of the standard data rights licenses obtained under the clause. When non-standard license rights in technical data will be negotiated, negotiate the extent of the copyright license concurrent with negotiations for the data rights license. Do not negotiate a copyright license that provides less rights than the standard limited rights license in technical data.</P> <P>(2) The clause at 252.227-7013 does not permit a contractor to incorporate a third party's copyrighted data into a deliverable data item unless the contractor has obtained an appropriate license for the Government and, when applicable, others acting on the Government's behalf, or has obtained the contracting officer's written approval to do so. Grant approval to use third party copyrighted data in which the Government will not receive a copyright license only when the Government's requirements cannot be satisfied without the third party material or when the use of the third party material will result in cost savings to the Government which outweigh the lack of a copyright license.</P> <P>(b) <E T="03">Copyright considerations—acquisition of existing and special works.</E> See 227.7105 or 227.7106 for copyright considerations when acquiring existing or special works.</P> </SECTION> <SECTION> <SECTNO>227.7103-10</SECTNO> <SUBJECT>Contractor identification and marking of technical data to be furnished with restrictive markings.</SUBJECT> <P>(a) <E T="03">Identification requirements.</E> (1) The solicitation provision at 252.227-7017, Identification and Assertion of Use, Release, or Disclosure Restrictions, requires offerors to identify to the contracting officer, prior to contract award, any technical data that the offeror asserts should be provided to the Government with restrictions on use, modification, reproduction, release or disclosure. This requirement does not apply to restrictions based solely on copyright. The notification and identification must be submitted as an attachment to the offer. If an offeror fails to submit the attachment or fails to complete the attachment in accordance with the requirements of the solicitation provision, such failure shall constitute a minor informality. Provide offerors an opportunity to remedy a minor informality in accordance with the procedures at FAR 14.405 or 15.607. <PRTPAGE P="190"/>An offeror's failure to correct the informality within the time prescribed by the contracting officer shall render the offer ineligible for award.</P> <P>(2) The procedures for correcting minor informalities shall not be used to obtain information regarding asserted restrictions or an offeror's suggested asserted rights category. Questions regarding the justification for an asserted restriction or asserted rights category must be pursued in accordance with the procedures at 227.7103-13.</P> <P>(3) The restrictions asserted by a successful offeror shall be attached to its contract unless, in accordance with the procedures at 227.7103-13, the parties have agreed that an asserted restriction is not justified. The contract attachment shall provide the same information regarding identification of the technical data, the asserted rights category, the basis for the assertion, and the name of the person asserting the restrictions as required by paragraph (d) of the solicitation provision at 252.227-7017. Subsequent to contract award, the clause at 252.227-7013, Rights in Technical Data—Noncommercial Items, permits the contractor to make additional assertions under certain conditions. The additional assertions must be made in accordance with the procedures and in the format prescribed by that clause.</P> <P>(4) Neither the pre- or post-award assertions made by the contractor, nor the fact that certain assertions are identified in the attachment to the contract, determine the respective rights of the parties. As provided at 227.7103-13, the Government has the right to review, verify, challenge and validate restrictive markings.</P> <P>(5) Information provided by offerors in response to the solicitation provision may be used in the source selection process to evaluate the impact on evaluation factors that may be created by restrictions on the Government's ability to use or disclose technical data. However, offerors shall not be prohibited from offering products for which the offeror is entitled to provide the Government limited rights in the technical data pertaining to such products and offerors shall not be required, either as a condition of being responsive to a solicitation or as a condition for award, to sell or otherwise relinquish any greater rights in technical data when the offeror is entitled to provide the technical data with limited rights.</P> <P>(b) <E T="03">Contractor marking requirements.</E> The clause at 252.227-7013, Rights in Technical Data—Noncommercial Items—</P> <P>(1) Requires a contractor that desires to restrict the Government's rights in technical data to place restrictive markings on the data, provides instructions for the placement of the restrictive markings, and authorizes the use of certain restrictive markings; and</P> <P>(2) Requires a contractor to deliver, furnish, or otherwise provide to the Government any technical data in which the Government has previously obtained rights with the Government's pre-existing rights in that data unless the parties have agreed otherwise or restrictions on the Government's rights to use, modify, reproduce, release, perform, display, or disclose the data have expired. When restrictions are still applicable, the contractor is permitted to mark the data with the appropriate restrictive legend for which the data qualified.</P> <P>(c) <E T="03">Unmarked technical data.</E> (1) Technical data delivered or otherwise provided under a contract without restrictive markings shall be presumed to have been delivered with unlimited rights and may be released or disclosed without restriction. To the extent practicable, if a contractor has requested permission (see paragraph (c)(2) of this subsection) to correct an inadvertent omission of markings, do not release or disclose the technical data pending evaluation of the request.</P> <P>(2) A contractor may request permission to have appropriate legends placed on unmarked technical data at its expense. The request must be received by the contracting officer within six months following the furnishing or delivery of such data, or any extension of that time approved by the contracting officer. The person making the request must:</P> <P>(i) Identify the technical data that should have been marked;<PRTPAGE P="191"/> </P> <P>(ii) Demonstrate that the omission of the marking was inadvertent, the proposed marking is justified and conforms with the requirements for the marking of technical data contained in the clause at 252.227-7013; and</P> <P>(iii) Acknowledge, in writing, that the Government has no liability with respect to any disclosure, reproduction, or use of the technical data made prior to the addition of the marking or resulting from the omission of the marking.</P> <P>(3) Contracting officers should grant permission to mark only if the technical data were not distributed outside the Government or were distributed outside the Government with restrictions on further use or disclosure.</P> </SECTION> <SECTION> <SECTNO>227.7103-11</SECTNO> <SUBJECT>Contractor procedures and records.</SUBJECT> <P>(a) The clause at 252.227-7013, Rights in Technical Data—Noncommercial Items, requires a contractor, and its subcontractors or suppliers that will deliver technical data with other than unlimited rights, to establish and follow written procedures to assure that restrictive markings are used only when authorized and to maintain records to justify the validity of asserted restrictions on delivered data.</P> <P>(b) The clause at 252.227-7037, Validation of Restrictive Markings on Technical Data requires contractors and their subcontractors at any tier to maintain records sufficient to justify the validity of restrictive markings on technical data delivered or to be delivered under a Government contract.</P> </SECTION> <SECTION> <SECTNO>227.7103-12</SECTNO> <SUBJECT>Government right to establish conformity of markings.</SUBJECT> <P>(a) <E T="03">Nonconforming markings.</E> (1) Authorized markings are identified in the clause at 252.227-7013, Rights in Technical Data—Noncommercial Items. All other markings are nonconforming markings. An authorized marking that is not in the form, or differs in substance, from the marking requirements in the clause at 252.227-7013 is also a nonconforming marking.</P> <P>(2) The correction of nonconforming markings on technical data is not subject to 252.227-7037, Validation of Restrictive Markings on Technical Data. To the extent practicable, the contracting officer should return technical data bearing nonconforming markings to the person who has placed the nonconforming markings on such data to provide that person an opportunity to correct or strike the nonconforming marking at that person's expense. If that person fails to correct the nonconformity and return the corrected data within 60 days following the person's receipt of the data, the contracting officer may correct or strike the nonconformity at that person's expense. When it is impracticable to return technical data for correction, contracting officers may unilaterally correct any nonconforming markings at Government expense. Prior to correction, the data may be used in accordance with the proper restrictive marking.</P> <P>(b) <E T="03">Unjustified markings.</E> (1) An unjustified marking is an authorized marking that does not depict accurately restrictions applicable to the Government's use, modification, reproduction, release, performance, display, or disclosure of the marked technical data. For example, a limited rights legend placed on technical data pertaining to items, components, or processes that were developed under a Government contract either exclusively at Government expense or with mixed funding (situations under which the Government obtains unlimited or government purpose rights) is an unjustified marking.</P> <P>(2) Contracting officers have the right to review and challenge the validity of unjustified markings. However, at any time during performance of a contract and notwithstanding existence of a challenge, the contracting officer and the person who has asserted a restrictive marking may agree that the restrictive marking is not justified. Upon such agreement, the contracting officer may, at his or her election, either—</P> <P>(i) Strike or correct the unjustified marking at that person's expense; or</P> <P>(ii) Return the technical data to the person asserting the restriction for correction at that person's expense. If the data are returned and that person fails to correct or strike the unjustified restriction and return the corrected data to the contracting officer within 60 days following receipt of the data, the <PRTPAGE P="192"/>unjustified marking shall be corrected or stricken at that person's expense.</P> </SECTION> <SECTION> <SECTNO>227.7103-13</SECTNO> <SUBJECT>Government right to review, verify, challenge and validate asserted restrictions.</SUBJECT> <P>(a) <E T="03">General.</E> An offeror's assertion(s) of restrictions on the Government's rights to use, modify, reproduce, release, or disclose technical data do not, by themselves, determine the extent of the Government's rights in the technical data. Under 10 U.S.C. 2321, the Government has the right to challenge asserted restrictions when there are reasonable grounds to question the validity of the assertion and continued adherence to the assertion would make it impractical to later procure competitively the item to which the data pertain.</P> <P>(b) <E T="03">Pre-award considerations.</E> The challenge procedures required by 10 U.S.C. 2321 could significantly delay awards under competitive procurements. Therefore, avoid challenging asserted restrictions prior to a competitive contract award unless resolution of the assertion is essential for successful completion of the procurement.</P> <P>(c) <E T="03">Challenge and validation.</E> Contracting officers must have reasonable grounds to challenge the current validity of an asserted restriction. Before issuing a challenge to an asserted restriction, carefully consider all available information pertaining to the assertion. All challenges must be made in accordance with the provisions of the clause at 252.227-7037, Validation of Restrictive Markings on Technical Data.</P> <P>(1) <E T="03">Challenge period.</E> Asserted restrictions should be reviewed before acceptance of technical data deliverable under the contract. Assertions must be challenged within three years after final payment under the contract or three years after delivery of the data, whichever is later. However, restrictive markings may be challenged at any time if the technical data—</P> <P>(i) Are publicly available without restrictions;</P> <P>(ii) Have been provided to the United States without restriction; or</P> <P>(iii) Have been otherwise made available without restriction other than a release or disclosure resulting from the sale, transfer, or other assignment of interest in the technical data to another party or the sale or transfer of some or all of a business entity or its assets to another party.</P> <P>(2) <E T="03">Pre-challenge requests for information.</E> (i) After consideration of the situation described in paragraph (c)(3) of this subsection, contracting officers may request the person asserting a restriction to furnish a written explanation of the facts and supporting documentation for the assertion in sufficient detail to enable the contracting officer to ascertain the basis of the restrictive markings. Additional supporting documentation may be requested when the explanation provided by the person making the assertion does not, in the contracting officer's opinion, establish the validity of the assertion.</P> <P>(ii) If the person asserting the restriction fails to respond to the contracting officer's request for information or additional supporting documentation, or if the information submitted or any other available information pertaining to the validity of a restrictive marking does not justify the asserted restriction, a challenge should be considered.</P> <P>(3)<E T="03">Transacting matters directly with subcontracts.</E> The clause at 252.227-7037 obtains the contractor's agreement that the Government may transact matters under the clause directly with a subcontractor, at any tier, without creating or implying privity of contract. Contracting officers should permit a subcontractor or supplier to transact challenge and validation matters directly with the Government when—</P> <P>(i) A subcontractor's or supplier's business interests in its technical data would be compromised if the data were disclosed to a higher tier contractor;</P> <P>(ii) There is reason to believe that the contractor will not respond in a timely manner to a challenge and an untimely response would jeopardize a subcontractor's or suppliers right to assert restrictions; or</P> <P>(iii) Requested to do so by a subcontractor or supplier.</P> <P>(4) <E T="03">Challenge notice.</E> Do not issue a challenge notice unless there are reasonable grounds to question the validity of an assertion. Assertions may be <PRTPAGE P="193"/>challenged whether or not supporting documentation was requested from the person asserting the restriction. Challenge notices must be in writing and issued to the contractor or, after consideration of the situations described in paragraph (c)(3) of this subsection, the person asserting the restriction. The challenge notice must include the information in paragraph (e) of the clause at 252.227-7037.</P> <P>(5) <E T="03">Extension of response time.</E> The contracting officer, at his or her discretion, may extend the time for response contained in a challenge notice, as appropriate, if the contractor submits a timely written request showing the need for additional time to prepare a response.</P> <P>(6) <E T="03">Contracting officer's final decision.</E> Contracting officers must issue a final decision for each challenged assertion, whether or not the assertion has been justified.</P> <P>(i) A contracting officer's final decision that an assertion is not justified must be issued a soon as practicable following the failure of the person asserting the restriction to respond to the contracting officer's challenge within 60 days, or any extension to that time granted by the contracting officer.</P> <P>(ii) A contracting officer who, following a challenge and response by the person asserting the restriction, determines that an asserted restriction is justified, shall issue a final decision sustaining the validity of the asserted restriction. If the asserted restriction was made subsequent to submission of the contractor's offer, add the asserted restriction to the contract attachment.</P> <P>(iii) A contracting officer who determine that the validity of an asserted restriction has not been justified shall issue a contracting officer's final decision within the time frames prescribed in 252.227-7037. As provided in paragraph (g) of that clause, the Government is obligated to continue to respect the asserted restrictions through final disposition of any appeal unless the agency head notifies the person asserting the restriction that urgent or compelling circumstances do not permit the Government to continue to respect the asserted restriction.</P> <P>(7) <E T="03">Multiple challenges to an asserted restriction.</E> When more than one contracting officer challenges an asserted restriction, the contracting officer who made the earliest challenge is responsible for coordinating the Government challenges. That contracting officer shall consult with all other contracting officers making challenges, verify that all challenges apply to the same asserted restriction and, after consulting with the contractor, subcontractor, or supplier asserting the restriction, issue a schedule that provides that person a reasonable opportunity to respond to each challenge.</P> <P>(8) <E T="03">Validation.</E> Only a contracting officer's final decision, or actions of an agency board of contract appeals or a court of competent jurisdiction, that sustain the validity of an asserted restriction constitute validation of the asserted restriction.</P> </SECTION> <SECTION> <SECTNO>227.7103-14</SECTNO> <SUBJECT>Conformity, acceptance, and warranty of technical data.</SUBJECT> <P>(a) <E T="03">Statutory requirements.</E> 10 U.S.C. 2320—</P> <P>(1) Provides for the establishment of remedies applicable to technical data found to be incomplete, inadequate, or not to satisfy the requirements of the contract concerning such data; and</P> <P>(2) Authorizes agency heads to withhold payments (or exercise such other remedies an agency head considers appropriate) during any period if the contractor does not meet the requirements of the contract pertaining to the delivery of technical data.</P> <P>(b) <E T="03">Conformity and acceptance.</E> (1) Solicitations and contracts requiring the delivery of technical data shall specify the requirements the data must satisfy to be acceptable. Contracting officers, or their authorized representatives, are responsible for determining whether technical data tendered for acceptance conform to the contractual requirements.</P> <P>(2) The clause at 252.227-7030, Technical Data—Withholding of Payment, provides for withholding up to 10 percent of the contract price pending correction or replacement of the nonconforming technical data or negotiation of an equitable reduction in contract price. The amount subject to withholding may be expressed as a fixed <PRTPAGE P="194"/>dollar amount or as a percentage of the contract price. In either case, the amount shall be determined giving consideration to the relative value and importance of the data. For example—</P> <P>(i) When the sole purpose of a contract is to produce the data, the relative value of that data may be considerably higher than the value of data produced under a contract where the production of the data is a secondary objective; or</P> <P>(ii) When the Government will maintain or repair items, repair and maintenance data may have a considerably higher relative value than data that merely describe the item or provide performance characteristics.</P> <P>(3) Do not accept technical data that do not conform to the contractual requirements in all respects. Except for nonconforming restrictive markings (see paragraph (b)(4) of this subsection), correction or replacement of nonconforming data or an equitable reduction in contract price when correction or replacement of the nonconforming data is not practicable or is not in the Government's interests, shall be accomplished in accordance with—</P> <P>(i) The provisions of a contract clause providing for inspection and acceptance of deliverables and remedies for nonconforming deliverables; or</P> <P>(ii) The procedures at FAR 46.407(c) through (g), if the contract does not contain an inspection clause providing remedies for nonconforming deliverables.</P> <P>(4) Follow the procedures at 227.7103-12(a)(2) if nonconforming markings are the sole reason technical data fail to conform to contractual requirements. The clause at 252.227-7030 may be used to withhold an amount for payment, consistent with the terms of the clause, pending correction of the nonconforming markings.</P> <P>(c) <E T="03">Warranty.</E> (1) The intended use of the technical data and the cost, if any, to obtain the warranty should be considered before deciding to obtain a data warranty (see FAR 46.703). The fact that a particular item, component, or process is or is not warranted is not a consideration in determining whether or not to obtain a warranty for the technical data that pertain to the item, component, or process. For example, a data warranty should be considered if the Government intends to repair or maintain an item and defective repair or maintenance data would impair the Government's effective use of the item or result in increased costs to the Government.</P> <P>(2) As prescribed in 246.710, use the clause at 252.246-7001, Warranty of Data, and its alternates, or a substantially similar clause when the Government needs a specific warranty of technical data.</P> <CITA>[60 FR 33471, June 28, 1995, as amended at 69 FR 31912, June 8, 2004]</CITA> </SECTION> <SECTION> <SECTNO>227.7103-15</SECTNO> <SUBJECT>Subcontractor rights in technical data.</SUBJECT> <P>(a) 10 U.S.C. 2320 provides subcontractors at all tiers the same protection for their rights in data as is provided to prime contractors. The clauses at 252.227-7013, Rights in Technical Data—Noncommercial Items, and 252.227-7037, Validation of Restrictive Markings on Technical Data, implement the statutory requirements.</P> <P>(b) 10 U.S.C. 2321 permits a subcontractor to transact directly with the Government matters relating to the validation of its asserted restrictions on the Government's rights to use or disclose technical data. The clause at 252.227-7037 obtains a contractor's agreement that the direct transaction of validation or challenge matters with subcontractors at any tier does not establish or imply privity of contract. When a subcontractor or supplier exercise its right to transact validation matters directly with the Government, contracting officers shall deal directly with such persons, as provided at 227.7103-13(c)(3).</P> <P>(c) Require prime contractors whose contracts include the following clauses to include those clauses, without modification except for appropriate identification of the parties, in contracts with subcontractors or suppliers, at all tiers, who will be furnishing technical data for non-commercial items in response to a Government requirement:</P> <P>(1) 252.227-7013, Rights in Technical Data—Noncommercial Items;<PRTPAGE P="195"/> </P> <P>(2) 252.227-7025, Limitations on the Use or Disclosure of Government-Furnished Information Marked with Restrictive Legends;</P> <P>(3) 252.227-7028, Technical Data or Computer Software Previously Delivered to the Government; and</P> <P>(4) 252.227-7037, Validation of Restrictive Markings on Technical Data.</P> <P>(d) Do not require contractors to have their subcontractors or suppliers at any tier relinquish rights in technical data to the contractor, a higher tier subcontractor, or to the Government, as a condition for award of any contract, subcontract, purchase order, or similar instrument except for the rights obtained by the Government under the Rights in Technical Data—Noncommercial Items clause contained in the contractor's contract with the Government.</P> <CITA>[56 FR 36389, July 31, 1991, as amended at 60 FR 61598, Nov. 30, 1995]</CITA> </SECTION> <SECTION> <SECTNO>227.7103-16</SECTNO> <SUBJECT>Providing technical data to foreign governments, foreign contractors, or international organizations.</SUBJECT> <P>Technical data may be released or disclosed to foreign governments, foreign contractors, or international organizations only if release or disclosure is otherwise permitted both by Federal export controls and other national security laws or regulations. Subject to such laws and regulations, the Department of Defense—</P> <P>(a) May release or disclose technical data in which it has obtained unlimited rights to such foreign entities or authorize the use of such data by those entities; and</P> <P>(b) Shall not release or disclose technical data for which restrictions on use, release, or disclosure have been asserted to foreign entities, or authorize the use of technical data by those entities, unless the intended recipient is subject to the same provisions as included in the use and non-disclosure agreement at 227.7103-7 and the requirements of the clause at 252.227-7103, Rights in Technical Data—Noncommercial Items, governing use, modification, reproduction, release, performance, display, or disclosure of such data have been satisfied.</P> </SECTION> <SECTION> <SECTNO>227.7103-17</SECTNO> <SUBJECT>Overseas contracts with foreign sources.</SUBJECT> <P>(a) The clause at 252.227-7032, Rights in Technical Data and Computer Software (Foreign), may be used in contracts with foreign contractors to be performed overseas, except Canadian purchases (see paragraph (c) of this subsection), in lieu of the clause at 252.227-7013, Rights in Technical Data—Noncommercial Items, when the Government requires the unrestricted right to use, modify, reproduce, perform, display, release or disclose all technical data to be delivered under the contract. Do not use the clause in contracts for existing or special works.</P> <P>(b) When the Government does not require unlimited rights, the clause at 252.227-7032 may be modified to accommodate the needs of a specific overseas procurement situation. The Government should obtain rights in the technical data that are not less than the rights the Government would have obtained under the data rights clause(s) prescribed in this part for a comparable procurement performed within the United States or its outlying areas.</P> <P>(c) Contracts for Canadian purchases shall include the appropriate data rights clause prescribed in this part for a comparable procurement performed within the United States or its outlying areas.</P> <CITA>[56 FR 36389, July 31, 1991, as amended at 70 FR 35545, June 21, 2005]</CITA> </SECTION> <SECTION> <SECTNO>227.7104</SECTNO> <SUBJECT>Contracts under the Small Business Innovation Research (SBIR) Program.</SUBJECT> <P>(a) Use the clause at 252.227-7018, Rights in Noncommercial Technical Data and Computer Software—Small Business Innovation Research (SBIR) Program, when technical data or computer software will be generated during performance of contracts under the SBIR program.</P> <P>(b) Under the clause at 252.227-7018, the Government obtains a royalty-free license to use technical data marked with an SBIR data rights legend only for government purposes during the period commencing with contract award and ending five years after completion of the project under which the data were generated. Upon expiration of the <PRTPAGE P="196"/>five-year restrictive license, the Government has unlimited rights in the SBIR data. During the license period, the Government may not release or disclose SBIR data to any person other than its support services contractors except—</P> <P>(1) For evaluational purposes;</P> <P>(2) As expressly permitted by the contractor; or</P> <P>(3) A use, release, or disclosure that is necessary for emergency repair or overhaul of items operated by the Government.</P> <P>(c) Do not make any release or disclosure permitted by paragraph (b) of this section unless, prior to release or disclosure, the intended recipient is subject to the use and nondisclosure agreement at 227.7103-7.</P> <P>(d) Use the clause at 252.227-7018 with its Alternate I in research contracts when the contracting officer determines, in consultation with counsel, that public dissemination by the contractor would be—</P> <P>(1) In the interest of the Government; and</P> <P>(2) Facilitated by the Government relinquishing its right to publish the work for sale, or to have others publish the work for sale on behalf of the Government.</P> <P>(e) Use the following provision and clauses in SBIR solicitations and contracts that include the clause at 252.227-7018:</P> <P>(1) 252.227-7016, Rights in Bid or Proposal Information;</P> <P>(2) 252.227-7017, Identification and Assertion of Use, Release, or Disclosure Restrictions;</P> <P>(3) 252.227-7019, Validation of Asserted Restrictions—Computer Software;</P> <P>(4) 252.227-7030, Technical Data—Withholding of Payment; and</P> <P>(5) 252.227-7037, Validation of Restrictive Markings on Technical Data (paragraph (e) of the clause contains information that must be included in a challenge).</P> <P>(f) Use the following clauses and provision in SBIR solicitations and contracts in accordance with the guidance at 227.7103-6 (c) and (d):</P> <P>(1) 252.227-7025, Limitations on the Use or Disclosure of Government-Furnished Information Marked with Restrictive Legends; and</P> <P>(2) 252.227-7028, Technical Data or Computer Software Previously Delivered to the Government.</P> <CITA>[56 FR 36389, July 31, 1991, as amended at 60 FR 61598, Nov. 30, 1995; 62 FR 2614, Jan. 17, 1997; 69 FR 31912, June 8, 2004]</CITA> </SECTION> <SECTION> <SECTNO>227.7105</SECTNO> <SUBJECT>Contracts for the acquisition of existing works.</SUBJECT> </SECTION> <SECTION> <SECTNO>227.7105-1</SECTNO> <SUBJECT>General.</SUBJECT> <P>(a) Existing works include motion pictures, television recordings, video recordings, and other audiovisual works in any medium; sound recordings in any medium; musical, dramatic, and literary works; pantomimes and choreographic works; pictorial, graphic, and sculptural works; and works of a similar nature. Usually, these or similar works were not first created, developed, generated, originated, prepared, or produced under a Government contract. Therefore, the Government must obtain a license in the work if it intends to reproduce the work, distribute copies of the work, prepare derivative works, or perform or display the work publicly. When the Government is not responsible for the content of an existing work, it should require the copyright owner to indemnify the Government for liabilities that may arise out of the content, performance, use, or disclosure of such data.</P> <P>(b) Follow the procedures at 227.7106 for works which will be first created, developed, generated, originated, prepared, or produced under a Government contract and the Government needs to control distribution of the work or has a specific need to obtain indemnity for liabilities that may arise out of the creation, content, performance, use, or disclosure of the work or from libelous or other unlawful material contained in the work. Follow the procedures at 227.7103 when the Government does not need to control distribution of such works or obtain such indemnities.</P> </SECTION> <SECTION> <SECTNO>227.7105-2</SECTNO> <SUBJECT>Acquisition of existing works without modification.</SUBJECT> <P>(a) Use the clause at 252.227-7021, Rights in Data—Existing Works, in lieu of the clause at 252.227-7013, Rights in Technical Data—Noncommercial <PRTPAGE P="197"/>Items, in solicitations and contracts exclusively for existing works when—</P> <P>(1) The existing works will be acquired without modification; and</P> <P>(2) The Government requires the right to reproduce, prepare derivative works, or publicly perform or display the existing works; or</P> <P>(3) The Government has a specific need to obtain indemnity for liabilities that may arise out of the content, performance, use, or disclosure of such data.</P> <P>(b) The clause at 252.227-7021 provides the Government, and others acting on its behalf, a paid-up, non-exclusive, irrevocable, world-wide license to reproduce, prepare derivative works and publicly perform or display the works called for by a contract and to authorize others to do so for government purposes.</P> <P>(c) A contract clause is not required to acquire existing works such as books, magazines and periodicals, in any storage or retrieval medium, when the Government will not reproduce the books, magazines or periodicals, or prepare derivative works.</P> </SECTION> <SECTION> <SECTNO>227.7105-3</SECTNO> <SUBJECT>Acquisition of modified existing works.</SUBJECT> <P>Use the clause at 252.227-7020, Rights in Special Works, in solicitations and contracts for modified existing works in lieu of the clause at 252.227-7021, Rights in Data—Existing Works.</P> </SECTION> <SECTION> <SECTNO>227.7106</SECTNO> <SUBJECT>Contracts for special works.</SUBJECT> <P>(a) Use the clause at 252.227-7020, Rights in Special Works, in solicitations and contracts where the Government has a specific need to control the distribution of works first produced, created, or generated in the performance of a contract and required to be delivered under that contract, including controlling distribution by obtaining an assignment of copyright, or a specific need to obtain indemnity for liabilities that may arise out of the creation, delivery, use, modification, reproduction, release, performance, display, or disclosure of such works. Use the clause—</P> <P>(1) In lieu of the clause at 252.227-7013, Rights in Technical Data—Noncommercial Items, when the Government must own or control copyright in all works first produced, created, or generated and required to be delivered under a contract; or</P> <P>(2) In addition to the clause at 252.227-7013 when the Government must own or control copyright in a portion of a work first produced, created, or generated and required to be delivered under a contract. The specific portion in which the Government must own or control copyright must be identified in a special contract requirement.</P> <P>(b) Although the Government obtains an assignment of copyright and unlimited rights in a special work under the clause at 252.227-7020, the contractor retains use and disclosure rights in that work. If the Government needs to restrict a contractor's rights to use or disclose a special work, it must also negotiate a special license which specifically restricts the contractor's use or disclosure rights.</P> <P>(c) The clause at 252.227-7020 does not permit a contractor to incorporate into a special work any works copyrighted by others unless the contractor obtains the contracting officer's permission to do so and obtains for the Government a non-exclusive, paid up, world-wide license to make and distribute copies of that work, to prepare derivative works, to perform or display publicly any portion of the work, and to permit others to do so for government purposes. Grant permission only when the Government's requirements cannot be satisfied unless the third party work is included in the deliverable work.</P> <P>(d) Examples of works which may be procured under the Rights in Special Works clause include, but are not limited, to audiovisual works, computer data bases, computer software documentation, scripts, soundtracks, musical compositions, and adaptations; histories of departments, agencies, services or units thereof; surveys of Government establishments; instructional works or guidance to Government officers and employees on the discharge of their official duties; reports, books, studies, surveys or similar documents; collections of data containing information pertaining to individuals that, if disclosed, would violate the right of privacy or publicity of the individuals to whom the information relates; or investigative reports.</P> </SECTION> <SECTION> <PRTPAGE P="198"/> <SECTNO>227.7107</SECTNO> <SUBJECT>Contracts for architect-engineer services.</SUBJECT> <P>This section sets forth policies and procedures, pertaining to data, copyrights, and restricted designs unique to the acquisition of construction and architect-engineer services.</P> </SECTION> <SECTION> <SECTNO>227.7107-1</SECTNO> <SUBJECT>Architectural designs and data clauses for architect-engineer or construction contracts.</SUBJECT> <P>(a) Except as provided in paragraph (b) of this subsection and in 227.7107-2, use the clause at 252.227-7022, Government Rights (Unlimited), in solicitations and contracts for architect-engineer services and for construction involving architect-engineer services.</P> <P>(b) When the purpose of a contract for architect-engineer services, or for construction involving architect-engineer services, is to obtain a unique architectural design of a building, a monument, or construction of similar nature, which for artistic, aesthetic or other special reasons the Government does not want duplicated, the Government may acquire exclusive control of the data pertaining to the design by including the clause at 252.227-7023, Drawings and Other Data to Become Property of Government, in solicitations and contracts.</P> <P>(c) The Government shall obtain unlimited rights in shop drawings for construction. In solicitations and contracts calling for delivery of shop drawings, include the clause at 252.227-7033, Rights in Shop Drawings.</P> </SECTION> <SECTION> <SECTNO>227.7107-2</SECTNO> <SUBJECT>Contracts for construction supplies and research and development work.</SUBJECT> <P>Use the provisions and clauses required by 227-7103-6 and 227.7203-6 when the acquisition is limited to—</P> <P>(a) Construction supplies or materials;</P> <P>(b) Experimental, developmental, or research work, or test and evaluation studies of structures, equipment, processes, or materials for use in construction; or</P> <P>(c) Both.</P> </SECTION> <SECTION> <SECTNO>227.7107-3</SECTNO> <SUBJECT>Approval of restricted designs.</SUBJECT> <P>The clause at 252.227-7024, Notice and Approval of Restricted Designs, may be included in architect-engineer contracts to permit the Government to make informed decisions concerning noncompetitive aspects of the design.</P> </SECTION> <SECTION> <SECTNO>227.7108</SECTNO> <SUBJECT>Contractor data repositories.</SUBJECT> <P>(a) Contractor data repositories may be established when permitted by agency procedures. The contractual instrument establishing the data repository must require, as a minimum, the data repository management contractor to—</P> <P>(1) Establish and maintain adequate procedures for protecting technical data delivered to or stored at the repository from unauthorized release or disclosure;</P> <P>(2) Establish and maintain adequate procedures for controlling the release or disclosure of technical data from the repository to third parties consistent with the Government's rights in such data;</P> <P>(3) When required by the contracting officer, deliver data to the Government on paper or in other specified media;</P> <P>(4) Be responsible for maintaining the currency of data delivered directly by Government contractors or subcontractors to the repository;</P> <P>(5) Obtain use and non-disclosure agreements (see 227.7103-7) from all persons to whom government purpose rights data is released or disclosed; and</P> <P>(6) Indemnify the Government from any liability to data owners or licensors resulting from, or as a consequence of, a release or disclosure of technical data made by the data repository contractor or its officers, employees, agents, or representatives.</P> <P>(b) If the contractor is or will be the data repository manager, the contractor's data management and distribution responsibilities must be identified in the contract or the contract must reference the agreement between the Government and the contractor that establishes those responsibilities.</P> <P>(c) If the contractor is not and will not be the data repository manager, do not require a contractor or subcontractor to deliver technical data marked with limited rights legends to a data repository managed by another contractor unless the contractor or subcontractor who has asserted limited rights agrees to release the data to the <PRTPAGE P="199"/>repository or has authorized, in writing, the Government to do so.</P> <P>(d) Repository procedures may provide for the acceptance, delivery, and subsequent distribution of technical data in storage media other than paper, including direct electronic exchange of data between two computers. The procedures must provide for the identification of any portions of the data provided with restrictive legends, when appropriate. The acceptance criteria must be consistent with the authorized delivery format.</P> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart 227.72—Rights in Computer Software and Computer Software Documentation</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>60 FR 33482, June 28, 1995, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>227.7200</SECTNO> <SUBJECT>Scope of subpart.</SUBJECT> <P>This subpart—</P> <P>(a) Prescribes policies and procedures for the acquisition of computer software and computer software documentation, and the rights to use, modify, reproduce, release, perform, display, or disclose such software or documentation. It implements requirements in the following laws and Executive Order:</P> <P>(1) 10 U.S.C. 2302(4).</P> <P>(2) 10 U.S.C. 2305 (subsection (d)(4)).</P> <P>(3) 10 U.S.C. 2320.</P> <P>(4) 10 U.S.C. 2321.</P> <P>(5) 10 U.S.C. 2325.</P> <P>(6) Executive Order 12591 (subsection 1(b)(6)).</P> <P>(b) Does not apply to computer software or computer software documentation acquired under GSA schedule contracts.</P> </SECTION> <SECTION> <SECTNO>227.7201</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>(a) As used in this subpart, unless otherwise specifically indicated, the terms “offeror” and “contractor” include an offeror's or contractor's subcontractors, suppliers, or potential subcontractors or suppliers at any tier.</P> <P>(b) Other terms used in this subpart are defined in the clause at 252.227-7014, Rights in Noncommercial Computer Software and Noncommercial Computer Software Documentation.</P> </SECTION> <SECTION> <SECTNO>227.7202</SECTNO> <SUBJECT>Commercial computer software and commercial computer software documentation.</SUBJECT> </SECTION> <SECTION> <SECTNO>227.7202-1</SECTNO> <SUBJECT>Policy.</SUBJECT> <P>(a) Commercial computer software or commercial computer software documentation shall be acquired under the licenses customarily provided to the public unless such licenses are inconsistent with Federal procurement law or do not otherwise satisfy user needs.</P> <P>(b) Commercial computer software and commercial computer software documentation shall be obtained competitively, to the maximum extent practicable, using firm-fixed-price contracts or firm-fixed-priced orders under available pricing schedules.</P> <P>(c) Offerors and contractors shall not be required to—</P> <P>(1) Furnish technical information related to commercial computer software or commercial computer software documentation that is not customarily provided to the public except for information documenting the specific modifications made at Government expense to such software or documentation to meet the requirements of a Government solicitation; or</P> <P>(2) Relinquish to, or otherwise provide, the Government rights to use, modify, reproduce, release, perform, display, or disclose commercial computer software or commercial computer software documentation except for a transfer of rights mutually agreed upon.</P> </SECTION> <SECTION> <SECTNO>227.7202-2</SECTNO> <RESERVED>[Reserved]</RESERVED> </SECTION> <SECTION> <SECTNO>227.7202-3</SECTNO> <SUBJECT>Rights in commercial computer software or commercial computer software documentation.</SUBJECT> <P>(a) The Government shall have only the rights specified in the license under which the commercial computer software or commercial computer software documentation was obtained.</P> <P>(b) If the Government has a need for rights not conveyed under the license customarily provided to the public, the Government must negotiate with the contractor to determine if there are acceptable terms for transferring such rights. The specific rights granted to the Government shall be enumerated in the contract license agreement or an addendum thereto.</P> </SECTION> <SECTION> <PRTPAGE P="200"/> <SECTNO>227.7202-4</SECTNO> <SUBJECT>Contract clause.</SUBJECT> <P>A specific contract clause governing the Government's rights in commercial computer software or commercial computer software documentation is not prescribed. As required by 227.7202-3, the Government's rights to use, modify, reproduce, release, perform, display, or disclose computer software or computer software documentation shall be identified in a license agreement.</P> </SECTION> <SECTION> <SECTNO>227.7203</SECTNO> <SUBJECT>Noncommercial computer software and noncommercial computer software documentation.</SUBJECT> </SECTION> <SECTION> <SECTNO>227.7203-1</SECTNO> <SUBJECT>Policy.</SUBJECT> <P>(a) DoD policy is to acquire only the computer software and computer software documentation, and the rights in such software or documentation, necessary to satisfy agency needs.</P> <P>(b) Solicitations and contracts shall—</P> <P>(1) Specify the computer software or computer software documentation to be delivered under a contract and the delivery schedules for the software or documentation;</P> <P>(2) Establish or reference procedures for determining the acceptability of computer software or computer software documentation;</P> <P>(3) Establish separate contract line items, to the extent practicable, for the computer software or computer software documentation to be delivered under a contract and require offerors and contractors to price separately each deliverable data item; and</P> <P>(4) Require offerors to identify, to the extent practicable, computer software or computer software documentation to be furnished with restrictions on the Government's rights and require contractors to identify computer software or computer software documentation to be delivered with such restrictions prior to delivery.</P> <P>(c) Offerors shall not be required, either as a condition of being responsive to a solicitation or as a condition for award, to sell or otherwise relinquish to the Government any rights in computer software developed exclusively at private expense except for the software identified at 227.7203-5(a) (3) through (6).</P> <P>(d) Offerors and contractors shall not be prohibited or discouraged from furnishing or offering to furnish computer software developed exclusively at private expense solely because the Government's rights to use, modify, release, reproduce, perform, display, or disclose the software may be restricted.</P> <P>(e) For acquisitions involving major weapon systems or subsystems of major weapon systems, the acquisition plan shall address acquisition strategies that provide for computer software and computer software documentation, and the associated license rights, in accordance with 207.106(S-70).</P> <CITA>[60 FR 33471, June 28, 1995 as amended at 72 FR 51189, Sept. 6, 2007]</CITA> </SECTION> <SECTION> <SECTNO>227.7203-2</SECTNO> <SUBJECT>Acquisition of noncommercial computer software and computer software documentation.</SUBJECT> <P>(a) Contracting officers shall work closely with data managers and requirements personnel to assure that computer software and computer software documentation requirements included in solicitations are consistent with the policy expressed in 227.7203-1.</P> <P>(b)(1) Data managers or other requirements personnel are responsible for identifying the Government's minimum needs. In addition to desired software performance, compatibility, or other technical considerations, needs determinations should consider such factors as multiple site or shared use requirements, whether the Government's software maintenance philosophy will require the right to modify or have third parties modify the software, and any special computer software documentation requirements.</P> <P>(2) When reviewing offers received in response to a solicitation or other request for computer software or computer software documentation, data managers must balance the original assessment of the Government's needs with prices offered.</P> <P>(c) Contracting officers are responsible for ensuring that, wherever practicable, solicitations and contracts—</P> <P>(1) Identify the types of computer software and the quantity of computer programs and computer software documentation to be delivered, any requirements for multiple users at one site or <PRTPAGE P="201"/>multiple site licenses, and the format and media in which the software or documentation will be delivered;</P> <P>(2) Establish each type of computer software or computer software documentation to be delivered as a separate contract line item (this requirement may be satisfied by an exhibit to the contract);</P> <P>(3) Identify the prices established for each separately priced deliverable item of computer software or computer software documentation under a fixed-price type contract;</P> <P>(4) Include delivery schedules and acceptance criteria for each deliverable item; and</P> <P>(5) Specifically identify the place of delivery for each deliverable item.</P> </SECTION> <SECTION> <SECTNO>227.7203-3</SECTNO> <SUBJECT>Early identification of computer software or computer software documentation to be furnished to the Government with restrictions on use, reproduction or disclosure.</SUBJECT> <P>(a) Use the provision at 252.227-7017, Identification and Assertion of Use, Release, or Disclosure Restrictions, in all solicitation that include the clause at 252.227-7014, Rights in Noncommercial Computer Software and Noncommercial Computer Software Documentation. The provision requires offerors to identify any computer software or computer software documentation for which restrictions, other than copyright, on use, modification, reproduction, release, performance, display, or disclosure are asserted and to attach the identification and assertion to the offer.</P> <P>(b) Subsequent to contract award, the clause at 252.227-7014 permits a contractor, under certain conditions, to make additional assertions of restrictions. The prescriptions for the use of that clause and its alternates are at 227.7203-6(a).</P> </SECTION> <SECTION> <SECTNO>227.7203-4</SECTNO> <SUBJECT>License rights.</SUBJECT> <P>(a) <E T="03">Grant of license.</E> The Government obtains rights in computer software or computer software documentation, including a copyright license, under an irrevocable license granted or obtained by the contractor which developed the software or documentation or the licensor of the software or documentation if the development contractor is not the licensor. The contractor or licensor retains all rights in the software or documentation not granted to the Government. The scope of a computer software license is generally determined by the source of funds used to develop the software. Contractors or licensors may, with some exceptions, restrict the Government's rights to use, modify, reproduce, release, perform, display, or disclose computer software developed exclusively or partially at private expense (see 227.7203-5 (b) and (c)). They may not, without the Government's agreement (see 227.7203-5(d)), restrict the Government's rights in computer software developed exclusively with Government funds or in computer software documentation required to be delivered under a contract.</P> <P>(b) <E T="03">Source of funds determination.</E> The determination of the source of funds used to develop computer software should be made at the lowest practicable segregable portion of the software or documentation (e.g., a software sub-routine that performs a specific function). Contractors may assert restricted rights in a segregable portion of computer software which otherwise qualifies for restricted rights under the clause at 252.227-7014, Rights in Noncommercial Computer Software and Noncommercial Computer Software Documentation.</P> </SECTION> <SECTION> <SECTNO>227.7203-5</SECTNO> <SUBJECT>Government rights.</SUBJECT> <P>The standard license rights in computer software that a licensor grants to the Government are unlimited rights, government purpose rights, or restricted rights. The standard license in computer software documentation conveys unlimited rights. Those rights are defined in the clause at 252.227-7014, Rights in Noncommercial Computer Software and Noncommercial Computer Software Documentation. In unusual situations, the standard rights may not satisfy the Government's needs or the Government may be willing to accept lesser rights in return for other consideration. In those cases, a special license may be negotiated. However, the licensor is not obligated to provide the Government greater rights and the contracting officer is not required to accept lesser rights <PRTPAGE P="202"/>than the rights provided in the standard grant of license. The situations under which a particular grant of license applies are enumerated in paragraphs (a) through (d) of this subsection.</P> <P>(a) <E T="03">Unlimited rights.</E> The Government obtains an unlimited rights license in—</P> <P>(1) Computer software developed exclusively with Government funds;</P> <P>(2) Computer software documentation required to be delivered under a Government contract;</P> <P>(3) Corrections or changes to computer software or computer software documentation furnished to the contractor by the Government;</P> <P>(4) Computer software or computer software documentation that is otherwise publicly available or has been released or disclosed by the contractor or subcontractor without restrictions on further use, release or disclosure other than a release or disclosure resulting from the sale, transfer, or other assignment of interest in the software to another party or the sale or transfer of some or all of a business entity or it assets to another party;</P> <P>(5) Computer software or computer software documentation obtained with unlimited rights under another Government contract or as a result of negotiations; or</P> <P>(6) Computer software or computer software documentation furnished to the Government, under a Government contract or subcontract with—</P> <P>(i) Restricted rights in computer software, limited rights in technical data, or government purpose license rights and the restrictive conditions have expired; or</P> <P>(ii) Government purpose rights and the contractor's exclusive right to use such software or documentation for commercial purposes has expired.</P> <P>(b) <E T="03">Government purpose rights.</E> (1) Except as provided in paragraph (a) of this subsection, the Government obtains government purpose rights in computer software developed with mixed funding.</P> <P>(2) The period during which government purpose rights are effective is negotiable. The clause at 252.227-7014 provides a nominal five-year period. Either party may request a different period. Changes to the government purpose rights period may be made at any time prior to delivery of the software without consideration from either party. Longer periods should be negotiated when a five-year period does not provide sufficient time to commercialize the software or, for software developed by subcontractors, when necessary to recognize the subcontractors' interests in the software.</P> <P>(3) The government purpose rights period commences upon execution of the contract, subcontract, letter contract (or similar contractual instrument), contract modification, or option exercise that required development of the computer software. Upon expiration of the government purpose rights period, the Government has unlimited rights in the software including the right to authorize others to use data for commercial purposes.</P> <P>(4) During the government purpose rights period, the Government may not use, or authorize other persons to use, computer software marked with government purpose rights legends for commercial purposes. The Government shall not release or disclose, or authorize others to release or disclose, computer software in which it has government purpose rights to any person unless—</P> <P>(i) Prior to release or disclosure, the intended recipient is subject to the use and non-disclosure agreement at 227.7103-7; or</P> <P>(ii) The intended recipient is a Government contractor receiving access to the software for performance of a Government contract that contains the clause at 252.227-7025, Limitations on the Use or Disclosure of Government-Furnished Information Marked with Restrictive Legends.</P> <P>(5) When computer software marked with government purpose rights legends will be released or disclosed to a Government contractor performing a contract that does not include the clause at 252.227-7025, the contract may be modified, prior to release or disclosure, to include such clause in lieu of requiring the contractor to complete a use and non-disclosure agreement.</P> <P>(6) Contracting activities shall establish procedures to assure that computer software or computer software <PRTPAGE P="203"/>documentation marked with government purpose rights legends are released or disclosed, including a release or disclosure through a Government solicitation, only to persons subject to the use and non-disclosure restrictions. Public announcements in the Commerce Business Daily or other publications must provide notice of the use and non-disclosure requirements. Class use and non-disclosure agreements (e.g., agreements covering all solicitations received by the XYZ company within a reasonable period) are authorized and may be obtained at any time prior to release or disclosure of the government purpose rights software or documentation. Documents transmitting government purpose rights software or documentation to persons under class agreements shall identify the specific software or documentation subject to government purpose rights and the class agreement under which such software or documentation are provided.</P> <P>(c) <E T="03">Restricted rights.</E> (1) The Government obtains restricted rights in noncommercial computer software required to be delivered or otherwise provided to the Government under a contract that were developed exclusively at private expense.</P> <P>(2) Contractors are not required to provide the Government additional rights in computer software delivered or otherwise provided to the Government with restricted rights. When the Government has a need for additional rights, the Government must negotiate with the contractor to determine if there are acceptable terms for transferring such rights. List or describe all software in which the contractor has granted the Government additional rights in a license agreement made part of the contract (see paragraph (d) of this subsection). The license shall enumerate the specific additional rights granted to the Government.</P> <P>(d) <E T="03">Specifically negotiated license rights.</E> Negotiate specific licenses when the parties agree to modify the standard license rights granted to the Government or when the Government wants to obtain rights in computer software in which it does not have rights. When negotiating to obtain, relinquish, or increase the Government's rights in computer software, consider the planned software maintenance philosophy, anticipated time or user sharing requirements, and other factors which may have relevance for a particular procurement. If negotiating to relinquish rights in computer software documentation, consider the administrative burden associated with protecting documentation subject to restrictions from unauthorized release or disclosure. The negotiated license rights must stipulate the rights granted the Government to use, modify, reproduce, release, perform, display, or disclose the software or documentation and the extent to which the Government may authorize others to do so. Identify all negotiated rights in a license agreement made part of the contract.</P> <P>(e) <E T="03">Rights in derivative computer software or computer software documentation.</E> The clause at 252.227-7014 protects the Government's rights in computer software, computer software documentation, or portions thereof that the contractor subsequently uses to prepare derivative software or subsequently embeds or includes in other software or documentation. The Government retains the rights it obtained under the development contract in the unmodified portions of the derivative software or documentation.</P> </SECTION> <SECTION> <SECTNO>227.7203-6</SECTNO> <SUBJECT>Contract clauses.</SUBJECT> <P>(a)(1) Use the clause at 252.227-7014, Rights in Noncommercial Computer Software and Noncommercial Computer Software Documentation, in solicitations and contracts when the successful offeror(s) will be required to deliver computer software or computer software documentation. Do not use the clause when the only deliverable items are technical data (other than computer software documentation), commercial computer software or commercial computer software documentation, commercial items (see 227.7102-3), special works (see 227.7205), or contracts under the Small Business Innovative Research Program (see 227.7104), Except as provided in 227.7107-2, do not use the clause in architect-engineer and construction contracts.</P> <P>(2) Use the clause at 252.227-7014 with its Alternate I in research contracts <PRTPAGE P="204"/>when the contracting officer determines, in consultation with counsel, that public dissemination by the contractor would be—</P> <P>(i) In the interest of the Government; and</P> <P>(ii) Facilitated by the Government relinquishing its right to publish the work for sale, or to have others publish the work for sale on behalf of the Government.</P> <P>(b) Use the clause at 252.227-7016, Rights in Bid or Proposal Information, in solicitations and contracts that include the clause at 252.227-7014.</P> <P>(c) Use the clause at 252.227-7019, Validation of Asserted Restrictions—Computer Software, in solicitations and contracts that include the clause at 252.227-7014. The clause provides procedures for the validation of asserted restrictions on the Government's rights to use, release, or disclose computer software.</P> <P>(d) Use the provision at 252.227-7025, Limitations on the Use or Disclosure of Government-Furnished Information Marked with Restrictive Legends, in solicitations and contracts when it is anticipated that the Government will provide the contractor, for performance of its contract, computer software or computer software documentation marked with another contractor's restrictive legend(s).</P> <P>(e) Use the provision at 252.227-7028, Technical Data or Computer Software Previously Delivered to the Government, in solicitations when the resulting contract will require the contractor to deliver computer software or computer software documentation. The provision requires offerors to identify any software or documentation specified in the solicitation as deliverable items that are the same or substantially the same as software or documentation which the offeror has delivered or is obligated to deliver, either as a contractor or subcontractor, under any other federal agency contract.</P> <P>(f) Use the clause at 252.227-7037, Validation of Restrictive Markings on Technical Data, in solicitations and contracts that include the clause at 252.227-7014 when the contractor will be required to deliver noncommercial computer software documentation (technical data). The clause implements statutory requirements under 10 U.S.C. 2321. Paragraph (e) of the clause contains information that must be included in a formal challenge.</P> </SECTION> <SECTION> <SECTNO>227.7203-7</SECTNO> <RESERVED>[Reserved]</RESERVED> </SECTION> <SECTION> <SECTNO>227.7203-8</SECTNO> <SUBJECT>Deferred delivery and deferred ordering of computer software and computer software documentation.</SUBJECT> <P>(a) <E T="03">Deferred delivery.</E> Use the clause at 252.227-7026, Deferred Delivery of Technical Data or Computer Software, when it is in the Government's interests to defer the delivery of computer software or computer software documentation. The clause permits the contracting officer to require the delivery of data identified as “deferred delivery” data or computer software at any time until two years after acceptance by the Government of all items (other than technical data or computer software) under the contract or contract termination, whichever is later. The obligation of subcontractors or suppliers to deliver such data expires two years after the date the prime contractor accepts the last item from the subcontractor or supplier for use in the performance of the contract. The contract must specify the computer software or computer software documentation that is subject to deferred delivery. The contracting officer shall notify the contractor sufficiently in advance of the desired delivery date for such software or documentation to permit timely delivery.</P> <P>(b) <E T="03">Deferred ordering.</E> Use the clause at 252.227-7027, Deferred Ordering of Technical Data or Computer Software, when a firm requirement for software or documentation has not been established prior to contract award but there is a potential need for computer software or computer software documentation. Under this clause the contracting officer may order any computer software or computer software documentation generated in the performance of the contract or any subcontract thereunder at any time until three years after acceptance of all items (other than technical data or computer software) under the contract or contract termination, whichever is later. The obligation of subcontractors to deliver such technical data or computer software expires three years after <PRTPAGE P="205"/>the date the contractor accepts the last item under the subcontract. When the software or documentation are ordered, the delivery dates shall be negotiated and the contractor compensated only for converting the software or documentation into the prescribed form, reproduction costs, and delivery costs.</P> </SECTION> <SECTION> <SECTNO>227.7203-9</SECTNO> <SUBJECT>Copyright.</SUBJECT> <P>(a) <E T="03">Copyright license.</E> (1) The clause at 252.227-7014, Rights in Noncommercial Computer Software and Noncommercial Computer Software Documentation, requires a contractor to grant, or obtain for the Government license rights which permit the Government to reproduce the software or documentation, distribute copies, perform or display the software or documentation and, through the right to modify data, prepare derivative works. The extent to which the Government, and others acting on its behalf, may exercise these rights varies for each of the standard data rights licenses obtained under the clause. When non-standard license rights in computer software or computer software documentation will be negotiated, negotiate the extent of the copyright license concurrent with negotiations for the data rights license. Do not negotiate copyright licenses for computer software that provide less rights than the standard restricted rights in computer software license. For computer software documentation, do not negotiate a copyright license that provides less rights than the standard limited rights in technical data license.</P> <P>(2) The clause at 252.227-7013, Rights in Technical Data—Noncommercial Items, does not permit a contractor to incorporate a third party's copyrighted software into a deliverable software item unless the contractor has obtained an appropriate license for the Government and, when applicable, others acting on the Government's behalf, or has obtained the contracting officer's written approval to do so. Grant approval to use third party copyrighted software in which the Government will not receive a copyright license only when the Government's requirements cannot be satisfied without the third party material or when the use of the third party material will result in cost savings to the Government which outweigh the lack of a copyright license.</P> <P>(b) <E T="03">Copyright considerations—special works.</E> See 227.7205 for copyright considerations when acquiring special works.</P> </SECTION> <SECTION> <SECTNO>227.7203-10</SECTNO> <SUBJECT>Contractor identification and marking of computer software or computer software documentation to be furnished with restrictive markings.</SUBJECT> <P>(a) <E T="03">Identification requirements.</E> (1) The solicitation provision at 252.227-7017, Identification and Assertion of Use, Release, or Disclosure Restrictions, requires offerors to identify, prior to contract award, any computer software or computer software documentation that an offeror asserts should be provided to the Government with restrictions on use, modification, reproduction, release, or disclosure. This requirement does not apply to restrictions based solely on copyright. The notification and identification must be submitted as an attachment to the offer. If an offeror fails to submit the attachment or fails to complete the attachment in accordance with the requirements of the solicitation provision, such failure shall constitute a minor informality. Provide offerors an opportunity to remedy a minor informality in accordance with the procedures at FAR 14.405 or 15.306(a). An offeror's failure to correct an informality within the time prescribed by the contracting officer shall render the offer ineligible for award.</P> <P>(2) The procedures for correcting minor informalities shall not be used to obtain information regarding asserted restrictions or an offeror's suggested asserted rights category. Questions regarding the justification for an asserted restriction or asserted rights category must be pursued in accordance with the procedures at 227.7203-13.</P> <P>(3) The restrictions asserted by a successful offeror shall be attached to its contract unless, in accordance with the procedures at 227.7203-13, the parties have agreed that an asserted restriction is not justified. The contract attachment shall provide the same information regarding identification of the computer software or computer software documentation, the asserted <PRTPAGE P="206"/>rights category, the basis for the assertion, and the name of the person asserting the restrictions as required by paragraph (d) of the solicitation provision at 252.227-7017. Subsequent to contract award, the clause at 252.227-7014, Rights in Noncommercial Computer Software and Noncommercial Computer Software Documentation, permits a contractor to make additional assertions under certain conditions. The additional assertions must be made in accordance with the procedures and in the format prescribed by that clause.</P> <P>(4) Neither the pre- or post-award assertions made by the contractor nor the fact that certain assertions are identified in the attachment to the contract, determine the respective rights of the parties. As provided at 227.7203-13, the Government has the right to review, verify, challenge and validate restrictive markings.</P> <P>(5) Information provided by offerors in response to the solicitation provision at 252.227-7017 may be used in the source selection process to evaluate the impact on evaluation factors that may be created by restrictions on the Government's ability to use or disclose computer software or computer software documentation.</P> <P>(b) <E T="03">Contractor marking requirements.</E> The clause at 252.227-7014, Rights in Noncommercial Computer Software and Noncommercial Computer Software Documentation—</P> <P>(1) Requires a contractor who desires to restrict the Government's rights in computer software or computer software documentation to place restrictive markings on the software or documentation, provides instructions for the placement of the restrictive markings, and authorizes the use of certain restrictive markings. When it is anticipated that the software will or may be used in combat or situations which simulate combat conditions, do not permit contractors to insert instructions into computer programs that interfere with or delay operation of the software to display a restrictive rights legend or other license notice; and</P> <P>(2) Requires a contractor to deliver, furnish, or otherwise provide to the Government any computer software or computer software documentation in which the Government has previously obtained rights with the Government's pre-existing rights in that software or documentation unless the parties have agreed otherwise or restrictions on the Government's rights to use, modify, produce, release, or disclose the software or documentation have expired. When restrictions are still applicable, the contractor is permitted to mark the software or documentation with the appropriate restrictive legend.</P> <P>(c) <E T="03">Unmarked computer software or computer software documentation.</E> (1) Computer software or computer software documentation delivered or otherwise provided under a contract without restrictive markings shall be presumed to have been delivered with unlimited rights and may be released or disclosed without restriction. To the extent practicable, if a contractor has requested permission (see paragraph (c)(2) of this subsection) to correct an inadvertent omission of markings, do not release or disclose the software or documentation pending evaluation of the request.</P> <P>(2) A contractor may request permission to have appropriate legends placed on unmarked computer software or computer software documentation at its expense. The request must be received by the contracting officer within six months following the furnishing or delivery of such software or documentation, or any extension of that time approved by the contracting officer. The person making the request must—</P> <P>(i) Identify the software or documentation that should have been marked;</P> <P>(ii) Demonstrate that the omission of the marking was inadvertent, the proposed marking is justified and conforms with the requirements for the marking of computer software or computer software documentation contained in the clause at 252.227-7014; and</P> <P>(iii) Acknowledge, in writing, that the Government has no liability with respect to any disclosure, reproduction, or use of the software or documentation made prior to the addition of the marking or resulting from the omission of the marking.<PRTPAGE P="207"/> </P> <P>(3) Contracting officers should grant permission to mark only if the software or documentation were not distributed outside the Government or were distributed outside the Government with restrictions on further use or disclosure.</P> <CITA>[60 FR 33482, June 28, 1995, as amended at 63 FR 55052, Oct. 14, 1998]</CITA> </SECTION> <SECTION> <SECTNO>227.7203-11</SECTNO> <SUBJECT>Contractor procedures and records.</SUBJECT> <P>(a) The clause at 252.227-7014, Rights in Noncommercial Computer Software and Noncommercial Computer Software Documentation, requires a contractor, and its subcontractors or suppliers that will deliver computer software or computer software documentation with other than unlimited rights, to establish and follow written procedures to assure that restrictive markings are used only when authorized and to maintain records to justify the validity of restrictive markings.</P> <P>(b) The clause at 252.227-7019, Validation of Asserted Restrictions—Computer Software, requires contractors and their subcontractors or suppliers at any tier to maintain records sufficient to justify the validity of markings that assert restrictions on the use, modification, reproduction, release, performance, display, or disclosure of computer software.</P> </SECTION> <SECTION> <SECTNO>227.7203-12</SECTNO> <SUBJECT>Government right to establish conformity of markings.</SUBJECT> <P>(a) <E T="03">Nonconforming markings.</E> (1) Authorized markings are identified in the clause at 252.227-7014, Rights in Noncommercial Computer Software and Noncommercial Computer Software Documentation. All other markings are nonconforming markings. An authorized marking that is not in the form, or differs in substance, from the marking requirements in the clause at 252.227-7014 is also a nonconforming marking.</P> <P>(2) The correction of nonconforming markings on computer software is not subject to 252.227-7019, Validation of Asserted Restrictions—Computer Software, and the correction of nonconforming markings on computer software documentation (technical data) is not subject to 252.227-7037, Validation of Restrictive Markings on Technical Data. To the extent practicable, the contracting officer should return computer software or computer software documentation bearing nonconforming markings to the person who has placed the nonconforming markings on the software or documentation to provide that person an opportunity to correct or strike the nonconforming markings at that person's expense. If that person fails to correct the nonconformity and return the corrected software or documentation within 60 days following the person's receipt of the software or documentation, the contracting officer may correct or strike the nonconformity at the person's expense. When it is impracticable to return computer software or computer software documentation for correction, contracting officers may unilaterally correct any nonconforming markings at Government expense. Prior to correction, the software or documentation may be used in accordance with the proper restrictive marking.</P> <P>(b) <E T="03">Unjustified markings.</E> (1) An unjustified marking is an authorized marking that does not depict accurately restrictions applicable to the Government's use, modification, reproduction, release, or disclosure of the marked computer software or computer software documentation. For example, a restricted rights legend placed on computer software developed under a Government contract either exclusively at Government expense or with mixed funding (situations under which the Government obtains unlimited or government purpose rights) is an unjustified marking.</P> <P>(2) Contracting officers have the right to review and challenge the validity of unjustified markings. However, at any time during performance of a contract and notwithstanding existence of a challenge, the contracting officer and the person who has asserted a restrictive marking may agree that the restrictive marking is not justified. Upon such agreement, the contracting officer may, at his or her election, either—</P> <P>(i) Strike or correct the unjustified marking at that person's expense; or</P> <P>(ii) Return the computer software or computer software documentation to the person asserting the restriction for <PRTPAGE P="208"/>correction at that person's expense. If the software or documentation are returned and that person fails to correct or strike the unjustified restriction and return the corrected software or documentation to the contracting officer within 60 days following receipt of the software or documentation, the unjustified marking shall be corrected or stricken at that person's expense.</P> </SECTION> <SECTION> <SECTNO>227.7203-13</SECTNO> <SUBJECT>Government right to review, verify, challenge and validate asserted restrictions.</SUBJECT> <P>(a) <E T="03">General.</E> An offeror's or contractor's assertion(s) of restrictions on the Government's rights to use, modify, reproduce, release, or disclose computer software or computer software documentation do not, by themselves, determine the extent of the Government's rights in such software or documentation. The Government may require an offeror or contractor to submit sufficient information to permit an evaluation of a particular asserted restriction and may challenge asserted restrictions when there are reasonable grounds to believe that an assertion is not valid.</P> <P>(b) <E T="03">Requests for information.</E> Contracting officers should have a reason to suspect that an asserted restriction might not be correct prior to requesting information. When requesting information, provide the offeror or contractor the reason(s) for suspecting that an asserted restriction might not be correct. A need for additional license rights is not, by itself, a sufficient basis for requesting information concerning an asserted restriction. Follow the procedures at 227.7203-5(d) when additional license rights are needed but there is no basis to suspect that an asserted restriction might not be valid.</P> <P>(c) <E T="03">Transacting matters directly with subcontractors.</E> The clause at 252.227-7019, Validation of Asserted Restrictions—Computer Software, obtains the contractor's agreement that the Government may transact matters under the clause directly with a subcontractor or supplier, at any tier, without creating or implying privity of contract. Contracting officers should permit a subcontractor or supplier to transact challenge and validation matters directly with the Government when—</P> <P>(1) A subcontractor's or supplier's business interests in its technical data would be compromised if the data were disclosed to a higher tier contractor.</P> <P>(2) There is reason to believe that the contractor will not respond in a timely manner to a challenge and an untimely response would jeopardize a subcontractor's or supplier's right to assert restrictions; or</P> <P>(3) Requested to do so by a subcontractor or supplier.</P> <P>(d) <E T="03">Challenging asserted restrictions</E>—(1) <E T="03">Pre-award considerations.</E> The challenge procedures in the clause at 252.227-7019 could significantly delay competitive procurements. Therefore, avoid challenging asserted restrictions prior to a competitive contract award unless resolution of the assertion is essential for successful completion of the procurement.</P> <P>(2) <E T="03">Computer software documentation.</E> Computer software documentation is technical data. Challenges to asserted restrictions on the Government's rights to use, modify, reproduce, release, perform, display, or disclose computer software documentation must be made in accordance with the clause at 252.227-7037, Validation of Restrictive Markings on Technical Data, and the guidance at 227.7103-13. The procedures in the clause at 252.227-7037 implement requirements contained in 10 U.S.C. 2321. Resolution of questions regarding the validity of asserted restrictions using the process described at 227.7103-12(b)(2) is strongly encouraged.</P> <P>(3) <E T="03">Computer software.</E> (i) Asserted restrictions should be reviewed before acceptance of the computer software deliverable under a contract. The Government's right to challenge an assertion expires three years after final payment under the contract or three years after delivery of the software, whichever is later. Those limitations on the Government's challenge rights do not apply to software that is publicly available, has been furnished to the Government without restrictions, or has been otherwise made available without restrictions.</P> <P>(ii) Contracting officers must have reasonable grounds to challenge the <PRTPAGE P="209"/>current validity of an asserted restriction. Before challenging an asserted restriction, carefully consider all available information pertaining to the asserted restrictions. Resolution of questions regarding the validity of asserted restrictions using the process described at 227.7203-12(b)(2) is strongly encouraged. After consideration of the situations described in paragraph (c) of this subsection, contracting officers may request the person asserting a restriction to furnish a written explanation of the facts and supporting documentation for the assertion in sufficient detail to enable the contracting officer to determine the validity of the assertion. Additional supporting documentation may be requested when the explanation provided by that person does not, in the contracting officer's opinion, establish the validity of the assertion.</P> <P>(iii) Assertions may be challenged whether or not supporting documentation was requested. Challenges must be in writing and issued to the person asserting the restriction.</P> <P>(4) <E T="03">Extension of response time.</E> The contracting officer, at his or her discretion, may extend the time for response contained in a challenge, as appropriate, if the contractor submits a timely written request showing the need for additional time to prepare a response.</P> <P>(e) <E T="03">Validating or denying asserted restrictions.</E> (1) Contracting officers must promptly issue a final decision denying or sustaining the validity of each challenged assertion unless the parties have agreed on the disposition of the assertion. When a final decision denying the validity of an asserted restriction is made following a timely response to a challenge, the Government is obligated to continue to respect the asserted restrictions through final disposition of any appeal unless the agency head notifies the person asserting the restriction that urgent or compelling circumstances do not permit the Government to continue to respect the asserted restriction. See 252.227-7019(g) for restrictions applicable following a determination of urgent and compelling circumstances.</P> <P>(2) Only a contracting officer's final decision, or actions of an agency Board of Contract Appeals or a court of competent jurisdiction, that sustain the validity of an asserted restriction constitute validation of the restriction.</P> <P>(f) <E T="03">Multiple challenges to an asserted restriction.</E> When more than one contracting officer challenges an asserted restriction, the contracting officer who made the earliest challenge is responsible for coordinating the Government challenges. That contracting officer shall consult with all other contracting officers making challenges, verify that all challenges apply to the same asserted restriction and, after consulting with the contractor, subcontractor, or supplier asserting the restriction, issue a schedule that provides that person a reasonable opportunity to respond to each challenge.</P> </SECTION> <SECTION> <SECTNO>227.7203-14</SECTNO> <SUBJECT>Conformity, acceptance, and warranty of computer software and computer software documentation.</SUBJECT> <P>(a) <E T="03">Computer software documentation.</E> Computer software documentation is technical data. See 227.7103-14 for appropriate guidance and statutory requirements.</P> <P>(b) <E T="03">Computer software</E>—(1) <E T="03">Conformity and acceptance.</E> Solicitations and contracts requiring the delivery of computer software shall specify the requirements the software must satisfy to be acceptable. Contracting officers, or their authorized representatives, are responsible for determining whether computer software tendered for acceptance conforms to the contractual requirements. Except for nonconforming restrictive markings (follow the procedures at 227.7203-12(a) if nonconforming markings are the sole reason computer software tendered for acceptance fails to conform to contractual requirements), do not accept software that does not conform in all respects to applicable contractual requirements. Correction or replacement of nonconforming software, or an equitable reduction in contract price when correction or replacement of the nonconforming data is not practicable or is not in the Government's interests, shall be accomplished in accordance with—<PRTPAGE P="210"/> </P> <P>(i) The provisions of a contract clause providing for inspection and acceptance of deliverables and remedies for nonconforming deliverables; or</P> <P>(ii) The procedures at FAR 46.407(c) through (g), if the contract does not contain an inspection clause providing remedies for nonconforming deliverables.</P> <P>(2) <E T="03">Warranties</E>—(i) <E T="03">Weapon systems.</E> Computer software that is a component of a weapon system or major subsystem should be warranted as part of the weapon system warranty. Follow the procedures at 246.770.</P> <P>(ii) <E T="03">Non-weapon systems.</E> Approval of the chief of the contracting office must be obtained to use a computer software warranty other than a weapon system warranty. Consider the factors at FAR 46.703 in deciding whether to obtain a computer software warranty. When approval for a warranty has been obtained, the clause at 252.246-7001, Warranty of Data, and its alternates, may be appropriately modified for use with computer software or a procurement specific clause may be developed.</P> </SECTION> <SECTION> <SECTNO>227.7203-15</SECTNO> <SUBJECT>Su