41 U.S.C. 421 and 48 CFR chapter 1.
(a) Foreign governments and international organizations may request contract administration services on their direct purchases from U.S. producers. Direct purchase is the purchase of defense supplies in the United States through commercial channels for use by the foreign government or international organization.
(d)(i) DoD requires reimbursement, at a rate set by the Under Secretary of Defense (Comptroller/Chief Financial Officer), from non-DoD organizations, except for—
(A) Quality assurance, contract administration, and audit services provided under a no-charge reciprocal agreement;
(B) Services performed under subcontracts awarded by the Small Business Administration under FAR subpart 19.8; and
(C) Quality assurance and pricing services performed for the Supply and Services Canada.
(ii) Departments and agencies may request an exception from the reimbursement policy in paragraph (d)(i) of this section from the Under Secretary of Defense (Comptroller/Chief Financial Officer). A request must show that an exception is in the best interest of the Government.
(iii) Departments and agencies must pay for services performed by non-DoD activities, foreign governments, or international organizations, unless otherwise provided by reciprocal agreements.
(b)(i) Supply and Services Canada (SSC) is permitted to submit its requests for contract administration services directly to the cognizant contract administration office.
(ii) Other foreign governments (including Canadian government organizations other than SSC) and international organizations send their requests for contract administration services to the DoD Central Control Point (CCP) at the Defense Contract Management Command (DCMC), New York, NY. Contract administration offices provide services only upon request from the CCP. The CCP shall—
(A) Determine whether the request is from a friendly foreign government or an international agency in which the United States is a participant;
(B) Determine whether the services are consistent with the DoD mutual security program policies (the Assistant Secretary of Defense (International Security Affairs) is the source of information for questions as to the eligibility of foreign governments to receive services);
(C) Ensure that the reimbursement arrangements are consistent with 242.101(d);
(D) Coordinate with appropriate contract administration offices to determine whether DoD can provide the services;
(E) Notify the requestor that the request is accepted, or provide reasons why it cannot be accepted;
(F) Distribute the acquisition documents and related materials to contract administration offices; and
(G) Receive statements of costs incurred by contract administration offices for reimbursable services and forward them for billing to the Security Assistance Accounting Center.
This subpart does not address the contract administration role of a contracting officer's representative (see 201.602).
(a)(i) DoD activities shall not retain any contract for administration that requires performance of any contract administration function at or near contractor facilities, except contracts for—
(A) The National Security Agency;
(B) Research and development with universities;
(C) Flight training;
(D) Consultant support services;
(E) Mapping, charting, and geodesy services;
(F) Base, post, camp, and station purchases;
(G) Operation or maintenance of, or installation of equipment at radar or communication network sites;
(H) Communications services;
(I) Installation, operation, and maintenance of space-track sensors and relays;
(J) Dependents Medicare program contracts;
(K) Stevedoring contracts;
(L) Construction and maintenance of military and civil public works, including harbors, docks, port facilities, military housing, development of recreational facilities, water resources, flood control, and public utilities;
(M) Architect-engineer services;
(N) Airlift and sealift services (Military Airlift Command and Military Sealift Command may perform contract administration services at contractor locations involved solely in performance of airlift or sealift contracts);
(O) Subsistence supplies;
(P) Ballistic missile sites (contract administration offices may perform supporting administration of these contracts at missile activation sites during the installation, test, and checkout of the missiles and associated equipment);
(Q) Operation and maintenance of, or installation of equipment at, military test ranges, facilities, and installations; and
(R) Purchase orders issued via written telecommunications (See FAR 13.506).
(ii) Contract administration functions for base, post, camp, and station contracts on a military installation are normally the responsibility of the installation or tenant commander. However, the Defense Contract Management Command (DCMC) shall, upon request of the military department, and subject to prior agreement, perform contract administration services on a military installation.
(iii) DCMC shall provide preaward survey assistance for post, camp, and station work performed on a military installation. The contracting office and the DCMC preaward survey monitor should jointly determine the scope of the survey and individual responsibilities.
(iv) To avoid duplication, contracting offices shall not locate their personnel at contractor facilities, except—
(A) In support of contracts retained for administration in accordance with paragraph (a)(i) of this section; or
(B) As permitted under subpart 242.74.
(a) In special circumstances, a contract administration office may request support from a component not listed in the DoD Directory of Contract Administration Services Components (DLAH 4105.4). An example is where the contractor's work site is on a military base and a base organization is asked to provide support. Before formally sending the request, coordinate with the office concerned to ensure that resources are available for, and capable of, providing the support.
(b) When requesting support on a subcontract which includes foreign military sale (FMS) requirements, the contract administration office shall—
(i) Mark “FMS Requirement” on the face of the documents;
(ii) For each FMS case involved, provide the FMS case identifier, associated item quantities, DoD prime contract number, and prime contract line/subline item number.
(1) For contracts assigned to the Defense Contract Management Command (DCMC), designate as the paying office—
(i) The cognizant Defense Finance and Accounting Service (DFAS) payment office as specified in the DoD Directory of Contract Administration Services Components (DLAH section 4105.4), for contracts funded with DoD funds;
(ii) The department or agency payment office if authorized by defense financial management regulations or if the contract is funded with non-DoD funds; or
(iii) Multiple paying offices under paragraphs (1)(i) and (ii) of this section—if the contract is funded with both DoD and non-DoD funds.
(2) For contracts not assigned to DCMC, select a paying office or offices under department/agency procedures.
Contract administration services performed outside the U.S. should be performed in accordance with FAR 42.301 unless there are no policies and procedures covering a given situation. In this case, coordinate proposed actions with the appropriate U.S. country teams or commanders of unified and specified commands.
(a)(4) Also, review and evaluate—
(A) Contractor estimating systems (see FAR 15.407-5); and
(B) Contractor material management and accounting systems under subpart 242.72.
(7) See 242.7503 for ACO responsibilities with regard to receipt of an audit report identifying significant accounting system or related internal control deficiencies.
(8) Monitor contractor costs under subpart 242.70.
(9) For additional contract administration functions related to IR&D/B&P projects performed by major contractors, see 242.771-3(a).
(19) Also negotiate and issue contract modifications reducing contract prices in connection with the provisions of paragraph (b) of the clause at FAR 52.225-10, Duty-Free Entry.
(33) Also perform industrial readiness and mobilization production planning field surveys and negotiate schedules.
(39) See 223.370 for safety requirements on contracts for ammunition and explosives.
(41) The Defense Contract Management Command (DCMC) has responsibility for reviewing earned value management system (EVMS) plans and verifying initial and continuing contractor compliance with DoD EVMS criteria.
(67) Also support program offices and buying activities in precontractual efforts leading to a solicitation or award.
(S-70) Serve as the single point of contact for all Single Process Initiative (SPI) Management Council activities. The ACO shall negotiate and execute facilitywide class modifications and agreements for SPI processes, when authorized by the affected components.
(b)(S-70) Issue, negotiate and execute orders under basic ordering agreements for overhaul, maintenance and repair.
(a) If a visit to a contractor facility will require access to classified information, the visitors must give the contractor advance written notice (DoD 5220.22-R, Industrial Security Regulation).
Use the conference program outlined on the DD Form 1484, Post-Award Conference Record, in conducting the conference.
The DD Form 1484, Post-Award Conference Record, may be used for this report.
Use the clause at 252.242-7000, Postaward Conference, in solicitations and contracts.
(c)(2) If the agencies cannot agree, refer the matter to the Director of Defense Procurement.
(c) The administrative contracting officer or auditor shall periodically review billing rates for continued applicability. Billing rates should be established on a year-to-year basis.
(a)
(b)
(b)
(iv) When agreement cannot be reached with the contractor, the auditor will issue a DCAA Form 1, Notice of Contract Costs Suspended and/or Disapproved, in addition to the advisory report to the administrative contracting officer. The DCAA Form 1 details the items of exception and advises the contractor that requests for reconsideration should be submitted in writing to the administrative contracting officer.
(b)
(6) Predetermined indirect cost rates may be established to cover up to four years.
This section implements section 802 of the National Defense Authorization Act for Fiscal Years 1992 and 1993 (Pub. L. 102-190) and is effective for IR&D/
Defense contractors are encouraged to engage in IR&D/B&P activities of potential interest to DoD, including activities cited in 231.205-18(c)(2)(i)(2).
(a) The cognizant administrative contracting officer (ACO) or corporate ACO shall—
(1) Determine, with input from the field pricing team, whether IR&D/B&P projects performed by major contractors (see FAR 31.205-18(a)) are of potential interest to DoD.
(2) Notify the contractor promptly of any IR&D/B&P activities which are not of potential interest to DoD.
(b) The Defense Contract Management Command of the Defense Logistics Agency or the Military Department responsible for performing contract administration functions is responsible for—
(1) Implementing the requirements of section 802 of Public Law 102-190 as set forth in 231.205-18(c)(2) and FAR 31.205-18.
(2) Submitting an annual report to the Director of Defense Procurement (OUSD(A&T)) setting forth required statistical information relating to the DoD-wide IR&D/B&P program. The Report Control Symbol is DD-ACQ(A)1139.
(c) The Director, Defense Research and Engineering (OUSD(A&T)DDR&E), is responsible for establishing a regular method for communication—
(1) From DoD to contractors, of timely and comprehensive information regarding planned or expected DoD future needs; and
(2) From contractors to DoD, of brief technical descriptions of contractor IR&D projects.
(e) A corporate administrative contracting officer need not obtain the approval of the individual administrative contracting officers to disallow items of corporate expense.
(a)
(b)
(i) The contract auditor is the authorized representative of the contracting officer for—
(A) Receiving vouchers from contractors;
(B) Approving interim vouchers for provisional payment (this includes approving the fee portion of vouchers in accordance with the contract schedule and administrative contracting officer instructions) and sending them to the disbursing office;
(C) Authorizing direct submission of interim vouchers for provisional payment to the disbursing office for contractors with approved billing systems;
(D) Reviewing completion/final vouchers and sending them to the administrative contracting officer; and
(E) Issuing DCAA Forms 1, Notice of Contract Costs Suspended and/or Disapproved, to deduct costs where allowability is questionable.
(ii) The administrative contracting officer—
(A) Approves all completion/final vouchers and sends them to the disbursing officer; and
(B) May issue or direct the issuance of DCAA Form 1 on any cost when there is reason to believe it should be suspended or disallowed.
(a)(i) As a minimum, contracts will receive pre-delivery telephonic surveillance.
(ii) Contracts in the following categories will receive pre-delivery on-site production surveillance:
(A) Contracts assigned criticality designator A (see FAR 42.1105).
(B) Contracts specifically identified for special surveillance by the contracting officer.
(C) Any contract where telephonic surveillance reveals actual or anticipated delinquency unless the contract administration office, in coordination with the contracting officer, decides that on-site surveillance is not warranted.
(1) Contracting officers shall—
(i) Assign criticality designator A to items with a priority 01, 02, 03, or 06 (if emergency supply of clothing) under DoD Directive 4410.6, Uniform Materiel Movement and Issue Priority System; and
(ii) Ordinarily assign criticality designator C to unilateral purchase orders.
(2) Only the contracting officer shall change the assigned designator.
(a) See also—
(i) DoD 5000.2-R, Mandatory Procedures for Major Defense Acquisition Programs (MDAPs) and Major Automated Information System (MAIS) Acquisition Programs; and
(ii) For cost/schedule control system requirements on major systems acquisitions, 234.005-70.
(b)(i) Within 4 working days after receipt of the contractor's report, the contract administration office (CAO) shall provide the report and any required comments to the contracting officer and, unless otherwise specified in the contract, the inventory control manager.
(ii) If the contractor's report indicates that the contract is on schedule and the CAO agrees, the CAO does not need to add further comments. In all other cases, the CAO shall add comments and recommend a course of action.
(c)(i) CAOs may report using—
(A) DD Form 375-2, Delay in Delivery (Flash Notice);
(B) DD Form 375, Production Progress Report;
(C) MILSCAP Revised Delivery Forecast (RDF) system; or
(D) Message, letters, or facsimile.
(ii) The contracting office shall acknowledge receipt of the CAO report.
(b) When using the clause at FAR 52.242-2, include the following instructions in the contract schedule—
(i) Frequency and timing of reporting (normally 5 working days after each reporting period);
(ii) Contract line items, exhibits, or exhibit line items requiring reports;
(iii) Offices (with addressees/codes) where reports should be sent (always include the contracting office and contract administration office); and
(iv) The following requirements for report content—
(A) The problem, actual or potential, and its cause;
(B) Items and quantities affected;
(C) When the delinquency started or will start;
(D) Actions taken to overcome the delinquency;
(E) Estimated recovery date; and/or
(F) Proposed schedule revision.
(a) Use the clause at 252.242-7005, Cost/Schedule Status Report, in solicitations and contracts for other than major systems that require cost/schedule status reports (i.e., when the Contract Data Requirements List includes DI-MGMT-81467 in accordance with DoD 5000.2-R).
(b) Use the provision at 252.242-7006, Cost/Schedule Status Report Plans, in
The contracting officer responsible for processing and executing novation and change-of-name agreements shall ensure agreements are executed promptly.
(b)(1) For contracts awarded by the Military Departments, provide notices to the following addressees instead of individual contracting or contract administration offices—
(2)(A) Lists for notices of a successor in interest should include the information at FAR 42.1204(c)(2).
(B) Lists for notices of a name change should include the information at FAR 42.1205(a)(3).
(C) On notices sent to the addressees in paragraph (b)(1) of this section, include a consolidated list for all subordinate contracting offices of the addressee.
(d)(i) Before making any substantial alterations or additions to the novation agreement format at FAR 42.1204(e), coordinate with those addressees in paragraph (b)(1) of this section that have contracts with the contractor. Resolve any objections before executing the agreement.
(ii) If the National Aeronautics and Space Administration (NASA) wants a separate agreement with the contractor, continue to process the agreement only for DoD.
(e) Also, make distribution to—
(i) The addressees in paragraph (b)(1) of this section—two copies; and
(ii) The appropriate Military Traffic Management Command (MTMC) area command for agreements affecting contracts and basic agreements for storage and related services for personal property of military and civilian personnel—two copies—
(f)(4) Additional distribution in-struc-tions—
(A) Send two copies to the address in paragraph (b)(1) of this section. The list of contracts may be confined to those issued by that department.
(B) Do not send copies to NASA or the MTMC commands in paragraph (e)(ii). They will issue their own modifications.
(e) When a novation agreement is required and the transferee intends to incur restructuring costs as defined at 213.205-70, the cognizant contracting officer shall include the following provision as paragraph (b)(7) of the novation agreement instead of the paragraph (b)(7) provided in the sample format at FAR 42.1204(e):
“(7)(i) Except as set forth in subparagraph (7)(ii) below, the Transferor and the Transferee agree that the Government is not obligated to pay or reimburse either of them for, or otherwise give effect to, any costs, taxes, or other expenses, or any related increases, directly or indirectly arising out of or resulting from the transfer or this Agreement, other than those that the Government in the absence of this transfer or Agreement would have been obligated to pay or reimburse under the terms of the contracts.
(ii) The Government recognizes that restructuring by the Transferee incidental to
(b)(12) Chapter 39 of the Defense Traffic Management Regulation (DTMR) (AR 55-355, NAVSUPINST 4600.70, AFM 75-2, MCO P4600 14A, DLAR 4500.3) contains methods for tracing and expediting shipments.
(a)(2) In reporting planned and actual volume movements—
(A) The contracting officer—
(
(
(B) The contract administration office submits a volume movement report when—
(
(
(C) Include the destination country, foreign forwarder, and, if known, port of embarkation on volume movement reports for foreign military sale shipments.
(a)(i) Procedures for the contractor to obtain Government bills of lading are in the clause at 252.242-7003, Application for U.S. Government Shipping Documentation/Instructions.
(ii) The term commercial bills of lading includes the use of any commercial form or procedure. Appendix J of the DTMR lists carriers and carrier associations that provide transportation within the continental United States under commercial forms and procedures.
(b)(1) See DoD 4525.8-M, DoD Official Mail Manual.
When using FAR 52.213-1, Fast Payment Procedures, do not use FAR clauses 52.242-10, F.o.b. Origin—Government Bills of Lading or Prepaid Postage, or 52.242-11, F.o.b. Origin—Government Bills of Lading or Indicia Mail.
Use the clause at 252.242-7003, Application for U.S. Government Shipping Documentation/Instructions, when using the clause at FAR 52.242-10, F.o.b. Origin—Government Bills of Lading or Prepaid Postage, or FAR 52.242-11, F.o.b. Origin—Government Bills of Lading or Indicia Mail.
(a) See also chapter 41 of the Defense Traffic Management Regulation (DTMR) for discrepancy procedures.
(a) Procedures for payment or collection of demurrage or detention charges are contained in chapter 38 of the DTMR.
(b) Carrier demurrage rules usually allow for a “free time” for loading or unloading cars or for any other purpose, and impose charges for cars held beyond this period. If a contractor detains railroad cars beyond the “free time,” the contractor has to pay the carrier's published tariff charges for demurrage.
(c) Detention results when a shipper or consignee holds motor carrier equipment beyond a reasonable period for loading, unloading, forwarding directions, or any other reason. Detention rules and charges are not uniform; they are published in individual carrier or agency tenders.
Evaluations should consider any notifications submitted under paragraph (g) of the clause at 252.219-7003, Small, Small Disadvantaged and Women-Owned Small Business Subcontracting Plan (DoD Contracts).
(a) A voluntary refund is a payment or credit (adjustment under one or more contracts or subcontracts) to the Government from a contractor or subcontractor which is not required by any contractual or other legal obligation.
(b) A voluntary refund may be solicited (requested by the Government) or unsolicited.
(1) Generally, request voluntary refunds only after determining that no contractual remedy is readily available to recover the amount sought.
(2) Acceptance of unsolicited refunds does not prejudice remedies otherwise available to the Government.
(c) Before soliciting a voluntary refund or accepting an unsolicited one, the contracting officer should have legal counsel review the contract and related data to—
(1) Confirm that there are no readily available contractual remedies; and
(2) Advise whether the proposed action would jeopardize or impair the Government's rights.
(a) Request voluntary refunds only when—
(1) The contracting officer concludes that the contractor overcharged under a contract, or inadequately compensated the Government for the use of Government-owned property, or inadequately compensated the Government in the disposition of contractor inventory; and
(2) Retention of the amount in question by the contractor or subcontractor would be contrary to good conscience and equity.
(b) Do not solicit voluntary refunds without approval of the head of the contracting activity, or as provided in department/agency regulations.
(c) Voluntary refunds may be requested during or after contract performance.
A contract modification, rather than a check, is the preferred means of effecting a solicited or unsolicited refund transacted before final payment.
(a) For modifications, adjust the price for the refund and credit the refund to the applicable appropriation cited in the contract.
(b) For checks—
(1) Advise the contractor to—
(i) Make the check payable to the agency which awarded the contract;
(ii) Forward the check to the contracting officer or when the contract is assigned to another office for administration, to that office; and
(iii) Include a letter with the check—
(A) Identifying it as a voluntary refund;
(B) Giving the contract number involved; and
(C) Where possible, giving the appropriation and account number to be credited.
(2) Forward the check to the office responsible for control of funds.
This subpart provides policies, procedures, and standards for use in the evaluation of a contractor's material management and accounting system (MMAS).
DoD policy is for all contractors to have an MMAS that—
(a) Reasonably forecasts material requirements;
(b) Ensures the costs of purchased and fabricated material charged or allocated to a contract are based on valid time-phased requirements;
(c) Maintains a consistent, equitable, and unbiased logic for costing of material transactions; and
(d) Conforms to the standards at 252.242-7004(f) when the contractor has cost-reimbursement or fixed-price contracts exceeding the simplified acquisition threshold, with progress or other contract financing provisions, except when all of the contracts and subcontracts are awarded under the set-aside or Section 8(a) procedures of FAR part 19.
(a) A large business contractor is subject to MMAS disclosure, demonstration, and maintenance if in its preceding fiscal year the contractor received DoD prime contracts or subcontracts (including modifications) totaling—
(1) $70 million or more; or
(2) $30 million or more (but less than $70 million), and the contracting officer determines it to be in the best interests of the Government (e.g., contractor disclosure, demonstration, or other activities indicate significant MMAS problems exist).
(b) After the administrative contracting officer determines the contractor's MMAS is adequate (see 242.7204(b)), written disclosure will not be required for the next MMAS review unless the contractor's policies, procedures, or practices have changed in the interim period(s). Similarly, once the contractor demonstrates that its MMAS contains no significant deficiencies, demonstration requirements for subsequent reviews may be satisfied if internal audits are reasonably current and contain sufficient transaction tests to demonstrate MMAS compliance with each standard.
(a) The contracting officer shall—
(1) Through use of the clause at 252.242-7004, Material Management and Accounting System, apply the disclosure, demonstration, and maintenance requirements to large business contractors meeting the criteria in 242.7203(a);
(2) Consider whether to apply the disclosure, demonstration, and maintenance requirements to other large business contractors under 242.7203(a)(2) after concurrence from, or at the request of, the administrative contracting officer; and
(3) Not apply the disclosure, demonstration, and maintenance requirements to small businesses, educational institutions, or nonprofit organizations.
(b) For contractors subject to the disclosure, demonstration, and maintenance requirements, the administrative contracting officer (ACO) determines the adequacy of the contractor's MMAS and pursues correction of deficiencies.
(c) The contract auditor shall—
(1) Assist the ACO in evaluating the contractor's MMAS;
(2) Assess the significance of contractor deficiencies and provide the ACO an estimate of the resulting adverse material impact to the Government; and
(3) Assist the ACO in evaluating the contractor's correction of deficiencies.
(a)
(1) Conduct reviews as a team effort.
(i) The administrative contracting officer—
(A) Appoints a team leader; and
(B) Ensures that the team includes appropriate functional specialists (i.e., industrial specialists, engineer, property administrator, auditor, etc.).
(ii) The team leader—
(A) Advises the ACO and contractor of findings during the review and at the exit conference.
(B) Makes every effort to resolve differences regarding questions of fact during the review.
(2) Tailor reviews to take full advantage of the day-to-day work done by both organizations.
(3) Prepare a review report.
(4) Conduct a review every 3 years. The ACO, with advice from the auditor, may lengthen or shorten the 3 year period based on a risk assessment of the contractor's past experience and current vulnerability.
(b)
(1)
(i) The ACO shall notify the contractor in a timely manner if there are no deficiencies.
(ii) If there are deficiencies, the ACO shall request the contractor to provide a written response within 30 days from the date of initial notification.
(iii) If the contractor agrees with the report, the contractor has 60 days to correct any identified deficiencies or submit a corrective action plan showing milestones and actions to eliminate the deficiencies.
(iv) If the contractor disagrees, request rationale in the written response.
(2)
(i) The MMAS contains deficiencies which need correction;
(ii) The deficiencies are significant enough to result in the reduction or suspension of progress payments or of payments under public vouchers; and
(iii) Proposed corrective actions (if the contractor submitted them) are adequate to correct the deficiencies.
(3)
(A) The deficiencies are corrected; or
(B) The amount of the impact is immaterial.
(ii) The maximum payment adjustment is the adverse material impact to the Government as specified in the team's report. The ACO should use the maximum adjustment when the contractor did not submit a corrective action plan with its response, or the plan is unacceptable. In other cases, the ACO should consider the quality of the contractor's self-assessment, demonstration, and corrective action plan in determining the appropriate percentage.
(iii) As the contractor implements its accepted corrective action plan, the
(4)
(A) Deficiencies needing correction;
(B) Acceptability of the contractor's corrective action plan (if one was submitted) or the need for a corrective action plan; and
(C) Any decision to reduce or suspend progress payments or public vouchers because of significant deficiencies.
(ii) The Government does not approve or disapprove the contractor's MMAS system. ACO notifications should avoid any such implications.
(iii) From the time the ACO determines that there is a significant material management and accounting system deficiency until the time the deficiency is corrected, all field pricing reports for that contractor shall contain a recommendation relating to proposed cost or pricing data adjustments necessary to protect the Government's interests.
(iv) The ACO should consider the effect of significant MMAS deficiencies in reviews of the contractor's estimating system (215.811).
(5)
(i) Elevate the issue to higher level management;
(ii) Further reduce or suspend progress payments;
(iii) Notify the contractor of the inadequacy of the contractor's cost estimating system and/or cost accounting system.
(iv) Take appropriate contractual action, i.e., disallow charges as unreasonable; and
(v) Issue cautions to contracting activities regarding the award of future contracts.
Use the clause at 252.242-7004, Material Management and Accounting System, in all solicitations and contracts exceeding the simplified acquisition threshold that are not for the acquisition of commercial items and—
(a) Are not awarded under the set-aside or section 8(a) procedures of FAR part 19; and
(b) Are either—
(1) Cost-reimbursement contracts; or
(2) Fixed-price contracts with progress payments or other Government financing.
This subpart provides the requirements for conducting a Contractor Insurance/Pension Review (CIPR).
(a) The administrative contracting officer (ACO) is responsible for determining the allowability of insurance/pension costs in Government contracts. Defense Logistics Agency (DLA) insurance/pension specialists and Defense Contract Audit Agency (DCAA) auditors assist ACOs in making these determinations by conducting CIPRs.
(1) A CIPR is an in-depth evaluation of a contractor's—
(i) Insurance program;
(ii) Pension plans;
(iii) Other deferred compensation plans; and
(iv) Related policies, procedures, practices, and costs.
(2) A special CIPR is a joint DLA/DCAA review that concentrates on specific areas of the contractor's insurance program, pension plan, or other deferred compensation plan.
(b) DLA is the DoD Executive Agency for the performance of all CIPRs conducted under 242.7302.
(a)(1) A CIPR shall be conducted only when—
(i) A contractor has $40 million of qualifying sales to the Government during the contractor's preceding fiscal year; and
(ii) The ACO, with advice from DLA insurance/pension specialists and DCAA auditors, determines a CIPR is needed based on a risk assessment of the contractor's past experience and current vulnerability.
(2) Qualifying sales are sales for which cost or pricing data were required under 10 U.S.C. 2306a, as implemented in FAR 15.403, or that are contracts priced on other than a firm-fixed-price or fixed-price with economic price adjustment basis. Sales include prime contracts, subcontracts, and modifications to such contracts and subcontracts.
(b) A special CIPR shall be performed for a contractor (including, but not limited to, a contractor meeting the requirements in paragraph (a) of this section) when any of the following circumstances exists, but only if the circumstance(s) may result in a material impact on Government contract costs:
(1) Information reveals a deficiency in the contractor's insurance/pension program.
(2) The contractor proposes or implements changes in its insurance, pension, or deferred compensation plans.
(3) The contractor is involved in a merger, acquisition, or divestiture.
(4) The Government needs to follow up on contractor implementation of prior CIPR recommendations.
(c) The DCAA auditor shall use relevant findings and recommendations of previously performed CIPRs in determining the scope of any audits of insurance and pension costs.
(d) When a Government organization believes that a review of the contractor's insurance/pension program should be performed, that organization should provide a recommendation for a review to the ACO. If the ACO concurs, the review should be performed as part of an ACO-initiated special CIPR or as part of a CIPR already scheduled for the near future.
(a) The ACO is responsible for—
(1) Determining the need for a CIPR under 242.7302;
(2) Requesting and scheduling the reviews with the appropriate DLA activity;
(3) Notifying the contractor of the proposed date and purpose of the review, and obtaining any preliminary data needed by the DLA insurance/pension specialist or the DCAA auditor;
(4) Reviewing the CIPR report, advising the contractor of the recommendations contained therein, considering contractor comments, and rendering a decision on those recommendations;
(5) Providing other interested contracting officers copies of documents related to the CIPR;
(6) Ensuring adequate follow-up on all CIPR recommendations; and
(7) Performing contract administration responsibilities related to Cost Accounting Standards administration as described in FAR Subparts 30.2 and 30.6.
(b) The DLA insurance/pension specialist is responsible for—
(1) Preparing and maintaining the schedule of CIPRs to be performed during the next 12 months and providing the military departments and DCAA a copy of the schedule;
(2) Issuing a technical report on the contractor's insurance/pension plans for incorporation into the final CIPR report based on an analysis of the contractor's pension program, insurance program, and other related data;
(3) Leading the team that conducts the review. Another individual may serve as the team leader when both the insurance/pension specialist and the individual agree. The team leader is responsible for—
(i) Maintaining complete documentation for CIPR reports;
(ii) To the extent possible, resolving discrepancies between audit reports and CIPR draft reports prior to releasing the final CIPR report;
(iii) Preparing and distributing the final CIPR report;
(iv) Providing the final audit report and/or the insurance/pension specialist's report as an attachment to the CIPR report; and
(v) Preparing a draft letter for the administrative contracting officer's use in notifying the contractor of CIPR results; and
(4) When requested, advising administrative contracting officers and other Government representatives concerning contractor insurance/pension matters.
(c) The DCAA auditor is responsible for—
(1) Participating as a member of the CIPR team or serving as the team leader (see paragraph (b)(3) of this section);
(2) Issuing an audit report for incorporation into the final CIPR report based on an analysis of the contractor's books, accounting records, and other related data; and
(3) Performing contract audit responsibilities related to Cost Accounting Standards administration as described in FAR Subparts 30.2 and 30.6.
(a) Contract administration offices (CAOs) are the designated representatives of DoD for the administration of contracts (see FAR 42.202 and 42.302). DoD activities shall use CAOs to perform contract administration service functions at or near contractor facilities (see 242.203(a) (i) and (v).
(b) Program managers may conclude that they need technical representation in contractor facilities to perform non-contract administration service (CAS) technical duties and to provide liaison, guidance, and assistance on systems and programs. In these cases, the program manager may assign technical representatives under the procedures in 242.7401.
(c) Program managers should carefully assess the number of technical representatives required to perform the non-CAS technical functions so as to keep the total assigned in-plant to the minimum necessary.
(d) A technical representative is a representative of a DoD program, project, or system office performing non-CAS technical duties at or near a contractor facility. A technical representative is not—
(1) A representative of a contract administration or contract audit component; or
(2) A contracting officer's representative (COR) (see 201.602).
(a) When the program, project, or system manager determines that a technical representative is required, the manager shall issue a letter of intent to the contract administration office commander listing the assignment location, starting and ending assignment dates, technical duties assigned, delegated authority, and support required from the contract administration office. Any issues regarding the assignment of a technical representative should be resolved promptly. However, final decision on the assignment remains with the program manager. Issues regarding the assignment of technical duties which cannot be resolved between the program office and the defense plant representative office will be escalated.
(b) The program, project, or system manager shall furnish the designated technical representative a letter of assignment of delegated technical duties, with copies to the contract administration office, the contracting officer, and contractor, at least 30 days before the assignment date (or termination date). Any changes to the requirements of the assignment letter will be made by a new letter of intent and processed in accordance with paragraph (a) of this section.
(c) The contract administration office normally provides the technical representative with office space, equipment, supplies, and part-time clerical support. The program, project, or system manager provides supervision, technical direction, administrative services (e.g., pay, travel, maintenance of personnel records), and, when required, full-time clerical support.
(d) The program manager or designee and the contract administration office, at the local level, shall negotiate a memorandum of agreement (MOA) delineating their functional administrative interrelationships, with annual updates as necessary. The agreements
(e) The technical representative shall keep the contract administration office commander fully informed of matters discussed with the contractor. The contract administration office shall also keep the technical representative fully informed of contractor discussions which relate to technical matters within the purview of the technical representative's assigned duties.
This subpart provides policies and procedures applicable to contractor accounting systems and related internal controls.
Contractors receiving cost-reimbursement or incentive type contracts, or contracts which provide for progress payments based on costs or on a percentage or stage of completion, shall maintain an accounting system and related internal controls throughout contract performance which provide reasonable assurance that—
(a) Applicable laws and regulations are complied with;
(b) The accounting system and cost data are reliable;
(c) Risk of misallocations and mischarges are minimized; and
(d) Contract allocations and charges are consistent with invoice procedures.
(a) Upon receipt of an audit report identifying significant accounting system or related internal control deficiencies, the ACO will—
(1) Provide a copy of the report to the contractor and allow 30 days, or a reasonable extension, for the contractor to respond;
(2) If the contractor agrees with the report, the contractor has 60 days from the date of initial notification to correct any identified deficiencies or submit a corrective action plan showing milestones and actions to eliminate the deficiencies.
(3) If the contractor disagrees, the contractor should provide rationale in its written response.
(4) The ACO will consider whether it is appropriate to suspend a percentage of progress payments or reimbursement of costs proportionate to the estimated cost risk to the Government, considering audit reports or other relevant input, until the contractor submits a corrective action plan acceptable to the ACO and corrects the deficiencies. (See FAR 32.503-6 (a) and (b) and FAR 42.302(a)(7)).
41 U.S.C. 421 and 48 CFR chapter 1.
(b)(i) See subpart 217.74 for limitations on issuing undefinitized contract actions.
(ii) Modifications of letter contracts are subject to the same policies and procedures as modifications of definitive contracts.
(a)(i) 10 U.S.C. 2405 prohibits adjustments in price under a shipbuilding contract entered into after December 7, 1983, for a claim, request for equitable adjustment, or demand for payment under the contract, arising out of events occurring more than 18 months before submission of the claim, request, or demand.
(ii) Section 558 of the National Defense Authorization Act for Fiscal Year 1995 (Public Law 103-337) provides that no funds available to DoD may be provided by contract or contract modification, nor may contract payments be made, to an institution of higher education that has a policy of denying or that effectively prevents the Secretary of Defense from obtaining for military recruiting purposes—
(A) Entry to campuses or access to students on campuses; or
(B) Access to directory information pertaining to students. (See 209.470.)
(iii) Pursuant to 10 U.S.C. 983, no funds may be obligated by contract or contract modification to an institution of higher education that has an anti-ROTC policy. (See 209.470.)
For DoD, the
The Secretary of Defense is required to notify the Secretary of Labor if a modification of a major defense contract or subcontract will have a substantial impact on employment. The clause prescribed at 249.7002(c) requires that the contractor notify the contracting officer when a contract modification will have a substantial impact on employment.
Identify contract modifications that add FMS requirements by clearly marking “FMS Requirement” on the front. Within the modification, cite each FMS case identifier code by line/subline item number, e.g., FMS Case Identifier GY-D-DCA.
For each contract modification, the contracting officer shall identify, in Section G, Contract Administration Data (Uniform Contract Format), or the contract schedule (Simplified Contract Format), under the heading “Summary for the Payment Office,” information sufficient to permit the paying office to readily identify the changes for each contract line and subline item as follows—
(a) The amount of funds obligated by prior contract actions, to include the total cost and fee if a cost-type contract; the target fee at time of contract award if a cost-plus-incentive-fee contract; the base fee if a cost-plus-award-fee contract; or the target price and target profit if a fixed-price incentive contract;
(b) The amount of funds obligated or deobligated by the instant modification, categorized by the types of contracts specified in paragraph (a) of this section; and
(c) The total cumulative amount of obligated or deobligated funds, categorized by the types of contracts specified in paragraph (a) of this section.
(b)
(a) A request for equitable adjustment to contract terms that exceeds the simplified acquisition threshold may not be paid unless the contract certifies the request in accordance with the clause at 252.243-7002.
(b) The aggregate amount of both the increased and decreased costs shall be used in determining when the dollar threshold requiring certification is met (see example in FAR 15.403-4(a)(1)(iii)).
(c) The certification required by 10 U.S.C. 2410(a), as implemented in the clause at 252.243-7002, is different from the certification required by the Contract Disputes Act of 1978 (41 U.S.C. 605(c)). If the contractor has certified a request for equitable adjustment in accordance with 10 U.S.C. 2410(a), and desires to convert the request to a claim under the Contract Disputes Act, the contractor shall certify the claim in accordance with FAR Subpart 33.2.
Engineering changes can originate with either the contractor or the Government. In either case, the Government will need detailed information from the contractor for evaluation of the technical, cost, and schedule effects of implementing the change. When the contracting officer wants this information submitted in the format prescribed by MIL-STD-973, use the clause at 252.243-7000, Engineering Change Proposals. Use the clause with its Alternate I, when appropriate, to discourage submission of a large number of small dollar, contractor originated engineering change proposals.
Use the clause at 252.243-7001, Pricing of Contract Modifications, in solicitations and contracts when anticipating and using a fixed price type contract.
Use the clause at 252.243-7002, Requests for Equitable Adjustment, in solicitations and contracts estimated to exceed the simplified acquisition threshold.
41 U.S.C. 421 and 48 CFR chapter 1.
(a) Where other than lowest price is the basis for subcontractor selection,
The administrative contracting officer (ACO) is responsible for reviewing the contractor's purchasing systems. Members of other organizations such as audit or program management activities should not conduct separate reviews of a contractor's purchasing system, but may participate in a review conducted for the ACO. These organizations may, if they suspect a problem, recommend that the ACO initiate a special review.
(b) The ACO, or the purchasing system analyst (PSA) with the concurrence of the ACO, may initiate a special review of specific weaknesses in the contractor's purchasing system. The weaknesses, for example—
(i) May arise because of—
(A) Major changes in the contractor's purchasing policies, procedures, or key personnel; or
(B) Changes in plant workload or type of work.
(ii) May be discovered—
(A) During reviews of subcontracts submitted under advance notification and consent (FAR subpart 44.2); or
(B) From information provided by Government personnel.
Use this subsection instead of FAR 44.305-2(c) and 44.305-3(b).
(a) At the completion of the in-plant portion of the review, the ACO shall hold an exit conference with the contractor. At the conference, the ACO should—
(1) Present the review team's recommendations, signed by the ACO;
(2) Request the contractor submit its plan for correcting deficiencies or making improvements within 15 days; and
(3) Not comment on the pending or planned decision to grant or withhold approval of the contractor's purchasing system.
(b) The PSA should submit the complete report to the ACO, or any department or agency established review board, within ten days after receipt of the contractor's response under paragraph (a)(2) of this subsection.
(c) The ACO should completely review the report and consider the contractor's response before making a decision on granting, withholding, or withdrawing purchasing system approval. The ACO shall notify the contractor of the decision within ten days after receipt of the report with a copy of the decision to the PSA and the contracting office, when requested.
(d) When a contractor advises that it has corrected deficiencies that led the ACO to withhold or withdraw the purchasing system approval, the ACO—
(1) Shall request the PSA to verify that the contractor has—
(i) Corrected the deficiencies; and
(ii) Implemented any other ACO recommendations.
(2) Should ask for a review of purchasing policies and procedures issued since the last review.
Use the clause at 252.244-7000, Subcontracts for Commercial Items and Commercial Components (DoD Contracts), in solicitations and contracts for supplies or services other than commercial items, that contain the clause at 252.225-7014, Preference for Domestic Specialty Metals, Alternate I.
41 U.S.C. 421 and 48 CFR chapter 1.
(a) The property administrator shall perform property administration in accordance with DoD 4161.2-M, Manual for the Performance of Contract Property Administration.
(a)(4)(A) Comply with DoD Directive 4275.5, Acquisition and Management of Industrial Resources, in processing a request for facilities. Submit requests for approval of facilities projects—
(
(
(
(
(
(B) The contracting officer shall coordinate the Determination and Finding with the program or project manager.
(C) Departments and agencies must submit reports of facilities projects to the House and Senate Armed Services Committees—
(
(
(b)(1)(A)
(
(
(B)
Terminate facilities contracts when Government production and research property is no longer required for the performance of Government contracts or subcontracts, unless termination is not in the best interest of the Government. The contractor is not allowed to extend the time for use of property provided under the facilities contract without Government authorization.
Use the clause at 252.225-7030, Restriction on Acquisition of Carbon, Alloy, and Armor Steel Plate, as prescribed in 225.7017-4.
When a contractor will be responsible for preparing requisitioning documentation, include in the contract the requirement to prepare the documentation in accordance with DoD 4000.25-1-M, Military Standard Requisitioning and Issue Procedures (MILSTRIP). Copies are available from the address cited at 251.102(e)2.b(2).
(b)
(c) All Government-furnished mapping, charting and geodesy (MC&G) property is under the control of the Director, Defense Mapping Agency (DMA). (See DoDD 5105.40, Defense Mapping Agency (DMA)).
(i) MC&G property shall not be duplicated, copied, or otherwise reproduced for purposes other than those necessary for contract performance.
(ii) Upon completion of contract performance, the contracting officer shall—
(A) Contact the Director, DMA(PP), 8613 Lee Highway, Fairfax, VA 22031-2137 for disposition instructions;
(B) Direct the contractor to destroy or return all Government-furnished MC&G property not consumed during contract performance; and
(C) Specify the destination and means of shipment for material to be returned to the Government.
Use the clause at 252.245-7000, Government-Furnished Mapping, Charting, and Geodesy Property, in solicitations and contracts when mapping, charting, and geodesy property is to be furnished.
(1) The DoD normally recovers a fair share of nonrecurring costs of special tooling and special test equipment by including these costs in its calculation of the nonrecurring cost recoupment charge when major defense equipment is sold by foreign military sales or direct commercial sales to foreign governments or international organizations. Major defense equipment is defined in DODD 2140.2, Recoupment of Nonrecurring Costs on Sales of U.S. Products and Technology, as any item of significant combat equipment on the United States Munitions List having a nonrecurring RDT&E cost of more than $50 million or a total production cost of more than $200 million.
(2) When these cost thresholds are not met, the contracting officer shall assess rental charges for use of special tooling and special test equipment pursuant to the Use and Charges clause when administratively practicable.
(1)
(i) The use will not interfere with foreseeable requirements of the United States;
(ii) The work is undertaken as a DoD foreign military sale; or
(iii) For a direct commercial sale, the foreign country or international organization would be authorized to contract with the department concerned under the Arms Export Control Act.
(2)
(ii) When a particular foreign government or international organization has funded the acquisition of specific production and research property, do not assess the foreign government or international organization rental charges or nonrecurring recoupments for the use of such property.
(3)
(ii) Requests for waivers or reduction of charges for the use of Government
(a)(i) Non-Government use of industrial plant equipment (IPE) exceeding 25 percent requires prior approval of the—
(A) Assistant Secretary of the Army (RD&A);
(B) Assistant Secretary of the Navy (RD&A);
(C) Assistant Secretary of the Air Force (Acquisition); or
(D) Director, Defense Logistics Agency.
(ii) The authority in paragraph (a)(i) of this section may be delegated to the head of a contracting activity. Any redelegation requires the approval of the Office of the Deputy Under Secretary of Defense (Industrial Affairs and Installations).
(iii) To determine percentage—
(A) Compute the percentage of non-Government use on time available for use. Use contractor's normal work schedule as represented by the scheduled production shift hours.
(B) Use a base time period which is neither less than three months nor more than one year.
(C) Use may be averaged at a single plant for all items costing less than $25,000.
(iv) Contractors should submit requests for non-Government use of IPE to the contract administration office at least six weeks before the projected use. The requests shall include:
(A) Total number and acquisition cost of IPE items; and
(B) For each unit of IPE with an acquisition cost of $25,000 or more, an itemized list including nomenclature, plant equipment code, year of manufacture and acquisition cost.
(v) Approving officials shall retain for periodic review, documentation of the circumstances justifying non-Government use of IPE.
If adequate controls are in place to meet the requirements of the clause at 252.242-7004, Material Management and Accounting System, the contractor's material control system may physically commingle inventories that may include materials for which costs are charged or allocated to fixed-price, cost-reimbursement, and commercial contracts. Government-furnished material (GFM) may not be physically commingled with other material, nor may GFM be used on contractor's commercial work.
(a) The contractor may use DD Form 1342, DoD Property Record, as a source document for setting up prescribed records.
The contractor shall prepare a DD Form 1342 in accordance with instructions contained in AR 700-43/NAVSUP PUB 5009/AFM 78-9/DLAM 4215.1, Management of Defense-Owned Industrial Plant Equipment (IPE)—
(1) Upon receipt and acceptance of each item of IPE including items which, though part of a manufacturing system, would otherwise qualify as IPE;
(2) Whenever major changes occur in the data initially submitted to Defense Supply Center Richmond (DSCR) (as specified by DLAM 4215.1);
(3) When IPE, including general purpose components of special test equipment which otherwise qualify as IPE, is no longer required for the purpose authorized or provided; or
(4) When disposal is completed.
(a) Use the clause at 252.245-7001, Reports of Government Property, in all solicitations and contracts containing one of the following clauses—
(1) FAR Section 52.245-2, Government Property (Fixed-Price Contracts);
(2) FAR Section 52.245-5, Government Property (Cost Reimbursement, Time-and-Material, or Labor-Hour Contracts;
(3) FAR Section 52.245-7, Government Property (Consolidated Facilities);
(4) FAR Section 52.245-10, Government Property (Facilities Acquisition); or
(5) FAR Section 52.245-11, Government Property (Facilities Use).
(1)
(i) Narcotic, depressant, stimulant, or hallucinogenic drug or substance;
(ii) Any other drug or substance controlled under Title II of the Comprehensive Drug Abuse Prevention and Control Act of 1970; or
(iii) A drug or substance required to be controlled by international treaty, convention or protocol.
(2)
(3)
(4)
(a)
(2) The written authorization shall, as a minimum—
(i) Designate the contractor as an “accredited contractor”;
(ii) Identify the plant clearance actions to be performed;
(iii) State that the Government may cancel part of or all of the authorization to perform plant clearance actions; and
(iv) Provide for plant clearance officer participation when required.
(b)
(2) The plant clearance officer shall—
(i) Evaluate the adequacy and ensure compliance with contractor procedures;
(ii) Ensure discrepancies are promptly resolved;
(iii) Advise the contractor of screening and inventory schedule requirements;
(iv) Respond to contractor requests to withdraw Government-furnished property from inventory schedules;
(v) Evaluate physical, quantitative, and technical allocability of contractor inventory prior to disposal using Standard Form 1423, Inventory Verification Survey, as a guide;
(vi) Direct contractor to delay disposition of nonallocable inventory pending a contracting officer decision;
(vii) With the contractor's assistance, establish criteria for review and approval of selected contractor disposal decisions;
(viii) Complete first endorsement section of DD Form 1640, Request for Plant Clearance, on referrals from
(ix) Work with the contractor, screeners, and buyers to ensure that the Government receives maximum reutilization and disposal proceeds.
(c)
(1) Ensure inventory schedule acceptability. Use DD Form 1637, Notice of Acceptance of Inventory, if desired;
(2) Suspend disposition of property when assets are determined nonallocable (FAR 45.606-3);
(3) Withdraw property from inventory schedules and notify the affected screening activities. Obtain plant clearance officer approval for withdrawal of Government furnished property from inventory schedules (FAR 45.606-4);
(4) Determine method of disposal under established priorities and document disposal decisions and actions;
(5) Assign the automatic release date and the surplus release date;
(6) Initiate prescribed screening and effect resulting transfers and donations;
(7) Account for disposal of all contractor inventory and application of proceeds and submit to the plant clearance officer a Standard Form 1424, Inventory Disposal Report, or equivalent;
(8) Maintain the donable file and release property to eligible donees (FAR 45.609);
(9) Prepare, approve, sign, and maintain official plant clearance files and required forms (245.7101);
(10) Not conduct noncompetitive sales of surplus contractor inventory; and
(11) Notify the plant clearance officer in advance when bidding on property.
(a) North Atlantic Treaty Organization (NATO) cooperative project agreements may include disposal provisions of jointly acquired property without regard to any applicable disposal laws of the United States.
(b) Disposal of such property may include a transfer of the U.S. interest in the property to one of the other governments participating in the agreement, or the sale of the property.
(c) Payment for the transfer or sale of any U.S. interest shall be made in accordance with the terms of the project agreement.
(1) Contractors authorized to sell inventory may not knowingly sell the inventory to any person or that person's agent, employee, or household member if that person—
(i) Is a civilian employee of the DoD or the U.S. Coast Guard; or
(ii) Is a member of the armed forces of the United States, including the Coast Guard; and
(iii) Has any functional or supervisory responsibilities for or within the Defense Reutilization and Marketing Program, or for the disposal of contractor inventory.
(2)(i) A contractor's authority to approve a subcontractor's sale, purchase, or retention at less than cost, and the subcontractor's authority to sell, purchase, or retain at less than cost if approved by a higher-tier contractor, does not include authority to approve—
(A) A sale by a subcontractor to the next-higher tier contractor or to an affiliate of such contractor or of the subcontractor; or
(B) A sale, purchase, or retention at less than cost, by a subcontractor affiliated with the next higher-tier contractor.
(ii) The written approval of the plant clearance officer is required for each excluded sale, purchase, or retention at less than cost.
(3)
(4)
(5)
(a) If the schedules are acceptable, the plant clearance officer shall, within 15 days, complete and send the contractor a DD Form 1637, Notice of Acceptance of Inventory.
(b) To assist in verifying inventory allocability, the plant clearance officer shall follow the instructions in 245.7201.
(d)
(4) The contractor shall use the following codes together with the disposal codes 1 through 9, X, and S (e.g., A1, F7, SS) to indicate the condition of the property—
A—New, used, repaired, or reconditioned property; serviceable and issuable to all customers without limitations or restrictions; includes material with remaining shelf life of more than six months.
B—New, used, repaired, or reconditioned property; serviceable and issuable or for its intended purpose but restricted from issue to specific units, activities, or geographical areas because of its limited usefulness or short service-life expectancy; includes material and remaining shelf life of three to six months.
F—Economically reparable property which requires repair, overhaul or reconditioning; includes reparable items which are radioactively contaminated.
H—Property which has been determined to be unserviceable and does not meet repair criteria.
S—Property that has no value except for its basic material content.
(e)
(4)
(ii)
For termination inventory included in a settlement proposal, include cost of inventory acquired for performance of the entire contract in column F1 and cost of inventory acquired solely for the terminated portion of the contract in column F2. Cost of inventory acquired for the entire contract must be prorated between the terminated and nonterminated portions.
(a) The contractor shall list excess industrial plant equipment (IPE) on DD Form 1342, DoD Property Record, and submit it to the Government property administrator for review and transmittal to the plant clearance officer. For numerically controlled IPE, the contractor shall prepare and submit DD Form 1342, section VI, (page 2), Numerically Controlled Machine Data.
(b) Upon receipt of the DD Form 1342, the plant clearance officer will—
(1) Designate the 75th day from the date of receipt as the automatic release date (ARD) and the 90th day as the screening completion date (SCD); and
(2) Enter the ARD in Block 24 of the DD Form 1342.
(a)(i) The contractor may request a pre-inventory scrap determination, made by the plant clearance officer after an on-site survey, if inventory is considered without value except for scrap. If approved, the contractor may make a single descriptive entry on an inventory schedule, generally describing the property and indicating its approximate total cost. The plant clearance officer will establish a plant clearance case and perform limited screening.
(ii) If the contractor has an approved scrap procedure, routine disposal of production scrap and spoilage is authorized, and a plant clearance case is unnecessary. The contractor may similarly dispose of worn, broken, mutilated, or otherwise rejected parts from overhaul and repair contracts with the approval of the plant clearance officer.
(iii) In addition to segregating scrap to maximize proceeds, the contractor may also consolidate sales of Government and contractor scrap if approved by the plant clearance officer. When a consolidated sale is approved, the plant clearance officer shall waive the scrap warranty required at 245.607-70.
(iv) When a contractor's approved scrap procedure does not require physical segregation of Government and contractor scrap, the plant clearance officer shall ensure the proceeds of scrap sale are equitably distributed.
(b) Precious metals are silver, gold, platinum, palladium, rhodium, iridium, osmium, and ruthenium.
(i) At the beginning of every fiscal year, the Defense Reutilization and Marketing Service (DRMS) will provide each contract administration office with disposition instructions for certain categories of precious metals-bearing property, including scrap and usable items containing recoverable quantities of these metals. The disposition instructions—
(A) Will remain in effect for the entire fiscal year, unless modified by DRMS; and
(B) Will contain a fund citation to be used when disposition requires shipment of precious metals-bearing property for recovery.
(ii) Plant clearance officers shall obtain disposition instructions for precious metals-bearing property not covered by the annual disposition instructions from the Defense Reutilization and Marketing Service, Attn: DRMS-OC, 74 N. Washington Avenue, Battle Creek, MI 49017-3092.
(a) If the contractor sells its inventory as scrap to anyone, including a holding contractor, the contractor shall include in the sales contract a signed copy of DD Form 1639, Scrap Warranty.
(b) The contracting officer may release the contractor from the terms of the scrap warranty in return for consideration paid to the Government. The consideration will represent the difference between—
(1) The sale price of the scrap; and
(2) A fair and reasonable price for the material if it had been sold for purposes other than scrap.
(c) The contractor shall pay the consideration to the Government and the Government may execute the release even though the contract containing the warranty was not made directly with the Government.
(d) If the scrap is resold to a second buyer, the first buyer shall obtain a scrap warranty from the second buyer. Upon receipt of the second buyer's scrap warranty, the Government will release the first buyer from liability under the original warranty.
(a) The plant clearance officer shall arrange for inspection of property at the contractor's plant if requested by a prospective transferee, in such a manner as to avoid interruption of the contractor's operations.
(b)(1) For the first 30 days, property screening will be limited to the contracting agency and the requiring agency, when they are not the same. The requiring agency shall have priority for retention of listed items.
(a)
(2) The plant clearance officer will perform the initial screening of the composite STE unit.
(A) If the contracting department/agency and the requiring department/agency decline the STE or the standard components or do not approve their transfer to another contract; then,
(B) The plant clearance officer will screen the STE and any severable components with the—
(
(
(
(
The Defense Logistics Agency will pay for the movement of industrial plant equipment under the direction and control of the Defense Industrial Plant Equipment Center.
(a) Screen serviceable and usable contractor inventory through CIRS when it—
(1) Is listed on SF 1428, Inventory Schedule B, or SF 1434, Inventory Schedule E; and
(2) Has a national stock number, and line item acquisition value in excess of $50; or
(3) Has a line item acquisition value in excess of $1,000 ($500 for furniture) but no national stock number.
(b) Using Standard Form 120, Report of Excess Personal Property, the plant clearance officer will send two copies of SF 1428 or SF 1434 (or authorized substitutes) to the Defense Reutilization and Marketing Service (DRMS). DRMS will notify the plant clearance officer of items processed, not accepted, or available for local area screening.
(c) Property subject to CIRS processing will be screened within DoD for 30 days. On the 31st day, unless otherwise specified on SF Form 120, appropriate items not requisitioned by DoD will be reported to the General Services Administration (GSA) for standard Federal agency and donation screening. Examples of items which are not reportable to GSA include usable hazardous cleaners and solvents.
(d) For requisitioned items, DRMS will issue shipping instructions to the plant clearance officer. During the first 45 days of the screening period, the plant clearance officer forwards any requisitions received to DRMS. After 45 days, the plant clearance officer forwards the requisition directly to GSA.
(e) The contractor sends one copy of the shipping document to DRMS when shipment has been made.
(f) Unless directed by the contracting officer, motor vehicles excess to Army and Navy contracts shall not be screened through CIRS.
(a)
(b)
(i) Screen excess IPE against all DoD requirements with priority given to requirements of the owning department/agency through the 30th day.
(ii) For items selected, issue shipping instructions containing accounting, funding, transportation, routing recommendations, and preservation instructions.
(2)
(ii) GSA will—
(A) Approve department/agency requests on first come-first served basis;
(B) Approve and forward transfer orders to the contract administration office; and
(C) Forward copies of approved transfer orders to DSCR.
(3)
(i) Provide for screening for donation;
(ii) Receive, approve and forward donation applications to the contract administration office; and
(iii) Send copies of approved applications to DSCR.
(4)
(c) The plant clearance officer shall ensure that a copy of the shipping document is submitted to DSCR when IPE is transferred use-to-use or use-to-storage within DoD.
(d) When GSA sells IPE that is excess to ownership but not to DoD requirements, report the sale to DSCR in accordance with department/agency procedures.
Report ADPE that is Government-owned or leased by the contractor (with Government purchase option or other interests, including use rights) to the Defense Information Systems Agency, Defense Automation Resources Management Program Division (DARMP). DARMP does all required screening, including General Services Administration screening, for ADPE. (See the Defense Automation Resources Management Manual.)
Agencies may donate, with GSA approval and without expense to the United States, certain material not needed by DoD to certain organizations such as veterans’ organizations, soldiers’ monument associations, State museums, and incorporated educational, not for profit museums. For further guidance, see DoD 4160 .21-M, Defense Reutilization and Disposal Manual.
(a) See Subpart 245.73 for sales of contractor inventory under the control of DoD.
(1) Unless otherwise provided in the contract, the proceeds of any sale, purchase, or retention shall be—
(i) Credited to the Government as part of the settlement agreement;
(ii) Credited to the price or cost of the contract;
(iii) Applied as otherwise directed by the contracting officer; or
(iv) Forwarded to the plant clearance officer. The plant clearance officer—
(A) Within two days after receipt will send the proceeds and a DD Form 1131, Cash Collection Voucher, to the designated disbursing officer. Identify on the DD Form 1131 the contractor name and contract number; or
(B) For contractors with an approved scrap procedure, will ensure the proceeds are appropriately applied to an overhead account. The plant clearance officer may assign a representative who, with the assistance of the contract auditor, shall periodically validate that proceeds from sales of production generated scrap are collected and applied to the appropriate account.
(2) Except as prescribed in paragraph (1)(iv)(B) of this subsection, the plant clearance officer will not close the plant clearance case until verification is received that the credit has, in fact, been properly applied.
(1) Normally, DRMS disposal activities shall be used to dispose of surplus contractor inventory located outside the United States or Canada. However, if authorized by the contracting officer, a contractor may sell or make other disposition of inventory in foreign countries.
(2) Sale or other disposition of foreign inventory by the contractor, including sale to foreign governments, requires that—
(i) The sales contract or other document transferring title include the following certificate:
The Purchaser certifies that the property covered by this contract will be used in (
(ii) The contracting officer approve sales contracts, resales, or exports. Approval is permitted only if—
(A) The proposed purchaser's name is not on the list of Parties Excluded from Procurement Programs; and
(B) The sales contract or other document forbids exports by purchasers and subpurchasers to communist areas (FAR 25.702) or other prohibited destinations.
(a) Before authorizing storage, the contracting officer shall ensure funds are available to pay for the storage and related tasks. In addition, the contracting officer shall ensure an annual review of the need for continued storage at Government expense.
(b) All storage contracts or agreements shall be fully funded and separately priced and shall include all allocable costs.
The plant clearance officer shall—
(1) Record the reason for disposing of the property—
(i) As scrap and salvage;
(ii) By abandonment or destruction; and
(iii) By noncompetitive sale;
(2) Use DD Form 1641, Disposal Determination/Approval, to record disposal determinations; and
(3) File the completed form in the plant clearance case file.
(a) The head of a contracting activity for the Defense Logistics Agency, or the head of the contract administration office for other departments and agencies shall select, appoint, or terminate (in writing) property administrators and plant clearance officers.
(b) In selecting qualified property administrators and plant clearance officers, the appointment authority shall consider experience, training, education, business acumen, judgment, character, and ethics.
The plant clearance officer shall—
(a) Instruct the contractor on the preparation of inventory schedules;
(b) Make pre-inventory scrap determinations;
(c) Determine the acceptability of inventory schedules and DD Forms 1342, DoD Property Record;
(d) Prepare and maintain plant clearance cases and disposal documents;
(e) Initiate screening and provide technical support to screeners in the selection of assets;
(f) Conduct or arrange for verification of the following—
(1) Quantity, condition, description, and special processing requirements of property listed on inventory schedules;
(2) Technical and quantitative allocability of property;
(g) Ensure the timely shipment or release by the contractor of property selected for transfer and donation;
(h) Determine the appropriate method of disposal for items not selected for Federal agency use or donation and ensure final plant clearance is accomplished;
(i) Evaluate and monitor the contractor's surplus property sales program;
(j) For individual surplus property sales—
(1) Approve method of sale;
(2) Ensure the sales offerings meet prescribed requirements;
(3) Witness bid openings;
(4) Evaluate bids;
(5) Approve sale awards;
(6) Secure anti-trust clearances, as required;
(7) Recommend the reasonableness of selling expenses; and
(8) Ensure that sales proceeds are collected and property credited;
(k) Monitor ongoing plant clearance actions to ensure delays are minimized and, when necessary, work with the contractor and property administrator to implement improvements;
(l) Evaluate the adequacy of the contractor's property disposal procedures;
(m) Support the property administrator during the compliance analysis of the disposition portion of the contractor's property control procedures;
(n) Report all disposal deficiencies to the property administrator;
(o) Account for all contractor inventory reported for disposal by the contractor and prepare prescribed plant clearance reports; and
(p) Advise and assist the contractor, contracting officer, inventory manager, Federal agencies, and eligible donees in actions related to the proper and timely disposal of contractor inventory.
Use the forms listed below in performance of plant clearance actions.
Use for transfers, donations, and sales of motor vehicles. The contracting officer shall execute the SF 97 and furnish it to the purchaser.
Use for transfer and donation of contractor inventory. Donations of industrial plant equipment may be shipped via DD Form 1149. This form may also be used to consolidate contractor inventory redistribution system-directed shipments going to the same destination.
Use for shipments of excess industrial plant equipment and contractor inventory redistribution system (CIRS) inventory.
Use to request plant clearance assistance or transfer plant clearance.
Use the following guidance for verifying inventory schedules—
(a)
(i) Is more than required or reasonably expected to be required for completion of the contract; or
(ii) Might be usable on the current contract, or diverted to other commercial work or Government use.
(2) Review the contractor's—
(i) Recent purchases of similar material;
(ii) Plans for current and scheduled production;
(iii) Stock record entries; and
(iv) Bills of material for similar items.
(b)
(c)
(a) Upon receipt of an acceptable inventory schedule or a DD Form 1342, DoD Property Record, the plant clearance officer shall establish a plant clearance case file. The case folder will—
(1) Identify the case number (see 245.7203);
(2) Indicate the contractor's name and contract number;
(3) Note the word “Termination” if applicable; and
(4) Consolidate all inventory schedules applicable to one contract at the same location, if possible.
(b) As a minimum, include in the plant clearance case file—
(1) Inventory schedules or DD Form 1342, DoD Property Record, annotated to show all disposal actions;
(2) Copies of documents forwarding inventory schedules to the appropriate screening activity;
(3) Shipping or other instructions and correspondence directing disposition of contractor inventory;
(4) Shipping documents transferring inventory;
(5) Inventory verification survey or other documents showing completion of allocability review;
(6) Forms authorizing donation or sale;
(7) Document showing disposition of proceeds from plant clearance actions; and
(8) Any other documents pertinent to disposal actions, including review board cases, antitrust clearances, and inventory disposal reports.
(a) Use a three-part, 11-character number constructed as follows:
(1) Part 1: DoD Activity Address Number (6-character alphanumeric code) assigned to the contract administering activity.
(2) Part 2: Locally assigned 4-character consecutive alphanumeric code, beginning each calendar year with 001 continuing as necessary through ZZZ. The fourth digit is the last number of the calendar year.
(3) Part 3: The 11th character is a single letter identifying the department/agency:
(b) Record the plant clearance number on DD Form 1635, Plant Clearance Case Register, or mechanized equivalent.
(a) Prepare Standard Form 1424, Inventory Disposal Report, for each completed plant clearance case. For terminated contracts, prepare a consolidated Inventory Disposal Report for each termination docket.
(b) Distribute the report to the contracting officer and to any other activities having an interest in the inventory disposal.
(c) Items on the form are self-explanatory except:
(1) Item 12—Insert net change due to shortages, overages, errors, pricing, or withdrawals, etc. Explain in item 16, Remarks.
(2) Item 14—Insert amount contractor is retaining or purchasing at full acquisition cost (see FAR 45.605-1).
(3) Item 15—Insert acquisition cost and net credit (full credit less approved handling, transportation, and restocking charges for items returned to supplier).
(4) Item 16—Insert the acquisition cost for all transfers accomplished. For lines 16A and 16B, insert subtotals as indicated.
(5) Item 18—Insert acquisition cost and gross proceeds. When approved sale costs are reimbursed from proceeds, show net proceeds in Item 26, Remarks.
(6) Items 20 and 21—Use to identify and report transactions not otherwise identified, such as assets shipped to a Government precious metals reclamation activity, etc. Further explanation may be provided in Item 26, Remarks, if necessary.
(7) Item 25—Totals dispositions must equal amounts on line 13 and must reflect all disposal actions within the case.
(8) Item 26—Show the specific disposition of proceeds reported in Items 14, 15, and 18. Also indicate amounts deleted for specific contractor claims, or applied as a credit to the claim. Explain any entry requiring explanation.
(a) Contract administration offices with plant clearance responsibilities will—
(1) Use DD Form 1638, Report of Excess and Surplus Contractor Inventory, or mechanized equivalent, to report the disposition of contractor inventory. Do not include disposition actions transferred to other offices. Unless headquarters of the administering activity directs otherwise, complete only the column total for each line of this report.
(2) Prepare quarterly reports for periods ending March 31, June 30, September 30, and December 31. Activities preparing manual reports will submit duplicate reports to the headquarters of the administering activity within ten working days after the close of the report period. (Report Control Symbol DD(I&L)(Q)1430).
(b) Items on the report are self-explanatory except:
(1) Line 1—Insert totals from line 7 of the preceding report.
(2) Line 2—Insert net changes due to shortages, overages, errors, or withdrawals (other than purchases or retention at cost).
(3) Line 3—Insert total excess inventory reported by contractors during the report period.
(4) Line 5—Insert total plant clearance cases completed during the report period. Do not report cases as completed until all property is disposed. Acquisition cost must equal line 19.
(5) Line 8—Insert amount retained or withdrawn at full cost.
(6) Line 9—Insert acquisition cost in the “Acquisition Cost” column and insert acquisition cost less handling, transportation, or restocking charges, in the “Proceeds” column.
(7) Line 10—Insert acquisition cost of all transfers completed during the report period. On lines 10A through 10H, insert subtotals representing transfers to the agency indicated. Exclude amounts on lines 10A through 10H when computing line 19 totals.
(8) Line 12—Insert the acquisition cost and gross proceeds. When sale costs are reimbursed from proceeds, show net proceeds in remarks.
(9) Lines 14 and 15—Used to identify and report other transactions.
(10) Line 18—Insert Section II totals. Line 18 acquisition cost must equal acquisition cost on line 5.
As a minimum, the plant clearance officer will provide the following information in a letter forwarding DD Forms 1342 to DSCR—
(a) Number of DD Forms 1342 included;
(b) Automatic release date;
(c) Screening complete date;
(d) Contractor's name and address;
(e) Contract number;
(f) Contracting activity that awarded the contract under which the contractor acquired the equipment;
(g) Location of the industrial plant equipment;
(h) Total acquisition cost;
(i) A statement advising that the automatic release date will not be extended;
(j) A note stating that—
(1) Request for transfer or shipment must include appropriate fund citations for packing, crating, and handling charges; and
(2) Government bills of lading (GBLs) should be furnished or, if shipment will be accomplished by other than GBL, DSCR must cite transportation funds; and
(k) The plant clearance officer's signature block.
(a) Screening must be completed before any surplus contractor inventory sale.
(b) Except as provided in 245.7307, sales of surplus contractor inventory shall be competitive.
(c) The commander of the contract administration office must approve the use of auctions, spot bids, or retail sales.
(a) Describe the property as “used” or “unused.” Indicate if unused property is still in the manufacturer's original containers. Qualifying statements such as “well-preserved” or “repairs required” are authorized. Do not use condition codes or the terms “new” or “salvage.”
(b) Property descriptions must be accurate and adequate for identification by prospective bidders. Use commercial terminology and original manufacturer and brand name, if applicable.
(a) Consider combining property into lots when the quantities, value, or nature of the property makes it uneconomical to sell separately.
(b) When lotting is appropriate and economically practical—
(1) Size the lots to encourage bidding by small businesses or individuals;
(2) Lot unused items by make or manufacturer, except when quantities or dollar values are small;
(3) Lot commercially similar items when practicable;
(4) Lot used and unused items separately unless quantities, value, or nature of property makes it uneconomical to sell separately;
(5) Size lots large enough to ensure the selling costs are not disproportionate to the anticipated proceeds.
Offerors may be solicited to bid for groups or for the entire offering by use of the following:
Item
This item consists of all property listed and described in Items
(a)
(b)
(a) The plant clearance officer will ensure the contractor solicits a sufficient number of bidders to obtain adequate competition.
(b) When large quantities of property, special commodities, or unusual geographic locations are involved, the plant clearance officer is encouraged to obtain additional listings from: Defense Reutilization and Marketing Service, Attn: DRMS-OCR, 74 North Washington Avenue, Battle Creek, MI 49017-3092.
(a) The contractor will use formal invitations for bid unless the plant clearance officer approves use of informal bid procedures.
(b) The contractor shall solicit bids at least 15 calendar days before bid opening to allow adequate opportunity to inspect property and prepare bids.
(c) For large sales, the contractor may use summary lists of items offered as bid sheets with detailed descriptions attached.
(d) In addition to mailing or delivering notice of the proposed sale to prospective bidders, the contractor may, when the results are expected to justify the additional expense—
(1) Display a notice of the proposed sale in appropriate public places.
(2) Publish a sales notice in appropriate trade journals or magazines and local newspapers.
(e) When the acquisition cost of the property to be sold at one time, in one place, is $250,000 or more, the contractor shall send a notice of the proposed sale to: U.S. Department of Commerce, Commerce Business Daily, Sales Section, P.O. Box 5999, Chicago, IL 60680.
(1) The contractor shall send the CBD notice at least 20 days before bid opening, or date of sale.
(2) CBD notices shall be—
(i) Double spaced and in synopsis form suitable for printing;
(ii) Transmitted by fastest mail available; and
(iii) Contain the following information in the order listed:
(A) Name and address of contractor issuing the invitation for bids;
(B) Name or title, address, and telephone number of the official from whom copies of the sales offering and other information can be obtained;
(C) Description of the property to be sold including, when desired, the total estimated acquisition cost;
(D) The number of the invitation or sale;
(E) The date of the sale or bid opening;
(F) The type of sale, i.e., sealed bid, spot bid, auction; and
(G) The location of the property.
(f) The plant clearance officer or representative will witness the bid opening. Within two working days after bid opening, the contractor will submit to the plant clearance officer two copies of an abstract of all bids, signed by the witnessing Government representative.
(a) Upon approval of the plant clearance officer, the contractor may issue informal invitations to bid (orally, telephonically, or by other informal media), provided—
(1) Maximum practical competition is maintained;
(2) Sources solicited are recorded; and
(3) Informal bids are confirmed in writing.
(b) Bids by the contractor or its employees shall be submitted to the plant clearance officer prior to soliciting bids from other prospective bidders.
The plant clearance officer will—
(1) Evaluate bids to establish that the sale price is fair and reasonable, taking into consideration—
(i) Knowledge or tests of the market;
(ii) Current published prices for the property;
(iii) The nature, condition, quantity, and location of the property; and
(iv) Information from the Defense Reutilization and Marketing Service.
(2) Approve award to the responsible bidder whose bid is most advantageous to the Government, price and other factors considered. Award shall not be approved to any bidder who is not eligible to enter into a contract with the DoD due to inclusion on the list of Parties Excluded from Procurement Programs. If a compelling reason exists to award to a bidder on the excluded list, the plant clearance officer shall request approval from the headquarters of the administering activity.
(3) Notify the contractor within five working days of the bidder to whom an award shall be made. The contractor shall make the award, collect the proceeds of the sale, and release the property to the purchaser. The contractor shall provide the plant clearance officer with evidence of delivery reflecting actual quantities released to the purchaser.
When sale services are needed, the plant clearance officer will document the reasons in the case file and make arrangements directly with the Defense Reutilization and Marketing Service (DRMS) or General Services Administration (GSA). The arrangements will include a requirement to return all proceeds to the plant clearance officer for crediting in compliance with FAR 45.610-3.
(a) Non-competitive sales include purchases or retention at less than cost by the contractor.
(b) Non-competitive sales may be made when—
(1) The contracting department/agency or the plant clearance officer determines that this method is essential to expeditious plant clearance;
(2) The sale is otherwise justified on the basis of circumstances listed in 245.7307-2;
(3) The Government's interests are adequately protected; and
(4) FAR subpart 1.7 requirements are met.
(c) Non-competitive sales shall be at fair and reasonable prices not less than those reasonably expected under competitive sale.
(a) Conditions justifying non-competitive sales are—
(1) Scientific equipment allocated to terminated research and development contracts with educational institutions;
(2) No acceptable bids received under an advertised competitive sale;
(3) Property value so small that anticipated proceeds would not warrant formal competitive sale;
(4) Sale to States, territories, possessions, political subdivisions thereof, or tax-supported agencies therein, and the estimated fair market value of the property and other satisfactory terms of disposal are obtained;
(5) Specialized nature of the property would not create bidder interest;
(6) Removal of the property would reduce its value or result in disproportionate handling expenses; or
(7) Such action is essential to the Government's interests.
(b) The contracting department/agency will provide the contract administration office the sales justification and any special sales provisions when the department/agency decides to sell production equipment to the contractor by non-competitive sale.
(a) When contractor inventory with an estimated fair market value of $3 million or more or any patents, processes, techniques, or inventions, regardless of cost, are sold or otherwise disposed of to private interests notify the Attorney General and the General Services Administration (GSA) of the proposed terms and conditions of disposal. Submit the following information to the Department of Justice and the GSA through the contract administration agency channels. Report Control Symbol DD-ACQ(AR) 1492 applies.
(1) Location and description of property (specify tonnage if scrap);
(2) Proposed sale price (explain if the proposed purchaser was not highest bidder);
(3) Acquisition cost of property;
(4) Manner of sale, indicating whether by—
(i) Sealed bid (specify number of bidders solicited and bids received);
(ii) Auction or spot bid (state how sale was advertised); or
(iii) Negotiation (explain why property was not sold competitively);
(5) Proposed purchaser's name, address, and trade name (if any) under which proposed purchaser is doing business;
(6) If a corporation, provide state and date of incorporation, and name and address of—
(i) Each holder of 25 percent or more of the corporate stock;
(ii) Each subsidiary; and
(iii) Each company under common control with proposed purchaser;
(7) If a partnership, provide—
(i) Name and address of each partner; and
(ii) Other business connections of each partner;
(8) Nature of proposed purchaser's business (indicate whether its scope is local, statewide, regional, or national);
(9) Estimated dollar volume of sales of proposed purchaser (as of latest calendar or fiscal year);
(10) Estimated net worth of proposed purchaser; and
(11) Intended use of property.
(b) Do not dispose of property until the Attorney General determines whether the proposed disposal action would tend to create or maintain a situation inconsistent with the antitrust laws.
(c) If the Attorney General advises that the proposed disposition is inconsistent with the antitrust laws, do not continue with the proposed disposition.
(d) Under non-competitive sales, the prospective purchaser shall be informed that final consummation of the sale is subject to determination by the Attorney General.
(e) Under competitive or non-competitive sales, the purchaser is required to provide the information required in paragraph (a) of this subsection.
Sale by formal invitation shall include, as a minimum, the terms and conditions in this section.
The Bidder is invited to inspect the property prior to submitting a bid. Property will be available for inspection at the places and times specified in the Invitation. Failure to inspect property does not constitute grounds for the withdrawal of a bid after opening.
(a) Unless otherwise specifically provided in the Invitation, all property is offered for sale “as is” and “where is.” If the Invitation provides that the Contractor will load, then “where is” means f.o.b. conveyance at the point specified in the Invitation.
(b) The description is based on the best available information. However, the Contractor makes no warranty, express or implied, as to quantity, kind, character, quality, weight, size, or description of the property or its fitness for any use or purpose.
(c) Except as provided in Conditions 245.7306-8, Variations in Quantity or Weight, and 245.7306-10, Risk of Loss, no request for adjustment in price or for rescission of the sale will be considered. This is not a sale by sample.
(a) Bidder agrees that this bid is firm and irrevocable within the acceptance period specified in the Invitation (or, if not specified, not less than ten or more than 60 days).
(b) The right is reserved to reject any or all bids, to waive any technical defects in bids, and, unless otherwise specified in the offering or by the Bidder, to accept any one item or group of items in the bid. Unless the invitation provides otherwise, bids—
(1) May be on any or all items;
(2) Must be submitted on the unit basis specified for that item;
(3) Must cover the total number of units designated for that item; and
(4) Unit prices govern.
(a) Purchaser agrees to pay the full purchase price for awarded property at the prices quoted in the bid. Unless an adjustment is required pursuant to Condition 245.7306-8, Variations in Quantity or Weight, payment must be made within the time specified for removal and prior to delivery of any of the property. In the event that any adjustment is made, payment must be made immediately after such adjustment.
(b) The full purchase price, or balance if a bid deposit was required, shall be paid to the Contractor in cash or by certified check, cashier's check, traveler's check, bank draft, or postal or express money order. The Contractor is not required to extend credit to any purchaser.
(c) The Contractor reserves the right to apply any bid deposits made under this Invitation by a bidder against any amounts due under a contract awarded by the Contractor under this Invitation. If the total sum due to the contractor is less than the amount deposited with the bid, the difference shall be promptly refunded. Deposits accompanying bids which are not accepted shall be promptly returned.
(a) Unless otherwise specified in the Invitation, title to property sold under this Invitation shall vest in the Purchaser when full payment is made. If the Invitation provides for loading by the Contractor, title shall not vest until payment and loading are completed.
(b) A Standard Form 97, Certificate of Release of a Motor Vehicle, (or a State certificate of title) shall be furnished for motor vehicles and motor-propelled or motor-drawn equipment requiring licensing.
(a) Unless otherwise specified in the Invitation, the Purchaser shall be entitled to obtain the property upon vesting of title in the Purchaser. Delivery shall be made at the designated location, and removal will be at the Purchaser's expense within the time frame specified in the Invitation or any additional time allowed by the Contractor.
(b) The Purchaser shall reimburse the Contractor for any damage to the Contractor's property caused by Purchaser's removal operations. If additional time is required to remove the
If the successful Bidder fails to make full payment, remove property by the specified date, or comply with any other terms and conditions of sale, the Contractor reserves the right to sell or otherwise dispose of any or all such property and to charge losses and incidental expenses to the defaulting Bidder. Bid deposits received (if required in the Invitation) shall be applied against such losses and expenses.
When property is sold on a “unit price” basis, the Contractor reserves the right to vary by up to 15 percent the quantity or weight listed in the Invitation and the Purchaser agrees to accept delivery of any quantity or weight within these limits. The purchase price shall be adjusted in accordance with the unit price and on the basis of the quantity or weight delivered.
(a) When weighing is necessary to determine the exact purchase price, the Purchaser shall arrange for and pay all weighing expenses. When removal is by truck, weighing shall be subject to supervision and accomplished on—
(1) Contractor scales;
(2) Certified scales; or
(3) Other scales acceptable to both parties.
(b) When removal is by rail, weighing shall be on railroad scales or by other means acceptable to the railroad for freight purposes. The Purchaser shall pay switching charges.
The Contractor is responsible for reasonable care and protection of the property until the date specified for removal. All risk of loss, damage, or destruction from any cause whatsoever shall be borne by the Purchaser after passage of title.
Contractor and Government liability, when liability has been established, shall not exceed the refund of any portion of the purchase price already received by the Contractor.
Any oral statement by the Contractor changing or supplementing the contract or any condition thereof is unauthorized.
The Bidder shall certify that the Bidder is not—
(a) A civilian employee of the Department of Defense or the United States Coast Guard whose duties include any functional or supervisory responsibility for disposal of contractor inventory;
(b) A member of the United States Armed Forces, including the Coast Guard, whose duties include any functional or supervisory responsibility for disposal of contractor inventory;
(c) An agent, employee or immediate member of the household of personnel in paragraphs (a) and (b).
The Purchaser or Bidder agrees to save the Contractor and Government harmless from any and all claims, demands, actions, debts, liabilities, judgments, costs, and attorney's fees arising out of, claimed on account of, or in any manner predicated upon loss of or damage to property of, and injuries to or the death of any and all persons whatsoever, in any manner caused or contributed to by the Purchaser or Bidder, their agents, servants or employees, while in, upon, or about the sale site on which the property sold or offered for sale is located, or while going to or departing from such areas; and to save the Contractor and Government harmless from and on account of damages of any kind which the Contractor may suffer as the result of the acts of any of the Purchaser's agents, servants, or employees while in or about the said sites.
When necessary, include the special conditions of this section in formal invitations.
When demilitarization of property is required, whether on or off contractor or Government premises, the invitation must include the following clause:
(a)
Item(s)
(1) For property located in the United States insert item number(s) and specific demilitarization requirements for item(s) shown in Attachment 1, Part 2 of Defense, Demilitarization Manual;
(2) For property located outside the United States, insert item number(s) and specific demilitarization requirements for item(s) shown in Attachment 1, Part 3 of DoD 4160.21-M-1, Defense Demilitarization Manual.
(b)
Property requiring demilitarization shall not be removed, and title shall not pass to the Purchaser, until demilitarization has been completed and approved by an authorized Contractor and Government representative. Demilitarization will be accomplished as specified in the contract. Component parts vital to the military or lethal purpose of the property shall be rendered unusable. The Purchaser agrees to assume all cost incident to the demilitarization and to restore the working area to its present condition after removing the demilitarized property.
(c)
(d)
(1) Repossess, demilitarize, and return the property to the Purchaser. The Purchaser hereby agrees to pay to the Contractor, prior to the return of the property, all costs incurred by the Contractor in repossessing, demilitarizing, and returning the property to the Purchaser.
(2) Repossess, demilitarize, and resell the property, and charge the defaulting Purchaser will all excess costs incurred by the Contractor. The Contractor shall deduct these costs from the purchase price and refund the balance of the purchase price, if any, to the Purchaser. In the event the excess costs exceed the purchase price, the defaulting Purchaser hereby agrees to pay these excess costs to the Contractor.
(3) Repossess and resell the property under similar terms and conditions. In the event this option is exercised, the Contractor shall charge the defaulting Purchaser with all excess costs incurred by the Contractor. The Contractor shall deduct these excess costs from the original purchase price and refund the balance of the purchase price, if any, to the defaulting Purchaser. Should the excess costs to the Contractor exceed the purchase price, the defaulting Purchaser hereby agrees to pay these excess costs to the Contractor.
Performance bonds are required when work, other than loading, is to be performed by the purchaser and a bond is considered necessary to ensure performance. Generally, performance bonds shall be 100 percent of the estimated cost of the work to be performed. If a 100 percent performance bond would be disadvantageous to the Contractor or to the Government, the amount may be reduced to not less than 50 percent of the estimated cost of the work. Include the following condition when performance bonds are required:
Within ten days after notice of award, the Purchaser shall furnish a performance bond in the sum of $
When the work to be performed by the purchaser warrants, use the following:
The Purchaser shall at the Purchaser's own expense purchase and maintain during
(a) Standard workers’ compensation and employer's liability insurance required under State and Federal statutes. However, the Contractor may waive this requirement upon receipt of satisfactory evidence that the Purchaser is qualified as a self-insurer under applicable provisions of law.
(b) Bodily injury liability insurance in an amount not less than $300,000 for any one occurrence; and
(c) Property damage liability insurance.
The following warning shall be included when it cannot be certified that the property is completely harmless:
Purchasers are warned that the property purchased may contain items of an explosive, toxic, or inflammable nature, notwithstanding reasonable care exercised by the Contractor to render the property harmless. The Contractor and the Government assume no liability for damage to the property of the Purchaser, or for personal injuries or disabilities to the Purchaser or the Purchaser's employees, or to any other person, arising from or incident to the purchase of the property, or its use or disposition by the Purchaser. The Purchaser shall save the Contractor and the Government harmless from any and all such claims.
The sale of controlled substances, e.g., narcotics, stimulants, depressants, or hallucinogenic drugs, shall be subject to the following special conditions:
(a)
The undersigned represents and warrants that it is registered under The Comprehensive Drug Abuse Prevention and Control Act of 1970, and is authorized under the law and by the Attorney General, U.S. Department of Justice (Bureau of Narcotics and Dangerous Drugs) to buy controlled substances as a medical practitioner, dealer or manufacturer of controlled substances.
(b)
The undersigned represents and warrants that it is registered under Federal narcotics laws and is authorized by law and by the Bureau of Narcotics, United States Treasury Department, as a manufacturer of narcotics.
The following shall be used whenever the property offered for sale is capable of emitting ionized radiation:
Purchasers are warned that the property may be capable of emitting ionized radiation. The Contractor and the Government assume no liability for damage to the property of the Purchaser, or for personal injuries or disabilities to the Purchaser or the Purchaser's employees, or to any other person arising from or incident to the purchase of the property or its use or disposition by the Purchaser. The Purchaser shall hold the Contractor and the Government harmless from all such claims. The Purchase should warn possessors or users of the property that it may be capable of emitting ionized radiation.
The following condition shall be used whenever property, other than production scrap, is offered for sale as scrap:
The Purchaser represents and warrants that the property will be used only as scrap, and will not be resold until—
(a) Scrapping has been accomplished; or
(b) The Purchaser obtains an identical warranty from any subsequent purchaser.
When property with an acquisition cost of $3 million or more is to be sold, include the following in the invitation:
When the property offered for sale has an acquisition cost of $3 million or more, or consists of patents, processes, techniques, or inventions, irrespective of cost, the successful Bidder shall be required to furnish additional information and shall allow up to 60 days for acceptance of its bid. Award shall be made only upon advice from the Department of Justice that the proposed sale would not create or maintain a situation inconsistent with the antitrust laws.
The following special conditions of sale may be added at the option of the contractor:
For purchases of property subject to a state sales or use tax, a special condition of sale may stipulate that the Purchaser shall pay and the Contractor shall collect the amount of the tax, which shall be itemized separately on the billing document.
Other special conditions considered necessary by the Contractor are subject to the prior approval of the plant clearance officer. Approval will normally be granted provided the prescribed conditions of sale are not altered or affected and the interest of the Government is not adversely affected.
41 U.S.C. 421 and 48 CFR chapter 1.
Departments and agencies shall also—
(1) Develop and manage a cost effective quality program to ensure that contract performance conforms to specified requirements. Apply the quality program to all contracts for services and products designed, developed, purchased, produced, stored, distributed, operated, maintained, or disposed of by contractors.
(2) Conduct quality audits to ensure the quality of products and services meet contractual requirements.
(3) Base the type and extent of Government contract quality assurance actions on the particular acquisition.
(4) Provide contractors the maximum flexibility in establishing efficient and effective quality programs to meet contractual requirements. Contractor quality programs may be modeled on military, commercial, national, or international quality standards.
The contracting office may conduct product-oriented surveys and evaluations to determine—
(1) The adequacy of the technical requirements relating to quality; and
(2) Product conformance to design intent. Consider conducting the surveys and evaluations in conjunction with the activity responsible for technical requirements.
(a) Contracting offices are also responsible for—
(i) Assisting the technical activity in improving the quality requirements for contracts when first identified for competitive acquisition; and
(ii) Assisting in determining the cause of problems noted in user experience reports.
(b) The contracting office must coordinate with the quality assurance activity before changing any quality requirement.
(c) The activity responsible for technical requirements may prepare instructions covering the type and extent of Government inspections for acquisitions that are complex, have critical applications, or have unusual requirements.
(i) In preparing the instructions, the technical activity shall consider, as applicable—
(A) The past quality history of the contractor;
(B) The criticality of the material procured in relation to its intended use, considering such factors as—
(
(
(
(
(C) Problems encountered in the development of the material;
(D) Problems encountered in other procurements of the same or similar material;
(E) Available feed-back data from contract administration, receiving, testing, or using activities; and
(F) The experience of other contractors in overcoming manufacturing problems.
(ii) The instructions shall—
(A) Be kept to a minimum;
(B) Comply with 246.470-2; and
(C) Be prepared on a contract-by-contract basis.
(iii) The instructions shall not—
(A) Serve as a substitute for incomplete contract quality requirements;
(B) Impose greater inspection requirements than are in the contract;
(C) Use broad or general designations such as—
(
(
(
(D) Be used for routine administrative procedures; or
(E) Specify continued inspection requirements when statistically sound sampling will provide an adequate degree of protection.
(iv) After issuing the instructions, the technical activity—
(A) Must provide the contract administration office available information regarding those factors which resulted
(B) Must periodically analyze the need to continue, change, or discontinue the instructions; and
(C) Must advise the contract administration office of the results of the periodic analyses.
(f) The contract administration office shall continue to follow any specific written instructions received from the contracting office until the contracting office acts on a recommendation.
(1) Higher-level contract quality requirements are used in addition to a standard inspection requirement.
(2) Higher-level contract quality requirements, including nongovernment quality system standards adopted to meet DoD needs, are listed in the DoD Index of Specifications and Standards.
(c)
(a) Use the clause at 252.246-7000, Material Inspection and Receiving Report, in solicitations and contracts when there will be separate and distinct deliverables, even if the deliverables are not separately priced.
(b) When contract administration is retained by the contracting office, the clause at 252.246-7000, Material Inspection and Receiving Report, is not required for—
(1) Contracts awarded using small and other simplified purchase procedures (FAR part 13);
(2) Negotiated subsistence contracts;
(3) Contracts for fresh milk and related fresh dairy products;
(4) Contracts for which the deliverable is a scientific or technical report;
(5) Research and development contracts not requiring the delivery of separately priced end items;
(6) Base, post, camp, or station contracts;
(7) Contracts in overseas areas when the preparation and distribution of the DD Form 250, Material Inspection and Receiving Report, by the contractor would not be practicable. In these cases, arrange for the contractor to provide the information necessary for the contracting office to prepare the DD Form 250;
(8) Contracts for services when hardware is not acquired as an item in the contract; and
(9) Indefinite delivery type contracts placed by central contracting offices which authorize only base, post, camp, or station activities to issue orders.
(1)
(A) Contains the processes, procedures, terms, and conditions under which one NATO member nation will perform quality assurance for another NATO member nation or NATO organization;
(B) Standardizes the development, updating, and application of the Allied Quality Assurance Publications; and
(C) Has been ratified by the United States and other nations in NATO with certain reservations identified in STANAG 4107.
(ii) Departments and agencies shall follow STANAG 4107 when—
(A) Asking a NATO member nation to perform quality assurance; or
(B) Performing quality assurance when requested by a NATO member nation or NATO organization.
(2)
(i) Perform quality assurance services on international military sales contracts or in accordance with existing agreements;
(ii) Ensure conformance to the technical and quality requirements of international military sales contracts;
(iii) Inform host or U.S. Government personnel and contractors on the use of quality assurance publications;
(iv) Specify appropriate quality requirements in contracts awarded to other countries; and
(v) Delegate quality assurance to the host government when satisfactory services are available.
(3)
(1) Contracting officers shall use the following MIL-STD-109 definitions in determining conformance with contract requirements—
(i)
(A) Is likely to result in hazardous or unsafe conditions for individuals using, maintaining, or depending upon the supplies or services; or
(B) Is likely to prevent performance of a vital agency mission.
(ii)
(iii)
(2) Contracting officers shall ensure that—
(i) Nonconformances are identified; and
(ii) The significance of a nonconformance is established when considering the acceptability of supplies or services which do not meet contract requirements.
(f) If nonconforming material or services are discovered after acceptance, the defect appears to be the fault of the contractor, any warranty has expired, and there are no other contractual remedies, the contracting officer—
(i) Shall notify the contractor in writing of the nonconforming material or service;
(ii) Shall request that the contractor repair or replace the material, or perform the service, at no cost to the Government; and
(iii) May accept consideration if offered. For guidance on solicitation of a refund, see subpart 242.71.
(a) The Surgeons General of the military departments are responsible for—
(1) Acceptance criteria;
(2) Technical requirements; and
(3) Inspection procedures needed to assure wholesomeness of foods.
(b) The contracting office may designate any Federal activity, capable of assuring wholesomeness and quality in food, to perform quality assurance for subsistence contract items. The designation may—
(1) Include medical service personnel of the military departments; and
(2) Be on a reimbursable basis.
(a) The Federal Aviation Administration (FAA) has certain responsibilities and prerogatives in connection with
(b) FAA evaluations are not a substitute for normal DoD evaluations of the contractor's quality assurance measures. Actual records of FAA evaluations may be of use to the contract administration office (CAO) and should be used to their maximum advantage.
(c) The CAO shall ensure that—
(1) The supplies and services conform to the terms of the contract; and
(2) The contractor possesses any required FAA certificates and approvals prior to acceptance.
(a) The department or agency responsible for the construction of a building or other structure is normally responsible for on-site inspection.
(b) The contract administration office performs quality assurance for construction materials and supplies acquired for military and civil works projects.
(c) The offices responsible for on-site inspection and for quality assurance of materials and supplies must coordinate their efforts to ensure the compatibility of buildings and structures and installed equipment.
In systematically planning Government contract quality assurance actions used to determine a contractor's compliance with contract quality requirements, consider—
(a) The relative importance of the product; and
(b) The variety of tasks required of the available resources.
Use objective evidence of quality to determine conformance to contract quality requirements.
(a) Under the clause at FAR 52.246-2, Inspection of Supplies—Fixed-Price, the Government may charge the contractor for additional costs incurred by the Government due to delays in tests or inspections caused by the contractor, or due to the necessity for reinspection or retest. This action may be necessary when—
(1) Supplies are not ready at the time such inspection and test are requested by the contractor; or
(2) Reinspection or retest is necessitated by prior rejection.
(b) After considering the factors in paragraph (d) of this subsection, the quality assurance representative (QAR) may believe that the assessment of additional costs is warranted. If so, the representative shall recommend that the contracting officer take the necessary action and provide a recommendation as to the amount of additional costs. Costs are based on the applicable Federal agency, foreign military sale, or public rate in effect at the time of the delay, reinspection, or retest.
(c) If the contracting officer agrees with the QAR, the contracting officer shall—
(1) Notify the contractor, in writing, of the determination to exercise the Government's right under the clause at FAR 52.246-2, Inspection of Supplies—Fixed Price; and
(2) Demand payment of the costs in accordance with the collection procedures contained in FAR subpart 32.6.
(d) In making a determination to assess additional costs, the contracting officer shall consider—
(1) The frequency of delays, reinspection, or retest under both current and prior contracts;
(2) The cause of such delay, reinspection, or retest; and
(3) The expense of recovering the additional costs.
The contract administration office shall maintain suitable records of the quality assurance performance of contractors.
The contract administration office shall establish a system that provides, as a minimum, for the collection, evaluation, and use of—
(a) Quality data developed by the contractor during performance;
(b) Data developed by the Government through contract quality assurance actions; and
(c) Reports by users and customers.
(a)
(2) An alternative procedure (see paragraph (b) of this section) permits the contractor to assume the responsibility for releasing the supplies for shipment.
(3) The alternative procedure may include prime contractor release of supplies inspected at a subcontractor's facility.
(4) The use of the alternative procedure releases DoD manpower to perform technical functions by eliminating routine signing or stamping of the papers accompanying each shipment.
(b)
(i) The stamping or signing of the shipping papers by a representative of the contract administration office interferes with the operation of the Government contract quality assurance program or takes too much of the Government representative's time;
(ii) There is sufficient continuity of production to permit the Government to establish a systematic and continuing evaluation of the contractor's control of quality; and
(iii) The contractor has a record of satisfactory quality, including that pertaining to preparation for shipment.
(2) The contract administration office shall withdraw, in writing, the authorization when there is an indication that the conditions in paragraph (b)(1) of this subsection no longer exist.
(3) When the alternative procedure is used, require the contractor to—
(i) Type or stamp, and sign, the following statement on the required copy or copies of the shipping paper(s), or on an attachment—
The supplies in this shipment—
1. Have been subjected to and have passed all examinations and tests required by the contract;
2. Were shipped in accordance with authorized shipping instructions;
3. Conform to the quality, identity, and condition called for by the contract; and
4. Are of the quantity shown on this document.
This shipment was—
1. Released in accordance with section 246.471 of the Defense FAR Supplement; and
2. Authorized by (name and title of the authorized representative of the contract administration office) in a letter dated (date of authorizing letter). (Signature and title of contractor's designated official.)
(ii) Release and process, in accordance with established instructions, the DD Form 250, Material Inspection and Receiving Report, or other authorized receiving report.
(a) There are two DoD quality inspection approval marking designs (stamps). Both stamps are used—
(1) Only by, or under the direct supervision of, the Government representative; and
(2) For both prime and subcontracts.
(b) The designs of the two stamps and the differences in their uses are—
(1)
(ii) Further inspection is to be performed at another time and/or place.
(iii) Material not inspected is so listed on the associated DD Form 250 (Material Inspection and Receiving Report), packing list, or comparable document.
(2)
(ii) The material satisfies all contract quality requirements and is in complete conformance with all contract quality requirements applicable at the time and place of inspection.
(iii) Complete inspection approval establishes that material which once was partially approved has subsequently been completely approved.
(iv) One imprint of the square stamp voids multiple imprints of the circle stamp.
(c) The marking of each item is neither required nor prohibited. Ordinarily, the stamping of shipping containers, packing lists, or routing tickets serves to adequately indicate the status of the material and to control or facilitate its movement.
(d) Stamping material does not mean that it has been accepted by the Government. Evidence of acceptance is ordinarily a signed acceptance certificate on the DD Form 250, Material Inspection and Receiving Report.
(e) Policies and procedures regarding the use of National Aeronautics and Space Administration (NASA) quality status stamps are contained in NASA publications. When requested by NASA centers, the DoD inspector shall use NASA quality status stamps in accordance with current NASA requirements.
(a) Material Inspection and Receiving Reports (MIRRs) are used to document—
(1) Contract quality assurance;
(2) Acceptance of supplies and services; and
(3) Shipments.
(b) MIRRs are used by activities responsible for—
(1) Receiving;
(2) Status control;
(3) Technical requirements;
(4) Contracting;
(5) Inventory control;
(6) Requisitioning; and
(7) Payment.
See Appendix F, Material Inspection and Receiving Report, for procedures and instructions for the use, preparation, and distribution of—
(a) The Material Inspection and Receiving Report (DD Form 250 series) and;
(b) Supplier's commercial shipping/packing lists used to evidence Government contract quality assurance.
(c) Departments and agencies shall establish procedures to track and accumulate data on warranty costs.
(b)
The chief of the contracting office must approve use of a warranty, except in acquisitions for—
(1) Commercial items (see FAR 46.709);
(2) Technical data, unless the warranty provides for extended liability (see 246.708);
(3) Supplies and services in fixed-price type contracts containing quality
(4) Supplies and services in construction contracts when using the warranties that are contained in Federal, military, or construction guide specifications.
(a) Warranties in the clause at 252.246-7001, Warranty of Data, are also an exception to the prohibition on use of warranties in cost-reimbursement contracts.
(b)(5)
Obtain warranties on technical data when practicable and cost effective. Consider the factors in FAR 46.703 in deciding whether to obtain warranties of technical data. Consider the following in deciding whether to use extended liability provisions—
(1) The likelihood that correction or replacement of the nonconforming data, or a price adjustment, will not give adequate protection to the Government; and
(2) The effectiveness of the additional remedy as a deterrent against furnishing nonconforming data.
(1) Use a clause substantially the same as the clause at 252.246-7001, Warranty of Data, in solicitations and contracts that include the clause at 252.227-7013, Rights in Technical Data and Computer Software, and there is a need for greater protection or period of liability than provided by other contract clauses, such as the clauses at—
(i) FAR 52.246-3, Inspection of Supplies—Cost-Reimbursement;
(ii) FAR 52.246-6, Inspection—Time-and-Material and Labor-Hour;
(iii) FAR 52.246-8, Inspection of Research and Development—Cost-Reimbursement; and
(iv) FAR 52.246-19, Warranty of Systems and Equipment Under Performance Specifications or Design Criteria.
(2) Use the clause at 252.246-7001, Warranty of Data, with its Alternate I when extended liability is desired and a fixed price incentive contract is contemplated.
(3) Use the clause at 252.246-7001, Warranty of Data, with its Alternate II when extended liability is desired and a firm fixed price contract is contemplated.
(4) Use the clause at 252.246-7002, Warranty of Construction (Germany), in solicitations and contracts for construction when a fixed-price contact will be awarded and contract performance will be in Germany.
41 U.S.C. 421 and 48 CFR chapter 1.
(b)(2) Appendix J of the Defense Traffic Management Regulation lists the carriers and carrier associations that have agreed to provide transportation under commercial forms and procedures within CONUS.
(a) Section 10721 rates do not apply to foreign military sale (FMS) shipments.
(i) On shipments of stock fund items from a contractor to a depot, when some of the items in a specific transportation unit are clearly for FMS—
(A) Section 10721 rates do not apply to FMS items shipped on a separate bill of lading; and
(B) Section 10721 rates do apply to the non-FMS items.
(a) See section XI, chapter 32 of the Defense Traffic Management Regulation for instructions on converting commercial bills of lading to Government bills of lading within CONUS.
(a)(i) Transportation assistance includes all transportation factors, such as—
(A) Freight rates (for evaluation of bids or routing purposes);
(B) Other transportation costs;
(C) Transit agreements;
(D) Time in transit;
(E) Port handling charges; and
(F) Port capabilities.
(ii) Within CONUS, the Military Traffic Management Command (MTMC), through its eastern and western area commands, is responsible for the performance of traffic management functions. These functions include the direction, control, and supervision of all functions incident to the acquisition and use of commercial freight and passenger transportation services. See chapters 1 and 2 of the Defense Traffic Management Regulation for the locations and geographical areas of jurisdiction of each area headquarters.
(iii) For assistance with international shipments—
(A) Originating in CONUS, request assistance from the appropriate military activity; i.e., the Air Mobility Command (AMC), Military Sealift Command (MSC), MTMC, or the military service sponsoring the cargo;
(B) For all modes of transportation originating overseas, request assistance from the overseas Theater Commander assigned responsibility for common-user, military-operated land transportation;
(C) Of bulk petroleum via ocean tanker, request assistance, rates, or other costs from the MSC;
(D) Of supplies between points outside the CONUS, including Alaska and Hawaii, request assistance, rates, or other costs from the military service sponsoring the cargo. Direct the requests to:
(E) When requesting rates and related costs for the evaluation of bids or proposals, include the bid opening or proposal due date and the expected date of initial shipment, if established.
This section contains procedures peculiar to stevedoring. Other portions of the FAR and DFARS dealing with service contracting also apply to stevedoring contracts.
(1) The price quoted for handling a ton (weight or measurement) of a specified commodity.
(2) Computed by dividing the hourly stevedoring gang cost by the estimated number of tons of the specified commodity which can be handled in 1 hour.
(1) The total hourly wages paid to the workers in the gang, in accordance with the collective bargaining agreement between the maritime industry and the unions at a specific port; and
(2) Payments for workmen's compensation, social security taxes, unemployment insurance, taxes, liability and property damage insurance, general and administrative expenses, and profit.
(1) Loading of cargo from an agreed point of rest on a pier or lighter and its storage aboard a vessel; or
(2) Breaking out and discharging of cargo from any space in the vessel to an agreed point of rest dockside or in a lighter.
Normally, use an indefinite-quantity type contract.
(a) Because conditions vary at different ports, and sometimes within the same port, it is not practical to develop standard technical provisions covering all phases of stevedoring operations.
(b) When including car loading and unloading or other dock and terminal work under a stevedoring contract, include these requirements as separate items of work.
At a minimum, require that offers include—
(a) Tonnage or commodity rates which apply to the bulk of the cargo worked under normal conditions;
(b) Labor-hour rates which apply to services not covered by commodity rates, or to work performed under hardship conditions; and
(c) Cost of equipment rental.
Make the award to the contractor submitting the offer most advantageous to the Government, considering cost or price and other factors specified elsewhere in the solicitation. Evaluation will include, but is not limited to—
(a) Total estimated cost of tonnage to be moved at commodity rates;
(b) Estimated cost at labor-hour rates; and
(c) Cost of equipment rental.
Use the following clauses in solicitations and contracts for stevedoring services as indicated—
(a) 252.247-7000, Hardship Conditions, as appropriate;
(b) 252.247-7001, Price Adjustment, when using sealed bidding;
(c) 252.247-7002, Revision of Prices, when using negotiation;
(d) 252.247-7003, Termination, when it is desirable to permit either party to terminate the contract;
(e) 252.247-7004, Indefinite Quantities-Fixed Charges, when the contract will provide for the payment of fixed charges;
(f) 252.247-7005, Indefinite Quantities-No Fixed Charges, when the contract will not provide for the payment of fixed charges;
(g) 252.247-7006, Removal of Contractor's Employees; and
(h) 252.247-7007, Liability and Insurance.
This section contains procedures peculiar to the preparation of personal property for shipment or storage, and for the performance of intra-area or intra-city movement. Other portions of the FAR and DFARS dealing with service contracting also apply to these services.
(a)
(1) Use requirements contracts awarded through sealed bidding to acquire services for the—
(i) Preparation of personal property for shipment or storage; and
(ii) Performance of intra-area movement.
(2) Award contracts on a calendar year basis.
(3) Provide for option years.
(4) Award contracts, or exercise option years, before November 1 of each year, if possible.
(b)
(1) Establish one or more areas; however, hold the number to a minimum consistent with local conditions.
(2) Each schedule may provide for the same or different areas of performance. Determine the areas as follows—
(i) Use political boundaries, streets, or any other features as lines of demarcation. Consider such matters as—
(A) Total volume;
(B) Size of overall area; and
(C) The need to service isolated areas of high population density.
(ii) Specifically identify frequently used terminals, and consider them as being included in each area of performance described in the solicitation.
(c)
(1) Establish realistic quantities on the Estimated Quantities Report in DoD 4500.34-R, Personal Property Traffic Management Regulation;
(2) Ensure that the Government's minimum acceptable daily capability—
(i) Will at least equal the maximum authorized individual weight allowance as prescribed by the Joint Federal Travel Regulations; and
(ii) Will not preclude bidding by small business firms.
(a)
(2) The Commander, MTMC, shall designate the contracting activity when local commanders are unable to reach agreement.
(b)
(2) Additional services are those not specified in the bid items.
(i) Additional services may include—
(A) Hoisting or lowering of articles;
(B) Waiting time;
(C) Special packaging; and
(D) Stuffing or unstuffing of sea van containers.
(ii) Consider contracting for local moves that do not require drayage by using hourly rate or constructive weight methods. The rate will include those services necessary for completion of the movement, including—
(A) Packing and unpacking;
(B) Movement;
(C) Inventorying; and
(D) Removal of debris.
(iii) Each personal property shipping activity shall determine if local requirements exist for any additional services.
(iv) The contracting officer may obtain additional services by—
(A) Including them as items within the contract; provided, they are not used in the evaluation of bids (see 252.247-7008, Evaluation of Bids); or
(B) Using small purchase procedures.
(v) Either predetermine prices for additional services with the contractor, or negotiate them on a case-by-case basis.
(vi) The contracting officer must authorize the contractor to perform any additional services, other than attempted pick up or delivery, regardless of the contracting method.
(vii) To the maximum extent possible, identify additional services required that are incidental to an order before placing the order; or, when applicable, during the premove survey.
(c)
(1) CONUS personal property shipping activities shall send the copy to the Commander, Military Traffic Management Command, Attn: MTPP-CI, Room 408, 5611 Columbia Pike, Falls Church, VA 22041-5050.
(2) In the European and Pacific areas, personal property shipping activities shall send the copy to either the Property Directorate, MTMC Europe, or the MTMC Field Office-Pacific.
(3) Other overseas personal property shipping activities shall send the copy to the Commander, Military Traffic Management Command, Attn: MTPP-Q, 5611 Columbia Pike, Falls Church, VA 22041-5050.
When acquiring services for the preparation of personal property for movement or storage, and for performance of intra-city or intra-area movement, use the following provisions, clauses, and schedules. Revise solicitation provisions and schedules, as appropriate, if using negotiation rather than sealed bidding. Overseas commands, except those in Alaska and Hawaii, may modify these clauses to conform to local practices, laws, and regulations.
(a) The provision at 252.247-7008, Evaluation of Bids. When adding “additional services” items to any schedule, use the basic clause with Alternate I.
(b) The provision at 252.247-7009, Award.
(c) In solicitations and resulting contracts, the schedules contained in DoD 4500.34-R, Personal Property Traffic Management Regulation, as provided by the installation personal property shipping office.
(1) When there is no requirement for an item or subitem in a schedule, indicate that item or subitem number, in its proper numerical sequence, and add the statement “No Requirement.”
(2) Within Schedules I (Outbound) and II (Inbound), item numbers are reserved to permit inclusion of additional items as required by local conditions.
(3) Overseas activities, except those in Alaska and Hawaii, may modify the schedules when necessary to conform with local trade practices, laws, and regulations.
(4) All generic terminology, schedule, and item numbers in proper sequence shall follow those contained in the basic format.
(5) When it is in the Government's best interest to have both outbound and inbound services within a given area of performance furnished by the same contractor, modify the schedule format to combine both services in a single schedule. However, items shall follow the same sequential order as in the basic format.
(6) Process any modification of schedule format, other than those authorized in paragraphs (c) (1) through (5) of this subsection, as a request for
(d) The clause at 252.247-7010, Scope of Contract.
(e) The clause at 252.247-7011, Period of Contract. When the period of performance is less than a calendar year, modify the clause to indicate the beginning and ending dates. However, the contract period shall not end later than December 31 of the year in which the contract is awarded.
(f) In addition to designating each ordering activity, as required by the clause at FAR 52.216-18, Ordering, identify by name or position title the individuals authorized to place orders for each activity. When provisions are made for placing oral orders in accordance with FAR 16.506(b), document the oral orders in accordance with departmental/agency instructions.
(g) The clause at 252.247-7012, Ordering Limitation.
(h) The clause at 252.247-7013, Contract Areas of Performance.
(i) The clause at 252.247-7014, Demurrage.
(j) When using the clause at FAR 52.216-21, Requirements, see 216.505(d) which prescribes use of Alternate I at 252.247-7015.
(k) The clause at 252.247-7016, Contractor Liability for Loss and Damage.
(l) The clause at 252.247-7017, Erroneous Shipments.
(m) The clause at 252.247-7018, Subcontracting.
(n) The clause at 252.247-7019, Drayage.
(o) The clause at 252.247-7020, Additional Services.
(p) The clauses at FAR 52.247-2, Permits, Authorities, or Franchises; FAR 52.247-8, Estimated Weights or Quantities Not Guaranteed; FAR 52.247-13, Accessorial Services—Moving Contracts; and FAR 52.247-17, Charges.
(b) Consignment instructions shall include, as a minimum—
(i) The clear text and coded MILSTRIP data as follows—
(A) Consignee code and clear text identification of consignee and destination as published in—
(
(
(
(
Reporting procedures and instructions shall comply with DoD Regulation 4500.32-R, MILSTAMP.
(B) Project code, when applicable;
(C) Transportation priority;
(D) Required delivery date; and
(E) Coded MILSTRIP document number, demand/suffix code, a supplementary address and signal code.
(ii) Non-MILSTRIP shipments shall include data similar to paragraph (b)(i) (A) through (D) of this subsection and the applicable portion of paragraph (b)(i)(E) with the notation “Non-MILSTRIP.”
(iii) In amended shipping instructions include, in addition to the data requirements of paragraphs (b)(i) (A) through (E) of this subsection, the following, when appropriate—
(A) Name of the activity originally designated, from which the stated quantities are to be deducted; and
(B) Any other features of the amended instructions not contained in the basic contract.
(iv) If a contract is assigned for any contract administration function listed
(A) Modification serial number; and, if a new line item is created by the issuance of shipping instructions;
(B) New line item number; and
(C) Existing line item number, if affected.
(v) For petroleum, oil and lubricant products, instructions for diversions need not include the modification serial number and new line item number, when the instructions are—
(A) For diversions overseas to new destinations;
(B) Issued by an office other than that issuing the contract or delivery order; and
(C) Issued by telephone, teletype, or telegram.
Use the clause at 252.247-7021, Returnable Containers Other Than Cylinders, in solicitations and contracts for supplies involving contractor-furnished returnable reels, spools, drums, carboys, liquid petroleum gas containers, or other returnable containers if the contractor is to retain title to the containers.
When complete consignment instructions are not known initially, use the Standard Form 30, Amendment of Solicitation/Modification of Contract, to issue or amend consignment instructions, and when necessary, to confirm consignment instructions issued by telephone, teletype, or telegram.
(a) When using the SF 30 to confirm delivery instructions—
(1) Stamp or mark “CONFIRMATION” in block letters on the form, and specify in detail those instructions being confirmed.
(2) Do not change the instructions being confirmed.
(b) Process the confirming SF 30 as follows—
(1) For contracts assigned for any contract administration function listed in subpart 247.3 to any office listed in DoD 4105.4, DoD Directory of Contract Administration Services Components, within five working days;
(2) For diversions of petroleum, oil, and lubricant products overseas to new destinations, within 30 days of instructions being confirmed; and
(3) Other contracts—
(i) Telephone—within five working days; and
(ii) Teletype or telegraph—consolidate on a monthly basis.
Reporting procedures and instructions for this form will be in compliance with DoD Regulation 4500.32-R, MILSTAMP.
(a) The transportation specialist prepares the DD Form 1653 at the request of the contracting officer. The completed form will contain recommendations concerning f.o.b. terms best suited for a particular acquisition, and other suggested transportation provisions for inclusion in the solicitation.
(b) When appropriate, the DD Form 1653 will also include information on combined port handling and transportation charges for inclusion in the solicitation in connection with export shipments.
Contracting personnel may use the DD Form 1654 to furnish information to the transportation office for development of cost factors for use by the contracting officer in the evaluation of f.o.b. origin offers.
This subpart—
(a) Implements the Cargo Preference Act of 1904, 10 U.S.C. 2631, which applies to the ocean transportation of cargo owned by, or destined for use by, the DoD.
(b) Does not specifically implement the Cargo Preference Act of 1954, 46
(c) Is an approved class deviation from FAR subpart 47.5 in its entirety (but see 247.571(c)).
(a) DoD contractors shall transport supplies, as defined in the clause at 252.247-7023, Transportation of Supplies by Sea, exclusively on U.S.-flag vessels unless—
(1) Those vessels are not available, and notices are given and approvals received in accordance with this subpart;
(2) The Secretary of the Navy determines that the freight charged is excessive or unreasonable; or
(3) The contracting officer finds that the charges to the Government are higher than charges to private persons for the transportation of like goods.
(b) Contracts shall provide for the use of Government-owned vessels when security classifications prohibit the use of other than Government-owned vessels.
(c)(1) Any vessel used under a time charter contract for the transportation of supplies shall have any reflagging or repair work, as defined in the clause at 252.247-7205, Reflagging or Repair Work, performed in the United States or its territories, if the reflagging or repair work is performed—
(i) On a vessel for which the contractor submitted an offer in response to the solicitation for the contract; and
(ii) Prior to acceptance of the vessel by the Government.
(2) The Secretary of Defense may waive this requirement if the Secretary determines that such waiver is critical to the national security of the United States.
(d) The Cargo Preference Act of 1904 does not apply to ocean transportation of—
(1) Products obtained for contributions to foreign assistance programs; or
(2) Products owned by agencies other than the DoD. In these cases, FAR subpart 47.5 applies.
(a) This subsection applies when ocean transportation is not the purpose of the contract. However, effective May 1, 1996, this subsection does not apply to subcontracts for the acquisition of commercial items or commercial components (see 212.504(a)(xxii)).
(b) The contracting officer shall obtain assistance from the cognizant transportation activity (see 247.105), in developing—
(1) The Government estimate for transportation costs, irrespective of whether freight will be paid directly by the Government;
(2) Shipping instructions and delivery terms for inclusion in solicitations and contracts that may involve transportation of supplies by sea.
(c) The contracting officer shall ask each offeror whether it will transport supplies by sea if awarded the contract (see 247.573(a)). Even if the successful offeror responds that it does not anticipate sea transport of supplies, it may discover during contract performance that ocean transportation is required. In that event, the Act will apply to the contract, and it must—
(1) Notify the Government that it now intends to use ocean transportation;
(2) Use U.S.-flag vessels unless certain conditions exist (see 247.571(a)); and
(3) Comply with the other requirements of the clause at 252.247-7023, Transportation of Supplies by Sea.
(d) When the contracting officer is notified that the contractor or subcontractor considers that—
(1) No U.S.-flag vessels are available, the contracting officer shall request confirmation of the nonavailability from the Director, Office of Contracts and Business Management, Military Sealift Command (MSC).
(2) The freight charges to the Government, the contractor or any subcontractor, are higher than charges for transportation of like goods to private persons, the contracting officer may approve any request for a waiver of the requirement to ship on U.S.-flag vessels for a particular shipment.
(i) Prior to granting a waiver, the contracting officer shall request advice, oral or written, from the Commander, MSC.
(ii) In advising the contracting officer whether to grant the waiver, the Commander, MSC, shall consider, as appropriate, evidence from—
(A) Published tariffs;
(B) Industry publications;
(C) The Maritime Administration; and
(D) Any other available sources.
(3) The freight charged by U.S.-flag carriers is considered excessive or otherwise unreasonable, the contracting officer shall forward a report to the Commander, MSC, through the head of the contracting activity, and the Director, Office of Contracts and Business Management, MSC.
(i) The report shall be in determination and finding format, and—
(A) Take into consideration that the 1904 Act is, in part, a subsidy of the U.S.-flag commercial shipping industry that recognizes that lower prices may be available from foreign shippers;
(B) Consider, accordingly, not only excessive profits to the vessel owner, if ascertainable, but also excessive costs (i.e., costs beyond the economic penalty normally incurred by excluding foreign competition) resulting from the use of U.S.-flag vessels in extraordinarily inefficient circumstances;
(C) Include, as appropriate—
(
(
(
(
(D) Consider that the fact that it would be less expensive to use a foreign-flag vessel is not a sufficient basis, on its own, to determine that the freight rate proposed by the U.S.-flag carrier is excessive or otherwise unreasonable. However, such a differential may indicate a need for further review.
(ii) If the Commander, MSC, concurs with the contracting officer, the Commander will forward the report to the Secretary of the Navy, via ASN(RDA)(PP), for a determination as to whether the freight charges are excessive or otherwise unreasonable.
(a) This subsection applies when ocean transportation is the principal purpose of the contract, including—
(1) Time charters;
(2) Voyage charters;
(3) Contracts of affreightment;
(4) Dedicated contractor contracts of affreightment;
(5) Ocean bills of lading; and
(6) Subcontracts under Government contracts or agreements for ocean transportation services.
(b) Coordinate these acquisitions, as appropriate, with the MSC in accordance with DoDD 5160.10, Single Manager Assignment for Ocean Transportation.
(c) The Commander, MSC, is authorized to make any determination as to the availability of U.S.-flag vessels, in order to ensure the proper utilization of Government and private U.S. vessels.
(d) All solicitations for ocean transportation services for supplies owned by the military departments shall provide a preference for U.S.-flag vessels as an evaluation factor.
(e) The contracting officer shall not award a contract of the type described in paragraph (a) of this subsection for a foreign-flag vessel unless—
(1) The contracting officer determines that no U.S.-flag vessels are
(2) The contracting officer determines that the freight charges proposed by U.S.-flag vessels to the Government are higher than charges to private persons for transportation of like goods, and obtains the approval of the Commander; MSC; or
(3) The Secretary of the Navy determines (see paragraph (f) of this subsection) that the freight charges for U.S.-flag vessels are excessive or otherwise unreasonable.
(f) When the contracting officer concludes, based solely on economic considerations, that the charge offered for a U.S.-flag vessel is excessive or otherwise unreasonable, the contracting officer will send a report through the head of the contracting activity to the Commander, MSC.
(1) The fact that it would be less expensive to use a foreign-flag vessel is an insufficient basis, on its own, to determine that the freight rate proposed by the U.S.-flag carrier is excessive or otherwise unreasonable. However, such a differential may indicate a need for further review.
(2) The Commander, MSC, will forward the report, if in agreement with the contracting officer, to the Secretary of the Navy for a determination.
(3) The report shall be in determination and finding format; take into consideration the factors in 247.572-1(d)(3); and include, as appropriate—
(i) An analysis of the carrier's cost in accordance with FAR subpart 15.8, or profit in accordance with DFARS subpart 215.9. The costs or profit should not be so high as to make it unreasonable to apply the preference for U.S.-flag vessels;
(ii) A description of efforts taken pursuant to FAR 15.803(d), to negotiate a reasonable price. For the purpose of FAR 15.803(d), this report is the referral to higher authority; and
(iii) An analysis of whether the cost is excessive (i.e., cost beyond the economic penalty normally incurred by excluding foreign competition), taking into consideration such factors as—
(A) The differential between freight charges by the U.S.-flag carrier and an estimate of what foreign-flag carriers would charge based upon a price analysis;
(B) A comparison of rates charged by other U.S.-flag carriers on comparable routes;
(C) Efficiency of operation regardless of rate differential (i.e., suitability of the vessel capacity/cargo requirements; the commercial reasonableness of the vessel positioning required, etc.); and
(D) Any other relevant economic and financial considerations affecting the Government.
(a) Use the provision at 252.247-7022, Representation of Extent of Transportation by Sea, in full text, in all solicitations except—
(1) Those for direct purchase of ocean transportation services; or
(2) Those with an anticipated value below the small purchase limitation at FAR 13.000.
(b) Use the clause at 252.247-7023, Transportation of Supplies by Sea, in all solicitations and resultant contracts, in full text, except—
(1) Those for direct purchase of ocean transportation services; or
(2) Those with an anticipated value below the small purchase limitation at FAR 13.000.
(c) Use the clause at 252.247-7024, Notification of Transportation of Supplies by Sea, in full text, in all contracts for which the offeror made a negative response to the inquiry in the provision at 252.247-7022, Representation of Extent of Transportation by Sea.
(d) Use the clause at 252.247-7025, Reflagging or Repair Work, in all time charter solicitations and contracts for the use of a vessel for the transportation of supplies, unless a waiver has been granted in accordance with 247.571(c).
41 U.S.C. 421 and 48 CFR chapter 1.
When one of the clauses prescribed by FAR subpart 48.2 is used and the contracting officer wants value engineering change proposals submitted in the format prescribed by MIL-STD-973, use the clause at 252.248-7000, Preparation of Value Engineering Change Proposals.
41 U.S.C. 421 and 48 CFR chapter 1.
When the contract administration office receives a termination notice, it will under Report Control Symbol DD-ACQ (AR) 1411—
(i) Prepare a DD Form 1598, Contract Termination Status Report;
(ii) Within 30 days, send one copy to the purchasing office and one copy to the headquarters office to which the contract administration office is directly responsible;
(iii) Continue reporting semiannually to cover the 6 month periods ending March and September. The semiannual reports must be submitted within 30 days after the end of the reporting period; and
(iv) Submit a final report within 30 days after closing the termination case.
The DD Form 1598, Contract Termination Status Report, may be used to recommend the release of excess funds. The final recommendation to release excess funds should include the appropriations and allocated amounts.
(a)(1)(ii) Industrial plant equipment included in the inventory—
(
(
(a)(i) Use a Standard Form 30 (SF 30), Amendment of Solicitation/Modification of Contract, to settle a convenience termination by determination—
(A) When the contractor has lost its right of appeal because it failed to submit a timely settlement proposal; and
(B) To confirm the determination when the contractor does not appeal the termination contracting officer's decision.
(ii) The effective date of the SF 30 shall be the same as the date of the letter of determination. Do not assign a supplementary procurement instrument number to the letter of determination. Send a copy of the SF 30 to the contractor by certified mail return receipt requested.
(a)(i)
(ii)
(a) The clause at 252.249-7000, Special Termination Costs, may be used in an incrementally funded contract when its use is approved by the agency head.
(b) The clause is authorized when—
(1) The contract term is 2 years or more;
(2) The contract is estimated to require—
(i) Total RDT&E financing in excess of $25 million; or
(ii) Total production investment in excess of $100 million; and
(3) Adequate funds are available to cover the contingent reserve liability for special termination costs.
(c) The contractor and the contracting officer must agree upon an amount that represents their best estimate of the total special termination costs to which the contractor would be entitled in the event of termination of the contract. Insert this amount in paragraph (c) of the clause.
(d)(1) Consider substituting an alternate paragraph (c) for paragraph (c) of the basic clause when—
(i) The contract covers an unusually long performance period; or
(ii) The contractor's cost risk associated with contingent special termination costs is expected to fluctuate extensively over the period of the contract.
(2) The alternate paragraph (c) should provide for periodic negotiation and adjustment of the amount reserved for special termination costs. Occasions for periodic adjustment may include—
(i) The Government's incremental assignment of funds to the contract;
(ii) The time when certain performance milestones are accomplished by the contractor; or
(iii) Other specific time periods agreed upon by the contracting officer and the contractor.
(a) Terminate contracts with the Canadian Commercial Corporation in accordance with—
(1) The Letter of Agreement (LOA) between the Department of Defence Production (Canada) and the U.S. DoD, “Canadian Agreement” (for a copy of the LOA or for questions on its currency, contact the Foreign Contracting Directorate, Office of the Director of Defense Procurement, (703) 697-9351, DSN 227-9351));
(2) Policies in the Canadian Agreement and part 249; and
(3) The Manual of Procedure on Termination of Contracts, Department of Supply and Services (Canada).
(b) Contracting officers shall ensure that the Canadian Commercial Corporation submits termination settlement proposals in the format prescribed in FAR 49.602 and that they contain the amount of settlements with subcontractors. The termination contracting officer (TCO) shall prepare an appropriate settlement agreement. (See FAR 49.603.) The letter transmitting a settlement proposal must certify—
(1) That disposition of inventory has been completed; and
(2) That the Contracts Settlement Committee of the Supply and Services Canada (SSC) has approved settlements with Canadian subcontractors when the Manual of Procedure on Termination of Contracts, SSC, requires such approval.
(c)(1) The Canadian Commercial Corporation will—
(i) Settle all Canadian subcontractor termination claims under the Canadian Agreement; and
(ii) Submit schedules listing serviceable and usable contractor inventory for screening to the TCO (see FAR 45.6).
(2) After screening, the TCO must provide guidance to the Canadian Commercial Corporation for disposition of the contractor inventory.
(3) Settlement of Canadian subcontractor claims are not subject to the approval and ratification of the TCO. However, when the proposed negotiated settlement exceeds the total contract price of the prime contract, the TCO shall obtain from the U.S. contracting officer prior to final settlement—
(i) Ratification of the proposed settlement; and
(ii) A contract modification increasing the contract price and obligating the additional funds.
(d) The Canadian Commercial Corporation (CCC) should send all termination settlement proposals submitted by U.S. subcontractors and suppliers to the TCO, Defense Contract Management Area Operations, Ottawa, for settlement. The TCO will inform the CCC of the amount of the net settlement of U.S. subcontractors and suppliers so that this amount can be included in the CCC termination proposal. The Canadian Commercial Corporation is responsible for execution of the settlement agreement with these subcontractors.
(a) Congressional notification is required for any termination involving a reduction in employment of 100 or more contractor employees. Proposed terminations must be cleared through department/agency liaison offices before release of the termination notice, or any information on the proposed termination, to the contractor.
(b) Department and agency liaison offices will coordinate timing of the congressional notification and public release of the information with release of
(1) Army—Chief, Legislative Liaison (SALL-SPA)
(2) Navy—Chief of Legislative Affairs (OLA-N)
(3) Air Force—SAF/AQC
(4) Defense Advanced Research Projects Agency—CMO
(5) Defense Information Systems Agency—Contract Management Division (Code 260)
(6) Defense Intelligence Agency—RSQ
(7) Defense Logistics Agency—DLA-PP
(8) Defense Mapping Agency—HQ DMA (AQ)
(9) Defense Special Weapons Agency—Acquisition Management Directorate (AM)
(10) National Security Agency/Central Security Service—Chief, Office of Contracting
(11) On-Site Inspection Agency—Acquisition Management Office (AM)
(12) Ballistic Missile Defense Organization—Director of Contracts (BMDO-DCT)
(c) Request clearance to release information in accordance with departmental procedures as soon as possible after the decision to terminate is made. Until clearance has been obtained, treat this information as “For Official Use Only” unless the information is classified.
(d) Include the following in the request for clearance—
(1) Contract number, date, and type of contract;
(2) Name of the company;
(3) Nature of contract or end item;
(4) The reason for the termination;
(5) Contract price of the items terminated;
(6) Total number of contractor employees involved, including the Government's estimate of the number who may be discharged;
(7) Statement of anticipated impact on the company and the community;
(8) The area labor category, whether the contractor is a large or small business, and any known impact on hard core disadvantaged employment programs;
(9) Total number of subcontractors involved and the impact in this area; and
(10) An unclassified draft of a suggested press release.
(e) To minimize termination costs, liaison offices will act promptly on all requests for clearances and provide a response not later than two working days after receipt of the request.
(f) This reporting requirement is assigned RCS:DD(I&L)(AR) 1412.
(a) Section 1372 of the National Defense Authorization Act for Fiscal Year 1994 (Pub. L. 103-160) and Section 824 of the National Defense Authorization Act for Fiscal Year 1997 (Pub. L. 104-201) are intended to help establish benefit eligibility under the Job Training Partnership Act (29 U.S.C. 1661 and 1662) for employees of DoD contractors and subcontractors adversely affected by termination or substantial reductions in major defense programs.
(b) Departments and agencies are responsible for establishing procedures to:
(1) Identify which contracts (if any) under major defense programs will be terminated or substantially reduced as a result of the funding levels provided in an appropriations act.
(2) Within 60 days of the enactment of such an act, provide notice of the anticipated termination of or substantial reduction in the funding of affected contracts—
(i) Directly to the Secretary of Labor; and
(ii) Through the contracting officer to each prime contractor.
(c) Use the clause at 252.249-7002, Notification of Anticipated Contract Termination or Reduction, in all contracts under a major defense program.
41 U.S.C. 421 and 48 CFR chapter 1.
As used in this part,
(1) An official at or above the level of an Assistant Secretary (or Deputy) of Defense or of the Army, Navy, or Air Force; and
(2) A contract adjustment board established by the Secretary concerned.
See 10 U.S.C. 2410b for limitations on Congressionally directed payment of a request for equitable adjustment to contract terms or a request for relief under Pub. L. 85-804.
Prepare reports required by this section in accordance with DoDI 4105.69, Miscellaneous Procurement Report. Department and agency supplements identify officials responsible for preparing and processing the reports required by this section.
(1) Departments and agencies will—
(i) Prepare a preliminary record when a request for a contract adjustment under FAR 50.3 is filed (see 250.305-70).
(ii) Prepare a final record stating the disposition of the request (see 250.306-70).
(iii) Designate the offices or officials responsible for preparing, submitting, and receiving all records required by this part 250. Records shall be maintained by the contract adjustment boards of the Army, Navy, and Air Force, respectively, and by the headquarters of the defense agencies.
(2) A suggested format for the record is in Table 50-1, Record of Request for Adjustment. This format permits the information required for the preliminary and final records to be combined on one form.
(3) The following instructions are provided for those items which are not self-explanatory:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(b) Authority under FAR Subpart 50.4 to approve actions obligating $50,000 or less may not be delegated below the level of the head of the contracting activity; however, see FAR 50.201(d) for indemnification authority.
(a)
(b)
(1) Requests to obligate the Government in excess of $50,000 must be submitted to the Under Secretary of Defense (Acquisition & Technology) (USDA&T)) for approval.
(2) Requests for indemnification against unusually hazardous or nuclear risks must be submitted to the USD(A&T) for approval before using the indemnification clause at FAR 52.250-1, Indemnification Under Public Law 85-804.
(c)
The Departments of the Army, Navy, and Air Force each have a contract adjustment board. The board consists of a Chair and not less than two nor more than six other members, one of whom may be designated the Vice-Chair. A majority constitutes a quorum for any purpose and the concurring vote of a majority of the total board membership constitutes an action of the board. Alternates may be appointed to act in the absence of any member.
Requests should be filed with the procuring contracting officer (PCO). If a request is filed with an administrative contracting officer (ACO), the ACO shall promptly forward it to the PCO for appropriate action. If filing with the PCO is impracticable, requests may be filed with the following addresses for forwarding to the cognizant PCO:
(1) Office of the Secretary of Defense—Washington Headquarters Service, Attn: RE&F-AM.
(2) Army—Forward to the head of the contracting activity listed in Part 202 that appears to be the cognizant office for the contract or commitment involved.
(3) Navy—Assistant Secretary of the Navy (RD&A), Attn: Procurement Policy.
(4) Air Force—Deputy Assistant Secretary (Contracting), Attn: SAF/AQCX.
(5) Defense Advanced Research Projects Agency—Director, CMO.
(6) Defense Information Systems Agency—Attn: Code PA.
(7) Defense Intelligence Agency—Assistant Deputy Director for Procurement, Attn: RSQ.
(8) Defense Logistics Agency—The Commander of the Defense Supply Center involved.
(9) Defense Mapping Agency—Director, DMA, Attn: AQ.
(10) Defense Special Weapons Agency—Director, DSWA, Attn: AM.
(11) National Security Agency—Director, NSA.
(12) On-Site Inspection Agency—Director, OSIA, Attn: DSP.
(13) Ballistic Missile Defense Organization—Director, BMDO.
At the time the request is filed, the activity will prepare the record described at 250.105(1)(i) and forward it to the appropriate official within 30 days after the close of the month in which the record is prepared.
(a) The officer or official responsible for the case shall forward to the contract adjustment board, through departmental channels, two copies of the following:
(1) A letter stating—
(i) The nature of the case;
(ii) The basis for the board's authority to act;
(iii) The findings of fact essential to the case (see FAR 50.304). Arrange the findings chronologically with cross references to supporting enclosures;
(iv) The conclusions drawn;
(v) The recommended disposition; and
(vi) If contractual action is recommended, a statement by the signer that the action will facilitate the national defense.
(2) The contractor's request
(3) All evidentiary materials
(4) All endorsements, reports and comments of cognizant Government officials
(b) A letter to the Board recommending an amendment without consideration where essentiality is a factor (see FAR 50.302-1(a)) should also provide—
(1) The information required by FAR 50.304 (a) and (b), and
(2) Findings as to—
(i) The contractor's performance record, including the quality of product, rate of production, and promptness of deliveries;
(ii) The importance to the Government, particularly to the active duty military, of the performance of the contract and the importance of the contractor to the national defense;
(iii) The forecast of future contracts with the contractor; and
(iv) Other available sources of supply for the supplies or services covered by the contract, and the time and cost of having contract performance completed by such other sources.
Contract adjustment boards will render decisions as expeditiously as practicable. The Chair shall sign a memorandum of decision disposing of the case. The decision shall be dated and shall contain the information required by FAR 50.306. The memorandum of decision shall not contain any information classified “Confidential” or higher. The board's decision will be sent to the appropriate official for implementation.
(a) When the request for relief is denied or approved below the Secretarial level, submit the following documents to the appropriate office within 30 days after the close of the month in which the decision is executed:
(1) Two copies of the memorandum of decision;
(2) Except for the Army, one copy of the contractual document implementing any decision approving contractual action; and
(3) One copy of a final record, as described at 250.105.
(b) When a contract adjustment board decision is implemented, the activity which forwarded the case to the board shall prepare and submit to the board the documents identified in paragraphs (a) (2) and (3) of this subsection.
When indemnification is to be provided on contracts requiring both research and development work and other work, the contracting officer shall insert an appropriate clause using the authority of both 10 U.S.C. 2354 and Public Law 85-804.
(a) The use of Public Law 85-804 is limited to work which cannot be indemnified under 10 U.S.C. 2354 and is
(b) Indemnification under 10 U.S.C. 2354 is covered by 235.070.
41 U.S.C. 421 and 48 CFR chapter 1.
(e) Use the format in Table 51-1, Authorization to Purchase from Government Supply Sources. Specify the terms of the purchase, including contractor acceptance of any Government materiel, payment terms, and the addresses required by paragraph (f) of the clause at 252.251-7000, Ordering from Government Supply Sources.
(3)(ii) In addition to the procedure and form authorized by FAR 51.102(e)(3)(ii), contractors may use the DD Form 1155 when requisitioning from the Department of Veterans Affairs.
(f) The authorizing agency shall also be responsible for promptly considering requests of the DoD supply source for authority to refuse to honor requisitions from a contractor which is indebted to the DoD and has failed to pay proper invoices in a timely manner.
Contractor payments for purchases from DoD supply sources are due within 30 days of the date of a proper invoice (see FAR 32.902 for definition of “due date” and “payment date;” also see FAR 32.905(e)).
Use the clause at 252.251-7000, Ordering From Government Supply Sources, in solicitations and contracts which include the clause at FAR 52.251-1, Government Supply Sources.
(a)(2)(A) See FAR 28.307-2(c) for policy on contractor insurance.
(B) See FAR 28.308 for policy on self-insurance.
(C) See FAR 31.205-19 for allowability of insurance costs.
(5) Paragraph (d) of the clause at 252.251-7001 satisfies the requirement of FAR 51.202(a)(5) for a written statement.
Use the clause at 252.251-7001, Use of Interagency Fleet Management System (IFMS)Vehicles and Related Services, in solicitations and contracts which include the clause at FAR 52.251-2, Interagency Fleet Management System (IFMS) Vehicles and Related Services.