[Title 48 CFR ]
[Code of Federal Regulations (annual edition) - October 1, 1996 Edition]
[From the U.S. Government Printing Office]


          48



          Federal Acquisition Regulations System



[[Page i]]

          CHAPTER 2 (Parts 201 to 251)

          Revised as of October 1, 1996
          CONTAINING
          A CODIFICATION OF DOCUMENTS
          OF GENERAL APPLICABILITY
          AND FUTURE EFFECT

          AS OF OCTOBER 1, 1996
          With Ancillaries
          Published by
          the Office of the Federal Register
          National Archives and Records
          Administration

          as a Special Edition of
          the Federal Register



[[Page ii]]

                                      




                     U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 1996



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



[[Page iii]]




                            Table of Contents


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

  Title 48:
    Chapter 2--Department of Defense..........................       3
  Finding Aids:
    Table of CFR Titles and Chapters..........................     409
    Alphabetical List of Agencies Appearing in the CFR........     425
    List of CFR Sections Affected.............................     435

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

    Cite this Code:  CFR                                                         
                                                                                                                
    To cite the regulations in this volume use title, part                       
    and section number. Thus, 48 CFR 201.103 refers to                          
    title 48, part 201, section 103.                                            
                                  ----------------------------------------------------------                    
                                                                                                                


[[Page v]]

                               EXPLANATION

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

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1
    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

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

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, October 1, 1996), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

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

OMB CONTROL NUMBERS

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

[[Page vi]]

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

OBSOLETE PROVISIONS

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

CFR INDEXES AND TABULAR GUIDES

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

REPUBLICATION OF MATERIAL

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

INQUIRIES

    For a legal interpretation or explanation of any regulation in this 
volume, contact the issuing agency. The issuing agency's name appears at 
the top of odd-numbered pages.
    For inquiries concerning CFR reference assistance, call 202-523-5227 
or write to the Director, Office of the Federal Register, National 
Archives and Records Administration, Washington, DC 20408.
SALES
    The Government Printing Office (GPO) processes all sales and 
distribution of the CFR. For payment by credit card, call 202-512-1800, 
M-F 8 a.m. to 4 p.m. e.s.t. or fax your order to 202-512-2233, 24 hours 
a day. For payment by check, write to the Superintendent of Documents, 
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Customer Service call 202-512-1803.

                              Richard L. Claypoole,
                                    Director,
                          Office of the Federal Register.

October 1, 1996.



[[Page vii]]



                               THIS TITLE

    Title 48--Federal Acquisition Regulations System is composed of 
eight volumes. The chapters in these volumes are arranged as follows: 
Chapter 1 (parts 1 to 51), chapter 1 (parts 52 to 99), chapter 2 (parts 
201 to 251 and parts 252 to 299), chapters 3 to 6, chapters 7 to 14, 
chapters 15 to 28 and chapter 29 to end. The contents of these volumes 
represent all current regulations codified under this title of the CFR 
as of October 1, 1996.

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

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

    The two volumes containing chapter 1 include an index to the Federal 
acquisition regulations. The second volume, containing chapter 1 (parts 
52 to 99), includes contract clauses and forms.

    For this volume, Ann Elise Maso was Chief Editor. The Code of 
Federal Regulations publication program is under the direction of 
Richard L. Claypoole, assisted by Alomha S. Morris.

[[Page viii]]



 

[[Page 1]]



            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM




            (This book contains chapter 2, parts 201 to 251)

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

                                                                    Part
chapter 2--Department of Defense............................         201

[[Page 3]]



                    CHAPTER 2--DEPARTMENT OF DEFENSE




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

                          SUBCHAPTER A--GENERAL
Part                                                                Page
201             Federal Acquisition Regulations System......           5
202             Definitions of words and terms..............           9
203             Improper business practices and personal 
                    conflicts of interest...................          11
204             Administrative matters......................          14
                   SUBCHAPTER B--ACQUISITION PLANNING
205             Publicizing contract actions................          40
206             Competition requirements....................          42
207             Acquisition planning........................          45
208             Required sources of supplies and services...          48
209             Contractor qualifications...................          60
211             Describing agency needs.....................          67
212             Acquisition of commercial items--general....          69
          SUBCHAPTER C--CONTRACTING METHODS AND CONTRACT TYPES
213             Simplified acquisition procedures...........          72
214             Sealed bidding..............................          75
215             Contracting by negotiation..................          75
216             Types of contracts..........................          99
217             Special contracting methods.................         110
                  SUBCHAPTER D--SOCIOECONOMIC PROGRAMS
219             Small business programs.....................         125
222             Application of labor laws to government 
                    acquisitions............................         139
223             Environment, conservation, occupational 
                    safety, and drug-free workplace.........         151
224             Protection of privacy and freedom of 
                    information.............................         158
225             Foreign acquisition.........................         158
226             Other socioeconomic programs................         199
             SUBCHAPTER E--GENERAL CONTRACTING REQUIREMENTS
227             Patents, data, and copyrights...............         203
228             Bonds and insurance.........................         244

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229             Taxes.......................................         247
230             Cost accounting standards...................         248
231             Contract cost principles and procedures.....         251
232             Contract financing..........................         256
233             Protests, disputes, and appeals.............         271
             SUBCHAPTER F--SPECIAL CATEGORIES OF CONTRACTING
234             Major system acquisition....................         273
235             Research and development contracting........         273
236             Construction and architect-engineer 
                    contracts...............................         296
237             Service contracting.........................         302
239             Acquisition of information resources........         314
241             Acquisition of utility services.............         325
                    SUBCHAPTER G--CONTRACT MANAGEMENT
242             Contract administration.....................         328
243             Contract modifications......................         346
244             Subcontracting policies and procedures......         347
245             Government property.........................         349
246             Quality assurance...........................         371
247             Transportation..............................         382
248             Value engineering...........................         391
249             Termination of contracts....................         391
250             Extraordinary contractual actions...........         399
251             Use of government sources by contractors....         404

  Editorial Note: The Department of Defense acquisition regulations are 
continued in the volume containing 48 CFR chapter 2, parts 252 to 299.

  Note: Although the text of Manuals and Supplements to the Defense FAR 
Supplement are not published in the Code of Federal Regulations, they 
were listed for the convenience of the user. All of the Supplements have 
been deleted. The only manuals which remain in effect are: Armed 
Services Pricing Manual (1986) and Armed Services Pricing Manual, Volume 
2, Price Analysis (1987).

[[Page 5]]



                          SUBCHAPTER A--GENERAL





PART 201--FEDERAL ACQUISITION REGULATIONS SYSTEM--Table of Contents




Sec.

               Subpart 201.1--Purpose, Authority, Issuance

201.103  Applicability.
201.104  Issuance.
201.104-3  Copies.

                      Subpart 201.2--Administration

201.201  Maintenance of the FAR.
201.201-1  The two councils.

              Subpart 201.3--Agency Acquisition Regulations

201.301  Policy.
201.303  Publication and codification.
201.304  Agency control and compliance procedures.

                 Subpart 201.4--Deviations From the FAR

201.402  Policy.
201.403  Individual deviations.
201.404  Class deviations.

        Subpart 201.6--Contracting Authority and Responsibilities

201.602  Contracting officers.
201.602-2  Responsibilities.
201.602-70  Contract clause.
201.603  Selection, appointment, and termination of appointment.
201.603-2  Selection.
201.603-3  Appointment.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36284, July 31, 1991, unless otherwise noted.



               Subpart 201.1--Purpose, Authority, Issuance



Sec. 201.103  Applicability.

    The FAR and the Defense Federal Acquisition Regulation Supplement 
(DFARS) also apply to purchases and contracts by DoD contracting 
activities made in support of foreign military sales or North Atlantic 
Treaty Organization cooperative projects without regard to the nature or 
sources of funds obligated, unless otherwise specified in this 
regulation.
201.104  Issuance.



Sec. 201.104-3  Copies.

    Copies of the DFARS in loose-leaf and CFR form may be purchased from 
the Superintendent of Documents, Government Printing Office, Washington, 
DC 20402-9325. Purchase of a copy of DFARS includes a subscription for 
Defense Acquisition Circulars.



                      Subpart 201.2--Administration

201.201  Maintenance of the FAR.



Sec. 201.201-1  The two councils.

    (c) The composition and operation of the DAR Council is prescribed 
in DoD Directive 5000.35, Defense Acquisition Regulatory System.
    (d)(i) Departments and agencies process proposed revisions of FAR or 
DFARS through channels to the Director of the DAR Council. Process the 
proposed revision as a memorandum in the following format, addressed to 
the Director, DAR Council, OUSD(A&T), 3062 Defense Pentagon, Washington, 
DC 20301-3062; datafax (703) 602-0350:

    I. Problem: Succinctly state the problem created by current FAR and/
or DFARS coverage and describe the factual and/or legal reasons 
necessitating regulatory change.
    II. Recommendation: Identify the FAR and/or DFARS citations to be 
revised. Attach as TAB A a copy of the text of the existing coverage, 
conformed to include the proposed additions and deletions. Indicate 
deleted coverage with dashed lines through the current words being 
deleted and insert proposed language in brackets at the appropriate 
locations within the existing coverage. If the proposed deleted portion 
is extensive, it may be outlined by lines forming a box with diagonal 
lines drawn connecting the corners.
    III. Discussion: Include a complete, convincing explanation of why 
the change is necessary and how the recommended revision will solve the 
problem. Address advantages and disadvantages of the proposed revision, 
as well as any cost or administrative impact on Government activities 
and contractors. Identify any potential impact of the change on 
automated systems, e.g., automated financial and procurement systems. 
Provide any other background information that would be helpful in 
explaining the issue.

[[Page 6]]

    IV. Collaterals: Address the need for public comment (FAR 1.301(b) 
and subpart 1.5), the Paperwork Reduction Act, and the Regulatory 
Flexibility Act (FAR 1.301(c)).
    V. Deviations: If a recommended revision of DFARS is a FAR 
deviation, identify the deviation and include under separate TAB a 
justification for the deviation, which addresses the requirements of 
201.402(3). The justification should be in the form of a memorandum for 
the USD(A&T)DP.

    (ii) The public may offer proposed revisions of FAR or DFARS by 
submission of a memorandum, in the format (including all of the 
information) prescribed in paragraph (d)(i) of this subsection, to the 
Director of the DAR Council.

[56 FR 36284, July 31, 1991, as amended at 60 FR 61591, Nov. 30, 1995; 
61 FR 50451, Sept. 26, 1996]



              Subpart 201.3--Agency Acquisition Regulations



Sec. 201.301  Policy.

    (a) DoD implementation and supplementation of the FAR is issued in 
the Defense Federal Acquisition Regulation Supplement (DFARS) under 
authorization and subject to the authority, direction, and control of 
the Secretary of Defense.
    (b) When Federal Register publication is required for any policy, 
procedure, clause, or form, the department or agency requesting USD(A&T) 
approval for use of the policy, procedure, clause, or form (see 
201.304(1)) must include an analysis of the public comments in the 
request for approval.

[56 FR 36284, July 31, 1991, as amended at 60 FR 61591, Nov. 30, 1995]



Sec. 201.303  Publication and codification.

    (a)(i) The DFARS is codified under chapter 2 in title 48, Code of 
Federal Regulations.
    (ii) To the extent possible, all DFARS text (whether implemental or 
supplemental) is numbered as if it were implemental. Supplemental 
numbering is used only when the text cannot be integrated intelligibly 
with its FAR counterpart.
    (A) Implemental numbering is the same as its FAR counterpart, except 
when the text exceeds one paragraph, the subdivisions are numbered by 
skipping a unit in the FAR 1.104-2(b)(2) prescribed numbering sequence. 
For example, three paragraphs implementing FAR 19.501 would be numbered 
219.501 (1), (2), and (3) rather than (a), (b), and (c). Three 
paragraphs implementing FAR 19.501(a) would be numbered 219.501(a) (i), 
(ii), and (iii) rather than (a) (1), (2), and (3). Further subdivision 
of the paragraphs follows the prescribed numbering sequence, e.g., 
219.501(1)(i)(A)(1)(i).
    (B) Supplemental numbering is the same as its FAR counterpart, with 
the addition of a number of 70 and up or (S-70) and up. Parts, subparts, 
sections, or subsections are supplemented by the addition of a number of 
70 and up. Lower divisions are supplemented by the addition of a number 
of (S-70) and up. When text exceeds one paragraph, the subdivisions are 
numbered using the FAR 1.104-2(b)(2) prescribed sequence, without 
skipping a unit. For example, DFARS text supplementing FAR 19.501 would 
be numbered 219.501-70. Its subdivisions would be numbered 219.501-70 
(a), (b), and (c).
    (C) Subdivision numbering below the 4th level does not repeat the 
numbering sequence. It uses italicized Arabic numbers and then 
italicized lower case Roman numerals.
    (D) An example of DFARS numbering is in Table 1-1, DFARS Numbering.
    (iii) Department/agency and component supplements must parallel the 
FAR and DFARS numbering, except department/agency supplemental numbering 
uses subsection numbering of 90 and up, instead of 70 and up.

                       Table 1-1--DFARS Numbering                       
------------------------------------------------------------------------
       FAR             Is implemented as          Is supplemented as    
------------------------------------------------------------------------
19                 219                        219.70                    
19.5               219.5                      219.570                   
19.501             219.501                    219.501-70                
19.501-1           219.501-1                  219.501-1-70              
19.501-1(a)        219.501-1(a)               219.501-1(a)(S-70)        
19.501-1(a)(1)     219.501-1(a)(1)            219.501-1(a)(1)(S-70)     
------------------------------------------------------------------------


[[Page 7]]



Sec. 201.304  Agency control and compliance procedures.

    Departments/agencies and their component organizations may issue 
acquisition regulations as necessary to implement or supplement the FAR 
or DFARS.
    (1) Approval of the USD(A&T) is required, before inclusion in a 
department/agency or component supplement or any other contracting 
regulatory document such as a policy letter, or clause book, of any 
policy, procedure, clause, or form which--
    (i) Has a significant effect beyond the internal operating 
procedures of the agency; or
    (ii) Has a significant cost or administrative impact on contractors 
or offerors.
    (2) The USD(A&T) has delegated authority to the USD(A&T)DP to 
approve or disapprove the policies, procedures, clauses, and forms 
subject to paragraph (1) of this section.
    (3) Approval of USD(A&T)DP is required for any class deviation (as 
defined in FAR subpart 1.4) from the FAR or DFARS, before its inclusion 
in a department/agency or component supplement or any other contracting 
regulatory document such as a policy letter or clause book.
    (4) Each department and agency shall develop and, upon approval by 
USD(A&T)DP, implement, maintain, and comply with a plan for controlling 
the use of clauses other than those prescribed by FAR or DFARS.
    (5) Departments/agencies submit requests for the USD(A&T) and 
USD(A&T)DP approvals required by this section through the Director of 
the DAR Council.
    (6) Revisions to the DFARS are issued through Defense Acquisition 
Circulars or Departmental Letters.
    (i) Defense Acquisition Circulars--
    (A) Are issued on a quarterly basis to all recipients of the DFARS.
    (B) Are published in the Federal Register.
    (C) Include, in addition to DFARS revisions, policies, directives, 
and informational items.
    (D) Include the effective dates for use of the revisions, policies, 
or directives. The effective date means the date on which the revisions, 
policies, or directives must be applied. Unless stated otherwise in the 
circular, any new or revised clauses, provisions, or forms must be 
included in solicitations issued on or after that date.
    (ii) Departmental Letters--
    (A) Are issued as necessary to the departments and agencies when 
time is of essence in disseminating a revision, policy, or directive.
    (B) Are effective until the revision, policy, or directive is 
superseded by publication of the material in a Federal Acquisition 
Circular, Defense Acquisition Circular, or other directive or is 
specifically withdrawn.

[56 FR 36284, July 31, 1991, as amended at 60 FR 61591, Nov. 30, 1995]



                 Subpart 201.4--Deviations From the FAR



Sec. 201.402  Policy.

    (1) The Director of Defense Procurement, Office of the Under 
Secretary of Defense (Acquisition & Technology), USD(A&T)DP, is the 
approval authority within the DoD for--
    (i) Any individual deviation from--
    (A) FAR/DFARS Section 3.104, Procurement integrity;
    (B) FAR/DFARS Subpart 27.4, Rights in Data and Copyrights;
    (C) FAR/DFARS Subpart 31.1, Applicability (contract cost 
principles);
    (D) FAR/DFARS Subpart 31.2, Contracts with Commercial Organizations; 
or
    (E) FAR/DFARS Part 32, Contract Financing (except 32.7, 32.8, and 
the payment clauses prescribed by 32.1).
    (ii) Any class deviation.
    (2) Individual deviations.
    (i) Except as provided in paragraph (2)(ii) of this section, 
individual deviations, other than those in paragraph (1)(i) of this 
section, must be approved in accordance with the department/agency plan 
prescribed by 201.304(4).
    (ii) Contracting officers outside the United States are authorized 
to deviate from prescribed non-statutory FAR and DFARS clauses when 
contracting for support services, supplies, or construction, with the 
governments of North Atlantic Treaty Organization (NATO) countries or 
other allies (as described in 10 U.S.C. 2341(2)), or with United Nations 
or NATO organizations.

[[Page 8]]

This authority shall be exercised only if such governments or 
organizations will not agree to the standard clauses.
    (3) Submit requests for deviation approval through department/agency 
channels to the approval authority in paragraph (1) or (2), as 
appropriate. Submit deviations which require USD(A&T)DP approval through 
the Director of the DAR Council. At a minimum, each request must--
    (i) Identify the department/agency, and component if applicable, 
requesting the deviation;
    (ii) Identify the FAR or DFARS citation from which a deviation is 
needed, state what is required by that citation, and indicate whether an 
individual or class deviation is requested;
    (iii) Describe the deviation and indicate which of paragraphs (a) 
through (f) of FAR 1.401 best categorizes the deviation.
    (iv) State whether the deviation will have a significant effect 
beyond the internal operating procedures of the agency and/or a 
significant cost or administrative impact on contractors or offerors, 
and give reasons to support the statement;
    (v) State the period of time for which the deviation is required;
    (vi) State whether approval for the same deviation has been received 
previously, and if so, when;
    (vii) State whether the proposed deviation was published (see FAR 
subpart 1.5 for publication requirements) in the Federal Register and 
provide analysis of comments;
    (viii) State whether the request for deviation has been reviewed by 
legal counsel, and if so, state results; and
    (ix) Give detailed rationale for the request. State what problem or 
situation will be avoided, corrected, or improved if request is 
approved.

[56 FR 36284, July 31, 1991, as amended at 60 FR 61591, Nov. 30, 1995; 
61 FR 50451, Sept. 26, 1996]



Sec. 201.403  Individual deviations.

    See approval requirements in 201.402.



Sec. 201.404  Class deviations.

    See approval requirements in 201.402.



        Subpart 201.6--Contracting Authority and Responsibilities

201.602  Contracting officers.



Sec. 201.602-2  Responsibilities.

    Contracting officers may designate qualified personnel as their 
authorized representatives to assist in the technical monitoring or 
administration of a contract. A contracting officer's representative 
(COR)--
    (1) Must be a Government employee, unless otherwise authorized in 
agency regulations.
    (2) Must be qualified by training and experience commensurate with 
the responsibilities to be delegated in accordance with department/
agency guidelines.
    (3) May not be delegated responsibility to perform functions at a 
contractor's location that have been delegated under FAR 42.202(a) to a 
contract administration office.
    (4) May not be delegated authority to make any commitments or 
changes that affect price, quality, quantity, delivery, or other terms 
and conditions of the contract.
    (5) Must be designated in writing, and a copy furnished the 
contractor and the contract administration office,--
    (i) Specifying the extent of the COR's authority to act on behalf of 
the contracting officer;
    (ii) Identifying the limitations on the COR's authority;
    (iii) Specifying the period covered by the designation;
    (iv) Stating the authority is not redelegable; and
    (v) Stating that the COR may be personally liable for unauthorized 
acts.
    (6) Must maintain a file for each contract assigned. This file must 
include, as a minimum--
    (i) A copy of the contracting officer's letter of designation and 
other documentation describing the COR's duties and responsibilities; 
and
    (ii) Documentation of actions taken in accordance with the 
delegation of authority.

[[Page 9]]



Sec. 201.602-70  Contract clause.

    Use the clause at 252.201-7000, Contracting Officer's 
Representative, in solicitations and contracts when appointment of a 
contracting officer's representative is anticipated.
201.603  Selection, appointment, and termination of appointment.



Sec. 201.603-2  Selection.

    (1) Pursuant to 10 U.S.C. 1724, beginning October 1, 1993, in order 
to qualify to serve as a contracting officer with authority to award or 
administer contracts for amounts above the small purchase threshold in 
FAR 13.000, a person must--
    (i) Have completed all mandatory contracting courses required for a 
contracting officer at the grade level, or in the position within the 
grade of the General Schedule in which the person is serving;
    (ii) Have at least two years experience in a contracting position;
    (iii) Have--
    (A) Received a baccalaureate degree from an accredited educational 
institution;
    (B) Completed at least 24 semester credit hours, or equivalent, of 
study from an accredited institution of higher education in any of the 
following disciplines: Accounting, business finance, law, contracts, 
purchasing, economics, industrial management, marketing, quantitative 
methods, and organization and management; or
    (C) Passed an examination considered to demonstrate skills, 
knowledge, or abilities comparable to that of an individual who has 
completed at least 24 semester credit hours, or equivalent, of study 
from an accredited institution of higher education in any of the 
disciplines in paragraph (1)(iii)(B) of this subsection; and
    (iv) Meet such additional requirements, based on the dollar value 
and complexity of the contracts awarded or administered in the position 
as may be established by the Secretary of Defense.
    (2) The requirements in 201.603-2(1)(iii) do not apply to any 
employee who, as of October 1, 1991, had at least 10 years experience in 
acquisition positions, in comparable positions in other government 
agencies or the private sector, or in similar positions in which the 
individual obtained experience directly relevant to the field of 
contracting.
    (3) The requirements in 201.603-2(1) do not apply to any employee 
for purposes of qualifying to serve in the position in which the 
employee is serving on October 1, 1993, or any other position in the 
same grade and involving the same level of responsibilities as the 
position in which the employee is serving on that date.
    (4) Waivers may be authorized. Information on waivers is contained 
in DoD Manual 5000.52-M, Career Development Program for Acquisition 
Personnel.

[58 FR 28463, May 13, 1993]



Sec. 201.603-3  Appointment.

    Certificates of Appointment executed under the Armed Services 
Procurement Regulation or the Defense Acquisition Regulation have the 
same effect as if they had been issued under FAR.



PART 202--DEFINITIONS OF WORDS AND TERMS--Table of Contents




    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.



                       Subpart 202.1--Definitions



Sec. 202.101  Definitions.

    Contracting activity for DoD also means elements designated by the 
director of a defense agency which has been delegated contracting 
authority through its agency charter. DoD contracting activities are--

                          Department of Defense

Real Estate and Facilities Directorate, Washington Headquarters Services
Defense Evaluation Support Activity
Department of Defense Office of Dependents Schools
Office of Civilian Health and Medical Program of the Uniformed Services

                                  Army

Contract Support Agency
Office of the Deputy Chief of Staff for Procurement, Headquarters, U.S. 
Army Materiel Command
Armament Munitions and Chemical Command
Missile Command

[[Page 10]]

Research Laboratory
Communications-Electronics Command
Troop Support Agency
Troop Support Command
Tank-Automotive Command
Aviation Systems Command
Training and Doctrine Command
Test and Evaluation Command
Forces Command
Health Services Command
Military District of Washington
U.S. Army, Europe
National Guard Bureau
Corps of Engineers
Information Systems Command
Medical Research and Development Command
U.S. Army, Pacific
Military Traffic Management Command
Space and Strategic Defense Command
Eighth U.S. Army
Depot System Command
Intelligence and Security Command
U.S. Army South
Defense Supply Service--Washington
Directorate of Information Systems for Command, Control, Communications 
and Computers, Office of the Secretary of the Army
U.S. Army Special Operations Command

                                  Navy

Deputy, Acquisition and Business Management, Office of the Assistant 
Secretary of the Navy (Research, Development, and Acquisition)
Directorate of Procurement Policy, Office of the Assistant Secretary of 
the Navy (Research, Development, and Acquisition)
Naval Air Systems Command
Space and Naval Warfare Systems Command
Naval Facilities Engineering Command
Naval Inventory Control Point
Naval Sea Systems Command
Naval Supply Systems Command
Office of Naval Research
Military Sealift Command
Strategic Systems Programs
Headquarters, U.S. Marine Corps
Marine Corps Systems Command
Installations and Logistics, Headquarters, U.S Marine Corps

                                Air Force

Office of the Deputy Assistant Secretary (Contracting)
Air Force Materiel Command
Air Combat Command
Air Mobility Command
Air Education and Training Command
Pacific Air Forces
United States Air Forces in Europe
Air Force Space Command

                Defense Advanced Research Projects Agency

Office of the Deputy Director, Management

                   Defense Information Systems Agency

Headquarters, Defense Information Systems Agency
Defense Commercial Communications Office

                       Defense Intelligence Agency

Office of Procurement

                        Defense Logistics Agency

Office of the Executive Director, Contract Management
Office of the Executive Director, Contracting
Defense Supply Centers
Defense Personnel Support Center

                         Defense Mapping Agency

Headquarters, Office of Acquisition, Installations and Logistics

                     Defense Special Weapons Agency

Headquarters, Defense Special Weapons Agency

                        National Security Agency

Headquarters, National Security Agency

                        On-Site Inspection Agency

Acquisition Management Office

                 Ballistic Missile Defense Organization

Headquarters, Ballistic Missile Defense Organization

                United States Special Operations Command

Headquarters, United States Special Operations Command

    Contracting officer's representative means an individual designated 
and authorized in writing by the contracting officer to perform specific 
technical or administrative functions.
    Departments and agencies, as used in DFARS, means the military 
departments and the defense agencies. The military departments are the 
Departments of the Army, Navy, and Air Force (the Marine Corps is a part 
of the Department of the Navy). The defense agencies are the Defense 
Advanced Research Projects Agency, the Defense Commissary Agency, the 
Defense Information Systems Agency, the Defense Intelligence Agency, the 
Defense Investigative Service, the Defense Logistics Agency, the Defense 
Mapping Agency, the Defense Special Weapons Agency, the National 
Security Agency, the On-Site Inspection Agency, the Ballistic Missile 
Defense Organization, and the

[[Page 11]]

United States Special Operations Command.
    Department of Defense (DoD), as used in DFARS, means the Department 
of Defense, the military departments, and the defense agencies.
    Executive agency means for DoD, the Department of Defense, the 
Department of the Army, the Department of the Navy, and the Department 
of the Air Force.
    Head of the agency, means for DoD, the Secretary of Defense, the 
Secretary of the Army, the Secretary of the Navy, and the Secretary of 
the Air Force. Subject to the direction of the Secretary of Defense, the 
Under Secretary of Defense (Acquisition), and the Director of Defense 
Procurement, the directors of the defense agencies have been delegated 
authority to act as head of the agency for their respective agencies 
(i.e., to perform functions under the FAR or DFARS reserved to a head of 
agency or agency head), except for such actions that by terms of 
statute, or any delegation, must be exercised within the Office of the 
Secretary of Defense.
    Senior procurement executive, means for DoD--
    Department of Defense (including the defense agencies)--Under 
Secretary of Defense (Acquisition & Technology);
    Department of the Army--Assistant Secretary of the Army (Research, 
Development and Acquisition);
    Department of the Navy--Assistant Secretary of the Navy (Research, 
Development and Acquisition);
    Department of the Air Force--Assistant Secretary of the Air Force 
(Acquisition).
    The directors of the defense agencies have been delegated authority 
to act as senior procurement executive for their respective agencies, 
except for such actions that by terms of statute, or any delegation, 
must be exercised by the Under Secretary of Defense (Acquisition & 
Technology).

[56 FR 36287, July 31, 1991, as amended at 56 FR 67212, Dec. 30, 1991; 
57 FR 42629, Sept. 15, 1992; 59 FR 27668, May 27, 1994; 60 FR 29497, 
June 5, 1995; 60 FR 61591, Nov. 30, 1995; 61 FR 7741, Feb. 29, 1996; 61 
FR 50451, Sept. 26, 1996]



PART 203--IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST--Table of Contents




Sec.

                        Subpart 203.1--Safeguards

203.103  Independent pricing.
203.103-2  Evaluating the certification.
203.104  Procurement integrity.
203.104-4  Definitions.
203.104-5  Disclosure of proprietary and source selection information.
203.170  Statutory prohibitions on compensation to former DoD employees.
203.170-1  Policy.
203.170-2  Reporting requirements.
203.170-3  Penalties.
203.170-4  Contract clause.

      Subpart 203.2--Contractor Gratuities to Government Personnel

203.203  Reporting suspected violations of the Gratuities clause.

        Subpart 203.3--Reports of Suspected Antitrust Violations

203.301  General.

                     Subpart 203.4--Contingent Fees

203.409  Misrepresentations or violations of the Covenant Against 
          Contingent Fees.

            Subpart 203.5--Other Improper Business Practices

203.502  Subcontractor kickbacks.
203.502-2  General.
203.570  Employment prohibitions on persons convicted of fraud or other 
          DoD contract-related felonies.
203.570-1  Scope.
203.570-2  Policy.
203.570-3  Waiver.
203.570-4  Reporting.
203.570-5  Contract clause.

             Subpart 203.7--Voiding and Rescinding Contracts

203.703  Authority.

             Subpart 203.70--Contractor Standards of Conduct

203.7000  Policy.
203.7001  Procedures.
203.7002  Contract clause.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36288, July 31, 1991, unless otherwise noted.

[[Page 12]]



                        Subpart 203.1--Safeguards

203.103  Independent pricing.



Sec. 203.103-2  Evaluating the certification.

    (b)(3) The contracting officer also shall report the matter in 
accordance with 209.406-3 and DoDD 7050.5, Coordination of Remedies for 
Fraud and Corruption Related to Procurement Activities.
203.104  Procurement integrity.



Sec. 203.104-4  Definitions.

    (c)(2) Each order under a basic ordering agreement is a separate 
procurement action.



Sec. 203.104-5  Disclosure of proprietary and source selection information.

    (e)(4) For purposes of FAR 3.104-5(e)(4) only, DoD follows the 
notification procedures in FAR 27.404(h). However, the first sentence in 
FAR 27.404(h) does not apply to DoD.
203.170  Statutory prohibitions on compensation to former DoD employees.



Sec. 203.170-1  Policy.

    (a) 10 U.S.C. 2397b prohibits DoD officials who left DoD service on 
or after April 16, 1987, and who, while serving with the DoD, performed 
acquisition related functions in connection with a major defense 
contractor, from accepting compensation from that contractor for a 
period of two years after the officials have left service with the DoD. 
Additional DoD implementation of the statute is in DoD Directive 5500.7, 
Standards of Conduct. (See the clause at 252.203-7000, Statutory 
Prohibition on Compensation to Former Department of Defense Employees, 
for definition of terms.) The prohibitions in 10 U.S.C. 2397b do not 
apply to contractors that supply only commercial items to DoD.
    (b) Section 507 of the Ethics Reform Act of 1989 suspended the 
prohibitions of 10 U.S.C. 2397b from December 1, 1989, to November 30, 
1990. Section 815 of the 1991 DoD Authorization Act (Pub. L. 101-510) 
continued the suspension from December 1, 1990, through May 31, 1991. 
During the period of the suspension, the clause which appeared at 
252.203-7002, Statutory Compensation Prohibitions and Reporting 
Requirements Relating to Certain Former Department of Defense (DoD) 
Employees, was inserted in solicitations and contracts, but the 
provision of the clause that prohibited the offering of compensation to 
a person if the compensation would violate 10 U.S.C. 2397b, and the 
remedies for violating that provision, were not applied.

[56 FR 36288, July 31, 1991, as amended at 60 FR 61591, Nov. 30, 1995]



Sec. 203.170-2  Reporting requirements.

    Paragraph (c) of the clause at 252.203-7000, Statutory Prohibitions 
on Compensation to Former Department of Defense Employees, requires 
major defense contractors to report on the employment of certain former 
DoD employees.



Sec. 203.170-3  Penalties.

    (a) Major defense contractors are subject to the following penalties 
for knowing failure to comply with the statute, the contractual 
prohibition, or the reporting requirements--
    (1) Civil fines up to $500,000 for knowingly offering or providing 
compensation to another person with knowledge that acceptance of that 
compensation is or would be in violation of the statute.
    (2) Liquidated damages in the amount of either $100,000 or three 
times the amount of compensation paid by the contractor to the former 
DoD official, whichever is greater, for failure to comply with the 
contract prohibition.
    (3) An administrative penalty not to exceed $10,000 for failure to 
report as required by the statute and as implemented in the clause at 
252.203-7000, Statutory Prohibitions on Compensation to Former 
Department of Defense Employees.
    (b) Liquidated damages will be assessed in accordance with agency 
procedures in coordination with the Designated Agency Ethics Official.



Sec. 203.170-4  Contract clause.

    Use the clause at 252.203-7000, Statutory Prohibitions on 
Compensation to

[[Page 13]]

Former Department of Defense Employees, in all solicitations and 
contracts expected to exceed $100,000, except solicitations and 
contracts for commercial items.

[60 FR 61591, Nov. 30, 1995]



      Subpart 203.2--Contractor Gratuities to Government Personnel



Sec. 203.203  Reporting suspected violations of the Gratuities clause.

    Report suspected violations of the Gratuities clause in accordance 
with 209.406-3 and DoDD 7050.5, Coordination of Remedies for Fraud and 
Corruption Related to Procurement Activities.



        Subpart 203.3--Reports of Suspected Antitrust Violations



Sec. 203.301  General.

    (b) Report suspected antitrust violations in accordance with 
209.406-3 and DoDD 7050.5, Coordination of Remedies for Fraud and 
Corruption Related to Procurement Activities.



                     Subpart 203.4--Contingent Fees



Sec. 203.409  Misrepresentations or violations of the Covenant Against Contingent Fees.

    (b) Report suspected fraud or other criminal conduct in accordance 
with 209.406-3 and DoDD 7050.5, Coordination of Remedies for Fraud and 
Corruption Related to Procurement Activities.



            Subpart 203.5--Other Improper Business Practices



Sec. 203.502  Subcontractor kickbacks.

    Report suspected violations of the Anti-Kickback Act in accordance 
with 209.406-3 and DoDD 7050.5, Coordination of Remedies for Fraud and 
Corruption Related to Procurement Activities.



Sec. 203.502-2  General.

    (h) The DoD Inspector General has designated Special Agents of the 
following investigative organizations as representatives for conducting 
inspections and audits under the Anti-Kickback Act of 1986:
    (i) U.S. Army Criminal Investigation Command.
    (ii) Naval Criminal Investigative Service.
    (iii) Air Force Office of Special Investigations.
    (iv) Defense Criminal Investigative Service.

[56 FR 36288, July 31, 1991, as amended at 60 FR 29497, June 5, 1995]
203.570  Employment prohibitions on persons convicted of fraud or other 
DoD contract-related felonies.



Sec. 203.570-1  Scope.

    This subpart prescribes policies and procedures to implement 10 
U.S.C. 2408.



Sec. 203.570-2  Policy.

    (a) Contractors or subcontractors shall not knowingly allow a 
person, convicted after September 29, 1988, of fraud or any other felony 
arising out of a contract with the DoD, to serve--
    (1) In a management or supervisory capacity on any DoD contract or 
first-tier subcontract; or,
    (2) On its board of directors; or
    (3) As a consultant, agent, or representative.
    (b) The period covered by the prohibition in paragraph (a) of this 
subsection is for five years from the date of conviction unless waived 
in the interest of national security by the agency head or designee.



Sec. 203.570-3  Waiver.

    (a) The contracting officer shall--
    (1) Review any request for waiver; and
    (2) Deny the request if the contracting officer decides the waiver 
is not required in the interests of national security; or
    (3) Forward the request to the head of the agency or designee for 
approval if the contracting officer decides the waiver may be in the 
interest of national security.
    (b) The head of the agency or designee shall report all waivers 
granted, and the reasons for granting the waiver, to the Under Secretary 
of Defense (Acquisition), who will forward the report to Congress as 
required by 10 U.S.C. 2408(a)(3).

[[Page 14]]



Sec. 203.570-4  Reporting.

    When a Defense contractor or first-tier subcontractor is found in 
violation of the prohibition in 203.570-2, the contracting officer shall 
report the matter in accordance with 209.406-3 and DoDD 7050.5, 
Coordination of Remedies for Fraud and Corruption Related to Procurement 
Activities.



Sec. 203.570-5  Contract clause.

    Use the clause at 252.203-7001, Special Prohibition on Employment, 
in all solicitations and contracts exceeding the simplified acquisition 
threshold in FAR part 13, except solicitations and contracts for 
commercial items.

[60 FR 61592, Nov. 30, 1995]



             Subpart 203.7--Voiding and Rescinding Contracts



Sec. 203.703  Authority.

    The authority to act for the agency head under this subpart is 
limited to a level no lower than an official who is appointed by and 
with the advice of the Senate, without power of redelegation. For the 
defense agencies, for purposes of this subpart, the agency head designee 
is the Under Secretary of Defense (Acquisition & Technology).

[56 FR 36288, July 31, 1991, as amended at 60 FR 61592, Nov. 30, 1995]



             Subpart 203.70--Contractor Standards of Conduct



Sec. 203.7000  Policy.

    Government contractors must conduct themselves with the highest 
degree of integrity and honesty. Contractors should have standards of 
conduct and internal control systems that--
    (1) Are suitable to the size of the company and the extent of their 
involvement in Government contracting,
    (2) Promote such standards,
    (3) Facilitate timely discovery and disclosure of improper conduct 
in connection with Government contracts, and
    (4) Ensure corrective measures are promptly instituted and carried 
out.



Sec. 203.7001  Procedures.

    (a) A contractor's system of management controls should provide 
for--
    (1) A written code of business ethics and conduct and an ethics 
training program for all employees;
    (2) Periodic reviews of company business practices, procedures, 
policies, and internal controls for compliance with standards of conduct 
and the special requirements of Government contracting;
    (3) A mechanism, such as a hotline, by which employees may report 
suspected instances of improper conduct, and instructions that encourage 
employees to make such reports;
    (4) Internal and/or external audits, as appropriate;
    (5) Disciplinary action for improper conduct;
    (6) Timely reporting to appropriate Government officials of any 
suspected or possible violation of law in connection with Government 
contracts or any other irregularities in connection with such contracts; 
and
    (7) Full cooperation with any Government agencies responsible for 
either investigation or corrective actions.
    (b) Contractors who are awarded a DoD contract of $5 million or more 
must display DoD Hotline Posters prepared by the DoD Office of the 
Inspector General unless--
    (1) The contract will be performed in a foreign country; or
    (2) The contractor has established an internal reporting mechanism 
and program, as described in paragraph (a) of this section.



Sec. 203.7002  Contract clause.

    Use the clause at 252.203-7002, Display of DoD Hotline Poster, in 
solicitations and contracts expected to exceed $5 million, except when 
performance will take place in a foreign country.



PART 204--ADMINISTRATIVE MATTERS--Table of Contents




Sec.

                    Subpart 204.1--Contract Execution

204.101  Contracting officer's signature.

[[Page 15]]

                  Subpart 204.2--Contract Distribution

204.201  Procedures.
204.202  Agency distribution requirements.

   Subpart 204.4--Safeguarding Classified Information Within Industry

204.402  General.
204.404  Contract clause.
204.404-70  Additional contract clauses.

                    Subpart 204.6--Contract Reporting

204.600  Scope of subpart.
204.601  Record requirements.
204.602  Federal Procurement Data System.
204.602-70  Solicitation provision.
204.670  Defense Contract Action Data System (DCADS).
204.670-1  Definitions.
204.670-2  Reportable contracting actions.
204.670-3  Contracting office responsibilities.
204.670-4  Contract administration office responsibilities.
204.670-5  Departmental data collection point responsibilities.
204.670-6  Types of DD Form 350 reports.
204.670-7  Report formats.
204.670-8  Security classification.
204.670-9  Reporting of individual contracting actions of $25,000 or 
          less.

                      Subpart 204.8--Contract Files

204.802  Contract files.
204.804  Closeout of contract files.
204.804-1  Closeout by the office administering the contract.
204.804-2  Closeout of the contracting office files if another office 
          administers the contract.
204.805  Disposal of contract files.

  Subpart 204.9--Information Reporting to the Internal Revenue Service

204.902  General.

  Subpart 204.70--Uniform Procurement Instrument Identification Numbers

204.7000  Scope.
204.7001  Policy.
204.7002  Procedures.
204.7003  Basic PII number.
204.7004  Supplementary PII numbers.

       Subpart 204.71--Uniform Contract Line Item Numbering System

204.7100  Scope.
204.7101  Definitions.
204.7102  Policy.
204.7103  Contract line items.
204.7103-1  Criteria for establishing.
204.7103-2  Numbering procedures.
204.7104  Contract subline items.
204.7104-1  Criteria for establishing.
204.7104-2  Numbering procedures.
204.7105  Contract exhibits and attachments.
204.7106  Contract modifications.
204.7107  Contract accounting classification reference number (ACRN).

                Subpart 204.72--Contractor Identification

204.7200  Scope of subpart.
204.7201  Definitions.
204.7202  General.
204.7202-1  CAGE codes.
204.7202-2  Contractor identification number.
204.7202-3  Taxpayer identification numbers.
204.7202-4  Locally developed coding systems.
204.7203  Responsibilities of contracting officers.
204.7204  Maintenance.
204.7204-1  Maintenance of the CAGE file.
204.7204-2  Maintenance of contractor identification number codes.
204.7205  Novation agreements, mergers and sales of assets.
204.7206  Using CAGE codes to identify agents and brokers.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36289, July 31, 1991, unless otherwise noted.



                    Subpart 204.1--Contract Execution



Sec. 204.101  Contracting officer's signature.

    (a)(i) Include the contracting officer's telephone number on 
contracts and modifications.
    (ii) The contracting officer may sign bilateral modifications of a 
letter contract before signature by the contractor.



                  Subpart 204.2--Contract Distribution



Sec. 204.201  Procedures.

    (1) The procuring contracting officer (PCO) retains the original 
signed contract for the official contract file. Administrative 
contracting officers and terminations contracting officers provide the 
original of each modification to the PCO for retention in the official 
contract file. Unless otherwise directed by department/agency 
procedures, the office issuing the orders maintains the original of 
orders under basic ordering agreements and the original of provisioning 
orders.

[[Page 16]]

    (2) Ensure that distribution of contracts and modifications is 
consistent with security directives.
    (e)(i) Distribute one copy of each of the following types of 
contracts or modifications to the appropriate Defense Contract Audit 
Agency (DCAA) field audit office (listed in the DCAA Directory--
Headquarters and Field Offices)--
    (A) Cost reimbursement;
    (B) Time-and-materials;
    (C) Labor-hour;
    (D) Fixed price contracts with provisions for redetermination, 
incentives, economic price adjustment, or cost allowability; and
    (E) Any other contract that requires audit service.
    (ii) If there is a question as to the appropriate DCAA field audit 
office, request the assistance of the DCAA procurement liaison auditor 
or the nearest DCAA field audit office.
    (f) Provide two copies to offices performing contract administration 
support functions.

[56 FR 36289, July 31, 1991, as amended at 59 FR 27668, May 27, 1994]



Sec. 204.202  Agency distribution requirements.

    (1) Distribute copies of contracts as follows--
    (i) Four copies to the contract administration office (send 
simultaneously with the copy furnished under FAR 4.201(b));
    (ii) One copy to each consignee indicated in the contract. A 
transshipping terminal is not a consignee.
    (A) Inventory control points that have an automated uniform 
inventory control point data base that interfaces with consignees may 
use their automated procedure rather than sending a written copy of the 
contract. However, when inspection is required at destination, send a 
written copy to the consignee.
    (B) The Defense Logistics Agency is authorized to prescribe 
alternate procedures for distribution of contract documents in Defense 
Subsistence Region, Europe;
    (iii) Two copies to the military interdepartmental purchase request 
requiring activity in the case of coordinated acquisition;
    (iv) One copy to the contract administration office (CAO) automatic 
data processing point, except when the DoDAAD code is the same as that 
of either the CAO or payment office (see DLAH 4105.4, DoD Directory of 
Contract Administration Services Components); and
    (v) One copy, or an extract of the pertinent information, to the 
cognizant Defense Investigative Service office listed in DoD 5100.76-M, 
Physical Security of Sensitive Conventional Arms, Ammunition, and 
Explosives, when the clause at 252.223-7007, Safeguarding Sensitive 
Conventional Arms, Ammunition, and Explosives, is included in the 
contract.
    (2) The activity executing a contract modification shall furnish a 
copy of the basic contract and all modifications to--
    (i) The new and old payment office when adding or changing a payment 
office;
    (ii) The new contract administration office, a new consignee or 
other activity, based on the extent to which each activity is concerned 
with the basic contract and modifications.
    (3) Distribution of modifications issued to provide initial or 
amended shipping instructions under 204.7004(c)(3)(iii) and 204.7004(f) 
may be limited to the following--
    (i) Contractor, one copy;
    (ii) Receiving activity, one copy each;
    (iii) Contract administration office, one copy;
    (iv) Payment office, one copy; and
    (v) Contract administration office automatic data processing point, 
one copy.
    (4) Distribution of modifications generated by automated means 
(computer programs) may be limited to the following--
    (i) Contractor, one copy;
    (ii) Contract administration office, one copy;
    (iii) New payment office, one copy;
    (iv) Procuring contracting office, one copy;
    (v) Funding activities, one copy to each; and
    (vi) Consignee, one copy to each.

[56 FR 36289, July 31, 1991, as amended at 61 FR 7742, Feb. 29, 1996]

[[Page 17]]



   Subpart 204.4--Safeguarding Classified Information Within Industry



Sec. 204.402  General.

    (1) Subpart 239.74 contains policy and procedures for securing 
telecommunications between Government agencies and contractors and 
subcontractors.
    (2) Pursuant to section 808 of Pub. L. 102-190, DoD employees or 
members of the Armed Forces who are assigned to or visiting a contractor 
facility and are engaged in oversight of an acquisition program will 
retain control of their work product. Classified work products of DoD 
employees or members of the Armed Forces shall be handled in accordance 
with DoD 5220.22-M, Industrial Security Manual, and DoD 5220.22-R, 
Industrial Security Regulation. Contractor procedures for protecting 
against unauthorized disclosure of information shall not require DoD 
employees or members of the Armed Forces to relinquish control of their 
work products, whether classified or not, to a contractor.

[57 FR 14992, Apr. 23, 1992]
204.404  Contract clause.



Sec. 204.404-70  Additional contract clauses.

    (a) Use the clause at 252.204-7000, Disclosure of Information, in 
solicitations and contracts when the contractor will have access to or 
generate unclassified information that may be sensitive and 
inappropriate for release to the public.
    (b) Use the clause at 252.204-7003, Control of Government Personnel 
Work Product, in all solicitations and contracts.

[57 FR 14992, Apr. 23, 1992]



                    Subpart 204.6--Contract Reporting



Sec. 204.600  Scope of subpart.

    The Defense Contract Action Data System (DCADS) (see 204.670) is the 
DoD reporting system which supports the uniform reporting requirements 
for--
    (1) DD Form 350, Individual Contracting Action Report; and
    (2) DD Form 1057, Monthly Summary of Actions $25,000 or Less.



Sec. 204.601  Record requirements.

    (a) The DCADS meets these record retention requirements.
    (d) The Directorate for Information, Operation, and Reports (DIOR), 
of the Washington Headquarters Services (WHS) transmits required DoD 
information to the Federal Procurement Data System.



Sec. 204.602  Federal Procurement Data System.

    (c) DoD uses the DD Form 350, Individual Contracting Action Report, 
in lieu of the SF 279, Federal Procurement Data System (FPDS) Individual 
Contract Action Report. DoD uses the DD Form 1057, Monthly Contracting 
Summary of Actions $25,000 or Less, in lieu of the SF 281, FPDS Summary 
Contract Action Report ($25,000 or Less).



Sec. 204.602-70  Solicitation provision.

    When the Commercial and Government Entity codes for the prospective 
offerors are not available to the contracting office, use the provision 
at 252.204-7001, Commercial and Government Entity (CAGE) Code Reporting.

[61 FR 61592, Nov. 30, 1995]
204.670  Defense Contract Action Data System (DCADS)



Sec. 204.670-1  Definitions.

    As used in this section and 253.204-70 and 253.204-71--
    (a) Contract administration office means an office, other than the 
contracting office, which awards or executes contracting actions on 
behalf of the contracting office, including actions relating to the 
settlement of terminated contracts.
    (b) Contracting action means any written action obligating or 
deobligating funds in connection with the purchasing, renting, or 
leasing of supplies, services, or construction. The term does not 
include grants or cooperative agreements. The term includes, but is not 
limited to--
    (1) Definitive contracts, including notices of award;
    (2) Letter contracts;
    (3) Purchase orders;

[[Page 18]]

    (4) Orders under existing contracts or agreements, e.g.--
    (i) Orders against basic ordering agreements, including service 
orders issued on DD Form 1164 by installation transportation offices;
    (ii) Calls against blanket purchase agreements;
    (iii) Job orders;
    (iv) Task orders;
    (v) Delivery orders;
    (vi) Communication services authorizations; and
    (vii) Notices of termination or cancellation.
    (5) Contract modifications, e.g.--
    (i) Change orders;
    (ii) Supplemental agreements;
    (iii) Funding actions; and
    (iv) Option exercises.
    (c) Departmental data collection points are--
    (1) For the Army (including Corps of Engineers civil Works): U.S. 
Army Contracting Support Agency, Attn: SFAE-CSA-PPS, 5109 Leesburg Pike, 
Suite 916, Falls Church, VA 22041-3201
    (2) For the Navy: Fleet Industrial Supply Center, Norfolk Detachment 
Washington, Attn: PMRS, Washington Navy Yard, Bldg. 200, 4th Floor, 
800 M Street, SW, Washington, DC 20374-2004
    (3) For the Air Force: SAF/AQCI, 1060 Air Force Pentagon, 
Washington, DC 20330-1060
    (4) For the Defense Logistics Agency: Headquarters, Defense 
Logistics Agency, 8725 John J. Kingman Road, Suite 3147, Attn: 
Directorate of Procurement (Acquisition Operations Team, Ft. Belvoir, VA 
22060-6221
    (5) For other DoD contracting activities: U.S. Army Contracting 
Support Agency, Attn: SFAE-CSA-PPS, 5109 Leesburg Pike, Suite 916, Falls 
Church, VA 22041-3201.
    (d) United States and outlying areas is defined in Federal 
Information Processing Standard Publication (FIPS PUB) 55-2, Guideline: 
Codes for Named Populated Places, Primary County Divisions, and Other 
Locational Entities of the United States and Outlying Areas. Outlying 
areas are--
    (1) American Samoa;
    (2) The Federated States of Micronesia;
    (3) Guam;
    (4) The Marshall Islands;
    (5) Northern Mariana Islands;
    (6) The Trust Territory of Palau;
    (7) Puerto Rico;
    (8) The U.S. Minor Outlying Islands; and
    (9) The U.S. Virgin Islands.

[56 FR 36289, July 31, 1991, as amended at 60 FR 61592, Nov. 30, 1995; 
61 FR 51030, Sept. 30, 1996]



Sec. 204.670-2  Reportable contracting actions.

    (a) Except as provided in paragraph (c) of this subsection, complete 
a DD Form 350 for--
    (1) All contracting actions that obligate or deobligate more than 
$25,000; and
    (2) All contracting actions that obligate or deobligate $25,000 or 
less if the action is in a designated industry group under the small 
business competitiveness demonstration program (See 204.670-9 and FAR 
subpart 19.10).
    (b) Except as provided in paragraph (c) of this subsection, complete 
a DD Form 1057 for all contracting actions which obligate or deobligate 
$25,000 or less, including contracting actions reported on a DD Form 350 
under paragraph (a)(2) of this subsection.
    (c) Do not report on a DD Form 350, contingency actions defined in 
213.101. Summarize these actions on a DD Form 1057 in accordance with 
the instructions in 253.204-71(a)(3).
    (d) The following contracting actions shall not be reported on 
either the DD Form 350 or DD Form 1057:
    (1) Imprest fund transactions, SF 44 purchases, and micro-purchases 
obtained through use of the purchase card;
    (2) Transactions that cite only nonappropriated funds (Funds held in 
trust accounts for foreign governments shall be treated as appropriated 
funds.);
    (3) Transactions for purchase of land, or rental or lease of real 
property, when the General Services Administration (GSA) executes the 
contracting action;
    (4) Orders from GSA stock and the GSA Consolidated Purchase Program;
    (5) Transactions that involve Government bills of lading or 
transportation requests, except orders placed under Regional Storage 
Management Office's (RSMO) BOAs;

[[Page 19]]

    (6) Requisitions transferring supplies within or among the 
departments or agencies; and
    (7) Pursuant to 204.670-6(b), orders placed by other contracting 
activities against indefinite delivery contracts awarded by the--
    (i) Military Sealift Command;
    (ii) Defense Fuel Supply Center for petroleum and petroleum 
products; or
    (iii) Defense Supply Center, Richmond, for petroleum products.

[56 FR 36289, July 31, 1991, as amended at 57 FR 53598, Nov. 12, 1992; 
60 FR 61592, Nov. 30, 1995; 61 FR 51030, Sept. 30, 1996]



Sec. 204.670-3  Contracting office responsibilities.

    (a) For DD Form 350, contracting offices--
    (1) Prepare the appropriate type of DD Form 350 (see 204.670-6), in 
accordance with the instructions in 253.204-70, on all reportable 
contracting actions (see 204.670-2(a)), including actions accomplished 
by contract administration offices on behalf of the contracting office.
    (2) Complete the DD Form 350 in the required format within three 
working days after the date on which the dollars were actually obligated 
or deobligated (see 204.670-7). Submit all contracting actions for the 
calendar month to the departmental data collection point (see 204.670-
1(c)) in accordance with departmental/agency procedures, except--
    (i) For Defense Fuel Supply Center major petroleum acquisitions 
which result in multiple awards, the due date is ten working days when 
permitted by the departmental data collection point;
    (ii) For actions executed in the month of September, due dates may 
be extended ten calendar days when permitted by the departmental data 
collection point; and
    (iii) For actions accomplished by a contract administration office, 
the due date is three working days after the receipt of the contractual 
instrument annotated ``DD FORM 350 REPORTING COPY.''
    (3) Prepare and submit a corrected or cancelling DD Form 350 as 
required in accordance with departmental data collection point 
instructions.
    (4) Establish a control system for assigning report numbers to DD 
Forms 350 (Block A2 of the DD Form 350). The number shall have four 
positions and may be any combination of alpha or numeric characters. If 
more than one activity within a contracting office utilizes the same 
reporting office code, the contracting office shall assign separate 
blocks of numbers to each activity in order to prevent duplication of 
report numbers.
    (5) Maintain a copy of the DD Form 350 in the contract file, in 
accordance with departmental/agency procedures.
    (b) For DD Form 1057, contracting offices--
    (1) Prepare a DD Form 1057, in accordance with the instructions in 
253.204-71, covering reportable contracting actions (see 204.670-2(b)), 
including actions accomplished by contract administration offices on 
behalf of the contracting office. An installation, base, or other 
activity may have more than one contracting office code to separate the 
various types of acquisitions, such as base and central contracting, or 
RDT&E and non-RDT&E acquisition. Each contracting office with a separate 
code must submit its own DD Form 1057.
    (2) Complete the DD Form 1057 in the required format within three 
working days after the cutoff of the reporting month (see 204.670-7 for 
alternate formats). Contracting offices are authorized to cut off the 
reporting month no earlier than the 25th calendar day. For September 
only, the cutoff date shall not be later than September 30. Submit the 
DD Form 1057 to the departmental data collection point in accordance 
with departmental/agency procedures.
    (3) Unless otherwise instructed by the departmental data collection 
point, do not submit revised DD Form 1057 reports. Include any required 
corrections or adjustments in following month's report.

[56 FR 36289, July 31, 1991, as amended at 61 FR 51030, Sept. 30, 1996]



Sec. 204.670-4  Contract administration office responsibilities.

    Contract administration offices executing actions subject to DD Form 
350 or DD Form 1057 reporting must submit an annotated copy of the 
contractual

[[Page 20]]

instrument to the contracting office so that the contracting office can 
submit the required report.
    (a) For DD Form 350, annotate in the heading of the contractual 
instrument in large block letters ``DD FORM 350 REPORTING COPY.'' Send 
the annotated copy to the contracting office within one working day 
after the action date.
    (b) For DD Form 1057, annotate in the heading of the contractual 
instrument in large block letters ``DD FORM 1057 REPORTING COPY.'' Send 
the annotated copy with the normal distribution.



Sec. 204.670-5  Departmental data collection point responsibilities.

    Departmental data collection points--
    (a) Collect DD Forms 350 and 1057 data provided by their contracting 
activities;
    (b) Electronically record the data in accordance with the 
instructions for recording and editing developed by WHS-DIOR with the 
majority agreement of the departments/agencies and prescribed by the 
Director of Defense Procurement; and
    (c) Submit monthly reports (noncumulative) to Washington 
Headquarters Services, ATTN: DIOR, within 18 days after the close of the 
reporting period, except the due date for September may be extended for 
no more than ten days. Reports control symbols, DD-P&L(M) 1014 and DD-
P&L(M) 1015, respectively, apply to reports submitted to WHS-DIOR for DD 
Form 350 actions and DD Form 1057.

[61 FR 51030, Sept. 30, 1996]



Sec. 204.670-6  Types of DD Form 350 reports.

    There are three types of reports--single, consolidated, and 
multiple.
    (a) A single report is one DD Form 350 report per contracting 
action.
    (b) A consolidated report is one DD Form 350 report which combines 
several contracting actions.
    (1) Prepare consolidated reports for--
    (i) Air Mobility Command awards for international airlift services. 
The Command reports these at the end of each operating month with one DD 
Form 350 for each airlift contract.
    (ii) Military Sealift Command awards of indefinite delivery 
contracts for ocean transportation. The Command reports at the beginning 
of each fiscal year the estimated value of the orders for that fiscal 
year on one DD Form 350.
    (iii) Defense Fuel Supply Center of Defense Supply Center, Richmond, 
indefinite delivery contracts for petroleum or petroleum supplies. The 
Centers, at the time of award, report the estimated value of the orders 
to be placed against the contract on one DD Form 350.
    (iv) Order place by the Defense commissary Agency (DeCA) for resale 
items in excess of $25,000. DeCA consolidates the orders monthly and 
reports the cumulative dollar amounts and actions on one DD Form 350 in 
accordance with departmental/agency procedures. Defense Logistics Agency 
activities submit single rather than consolidated reports.
    (v) Vouchers processed by the U.S. Army Contracting Command, Europe 
(USACCE), for the purchase of utilities from municipalities (e.g., gas, 
electricity, water, sewage, steam, snow removal, and garbage 
collection). USACCE consolidates these transactions monthly and reports 
the cumulative dollar amount on one DD Form 350 in accordance with 
departmental/agency procedures.
    (2) Consolidated reports may be prepared in accordance with 
departmental/agency procedures for orders under communications service 
agreements for local dial tone services.
    (c) A multiple report is more than one DD Form 350 per contracting 
action. Prepare multiple reports if--
    (1) The contracting action includes foreign military sales (FMS) 
requirements in addition to non-FMS requirements (Block B9 on the DD 
Form 350). Submit one DD Form 350 report for the FMS requirements and 
another DD Form 350 report for the non-FMS requirements, except if 
either of the portions in $25,000 or less, report the $25,000 or less 
portion on a DD Form 1057 in lieu of a DD Form 350.
    (2) The contracting action includes more than one type of contract 
(Block C5 on the DD Form 350) and the type with the least dollar value 
exceeds

[[Page 21]]

$500,000. Prepare a separate DD Form 350 for each contract type.

[56 FR 36289, July 31, 1991, as amended at 59 FR 27668, May 27, 1994; 60 
FR 61592, Nov. 30, 1995; 61 FR 51031, Sept. 30, 1996]



Sec. 204.670-7  Report formats.

    Contracting offices submit the signed original DD Forms 350 and 
1057, unless the data collection point approves use of an automated 
facsimile or electronic equivalent containing the information.



Sec. 204.670-8  Security classification.

    Submit DD Forms 350 as unclassified documents. Classified contracts 
are not exempt from reporting solely because the contract is classified. 
Contact the appropriate departmental data collection points for special 
instructions if it is necessary for security reasons to modify coding of 
all or any individual blocks on the DD Form 350. If contact cannot be 
made for security reasons, obtain instructions from the Office of the 
Deputy to the Under Secretary of Defense for Policy Support, ATTN: 
Director for Special Programs. Telephone number is (703) 614-0578/9 or 
DSN 224-0578/9.

[61 FR 51031, Sept. 30, 1996]



Sec. 204.670-9  Reporting of individual contracting actions of $25,000 or less.

    Under the Small Business Competitiveness Demonstration Program (see 
FAR subpart 19.10), contract actions of $25,000 or less in four 
designated industry groups (for Army, includes dredging) must be 
reported in the same manner as if the action were in excess of $25,000.
    (a) Report contract actions of $25,000 or less in the designated 
industry groups on both the DD Form 350 and the DD Form 1057.
    (b) The following contracting actions are not subject to the 
additional DD Form 350 reporting, although they must still be reported 
on the DD Form 1057:
    (1) Contracting actions of $500 or less.
    (2) Foreign military sales.
    (3) Orders or modifications under a Federal schedule.
    (4) Actions with a government agency.
    (5) Actions with non-U.S. business firms.
    (6) Actions where the place of performance is other than the United 
States and its outlying areas.

[56 FR 36289, July 31, 1991, as amended at 61 FR 51031, Sept. 30, 1996]



                      Subpart 204.8--Contract Files



Sec. 204.802  Contract files.

    Official contract files shall consist of--
    (1) Only original, authenticated or conformed copies of contractual 
instruments--
    (i) Authenticated copies means copies that are shown to be genuine 
in one of two ways--
    (A) Certification as true copy by signature of an authorized person; 
or
    (B) Official seal.
    (ii) Conformed copies means copies that are complete and accurate, 
including the date signed and the names and titles of the parties who 
signed them.
    (2) Signed or official record copies of correspondence, memoranda, 
and other documents.



Sec. 204.804  Closeout of contract files.

    Normally, the closeout date for contract files is the date in Block 
9d on the DD Form 1594, Contract Completion Statement, or in columns 59-
65 on the PK9. If the contracting office must do a major closeout action 
that will take longer than three months after the date shown in Block 9d 
of the DD Form 1594, or in columns 59-65 of the PK9--
    (1) The closeout date for file purposes will be the date in Block 
10e of the DD Form 1594 or the date of the closeout statement executed 
when the MILSCAP PK9 is received.
    (2) The contracting office shall notify the contract administration 
office of the revised closeout date by either sending a copy of the 
completed DD Form 1594 or by preparing a MILSCAP Format Identifier PKZ, 
Contract Closeout Extension.



Sec. 204.804-1  Closeout by the office administering the contract.

    (1) For contracting offices administering their own contracts, 
locally

[[Page 22]]

developed forms or statement of completion may be used instead of the DD 
Form 1594, Contract Completion Statement. Whichever method is used, the 
form shall be retained in the official contract file.
    (2) For contracts valued above the small purchase threshold, prepare 
a DD Form 1597, Contract Closeout Check List, (or agency equivalent) to 
ensure that all required contract actions have been satisfactorily 
accomplished.



Sec. 204.804-2  Closeout of the contracting office files if another office administers the contract.

    (1) When an office, other than the contracting office, administers 
the contract, it shall--
    (i) Provide the contracting office an interim contract completion 
statement when the contract is physically completed and accepted. This 
notice may be in the form of either a DD Form 1594, Contract Completion 
Statement, or a MILSCAP Format Identifier Interim PK9, Contract Physical 
Completion. When the DD Form 1594 is used, the contracting officer--
    (A) Annotates Block 8, Remarks, with--
    (1) ``Notice of Physical Completion;''
    (2) Final acceptance date;
    (3) Signature of a responsible official; and
    (4) Date signed.
    (B) Does not complete Blocks 9 (b), (c), and (d) at this time;
    (ii) Prepare a DD Form 1597, Contract Closeout Check List, if 
necessary, to determine that all the required actions have been done;
    (iii) Initiate DD Form 1593, Contract Administration Completion 
Record, if necessary to obtain statements from other organizational 
elements that they have completed the actions they are responsible for; 
and
    (iv) Upon final payment--
    (A) Process the DD Form 1594 with Blocks 1 through 9 completed or 
the MILSCAP Format Identifier PK9 verifying that all contract 
administration office actions have been done; and
    (B) Send the original of the DD Form 1594 or the MILSCAP Format 
Identifier PK9 to the contracting office, and file a copy in the 
official contract file.
    (2) If the administrative contracting officer (ACO) cannot closeout 
a contract within the specified time period (see FAR 4.804-1), the ACO 
must notify the procuring contracting officer (PCO) within 45 days after 
the expiration of the time period of--
    (i) The reasons for the delay; and
    (ii) New target date for closeout. If MILSCAP procedures apply, the 
ACO shall use the MILSCAP Format Identifier PKX, Unclosed Contract 
Status, to provide this notice to the PCO.
    (3) If the contract still is not closed out by the new target date, 
the ACO shall again notify the PCO with the reasons for delay and new 
target date. If MILSCAP procedures apply, continue to use the MILSCAP 
Format Identifier PKX, Unclosed Contract Status, to provide this notice.



Sec. 204.805  Disposal of contract files.

    (1) The sources of the period for which official contract files must 
be retained are General Records Schedule 3 (Procurement, Supply, and 
Grant Records) and General Records Schedule 6 (Accountable Officers' 
Accounts Records). Copies of the General Records Schedule may be 
obtained from the National Archives and Records Administration, 
Washington, DC 20408.
    (2) Deviations from the periods cannot be granted by the Defense 
Acquisition Regulatory Council. Forward requests for deviations to both 
the General Accounting Office and the National Archives and Records 
Administration.
    (3) Hold completed contract files in the office responsible for 
maintaining them for a period of 12 months after completion. After the 
initial 12 month period, send the records to the local records holding 
or staging area until they are eligible for destruction. If no space is 
available locally, transfer the files to the General Services 
Administration Federal Records Center that services the area.
    (4) Duplicate or working contract files should contain no originals 
of materials that properly belong in the official files. Destroy working 
files as soon as practicable once they are no longer needed.

[[Page 23]]

    (5) Retain pricing review files, containing documents related to 
reviews of the contractor's price proposals, subject to certification of 
cost or pricing data (see FAR 15.804-2), for six years. If it is 
impossible to determine the final payment date in order to measure the 
six year period, retain the files for nine years.



  Subpart 204.9--Information Reporting to the Internal Revenue Service



Sec. 204.902  General.

    (b) DoD uses the DD Form 350, Individual Contract Action Report, 
(see 204.670) to meet these reporting requirements.



  Subpart 204.70--Uniform Procurement Instrument Identification Numbers



Sec. 204.7000  Scope.

    This subpart prescribes policies and procedures for assigning 
numbers to all solicitations, contracts, and related instruments. This 
subpart--
    (a) Does not apply to solicitations or contracts issued by the 
Defense Commercial Communications Office of the Defense Information 
Systems Agency; and
    (b) Is optional for solicitations and contracts that will be 
completely administered by the purchasing office or the consignee, 
except that--
    (1) The procurement instrument identification (PII) number, 
including supplemental modification numbers, shall not exceed 19 
characters (excluding hyphens); and
    (2) The number shall begin with the purchasing office identifier and 
the fiscal year in accordance with 204.7003(a) (1) and (2) and appendix 
G.

[56 FR 36289, July 31, 1991, as amended at 56 FR 67212, Dec. 30, 1991]



Sec. 204.7001  Policy.

    (a) Use the uniform PII numbering system prescribed by this subpart 
for the solicitation/contract instruments described in 204.7003 and 
204.7004.
    (b) Retain the basic PII number unchanged for the life of the 
instrument.



Sec. 204.7002  Procedures.

    (a) In assigning PII numbers--
    (1) Use only the alpha-numeric characters, as prescribed in this 
subpart; and
    (2) Do not use the letters ``I'' or ``O,'' except as noted in 
204.7003(a)(1)(i) (J) and (K).
    (b) If department/agency procedures require other identification on 
the solicitation, contract, or other related instrument forms, enter it 
in such a location so as to separate it clearly from the PII number.
    (c) Enter the basic PII number, including Federal supply contract 
numbers and any supplementary numbers, in the spaces provided on the 
solicitation, contract, or related instrument forms. Separate the major 
elements by dashes, e.g., N00023-90-D-0009. If there is no space 
provided on the form, enter the number in the upper right corner of the 
form and identify what it is (e.g., Supplementary Number N00023-90-F-
0120).



Sec. 204.7003  Basic PII number.

    (a) Elements of a number. The number consists of 13 alpha-numeric 
characters grouped to convey certain information.
    (1) Positions 1 through 6. The first of the six positions, in upper 
case letters, identify the department/agency and office issuing the 
instrument.
    (i) Department/agency identification:

(A) Department of the Army.................  DA                         
(B) Department of the Navy (except Marine    N                          
 Corps).                                                                
(C) Department of the Air Force............  F                          
(D) Defense Information Systems Agency.....  DCA                        
(E) Defense Logistics Agency...............  S                          
(F) Defense Special Weapons Agency.........  DSWA                       
(G) Defense Mapping Agency.................  DMA                        
(H) Miscellaneous Defense Activities.......  MDA                        
(I) Marine Corps...........................  M                          
(J) Ballistic Missile Defense Organization.  HQ0006                     
(K) On Site Inspection Agency..............  OSIA                       
(L) Defense Commissary Agency..............  DECA                       
(M) United States Special Operations         USZA                       
 Command.                                                               
                                                                        


    (ii) Issuing office identification. The remaining positions are the 
alpha-numeric characters that identify the

[[Page 24]]

issuing office. These characters are in appendix G.
    (iii) Use all six positions. If necessary, enter zeros between the 
department/agency identifier and the issuing office identifier.
    (2) Positions 7 through 8. The seventh and eighth positions are the 
last two digits of the fiscal year in which the PII number was assigned.
    (3) Position 9. Indicate the type of instrument by entering one of 
the following upper case letters in position nine--

    (i) Blanket purchase agreements--A
    (ii) Invitations for bids--B
    (iii) Contracts of all types except indefinite delivery contracts, 
facilities contracts, sales contracts, and contracts placed with or 
through other Government departments or agencies or against contracts 
placed by such departments or agencies outside the DoD--C
    (iv) Indefinite delivery contracts--D
    (v) Facilities contracts--E
    (vi) Contracting actions placed with or through other Government 
departments or agencies or against contracts placed by such departments 
or agencies outside the DoD (including actions with the National 
Industries for the Blind (NIB), the National Industries for the Severely 
Handicapped (NISH), and the Federal Prison Industries (UNICOR))--F
    (vii) Basic ordering agreements--G
    (viii) Agreements, including basic agreements and loan agreements, 
but excluding basic purchasing agreements, basic ordering agreements, 
and leases--H
    (ix) Do not use--I
    (x) Reserved--J
    (xi) Short form research contract--K
    (xii) Lease agreement--L
    (xiii) Purchase orders--manual (assign W when numbering capacity of 
M is exhausted during the fiscal year)--M
    (xiv) Notice of intent to purchase--N
    (xv) Do not use--O
    (xvi) Purchase order--automated (assign V when numbering capacity of 
P is exhausted during a fiscal year)--P
    (xvii) Request for quotation--manual--Q
    (xviii) Request for proposal--R
    (xix) Sales contract--S
    (xx) Request for quotation--automated (assign U when numbering 
capacity of T is exhausted during a fiscal year)--T
    (xxi) See T--U
    (xxii) See P--V
    (xxiii) See M--W
    (xxiv) Reserved for departmental use--X
    (xxv) Imprest fund--Y
    (xxvi) Reserved for departmental use--Z
    (4) Position 10 through 13. Enter the serial number of the 
instrument in these positions. A separate series of serial numbers may 
be used for any type of instrument listed in paragraph (a)(3) of this 
section. Activities shall assign such series of PII numbers 
sequentially. An activity may reserve blocks of numbers or alpha-numeric 
numbers for use by its various components.
    (b) Illustration of PII number. The following illustrates a properly 
configured PII number--

[[Page 25]]

[GRAPHIC] [TIFF OMITTED] TC01FE91.052



[56 FR 36289, July 31, 1991, as amended at 56 FR 67212, Dec. 30, 1991; 
59 FR 27668, May 27, 1994; 60 FR 61592, Nov. 30, 1995; 61 FR 50451, 
Sept. 26, 1996]



Sec. 204.7004  Supplementary PII numbers.

    (a) Uses of the supplementary number. Use supplementary numbers with 
the basic PII number, to identify--
    (1) Amendments to solicitations;
    (2) Modifications to contracts and agreements, including provisioned 
item orders; and
    (3) Calls or orders under contracts, basic ordering agreements, or 
blanket purchase agreements, issued by the contracting office or by a 
DoD activity other than the contracting office, including DoD orders 
against Federal supply schedules.
    (b) Amendments to solicitations. Number amendments to solicitations 
sequentially using a four position numeric serial number added to the 
basic PII number and beginning with 0001, e.g., N00062-91-R-1234-0001.
    (c) Modifications to contracts and agreements. (1) Number 
modifications to contracts and agreements using a six position alpha-
numeric added to the basic PII number.
    (2) Position 1. Identify the office issuing the modification--
    (i) Contract administration office--A
    (ii) Contracting office--P
    (3) Positions 2 through 3. These are the first two digits in a 
serial number. They may be either alpha or numeric. Use the letters K, 
L, M, N, P, Q, S, T, U, V, W, X, Y, or Z only in the second position and 
only in the following circumstances--
    (i) Use K, L, M, N, P, and Q in the second position only if the 
modification is issued by the Air Force and is a provisioned item order.
    (ii) Use S, and only S, in the second position to identify 
modifications issued to provide initial or amended shipping instructions 
when--
    (A) The contract has either FOB origin or destination delivery 
terms; and
    (B) The price changes.
    (iii) Use T, U, V, W, X, or Y, and only those characters, in the 
second position to identify modifications issued to provide initial or 
amended shipping instructions when--
    (A) The contract has FOB origin delivery terms; and
    (B) The price does not change.
    (iv) Only use Z in the second position to identify a modification 
which definitizes a letter contract.
    (4) Positions 4 through 6. These positions are always numeric. Use a 
separate series of serial numbers for each type of modification listed 
in paragraph (c)(3) of this section. Examples of proper numbering for 
positions 2-6 (the first position will be either ``A'' or ``P'') are as 
follows:

[[Page 26]]



------------------------------------------------------------------------
                                  Provisioned items                     
                                 order (reserved for       Shipping     
      Normal modification          exclusive use by      instructions   
                                 the Air Force only)                    
------------------------------------------------------------------------
00001-99999....................  K0001-K9999          S0001-S9999       
  then.........................  KA001-KZ999          SA001-SZ999       
A0001-A9999....................  L0001-L9999          T0001-T9999       
B0001-B9999....................  LA001-LZ999          TA001-TZ999       
  and so on to.................  M0001-M9999          U0001-U9999       
H0001-H9999....................  MA001-MZ999          UA001-UZ999       
  then.........................  N0001-N9999          V0001-V9999       
J0001-J9999....................  NA001-NZ999          VA001-VZ999       
  then.........................  P0001-P9999          W0001-W9999       
R0001-R9999....................  PA001-PZ999          WA001-WZ999       
  then.........................  Q0001-Q9999          X0001-X9999       
AA001-HZ999....................  QA001-QZ999          XA001-XZ999       
  then.........................                       Y0001-Y9999       
JA001-JZ999....................                       YA001-YZ999       
RA001-RZ999....................                                         
------------------------------------------------------------------------

    (5) If the contract administration office is changing the contract 
administration or disbursement office for the first time and is using 
computer generated modifications to notify many offices, it uses the six 
position supplementary number ARZ999. If either office has to be changed 
again during the life of the contract, the supplementary number will be 
ARZ998, and on down as needed.
    (6) Each office authorized to issue modifications shall assign the 
supplementary identification numbers in sequence. Do not assign the 
numbers until it has been determined that a modification is to be 
issued.
    (d) Delivery orders under indefinite delivery contracts, orders 
under basic ordering agreements, and calls under blanket purchase 
agreements. (1) Calls or orders issued by the office issuing the 
contract or agreement. Use a four position alpha-numeric call or order 
serial number added to the basic PII number. These shall be identified 
by using serial numbers beginning 0001 through 9999. When the numeric 
identifiers run out, use alpha characters in the third and fourth 
positions. Never use alpha characters in the first and second positions.
    (2) Orders placed against another activity's contract or agreement.
    (i) If the office placing the order or call is different from the 
office identified in the basic PII number, assign a serial number to the 
order or call. The first and second positions contain the call/order 
code assigned to the ordering office by appendix G. Do not use the 
letters A or P in the first position. The third and fourth positions are 
a two position serial number assigned by the ordering office. The series 
will begin with 01. When the numbers exceed 99, the office will assign a 
uniform series of identifiers containing alpha and/or numeric 
characters, e.g., Basic : N00383-91-D-0001 serial : TU01.
    (ii) If an office is placing calls or orders with NIB, NISH, or 
UNICOR, the office shall identify the instrument with a 13 position 
supplementary PII number using an F in the 9th position. Modifications 
to these calls or orders shall be numbered in accordance with paragraph 
(c) of this section, e.g., Order : DLA100-91-F-0001 modification : 
A00001.
    (e) Modifications to calls or orders. Use a two position alpha-
numeric suffix, known as a call or order modification indicator, to 
identify a modification to a call or order.
    (1) Modifications to a call or order issued by a purchasing office 
begin with 01, 02, and so on through 99, then B1 through B9, BA through 
BZ, C1 through C9, and so on through ZZ.
    (2) Modifications to a call or order issued by a contract 
administration office begin with 1A, 1B, and so on through 9Z, followed 
by A1, A2, and so on to A9, then AA, AB, and so on through AZ.



       Subpart 204.71--Uniform Contract Line Item Numbering System



Sec. 204.7100  Scope.

    This subpart prescribes policies and procedures for assigning 
contract line item numbers.



Sec. 204.7101  Definitions.

    Accounting classification reference number (ACRN) means a two 
position alpha or alpha/numeric control code used as a method of 
relating the accounting classification citation to detailed line item 
information contained in the schedule.
    Attachment means any documentation, appended to a contract or 
incorporated by reference, which does not establish a requirement for 
deliverables.
    Definitized item, as used in this subpart, means an item for which a 
firm

[[Page 27]]

price has been established in the basic contract or by modification.
    Exhibit means a document, referred to in a contract, which is 
attached and establishes requirements for deliverables. The term shall 
not be used to refer to any other kind of attachment to a contract. The 
DD Form 1423, Contract Data Requirements List, is always an exhibit, 
rather than an attachment.
    Nonseverable deliverable, as used in this subpart, means a 
deliverable item that is a single end product or undertaking, entire in 
nature, that cannot be feasibly subdivided into discrete elements or 
phases without losing its identity.
    Undefinitized item, as used in this subpart, means an item for which 
a price has not been established in the basic contract or by 
modification.

[56 FR 36289, July 31, 1991, as amended at 60 FR 34468, July 3, 1995]



Sec. 204.7102  Policy.

    (a) The numbering procedures of this subpart shall apply to all--
    (1) Solicitations;
    (2) Solicitation line and subline item numbers, if practicable;
    (3) Contracts as defined in FAR Subpart 2.1;
    (4) Contract line and subline item numbers;
    (5) Exhibits;
    (6) Exhibit line and subline items; and
    (7) Any other document expected to become part of the contract.
    (b) The numbering procedures are mandatory for all contracts where 
separate contract line item numbers are assigned, unless--
    (1) There are no postaward contract administration functions that 
the contracting officer will assign to an office listed in the DoD 
Directory of Contract Administration Services Components;
    (2) The contract is an indefinite delivery type for petroleum 
products against which posts, camps, and stations issue delivery orders 
for products to be consumed by them; or
    (3) The contract is a communications service authorization issued by 
the Defense Information Systems Agency's Office of Defense Commercial 
Communications.

[56 FR 36289, July 31, 1991, as amended at 56 FR 67212, Dec. 30, 1991; 
60 FR 34468, July 3, 1995]
204.7103  Contract line items.



Sec. 204.7103-1  Criteria for establishing.

    Contracts shall identify the items or services to be acquired as 
separate contract line items unless it is not feasible to do so.
    (a) Contract line items shall have all four of the following 
characteristics; however, there are exceptions within the 
characteristics, which may make establishing a separate contract line 
item appropriate even though one of the characteristics appears to be 
missing--
    (1) Single unit price. The item shall have a single unit price or a 
single total price, except--
    (i) If the item is not separately priced (NSP) but the price is 
included in the unit price of another contract line item, enter NSP 
instead of the unit price;
    (ii) When there are associated subline items, established for other 
than informational reasons, and those subline items are priced in 
accordance with 204.7104;
    (iii) When the items or services are being acquired on a cost-
reimbursement contract;
    (iv) When the contract is for maintenance and repair services (e.g., 
a labor hour contract) and firm prices have been established for 
elements of the total price of an item but the actual number and 
quantity of the elements are not known until performance. The 
contracting officer may structure these contracts to reflect a firm or 
estimated total amount for each line item;
    (v) When the contract line item is established to refer to an 
exhibit or an attachment (if management needs dictate that a unit price 
be entered, the price shall be set forth in the item description block 
and enclosed in parentheses); or
    (vi) When the contract is an indefinite delivery type contract and 
provides that the price of an item shall be determined at the time a 
delivery

[[Page 28]]

order is placed and the price is influenced by such factors as the 
quantity ordered (e.g., 10-99 @ $1.00, 100-249 @ $.98, 250+ @ $.95), the 
destination, the FOB point, or the type of packaging required.
    (2) Separately identifiable. A contract line item must be identified 
separately from any other items or services on the contract.
    (i) Supplies are separately identifiable if they have no more than 
one--
    (A) National stock number (NSN);
    (B) Item description; or
    (C) Manufacturer's part number.
    (ii) Services are separately identifiable if they have no more than 
one--
    (A) Scope of work; or
    (B) Description of services.
    (iii) This requirement does not apply if there are associated 
subline items, established for other than informational reasons, and 
those subline items include the actual detailed identification in 
accordance with 204.7104. Where this exception applies, use a general 
narrative description instead of the contract item description.
    (3) Separate delivery schedule. Each contract line item or service 
shall have its own delivery schedule, period of performance, or 
completion date expressly stated (``as required'' constitutes an 
expressly stated delivery term).
    (i) The fact that there is more than one delivery date, destination, 
performance date, or performance point may be a determining factor in 
the decision as to whether to establish more than one contract line 
item.
    (ii) If a contract line item has more than one destination or 
delivery date, the contracting officer may create individual contract 
line items for the different destinations or delivery dates, or may 
specify the different delivery dates for the units by destination in the 
delivery schedule.
    (4) Single accounting classification citation. (i) Each contract 
line item shall reference a single accounting classification citation 
except as provided in paragraph (a)(4)(ii) of this subsection.
    (ii) The use of multiple accounting classification citations for a 
contract line item is authorized in the following situations:
    (A) A single, nonseverable deliverable to be paid for with R&D or 
other funds properly incrementally obligated over several fiscal years 
in accordance with DoD policy;
    (B) A single, nonseverable deliverable to be paid for with different 
authorizations or appropriations, such as in the acquisition of a 
satellite or the modification of production tooling used to produce 
items being acquired by several activities; or
    (C) A modification to an existing contract line item for a 
nonseverable deliverable that results in the delivery of a modified 
item(s) where the item(s) and modification are to be paid for with 
different accounting classification citations.
    (iii) When the use of multiple accounting classification citations 
is authorized for a single contract line item, establish informational 
subline items for each accounting classification citation in accordance 
with 204.7104-1(a).
    (b) Exhibits may be used as an alternative to putting a long list of 
contract line items in the schedule. If exhibits are used, create a 
contract line item citing the exhibit's identifier. See 204.7105(a).
    (c) If the contract involves a test model or a first article which 
must be approved, establish a separate contract line item or subline 
item for each item of supply or service which must be approved. If the 
test model or first article consists of a lot composed of a mixture of 
items, a single line item or subline item may be used for the lot.
    (d) If a supply or service involves ancillary functions, like 
packaging and handling, transportation, payment of state or local taxes, 
or use of reusable containers, and these functions are normally 
performed by the contractor and the contractor is normally entitled to 
reimbursement for performing these functions, do not establish a 
separate contract line item solely to account for these functions. 
However, do identify the functions in the contract schedule. If the 
offeror separately prices these functions, contracting officers may 
establish separate contract line items for the functions; however, the 
separate

[[Page 29]]

line items must conform to the requirements of paragraph (a) of this 
subsection.

[56 FR 36289, July 31, 1991, as amended at 60 FR 34468, July 3, 1995; 60 
FR 43191, Aug. 18, 1995]



Sec. 204.7103-2  Numbering procedures.

    (a) Contract line items shall consist of four numeric digits 0001 
through 9999. Do not use numbers beyond 9999. Within a given contract, 
the item numbers shall be sequential but need not be consecutive.
    (b) The contract line item number shall be the same as the 
solicitation line item number unless there is a valid reason for using 
different numbers.
    (c) Once a contract line item number has been assigned, it shall not 
be assigned to another, different, contract line item in the same 
contract.
204.7104  Contract subline items.



Sec. 204.7104-1  Criteria for establishing.

    Contract subline items provide flexibility to further identify 
elements within a contract line item for tracking performance or 
simplifying administration. There are only two kinds of subline items: 
those which are informational in nature and those which consist of more 
than one item that requires separate identification.
    (a) Informational subline items. (1) This type of subline item 
identifies information that relates directly to the contract line item 
and is an integral part of it (e.g., parts of an assembly or parts of a 
kit). These subline items shall not be scheduled separately for 
delivery, identified separately for shipment or performance, or priced 
separately for payment purposes.
    (2) The informational subline item may include quantities, prices, 
or amounts, if necessary to satisfy management requirements. However, 
these elements shall be included within the item description in the 
supplies/services column and enclosed in parentheses to prevent 
confusing them with quantities, prices, or amounts that have contractual 
significance. Do not enter these elements in the quantity and price 
columns.
    (3) Informational subline items shall be used to identify each 
accounting classification citation assigned to a single contract line 
item number when use of multiple citations is authorized (see 204.7103-
1(a)(4)(ii)).
    (b) Separately identified subline items. (1) Subline items will be 
used instead of contract line items to facilitate payment, delivery 
tracking, contract funds accounting, or other management purposes. Such 
subline items shall be used when items bought under one contract line 
item number--
    (i) Are to be paid for from more than one accounting classification. 
A subline item shall be established for the quantity associated with the 
single accounting classification citation. Establish a line item rather 
than a subline item if it is likely that a subline item may be assigned 
additional accounting classification citations at a later date. Identify 
the funding as described in 204.7104-1(a)(3);
    (ii) Are to be packaged in different sizes, each represented by its 
own NSN;
    (iii) Have collateral costs, such as packaging costs, but those 
costs are not a part of the unit price of the contract line item;
    (iv) Have different delivery dates or destinations or requisitions, 
or a combination of the three; or
    (v) Identify parts of an assembly or kit which--
    (A) Have to be separately identified at the time of shipment or 
performance; and
    (B) Are separately priced.
    (2) Each separately identified contract subline item shall have its 
own--
    (i) Delivery schedule, period of performance, or completion date;
    (ii) Unit price or single total price or amount (not separately 
priced (NSP) is acceptable as an entry for price or amount if the price 
is included in another subline item or a different contract line item). 
This requirement does not apply--
    (A) If the subline item was created to refer to an exhibit or an 
attachment. If management needs dictate that a unit price be entered, 
the price shall be set forth in the item description block of the 
schedule and enclosed in parentheses; or

[[Page 30]]

    (B) In the case of indefinite delivery contracts described at 
204.7103-1(a)(1)(vi).
    (iii) Identification (e.g., NSN, item description, manufacturer's 
part number, scope of work, description of services).
    (3) Unit prices and extended amounts.
    (i) The unit price and total amount for all subline items may be 
entered at the contract line item number level if the unit price for the 
subline items is identical. If there is any variation, the subline item 
unit prices shall be entered at the subline item level only.
    (ii) The unit price and extended amounts may be entered at the 
subline items level.
    (iii) The two methods in paragraphs (b)(3) (i) and (ii) of this 
subsection shall not be combined in a contract line item.
    (iv) When the price for items not separately priced is included in 
the price of another subline item or contract line item, it may be 
necessary to withhold payment on the priced subline item until all the 
related subline items that are not separately priced have been 
delivered. In those cases, use the clause at 252.204-7002, Payment for 
Subline Items Not Separately Priced.

[56 FR 36289, July 31, 1991, as amended at 60 FR 34468, July 3, 1995]



Sec. 204.7104-2  Numbering procedures.

    (a) Number subline items by adding either two numeric characters or 
two alpha characters to the basic contract line item number.
    (1) Information subline item numbers. Use numeric characters only 
for information subline items, running 01 through 99. Do not use spaces 
or special characters to separate the subline item number from the 
contract line item number that is its root. For example, if the contract 
line item number is 0001, the first three subline items would be 000101, 
000102, and 000103. Do not use a designation more than once within a 
contract line item.
    (2) Separately identified subline items. Use alpha characters only 
for separately identified subline items, running AA through ZZ. Do not 
use spaces or special characters to separate the subline item number 
from the contract line item number that is its root. For example, if the 
contract line item number is 0001, the first three subline items would 
be 0001AA, 0001AB, and 0001AC.
    (i) Do not use the letters I or O as alpha characters.
    (ii) Use all 24 available alpha characters in the second position 
before selecting a different alpha character for the first position. For 
example, AA, AB, AC, through AZ before beginning BA, BB, and BC.
    (b) Within a given contract line item, the subline item numbers 
shall be sequential but need not be consecutive.
    (c) Exhibits may be used as an alternative to setting forth in the 
schedule a long list of contract subline items. If exhibits are used, 
create a contract subline item citing the exhibit's identifier. See 
204.7105.
    (d) If a contract line item involves ancillary functions, like 
packaging and handling, transportation, payment of state or local taxes, 
or use of reusable containers, and these functions are normally 
performed by the contractor and the contractor is normally entitled to 
reimbursement for performing these functions, do not establish a 
separate subline item solely to account for these functions. However, do 
identify the functions in the contract schedule. If offeror separately 
prices these functions, then contracting officers may establish separate 
subline items for the functions; however, the separate subline items 
must conform to the requirements of 204.7104-1.
    (e) The following examples illustrate subline items numbering--
    (1) Subline items structured to identify destinations for identical 
items, identically priced (delivery schedule shall be established for 
each subline item, not the contract line item).

----------------------------------------------------------------------------------------------------------------
         Item No.                Supplies/service         Quantity          Unit         Unit price     Amount  
----------------------------------------------------------------------------------------------------------------
0001                       NSN 1615-00-591-6620 Shim,   ...........                     ...........  ...........
                            Aluminum Alloy, Apbl,                                                               
                            Rotor, Helicopter PRON A1-                                                          
                            9-63821-M1-M1 ACRN:AA.                                                              
0001AA                     A3168R-9030-4025 A2537M               10  EA                     $100.00    $1,000.00
                            IPD: 2 RDD: 334 PROJ: 501.                                                          

[[Page 31]]

                                                                                                                
0001AB                     A3168R-9030-4026 A51AXBM              10  EA                     $100.00    $1,000.00
                            IPD: 2 RDD: 325 PROJ: 502.                                                          
0001AC                     A3168R-9030-4027 A67KBCM              15  EA                     $100.00    $1,500.00
                            IPD: 2 RDD: 349 PROJ: 503.                                                          
----------------------------------------------------------------------------------------------------------------

    (2) Subline items structured to identify destinations for identical 
items, not identically priced (delivery schedule shall be established 
for each subline item, not the contract line item).

----------------------------------------------------------------------------------------------------------------
         Item No.                Supplies/service         Quantity          Unit         Unit price     Amount  
----------------------------------------------------------------------------------------------------------------
0001                       NSN 1615-00-591-6620 Shim,   ...........                     ...........  ...........
                            Aluminum Alloy, Apbl,                                                               
                            Rotor, Helicopter PRON A1-                                                          
                            9-63821-M1-M1 ACRN:AA.                                                              
0001AA                     A3168R-9030-4025 A2537M               10  EA                     $100.00    $1,000.00
                            IPD: 2 RDD: 334 PROJ: 501.                                                          
0001AB                     A3168R-9030-4026 A51AXBM              20  EA                      $99.00    $1,980.00
                            IPD: 2 RDD: 325 PROJ: 502.                                                          
0001AC                     A3168R-9030-4027 A67KBCM              30  EA                      $98.00    $2,940.09
                            IPD: 2 RDD: 349 PROJ: 503.                                                          
----------------------------------------------------------------------------------------------------------------
Note: Difference in prices for identical items is due to separate destinations for FOB destination delivery.    

    (3) Subline items structured to identify different sizes of an item 
that are identically priced (delivery schedule shall be established for 
each subline item, not the contract line item).

----------------------------------------------------------------------------------------------------------------
         Item No.                Supplies/service         Quantity          Unit         Unit price     Amount  
----------------------------------------------------------------------------------------------------------------
0013                       Boots Insulated, Cold        ...........  PR                      $38.35   $13,422.50
                            Weather White, Type II,                                                             
                            Class 1.                                                                            
0013AA                     8430-00-655-5541 Size 5N...           50                     ...........  ...........
0013AB                     8430-00-655-5544 Size 8N...           70                     ...........  ...........
0013AC                     8430-00-655-5551 Size 9N...           30                     ...........  ...........
0013AD                     8430-00-655-5535 Size 9R...          200                     ...........  ...........
----------------------------------------------------------------------------------------------------------------
Note: Unit price and total amount shown at line item level rather than at subline item level.                   

    (4) Subline items structured to identify different sizes of an item 
that are not identically priced (delivery schedule shall be established 
for each subline item, not the contract line item).

----------------------------------------------------------------------------------------------------------------
         Item No.                Supplies/service         Quantity          Unit         Unit price     Amount  
----------------------------------------------------------------------------------------------------------------
0002                       Body Armor Ground Troops     ...........                     ...........  ...........
                            Variable Type Small Arms,                                                           
                            Fragmentation Protective                                                            
                            Nylon Felt Vest, Front and                                                          
                            Back Plates, Ceramic                                                                
                            Plate, Type I.                                                                      
0002AA                     First Article..............            1  LO                         NSP  ...........
0002AB                     8470-00-141-0935, Medium            1936  SE                     $331.77  $642,306.72
                            Regular.                                                                            
0002AC                     8470-00-141-0936, Large              625  SE                      355.77   222,356.25
                            Regular.                                                                            
0002AD                     8470-00-141-0937, Medium            1237  SE                      346.77   428,954.49
                            Long.                                                                               
0002AE                     8470-00-141-0938, Large              804  SE                      365.77   294,079.08
                            Long.                                                                               
----------------------------------------------------------------------------------------------------------------

    (5) Subline items structured to provide the capability for relating 
subordinate separately priced packaging costs to the overall contract 
line item. (Separate delivery schedules shall be established for the 
subline item identifying the contractor's product and for the subline 
item identifying packaging. No schedule will be established for the 
contract line item.)

----------------------------------------------------------------------------------------------------------------
        Item No.              Supplies/service        Quantity         Unit         Unit price        Amount    
----------------------------------------------------------------------------------------------------------------
0001                      6105-00-635-6568 50380                                                                
                          Ref No 63504-WZ Armature                                                              

[[Page 32]]

                                                                                                                
0001AA                    6105-00-635-6568 50380              2  Ea.............       $2,895.87       $5,791.74
                          Ref No 63504-WZ Armature                                                              
                           Motor ACRN:AA                                                                        
0001AB                    Packaging ACRN:AA.......            2  Ea.............         $289.58         $579.16
----------------------------------------------------------------------------------------------------------------

    (6) Subline items structured to identify different accounting 
classifications for identical items (delivery schedule shall be 
established for each subline item, not the contract line item).
    AJ: 17X150518350315069100000192B000000000000000000
    AK: 17X150518370317569100000192B000000000000000000
    AL: 17X150519350314369100000192B000000000000000000

----------------------------------------------------------------------------------------------------------------
         Item no.                Supplies/service         Quantity          Unit         Unit price     Amount  
----------------------------------------------------------------------------------------------------------------
0002                       Pulse Decoder, KY-312/A5Q-   ...........  EA                   $3,037.40             
                            19.                                                                                 
0002AA                     Pulse Decoder, KY-312/A5Q-             2                     ...........     6,074.80
                            19 ACRN: AJ.                                                                        
0002AB                     Pulse Decoder, K1Y-312/A5Q-            6                     ...........    18,224.40
                            19 ACRN: AK.                                                                        
0002AC                     Pulse Decoder, KY-312/A5Q-             2                     ...........   $6,074.80 
                            19 ACRN: AL.                                                                        
----------------------------------------------------------------------------------------------------------------
Note: Unit price may be shown at line item level and total amounts shown at subline item level.                 

    (7) Informational subline items established to identify multiple 
accounting classification citations assigned to a single contract line 
item.

----------------------------------------------------------------------------------------------------------------
         Item No.                Supplies/service         Quantity          Unit         Unit price     Amount  
----------------------------------------------------------------------------------------------------------------
0001                       Air Vehicle................            1  Ea                  $6,700,000   $6,700,000
000101                     ACRN:AA $3,300,000                                                                   
000102                     ACRN:AB $2,000,000                                                                   
000103                     ACRN:AC $1,400,000                                                                   
----------------------------------------------------------------------------------------------------------------

    (8) Subline items structured to identify parts of an assembly 
(delivery schedule and price shall be established for each identified 
part at the subline item level, not for the assembly at the contract 
line item level).

----------------------------------------------------------------------------------------------------------------
         Item no.                Supplies/service         Quantity          Unit         Unit price     Amount  
----------------------------------------------------------------------------------------------------------------
0003                       Automatic Degausing System   ...........                     ...........  ...........
                            Consisting of: (2 ea @                                                              
                            $52,061; $104,122 total).                                                           
0003AA                     Switchboard................            2  EA                  $52,061.00  $104,122.00
0003AB                     Remote Control Panel.......            2  EA                         NSP  ...........
0003AC                     Power Supply (M Coil) SSM              2  EA                         NSP  ...........
                            Type 145 Amps, 220 V DC).                                                           
0003AF                     Power Supply (A Coil) SSM              2  EA                         NSP  ...........
                            Type (118 Amps, 220 V DC).                                                          
----------------------------------------------------------------------------------------------------------------

    (9) Subline items structured to identify parts of a kit (delivery 
schedule and price shall be established for each identified part at the 
subline item level, not for the kit at the contract line item level).

----------------------------------------------------------------------------------------------------------------
         Item no.                Supplies/service         Quantity          Unit         Unit price     Amount  
----------------------------------------------------------------------------------------------------------------
0031                       Conversion Kit to Convert    ...........                     ...........  ...........
                            Torpedo MK 45 Mod 0 to                                                              
                            Torpedo MK 45 Mod 1, (50                                                            
                            Kt @ $10,868.52; $543,426                                                           
                            total).                                                                             
0031AA                     Integrator Assy LD 620106..           50  EA                  $10,868.52  $543,426.00
0031AB                     Pulse Generator Assy LD               50  EA                         NSP  ...........
                            587569.                                                                             
0031AC                     Drive Shaft Assy LD 587559.           50  EA                         NSP  ...........
0031BF                     Actual Panel Assy LD 542924           50  EA                         NSP  ...........
----------------------------------------------------------------------------------------------------------------
Note: In this example, the prices of subline items 0031AB through 0031BF are included in the Integrator         
  Assembly.                                                                                                     



[[Page 33]]

[56 FR 36289, July 31, 1991, as amended at 60 FR 34468, July 3, 1995]



Sec. 204.7105  Contract exhibits and attachments.

    (a) Use of exhibits. (1) Exhibits may be used instead of putting a 
long list of contract line items or subline items in the contract 
schedule. Exhibits are particularly useful in buying spare parts.
    (2) When using exhibits, establish a contract line or subline item 
and refer to the exhibit.
    (3) Identify exhibits individually.
    (4) Each exhibit shall apply to only one contract line item or 
subline item, except--
    (i) One exhibit may apply to one or more option line item(s) when 
the data required under the exhibits is identical in all respects except 
the period during which the option is to be exercised; and
    (ii) An exhibit may apply to more than one contract line item if the 
exhibit is not separately priced and the exhibit deliverable is 
identical for all applicable contract line items.
    (5) More than one exhibit may apply to a single contract line item.
    (6) Data items on a DD Form 1423, Contract Data Requirements List, 
may be either separately priced or not separately priced.
    (i) Separately priced. When data are separately priced, enter the 
price in only one place in the contract: in either Section B of the 
contract schedule or on the DD Form 1423. Whichever place, display the 
price there consistently.
    (A) Section B. If the prices are entered in section B of the 
schedule, detach Blocks 17 and 18 of the DD Form 1423 and file elsewhere 
in the contract file. If the prices are entered on the DD Form 1423, do 
not detach Blocks 17 and 18 of the DD Form 1423.
    (B) DD Form 1423. If the prices are entered on the DD Form 1423, the 
price of all separately priced deliverable data items attributable to a 
line item shall be totalled and included, for information purposes, in 
parentheses, below the supplies services for that line item, in section 
B of the schedule.
    (ii) NSP. Include prices in a priced contract line item or subline 
item. Detach Blocks 17 and 18 of the DD Form 1423 and retain them 
elsewhere as required.
    (7) The contracting officer may append attachments to exhibits, as 
long as the attachment does not identify a deliverable requirement which 
has not been established by a contract or exhibit line or subline item.
    (b) Numbering exhibits and attachments. (1) Use alpha characters to 
identify exhibits. The alpha characters shall be either single or double 
capital letters. Do not use the letters I or O.
    (2) Exhibit identifiers need not be either consecutive or 
sequential.
    (3) Once an identifier has been assigned to an exhibit, do not use 
it on another exhibit in the same contract.
    (4) The identifier shall always appear in the first or first and 
second positions of all applicable exhibit line item numbers.
    (5) If the exhibit has more than one page, cite the procurement 
instrument identification number, exhibit identifier, and applicable 
contract line or subline item number on each page.
    (6) Use numbers to identify attachments.
    (c) Numbering exhibit line items and subline items--(1) Criteria for 
establishing. The criteria for establishing exhibit line items and 
subline items is the same as those for establishing contract line items 
and subline items (see 204.7103 and 204.7104, respectively).
    (2) Procedures for numbering. (i) Number items in an exhibit in a 
manner similar to contract line items and subline items.
    (ii) Number line items using a four position number.
    (A) The first position or the first and second position contain the 
exhibit identifier.
    (B) The third and fourth positions contain the alpha or numeric 
character serial numbers assigned to the line item.
    (iii) Assign alpha or numeric characters to the line item on the 
basis of the same criteria outlined in contract subline items at 
204.7104.
    (iv) Exhibit line item numbers shall be sequential within the 
exhibit.
    (3) Examples--(i) Two position serial number for double letter 
exhibit identifier.

[[Page 34]]



------------------------------------------------------------------------
    Cumulative No. of line items            Serial number sequence      
------------------------------------------------------------------------
1-33................................  01 thru 09, then OA thru OZ, then 
34-67...............................  10 thru 19, then 1A thru 1Z, then 
68-101..............................  20 thru 29, then 2A thru 2Z, then 
102-135.............................  30 thru 39, then 3A thru 3Z, then 
136-169.............................  40 thru 49, then 4A thru 4Z, then 
170-203.............................  50 thru 59, then 5A thru 5Z, then 
204-237.............................  60 thru 69, then 6A thru 6Z, then 
238-271.............................  70 thru 79, then 7A thru 7Z, then 
272-305.............................  80 thru 89, then 8A thru 8Z, then 
306-339.............................  90 thru 99, then 9A thru 9Z, then 
340-373.............................  A0 thru A9, then AA thru AZ, then 
374-407.............................  B0 thru B9, then BA thru BZ, then 
408-441.............................  C0 thru C9, then CA thru CZ, then 
442-475.............................  D0 thru D9, then DA thru DZ, then 
476-509.............................  E0 thru E9, then EA thru EZ, then 
510-543.............................  F0 thru F9, then FA thru FZ, then 
544-577.............................  G0 thru G9, then GA thru GZ, then 
578-611.............................  H0 thru H9, then HA thru HZ, then 
612-645.............................  J0 thru J9, then JA thru JZ, then 
646-679.............................  K0 thru K9, then KA thru KZ, then 
680-713.............................  L0 thru L9, then LA thru LZ, then 
714-747.............................  M0 thru M9, then MA thru MZ, then 
748-781.............................  N0 thru N9, then NA thru NZ, then 
782-815.............................  P0 thru P9, then PA thru PZ, then 
816-849.............................  Q0 thru Q9, then QA thru QZ, then 
850-883.............................  R0 thru R9, then RA thru RZ, then 
884-917.............................  S0 thru S9, then SA thru SZ, then 
918-951.............................  T0 thru T9, then TA thru TZ, then 
952-985.............................  U0 thru U9, then UA thru UZ, then 
986-1019............................  V0 thru V9, then VA thru VZ, then 
1020-1053...........................  W0 thru W9, then WA thru WZ, then 
1054-1087...........................  X0 thru X9, then XA thru XZ, then 
1088-1121...........................  Y0 thru Y9, then YA thru YZ, then 
1122-1155...........................  Z0 thru Z9, then ZA thru ZZ       
------------------------------------------------------------------------

    (ii) Three position numbers.

------------------------------------------------------------------------
    Cumulative No. of line items            Serial number sequence      
------------------------------------------------------------------------
(ii) Three position numbers.                                            
1-33................................  001 thru 009, then 00A thru 00Z,  
                                       then                             
34-67...............................  010 thru 019, then 01A thru 101Z, 
                                       then                             
68-101..............................  020 thru 029, then 02A thru 02Z,  
                                       then                             
102-135.............................  030 thru 039, then 03A thru 03Z   
                                       and so                           
136-305.............................  on to                             
306-339.............................  090 thru 099, then 09A thru 09Z,  
                                       then                             
340-373.............................  0A0 thru 0A9, then 0AA thru 0AZ,  
                                       then                             
374-407.............................  0B0 thru 0B9, then 0BB thru 0BZ,  
                                       then                             
408-441.............................  0C0 thru 0C9, then 0CA thru 0CZ,  
                                       and                              
442-1121............................  so on to                          
1122-1155...........................  0Z0 thru 0Z9, then 0ZA thru 0ZZ,  
                                       then                             
1156-1189...........................  100 thru 109, then 10A thru 10Z,  
                                       then                             
1190-1223...........................  110 thru 119, then 11A thru 11Z,  
                                       then                             
1224-1257...........................  120 thru 129, then 12A thru 12Z,  
                                       and                              
1258-1461...........................  so on to                          
1462-1495...........................  190 thru 199, then 19A thru 19Z,  
                                       then                             
1496-1529...........................  1A0 thru 1A9, then 1AA thru 1AZ,  
                                       then                             
1530-1563...........................  1B0 thru 1B9, then 1BA thru 1BZ,  
                                       and                              
1564-2277...........................  so on to                          
2278-2311...........................  1Z0 thru 1Z9, then 1ZA thru 1ZB,  
                                       then                             
2312-2345...........................  200 thru 109, then 10A thru 10Z,  
                                       then                             
2346-2379...........................  210 thru 219, then 21A thru 21Z,  
                                       then                             
2380-2413...........................  220 thru 229, then 22A thru 22Z,  
                                       and                              
2414-2617...........................  so on to                          
2618-2651...........................  290 thru 299, then 29A thru 29Z,  
                                       then                             
2652-2685...........................  2A0 thru 2A9, then 2AA thru 2AZ,  
                                       then                             
2686-2719...........................  2B0 thru 2B9, then 2BA thru 2BZ,  
                                       and                              
2720-3433...........................  so on to                          
3434-3467...........................  2Z0 thru 2Z9, then 2ZA thru 2ZZ,  
                                       then                             
3468-3501...........................  300 thru 309, then 30Z thru 30Z,  
                                       and                              
3502-10403..........................  so on to                          
10404-10437.........................  900 thru 909, then 90A thru 90Z,  
                                       then                             
10438-10471.........................  910 thru 919, then 91A thru 91Z,  
                                       and                              
10472-10709.........................  so on to                          
10710-10743.........................  990 thru 999, then 99A thru 99Z,  
                                       then                             
10744-10777.........................  9A0 thru 9A9, then 9AA thru 9AZ,  
                                       then                             
10778-10811.........................  9B0 thru 9B9, then 9BA thru 9BZ,  
                                       and                              
10812-11525.........................  so on to                          
11526-11559.........................  9Z0 thru 9Z9, then 9ZA thru 9ZZ   
------------------------------------------------------------------------



Sec. 204.7106  Contract modifications.

    (a) If new items are added, assign new contract line or subline item 
numbers or exhibit line item numbers, in accordance with the procedures 
established at 204.7103, 204.7104, and 204.7105.
    (b) Modifications to existing contract line items or exhibit line 
items. (1) If the modification relates to existing contract line items 
or exhibit line items, the modification shall refer to those item 
numbers.
    (2) If the contracting officer decides to assign new identifications 
to existing contract or exhibit line items, the following rules apply--
    (i) Definitized and undefinitized items. (A) The original line item 
or subline item number may be used if the modification applies to the 
total quantity of the original line item or subline.
    (B) The original line item or subline item number may be used if the 
modification makes only minor changes in the specifications of some of 
the items ordered on the original line item or subline item and the 
resulting changes in unit price can be averaged to provide a new single 
unit price for the total quantity. If the changes in the specifications 
make the item significantly distinguishable from the original item or 
the resulting changes in unit price cannot be averaged, create a new 
line item.
    (C) If the modification affects only a partial quantity of an 
existing contract or exhibit line item or subline item and the change 
does not involve either the delivery date or the ship-to/mark-for data, 
the original contract or exhibit line item or subline item number shall 
remain with the unchanged quantity. Assign the changed quantity the next 
available number.
    (ii) Undefinitized items. In addition to the rules in paragraph 
(b)(2)(i), the following additional rules apply to undefinitized items--

[[Page 35]]

    (A) If the modification is undefinitized and increases the quantity 
of an existing definitized item, assign the undefinitized quantity the 
next available number.
    (B) If the modification increases the quantity of an existing 
undefinitized item, the original contract or exhibit line item or 
subline item may be used if the unit price for the new quantity is 
expected to be the same as the price for the original quantity. If the 
unit prices of the two quantities will be different, assign the new 
quantity the next available number.
    (C) If the modification both affects only a partial quantity of the 
existing contract or exhibit line or subline item and definitizes the 
price for the affected portion, the definitized portion shall retain the 
original item number. If there is any undefinitized portion of the item, 
assign it the next available number. However, if the modification 
definitizes the price for the whole quantity of the line item, and price 
impact of the changed work can be apportioned equally over the whole to 
arrive at a new unit price, the quantity with the changes can be added 
into the quantity of the existing item.
    (D) If the modification affects only a partial quantity of an 
existing contract or exhibit line or subline item but does not change 
the delivery schedule or definitize price, the unchanged portion shall 
retain the original contract or exhibit line or subline item number. 
Assign the changed portion the next available number.



Sec. 204.7107  Contract accounting classification reference number (ACRN).

    (a) When a contract contains more than one accounting classification 
citation, contracting offices shall use ACRNs. Assigning the ACRNs is 
the responsibility of the contracting office issuing the contract, basic 
ordering agreement, or blanket purchase agreement. This authority shall 
not be delegated. If more than one office will use the contract (e.g., 
ordering officers, other contracting officers), the contract must 
contain instructions for assigning ACRNs.
    (b) ACRNs are used to process certain contract data through the 
Military Standard Contract Administration Procedures (MILSCAP) system. 
The MILSCAP system uses the ACRN to relate certain contract 
administration records to the accounting classification citation used to 
obligate funds on the contract. Among these records are the accounting 
classification trailer record, the supplies schedules data record, and 
the services line item data record. ACRNs are also used to associate the 
various record formats of the contract payment notice as described in 
chapter 9 of the MILSCAP Manual, DoD 4000.25-5-M.
    (c) Procedures for establishing ACRNs. ACRNs consist of a two 
position alpha or alpha/numeric code assigned to each discrete 
accounting classification citation within each contract. ACRNs shall be 
established in accordance with the following guidelines:
    (1) Do not use the letters I and O.
    (2) In no case shall an ACRN apply to more than one accounting 
classification citation, nor shall more than one ACRN be assigned to one 
accounting classification citation.
    (d) Using the ACRN in the contract. (1) Show the ACRN as a detached 
prefix to the accounting classification citation in the accounting and 
appropriation data block or, if there are too many accounting 
classification citations to fit reasonably in that block, in section G 
(Contract Administration Data).
    (2) ACRNs need not prefix accounting classification citations if the 
accounting classification citations are present in the contract only for 
the transportation officer to cite to Government bills of lading.
    (3) If the contracting officer is making a modification to a 
contract and using the same accounting classification citations, which 
have had ACRNs assigned to them, the modification need cite only the 
ACRNs in the accounting and appropriations data block or on the 
continuation sheets.
    (e) Showing the ACRN in the contract. If there is more than one ACRN 
in a contract, all the ACRNs will appear in several places in the 
schedule (e.g., ACRN:AA).
    (1) Ship-to/mark-for block. Show the ACRN beside the identity code 
of each activity in the ship-to/mark-for block unless only one 
accounting classification citation applies to a line item or

[[Page 36]]

subline item. Only one ACRN may be assigned to the same ship-to/mark-for 
within the same contract line or subline item number unless multiple 
accounting classification citations apply to a single nonseverable 
deliverable unit such that the item cannot be related to an individual 
accounting classification citation.
    (2) Supplies/services column. (i) If only one accounting 
classification citation applies to a line item or a subline item, the 
ACRN may be shown in the supplies/services column near the item 
description.
    (ii) If more than one accounting classification citation applies to 
a single contract line item, identify each assigned ACRN and the amount 
of associated funds using informational subline items (see 204.7104-
1(a)).
    (3) Payment instructions. (i) When a contract line item is funded by 
multiple accounting classification citations, the contracting officer 
shall provide adequate instructions in section G (Contract 
Administration Data), under the heading ``Payment Instructions for 
Multiple Accounting Classification Citations,'' to permit the paying 
office to charge the accounting classification citations assigned to 
that contract line item (see 204.7104-1(a)) in a manner that reflects 
the performance of work on the contract. If additional accounting 
classification citations are subsequently added, the payment 
instructions must be modified to include the additional accounting 
classification citations.
    (ii) Payment instructions shall provide a methodology for the paying 
office to assign payments to the appropriate accounting classification 
citation(s), based on anticipated contract work performance. The method 
established should be consistent with the reasons for the establishment 
of the line items. The payment method may be based upon a unique 
distribution profile devised to reflect how the funds represented by 
each of the accounting classification citations support contract 
performance. Payment methods that direct that payments be made from the 
earliest available fiscal year funding sources, or that provide for 
proration across accounting classification citations assigned to the 
line item, or a combination thereof, may be used if that methodology 
reasonably reflects how each of the accounting classification citations 
supports contract performance.

[60 FR 34469, July 3, 1995; 60 FR 43191, Aug. 18, 1995]



                Subpart 204.72--Contractor Identification



Sec. 204.7200  Scope of subpart.

    This subpart prescribes uniform policies and procedures for 
identification of commercial and Government entities when it is 
necessary to:
    (a) Exchange data with another contracting activity, including 
contract administration activities and contract payment activities, or 
to comply with the reporting requirements of subpart 204.6; or
    (b) Identify contractors for the purposes of developing computerized 
acquisition systems or solicitation mailing lists.



Sec. 204.7201  Definitions.

    (a) Commercial and Government entity (CAGE) code means--
    (1) A code assigned by the Defense Logistics Services Center (DLSC) 
to identify a commercial or Government entity; or
    (2) A code assigned by a member of the North Atlantic Treaty 
Organization (NATO) and maintained by the Defense Logistics Services 
Center.
    (b) Contractor identification code means any code required by the 
contracting office for the purpose of identifying the offeror. CAGE code 
and contractor identification numbers are two examples of contractor 
identification codes.

[56 FR 36289, July 31, 1991, as amended at 61 FR 51031, Sept. 30, 1996]



Sec. 204.7202  General.

    Various coding systems are in use to identify commercial and 
government entities. Codes are requested by contracting and contract 
administration offices for various reasons. This guidance is designed to 
improve the accuracy of the initial code assignment and to help ensure 
that the data are maintained accurately and are up-to-date.

[[Page 37]]



Sec. 204.7202-1  CAGE codes.

    (a) CAGE codes are assigned or maintained by the Defense Logistics 
Services Center (DLSC) to identify commercial and Government activities. 
Their use is prescribed by 253.204-70(b)(5)(ii)(C) and DoD 4000.25-5-M, 
Military Standard Contract Administration Procedures (MILSCAP).
    (b) CAGE codes have also been known in the past as federal supply 
codes for manufacturers (FSCM) and federal supply codes for 
nonmanufacturers (FSCNM).
    (c) If the CAGE code is not already available in the contracting 
office, and the apparent awardee does not respond to the provision at 
252.204-7001, Commercial and Government Entity (CAGE) Code Reporting, 
use the following procedures in the order listed--
    (1) Use the bimonthly H-8 microfiche or CD ROM publication issued by 
DLSC. (Their address is: DLSC-RP, Federal Center, 74 N. Washington, 
Battle Creek, MI 49017-3084. Their telephone numbers are: DSN 932-4725, 
FTS 552-4725, or commercial (616) 961-4725.);
    (2) Use the on-line access to the CAGE file through the Defense 
Logistics Information System;
    (3) Use the on-line access to the Defense Logistics Agency CAGE file 
through the DLA Network or dial-up capability; or
    (4) Ask DLSC to assign a CAGE code. Submit a DD Form 2051, Request 
for Assignment of a CAGE Code, (or electronic equivalent) to the address 
in paragraph (c)(1) of this subsection, ATTN: DLSC-SBB. The contracting 
activity completes Section A of the DD Form 2051, Request for Assignment 
of a Commercial and Government Entity (CAGE) Code, and the contractor 
completes section B. The contracting activity must verify section B 
before the form is submitted.
    (5) Direct questions on obtaining computer tapes, electronic 
updates, or code assignments to DLSC (DLSC-SBB) at DSN 932-4358, FTS 
552-4358, or commercial (616) 961-4358.

[56 FR 36289, July 31, 1991, as amended at 57 FR 53598, Nov. 12, 1992; 
61 FR 51031, Sept. 30, 1996]



Sec. 204.7202-2  Contractor identification number.

    Use of the contractor identification number for contract data 
reporting is prescribed by 253.204-70(b)(5)(ii)(A). A Data Universal 
Numbering System (DUNS) number, which is a nine-digit number assigned by 
Dun and Bradstreet Information Services to an establishment, is the 
contractor identification number for Federal contractors. When the 
contractor identification number is not already available to the 
contracting activity, use the following procedures in the order listed:
    (a) Contact the offeror and obtain the DUNS number.
    (b)(1) Dun & Bradstreet Information Services for a DUNS number by--
    (i) Telephone (610) 882-7741.
    (ii) Facsimile (610) 882-7140.
    (iii) Writing to FPDC Department, Dun & Bradstreet Information 
Services, 899 Eaton Avenue, Bethlehem, PA 18025-0013.
    (2) All requesters should provide the following information:
    (i) Name of requesting contracting office;
    (ii) Contracting office code (Block A3 on the DD Form 350) assigned 
by the departmental data collection point;
    (iii) Appropriate agency code as follows:
    (A) Army activities--2100;
    (B) Navy activities--1700;
    (C) Air Force activities--5700;
    (D) Defense Logistics Agency--97AS;
    (E) Other DoD contracting activities--9700.
    (iv) Contracting office area code and commercial telephone number;
    (v) Name of individual making the request;
    (vi) Total number of DUNS requests, if more than one; and
    (vii) Contractor establishment name, street address, P.O. Box, city/
town, state, ZIP code, and telephone number (if available). For foreign 
offerors, include province, country, and postal code.

[57 FR 42629, Sept. 15, 1992, as amended at 61 FR 51031, Sept. 30, 1996]



Sec. 204.7202-3  Taxpayer identification numbers.

    The taxpayer identification number (TIN) is prescribed in FAR 
subpart 4.9.

[[Page 38]]



Sec. 204.7202-4  Locally developed coding systems.

    Locally developed coding systems may be used to identify contractors 
as long as the contracting activity is able to comply with the 
identification requirements of the activities with which it must share 
data, e.g., furnish the CAGE code to the contract administration 
activity.



Sec. 204.7203  Responsibilities of contracting officers.

    (a) The contracting officer shall assist the offeror in obtaining 
the required contractor code(s).
    (b) Prospective offerors may not be denied a solicitation or bid set 
because the offeror does not have a contractor code.
    (c) The contracting officer or designee shall not request a new code 
assignment until the appropriate microfiche, hardcopy or computer files 
have been screened in an effort to identify a current code for the 
entity. If the contracting officer does not have access to the files or 
listings, then initiate action to obtain the files or listings and any 
equipment necessary to use those files and/or listings (see 204.7202-1 
and 2).
    (d) If a CAGE code is being requested, it is the responsibility of 
the contracting activity to request the assignment of the CAGE code by 
completing section A of the DD Form 2051, Request for Assignment of a 
Commercial and Government Entity (CAGE) Code (see 253.303-2051). The 
prospective contractor will complete section B of the form. The 
completed form or electronic equivalent will be submitted by the 
contracting activity to DLSC-SBB for processing and code assignment 
after the contracting activity has verified the data submitted by the 
contractor. CAGE codes may be requested at the time the offeror is sent 
a solicitation package or added to the mailing list to ensure that a 
code is assigned in sufficient time to process the DD Form 350, 
Individual Contracting Action Report, without delay.

[56 FR 36289, July 31, 1991, as amended at 57 FR 53598, Nov. 12, 1992; 
61 FR 51031, Sept. 30, 1996]



Sec. 204.7204  Maintenance.

    Maintenance transactions such as changes in name or address are to 
be submitted to the maintenance activity.



Sec. 204.7204-1  Maintenance of the CAGE file.

    (a) Changes, except name changes, may be submitted in writing--
    (1) By the entity identified by the code, using company letterhead, 
through the contract administration office;
    (2) By the contracting office; or
    (3) By the contract administration office (see also FAR Subpart 
42.12, Novation and Change-of-Name Agreements.)
    (4) Using the DD Form 2051, facsimile or electronic equivalent to: 
Defense Logistics Services Center, DLSC-SBB, Federal Center, 74 N. 
Washington, Battle Creek, MI 49017-3084. Telephone Numbers: DSN 932-
4358, FTS 552-4358, commercial (616) 961-4358. Facsimile: (616) 961-
4528, 4352, 4265. Bulletin Board: (616) 961-4589, 4527, 5262, 5303; 
Message: RUEBUAA.
    (b) The change-of-name agreement shall be submitted to DLSC-SBB by 
the contracting officer responsible for execution of the agreement (see 
FAR subpart 42.12). In the event there are no current contracts in 
force, each contracting and contract administration office receiving 
notification of changes from the commercial entity shall forward a copy 
of the change notice annotated with the CAGE code to the DLSC-SBB unless 
the change notice indicates that DLSC-SBB has already been notified.
    (c) Additional guidance for maintaining CAGE codes is set forth at 
Volume 7 of DoD 4100.39-M, Defense Integrated Data System (DIDS) Manual.

[56 FR 36289, July 31, 1991, as amended at 57 FR 53598, Nov. 12, 1991; 
61 FR 51031, Sept. 30, 1996]



Sec. 204.7204-2  Maintenance of contractor identification number codes.

    Changes, except name changes, may be submitted in writing using 
company letterhead by the entity identified by the code through the 
contract administration office, by the contracting office or the 
contract administration office (see also FAR Subpart 42.12, Novation

[[Page 39]]

and Change-of-Name Agreements), using the agency letterhead, by mail, 
facsimile or electronic equivalent to FPDC Department, Dun & Bradstreet 
Information Services, 899 Eaton Avenue, Bethlehem, PA 18025-0013.

[56 FR 67212, Dec. 30, 1991]



Sec. 204.7205  Novation agreements, mergers and sales of assets.

    Contracting officers shall process and execute novation agreements 
in accordance with FAR Subpart 42.12, Novation and Change-of-Name 
Agreements. These actions are independent of code and name assignments 
made as a result of the occasion which created the need for the novation 
agreement. The maintenance activity will determine which entity(s) will 
retain the existing code(s) and which entities will be assigned new 
codes. The contracting officer responsible for processing the novation 
agreement shall provide the maintenance activity with the following 
information:
    (a) Name(s), address(es), and code(s) of the contractor(s) 
transferring the original contractual rights and obligations.
    (b) Name(s), address(es), and code(s) (if any) of the entity who is 
the successor in interest (transferor).
    (c) Name(s), address(es), and code(s) (if any) of the entity who is 
retaining or receiving the rights to the technical data.
    (d) Description of the circumstances surrounding the novation 
agreement and especially the relationship of each entity to the other.



Sec. 204.7206  Using CAGE codes to identify agents and brokers.

    Authorized agents and brokers are entities and, as such, may be 
assigned CAGE codes and contractor identification number codes for 
identification and processing purposes.
    (a) A single CAGE code will be assigned to the agent/broker 
establishment in addition to any codes assigned to the entities 
represented by the agent/broker, i.e., only one code will be assigned to 
a specific agent/broker entity regardless of the number of firms 
represented by that agent/broker.
    (b) Additional codes may be assigned to an agent/broker if they meet 
the criteria for assigning additional codes for entities, e.g., 
different location.
    (c) Codes will not be assigned to an agent/broker in care of the 
entity being represented or in any way infer that the agent/broker is a 
separate establishment bearing the name of the entity represented by the 
agent/broker.

[56 FR 36289, July 31, 1991, as amended at 61 FR 51032, Sept. 30, 1996]

[[Page 40]]



                   SUBCHAPTER B--ACQUISITION PLANNING





PART 205--PUBLICIZING CONTRACT ACTIONS--Table of Contents




Sec.

          Subpart 205.2--Synopses of Proposed Contract Actions

205.203  Publicizing and response time.
205.207  Preparation and transmittal of synopses.

               Subpart 205.3--Synopses of Contract Awards

205.303  Announcement of contract awards.

                  Subpart 205.4--Release of Information

205.470  Contractor information to be provided cooperative agreement 
          holders.
205.470-1  Statutory requirement.
205.470-2  Contract clause.

                   Subpart 205.5--Paid Advertisements

205.502  Authority.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36302, July 31, 1991, unless otherwise noted.



          Subpart 205.2--Synopses of Proposed Contract Actions



Sec. 205.203  Publicizing and response time.

    (b) Allow at least 45 days response time when requested by a 
qualifying or designated country source (as these terms are used in part 
225) and the request is consistent with the Government's requirement.



Sec. 205.207  Preparation and transmittal of synopses.

    (d)(i) For small disadvantaged business set-asides under 219.502-2-
70, use CBD Numbered Note 4.
    (ii) For acquisitions being considered for small disadvantaged 
business set-aside, use CBD Numbered Note 6.
    (iii) For historically black college and university and minority 
institution set-asides under 226.7003, use CBD Numbered Note 5.
    (iv) For acquisitions being considered for historically black 
college and university and minority institution set-aside, state:

    This proposed contract is being considered as a 100 percent set-
aside for historically black colleges and universities (HBCUs) and 
minority institutions (MIs), as defined by the clause at 252.226-7000 of 
the Defense Federal Acquisition Regulation Supplement. Interested HBCUs 
and MIs should provide the contracting office as early as possible, but 
not later than 15 days after this notice, evidence of their capability 
to perform the contract, and a positive statement of their eligibility 
as an HBCU or MI. If adequate response is not received from HBCUs and 
MIs, the solicitation will instead be issued, without further notice, 
as: ______________ (indicate if unrestricted, or restricted for small 
business or small disadvantaged business, etc.). Therefore, replies to 
this notice are also requested from
_______________________________________________________________________
(enter the types of firms to be solicited in the event an HBCU or MI 
set-aside is not made).''

    (v) For broad agency announcement (BAA) (see 235.016) notices, 
indicate which, if any, portion of the BAA will be set-aside for 
historically black colleges and universities and minority institutions.
    (e) For acquisitions restricted to domestic sources under the 
authority of FAR 6.302-3, use CBD Numbered Note 13.



               Subpart 205.3--Synopses of Contract Awards



Sec. 205.303  Announcement of contract awards.

    (a) Public announcement. (i) The threshold for DoD awards is $5 
million. Report all contractual actions, including modifications, that 
have a face value, excluding unexercised options, of more than $5 
million.
    (A) For undefinitized contractual actions, report the not-to-exceed 
(NTE) amount. Later, if the definitized amount exceeds the NTE amount by 
more than $5 million, report only the amount exceeding the NTE.
    (B) For indefinite delivery, time and material, labor hour, and 
similar contracts, report the initial award if the estimated face value, 
excluding

[[Page 41]]

unexercised options, is more than $5 million. Do not report orders up to 
the estimated value, but after the estimated value is reached, report 
subsequent modifications and orders that have a face value of more than 
$5 million.
    (C) Do not report the same work twice.
    (ii) Departments and agencies submit the information--
    (A) To the Office of the Assistant Secretary of Defense (Public 
Affairs);
    (B) By the close of business the day before the date of the proposed 
award;
    (C) Using report control symbol DD-LA- (AR) 1279;
    (D) Including, as a minimum, the following--
    (1) Contract data. Contract number, modification number, or delivery 
order number, face value of this action, total cumulative face value of 
the contract, description of what is being bought, contract type, 
whether any of the buy was for foreign military sales (FMS) and 
identification of the FMS customer;
    (2) Competition information. Number of solicitations mailed and 
number of offers received;
    (3) Contractor data. Name, address, and place of performance (if 
significant work is performed at a different location);
    (4) Funding data. Type of appropriation and fiscal year of the 
funds, and whether the contract is multiyear (see FAR Subpart 17.1); and
    (5) Miscellaneous data. Identification of the contracting office, 
the contracting office point of contact, known congressional interest, 
and the information release date.
    (iii) Departments and agencies, in accordance with department/agency 
procedures and concurrent with the public announcement, shall provide 
information similar to that required by paragraph (a)(ii) of this 
section to members of Congress in whose state or district the contractor 
is located and the work is to be performed.

[56 FR 36302, July 31, 1991, as amended at 56 FR 67212, Dec. 30, 1991]



                  Subpart 205.4--Release of Information

205.470  Contractor information to be provided cooperative agreement 
holders.



Sec. 205.470-1  Statutory requirement.

    (a) As required by 10 U.S.C. 2413, the Defense Logistics Agency 
enters into cooperative agreements--
    (1) With--
    (i) State and local governments;
    (ii) Non-profit organizations;
    (iii) Indian tribal organizations; and
    (iv) Indian-owned economic enterprises
    (2) For the provision of technical assistance to business entities.
    (b) Contractors receiving defense contracts valued at more than 
$500,000 must provide cooperative agreement holders, at their request, 
the information specified in the clause at 252.205-7000, Provision of 
Information to Cooperative Agreement Holders.



Sec. 205.470-2  Contract clause.

    Use the clause at 252.205-7000, Provision of Information to 
Cooperative Agreement Holders, in solicitations and contracts expected 
to exceed $500,000.



                   Subpart 205.5--Paid Advertisements



Sec. 205.502  Authority.

    For paid advertisements to recruit civilian personnel, see section 
332-1-9 of the Federal Personnel Manual.
    (a) Newspapers. (i) Heads of contracting activities are delegated 
authority to approve the publication of paid advertisements in 
newspapers. They may redelegate this authority in accordance with agency 
procedures.
    (ii) Submit DD Form 1535, Request/Approval for Authority to 
Advertise, to the approval authority to obtain special or general 
authority.
    (A) Special authority permits the publication of a given 
advertisement for a specified number of times in designated newspapers.
    (B) General authority permits the publication of such advertisements 
as may be required during a designated fiscal year.

[[Page 42]]



PART 206--COMPETITION REQUIREMENTS--Table of Contents




Sec.
206.001  Applicability.

   Subpart 206.2--Full and Open Competition After Exclusion of Sources

206.202  Establishing or maintaining alternative sources.
206.203  Set-asides for small business and labor surplus area concerns.

           Subpart 206.3--Other Than Full and Open Competition

206.302  Circumstances permitting other than full and open competition.
206.302-1  Only one responsible source and no other supplies or services 
          will satisfy agency requirements.
206.302-2  Unusual and compelling urgency.
206.302-3  Industrial mobilization; or engineering, development, or 
          research capability.
206.302-3-70  Solicitation provision.
206.302-4  International agreement.
206.302-5  Authorized or required by statute.
206.302-7  Public interest.
206.303  Justifications.
206.303-1  Requirements.
206.303-2  Content.
206.304  Approval of the justification.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36303, July 31, 1991, unless otherwise noted.



Sec. 206.001  Applicability.

    (b) Contracts awarded using the procedures in 237.104(b)(ii) are 
expressly authorized by 10 U.S.C. 1091.

[60 FR 61592, Nov. 30, 1995]



   Subpart 206.2--Full and Open Competition After Exclusion of Sources



Sec. 206.202  Establishing or maintaining alternative sources.

    (a) Agencies may use this authority to totally or partially exclude 
a particular source from a contract action.
    (b) The determination and findings (D&F) and the documentation 
supporting the D&F must identify the source to be excluded from the 
contract action.
    (i) Include the following information, as applicable, and any other 
information that may be pertinent, in the supporting documentation:
    (A) The acquisition history of the supplies or services, including 
sources, prices, quantities, and dates of award;
    (B) The circumstances which make it necessary to exclude the 
particular source from the contract action, including--
    (1) The reasons for the lack of or potential loss of alternative 
sources; e.g., the technical complexity and criticality of the supplies 
or services; and
    (2) The current annual requirement and projected needs for the 
supplies or services;
    (C) Whether the existing source must be totally excluded from the 
contract action or whether a partial exclusion is sufficient;
    (D) The potential effect of exclusion on the excluded source in 
terms of loss of capability to furnish the supplies or services in the 
future;
    (E) When FAR 6.202(a)(1) is the authority, the basis for--
    (1) The determination of future competition; and
    (2) The determination of reduced overall costs. Include, as a 
minimum, a discussion of start-up costs, facility costs, duplicative 
administration costs, economic order quantities, and life cycle cost 
considerations; and
    (F) When FAR 6.202(a)(2) is the authority--
    (1) The current annual and mobilization requirements for the 
supplies or services, citing the source of, or the basis for, the data;
    (2) A comparison of current production capacity with that necessary 
to meet mobilization requirements;
    (3) An analysis of the risks of relying on the present source; and
    (4) A projection of the time required for a new source to acquire 
the necessary facilities and achieve the production capacity necessary 
to meet mobilization requirements.
    (ii) A sample format for Determination and Findings citing the 
authority of FAR 6.202(a) is in Table 6-1, Determinations and Findings.

[[Page 43]]



                 Table 6-1--Determinations and Findings                 
                       Determinations and Findings                      
                      Authority to Exclude a Source                     
In accordance with 10 U.S.C. 2304(b)(1), it is my determination that the
 following contract action may be awarded using full and open           
 competition after exclusion of ________\1\:                            
------------------------------------------------------------------------

    (Describe requirement.) Findings The exclusion of ________\1\
---------------------------------------------------------------------------

    \1\ Identify source being excluded.
---------------------------------------------------------------------------

    Alternate 1: will increase or maintain competition for this 
requirement and is expected to result in a reduction of $______ in 
overall costs for the present and future acquisition of these supplies 
or services. (Describe how estimate was derived.)
    Alternate 2: is in the interest of national defense because it will 
result in having a supplier available for furnishing these supplies or 
services in case of a national emergency or industrial mobilization. 
(Explain circumstances requiring exclusion of source.)
    Alternate 3: is in the interest of national defense because it will 
result in establishment or maintenance of an essential engineering, 
research or development capability to be provided by an educational or 
other nonprofit institution or a federally funded research and 
development center. (Explain circumstances requiring exclusion of 
source.)



Sec. 206.203  Set-asides for small business and labor surplus area concerns.

    (b) Also no separate justification or determination and findings is 
required for contract actions processed as small disadvantaged business 
set-asides (219.502-2-70) or as historically black college and 
university and minority institution set-asides (226.7003).



           Subpart 206.3--Other Than Full and Open Competition

206.302  Circumstances permitting other than full and open competition.



Sec. 206.302-1  Only one responsible source and no other supplies or services will satisfy agency requirements.

    (a) Authority. (2)(i) Section 8059 of Pub. L. 101-511 and similar 
sections in subsequent defense appropriations acts prohibit departments 
and agencies from entering into contracts for studies, analyses, or 
consulting services (see FAR subpart 37.2) on the basis of an 
unsolicited proposal without providing for full and open competition, 
unless--
    (1) The head of the contracting activity, or a designee no lower 
than chief of the contracting office, determines that--
    (i) Following thorough technical evaluation, only one source is 
fully qualified to perform the proposed work;
    (ii) The unsolicited proposal offers significant scientific or 
technological promise, represents the product of original thinking, and 
was submitted in confidence; or
    (iii) The contract benefits the national defense by taking advantage 
of a unique and significant industrial accomplishment or by ensuring 
financial support to a new product or idea;
    (2) A civilian official of the DoD, whose appointment has been 
confirmed by the Senate, determines the award to be in the interest of 
national defense; or
    (3) The contract is related to improvement of equipment that is in 
development or production.
    (b) Application. This authority may be used for acquisitions of test 
articles and associated support services from a designated foreign 
source under the DoD Foreign Comparative Testing Program.
    (4) Do not use this authority unless the equipment or parts have 
been adopted as standard items of supply in accordance with DoDI 5000.2, 
Defense Acquisition Management Policies and Procedures.

[56 FR 36303, July 31, 1991, as amended at 57 FR 14992, Apr. 23, 1992; 
58 FR 28463, May 13, 1993]



Sec. 206.302-2  Unusual and compelling urgency.

    (b) Application. The circumstances under which use of this authority 
may be appropriate include, but are not limited to, the following:
    (i) Supplies, services, or construction needed at once because of 
fire, flood, explosion, or other disaster;

[[Page 44]]

    (ii) Essential equipment or repair needed at once to--
    (A) Comply with orders for a ship;
    (B) Perform the operational mission of an aircraft; or
    (C) Preclude impairment of launch capabilities or mission 
performance of missiles or missile support equipment.
    (iii) Construction needed at once to preserve a structure or its 
contents from damage;
    (iv) Purchase requests citing an issue priority designator under 
DoDD 4410.6, Uniform Material Movement and Issue Priority System, of 4 
or higher, or citing ``Electronic Warfare QRC Priority.''
206.302-3  Industrial mobilization; or engineering, development, or 
research capability.



Sec. 206.302-3-70  Solicitation provision.
    Use the provision at 252.206-7000, Domestic Source Restriction, in 
all solicitations that are restricted to domestic sources under the 
authority of FAR 6.302-3.



Sec. 206.302-4  International agreement.

    (c) Limitations. Pursuant to 10 U.S.C. 2304(f)(2)(E), the 
justifications and approvals described in FAR 6.303 and 6.304 are not 
required if--
    (i) The head of the contracting activity prepares a document which 
describes the terms of an agreement or treaty or the written directions, 
such as a Letter of Offer and Acceptance, that have the effect of 
requiring the use of other than competitive procedures for the 
acquisition; and
    (ii) The document in paragraph (c)(i) of this subsection is approved 
by the competition advocate for the contracting activity.



Sec. 206.302-5  Authorized or required by statute.

    (b) Application. Agencies may use this authority to--
    (i) Acquire supplies and services from military exchange stores 
outside the United States for use by the armed forces outside the United 
States in accordance with 10 U.S.C. 2424(a) and subject to the 
limitations of 10 U.S.C. 2424(b). The limitations of 10 U.S.C. 2424(b) 
(1) and (2) do not apply to the purchase of soft drinks that are 
manufactured in the United States. For the purposes of 10 U.S.C. 2424, 
soft drinks manufactured in the United States are brand name carbonated 
sodas, manufactured in the United States, as evidenced by product 
markings.
    (ii) Acquire police, fire protection, airfield operation, or other 
community services from local governments at military installations to 
be closed under the circumstances in 237.7401 (Section 2907 of Fiscal 
Year 1994 Defense Authorization Act (Pub. L. 103-160)).
    (c) Limitations. (i) 10 U.S.C. 2361 precludes use of this exception 
for awards to colleges or universities for the performance of research 
and development, or for the construction of any research or other 
facility, unless--
    (A) The statute authorizing or requiring award specifically--
    (1) States that the statute modifies or supersedes the provisions of 
10 U.S.C. 2361,
    (2) Identifies the particular college or university involved, and
    (3) States that award is being made in contravention of 10 U.S.C. 
2361(a); and
    (B) The Secretary of Defense provides Congress written notice of 
intent to award. The contract cannot be awarded until 180 days have 
elapsed since the date Congress received the notice of intent to award. 
Contracting activities must submit a draft notice of intent with 
supporting documentation through channels to the Director of Defense 
Procurement, Office of the Under Secretary of Defense (Acquisition & 
Technology).
    (ii) The limitation in paragraph (c)(i) of this subsection applies 
only if the statute authorizing or requiring award was enacted after 
September 30, 1989.
    (iii) Subsequent statutes may provide different or additional 
constraints on the award of contracts to specified colleges and 
universities. Contracting officers should consult legal counsel on a 
case-by-case basis.

[56 FR 36303, July 31, 1991, as amended at 57 FR 14992, Apr. 23, 1992; 
58 FR 28463, May 13, 1993; 59 FR 36089, July 15, 1994; 60 FR 29497, June 
5, 1995; 60 FR 40107, Aug. 7, 1995]

[[Page 45]]



Sec. 206.302-7  Public interest.

    (c) Limitations. For the defense agencies, the written determination 
to use this authority must be made by the Secretary of Defense.
206.303  Justifications.



Sec. 206.303-1  Requirements.

    (b) Technical and requirements personnel must obtain any review and 
approval required by department or agency procedures before submission 
of a recommendation for other than full and open competition to the 
contracting officer.
    (c) When conditions warrant, a class justification may provide for 
award of multiple contracts extending across more than one program 
phase.

[56 FR 36303, July 31, 1991, as amended at 60 FR 61592, Nov. 30, 1995]



Sec. 206.303-2  Content.

    (a) Include sufficient information in the justification to permit 
its approval as a stand-alone document, even though agency procedures 
may require supplementary documentation.



Sec. 206.304  Approval of the justification.

    (a)(4) The Under Secretary of Defense (Acquisition & Technology) may 
delegate this authority to--
    (A) An Assistant Secretary of Defense; or
    (B) For a defense agency, an officer or employee serving in, 
assigned, or detailed to that agency who--
    (1) If a member of the armed forces, is serving in a rank above 
brigadier general or rear admiral (lower half); or
    (2) If a civilian, is serving in a position with a grade under the 
General Schedule (or any other schedule for civilian officers or 
employees) that is comparable to or higher than the grade of major 
general or rear admiral.

[61 FR 10285, Mar. 13, 1995, as amended at 61 FR 50451, Sept. 26, 1996]



PART 207--ACQUISITION PLANNING--Table of Contents




                    Subpart 207.1--Acquisition Plans

Sec.
207.102  Policy.
207.103  Agency-head responsibilities.
207.104  General procedures.
207.105  Contents of written acquisition plans.
207.106 Additional requirements for major systems.

               Subpart 207.4--Equipment Lease or Purchase

207.401  Acquisition considerations.
207.470  Statutory requirements.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36305, July 31, 1991, unless otherwise noted.



                    Subpart 207.1--Acquisition Plans



Sec. 207.102  Policy.

    When a class justification for other than full and open competition 
has been approved, planning for competition shall be accomplished 
consistent with the terms of that approval.

[60 FR 61592, Nov. 30, 1995]



Sec. 207.103  Agency-head responsibilities.

    (c)(i) Military departments and agencies shall prepare written 
acquisition plans for--
    (A) Acquisitions for development, as defined in FAR 35.001, when the 
total cost of all contracts for the acquisition program is estimated at 
$5 million or more;
    (B) Acquisitions for production or services when the total cost of 
all contracts for the acquisition program is estimated at $30 million or 
more for all years or $15 million or more for any fiscal year; and
    (C) Any other acquisition considered appropriate by the department 
or agency.
    (ii) Written plans are not required in acquisitions for a final buy 
out or one-time buy. The terms ``final buy out'' and ``one-time buy'' 
refer to a single contract which covers all known present and future 
requirements. This exception does not apply to a multiyear contract or a 
contract with options or phases.
    (d) Prepare written acquisition plans for acquisition programs 
meeting the thresholds of paragraphs (c)(i) (A) and (B) of this section 
on a program basis. Other acquisition plans may be written

[[Page 46]]

on either a program or an individual contract basis.
    (f) The program manager, or other official responsible for the 
program, has overall responsibility for acquisition planning.
    (h)(i) Apply design-to-cost principles--
    (A) In all major defense acquisition programs (DoDD 5000.1, Defense 
Acquisition), unless exempted by the Secretary of Defense; and
    (B) To the acquisition of systems, subsystems, and components below 
the thresholds for major defense acquisition programs, to the extent 
prescribed by DoDD 5000.1.
    (ii) Consider life-cycle-cost in all acquisitions of systems and 
equipment.

[56 FR 36305, July 31, 1991, as amended at 61 FR 50451, Sept. 26, 1996]



Sec. 207.104   General procedures.

    (b) The planner should forward the requirements information to the 
contract administration organization when assistance in identification 
of potential sources of supply is necessary, when an existing contract 
is being modified or resolicited, or when contract administration 
resource requirements will be affected.

[61 FR 50451, Sept. 26, 1996]



Sec. 207.105  Contents of written acquisition plans.

    For acquisitions covered by 207.103(c)(i) (A) and (B), correlate the 
plan to the DoD Future Years Defense Program, applicable budget 
submissions, and the decision coordinating paper/program memorandum, as 
appropriate. It is incumbent upon the planner to coordinate the plan 
with all those who have a responsibility for the development, 
management, or administration of the acquisition. The acquisition plan 
should be provided to the contract administration organization to 
facilitate resource allocation and planning for the evaluation, 
identification, and management of contractor performance risk.
    (a) Acquisition background and objectives--(1) Statement of need. 
Include--
    (A) Applicability of a decision coordinating paper (DCP), 
acquisition decision memorandum, Defense Acquisition Board (DAB), and/or 
internal service reviews. Describe the options in the DCP/acquisition 
decision memorandum and delineate which option the acquisition plan 
supports.
    (B) The date approval for operational use has been or will be 
obtained. If waivers are requested, describe the need for the waivers.
    (C) A milestone chart depicting the acquisition objectives.
    (D) Milestones for updating the acquisition plan. Indicate when the 
plan will be updated. Program managers should schedule updates to 
coincide with DAB reviews and the transition from one phase to another 
(e.g., engineering and manufacturing development to production and 
deployment).
    (8) Acquisition streamlining. DoDD 5000.1, Defense Acquisition, and 
DoD 5000.2-R, Mandatory Procedures for Major Defense Acquisition 
Programs (MDAPs) and Major Automated Information System (MAIS) 
Acquisition Programs, contain policy direction on acquisition 
streamlining. See MIL-HDBK 248, Acquisition Streamlining, for guidance 
on streamlining performance requirements, the technical package, and the 
contract strategy.
    (b) Plan of action.--(5) Budgeting and funding. Include specific 
references to budget line items and program elements, where applicable, 
estimated production unit cost, and the total cost for remaining 
production.
    (6) Product descriptions. For development acquisitions, describe the 
market research undertaken to identify commercial items, commercial 
items with modifications, or nondevelopmental items (see FAR part 10) 
that could satisfy the acquisition objectives.
    (13) Logistics considerations. (i) Describe the extent of integrated 
logistics support planning to date, including references to approved 
plans.
    (ii) Discuss the mission profile, reliability, and maintainability 
(R&M) program plan, R&M predictions, redundancy, qualified parts lists, 
parts and material qualification, R&M requirements imposed on vendors, 
failure analysis, corrective action and feedback, and R&M design reviews 
and trade-off studies.
    (iv) See DoDD 5000.1, Defense Acquisition, and DoD 5000.2-R, 
Mandatory

[[Page 47]]

Procedures for Major Defense Acquisition Programs (MDAPs) and Major 
Automated Information System (MAIS) Acquisition Programs, for procedures 
on standardization and on the DoD Parts Control Program. See MIL-STD-
965, Parts Control Program, for procedures on the Standardized Military 
Drawing Program.
    (S-70) Describe the extent of Computer-Aided Acquisition and 
Logistics Support (CALS) implementation (see MIL-HDBK 59, Department of 
Defense Computer-Aided Logistics Support (CALS) Program Guide, and MIL-
STD-1840A, Automated Interchange of Technical Information.
    (16) Environmental and energy conservation objectives. Discuss 
actions taken to ensure either elimination of or authorization to use 
class I ozone-depleting chemicals and substances (see 211.271).
    (18) Other considerations. (A) National Technology and Industrial 
Base. For major defense acquisition programs, address the following 
(Pub. L. 102-484, section 4220)--
    (1) An analysis of the capabilities of the national technology and 
industrial base to develop, produce, maintain, and support such program, 
including consideration of the following factors related to foreign 
dependency (Pub. L. 102-484, section 4219(h))--
    (i) The availability of essential raw materials, special alloys, 
composite materials, components, tooling, and production test equipment 
for the sustained production of systems fully capable of meeting the 
performance objectives established for those systems; the uninterrupted 
maintenance and repair of such systems; and the sustained operation of 
such systems.
    (ii) The identification of items specified in paragraph 
(b)(18)(A)(1)(i) of this section that are available only from sources 
outside the national technology and industrial base.
    (iii) The availability of alternatives for obtaining such items from 
within the national technology and industrial base if such items become 
unavailable from sources outside the national technology industrial 
base; and an analysis of any military vulnerability that could result 
from the lack of reasonable alternatives.
    (iv) The effects on the national technology and industrial base that 
result from foreign acquisition of firms in the United States.
    (2) Consideration of requirements for efficient manufacture during 
the design and production of the systems to be procured under the 
program.
    (3) The use of advanced manufacturing technology, processes, and 
systems during the research and development phase and the production 
phase of the program.
    (4) To the maximum extent practicable, the use of contract 
solicitations that encourage competing offerors to acquire, for use in 
the performance of the contract, modern technology, production 
equipment, and production systems (including hardware and software) that 
increase the productivity of the offerors and reduce the life-cycle 
costs.
    (5) Methods to encourage investment by U.S. domestic sources in 
advanced manufacturing technology production equipment and processes 
through--
    (i) Recognition of the contractor's investment in advanced 
manufacturing technology production equipment, processes, and 
organization of work systems that build on workers' skill and 
experience, and work force skill development in the development of the 
contract objective; and
    (ii) Increased emphasis in source selection on the efficiency of 
production.
    (6) Expanded use of commercial manufacturing processes rather than 
processes specified by DoD.
    (7) Elimination of barriers to, and facilitation of, the integrated 
manufacture of commercial items and items being produced under DoD 
contracts.
    (8) Expanded use of commercial items, commercial items with 
modifications, or to the extent commercial items are not available, 
nondevelopmental items (see FAR part 10).
    (B) Industrial preparedness (IP).
    (1) Provide the program's IP strategy that assesses the capability 
of the U.S. industrial base to achieve identified surge and mobilization 
goals. If no IP strategy has been developed, provide supporting 
rationale for this position.
    (2) If in the IP strategy, the development of a detailed IP plan was 
determined to be applicable, include the

[[Page 48]]

plan by text or by reference. If the development of the IP plan was 
determined not to be applicable, summarize the details of the analysis 
forming the basis of this decision.
    (3) If the program involves peacetime and wartime hardware 
configurations which are supported by logistics support plans, identify 
their impact on the IP plan.
    (C) Ensure compliance with DoDD 4210.15, Hazardous Material 
Pollution Prevention.
    (D) Contract administration. Discuss the level of Government 
administration anticipated or currently performed and any change 
proposed by the contract administration office.

[56 FR 36305, July 31, 1991, as amended at 58 FR 28463, May 13, 1993; 58 
FR 32061, June 8, 1993; 60 FR 29497, June 5, 1995; 60 FR 61593, Nov. 30, 
1995; 61 FR 50451, Sept. 26, 1996]



Sec. 207.106  Additional requirements for major systems.

    (b)(1)(A) The contracting officer is prohibited by 10 U.S.C. 
2305(d)(4)(A) from requiring offers for development or production of 
major systems that would enable the Government to use technical data to 
competitively reprocure identical items or components of the system if 
the item or component were developed exclusively at private expense, 
unless the contracting officer determines that--
    (1) The original supplier of the item or component will be unable to 
satisfy program schedule or delivery requirements;
    (2) Proposals by the original supplier of the item or component to 
meet mobilization requirements are insufficient to meet the agency's 
mobilization needs; or
    (3) The Government is otherwise entitled to unlimited rights in 
technical data.
    (B) If the contracting officer makes a determination, under 
paragraphs (b)(1)(A) (1) and (2) of this section, for a competitive 
solicitation, 10 U.S.C. 2305(d)(4)(B) requires that the evaluation of 
items developed at private expense be based on an analysis of the total 
value, in terms of innovative design, life-cycle costs, and other 
pertinent factors, of incorporating such items in the system.



               Subpart 207.4--Equipment Lease or Purchase



Sec. 207.401  Acquisition considerations.

    If the equipment will be leased for more than 60 days, the requiring 
activity must prepare and provide the contracting officer with the 
justification supporting the decision to lease or purchase.



Sec. Sec. 207.470  Statutory requirements.

    (a) Limitation on contracts with terms of 18 months or more. As 
required by 10 U.S.C. 2401a, the contracting officer shall not enter 
into any contract for any vessel, aircraft, or vehicle, through a lease, 
charter, or similar agreement with a term of 18 months or more, or 
extend or renew any such contract for a term of 18 months or more, 
unless the head of the contracting activity has--
    (1) Considered all costs of such a contract (including estimated 
termination liability); and
    (2) Determined in writing that the contract is in the best interest 
of the Government.
    (b) Leasing of commercial vehicles and associated equipment. Except 
as provided in paragraph (a) of this section, the contracting officer 
may use leasing in the acquisition of commercial vehicles and associated 
equipment whenever the contracting officer determines that leasing of 
such vehicles is practicable and efficient (10 US.C. 2401a).

[61 FR 16879, Apr. 18, 1996, as amended at 61 FR 50451, Sept. 26, 1996]



PART 208--REQUIRED SOURCES OF SUPPLIES AND SERVICES--Table of Contents




Sec.
208.001  Priorities for use of Government supply sources.
208.002  Use of other Government supply sources.

          Subpart 208.4--Ordering from Federal Supply Schedules

208.404  Using schedules.
208.404-1  Mandatory use.
208.404-2  Optional use.
208.405  Ordering office responsibilities.
208.405-2  Order placement.

[[Page 49]]

Subpart 208.7--Acquisition from the Blind and Other Severely Handicapped

208.705  Procedures.

                 Subpart 208.70--Coordinated Acquisition

208.7000  Scope of subpart.
208.7001  Definitions.
208.7002  Assignment authority.
208.7002-1  Acquiring department responsibilities.
208.7002-2  Requiring department responsibilities.
208.7003  Applicability.
208.7003-1  Assignments under integrated material management (IMM).
208.7003-2  Assignments under coordinated acquisition.
208.7004  Procedures.
208.7004-1  Purchase authorization from requiring department.
208.7004-2  Acceptance by acquiring department.
208.7004-3  Use of advance MIPRs.
208.7004-4  Cutoff dates for submission of Category II MIPRs.
208.7004-5  Notification of inability to obligate on Category II MIPRs.
208.7004-6  Cancellation of requirements.
208.7004-7  Termination for default.
208.7004-8  Transportation funding.
208.7004-9  Status reporting.
208.7004-10  Administrative costs.
208.7005  MIPRs.
208.7006  Coordinated acquisition assignments.

     Subpart 208.71--Acquisition for National Aeronautics and Space 
                          Administration (NASA)

208.7100  Authorization.
208.7101  Policy.
208.7102  Procedures.
208.7103  Purchase request and acceptance.
208.7104  Changes in estimated total prices.
208.7105  Payments.

       Subpart 208.72--Industrial Preparedness Production Planning

208.7201  Definitions.
208.7202  General.
208.7203  Authority.
208.7204  Procedures.

         Subpart 208.73--Use of Government-Owned Precious Metals

208.7301  Definitions.
208.7302  Policy.
208.7303  Procedures.
208.7304  Refined precious metals.
208.7305  Contract clause.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36306, July 31, 1991, unless otherwise noted.



Sec. 208.001  Priorities for use of Government supply sources.

    (a)(1)(v) See subpart 208.70, Coordinated Acquisition.
    (2)(iii) Information on General Services Administration (GSA) 
schedules for maintenance, repair, and rehabilitation of personal 
property is in the GSA supply catalog. The types of personal property 
for which GSA, Federal Supply Service has schedule contracts for 
maintenance, repair, and/or rehabilitation are--
    (1) Furniture (office, household, quarters, institutional, and 
hospital type);
    (2) Typewriters (manual, electric, and electronic);
    (3) Repair and maintenance of Government owned vehicles; and
    (4) Tire retreading and repair (except aircraft).



Sec. 208.002  Use of other Government supply sources.

    (f) Detailed information on strategic and critical materials in 
excess of national stockpile requirements (e.g., metals, ores, 
chemicals) is available from the Defense National Stockpile Center, 1745 
Jefferson Davis Highway, Crystal Square Bldg. 4, suite 100, Arlington, 
VA 22202.
    (g) Acquire helium (Pub. L. 86-777)--
    (i) In bulk from--
    (A) The Department of Interior (Bureau of Mines); or
    (B) Eligible private helium distributors. A list of eligible private 
helium distributors is maintained by the Bureau of Mines, Helium Field 
Operations, 1100 South Fillmore Street, Amarillo, TX 79101.
    (ii) In cylinders or trailers, from--
    (A) The Department of Interior (Bureau of Mines); or
    (B) Through GSA Federal Supply Schedule contracts.



          Subpart 208.4--Ordering From Federal Supply Schedules



Sec. 208.404  Using schedules.

    (a) When a schedule lists both foreign and domestic items that will 
meet the needs of the requiring activity, the ordering office must apply 
the procedures

[[Page 50]]

of part 225 and FAR part 25, Foreign Acquisition. When purchase of an 
item of foreign origin is specifically required, the requiring activity 
must furnish the ordering office sufficient information to permit the 
determinations required by part 225 and FAR part 25 to be made.



Sec. 208.404-1  Mandatory use.

    The DoD will not be a mandatory user of any schedule unless 
individual DoD activities elect to provide annual requirements estimates 
to GSA and become mandatory users. Examples of areas where this approach 
may be applied are:
    (1) Group 68--gases and chemicals;
    (2) Group 26--pneumatic tires and inner tubes;
    (3) Maintenance, repair, and/or rehabilitation of personal property; 
and
    (4) ``Just-in-time'' arrangements for delivery of material directly 
from vendors to users.



Sec. 208.404-2  Optional use.

    Make maximum use of the schedules. Other procedures may be used if 
further competition is judged to be in the best interest of the 
Government in terms of quality, responsiveness, or cost.
208.405  Ordering office responsibilities.



Sec. 208.405-2  Order placement.

    (1) Ordering offices may use DD Form 1155, Order for Supplies or 
Services, to order items from schedules.
    (2) Orders may be placed orally if--
    (i) The order does not exceed the small purchase threshold at FAR 
13.000;
    (ii) The contractor agrees to furnish a delivery ticket for each 
shipment under the order (in the number of copies required by the 
ordering office). The ticket must include the--
    (A) Contract number;
    (B) Order number under the contract;
    (C) Date of order;
    (D) Name and title of person placing order;
    (E) Itemized listing of supplies or services furnished; and
    (F) Date of delivery or shipment.
    (iii) Invoicing procedures are agreed upon. Optional methods of 
submitting invoices for payment are permitted, such as--
    (A) An individual invoice with a receipted copy of the delivery 
ticket;
    (B) A summarized monthly invoice covering all oral orders made 
during the month, with receipted copies of the delivery tickets (this 
option is preferred if there are many oral orders); or
    (C) A contracting officer statement that the Government has received 
the supplies.
    (3) For purchases where cash payment is an advantage, the use of 
imprest funds (see FAR 13.4) is authorized when--
    (i) The order does not exceed the threshold at FAR 13.404(a); and
    (ii) The contractor agrees to the procedure.



Subpart 208.7--Acquisition From the Blind and Other Severely Handicapped



Sec. 208.705  Procedures.

    Ordering offices may use DD Form 1155, Order for Supplies or 
Services, to place orders with central nonprofit agencies or workshops.



                 Subpart 208.70--Coordinated Acquisition



Sec. 208.7000  Scope of subpart.

    This subpart prescribes policy and procedures for acquisition of 
items for which contracting responsibility is assigned to one or more of 
the departments/agencies or the General Services Administration. 
Contracting responsibility is assigned through--
    (a) The Coordinated Acquisition Program (commodity assignments are 
listed in appendix B); or
    (b) The Integrated Materiel Management Program (assignments are in 
DoD 4140.26-M, Integrated Materiel Management for Consumable Items).



Sec. 208.7001  Definitions.

    For purposes of this subpart--
    Acquiring department means the department, agency, or General 
Services Administration which has contracting

[[Page 51]]

responsibility under the Coordinated Acquisition Program.
    Integrated materiel management means assignment of acquisition 
management responsibility to one department, agency, or the General 
Services Administration for all of DoD's requirements for the assigned 
item. Acquisition management normally includes computing requirements, 
funding, budgeting, storing, issuing, cataloging, standardizing, and 
contracting functions.
    Requiring department means the department or agency which has the 
requirement for an item.



Sec. 208.7002  Assignment authority.

    (a) Under the DoD Coordinated Acquisition Program, contracting 
responsibility for certain commodities is assigned to a single 
department, agency, or the General Services Administration (GSA). 
Commodity assignments are made--
    (1) To the departments and agencies, by the Assistant Secretary of 
Defense (Production and Logistics);
    (2) To the GSA, through agreement with GSA, by the Assistant 
Secretary of Defense (Production and Logistics);
    (3) Outside the continental United States, by the Unified 
Commanders; and
    (4) For acquisitions to be made in the United States for commodities 
not assigned under paragraphs (a) (1), (2), or (3) of this section, by 
agreement of agency heads (10 U.S.C. 2308).
    (i) Agreement may be on either a one-time or a continuing basis. The 
submission of a military interdepartmental purchase request (MIPR) by a 
requiring activity and its acceptance by the contracting activity of 
another department, even though based on an oral communication, 
constitutes a one-time agreement.
    (ii) Consider repetitive delegated acquisition responsibilities for 
coordinated acquisition assignment. If not considered suitable for 
coordinated acquisition assignment, formalize continuing agreements and 
distribute them to all activities concerned.
    (b) Under the Integrated Materiel Management Program, assignments 
are made by the Assistant Secretary of Defense (Production and 
Logistics)--
    (1) To the departments and agencies; and
    (2) To the GSA, through agreement with GSA.



Sec. 208.7002-1  Acquiring department responsibilities.

    The acquiring department generally is responsible under coordinated 
acquisition for--
    (a) Operational aspects of acquisition planning (Phasing the 
submission of requirements to contracting, consolidating or dividing 
requirements, analyzing the market, and determining patterns for the 
phased placement of orders to avoid unnecessary production fluctuations 
and meet the needs of requiring departments at the lowest price);
    (b) Purchasing;
    (c) Performing or assigning contract administration, including 
follow up and expediting of inspection and transportation; and
    (d) Obtaining licenses under patents and settling patent 
infringement claims arising out of the acquisition. (Acquiring 
departments must obtain approval from the department whose funds are to 
be charged for obtaining licenses or settling claims.)



Sec. 208.7002-2  Requiring department responsibilities.

    The requiring department is responsible for--
    (a) Ensuring compliance with the order of priority in FAR 8.001 for 
use of Government supply sources before submitting a requirement to the 
acquiring department for contracting action.
    (b) Providing the acquiring department--
    (1) The complete and certified documentation required by FAR 6.303-
2(b). A requiring department official, equivalent to the appropriate 
level in FAR 6.304, must approve the documentation before submission of 
the military interdepartmental purchase request (MIPR) to the acquiring 
department;
    (2) Any additional supporting data which the acquiring department 
contracting officer requests (e.g., the results of any market survey or 
why none was conducted, and actions the requiring department will take 
to overcome barriers to competition in the future);

[[Page 52]]

    (3) The executed determination and findings required by FAR 6.302-
7(c)(1);
    (4) When a requiring department requests an acquiring department to 
contract for supplies or services using full and open competition after 
exclusion of sources, all data required by FAR 6.202(b)(2);
    (5) When the requiring department specifies a foreign end product, 
any determinations required by part 225 or FAR part 25;
    (6) A complete definition of the requirements, including a list (or 
copies) of specifications, drawings, and other data required for the 
acquisition. The requiring department need not furnish Federal, 
military, departmental, or other specifications or drawings or data 
which are available to the acquiring department;
    (7) Justification required by FAR 17.205(a) for any option 
quantities requested;
    (8) A statement as to whether used or reconditioned material, former 
Government surplus property, or residual inventory will be acceptable, 
and if so--
    (i) A list of any supplies that need not be new; and
    (ii) The basis for determining the acceptability of such supplies, 
including an analysis of the factors at FAR 10.010(b);
    (9) A statement as to whether the acquiring department may exceed 
the total MIPR estimate, and if so, by what amount;
    (10) Unless otherwise agreed between the departments, an original 
and six copies of each MIPR and its attachments (except specifications, 
drawings, and other data); and
    (11) A list of all persons who have had access to proprietary or 
source selection information (see FAR 3.104-9(e)).
208.7003  Applicability.



Sec. 208.7003-1  Assignments under integrated material management (IMM).

    (a) All items assigned for IMM must be acquired from the IMM manager 
except--
    (1) Items purchased under circumstances of unusual and compelling 
urgency as defined in FAR 6.302-2. After such a purchase is made, the 
requiring activity must send one copy of the contract and a statement of 
the emergency to the IMM manager;
    (2) Items for which the IMM manager assigns a supply system code for 
local purchase or otherwise grants authority to purchase locally; or
    (3) When purchase by the requiring activity is in the best interest 
of the Government in terms of the combination of quality, timeliness, 
and cost that best meets the requirement. This exception does not apply 
to items--
    (i) Critical to the safe operation of a weapon system;
    (ii) With special security characteristics; or
    (iii) Which are dangerous (e.g., explosives, munitions).
    (b) When an item assigned for IMM is to be acquired by the requiring 
activity under paragraph (a)(3) of this subsection, the contracting 
officer must--
    (1) Document the contract file with a statement of the specific 
advantage of local purchase for an acquisition exceeding the micro-
purchase threshold in FAR part 13; and
    (2) Ensure that a waiver is obtained from the IMM manager before 
initiating an acquisition exceeding the simplified acquisition threshold 
in FAR part 13, if the IMM assignment is to the General Services 
Administration (GSA), the Defense Logistics Agency (DLA), or the Army 
Materiel Command (AMC). Submit requests for waiver to--

(i) For GSA:
    Commissioner (F), Federal Supply Service, Washington, DC 20406
(ii) For DLA:
    Defense Construction Supply Center, ATTN: DCSC-BDA, P.O. Box 3990, 
Columbus, OH 43216-5000
    Defense Electronics Supply Center, ATTN: DESC-ERM, 1507 Wilmington 
Pike, Dayton, OH 45444-5000
    Defense Fuel Supply Center, ATTN: DFSC-OI, Cameron Station, VA 
22304-6160
    Defense General Supply Center, ATTN: DGSC-X, Richmond, VA 23297-5000
    Defense Industrial Supply Center, ATTN: DISC-OPD, 700 Robbins 
Avenue, Philadelphia, PA 19111-5096
    Defense Personnel Support Center, ATTN: DPSC-CSH, 2800 South 20th 
Street, P.O. Box 8419, Philadelphia, PA 19101-8419

[[Page 53]]

(iii) For AMC:
    Commander, U.S. Army Materiel Command, ATTN: AMCLG-S, 5001 
Eisenhower Avenue, Alexandria, VA 22333-0001

[60 FR 61593, Nov. 30, 1995]



Sec. 208.7003-2  Assignments under coordinated acquisition.

    Requiring departments must submit to the acquiring department all 
contracting requirements for items assigned for coordinated acquisition, 
except--
    (a) Items obtained through the sources in FAR 8.001(a)(1) (i) 
through (vii);
    (b) Items obtained under 208.7003-1(a);
    (c) Requirements not in excess of the simplified acquisition 
threshold in FAR part 13, when contracting by the requiring department 
is in the best interest of the Government;
    (d) In an emergency. When an emergency purchase is made, the 
requiring department must send one copy of the contract and a statement 
of the emergency to the contracting activity of the acquiring 
department;
    (e) Requirements for which the acquiring department's contracting 
activity delegates contracting authority to the requiring department;
    (f) Items in a research and development stage (as described in FAR 
part 35). Under this exception, the military departments may contract 
for research and development requirements, including quantities for 
testing purposes and items undergoing in-service evaluation (not yet in 
actual production, but beyond prototype). Generally, this exception 
applies only when research and development funds are used.
    (g) Items peculiar to nuclear ordnance material where design 
characteristics or test-inspection requirements are controlled by the 
Department of Energy (DoE) or by DoD to ensure reliability of nuclear 
weapons.
    (1) This exception applies to all items designed for and peculiar to 
nuclear ordnance regardless of agency control, or to any item which 
requires test or inspection conducted or controlled by DoE or DoD.
    (2) This exception does not cover items used for both nuclear 
ordnance and other purposes if the items are not subject to the special 
testing procedures.
    (h) Items to be acquired under FAR 6.302-6 (national security 
requires limitation of sources);
    (i) Items to be acquired under FAR 6.302-1 (supplies available only 
from the original source for follow-on contract);
    (j) Items directly related to a major system and which are design 
controlled by and acquired from either the system manufacturer or a 
manufacturer of a major subsystem;
    (k) Items subject to rapid design changes, or to continuous redesign 
or modification during the production and/or operational use phases, 
which require continual contact between industry and the requiring 
department to ensure that the item meets the requirements:
    (1) This exception permits the requiring department to contract for 
items of highly unstable design. For use of this exception, it must be 
clearly impractical, both technically and contractually, to refer the 
acquisition to the acquiring department. Anticipation that contracting 
by negotiation will be appropriate, or that a number of design changes 
may occur during contract performance is not in itself sufficient reason 
for using this exception.
    (2) This exception also applies to items requiring compatibility 
testing, provided such testing requires continual contact between 
industry and the requiring department;
    (l) Containers acquired only with items for which they are designed;
    (m) One-time buy of a noncataloged item.
    (1) This exception permits the requiring departments to contract for 
a nonrecurring requirement for a noncataloged item. This exception could 
cover a part or component for a prototype which may be stock numbered at 
a later date.
    (2) This exception does not permit acquisitions of recurring 
requirements for an item, based solely on the fact that the item is not 
stock numbered, nor may it be used to acquire items which have only 
slightly different

[[Page 54]]

characteristics than previously cataloged items.

[56 FR 36306, July 31, 1991, as amended at 60 FR 61593, Nov. 30, 1995]
208.7004  Procedures.



Sec. 208.7004-1  Purchase authorization from requiring department.

    (a) Requiring departments send their requirements to acquiring 
departments on either a DD Form 448, Military Interdepartmental Purchase 
Request (MIPR), or a DD Form 416, Requisition for Coal, Coke or 
Briquettes. A MIPR or a DD Form 416 is the acquiring department's 
authority to acquire the supplies or services on behalf of the requiring 
department.
    (b) The acquiring department is authorized to create obligations 
against the funds cited in a MIPR without further referral to the 
requiring department. The acquiring department has no responsibility to 
determine the validity of a stated requirement in an approved MIPR, but 
it should bring apparent errors in the requirement to the attention of 
the requiring department.
    (c) Changes that affect the contents of the MIPR must be processed 
as a MIPR amendment regardless of the status of the MIPR. The requiring 
department may initially transmit changes electronically or by some 
other expedited means, but must confirm changes by a MIPR amendment.
    (d) The requiring department must submit requirements for additional 
line items of supplies or services not provided for in the original MIPR 
as a new MIPR. The requiring department may use a MIPR amendment for 
increased quantities only if--
    (1) The original MIPR requirements have not been released for 
solicitation; and
    (2) The acquiring department agrees.



Sec. 208.7004-2  Acceptance by acquiring department.

    (a) Acquiring departments formally accept a MIPR by DD Form 448-2, 
Acceptance of MIPR, as soon as practicable, but no later than 30 days 
after receipt of the MIPR. If the 30 day time limit cannot be met, the 
acquiring department must inform the requiring department of the reason 
for the delay, and the anticipated date the MIPR will be accepted. The 
acquiring department must accept MIPRs in writing before expiration of 
the funds.
    (b) The acquiring department in accepting a MIPR will determine 
whether to use Category I (reimbursable funds citation) or Category II 
(direct funds citation) methods of funding.
    (1) Category I method of funding is used under the following 
circumstances and results in citing the funds of the acquiring 
department in the contract--
    (i) Delivery is from existing inventories of the acquiring 
department;
    (ii) Delivery is by diversion from existing contracts of the 
acquiring department;
    (iii) Production or assembly is through Government work orders in 
Government-owned plants;
    (iv) Production quantities are allocated among users from one or 
more contracts, and the identification of specific quantities of the end 
item to individual contracts is not feasible at the time of MIPR 
acceptance;
    (v) Acquisition of the end items involves separate acquisition of 
components to be assembled by the acquiring department;
    (vi) Payments will be made without reference to deliveries of end 
items (e.g., cost-reimbursement type contracts and fixed price contracts 
with progress payment clauses); or
    (vii) Category II method of funding is not feasible and economical.
    (2) Category II method of funding is used in circumstances other 
than those in paragraph (b)(1) of this subsection. Category II funding 
results in citation of the requiring department's funds and MIPR number 
in the resultant contract.
    (c) When the acquiring departments accepts a MIPR for Category I 
funding--
    (1) The DD Form 448-2, Acceptance of MIPR, is the authority for the 
requiring department to record the obligation of funds;
    (2) The acquiring department will annotate the DD Form 448-2 if 
contingencies, price revisions, or variations in quantities are 
anticipated. The acquiring department will periodically advise the 
requiring department, prior to submission of billings, of any

[[Page 55]]

changes in the acceptance figure so that the requiring department may 
issue an amendment to the MIPR, and the recorded obligation may be 
adjusted to reflect the current price;
    (3) If the acquiring department does not qualify the acceptance of a 
MIPR for anticipated contingencies, the price on the acceptance will be 
final and will be billed at time of delivery;
    (4) Upon receipt of the final billing (SF 1080, Voucher for 
Transferring Funds), the requiring department may adjust the fiscal 
records accordingly without authorization from or notice to the 
acquiring department.
    (d) When the MIPR is accepted for Category II funding, a conformed 
copy of the contract (see 204.802(1)(ii)) is the authority to record the 
obligation. When all awards have been placed to satisfy the total MIPR 
requirement, any unused funds remaining on the MIPR become excess to the 
acquiring department. The acquiring department will immediately notify 
the requiring department of the excess funds by submitting an Acceptance 
of MIPR (DD Form 448-2). This amendment is authorization for the 
requiring department to withdraw the funds. The acquiring department is 
prohibited from further use of such excess funds.
    (e) When the acquiring department requires additional funds to 
complete the contracting action for the requiring department, the 
request for additional funds must identify the exact items involved, and 
the reason why additional funds are required. The requiring department 
shall act quickly to--
    (1) Provide the funds by an amendment of the MIPR; or
    (2) Reduce the requirements.
    (f) The accepting activity of the acquiring department shall remain 
responsible for the MIPR even though that activity may split the MIPR 
into segments for action by other contracting activities.



Sec. 208.7004-3  Use of advance MIPRs.

    (a) An advance MIPR is an unfunded MIPR provided to the acquiring 
department in advance of the funded MIPR so that initial steps in 
planning the contract action can begin at an earlier date.
    (b) In order to use an advance MIPR, the acquiring department and 
the requiring department must agree that its use will be beneficial. The 
departments may execute a blanket agreement to use advance MIPRs.
    (c) The requiring department shall not release an advance MIPR to 
the acquiring department without obtaining proper internal approval of 
the requirement.
    (d) When advance MIPRs are used, mark ``ADVANCE MIPR'' prominently 
on the DD Form 448.
    (e) For urgent requirements, the advance MIPR may be transmitted 
electronically.
    (f) On the basis of an advance MIPR, the acquiring department may 
take the initial steps toward awarding a contract, such as obtaining 
internal coordination and preparing an acquisition plan. Acquiring 
departments may determine the extent of these initial actions but shall 
not award contracts on the basis of advance MIPRs.



Sec. 208.7004-4  Cutoff dates for submission of Category II MIPRs.

    (a) Unless otherwise agreed between the departments, May 31 is the 
cutoff date for the receipt of MIPRs citing expiring appropriations 
which must be obligated by September 30 of that fiscal year. If 
circumstances arise which require the submission of MIPRs citing 
expiring appropriations after the cutoff date, the requiring department 
will communicate with the acquiring department before submission to find 
out whether the acquiring department can execute a contract or otherwise 
obligate the funds by the end of the fiscal year. Acquiring departments 
will make every effort to obligate funds for all such MIPRs accepted 
after the cutoff date. However, acceptance of a late MIPR does not 
constitute assurance by the acquiring department that all such funds 
will be obligated.
    (b) Nothing in these instructions is intended to restrict the 
processing of MIPRs when the acquiring department is capable of 
executing contracts or otherwise obligating funds before the end of the 
fiscal year.
    (c) The May 31 cutoff date does not apply to MIPRs citing continuing 
appropriations.

[[Page 56]]



Sec. 208.7004-5  Notification of inability to obligate on Category II MIPRs.

    On August 1, the acquiring department will advise the requiring 
department of any Category II MIPRs on hand citing expiring 
appropriations they will be unable to obligate prior to the fund 
expiration date. If an unforeseen situation develops after August 1 
which will prevent execution of a contract, the acquiring department 
will notify the requiring department as quickly as possible and return 
the MIPR. The letter of transmittal returning the MIPR will authorize 
purchase by the requiring department and state the reason that the 
acquisition could not be accomplished.



Sec. 208.7004-6  Cancellation of requirements.

    (a) Category I MIPRs. The requiring department will notify the 
acquiring department by electronic or other immediate means when 
cancelling all or part of the supplies or services requested in the 
MIPR. Within 30 days, the acquiring department will notify the requiring 
department of the quantity of items available for termination and the 
amount of funds in excess of the estimated settlement costs. Upon 
receipt of this information, the requiring department will issue a MIPR 
amendment to reduce the quantities and funds accordingly.
    (b) Category II MIPRs. The requiring department will notify the 
acquiring department electronically or by other immediate means when 
cancelling all or any part of the supplies or services requested in the 
MIPR.
    (1) If the acquiring department has not entered into a contract for 
the supplies or services to be cancelled, the acquiring department will 
immediately notify the requiring department. Upon receipt of such 
notification, the requiring department shall initiate a MIPR amendment 
to revoke the estimated amount shown on the original MIPR for the 
cancelled items.
    (2) If the items to be cancelled have already been placed under 
contract--
    (i) As soon as practicable, but in no event more than 45 days after 
receipt of the cancellation notice from the requiring department, the 
contracting officer shall issue a termination data letter to the 
requiring department (original and four copies) containing, as a 
minimum, the information in Table 8-1, Termination Data Letter.
    (ii) The termination contracting officer (TCO) will review the 
proceedings at least every 60 days to reassess the Government's probable 
obligation. If any additional funds are excess to the probable 
settlement requirements, or if it appears that previous release of 
excess funds will result in a shortage of the amount which will be 
required for settlement, the TCO will promptly notify the contracting 
office which will amend the termination data letter. The requiring 
department will process a MIPR amendment to reflect the reinstatement of 
funds within 30 days after receiving the amended termination data 
letter.
    (iii) Upon receipt of a copy of the termination settlement 
agreement, the requiring department will prepare a MIPR amendment, if 
required, to remove any remaining excess funds.

                   Table 8-1, Termination Data Letter                   
  SUBJECT: Termination Data Re:                                         
  Contract No. ____________                                             
  Termination No. ____________                                          
  Contract ____________                                                 
  (a) As termination action is now in progress on the above contract,   
 the following information is submitted:                                
  (1) Brief Description of items terminated.                            
  (2) You are notified that the sum of $________ is available for       
 release under the subject contract. This sum represents the difference 
 between $________, the value of items terminated under the contract,   
 and $________, estimated to be required for settlement of the          
 terminated contract. The estimated amount available for release is     
 allocated by the appropriations cited on the contract as follows:      
  MIPR NO. ________ ACCOUNTING CLASSIFICATION ________ AMOUNT ________  
  Total available for release at this time $________                    
  (b) Request you forward an amendment to MIPR ________ on DD Form 448-2
 to reflect the reduced quantity and amount of funds available for      
 release.                                                               
  (c) Periodic reviews (not less than 60 days) will be made as          
 termination proceedings progress to redetermine the Government's       
 probable obligation.                                                   
  ________________________________________                              
  Contracting Officer                                                   
------------------------------------------------------------------------


[[Page 57]]



Sec. 208.7004-7  Termination for default.

    (a) When the acquiring department terminates a contract for default, 
they will ask the requiring department if the supplies or services to be 
terminated are still required so that repurchase action can be started.
    (b) The requiring department will not deobligate funds on a contract 
terminated for default until receipt of a settlement modification or 
other written evidence from the acquiring department authorizing release 
of funds.
    (c) On the repurchase action, the acquiring department will not 
exceed the unliquidated funds on the defaulted contract without 
receiving additional funds from the requiring department.



Sec. 208.7004-8  Transportation funding.

    The requiring department will advise the acquiring department or the 
transportation officer in the contract administration office of the fund 
account to be charged for transportation costs. The requiring department 
may cite the fund account on each MIPR or provide the funding cite to 
the transportation officer at the beginning of each fiscal year for use 
on Government bills of lading. When issuing a Government bill of lading, 
show the requiring department as the department to be billed and cite 
the appropriate fund account.



Sec. 208.7004-9  Status reporting.

    (a) The acquiring department will maintain a system of MIPR follow 
up to inform the requiring department of the current status of its 
requests. In addition, the contract administration office will maintain 
a system of follow up in order to advise the acquiring department on 
contract performance.
    (b) If requested by the requiring department, the acquiring 
department will furnish the requiring department a copy of the 
solicitation when the MIPR is satisfied through Category II funding.
    (c) Any reimbursement billings, shipping document, contractual 
documents, project orders, or related documentation furnished to the 
requiring department will identify the requiring department's MIPR 
number, quantities of items, and funding information.



Sec. 208.7004-10  Administrative costs.

    The acquiring department bears the administrative costs of acquiring 
supplies for the requiring department. However, when an acquisition 
responsibility is transferred to another department, funds appropriated 
or to be appropriated for administrative costs will transfer to the 
successor acquiring department. The new acquiring department must assume 
budget cognizance as soon as possible.



Sec. 208.7005  MIPRs.

    Instructions on preparation and use of DD Form 448, Military 
Interdepartmental Purchase Request, and DD Form 448-2, Acceptance of 
MIPR, are in 253.208.



Sec. 208.7006  Coordinated acquisition assignments.

    See appendix B for coordinated acquisition assignments.



     Subpart 208.71--Acquisition for National Aeronautics and Space 
                          Administration (NASA)



Sec. 208.7100  Authorization.

    NASA is authorized by Public Law 85-568 to use the acquisition 
services, personnel, equipment, and facilities of DoD departments and 
agencies with their consent, with or without reimbursement, and on a 
similar basis to cooperate with the departments/agencies in the use of 
acquisition services, equipment, and facilities.



Sec. 208.7101  Policy.

    Departments and agencies will--
    (a) Cooperate fully with NASA in making acquisition services, 
equipment, personnel, and facilities available on the basis of mutual 
agreement.
    (b) Not claim reimbursement for administrative costs incident to 
acquisitions for NASA, unless agreed otherwise prior to the time 
services are performed.



Sec. 208.7102  Procedures.

    (a) When contracting or performing field service functions for NASA, 
the departments and agencies will use

[[Page 58]]

their own methods, except when otherwise required by the terms of the 
agreement.
    (b) Departments and agencies normally will use their own funds when 
contracting for or performing services for NASA and will not cite NASA 
funds on any defense obligation or payment document.



Sec. 208.7103  Purchase request and acceptance.

    (a) NASA will use NASA Form 523, NASA-Defense Purchase Request, to 
request acquisition of supplies or services.
    (b) Except as provided in paragraph (d) of this section, departments 
and agencies will respond within 30 days to a NASA purchase request by 
forwarding DD Form 448-2, Acceptance of MIPR. Forward each DD Form 448-2 
in quadruplicate and indicate action status as well as the name and 
address of the DoD acquisition activity for future use by the NASA 
initiator.
    (c) To the extent feasible, all documents related to the NASA action 
will reference the NASA-Defense Purchase Request number and the item 
number when appropriate.
    (d) Departments and agencies are not required to accept NASA-Defense 
Purchase Requests for common-use standard stock items which the 
supplying department has on hand or on order for prompt delivery at 
published prices.



Sec. 208.7104  Changes in estimated total prices.

    When a department or agency determines that the estimated total 
price (Block 6F, NASA Form 523) for NASA items is not sufficient to 
cover the required reimbursement, or is in excess of the amount 
required, the department/agency will forward a request for amendment to 
the NASA originating office. Indicate in the request a specific dollar 
amount, rather than a percentage, and include justification for any 
upward adjustment requested. Upon approval of a request, NASA will 
forward an amendment of its purchase request to the contracting 
activity.



Sec. 208.7105  Payments.

    Departments and agencies will submit SF 1080, Voucher for 
Transferring Funds, billings to the NASA office designated in Block 9 of 
the NASA-Defense Purchase Request, except where agreements provide that 
reimbursement is not required. Departments and agencies will support 
billings in the same manner as billings between departments and 
agencies.



       Subpart 208.72--Industrial Preparedness Production Planning



Sec. 208.7201  Definitions.

    As used in this subpart--
    Industrial base means that part of the total privately-owned and 
Government-owned industrial production and maintenance capacity of the 
United States and Canada, which will be available during national 
emergencies to manufacture and repair items required by the departments.
    Industrial preparedness production planning means planning designed 
to maintain an adequate industrial base to support DoD requirements for 
selected essential military items in a national emergency.
    National emergency means a condition declared by the President or 
the Congress which authorizes certain emergency action in the national 
interest, including partial or total mobilization of national resources.
    Planned item means any item selected for industrial preparedness 
planning under the criteria of DoDI 4005.3, Industrial Preparedness 
Planning.
    Planned producer means an industrial firm which has agreed by either 
non-binding memorandum of understanding or binding contract/contract 
clause to provide production capacity data, to maintain existing 
capacity for a negotiated period of time, and to accept contracts for 
planned items upon the request of the Government.



Sec. 208.7202  General.

    (a) Under the Industrial Preparedness Production Planning (IPPP) 
program, DoD components and industry work together to ensure essential 
military items are available during an emergency.
    (b) Departments and agencies select weapon systems and items for 
planning in accordance with DoDI 4005.3, Industrial Preparedness 
Planning. Planning

[[Page 59]]

is conducted only with U.S. or Canadian sources.
    (c) The use of privately-owned facilities is preferred to minimize 
the need for Government investment. Departments and agencies will 
include Government-owned production facilities in the industrial base 
only when--
    (1) Private industry is unable to provide the facilities necessary 
to support DoD requirements; or
    (2) The facilities are necessary--
    (i) For reasons of national security; or
    (ii) To ensure a quick response capability to meet fluctuating 
demands.



Sec. 208.7203  Authority.

    Authority under current contracting procedures to accomplish 
industrial planning actions includes--
    (a) Leasing of Government-owned property to planned emergency 
producers under the authority of the Military Leasing Act of 1947, 10 
U.S.C. 2667;
    (b) Acquisitions in the interest of national defense under FAR 
6.202(a)(2), or in case of a national emergency or to achieve industrial 
mobilization under FAR 6.302-3;
    (c) Acquisition under 225.71 of--
    (1) Miniature and instrument bearings;
    (2) Precision components for mechanical time devices;
    (3) High-purity silicon;
    (4) High-carbon ferrochrome;
    (5) Anti-friction bearings; and
    (6) Forgings and welded shipboard anchor chain;
    (d) Acquisition of jewel bearings (FAR 8.2);
    (e) Use of multiyear contracting (FAR 17.1);
    (f) Providing Government production and research property to 
contractors; and
    (g) Use of direct payment for idle facilities or idle capacities 
reserved for defense mobilization production (FAR 31.205-17(d)).

[56 FR 36306, July 31, 1991, as amended at 57 FR 42629, Sept. 15, 1992]



Sec. 208.7204  Procedures.

    (a) Planned producers shall be solicited for all acquisitions of 
their planned items, when the acquisition is over the small purchase 
threshold in FAR 13.000, except as provided in FAR or DFARS.
    (b) The contracting officer may contract for industrial planning 
efforts for selected essential military items. These efforts may 
include, but are not limited to, the maintenance of Government-owned 
industrial facilities (real and personal property) or production data 
packages. These planning efforts may be acquired through an individual 
service contract or as a line item on a contract for a planned item.



         Subpart 208.73--Use of Government-Owned Precious Metals



Sec. 208.7301  Definitions.

    As used in this subpart--
    Defense Industrial Supply Center (DISC) means the Defense Logistics 
Agency field activity located at 700 Robbins Avenue, Philadelphia, PA 
19111-5096, which is the assigned commodity integrated material manager 
for refined precious metals and is responsible for the storage and issue 
of such material.
    Dual pricing evaluation procedure means a procedure where offerors 
submit two prices for precious metals bearing items--one based on 
Government-furnished precious metals and one based on contractor-
furnished precious metals. The contracting officer evaluates the prices 
to determine which is in the Government's best interest.
    Precious Metals Indicator Code (PMIC) means a single digit, alpha-
numeric code assigned to national stock numbered items in The Defense 
Integrated Data System Total Item Record used to indicate the presence 
or absence of precious metals in the item. PMICs and the content value 
of corresponding items are listed in DoDD 4100.39M, Defense Integrated 
Data System (DIDS) Procedures Manual, chapter 10, Table 160.
    Refined precious metal means recovered silver, gold, platinum, 
palladium, iridium, rhodium, or ruthenium, in bullion, granulation or 
sponge form, which has been purified to at least .999 percentage of 
fineness.

[[Page 60]]



Sec. 208.7302  Policy.

    DoD policy is for maximum participation in the Precious Metals 
Recovery Program (PMRP). DoD components shall furnish recovered precious 
metals contained in the DISC inventory to production contractors rather 
than use contractor-furnished precious metals whenever the contracting 
officer determines it to be in the Government's best interest. (See DoDD 
4160.22, Recovery and Utilization of Precious Metals.)



Sec. 208.7303  Procedures.

    (a) Item managers and contracting officers will use the PMIC and/or 
other relevant data furnished with a purchase request to determine the 
applicability of this subpart.
    (b) When an offeror advises of a precious metals requirement, the 
contracting officer shall use the procedures in chapter X of DoD 
4160.21-M, Defense Utilization and Disposal Manual, to determine 
availability of required precious metal assets and current government-
furnished materiel (GFM) unit prices. If the precious metals are 
available, the contracting officer shall evaluate offers and award the 
contract on the basis of the offer which is in the best interest of the 
Government.
    (c) When the clause prescribed by 208.7305 is included in a 
solicitation, the contracting officer will ensure that section B, 
Schedule of Supplies or Services and Prices, is structured to--
    (1) Permit insertion of alternate prices for each deliverable 
contract line item number that uses precious metals; and
    (2) Use dual pricing evaluation procedures.



Sec. 208.7304  Refined precious metals.

    The following refined precious metals are currently managed by DISC:

------------------------------------------------------------------------
                                                      National Stock No.
                   Precious metal                            (NSN)      
------------------------------------------------------------------------
Silver Bullion/Granules.............................    9660-00-106-9432
Gold Bullion/Granules...............................    9660-00-042-7733
Platinum Granules...................................    9660-00-042-7768
Platinum Sponge.....................................    9660-00-151-4050
Palladium Granules..................................    9660-00-042-7765
Palladium Sponge....................................    9660-01-011-0320
Rhodium Sponge......................................    9660-01-011-2625
Iridium Sponge......................................    9660-01-011-1937
Ruthenium Sponge....................................    9660-01-039-0313
------------------------------------------------------------------------



Sec. 208.7305  Contract clause.

    (a) Use the clause at 252.208-7000, Intent to Furnish Precious 
Metals as Government-Furnished Material, in all solicitations and 
contracts except--
    (1) When the contracting officer has determined that the required 
precious metals are not available from DISC;
    (2) When the contracting officer knows that the items being acquired 
do not require precious metals in their manufacture; or
    (3) For acquisitions below the small purchase threshold in FAR 
13.000.
    (b) To make the determination in paragraph (a)(1) of this section, 
the contracting officer shall consult with the end item inventory 
manager and comply with the procedures in Chapter X, DoD 4160.21-M, 
Defense Utilization and Disposal Manual.



PART 209--CONTRACTOR QUALIFICATIONS--Table of Contents




Sec.

           Subpart 209.1--Responsible Prospective Contractors

209.101  Definitions.
209.103  Policy.
209.103-70  Contract clause.
209.104  Standards.
209.104-1  General standards.
209.104-4  Subcontractor responsibility.
209.104-70  Solicitation provisions and contract clause.
209.106  Preaward surveys.
209.106-1  Conditions for preaward surveys.
209.106-2  Requests for preaward surveys.

               Subpart 209.2--Qualifications Requirements

209.202  Policy.

            Subpart 209.3--First Article Testing and Approval

209.303  Use.
209.305  Risk.
209.306  Solicitation requirements.
209.308  Contract clauses.

         Subpart 209.4--Debarment, Suspension, and Ineligibility

209.402  Policy.
209.403  Definitions.
209.405  Effect of listing.
209.405-1  Continuation of current contracts.
209.406  Debarment.

[[Page 61]]

209.406-1  General.
209.406-2  Causes for debarment.
209.406-3  Procedures.
209.470  Military recruiting on campus.
209.470-1  Policy.
209.470-2  Procedures.
209.470-3  Contract clause.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36313, July 31, 1991, unless otherwise noted.



           Subpart 209.1--Responsible Prospective Contractors



Sec. 209.101  Definitions.

    ``Entity controlled by a foreign government,'' ``foreign 
government,'' and ``proscribed information,'' are defined in the 
provision at 252.209-7002, Disclosure of Ownership or Control by a 
Foreign Government.

[59 FR 51132, Oct. 7, 1994]



Sec. 209.103   Policy.

    (a)(i) Do not deny award to contractors subject to on-site 
inspection under the Intermediate-Range Nuclear Forces (INF) Treaty, or 
similar treaty, due to the actual or potential presence of Soviet 
inspectors at the contractor's facility unless--
    (A) Necessary for reasons of national security;
    (B) The decision is based on full information, including comment 
from the potential contractor or subcontractor on the security issues 
involved; and
    (C) The department or agency acquisition executive reviews the 
decision and the Under Secretary of Defense (Acquisition & Technology) 
approves the decision.
    (ii) Make any decision to deny consideration for award under 
paragraph (a)(i) of this section as early as possible in the acquisition 
process. Notify the firm in writing of any decision not to consider the 
firm for award of a contract or subcontract.
    (c) The additional cost of contract administration and audit due to 
a contractor's performance risk may be considered in evaluating the 
contractor's price.

[56 FR 36313, July 31, 1991, as amended at 60 FR 29497, June 5, 1995; 61 
FR 50452, Sept. 26, 1996]



Sec. 209.103-70  Contract clause.

    Use the clause at 252.209-7000, Acquisition from Subcontractors 
Subject to On-Site Inspection Under the Intermediate-Range Nuclear 
Forces (INF) Treaty, in all solicitations and contracts exceeding the 
simplified acquisition threshold, except solicitations and contracts for 
commercial items.

[60 FR 61593, Nov. 30, 1995, as amended at 61 FR 50452, Sept. 26, 1996]
209.104  Standards.



Sec. 209.104-1   General standards.

    (e) For cost-reimbursement or incentive type contracts, or contracts 
which provide for progress payments based on costs or on a percentage or 
stage of completion, the prospective contractor's accounting system and 
related internal controls must provide reasonable assurance that--
    (i) Applicable laws and regulations are complied with;
    (ii) The accounting system and cost data are reliable;
    (iii) Risk of misallocations and mischarges are minimized; and
    (iv) Contract allocations and charges are consistent with invoice 
procedures.
    (g)(i) Ownership or control by the government of a terrorist 
country. (A) Under 10 U.S.C. 2327(b), a contracting officer shall not 
award a contract to a firm or to a subsidiary of a firm when a foreign 
government--
    (1) Either directly or indirectly, has a significant interest--
    (i) In the firm; or
    (ii) In the subsidiary; and
    (2) Has been determined by the Secretary of State under 50 U.S.C. 
App. 2405(j)(1)(A) to be a government of a country that has repeatedly 
provided support for acts of international terrorism.
    (B) The Secretary of Defense may waive the prohibition in paragraph 
(g)(i)(A) of this subsection in accordance with 10 U.S.C. 2327(c). This 
waiver authority may not be delegated.
    (ii) Ownership or control by a foreign government when access to 
proscribed information is required to perform the contract. (A) Under 10 
U.S.C. 2536(a), no DoD contract under a national security program may be 
awarded to an entity controlled by a foreign government if

[[Page 62]]

that entity requires access to proscribed information to perform the 
contract.
    (B) Whenever the contracting officer has a question about 
application of the provision at 252.209-7002, the contracting officer 
may seek advice from the Director, Defense Security Programs, Office of 
the Assistant Secretary of Defense for Command, Control, Communications 
and Intelligence.
    (C) In accordance with 10 U.S.C. 2536(b), the Secretary of Defense 
may waive the prohibition in subparagraph (g)(ii)(A) of this subsection 
upon determining that the waiver is essential to the national security 
interests of the United States. The Secretary has delegated authority to 
grant this waiver to the Assistant Secretary of Defense Command, 
Control, Communications and Intelligence. Waiver requests, prepared by 
the requiring activity in coordination with the contracting officer, 
shall be processed through the Director of Defense Procurement, Office 
of the Under Secretary of Defense (Acquisition & Technology), and shall 
include a proposed national interest determination. The proposed 
national interest determination, prepared by the requiring activity in 
coordination with the contracting officer, shall include:
    (1) Identification of the proposed awardee, with a synopsis of its 
foreign ownership (include solicitation and other reference numbers to 
identify the action);
    (2) General description of the acquisition and performance 
requirements;
    (3) Identification of the national security interests involved and 
the ways award of the contract helps advance those interests;
    (4) The availability of another entity with the capacity, capability 
and technical expertise to satisfy defense acquisition, technology base, 
or industrial base requirements; and
    (5) A description of any alternate means available to satisfy the 
requirement, e.g., use of substitute products or technology or alternate 
approaches to accomplish the program objectives.
    (iii) Commercial transactions with the government of a terrorist 
country. (A) In accordance with section 843 of the National Defense 
Authorization Act for Fiscal Year 1994 (Public Law 103-160)--
    (1) Each offeror submitting an offer exceeding $5,000,000 must 
disclose each commercial transaction that it has conducted with the 
government of a terrorist country since February 28, 1994; and
    (2) For each contract exceeding $5,000,000, the contractor must 
annually report each commercial transaction that it conducts during the 
course of the contract (but not beyond September 30, 1996) with the 
government of a terrorist country.
    (B) Upon award of a contract exceeding $5,000,000 to an offeror 
disclosing that it has conducted commercial transactions with the 
government of a terrorist country, the contracting officer shall--
    (1) Forward a copy of the offeror's disclosure to the Deputy 
Director of Defense Procurement (Foreign Contracting); and
    (2) Include with the disclosure the following information:
    (i) Offeror's name and address;
    (ii) Contracting officer's name and telephone number; and
    (iii) Contract number and award date.

[58 FR 28464, May 13, 1993, as amended at 59 FR 51131, 51132, Oct. 7, 
1994; 60 FR 29497, June 5, 1995]



Sec. 209.104-4  Subcontractor responsibility.

    Generally, the Canadian Commercial Corporation's (CCC) proposal of a 
firm as its subcontractor is sufficient basis for an affirmative 
determination of responsibility. However, when the CCC determination of 
responsibility is not consistent with other information available to the 
contracting officer, the contracting officer shall request from CCC and 
any other sources whatever additional information is necessary to make 
the responsibility determination.



Sec. 209.104-70  Solicitation provisions and contract clause.

    (a) Use the provision at 252.209-7001, Disclosure of Ownership or 
Control by the Government of a Terrorist Country, in all solicitations 
expected to result in contracts of $100,000 or more.
    (b) Use the provision at 252.209-7002, Disclosure of Ownership or 
Control by

[[Page 63]]

a Foreign Government, in all solicitations, including those subject to 
the procedures in FAR part 13, when access to proscribed information is 
necessary to perform a DoD contract under a national security program.
    (c) Use the provision at 252.209-7003, Disclosure of Commercial 
Transactions with the Government of a Terrorist Country, in all 
solicitations expected to result in contracts exceeding $5,000,000.
    (d) Use the clause at 252.209-7004, Reporting of Commercial 
Transactions with the Government of a Terrorist Country, in all 
solicitations that include the provision at 252.209-7003, and in all 
contracts exceeding $5,000,000.

[58 FR 28464, May 13, 1993, as amended at 59 FR 51131, Oct. 7, 1994]
209.106  Preaward surveys.



Sec. 209.106-1  Conditions for preaward surveys.

    (a) If a preaward survey is requested, include the rationale in 
block 23 of the SF 1403, Preaward Survey of Prospective Contractor 
(General).

[60 FR 61593, Nov. 30, 1995]



Sec. 209.106-2  Requests for preaward surveys.

    (1) The surveying activity is the cognizant contract administration 
office as listed in DLAH 4105.4, DoD Directory of Contract 
Administration Services Components. When information is required as part 
of the survey on the adequacy of the contractor's accounting system or 
its suitability for administration of the proposed type of contract, the 
surveying activity will obtain the information from the auditor.
    (2) Limited information may be requested by telephone.
    (3) The contracting officer may request a formal survey by telephone 
but must confirm immediately with SF 1403, Preaward Survey of 
Prospective Contractor (General). For a formal survey, send original and 
three copies of SF 1403, including necessary drawings and 
specifications.
    (a) List additional factors in item H, section III of the SF 1403 
and explain them in block 23. For example--
    (i) Information needed to determine a prospective contractor's 
eligibility under the Walsh-Healey Public Contracts Act. (Note that the 
Walsh-Healey Public Contracts Act, block 12 of section I, only indicates 
what the contractor has represented its classification to be under 
Walsh-Healey.)
    (ii) Evaluation of a contractor as a planned producer when the 
offered item is or may appear on the Industrial Preparedness Planning 
List (IPPL). When the preaward survey results in a recommendation for 
award, ask the office responsible for industrial preparedness planning 
to consider designating the prospective contractor as a planned 
producer. If the item is already on the IPPL or the prospective 
contractor is already a planned producer, note the information in block 
23.
    (iii) Evaluation of the prospective contractor's performance against 
small business subcontracting plans.
    (c) On base level preaward surveys, technical personnel from the 
requiring installation should participate when there is concern about 
the ability of a prospective contractor to perform a base level service 
or construction contract.
    (d) Allow more time for--
    (i) Complex items;
    (ii) New or inexperienced DoD contractors; and
    (iii) Surveys with time-consuming requirements, e.g., secondary 
survey, accounting system review, financial capability analysis, or 
purchasing office participation.
    (e) Only request those factors essential to the determination of 
responsibility. See 253.209-1(a) for an explanation of the factors in 
section III, blocks 19 and 20 of the SF 1403.

[56 FR 36313, July 31, 1991, as amended at 58 FR 28464, May 13, 1993]



               Subpart 209.2--Qualifications Requirements



Sec. 209.202  Policy.

    (a)(1) The inclusion of qualification requirements in specifications 
for products which are to be included on a Qualified Products List, or 
manufactured by business firms included on a Qualified Manufacturers 
List, requires approval by the departmental standardization office in 
accordance with

[[Page 64]]

DoD Manual 4120.3-M, Defense Standardization Program Policies and 
Procedures. The inclusion of other qualification requirements in an 
acquisition or group of acquisitions requires approval by the chief of 
the contracting office.

[60 FR 61593, Nov. 30, 1995]



            Subpart 209.3--First Article Testing and Approval



Sec. 209.303  Use.

    (d) The contracting officer may require that first articles be 
manufactured using the same facilities, production processes, methods, 
and materials to be used for production units under the contract.



Sec. 209.305  Risk.

    The contracting officer may give this authorization to a contractor 
only after approval by a level higher than the contracting officer.



Sec. 209.306  Solicitation requirements.

    (a)(1) To be sure that the contractor and the Government clearly 
understand and interpret contract terms and conditions in the same 
manner, avoid describing first article requirements exclusively in 
general terms such as ``visual,'' ``dimensional,'' ``workmanship,'' or 
``specification compliance.''



Sec. 209.308  Contract clauses.

    Alternate I of the clauses at FAR 52.209-3, First Article Approval--
Contractor Testing, or 52.209-4, First Article Approval--Government 
Testing, as appropriate, may be used when--
    (1) The form, fit, or function of the product would be adversely 
affected by contractor changes in the production facilities, processes, 
methods, or materials subsequent to first article approval; and
    (2) The Government has relied upon first article testing in the 
absence of complete design specifications to supplement a performance 
specification; or
    (3) It is essential to have an approved first article to serve as a 
manufacturing standard.



         Subpart 209.4--Debarment, Suspension, and Ineligibility



Sec. 209.402  Policy.

    (d) The uniform suspension and debarment procedures to be followed 
by all debarring and suspending officials are set out in appendix H to 
this chapter.
    (e) The department or agency shall provide a copy of the Debarment 
and Suspension Procedures at DFARS appendix H to this chapter to 
contractors at the time of their suspension or when they are proposed 
for debarment, and upon request to other interested parties.

[59 FR 27668, May 27, 1994]



Sec. 209.403  Definitions.

    Debarring official. (1) For DoD, the designees are--

Army--Commander, U.S. Army Legal Services Agency
Navy--the General Counsel of the Department of the Navy
Air Force--Deputy General Counsel (Contractor Responsibility)
Defense Advanced Research Projects Agency--The Director
Defense Information Systems Agency--The General Counsel
Defense Logistics Agency--The Special Assistant for Contracting 
Integrity
Defense Mapping Agency--The General Counsel
Defense Special Weapons Agency--The Director
National Security Agency--The Director
Ballistic Missile Defense Organization--The General Counsel
Overseas installations--as designated by the agency head

    (2) Overseas debarring officials--
    (i) Are authorized to debar or suspend contractors located within 
the official's geographic area of responsibility under any delegation of 
authority they receive from their agency head.
    (ii) Debar or suspend in accordance with the procedures in FAR 
subpart 9.4 or under modified procedures approved by the agency head 
based on consideration of the laws or customs of the foreign countries 
concerned.
    (iii) In addition to the bases for debarment in FAR 9.406-2, may 
consider the following additional bases--

[[Page 65]]

    (A) The foreign country concerned determines that a contractor has 
engaged in bid-rigging, price-fixing, or other anti-competitive 
behavior; or
    (B) The foreign country concerned declares the contractor to be 
formally debarred, suspended, or otherwise ineligible to contract with 
that foreign government or its instrumentalities.

[56 FR 36313, July 31, 1991, as amended at 56 FR 67212, Dec. 30, 1991; 
59 FR 27669, May 27, 1994; 60 FR 61593, Nov. 30, 1995; 61 FR 50452, 
Sept. 26, 1996]



Sec. 209.405  Effect of listing.

    Under 10 U.S.C. 2393b, when a department or agency determines that a 
compelling reason exists for it to conduct business with a contractor 
that is on the list of parties excluded from procurement programs, it 
shall provide written notice of the determination to the General 
Services Administration, Office of Acquisition Policy. Examples of 
compelling reasons are--
    (1) Only a listed contractor can provide the supplies or services;
    (2) Urgency requires contracting with a listed contractor;
    (3) The contractor and a department or agency have an agreement 
covering the same events which resulted in the listing and the agreement 
includes the department/agency decision not to debar or suspend the 
contractor; or
    (4) The national defense requires continued business dealings with 
the listed contractor.



Sec. 209.405-1  Continuation of current contracts.

    (b) Unless the agency head makes a written determination that a 
compelling reason exists to do so, ordering activities shall not--
    (i) Place orders exceeding the guaranteed minimum under indefinite 
quantity contracts: or
    (ii) When the agency is an optional user, place orders against 
Federal Supply Schedule contracts.
    (c) This includes exercise of options.

[60 FR 29497, June 5, 1995, as amended at 60 FR 61593, Nov. 30, 1995]
209.406  Debarment.



Sec. 209.406-1  General.

    (a)(i) When the debarring official decides that debarment is not 
necessary, the official may require the contractor to enter into a 
written agreement which includes--
    (A) A requirement for the contractor to establish, if not already 
established, and to maintain the standards of conduct and internal 
control systems prescribed by subpart 203.70; and
    (B) Other requirements the debarring official considers appropriate.
    (ii) Before the debarring official decides not to suspend or debar 
in the case of an indictment or conviction for a felony, the debarring 
official must determine that the contractor has addressed adequately the 
circumstances that gave rise to the misconduct, and that appropriate 
standards of ethics and integrity are in place and are working.

[57 FR 14992, Apr. 23, 1992]



Sec. 209.406-2  Causes for debarment.

    (a) Any person shall be considered for debarment if criminally 
convicted of intentionally affixing a label bearing a ``Made in 
America'' inscription to any product sold in or shipped to the United 
States that was not made in America (10 U.S.C. 2410f).
    (i) The debarring official will make a determination concerning 
debarment not later than 90 days after determining that a person has 
been so convicted.
    (ii) In cases where the debarring official decides not to debar, the 
debarring official will report that decision to the Director of Defense 
Procurement who will notify Congress within 30 days after the decision 
is made.

[58 FR 28464, May 13, 1993]



Sec. 209.406-3  Procedures.

    (a) Investigation and referral. (i) The contracting officer shall 
prepare a report containing the information required by paragraph 
(a)(ii) of this subsection when--
    (A) A contractor has committed, or is suspected of having committed, 
any of

[[Page 66]]

the acts described in FAR 9.406-2 and 9.407-2;
    (B) FAR 49.106 requires a report;
    (C) Part 203 requires a report;
    (D) The Government suspects a contractor of violating the Buy 
American Act (see FAR 25.204); or
    (E) The Government suspects a contractor of attempting to evade the 
prohibitions of debarment or suspension by changes of address, multiple 
addresses, formation of new companies, or by other devices.
    (ii) Include the following information, when available, in the 
report required by paragraph (a)(i) of this subsection--
    (A) Name, address, and telephone number of the point of contact for 
the activity making the report;
    (B) Name, contractor and Government entity (CAGE) code, and address 
of the contractor;
    (C) Name and addresses of the members of the board, principal 
officers, partners, owners, and managers;
    (D) Name and addresses of all known affiliates, subsidiaries, or 
parent firms, and the nature of the business relationship;
    (E) For each contract affected by the conduct being reported--
    (1) The contract number;
    (2) All office identifying numbers or symbols;
    (3) Description of supplies or services;
    (4) The amount;
    (5) The percentage of completion;
    (6) The amount paid the contractor;
    (7) Whether the contract is assigned under the Assignment of Claims 
Act and, if so, to whom; and
    (8) The amount due the contractor;
    (F) For any other contracts outstanding with the contractor or any 
of its affiliates--
    (1) The contract number;
    (2) The amount;
    (3) The amounts paid the contractor;
    (4) Whether the contract is assigned under the Assignment of Claims 
Act and, if so, to whom; and
    (5) The amount due the contractor;
    (G) A complete summary of all pertinent evidence and the status of 
any legal proceedings involving the contractor;
    (H) An estimate of any damages sustained by the Government as a 
result of the contractor's action (explain how the estimate was 
calculated);
    (I) The comments and recommendations of the contracting officer and 
of each higher level contracting review authority regarding--
    (1) Whether to suspend or debar the contractor;
    (2) Whether to apply limitations to the suspension or debarment;
    (3) The period of any recommended debarment; and
    (4) Whether to continue any current contracts with the contractor 
(explain why a recommendation regarding current contracts is not 
included);
    (J) When appropriate, as an enclosure to the report--
    (1) A copy or extracts of each pertinent contract;
    (2) Witness statements or affidavits;
    (3) Copies of investigative reports;
    (4) Certified copies of indictments, judgments, and sentencing 
actions; and
    (5) Any other appropriate exhibits or documentation.
    (iii) Send three copies of each report, including enclosures, to the 
debarring official in 209.403.
209.470  Military recruiting on campus.



Sec. 209.470-1  Policy.

    (a)(1) 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 grant or contract to any institution of higher 
education that has a policy of denying or that effectively prevents the 
Secretary of Defense from obtaining for military recruiting purposes--
    (i) Entry to campuses or access to students on campuses; or
    (ii) Access to directory information pertaining to students.
    (2) Section 541 of the National Defense Authorization Act for Fiscal 
Year 1996 (10 U.S.C. 983) provides that no funds appropriated or 
otherwise available to DoD may be obligated by contract or by grant, 
including a grant of funds to be available for student aid, to any 
institution of higher education that, as determined by the Secretary of 
Defense, has an anti-ROTC policy and at which, as determined by the 
Secretary, the Secretary would otherwise

[[Page 67]]

maintain or seek to establish a unit of the Senior Reserve Officer 
Training Corps, or at which the Secretary would otherwise enroll or seek 
to enroll students for participation in a unit of the Senior Reserve 
Officer Training Corps at another nearby institution of higher 
education. This prohibition applies to new contracts and all contract 
modifications. (See 243.105.) This prohibition shall cease to apply to 
that institution upon a determination by the Secretary that the 
institution no longer has an anti-ROTC policy.
    (b) Institutions of higher education that are determined under 32 
CFR part 216 to have the policy or practice in paragraph (a)(1) or 
(a)(2) of this subsection shall be listed as ineligible on the List of 
Parties Excluded from Federal Procurement and Nonprocurement Programs 
published by the General Services Administration. (See FAR 9.404.)
    (c) In cases where a determination is made under 32 CFR part 216 
that specific subordinate elements of an institution of higher 
education, rather than the institution as a whole, have the policy or 
practice in paragraph (a)(1) or (a)(2) of this subsection, 32 CFR part 
216 provides that the prohibition on use of DoD funds applies only to 
those subordinate elements.

[61 FR 25408, My 21, 1996]



Sec. 209.470-2  Procedures.

    (a) Agencies shall not solicit offers from, award contracts to, or 
consent to subcontracts with ineligible contractors.
    (b) After a determination of ineligibility under 209.470-1(a)(1), 
departments and agencies shall make no further payments under existing 
contracts with the institutions, and shall initiate termination action.

[61 FR 25408, My 21, 1996]



Sec. 209.470-3  Contract clause.

    Use the clause at 252.209-7005, Military Recruiting on Campus, in 
all solicitations and contracts with institutions of higher education.

[60 FR 13074, Mar. 10, 1995, as amended at 60 FR 51693, Nov. 30, 1995]



PART 211--DESCRIBING AGENCY NEEDS--Table of Contents




Sec.
211.002  Policy.
211.002-70  Contract clause.

       Subpart 211.2--Using and Maintaining Requirements Documents

211.201  Identification and availability of specifications.
211.204  Solicitation provisions and contract clauses.
211.270  Brand name or equal purchase descriptions.
211.270-1  Policy.
211.270-2  Solicitation provision.
211.271  Elimination of use of class I ozone-depleting substances.
211.272  Alternate preservation, packaging, and packing.

                    Subpart 211.5--Liquidated Damages

211.504  Contract clauses.

                Subpart 211.6--Priorities and Allocations

211.602  General.

    Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.

    Source: 60 FR 61594, Nov. 30, 1995, unless otherwise noted.



Sec. 211.002  Policy

    All systems acquisition programs in the DoD are subject to the 
acquisition streamlining policies and procedures in DoDI 5000.2, Defense 
Acquisition Management Policies and Procedures.



Sec. 211.002-70  Contract clause.

    Use the clause at 252.211-7000, Acquisition Streamlining, in all 
solicitations and contracts for systems acquisition programs.

       Subpart 211.2--Using and Maintaining Requirements Documents



Sec. 211.201  Identification and availability of specifications.

    (a) The DoD index of data item descriptions is DoD 5010.12-L, 
Acquisition Management Systems and Data Requirements Control List 
(AMSDL).
    (b) Also, furnish data item descriptions which are not listed in the 
AMSDL, except when it is not feasible, e.g., documents are bulky or only 
a

[[Page 68]]

limited number of copies are available at the contracting activity.
    (d) The AMSDL, all unclassified specifications and standards listed 
in the DODISS, and data item descriptions listed in the AMSDL may also 
be purchased from the Standardization Documents Desk, Building 4D, 700 
Robbins Avenue, Philadelphia, PA 19111-5094. Include with the letter or 
DD Form 1425--
    (i) The requester's customer number; and
    (ii) Complete return mailing address, including any ``mark for'' 
instructions.



Sec. 211.204  Solicitation provisions and contract clauses.

    (c) When contract performance requires use of specifications and 
standards which are not listed in the DODISS and data item descriptions 
which are not listed in the AMSDL, use provisions, as appropriate, 
substantially the same as those at 252.211-7001, Availability of 
Specifications and Standards Not Listed in DODISS, Data Item 
Descriptions Not Listed in DoD 5010.12-L, and Plans, Drawings, and Other 
Pertinent Documents, and 252.211-7002, Availability for Examination of 
Specifications, Standards, Plans, Drawings, Data Item Descriptions, and 
Other Pertinent Documents.



Sec. 211.270  Brand name or equal purchase descriptions.



Sec. 211.270-1  Policy.

    When a ``brand name or equal'' purchase description is used--
    (a) The purchase description--
    (1) Should include a complete common generic identification of the 
item.
    (2) Should reference all known acceptable brand name products, to 
include--
    (i) Name of manufacturer, producer, or distributor of each brand 
name product referenced (and address if not well known); and
    (ii) Model, make, or catalog number for each, and identity of the 
commercial catalog in which it appears.
    (3) May, if necessary to adequately describe an item, use a 
commercial catalog description or an extract from the catalog. Ensure 
that a copy of each catalog referenced (except parts catalogs) is 
available at the contracting office for review by offerors.
    (4) Should give prospective offerors the opportunity to offer 
products other than those specifically referenced by brand name, as long 
as they meet the needs of the Government in essentially the same manner 
as the brand name product.
    (5) Must identify those salient physical, functional, or other 
characteristics which are essential to the needs of the Government.
    (b) The solicitation--
    (1) Shall be at or below the simplified acquisition threshold in FAR 
part 13.
    (2) May require bid samples for ``or equal'' offers, but not for 
``brand name'' offers.
    (3) Must provide for full consideration and evaluation of ``or 
equal'' offers against the salient characteristic specified in the 
purchase description. Do not reject offers for minor differences in 
design, construction, or features which do not affect the suitability of 
the product for its intended use.
    (4) Must include the following immediately after the item 
description--Offering:

Manufacturer's Name______ Brand______ Model or Part No.______

    (c) The contract shall--
    (1) Not exceed the simplified acquisition threshold in FAR part 13.
    (2) Identify, or incorporate by reference an identification of the 
specific products the contractor is to furnish. Include any brand name, 
make or model number, descriptive material, and any modifications of 
brand name products specified in the offer.



Sec. 211.270-2  Solicitation provision.

    (a) When a brand name or equal purchase description is included in a 
solicitation at or below the simplified acquisition threshold in FAR 
part 13, use the provision at 252.211-7003, Brand Name or Equal.
    (b) When component parts of an end item are described by brand name 
or equal purchase descriptions and application of the provision at 
252.211-7003

[[Page 69]]

to some or all of the components is impracticable, either do not use the 
provision or limit its application to specified components.



Sec. 211.271  Elimination of use of class I ozone-depleting substances.

    (a) Contracts. No DoD contract may include a specification or 
standard that requires the use of a class I ozone-depleting substance or 
that can be met only through the use of such a substance unless the 
inclusion of the specification or standard is specifically authorized at 
a level no lower than a general or flag officer or member of the Senior 
Executive Service of the requiring activity in accordance with Section 
326, Public Law 102-484 (10 U.S.C. 2301 (repealed) note).
    (b) Modifications. (1) Contracts awarded before June 1, 1993, with a 
value in excess of $10 million, that are modified or extended (including 
option exercise) and, as a result of the modification or extension will 
expire more than one year after the effective date of the modification 
or extension, must be evaluated in accordance with agency procedures for 
the elimination of ozone-depleting substances.
    (i) The evaluation must be carried out within 60 days after the 
first modification or extension.
    (ii) No further modification or extension may be made to the 
contract until the evaluation is complete.
    (2) If, as a result of this evaluation, it is determined that an 
economically feasible substitute substance or alternative technology is 
available, the contracting officer shall modify the contract to require 
the use of the substitute substance or alternative technology.
    (3) If a substitute substance or alternative technology is not 
available, a written determination shall be made to that effect at a 
level no lower than a general or flag officer or member of the Senior 
Executive Service of the requiring activity.



Sec. 211.272  Alternate preservation, packaging, and packing.

    Use the provision at 252.211-7004, Alternate Preservation, 
Packaging, and Packing, in solicitations which include military 
preservation, packaging, or packing specifications when it is feasible 
to evaluate and award using commercial or industrial preservation, 
packaging, or packing.



                    Subpart 211.5--Liquidated Damages



Sec. 211.504  Contract clauses.

    (b) Use the clause at FAR 52.211-12, Liquidated Damages--
Construction, in all construction contracts exceeding $500,000, except 
cost-plus-fixed-fee contracts or contracts where the contractor cannot 
control the pace of the work. Use of the clause in contracts of $500,000 
or less is optional.



                Subpart 211.6--Priorities and Allocations



Sec. 211.602  General.

    DoD implementation of the Defense Priorities and Allocations System 
is in DoDI 4400.1, Priorities and Allocations--Delegation of DO and DX 
Priorities and Allocations Authorities, Rescheduling of Deliveries and 
Continuance of Related Manuals.



PART 212--ACQUISITION OF COMMERCIAL ITEMS--GENERAL--Table of Contents




 Subpart 212.2--Special Requirements for the Acquisition of Commercial 
                                  Items

Sec.
212.211  Technical data.

  Subpart 212.3--Solicitation Provisions and Contract Clauses for the 
                     Acquisition of Commercial Items

212.301  Solicitation provisions and contract clauses for the 
          acquisition of commercial items.
212.302  Tailoring of provisions and clauses for the acquisition of 
          commercial items.

   Subpart 212.5--Applicability of Certain Laws to the Acquisition of 
                            Commercial Items

212.503  Applicability of certain laws to Executive Agency contracts for 
          the acquisition of commercial items.
212.504  Applicability of certain laws to subcontracts for the 
          acquisition of commercial items.

    Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.


[[Page 70]]


    Source: 60 FR 61595, Nov. 30, 1995, unless otherwise noted.



 Subpart 212.2--Special Requirements for the Acquisition of Commercial 
                                  Items



Sec. 212.211  Technical data.

    The DoD policy for acquiring technical data for commercial items is 
at 227.7102.



  Subpart 212.3--Solicitation Provisions and Contract Clauses for the 
                     Acquisition of Commercial Items



Sec. 212.301  Solicitation provisions and contract clauses for the acquisition of commercial items.

    (f)(i) Use one of the following provisions as prescribed in part 
225:
    (A) 252.225-7000, Buy American Act--Balance of Payments Program 
Certificate.
    (B) 252.225-7006, Buy American Act--Trade Agreements--Balance of 
Payments Program Certificate.
    (C) 252.225-7035, Buy American Act--North American Free Trade 
Agreement Implementation Act--Balance of Payments Program Certificate.
    (ii) Use the provision at 252.212-7000, Offeror Representations and 
Certifications--Commercial Items, in all solicitations for commercial 
items exceeding the simplified acquisition threshold. If an exception to 
10 U.S.C. 2410i applies to a solicitation exceeding the simplified 
acquisition threshold (see 225.770-3), indicate on an addendum that 
``The certification in paragraph (b) of the provision at 252.225-7000 
does not apply to this solicitation.''
    (iii) Use the clause at 252.212-7001, Contract Terms and Conditions 
Required to Implement Statutes Applicable to Defense Acquisitions of 
Commercial Items, in all solicitations and contracts for commercial 
items, completing paragraph (b), as appropriate.

[60 FR 61595, Nov. 30, 1995, as amended at 61 FR 50452, Sept. 26, 1996]



Sec. 212.302  Tailoring of provisions and clauses for the acquisition of commercial items.

    (c) Tailoring inconsistent with customary commercial practice.
    The head of the contracting activity is the approval authority 
within the DoD for waivers under FAR 12.302(c).



   Subpart 212.5--Applicability of Certain Laws to the Acquisition of 
                            Commercial Items



Sec. 212.503  Applicability of certain laws to Executive Agency contracts for the acquisition of commercial items.

    (a) The following laws are not applicable to contracts for the 
acquisition of commercial items:
    (i) Section 806, Public Law 102-190 (10 U.S.C. 2301 (repealed) 
note), Payment Protections for Subcontractors and Suppliers.
    (ii) 10 U.S.C. 2306(b), Prohibition on Contingent Fees.
    (iii) 10 U.S.C. 2324, Allowable Costs Under Defense Contracts.
    (iv) 10 U.S.C. 2384(b), Requirement to Identify Suppliers.
    (v) 10 U.S.C. 2397(a)(1), Reports by Employees or Former Employees 
of Defense Contractors.
    (vi) 10 U.S.C. 2397b(f), Limits on Employment for Former DoD 
Officials.
    (vii) 10 U.S.C. 2397c, Defense Contractor Requirements Concerning 
Former DoD Officials.
    (viii) 10 U.S.C. 2408(a), Prohibition on Persons Convicted of 
Defense Related Felonies.
    (ix) 10 U.S.C. 2410b, Contractor Inventory Accounting System 
Standards (see 252.242-7004).
    (x) 107 Stat 1720 (Section 843(a), Public Law 103-160), Reporting 
Requirement Regarding Dealings with Terrorist Countries.
    (xi) Domestic Content Restrictions in the National Defense 
Appropriations Acts for Fiscal Years 1996 and Subsequent Years.
    (c) The applicability of the following laws has been modified in 
regard to contracts for the acquisition of commercial items:
    (i) 10 U.S.C. 2402, Prohibition on Limiting Subcontractor Direct 
Sales to the United States (see FAR 3.503 and 52.203-6).

[[Page 71]]

    (ii) 10 U.S.C. 2306a, Truth in Negotiations Act (see FAR 15.804).



Sec. 212.504  Applicability of certain laws to subcontracts for the acquisition of commercial items.

    (a) The following laws are not applicable to subcontracts at any 
tier for the acquisition of commercial items or commercial components:
    (i) 10 U.S.C. 2241 note, Limitations on Procurement of Food, 
Clothing, and Specialty Metals Not Produced in the United States.
    (ii) Section 806, Public Law 102-190 (10 U.S.C. 2301 (repealed) 
note), Payment Protections for Subcontractors and Suppliers.
    (iii) 10 U.S.C. 2306(b) Prohibition on Contingent Fees.
    (iv) 10 U.S.C. 2313(c), Examination of Records of a Contractor.
    (v) 10 U.S.C. 2320, Rights in Technical Data.
    (vi) 10 U.S.C. 2321, Validation of Proprietary Data Restrictions.
    (vii) 10 U.S.C. 2324, Allowable Costs Under Defense Contracts.
    (viii) 10 U.S.C. 2327, Reporting Requirement Regarding Dealings with 
Terrorist Countries.
    (ix) 10 U.S.C. 2384(b), Requirement to Identify Suppliers.
    (x) 10 U.S.C. 2391 note, Notification of Substantial Impact on 
Employment.
    (xi) 10 U.S.C. 2393, Prohibition Against Doing Business with Certain 
Offerors or Contractors.
    (xii) 10 U.S.C. 2397(a)(1), Reports by Employees or Former Employees 
of Defense Contractors.
    (xiii) 10 U.S.C. 2397b(f), Limits on Employment for Former DoD 
Officials.
    (xiv) 10 U.S.C. 2397c, Defense Contractor Requirements Concerning 
Former DoD Officials.
    (xv) 10 U.S.C. 2408(a) Prohibition on Persons Convicted of Defense 
Related Felonies.
    (xvi) 10 U.S.C. 2410b, Contractor Inventory Accounting System 
Standards.
    (xvii) 10 U.S.C. 2501 note, Notification of Proposed Program 
Termination.
    (xviii) 10 U.S.C. 2534, Miscellaneous Limitations on the Procurement 
of Goods Other Than United States Goods.
    (xix) 10 U.S.C. 2534(c), Preference for United States and Canadian 
Valves and Machine Tools.
    (xx) 10 U.S.C. 2534(d), Restriction on Acquisition of Carbonyl Iron 
Powder.
    (xxi) 10 U.S.C. 2534(e), Restriction on Acquisition of Air Circuit 
Breakers.
    (xxii) Effective May 1, 1996: 10 U.S.C. 2631, Transportation of 
Supplies by Sea.
    (xxiii) 19 U.S.C. 2512, Trade Agreements Act.
    (xxiv) 41 U.S.C. 10, Buy American Act.
    (xxv) 10 U.S.C. 2327 (Section 843(a), Public Law 103-160), Reporting 
Requirement Regarding Dealings with Terrorist Countries.
    (xxvi) Domestic Content Restrictions in the National Defense 
Appropriations Acts for Fiscal Years 1996 and Subsequent Years.
    (b) Certain requirements of the following laws have been eliminated 
for subcontracts at any tier for the acquisition of commercial items or 
commercial components:
    (i) 10 U.S.C. 2393(d), Subcontractor Reports Under Prohibition 
Against Doing Business with Certain Offerors (see FAR 52.209-6).
    (ii) 10 U.S.C. 2402, Prohibition on Limiting Subcontractor Direct 
Sales to the United States (see FAR 3.503 and 52.203-6).

[[Page 72]]



          SUBCHAPTER C--CONTRACTING METHODS AND CONTRACT TYPES





PART 213--SIMPLIFIED ACQUISITION PROCEDURES--Table of Contents




Sec.
213.000  Scope of part.

                         Subpart 213.1--General

213.101  Definitions.

               Subpart 213.2--Blanket Purchase Agreements

213.203  Establishment of Blanket Purchase Agreements.
213.203-1  General.
213.203-2  Clauses.
213.204  Purchase under Blanket Purchase Agreements.

                  Subpart 213.3--Fast Payment Procedure

213.302  Conditions for use.

                       Subpart 213.4--Imprest Fund

213.401  General.
213.402  Agency responsibilities.
213.403  Conditions for use.

                     Subpart 213.5--Purchase Orders

213.503  Obtaining contractor acceptance and modifying purchase orders.
213.504  Termination or cancellation of purchase orders.
213.505  Purchase order and related forms.
213.505-1  Optional Form (OF) 347, Order for Supplies or Services, and 
          Optional Form 348, Order for Supplies or Services Schedule-
          Continuation.
213.505-3  Standard Form 44, Purchase Order-Invoice-Voucher.
213.507  Provisions and clauses.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36324, July 31, 1991, unless otherwise noted.



Sec. 213.000  Scope of part.

    This part also implements 10 U.S.C. 2302(7) which increases the 
simplified acquisition threshold to $200,000 for any contract to be 
awarded and performed outside the United States in support of a 
contingency operation as defined in 10 U.S.C. 101(a)(13).

[59 FR 50851, Oct. 6, 1994, as amended at 61 FR 7742, Feb. 29. 1996]
Subpart 213.1--General



Sec. 213.101  Definitions.

    Contingency operation is defined in 10 U.S.C. 101(a)(13) as a 
military operation that--
    (1) Is designated by the Secretary of Defense as an operation in 
which members of the armed forces are or may become involved in military 
actions, operations, or hostilities against an enemy of the United 
States or against an opposing military force; or
    (2) Results in the call or order to, or retention on, active duty of 
members of the uniformed services under section 688, 12301(a), 12302, 
12304, 12305, or 12406 of Title 10, chapter 15 of Title 10, or any other 
provision of law during a war or during a national emergency declared by 
the President or Congress.

[59 FR 50851, Oct. 6, 1994, as amended at 61 FR 7742, Feb. 29, 1996]



               Subpart 213.2--Blanket Purchase Agreements

213.203  Establishment of Blanket Purchase Agreements.



Sec. 213.203-1  General.

    (i) Prepare and issue blanket purchase agreements (BPAs) on DD Form 
1155, Order for Supplies or Services.



Sec. 213.203-2  Clauses.

    (a) The clauses prescribed at 213.507 for purchase orders also apply 
to BPAs.



Sec. 213.204  Purchase under Blanket Purchase Agreements.

    (b) Individual purchases for subsistence may be made at any dollar 
value; however, the contracting officer shall satisfy the competition 
requirements

[[Page 73]]

of FAR part 6 for any action not using simplified acquisition 
procedures.

[56 FR 36324, July 31, 1991, as amended at 61 FR 7742, Feb. 29, 1996]



                  Subpart 213.3--Fast Payment Procedure



Sec. Sec. 213.302  Conditions for use.

    (a) Individual orders may exceed $25,000 for--
    (i) Brand name commissary resale subsistence; and
    (ii) Medical supplies for direct shipment overseas.



                       Subpart 213.4--Imprest Fund



Sec. 213.401  General.

    See DoDD 7360.10, Disbursing Policies, and chapter 32 of the DoD 
Accounting Manual, DoD 7220.9-M.

[56 FR 36324, July 31, 1991. Redesignated at 61 FR 7742, Feb. 29, 1996]



Sec. 213.402  Agency responsibilities.

    (c) Installation commanders and commanders of other activities with 
contracting authority are responsible for approving the establishment of 
imprest funds.

[56 FR 36324, July 31, 1991. Redesignated at 61 FR 7742, Feb. 29, 1996]



Sec. 213.403  Conditions for use.

    (a) Overseas transactions in support of a contingency operation as 
defined in 10 U.S.C. 101(a)(13) may use imprest funds up to $2,500.
    (c)(i) Additional conditions for use include--
    (A) Availability for delivery within 60 days; and
    (B) No requirement for detailed technical specifications or 
technical inspections.
    (ii) When imprest funds are used for simplified acquisitions, the 
funds may also be used to pay charges for local delivery, parcel post, 
c.o.d. charges, and line haul or inter-city transportation charges when 
the supplier is to arrange for delivery.

[56 FR 36324, July 31, 1991, as amended at 59 FR 50851, Oct. 6, 1994. 
Redesignated and amended at 61 FR 7742, Feb. 29, 1996]



                     Subpart 213.5--Purchase Orders



Sec. 213.503  Obtaining contractor acceptance and modifying purchase orders.

    (a) Require written acceptance of purchase orders for classified 
acquisitions.
    (b) Use Standard Form 30, Amendment of Solicitation/Modification of 
Contract, to modify purchase orders.
    (d)(i) Unilateral modifications (see FAR 43.103) may also be used 
for--
    (A) No cost amended shipping instructions (ASI) if--
    (1) The ASI modifies a unilateral purchase order, and
    (2) The contractor agrees verbally or in writing.
    (B) Any change made before work begins if--
    (1) The change is within the scope of the original order;
    (2) The contractor agrees;
    (3) The modification references the contractor's verbal or written 
agreement; and
    (4) Block 13D of the Standard Form 30 is annotated to reflect the 
authority for issuance of the modification.
    (ii) A supplemental agreement converts a unilateral purchase order 
to a bilateral agreement. If not previously included in the purchase 
order, incorporate the clauses prescribed in 213.507(a)(ii) in the 
Standard Form 30, Amendment of Solicitation/Modification of Contract, 
and obtain the contractor's acceptance by signature on the Standard Form 
30.



Sec. 213.504  Termination or cancellation of purchase orders.

    (b) Use Standard Form 30 to cancel a unilateral purchase order.
213.505  Purchase order and related forms.



Sec. 213.505-1  Optional Form (OF) 347, Order for Supplies or Services, and Optional Form 348, Order for Supplies or Services Schedule-Continuation.

    Departments and agencies shall not use Optional Forms 347, Order for 
Supplies or Services, and 348, Order for Supplies or Services Schedule-
Continuation.

[[Page 74]]

    (b)(i) Use DD Form 1155, Orders for Supplies or Services, (see 
253.213(e)), for purchases made using the simplified acquisition 
procedures of FAR part 13. The DD Form 1155 serves as--
    (A) A purchase order or a blanket purchase agreement, when used with 
the clauses prescribed at 213.507(a);
    (B) A delivery order under a Government contract or from Government 
agencies outside the DoD;
    (C) A receiving and inspection report;
    (D) A property voucher;
    (E) A document for acceptance by the supplier; and
    (F) A public voucher, when used as--
    (1) A delivery order;
    (2) The basis for payment of an invoice against blanket purchase 
agreements or basic ordering agreements when a firm price has been 
established; or
    (3) A purchase order for acquisitions using simplified acquisition 
procedures.
    (ii) The DD Form 1155 is also authorized for use for--
    (A) Classified acquisitions when the purchase is made within the 
United States, its possessions, and Puerto Rico. Attach the DD Form 254, 
Contract Security Classification Specification, to the purchase order.
    (B) Orders under departmental contracts or from Government agencies 
outside the DoD (see FAR subparts 8.4, 8.6, 8.7, and 16.5).

[56 FR 36324, July 31, 1991. Redesignated and amended at 61 FR 7742, 
Feb. 29, 1996; 61 FR 9532, Mar. 8, 1996]



Sec. 213.505-3  Standard Form 44, Purchase Order-Invoice-Voucher.

    (b)(1) The micro-purchase limitation applies to all purchases except 
that purchases up to the simplified acquisition threshold may be made 
for--
    (A) Aviation fuel and oil;
    (B) Overseas transactions by contracting officers in support of a 
contingency operation as defined in 10 U.S.C. 101(a)(13); and
    (C) Transactions in support of intelligence and other specialized 
activities addressed by Part 2.7 of Executive Order 12333.

[59 FR 50851, Oct. 6, 1994, as amended at 61 FR 7742, Feb. 29, 1996; 61 
FR 18195, Apr. 24, 1996 ]



Sec. 213.507  Provisions and clauses.

    (a) Use the clauses in paragraphs (a) (i) through (iii) of this 
section, as applicable, in all purchase orders and blanket purchase 
agreements. The clauses listed in the following paragraphs (i) and (ii) 
may be incorporated by reference, except for FAR 52.252-2, Clauses 
Incorporated by Reference. Any other clauses included in the purchase 
order shall be incorporated by reference or in full text as required by 
the matrix in FAR 52.3.
    (i) Unilateral purchase orders--
    (A) FAR 52.252-2, Clauses Incorporated by Reference (required only 
if other clauses are incorporated by reference);
    (B) FAR 52.203-3, Gratuities;
    (C) FAR 52.211-16, Variation in Quantity;
    (D) FAR 52.222-3, Convict Labor (unless the order will be subject to 
the Walsh-Healey Public Contracts Act (see FAR subpart 22.6));
    (E) FAR 52.222-26, Equal Opportunity (unless exempt under FAR 
22.807);
    (F) FAR 52.225-3, Buy American Act-Supplies;
    (G) FAR 52.232,-1, Payments;
    (H) FAR 52.232-25, Prompt Payment;
    (I) FAR 52.232-28, Electronic Funds Transfer Payment Methods;
    (J) FAR 52.233-1, Disputes;
    (K) FAR 52.246-1, Contractor Inspection Requirements (except when an 
alternate level of quality assurance is necessary (see FAR 46.203 and 
46.204)); and
    (L) FAR 52.246-16, Responsibility for Supplies.
    (ii) Bilateral purchase orders--
    (A) The clauses in paragraph (a)(i) of this section;
    (B) FAR 52.204-2, Security Requirements (if the acquisition is 
classified);
    (C) FAR 52.243-1, Changes--Fixed Price (with appropriate alternate 
as necessary);
    (D) 252.243-7001, Pricing of Contract Modifications;
    (E) FAR 52.249-1, 52.249-4, or 52.249-5, Termination for Convenience 
of the Government; and
    (F) FAR 52.249-8, 52.249-9, or 52.249-10, Default.

[[Page 75]]

    (iii) Any other clauses required by the prescription for their use.

[56 FR 36324, July 31, 1991, as amended at 61 FR 7742, Feb. 29, 1996]



PART 214--SEALED BIDDING--Table of Contents




Sec.

                   Subpart 214.2--Solicitation of Bids

214.202  General rules for solicitation of bids.
214.202-5  Descriptive literature.

          Subpart 214.4--Opening of Bids and Award of Contract

214.404  Rejection of bids.
214-404-1  Cancellation of invitations after opening.
214.406  Mistakes in bids.
214.406-3  Other mistakes disclosed before award.

                 Subpart 214.5--Two-Step Sealed Bidding

214.503  Procedures.
214.503-1  Step one.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36326, July 31, 1991, unless otherwise noted.



                   Subpart 214.2--Solicitation of Bids

214.202  General rules for solicitation of bids.



Sec. 214.202-5  Descriptive literature.

    (d) Requirements of invitation for bids. When brand name or equal 
purchase descriptions are used, use of the provision at 252.210-7000, 
Brand Name or Equal, satisfies this requirement.



          Subpart 214.4--Opening of Bids and Award of Contract

214.404  Rejection of bids.



Sec. 214.404-1  Cancellation of invitations after opening.

    The contracting officer shall make the written determinations 
required by FAR 14.404-1 (c) and (e).
214.406  Mistakes in bids.



Sec. 214.406-3  Other mistakes disclosed before award.

    (e) Authority for making a determination under FAR 14.406-3(a), (b) 
and (d) is delegated for the defense agencies, without power of 
redelegation, as follows:
    (i) Defense Advanced Research Projects Agency: General Counsel, 
DARPA.
    (ii) Defense Information Systems Agency: General Counsel, DISA.
    (iii) Defense Intelligence Agency: Principal Assistant for 
Acquisition.
    (iv) Defense Logistics Agency:
    (A) General Counsel, DLA; and
    (B) Associate General Counsel, DLA.
    (v) Defense Mapping Agency: General Counsel, DMA.
    (vi) Defense Special Weapons Agency: General Counsel, DSWA.
    (vii) National Security Agency: Director of Procurement, NSA.
    (viii) On-Site Inspection Agency: General Counsel, OSIA.
    (ix) Ballistic Missile Defense Organization: General Counsel, BMDO.
    (h) Send a signed copy of the document authorizing correction of the 
bid to the appropriate finance center with its copy of the contract.

[57 FR 42629, Sept. 15, 1992, as amended at 59 FR 27669, May 27, 1994; 
61 FR 50452, Sept. 26, 1996]



                 Subpart 214.5--Two-Step Sealed Bidding

214.503  Procedures.



Sec. 214.503-1  Step one.

    (a) Requests for technical proposals may be in the form of a letter.

[56 FR 36326, July 31, 1991, as amended at 57 FR 53599, Nov. 12, 1992]



PART 215--CONTRACTING BY NEGOTIATION--Table of Contents




Sec.

   Subpart 215.4--Solicitation and Receipt of Proposals and Quotations

215.401  Applicability.
215.406-2  Part I--The Schedule.
215.414  Forms.

[[Page 76]]

                     Subpart 215.6--Source Selection

215.605  Evaluation factors and subfactors.
215.607  Disclosure of mistakes before award.
215.608  Proposal evaluation.
215.611  Best and final offers.
215.613  Alternate source selection procedures.
215.613-70  Four-step source selection procedures.

                   Subpart 215.7--Make-or-Buy Programs

215.704  Items and work included.

                    Subpart 215.8--Price Negotiation

215.801  Definitions.
215.804  Cost or pricing data.
215.804-1  General.
215.804-3  Exemptions from or waiver of submission of certified cost or 
          pricing data.
215.804-6  Procedural requirements.
215.804-7  Defective cost or pricing data.
215.804-8  Contract clauses.
215.805  Proposal analysis.
215.805-5  Field pricing support.
215.805-70  Cost realism analysis.
215.806  Subcontract pricing considerations.
215.806-1  General.
215.806-3  Field pricing reports.
215.807  Prenegotiation objectives.
215.808  Price negotiation memorandum.
215.809  Forward pricing rate agreements.
215.810  Should-cost review.
215.810-2  Program should-cost review.
215.810-3  Overhead should-cost review.
215.811  Estimating systems.
215.811-70  Disclosure, maintenance, and review requirements.
215.870--215.871  [Reserved]
215.872  Work measurement systems.
215.872-1  Definition.
215.872-2  Policy.
215.872-3  General.
215.872-4  Applicability.
215.873  Estimated data prices.

                          Subpart 215.9--Profit

215.902  Policy.
215.903  Contracting officer responsibilities.
215.905  Profit-analysis factors.
215.905-1  Common factors.
215.970  DD Form 1547, Record of Weighted Guidelines Method Application.
215.971  Weighted guidelines method.
215.971-1  General.
215.971-2  Performance risk.
215.971-3  Contract type risk and working capital adjustment.
215.971-4  Facilities capital employed.
215.972  Modified weighted guidelines method for nonprofit 
          organizations.
215.973  Alternate structured approaches.
215.974  Fee requirements for cost-plus-award-fee contracts.
215.975  Reporting profit and fee statistics.

Subpart 215.10--Preaward, Award, and Postaward Notifications, Protests, 
                              and Mistakes

215.1001  Notifications to unsuccessful offerors.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36326, July 31, 1991, unless otherwise noted.



   Subpart 215.4--Solicitation and Receipt of Proposals and Quotations



Sec. 215.401  Applicability.

    See 225.872 for additional guidance on procedures for purchasing 
from qualifying countries.



Sec. 215.406-2  Part I--The Schedule.

    (g) When a contract contains both fixed-priced and cost-
reimbursement line items or subline items, the contracting officer shall 
provide, in Section B, Supplies or Services and Prices/Costs, an 
identification of contract type specified for each contract line item or 
subline item to facilitate appropriate payment.

[60 FR 34470, July 3, 1995; 60 FR 43191, Aug. 18, 1995]



Sec. 215.414  Forms.

    This does not preclude use of letter RFPs and RFQs, provided their 
use complies with other requirements of the FAR and this regulation.



                     Subpart 215.6--Source Selection



Sec. 215.605  Evaluation factors and subfactors.

    (b)(2)(A) In acquisitions which require use of the clause at FAR 
52.219-9, Small, Small Disadvantaged and Women-Owned Small Business 
Subcontracting Plan, the extent of participation of small and small 
disadvantaged business in performance of the contact shall be addressed 
in source selection.
    (1) For acquisitions other than those based only on cost or price 
competition, the contracting officer shall evaluate the extent to which 
offerors identify and commit to small business and to small 
disadvantaged business,

[[Page 77]]

historically black college and university, or minority institution 
performance of the contract, whether as a joint venture, teaming 
arrangement, or subcontractor.
    (2) Criteria for evaluation may include--
    (i) The extent which such firms are specifically identified in 
proposals;
    (ii) The extent of commitment to use such firms (for example, 
enforceable commitments are to be weighted more heavily than non-
enforceable ones);
    (iii) The complexity and variety of the work small firms are to 
perform;
    (iv) The realism of the proposal;
    (v) When not otherwise required by 215.608(a)(2), past performance 
of the offerors in complying with requirements of the clauses at FAR 
52.219-8, Utilization of Small, Small Disadvantaged and Women-Owned 
Small Business Concerns, and 52.219-9, Small, Small Disadvantaged and 
Women-Owned Small Business Subcontracting Plan; and
    (vi) The extent of participation of such firms in terms of the value 
of the total acquisition.
    (3) Proposals addressing the extent of small and small disadvantaged 
business performance may be separate from subcontracting plans submitted 
pursuant to the clause at FAR 52.219-9 and should be structured to allow 
for consideration of offers from small businesses.
    (4) When an evaluation includes the criterion in paragraph 
(b)(2)(A)(2)(i) of this section, the small, small disadvantaged, or 
women-owned small businesses considered in the evaluation shall be 
listed in any subcontracting plan submitted pursuant to FAR 52.219-9 to 
facilitate compliance with 252.219-7003(g).
    (B) The costs or savings related to contract administration and 
audit may be considered when the offeror's past performance or 
performance risk is likely to result in significant costs or savings.
    (c) In competitive acquisitions of services--
    (i) Evaluation and award should be based, to the maximum extent 
practicable, on best overall value to the Government in terms of quality 
and other factors.
    (ii) The weighting of costs must be commensurate with the nature of 
the services being acquired.
    (A) It may be appropriate to award to an offeror, based on technical 
and quality considerations, at other than the lowest price when--
    (1) The effort being contracted for departs from clearly defined 
efforts; or
    (2) Highly skilled personnel are required.
    (B) It may be appropriate to award to the technically acceptable 
offeror with the lowest price when--
    (1) Services being acquired are of a routine or simple nature;
    (2) Highly skilled personnel are not required; or
    (3) The product to be delivered is clearly defined at the outset of 
the acquisition.

[56 FR 36326, July 31, 1991, as amended at 56 FR 67213, Dec. 30, 1991; 
57 FR 14992, Apr. 23, 1992; 59 FR 27669, May 27, 1994; 61 FR 18687, Apr. 
29, 1996; 61 FR 50452, Sept. 26, 1996]



Sec. 215.607  Disclosure of mistakes before award.

    (c)(3) The designee is the head of the contracting activity, who may 
redelegate this authority to the chief of the contracting office.



Sec. 215.608  Proposal evaluation.

    (a)(1) Contracting officers shall ensure that the use of 
uncompensated overtime in contracts to acquire services on the basis of 
the number of hours provided (see 237.170) will not degrade the level of 
technical expertise required to fulfill the Government's requirements. 
When acquiring such services, contracting officers shall conduct a risk 
assessment, and evaluate for award on that basis, any proposals received 
that reflect factors such as--
    (i) Unrealistically low labor rates or other costs that may result 
in quality or service shortfalls; and
    (ii) Unbalanced distribution of uncompensated overtime among skill 
levels and its use in key technical positions.
    (2) When a past performance evaluation is required by FAR 15.605, 
and the solicitation includes the clause at FAR 52.219-8, Utilization of 
Small, Small Disadvantaged and Women-Owned

[[Page 78]]

Small Business Concerns, the evaluation shall include the past 
performance of offerors in complying with requirements of that clause. 
When a past performance evaluation is required by FAR 15.605, and the 
solicitation includes the clause at FAR 52.219-9, Small, Small 
Disadvantaged and Women-Owned Small Business Subcontracting Plan, the 
evaluation shall include the past performance of offerors in complying 
with requirements of that clause.
    (b) Except for determinations based on violations or possible 
violations of section 27 of the Office of Federal Procurement Policy 
(OFPP) Act, and unless otherwise specified in department/agency 
regulations, the contracting officer shall make the written 
determination. Determinations based on violations or possible violations 
of section 27 of the OFPP Act shall be made at the level specified in 
FAR 3.104-11(g).

[56 FR 36326, July 31, 1991, as amended at 56 FR 67213, Dec. 30, 1991; 
61 FR 18687, Apr. 29, 1996]



Sec. 215.611  Best and final offers.

    (c)(i) Before requesting an additional (second or subsequent) best 
and final offer, the contracting officer shall obtain approval from--
    (A) The source selection authority and the senior procurement 
executive (SPE) for competitive negotiated acquisitions under formal 
source selection (see FAR 15.612). The SPE may delegate this authority 
to a level no lower than the head of the contracting activity.
    (B) The head of the contracting activity (HCA) for all other 
competitive negotiated acquisitions. The HCA may delegate this authority 
to the chief of the contracting office.
    (ii) Each HCA shall establish a system for reporting and documenting 
additional requests for best and final offers. Systems shall include as 
a minimum--
    (A) The total number of competitive negotiated acquisitions awarded;
    (B) The number of those acquisitions for which an additional request 
for best and final offers was approved and issued; and
    (C) The reasons for approving each additional request for best and 
final offers.
    (iii) To ensure that additional requests for best and final offers 
are used only when necessary and unavoidable, HCAs shall--
    (A) Periodically analyze data collected under paragraph (c)(ii) of 
this section;
    (B) Take appropriate corrective action, e.g., training, revising 
approval levels; and
    (C) Provide periodic summary reports to the SPE as specified in 
department/agency regulations.
215.613  Alternate source selection procedures.



Sec. 215.613-70  Four-step source selection procedures.

    (a) General. The four-step source selection procedure is designed 
for those situations where the Government wishes to focus on technical 
excellence. Proposals are evaluated, a competitive range established, 
and an apparent successful offeror selected without discussions of 
proposal deficiencies (a deficiency is defined as that part of an 
offeror's proposal which would not satisfy the Government's 
requirements). Negotiations are conducted only in the final step and 
only with the apparent successful offeror.
    (b) Applicability. Four-step source selection procedures may be used 
for--
    (1) Competitively negotiated research and development acquisitions 
with an estimated value of $2 million or more; or
    (2) Other acquisitions as permitted by department/agency 
regulations, except those in paragraph (c) of this subsection.
    (c) Restrictions. Four-step source selection procedures shall not be 
used for acquisitions which--
    (1) Will require extensive discussion and negotiations;
    (2) Use the authority of FAR 6.302-2;
    (3) Are solely for personal or nonpersonal services;
    (4) Are for architect-engineer services; or
    (5) Have an estimated value of less than $2 million.
    (d) Presolicitation. Establish early and open dialogue with 
prospective offerors

[[Page 79]]

to ensure their understanding of the Government's needs, since the 
evaluation will be conducted with limited discussions and without 
disclosing deficiencies in offeror proposals. Ways of establishing this 
dialogue are--
    (1) Presolicitation notices;
    (2) Presolicitation conferences;
    (3) Preproposal conferences;
    (4) Solicitations for information or planning purposes; and
    (5) Tailoring of specifications.
    (e) Solicitations. Include the following special provisions in four-
step source selection solicitations--
    (1) Explanation of the four-step concept and procedures;
    (2) Statement regarding the relative importance of technical/system 
performance criteria;
    (3) Notification that the contracting officer may reject proposals 
with unrealistic technical, schedule, cost, or price commitments since 
unrealistic commitments reflect an inherent lack of technical competence 
or indicate a failure to comprehend the complexity and risks of the 
requirements;
    (4) Schedule of planned source selection events, including specific 
dates for the sequential submission of separate technical and cost 
proposal.
    (5) Requirement for the technical proposal to include--
    (i) Identification, when appropriate, of trade-offs (with 
illustrative cost estimate impacts) among performance, production costs, 
operating and support costs, schedule and logistics support factors; and
    (ii) Information showing that the goals for design to cost and 
operating and support costs (when used) will be achieved when the item 
enters production.
    (6) Requirement for the cost proposal to include detailed cost 
information supporting the technical proposal and the cost factors in 
the evaluation criteria;
    (7) Statement that both technical and cost discussions will be 
limited as described in paragraphs (f) and (g) of this subsection; and
    (8) Notification that the contracting officer will only negotiate 
with the selected offeror, and that offerors' initial technical and cost 
proposals should be their best offer.
    (f) Step one--evaluation of technical proposals. (1) The sequence of 
step one--
    (i) Evaluate all technical proposals;
    (ii) Conduct limited discussions with all offerors; and
    (iii) Ask for any necessary clarifications and additional supporting 
data when necessary (normally, ask that this be submitted with the cost 
proposal).
    (2) In conducting step one--
    (i) Limit discussions to only what is necessary to ensure that both 
parties understand each other;
    (ii) Do not tell offerors about deficiencies in their proposals; and
    (iii) Provide written clarification to all offerors when it appears 
the Government's requirements have been misinterpreted.
    (g) Step two--evaluation of cost proposals. (1) The sequence of step 
two--
    (i) Request cost proposals;
    (ii) Evaluate all cost proposals;
    (iii) Establish the competitive range;
    (iv) Eliminate those proposals outside the range and advise those 
offerors;
    (v) Conduct limited discussions with remaining offerors; and
    (vi) Eliminate proposals which cannot be made acceptable and advise 
the offerors.
    (2) In conducting step two--
    (i) Limit discussions to--
    (A) Clarifying inconsistencies or correcting mathematical errors;
    (B) Correlating cost elements with technical effort in order to 
assess cost realism; and
    (C) Ensuring a complete understanding of the Government's 
requirements, the offeror's offer, and other contract terms;
    (ii) Do not tell an offeror that any of its cost elements are either 
too high or too low; and
    (iii) Follow the guidelines in paragraph (f) of this subsection if 
further discussions of technical proposals or clarifications are 
required.
    (h) Step three--common cut-off and selection of an offeror for final 
contract negotiations. (1) The sequence of step three--
    (i) Notify offerors of the common cut-off date for receipt of best 
and final offers (technical and cost);
    (ii) Evaluate the offers;

[[Page 80]]

    (iii) Select the best offeror (see paragraph (h)(2)(iv) of this 
subsection for multiple sources);
    (iv) Tell the selected source that the decision is conditional based 
on negotiation of a definitive contract within the time period 
prescribed by the source selection authority; and
    (v) Advise the other offerors of the source selected.
    (2) In conducting step three--
    (i) Remind offerors, when notifying them of the common cut-off date, 
that any changes incorporated in the final proposal must be fully 
documented;
    (ii) Do not accept lump sum reductions in final cost proposals 
without supporting data;
    (iii) Do not request additional best and final offers without the 
approval required by 215.611(c); and
    (iv) Do not select two or more offerors, rather than a single 
source, for final contract negotiations, unless the HCA makes a written 
determination that final selection of a single source should not be made 
until the prospective contracts have been tentatively negotiated.
    (i) Step four--final negotiations and contract award. (1) The 
sequence of step four (single selectee)--
    (i) Negotiate the final contract price, terms, and conditions; and
    (ii) Award the contract.
    (2) The sequence of step four (multiple selectees)--
    (i) Negotiate tentative final contract terms and conditions;
    (ii) Select the best source; and
    (iii) Award.
    (3) In conducting step four--
    (i) Complete negotiations and award the contract within the time 
prescribed by the source selection authority;
    (ii) Terminate negotiations and make a new source selection decision 
if the condition in paragraph (i)(3)(i) cannot be met;
    (iii) Do not permit changes in the Government's requirements or the 
offeror's proposal which would affect the source selection decision; and
    (iv) Follow the procedures in FAR 15.606 if changes in the 
Government's requirements are necessary.



                   Subpart 215.7--Make-or-Buy Programs



Sec. 215.704  Items and work included.

    The minimum dollar amount is $1 million.



                    Subpart 215.8--Price Negotiation



Sec. 215.801  Definitions.

    Cost realism analysis means a review of the overall costs in an 
offeror's proposal to determine if they--
    (1) Are realistic for the work to be performed;
    (2) Reflect a clear understanding of the requirements; and
    (3) Are consistent with the various elements of the offeror's 
technical proposal.
215.804  Cost or pricing data.



Sec. 215.804-1  General.

    (a) When certified cost or pricing data are not required, the 
contracting officer may ask for partial or limited data when the data 
are necessary for the Government's analysis. The contracting officer 
shall not ask the contractor to certify these data.

[57 FR 42629, Sept. 15, 1992]



Sec. 215.804-3  Exemptions from or waiver of submission of certified cost or pricing data.

    (a)(1) The contracting officer rarely should need to require the 
submission or certification of cost or pricing data on acquisitions 
where adequate price competition is expected (regardless of the type of 
contract anticipated).
    (b) Adequate price competition. (1) Adequate price competition may 
exist for any contract, including cost-reimbursement contracts, as long 
as price is a substantial factor in the evaluation. If, after receipt of 
proposals, the contracting officer determines that adequate price 
competition does not exist, the contracting officer shall obtain, as 
appropriate (see FAR 15.804-2), certified cost or price data.
    (3)(A) Examples of a price ``based on'' adequate price competition 
are:

[[Page 81]]

    (1) Exercise of an option in a contract where adequate price 
competition existed, if the contracting officer has determined that the 
option price is reasonable under FAR 17.207(d);
    (2) Acquisition of an item that has multiple suppliers, where the 
contracting officer only solicits or receives one offer, but the price 
is clearly reasonable in comparison with recent purchases where adequate 
price competition existed.
    (B) Dual or multiple source programs. (1) In dual or multiple source 
programs, the determination of adequate price competition must be made 
on a case-by-case basis. Contracting officers must exercise deliberation 
and thorough review in making the determination. Even when adequate 
price competition exists, in certain cases it may be appropriate to 
obtain some data to assist in price analysis.
    (2) Adequate price competition normally exists when--
    (i) Prices are solicited across a full range of step quantities, 
normally including a 0-100 percent split, from at least two offerors who 
are individually capable of producing the full quantity; and
    (ii) The price reasonableness of all prices awarded is clearly 
established on the basis of price analysis (see FAR section 15.805-2).
    (3) If price reasonableness cannot be determined on the basis of 
price analysis, including the results of negotiations, the exemption at 
FAR section 15.804-3(a)(1) from submission of certified cost of pricing 
data shall not apply.
    (i) Waiver for exceptional cases. (i) The DoD has exempted the 
Canadian Commercial Corporation and its subcontractors from submission 
and certification of cost or pricing data on all acquisitions.
    (ii) The DoD has waived certain cost or pricing data certification 
requirements for nonprofit organizations (including educational 
institutions) on cost-reimbursement-no-fee contracts. The contracting 
officer--
    (A) Shall require cost or pricing data, including cost or pricing 
data from subcontractors;
    (B) Shall not require certification of data submitted by the 
organization on its own behalf or on behalf of subcontractors which are 
also nonprofit organizations;
    (C) Shall require certification of cost or pricing data from 
subcontractors which are not nonprofit organizations or educational 
institutions.
    (iii) Use the following format when preparing an authorization for 
waiver in accordance with FAR 15.804-3(i):

                 (Military Department or Defense Agency)

     Authority to Waive Submission of Certified Cost or Pricing Data

    1. The (contracting activity) proposes to award a contract to (name 
of contractor) for acquisition of (brief description of supplies or 
services).
    2. Under FAR 15.804-2, the prospective contractor is required to 
submit certified cost or pricing data. However, for the following 
reasons, I am waiving the requirement for certification of the data (The 
waiver may be partial, e.g., limited to particular cost or pricing data. 
If so, describe the cost or pricing data for which the certification is 
to be waived): Explain the circumstances and conditions which make the 
prospective contract action an exceptional case. State the reasons why 
the waiver is justified.)
    3. I make this waiver under the authority of 10 U.S.C. 2306a(b)(2), 
as implemented by FAR 15.804-3(i).
Date____________________________________________________________________
Signed__________________________________________________________________

[56 FR 36326, July 31, 1991, as amended at 57 FR 42629, Sept. 15, 1992; 
57 FR 53599, Nov. 12, 1992; 59 FR 27669, May 27, 1994]



Sec. 215.804-6  Procedural requirements.

    (b)(2)(A) When the solicitation requires contractor compliance with 
the Contractor Cost Data Reporting (CCDR) System (Army--AMCP 715-8, 
Navy--NAV PUB P-5241, and Air Force--AFMCP 800-15), require the 
contractor to submit DD Forms 1921 or 1921-1 with its SF 1411.
    (B) Contracting offices may develop contract pricing proposal 
supporting schedules for use by offerors in providing supporting data 
for the SF 1411. Schedules should only ask for data that are necessary 
and reasonable based on industry, company, or commodity practices.

[56 FR 36326, July 31, 1991, as amended at 59 FR 27669, May 27, 1994]

[[Page 82]]



Sec. 215.804-7  Defective cost or pricing data.

    (b)(2) Unless there is clear evidence to the contrary, the 
contracting officer may presume the defective data were relied on and 
resulted in a contract price increase equal to the amount of the defect 
plus related overhead and profit or fee. The contracting officer is not 
expected to reconstruct the negotiation by speculating as to what would 
have been the mental attitudes of the negotiating parties if the 
nondefective data had been known.



Sec. 215.804-8  Contract clauses.

    If the solicitation or contract includes one of the clauses at FAR 
52.215-23, FAR 52.215-24, or FAR 52.215-25, also use the clause at 
252.215-7000, Pricing Adjustments.

[60 FR 61596, Nov. 30, 1995]
215.805  Proposal analysis.



Sec. 215.805-5  Field pricing support.

    (a)(1)(A) Contracting officers shall request field pricing reports 
for--
    (1) Fixed-price proposals exceeding $500,000;
    (2) Cost-type proposals exceeding $500,000 from offerors with 
significant estimating system deficiencies (see 215.811-70(a)(3) and 
(c)(2)(i)); or
    (3) Cost-type proposals exceeding $10 million from offerors without 
significant estimating system deficiencies.
    (B) Contracting officers may, with adequate written justification, 
waive the requirement for these reports.
    (2)(A) The contract administration office price/cost analyst 
supports the administrative contracting officer in preparing a complete 
and accurate field pricing report for the contracting officer. The 
analyst--
    (1) In concert with the auditor and in consideration of the 
auditor's workload, establishes a deadline for the auditor's input, 
subject to adjustments when considered necessary;
    (2) Identifies areas for special consideration;
    (3) Arranges for exchanges of technical and audit information; and
    (4) Must be fully responsive to a request for technical information 
from the auditor.
    (B) The pricing report--
    (1) Details the price/cost analyst's comprehensive review and 
evaluation of the proposal;
    (2) Includes information specifically requested by the contracting 
officer; and
    (3) Summarizes what was analyzed, how it was analyzed, and the 
conclusions reached.
    (c)(i) In requesting field pricing support--
    (A) Mark all requests ``FIELD PRICING REQUEST'' in bold letters on 
the mailing envelope;
    (B) On urgent requests, provide facsimile numbers to facilitate 
return of the completed report; and
    (C) Send an advance copy to the audit activity.
    (ii) When the contracting officer knows in advance that field 
pricing support will be required, the contracting officer may request 
field pricing support before the offeror submits a proposal.
    (A) Give the administrative contracting officer (ACO) and auditor a 
copy of the solicitation;
    (B) Tell them when to expect the proposal; and
    (C) Tell the offeror to provide the ACO and auditor copies of the 
proposal.
    (iii) Where audit reports are received on contracting actions that 
are subsequently cancelled or unsuccessful, notify the cognizant auditor 
in writing.
    (iv) For spare parts or support equipment, identify all line items 
where the proposed price exceeds by 25 percent or more the lowest price 
the Government has paid within the most recent 12-month period. The 
field pricing report will include, as a minimum--
    (A) A detailed analysis of each line item identified by the 
contracting officer in the request;
    (B) A detailed analysis of those line items where a comparison of 
the item description and the proposed price indicates a potential for 
overpricing;
    (C) An analysis of the significant high-dollar-value items. If there 
are no obvious high-dollar-value items, include an analysis of a random 
sample of items; and
    (D) An analysis of a random sample of the remaining low-dollar value 
items. Sample size may be determined

[[Page 83]]

by subjective judgment, e.g., experience with the contractor and 
reliability of its estimating and accounting systems.
    (v) For spare parts proposals that have been identified as Spares 
Acquisition Integrated with Production (SAIP) items (see DoD Instruction 
4245.12, Spares Acquisition Integrated with Production (SAIP))--
    (A) Include a copy of the data entitled ``Contractor's Procurement 
Schedule for SAIP'' (Data Item DI-V-7200), or equivalent, in the request 
so that the benefits of combining new and in process quantities can be 
assured (these data are delivered by the contractor on contracts that 
include SAIP requirements); or
    (B) Require the contractor to include these data in its proposal.
    (e)(6) The contract administration office price/cost analyst is 
responsible for providing a complete and accurate field pricing report. 
This includes quantifying technical findings; however, if the auditor 
requests a technical analysis, the auditor normally will incorporate the 
financial effect of the analysis in the audit report.
    (7) The contracting officer shall, with the advice of the ACO and 
auditor, ensure that the contractor initiates necessary corrective 
action before contract award.
    (8) The administrative contracting officer and auditor shall confer 
with the contractor during the course of the field pricing review to 
fully understand the basis for each item in the proposal and to remove 
any doubts as to the validity and accuracy of their conclusions and 
findings.
    (g) The audit activity sends the original to the administrative 
contracting officer and a copy to the contracting officer.

[56 FR 36326, July 31, 1991, as amended at 60 FR 61596, Nov. 30, 1995]



Sec. 215.805-70  Cost realism analysis.

    (a) In competitive acquisitions, even when adequate price 
competition exists, to ensure that proposed costs are consistent with 
the technical proposal, the contracting officer--
    (1) Should perform a cost realism analysis when--
    (i) A cost-reimbursement contract is anticipated;
    (ii) The solicitation contains new requirements that may not be 
fully understood by competing contractors;
    (iii) There are quality concerns; or
    (iv) Past experience indicates that contractors proposed costs have 
resulted in quality or service shortfalls.
    (2) May perform a cost realism analysis on other acquisitions.
    (b) The contracting officer should determine what data are necessary 
for the cost realism analysis during acquisition planning and 
development of the solicitation. Unless these data are already available 
from Government sources, the contracting officer will need to ask the 
offerors for them.
    (1) Request only necessary data; and
    (2) Do not request submission or certification of cost or pricing 
data.
215.806  Subcontract pricing considerations.



Sec. 215.806-1  General.

    Price redeterminable or fixed-price incentive contracts may include 
subcontracts placed on the same basis. When the contracting officer 
wants to reprice the prime contract even though the contractor has not 
yet established final prices for the subcontracts, the contracting 
officer may negotiate a firm contract price--
    (1) If cost or pricing data on the subcontracts show the amounts to 
be reasonable and realistic; or
    (2) If cost or pricing data on the subcontracts are too indefinite 
to determine whether the amounts are reasonable and realistic, but--
    (i) Circumstances require prompt negotiation; and
    (ii) A statement substantially as follows is included in the 
repricing modification of the prime contract:

    As soon as the Contractor establishes firm prices for each 
subcontract listed below, the Contractor shall submit (in the format and 
with the level of detail specified by the Contracting Officer) to the 
Contracting Officer the subcontractor's cost incurred in performing the 
subcontract and the final subcontract price. The Contractor and 
Contracting Officer shall negotiate an equitable adjustment in the total 
amount paid or to be paid under this contract to reflect the final 
subcontract price.


[[Page 84]]


    (a)(1) Contractor and subcontractor proposals may reflect the 
selection of sources whose proposals offer the greatest value to the 
Government in terms of performance and other factors. If the selection 
is based on greatest value rather than lowest price, the analysis 
supporting subcontractor selection should include a discussion of the 
factors considered in the selection (see also FAR 15.605(c) and 
215.605(c)). If the contractor's analysis is not adequate, return it for 
correction of deficiencies.
    (d) The contracting officer shall make every effort to ensure that 
fees negotiated by contractors for cost-plus-fixed-fee subcontracts do 
not exceed the fee limitations in FAR 15.903(d).

[56 FR 36326, July 31, 1991, as amended at 60 FR 29497, June 5, 1995]



Sec. 215.806-3  Field pricing reports.

    (a)(i) If, in the opinion of the contracting officer or auditor, the 
review of a prime contractor's proposal requires further review of 
subcontractors' cost estimates at the subcontractors' plants (after due 
consideration of reviews performed by the prime contractor), these 
reviews should be fully coordinated with the administrative contracting 
officer (ACO) having cognizance of the prime contractor before being 
initiated. The ACO for the prime contractor will initiate the request to 
the ACO for the subcontractor, with an information copy to the auditor 
for the subcontractor. The ACO for the subcontractor sends the resulting 
field pricing report to the prime ACO with an information copy to the 
prime auditor. Requests for field pricing support on lower tier 
subcontractors are handled in a like manner.
    (ii) Notify the appropriate contract administration activities when 
extensive, special, or expedited field pricing assistance will be needed 
to review and evaluate subcontractors' proposals under a major weapon 
system acquisition.



Sec. 215.807  Prenegotiation objectives.

    (a)(i) Also consider data resulting from application of work 
measurement systems in developing prenegotiation objectives.
    (ii) Consider field pricing support personnel participation in 
planned prenegotiation and negotiation activities.
    (b) Prenegotiation objectives, including objectives related to 
disposition of findings and recommendations contained in preaward and 
postaward contract audit and other advisory reports, shall be documented 
and reviewed in accordance with Departmental procedures.

[56 FR 36326, July 31, 1991, as amended at 59 FR 27669, May 27, 1994]



Sec. 215.808  Price negotiation memorandum.

    (a)(8) Include the principal factors related to the disposition of 
findings and recommendations contained in preaward and postaward 
contract audit and other advisory reports.
    (10) The memorandum--
    (A) Must document significant deviations from the prenegotiation 
profit objective;
    (B) Should include the DD Form 1547, Record of Weighted Guidelines 
Application (see subpart 215.9), if used, with supporting rationale; and
    (C) Must document the rationale for not using the weighted 
guidelines method when its use is required by 215.9.



Sec. 215.809  Forward pricing rate agreements.

    (e)(i) Use forward pricing rate agreement (FPRA) rates when such 
rates are available, unless waived on a case-by-case basis by the head 
of the contracting activity.
    (ii) Advise the ACO of each case waived.
    (iii) Contact the ACO for questions on FPRAs or recommended rates.
215.810  Should-cost review.



Sec. 215.810-2  Program should-cost review.

    (b) DoD contracting activities should consider performing a program 
should-cost review before award of a definitive major systems contract 
exceeding $100 million.

[61 FR 7742, Feb. 29, 1996]

[[Page 85]]



Sec. 215.810-3  Overhead should-cost review.

    (a) Contact the DCMC/DLA Overhead Center, Fort Belvoir, VA 22060-
6221, at (703) 767-3387, for questions on overhead should-cost analysis.
    (b)(i) The Defense Contract Management Command/Defense Logistics 
Agency (DCMC/DLA), or the military department responsible for performing 
contract administration functions (e.g., Navy SUPSHIP), should consider, 
based on risk assessment, performing an overhead should-cost review of a 
contractor business unit (as defined in FAR 31.001) when all of the 
following conditions exist:
    (A) Projected annual sales to DoD exceed $1 billion;
    (B) Projected DoD versus total business exceeds 30 percent;
    (C) Level of sole-source DoD contracts is high;
    (D) Significant volume of proposal activity is anticipated;
    (E) Production or development of a major weapon system or program is 
anticipated; and
    (F) Contractor cost control/reduction initiatives appear inadequate.
    (ii) The head of the contracting activity may request an overhead 
should-cost review for a business unit which does not meet the criteria 
in paragraph (b)(i) of this subsection.
    (iii) Overhead should-cost reviews are labor intensive. These 
reviews generally involve participation by the contracting, contract 
administration, and contract audit elements. The extent of availability 
of military department, contract administration, and contract audit 
resources to support DCMC/DLA-led teams should be considered when 
determining whether a review will be conducted. Overhead should-cost 
reviews generally shall not be conducted at a contractor business 
segment more frequently than every three years.

[61 FR 7743, Feb. 29, 1996; 61 FR 18195, Apr. 24, 1996]
215.811  Estimating systems.



Sec. 215.811-70  Disclosure, maintenance, and review requirements.

    (a) Definitions. (1) Adequate estimating system means an estimating 
system that--
    (i) Is established, maintained, reliable, and consistently applied; 
and
    (ii) Produces verifiable, supportable, and documented cost 
estimates.
    (2) Contractor means a business unit as defined in FAR 31.001.
    (3) Estimating system is as defined in the clause at 252.215-7002 
Cost Estimating System Requirements.
    (4) Significant estimating system deficiency means a shortcoming in 
the estimating system which is likely to consistently result in proposal 
estimates for total cost or a major cost element(s) which do not provide 
an acceptable basis for negotiation of fair and reasonable prices.
    (b) Applicability. (1) DoD policy is that all contractors have 
estimating systems that--
    (i) Are adequate;
    (ii) Consistently produce well supported proposals that are 
acceptable as a basis for negotiation of fair and reasonable prices;
    (iii) Are consistent with and integrated with the contractor's 
related management systems; and
    (iv) Are subject to applicable financial control systems.
    (2) A large business contractor is subject to estimating system 
disclosure, maintenance, and review requirements if--
    (i) In its preceding fiscal year the contractor received DoD prime 
contracts or subcontracts totalling $50 million or more for which 
certified cost or pricing data were required; or
    (ii) If in its preceding fiscal year the contractor received DoD 
prime contracts or subcontracts totalling $10 million or more (but less 
than $50 million) for which certified cost or pricing data were required 
and the contracting officer, with concurrence or at the request of the 
administrative contracting officer, determines it to be in the best 
interest of the Government (e.g., significant estimating problems are 
believed to exist or the contractor's sales are predominantly 
Government).
    (c) Responsibilities. (1) The contracting officer shall--
    (i) Through use of the clause at 252.215-7002 Cost Estimating System 
Requirements, apply the disclosure, maintenance and review requirements 
to large business contractors meeting

[[Page 86]]

the criteria in paragraph (b)(2)(i) of this subsection;
    (ii) Consider whether to apply the disclosure, maintenance, and 
review requirements to large business contractors under paragraph 
(b)(2)(ii) of this subsection; and
    (iii) Not apply the disclosure, maintenance, and review requirement 
to other than large business contractors.
    (2) The cognizant administrative contracting officer, for 
contractors subject to paragraph (b)(2) of this subsection, shall--
    (i) Determine the adequacy of the disclosure and system; and
    (ii) Pursue correction of any deficiencies.
    (3) The cognizant auditor, on behalf of the ACO, serves as team 
leader in conducting estimating system reviews.
    (4) A contractor subject to estimating system disclosure, 
maintenance, and review requirements shall--
    (i) Maintain an adequate system;
    (ii) Describe its system to the administrative contracting officer 
(ACO);
    (iii) Provide timely notice of changes in the system; and
    (iv) Correct system deficiencies identified by the ACO.
    (d) Characteristics of an adequate estimating system--(1) General. 
An adequate system should provide for the use of appropriate source 
data, utilize sound estimating techniques and good judgment, maintain a 
consistent approach, and adhere to established policies and procedures.
    (2) Evaluation. In evaluating the adequacy of a contractor's 
estimating system, the ACO should consider whether the contractor's 
estimating system, for example--
    (i) Establishes clear responsibility for preparation, review and 
approval of cost estimates;
    (ii) Provides a written description of the organization and duties 
of the personnel responsible for preparing, reviewing, and approving 
cost estimates;
    (iii) Assures that relevant personnel have sufficient training, 
experience and guidance to perform estimating tasks in accordance with 
the contractor's established procedures;
    (iv) Identifies the sources of data and the estimating methods and 
rationale used in developing cost estimates;
    (v) Provides for appropriate supervision throughout the estimating 
process;
    (vi) Provides for consistent application of estimating techniques;
    (vii) Provides for detection and timely correction of errors;
    (viii) Protects against cost duplication and omissions;
    (ix) Provides for the use of historical experience, including 
historical vendor pricing information, where appropriate;
    (x) Requires use of appropriate analytical methods;
    (xi) Integrates information available from other management systems, 
where appropriate;
    (xii) Requires management review including verification that the 
company's estimating policies, procedures and practices comply with this 
regulation;
    (xiii) Provides for internal review of and accountability for the 
adequacy of the estimating system, including the comparison of projected 
results to actual results and an analysis of any differences;
    (xiv) Provides procedures to update cost estimates in a timely 
manner throughout the negotiation process; and
    (xv) Addresses responsibility for review and analysis of the 
reasonableness of subcontract prices.
    (3) Indicators of potentially significant estimating deficiencies. 
The following examples indicate conditions that may produce or lead to 
significant estimating deficiencies--
    (i) Failure to ensure that historical experience is available to and 
utilized by cost estimators, where appropriate;
    (ii) Continuing failure to analyze material costs or failure to 
perform subcontractor cost reviews as required.
    (iii) Consistent absence of analytical support for significant 
proposed cost amounts;
    (iv) Excessive reliance on individual personal judgment where 
historical experience or commonly utilized standards are available;
    (v) Recurring significant defective pricing findings within the same 
cost element(s);
    (vi) Failure to integrate relevant parts of other management systems

[[Page 87]]

(e.g., production control or cost accounting) with the estimating system 
so that the ability to generate reliable cost estimates is impaired; and
    (vii) Failure to provide established policies, procedures, and 
practices to persons responsible for preparing and supporting estimates.
    (e) Review Procedures. Cognizant audit and contract administration 
activities shall--
    (1) Establish and manage regular programs for reviewing selected 
contractors' estimating systems.
    (2) Conduct reviews as a team effort.
    (i) The contract auditor will be the team leader.
    (ii) The team leader will--
    (A) Coordinate with the ACO to ensure that team membership includes 
qualified contract administration technical specialists.
    (B) Advise the ACO and contractor of significant findings during the 
conduct of the review and during the exit conference.
    (C) Prepare a team report.
    (1) The ACO or a representative should--
    (i) Coordinate the contract administration activity's review;
    (ii) Consolidate findings and recommendations; and
    (iii) When appropriate, prepare a comprehensive written report for 
submission to the auditor.
    (2) The contract auditor will attach the ACO's report to the team 
report.
    (3) Tailor reviews to take full advantage of the day-to-day work 
done by both organizations.
    (4) Conduct a review every three years of contractors subject to the 
disclosure requirements. The ACO and auditor may lengthen or shorten the 
three-year period based on their joint risk assessment of the 
contractor's past experience and current vulnerability.
    (f) Disposition of survey team findings--(1) Reporting of survey 
team findings. The auditor will document the findings and 
recommendations of the survey team in a report to the ACO. If there are 
significant estimating deficiencies, the auditor will recommend 
disapproval of all or portions of the estimating system.
    (2) Initial notification to the contractor. The ACO will provide a 
copy of the team report to the contractor and, unless there are no 
deficiencies mentioned in the report, ask the contractor to submit a 
written response in 30 days, or a reasonable extension.
    (i) If the contractor agrees with the report, the contractor has 60 
days from the date of initial notification to correct any identified 
deficiencies or submit a corrective action plan showing milestones and 
actions to eliminate the deficiencies.
    (ii) If the contractor disagrees, the contractor should provide 
rationale in its written response.
    (3) Evaluation of contractor's response. The ACO, in consultation 
with the auditor, will evaluate the contractor's response to determine 
whether--
    (i) The estimating system contains deficiencies which need 
correction;
    (ii) The deficiencies are significant estimating deficiencies which 
would result in disapproval of all or a portion of the contractor's 
estimating system; or
    (iii) The contractor's proposed corrective actions are adequate to 
eliminate the deficiency.
    (4) Notification of ACO determination. The ACO will notify the 
contractor and the auditor of the determination and, if appropriate, of 
the Government's intent to disapprove all or selected portions of the 
system. The notice shall--
    (i) List the cost elements covered;
    (ii) Identify any deficiencies requiring correction; and
    (iii) Require the contractor to correct the deficiencies within 45 
days or submit an action plan showing milestones and actions to 
eliminate the deficiencies.
    (5) Notice of disapproval. If the contractor has neither submitted 
an acceptable corrective action plan nor corrected significant 
deficiencies within 45 days, the ACO shall disapprove all or selected 
portions of the contractor's estimating system. The notice of 
disapproval must--
    (i) Identify the cost elements covered;
    (ii) List the deficiencies which prompted the disapproval; and

[[Page 88]]

    (iii) Be sent to the cognizant auditor, and each contracting and 
contract administration office having substantial business with the 
contractor.
    (6) Monitoring contractor's corrective action. The auditor and ACO 
will monitor the contractor's progress in correcting deficiencies. If 
the contractor fails to make adequate progress, the ACO shall take 
whatever action is necessary to ensure that the contractor corrects the 
deficiencies. Examples of actions the ACO can take are: Bringing the 
issue to the attention of higher level management, reducing or 
suspending progress payments (see FAR 32.503-6), and recommending 
nonaward of potential contracts.
    (7) Withdrawal of estimating system disapproval. The ACO will 
withdraw the disapproval when the ACO determines that the contractor has 
corrected the significant system deficiencies. The ACO will notify the 
contractor, the auditor, and affected contracting and contract 
administration activities of the withdrawal.
    (g) Impact of estimating system deficiencies on specific proposals. 
(1) Field pricing teams will discuss identified estimating system 
deficiencies and their impact in all reports on contractor proposals 
until the deficiencies are resolved.
    (2) The contracting officer responsible for negotiation of a 
proposal generated by an estimating system with an identified deficiency 
shall evaluate whether the deficiency impacts the negotiations. If it 
does not, the contracting officer should proceed with negotiations. If 
it does, the contracting officer should consider other alternatives, 
e.g.--
    (i) Allowing the contractor additional time to correct the 
estimating system deficiency and submit a corrected proposal;
    (ii) Considering another type of contract, e.g., an FPIF instead of 
an FFP;
    (iii) Using additional cost analysis techniques to determine the 
reasonableness of the cost elements affected by the system's deficiency;
    (iv) Segregating the questionable areas as a cost reimbursable line 
item;
    (v) Reducing the negotiation objective for profit or fee; or
    (vi) Including a contract (reopener) clause that provides for 
adjustment of the contract amount after award.
    (3) The contracting officer who incorporates a reopener clause into 
the contract is responsible for negotiating price adjustments required 
by the clause. Any reopener clause necessitated by an estimating 
deficiency should--
    (i) Clearly identify the amounts and items which are in question at 
the time of negotiation;
    (ii) Indicate a specific time or subsequent event by which the 
contractor will submit a supplemental proposal, including cost or 
pricing data, identifying the cost impact adjustment necessitated by the 
deficient estimating system. The clause should require that the 
contractor certify cost or pricing data submitted as part of the 
supplemental proposal;
    (iii) Provide for the contracting officer to unilaterally adjust the 
contract price if the contractor fails to submit the supplemental 
proposal; and
    (iv) Provide that failure of the Government and the contractor to 
agree to the price adjustment shall be a dispute under the Disputes 
clause.
    (h) Contract clause. Use the clause at 252.215-7002, Cost Estimating 
System Requirements, in all solicitations and contracts to be awarded on 
the basis of certified cost or pricing data.

[56 FR 36326, July 31, 1991, as amended at 56 FR 67213, Dec. 30, 1991]
215.870--215.871  [Reserved]
215.872  Work measurement systems.



Sec. 215.872-1  Definition.

    Work measurement systems (WMS), as used in this section, means 
systems used--
    (a) To analyze the touch labor content of a manufacturing operation,
    (b) To establish labor standards for that operation;
    (c) To measure and analyze variances from those standards;
    (d) To continuously improve both the manufacturing operation and the 
labor standards used in that operation.

[[Page 89]]



Sec. 215.872-2  Policy.

    DoD policy is to use WMS, when appropriate, to provide data for use 
in planning, cost estimating, and monitoring contract performance.



Sec. 215.872-3  General.

    (a) The contracting officer, in coordination with the program 
manager, shall include provisions in the contract to implement the 
program's work measurement system requirements.
    (b) An example of an acceptable set of criteria for WMS is found in 
MIL-STD-1567A. Tailor either MIL-STD-1567A or the contractor's existing 
WMS, if acceptable to the Government, for the specific program or 
contract.



Sec. 215.872-4  Applicability.

    The contracting officer--
    (a) Should include provisions for WMS in solicitations and resulting 
production contracts for major weapons systems or subsystems in excess 
of--
    (1) $100 million total cost; or
    (2) $20 million annually.
    (b) Should tailor the provisions to be consistent with program 
requirements and compatible with existing contractor technical and 
management processes and procedures;
    (c) May include WMS requirements in full scale development contracts 
exceeding $100 million, when appropriate (e.g., to assist in 
transitioning from full scale development to production).
    (d) Should not include WMS when--
    (1) Acquiring commercial products (FAR 11.001);
    (2) There will be low volume, nonrepetitive production runs;
    (3) Submission and certification of cost or pricing data are not 
required; or
    (4) There will be no cost benefit from the imposition of these 
systems.



Sec. 215.873  Estimated data prices.

    (a) The Department of Defense requires estimates of the prices of 
data in order to evaluate the cost to the Government of data items in 
terms of their management, product, or engineering value.
    (b) When data are required to be delivered under a contract, the 
solicitation will include DD Form 1423, Contract Data Requirements List. 
The form and the provision included in the solicitation request the 
offeror to state what portion of the total price is estimated to be 
attributable to the production or development of the listed data for the 
Government (not to the sale of rights in the data). However, offerors' 
estimated prices may not reflect all such costs; and different offerors 
may reflect these costs in a different manner, for the following 
reasons--
    (1) Differences in business practices in competitive situations;
    (2) Differences in accounting systems among offerors;
    (3) Use of factors or rates on some portions of the data;
    (4) Application of common effort to two or more data items; and
    (5) Differences in data preparation methods among offerors.
    (c) Data price estimates should not be used for contract pricing 
purposes without further analysis.
    (d) The contracting officer shall ensure that the contract does not 
include a requirement for data which the contractor has delivered or is 
obligated to deliver to the Government under another contract or 
subcontract, and that the successful offeror furnishes any certification 
required by the solicitation. However, where duplicate data are desired, 
the contract price shall include the costs of duplication, but not of 
preparation, of such data.



                          Subpart 215.9--Profit



Sec. 215.902  Policy.

    Departments and agencies shall use a structured approach for 
developing a prenegotiation profit or fee objective (profit objective) 
on any negotiated contract action that requires cost analysis, except on 
cost-plus-award-fee contracts (but see 215.974). There are three 
approaches--
    (1) The weighted guidelines method;
    (2) The modified weighted guidelines method; and
    (3) An alternate structured approach.



Sec. 215.903  Contracting officer responsibilities.

    (a) Also, do not perform a profit analysis when assessing cost 
realism in competitive acquisitions.
    (b) The contracting officer--

[[Page 90]]

    (1) Shall use the weighted guidelines method (see 215.971), unless--
    (A) The modified weighted guidelines method applies; or
    (B) An alternate approach is justified.
    (2) Shall use the modified weighted guidelines method (see 215.972) 
on contract actions with nonprofit organizations;
    (3) May use an alternate structured approach (see 215.973) when--
    (i) The contract action is--
    (A) Under $500,000;
    (B) For architect-engineer or construction work;
    (C) Primarily for delivery of material from subcontractors; or
    (D) A termination settlement; or
    (ii) The weighted guidelines method does not produce a reasonable 
overall profit objective and the head of the contracting activity 
approves use of the alternate approach in writing.
    (4) Shall use the weighted guidelines method to establish a basic 
profit rate under a formula type pricing agreement, and may then use the 
basic rate on all actions under the agreement, provided that conditions 
affecting profit do not change.
    (5) Shall document the profit analysis in the price negotiation 
memorandum.
    (e) Although specific agreement on the applied weights or values for 
individual profit factors shall not be attempted, the contracting 
officer may encourage the contractor to--
    (1) Present the details of its proposed profit amounts in the 
weighted guidelines format or similar structured approach; and
    (2) Use the weighted guidelines method in developing profit 
objectives for negotiated subcontracts.
    (f) The contracting officer must also verify that relevant variables 
have not materially changed (e.g., performance risk, interest rates, 
progress payment rates, distribution of facilities capital).
215.905  Profit-analysis factors.



Sec. 215.905-1  Common factors.

    The common factors are embodied in the DoD structured approaches and 
need not be further considered by the contracting officer.



Sec. 215.970  DD Form 1547, Record of Weighted Guidelines Method Application.

    (a) The DD Form 1547--
    (1) Provides a vehicle for performing the analysis necessary to 
develop a profit objective;
    (2) Provides a format for summarizing profit amounts subsequently 
negotiated as part of the contract price; and
    (3) Serves as the principal source document for reporting profit 
statistics to DoD's management information system.
    (b) The Military Departments are responsible for establishing 
policies and procedures for feeding the DoD-wide management information 
system on profit and fee statistics (see 215.975).
    (c) The contracting officer shall--
    (1) Use and prepare a DD Form 1547 whenever a structured approach to 
profit analysis is required by 215.902. (See 215.971, 215.972, and 
215.973 for guidance on using the structured approaches.) Administrative 
instructions for completing the form are in 253.215-70.
    (2) Ensure that the DD Form 1547 is accurately completed. The 
contracting officer is responsible for the correction of any errors 
detected by the management system auditing process.
215.971  Weighted guidelines method.



Sec. 215.971-1  General.

    (a) The weighted guidelines method focuses on three profit factors--
    (1) Performance risk;
    (2) Contract type risk; and
    (3) Facilities capital employed.
    (b) The contracting officer assigns values to each profit factor; 
the value multiplied by the base results in the profit objective for 
that factor. Each profit factor has a normal value and a designated 
range of values. The normal value is representative of average 
conditions on the prospective contract when compared to all goods and 
services acquired by DoD. The designated range provides values based on 
above normal or below normal conditions. In the price negotiation 
memorandum, the contracting officer need not explain assignment of the 
normal value,

[[Page 91]]

but should address conditions that justify assignment of other than the 
normal value.



Sec. 215.971-2  Performance risk.

    (a) Description. This profit factor addresses the contractor's 
degree of risk in fulfilling the contract requirements. The factor 
consists of three parts--
    (1) Technical--the technical uncertainties of performance.
    (2) Management--the degree of management effort necessary to ensure 
that contract requirements are met.
    (3) Cost control--the contractor's efforts to reduce and control 
costs.
    (b) Determination. The following extract from the DD Form 1547 is 
annotated to describe the process.

----------------------------------------------------------------------------------------------------------------
                                                                Assigned     Assigned    Base (Item     Profit  
            Item                  Contractor Risk Factors      Weighting      Value         18)       Objective 
----------------------------------------------------------------------------------------------------------------
21..........................  Technical.....................          (1)          (2)          N/A          N/A
22..........................  Management....................          (1)          (2)          N/A          N/A
23..........................  Cost Control..................          (1)          (2)          N/A          N/A
24..........................  Performance Risk (Composite)..          N/A          (3)          (4)          (5)
----------------------------------------------------------------------------------------------------------------

    (1) Assign a weight (percentage) to each element according to its 
input to the total performance risk. The total of the three weights 
equals 100%.
    (2) Select a value for each element from the list in paragraph (c) 
of this subsection using the evaluation criteria in paragraphs (d), (e), 
and (f) of this subsection.
    (3) Compute the composite as shown in the following example--

------------------------------------------------------------------------
                                       Assigned    Assigned    Weighted 
             Assigned--                weighting     value       value  
                                       (percent)   (percent)   (percent)
------------------------------------------------------------------------
Technical...........................          30         5.0         1.5
Management..........................          30         4.0         1.2
Cost Control........................          40         4.5         1.8
Composite Value.....................         100                     4.5
------------------------------------------------------------------------

    (4) Insert the amount from Block 18 of the DD Form 1547. Block 18 is 
total contract costs, excluding general and administrative expenses, 
contractor independent research and development/bid and proposal 
expenses, and facilities capital cost of money.
    (5) Multiply (3) by (4).
    (c) Values: Normal and designated ranges.

------------------------------------------------------------------------
                                         Normal                         
          Standard Alternate              value       Designated range  
                                        (percent)        (percent)      
------------------------------------------------------------------------
Standard.............................           4  2 to 6.              
Alternate............................           6  4 to 8               
------------------------------------------------------------------------

    (1) Standard. The standard designated range should apply to most 
contracts.
    (2) Alternate. Contracting officers may use the alternate designated 
range for research and development and service contractors when these 
contractors require relatively low capital investment in buildings and 
equipment when compared to the defense industry overall. If the 
alternate designated range is used, do not give any profit for 
facilities capital employed (see 215.971-4(c)(3)).
    (d) Evaluation criteria for technical. (1) Review the contract 
requirements and focus on the critical performance elements in the 
statement of work or specifications. Factors to consider include--
    (i) Technology being applied or developed by the contractor;
    (ii) Technical complexity;
    (iii) Program maturity;
    (iv) Performance specifications and tolerances;
    (v) Delivery schedule; and
    (vi) Extent of a warranty or guarantee.
    (2) Above normal conditions. (i) The contracting officer may assign 
a higher than normal value in those cases where there is a substantial 
technical risk. Indicators are--
    (A) The contractor is either developing or applying advanced 
technologies;
    (B) Items are being manufactured using specifications with stringent 
tolerance limits;
    (C) The efforts require highly skilled personnel or require the use 
of state of the art machinery;
    (D) The services and analytical efforts are extremely important to 
the Government and must be performed to exacting standards;

[[Page 92]]

    (E) The contractor's independent development and investment has 
reduced the Government's risk or cost;
    (F) The contractor has accepted an accelerated delivery schedule to 
meet DoD requirements; or
    (G) The contractor has assumed additional risk through warranty 
provisions.
    (ii) Extremely complex, vital efforts to overcome difficult 
technical obstacles which require personnel with exceptional abilities, 
experience, and professional credentials may justify a value 
significantly above normal.
    (iii) The following may justify a maximum value--
    (A) Development or initial production of a new item, particularly if 
performance or quality specifications are tight; or
    (B) A high degree of development or production concurrency.
    (3) Below normal conditions.
    (i) The contracting officer may assign a lower than normal value in 
those cases where the technical risk is low. Indicators are--
    (A) Acquisition is for off-the-shelf items;
    (B) Requirements are relatively simple;
    (C) Technology is not complex;
    (D) Efforts do not require highly skilled personnel;
    (E) Efforts are routine;
    (F) Programs are mature; or
    (G) Acquisition is a follow-on effort or a repetitive type 
acquisition.
    (ii) The contracting officer may assign a value significantly below 
normal for--
    (A) Routine services;
    (B) Production of simple items;
    (C) Rote entry or routine integration of Government furnished 
information; or
    (D) Simple operations with Government-furnished property.
    (e) Evaluation criteria for management. (1) The contracting officer 
should--
    (i) Assess the contractor's management and internal control systems 
using contracting office information and reviews made by field contract 
administration offices or other DoD field offices;
    (ii) Assess the management involvement expected on the prospective 
contract action;
    (iii) Consider the degree of cost mix as an indication of the types 
of resources applied and value-added by the contractor; and
    (iv) Consider the contractor's support of Federal socioeconomic 
programs.
    (2) Above normal conditions. (i) The contracting officer may assign 
a higher than normal value when the management effort is intense. 
Indicators of this are--
    (A) The contractor's value-added is both considerable and reasonably 
difficult;
    (B) The effort involves a high degree of integration or 
coordination; or
    (C) The contractor has a substantial record of active participation 
in Federal socioeconomic programs.
    (ii) The contracting officer may justify a maximum value when the 
effort--
    (A) Requires large scale integration of the most complex nature;
    (B) Involves major international activities with significant 
management coordination (e.g., offsets with foreign vendors); or
    (C) Has critically important milestones.
    (3) Below normal conditions. (i) The contracting officer may assign 
a lower than normal value when the management effort is minimal. 
Indicators of this are--
    (A) The program is mature and many end item deliveries have been 
made;
    (B) The contractor adds minimum value to an item;
    (C) The efforts are routine and require minimal supervision;
    (D) The contractor provides poor quality, untimely proposals;
    (E) The contractor fails to provide an adequate analysis of 
subcontractor costs; or
    (F) The contractor does not cooperate in the evaluation and 
negotiation of the proposal.
    (ii) The following may justify a value significantly below normal--
    (A) Reviews performed by the field contract administration offices 
disclose unsatisfactory management and internal control systems (e.g., 
quality

[[Page 93]]

assurance, property control, safety, security); or
    (B) The effort requires an unusually low degree of management 
involvement.
    (f) Evaluation criteria for cost control. (1) The contracting 
officer should evaluate--
    (i) The expected reliability of the contractor's cost estimates 
(including the contractor's cost estimating system);
    (ii) The contractor's cost reduction initiatives (e.g., competition 
advocacy programs, dual sourcing, spare parts pricing reform, value 
engineering);
    (iii) The adequacy of the contractor's management approach to 
controlling cost and schedule; and
    (iv) Any other factors which affect the contractor's ability to meet 
the cost targets, e.g., foreign currency exchange rates and inflation 
rates.
    (2) Above normal conditions. The contracting officer may assign a 
higher than normal value if the contractor can demonstrate a highly 
effective cost control program. Indicators of this are--
    (i) The contractor provides fully documented and reliable cost 
estimates;
    (ii) The contractor has an aggressive cost reduction program that 
has demonstrable benefits;
    (iii) The contractor uses a high degree of subcontract competition 
(e.g., aggressive dual sourcing); or
    (iv) The contractor has a proven record of cost tracking and 
control.
    (3) Below normal conditions. The contracting officer may assign a 
lower than normal value if the contractor demonstrates minimal concern 
for cost control. Indicators are--
    (i) The contractor's cost estimating system is marginal;
    (ii) The contractor has made minimal effort to initiate cost 
reduction programs;
    (iii) The contractor's cost proposal is inadequate;
    (iv) The contractor has a record of cost overruns or other 
indication of unreliable cost estimates and lack of cost control.



Sec. 215.971-3  Contract type risk and working capital adjustment.

    (a) Description. The contract type risk factor focuses on the degree 
of cost risk accepted by the contractor under varying contract types. 
The working capital adjustment is an adjustment added to the profit 
objective for contract type risk. It only applies to fixed-price 
contracts that provide for progress payments. Though it uses a formula 
approach, it is not intended to be an exact calculation of the cost of 
working capital. Its purpose is to give general recognition to the 
contractor's cost of working capital under varying contract 
circumstances, financing policies, and the economic environment.
    (b) Determination. The following extract from the DD 1547 is 
annotated to explain the process.

------------------------------------------------------------------------
                  Contractor risk    Assigned    Base (Item     Profit  
      Item            factors         value         18)       objective 
------------------------------------------------------------------------
25.............  Contract Type             (1)          (2)          (3)
                  Risk.                                                 
------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                                  Cost        Length      Interest              
                                                                financed      factor        rate                
----------------------------------------------------------------------------------------------------------------
26..........................  Working Capital (4)...........          (5)          (6)          (7)          (8)
----------------------------------------------------------------------------------------------------------------

    (1) Select a value from the list of contract types in paragraph (c) 
of this subsection using the evaluation criteria in paragraph (d) of 
this subsection.
    (2) Insert the amount from Block 18, i.e., the total allowable costs 
excluding general and administrative expenses, independent research and 
development/bid proposal expenses, and facilities capital cost of money.
    (3) Multiply (1) by (2).
    (4) Only complete this Block when the prospective contract is a 
fixed-price contract containing provisions for progress payments.
    (5) Insert the amount computed per paragraph (e) of this subsection.

[[Page 94]]

    (6) Insert the appropriate figure from paragraph (f) of this 
subsection.
    (7) Use the interest rate established by the Secretary of the 
Treasury (230.7101(a)). Do not use any other interest rate.
    (8) Multiply (5) by (6) by (7). This is the working capital 
adjustment. It shall not exceed 4 percent of the contract costs in Block 
20.
    (c) Values: Normal and designated ranges.

------------------------------------------------------------------------
                                               Normal                   
         Contract type              Notes       value       Designated  
                                              (percent)  range (percent)
------------------------------------------------------------------------
Firm fixed-price, no financing.         (1)           5  4 to 6.        
Firm fixed-price, with                  (2)           3  2 to 4.        
 financing.                                                             
Fixed-price-incentive, no               (1)           3  2 to 4.        
 financing.                                                             
Fixed-price with redeterminable         (3)                             
 provision.                                                             
Fixed-price-incentive, with             (2)           1  0 to 2.        
 financing.                                                             
Cost-plus-incentive-fee........         (4)           1  0 to 2.        
Cost-plus-fixed-fee............         (4)          .5  0 to 1.        
Time and material contracts             (5)          .5  0 to 1.        
 (including overhaul contracts                                          
 priced on time and material                                            
 basis).                                                                
Labor-hour contracts...........         (5)          .5  0 to 1.        
Firm fixed-price-level-of-              (5)          .5  0 to 1.        
 effort-term.                                                           
------------------------------------------------------------------------

    (1) No financing means that the contract either does not provide 
progress payments, or provides them only on a limited basis, such as 
financing of first articles. Do not compute a working capital 
adjustment.
    (2) With financing means progress payments. When progress payments 
are present, compute a working capital adjustment (Block 26).
    (3) For the purposes of assigning profit values, treat a fixed-price 
contract with redeterminable provisions as if it were a fixed-price-
incentive contract with below normal conditions.
    (4) Cost-plus contracts shall not receive the working capital 
adjustment.
    (5) These types of contracts are considered cost-plus-fixed-fee 
contracts for the purposes of assigning profit values. They shall not 
receive the working capital adjustment in Block 26. However, they may 
receive higher than normal values within the designated range to the 
extent that portions of cost are fixed.
    (d) Evaluation criteria--(1) General. The contracting officer should 
consider elements that affect contract type risk such as--
    (i) Length of contract;
    (ii) Adequacy of cost data for projections;
    (iii) Economic environment;
    (iv) Nature and extent of subcontracted activity;
    (v) Protection provided to the contractor under contract provisions 
(e.g., economic price adjustment clauses);
    (vi) The ceilings and share lines contained in incentive provisions; 
and
    (vii) Risks associated with contracts for foreign military sales 
(FMS) which are not funded by U.S. appropriations.
    (2) Mandatory--The contracting officer shall assess the extent to 
which costs have been incurred prior to definitization of the contract 
action (see also 217.7404-6(a)). The assessment shall include any 
reduced contractor risk on both the contract before definitization and 
the remaining portion of the contract. When costs have been incurred 
prior to definitization, generally regard the contract type risk to be 
in the low end of the designated range. If a substantial portion of the 
costs have been incurred prior to definitization, the contracting 
officer may assign a value as low as 0%, regardless of contract type.
    (3) Above normal conditions. The contracting officer may assign a 
higher than normal value when there is substantial contract type risk. 
Indicators of this are--
    (i) Efforts where there is minimal cost history;
    (ii) Long-term contracts without provisions protecting the 
contractor, particularly when there is considerable economic 
uncertainty;
    (iii) Incentive provisions (e.g., cost and performance incentives) 
which place a high degree of risk on the contractor; or
    (iv) FMS sales (other than those under DoD cooperative logistics 
support arrangements or those made from U.S. Government inventories or 
stocks) where the contractor can demonstrate

[[Page 95]]

that there are substantial risks above those normally present in DoD 
contracts for similar items.
    (4) Below normal conditions. The contracting officer may assign a 
lower than normal value when the contract type risk is low. Indicators 
of this are--
    (i) Very mature product line with extensive cost history;
    (ii) Relatively short-term contracts;
    (iii) Contractual provisions which substantially reduce the 
contractor's risk; or
    (iv) Incentive provisions which place a low degree of risk on the 
contractor.
    (e) Costs financed. (1) Costs financed equal total costs multiplied 
by the portion (percent) of costs financed by the contractor.
    (2) Total costs equal Block 20 (i.e., all allowable costs, including 
general and administrative and independent research and development/bid 
and proposal, but excluding facilities capital cost of money), reduced 
as appropriate when--
    (i) The contractor has little cash investment (e.g., subcontractor 
progress payments liquidated late in period of performance);
    (ii) Some costs are covered by special financing provisions, such as 
advance payments; or
    (iii) The contract is multiyear and there are special funding 
arrangements.
    (3) The portion financed by the contractor is generally the portion 
not covered by progress payments, i.e., 100% minus the customary 
progress payment rate (FAR 32.501). For example, if a contractor 
receives progress payments at 75%, the portion financed by the 
contractor is 25%. On contracts that provide flexible progress payments 
(252.232-7003) or progress payments to small businesses, use the 
customary progress payment rate for large businesses.
    (f) Contract length factor. (1) This is the period of time that the 
contractor has a working capital investment in the contract. It--
    (i) Is based on the time necessary for the contractor to complete 
the substantive portion of the work;
    (ii) Is not necessarily the period of time between contract award 
and final delivery (or final payment), as periods of minimal effort 
should be excluded;
    (iii) Should not include periods of performance contained in option 
provisions; and
    (iv) Should not, for multiyear contracts, include periods of 
performance beyond that required to complete the initial program year's 
requirements.
    (2) The contracting officer--
    (i) Should use the following table to select the contract length 
factor;
    (ii) Should develop a weighted average contract length when the 
contract has multiple deliveries; and
    (iii) May use sampling techniques provided they produce a 
representative result.

                                  Table                                 
------------------------------------------------------------------------
                                                               Contract 
     Period to perform substantive portion (in months)          length  
                                                                factor  
------------------------------------------------------------------------
21 or less.................................................          .40
22 to 27...................................................          .65
28 to 33...................................................          .90
34 to 39...................................................         1.15
40 to 45...................................................         1.40
46 to 51...................................................         1.65
52 to 57...................................................         1.90
58 to 63...................................................         2.15
64 to 69...................................................         2.40
70 to 75...................................................         2.65
76 or more.................................................         2.90
------------------------------------------------------------------------

    (3) Example: A prospective contract has a performance period of 40 
months with end items being delivered in the 34th, 36th, 38th, and 40th 
months of the contract. The average period is 37 months and the contract 
length factor is 1.15.

[56 FR 36326, July 31, 1991, as amended at 59 FR 27669, May 27, 1994]



Sec. 215.971-4  Facilities capital employed.

    (a) Description. This factor focuses on encouraging and rewarding 
aggressive capital investment in facilities that benefit DoD. It 
recognizes both the facilities capital that the contractor will employ 
in contract performance and the contractor's commitment to improving 
productivity.
    (b) Determination. The following extract from the DD Form 1547 has 
been annotated to explain the process.

[[Page 96]]



------------------------------------------------------------------------
                    Contractor                                          
      Item          facilities       Assigned      Amount       Profit  
                 capital employed     value       employed    objective 
------------------------------------------------------------------------
27.............  Land............          N/A          (2)          N/A
28.............  Buildings.......          (1)          (2)          (3)
29.............  Equipment.......          (1)          (2)          (3)
------------------------------------------------------------------------

    (1) Select a value from the list in paragraph (c) of this subsection 
using the evaluation criteria in paragraph (d) of this subsection.
    (2) Use the allocated facilities capital attributable to land, 
buildings, and equipment, as derived in DD Form 1861, ``Contract 
Facilities Capital Cost of Money'' (see 215.871-5 and 230.7001).
    (i) In addition to the net book value of facilities capital 
employed, consider facilities capital that is part of a formal 
investment plan if the contractor submits reasonable evidence that--
    (A) Achievable benefits to DoD will result from the investment; and
    (B) The benefits of the investment are included in the forward 
pricing structure.
    (ii) If the value of intracompany transfers has been included in 
Block 18 at cost (i.e., excluding general and administrative (G&A) 
expenses and profit), add to the contractor's allocated facilities 
capital, the allocated facilities capital attributable to the buildings 
and equipment of those corporate divisions supplying the intracompany 
transfers. Do not make this addition if the value of intracompany 
transfers has been included in Block 18 at price (i.e., including G&A 
expenses and profit).
    (3) Multiply (1) by (2).
    (c) Values: Normal and designated ranges.

------------------------------------------------------------------------
                                            Normal                      
      Notes              Asset type          value     Designated range 
                                           (percent)                    
------------------------------------------------------------------------
(1)..............  Land.................           0  N/A.              
(1)..............  Buildings............          15  10% to 20%.       
(1)..............  Equipment............          35  20% to 50%.       
(2)..............  Land.................           0  N/A.              
(2)..............  Buildings............           5  0% to 10%.        
(2)..............  Equipment............          20  15% to 25%.       
(3)..............  Land.................           0  N/A.              
(3)..............  Buildings............           0  0%.               
(3)..............  Equipment............           0  0%.               
------------------------------------------------------------------------

    (1) These are the normal values and ranges. They apply to all 
situations except those noted in (2) and (3).
    (2) These alternate values and ranges apply to situations where a 
highly facilitized manufacturing firm will be performing a research and 
development or services contract. They balance the method used to 
allocate facilities capital cost of money, which may produce 
disproportionate allocation of assets to these types of efforts.
    (3) When using a value from the alternate designated range for the 
performance risk factor (215.971-2(c)(2)), do not allow profit on 
facilities capital employed.
    (d) Evaluation criteria. (1) In evaluating facilities capital 
employed, the contracting officer--
    (i) Should relate the usefulness of the facilities capital to the 
goods or services being acquired under the prospective contract;
    (ii) Should analyze the productivity improvements and other 
anticipated industrial base enhancing benefits resulting from the 
facilities capital investment, including--
    (A) The economic value of the facilities capital, such as physical 
age, undepreciated value, idleness, and expected contribution to future 
defense needs; and
    (B) The contractor's level of investment in defense related 
facilities as compared with the portion of the contractor's total 
business which is derived from DoD;
    (iii) Should consider any contractual provisions that reduce the 
contractor's risk of investment recovery, such as termination protection 
clause, capital investment indemnification, and productivity saving 
rewards (215.870-3); and
    (iv) Shall ensure that increases in facilities capital investments 
are not merely asset revaluations attributable to mergers, stock 
transfers, take-overs, sales of corporate entities, or similar actions.
    (2) Above normal conditions. (i) The contracting officer may assign 
a higher than normal value if the facilities capital investment has 
direct, identifiable,

[[Page 97]]

and exceptional benefits. Indicators are--
    (A) New investments in state-of-the-art technology which reduce 
acquisition cost or yield other tangible benefits such as improved 
product quality or accelerated deliveries;
    (B) Investments in new equipment for research and development 
applications; or
    (C) Contractor demonstration that the investments are over and above 
the normal capital investments necessary to support anticipated 
requirements of DoD programs.
    (ii) The contracting officer may assign a value significantly above 
normal when there are direct and measurable benefits in efficiency and 
significantly reduced acquisition costs on the effort being priced. 
Maximum values apply only to those cases where the benefits of the 
facilities capital investment are substantially above normal.
    (3) Below normal conditions. (i) The contracting officer may assign 
a lower than normal value if the facilities capital investment has 
little benefit to DoD. Indicators are--
    (A) Allocations of capital apply predominantly to commercial item 
lines;
    (B) Investments are for such things as furniture and fixtures, home 
or group level administrative offices, corporate aircraft and hangars, 
gymnasiums; or
    (C) Facilities are old or extensively idle.
    (ii) The contracting officer may assign a value significantly below 
normal when a significant portion of defense manufacturing is done in an 
environment characterized by outdated, inefficient, and labor-intensive 
capital equipment.

[56 FR 36326, July 31, 1991, as amended at 60 FR 61596, Nov. 30, 1995]



Sec. 215.972  Modified weighted guidelines method for nonprofit organizations.

    (a) Definition. As used in this subpart, a nonprofit organization is 
a business entity--
    (1) Which operates exclusively for charitable, scientific, or 
educational purposes;
    (2) Whose earnings do not benefit any private shareholder or 
individual;
    (3) Whose activities do not involve influencing legislation or 
political campaigning for any candidate for public office; and
    (4) Which is exempted from Federal income taxation under section 501 
of the Internal Revenue Code.
    (b) For nonprofit organizations which are Federally funded research 
and development centers (FFRDCs), the contracting officer--
    (1) Should consider whether any fee is appropriate. Considerations 
shall include the FFRDC's--
    (i) Proportion of retained earnings (as established under generally 
accepted accounting methods) that relates to DoD contracted effort;
    (ii) Facilities capital acquisition plans;
    (iii) Working capital funding as assessed on operating cycle cash 
needs;
    (iv) Contingency funding; and
    (v) Provision for funding unreimbursed costs deemed ordinary and 
necessary to the FFRDC.
    (2) Shall, when a fee is considered appropriate, compute the fee 
objective using the weighted guidelines method in 215.971, with the 
following modifications--
    (i) Modifications to performance risk (Blocks 21-24 of the DD Form 
1547). (A) If the contracting officer assigns a value from the standard 
designated range (215.971-2(c)), reduce the fee objective by an amount 
equal to 1% of the costs in Block 18 of the DD Form 1547. Show the net 
(reduced) amount on the DD Form 1547.
    (B) If the contracting officer assigns a value from the alternate 
designated range, reduce the fee objective by an amount equal to 2% of 
the costs in Block 18 of the DD Form 1547. Show the net (reduced) amount 
on the DD Form 1547.
    (ii) Modifications to contract type risk (Block 25 of the DD Form 
1547). Use a designated range of -1% to 0% in lieu of the values in 
215.971-3. There is no normal value.
    (c) For nonprofit organizations which are entities that have been 
identified by the Secretary of Defense or a Secretary of a Department as 
receiving sustaining support on a cost-plus-fixed-

[[Page 98]]

fee basis from a particular DoD department or agency, compute a fee 
objective for covered actions using the weighted guidelines method in 
215.971, modified as described in paragraph (b)(2) of this section.
    (d) For all other nonprofit organizations, compute a fee objective 
for covered actions using the weighted guidelines method in 215.971, 
modified as described in paragraph (b)(2)(i) of this section.



Sec. 215.973  Alternate structured approaches.

    (a) The contracting officer may use an alternate structured approach 
under 215.903.
    (b) The contracting officer may design the structure of the 
alternate, but it shall include--
    (1) Consideration of the three basic components of profit--
performance risk, contract type risk (including working capital), and 
facilities capital employed. However, the contracting officer is not 
required to complete Blocks 21 through 30 of the DD Form 1547.
    (2) Offset for facilities capital cost of money.
    (i) The contracting officer shall reduce the overall prenegotiation 
profit objective by the lesser of 1% of total cost or the amount of 
facilities capital cost of money. The profit amount in the negotiation 
summary of the DD Form 1547 must be net of the offset.
    (ii) This adjustment is needed for the following reason: The values 
of the profit factors used in the weighted guidelines method were 
adjusted to recognize the shift in facilities capital cost of money from 
an element of profit to an element of contract cost (FAR 31.205-10) and 
reductions were made directly to the profit factors for performance 
risk. In order to ensure that this policy is applied to all DoD 
contracts which allow facilities capital cost of money, similar 
adjustments shall be made to contracts which use alternate structured 
approaches.



Sec. 215.974  Fee requirements for cost-plus-award-fee contracts.

    In developing a fee objective for cost-plus-award-fee contracts, the 
contracting officer shall--
    (a) Follow the guidance in FAR 16.404-2 and 216.404-2;
    (b) Not use the weighted guidelines method or alternate structured 
approach;
    (c) Apply the offset policy in 215.973(b)(2) for facilities capital 
cost of money, i.e., reduce the base fee by the lesser of 1% of total 
costs or the amount of facilities capital cost of money; and
    (d) Not complete a DD Form 1547.



Sec. 215.975  Reporting profit and fee statistics.

    (a) Contracting officers in contracting offices which participate in 
the management information system for profit and fee statistics send 
completed DD Forms 1547 on actions of $500,000 or more, where the 
contracting officer used either the weighted guidelines method, an 
alternate structured approach, or the modified weighted guidelines 
method, to their designated office within 30 days after contract award.
    (b) Participating contracting offices and their designated offices 
are--

[[Page 99]]



------------------------------------------------------------------------
            Contracting office                    Designated office     
------------------------------------------------------------------------
Army:                                                                   
  All                                       Army Procurement Research   
                                             and Analysis Office, ATTN: 
                                             SFRD-KPR(WGL), Bldg 12500, 
                                             C Wing, Ft. Lee, VA 23801- 
                                             6045.                      
Navy:                                                                   
  Naval Air Systems Command \1\             Commander, Naval Supply     
                                             Systems Command, ATTN: SUP 
                                             026, Washington, DC 20376- 
                                             5000.                      
  Naval Sea Systems Command \1\                                         
  Space and Naval Warfare Systems Command                               
   \1\                                                                  
  Naval Facilities Engineering Command \1\                              
  Naval Supply Systems Command \1\                                      
  Office of Naval Research \1\                                          
  Headquarters, United States Marine Corps                              
   \1\                                                                  
  Strategic Systems Programs Office \1\                                 
  Military Sealift Command \1\                                          
  Automatic Data Processing Selection                                   
   Office \1\                                                           
  Navy Regional Data Automation Center \1\                              
  Naval Research Laboratory \1\                                         
  Navy Commercial Communications Center                                 
   \1\                                                                  
  Naval Aviation Depot Operations Center                                
   \1\                                                                  
Air Force:                                                              
  Air Force Materiel Command (all field     Air Force Materiel Command, 
   offices)                                  645 CCSG/SCOS, ATTN: J010  
                                             Clerk, 2721 Sacramento     
                                             Street, Wright-Patterson   
                                             Air Force Base, Ohio 45433.
------------------------------------------------------------------------
\1\ Includes all subordinate field offices.                             

    (c) When negotiation of a contract action over $500,000 has been 
delegated to another contracting agency (e.g., to an administrative 
contracting officer), that agency shall ensure that a copy of the DD 
Form 1547 is provided to the delegating office for reporting purposes 
within 30 days from negotiation of the contract action.
    (d) Contracting offices outside the United States, its possessions, 
and Puerto Rico are exempt from reporting.
    (e) Designated offices send a quarterly (non-cumulative) report of 
DD Form 1547 data to: Washington Headquarters Service, Directorate for 
Information Operations and Reports (WHS/DIOR), 1215 Jefferson Davis 
Highway, suite 1204, Arlington, VA 22202-4302.
    (f) In preparing/sending the quarterly report, designated offices--
    (1) Perform the necessary audits to ensure information accuracy;
    (2) Do not enter classified information;
    (3) Transmit the report via computer magnetic tape using the 
procedures, format, and editing process issued by the Director of 
Defense Procurement; and
    (4) Send the reports not later than the 30th day after the close of 
the quarterly reporting periods.
    (g) These reporting requirements have been assigned report control 
symbol: P&L(Q) 1751.

[56 FR 36326, July 31, 1991, as amended at 57 FR 53599, Nov. 12, 1992; 
59 FR 27669, May 27, 1994]



Subpart 215.10--Preaward, Award, and Postaward Notifications, Protests, 
                              and Mistakes



Sec. 215.1001  Notifications to unsuccessful offerors.

    (b) Preaward notices.
    (2) Acquisitions processed under small purchase procedures are 
exempt from the requirements of FAR 15.1001(b)(2).



PART 216--TYPES OF CONTRACTS--Table of Contents




Sec.

                 Subpart 216.1--Selecting Contract Types

216.104  Factors in selecting contract types.
216.104-70  Research and development.

                  Subpart 216.2--Fixed-Price Contracts

216.203  Fixed-price contracts with economic price adjustment.
216.203-4  Contract clauses.
216.203-4-70  Additional clauses.

               Subpart 216.3--Cost-Reimbursement Contracts

216.301  General.
216.301-3  Limitations.
216.306  Cost-plus-fixed-fee contracts.
216.307  Contract clauses.

                   Subpart 216.4--Incentive Contracts

216.402  Application of predetermined, formula-type incentives.
216.402-2  Technical performance incentives.
216.403  Fixed-price incentive contracts.
216.403-2  Fixed-price incentive (successive targets) contracts.

[[Page 100]]

216.403-70  Fixed-price contracts with award fees.
216.404  Cost-reimbursement incentive contracts.
216.404-1  Cost-plus-incentive-fee contracts.
216.404-2  Cost-plus-award-fee contracts.
216.470  Other applications of award fees.

              Subpart 216.5--Indefinite-Delivery Contracts

216.501  General.
216.505  Contract clauses.
216.506  Ordering.

   Subpart 216.6--Time-and-Materials, Labor-Hour, and Letter Contracts

216.603  Letter contracts.
216.603-3  Limitations.
216.603-4  Contract clauses.

                        Subpart 216.7--Agreements

216.703  Basic ordering agreements.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36340, July 31, 1991, unless otherwise noted.



                 Subpart 216.1--Selecting Contract Types



Sec. 216.104  Factors in selecting contract types.

    (d) Design stability should also be considered.



Sec. 216.104-70  Research and development.

    (a) General. There are several categories of research and 
development (R&D) contracts: research, exploratory development, advanced 
development, engineering development, and operational systems 
development (see 235.001 for definitions). Each category has a primary 
technical or functional objective. Different parts of a project may fit 
several categories. The contract type must fit the work required, not 
just the classification of the overall program.
    (b) Research and exploratory development. (1) Price is not 
necessarily the primary factor in determining the contract type.
    (2) The nature of the work to be performed will usually result in a 
cost-plus award fee, cost-plus fixed fee term, cost-no-fee, or cost-
sharing contract.
    (3) If the Government and the contractor can identify and agree upon 
the level of contractor effort required, the contracting officer may 
select a firm fixed-price level-of-effort contract, except see 235.006.
    (4) If the Government and the contractor agree that an incentive 
arrangement is desirable and capable of being evaluated after completion 
of the work, the contracting officer may use an incentive type contract.
    (c) Advanced development. (1) The nature of the work to be performed 
often results in a cost-plus fixed fee completion type contract.
    (2) Contracting officers may select incentive contracts if--
    (i) Realistic and measurable targets are identified; and
    (ii) Achievement of those targets is predictable with a reasonable 
degree of accuracy.
    (3) Contracting officers should not use contracts with only cost 
incentives where--
    (i) There will be a large number of major technical changes; or
    (ii) Actions beyond the control of the contractor may influence the 
contractor's achievement of cost targets.
    (d) Engineering development and operational systems development. (1) 
When selecting contract types, also consider--
    (i) The degree to which the project is clearly defined, which in 
turn affects the contractor's ability to provide accurate cost 
estimates;
    (ii) The need for effort that will overlap that of earlier stages;
    (iii) The need for firm technical direction by the Government; and
    (iv) The degree of configuration control the Government will 
exercise.
    (2) For development efforts, particularly for major defense systems, 
the preferred contract type is cost reimbursement.
    (3) Contracting officers should use fixed-price type contracts when 
risk has been reduced to the extent that realistic pricing can occur; 
e.g., when a program has reached the final stages of development and 
technical risks are minimal, except see 235.006.

[[Page 101]]



                  Subpart 216.2--Fixed-Price Contracts

216.203  Fixed-price contracts with economic price adjustment.



Sec. 216.203-4  Contract clauses.

    (a) Adjustment based on established prices-standard supplies. 
Generally, use the clause at FAR 52.216-2, Economic Price Adjustment-
Standard Supplies only when--
    (i) The total contract price is over the small purchase threshold in 
FAR 13.000; and
    (ii) Delivery will not be completed within 6 months after the 
contract date.
    (b) Adjustment based on established prices-semistandard supplies. 
Generally, use the clause at FAR 52.216-3, Economic Price Adjustment-
Semistandard Supplies, only when--
    (i) The total contract price is over the small purchase threshold in 
FAR 13.000; and
    (ii) Delivery will not be completed within 6 months after the 
contract date.
    (c) Adjustments based on actual cost of labor or material.
    (2) Limit use of the clause at FAR 52.216-4, Economic Price 
Adjustment-Labor and Material, to contracts in which the price exceeds 
$50,000 and the period of performance exceeds 6 months, unless otherwise 
approved by the chief of the contracting office. Use an appropriate 
modification of the clause in sealed bidding.
    (4) Apply the full amount of the decrease in the labor rates and 
fringe benefits or unit prices for materials.
    (d) Adjustments based on cost indexes of labor or material. Use the 
following guidelines--
    (i) Do not make the clause unnecessarily complex.
    (ii) Normally, the clause should not provide either a ceiling or a 
floor for adjustment unless adjustment is based on indices below the 
four digit level of the Bureau of Labor Statistics--
    (A) Producer Price Index;
    (B) Employment Cost Index for wages and salaries, benefits, and 
compensation costs for aerospace industries; or
    (C) Wage and Income Series by Standard Industrial Classification 
(Labor).
    (iii) Normally, the clause should cover all potential economic 
fluctuations within the original contract period of performance.
    (iv) The clause must accurately identify the index(es) upon which 
adjustments will be based.
    (A) It must provide for a means to adjust for appropriate economic 
fluctuation in the event publication of the movement of the designated 
index is discontinued. This might include the substitution of another 
index if the time remaining would justify doing so and an appropriate 
index is reasonably available, or some other method for repricing the 
remaining portion of work to be performed.
    (B) Normally, there should be no need to make an adjustment if 
computation of the identified index is altered. However, it may be 
appropriate to provide for adjustment of the economic fluctuation 
computations in the event there is such a substantial alteration in the 
method of computing the index that the original intent of the parties is 
negated.
    (C) When an index to be used is subject to revision (e.g., the 
Bureau of Labor Statistics Producer Price Indexes), the economic price 
adjustment clause must specify that any economic price adjustment will 
be based on a revised index and must identify which revision to the 
index will be used.
    (v) Construct the index to encompass a large sample of relevant 
items while still bearing a logical relationship to the type of contract 
costs being measured. The basis of the index should not be so large and 
diverse that it is significantly affected by fluctuations not relevant 
to contract performance, but it must be broad enough to minimize the 
effect of any single company, including the anticipated contractor(s).
    (vi) Construction of an index is largely dependent upon three 
general series published by the U.S. Department of Labor, Bureau of 
Labor Statistics (BLS). These are the--
    (A) Industrial Commodities portion of the Producer Price Index;

[[Page 102]]

    (B) Employment Cost Index for wages and salaries, benefits, and 
compensation costs for aerospace industries; and
    (C) Wage and Income Series by Standard Industrial Classification 
(Labor). Since there is no BLS published series currently available that 
relates directly to total prices of delivered DoD aircraft, ships, 
missiles, electronics, etc., it will be necessary to construct composite 
indices from major portions of the three series identified.
    (vii) Normally, do not use more than two indices, i.e., one for 
labor (direct and indirect) and one for material (direct and indirect).
    (viii) The clause must establish and properly identify a base period 
comparable to the contract periods for which adjustments are to be made 
as a reference point for application of an index.
    (ix) The clause should not provide for an adjustment beyond the 
original contract performance period, including options. The start date 
for the adjustment may be the beginning of the contract or a later time, 
as appropriate, based on the projected rate of expenditures.
    (x) The expenditure profile for both labor and material should be 
based on a predetermined rate of expenditure (expressed as the 
percentage of material or labor usage as it relates to the total 
contract price) in lieu of actual cost incurred.
    (A) If the clause is to be used in a competitive acquisition, 
determine the labor and material allocations, with regard to both mix of 
labor and material and rate of expenditure by percentage, in a manner 
which will, as nearly as possible, approximate the average expenditure 
profile of all companies to be solicited so that all companies may 
compete on an equal basis.
    (B) If the clause is to be used in a noncompetitive acquisition, the 
labor and material allocations may be subject to negotiation and 
agreement.
    (C) For multiyear contracts, establish predetermined expenditure 
profile tables for each of the annual increments in the multiyear buy. 
Each of the second and subsequent year tables must be cumulative to 
reflect the total expenditures for all increments funded through the 
latest multiyear funding.
    (xi) The clause should state the percentage of the contract price 
subject to price adjustment.
    (A) Normally, do not apply adjustments to the profit portion of the 
contract.
    (B) Examine the labor and material portions of the contract to 
exclude any areas that do not require adjustment. For example, it may be 
possible to exclude--
    (1) Subcontracting for short periods of time during the early life 
of the contract which could be covered by firm-fixed-priced 
subcontracting;
    (2) Certain areas of overhead, e.g., depreciation charges, prepaid 
insurance costs, rental costs, leases, certain taxes, and utility 
charges;
    (3) Labor costs for which a definitive union agreement exists; and
    (4) Those costs not likely to be affected by fluctuation in the 
economy.
    (C) Allocate that part of the contract price subject to adjustment 
to specific periods of time (e.g., quarterly, semiannually, etc.) based 
on the most probable expenditure or commitment basis (expenditure 
profile).
    (xii) The clause should provide for definite times or events that 
trigger price adjustments. Adjustments should be frequent enough to 
afford the contractor appropriate economic protection without creating a 
burdensome administrative effort. The adjustment period should normally 
range from quarterly to annually.
    (xiii) When the contract contains cost incentives, any sums paid to 
the contractor on account of economic price adjustment provisions must 
be subtracted from the total of the contractor's allowable costs for the 
purpose of establishing the total costs to which the cost incentive 
provisions apply. If the incentive arrangement is cited in percentage 
ranges, rather than dollar ranges, above and below target costs, 
structure the economic price adjustment clause to maintain the original 
contract incentive range in dollars.
    (xiv) The economic price adjustment clause should provide that once 
the labor and material allocations and the portion of the contract price 
subject to

[[Page 103]]

price adjustment have been established, they remain fixed through the 
life of the contract and shall not be modified except in the event of 
significant changes in the scope of the contract. The clause should 
state that pricing actions pursuant to the Changes clause or other 
provisions of the contract will be priced as though there were no 
provisions for economic price adjustment. However, subsequent 
modifications may include a change to the delivery schedule or 
significantly change the amount of, or mix of, labor or material for the 
contract. In such cases, it may be appropriate to prospectively apply 
economic price adjustment coverage. This may be accomplished by--
    (A) Using an economic price adjustment (EPA) clause that applies 
only to the effort covered by the modification;
    (B) Revising the baseline data or period in the EPA clause for the 
basic contract to include the new work; or
    (C) Using an entirely new EPA clause for the entire contract, 
including the new work.
    (xv) Consistent with the factors in paragraphs (d)(i) through (xiv) 
of this subsection, it may also be appropriate to provide in the prime 
contract for similar economic price adjustment arrangements between the 
prime contractor and affected subcontractors to allocate risks properly 
and ensure that those subcontractors are provided similar economic 
protection.
    (xvi) When economic price adjustment clauses are included in 
contracts that do not require submission of cost or pricing data as 
provided for in FAR 15.804-3, the contracting officer must obtain 
adequate information to establish the baseline from which adjustments 
will be made. The contracting officer may require verification of the 
data submitted to the extent necessary to permit reliance upon the data 
as a reasonable baseline.



Sec. 216.203-4-70  Additional clauses.

    (a) Price adjustment for basic steel, aluminum, brass, bronze, or 
copper mill products. (1) The price adjustment clause at 252.216-7000, 
Economic Price Adjustment--Basic Steel, Aluminum, Brass, Bronze, or 
Copper Mill Products, may be used in fixed-price supply contracts for 
basic steel, aluminum, brass, bronze, or copper mill products, such as 
sheets, plates, and bars, when an established catalog or market price--
    (i) Exists for the particular product being acquired; and
    (ii) Has been verified in accordance with the criteria at FAR 
15.804-3(c).
    (2) Do not make an adjustment under this clause until the adjustment 
has been verified in accordance with the criteria set forth in FAR 
15.804-3.
    (3) The ten percent figure in paragraph (d)(1) of the clause shall 
not be exceeded unless approval is obtained at a level above the 
contracting officer.
    (b) Price adjustment for nonstandard steel items. (1) The price 
adjustment clause at 252.216-7001, Economic Price Adjustment--
Nonstandard Steel Items, may be used in fixed-price supply contracts 
when--
    (i) The contractor is a steel producer and actually manufacture the 
standard steel mill item referred to in the ``base steel index'' 
definition of the clause; and
    (ii) The items being acquired are nonstandard steel items made 
wholly or in part of standard steel mill items.
    (2) When this clause is included in invitations for bids, omit Note 
6 of the clause and all references to Note 6.
    (3) Solicitations shall instruct offerors to complete all blanks in 
accordance with the applicable notes.
    (4) When the clause is to provide for adjustment based on the 
contractor's ``established price'' (see paragraphs (a) and (f) and Note 
6 of the clause), verify the established price before contract award in 
accordance with FAR 15.804-3.
    (5) When the clause is to provide for adjustment on a basis other 
than ``established price'' (see Note 6 of the clause), that price must 
be verified.
    (6) Make no adjustment in contract price under this clause until the 
requested adjustment has been verified in accordance with the criteria 
in FAR 15.804-3 (but see Note 6 of the clause) and as required by 
paragraph (f) of the clause.
    (7) The ten percent figure in paragraph (e)(4) of the clause shall 
not be exceeded unless approval is obtained at a level above the 
contracting officer.

[[Page 104]]



               Subpart 216.3--Cost-Reimbursement Contracts

216.301  General.



Sec. 216.301-3  Limitations.

    (c) The contracting officer executes the determination and findings.



Sec. 216.306  Cost-plus-fixed-fee contracts.

    (c) Limitations.
    (i) Annual military construction appropriations acts restrict the 
use of cost-plus-fixed-fee contracts that--
    (A) Are funded by a military construction appropriations act:
    (B) Are estimated to exceed $25,000; and
    (C) Will be performed within the United States, except Alaska.
    (ii) The Secretaries of the military departments are authorized to 
approve contracts described in paragraph (c)(i) of this section that are 
for environmental work only, provided the environmental work is not 
classified as construction, as defined by 10 U.S.C 2801.
    (iii) The Secretary of Defense or designee must specifically approve 
contracts described in paragraph (c)(i) of this section that are not for 
environmental work only.

[61 FR 7743, Feb. 29, 1996; 61 FR 18195, Apr. 24, 1996]



Sec. 216.307  Contract clauses.

    (i) Use the clause at FAR 52.216-15, Predetermined Indirect Cost 
Rates, with 252.216-7002, Alternate A, in solicitations and contracts 
when a cost-reimbursement research and development contract with an 
educational institution (see FAR 42.705-3(b)) is contemplated and 
predetermined indirect cost rates are to be used.

[59 FR 53116, Oct. 21, 1994]



                   Subpart 216.4--Incentive Contracts

216.402  Application of predetermined, formula-type incentives.



Sec. 216.402-2  Technical performance incentives.

    Contractor performance incentives should relate to specific 
performance areas of milestones, such as delivery or test schedules, 
quality controls, maintenance requirements, and reliability standards.



Sec. 216.403  Fixed-price incentive contracts.

    (b) Application.
    (3) Individual line items may have separate incentive provisions; 
e.g., when dissimilar work calls for separate formulas.



Sec. 216.403-2  Fixed-price incentive (successive targets) contracts.

    (a) Description. (1)(iii) The formula does not apply for the life of 
the contract. It is used to fix the firm target profit for the contract. 
To provide an incentive consistent with the circumstances, the formula 
should reflect the relative risk involved in establishing an incentive 
arrangement where cost and pricing information were not sufficient to 
permit the negotiation of firm targets at the outset.



Sec. 216.403-70  Fixed-price contracts with award fees.

    Award fee provisions may be used in fixed price contracts as 
provided in 216.470.
216.404  Cost-reimbursement incentive contracts.



Sec. 216.404-1  Cost-plus-incentive-fee contracts.

    (b) Application.
    (3) Give appropriate weight to basic acquisition objectives in 
negotiating the range of fee and the fee adjustment formula. For 
example--
    (A) In an initial product development contract, it may be 
appropriate to provide for relatively small adjustments

[[Page 105]]

in fee tied to the cost incentive feature, but provide for significant 
adjustments if the contractor meets or surpasses performance targets.
    (B) In subsequent development and test contracts, it may be 
appropriate to negotiate an incentive formula tied primarily to the 
contractor's success in controlling costs.



Sec. 216.404-2  Cost-plus-award-fee contracts.

    (a) Description. (i) Normally, award fee is not earned when the fee-
determining official has determined that contractor performance has been 
submarginal or unsatisfactory.
    (ii) The basis for all award fee determinations shall be documented 
in the contract file.
    (b) Application. (1) The cost-plus-award-fee (CPAF) contract is also 
suitable for level of effort contracts where mission feasibility is 
established but measurement of achievement must be by subjective 
evaluation rather than objective measurement. See Table 16-1, 
Performance Evaluation Criteria, for sample performance evaluation 
criteria and Table 16-2, Contractor Performance Evaluation Report, for a 
sample evaluation report.
    (2) The contracting activity may--
    (A) Establish a board to--
    (1) Evaluate the contractor's performance; and
    (2) Determine the amount of the award or recommend an amount to the 
contracting officer.
    (B) Afford the contractor an opportunity to present information on 
its own behalf.
    (c) Limitations. The CPAF contract shall not be used--
    (i) To avoid--
    (A) Establishing CPFF contracts when the criteria for CPFF contracts 
apply, or
    (B) Developing objective targets so a CPIF contract can be used.
    (ii) For either engineering development or operational system 
development acquisitions which have specifications suitable for 
simultaneous research and development and production, except a CPAF 
contract may be used for individual engineering development or 
operational system development acquisitions ancillary to the development 
of a major weapon system or equipment, where--
    (A) It is more advantageous; and
    (B) The purpose of the acquisition is clearly to determine or solve 
specific problems associated with the major weapon system or equipment.
    (2)(A) Do not apply the weighted guidelines method to CPAF contracts 
for either the base (fixed) fee or the award fee.
    (B) The base fee shall not exceed three percent of the estimated 
cost of the contract exclusive of the fee.



Sec. 216.470  Other applications of award fees.

    The ``award amount'' portion of the fee may be used in other types 
of contracts under the following conditions--
    (1) The Government wishes to motivate and reward a contractor for 
management performance in areas which cannot be measured objectively and 
where normal incentive provisions cannot be used. For example, logistics 
support, quality, timeliness, ingenuity, and cost effectiveness are 
areas under the control of management which may be susceptible only to 
subjective measurement and evaluation.
    (2) The ``base fee'' (fixed amount portion) is not used.
    (3) The chief of the contracting office approves the use of the 
``award amount.''
    (4) An award review board and procedures are established for conduct 
of the evaluation.
    (5) The administrative costs of evaluation do not exceed the 
expected benefits.

[[Page 106]]



                                                       Table 16-1--Performance Evaluation Criteria                                                      
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Submarginal          Marginal              Good              Very good           Excellent    
--------------------------------------------------------------------------------------------------------------------------------------------------------
A--Time of Delivery.............  (A-1) Adherence to  Consistently late   Late on 10% plans   Occasional plan     Meets plan          Delivers all plans
                                   plan schedule.      on 20% of plans.    w/o prior           late w/o            schedule.           on schedule &    
                                                                           agreement.          justification.                          meets prod.      
                                                                                                                                       change           
                                                                                                                                       requirements on  
                                                                                                                                       schedule.        
                                  (A-2) Action on     Does not expose     Exposes changes     Anticipates         Keeps Yard posted   Anticipates in    
                                   Anticipated         changes or          but is dilatory     changes, advise     on delays,          good time,       
                                   delays.             resolve them as     in resolution on    Shipyard but        resolves            advises Shipyard,
                                                       soon as             plans.              misses completion   independently on    resolves         
                                                       recognized.                             of design plans     plans.              independently and
                                                                                               10%.                                    meets production 
                                                                                                                                       schedule.        
                                  (A-3) Plan          Does not complete   System studies      Major work plans    Design changes      Design changes,   
                                   Maintenance.        interrelated        completed but       coordinated in      from studies and    studies resolved 
                                                       systems studies     constr. plan        time to meet        interrelated        and test data    
                                                       concurrently.       changes delayed.    production          plans issued in     issued ahead of  
                                                                                               schedules.          time to meet        production       
                                                                                                                   product schedules.  requirements.    
B--Quality of Work..............  (B-1) Work          25% dwgs. not       20% not compatible  10% not compatible  0% dwgs. prepared   0% dwgs. presented
                                   Appearance.         compatible with     with Shipyard       with Shipyard       by Des. agent not   incl. Des. agent,
                                                       Shipyard repro.     repro. processes    repro. processes    compatible with     vendors,         
                                                       processes and use.  and use.            and use.            Shipyard repro.     subcontr. not    
                                                                                                                   processes and use.  compatible with  
                                                                                                                                       Shipyard repro.  
                                                                                                                                       processes and    
                                                                                                                                       use.             
                                  (B-2) Thoroughness  Is brief on plans   Has followed        Has followed        Work complete with  Work of highest   
                                   and Accuracy of     tending to leave    guidance, type      guidance, type      notes and           caliber          
                                   Work.               questionable        and standard dwgs.  and standard        thorough            incorporating all
                                                       situations for                          dwgs. questioning   explanations for    pertinent data   
                                                       Shipyard to                             and resolving       anticipated         required         
                                                       resolve.                                doubtful areas.     questionable        including related
                                                                                                                   areas.              activities.      
                                  (B-3) Engineering   Tendency to follow  Adequate engrg. to  Engineered to       Displays excellent  Exceptional       
                                   Competence.         past practice       use & adapt         satisfy specs.,     knowledge of        knowledge of     
                                                       with no variation   existing designs    guidance plans      constr. reqmts.     Naval shipwork & 
                                                       to meet reqmts.     to suit job on      and material        considering         adaptability to  
                                                       job in hand.        hand for routine    provided.           systems aspect,     work process     
                                                                           work.                                   cost, shop          incorporating    
                                                                                                                   capabilities and    knowledge of     
                                                                                                                   procurement         future planning  
                                                                                                                   problems.           in Design.       
                                  (B-4) Liaison       Indifferent to      Satisfactory but    Maintains normal    Maintains           Maintains expert  
                                   Effectiveness.      requirements of     dependent on        contact with        independent         contact, keeping 
                                                       associated          Shipyard to force   associated          contact with all    Yard informed,   
                                                       activities,         resolution of       activities          associated          obtaining info   
                                                       related systems,    problems without    depending on        activities,         from equip.,     
                                                       and Shipyard        constructive        Shipyard for        keeping them        supplies   w/o   
                                                       advice.             recommendations     problems            informed to         prompting by     
                                                                           to subcontr. or     requiring           produce             Shipyard.        
                                                                           vendors.            military            compatible design                    
                                                                                               resolution.         with little                          
                                                                                                                   assistance for                       
                                                                                                                   Yard.                                

[[Page 107]]

                                                                                                                                                        
                                  (B-5) Independence  Constant            Requires            Normal interest     Complete &          Develops complete 
                                   and Initiative.     surveillance        occasional          and desire to       accurate job.       and accurate     
                                                       req'd to keep job   prodding to stay    provide workable    Free of             plans, seeks out 
                                                       from slipping--     on schedule &       plans with          incompatibilities   problem areas and
                                                       assign to low       expects Shipyard    average             with little or no   resolves with    
                                                       priority to         resolution of       assistance &        direction by        assoc. act. ahead
                                                       satisfy needs.      most problems.      direction by        Shipyard.           of schedule.     
                                                                                               Shipyard.                                                
C--Effectiveness in Controlling   (C-1) Utilization   Planning of work    Supervision sets &  System planning by  Design parameters   Mods. to design   
 and/or Reducing Costs.            of Personnel.       left to designers   reviews goals for   supervisory,        established by      plans limited to 
                                                       on drafting         designers.          personnel,          system engineers    less than 5% as  
                                                       boards.                                 studies checked     & held in design    result lack      
                                                                                               by engineers.       plans.              engrg. system    
                                                                                                                                       correlation.     
                                  (C-2) Control       Expenditures not    Expenditures        Direct charges set  Provides services   No cost overruns  
                                   Direct Charges      controlled for      reviewed            & accounted for     as part of normal   on original      
                                   (Except Labor).     services.           occasionally by     on each work        design function     estimates absorbs
                                                                           supervision.        package.            w/o extra charges.  service demands  
                                                                                                                                       by Shipyard.     
                                  (C-3) Performance   Does not meet cost  Does not meet cost  Exceeds original    Exceeds original    Never exceeds     
                                   to Cost Estimate.   estimate for        estimate for        est. on change      est. on change      estimates of     
                                                       original work or    original work or    orders 10% time     orders 5% time.     original package 
                                                       changes 30% time.   changes 20% time.   and meets                               or change orders.
                                                                                               original design                                          
                                                                                               costs.                                                   
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 108]]


                                                  Table 16-2.--Contractor Performance Evaluation Report                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                      Category                          
     Category                Criteria                  Rating             Item factor       Evaluation rating          factor         Efficiency rating 
--------------------------------------------------------------------------------------------------------------------------------------------------------
A                  TIME OF DELIVERY...........                                                                                                          
                   A-1 Adherence to Plan               ______          x          .40   =         ______                                                
                    Schedule.                                                                                                                           
                   A-2 Action on Anticipated           ______          x          .30   =         ______                                                
                    Delays.                                                                                                                             
                   A-3 Plan Maintenance.......         ______          x          .30   =         ______                                                
                                                                                                                                                        
                       Total Item Weighed       ....................  ..  ...........  ..         ______         x          .30   =         ______      
                    Rating.                                                                                                                             
B                  QUALITY OF WORK............                                                                                                          
                   B-1 Work Appearance........         ______          x          .15   =         ______                                                
                                                                                                                                                        
                   B-2 Thoroughness and                ______          x          .30   =         ______                                                
                    Accuracy of Work.                                                                                                                   
                   B-3 Engineering Competence.         ______          x          .20   =         ______                                                
                                                                                                                                                        
                   B-4 Liaison Effectiveness..         ______          x          .15   =         ______                                                
                                                                                                                                                        
                   B-5 Independence and                ______          x          .20   =         ______                                                
                    Initiative.                                                                                                                         
                       Total Item Weighed       ....................  ..  ...........  ..         ______         x          .40   =         ______      
                    Rating.                                                                                                                             
C                  EFFECTIVENESS IN                                                                                                                     
                    CONTROLLING AND/OR                                                                                                                  
                    REDUCING COSTS.                                                                                                                     
                   C-1 Utilization of                  ______          x          .30   =         ______                                                
                    Personnel.                                                                                                                          
                   C-2 Control of all Direct           ______          x          .30   =         ______                                                
                    Charges Other than Labor.                                                                                                           
                   C-3 Performance to Cost             ______          x          .40   =         ______                                                
                    Estimate.                                                                                                                           
                       Total Item Weighed       ....................  ..  ...........  ..         ______         x          .30   =         ______      
                    Rating.                                                                                                                             
TOTAL WEIGHED RATING:                                                                                                                                   
Rated by:                                                                                                                                               
Signature(s):                                                                                                                                           
--------------------------------------------------------------------------------------------------------------------------------------------------------
Ratings--Excellent; Very good; Good; Marginal; Submarginal;                                                                                             
Period of        19                                                                                                                                     
Contract Number                                                                                                                                         
Contractor                                                                                                                                              
Date of Report                                                                                                                                          
PNS Techical Monitor/s                                                                                                                                  
Note: Provide supporting data and/or justification for below average or outstanding item ratings.                                                       


[[Page 109]]



              Subpart 216.5--Indefinite-Delivery Contracts



Sec. 216.501  General.

    (a)(i) For items with a shelf-life of less than 6 months, consider 
the use of indefinite delivery type contracts with orders to be placed 
either--
    (A) Directly by the users; or
    (B) By central purchasing offices with deliveries direct to users.
    (ii) Whenever an indefinite delivery contract is issued, the issuing 
office must furnish all ordering offices sufficient information for the 
ordering office to complete its contract reporting responsibilities 
under 204.670-2. This data must be furnished to the ordering activity in 
sufficient time for the activity to prepare its report for the action 
within 3 working days of the order.

[56 FR 36340, July 31, 1991, as amended at 57 FR 42630, Sept. 15, 1992]



Sec. 216.505  Contract clauses.

    (d) If the contract is for the preparation of personal property for 
shipment or storage (see 247.271-4), substitute paragraph (f) at 
252.247-7015, Requirements, for paragraph (f) of the clause at FAR 
52.216-21, Requirements.



Sec. 216.506  Ordering.

    Orders placed under indefinite delivery contracts may be issued on 
DD Form 1155, Order for Supplies or Services.



   Subpart 216.6--Time-And-Materials, Labor-Hour, and Letter Contracts

216.603  Letter contracts.



Sec. 216.603-3  Limitations.

    See subpart 217.74 for additional limitations on the use of letter 
contracts.



Sec. 216.603-4  Contract clauses.

    (b)(2) See 217.7406(a) for additional guidance regarding use of the 
clause at FAR 52.216-24, Limitation of Government Liability.
    (3) Use the clause at 252.217-7027, Contract Definitization, in 
accordance with its prescription at 217.7406(b), instead of the clause 
at FAR 52.216-25, Contract Definitization.

[61 FR 7743, Feb. 29, 1996]



                        Subpart 216.7--Agreements



Sec. 216.703  Basic ordering agreements.

    (c) Limitations. The period during which orders may be placed 
against a basic ordering agreement may not exceed three years. The 
contracting officer, with the approval of the chief of the contracting 
office, may grant extensions for up to two years. No single extension 
shall exceed one year. See subpart 217.74 for additional limitations on 
the use of undefinitized orders under basic ordering agreements.
    (d) Orders. (i) The contracting officer issuing an order under a 
basic ordering agreement shall be responsible for ensuring compliance 
with the provisions and limitations of this section.
    (ii) Individual orders under a basic ordering agreement shall be 
individually closed following completion of the orders (see FAR 4.804).
    (1)(iii) The office issuing the agreement shall furnish all 
authorized ordering offices sufficient information for the ordering 
office to complete its contract reporting responsibilities under 
204.670-2 or, in the case of civilian agencies, the Federal Procurement 
Data System reporting requirement. Data furnished to civilian agencies 
must contain uncoded information about the data elements and the 
meanings of the codes to permit these users to translate the data into 
the federal format. This data must be furnished to the ordering activity 
in sufficient time for the activity to prepare its report for the action 
within 3 working days of the order.
    (2)(i) Any activity listed in the agreement may issue orders on DD 
Form 1155, Order for Supplies or Services, or Standard Form 26, Award/
Contract.
    (3) Incentive provisions consistent with this part are permitted.

[56 FR 36340, July 31, 1991, as amended at 61 FR 7743, Feb. 29, 1996; 61 
FR 18195, Apr. 24, 1996]

[[Page 110]]





PART 217--SPECIAL CONTRACTING METHODS--Table of Contents




Sec.

                  Subpart 217.1--Multiyear Contracting

217.102  Policy.
217.102-2  General.
217.102-3  Objectives.
217.103  Procedures.
217.103-1  General.

                         Subpart 217.2--Options

217.202  Use of options.
217.208  Solicitation provisions and contract clauses.
217.208-70  Additional clauses.

                Subpart 217.4--Leader Company Contracting

217.401  General.

      Subpart 217.5--Interagency Acquisitions Under the Economy Act

217.500  Scope of subpart.
217.502  General.
217.504  Ordering procedures.

            Subpart 217.6--Management and Operating Contracts

217.600  Scope of subpart.

              Subpart 217.70--Exchange of Personal Property

217.7000  Scope of subpart.
217.7001  Definitions.
217.7002  Policy.
217.7003  Purchase request.
217.7004  Solicitation and award.
217.7005  Solicitation provision.

  Subpart 217.71--Master Agreement for Repair and Alteration of Vessels

217.7100  Scope of subpart.
217.7101  Definitions.
217.7102  General.
217.7103  Procedures.
217.7103-1  Content and format.
217.7103-2  Period of agreement.
217.7103-3  Solicitations for job orders.
217.7103-4  Award of a job order.
217.7103-5  Emergency work.
217.7103-6  Repair costs not readily ascertainable.
217.7103-7  Modification of master agreements.
217.7104  Contract clauses.

                Subpart 217.72--Bakery and Dairy Products

217.7200  Scope.
217.7201  Contract requirements for dairy products.
217.7202  Contract type.
217.7203  Contract clauses.

           Subpart 217.73--Identification of Sources of Supply

217.7300  Scope.
217.7301  Policy.
217.7302  Procedures.
217.7303  Solicitation provision.

             Subpart 217.74--Undefinitized Contract Actions

217.7400  Scope.
217.7401  Definitions.
217.7402  Exceptions.
217.7403  Policy.
217.7404  Limitations.
217.7404-1  Authorization.
217.7404-2  Price ceiling.
217.7404-3  Definitization schedule.
217.7404-4  Limitations on obligations.
217.7404-5  Exceptions.
217.7404-6  Allowable profit.
217.7405  Definitizations.
217.7406  Contract clauses.

           Subpart 217.75--Acquisition of Replenishment Parts

217.7500  Scope of subpart.
217.7501  General.
217.7502  Spares acquisition integrated with production (SAIP).
217.7503  Acquisition of parts when data is not available.
217.7504  Limitations on price increases.

        Subpart 217.76--Contracts with Provisioning Requirements

217.7600  Scope of subpart.
217.7601  Definitions.
217.7602  Contracting requirements.
217.7602-1  Contractual provisions.
217.7602-2  Issuance of provisioned items orders.
217.7603  Contract administration requirements.
217.7603-1  Provisioning conferences.
217.7603-2  Contract administration office monitoring.
217.7603-3  Negotiating and executing supplemental agreements.

                   Subpart 217.77--Over and Above Work

217.7700  Scope of subpart.
217.7701  Procedures.
217.7702  Contract clause.


[[Page 111]]


    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36345, July 31, 1991, unless otherwise noted.



                  Subpart 217.1--Multiyear Contracting

217.102  Policy.



Sec. 217.102-2  General.

    (b) The applicable program year is that shown in the DoD Future 
Years Defense Program.



Sec. 217.102-3  Objectives.

    (d)(3) For additional restrictions on inclusion of recurring costs 
in the cancellation ceiling in DoD multiyear contracts, see 217.103-
1(a)(iii) and the DoD Budget Guidance Manual (DoD 7110.1-M).

[57 FR 53599, Nov. 12, 1992]
217.103  Procedures.



Sec. 217.103-1  General.

    (a) Criteria. 10 U.S.C. 2306(h) and annual DoD authorization and 
appropriations acts have established the following additional criteria:
    (i) The use of such a contract will promote the national security of 
the United States (10 U.S.C. 2306(h)(1)).
    (ii) The contract provides for a production rate at not less than 
minimum economic production rates given the existing tooling and 
facilities (10 U.S.C. 2306(h)(9));
    (iii) Any advance economic order quantity acquisition (see FAR 
17.101) is funded at least to the limits of the Government's liability. 
Recurring costs for such economic order quantities shall not be included 
in the unfunded cancellation ceiling. (Section 9021, Pub. L. 101-165 and 
similar sections in subsequent Defense appropriations acts).
    (b) Limitations.
    (i) Public Law 90-378 (10 U.S.C. 2306(g)).
    (A) DoD may enter into multiyear acquisitions for the following 
services (and items of supply relating to such services), even though 
funds are limited by statute to obligation during the fiscal year in 
which the contract is executed:
    (1) Operation, maintenance, and support of facilities and 
installations;
    (2) Maintenance or modification of aircraft, ships, vehicles, and 
other highly complex military equipment;
    (3) Specialized training requiring high quality instructor skills 
(e.g., training for pilots and other aircrew members or foreign language 
training); and
    (4) Base services (e.g., ground maintenance, in-plane refueling, bus 
transportation, and refuse collection and disposal).
    (B) This authority may be used as long as the contract--
    (1) Does not extend beyond five years;
    (2) Complies with FAR 17.101 through 17.105; and
    (3) Performance years do not extend beyond the end of any fiscal 
year.
    (ii) Public Law 97-214 (10 U.S.C. 2829).
    (A) DoD may enter into multiyear contracts for supplies and services 
required for management, maintenance, and operation of military family 
housing and may pay the costs of such contracts for each year out of 
annual appropriations for that year.
    (B) This authority may be used as long as the contract--
    (1) Does not extend beyond four years;
    (2) Complies with FAR 17.101 through 17.105; and
    (3) Performance years do not extend beyond the end of any fiscal 
year.
    (iii) Award of a multiyear contract for services requires a written 
determination by the head of the contracting activity (10 U.S.C. 
2306(g)(1)) that--
    (A) There will be a continuing need for the services and incidental 
supplies;
    (B) Furnishing the services and incidental supplies will require--
    (1) A substantial initial investment in plant or equipment;
    (2) The upfront commitment of substantial financial resources for 
the assembly, training or transportation of a specialized work force; or
    (3) Other substantial startup costs; and
    (C) Using a multiyear contract will be in the best interest of the 
United States by encouraging effective competition and promoting 
economical business operations.

[[Page 112]]

    (iv) The appropriate Secretary must provide a 30-day advance 
notification to the Committees on Appropriations and Armed Services of 
the House of Representatives and the Senate before the award of any--
    (A) Multiyear contract that contains a cancellation ceiling in 
excess of $100 million (10 U.S.C. 2306(h)(3));
    (B) Multiyear contract that provides for economic order quantity 
purchases in excess of $20 million in any year (Section 9021, Pub. L. 
101-165 and similar sections in subsequent appropriations acts);
    (C) Multiyear contract that includes an unfunded contingent 
liability in excess of $20 million (Section 9021, Pub. L. 101-165 and 
similar sections in subsequent appropriations acts); or
    (D) Contract for advance procurement leading to a multiyear contract 
with an economic order quantity procurement in excess of $20 million in 
any year (Section 9021, Pub. L. 101-165 and similar sections in 
subsequent appropriations acts).
    (v) Departments/agencies shall establish reporting procedures to 
meet the requirements of paragraph (b)(iv) of this subsection. Submit 
copies of the notifications to the Under Secretary of Defense 
(Acquisition & Technology), Director of Defense Procurement (USD(A&T)DP) 
and the Under Secretary of Defense (Comptroller) (Program/Budget) 
(USD(C)(P/B)).
    (vi) Do not initiate a multiyear contract--
    (A) In excess of $500 million for any system or component thereof 
unless--
    (1) Specifically provided for in a Defense appropriations act 
(section 9021, Pub. L. 101-165 and similar sections in subsequent 
appropriations acts); and
    (2) The Secretary of Defense certifies to Congress that the current 
Future Years Defense Program fully funds the support costs associated 
with the multiyear program. Forward documentation to support this 
certification to the Under Secretary of Defense (Acquisition & 
Technology), Director of Defense Procurement.
    (B) Without using present value analysis to determine the lowest 
cost to the Government of a multiyear contract compared to annual 
contracts (Section 9021, Pub. L. 101-165 and similar sections in 
subsequent appropriations acts).
    (vii) Do not terminate a multiyear contract under a program approved 
by Congress without providing a ten-day advance notification to the 
Committees on Appropriations and Armed Services of the House of 
Representatives and the Senate (Section 9021, Pub. L. 101-165 and 
similar sections in subsequent appropriations acts).
    (viii) The Secretary of Defense may ask Congress for relief from any 
conditions established by law for that particular procurement program 
(10 U.S.C. 2306(h)(11)).
    (A) A request for relief from the requirement to achieve specific 
cost savings may be made if it appears, after negotiations with the 
contractors, that such savings cannot be achieved, but that substantial 
savings could nevertheless be achieved by using a multiyear contract.
    (B) Include in such request details concerning the reasons for 
requesting use of a multiyear contract as well as details about the 
negotiated contract terms and conditions.
    (C) Forward supporting documentation to the Under Secretary of 
Defense (Acquisition & Technology), Director of Defense Procurement.
    (ix) Departments/agencies also must comply with any other 
restrictions or notification requirements contained in annual 
authorization or appropriation acts.
    (d) Cancellation. State cancellation ceilings in the schedule as a 
not-to-exceed amount.

[56 FR 36345, July 31, 1991, as amended at 57 FR 14992, Apr. 23, 1992; 
58 FR 28465, May 13, 1993; 60 FR 61596, Nov. 30, 1995]



                         Subpart 217.2--Options



Sec. 217.202  Use of options.

    (1) Options may be used for foreign military sales requirements.
    (2) Consider use of surge options to support the Industrial 
Preparedness Production Planning program (see subpart 208.72). A surge 
option allows the Government, prior to final delivery, to--
    (i) Accelerate the contractor's production rate in accordance with a 
surge production plan or a delivery schedule

[[Page 113]]

provided by the contractor under the terms of the contract; and
    (ii) Purchase additional quantities of supplies or services.
    (3) See subpart 217.74 for limitations on the use of undefinitized 
options.

[56 FR 36345, July 31, 1991, as amended at 61 FR 7743, Feb. 29, 1996]



Sec. 217.208  Solicitation provisions and contract clauses.

    Sealed bid solicitations shall not include provisions for 
evaluations of options unless the contracting officer determines that 
there is a reasonable likelihood that the options will be exercised (10 
U.S.C. 2301(a)(7)). This limitation also applies to sealed bid 
solicitations for the contracts excluded by FAR 17.200.



Sec. 217.208-70  Additional clauses.

    (a) Use the clause at 252.217-7000, Exercise of Option to Fulfill 
Foreign Military Sales Commitments, when an option may be used for 
foreign military sale requirements.
    (1) Use Alternate I when the foreign military sale country is not 
known at the time of solicitation or award.
    (2) Do not use this clause in contracts for establishment or 
replenishment of DoD inventories or stocks, or acquisitions made under 
DoD cooperative logistics support arrangements.
    (b) When a surge option is needed in support of industrial 
preparedness production planning (see subpart 208.72), use the clause at 
252.217-7001, Surge Option, in solicitations and contracts.
    (1) Insert the percentage of increase the option represents in 
paragraph (a) of the clause.
    (2) Change 30 days in paragraphs (b)(2) and (d)(1) to longer 
periods, if appropriate.
    (3) Change the 24-month period in paragraph (c)(3), if appropriate.



                Subpart 217.4--Leader Company Contracting



Sec. 217.401  General.

    When leader company contracting is to be considered, take special 
effort to select a small disadvantaged business (SDB) concern as the 
follower company. Where other than an SDB is selected as the follower 
company, the contracting officer shall document the contract file to 
reflect--
    (1) The extent of actions taken to identify SDB concerns for 
participation in the acquisition; and
    (2) The rationale for selection of a non-SDB as the follower 
company.



      Subpart 217.5--Interagency Acquisitions Under the Economy Act



Sec. 217.500  Scope of subpart.

    Acquisitions from required sources, as described in FAR part 8, are 
not orders under the Economy Act.

[59 FR 22760, May 3, 1994]



Sec. 217.502  General.

    If requested, the contracting officer who normally would contract 
for the requesting activity should advise in the determination process.

[59 FR 22760, May 3, 1994]



Sec. 217.504  Ordering procedures.

    (b) Do not send invitations for bids or requests for proposals to 
other Government agencies.



            Subpart 217.6--Management and Operating Contracts



Sec. 217.600  Scope of subpart.

    FAR subpart 17.6 does not apply to DoD.



              Subpart 217.70--Exchange of Personal Property



Sec. 217.7000  Scope of subpart.

    This subpart prescribes policy and procedures for exchange of 
nonexcess personal property concurrent with an acquisition. Section 
201(c) of the Federal Property and Administrative Services Act of 1949, 
63 Stat. 384, as amended (40 U.S.C. 481(c)) permits exchange of personal 
property and application of the exchange allowance to the acquisition of 
similar property. This subpart does not authorize the sale of nonexcess 
personal property.



Sec. 217.7001  Definitions.

    As used in this subpart,

[[Page 114]]

    (a) Exchange (trade-in) property means property which--
    (1) Is not excess but is eligible for replacement (because of 
obsolescence, unserviceability, or other reason); and
    (2) Is applied as whole or partial payment toward the acquisition of 
similar items (i.e., items designed and constructed for the same 
purpose).
    (b) Property means items which fall within one of the generic 
categories listed in DoDI 4140.51, Exchange of Nonexcess Personal 
Property in the Department of Defense.



Sec. 217.7002  Policy.

    DoD policy is to exchange, rather than replace, eligible nonexcess 
property whenever exchange promotes economical and efficient program 
accomplishment. Exchange policy, authority, and applicability are 
governed by--
    (a) The Federal Property Management Regulations issued by the 
Administrator of the General Services Administration; and
    (b) DoDI 4140.51, Exchange of Nonexcess Personal Property in the 
Department of Defense.



Sec. 217.7003  Purchase request.

    Ensure that the requiring activity provides all of the following in 
support of the purchase request--
    (a) A certification that the property is eligible for exchange and 
complies with all conditions and limitations of DoDI 4140.51;
    (b) A written determination of economic advantage indicating--
    (1) The anticipated economic advantage to the Government from use of 
the exchange authority;
    (2) That exchange allowances shall be applied toward, or in partial 
payment of, the items to be acquired; and
    (3) That, if required, the exchange property has been rendered safe 
or innocuous or has been demilitarized;
    (c) All applicable approvals for the exchange; and
    (d) A description of the property available for exchange (e.g., 
nomenclature, location, serial number, estimated travel value).



Sec. 217.7004  Solicitation and award.

    (a) Solicitations shall include a request for offerors to state 
prices--
    (1) For the new items being acquired without any exchange; and
    (2) For the new items with the exchange (trade-in allowance) for the 
exchange property listed.
    (b) The contracting officer is not obligated to award on an exchange 
basis. If the lowest evaluated offer is an offer for the new items 
without any exchange, the contracting officer may award on that basis 
and forgo the exchange.
    (c) Exchanges may be made only with the successful offeror. When the 
successful offer includes an exchange, award one contract for both the 
acquisition of the new property and the trade-in of the exchange 
property. The only exception is when the items must be acquired against 
a mandatory Federal supply schedule contract, in which case, award a 
separate contract for the exchange.



Sec. 217.7005  Solicitation provision.

    Use the provision at 252.217-7002, Offering Property for Exchange, 
when offering nonexcess personal property for exchange. Allow a minimum 
of 14 calendar days for the inspection period in paragraph (b) of the 
clause if the exchange property is in the continental United States. 
Allow at least 21 calendar days outside the United States.



  Subpart 217.71--Master Agreement for Repair and Alteration of Vessels



Sec. 217.7100  Scope of subpart.

    This subpart contains acquisition policies and procedures for master 
agreements for repair and alteration of vessels.



Sec. 217.7101  Definitions.

    (a) Master agreement for repair and alteration of vessels--
    (1) Is a written instrument of understanding, negotiated between a 
contracting activity and a contractor that--
    (A) Contains contract clauses, terms, and conditions applying to 
future contracts for repairs, alterations, and/or additions to vessels; 
and

[[Page 115]]

    (B) Contemplates separate future contracts that will incorporate by 
reference or attachment the required and applicable clauses agreed upon 
in the master agreement.
    (2) Is not a contract.
    (b) Job order--
    (1) Is a fixed price contract incorporating, by reference or 
attachment, a master agreement for repair and alteration of vessels;
    (2) May include clauses pertaining to subjects not covered by the 
master agreement; but applicable to the job order being awarded; and
    (3) Applies to a specific acquisition and sets forth the scope of 
work, price, delivery date, and other appropriate terms that apply to 
the particular job order.



Sec. 217.7102  General.

    (a) Activities shall enter into master agreements for repair and 
alteration of vessels with all prospective contractors located within 
the United States, its possessions, or Puerto Rico, which--
    (1) Request ship repair work; and
    (2) Which possess the organization and facilities to perform the 
work satisfactorily. (Issuance of a master agreement does not indicate 
approval of the contractor's facility for any particular acquisition and 
is not an affirmative determination of responsibility under FAR subpart 
9.1 for any particular acquisition.)
    (b) Activities may use master agreements in work with prospective 
contractors located outside the United States, its possessions, or 
Puerto Rico.
    (c) Activities may issue job orders under master agreements to 
effect repairs, alterations, and/or additions to vessels belonging to 
foreign governments.
    (1) Contractors shall treat vessels of a foreign government as if 
they were vessels of the U.S. Government whenever requested to do so by 
the contracting officer.
    (2) Identify the vessel and the foreign government in the 
solicitation and job order.



Sec. 217.7103  Procedures.



Sec. 217.7103-1  Content and format.

    (a) A Master agreement shall contain all clauses required by 
217.7104(a), statute and executive order.
    (b) The following format may be adapted to fit specific 
circumstances:

          Master Agreement for Repair and Alteration of Vessels

    (1) This agreement is entered into this ______ day of __________ 
19____, by the United States of America (the ``Government'':) 
represented by ____________, the Contracting Officer, and, ____________ 
a corporation organized and existing under the laws of the State of 
____________ (the ``Contractor'').
    (2) The clauses in this agreement, shall be incorporated, by 
reference or attachment, in job orders issued under this agreement to 
effect repairs, alterations, and/or additions to vessels.
    (3) By giving 30 days written notice, either party to this agreement 
has the right to cancel it without affecting the rights and liabilities 
under any job order existing at the time of cancellation. The Contractor 
shall perform, under the terms of this agreement, all work covered by 
any job order awarded before the effective date of the cancellation.
    (4) This agreement may be modified only by mutual agreement of the 
parties. A modification of this agreement shall not affect any job order 
in existence at the time of modification, unless the parties agree 
otherwise.
    (5) The rights and obligations of the parties to this agreement are 
set forth in this agreement and the clauses of any job orders issued 
under this agreement. In the event there is an inconsistency between 
this agreement and any job order, the provisions of this agreement shall 
govern.
    (6) This agreement shall remain in effect until canceled by either 
party.

THE UNITED STATES OF AMERICA
by______________________________________________________________________
(Contracting Officer)
_______________________________________________________________________
(Contractor)
by______________________________________________________________________
(Authorized Individual)
_______________________________________________________________________
(Title)



Sec. 217.7103-2  Period of agreement.

    (a) Master agreements remain in effect until canceled by either the 
contractor or the contracting officer.

[[Page 116]]

    (b) Master agreements can be canceled by either the contractor or 
the contracting officer by giving 30 days written notice to the other.
    (c) Cancellation of a master agreement does not affect the rights 
and liabilities under any job order existing at the time of 
cancellation. The contractor must continue to perform all work covered 
by any job order issued before the effective date of cancellation of the 
master agreement.



Sec. 217.7103-3  Solicitations for job orders.

    (a) When a requirement arises within the United States, its 
possessions, or Puerto Rico for the type of work covered by the master 
agreement, solicit offers from prospective contractors that--
    (1) Previously executed a master agreement; or
    (2) Have not previously executed a master agreement, but possess the 
necessary qualifications to perform the work and agree to execute a 
master agreement before award of a job order.
    (b) Prepare the solicitation in the uniform contract format and in 
accordance with FAR subparts 14.2 or 15.4, as applicable.
    (c) Include in the solicitation--
    (1) The nature of the work to be performed;
    (2) The date the vessel will be available to the contractor;
    (3) The date the work is to be completed; and
    (4) Whether bulk ammunition is aboard the vessel.
    (d) Unless the solicitation states otherwise, offers are to be based 
on performance at the contractor's site.
    (e) Solicitations processed under negotiated acquisition procedures 
shall require offerors to include a breakdown of the price with 
reasonable supporting detail in whatever format and detail the 
contracting officer may request.
    (f) Where practicable, afford potential offerors an opportunity to 
inspect the item needing repair or alteration.



Sec. 217.7103-4  Award of a job order.

    Award job orders in accordance with FAR subparts 14.4 or 15.10.



Sec. 217.7103-5  Emergency work.

    (a) The contracting officer, without soliciting offers, may issue a 
written job order to a contractor that has previously executed a master 
agreement when--
    (i) Delay in the performance of necessary repair work would endanger 
a vessel, its cargo or stores; or
    (ii) Military necessity requires immediate work on a vessel.
    (b) Process this type of undefinitized contract action in accordance 
with subpart 217.74.
    (c) Negotiate a price as soon as practicable after the issuance of 
an undefinitized order and definitize the job order upon completing 
negotiations.



Sec. 217.7103-6  Repair costs not readily ascertainable.

    If the nature of any repairs is such that their extent and probable 
cost cannot be ascertained readily, the solicitation should--
    (a) Solicit offers for determining the nature and extent of the 
repairs;
    (b) Provide that upon determination by the contracting officer of 
what work is necessary, the contractor, if requested by the contracting 
officer, shall negotiate prices for performance of the repairs; and
    (c) Provide that prices for the repairs, if ordered, will be set 
forth in a modification of the job order.



Sec. 217.7103-7  Modification of master agreements.

    (a) Review each master agreement at least annually before the 
anniversary of its effective date and revise it as necessary to conform 
to the requirements of the FAR and DFARS. Statutory or other mandatory 
changes may require review and revision earlier than one year.
    (b) A master agreement shall be changed only by modifying the master 
agreement itself. It shall not be changed through a job order.
    (c) A modification to a master agreement shall not affect job orders 
issued before the effective date of the modification.

[[Page 117]]



Sec. 217.7104  Contract clauses.

    (a) Use the following clauses in solicitations for, and in, master 
agreements for repair and alteration of vessels:
    (1) 252.217-7003, Changes.
    (2) 252.217-7004, Job Orders and Compensation.
    (3) 252.217-7005, Inspection and Manner of Doing Work.
    (4) 252.217-7006, Title.
    (5) 252.217-7007, Payments.
    (6) 252.217-7008, Bonds.
    (7) 252.217-7009, Default.
    (8) 252.217-7010, Performance.
    (9) 252.217-7011, Access to Vessel.
    (10) 252.217-7012, Liability and Insurance.
    (11) 252.217-7013, Guarantees.
    (12) 252.217-7014, Discharge of Liens.
    (13) 252.217-7015, Safety and Health.
    (14) 252.217-7016, Plant Protection, as applicable.
    (b)(1) Incorporate in solicitations for, and in, job orders, the 
clauses in the master agreement, and any other clauses on subjects not 
covered by the master agreement, but applicable to the job order to be 
awarded.
    (2) Use the clause at 252.217-7016, Plant Protection, in job orders 
where performance is to occur at the contractor's facility.



                Subpart 217.72--Bakery and Dairy Products



Sec. 217.7200  Scope.

    This subpart provides special policies and requirements for 
acquisition of perishable bakery and dairy products.



Sec. 217.7201  Contract requirements for dairy products.

    (a) Include the following chemical and microbiological requirements 
in solicitations and resulting contracts for milk, milk products, and 
cultured products (as defined in the Veterinary/Medical Wholesomeness 
Assurance Program for Fresh and Cultured Dairy Products and Frozen 
Desserts (AR-40-70/NAVSUPINST 4355.6/AFR 161-46/MCO 10110.44)):
    (1) Chemical requirements. Products shall meet the chemical 
requirements for each specification cited in the contract on the date of 
award.
    (2) Microbiological requirements. Products shall meet 
microbiological requirements stated in Public Health Service Publication 
229, Grade A Pasteurized Milk Ordnance, in effect on the date of award. 
In the event of conflict between these requirements and individual 
product specifications, the requirements of Public Health Service 
Publication 229 take precedence.
    (b) When the contractor is required to furnish its own cabinets for 
dispensing milk from bulk containers--
    (1) Include the following information in the solicitation--
    (i) The number (or estimated number) of dispenser cabinets required;
    (ii) Whether metal stands for the cabinets are required;
    (iii) The number of cabinets required with a capacity of two 
containers each; and
    (iv) The number required with a capacity of three containers each.
    (2) Include the contractor's list of cabinet equipment in the 
schedule of the contract.
    (c) The contracting officer shall notify the Government quality 
assurance representative of code changes approved under the clause at 
252.217-7022, Code Dating.



Sec. 217.7202  Contract type.

    Normally use requirements contracts for bakery and dairy products. 
Other indefinite delivery contracts and other contract types may be used 
as appropriate.



Sec. 217.7203  Contract clauses.

    (a) Use the following additional clauses in solicitations and 
contracts for perishable bakery and dairy products--
    (1) 252.217-7017, Time of Delivery. Use Alternate I when the 
contract is other than a requirements contract. Insert the number of 
hours in paragraph (c) of Alternate I.
    (2) 252.217-7018, Change in Plant Location.
    (3) 252.217-7019, Sanitary Conditions. Use Alternate I when the 
contract is other than a requirements contract.
    (4) 252.217-7022, Code Dating. Use this clause only when the 
schedule or a specification requires labels showing

[[Page 118]]

the date of pasteurization, manufacture, production, or processing.
    (5) 252.217-7023, Marking. Do not use this clause when MIL-STD-129, 
Marking for Shipment and Storage, is required.
    (6) 252.217-7024, Responsibility for Containers and Equipment. Use 
when contractor is required to provide reusable containers and 
equipment.
    (b) Use the following additional clauses in solicitations and 
contracts for perishable dairy products--
    (1) 252.217-7020, Examination and Testing. Use Alternate I when the 
contract is an indefinite quantity contract.
    (2) 252.217-7021, Deficiency Adjustment.
    (3) 252.217-7025, Containers and Equipment.



           Subpart 217.73--Identification of Sources of Supply



Sec. 217.7300  Scope.

    This subpart implements 10 U.S.C. 2384. It contains policy and 
procedures for requiring contractors to identify the actual manufacturer 
of supplies furnished to DoD.



Sec. 217.7301  Policy.

    Contractors shall identify their sources of supply in contracts for 
supplies. Contractor identification of sources of supply enables 
solicitation, in subsequent acquisitions, of actual manufacturers or 
other suppliers of items. This enhances competition and potentially 
avoids payment of additional costs for no significant added value.



Sec. 217.7302  Procedures.

    (a) Whenever practicable, include a requirement for contractor 
identification of sources of supply in all contracts for the delivery of 
supplies. The identification shall include--
    (1) The item's actual manufacturer or producer, or all the 
contractor's sources for the item;
    (2) The item's national stock number (if there is one);
    (3) The item identification number used by--
    (i) The actual manufacturer or producer of the item; or
    (ii) Each of the contractor's sources for the item; and
    (4) The source of any technical data delivered under the contract.
    (b) The requirement in paragraph (a) of this section does not apply 
to commercial items.

[56 FR 36345, July 31, 1991, as amended at 60 FR 61596, Nov. 30, 1995]



Sec. 217.7303   Solicitation provision.

    (a) Use the provision at 252.217-7026, Identification of Sources of 
Supply, or one substantially the same, in all solicitations for supplies 
when the acquisition is being conducted under other than full and open 
competition, except when--
    (1) Using FAR 6.302-5;
    (2) The contracting officer already has the information required by 
the provision (e.g., the information was obtained under other 
acquisitions);
    (3) The contract is for subsistence, clothing or textiles, fuels, or 
supplies purchased and used outside the United States;
    (4) The contracting officer determines that it would not be 
practicable to require offerors/contractors to provide the information, 
e.g., nonrepetitive local purchases; or
    (5) The contracting officer determines that the exception at 
217.7302(b) applies to all items under the solicitation.
    (b) If appropriate, use the provision at 252.217-7026, 
Identification of Sources of Supply, or one substantially the same, in 
service contracts requiring the delivery of supplies.



             Subpart 217.74--Undefinitized Contract Actions



Sec. 217.7400   Scope.

    This subpart prescribes policies and procedures implementing 10 
U.S.C. 2326.



Sec. 217.7401   Definitions.

    As used in this subpart--
    (a) Contract action means an action which results in a contract.
    (1) It includes contract modifications for additional supplies or 
services.

[[Page 119]]

    (2) It does not include change orders, administrative changes, 
funding modifications, or any other contract modifications that are 
within the scope and under the terms of the contract, e.g., engineering 
change proposals, value engineering change proposals, and over and above 
work requests as described in subpart 217.77.
    (b) Definitization means the agreement on, or determination of, 
contract terms, specifications, and price, which converts the 
undefinitized contract action to a definitive contract.
    (c) Qualifying proposal means a proposal containing sufficient 
information for the DoD to do complete and meaningful analyses and 
audits of the--
    (1) Information in the proposal; and
    (2) Any other information that the contracting officer has 
determined DoD needs to review in connection with the contract.
    (d) Undefinitized contract action means any contract action for 
which the contract terms, specifications, or price are not agreed upon 
before performance is begun under the action. Examples are letter 
contracts, orders under basic ordering agreements, and provisioned item 
orders, for which the price has not been agreed upon before performance 
has begun.



Sec. 217.7402   Exceptions.

    The following undefinitized contract actions (UCAs) are not subject 
to this subpart, but the contracting officer should apply the policy to 
them (and to changes under the Changes clause) to the maximum extent 
practicable--
    (a) UCAs for foreign military sales;
    (b) Purchases at or below the simplified acquisition threshold;
    (c) Special access programs;
    (d) Congressionally mandated long-lead procurement contracts.

[56 FR 36345, July 31, 1991, as amended at 61 FR 7743, Feb. 29, 1996]



Sec. 217.7403   Policy.

    DoD policy is that undefinitized contract actions shall--
    (a) Be used only when--
    (1) The negotiation of a definitive contract action is not possible 
in sufficient time to meet the Government's requirements; and
    (2) The Government's interest demands that the contractor be given a 
binding commitment so that contract performance can begin immediately.
    (b) Be as complete and definite as practicable under the particular 
circumstances.
217.7404  Limitations.



Sec. 217.7404-1   Authorization.

    The contracting officer shall obtain approval from the head of the 
contracting activity before--
    (a) Entering into a UCA. The request for approval must fully explain 
the need to begin performance before definitization, including the 
adverse impact on agency requirements resulting from delays in beginning 
performance.
    (b) Including requirements for non-urgent spare parts and support 
equipment in a UCA. The request should show that inclusion of the non-
urgent items is consistent with good business practices and in the best 
interest of the United States.
    (c) Modifying the scope of a UCA when performance has already begun. 
The request should show that the modification is consistent with good 
business practices and in the best interests of the United States.



Sec. 217.7404-2   Price ceiling.

    UCAs shall include a not-to-exceed price.



Sec. 217.7404-3   Definitization schedule.

    (a) UCAs shall contain definitization schedules which provide for 
definitization by the earlier of the following dates--
    (1) The date which is 180 days after issuance of the action (this 
date may be extended but may not exceed the date which is 180 days after 
the contractor submits a qualifying proposal); or
    (2) The date on which the amount of funds obligated under the 
contract action is equal to more than 50 percent of the not-to-exceed 
price.
    (b) Submission of a qualifying proposal in accordance with the 
definitization schedule is a material element of the contract. If the 
contractor does not submit a timely qualifying

[[Page 120]]

proposal, the contracting officer may suspend or reduce progress 
payments under FAR 32.503-6, or take other appropriate action.

[56 FR 36345, July 31, 1991, as amended at 60 FR 29498, June 5, 1995; 61 
FR 7743, Feb. 29, 1996]



Sec. 217.7404-4  Limitations on obligations.

    The Government shall not obligate more than 50 percent of the not-
to-exceed price before definitization. However, if a contractor submits 
a qualifying proposal before 50 percent of the not-to-exceed price has 
been obligated by the Government, then the limitation on obligations 
before definitization may be increased to no more than 75 percent (see 
232.102-70 for coverage on provisional delivery payments).

[60 FR 29498, June 5, 1995]



Sec. 217.7404-5  Exceptions.

    (a) The limitations in 217.7404-2, 217.7404-3, and 217.7404-4 do not 
apply to UCAs for the purchase of initial spares.
    (b) The head of an agency may waive the limitations in 217.7404-2, 
217.7404-3, and 217.7404-4 for UCAs if the head of the agency determines 
that the waiver is necessary to support a contingency operation.

[60 FR 29498, June 5, 1995]



Sec. 217.7404-6  Allowable profit.

    When the final price of a UCA is negotiated after a substantial 
portion of the required performance has been completed, the head of the 
agency shall ensure the profit allowed reflects--
    (a) Any reduced cost risk to the contractor for costs incurred 
during contract performance before negotiation of the final price; and
    (b) The contractor's reduced cost risk for costs incurred during 
performance of the remainder of the contract.



Sec. 217.7405  Definitizations.

    For each definitization modification, the contracting officer shall 
include all data required by 243.171.

[60 FR 34470, July 3, 1995]



Sec. 217.7406  Contract clauses.

    (a) Use the clause at FAR 52.216-24, Limitation of Government 
Liability, in all UCAs, solicitations associated with UCAs, basic 
ordering agreements, indefinite delivery contracts, and any other type 
of contract providing for the use of UCAs.
    (b) Use the clause at 252.217-7027, Contract Definitization, in all 
UCAs, solicitations associated with UCAs, basic ordering agreements, 
indefinite delivery contracts, and any other type of contract providing 
for the use of UCAs. Insert the applicable information in paragraphs 
(a), (b), and (d) of the clause. If, at the time of entering into the 
UCA, the contracting officer knows that the definitive contract action 
will meet the criteria of FAR 15.804-1 for not requiring submission of 
cost or pricing data, the words ``and cost or pricing data'' may be 
deleted from paragraph (a) of the clause.

[61 FR 7743, Feb. 29, 1996]



           Subpart 217.75--Acquisition of Replenishment Parts



Sec. 217.7500  Scope of subpart.

    This subpart provides guidance on additional requirements related to 
acquisition of replenishment parts (as defined in appendix E).



Sec. 217.7501  General.

    Departments and agencies--
    (a) May acquire replenishment parts concurrently with production of 
the end item.
    (b) Shall provide for full and open competition when fully adequate 
drawings and any other needed data are available with the right to use 
for acquisition purposes (see part 227). However--
    (1) When data is not available for a competitive acquisition, use 
one of the procedures in 217.7503.
    (2) Replenishment parts must be acquired so as to ensure the safe, 
dependable, and effective operation of the equipment. Where this 
assurance is not possible with new sources, competition may be limited 
to the original manufacturer of the equipment or other

[[Page 121]]

sources that have previously manufactured or furnished the parts as long 
as the action is justified.
    (c) Shall follow the limitations on price increases in 217.7504.



Sec. 217.7502  Spares acquisition integrated with production (SAIP).

    (a) Spares acquisition integrated with production (SAIP) is a 
technique used to acquire replenishment parts concurrently with parts 
being produced for the end item.
    (b) DoD acquisition managers select parts for SAIP under the 
criteria in DoDI 4245.12, Spares Acquisition Integrated With Production 
(SAIP).
    (c) Include appropriately tailored provisions in the contract when 
SAIP is used.



Sec. 217.7503  Acquisition of parts when data is not available.

    When acquiring a part for which the Government does not have 
necessary data with rights to use in a specification or drawing for 
competitive acquisition, use one of the following procedures in order of 
preference--
    (a) When items of identical design are not required, the acquisition 
may still be conducted through full and open competition by using a 
performance specification or other similar technical requirement or 
purchase description that does not contain data with restricted rights. 
Two methods are--
    (1) Two-step sealed bidding; and
    (2) Brand name or equal purchase descriptions.
    (b) When other than full and open competition is authorized under 
FAR part 6, acquire the part from the firm which developed or designed 
the item or process, or its licensees, provided productive capacity and 
quality are adequate and the price is fair and reasonable.
    (c) When additional sources are needed and the procedures in 
paragraph (a) of this section are not practicable, consider the 
following alternatives--
    (1) Encourage the developer to license others to manufacture the 
parts;
    (2) Acquire the necessary rights in data;
    (3) Use a leader company acquisition technique (FAR subpart 17.4) 
when complex technical equipment is involved and establishing 
satisfactory additional sources will require technical assistance as 
well as data; or
    (4) Incorporate a priced option in the contract which allows the 
Government to require the contractor to establish a second source.
    (d) As a last alternative, the contracting activity may develop a 
design specification for competitive acquisition through reverse 
engineering. Contracting activities shall not do reverse engineering 
unless--
    (1) Significant cost savings can be demonstrated; and
    (2) The action is authorized by the head of the contracting 
activity.



Sec. 217.7504  Limitations on price increases.

    This section provides implementing guidance for section 1215 of 
Public Law 98-94 (10 U.S.C. 2452 note).
    (a) The contracting officer shall not award, on a sole source basis, 
a contract for any centrally managed replenishment part when the price 
of the part has increased by 25 percent or more over the most recent 12-
month period.
    (1) Before computing the percentage difference between the current 
price and the prior price, adjust for quantity, escalation, and other 
factors necessary to achieve comparability.
    (2) Departments and agencies may specify an alternate percentage or 
percentages for contracts within the small purchase limitation in FAR 
part 13.
    (b) The contracting officer may award a contract for a part, the 
price of which exceeds the limitation in paragraph (a) of this section, 
if the contracting officer certifies in writing to the head of the 
contracting activity before award that--
    (1) The contracting officer has evaluated the price of the part and 
concluded that the price increase is fair and reasonable; or
    (2) The national security interests of the United States require 
purchase of the part despite the price increase.
    (c) The fact that a particular price has not exceeded the limitation 
in paragraph (a) of this section does not relieve the contracting 
officer of the

[[Page 122]]

responsibility for obtaining a fair and reasonable price.
    (d) Contracting officers may include a provision in sole source 
solicitations requiring that the offeror supply with its proposal, price 
and quantity data on any government orders for the replenishment part 
issued within the most recent 12 months.



        Subpart 217.76--Contracts with Provisioning Requirements



Sec. 217.7600  Scope of subpart.

    This subpart contains contract requirements and procedures for items 
to be provisioned. For technical requirements of provisioning, see DoDD 
4140.40, Provisioning of End Items of Material. For breakout 
requirements, see appendix E.



Sec. 217.7601  Definitions.

    As used in this subpart,
    (a) Provisioning means the process of determining and acquiring the 
range and quantity of spare and repair parts, and support and test 
equipment required to operate and maintain an end item for an initial 
period of service.
    (b) Provisioned item means any item selected under provisioning 
procedures.
    (c) Provisioned items order (PIO) means an undefinitized order 
issued under a contract which includes the Government's requirements for 
provisioned items. (Provisioned items with firm prices are acquired by 
supplemental agreement or by separate contract.)
    (d) Provisioning activity means the organization responsible for 
selecting and determining requirements for provisioned items.
    (e) Provisioning requirements statement means the contractual 
document listing the specific provisioning requirements for that 
contract. The statement normally includes:
    (1) Instructions, such as the provisioning method to be used;
    (2) The extent of provisioning technical documentation and data 
needed (including administrative requirements for submission and 
distribution);
    (3) The type and location of provisioning conferences;
    (4) Sample article requirements;
    (5) The delivery schedule;
    (6) Packaging and marking requirements for provisioned items; and
    (7) Requirements for provisioning screening.
    (f) Provisioning technical documentation means the data needed for 
the identification, selection, determination of initial requirements, 
and cataloging of support items to be acquired through the provisioning 
process. It includes such things as provisioning lists and logistics 
support analysis summaries. Descriptive data such as drawings and 
photographs are referred to as supplementary provisioning technical 
documentation.
217.7602  Contracting requirements.



Sec. 217.7602-1  Contractual provisions.

    Contracts containing provisioning requirements shall--
    (a) List the provisioning functions to be performed and who will 
perform them;
    (b) Include a provisioning requirements statement or specify a time 
limit for its incorporation into the contract by modification (revisions 
to the provisioning requirements statement shall also be incorporated by 
contract modification);
    (c) Include on the DD Form 1423, Contract Data Requirements List, a 
schedule for delivery of provisioning technical documentation, or 
provide for the schedule to be incorporated later by contract 
modification;
    (d) Require flowdown of the appropriate provisioning technical 
documentation requirement when the subcontractor prepares the 
documentation;
    (e) Specify any applicable procedures for interim release by the 
contractor of long lead time items, and include ordering and funding 
instructions for such items. As a minimum, the instructions shall 
require the contractor to advise the contracting officer or provisioning 
activity at least 30 days before release of the items, their estimated 
costs, and the effective date of release;
    (f) Specify the activity designated to issue provisioned items 
orders, i.e., contracting officer, provisioning activity, or 
administrative contracting officer. When it is expected that more than

[[Page 123]]

one activity will place provisioned items orders against the contract, 
state the requirements for provisioned items of each activity as 
separate contract line items;
    (g) Provide a definitization schedule (normally 120 days after 
receipt of the contractor's proposal), and a timeframe for the 
contractor to furnish price proposals for provisioned items orders 
(normally 60 days after order issuance);
    (h) Specify exhibit identifiers applicable to the contract line/
subline items; and
    (i) Include procedures for processing changes (including 
cancellations) in quantities of items ordered.



Sec. 217.7602-2  Issuance of provisioned items orders.

    (a) Use the Standard Form 30, Amendment of Solicitation/Modification 
of Contract, to--
    (1) Issue provisioned items orders;
    (2) Decrease or cancel quantities of items ordered; and
    (3) Cover the contractor's interim release of long lead items when 
the contracting officer approves the release (if the release is not 
approved, the contracting officer shall notify the contractor to cancel 
the items).
    (b) Include in Block 14 of the Standard Form 30--
    (1) The term PROVISIONED ITEMS ORDER in capital letters and 
underlined; and
    (2) The appropriate exhibit identifier(s) for all attached exhibits.
    (c) Obligate funds to cover the estimated price of the items being 
ordered. Show individual estimated prices for each exhibit line item on 
the accounting and payment office copies.
    (d) Distribution is the same as for the basic contract (see FAR 
4.2). However, if the exhibits are voluminous, the contracting officer 
may restrict distribution of the exhibits to the contract administration 
office.
    (e) See subpart 217.74 for additional guidance and limitations on 
the use of undefinitized contract actions.
217.7603  Contract administration requirements.



Sec. 217.7603-1  Provisioning conferences.

    When requested by the contracting officer or provisioning activity, 
the contract administration office shall assist the contracting officer 
or provisioning activity in scheduling and determining the types of 
provisioning conferences required, e.g., guidance meetings, long lead 
time items conferences, source coding meetings.



Sec. 217.7603-2  Contract administration office monitoring.

    The contract administration office (CAO) shall monitor contracts 
containing provisioning requirements. As a minimum the CAO shall--
    (a) Ensure that the contractor understands the provisioning 
requirements;
    (b) Review contractor progress in the preparation of provisioning 
technical documentation and, if requested by the contracting officer or 
provisioning activity, inspect it for format and content;
    (c) Ensure the prime contractor flows-down provisioning requirements 
to any subcontractor charged with preparation of documentation;
    (d) Advise the contracting office or provisioning activity of delays 
in delivery of provisioning technical documentation or other related 
problems (see FAR subpart 42.11);
    (e) Ensure contractor compliance with contract requirements 
concerning the assignment of national stock numbers; and
    (f) Ensure that the contractor complies with contractual criteria 
for release of long lead time items.



Sec. 217.7603-3  Negotiating and executing supplemental agreements.

    (a) The administrative contracting officer (ACO) shall definitize 
provisioned items orders within the prescribed schedule.
    (b) If the provisioned items order does not contain a delivery date, 
or the contractor cannot meet the date, the ACO shall coordinate the 
negotiated schedule with the contracting officer

[[Page 124]]

or provisioning activity before execution of the supplemental agreement.
    (c) The ACO shall maintain records of provisioned items orders 
showing--
    (1) The adequacy of obligated funds;
    (2) Due dates for price proposals; and
    (3) Actions taken to obtain additional funds or to deobligate excess 
funds.



                   Subpart 217.77--Over and Above Work



Sec. 217.7700  Scope of subpart.

    This subpart prescribes policies and procedures for acquisition of 
over and above work.



Sec. 217.7701  Procedures.

    (a) Contracts for the performance of maintenance, overhaul, 
modification, and repair of various items (e.g., aircraft, engines, 
ground support equipment, ships) generally contain over and above work 
requirements. When they do, the contracting officer shall establish a 
separate contract line item for the over and above work.
    (b) Over and above requirements task the contractor to identify 
needed repairs and recommend corrective action during contract 
performance. The contractor submits a work request to identify the over 
and above work and, as appropriate, the Government authorizes the 
contractor to proceed.
    (c) The clause at 252.217-7028, Over and Above Work, requires the 
contractor and the contracting officer responsible for administering the 
contract to negotiate specific procedures for Government administration 
and contractor performance of over and above work requests.
    (d) The contracting officer may issue a blanket work request 
authorization describing the manner in which individual over and above 
work requests will be administered and setting forth a dollar limitation 
for all over and above work under the contract. The blanket work request 
authorization may be in the form of a letter or contract modification 
(Standard Form 30).
    (e) Over and above work requests are within the scope of the 
contract. Therefore, procedures in subpart 217.74, Undefinitized 
Contractual Actions, do not apply.
    (f) To the maximum extent practical, over and above work shall be 
negotiated prior to performance of the work.



Sec. 217.7702  Contract clause.

    Use the clause at 252.217-7028, Over and Above Work, in 
solicitations and contracts containing requirements for over and above 
work, except as provided for in subpart 217.71.

[[Page 125]]



                  SUBCHAPTER D--SOCIOECONOMIC PROGRAMS





PART 219--SMALL BUSINESS PROGRAMS--Table of Contents




Sec.
219.000  Scope of part.
219.001  Definitions.

                         Subpart 219.2--Policies

219.201  General policy.
219.202  Specific policies.
219.202-1  Encouraging small business participation in acquisitions.
219.202-5  Data collection and reporting requirements.

   Subpart 219.3--Determination of Status as a Small Business Concern

219.301  Representation by the offeror.
219.302  Protesting a small business representation.
219.302-70  Protesting a small disadvantaged business representation.
219.304  Solicitation provisions.

    Subpart 219.4--Cooperation With the Small Business Administration

219.401  General.

              Subpart 219.5--Set-Asides for Small Business

219.501  General.
219.502  Setting aside acquisitions.
219.502-1  Requirements for setting aside acquisitions.
219.502-2  Total set-asides.
219.502-2-70  Total set-asides for small disadvantaged business 
          concerns.
219.502-3  Partial set-asides.
219.502-4  Methods of conducting set-asides.
219.504  Set aside program order of precedence.
219.505  Rejecting Small Business Administration recommendations.
219.506  Withdrawing or modifying set-asides.
219.508  Solicitation provisions and contract clauses.
219.508-70  Solicitation provisions and contract clauses.

    Subpart 219.6--Certificates of Competency and Determinations of 
                               Eligibility

219.602  Procedures.
219.602-1  Referral.
219.602-3  Resolving differences between the agency and the Small 
          Business Administration.

 Subpart 219.7--Subcontracting With Small Business, Small Disadvantaged 
            Business and Women-Owned Small Business Concerns

219.702  Statutory requirements.
219.703  Eligibility requirements for participating in the program.
219.704  Subcontracting plan requirements.
219.705  Responsibilities of the contracting officer under the 
          subcontracting assistance program.
219.705-2  Determining the need for a subcontracting plan.
219.705-4  Reviewing the subcontracting plan.
219.706  Responsibilities of the cognizant administrative contracting 
          officer.
219.708  Solicitation provisions and contract clauses.

 Subpart 219.8--Contracting With the Small Business Administration (The 
                              8(a) Program)

219.803  Selecting acquisitions for the 8(a) Program.
219.804  Evaluation, offering, and acceptance.
219.804-1  Agency evaluation.
219.808  Contract negotiation.
219.808-1  Sole source.
219.811  Preparing the contracts.
219.811-1  Sole source.
219.811-3  Contract clauses.

  Subpart 219.10--Small Business Competitiveness Demonstration Program

219.1005  Applicability.
219.1006  Procedures.
219.1007  Solicitation provisions.

 Subpart 219.70--Evaluation Preference for Small Disadvantaged Business 
                             (SDB) Concerns

219.7000  Policy.
219.7001  Applicability.
219.7002  Procedures.
219.7003  Solicitation provisions and contract clauses.

              Subpart 219.71--Pilot Mentor-Protege Program

219.7100  Scope.
219.7101  Policy.
219.7102  General.
219.7103  Procedures.
219.7103-1  General.
219.7103-2  Contracting officer responsibilities.

[[Page 126]]

219.7104  Developmental assistance costs eligible for reimbursement or 
          credit.
219.7105  Reporting.

 Subpart 219.72--Evaluation Preference for Small Disadvantaged Business 
        (SDB) Concerns in Construction Acquisitions--Test Program

219.7200  Policy.
219.7201  Administration of the test program.
219.7202  Applicability.
219.7203  Procedures.
219.7204  Contract clause.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36353, July 31, 1991, unless otherwise noted.



Sec. 219.000  Scope of part.

    This part also implements 10 U.S.C. 2323, which sets a goal for DoD 
for each of fiscal years 1987 through 2000 to--
    (1) Award five percent of contract and subcontract dollars to small 
disadvantaged business (SDB) concerns, historically black colleges and 
universities (HBCUs), and minority institutions (MIs) (See part 226 for 
policy/procedures on HBCU/MIs); and
    (2) Maximize the number of such entities in DoD contracting and 
subcontracting.

[56 FR 36353, July 31, 1991, as amended at 59 FR 27670, May 27, 1994]



Sec. 219.001  Definitions.

    The definition of small disadvantaged business concern to be used 
for DoD contracts is in the provision at 252.219-7000 and is more 
restrictive than the definition in FAR 19.001.



                         Subpart 219.2--Policies



Sec. 219.201  General policy.

    (a) The DoD will use the section 8(a) program, small disadvantaged 
business set asides and evaluation preferences, advance payments, 
outreach, and technical assistance to meet its five percent goal for 
contract and subcontract awards to small disadvantaged businesses.
    (c)(2) For the defense agencies, the director of the Office of Small 
and Disadvantaged Business Utilization shall be appointed by, be 
responsible to, and report directly to the director deputy director of 
the defense agency.
    (7) The responsibility for assigning small business technical 
advisors is delegated to the head of the contracting activity.
    (9) Contracting activity small business specialists perform this 
function by--
    (A) Reviewing and making recommendations for all acquisitions over 
$10,000, except small business-small purchase set-asides;
    (B) Making the review before issue of the solicitation or contract 
modification and documenting it on DD Form 2579, Small Business 
Coordination Record;
    (C) Referring recommendations which have been rejected by the 
contracting officer to the Small Business Administration (SBA) 
procurement center representative. However, in the case of a rejected 
small disadvantaged business set-aside recommendation or if an SBA 
representative is not assigned or available, the specialist refers the 
matter to the specialist's appointing authority.
    (d) Contracting and contract administration activities appoint small 
business specialists as directed by DoDD 4205.1, DoD Small Business and 
Small Disadvantaged Business Utilization Programs. Specialists--
    (i) Report directly and are responsible only to their appointing 
authority;
    (ii) Make sure that the contracting activity takes the necessary 
actions to implement small business, historically black college and 
university/minority institution, and labor surplus area programs;
    (iii) Advise and assist contracting, program manager, and 
requirements personnel on all matters which affect small businesses, 
historically black colleges and universities or minority institutions, 
and labor surplus area concerns;
    (iv) Aid, counsel, and assist small business, small disadvantaged 
business, historically black colleges and universities, and minority 
institutions by providing--
    (A) Advice concerning acquisition procedures;
    (B) Information regarding proposed acquisitions; and

[[Page 127]]

    (C) Instructions on preparation of proposals in the interpretation 
of standard clauses, representations, and certifications;
    (v) Maintain an outreach program (including participation in 
Government-industry conferences and regional interagency small business 
councils) designed to locate and develop information on the technical 
competence of small business, small disadvantaged business concerns, 
historically black colleges and universities, and minority institutions;
    (vi) Ensure that financial assistance, available under existing 
regulations, is offered and also assist small business concerns in 
obtaining payments under their contracts, late payment, interest 
penalties, or information on contractual payment provisions;
    (vii) Provide assistance to contracting officers in determining the 
need for and acceptability of subcontracting plans and assist 
administrative contracting officers (see 219.706(a)(ii)) in evaluating, 
monitoring, reviewing, and documenting contract performance to determine 
compliance with subcontracting plans; and
    (viii) Recommend to the appointing authority the activity's small 
and disadvantaged business program goals, including goal assignments to 
subordinate contracting offices; monitor the activity's performance 
against these goals; and recommend action to correct reporting errors/
deficiencies.
219.202  Specific policies.



Sec. 219.202-1  Encouraging small business participation in acquisitions.

    The DoD will maximize the use of small business concerns as planned 
producers in the Industrial Readiness Planning Program.



Sec. 219.202-5  Data collection and reporting requirements.

    Determine the premium percentage to be entered in Item D4E of the 
Individual Contract Action Report (DD Form 350), (see 253.204-70), as 
follows --
    (1) For small disadvantaged business or historically black college 
and university/minority institution set-asides, divide the difference 
between the fair market price and the award price by the fair market 
price.
    (2) For 219.7000 evaluation preference awards, divide the difference 
between the low responsive offer and the award price by the low 
responsive offer.
    (3) For 219.502-3 preferential consideration awards, divide the 
difference between the award price on the non-set-aside portion and the 
award price on the set-aside portion by the award price on the non-set-
aside portion.
    (b) Within 60 days after the end of each fiscal year, departments 
and agencies shall submit the report to the Secretary of Defense, who 
will report to the SBA on behalf of all DoD departments and agencies. 
Reports must include--
    (i) Justification for failure to meet goals established by the 
Office of the Secretary of Defense; and
    (ii) Planned actions for increasing participation by such firms in 
future contract awards.



   Subpart 219.3--Determination of Status as a Small Business Concern



Sec. 219.301  Representation by the offeror.

    (a) A concern must qualify as a small disadvantaged business (SDB) 
on the date of submission of its initial offer including price to be 
eligible for--
    (i) Award under a small disadvantaged business set-aside;
    (ii) Preferential consideration as an SDB under a partial set-aside; 
or
    (iii) An evaluation preference for SDBs.
    (b) The contracting officer shall protest an offeror's 
representation that it is a small disadvantaged business concern when--
    (i) There is conflicting evidence;
    (ii) The offeror certifies that the Small Business Administration 
previously determined the concern to be non-disadvantaged; or
    (iii) The offeror represents its ownership as other than Black 
American, Hispanic American, Native American (including Indian tribes 
and Native Hawaiian organizations), Asian Pacific American, or 
Subcontinent Asian American; unless the offeror--
    (A) Represents that it currently is in the section 8(a) program; or

[[Page 128]]

    (B) Certifies that--
    (1) Within the six months preceding submission of its offer, the 
offeror was determined by the Small Business Administration to be 
socially and economically disadvantaged; and
    (2) No circumstances have changed to vary that determination.

[56 FR 36353, July 31, 1991, as amended at 59 FR 22131, Apr. 29, 1994]
219.302  Protesting a small business representation.



Sec. 219.302-70  Protesting a small disadvantaged business representation.

    This section applies to protests of a small business concern's 
status as socially and economically disadvantaged. Protests of a 
concern's size are processed under FAR 19.302. Any offeror, the 
contracting officer, or the Small Business Administration (SBA) may 
protest a concern's representation of disadvantaged status.
    (a) An offeror may protest a concern's representation of 
disadvantaged status by filing a protest with the contracting officer. 
The protest--
    (1) Must be filed within the times specified in FAR 19.302(d)(1); 
and
    (2) Must contain specific detailed evidence supporting the basis of 
protest.
    (b) The contracting officer or the SBA may protest a concern's 
representation of disadvantaged status at any time.
    (1) If a contracting officer's protest is based on information 
brought to his/her attention by a party ineligible to protest directly 
or ineligible to protest under the timeliness standard, the contracting 
officer must be persuaded by the evidence presented before adopting the 
grounds for protest as his or her own.
    (2) The SBA protests a concern's representation of disadvantaged 
status by filing directly with its Office of Program Eligibility and 
notifying the contracting officer.
    (c) The contracting officer shall return untimely protests to the 
protestor. This includes protests filed before bid opening or 
notification of apparent successful offeror.
    (d) Upon receipt of a timely protest, the contracting officer shall 
withhold award and forward the protest to the SBA Office of Program 
Eligibility, Office of Minority Small Business and Capitol Ownership 
Development, 409 3rd Street, SW., Washington, DC 20416. Send SBA--
    (1) The protest;
    (2) The date the protest was received and a determination of 
timeliness;
    (3) A copy of the protested concern's self-certification of 
disadvantaged status; and
    (4) The date of bid opening or date on which notification of 
apparent successful offeror was sent to unsuccessful offerors.
    (e) Do not withhold award when--
    (1) The contracting officer makes a written determination that award 
must be made to protect the public interest or
    (2) The offeror has certified that--
    (i) Within the six months preceding submission of its offer, the SBA 
has determined the concern to be socially and economically 
disadvantaged; and
    (ii) No circumstances have changed to vary that determination.
    (f) The SBA Director, Office of Program Eligibility, will determine 
the disadvantaged status of the challenged offeror and notify the 
contracting officer, the challenged offeror, and the protestor. Award 
may be made on the basis of that determination. The determination is 
final for purposes of the instant acquisition, unless--
    (1) It is appealed; and
    (2) The contracting officer receives the appeal decision before 
award.
    (g) If the contracting officer does not receive an SBA determination 
within 15 working days after the SBA's receipt of the protest, the 
contracting officer shall presume that the challenged offeror is 
socially and economically disadvantaged. Do not use the presumption as a 
basis for award without first inquiring as to when a determination can 
be expected and waiting for the determination, unless further delay in 
award would be disadvantageous to the Government.
    (h) An SBA determination may be appealed by--
    (1) The interested party whose protest has been denied;
    (2) The concern whose status was protested; or

[[Page 129]]

    (3) The contracting officer.
    The appeal must be filed with the SBA's Associate Administrator for 
Minority Small Business and Capital Ownership Development within five 
working days after receipt of the determination. If the contracting 
officer receives the SBA's decision on the appeal before award, the 
decision shall apply to the instant acquisition. If the decision is 
received after award, it will apply to future acquisitions.



Sec. 219.304  Solicitation provisions.

    (b) Use the provision at 252.219-7000, Small Disadvantaged Business 
Concern Representation (DoD Contracts) instead of the provision at FAR 
52.219-2, Small Disadvantaged Business Concern Representation.



    Subpart 219.4--Cooperation With the Small Business Administration



Sec. 219.401  General.

    (b) The contracting activity small business specialist is the 
primary activity focal point for interface with the SBA.



              Subpart 219.5--Set-Asides for Small Business



Sec. 219.501  General.

    (g) This repetitive set-aside procedure applies to DoD.
    (S-70) When a product or service has been acquired successfully by a 
contracting office as a small disadvantaged business set-aside, all 
future requirements of that office for that product or service shall be 
acquired as small disadvantaged business set-asides, except those--
    (1) Processed under small purchase procedures; or
    (2) For which the contracting officer determines there is no 
reasonable expectation that the criteria for a small disadvantaged 
business set-aside can be met (see 219.502-2-70(a)).

    Effective Date Note: At 60 FR 54955, Oct. 27, 1995, in Sec. 219.501, 
(S-70) was stayed indefinitely.
219.502  Setting aside acquisitions.



Sec. 219.502-1  Requirements for setting aside acquisitions.

    Do not set aside acquisitions for--
    (1) Supplies which were developed and financed, in whole or in part, 
by Canadian sources under the U.S.-Canadian Defense Development Sharing 
Program; or
    (2) Architect-engineer services for military construction or family 
housing projects of $85,000 or more (10 U.S.C. 2855), including 
indefinite delivery and indefinite quantity contracts if the value of 
all anticipated orders is expected to total $85,000 or more.

[58 FR 28465, May 13, 1993]



Sec. 219.502-2  Total set-asides.

    (a) Unless the contracting officer determines that the criteria for 
set-aside cannot be met, set aside for small business concerns 
acquisitions for--
    (i) Construction, including maintenance and repairs, under $2 
million;
    (ii) Dredging under $1 million; and
    (iii) Architect-engineer services for military construction or 
family housing projects of under $85,000.

[58 FR 28465, May 13, 1993]



Sec. 219.502-2-70  Total set-asides for small disadvantaged business concerns.

    (a) Except as provided in paragraphs (b) and (c), the contracting 
officer shall set aside an acquisition for small disadvantaged 
businesses when there is a reasonable expectation that--
    (1) Offers will be received from at least two responsible small 
disadvantaged business (SDB) concerns who--
    (i) Can comply with the FAR 52.219-14 limitations on subcontracting; 
or
    (ii) In the case of an SDB regular dealer owned by an Indian tribe, 
including an Alaska Native Corporation, will provide the supplies of a 
small business for contracts awarded during fiscal years 1994 and 1995, 
as provided in section 8051 of Pub. L. 103-139 and section 8012 of Pub. 
L. 103-335; or,
    (iii) In the case of other SDB regular dealers, will provide the 
supplies of SDBs (except as provided in Alternate I of the clause at 
252.219-7002, Notice of Small Disadvantaged Business Set-Aside).

[[Page 130]]

    (2) Award will be made at not more than ten percent above fair 
market price; and
    (3) Scientific and/or technological talent consistent with the 
demands of the acquisition will be offered.
    (b) Do not set aside acquisitions for SDBs when--
    (1) The product or service has been successfully acquired as a small 
business set-aside (see FAR 19.501(g));
    (2) The acquisition is for construction, including maintenance and 
repairs, and is under $2 million, or is for dredging under $1 million;
    (3) The acquisition is for architect-engineer services or 
construction design for military construction projects, without regard 
to dollar value;
    (4) The acquisition is reserved for the 8(a) program;
    (5) The acquisition is processed under small purchase procedures; or
    (6) The acquisition is for commissary or exchange resale items.
    (c) Pursuant to 10 U.S.C. 2323(g), the Office of Small and 
Disadvantaged Business Utilization, Office of the Under Secretary of 
Defense (Acquisition & Technology), is responsible for determining 
whether use of small disadvantaged business (SDB) set-asides has caused 
a particular industry category to bear a disproportionate share of the 
contracts awarded by a particular contracting activity to achieve its 
SDB goal. Upon making a determination that a particular industry is 
bearing a disproportionate share, the OUSD(A&T) SADBU shall limit the 
use of total SDB set-asides in the affected industry category, at the 
contracting activity. This limitation shall not apply to solicitations 
that already had been synopsized as SDB set-asides. Forward requests for 
a determination through agency channels to OUSD(A&T) SADBU and include--
    (1) The standard industrial (SIC) code(s) affected;
    (2) Supporting information to justify the request, including dollars 
and percentages by the contracting activity, under the affected SIC 
code(s) for the previous two fiscal years and current fiscal year to 
date for--
    (i) Total awards;
    (ii) Total awards to small businesses;
    (iii) Total awards to SDBs; and
    (iv) Awards to SDBs under the SDB set-aside program.
    (d) See 205.207(d) for information on Commerce Business Daily 
synopsis.

[56 FR 36353, July 31, 1991, as amended at 59 FR 24959, May 13, 1994; 59 
FR 27670, May 27, 1994; 60 FR 29498, June 5, 1995]

    Effective Date Note: At 60 FR 54955, Oct. 27, 1995, Sec. 219.502-2-
70 was stayed indefinitely.



Sec. 219.502-3  Partial set-asides.

    When a portion of an acquisition is to be set aside for small 
business concerns, except acquisitions for commissary or exchange 
resale, the contracting officer shall give small disadvantaged business 
concerns preferential consideration by using the procedures in 252.219-
7001, Notice of Partial Small Business Set-Aside with Preferential 
Consideration for Small Disadvantaged Business (SDB) Concerns.



Sec. 219.502-4  Methods of conducting set-asides.

    (b) Offers on a small disadvantaged business (SDB) set-aside from 
concerns that do not qualify as SDB concerns shall be considered 
nonresponsive and shall be rejected.

    Effective Date Note: At 60 FR 54955, Oct. 27, 1995, Sec. 219.502-4 
was stayed indefinitely.



Sec. 219.504  Set-aside program order of precedence.

    (b) The order of precedence for DoD is (except see 219.803(c) and 
226.71)--
    (i) Total set-aside for small disadvantaged business concerns;
    (ii) Total set-aside for small business concerns;
    (iii) Partial set-aside for small business concerns with 
preferential consideration for small disadvantaged business concerns.

[56 FR 36353, July 31, 1991, as amended at 59 FR 12192, Mar. 16, 1994]

    Effective Date Note: At 60 FR 54955, Oct. 27, 1995, in Sec. 219.504, 
paragraph (b)(i) was stayed indefinitely.



Sec. 219.505  Rejecting Small Business Administration recommendations.

    (b) The designee shall be at a level no lower than chief of the 
contracting office.

[[Page 131]]



Sec. 219.506  Withdrawing or modifying set-asides.

    (a) Do not withdraw small disadvantaged business set-asides for 
reasons of price reasonableness unless the low responsive responsible 
offer exceeds fair market price by more than ten percent.

    Effective Date Note: At 60 FR 54955, Oct. 27, 1995, Sec. 219.506 was 
stayed indefinitely.



Sec. 219.508  Solicitation provisions and contract clauses.

    (d) Use the clause at 252.219-7001, Notice of Partial Small Business 
Set-Aside with Preferential Consideration for Small Disadvantaged 
Business Concerns, instead of the clause in FAR 52.219-7, Notice of 
Partial Small Business Set-Aside. Use the clause with its Alternate I 
when the contracting officer determines that there are no small 
disadvantaged business manufacturers that can meet the requirements of 
the solicitation.
    (e) Use the clause at 52.219-14, Limitations on Subcontracting, also 
in small disadvantaged business set-asides.

[56 FR 36353, July 31, 1991, as amended at 57 FR 42630, Sept. 15, 1992]

    Effective Date Note: At 60 FR 54955, Oct. 27, 1995, in Sec. 219.508, 
paragraph (e) was stayed indefinitely.



Sec. 219.508-70  Solicitation provisions and contract clauses.

    Use the clause at 252.219-7002, Notice of Small Disadvantaged 
Business Set-Aside, in solicitations and contracts for small 
disadvantaged business set-asides. Use the clause with its Alternate I 
when the contracting officer determines that there are no small 
disadvantaged business manufacturers that can meet the requirements of 
the solicitation.

    Effective Date Note: At 60 FR 54955, Oct. 27, 1995, Sec. 219.508-70 
was stayed indefinitely.



    Subpart 219.6--Certificates of Competency and Determinations of 
                               Eligibility

219.602  Procedures.



Sec. 219.602-1  Referral.

    When making a nonresponsibility determination on a small business 
concern, the contracting officer shall notify the contracting activity's 
small business specialist.

[58 FR 28465, May 13, 1993, as amended at 60 FR 40107, Aug. 7, 1995]



Sec. 219.602-3  Resolving differences between the agency and the Small Business Administration.

    (c)(i) If the contracting officer believes the agency should appeal, 
the contracting officer shall immediately inform the departmental 
director of the Office of Small and Disadvantaged Business Utilization, 
and send the director, through departmental channels--
    (A) A request for appeal, summarizing the issues. The request must 
be sent to arrive within five working days after receipt of the SBA 
Central Office's written position.
    (B) An appeal file, documenting the contracting activity's position. 
The file must be sent to arrive within five working days after 
transmission of the request.
    (ii) The departmental director will determine whether the agency 
will appeal and will notify the SBA of the agency's intent.



 Subpart 219.7--Subcontracting with Small Business, Small Disadvantaged 
            Business and Women-Owned Small Business Concerns



Sec. 219.702  Statutory requirements.

    (a) Section 834 of Public Law 101-189, as amended, requires the DoD 
to establish a test program to determine whether comprehensive 
subcontracting

[[Page 132]]

plans on a corporate, division, or plant-wide basis will reduce 
administrative burdens while enhancing subcontracting opportunities for 
small and small disadvantaged business concerns.
    (i) The test program--
    (A) Will be conducted--
    (1) From October 1, 1990, through September 30, 1998;
    (2) In accordance with the DoD test plan, ``Test Program for 
Negotiation of Comprehensive Small Business Subcontracting Plans;'' and
    (3) By the military departments and agencies through specifically 
designated contracting activities; and
    (B) Permits contractors selected by the designated contracting 
activities to--
    (1) Negotiate plant, division, or company-wide comprehensive 
subcontracting plans instead of individual contract subcontracting 
plans; and
    (2) Use the comprehensive plans in all DoD contracts which require a 
subcontracting plan.
    (ii) The comprehensive subcontracting plans will--
    (A) Be negotiated on an annual basis by the designated contracting 
activities;
    (B) Be incorporated by the contractors' cognizant contract 
administration activity into all of the contractors' active DoD 
contracts which require a plan;
    (C) Be used by all DoD contracting officers in contracts, which 
require a plan, awarded the selected contractors during the test period; 
and
    (D) Not be subject to application of liquidated damages during the 
period of the test program (section 402, Pub. L. 101-574).

[56 FR 36353, July 31, 1991, as amended at 60 FR 35668, July 10, 1995; 
61 FR 39900, July 31, 1996]



Sec. 219.703  Eligibility requirements for participating in the program.

    (a) Qualified nonprofit agencies for the blind and other severely 
disabled, that have been approved by the Committee for Purchase from 
People Who Are Blind or Severely Disabled under the Javits-Wagner-O'Day 
Act (41 U.S.C. 46-48), are eligible as a result of section 9077 of Pub. 
L. 102-396, and subsequent Appropriations Acts, and sections 808 of Pub. 
L. 102-484 and 804 of Pub. L. 103-337 through September 30, 1997, to 
participate in the program. Under this authority, subcontracts awarded 
to such entities may be counted toward the prime contractor's small 
business subcontracting goal through fiscal year 1997.
    (2)(A) To be eligible as an SDB subcontractor, a concern must meet 
the definition in the provision at 252.219-7000, Small Disadvantaged 
Business Concern Representation (DoD Contracts).
    (B) To be eligible as a historically black college or university or 
minority institution subcontractor, such entity must meet the definition 
in the clause at 252.219-7003, Small Business and Small Disadvantaged 
Business Subcontracting Plan (DoD Contracts).
    (b) A contractor may also rely on the written representation as to 
status of--
    (i) A historically black college or university or minority 
institution; or
    (ii) A qualified nonprofit agency for the blind and other severely 
handicapped approved by the Committee for Purchase from the Blind and 
Other Severely Handicapped.

[57 FR 42630, Sept. 15, 1992, as amended at 58 FR 28465, May 13, 1993; 
60 FR 13075, Mar. 10, 1995; 60 FR 41157, Aug. 11, 1995; 60 FR 61596, 
Nov. 30, 1995; 61 FR 50535, Sept. 26, 1996]



Sec. 219.704  Subcontracting plan requirements.

    (a)(1) The goal for use of small disadvantaged business concerns 
shall include subcontracts with historically black colleges and 
universities and minority institutions (see subpart 226.70), in addition 
to subcontracts with small disadvantaged business concerns. Subcontracts 
with historically black colleges and universities and minority 
institutions do not have to be included in the small disadvantaged 
business goal in commercial items subcontracting plans.
    (4) In those subcontracting plans which specifically identify small, 
small disadvantaged, and women-owned small businesses, prime contractors 
shall notify the administrative contracting officer of any substitutions 
of firms that are not small, small disadvantaged, or women-owned small 
businesses for the firms listed in the

[[Page 133]]

subcontracting plan. Notifications shall be in writing and shall occur 
within a reasonable period of time after award of the subcontract. 
Contractor-specified formats shall be acceptable.

[60 FR 61596, Nov. 30, 1995, as amended at 61 FR 18687, Apr. 29, 1996]
219.705  Responsibilities of the contracting officer under the 
subcontracting assistance program.



Sec. 219.705-2  Determining the need for a subcontracting plan.

    (d) See 215.605 for unique DoD requirements.

[59 FR 27670, May 27, 1994]



Sec. 219.705-4  Reviewing the subcontracting plan.

    (d) Challenge any subcontracting plan that does not contain positive 
goals and consider the extent to which an offeror plans to use 
competition restricted to small disadvantaged business concerns, 
historically black colleges and universities, or minority institutions. 
A small disadvantaged business goal of less than five percent must be 
approved two levels above the contracting officer.



Sec. 219.706  Responsibilities of the cognizant administrative contracting officer.

    (a)(i) The contract administration office also is responsible for 
reviewing, evaluating, and approving master subcontracting plans.
    (ii) The small business specialist supports the administrative 
contracting officer in evaluating a contractor's performance and 
compliance with its subcontracting plan.



Sec. 219.708  Solicitation provisions and contract clauses.

    (b)(1)(A) Use the clause at 252.219-7003, Small, Small Disadvantaged 
and Women-Owned Small Business Subcontracting Plan (DoD Contracts), in 
solicitations and contracts that contain the clause at FAR 52.219-9, 
Small, Small Disadvantaged and Women-Owned Small Business Subcontracting 
Plan.
    (B) In contracts with contractors which have comprehensive 
subcontracting plans approved under the test program described in 
219.702(a), use the clause at 252.219-7004, Small, Small Disadvantaged 
and Women-Owned Small Business Subcontracting Plan (Test Program), 
instead of the clauses at 252.219-7003, Small, Small Disadvantaged and 
Women-Owned Small Business Subcontracting Plan (DoD Contracts), and FAR 
52.219-9, Small, Small Disadvantaged and Women-Owned Small Business 
Subcontracting Plan.
    (2) In contracts with contractors which have comprehensive 
subcontracting plans approved under the test program described in 
219.702(a), do not use the clause at FAR 52.219-16, Liquidated Damages--
Small Business Subcontracting Plan.
    (c)(1) Do not use the clause at FAR 52.219-10, Incentive 
Subcontracting Program for Small and Small Disadvantaged Business 
Concerns.
    (A) When contracting by negotiation, use the clause at 252.219-7005, 
Incentive for Subcontracting with Small Businesses, Small Disadvantaged 
Businesses, Historically Black Colleges and Universities, and Minority 
Institutions, in all solicitations and contracts that contain the clause 
at FAR 52.219-9, Small, Small Disadvantaged and Women-Owned Small 
Business Subcontracting Plan. Incentives for exceeding SDB 
subcontracting goals shall be paid only if an SDB subcontracting goal 
was exceeded as a result of actual subcontract awards to SDBs, and not 
as a result of developmental assistant credit under the Pilot Mentor-
Protege Program (see subpart 219.71).
    (B) Use the clause at 252.219-7005 with its Alternate I when, in the 
judgement of the contracting officer, inclusion of an incentive is 
necessary to increase subcontracting opportunities for other small 
businesses.
    (C) Determine the percentage to be negotiated and used in the clause 
by considering the type and extent of effort required to exceed the 
goal, for example--
    (1) Unique outreach programs;
    (2) Use of small disadvantaged businesses, historically black 
colleges and universities, and minority institutions in nontraditional 
areas;
    (3) Technical assistance to qualify or assist these entities; and

[[Page 134]]

    (4) Proximity of subcontractors to the prime.
    (D) Do not use the clauses at 252.219-7005 and FAR 52.219-10 in 
contracts with contractors which have comprehensive subcontracting plans 
approved under the test program described in 219.702(a).
    (c)(2) For negotiated acquisitions of $10 million or more, the 
contracting officer may use an award fee provision instead of the 
incentive provision required by (c)(1)(A). When an award fee provision 
is used, do not use the clauses at 252.219-7005, Incentive for 
Subcontracting with Small Businesses, Small Disadvantaged Businesses, 
Historically Black Colleges and Universities, and Minority Institutions, 
and FAR 52.219-10, Incentive Subcontracting Program for Small and Small 
Disadvantaged Business Concerns. Do not use award fee provisions in 
contracts with contractors which have comprehensive subcontracting plans 
approved under the test program described in 219.702(a).

[56 FR 36353, July 31, 1991, as amended at 56 FR 67213, Dec. 30, 1991; 
61 FR 39901, July 31, 1996]



 Subpart 219.8--Contracting With the Small Business Administration (The 
                              8(a) Program)



Sec. 219.803  Selecting acquisitions for the 8(a) Program.

    (b) Contracting activities should respond to SBA requests for 
contract support within 30 calendar days after receipt.
    (c) Before considering the set-aside order of precedence in 
219.504(b), review the acquisition for offering under the 8(a) Program.
219.804  Evaluation, offering, and acceptance.



Sec. 219.804-1  Agency evaluation.

    When SBA asks for a requirement for the 8(a) Program, offer the 
requirement if appropriate, and do not use the small disadvantaged 
business set-aside procedure. If an acquisition, other than a repetitive 
acquisition (as described in FAR 19.804-4), was synopsized using either 
of the notices in 205.207(d) (i) or (ii) before receipt of the SBA 
request, the request does not have to be honored.
    (f) The 8(a) firms should be offered the opportunity to give a 
technical presentation.
219.808  Contract negotiation.



Sec. 219.808-1  Sole source.

    (b) Section 813 of Pub. L. 102-190 authorizes DoD to waive Miller 
Act requirements for performance and payment bonds under 8(a) 
construction contracts awarded before October 1, 1994. Section 813 
requires for each of fiscal years 1992, 1993, and 1994, that DoD make 
every reasonable effort to award no fewer than 30 contracts using this 
bond waiver authority.
    (i) A determination to waive bonds shall be approved at a level 
above the contracting officer. The contracting officer may consider 
waiver of bonding when--
    (A) The contractor is unable to obtain the requisite bonds from a 
surety. The contracting officer will verify with surety companies, SBA, 
and other appropriate sources that the contractor cannot obtain the 
required bonding.
    (B) The contractor has received less than five bond waivers while a 
participant in the 8(a) program.
    (C) The contractor is otherwise responsible as determined in 
accordance with FAR 9.104. Also, see 232.172.
    (ii) The authority of Section 813 shall not be used--
    (A) When SBA notifies the contracting officer that it will waive 
bonding requirements in accordance with 13 CFR 124.305;
    (B) For requirements expected to exceed $3 million; or
    (C) When competitive procedures described in 19.805 are anticipated.
    (iii) The contracting officer shall require the contractor to 
establish a special bank account before award (see 252.219-7007) to 
ensure protection of all suppliers and subcontractors expected to 
provide materials or services for performance of the contract.
    (iv) Upon award of a contract using these procedures, the 
contracting officer shall prepare a report to include the following 
information (RCS DD-ACQ(AR)1930). Accumulate reports at each buying 
activity and forward, at

[[Page 135]]

the end of each fiscal quarter, through agency channels to the Director, 
Office of Small and Disadvantaged Business Utilization, Office of the 
Under Secretary of Defense for Acquisition and Technology.
    (A) Title/Description of construction project.
    (B) Estimated dollar amount of the contract.
    (C) Name of contracting activity and contracting officer.
    (D) Name and address of contractor.
    (E) Contract number and award date.

[57 FR 38287, Aug. 24, 1992, as amended at 58 FR 28465, May 13, 1993; 59 
FR 27670, May 27, 1994]
219.811  Preparing the contracts.



Sec. 219.811-1  Sole source.

    (b)(5) See also 219.808-1(b).

[57 FR 38287, Aug. 24, 1992]



Sec. 219.811-3  Contract clauses.

    (a) Use the clause at FAR 52.219-11, Special 8(a) Contract 
Conditions, with 252.219-7007, Alternate A, when the contracting office 
has waived performance and payment bond requirements in accordance with 
219.808-1(b).
    (b) Use the clause at FAR 52.219-12, Special 8(a) Subcontract 
Conditions, with 252.219-7007, Alternate B, when the contracting office 
has waived performance and payment bond requirements in accordance with 
219.808-1(b).
    (c) Use the clause at FAR 52.219-17, Section 8(a) Award, with 
252.219-7007, Alternate C, when the contracting office has waived 
performance and payment bond requirements in accordance with 219.808-
1(b).

[57 FR 38287, Aug. 24, 1992]



  Subpart 219.10--Small Business Competitiveness Demonstration Program



Sec. 219.1005  Applicability.

    (a) Dredging (SIC 1629, FPDS Y216 and Z216) applies only to the Army 
Corps of Engineers.
    (3)(A) Architect-engineering services in support of military 
construction projects or military family housing projects are exempt 
from the Small Business competitiveness Demonstration Program, except 
for the emerging small business (ESB) set-aside requirements. 
Accordingly, these shall--
    (1) Be reviewed for possible award under the 8(a) program regardless 
of dollar value.
    (2) Not be set-aside for small business or small disadvantaged 
business if the estimated value is $85,000 or more (including indefinite 
delivery-indefinite quantity contracts if the value of all anticipated 
orders exceeds $85,000).
    (3) Be considered for ESB set-aside if the estimated value is both 
less than the emerging small business reserve amount and less than 
$85,000.
    (4) Be considered for small business set-aside (but not SDB set-
aside) if the estimated value is less than $85,000, regardless of 
whether small business set-asides for other architect-engineer services 
are prohibited under the Small Business Competitiveness Demonstration 
Program, when an ESB set-aside is not appropriate.
    (B) All requirements of the Small Business Competitiveness 
Demonstration Program apply to architect-engineer services in support of 
other than military construction projects or military housing objects, 
which otherwise meet criteria at FAR 19.1005(a)(3).
    (b) The targeted industry categories for DoD are:

------------------------------------------------------------------------
                                                                   SIC  
            Standard industrial classification (SIC)               Code 
------------------------------------------------------------------------
(1) Pharmaceutical preparations................................     2834
(2) Ammunition, except for small arms..........................     3483
(3) Ordnance and accessories, not elsewhere classified.........     3489
(4) Turbines and turbine generator sets........................     3511
(5) Aircraft engines and engine parts..........................     3724
(6) Guided missiles and space vehicles.........................     3761
(7) Space vehicle equipment, NEC...............................     3769
(8) Tanks and tank components..................................     3795
(9) Search and navigation equipment............................     3812
(10) Communication services, NEC...............................     4899
------------------------------------------------------------------------


[56 FR 36353, July 31, 1991, as amended at 59 FR 27670, May 27, 1994]



Sec. 219.1006  Procedures.

    (b)(1) During the period when small business set-asides cannot be 
considered for acquisitions in the four designated industry groups--
    (A) The restrictions at 219.502-2-70(b) (1) and (2) do not apply and 
the acquisitions shall be considered for small disadvantaged business 
set-asides; and

[[Page 136]]

    (B) The evaluation preference at 219.70 shall not be used. However, 
note the test program at 219.72 for construction acquisitions.
    (2) The Director, Office of Small and Disadvantaged Business 
Utilization, Office of the Under Secretary of Defense (Acquisition & 
Technology), will determine whether reinstatement of small business set-
asides are necessary to meet the agency goal and will recommend 
reinstatement to the Director, Defense Procurement. Military departments 
and defense agencies shall not reinstate small business set-asides 
unless directed by the Director, Defense Procurement.
    (d) Reporting requirements are at 204.670-9.

[58 FR 28466, May 13, 1993, as amended at 60 FR 61596, Nov. 30, 1995; 61 
FR 18687, Apr. 29, 1996]



Sec. 219.1007  Solicitation provisions.

    Do not use the clause at 252.219-7006, Notice of Evaluation 
Preference for Small Disadvantaged Business Concerns, in solicitations 
or contracts for the four designated industry groups.

[56 FR 36353, July 31, 1991, as amended at 57 FR 42630, Sept. 15, 1992]



 Subpart 219.70--Evaluation Preference for Small Disadvantaged Business 
                             (SDB) Concerns



Sec. 219.7000  Policy.

    Offers from small disadvantaged business concerns shall be given an 
evaluation preference in accordance with this subpart.



Sec. 219.7001  Applicability.

    (a) The evaluation preference shall be used in competitive 
acquisitions except as provided in paragraph (b) of this section and in 
219.1006(b)(1)(B).
    (b) Do not use the evaluation preference in acquisitions which--
    (1) Use small purchase procedures;
    (2) Are set-aside for small disadvantaged businesses;
    (3) Are set-aside for small businesses;
    (4) Are for commissary or exchange resale; or
    (5) Are for long distance telecommunications services.

[56 FR 36353, July 31, 1991, as amended at 60 FR 43563, Aug. 22, 1995; 
61 FR 18687, Apr. 29, 1996]



Sec. 219.7002  Procedures.

    (a) Give offers from small disadvantaged business concerns a 
preference in evaluation by adding a factor of ten percent to the price 
of all offers, except--
    (1) Offers from small disadvantaged business concerns, which have 
not waived the evaluation preference;
    (2) Offers from historically black colleges and universities or 
minority institutions, which have not waived the evaluation preference;
    (3) Otherwise successful offers of--
    (i) Eligible products under the Trade Agreements Act when the 
acquisition equals or exceeds the dollar threshold in FAR 25.402; or
    (ii) Qualifying country end products (see the definition in 
225.101); and
    (4) Offers where application of the factor would be inconsistent 
with a Memorandum of Understanding or other international agreement with 
a foreign government.
    (b) Apply the factor on a line item by line item basis or apply it 
to any group of items on which award may be made. Add other evaluation 
factors such as transportation costs or rent-free use of Government 
facilities to the offers before applying the ten percent factor.
    (c) Do not evaluate offers using the preference when it would cause 
award to be made at a price which exceeds fair market price by more than 
ten percent.
    (d) In partial small business set-asides, use the evaluation 
preference procedures set forth in the clause at 252.219-7001, Notice of 
Partial Small Business Set-Aside with Preferential Consideration for 
Small Disadvantaged Business Concerns, instead of the procedures in 
paragraphs (a) through (c) of this section.



Sec. 219.7003  Solicitation provisions and contract clauses.

    Use the clause at 252.219-7006, Notice of Evaluation Preference for 
Small Disadvantaged Business Concerns, in solicitations and contracts 
involving the

[[Page 137]]

evaluation preference, except those which include the clause at 252.219-
7001, Notice of Partial Small Business Set-Aside with Preferential 
Consideration for Small Disadvantaged Business Concerns. Use the clause 
with its Alternate I when the contracting officer determines that there 
are no small disadvantaged business manufacturers that can meet the 
requirements of the solicitation.



              Subpart 219.71--Pilot Mentor-Protege Program

    Source: 59 FR 27670, May 27, 1994, unless otherwise noted.



Sec. 219.7100  Scope.

    This subpart implements the Pilot Mentor-Protege Program established 
under section 831 of the National Defense Authorization Act for Fiscal 
Year 1991, Public Law 101-510, as amended. The purpose of the Program is 
to provide incentives for DoD contractors to assist small disadvantaged 
businesses in enhancing their capabilities and to increase participation 
of such firms in Government and commercial contracts. Qualified 
organizations employing the severely disabled, as defined in section 
8064A of Public Law 102-172, are also eligible to participate as protege 
firms.



Sec. 219.7101  Policy.

    DoD policy and procedures for implementation of the Program are 
contained in appendix I to chapter 2, Policy and Procedures for the DoD 
Pilot Mentor-Protege Program.



Sec. 219.7102  General.

    The Program includes--
    (a) Mentor firms, which are prime contractors with at least one 
active subcontracting plan negotiated under FAR subpart 19.7.
    (b) Protege firms, which are small disadvantaged business (SDB) 
concerns or qualified organizations employing the severely disabled, 
eligible for receipt of Federal contracts and selected by the mentor 
firm.
    (c) Mentor-protege agreements, which establish a developmental 
assistance program for a protege firm.
    (d) Incentives, which may be provided to mentor firms by the DoD 
including:
    (1) Reimbursement for developmental assistance costs through--
    (i) A separate contract;
    (ii) A separately priced contract line item on a DoD contract; or
    (iii) Inclusion of program cost in indirect expense pools.
    (2) Credit toward SDB subcontracting goals, established under a 
subcontracting plan negotiated under FAR subpart 19.7, for developmental 
assistance costs which are either reimbursed through indirect expense 
pools or are not reimbursed; or
    (3) A combination of reimbursement and credit.



Sec. 219.7103  Procedures.



Sec. 219.7103-1  General.

    The procedures for application, acceptance, and participation in the 
program are in appendix I to chapter 2, Policy and Procedures for the 
DoD Pilot Mentor-Protege Program. The Director of Small and 
Disadvantaged Business Utilization, Office of the Under Secretary of 
Defense (Acquisition and Technology) approves contractors as mentor 
firms, approves mentor-protege agreements, and forwards approved mentor-
protege agreements to the contracting officer when program funding is 
available through a DoD Program Manager.



Sec. 219.7103-2  Contracting officer responsibilities.

    Contracting officers shall--
    (a) Negotiate an advance agreement on the treatment of developmental 
assistance costs for credit, reimbursement, or both, if the mentor firm 
proposes such an agreement, or delegate authority to negotiate to the 
administrative contracting officer (see FAR 31.109).
    (b) Modify (without consideration) applicable contract(s) to 
incorporate the clause at 252.232-7005, Reimbursement of Subcontractor 
Advance Payments-DoD Pilot Mentor-Protege Program, when advance payments 
are provided by a mentor firm to a protege firm under the Program and 
the mentor firm requests reimbursement of advance payments.

[[Page 138]]

    (c) Modify (without consideration) applicable contract(s) to 
incorporate other than customary progress payments for small 
disadvantaged businesses in accordance with FAR 32.504(c) if such 
payments are provided by a mentor firm to a protege firm and the mentor 
firm requests reimbursement.
    (d) Modify applicable contract(s) to establish a contract line item 
for reimbursement of developmental assistance costs--
    (1) When funds have been made available for that purpose by a DoD 
program manager; and
    (2) The contractor has an approved mentor-protege agreement.
    (e) Advise contractors of reporting requirements in appendix I to 
chapter 2.



Sec. 219.7104  Developmental assistance costs eligible for reimbursement or credit.

    (a) Developmental assistance provided under an approved mentor-
protege agreement is distinct from, and shall not duplicate, any effort 
that is the normal and expected product of the award and administration 
of the mentor firm's subcontracts. Costs associated with the latter 
shall be accumulated and charged in accordance with the contractor's 
approved accounting practices. Mentor firm costs which are eligible for 
reimbursement are set forth in appendix I to chapter 2.
    (b) Before incurring any costs under the Program, mentor firms need 
to establish the accounting treatment of developmental assistance costs 
eligible for reimbursement or credit. Advance agreements are encouraged. 
To be eligible for reimbursement under the Program, costs must be 
incurred before October 1, 1996.
    (c) If the mentor firm is suspended or debarred while performing 
under an approved mentor-protege agreement, the mentor firm may not be 
reimbursed or credited for developmental assistance costs incurred more 
than 30 days after the imposition of the suspension or debarment.
    (d) Developmental assistance costs, incurred by a mentor firm before 
October 1, 1999, that are eligible for crediting under the Program may 
be credited towards subcontracting plan goals as set forth in appendix I 
to chapter 2.



Sec. 219.7105  Reporting.

    Mentor firms shall report on the progress made under active mentor-
protege agreements semi-annually as indicated in section I-111 of 
appendix I to chapter 2.



 Subpart 219.72--Evaluation Preference for Small Disadvantaged Business 
        (SDB) Concerns in Construction Acquisitions--Test Program

    Source: 61 FR 18688, Apr. 29, 1996, unless otherwise noted.



Sec. 219.7200  Policy.

    DoD policy is to ensure that, during this test program, offers from 
small disadvantaged business (SDB) concerns shall be given an evaluation 
preference in construction acquisitions.



Sec. 219.7201  Administration of the test program.

    The test program will be conducted over a 36-month period. The test 
program will be conducted by all DoD contracting activities that award 
construction contracts. The focal point for the test program is the 
Director, Small and Disadvantaged Business Utilization (SADBU), Office 
of the Deputy Under Secretary of Defense (International and Commercial 
Programs). The military departments and defense agencies shall submit 
status reports to the Director, SADBU. The first status report shall be 
submitted 18 months after initiation of the test program; the second 
status report shall be submitted 36 months after initiation of the test 
program. These reports shall specify the impact of the evaluation 
preference over each of the reporting periods of the test program, and 
shall provide recommendations with respect to continuation and/or 
modification of the evaluation preference.

[61 FR 18688, Apr. 29, 1996, as amended at 61 FR 50452, Sept. 26, 1996]

[[Page 139]]



Sec. 219.7202  Applicability.

    (a) The evaluation preference shall be used in competitive 
acquisitions for construction (see definition in FAR Subpart 36.1) when 
work is to be performed inside the United States, its territories or 
possessions, Puerto Rico, the Trust Territory of the Pacific Islands, or 
the District of Columbia.
    (b) Do not use the evaluation preference in acquisitions which--
    (1) Are less than or equal to the simplified acquisition threshold;
    (2) Are set aside for small businesses; or
    (3) Are awarded under section 8(a) procedures.
    (c) The evaluation preference need not be applied when the head of 
the contracting activity determines that the evaluation preference is 
having a disproportionate impact on non-SDB concerns or nondisadvantaged 
small business concerns.



Sec. 219.7203  Procedures.

    (a) Solicitations that require bonding shall require offerors to 
separately state bond costs in the offer. Bond costs include the costs 
of bid, performance, and payment bonds.
    (b) Evaluate total offers. If the apparently successful offeror is 
an SDB concern, no preference-based evaluation is required under this 
subpart.
    (c) If the apparently successful offeror is not an SDB concern, 
evaluate offers excluding bond costs. If, after excluding bond costs, 
the apparently successful offeror is an SDB concern, add bond costs back 
to all offers, and give offers from SDB concerns a preference in 
evaluation by adding a factor of 10 percent to the total price of all 
offers, except--
    (1) Offers from SDBs which have not waived the evaluation 
preference; and
    (2) Offers from historically black colleges and universities or 
minority institutions, which have not waived the evaluation preference.
    (d) When using the procedures in 236.303-70, Additive or deductive 
items, the evaluation preference in this subpart shall be applied.



Sec. 219.7204  Contract clause.

    Use the clause at 252.219-7008, Notice of Evaluation Preference for 
Small Disadvantaged Business Concerns--Construction Acquisitions--Test 
Program, in all solicitations--
    (1) That involve the evaluation preference of this subpart; and
    (2) Where work is to be performed inside the United States, its 
territories or possessions, Puerto Rico, the Trust Territory of the 
Pacific Islands, or the District of Columbia.



PART 222--APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS--Table of Contents




Sec.
222.001  Definition.

                   Subpart 222.1--Basic Labor Policies

222.101  Labor relations.
222.101-1  General.
222.101-3  Reporting labor disputes.
222.101-3-70  Impact of labor disputes on defense programs.
222.101-4  Removal of items from contractors' facilities affected by 
          work stoppages.
222.101-70  Acquisition of stevedoring services during labor disputes.
222.102  Federal and State labor requirements.
222.102-1  Policy.
222.103  Overtime.
222.103-4  Approvals.

       Subpart 222.3--Contract Work Hours and Safety Standards Act

222.302  Liquidated damages and overtime pay.

   Subpart 222.4--Labor Standards for Contracts Involving Construction

222.402  Applicability.
222.402-70  Installation support contracts.
222.403  Statutory and regulatory requirements.
222.403-4  Department of Labor regulations.
222.404  Davis-Bacon Act wage determinations.
222.404-2  General requirements.
222.404-3  Procedures for requesting wage determinations.
222.404-11  Wage determination appeals.
222.406  Administration and enforcement.
222.406-1  Policy.
222.406-6  Payrolls and statements.
222.406-8  Investigations.
222.406-9  Withholding from or suspension of contract payments.
222.406-10  Disposition of disputes concerning construction contract 
          labor standards enforcement.

[[Page 140]]

222.406-13  Semiannual enforcement reports.
222.407  Contract clauses.

            Subpart 222.6--Walsh-Healey Public Contracts Act

222.604  Exemptions.
222.604-2  Regulatory exemptions.
222.608  Procedures.
222.608-4  Award pending final determination.

               Subpart 222.8--Equal Employment Opportunity

222.804  Affirmative action programs.
222.804-2  Construction.
222.805  Procedures.
222.806  Inquiries.
222.807  Exemptions.

        Subpart 222.10--Service Contract Act of 1965, as Amended

222.1003  Applicability.
222.1003-1  General.
222.1003-7  Questions concerning applicability of the Act.
222.1008  Procedures for preparing and submitting notice (SF 98/98a).
222.1008-2  Preparation of SF 98a.
222.1008-7  Required time of submission of Notice.
222.1014  Delay of acquisition dates over 60 days.

        Subpart 222.13--Special Disabled and Vietnam Era Veterans

222.1303  Waivers.
222.1306  Complaint procedures.
222.1308  Contract clauses.

              Subpart 222.14--Employment of the Handicapped

222.1403  Waivers.
222.1406  Complaint procedures.

Subpart 222.70--Restrictions on the Employment of Personnel for Work on 
           Construction/Service Contracts in Alaska and Hawaii

222.7000  Scope of subpart.
222.7001  General.
222.7002  Waivers.
222.7003  Contract clause.

          Subpart 222.71--Right of First Refusal of Employment

222.7100  Scope of subpart.
222.7101  Policy.
222.7102  Contract clause.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36358, July 31, 1991, unless otherwise noted.



Sec. 222.001   Definition.

    Labor advisor, as used in this part, means the departmental or 
agency headquarters labor advisor.



                   Subpart 222.1--Basic Labor Policies

222.101  Labor relations.



Sec. 222.101-1  General.

    (a) Contracting offices shall--
    (i) Obtain departmental approval before contacting a national office 
of a labor organization, a Government agency headquarters, or any other 
organization on a labor relations matter;
    (ii) Notify departmental headquarters as required in departmental 
procedures when contacted by the national office of any labor 
organization or Government agency headquarters;
    (iii) Obtain the approval of the agency head on major policy 
decisions regarding labor relations matters such as recommendations for 
plant seizure or injunctive action relating to potential or actual work 
stoppages; and
    (iv) Submit questions involving FAR part 22 or other contractor 
labor relations matters to the labor advisor.



Sec. 222.101-3  Reporting labor disputes.

    The contract administration office shall--
    (1) Notify the labor advisor, the contracting officer, and the head 
of the contracting activity when interference is likely;
    (2) Disseminate information on labor disputes in accordance with 
departmental procedures; and
    (3) File an initial labor dispute report using DD Form 1507, Work 
Stoppage Report, when a work stoppage is imminent or when a work 
stoppage occurs. File a follow-up report when a significant change 
occurs in the dispute. This reporting requirement is assigned Report 
Control Symbol DD-ACQ (AR) 1153.

[56 FR 36358, July 31, 1991, as amended at 56 FR 67215, Dec. 30, 1991; 
59 FR 27671, May 27, 1994]

[[Page 141]]



Sec. 222.101-3-70  Impact of labor disputes on defense programs.

    (a) Each department and agency shall determine the degree of impact 
of potential or actual labor disputes on its own programs and 
requirements. In making these determinations, consider, for example--
    (1) Whether the dispute involves a product, project (including 
construction), or service which must be obtained in order to meet 
schedules for urgently needed military programs or requirements; and
    (2) Whether alternative sources of supply for the product, project, 
or service are reasonably available to fulfill the requirement or 
program in time to maintain essential military schedules.
    (b) Each contracting activity involved shall obtain and develop data 
reflecting the impact of a labor dispute on its requirements and 
programs. Upon determining the impact, the head of the contracting 
activity shall submit a report of findings and recommendations to the 
labor advisor. The report must be in narrative form and include--
    (1) Location of dispute and name of contractor or subcontractor 
involved;
    (2) A description of the impact, including how the specific items or 
services affect the specific programs or requirements;
    (3) Identity of alternate sources available to furnish the supply or 
service within the time required; and
    (4) A description of any action taken to reduce the impact.
    (c) The head of the contracting activity shall submit impact reports 
to the agency head when--
    (1) Specifically requested; or
    (2) The department or agency considers the impact to be of 
sufficient urgency to warrant the attention of the agency head.
    (d) The labor advisor will expand the report submitted under 
paragraph (c) of this subsection by addressing the following, as 
appropriate--
    (1) Description of military program, project, or service. Identify 
item, project, or service which will be or is being affected by the work 
stoppage. Describe its normal use and current functions in combat, 
combat support, or deterrent operations. For components or raw 
materials, identify the end item(s) for which they are used.
    (2) Requirements and assets. Identify requirements and assets in 
appropriate detail in terms commonly used by the DoD component.
    (i) For production programs, include requirements for each using 
military service. Where applicable, state in detail production schedule, 
inventory objectives, assets against these objectives, and critical 
shortages. For spares and highly expendable items, such as ground and 
air ammunition, show usage (consumption) rates and assets in absolute 
terms and in terms of daily, weekly, or monthly supplies. For 
components, include requirements for spares.
    (ii) For projects, describe the potential adverse effects of a delay 
in meeting schedules, and its impact on the national security.
    (iii) For services, describe how a loss or interruption affects the 
ability to support Defense operations in terms of traffic requirements, 
assets, testing programs, etc.
    (3) Possible measures to minimize strike impact. Describe--
    (i) Capabilities, if any, to substitute items or to use alternate 
sources and indicate the number of other facilities available and the 
relative capabilities of such facilities in meeting total requirements;
    (ii) How much time would be required to replace the loss of the 
facilities or service affected by a work stoppage; and
    (iii) The feasibility of transferring assets from theater to theater 
to relieve deficits in some areas of urgency.
    (4) Conclusion. (i) Describe the impact on operations of a 15-30, 
30-60, and a 60-90 day work stoppage.
    (ii) Project the degree of criticality of a program, project, or 
service resulting from a work stoppage on a calendar basis, indicating 
the increased impact, if any, as the stoppage lengthens. Criticality is 
measured by the number of days required for the work stoppage to have an 
effect on operational capability. This time must be stated in terms of 
days.

[[Page 142]]



Sec. 222.101-4  Removal of items from contractors' facilities affected by work stoppages.

    (a) When a contractor is unable to deliver urgent and critical items 
because of a work stoppage at its facility, the contracting officer, 
before removing any items from the facility, shall--
    (i) Before initiating any action, contact the labor advisor to 
obtain the opinion of the national office of the Federal Mediation and 
Conciliation Service or other mediation agency regarding the effect 
movement of the items would have on labor negotiations. Normally 
removals will not be made if they will adversely affect labor 
negotiations.
    (ii) Upon the recommendation of the labor advisor, provide a written 
request for removal of the material to the cognizant contract 
administration office. Include the following information in the 
request--
    (A) Contract number;
    (B) A statement as to the urgency and criticality of the item 
needed;
    (C) A description of the items to be moved (nature of the item, 
amount, approximate weight and cubic feet, item number, etc.);
    (D) Mode of transportation by which the items are to be moved, if 
different than in the contract, and whether by Government or commercial 
bill of lading; and
    (E) Destination of the material, if different from that specified in 
the contract.
    (iii) With the assistance of the labor advisor or the commander of 
the contract administration office, attempt to have both the management 
and the labor representatives involved agree to shipment of the material 
by normal means.
    (iv) If agreement for removal of the needed items cannot be reached 
following the procedures in paragraphs (a) (i) through (iii) of this 
subsection, the commander of the contract administration office, after 
obtaining approval from the labor advisor, may seek the concurrence of 
the parties to the dispute to permit movement of the material by 
military vehicles with military personnel. On receipt of such 
concurrences, the commander may proceed to make necessary arrangements 
to move the material.
    (v) If agreement for removal of the needed items cannot be reached 
following any of the procedures in paragraphs (a) (i) through (iv) of 
this subsection, refer the matter to the labor advisor with the 
information required by 222.101-3-70(b). If the labor advisor is 
unsuccessful in obtaining concurrence of the parties for the movement of 
the material and further action to obtain the material is deemed 
necessary, refer the matter to the agency head. Upon review and 
verification that the items are urgently or critically needed and cannot 
be moved with the consent of the parties, the agency head, on a 
nondelegable basis, may order removal of the items from the facility.



Sec. 222.101-70  Acquisition of stevedoring services during labor disputes.

    (a) Use the following procedures only in the order listed when a 
labor dispute delays performance of a contract for stevedoring services 
which are urgently needed.
    (1) Attempt to have management and labor voluntarily agree to exempt 
military supplies from the labor dispute by continuing the movement of 
such material.
    (2) Divert vessels to alternate ports able to provide necessary 
stevedoring services.
    (3) Consider contracting with reliable alternative sources of supply 
within the stevedoring industry.
    (4) Utilize civil service stevedores to perform the work performed 
by contract stevedores.
    (5) Utilize military personnel to handle the cargo which was being 
handled by contract stevedores prior to the labor dispute.
    (b) Notify the labor advisor when a deviation from the procedures in 
paragraph (a) of this subsection is required.
222.102  Federal and State labor requirements.



Sec. 222.102-1  Policy.

    (1) The Department of Labor is responsible for the administration 
and enforcement of the Occupational Safety and Health Act (OSHA). 
Contracting officers shall--

[[Page 143]]

    (i) Direct all inquiries from contractors or contractor employees 
regarding the applicability or interpretation of the OSHA regulations to 
the Department of Labor; and
    (ii) Upon request, provide the address of the appropriate field 
office of the Occupational Safety and Health Administration of the 
Department of Labor.
    (2) Do not initiate any application for the suspension or relaxation 
of labor requirements without prior coordination with the labor advisor.
222.103  Overtime.



Sec. 222.103-4  Approvals.

    (a) The department/agency approving official shall--
    (i) Obtain the concurrence of other appropriate approving officials; 
and
    (ii) Seek agreement as to the contracts under which overtime 
premiums will be approved when--
    (A) Two or more contracting offices have current contracts at the 
same contractor facility; and
    (B) The approval of overtime by one contracting office will affect 
the performance or cost of contracts of another office. In the absence 
of evidence to the contrary, a contracting officer may rely on a 
contractor's statement that approval of overtime premium pay for one 
contract will not affect performance or payments under any other 
contract.



       Subpart 222.3--Contract Work Hours and Safety Standards Act



Sec. 222.302  Liquidated damages and overtime pay.

    Upon receipt of notification of Contract Work Hours and Safety 
Standards Act violations, the contracting officer shall--
    (1) Immediately withhold such funds as are available;
    (2) Give the contractor written notification of the withholding and 
a statement of the basis for the liquidated damages assessment. The 
written notification shall also inform the contractor of its 60 days 
right to appeal the assessment, through the contracting officer, to the 
agency official responsible for acting on such appeals; and
    (3) If funds available for withholding are insufficient to cover 
liquidated damages, ask the contractor to pay voluntarily such funds as 
are necessary to cover the total liquidated damage assessment.
    (d)(i) The assessment shall become the final administrative 
determination of contractor liability for liquidated damages when--
    (A) The contractor fails to appeal to the contracting agency within 
60 days from the date of the withholding of funds;
    (B) The department agency, following the contractor's appeals, 
issues a final order which affirms the assessment of liquidated damages 
or waives damages of $500 or less; or
    (C) The Secretary of Labor takes final action on a recommendation of 
the agency head to waive or adjust liquidated damages in excess of $500.
    (ii) Upon final administrative determination of the contractor's 
liability for liquidated damages, the contracting officer shall transmit 
withheld or collected funds determined to be owed the Government as 
liquidated damages to the servicing finance and accounting officer for 
crediting to the appropriate Government Treasury account. The 
contracting officer shall return any excess withheld funds to the 
contractor.



   Subpart 222.4--Labor Standards for Contracts Involving Construction

222.402  Applicability.



Sec. 222.402-70  Installation support contracts.

    (a) Apply both the Service Contract Act (SCA) and the Davis-Bacon 
Act (DBA) to installation support contracts if--
    (1) The contract is principally for services but also requires a 
substantial and segregable amount of construction, alteration, 
renovation, painting, or repair work; and
    (2) The aggregate dollar value of such construction work exceeds or 
is expected to exceed $2,000.
    (b) SCA coverage under the contract. Contract installation support 
requirements, such as plant operation and installation services (i.e., 
custodial, snow

[[Page 144]]

removal, etc.) are subject to the SCA. Apply SCA clauses and minimum 
wage and fringe benefit requirements to all contract service calls or 
orders for such maintenance and support work.
    (c) DBA coverage under the contract. Contract construction, 
alteration, renovation, painting, and repair requirements (i.e., roof 
shingling, building structural repair, paving repairs, etc.) are subject 
to the DBA. Apply DBA clauses and minimum wage requirements to all 
contract service calls or orders for construction, alteration, 
renovation, painting, or repairs to buildings or other works.
    (d) Repairs versus maintenance. Some contract work may be 
characterized as either DBA painting/repairs or SCA maintenance. For 
example, replacing broken windows, spot painting, or minor patching of a 
wall could be covered by either the DBA or the SCA. In those instances 
where a contract service call or order requires construction trade 
skills (i.e., carpenter, plumber, painter, etc.), but it is unclear 
whether the work required is SCA maintenance or DBA painting/repairs, 
apply the following rules--
    (1) Individual service calls or orders which will require a total of 
32 or more work-hours to perform shall be considered to be repair work 
subject to the DBA.
    (2) Individual service calls or orders which will require less than 
32 work-hours to perform shall be considered to be maintenance subject 
to the SCA.
    (3) Painting work of 200 square feet or more to be performed under 
an individual service call or order shall be considered to be subject to 
the DBA regardless of the total work-hours required.
    (e) The determination of labor standards application shall be made 
at the time the solicitation is prepared in those cases where 
requirements can be identified. Otherwise, the determination shall be 
made at the time the service call or order is placed against the 
contract. The service call or order shall identify the labor standards 
law and contract wage determination which will apply to the work 
required.
    (f) Contracting officers may not avoid application of the DBA by 
splitting individual tasks between orders or contracts.
222.403  Statutory and regulatory requirements.



Sec. 222.403-4  Department of Labor regulations.

    Direct all questions regarding Department of Labor regulations to 
the labor advisor.



Sec. 222.404  Davis-Bacon Act wage determinations.

    Not later than April 1 of each year, each department and agency 
shall furnish the Administrator, Wage and Hour Division, with a general 
outline of its proposed construction program for the coming fiscal year. 
The Department of Labor uses this information to determine where general 
wage determination surveys will be conducted.
    (1) Indicate by individual project of $500,000 or more--
    (i) The anticipated type of construction;
    (ii) The estimated dollar value; and
    (iii) The location in which the work is to be performed (city, town, 
village, county, or other civil subdivision of the state).
    (2) The report format is contained in Department of Labor All Agency 
Memo 144, December 27, 1985.
    (3) The report control number is 1671-DOL-AN.



Sec. 222.404-2  General requirements.

    (c)(5) Information concerning the proper application of wage rate 
schedules to the type or types of construction involved shall be 
obtained from the appropriate district commander, Corps of Engineers, 
for the Army; from the cognizant Naval Facilities Engineering Command 
division for the Navy; from the appropriate Regional Industrial 
Relations Office for the Air Force; and from the appropriate Defense 
Contract Management District, ATTN: Industrial Labor Relations Office, 
for the Defense Logistics Agency.



Sec. 222.404-3  Procedures for requesting wage determinations.

    (b) Requests for project wage determinations. Submit requests for 
project wage

[[Page 145]]

determinations directly to the Department of Labor.



Sec. 222.404-11  Wage determination appeals.

    Send a copy of a petition for review filed by the contracting agency 
to the labor advisor.
222.406  Administration and enforcement.



Sec. 222.406-1  Policy.

    (a) General. The program shall also include--
    (i) Training appropriate contract administration, labor relations, 
inspection, and other labor standards enforcement personnel in their 
responsibilities; and
    (ii) Periodic review of field enforcement activities to ensure 
compliance with applicable regulations and instructions.
    (b) Preconstruction letters and conferences. (1) Promptly after 
award of the contract, the contracting officer shall provide a 
preconstruction letter to the prime contractor. This letter should 
accomplish the following, as appropriate--
    (A) Indicate that the labor standards requirements contained in the 
contract are based on the following statutes and regulations--
    (1) Davis-Bacon Act;
    (2) Contract Work Hours and Safety Standards Act;
    (3) Copeland (Anti-Kickback) Act;
    (4) Parts 3 and 5 of the Secretary of Labor's Regulations (parts 3 
and 5, subtitle A, title 29, CFR); and
    (5) Executive Order 11246 (Equal Employment Opportunity);
    (B) Call attention to the labor standards requirements in the 
contract which relate to--
    (1) Employment of foremen, laborers, mechanics, and others;
    (2) Wages and fringe benefits payments, payrolls, and statements;
    (3) Differentiation between subcontractors and suppliers;
    (4) Additional classifications;
    (5) Benefits to be realized by contractors and subcontractors in 
keeping complete work records;
    (6) Penalties and sanctions for violations of the labor standards 
provisions; and
    (7) The applicable provisions of FAR 22.403; and
    (C) Ensure that the contractor sends a copy of the preconstruction 
letter to each subcontractor.
    (2) Before construction begins, the contracting officer shall confer 
with the prime contractor and any subcontractor designated by the prime 
to emphasize their labor standards obligations under the contract when--
    (A) The prime contractor has not performed previous Government 
contracts;
    (B) The prime contractor experienced difficulty in complying with 
labor standards requirements on previous contracts; or
    (C) It is necessary to determine whether the contractor and its 
subcontractors intend to pay any required fringe benefits in the manner 
specified in the wage determination or to elect a different method of 
payment. If the latter, inform the contractor of the requirements of FAR 
22.406-2.



Sec. 222.406-6  Payrolls and statements.

    (a) Submission. Contractors who do not use Department of Labor Form 
WH 347 or its equivalent must submit a DD Form 879, Statement of 
Compliance, with each payroll report.



Sec. 222.406-8  Investigations.

    (a) The following guidance and procedures apply to investigations 
conducted by the contracting activity. (i) Beginning of the 
investigation. The investigator shall--
    (A) Inform the contractor of the investigation in advance;
    (B) Verify the exact legal name of the contractor, its address, and 
the names and titles of its principal officers;
    (C) Outline the general scope of the investigation and that it 
includes examining pertinent records and interviewing employees; and
    (D) Inform the contractor that the names of the employees to be 
interviewed will not be divulged to the contractor;

[[Page 146]]

    (E) When requested, provide a letter from the contracting officer 
verifying the investigator's authority.
    (ii) Conduct of the investigation--(A) Review of the contract.
    (1) Verify that all required labor standards and clauses and the 
wage determination are included in the contract.
    (2) Review the following items in the contract file, if applicable--
    (i) List of subcontractors;
    (ii) Payroll statements for the contractor and subcontractors;
    (iii) Approvals of additional classifications;
    (iv) Data regarding apprentices and trainees as required by FAR 
22.406-4;
    (v) Daily inspector's report or other inspection reports;
    (vi) Employee interview statements; and
    (vii) SF 1413, Statement and Acknowledgement.
    (B) Interview of the complainant. Interview the complainant except 
when this is impractical. The interview shall cover all aspects of the 
complaint to ensure that all pertinent information is obtained. Whenever 
an investigation does not include an interview of the complainant, 
explain such omission in the investigator's report.
    (C) Interview of employees and former employees. (1) Interview a 
sufficient number of employees or former employees, who represent all 
classifications, to develop information regarding the method and amount 
of payments, deductions, hours worked, and the type of work performed.
    (2) Interview employees at the job site if the interviews can be 
conducted privately and in such a manner so as to cause the least 
inconvenience to the employer and employees.
    (3) Former employees may be interviewed elsewhere.
    (4) Do not disclose to any employee any information, finding, 
recommendation, or conclusion relating to the investigation except to 
the extent necessary to obtain required information.
    (5) Do not disclose any employee's statement to anyone, except a 
Government representative working on the case, without the employee's 
written permission.
    (6) Obtain information by mail when personal interviews are 
impractical.
    (7) Use SF 1445, Labor Standards Interview, for employee interviews.
    (8) Request employees to sign their statements and to initial any 
changes.
    (9) Provide an evaluation of each employee's credibility.
    (D) Interview of foremen. Interview foremen to obtain information 
concerning the contractor's compliance with the labor standards 
provisions with respect to employees under the foreman's supervision and 
the correctness of the foreman's classification as a supervisory 
employee. All procedures established for the conduct of employee 
interviews, and the recording and use of information obtained, apply to 
foremen interviews.
    (E) Interview of the contractor. (1) Interview the contractor 
whenever the investigation indicates the possibility of a violation.
    (2) Inform the contractor that--
    (i) The interview does not mean that a violation has been found or 
that a requirement for corrective action exists; and
    (ii) The purpose of the interview is to obtain only such data as the 
contractor may desire to present in connection with the investigation.
    (3) Do not disclose the identity of any individual who filed a 
complaint or was interviewed.
    (F) Review of contractor and subcontractor records. (1) Review 
contractor and subcontractor records such as basic time cards, books, 
cancelled payroll checks, fringe benefits, and payment records. Compare 
them with submitted payrolls. When discrepancies are found, include 
pertinent excerpts or copies of the records in the investigation report 
with a statement of the discrepancy and any explanation the investigator 
obtains. When wages include contributions or anticipated costs for 
fringe payments requiring approval of the Secretary of Labor, examine 
the contractor records to ensure such approval has been obtained and 
that any requirements specified in the approval have been met. (See FAR 
22.406-2(a)(3)).
    (2) Review contractor's and subcontractor's weekly payrolls and 
payroll statements for completeness and accuracy regarding the 
following--

[[Page 147]]

    (i) Identification of employees, payroll amount, the contract, 
contractor, subcontractor, and payroll period;
    (ii) Inclusion of only job classifications and wage rates specified 
in the contract specifications, or otherwise established for the 
contract or subcontract;
    (iii) Computation of daily and weekly hours;
    (iv) Computation of time-and-one half for work in excess of 40 hours 
per week in accordance with FAR 22.406-2(c);
    (v) Gross weekly wages;
    (vi) Deductions;
    (vii) Computation of net weekly wages paid to each employee;
    (viii) Ratio of helpers, apprentices, and trainees to laborers and 
mechanics;
    (ix) Apprenticeship and trainee registration and ratios; and
    (x) Computation of fringe benefits payments.
    (3) Transcribe the contractor's records whenever they contain 
information at variance with payrolls or other submitted documents.
    (i) Make the transcriptions in sufficient detail to permit them to 
be used to check computations of restitution and to determine amounts to 
be withheld from the contractor.
    (ii) Follow the form used by the contractor.
    (iii) Place comments or explanations concerning the transcriptions 
on separate memoranda or in the narrative report.
    (iv) Determine whether the wage determination, any modifications of 
the determination, and any additional classifications are posted as 
required.
    (iii) Submission of the report of investigation. The investigator 
shall submit a report of the investigation in accordance with agency 
procedures. Each report shall include at least the--
    (A) Basis for the investigation, including the name of the 
complainant;
    (B) Names and addresses of prime contractors and subcontractors 
involved, and names and titles of their principal officers;
    (C) Contract number, date, dollar value of prime contract, and date 
and number of wage determination included in the contract;
    (D) Description of the contract and subcontract work involved;
    (E) Summary of the findings with respect to each of the items listed 
in 222.406-8(a)(ii);
    (F) Concluding statement concerning--
    (1) The types of violations, including the amount of kickbacks under 
the Copeland Act, underpayments of basic hourly rates and fringe 
benefits under the Davis-Bacon Act, or underpayments and liquidated 
damages under the Contract Work Hours and Safety Standards Act;
    (2) Whether violations are considered to be willful or due to the 
negligence of the contractor or its agent;
    (3) The amount of funds withheld from the contractor; and
    (4) Other violations found.
    (G) Exhibits indexed and appropriately tabbed, including copies of 
the following, when applicable--
    (1) Complaint letter;
    (2) Contract wage determination;
    (3) Preconstruction letter and memorandum of preconstruction 
conference;
    (4) Payrolls and statements indicating violations;
    (5) Transcripts of pertinent records of the contractor, and 
approvals of fringe benefit payments;
    (6) Employee interview statements;
    (7) Foreman interview statements;
    (8) Statements of others interviewed, including Government 
personnel;
    (9) Detailed computations showing kickbacks, underpayments, and 
liquidated damages;
    (10) Summary of all payments due to each employee or to a fund plan 
or program, and liquidated damages; and
    (11) Receipts and cancelled checks.
    (c) Notification to the contractor.
    (4)(A) Notify the contractor by certified mail of any finding that 
it is liable for liquidated damages under the Contract Work Hours and 
Safety Standards Act (CWHSSA). The notification shall inform the 
contractor that--
    (1) It has 60 days after receipt of the notice to appeal the 
assessment of liquidated damages; and
    (2) The appeal must demonstrate either that the alleged violations 
did not occur at all, occurred inadvertently notwithstanding the 
exercise of due

[[Page 148]]

care, or the assessment was computed improperly.
    (B) If an appeal is received, the contracting officer shall process 
the appeal in accordance with department or agency regulations.
    (d) Contracting officer's report. (1) In accordance with agency 
procedures, the contracting officer shall forward a detailed enforcement 
report or summary report in duplicate. These reports shall include at 
least the following--
    (A) SF 1446, Labor Standards Investigation Summary Sheet;
    (B) Contracting officer's findings;
    (C) Statement as to the disposition of any contractor rebuttal to 
the findings;
    (D) Statement as to whether the contractor has accepted the findings 
and has paid any restitution or liquidated damages;
    (E) Statement as to the disposition of funds available;
    (F) Recommendations as to disposition or further handling of the 
case (when appropriate, include recommendations as to the reduction, 
waiver, or assessment of liquidated damages, whether the contractor 
should be debarred, and whether the file should be referred for possible 
criminal prosecution); and
    (G) When applicable the following exhibits--
    (1) Investigator's report;
    (2) Copy of the contractor's written rebuttal or a summary of the 
contractor's oral rebuttal of the contracting officer's findings;
    (3) Copies of correspondence between the contractor and contracting 
officer, including a statement of specific violations found, corrective 
action requested, and the contractor's letter of acceptance or 
rejection;
    (4) Evidence of the contractor's payment of restitution or 
liquidated damages. (Copies of receipts, canceled checks, or 
supplemental payrolls); and
    (5) Letter from the contractor requesting relief from the liquidated 
damage provisions of the CWHSSA.



Sec. 222.406-9  Withholding from or suspension of contract payments.

    (a) Withholding from contract payments. The contracting officer 
shall contact the labor advisor for assistance when payments due a 
contractor are not available to satisfy that contractor's liability for 
Davis-Bacon or CWHSSA wage underpayments or liquidated damages.
    (c) Disposition of contract payments withheld or suspended.
    (3) Limitation on forwarding or returning funds. When disposition of 
withheld funds remains the final action necessary to close out a 
contract, the Department of Labor has given blanket approval to forward 
withheld funds to the Comptroller General pending completion of an 
investigation or other administrative proceedings.
    (4) Liquidated damages.
    (A) The agency head may adjust liquidated damages of $500 or less 
when the amount assessed is incorrect or waive the assessment when the 
violations--
    (1) Were nonwillful or inadvertent; and
    (2) Occurred notwithstanding the exercise of due care by the 
contractor, its subcontractor, or their agents.
    (B) The agency head may recommend to the Administrator, Wage and 
Hour Division, that the liquidated damages over $500 be adjusted because 
the amount assessed is incorrect. The agency head may also recommend the 
assessment be waived when the violations--
    (1) Were nonwillful or inadvertent; and
    (2) Occurred notwithstanding the exercise of due care by the 
contractor, the subcontractor, or their agents.



Sec. 222.406-10  Disposition of disputes concerning construction contract labor standards enforcement.

    (d) Forward the contracting officer's findings and the contractor's 
statement through the labor advisor.



Sec. 222.406-13  Semiannual enforcement reports.

    Forward these reports through the head of the contracting activity 
to the labor advisor within 15 days following the end of the reporting 
period. These reports shall not include information from investigations 
conducted by the Department of Labor. These reports shall contain the 
following information, as applicable, for construction

[[Page 149]]

work subject to the Davis-Bacon Act and the CWHSSA--
    (1) Period covered;
    (2) Number of prime contracts awarded;
    (3) Total dollar amount of prime contracts awarded;
    (4) Number of contractors/subcontractors against whom complaints 
were received;
    (5) Number of investigations conducted;
    (6) Number of contractors/subcontractors found in violation;
    (7) Amount of wage restitution found due under--
    (i) Davis-Bacon Act
    (ii) CWHSSA;
    (8) Number of employees due wage restitution under--
    (i) Davis-Bacon Act
    (ii) CWHSSA;
    (9) Amount of liquidated damages assessed under the CWHSSA--
    (i) Total amount
    (ii) Number of contracts involved;
    (10) Number of employees and amount paid/withheld under--
    (i) Davis-Bacon Act
    (ii) CWHSSA
    (iii) Copeland Act; and
    (11) Preconstruction activities--
    (i) Number of compliance checks performed
    (ii) Preconstruction letters sent.



Sec. 222.407  Contract clauses.

    In contracts with a State or political subdivision, use the contract 
clauses prescribed in FAR 22.407, but preface these clauses with the 
following--

    The Contractor agrees to comply with the requirements of the 
Contract Work Hours and Safety Standards Act and to insert the following 
clauses in all subcontracts under this contract with private persons or 
firms.



            Subpart 222.6--Walsh-Healey Public Contracts Act

222.604  Exemptions.



Sec. 222.604-2  Regulatory exemptions.

    (c) Submit all applications for such exemptions through contracting 
channels to the labor advisor.
222.608  Procedures.



Sec. 222.608-4  Award pending final determination.

    (b)(1) The head of the contracting activity is the approval 
authority for the contracting officer's certification.



               Subpart 222.8--Equal Employment Opportunity

222.804  Affirmative action programs.



Sec. 222.804-2  Construction.

    (b) Contracting officers forward requests for instructions directly 
to the servicing Office of Federal Contract Compliance Programs (OFCCP) 
regional office (see FAR 22.609).



Sec. 222.805  Procedures.

    (a)(2) See FAR 22.609 for a list of OFCCP regional offices.



Sec. 222.806  Inquiries.

    (b) Refer inquiries through the labor advisor.



Sec. 222.807  Exemptions.

    (c) Submit the request for exemption with a justification through 
contracting channels to the labor advisor who will forward them to the 
agency head. If the request is submitted under FAR 22.807(a)(1), the 
agency head shall act on the request. If the exemption is granted, the 
agency head shall notify the Director, OFCCP of such action within 30 
days. If the request is submitted under FAR 22.807(a)(2) or (b)(5), the 
agency head will forward it to the Director, OFCCP for action.



        Subpart 222.10--Service Contract Act of 1965, as Amended

222.1003  Applicability.



Sec. 222.1003-1  General.

    For contracts having a substantial amount of construction, 
alteration, renovation, painting, or repair work, see 222.402-70.



Sec. 222.1003-7  Questions concerning applicability of the Act.

    Contracting officers may contact the labor advisor by telephone for 
informal

[[Page 150]]

advice. Submit requests for formal determinations as to the Act's 
applicability to the labor advisor in writing through appropriate 
channels.
222.1008  Procedures for preparing and submitting Notice (SF 98/98a).



Sec. 222.1008-2  Preparation of SF 98a.

    (b)(1) The contracting officer shall secure the assistance of 
cognizant customer/technical personnel to ensure maximum use of the 
Service Contract Act Directory of Occupations (Directory) and 
incorporation of all service employee classes (Directory and 
nondirectory) expected to be utilized.
    (2)(A) When the statement of work job title, for which there is a 
Directory equivalent, differs from the Directory job title, make a 
written cross-reference either directly on the SF 98a file copy or on an 
attached sheet to the SF 98a file copy.
    (B) Include and note as such any classifications and minimum hourly 
wage rates conformed under any predecessor contract. Where a previously 
conformed classification is not included in the Directory, attach the 
job description to the SF 98a.



Sec. 222.1008-7  Required time of submission of notice.

    (d) Submit requests for immediate wage determination responses for 
emergency acquisitions through the labor advisor. If the request is 
justified, the labor advisor will contact Department of Labor 
headquarters officials.



Sec. 222.1014  Delay of acquisition dates over 60 days.

    Send update requests in writing directly to the Wage and Hour 
Division and provide a copy to the labor advisor. The update request 
shall--
    (1) State that one or more dates on the original notice have been 
delayed more than 60 days;
    (2) List the new dates; and
    (3) Include a copy of the original notice and SF 98a as enclosures.



        Subpart 222.13--Special Disabled and Vietnam Era Veterans



Sec. 222.1303  Waivers.

    (c) The contracting officer shall submit a waiver request through 
contracting channels to the labor advisor. If the request is justified, 
the labor advisor will endorse the request and forward it for action 
to--
    (i) The agency head for waivers under FAR 22.1303(a); or
    (ii) The Secretary of Defense, without the power of redelegation, 
for waivers under FAR 22.1303(b).



Sec. 222.1306  Complaint procedures.

    The contracting officer shall--
    (1) Forward each complaint received as indicated in FAR 22.1306; and
    (2) Notify the complainant of the referral. The contractor in 
question shall not be advised in any manner or for any reason of the 
complainant's name, the nature of the complaint, or the fact that the 
complaint was received.



Sec. 222.1308  Contract clauses.

    (a)(1) Use of the clause at FAR 52.222-35, Affirmative Action for 
Special Disabled and Vietnam Era Veterans, with its paragraph (c), 
Listing Openings, also satisfies the requirement of 10 U.S.C. 2410d.

[58 FR 28466, May 13, 1993]



              Subpart 222.14--Employment of the Handicapped



Sec. 222.1403  Waivers.

    (c) The contracting officer shall submit a waiver request through 
contracting channels to the labor advisor. If the request is justified, 
the labor advisor will endorse the request and forward it for action 
to--
    (i) The agency head for waivers under FAR 22.1403(a). For the 
defense agencies, waivers must be approved by the Under Secretary of 
Defense for Acquisition.
    (ii) The Secretary of Defense, without the power of redelegation, 
for waivers under FAR 22.1403(b).

[[Page 151]]



Sec. 222.1406  Complaint procedures.

    The contracting officer shall--
    (1) Forward each complaint received as indicated in FAR 22.1406 (see 
FAR 22.609 for a listing of Department of Labor regional/area offices); 
and
    (2) Notify the complainant of such referral. The contractor in 
question shall not be advised in any manner or for any reason of the 
complainant's name, the nature of the complaint, or the fact that the 
complaint was received.



Subpart 222.70--Restrictions on the Employment of Personnel for Work on 
           Construction/Service Contracts in Alaska and Hawaii



Sec. 222.7000  Scope of subpart.

    (a) This subpart implements section 8078 of the 1986 Defense 
Appropriations Act, Public Law 99-190, and similar sections in 
subsequent Defense Appropriations Acts.
    (b) This subpart applies only--
    (1) To construction and service contracts to be performed in whole 
or in part within the states of Alaska or Hawaii; and
    (2) When the unemployment rate in the state is in excess of the 
national average rate of unemployment as determined by the Secretary of 
Labor.

[56 FR 36358, July 31, 1991, as amended at 57 FR 14993, Apr. 23, 1992]



Sec. 222.7001  General.

    A contractor awarded a contract subject to this subpart must employ 
for the purpose of performing that portion of the contract work within 
the state, individuals who are residents of that state, and who, in the 
case of any craft or trade, possess or would be able to acquire promptly 
the necessary skills to perform the contract.



Sec. 222.7002  Waivers.

    Waivers may be granted, in the interest of national security, at a 
level no lower than the Assistant Secretary of any department.



Sec. 222.7003  Contract clause.

    Use the clause at 252.222-7000, Restrictions on Employment of 
Personnel, in all solicitations and contracts subject to this subpart.



          Subpart 222.71--Right of First Refusal of Employment

    Source: 57 FR 52593, Nov. 4, 1992, unless otherwise noted.



Sec. 222.7100  Scope of subpart.

    This subpart prescribes policies and procedures for use in 
acquisitions arising from closure of military installations.



Sec. 222.7101  Policy.

    (a) DoD policy is to minimize the adverse impact on civil service 
employees affected by the closure of military installations. One means 
of implementing this policy is to give employees adversely affected by 
closure of a military installation the right of first refusal for jobs 
created by award of contracts arising from the closure effort that the 
employee is qualified to fill.
    (b) Closure efforts include the acquisitions for preparing the 
installation for closure (such as environmental restoration and 
utilities modification) and maintaining the property after closure (such 
as security and fire prevention services).



Sec. 222.7102  Contract clause

    Use the clause at 252.222-7001, Right of First Refusal of 
Employment--Closure of Military Installations, in all solicitations and 
contracts arising from the closure of the military installation where 
the contract will be performed.



PART 223--ENVIRONMENT, CONSERVATION, OCCUPATIONAL SAFETY, AND DRUG-FREE WORKPLACE--Table of Contents




Sec.

        Subpart 223.1--Pollution Control and Clean Air and Water

223.104  Exemptions.

  Subpart 223.3--Hazardous Material Identification and Material Safety 
                                  Data

223.300  Scope of subpart.
223.302  General.

[[Page 152]]

223.303  Contract clause.
223.370  Safety precautions for ammunition and explosives.
223.370-1  Scope.
223.370-2  Definition.
223.370-3  Policy.
223.370-4  Procedures.
223.370-5  Contract clauses.

                Subpart 223.4--Use of Recovered Materials

223.404  Procedures.

                   Subpart 223.5--Drug-Free Workplace

223.570  Drug-free work force.
223.570-1  Definitions.
223.570-2  Policy.
223.570-3  General.
223.570-4  Contract clause.

                Subpart 223.8--Ozone-Depleting Substances

223.803  Policy.

                Subpart 223.70--Hazardous Waste Disposal

223.7000  Scope of subpart.
223.7001  Definitions.
223.7002  Contract clause.

  Subpart 223.71--Storage and Disposal of Toxic and Hazardous Materials

223.7100  Policy.
223.7101  Procedures.
223.7102  Exceptions.
223.7103  Contract clause.

 Subpart 223.72--Safeguarding Sensitive Conventional Arms, Ammunition, 
                             and Explosives

223.7200  Definition.
223.7201  Policy.
223.7202  Preaward responsibilities.
223.7203  Contract clause.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36365, July 31, 1991, unless otherwise noted.



        Subpart 223.1--Pollution Control and Clean Air and Water



Sec. 223.104  Exemptions.

    (c) The authority to act for the agency head under this subpart is 
limited to a level no lower than an official who is appointed by and 
with the advice of the Senate. For the defense agencies, this is the 
Under Secretary of Defense (Acquisition and Technology).

[60 FR 61596, Nov. 30, 1995]



  Subpart 223.3--Hazardous Material Identification and Material Safety 
                                  Data



Sec. 223.300  Scope of subpart.

    DoD procedures for use in acquisitions involving ammunition and 
explosives are in 223.370.



Sec. 223.302  General.

    (b) Successful offerors are also required to submit hazard warning 
labels under the clause at 252.223-7001, Hazard Warning Labels.
    (e) The contracting officer shall also provide hazard warning labels 
received from apparent successful offerors to the cognizant safety 
officer or other designated official in order to facilitate--
    (i) Inclusion of relevant data in the department/agency's material 
safety data sheet information system or label information system; and
    (ii) Other control, safety, or information purposes.

[56 FR 67215, Dec. 30, 1991]



Sec. 223.303  Contract clause.

    Use the clause at 252.223-7001, Hazard Warning Labels, in 
solicitations and contracts which require submission of hazardous 
material data sheets (see FAR 23.302(c)).

[56 FR 67215, Dec. 30, 1991]
223.370  Safety precautions for ammunition and explosives.



Sec. 223.370-1  Scope.

    (a) This section applies to all acquisitions involving the use of 
ammunition and explosives, including acquisitions for--
    (1) Development;
    (2) Testing;
    (3) Research;
    (4) Manufacturing;
    (5) Handling or loading;
    (6) Assembling;
    (7) Packaging;
    (8) Storage;
    (9) Transportation;
    (10) Renovation;
    (11) Demilitarization;
    (12) Modification;
    (13) Repair;
    (14) Disposal;

[[Page 153]]

    (15) Inspection; or
    (16) Any other use, including acquisitions requiring the use or the 
incorporation of materials listed in paragraph (b) of this subsection 
for initiation, propulsion, or detonation as an integral or component 
part of an explosive, an ammunition, or explosive end item or weapon 
system.
    (b) This section does not apply to acquisitions solely for--
    (1) Inert components containing no explosives, propellants, or 
pyrotechnics;
    (2) Flammable liquids;
    (3) Acids;
    (4) Oxidizers;
    (5) Powdered metals; or
    (6) Other materials having fire or explosive characteristics.



Sec. 223.370-2  Definition.

    Ammunition and explosives, as used in this section, is defined in 
the clause at 252.223-7002, Safety Precautions for Ammunition and 
Explosives.



Sec. 223.370-3  Policy.

    (a) DoD policy is to ensure that its contractors take reasonable 
precautions in handling ammunition and explosives so as to minimize the 
potential for mishaps that could--
    (1) Interrupt DoD operations;
    (2) Delay project or product completion dates;
    (3) Adversely impact DoD mission readiness, production base, or 
production capabilities;
    (4) Damage or destroy DoD property; or
    (5) Cause injury to DoD personnel.
    (b) This policy is implemented by DoD Manual 4145.26-M, DoD 
Contractors' Safety Manual for Ammunition and Explosives, which is 
incorporated into contracts under which ammunition and explosives are 
handled. The manual contains mandatory safety requirements for 
contractors. When work is to be performed on a Government-owned 
installation, the contracting officer may use the ammunition and 
explosives regulation of the DoD component or installation as a 
substitute for, or supplement to, DoD Manual 4145.26-M, as long as the 
contract cites these regulations.



Sec. 223.370-4  Procedures.

    (a) Preaward phase--(1) Waiver of the mandatory requirements. (i) 
Before either omitting the clause at 252.223-7002, Safety Precautions 
for Ammunition and Explosives, from solicitations and contracts or 
waiving the mandatory requirements of the manual, obtain approval of--
    (A) The safety personnel responsible for ammunition and explosives 
safety; and
    (B) The head of the contracting activity.
    (ii) If the contracting officer decides to waive the mandatory 
requirements before award, the contracting officer shall set forth in 
the solicitation, or in an amendment of the solicitation, the specific 
requirements to be waived.
    (iii) If the head of the contracting activity declines to approve a 
request for waiver, but the prospective contractor agrees to take 
corrective action to bring the operation into compliance, make the 
corrective action a part of the resulting contract.
    (2) Transportation considerations--If shipment of ammunition and 
explosives is involved in the contract, address in the schedule of the 
contract the applicable Department of Transportation or Military Traffic 
Management Command requirements and any other requirements for 
transportation, packaging, marking, and labeling.
    (3) Disposition of excess--Include instructions within the contract 
concerning final disposition of excess Government furnished material 
containing ammunition and explosives, including defective or rejected 
supplies.
    (4) Preaward survey--Before awarding any contract, including 
purchase orders, involving ammunition and explosives, obtain a preaward 
ammunition and explosives safety survey. If the prospective contractor 
proposes subcontracting any ammunitions or explosive work, include a 
review of the subcontractor's facility in the preaward survey.
    (b) Postaward phase--(1) Contract administration office 
responsibility. (i) The contract administration office is responsible 
for verifying that the safety requirements of the clause at 252.223- 

[[Page 154]]

7002, Safety Precautions for Ammunition and Explosives, are being 
implemented in a manner that will reduce, to the maximum extent 
practicable, or eliminate the probability of a mishap occurring.
    (ii) The clause at 252.223-7002, Safety Precautions for Ammunition 
and Explosives, requires the contractor to submit to the administrative 
contracting officer (ACO) any postaward requests for a waiver of the 
contract safety standards, a site plan modification, or a construction 
review. The ACO shall review any request and make recommendations to the 
contracting officer. The contracting officer shall make a decision after 
considering recommendations of the ACO and safety personnel responsible 
for ammunition and explosive safety.
    (A) If the request arrives at the contracting office without 
evidence that the ACO has seen it, immediately send it to the ACO for 
review and recommendations.
    (B) When the contracting officer has made a determination approving 
or disapproving the contractor's request, send the determination to the 
ACO for transmission to the contractor.
    (2) Subcontracts--(i) The clause at 252.223-7002, Safety Precautions 
for Ammunition and Explosives, requires the contractor to notify the 
contracting officer when placing a subcontract for ammunition and 
explosives. The contracting officer should coordinate with the safety 
personnel and request supporting contract administration in accordance 
with FAR 42.204. If the contracting officer believes the nature of the 
subcontract work poses a potential danger to Government property, 
Government personnel, production capability, or contract completion, 
request supporting contract administration.
    (ii) If the preaward safety survey identified areas in which a 
subcontractor was not complying with the manual, and the subcontractor 
was supposed to correct the deficiencies before start-up, the 
contracting officer shall require a preoperations survey to verify that 
the corrections were made.
    (iii) When postaward safety reviews by the Government uncover any 
safety deficiencies in the subcontractor's operation, the review team 
shall inform the ACO cognizant of the subcontractor, who shall 
immediately notify the ACO cognizant of the prime contractor. The ACO 
cognizant of the prime shall inform the prime contractor of deficiencies 
requiring correction. The notifications shall be made by the most 
expeditious means appropriate to the circumstance. If a critical safety 
deficiency poses an imminent danger, the ACO cognizant of the prime 
shall make the notifications by the most expeditious means available.

[56 FR 36365, July 31, 1991, as amended at 59 FR 27671, May 27, 1994]



Sec. 223.370-5  Contract clauses.

    Use the clauses at 252.223-7002, Safety Precautions for Ammunition 
and Explosives, and 252.223-7003, Change in Place of Performance--
Ammunition and Explosives, in all solicitations and contracts for 
acquisition to which this section applies.



                Subpart 223.4--Use of Recovered Materials



Sec. 223.404  Procedures.

    (b)(3) A contract for an EPA designated item which does not meet the 
EPA or agency minimum recovered material standards shall not be awarded 
before approval of the written determination required by FAR 
23.404(b)(3). The approving official shall be--
    (A) A general or flag officer, or a member of the Senior Executive 
Service, of the requiring activity; or
    (B) For requiring activities without a general or flag officer or 
member of the Senior Executive Service, the commander of the activity.
    (4) Annual contractor certifications shall be submitted for 
consolidation and reporting in accordance with department/agency 
procedures.

[60 FR 61596, Nov. 30, 1995]



                   Subpart 223.5--Drug-Free Workplace

    Source: 57 FR 32737, July 23, 1992, unless otherwise noted.


[[Page 155]]


223.570  Drug-free work force.



Sec. 223.570-1  Definitions.

    Employee in a sensitive position and illegal drugs, as used in this 
section, are defined in the clause at 252.223-7004, Drug-Free Work 
Force.



Sec. 223.570-2  Policy.

    DoD policy is to ensure that its contractors maintain a program for 
achieving a drug-free work force.



Sec. 223.570-3  General.

    (a) The use of illegal drugs is inconsistent with the law-abiding 
behavior expected of all citizens. Employees who use illegal drugs tend 
to be less productive, less reliable, and prone to greater absenteeism. 
The use of illegal drugs by contractor employees results in the 
potential for increased cost, delay, and risk in the performance of a 
Government contract.
    (b) If a contractor's employees use illegal drugs at any time, it 
can--
    (1) Impair their ability to perform tasks that are critical to 
proper contract performance;
    (2) Increase the potential for accidents and for failures that can 
pose a serious threat to the national security, health, and safety;
    (3) Cause less than the complete reliability, stability, and good 
judgment required of an individual who has access to sensitive 
information;
    (4) Create the possibility of coercion, influence, and irresponsible 
action under pressure that may post a serious risk to national security, 
health, and safety.



Sec. 223.570-4  Contract clause.

    (a) Use the clause at 252.223-7004, Drug-Free Work Force, in all 
solicitations and contracts--
    (1) That involve access to classified information; or
    (2) When the contracting officer determines that the clause is 
necessary for reasons of national security or for the purpose of 
protecting the health or safety of those using or affected by the 
product of, or performance of, the contract.
    (b) Do not use the clause in solicitations and contracts for--
    (1) Commercial items; or
    (2) Performance or partial performance outside the United States, 
its territories, and possessions, unless the contracting officer 
determines such inclusion to be in the best interest of the Government.

[57 FR 32737, July 23, 1992, as amended at 60 FR 61597, Nov. 30, 1995]



                Subpart 223.8--Ozone-Depleting Substances



Sec. 223.803  Policy.

    Section 211.271, Elimination of use of class I ozone-depleting 
substances, places restrictions on award or modification of DoD 
contracts requiring the use of class I ozone-depleting substances. These 
restrictions are in addition to any imposed by the Clean Air Act and 
apply after June 1, 1993, to all DoD contracts, regardless of place of 
performance.

[61 FR 50452, Sept. 26, 1996]



                Subpart 223.70--Hazardous Waste Disposal



Sec. 223.7000  Scope of subpart.

    This subpart implements section 331 of the Defense Authorization Act 
for Fiscal Year 1992 (Pub. L. 102-190) and similar sections in 
subsequent Defense authorization acts.

[58 FR 28466, May 13, 1993]



Sec. 223.7001  Definitions.

    As used in this subpart--
    (a) Remedial action has the meaning given that term by section 
101(24) of the Comprehensive Environmental Response, Compensation, and 
Liability Act of 1980 (42 U.S.C. 9601(24)).
    (b) Corrective action has the meaning given that term under section 
3004(u) of the Solid Waste Disposal Act (42 U.S.C. 6924(u)).

[57 FR 14993, Apr. 23, 1992]



Sec. 223.7002  Contract clause.

    (a) Use the clause at 252.223-7005, Hazardous Waste Liability, in 
all solicitations and contracts for the offsite treatment or disposal of 
hazardous waste from a facility under the jurisdiction of the Secretary 
of Defense--

[[Page 156]]

    (1) Entered into during or after fiscal year 1992;
    (2) With an owner or operator of a hazardous waste treatment or 
disposal facility.
    (b) The clause at 252.223-7005 does not apply to contracts--
    (1) For performance of remedial action or corrective action under--
    (i) The Defense Environmental Restoration Program;
    (ii) Other programs or activities of the Department of Defense; or
    (iii) Authorized State hazardous waste programs;
    (2) Under which the generation of the hazardous waste to be disposed 
of is incidental to the performance of the contract; or
    (3) For disposition of ammunition or solid rocket motors.
    Use of the clause at 252.223-7005 may be waived if the Secretary of 
Defense or the Secretary of the military department concerned determines 
that--
    (1) There is only one responsible offeror or there is no responsible 
offeror willing to provide the reimbursement required by paragraph (b) 
of the clause; or
    (2) Failure to award the contract would place the facility concerned 
in violation of any requirement of the Solid Waste Disposal Act (42 
U.S.C. 6901 et seq.).

[57 FR 14993, Apr. 23, 1992, as amended at 57 FR 53599, Nov. 12, 1992; 
58 FR 28466, May 13, 1993]



  Subpart 223.71--Storage and Disposal of Toxic and Hazardous Materials

    Source: 58 FR 28466, May 13, 1993, unless otherwise noted.



Sec. 223.7100   Policy.

    10 U.S.C. 2692 prohibits storage or disposal of non-DoD-owned toxic 
or hazardous materials on DoD installations, except as provided in 
223.7102. DoD Directive 6050.8, Storage and Disposal of Non-DoD-Owned 
Hazardous or Toxic Materials on DoD Installations, implements 10 U.S.C. 
2692.



Sec. 223.7101  Procedures.

    (a) If the contracting officer is uncertain as to whether particular 
activities are prohibited or fall under one of the exceptions in 
223.7102, the contracting officer should seek advice from the cognizant 
office of counsel.
    (b) When storage, treatment, or disposal of non-DoD-owned toxic or 
hazardous materials is authorized in accordance with this subpart, the 
contract or authorization should specify the types, conditions, and 
quantities of toxic or hazardous materials that may be temporarily 
stored, treated, or disposed of in connection with the contract or as a 
result of the authorized commercial use of a DoD industrial-type 
facility.

[60 FR 61597, Nov. 30, 1995]



Sec. 223.7102   Exceptions.

    (a) The prohibition of 10 U.S.C. 2692 does not apply to--
    (1) The storage of strategic and critical materials in the National 
Defense Stockpile under an agreement for such storage with the 
Administrator of General Services Administration;
    (2) The temporary storage or disposal of explosives in order to 
protect the public or to assist agencies responsible for Federal law 
enforcement in storing or disposing of explosives when no alternative 
solution is available, if such storage or disposal is made in accordance 
with an agreement between the Secretary of Defense and the head of the 
Federal agency concerned;
    (3) The temporary storage or disposal of explosives in order to 
provide emergency lifesaving assistance to civil authorities;
    (4) The disposal of excess explosives produced under a DoD contract, 
if the head of the military department concerned determines, in each 
case, that an alternative feasible means of disposal is not available to 
the contractor, taking into consideration public safety, available 
resources of the contractor, and national defense production 
requirements;
    (5) The temporary storage of nuclear materials or nonnuclear 
classified materials in accordance with an agreement with the Secretary 
of Energy;

[[Page 157]]

    (6) The storage of materials that constitute military resources 
intended to be used during peacetime civil emergencies in accordance 
with applicable DoD regulations;
    (7) The temporary storage of materials of other Federal agencies in 
order to provide assistance and refuge for commercial carriers of such 
material during a transportation emergency;
    (8) The storage of any material that is not owned by DoD, if the 
Secretary of the military department concerned determines that the 
material is required or generated by a private person in connection with 
the authorized and compatible use by that person of an industrial-type 
DoD facility; or
    (9) The treatment and disposal of any non-DoD-owned material if the 
Secretary of the military department concerned--
    (i) Determines that the material is required or generated by a 
private person in connection with the authorized and compatible 
commercial use by that person of an industrial-type facility of that 
military department; and
    (ii) Enters into a contract with that person that--
    (A) Is consistent with the best interest of national defense and 
environmental security; and
    (B) Provides for that person's continued financial and environmental 
responsibility and liability with regard to the material.
    (b) The Secretary of Defense, where DoD Directive 6050.8 applies, 
may grant exceptions to the prohibition of 10 U.S.C. 2692 when essential 
to protect the health and safety of the public from imminent danger.

[58 FR 28466, May 13, 1993, as amended at 60 FR 13076, Mar. 10, 1995; 60 
FR 61597, Nov. 30, 1995]



Sec. 223.7103  Contract clause.

    (a) Use the clause at 252.223-7006, Prohibition on Storage and 
Disposal of Toxic and Hazardous Materials, in all solicitations and 
contracts which require, may require, or permit contractor performance 
on a DoD installation.
    (b) Use the clause at 252.223-7006 with its Alternate I, when the 
Secretary of the military department issues a determination under the 
exception at 223.7102(a)(9).

[60 FR 13076, Mar. 10, 1995]



 Subpart 223.72--Safeguarding Sensitive Conventional Arms, Ammunition, 
                             and Explosives

    Source: 61 FR 7743, Feb. 29, 1996, unless otherwise noted.



Sec. 223.7200  Definition.

    ``Arms, ammunition, and explosives (AA&E),'' as used in this 
subpart, means those items within the scope (chapter 1, paragraph B) of 
DoD 5100.76-M, Physical Security of Sensitive Conventional Arms, 
Ammunition, and Explosives.



Sec. 223.7201  Policy.

    (a) The requirements of DoD 5100.76-M, Physical Security of 
Sensitive Conventional Arms, Ammunition, and Explosives, shall be 
applied to contracts when--
    (1) AA&E will be provided to the contractor or subcontractor as 
Government-furnished property; or
    (2) The principal development, production, manufacture, or purchase 
of AA&E is for DoD use.
    (b) The requirements of DoD 5100.76-M need not be applied to 
contracts when--
    (1) The AA&E to be acquired under the contract is a commercial item 
within the meaning of FAR 2.101; or
    (2) The contract will be performed in a Government-owned contractor-
operated ammunition production facility. However, if subcontracts issued 
under such a contract will meet the criteria of paragraph (a) of this 
section, the requirements of DoD 5100.76-M shall apply.



Sec. 223.7202  Preaward responsibilities.

    When an acquisition involves AA&E, technical or requirements 
personnel shall specify in the purchase request--
    (a) That AA&E is involved; and
    (b) Which physical security requirements of DoD 5100.76-M apply.

[[Page 158]]



Sec. 223.7203  Contract clause.

    Use the clause at 252.223-7007, Safeguarding Sensitive Conventional 
Arms, Ammunition, and Explosives, in all solicitations and contracts to 
which DoD 5100.76-M applies, in accordance with the policy at 223.7201. 
Complete paragraph (b) of the clause based on information provided by 
cognizant technical or requirements personnel.

[61 FR 7743, Feb. 29, 1996; 61 FR 18195, Apr. 24, 1996]



PART 224--PROTECTION OF PRIVACY AND FREEDOM OF INFORMATION--Table of Contents




Sec.

             Subpart 224.1--Protection of Individual Privacy

224.102  General.
224.103  Procedures.

                Subpart 224.2--Freedom of Information Act

224.202  Policy.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.
    Source: 56 FR 36367, July 31, 1991, unless otherwise noted.



             Subpart 224.1--Protection of Individual Privacy



Sec. 224.102  General.

    The Act does not apply to--
    (1) Systems of records the contractor maintains on its employees; or
    (2) The records generated by a State or private educational 
organization under a contract with the Government to provide training, 
when the records (admission forms, grade reports) are similar to and 
commingled with those maintained on other students.



Sec. 224.103  Procedures.

    (b)(2) DoD rules and regulations are contained in DoDD 5400.11, 
Department of Defense Privacy Program, and DoD 5400.11-R, Department of 
Defense Privacy Program.


                Subpart 224.2--Freedom of Information Act


Sec. 224.202  Policy.

    (a) DoD implementation is in DoDD 5400.7, DoD Freedom of Information 
Act Program, and DoD 5400.7-R, DoD Freedom of Information Act Program.


PART 225--FOREIGN ACQUISITION--Table of Contents



Sec.
225.000  Scope of part.
225.000-70  Definitions.
225.000-71  General guidelines.

                Subpart 225.1--Buy American Act--Supplies

225.102  Policy.
225.103  Agreements with certain foreign governments.
225.105  Evaluating offers.
225.107  Acquisition from or through other Government agencies.
225.108  Excepted articles, materials, and supplies.
225.109  Solicitation provisions and contract clauses.
225.109-70  Additional provisions and clauses.

         Subpart 225.2--Buy American Act--Construction Materials

225.202  Policy.
225.205  Solicitation provision and contract clause.
225.205-70  Additional clause.

               Subpart 225.3--Balance of Payments Program

225.302  Policy.
225.303  Procedures.
225.305  Solicitation provision and contract clause.
225.305-70  Additional clause.

     Subpart 225.4--Purchase Under the Trade Agreements Act of 1979

225.401  Definitions.
225.402  Policy.
225.403  Exceptions.
225.403-70  Products subject to trade agreement acts.
225.405  Procedures.
225.408  Solicitation provisions and contract clauses.

                    Subpart 225.6--Customs and Duties

225.602  Policy.
225.603  Procedures.
225.604  Exempted supplies.
225.605  Contract clause.

[[Page 159]]

225.605-70  Additional solicitation provisions and contract clauses.

        Subpart 225.7--Restrictions on Certain Foreign Purchases

225.702  Restrictions.
225.770  Secondary Arab boycott of Israel.
225.770-1  Restriction.
225.770-2  Procedures.
225.770-3  Exceptions.
225.770-4  Waivers
225.770-5  Solicitation provision and contract clause.

        Subpart 225.8--International Agreements and Coordination

225.801  International agreements.
225.802  Procedures.
225.802-70  Contracts for performance outside the United States and 
          Canada.
225.802-71  End user certificates.
225.870  Contracting with Canadian contractors.
225.870-1  General.
225.870-2  Solicitation of Canadian contractors.
225.870-3  Submission of offers.
225.870-4  Contracting procedures.
225.870-5  Contract administration.
225.870-6  Termination procedures.
225.870-7  Acceptance of Canadian supplies.
225.870-8  Industrial security.
225.871  North Atlantic Treaty Organization (NATO) cooperative projects.
225.871-1  Scope.
225.871-2  Definitions.
225.871-3  General.
225.871-4  Statutory waivers.
225.871-5  Directed subcontracting.
225.871-6  Disposal of property.
225.871-7  Congressional notification.
225.872  Contracting with qualifying country sources.
225.872-1  General.
225.872-2  Applicability.
225.872-3  Solicitation procedures.
225.872-4  Evaluation of offers.
225.872-5  Contract administration.
225.872-6  Audit.
225.872-7  Industrial security for qualifying countries.
225.872-8  Subcontracting with qualifying country sources.
225.873  Waiver of United Kingdom commercial exploitation levies.
225.873-1  Policy.
225.873-2  Procedures.
225.873-3  Contract clause.

              225.9--Additional Foreign Acquisition Clauses

225.970  Clause deviations in overseas contracts.

   Subpart 225.70--Authorization Acts, Appropriations Acts, and Other 
               Statutory Restrictions on Foreign Purchases

225.7000  Scope of subpart.
225.7001  Definitions.
225.7002  Restrictions on food, clothing, fabrics, specialty metals and 
          hand or measuring tools.
225.7002-1  Restrictions.
225.7002-2  Exceptions.
225.7002-3  Contract clauses.
225.7003  [Reserved]
225.7004  Restriction on machine tools and powered and non-powered 
          valves.
225.7004-1  Restriction.
225.7004-2  Applicability.
225.7004-3  Exception.
225.7004-4  Waiver.
225.7004-5  U.S. or Canadian origin.
225.7004-6  Contract clauses.
225.7005  [Reserved]
225.7006  Restrictions on construction or repair of vessels in foreign 
          shipyards.
225.7007  Restriction on acquisition of foreign buses.
225.7007-1  Restriction.
225.7007-2  Applicability.
225.7007-3  Exceptions.
225.7007-4  Waiver.
225.7008  Restriction on research and development.
225.7009  Restriction on aircraft ejection seats.
225.7010  Restriction on certain chemical weapons antidote.
225.7010-1  Restriction.
225.7010-2  Exception.
225.7010-3  Waiver.
225.7011  Restriction on Ballistic Missile Defense research, 
          development, test, and evaluation.
225.7011-1  Definitions.
225.7011-2  Restriction.
225.7011-3  Exceptions.
225.7011-4  Procedures.
225.7011-5  Solicitation provision.
225.7012  Restrictions on anchor and mooring chain.
225.7012-1  Restrictions.
225.7012-2  Waiver.
225.7012-3  Contract clauses.
225.7013  Restriction on polyacrylonitrile (PAN) based carbon fiber.
225.7013-1  Restriction.
225.7013-2  Contract clause.
225.7014  [Reserved]
225.7015  Restriction on night vision image intensifier tubes and 
          devices.
225.7015-1  Restriction.
225.7015-2  Exception.
225.7015-3  Contract clause.
225.7016  Restriction on air circuit breakers for naval vessels.
225.7016-1  Restriction.
225.7016-2  Exceptions.
225.7016-3  Waiver.

[[Page 160]]

225.7016-4  Contract clause.
225.7017  Restriction on carbon, alloy, and armor steel plate.
225.7017-1  Restriction.
225.7017-2  Exceptions.
225.7017-3  Waiver.
225.7017-4  Contract clause.
225.7018  Restriction on four ton dolly jacks.
225.7018-1  Restriction.
225.7018-2  Waiver.
225.7018-3  Contract clause.
225.7019  Restrictions on ball and roller bearings.
225.7019-1  Restrictions.
225.7019-2  Exceptions.
225.7019-3  Waiver.
225.7019-4  Contract clause.
225.7020  Restriction on coal and petroleum pitch carbon fiber.
225.7020-1  Restriction.
225.7020-2  Contract clause.
225.7021  Restriction on aircraft fuel cells.
225.7021-1  Restriction.
225.7021-2  Waiver.
225.7021-3  Contract clause.
225.7022  Restrictions on totally enclosed lifeboat survival systems.
225.7022-1  Restrictions.
225.7022-2  Exceptions.
225.7022-3  Waiver.
225.7022-4  Contract clause.
225.7023  Restriction on supercomputers.
225.7023-1  Restriction.
225.7023-2  Waiver.
225.7023-3  Contract clause.

         Subpart 225.71--Other Restrictions on Foreign Purchases

225.7100  Scope of subpart.
225.7101  Definitions.
225.7102  Policy.
225.7103  Exceptions.
225.7104  Waiver.
225.7105  Contract clause.

Subpart 225.72--Reporting Contract Performance Outside the United States

225.7200  Scope of subpart.
225.7201  Exception.
225.7202  Distribution of reports.
225.7203  Contract clause.

         Subpart 225.73--Acquisitions for Foreign Military Sales

225.7300  Scope of subpart.
225.7301  General.
225.7302  Procedures.
225.7303  Pricing acquisitions for foreign military sales.
225.7303-1  Contractor sales to other foreign customers.
225.7303-2  Cost of doing business with a foreign government or an 
          international organization.
225.7303-3  Government-to-government agreements.
225.7303-4  Sales commissions and contingent fees.
225.7303-5  Acquisitions wholly paid for from nonrepayable funds.
225.7304  Source selection.
225.7305  Limitation of liability.
225.7306  Exercise of options for foreign military sales.
225.7307  Implementation of offset arrangements negotiated pursuant to 
          foreign military sales agreements.
225.7307-1  General.
225.7307-2  Procedures.
225.7308  Contract clauses.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36367, July 31, 1991, unless otherwise noted.



Sec. 225.000  Scope of part.

    This part also provides policy and procedures for--
    (1) Purchasing foreign defense supplies, services, and construction 
materials;
    (2) Foreign military sale acquisitions;
    (3) Coordinating acquisitions involving work to be performed in 
foreign countries;
    (4) Cooperative programs.



Sec. 225.000-70  Definitions.

    As used in this part--
    (a) Defense equipment means any equipment, item of supply, 
component, or end product purchased by the DoD.
    (b) Domestic concern means a concern incorporated in the United 
States or an unincorporated concern having its principal place of 
business in the United States.
    (c) Domestic end product has the meaning given in the clause at 
252.225-7001, Buy American Act and Balance of Payments Program, instead 
of the meaning in FAR 25.101.
    (d) Foreign concern means any concern other than a domestic concern.
    (e) Nondesignated country end product means any end product which is 
not a U.S. made end product or a designated country end product.
    (f) Nonqualifying country means a country other than the United 
States or a qualifying country.
    (g) Nonqualifying country end product means an end product which is 
neither

[[Page 161]]

a domestic nor qualifying country end product.
    (h) Nonqualifying country offer means an offer of a nonqualifying 
country end product, including the price of transportation to 
destination.
    (i) Qualifying country is a term used to describe certain countries 
with memoranda of understanding or international agreements with the 
United States. These countries are listed in 225.872-1.
    (j) Qualifying country component and qualifying country end product 
are defined in the clause at 252.225-7001, Buy American Act and Balance 
of Payments Program.
    (k) Qualifying country offer means an offer of a qualifying country 
end product, including the price of transportation to destination.
    (l) Source, when restricted by such words as foreign, domestic, 
qualifying country, etc., refers to the actual manufacturer or producer 
of the end product or component.
    (m) U.S. made end product is defined in the clause at 252.225-7007, 
Trade Agreements.

[56 FR 36367, July 31, 1991, as amended at 59 FR 1289, Jan. 10, 1994]



Sec. 225.000-71  General guidelines.

    To apply the policies and procedures of this part, analyze and 
evaluate offers of foreign end products generally as follows--
    (a) Statutory or policy restrictions. (1) Determine whether the 
product is restricted by--
    (i) DoD Authorization or Appropriations Acts (see subpart 225.70); 
or
    (ii) DoD policy (see subpart 225.71 and FAR 6.302-3).
    (2) Where an exception to or waiver of a restriction would result in 
award of a foreign end product, apply the policies and procedures of the 
Buy American Act or the Balance of Payments Program, and, if applicable, 
the trade agreements.
    (b) Memoranda of understanding or other international agreements. 
(1) Determine whether the offered product is the product of one of the 
countries (qualifying country), listed in 225.872-1.
    (2) If the product is the product of a qualifying country, evaluate 
the offer under 225.105 and 225.872-4.
    (c) Trade agreements. (1) Determine whether the product is covered 
by the Trade Agreements Act or the North American Free Trade Agreement 
Implementation Act (see subpart 225.4).
    (2) If the product is an eligible product under subpart 225.4, 
evaluate the offer under FAR 25.402 and 225.105.
    (3) If the product is not an eligible product, a qualifying country 
end product, or a U.S. made end product, purchase of the foreign end 
product may be prohibited (see FAR 25.402(c) and 225.402(c)).
    (d) Contractors controlled by terrorist nations. (1) Determine 
whether the contractor is controlled by a terrorist nation.
    (2) If the contractor is controlled by a terrorist nation, comply 
with 209.104-1(g).
    (e) Buy American Act and Balance of Payments Program. See the 
evaluation procedures in 225.105.

[56 FR 36367, July 31, 1991, as amended at 59 FR 1289, Jan. 10, 1994]



                Subpart 225.1--Buy American Act--Supplies



Sec. 225.102  Policy.

    (a)(2) The cost of a domestic end product is unreasonable if it is 
not the low evaluated offer when evaluated under 225.105.
    (3)(A) Specific public interest exceptions for DoD are in 225.872.
    (B) Normally, use the evaluation procedures in 225.105, but consider 
recommending a public interest exception where the purposes of the Buy 
American Act are not served, or in order to meet a need set forth in 10 
U.S.C. 2533. For example, a public interest exception may be 
appropriate--
    (1) If accepting the low domestic offer will involve substantial 
foreign expenditures, or accepting the low foreign offer will involve 
substantial domestic expenditures;
    (2) To ensure access to advanced state-of-the-art commercial 
technology; or
    (3) To maintain the same source of supply for spare and replacement 
parts (also see paragraph (b)(iii)(B) of this section)--
    (i) For an end item that qualifies as an American good; or

[[Page 162]]

    (ii) In order not to impair integration of the military and 
commercial industrial base.
    (C) A determination whether to grant a public interest exception 
shall be made after consideration of the factors in 10 U.S.C. 2533--
    (1) At a level above the contracting officer for acquisitions valued 
at less than $100,000;
    (2) By the head of the contracting activity for acquisitions valued 
at $100,000 or more but less than $1,000,000; or
    (3) By the agency head for acquisitions valued at $1,000,000 or 
more.
    (b)(i) A determination that an article, material, or supply is not 
reasonably available is required where no domestic offer is received or 
when domestic offers are insufficient to meet the requirement and award 
is to be made on a nonqualifying country end product.
    (ii) Except as provided in FAR 25.102(b)(1), the determination must 
be approved--
    (A) At a level above the contracting officer, if the acquisition is 
estimated not to exceed $25,000;
    (B) By the chief of the contracting office if the acquisition is 
estimated not to exceed $250,000;
    (C) By the head of the contracting activity (HCA) or immediate 
deputy if the acquisition is estimated not to exceed $2 million; or
    (D) By the head of the agency, or designee at a level no lower than 
an HCA, if the acquisition is estimated to exceed $2 million.
    (iii) A determination as to whether an article, material, or supply 
is reasonably available is not required for--
    (A) End products or components listed in 225.108(d)(1) or FAR 
25.108(d)(1);
    (B) Acquisitions for spare/replacement parts when the acquisition is 
restricted to the original manufacturer or supplier; or
    (C) Acquisition of foreign drugs by the Defense Personnel Support 
Center when the Chief of the Technical Operations Division, Directorate 
of Medical Materiel, determines that only the requested foreign drug 
will fulfill the requirements.
    (iv) Under coordinated acquisition (see 208.70), the determination 
is the responsibility of the requiring department when the requiring 
department specifies acquisition of a foreign end product.

[56 FR 36367, July 31, 1991, as amended at 56 FR 67215, Dec. 30, 1991; 
60 FR 34470, July 3, 1995]



Sec. 225.103  Agreements with certain foreign governments.

    See 225.872.



Sec. 225.105  Evaluating offers.

    Use the following procedures instead of those in FAR 25.105.
    (1) Evaluate offers by adding a 50 percent factor to the price 
(including duty) of each nonqualifying country offer (see Example 1 in 
Table 25-1, Evaluation).
    (i) Nonqualifying country offers include duty in the offered price. 
When applying the factor, evaluate based on the inclusion of duty, 
whether or not duty is to be exempted. If award is made on the 
nonqualifying country offer and duty is to be exempted through inclusion 
of the clause at FAR 52.225-10, Duty-Free Entry, award at the offered 
price minus the amount of duty identified in the provision at 252.225-
7003, Information for Duty-Free Entry Evaluation. See Example 1, 
Alternate II, in Table 25-1, Evaluation.
    (ii) When a nonqualifying country offer includes more than one line 
item, apply the 50 percent factor--
    (A) On an item-by-item basis; or
    (B) On a group of items, if the solicitation specifically provides 
for award on a group basis.
    (2) When application of the factor would not result in the award of 
a domestic end product, e.g., when no domestic offers are received (see 
Example 3 of Table 25-1, Evaluation) or when a qualifying country offer 
is lower than the domestic offer (see Example 2 of Table 25-1, 
Evaluation), evaluate offers without the 50 percent factor.
    (i) If duty is to be exempted through inclusion of the clause at FAR 
52.225-10, Duty-Free Entry, evaluate the nonqualifying country offer 
exclusive of duty by reducing the offered price by the amount of duty 
identified in the clause at 252.225-7003, Information for Duty-Free 
Entry Evaluation (see Examples 2 and 3, Alternate II, of Table

[[Page 163]]

25-1, Evaluation). If award is made on the nonqualifying country offer, 
award at the offered price minus duty.
    (ii) If duty is not to be exempted and duty is to be paid by the 
Government, evaluate the nonqualifying country offer inclusive of duty. 
(See Examples 2 and 3, Alternate I, of Table 25-1, Evaluation.)
    (3) Treat offers of eligible products under acquisitions subject to 
the Trade Agreements Act or NAFTA as if they were qualifying country 
offers. (See Example 4 of Table 25-1, Evaluation.)
    (4) If these evaluation procedures result in a tie between a 
nonqualifying country offer and a domestic offer, make award on the 
domestic offer.
    (5)(i) There are two tests that must be met to determine whether a 
manufactured item is a domestic end product--
    (A) The end product must have been manufactured in the United 
States; and
    (B) The cost of its U.S. and qualifying country components must 
exceed 50 percent of the cost of all of its components. This test is 
applied to end products only, and not to individual components.
    (ii) Because of the component test, the definition of ``domestic end 
product'' is more restrictive than the definition for--
    (A) ``U.S. made end product'' under trade agreements;
    (B) ``Domestically produced or manufactured products'' under small 
business set-asides or small business-small purchase set-asides; and
    (C) Products of small businesses under FAR part 19.
    (iii) If an offer is for a ``U.S. made end product,'' ``domestically 
produced end product,'' or the product of a small business, but is not a 
``domestic end product'' as defined in the clause at 252.225-7001, Buy 
American Act and Balance of Payments Program, treat the offer as a 
nonqualifying country offer. (See Example 4 of Table 25-1, Evaluation.)

                         Table 25-1, Evaluation

                                Example 1

Alternate I: Duty Not Exempted for Nonqualifying Country Offers:
    Nonqualifying Country Offer (including $100 duty)--$6,000
    Domestic Offer--$8,900
    Qualifying Country Offer--$9,100
    Award on Domestic Offer. The 50% evaluation factor is added to the 
nonqualifying country offer, inclusive of duty, yielding an evaluated 
price of $9,000.
Alternate II: Duty Exempted:
    Nonqualifying Country Offer (including $1,000 duty)--$600,000
    Domestic Offer--$910,000
    Qualifying Country Offer--$920,000
    Award on Nonqualifying Country Offer. The addition of the evaluation 
factor yields an evaluated price of $900,000. Since duty is being 
exempted for nonqualifying country offers, the duty is subtracted from 
the offered price which is awarded at $599,000.

                                Example 2

Alternate I: Duty Not Exempted for Nonqualifying Country Offers:
    Nonqualifying Country Offer (including $100 duty)--$6,000
    Domestic Offer--$8,500
    Qualifying Country Offer--$7,800
    Award on Nonqualifying Country Offer. In this case, the application 
of the evaluation factor to the nonqualifying country offer results in a 
price ($9,000) that is higher than the other two offers, but would not 
result in award of a domestic offer, since the qualifying country offer 
is lower. Therefore, all offers are evaluated without the factor. Since 
duty is not being exempted for nonqualifying country offers, the offer 
is evaluated and award is made at the price inclusive of duty ($6,000).
Alternate II: Duty Exempted:
    Nonqualifying Country Offer (including $1,000 duty)--$880,500
    Domestic Offer--$950,000
    Qualifying Country Offer--$880,000
    Award on Nonqualifying Country Offer. Again, the addition of the 
evaluation factor would not result in the award of a domestic offer and 
all offers are evaluated without the factor. Since duty is being 
exempted for nonqualifying country offers, the duty identified by the 
offeror is subtracted from the offered price, which is evaluated and 
awarded at $879,500.

                                Example 3

Alternate I: Duty Not Exempted for Nonqualifying Country Offers:
    Nonqualifying Country Offer (including $1,000 duty)--$10,000
    Qualifying Country Offer--$9,500
    Award on Qualifying Country Offer. Since no domestic offers are 
received, the foreign offers are evaluated without the evaluation 
factor. Since duty is not being exempted and

[[Page 164]]

would be paid by the Government, the nonqualifying country offer is 
evaluated inclusive of duty.
Alternate II: Duty Exempted:
    Nonqualifying Country Offer (including $1,000 duty)--$880,500
    Qualifying Country Offer--$880,000
    Award on Nonqualifying Country Offer. Since duty is being exempted, 
duty is subtracted from the nonqualifying country offer, which is 
evaluated and awarded at $879,500.

                                Example 4

Alternate I:
    Offer of U.S. Made End Product which is not a Domestic Offer--
$800,000
    Domestic Offer--$820,000
    Eligible Product--$830,000
    Award on Domestic End Product. U.S. made end products which are not 
also domestic end products are evaluated the same as nonqualifying 
country end products. Adding the 50% evaluation factor yields an 
evaluated price of $1,200,000.
Alternate II:
    Offer of U.S. Made End Product which is not a Domestic Offer--
$800,000
    Eligible Product--$820,000
    Domestic Offer--$830,000
    Award on U.S. Made End Product. Adding the 50% evaluation factor to 
the U.S. made end product would not result in the award of a domestic 
end product since the eligible product, which is evaluated the same as a 
qualifying country offer, is lower. All offers are evaluated without the 
factor.

[56 FR 36367, July 31, 1991, as amended at 59 FR 1289, Jan. 10, 1994]



Sec. 225.107  Acquisition from or through other Government agencies.

    Contracting activities must apply the evaluation procedures in 
225.105 when using Federal supply schedules.



Sec. 225.108  Excepted articles, materials, and supplies.

    (a)(i)DoD has determined that the articles, materials, and supplies 
listed in FAR 25.108(d)(1) and in paragraph (d)(1) of this section, when 
purchased as end items or components, are not mined, produced, or 
manufactured in the United States in sufficient and reasonably available 
commercial quantities of a satisfactory quality. Regard these items or 
components as being of domestic origin when incorporated in--
    (A) An end product or construction material manufactured in the 
United States; or
    (B) A qualifying country end product or construction material. (For 
construction material, see FAR 25.2.)
    (ii) Scrap is domestic in origin if generated in, collected in, and 
prepared for processing in the United States.
    (d)(1) Aluminum clad steel wire. Sperm oil.



Sec. 225.109  Solicitation provisions and contract clauses.

    (a) Use the provision at 252.225-7000, Buy American Act--Balance of 
Payments Program Certificate, instead of the provisions at FAR 52.225-1, 
Buy American Certificate, and FAR 52.225-6, Balance of Payments Program 
Certificate. Use the provision in any solicitation which includes the 
clause at 252.225-7001, Buy American Act and Balance of Payments 
Program, unless the solicitation includes either the clause at 252.225-
7007, Trade Agreements Act, or the clause at 252.225-7036, North 
American Free Trade Agreements Implementation Act.
    (b) For oral solicitations inform prospective vendors that only 
domestic and qualifying country end products are acceptable, except 
nonqualifying country end products are acceptable if--
    (i) The items are excepted either on a blanket or an individual 
basis; or
    (ii) The price of the nonqualifying country end product is the low 
offer under the evaluation procedures in 225.105.
    (d) Use the clause at 252.225-7001, Buy American Act and Balance of 
Payments Program, instead of the clauses at FAR 52.225-3, Buy American 
Act-Supplies, and FAR 52.225-7, Balance of Payments Program, in 
solicitations and contracts for supplies or services which require the 
furnishing of supplies.
    (i) Do not use the clause if an exception to the Buy American Act or 
Balance of Payments Program is known to apply.
    (ii) The clause need not be used if nonqualifying country end 
products are ineligible for award, including--
    (A) End products restricted to domestic or domestic and qualifying 
country sources under Appropriations and Authorization Act restrictions 
(see 225.70);

[[Page 165]]

    (B) End products restricted to domestic or domestic and Canadian 
sources (see 225.71); and
    (C) End products restricted under the authority of FAR 6.302-3.
    (iii) The clause may be used if the contracting officer anticipates 
a waiver of the restrictions in paragraphs (d)(ii) (A) or (B) of this 
section.

[56 FR 36367, July 31, 1991, as amended at 57 FR 42630, Sept. 15, 1992; 
59 FR 1289, Jan. 10, 1994]



Sec. 225.109-70  Additional provisions and clauses.

    (a) Use the clause at 252.225-7002, Qualifying Country Sources as 
Subcontractors, in all solicitations and contracts that include the 
clause at 252.225-7001, Buy American Act and Balance of Payments 
Program.
    (b) Use the provision at 252.225-7003, Information for Duty-Free 
Entry Evaluation, in all solicitations that include the clause at 
252.225-7001, Buy American Act and Balance of Payments Program.
    (c) When only domestic end products are acceptable, the solicitation 
must make a statement to that effect.



         Subpart 225.2--Buy American Act--Construction Materials



Sec. 225.202  Policy.

    (b) A nonavailability determination is not required for construction 
materials listed in FAR 25.108(d)(1) or in 225.108(d)(1). For other 
materials, a nonavailability determination must be approved at the 
levels specified in 225.102(b)(ii). Use the estimated value of the 
construction materials to determine the approval level.
225.205  Solicitation provision and contract clause.



Sec. 225.205-70  Additional clause.

    Use the clause at 252.225-7004, Nondomestic Construction Materials, 
in solicitations and contracts if construction materials may be used 
without regard to the Buy American Act. List the excepted items in the 
clause.



               Subpart 225.3--Balance of Payments Program



Sec. 225.302  Policy.

    (a) DoD implements the Balance of Payments Program using evaluation 
factors similar to those which implement the Buy American Act. The 
Balance of Payments Program restrictions--
    (i) Apply to acquisitions for foreign military sales;
    (ii) Do not apply to services, except services which primarily 
involve the acquisition of supplies;
    (iii) Do not apply to qualifying country end products; and
    (iv) Do not apply to articles, materials, or supplies produced or 
manufactured in Panama when purchased by and for the use of U.S. forces 
in Panama.
    (b)(i) Before solicitation, the determinations required by FAR 
25.302(b)(2) and (3), or a determination that the cost of acquiring 
domestic end products or services is unreasonable (FAR 25.303(b)), may 
be made by the following individuals or their immediate deputies--

                                  Army

Deputy Chief of Staff for Procurement, U.S. Army Material Command
Commander-in-Chief, U.S. Army, Europe and DCSLOG, U.S. Army, Europe
Commander, Eighth U.S. Army and Chief of Staff, Eighth U.S. Army
Commander, Corps of Engineers Command
Commander, U.S. Army, Japan
Commander, U.S. Army Medical Research and Development Command
Commander, U.S. Army Forces Command
Commander, U.S. Army, South

                                  Navy

Commander-in-Chief, U.S. Naval Forces, Europe
Commander, U.S. Naval Forces, Japan
Commander, U.S. Naval Forces, Philippines
Commander-in-Chief, U.S. Atlantic Fleet
Commander-in-Chief, U.S. Pacific Fleet
Commander, Military Sealift Command
Commandant, U.S. Marine Corps
Commander, Naval Facilities Engineering Command
Commanding General, III Marine Amphibious Force

                                Air Force

Commander, U.S. Air Forces in Europe
Commander, Pacific Air Force

[[Page 166]]

Commander, Air Mobility Command
Commander, Air Force Materiel Command
Commander, Air Combat Command
Commander, Air Force Space Command

                    Advanced Research Projects Agency

Director, Contracts Management Office

                   Defense Information Systems Agency

Director

                        Defense Logistics Agency

Executive Director, Procurement

                         Defense Mapping Agency

Deputy Director for Acquisition, Installations, and Logistics

           Department of Defense Office of Dependents Schools

Director

                        On-Site Inspection Agency

Principal Deputy Director

    (ii) The authority to make the determinations required by 
225.302(b)(i) may be redelegated below the levels in paragraph (b)(i) 
for acquisitions estimated at $500,000 or less in foreign cost.
    (3)(A) This authority is not intended for use in making repetitive 
supply acquisitions or acquisitions of total annual supply requirements 
of items available in the United States but not available within the 
time required.
    (B) DoD has determined that requirements for the items on the lists 
at FAR 25.108(d)(1) and at 225.108(d)(1) can only be filled by a foreign 
end product.
    (4) DoD has determined the following items can only be acquired or 
performed in the country concerned--
    (A) Maintenance and repair of, and acquisition of spare parts for, 
foreign-manufactured vehicles, equipment, machinery, and systems; 
provided, in the case of spare parts, the acquisition is restricted to 
the original manufacturer or its supplier in accordance with DoD 
standardization policy (see DoD Directive 4120.3, Defense 
Standardization and Specification Program);
    (B) Industrial gases;
    (C) Brand drugs specified by the Defense Medical Materiel Board;
    (D) Bulk construction materials: sand, gravel, and other soil 
materials, stone, concrete masonry units, and fired brick; and
    (E) Overhaul and repair of vessels, aircraft, and vehicles which--
    (1) Are home-ported/stationed/deployed overseas; and
    (2) Cannot practically return to the United States or to U.S. 
operated repair facilities.
    (F) Ready-mixed asphalt and portland cement concrete, provided that 
foreign cost is estimated at not more than $100,000.
    (c)(i) Purchase of materials, equipment, and supplies for 
construction overseas shall generally be the responsibility of the 
contractor performing the work; but where necessary to comply with 
foreign law, to avoid taxation, or to obtain other advantages, consider 
direct purchase. Consider savings that may be obtained by exemptions 
from import and other taxes and, to the extent economical, take 
advantage of tax exemptions available under existing agreements.
    (ii) When purchase of materials is the responsibility of the 
construction contractor, the evaluation differential is determined 
through the estimating process and applied before solicitation.

[56 FR 36367, July 31, 1991, as amended at 56 FR 67215, Dec. 30, 1991; 
57 FR 42630, Sept. 15, 1992; 59 FR 27671, May 27, 1994; 60 FR 61597, 
Nov. 30, 1995]



Sec. 225.303  Procedures.

    (a) Solicitation of offers. When soliciting orally, advise vendors 
that only domestic and qualifying country end products are acceptable 
unless an exception applies or the price of a domestic end product is 
unreasonable.
    (b) Evaluation. (i) Use the evaluation procedures in 225.105 instead 
of the evaluation procedures in FAR 25.303(b). Treatment of duty may 
differ when delivery is overseas.
    (A) Duty may not be applicable to nonqualifying country offers.
    (B) The U.S. Government cannot guarantee the exemption of duty for 
components or end products imported into foreign countries.
    (C) Foreign governments may impose duties, and offers including such 
duties must be evaluated as offered.
    (ii) Where the evaluation procedures in 225.105 result in the award 
of a nonqualifying country end product, the acquisition of domestic end 
products is

[[Page 167]]

unreasonable or inconsistent with public interest. If no domestic end 
product offers are received, the determination in FAR 25.302(b)(3) is 
not required.
225.305  Solicitation provision and contract clause.



Sec. 225.305-70  Additional clause.

    In order to allow accurate reporting, by cognizant accounting and 
disbursing officers, of foreign and domestic expenditures, use the 
clause at 252.225-7005, Identification of Expenditures in the United 
States, in all negotiated contracts over $25,000 where--
    (a) For supply contracts, the contract requires end products 
manufactured or produced in the United States; and
    (1) The contractor is a foreign concern; or
    (2) The contractor is a domestic concern and the Government will 
take title outside the United States.
    (b) For contracts for construction, repair, and maintenance of real 
property, or services to be performed outside the United States--
    (1) The contractor is a domestic concern; or
    (2) The contractor is a foreign concern and the contract requires 
acquisition of materials, equipment, or services from U.S. sources.



     Subpart 225.4--Purchases Under the Trade Agreements Act of 1979



Sec. 225.401  Definitions.

    Caribbean Basin country end product includes petroleum or any 
product derived from petroleum.
    Eligible product means, instead of the definition at FAR 25.401, a 
designated, NAFTA, or Caribbean Basin country end product in the 
categories listed in 225.403.70.

[59 FR 1289, Jan. 10, 1994, as amended at 59 FR 23169, May 5, 1994]



Sec. 225.402  Policy.

    (a) To estimate the value of the acquisition, use the total 
estimated value of end products subject to trade agreement acts (see 
225.403-70).
    (1) See 225.105 for evaluation of eligible products and U.S. made 
end products.
    (c)(i) Except as provided in paragraphs (c) (ii) and (iii) of this 
section, do not purchase nondesignated country end products subject to 
the Trade Agreements Act unless they are NAFTA, Caribbean Basin, or 
qualifying country end products (see 225.872-1).
    (ii) The prohibition in paragraph (c)(i) of this section does not 
apply when the contracting officer determines that offers of U.S. made, 
qualifying country, or eligible products from responsive, responsible 
offerors are either--
    (A) Not received; or
    (B) Insufficient to fill the Government's requirements. In these 
cases, accept all responsive, responsible offers of U.S. made, 
qualifying country, and eligible products before accepting any other 
offers.
    (iii) National interest waivers under Section 302(b)(2) of the Trade 
Agreements Act are approved on a case-by-case basis. Except as delegated 
in paragraphs (c)(iii) (A) and (B) of this section, a request for a 
national interest waiver shall include supporting rationale and be 
submitted under department/agency procedures to the Director of Defense 
Procurement.
    (A) The head of the contracting activity may approve a national 
interest waiver for a purchase by an overseas purchasing activity of 
products critical to the support of U.S. forces stationed abroad. The 
waiver must be supported by a written statement from the requiring 
activity stating that the requirement is critical for the support of 
U.S. forces stationed abroad.
    (B) The Commander, Defense Fuel Supply Center, may approve national 
interest waivers for purchases of fuel for use by U.S. forces overseas.

[56 FR 36367, July 31, 1991, as amended at 59 FR 1289, Jan. 10, 1994; 59 
FR 39974, Aug. 5, 1994; 61 FR 130, Jan. 3, 1996; 61 FR 7744, Feb. 29, 
1996]



Sec. 225.403  Exceptions.

    (c) The evaluation preference for small disadvantaged businesses in 
subpart 219.70 does not displace an offer of an eligible product.
    (d)(1)(A) If a department or agency considers an individual 
acquisition of a

[[Page 168]]

product to be indispensable for national security or national defense 
purposes and appropriate for exclusion from the provisions of FAR 
subpart 25.4, it may submit a request with supporting rationale to the 
Director of Defense Procurement (USD(A&T)DP).
    (B) The following national security/national defense exceptions do 
not require approval by USD(A&T)DP--
    (1) Where purchase from foreign sources is restricted by the DoD 
annual Appropriations or Authorization Acts (see subpart 225.70) or by 
the establishment of required sources of supplies and services under FAR 
part 8.
    (2) Where competition from foreign sources is restricted under the 
authority of FAR 6.302-3(a)(2)(i). Provide USD(A&T)DP a copy of the 
justification for restricting competition in accordance with FAR 
25.402(e) and FAR 6.303-1(d).
    (3) Where competition from foreign sources is restricted under 
subpart 225.71.
    (g)(4) In accordance with Section 8094 of the Fiscal Year 1994 
Defense Appropriations Act (Public Law 103-139), the exception for 
petroleum and any product derived from petroleum does not apply.

[56 FR 36367, July 31, 1991, as amended at 59 FR 23169, May 5, 1994; 60 
FR 61597, Nov. 30, 1995; 61 FR 37841, July 22, 1996; 61 FR 50453, Sept. 
26, 1996]



Sec. 225.403-70  Products subject to trade agreement acts.

    Foreign end products subject to the Trade Agreements Act and NAFTA 
are those in the following Federal supply groups (FSG). If a product is 
not in one of the listed groups, the Trade Agreements Act and NAFTA do 
not apply. The definition of Caribbean Basin country end products in FAR 
25.401 excludes those end products which are not eligible for duty-free 
treatment under 19 U.S.C. 2703(b). However, 225.401 expands the 
definition of Caribbean Basin country end products to include petroleum 
and any product derived from petroleum. The list of products has been 
annotated to indicate those products which are eligible for designated 
and NAFTA countries, but are not presently eligible for Caribbean Basin 
countries.

                                                                        
              FSG                          Category/Description         
                                                                        
22                               Railway equipment                      
23                               Motor vehicles, trailers, and cycles   
                                  (except 2350 and buses under 2310)    
24                               Tractors                               
25                               Vehicular equipment components         
26                               Tires and tubes                        
29                               Engine accessories                     
30                               Mechanical power transmission equipment
32                               Woodworking machinery and equipment    
34                               Metalworking machinery (except 3408,   
                                  3410-3419, 3426, 3433, 3441-3443,     
                                  3446, 3448, 3449, 3460, 3461)         
35                               Service and trade equipment            
36                               Special industry machinery (except     
                                  3690)                                 
37                               Agricultural machinery and equipment   
38                               Construction, mining, excavating, and  
                                  highway maintenance equipment         
39                               Materials handling equipment           
40                               Rope, cable, chain and fittings        
41                               Refrigeration and air conditioning     
                                  equipment                             
42                               Fire fighting, rescue and safety       
                                  equipment                             
43                               Pumps and compressors                  
44                               Furnace, steam plant and drying        
                                  equipment (except 4470)               
45                               Plumbing, heating, and sanitation      
                                  equipment                             
46                               Water purification and sewage treatment
                                  equipment                             
47                               Piping, tubing, hose, and fitting      
48                               Valves                                 
49                               Maintenance and repair shop equipment  
                                  (except 4920-4927, 4931-4935, 4960)   
53                               Hardware and abrasives                 
54                               Prefabricated structures and           
                                  scaffolding                           
55                               Lumber, millwork, plywood, and veneer  
56                               Construction and building materials    
61                               Electric wire, and power and           
                                  distribution equipment                
62                               Lighting fixtures and lamps            
63                               Alarm and signal systems               
65                               Medical, dental, and veterinary        
                                  equipment and supplies                
66                               Instruments and laboratory equipment   
                                  (except aircraft clocks under 6645)-- 
                                  See FAR 25.401 exclusion of certain   
                                  watches and watch parts for certain   
                                  Caribbean Basin countries             
67                               Photographic equipment                 
68                               Chemicals and chemical products        
69                               Training aids and devices              
70                               General purpose ADPE, software,        
                                  supplies, and support equipment       
71                               Furniture                              
72                               Household and commercial furnishings   
                                  and appliances                        

[[Page 169]]

                                                                        
73                               Food preparation and serving equipment 
74                               Office machines, visible record        
                                  equipment and ADP equipment           
75                               Office supplies and devices            
76                               Books, maps, and other publications    
77                               Musical instruments, phonographs, and  
                                  home type radios                      
78                               Recreational and athletic equipment    
79                               Cleaning equipment and supplies        
80                               Brushes, paints, sealers, and adhesives
81                               Containers, packaging and packing      
                                  supplies (except 8140)                
84                               Luggage (only 8460)--See FAR 25.401 for
                                  exclusion of luggage for Caribbean    
                                  Basin countries                       
85                               Toiletries                             
87                               Agricultural supplies                  
88                               Live animals                           
91                               Fuels, oils and waxes                  
93                               Nonmetallic fabricated materials       
94                               Nonmetallic crude materials            
96                               Ores, minerals, and their primary      
                                  products                              
99                               Miscellaneous                          
                                                                        


[56 FR 36367, July 31, 1991, as amended at 59 FR 1289, Jan. 10, 1994; 59 
FR 23169, May 5, 1994; 61 FR 37841, July 22, 1996]



Sec. 225.405  Procedures.

    (d) The requirements of FAR 25.405(d) do not apply to offshore 
acquisitions or to Defense Fuel Supply Center post, camp, or station 
overseas requirements.



Sec. 225.408  Solicitation provisions and contract clauses.

    (a)(1) Use the provision at 252.225-7006, Buy American Act-Trade 
Agreements-Balance of Payments Program Certificate, instead of the 
provision at FAR 52.225-8, Buy American Act-Trade Agreements-Balance of 
Payments Program Certificate, in all solicitations that include the 
clause at 252.225-7007, Trade Agreements.
    (2) Use the clause at 252.225-7007, Trade Agreements, instead of the 
clause at FAR 52.225-9, Buy American Act--Trade Agreements--Balance of 
Payments Program. The clause need not be used where purchase from 
foreign sources is restricted (see 225.403(d)(1)(B)). The clause may be 
used where the contracting officer anticipates a waiver of the 
restriction. For procurements by the U.S. Army Corps of Engineers, use 
the clause with its Alternate I.
    (3) Use the provision at 252.225-7035, Buy American Act--North 
American Free Trade Agreement Implementation Act--Balance of Payments 
Program Certificate, instead of the provision at FAR 52.225-20, Buy 
American Act--North American Free Trade Agreement Implementation Act--
Balance of Payments Program Certificate, in all solicitations that 
include the clause at 252.225-7036, North American Free Trade Agreement 
Implementation Act.
    (4)(A) Use the clause at 252.225-7036, North American Free Trade 
Agreement Implementation Act, instead of the clause at FAR 52.225-21, 
Buy American Act--North American Free Trade Agreement Implementation 
Act--Balance of Payments Program. The clause need not be used where 
purchase from foreign sources is restricted (see 225.403(d)(1)(B)). The 
clause may be used where the contracting officer anticipates a waiver of 
the restriction.
    (B)(i) Use the clause in all solicitations and contracts for the 
items listed at 225.403-70, when the estimated value is $50,000 or more 
and the Trade Agreements Act does not apply. Include the clause in 
solicitations for multiple line items if any line item is subject to 
NAFTA.
    (ii) Use the clause with its Alternate I when the estimated value is 
between $25,000 and $50,000.
    (C) Application of the procedures in 225.402(a) and the acquisition 
of noneligible and eligible products under the same solicitation may 
result in the application of the North American Free Trade Agreement 
Implementation Act to only some of the items solicited. In such case, 
indicate in the schedule those items covered by the Act.

[56 FR 36367, July 31, 1991, as amended at 57 FR 42630, Sept. 15, 1992. 
Redesignated and amended at 59 FR 1289, Jan. 10, 1994; 60 FR 29498, June 
5, 1995; 61 FR 16880, Apr. 18, 1996]



                    Subpart 225.6--Customs and Duties



Sec. 225.602  Policy.

    (1) Section XXII, chapter 98, subchapter VIII, Item 9808.00.30 of 
the Harmonized Tariff Schedule of the United

[[Page 170]]

States authorizes duty-free importation of defense supplies.
    (2) 19 U.S.C. 1309 authorizes duty-free importation of certain 
supplies (not including equipment) for vessels or aircraft operated by 
the United States (see FAR 25.604(b)).
    (3) DoD will issue duty-free entry certificates for--
    (i) Qualifying country supplies (end products and components) on all 
defense contracts;
    (ii) Eligible products (end products but not components) on defense 
contracts subject to the Trade Agreements Act or NAFTA; and
    (iii) Other foreign supplies, if there is reasonable assurance that 
the administrative and other costs of processing and controlling the 
certificates will not exceed the amount of duty that would be paid.

[56 FR 36367, July 31, 1991, as amended at 59 FR 1290, Jan. 10, 1994]



Sec. 225.603  Procedures.

    (1) Issue duty-free entry certificates--
    (i) In accordance with the policy in 225.602;
    (ii) On contracts containing the clauses in--
    (A) FAR 52.225-10, Duty-Free Entry; or
    (B) 252.225-7009, Duty-Free Entry--Qualifying Country End Products 
and Supplies; or
    (C) 252.225-7037, Duty-Free Entry--NAFTA Country End Products and 
Supplies; or
    (iii) On other contracts that fall within one of the following 
categories--
    (A) Direct purchases of foreign supplies under a DoD prime contract, 
whether title passes at point of origin or at destination in the United 
States; provided, the contract states that the final price is exclusive 
of duty;
    (B) Purchases of foreign supplies by a domestic prime contractor 
under a cost-reimbursement type contract or by a cost-reimbursement type 
subcontractor (where no fixed-price prime or fixed-price subcontract 
intervenes between the purchaser and the Government), whether title 
passes at point of origin or at destination in the United States. If a 
fixed-price prime or fixed-price subcontract intervenes, follow the 
criteria stated in paragraph (1)(iii)(C) of this section; or
    (C) Purchases of foreign supplies by a fixed-price domestic prime 
contractor, a fixed-price subcontractor, or a cost-type subcontractor 
where a fixed-price prime contract, or fixed-price subcontract 
intervenes; provided--
    (1) The fixed-price prime contract and, where applicable, fixed-
price subcontract prices are, or are amended to be, exclusive of duty;
    (2) The prime contractor and, if applicable, the subcontractors 
concerned certify that--
    (i) The supplies so purchased will be delivered to the Government or 
incorporated in Government-owned property or in an end product to be 
furnished to the Government; and
    (ii) The duty will be paid if such supplies or any portion are used 
for other than the performance of the Government contract or disposed of 
other than for the benefit of the Government in accordance with the 
contract terms; and
    (3) Such acquisition abroad is authorized by the terms of the 
contract, the subcontract, or by the contracting officer. In any case, 
follow the procedures required by the clauses in FAR 52.225-10, Duty-
Free Entry, and 252.225-7009, Duty-Free Entry--Qualifying Country End 
Products and Supples, and 252.225-7037, Duty-Free Entry--NAFTA Country 
End Products and Supplies, to the extent practicable.
    (2) Do not issue duty-free entry certificates or exempt duty for end 
products, components, or supplies already entered into the customs 
territory of the United States for which duty has already been paid.
    (3) If a duty-free entry certificate is issued a contractor under a 
fixed-price contract based on the contractor's providing a domestic or 
qualifying country end product, component, or supply, negotiate an 
equitable reduction in the contract price if the contractor subsequently 
furnishes a nonqualifying country end product, component, or supply.
    (4) Exclude duty from the contract price for end products, 
components, or supplies that are being accorded duty-free entry.

[[Page 171]]

    (5) Except as required under the evaluation procedures in 225.105 
for the Buy American Act, do not evaluate duty for items accorded duty-
free entry.
    (6) Even if duty is evaluated under Subpart 225.1, the supplies may 
still be authorized duty-free entry if to do so is consistent with the 
policies in 225.602. However, if the Government will pay a duty, then 
the cost of the duty must be included in the contract price and 
evaluated as part of the offer.
    (b) Formal entry and release. (i) The administrative contracting 
officer must--
    (A) Ensure that prime contractors are aware of and understand any 
Duty-Free Entry clause requirements. Contractors should understand that 
failure by them or their subcontractors to include the data required by 
the clause will result in treatment of the shipment as without benefit 
of free entry under section XXII, chapter 98, subchapter VIII, Item 
9808.00.30 of the Harmonized Tariff Schedule of the United States.
    (B) Upon receipt of the required notice of purchase of foreign 
supplies from the contractor or any tier subcontractor--
    (1) Verify the duty-free entitlement of goods entering under the 
contract; and
    (2) Review the prime contract to ensure that performance of the 
contract requires the foreign supplies (quantity and price) identified 
in the notice.
    (C) Upon receipt of notification from the contractor that it is 
placing a foreign purchase that was not identified at the time of 
contract award--
    (1) Determine whether a reduction in the contract price is required 
under the clause at FAR 52.225-10, Duty-Free Entry;
    (2) If so, make an equitable adjustment in the contract price, 
unless the procuring contracting officer waives this adjustment;
    (3) Determine the price of the foreign supplies exclusive of duty, 
and advise the contractor that that amount will be the maximum dollar 
value of supplies for which duty-free entry certificates will be issued.
    (D) Within 20 days after receiving the notification of purchase of 
foreign supplies, forward the following information in the format 
indicated to the Commander, DCMAO New York, ATTN Customs Team, DCMDN-
GNIC, 207 New York Avenue, Staten Island, NY 10305-5013--

We have received a contractor notification of the purchase of foreign 
supplies. I have verified that foreign supplies are required for the 
performance of the contract. If required, the prime contract price has 
been or will be adjusted.
Prime Contractor Name and Address:
Prime Contractor CAGE Code:
Prime Contract Number plus Delivery Order Number, if applicable:
Total Dollar Value of the Prime Contract or Delivery Order:
Expiration Date of the Prime Contract or Delivery Order:
Foreign Supplier Name and Address:
Number of Subcontract/Purchase Order for Foreign Supplies:
Total Dollar Value of the Subcontract for Foreign Supplies:
Expiration Date of the Subcontract for Foreign Supplies:
CAO Activity Address Number:
ACO Name and Telephone Number:
ACO Code:
Signature:
Title:

    (E) If a contract modification results in a change to any data 
verifying duty-free entitlement previously furnished, forward a revised 
notification including the changed data to DCMAO New York.
    (ii) The responsibility for issuing duty-free entry certificates for 
foreign supplies purchased under a DoD contract or subcontract rests 
with the Customs Team, DCMDN-GNIC, DCMAO New York. Upon receipt of 
import documentation for incoming shipments from the contractor, its 
agent, or the U.S. Customs Service, DCMAO New York will verify the duty-
free entitlement and execute the duty-free entry certificate.
    (iii) Upon arrival of foreign supplies at ports of entry, the 
consignee, generally the contractor or its agent (import broker) for 
shipments to other than a military installation, will file U.S. Customs 
Form 7501, 7501A, or 7506, with the District Director of Customs.
    (c) Immediate entry and release. Importations made in the name of a 
DoD

[[Page 172]]

military facility or being shipped directly to a military facility are 
entitled to release under the immediate delivery procedure.
    (i) A DoD immediate delivery application has been approved and is on 
file at Customs Headquarters.
    (ii) The application is for an indefinite period and is good for all 
Customs districts, areas, and ports.

[56 FR 36367, July 31, 1991, as amended at 59 FR 1290, Jan. 10, 1994; 60 
FR 29498, June 5, 1995]



Sec. 225.604  Exempted supplies.

    (b)(i) The term ``supplies''--
    (A) Includes articles known as ``stores,'' such as food, medicines, 
and toiletries, as well as all consumable articles necessary and 
appropriate for the propulsion, operation, and maintenance of the vessel 
or aircraft, such as fuel, oil, gasoline, grease, paint, cleansing 
compounds, solvents, wiping rags, and polishes.
    (B) Does not include portable articles necessary and appropriate for 
the navigation, operation, or maintenance of vessel or aircraft and for 
the comfort and safety of the persons on board, such as rope, bolts and 
nuts, bedding, china and cutlery, which are included in the term 
``equipment.''
    (ii) The duty-free certificate shall be printed, stamped, or typed 
on the face of Customs Form 7501, or attached, and shall be executed by 
a duly designated officer or civilian official of the appropriate 
department or agency in the following form--
    (Date)____________________
    I certify that the acquisition of this material constituted a 
purchase of supplies by the United States for vessels or aircraft 
operated by the United States, and is admissible free of duty pursuant 
to 19 U.S.C. 1309.
    (Name)____________________
    (Title)____________________
    (Organization)____________________



Sec. 225.605  Contract clause.

    (b) The dollar amount in paragraphs (b)(1) and (i)(2) of the FAR 
52.225-10 clause may be reduced appropriately in solicitations and 
contracts of $100,000 or less.



Sec. 225.605-70  Additional solicitation provisions and contract clauses.

    (a) Use the clause at 252.225-7008, Supplies to be Accorded Duty-
Free Entry, in all solicitations and contracts when--
    (1) Duty-free entry will be granted under the resultant contract; 
and
    (2) The solicitation and contract include the clauses at--
    (i) FAR 52.225-10, Duty-Free Entry; or
    (ii) 252.225-7009, Duty-Free Entry--Qualifying Country End Products 
and Supplies.
    (b) Use the clause at 252.225-7009, Duty-Free Entry--Qualifying 
Country End Products and Supplies, in all solicitations and contracts 
for supplies and in all solicitations and contracts for services 
involving the furnishing of supplies. Do not use the clause in a 
contract for supplies for exclusive use outside the United States.
    (c) Use the clause at 252.225-7037, Duty-Free Entry--NAFTA Country 
End Products and Supplies, in all solicitations and contracts for 
supplies and services when the clause at FAR 52.225-10, Duty-Free Entry, 
is not used and NAFTA applies (see 225.403-70).
    (d) Use the clause at 252.225-7010, Duty-Free Entry--Additional 
Provisions, in all solicitations and contracts which include the clause 
at FAR 52.225-10, Duty-Free Entry.

[56 FR 36367, July 31, 1991, as amended at 59 FR 1290, Jan. 10, 1994]



        Subpart 225.7--Restrictions on Certain Foreign Purchases



Sec. 225.702  Restrictions.

    See 209.104-1(g)(i) for restrictions on contracting with firms owned 
or controlled by foreign governments that support terrorism. See 
209.104-1(g)(ii) for prohibition on award of a DoD contract under a 
national security program to an entity controlled by a foreign 
government when access to proscribed information is required to perform 
the contract.

[59 FR 51133, Oct. 7, 1994]

[[Page 173]]

225.770  Secondary Arab boycott of Israel.



Sec. 225.770-1   Restriction.

    In accordance with 10 U.S.C. 2410i, do not enter into a prime 
contract with a foreign person, company, or entity unless it has 
certified that it does not comply with the secondary Arab boycott of 
Israel.

[58 FR 28467, May 13, 1993]



Sec. 225.770-2  Procedures.

    For contracts awarded to the Canadian Commercial Corporation (CCC), 
the CCC will submit a certification from its proposed subcontractor with 
the other required precontractual material (see 225.870).

[57 FR 53599, Nov. 12, 1992]



Sec. 225.770-3  Exceptions.

    The restriction does not apply to--
    (a) Purchases below the small purchase threshold in FAR 13.101;
    (b) Contracts for consumable supplies, provisions, or services for 
the support of the United States or of allied forces in a foreign 
country; or
    (c) Contracts pertaining to any equipment, technology, data, or 
services for intelligence or classified purposes, or the acquisition or 
lease thereof in the interest of national security.

[57 FR 53599, Nov. 12, 1992]



Sec. 225.770-4  Waivers.

    The Secretary of Defense may waive the restriction on the basis of 
national security interests. Waiver requests should be forwarded to the 
Director of Defense Procurement, OUSD(A&T)DP.

[57 FR 53599, Nov. 12, 1992, as amended at 60 FR 61597, Nov. 30, 1995]



Sec. 225.770-5  Solicitation provision and contract clause.

    Unless an exception applies or a waiver has been granted, use the 
clause at 252.225-7031, Secondary Arab Boycott of Israel, in all 
solicitations and contracts.

[57 FR 53599, Nov. 12, 1992]



        Subpart 225.8--International Agreements and Coordination



Sec. 225.801  International agreements.

    (1) Treaties and agreements between the U.S. and foreign governments 
affect both--
    (i) The way offers from foreign contractors are evaluated in DoD 
acquisitions; and
    (ii) Performance of DoD contracts in foreign countries.
    (2) This subpart covers acquisition policy and procedures based on 
treaties and international agreements.
    (3) Information on specific agreements is available as follows--
    (i) Memoranda of understanding (MOU) and other international 
agreements between the United States and the countries listed in 
225.872-1 are maintained in the Office of the Deputy Assistant Secretary 
of Defense (Procurement) (Foreign Contracting) (703) 697-9351, DSN 227-
9351).
    (ii) Military Assistance Advisory Groups, Naval Missions, and Joint 
U.S. Military Aid Groups normally have copies of the agreements 
applicable to the countries concerned.
    (iii) Copies of international agreements covering existing 
agreements in the United Kingdom of Great Britain and Northern Ireland, 
Western European countries, North Africa, and in the Middle East are 
filed with the U.S. European Command (EUCOM).
    (iv) Agreements with countries in the Pacific and Far East are filed 
with the U.S. Pacific Command (CINCPAC).
225.802  Procedures.



Sec. 225.802-70  Contracts for performance outside the United States and Canada.

    (a) When a purchasing activity anticipates placement of a contract 
for performance outside the United States or Canada and the contracting 
activity is not under the command jurisdiction of a unified or specified 
command for the country involved, the purchasing activity shall maintain 
liaison with the cognizant contract administration office (CAO) (as 
specified in DLAH 4105.5) during preaward negotiations and postaward 
administration. The CAO will provide pertinent information

[[Page 174]]

for contract negotiations, effect appropriate coordination, and obtain 
required approvals for the performance of the contract.
    (b) Where the acquisition requires the performance of work in the 
foreign country by U.S. personnel or a third country contractor, or 
where the acquisition will require logistics support for contract 
employees, source inspection, or additional Government employees--
    (1) The contracting activity must coordinate with the cognizant 
contract administration office before contract award.
    (2) The contracting officer shall request the following information 
from the contract administration office--
    (i) The applicability of any international agreements to the 
acquisition;
    (ii) Security requirements applicable to the area;
    (iii) The standards of conduct required to be observed by the 
prospective contractor and its employees, and any action that may be 
taken in the event required standards are not maintained;
    (iv) Requirements for use of foreign currencies, including 
applicability of U.S. holdings of excess foreign currencies;
    (v) Availability of logistics support for contractor employees; and
    (vi) Information on taxes and duties from which the Government may 
be exempt.
    (3) The contracting officer shall furnish the following information 
to the contract administration office--
    (i) A synopsis of the work to be performed and, if practical, a copy 
of the solicitation;
    (ii) Any contractor logistical support desired in support of U.S. or 
foreign military sale requirements;
    (iii) Contract performance period and estimated contract value;
    (iv) Number and nationality of contractor employees and date of 
planned arrival of contractor personnel;
    (v) Contract security requirements; and
    (vi) Other pertinent information to effect complete coordination and 
cooperation.



Sec. 225.802-71  End user certificates.

    Contracting officers considering the purchase of an item from a 
foreign source may encounter a request for the signing of a certificate 
to the effect that the Armed Forces of the United States is the end user 
of the equipment, and that it will not be transferred to third parties 
without authorization from the Government of the country selling the 
item. When encountering this situation, refer to DoD Directive 2040.3, 
End User Certificates, for guidance.

[57 FR 42630, Sept. 15, 1992]
225.870  Contracting with Canadian contractors.



Sec. 225.870-1  General.

    (a) The Canadian Government guarantees to the U.S. Government all 
commitments, obligations, and covenants of the Canadian Commercial 
Corporation under any contract or order issued to the Corporation by any 
contracting activity of the U.S. Government. The Canadian Government has 
waived notice of any change or modification which may be made, from time 
to time, in these commitments, obligations, or covenants.
    (b) For production planning purposes, Canada is considered to be 
part of the defense industrial base (see 225.870-2(b)).
    (c) Contracts with contractors located in Canada should be awarded 
to and administered by the Canadian Commercial Corporation, except for--
    (1) Negotiated purchases for experimental, developmental, or 
research work unless the contract is for a project under the Defense 
Development Sharing Program;
    (2) Purchases of unusual or compelling urgency;
    (3) Small purchases; or
    (4) Purchases made by DoD activities located in Canada.
    (d) The Canadian Commercial Corporation, in placing contracts with 
Canadian or U.S. concerns, uses provisions in the contracts that give 
DoD the same production rights, data, and information that DoD would 
obtain in contracts with U.S. concerns.

[[Page 175]]

    (e) When contracts are placed with the Canadian Commercial 
Corporation, the government of Canada will provide the following 
services, without charge to DoD departments and agencies--
    (1) Contract administration services, including--
    (i) Cost and pricing analysis;
    (ii) Industrial security;
    (iii) Accountability and disposal of Government property;
    (iv) Production expediting;
    (v) Compliance with Canadian labor laws;
    (vi) Processing termination claims and disposing of termination 
inventory;
    (vii) Customs documentation;
    (viii) Processing of disputes and appeals; and
    (ix) Such other related contract administration functions as may be 
required with respect to the Canadian Commercial Corporation contract 
with the Canadian supplier; and
    (2) Audits. When required, audits are performed by the Audit Service 
Group, Supply and Services Canada. Requests for audit on non-Canadian 
Commercial Corporation contracts should be routed through the cognizant 
contract administration office of Defense Contract Management Command.
    (3) Inspection. The Department of National Defence (Canada) provides 
inspection personnel, services, and facilities, at no charge to DoD 
departments and agencies (see 225.870-7).



Sec. 225.870-2  Solicitation of Canadian contractors.

    (a) Except for the acquisitions in 225.870-1(c) (1) through (4), 
include Canadian firms on bidders mailing lists and comparable source 
lists only at the request of the Canadian Commercial Corporation.
    (b) Include Canadian planned producers under the Industrial 
Readiness Planning Program on bidders mailing lists for their planned 
items (see FAR 14.205-1).
    (c) Send solicitations directly to Canadian firms appearing on the 
appropriate bidders mailing lists. Send a complete copy of the 
solicitation and a listing of Canadian firms solicited to the Canadian 
Commercial Corporation, 11th Floor, 50 O'Connor Street, Ottawa, Ontario, 
K1A-0S6, Canada.
    (d) Furnish a solicitation, if requested, to the Canadian Commercial 
Corporation even if no Canadian firm is solicited.
    (e) Handle small purchases (see FAR part 13) directly with Canadian 
firms and not through the Canadian Commercial Corporation.

[56 FR 36367, July 31, 1991, as amended at 57 FR 42630, Sept. 15, 1992]



Sec. 225.870-3  Submission of offers.

    (a) As indicated in 225.870-4, the Canadian Commercial Corporation 
is the prime contractor. To indicate acceptance of offers by individual 
Canadian companies, the Canadian Commercial Corporation issues a letter, 
supporting the Canadian offer, containing the following information--
    (1) Name of the Canadian offeror;
    (2) Confirmation and endorsement of the offer in the name of the 
Canadian Commercial Corporation; and
    (3) A statement that the Corporation shall subcontract 100 percent 
with the offeror.
    (b) When a Canadian offer cannot be processed through the Canadian 
Commercial Corporation in time to meet the bid-opening requirement or 
the closing date for receipt of proposals, the Corporation may permit 
Canadian firms to submit offers directly. The Canadian Commercial 
Corporation's endorsement of award, however, must be received by the 
contracting officer before contract award.
    (c) All sealed bids will be submitted by the Canadian Commercial 
Corporation in terms of U.S. currency. Do not adjust contracts awarded 
under sealed bidding for losses or gains from fluctuation in exchange 
rates.
    (d) Except for sealed bids, all offers and quotations submitted by 
the Canadian Commercial Corporation are normally in terms of Canadian 
currency. The Corporation may, at the time of submitting an offer, elect 
to quote and receive payment in terms of U.S. currency, in which case 
the contract shall--
    (1) Provide for payment in U.S. currency; and

[[Page 176]]

    (2) Shall not be adjusted for losses or gains from fluctuation in 
exchange rates.



Sec. 225.870-4  Contracting procedures.

    (a) Award individual contracts covering purchases from suppliers 
located in Canada, except for those in 225.870-1(c)(1) through (4), to 
the Canadian Commercial Corporation, 11th Floor, 50 O'Connor Street, 
Ontario, Canada, K1A-0S6.
    (b) Direct communication with the Canadian supplier is authorized 
and encouraged in connection with all technical aspects of the contract; 
provided, that the Corporation's approval is obtained on any matters 
involving changes to the contract.
    (c) Identify in the contract, the type of currency, i.e., U.S. or 
Canadian. Contracts that provide for payment in Canadian currency shall 
quote the contract price in terms of Canadian dollars and shall identify 
the amount by the initials CN; e.g., $1,647.23CN. The contract shall 
clearly indicate on its face the U.S./Canadian conversion rate at the 
time of award and the U.S. dollar equivalent of the Canadian dollar 
contract amount.

[56 FR 36367, July 31, 1991, as amended at 57 FR 42630, Sept. 15, 1992]



Sec. 225.870-5  Contract administration.

    (a) Assign contract administration in accordance with part 242. When 
contract administration is performed in Canada by the cognizant contract 
administration office of the Defense Contract Management Command, the 
paying office to be named in the contract for disbursement of DoD funds 
(DoD Department Code: 17-Navy; 21-Army; 57-Air Force; 97-all other DoD 
components), whether payment is in Canadian or U.S. dollars, shall be: 
Disbursing Office, Defense Contract Management Area Office, Cleveland 
1240 East 9th Street, Anthony J. Celebrezze Federal Building, Cleveland, 
Ohio 44199.
    (b) For cost-reimbursement type contracts--
    (1) Audits on contracts with the Canadian Commercial Corporation 
(CCC) are automatically arranged by the Department of Supplies and 
Services (DSS), Canada. Audit reports are furnished to DSS. Upon advice 
from DSS, the CCC will certify the invoice and forward it with SF 1034, 
Public Voucher, to the administrative contracting officer for further 
processing and transmittal to the disbursing office.
    (2) On contracts placed directly with Canadian firms, the 
administrative contracting officer requests audits from the Audit 
Services Bureau (ASB), Ottawa, Ontario, Canada.
    (i) Invoices are approved by the ASB/DSS auditor on a provisional 
basis pending completion of the contract and final audit.
    (ii) The ASB/DSS forwards these invoices, accompanied by SF 1034, 
Public Voucher, to the administrative contracting officer for further 
processing and transmittal to the disbursing officer.
    (iii) ASB/DSS furnishes periodic advisory audit reports directly to 
the administrative contracting officer.



Sec. 225.870-6  Termination procedures.

    (a) The Canadian Commercial Corporation will continue administering 
contracts that may be terminated by the U.S. contracting officer.
    (b) The Corporation will settle all Canadian subcontracts in 
accordance with the policies, practices, and procedures of the Canadian 
Government.
    (c) The U.S. agency administering the contract with the Canadian 
Commercial Corporation shall provide any services required by the 
Canadian Commercial Corporation, including disposal of inventory, for 
settlement of any subcontracts placed in the United States. Settlement 
of such U.S. subcontracts is made under this regulation.



Sec. 225.870-7  Acceptance of Canadian supplies.

    (a) When contracts placed in Canada, either with the Canadian 
Commercial Corporation or directly with Canadian suppliers, require 
contract quality assurance (CQA) and/or acceptance before shipment, CQA 
and/or acceptance, as applicable, will be performed by the Department of 
National Defence (Canada), under paragraph 6 of the Letter of Agreement.

[[Page 177]]

    (b) Signature by the Department of National Defence (Canada) quality 
assurance representative on the DoD inspection and acceptance form is 
satisfactory evidence of acceptance for payment purposes.



Sec. 225.870-8  Industrial security.

    Industrial security for Canada shall be in accordance with the U.S.-
Canada Industrial Security Agreement of March 31, 1952, as amended.
225.871  North Atlantic Treaty Organization (NATO) cooperative projects.



Sec. 225.871-1  Scope.

    (a) This section provides guidance on awarding contracts based on 
NATO cooperative projects.
    (b) The authority is 22 U.S.C. 2767 and 10 U.S.C. 2350b.



Sec. 225.871-2  Definitions.

    (a) Cooperative project means a jointly managed arrangement--
    (1) Described in a written agreement between the parties;
    (2) Undertaken to further the objectives of standardization, 
rationalization, and interoperability of the armed forces of North 
Atlantic Treaty Organization member countries; and
    (3) Providing for--
    (i) One or more of the other participants to share with the United 
States the cost of research and development, testing, evaluation, or 
joint production (including follow-on support) of certain defense 
articles;
    (ii) Concurrent production in the United States and in another 
member country of a defense article jointly developed; or
    (iii) Acquisition by the United States of a defense article or 
defense service from another member country.
    (b) Other participant means a cooperative project participant other 
than the United States.



Sec. 225.871-3  General.

    (a) Cooperative project authority. (1) Departments or agencies, that 
have authority to do so, may enter into a cooperative project agreement 
with NATO or with one or more member countries of that organization 
under DoD Directive 5530.3, International Agreements.
    (2) Under laws and regulations governing the negotiation and 
implementation of cooperative project agreements, departments and 
agencies may enter into contracts, or incur other obligations, on behalf 
of other participants without charge to any appropriation or contract 
authorization.
    (3) Agency heads have authority to solicit and award contracts to 
implement cooperative projects.
    (b) Contracts implementing cooperative projects shall comply with 
all applicable laws relating to Government acquisition, unless a waiver 
is granted under 225.871-4. A waiver of certain laws and regulations may 
be obtained if--
    (1) Required by the terms of a written cooperative project 
agreement;
    (2) It will significantly further NATO standardization, 
rationalization, and interoperability; and
    (3) It is approved by the appropriate DoD official.



Sec. 225.871-4  Statutory waivers.

    (a) The Deputy Secretary of Defense may waive for contracts or 
subcontracts placed outside the United States any provision of law that 
specifically prescribes--
    (1) Procedures for the formation of contracts;
    (2) Terms and conditions for inclusion in contracts;
    (3) Requirements for, or preferences to be given--
    (i) To goods grown, produced, or manufactured in the United States 
or in U.S. Government-owned facilities; or
    (ii) For services to be performed in the United States; or
    (4) Requirements regulating the performance of contracts.
    (b) There is no authority for waiver of--
    (1) Any provision of the Arms Export Control Act (22 U.S.C. 2751);
    (2) Any provision of 10 U.S.C. 2304;
    (3) The cargo preference laws of the United States, including the 
Military Cargo Preference Act of 1904 (10 U.S.C. 2631) and the Cargo 
Preference Act of 1954 (46 U.S.C. 1241(b)); or
    (4) Any of the financial management responsibilities administered by 
the Secretary of the Treasury.

[[Page 178]]

    (c) If a waiver is contemplated under the terms of a cooperative 
project agreement, forward a request for the waiver to the Deputy 
Secretary of Defense, through the Director of Defense Procurement. The 
waiver request must include a draft Determination and Findings for 
signature by the Deputy Secretary of Defense establishing that the 
waiver is necessary to significantly further NATO standardization, 
rationalization, and interoperability.
    (d) The approval of the Deputy Secretary of Defense must be obtained 
before committing to make waivers in an agreement or an amendment to an 
agreement or contract.



Sec. 225.871-5  Directed subcontracting.

    (a) The Director of Defense Procurement may authorize the direct 
placement of subcontracts with particular subcontractors. Directed 
subcontracting is not authorized unless specifically addressed in the 
cooperative project agreement.
    (b) In some instances, it may not be feasible to name specific 
subcontractors at the time the agreement is concluded. The general 
provisions for work sharing at the prime and subcontractor level, 
however, must be clearly delineated in the agreement. This will provide 
the authority necessary to implement such arrangements during the 
acquisition phase.
    (c) The agreement is the authority necessary for including a 
contractual provision requiring the prime contractor to place certain 
subcontracts with particular subcontractors. No separate justification 
and approval during the acquisition process is required.



Sec. 225.871-6  Disposal of property.

    Dispose of property that is jointly acquired by the members of a 
cooperative project under the procedures established in the agreement or 
in a manner consistent with the terms of the agreement.



Sec. 225.871-7  Congressional notification.

    (a) Congress must be notified whenever DoD determines to award a 
prime contract or subcontract to a particular contractor if the 
determination was not part of the certification made under Section 27(f) 
of the Arms Export Control Act before finalizing the cooperative 
agreement.
    (1) Departments and agencies must provide a proposed Congressional 
notice to USD(A&T)DP in sufficient time to forward to Congress before 
the time of contract award.
    (2) The proposed notice shall include the reason why the authority 
to designate a particular contractor or subcontractor should be used.
    (b) Congressional notification is also required each time a 
statutory waiver is exercised under 225.871-4, if such information was 
not provided in the certification to Congress before finalizing the 
cooperative agreement. Exercise of the waiver means a contract award or 
modification which provides for a statutory exception.

[56 FR 36367, July 31, 1991, as amended at 60 FR 61597, Nov. 30, 1995]
225.872  Contracting with qualifying country sources.



Sec. 225.872-1  General.

    (a) As a result of memoranda of understanding and other 
international agreements, the DoD has determined it inconsistent with 
the public interest to apply restrictions of the Buy American Act/
Balance of Payments Program to the acquisition of defense equipment 
which is mined, produced, or manufactured in any of the following 
countries (referred to in this part as ``qualifying countries'')--

    Australia
    Belgium
    Canada
    Denmark
    Egypt
    Federal Republic of Germany
    France
    Greece
    Israel
    Italy
    Luxembourg
    Netherlands
    Norway
    Portugal
    Spain
    Turkey
    United Kingdom of Great Britain and Northern Ireland

    (b) Individual acquisitions for products of the following qualifying 
countries may, on a purchase-by-purchase basis, be exempted from 
application of

[[Page 179]]

the Buy American Act and Balance of Payments Program as inconsistent 
with the public interest--

    Austria
    Finland
    Sweden
    Switzerland

    (c) The determination in paragraph (a) of this subsection does not 
limit the authority of the cognizant Secretary to restrict acquisitions 
to domestic sources or reject an otherwise acceptable offer from a 
qualifying country source in instances where considered necessary for 
national defense reasons.

[56 FR 36367, July 31, 1991, as amended at 57 FR 53599, Nov. 12, 1992; 
60 FR 61597, Nov. 30, 1995]



Sec. 225.872-2  Applicability.

    (a) This section applies to all acquisitions of supplies except 
where restricted by--
    (1) Provision of U.S. National Disclosure Policy (NDP), DOD 
Directive 5230.11, Disclosure of Classified Military Information to 
Foreign Governments and International Organizations;
    (2) U.S. defense mobilization base requirements purchased under the 
authority of FAR 6.302-3(a)(2)(i) except for quantities in excess of 
that required to maintain the defense mobilization base. This 
restriction does not apply to Canadian planned producers--
    (i) Review individual solicitations to determine whether this 
restriction applies.
    (ii) Information concerning restricted items may be obtained from 
the Deputy Assistant Secretary of Defense (Industrial Affairs);
    (3) U.S. laws or regulations (e.g., the annual DoD Appropriations 
Act); and
    (4) U.S. industrial security requirements.
    (b) This section does not apply to construction contracts.

[56 FR 36367, July 31, 1991, as amended at 60 FR 61597, Nov. 30, 1995]



Sec. 225.872-3  Solicitation procedures.

    (a) Include qualifying country sources on bidders mailing lists and 
comparable source lists upon their request (see FAR 14.205).
    (b) Except for items developed under the U.S./Canadian Development 
Sharing Program, use the criteria for soliciting and making awards under 
FAR part 19 for small business concerns without regard to whether there 
are potential qualifying country sources for the end product. Do not 
consider an offer of a qualifying country end product if the 
solicitation is identified for the exclusive participation of small 
business firms.
    (c) Send solicitations directly to qualifying country sources. 
Solicit Canadian sources through the Canadian Commercial Corporation in 
accordance with 225.870.
    (d) Use international air mail if solicitation destinations are 
outside the United States and security classification permits such use 
(see FAR 14.202 and FAR 14.203).
    (e) If unusual technical or security requirements preclude the 
acquisition of otherwise acceptable defense equipment from qualifying 
country sources, review the need for such requirements. Do not impose 
unusual technical or security requirements solely for the purpose of 
precluding the acquisition of defense equipment from qualifying 
countries.
    (f) Do not automatically exclude qualifying country sources from 
submitting offers because their supplies have not been tested and 
evaluated by the department/agency.
    (1) Consider the adequacy of qualifying country service testing on a 
case-by-case basis. Departments or agencies that must limit 
solicitations to sources whose items have been service tested and 
evaluated by the department/agency shall consider supplies from 
qualifying country sources that have been tested and accepted by the 
qualifying country for service use.
    (2) The department/agency may perform a confirmatory test, if 
necessary.
    (3) Apply U.S. test and evaluation standards, policies, and 
procedures when the department/agency decides that confirmatory tests of 
qualifying country end products are necessary.
    (4) Where it appears that these provisions might adversely delay 
service programs, obtain the concurrence of the DoD Acquisition 
Executive, Under Secretary of Defense (Acquisition & Technology), before 
excluding the

[[Page 180]]

qualifying country source from consideration.
    (g) Permit industry representatives from a qualifying country to 
attend symposia, program briefings, prebid conferences (FAR 14.207 and 
FAR 15.409), and similar meetings that address U.S. defense equipment 
needs and requirements. When practical, structure these meetings to 
allow attendance by representatives of qualifying country concerns.

[56 FR 36367, July 31, 1991, as amended at 60 FR 61597, Nov. 30, 1995]



Sec. Sec. 225.872-4  Evaluation of offers.

    (a) Qualifying country sources competing for DoD requirements must 
be responsive to the terms and conditions of DoD solicitations.
    (b) Evaluate offers of end products from the qualifying country 
sources in 225.872-1(a) without application of the 50 percent Buy 
American Act or Balance of Payments Program evaluation factor, in 
accordance with 225.105 and 225.303.
    (c) Evaluate offers of end products from the qualifying country 
sources in 225.872-1(b) without application of the 50 percent Buy 
American Act or Balance of Payments Program evaluation factor. If the 
offer, as evaluated, is low or otherwise eligible for award, the 
contracting officer shall request an exemption of the Buy American Act/
Balance of Payments Program as inconsistent with the public interest.
    (1) To obtain an exemption, process a Determination and Findings for 
signature--
    (i) At a level above the contracting officer, for acquisitions of 
$25,000 or less;
    (ii) By the chief of the contracting office, for acquisitions of 
$250,000 or less;
    (iii) By the head of the contracting activity (HCA), for 
acquisitions of $2 million or less; or
    (iv) By the head of the agency, or designee at a level no lower than 
an HCA, for acquisitions over $2 million.
    (2) The Determination and Findings shall be substantially as follows 
for end items, or modified as necessary for components--

                            Service or Agency

      Exemption of the Buy American Act/Balance of Payments Program

                       Determination and Findings

    Upon the basis of the following findings and determination which I 
hereby make in accordance with the provisions of FAR 25.102, acquisition 
of (qualifying country--identify country) (describe item) may be made as 
provided below.

                                Findings

    1. The (contracting activity) proposes to purchase under contract 
number, ____________, mined, produced, or manufactured in (country of 
origin). The total estimated cost of this acquisition is ____________.
    2. The United States Government and the Government of ____________ 
have agreed to remove barriers to procurement at the prime and 
subcontract level for defense equipment produced in each other's 
countries insofar as laws and regulations permit.
    3. The agreement provides that competitive offers of (qualifying 
country) end products will be evaluated by the Department of Defense 
without imposing any price differential under the Buy American Act or 
Balance of Payments Program and without taking applicable U.S. customs 
and duties into consideration so that (qualifying country) items may 
better compete for sales of defense equipment to the Department of 
Defense. In addition, the Agreement stipulates that acquisitions of 
(qualifying country) items must fully satisfy Department of Defense 
requirements for performance, quality, and delivery and shall cost the 
Department of Defense no more than would comparable U.S. source or other 
foreign source defense equipment eligible for award.
    4. In order to achieve the above objectives, the solicitation 
contained the Buy American Act and Balance of Payments Program clause, 
252.225-7001. Offers were solicited from other sources and the offer 
received for (qualifying country end item) is found to be otherwise 
eligible for award.

                              Determination

    Pursuant to the Buy American Act and Balance of Payments Program, I 
hereby determine that it is inconsistent with the public interest to 
apply the restrictions of the Buy American Act or the Balance of 
Payments Program to the proposed offer.

_______________________________________________________________________
    (Date)

[56 FR 36367, July 31, 1991, as amended at 57 FR 42630, Sept. 15, 1992]

[[Page 181]]



Sec. 225.872-5  Contract administration.

    (a) Arrangements exist with some qualifying countries to provide 
reciprocal contract administration services. Some arrangements are at no 
cost to either government. To determine whether such an arrangement has 
been negotiated and what contract administration functions are covered, 
contact the Deputy Director of Defense Procurement (Foreign 
Contracting), ((703) 697-9351, DSN 227-9351).
    (b) When contract administration services are required on contracts 
to be performed in qualifying countries, direct the request to the 
cognizant activity under DLAH 4105.4, section II, part 2 (DoD Directory 
of Contract Administration Services Components). Contract administration 
services for DoD subcontracts placed by qualifying country sources in 
the United States will be arranged by the cognizant activity under DLAH 
4105.4, section II, part 2.
    (c) The contract administration activity receiving a delegation or 
secondary delegation shall review the delegation to determine whether 
any portion of the delegation are covered by memoranda of understanding 
annexes, and delegate those functions to the appropriate organization in 
the qualifying country's government.
    (d) Information on quality assurance delegations to foreign 
governments is in subpart 246.4, Government Contract Quality Assurance.

[56 FR 36367, July 31, 1991, as amended at 60 FR 29498, June 5, 1995]



Sec. 225.872-6  Audit.

    (a) Memoranda of understanding with some qualifying countries 
contain annexes that provide for reciprocal ``no-cost'' audits of 
contracts and subcontracts (pre- and post-award).
    (b) To determine if such an annex is applicable to a particular 
qualifying country, contact the Deputy Director of Defense Procurement 
(Foreign Contracting) ((703) 697-9351, DSN 227-9351).
    (c) Handle requests for audits in qualifying countries under 
215.805-5(c)(1).
    (1) Except for the United Kingdom (UK), send the request to the 
administrative contracting officer at the cognizant activity listed in 
DLAH 4105.4, section II, part 2 (DoD Directory of Contract 
Administration Services Components). Send the request for audit from the 
UK directly to their Ministry of Defence. See section VII, DLAH 4105.4 
for guidance.
    (2) Send an advance copy of the request to the focal point 
identified by the Foreign Contracting Directorate, Office of the 
Director of Defense Procurement.

[56 FR 36367, July 31, 1991, as amended at 60 FR 29498, June 5, 1995]



Sec. 225.872-7  Industrial security for qualifying countries.

    The required procedures for safeguarding classified defense 
information necessary for the performance of contracts awarded to 
qualifying country sources are in the DoD Industrial Security Regulation 
DoD 5220.22-R (implemented for the Army by AR 380-49; for the Navy by 
OPNAV Instruction 5540.8L; for the Air Force by AFR 205-4; for the 
Defense Information Systems Agency by DCA Instruction 240-110-8; and for 
the Defense Mapping Agency by DMA Instruction 5220.22).

[56 FR 36367, July 31, 1991, as amended at 56 FR 67215, Dec. 30, 1991]



Sec. 225.872-8  Subcontracting with qualifying country sources.

    In reviewing contractor subcontracting procedures, the contracting 
officer shall ensure that the prime contract does not preclude 
qualifying country sources from competing for subcontracts, except when 
restricted by national security interest reasons, mobilization base 
considerations, or applicable U.S. laws or regulations. (See the clause 
at 252.225-7002, Qualifying Country Sources as Subcontractors.)



Sec. 225.873  Waiver of United Kingdom commercial exploitation levies.



Sec. 225.873-1  Policy.

    DoD and the Government of the United Kingdom (U.K.) have agreed to 
waive U.K. commercial exploitation levies and U.S. nonrecurring cost 
recoupment charges on a reciprocal basis. In order for U.K. levies to be 
waived, they must be identified and a waiver must be requested before 
award

[[Page 182]]

of the contract or subcontract under which the levies are charged.

[57 FR 53599, Nov. 12, 1992]



Sec. 225.873-2  Procedures.

    (a) Waiver of U.K. levies must be approved by the Government of the 
U.K. When an offeror or contractor identifies a levy included in an 
offered or contract price, the contracting officer shall provide written 
notification to the Defense Security Assistance Agency, Operations 
Management Division, room 4B740, the Pentagon, Washington, DC 20301-
2800, telephone (703) 697-8108, which will request a waiver of the levy 
from the Government of the U.K. The notification shall include--
    (1) Name of the U.K. firm;
    (2) Prime contract number;
    (3) Description of item for which waiver is being sought;
    (4) Quantity being acquired; and
    (5) Amount of levy.
    (b) Waiver may occur after contract award. Where levies are waived 
before contract award, the offer will be evaluated without the levy. 
Where levies are identified but not waived before contract award, the 
offer will be evaluated inclusive of the levies.

[57 FR 53599, Nov. 12, 1992]



Sec. 225.873-3  Contract clause.

    Use the clause at 252.225-7032, Waiver of United Kingdom Levies, in 
all solicitations and contracts for supplies--
    (a) Where U.K. firms are expected to participate as offerors/prime 
contractors; or
    (b) If a subcontract over $1 million with a U.K. firm is 
anticipated.

[57 FR 53599, Nov. 12, 1992]



          Subpart 225.9--Additional Foreign Acquisition Clauses



Sec. 225.970  Clause deviations in overseas contracts.

    See 201.402(2) for approval authority for clause deviations in 
overseas contracts with governments of North Atlantic Treaty 
Organization (NATO) countries or other allies or with United Nations or 
NATO organizations.

[61 FR 50453, Sept. 26, 1996]



   Subpart 225.70--Authorization Acts, Appropriations Acts, and Other 
               Statutory Restrictions on Foreign Purchases



Sec. 225.7000  Scope of subpart.

    (a) This subpart contains restrictions on the acquisition of foreign 
products, imposed by DoD Appropriations and Authorization Acts and other 
statutes. Refer to the Acts to verify current applicability of the 
restrictions.
    (b) Nothing in this subpart affects the applicability of the Buy 
American Act or Balance of Payments Program.



Sec. 225.7001  Definitions.

    As used in this subpart--
    (a) Bearing components and miniature and instrument ball bearings 
are defined in the clause at 252.225-7016, Restriction on Acquisition of 
Ball and Roller Bearings.
    (b) Hand or measuring tools means those tools listed in Federal 
supply classifications 51 and 52, respectively.
    (c) Possessions, as used in the phrase ``United States or its 
possessions,'' includes Puerto Rico.
    (d) Specialty metals is defined in the clause at 252.225-7014, 
Preference for Domestic Specialty Metals.

[61 FR 10899, Mar. 18, 1996, as amended at 61 FR 50453, Sept. 26, 1996]



Sec. 225.7002-1  Restrictions.

    (a) In accordance with section 9009 of Public Law 101-165 and 
similar sections in subsequent Defense appropriations acts, do not 
acquire supplies consisting in whole or in part of any of the following, 
that have not been grown or produced in the United States or its 
possessions--
    (1) Food, but this does not restrict acquisition of foods 
manufactured or processed in the United States or its possessions;
    (2) Clothing;
    (3) Tents, tarpaulins, or covers;
    (4) Cotton and other natural fiber products, or wool (whether in the 
form of fiber or yarn or contained in fabrics, materials, or 
manufactured articles), but this does not restrict acquisition of cotton 
or wool reprocessed or reused in the United States or its possessions;
    (5) Woven silk or woven silk blends;

[[Page 183]]

    (6) Spun silk yarn for cartridge cloth;
    (7) Synthetic fabric or coated synthetic fabric;
    (8) Canvas products; or
    (9) Any item of individual equipment manufactured from or containing 
any of the listed fibers, yarns, fabrics, or materials.
    (b) Do not acquire specialty metals, including stainless steel 
flatware, that were not melted in steel manufacturing facilities located 
within the United States or its possessions.
    (c) Do not acquire hand or measuring tools that were not produced in 
the United States or its possessions.

[56 FR 36367, July 31, 1991, as amended at 57 FR 14993, Apr. 23, 1992; 
59 FR 27671, May 27, 1994]



Sec. 225.7002-2  Exceptions.

    Acquisitions in the following categories are not subject to the 
restrictions in 225.7002-1--
    (a) Any of the items in 225.7002-1(a) or (b), if the Secretary 
concerned, or designee, determines that they cannot be acquired when 
needed in a satisfactory quality and sufficient quantity grown or 
produced in the United States or its possessions at U.S. market prices.
    (b) Outside the United States--
    (1) In support of combat operations;
    (2) Perishable foods by activities located outside the United States 
for their personnel; or
    (3) Emergency acquisitions by such activities for their personnel.
    (c) Acquisitions by vessels in foreign waters.
    (d) Acquisitions of those supplies listed in FAR section 
25.108(d)(1), unless the supplies are hand or measuring tools.
    (e) Acquisitions using simplified acquisition procedures.
    (f) Acquisitions of end items incidentally incorporating cotton or 
wool, for which the estimated value of the cotton or wool is not more 
than 10 percent of the total price of the end item; provided the 
estimated value of the cotton or wool does not exceed the simplified 
acquisition threshold.
    (g) Supplies purchased specifically for commissary resale.
    (h) Purchases of specialty metals by subcontractors at any tier for 
programs, except--
    (1) Aircraft;
    (2) Missile and space systems;
    (3) Ships;
    (4) Tank-automotive;
    (5) Weapons; and
    (6) Ammunition.
    (i) Purchases of specialty metals and chemical warfare protective 
clothing when the acquisition furthers an agreement with a qualifying 
country (see section 225.872).
    (j) Commercial items or components purchased by contractors from 
subcontractors/suppliers.

[56 FR 36367, July 31, 1991, as amended at 58 FR 28467, May 13, 1993; 59 
FR 27671, May 27, 1994; 60 FR 61597, Nov. 30, 1995; 61 FR 50453, Sept. 
26, 1996]



Sec. 225.7002-3  Contract clauses.

    Unless an exception is known to apply--
    (a) Use the clause at 252.225-7012, Preference for Certain Domestic 
Commodities, in all solicitations and contracts which meet or exceed the 
simplified acquisition threshold.
    (b) Use the clause at 252.225-7014, Preference for Domestic 
Specialty Metals, in all solicitations and contracts over the simplified 
acquisition threshold that require delivery of an article containing 
specialty metals. Use the clause with its Alternate I in all 
solicitations and contracts over the simplified acquisition threshold 
requiring delivery, for one of the following major programs, of an 
article containing specialty metals--
    (1) Aircraft;
    (2) Missile and space systems;
    (3) Ships;
    (4) Tank-automotive;
    (5) Weapons; or
    (6) Ammunition.
    (c) Use the clause at 252.225-7015, Preference for Domestic Hand or 
Measuring Tools, in all solicitations and contracts over the simplified 
acquisition threshold calling for delivery of hand or measuring tools.

[61 FR 50453, Sept. 26, 1996]

[[Page 184]]

225.7003  [Reserved]
225.7004  Restriction on machine tools and powered and non-powered 
valves.



Sec. 225.7004-1  Restriction.

    In accordance with 10 U.S.C. 2534, through fiscal year 1996, do not 
acquire, either directly as end items or indirectly on behalf of the 
Government, the machine tools or powered and non-powered valves in 
225.7004-2 unless they are of U.S. or Canadian origin.

[60 FR 19532, Apr. 19, 1995]



Sec. 225.7004-2  Applicability.

    (a) Machine tools restricted under this section are those tools 
listed in Federal supply classes of metalworking machinery in the 
following categories--

------------------------------------------------------------------------
  Federal Supply Classification                                         
              (FSC)                                Name                 
------------------------------------------------------------------------
3405............................  Saw and filing machines.              
3408............................  Machine centers and way type machines.
3410............................  Electrical and ultrasonic erosion     
                                   machines.                            
3411............................  Boring machines.                      
3412............................  Broaching machines.                   
3413............................  Drilling and tapping machines.        
3414............................  Gear cutting and finishing machines.  
3415............................  Grinding machines.                    
3416............................  Lathes.                               
3417............................  Milling machines.                     
3418............................  Planers and shapers.                  
3419............................  Miscellaneous machine tools.          
3426............................  Metal finishing equipment.            
3433............................  Gas welding, heat cutting, and        
                                   metalizing equipment.                
3438............................  Miscellaneous welding equipment.      
3441............................  Bending and forming machines.         
3442............................  Hydraulic and pneumatic presses, power
                                   driven.                              
3443............................  Mechanical presses, power driven.     
3445............................  Punching and shearing machines.       
3446............................  Forging machinery, and hammers.       
3448............................  Riveting machines.                    
3449............................  Miscellaneous secondary metal forming 
                                   and cutting machines.                
3460............................  Machine tool accessories.             
3461............................  Accessories for secondary metalworking
                                   machinery.                           
------------------------------------------------------------------------

    (b) Machine tool accessories classified under FSC 3460 or 3461 are 
not components under 225.7004-5. Where a solicitation for machine tools 
includes machine tool accessories, list known machine tool accessories 
which are not separate line items in the provision at 252.225-7040, 
Machine Tool List. Identify accessories which are separate line items in 
the schedule. The contracting activity must exercise judgment in 
determining whether an item is an accessory or a component. This 
determination should be based on the use of the item in the machine tool 
being purchased.
    (c) Valves restricted under this section are those powered and non-
powered valves listed in Federal supply classes 4810 (valves, powered) 
and 4820 (valves, non-powered) used in piping for naval surface ships 
and submarines.

[60 FR 19532, Apr. 19, 1995, as amended at 60 FR 29498, June 5, 1995]



Sec. 225.7004-3  Exception.

    This restriction does not apply if the acquisition is below the 
simplified acquisition threshold.

[60 FR 19532, Apr. 19, 1995]



Sec. 225.7004-4  Waiver.

    (a) The head of the contracting activity may waive the restriction 
on a case-by-case basis upon execution of a determination and findings 
that any of the following applies:
    (1) The restriction would cause unreasonable delays.
    (2) United States producers of the item would not be jeopardized by 
competition from a foreign country, and that country does not 
discriminate against defense items produced in the United States to a 
greater degree than the United States discriminates against defense 
items produced in that country.
    (3) Application of the restriction would impede cooperative programs 
entered into between DoD and a foreign country, and that country does 
not discriminate against defense items produced in the United States to 
a greater degree than the United States discriminates against defense 
items produced in that country.
    (4) Satisfactory quality items manufactured in the United States or 
Canada are not available.
    (5) Application of the restriction would result in the existence of 
only one source for the item in the United States or Canada.
    (6) Application of the restriction is not in the national security 
interests of the United States.

[[Page 185]]

    (7) Application of the restriction would adversely affect a U.S. 
company.
    (b) The restriction is waived when it would cause unreasonable 
costs. The cost of the item of U.S. or Canadian origin is unreasonable 
if it exceeds 150 percent of the offered price, inclusive of duty, of 
items which are not of U.S. or Canadian origin.

[60 FR 19532, Apr. 19, 1995, as amended at 60 FR 61597, Nov. 30, 1995]



Sec. 225.7004-5  U.S. or Canadian origin.

    (a) A valve or machine tool shall be considered to be of U.S. or 
Canadian origin if--
    (1) It is manufactured in the United States or Canada; and
    (2) The cost of its components manufactured in the U.S. or Canada 
exceeds 50 percent of the cost of all its components.
    (b) The cost of components shall include transportation costs to the 
place of incorporation into the end product and duty (whether or not a 
duty-free certificate may be issued).

[60 FR 19532, Apr. 19, 1995]



Sec. 225.7004-6  Contract clauses.

    (a) Unless an exception applies or a waiver has been granted, use 
the clause at 252.225-7017, Preference for United States and Canadian 
Valves and Machine Tools, in all solicitations and contracts for valves 
and machine tools.
    (b) Consider using the clause at 252.225-7001, Buy American Act and 
Balance of Payments Program, and, if applicable, the clause at 252.225-
7007, Trade Agreements Act, whenever an exception or waiver is 
anticipated. Where these clauses are used, state in the solicitation 
that offers which do not conform to the restrictions of the more 
restrictive clause will only be considered if an exception applies or a 
waiver is granted.
    (c) Use the provision at 252.225-7040, Machine Tool List, in all 
solicitations for machine tools which contain the clause at 252.225-7017 
except where--
    (1) All machine tool accessories are listed as separate line items; 
and
    (2) The solicitation does not allow offerors to provide accessories 
which are not specifically required by the specifications.

[60 FR 19532, Apr. 19, 1995, as amended at 60 FR 29498, June 5, 1995]
225.7005  [Reserved]



Sec. 225.7006  Restrictions on construction or repair of vessels in foreign shipyards.

    10 U.S.C. 7309 restricts constructing or repairing vessels in 
foreign shipyards.
    (a) Do not award a contract to construct either of the following in 
a foreign shipyard--
    (1) A vessel constructed for any of the armed forces; or
    (2) A major component of the hull or superstructure of any such 
vessel.
    (b) Do not overhaul, repair, or maintain in a foreign shipyard, a 
naval vessel (or any other vessel under the jurisdiction of the 
Secretary of the Navy) homeported in the United States. This restriction 
does not apply to voyage repairs.
225.7007  Restriction on acquisition of foreign buses.



Sec. 225.7007-1  Restriction.

    In accordance with 10 U.S.C. 2534, do not acquire a multipassenger 
motor vehicle (bus) unless it is manufactured in the United States or 
Canada.

[60 FR 19533, Apr. 19, 1995]



Sec. 225.7007-2  Applicability.

    Apply this restriction if the buses are purchased, leased, rented, 
or made available under contracts for transportation services.

[60 FR 19533, Apr. 19, 1995]



Sec. 225.7007-3  Exceptions.

    This restriction does not apply in any of the following 
circumstances:
    (a) Buses manufactured outside the United States and Canada are 
needed for temporary use because buses manufactured in the United States 
or Canada are not available to satisfy requirements that cannot be 
postponed. Such use may not, however, exceed the lead time required for 
acquisition and delivery of buses manufactured in the United States or 
Canada.

[[Page 186]]

    (b) The requirement for buses is temporary in nature. For example, 
to meet a special, nonrecurring requirement or a sporadic and infrequent 
recurring requirement, buses manufactured outside the United States and 
Canada may be used for temporary periods of time. Such use may not, 
however, exceed the period of time needed to meet the special 
requirement.
    (c) Buses manufactured outside the United States and Canada are 
available at no cost to the U.S. Government.
    (d) The acquisition is below the simplified acquisition threshold.

[60 FR 19533, Apr. 19, 1995]



Sec. 225.7007-4  Waiver.

    The waiver criteria at 225.7004-4 also apply to this restriction.

[60 FR 61597, Nov. 30, 1995]



Sec. 225.7008  Restriction on research and development.

    (a) Public Law 92-570 precludes use of DoD appropriations for award 
to any foreign corporation, organization, person, or entity for research 
and development in connection with any weapon system or other military 
equipment if there is a U.S. corporation, organization, person, or 
entity--
    (1) Equally competent; and
    (2) Willing to perform at a lower cost.
    (b) The statutory restriction in paragraph (a) of this section does 
not change the rules for selecting research and development contractors 
in FAR part 35. However, when a U.S. source and a foreign source are 
equally competent, award to the source that will provide the services at 
the lower cost.



Sec. 225.7009  Restriction on aircraft ejection seats.

    (a) Do not use funds appropriated for DoD for FY1984 through 1989 to 
acquire aircraft ejection seats manufactured in a foreign nation if that 
foreign nation does not permit U.S. manufacturers to compete for its 
ejection seat requirements.
    (b) This limitation applies only to ejection seats acquired for 
installation on aircraft produced or assembled in the United States.
225.7010  Restriction on certain chemical weapons antidote.



Sec. 225.7010-1  Restriction.

    In accordance with 10 U.S.C. 2534, do not acquire chemical weapons 
antidote contained in automatic injectors, or the components for such 
injectors, unless the injector or component is manufactured in the 
United States or Canada by a company that--
    (a) Is a producer under the Industrial Preparedness Program at the 
time of contract award;
    (b) Has received all required regulatory approvals; and
    (c) Has the plant, equipment, and personnel to perform the contract 
in the United States or Canada at the time of contract award.

[60 FR 19533, Apr. 19, 1995]



Sec. 225.7010-2  Exception.

    This restriction does not apply if the acquisition is below the 
simplified acquisition threshold.

[60 FR 19533, Apr. 19, 1995]



Sec. 225.7010-3  Waiver.

    The waiver criteria at 225.7004-4 also apply to this restriction.

[60 FR 61597, Nov. 30, 1995]
225.7011  Restriction on Ballistic Missile Defense research, 
development, test, and evaluation.



Sec. 225.7011-1  Definitions.

    Competent, foreign firm, and U.S. firm have the meanings given in 
the provision at 252.225-7018, Notice of Prohibition of Certain 
Contracts with Foreign Entities for the Conduct of Ballistic Missile 
Defense RDT&E.

[56 FR 36367, July 31, 1991, as amended at 59 FR 27672, May 27, 1994]



Sec. 225.7011-2  Restriction.

    (a) Section 222 of the Defense Authorization Act for FY1988 and 1989 
(Pub. L. 100-180) prohibits the award of certain contracts for the 
conduct of Ballistic Missile Defense (BMD) Program research, 
development, test, and evaluation (RDT&E), to foreign governments or 
firms unless the Secretary of Defense certifies to Congress in writing 
at

[[Page 187]]

any time during the applicable fiscal year that work cannot be 
competently performed by a U.S. firm at a price equal to or less than 
the price of the foreign government or firm.
    (b) For purposes of implementing this section, heads of contracting 
activities are authorized to make this certification (see 225.7011-
3(b)).
    (c) Except as provided in 225.7011-3, do not use any funds 
appropriated to, or for the use of, DoD to enter into or carry out any 
contract, including any contract awarded as a result of a broad agency 
announcement, with a foreign government or firm if the contract provides 
for the conduct of RDT&E in connection with the BMD.
    (d) This prohibition is not intended to deny access to foreign 
expertise when contract performance requires a level of competency 
unavailable in the United States.

[56 FR 36367, July 31, 1991, as amended at 59 FR 27672, May 27, 1994]



Sec. 225.7011-3  Exceptions.

    This prohibition shall not apply--
    (a) To contracts awarded to a foreign government or firm if the 
contracting officer determines that--
    (1) The contract will be performed within the United States;
    (2) The contract is exclusively for RDT&E in connection with 
antitactical ballistic missile systems; or
    (3) The foreign government or foreign firm agrees to share a 
substantial portion of the total contract cost. Consider the foreign 
share as substantial if it is equitable with respect to the relative 
benefits to be derived from the contract by the United States and the 
foreign parties. For example, if the contract is more beneficial to the 
foreign party, its share of the cost should be correspondingly higher; 
or
    (b) If the head of the contracting activity certifies in writing, 
before contract award, that a contract for research, development, 
testing, or evaluation (other than for RDT&E described in paragraph 
(a)(2) of this subsection) cannot be competently performed by a U.S. 
firm at a price equal to or less than the price at which the RDT&E would 
be performed by a foreign government or firm.



Sec. 225.7011-4  Procedures.

    (a) When awarding a prime contract to a foreign government or firm 
under 225.7011-3(b), the contracting officer or source selection 
authority, as applicable, shall make a determination that will be the 
basis for the certification.
    (1) The determination must--
    (i) Describe the contract effort;
    (ii) State the number of proposals solicited and received from both 
U.S. and foreign firms;
    (iii) Identify the proposed awardee and the amount of the contract;
    (iv) State that selection of the contractor was based on the 
evaluation factors contained in the solicitation, or the criteria 
contained in the broad agency announcement; and
    (v) State that the effort cannot be competently performed by a U.S. 
firm at a price equal to, or less than, the price at which it would be 
performed by the foreign awardee.
    (2) When either a broad agency announcement (BAA) or program 
research and development announcement (PRDA) is used, or when the 
determination is otherwise not based on direct competition between 
foreign and domestic proposals, the determination must not be merely 
conclusory.
    (i) The determination must specifically explain its basis, include a 
description of the method used to determine the competency of U.S. 
firms, and describe the cost or price analysis performed.
    (ii) Alternately, the determination may contain--
    (A) A finding, including the basis for such finding, that the 
proposal was submitted solely in response to the terms of a BAA or PRDA, 
or other solicitation document without any technical guidance from the 
program office; and
    (B) A finding, including the basis for such finding, that disclosure 
of the information in the proposal for the purpose of conducting a 
competitive acquisition is prohibited.
    (b) Forward a copy of the certification (from 225.7011-3(b)) and, as 
appropriate, the determination or justification and approval (J&A) 
within 30 days of contract award to the Ballistic Missile Defense 
Organization, Attn: BMDO/DRI, 7100 Defense Pentagon,

[[Page 188]]

Washington, DC 20301-7100, if award is based on--
    (1) A determination under paragraph (a) of this subsection;
    (2) Other than full and open competition under FAR subpart 6.3; or
    (3) An unsolicited proposal under FAR subpart 15.5.

[56 FR 36367, July 31, 1991, as amended at 59 FR 27672, May 27, 1994; 61 
FR 50453, Sept. 26, 1996]



Sec. 225.7011-5  Solicitation provision.

    Use the provision at 252.225-7018, Notice of Prohibition of Certain 
Contracts With Foreign Entities for the Conduct of Ballistic Missile 
Defense RDT&E, in all competitively negotiated BMD solicitations for 
research, development, test, and evaluation, unless foreign 
participation is otherwise excluded.

[56 FR 36367, July 31, 1991, as amended at 59 FR 27672, May 27, 1994]
225.7012  Restrictions on anchor and mooring chain.



Sec. 225.7012-1  Restrictions.

    (a) Under Public Law 101-511, Section 8041, and similar sections in 
subsequent Defense appropriations acts, DoD appropriations for fiscal 
years 1991 and after may not be used to acquire welded shipboard anchor 
and mooring chain, four inches in diameter and under, unless--
    (1) It is manufactured in the United States, including cutting, heat 
treating, quality control, testing, and welding (both forging and shot 
blasting process); and
    (2) The cost of the components manufactured in the United States 
exceeds 50 percent of the total cost of components.
    (b) Acquisition of welded shipboard anchor and mooring chain, four 
inches in diameter and under, when used as a component of a naval 
vessel, is also restricted under 10 U.S.C. 2534(a)(3)(ii). However, the 
more stringent restriction under 225.7012-1(a) takes precedence.

[61 FR 13107, Mar. 26, 1996]



Sec. 225.7012-2  Waiver.

    The restriction in 225.7012-1(a) may be waived by the Secretary of 
the Department responsible for acquisition, on a case-by-case basis, 
where sufficient domestic suppliers are not available to meet DoD 
requirements on a timely basis and the acquisition is necessary to 
acquire capability for national security purposes.
    (a) Document the waive in a written D&F containing--
    (1) The factors supporting the waiver; and
    (2) A certification that the acquisition must be made in order to 
acquire capability for national security purposes.
    (b) Provide a copy of the D&F to the House and Senate Committees on 
Appropriations.

[61 FR 13107, Mar. 26, 1996]



Sec. 225.7012-3  Contract clause.

    Use the clause at 252.225-7019, Restriction on Acquisition of 
Foreign Anchor and Mooring Chain, in all solicitations and contracts--
    (a) Using fiscal year 1991 or later funds; and
    (b) Requiring welded shipboard anchor or mooring chain of four 
inches in diameter or less.

[61 FR 13107, Mar. 26, 1996, as amended at 61 FR 50453, Sept. 26, 1996]
225.7013  Restriction on polyacrylonitrile (PAN) based carbon fiber.



Sec. 225.7013-1  Restriction.

    (a) Section 8088, Public Law 100-202, and subsequent appropriations 
acts, require the Secretary of Defense to take such action as necessary 
to ensure by FY1992 that a minimum of 50 percent of the annual DoD 
requirements for PAN carbon fibers is acquired from domestic sources.
    (b) To meet this goal, all new major systems must use domestic or 
Canadian sources for all PAN carbon fiber requirements. ``Domestic or 
Canadian sources'' include U.S. and Canadian manufacturers and 
producers.



Sec. 225.7013-2  Contract clause.

    (a) Use the clause at 252.225-7022, Restriction on Acquisition of 
Polyacrylonitrile (PAN) Based Carbon Fiber, in all major systems 
acquisition

[[Page 189]]

programs (as defined in FAR part 34) that are not yet in production 
(milestone III as defined in DoDI 5000.2, Defense Acquisition Program 
Procedures).
    (b) Contracting officers may, with the approval of the head of the 
contracting activity, waive, in whole or in part, the requirement in the 
clause. For example, a waiver is justified if a qualified domestic or 
Canadian source cannot meet scheduling requirements.
225.7014  [Reserved]
225.7015  Restriction on night vision image intensifier tubes and 
devices.



Sec. 225.7015-1  Restriction.

    In accordance with Pub. L. 101-165 and 101-511, fiscal years 1990 
and 1991 funds may not be used to acquire second and third generation 
night vision image intensifier tubes and devices unless they are 
manufactured in the United States or Canada.

[58 FR 28467, May 13, 1993]



Sec. 225.7015-2  Exception.

    Second and third generation night vision image intensifier tubes and 
devices manufactured outside the United States or Canada may be acquired 
if--
    (a) Adequate domestic supplies are not available to meet DoD 
requirements on a timely basis; and
    (b) The Secretary of the Department responsible for the acquisition 
certifies to the House and Senate Committees on Appropriations that the 
acquisition of tubes and devices manufactured outside the United States 
or Canada is necessary in order to acquire capability for national 
security purposes.



Sec. 225.7015-3  Contract clause.

    Use the clause at 252.225-7024, Restriction on Acquisition of Night 
Vision Image Intensifier Tubes and Devices, in all solicitations and 
contracts which--
    (a) Use fiscal year 1990 or 1991 funds; and
    (b) Require second and third generation night vision image 
intensifier tubes and devices.

[58 FR 28467, May 13, 1993]
225.7016  Restriction on air circuit breakers for naval vessels.



Sec. 225.7016-1  Restriction.

    In accordance with 10 U.S.C. 2534, do not acquire air circuit 
breakers for naval vessels unless they are manufactured in the United 
States or Canada.

[60 FR 19533, Apr. 19, 1995]



Sec. 225.7016-2  Exceptions.

    This restriction does not apply if--
    (a) The acquisition is below the simplified acquisition threshold; 
or
    (b) Spares and repair parts are needed to support air circuit 
breakers manufactured outside the United States or Canada. Support 
includes the purchase of spare air circuit breakers where those from 
alternate sources are not interchangeable.

[60 FR 19533, Apr. 19, 1995]



Sec. 225.7016-3  Waiver.

    The waiver criteria at 225.7004-4 also apply to this restriction.

[60 FR 61597, Nov. 30, 1995]



Sec. 225.7016-4  Contract clause.

    Use the clause at 252.225-7029, Preference for United States or 
Canadian Air Circuit Breakers, in all solicitations and contracts 
requiring air circuit breakers for naval vessels, unless--
    (a) An exception under 225.7016-2 is known to apply; or
    (b) A waiver has been granted in accordance with 225.7016-3.

[60 FR 19534, Apr. 19, 1995]
225.7017  Restriction on carbon, alloy, and armor steel plate.



Sec. 225.7017-1  Restriction.

    In accordance with section 8111 of Pub. L. 102-172, and similar 
sections in subsequent appropriations acts, all carbon, alloy, and armor 
steel plate in Federal stock class 9515 or described by American Society 
for Testing Materials (ASTM) or American Iron and Steel Institute (AISI) 
specifications, purchased by the Government or a contractor for use in a 
Government-owned facility or in a facility controlled (e.g.,

[[Page 190]]

leased) by DoD, shall be melted and rolled in the United States or 
Canada.

[58 FR 28468, May 13, 1993]



Sec. 225.7017-2  Exceptions.

    This restriction does not apply to--
    (a) Contracts in effect as of November 26, 1991;
    (b) Direct purchases by DoD using other than fiscal year 1992 or 
subsequent year funds; or
    (c) Purchases by contractors unless the prime contract uses fiscal 
year 1992 or subsequent year funds.

[58 FR 28468, May 13, 1993]



Sec. 225.7017-3  Waiver.

    The restriction may be waived by the Secretary of the department 
responsible for acquisition, on a case-by-case, by certifying to the 
House and Senate Committees on Appropriations that--
    (a) Adequate U.S. or Canadian supplies are not available to meet DoD 
requirements on a timely basis; and
    (b) The acquisition must be made in order to acquire capability for 
national security purposes.

[57 FR 14994, Apr. 23, 1992]



Sec. 225.7017-4  Contract clause.

    Unless an exception under 225.7017-2 is known to apply or a waiver 
has been granted in accordance with 225.7017-3, use the clause at 
252.225-7030, Restriction on Acquisition of Carbon, Alloy, and Armor 
Steel Plate, in all solicitations and contracts which--
    (a) Require the delivery to the Government of carbon, alloy, or 
armor steel plate which will be used in a facility owned by the 
Government or under the control of DoD; or
    (b) Require contractors operating in a Government-owned facility or 
a facility under the control of DoD to purchase carbon, alloy, or armor 
steel plate.

[57 FR 14994, Apr. 23, 1992, as amended at 57 FR 53600, Nov. 12, 1992]



Sec. 225.7018  Restriction on four ton dolly jacks.



Sec. Sec. 225.7018-1  Restriction.

    In accordance with section 9108 of Public Law 102-396, no fiscal 
year 1993 funds shall be used to procure four ton dolly jacks 
manufactured outside the United States.

[59 FR 27672, May 27, 1994]



Sec. 225.7018-2  Waiver.

    The restriction is 225.7018-1 may be waived on a case-by-case basis 
where the Secretary of the Military Department or the Under Secretary of 
Defense (Acquisition & Technology) certifies to the Committees on 
Appropriations of the House and Senate that--
    (a) Adequate domestic supplies are available to meet requirements on 
a timely basis; and
    (b) The acquisition must be made in order to acquire capability for 
national security purposes.

[58 FR 28468, May 13, 1993, as amended at 60 FR 61597, Nov. 30, 1995]



Sec. Sec. 225.7018-3  Contract clause.

    Use the clause at section 252.225-7033, Restriction on Acquisition 
of Four Ton Dolly Jacks, in solicitations and contracts that use fiscal 
year 1993 funds for the acquisition of four ton dolly jacks.

[59 FR 27672, May 27, 1994]
225.7019  Restrictions on ball and roller bearings.



Sec. 225.7019-1  Restrictions.

    (a) In accordance with 10 U.S.C. 2534, through fiscal year 2000, do 
not acquire ball and roller bearings or bearing components which are not 
manufactured in the United States or Canada.
    (b) In accordance with Section 8099 of Public Law 104-61, do not use 
fiscal year 1996 funds to acquire ball and roller bearings other than 
those produced by a domestic source and of domestic origin, i.e., 
bearings and bearing components manufactured in the United States or 
Canada.

[61 FR 10900, Mar. 18, 1996]



Sec. 225.7019-2  Exceptions.

    (a) The restriction in 225.7019-1(a) does not apply to--
    (1) Acquisitions using simplified acquisition procedures, unless 
ball or roller bearings or bearing components are the end items being 
purchased;

[[Page 191]]

    (2) Purchases of commercial items incorporating ball or roller 
bearings;
    (3) Miniature and instrument ball bearings when necessary to meet 
urgent military requirements;
    (4) Items acquired overseas for use overseas; or
    (5) Ball and roller bearings or bearing components or items 
containing bearings for use in a cooperative or co-production project 
under an international agreement. This exception does not apply to 
miniature and instrument ball bearings.
    (b) The restriction in 225.7019-1(b) does not apply to contracts for 
acquisition of commercial items or subcontracts for acquisition of 
commercial items or subcontracts for acquisition of commercial items or 
commercial components (see 212.503(a)(xi) and 212.504(a)(xxxvi)).

[61 FR 50453, Sept. 26, 1996]



Sec. 225.7019-3  Waiver.

    (a) The head of the contracting activity may waive the restriction 
in 225.7019-1(a)--
    (1) Upon execution of a determination and findings that--
    (i) No domestic (U.S. or Canadian) bearing manufacturer meets the 
requirement;
    (ii) It is not in the best interests of the United States to qualify 
a domestic bearing to replace a qualified nondomestic bearing. This 
determination must be based on a finding that the qualification of a 
domestically manufactured bearing would cause unreasonable costs or 
delay. A finding that a cost is unreasonable should take into 
consideration DoD policy to assist the domestic industrial mobilization 
base. Contracts should be awarded to domestic bearing manufacturers to 
increase their capability to reinvest and become more competitive;
    (iii) United States producers of the item would not be jeopardized 
by competition from a foreign country, and that country does not 
discriminate against defense items produced in the United States to a 
greater degree than the United States discriminates against defense 
items produced in that country;
    (iv) Application of the restriction would impede cooperative 
programs entered into between DoD and a foreign country, and that 
country does not discriminate against defense items produced in the 
United States to a greater degree than the United States discriminates 
against defense items produced in that country;
    (v) Application of the restriction would result in the existence of 
only one source for the item in the United States or Canada;
    (vi) Application of the restriction is not in the national security 
interests of the United States; or
    (vii) Application of the restriction would adversely affect a U.S. 
company.
    (2) For multiyear contracts or contracts exceeding 12 months, except 
those for miniature and instrument ball bearings, only if--
    (i) The head of the contracting activity executes a determination 
and findings in accordance with paragraph (a) of this subsection;
    (ii) The contractor submits a written plan for transitioning from 
the use of nondomestic to domestically manufactured bearings;
    (iii) The plan--
    (A) States whether a domestically manufactured bearing can be 
qualified, at a reasonable cost, for use during the course of the 
contract period;
    (B) Identifies any bearings that are not domestically manufactured, 
their application, and source of supply; and
    (C) Describes, including cost and timetable, the transition to a 
domestically manufactured bearing. (The timetable for the transition 
should normally take no longer than 24 months from the date the waiver 
is granted); and
    (iv) The contracting officer accepts the plan and incorporates it in 
the contract.
    (3) For miniature and instrument ball bearings, only if the 
contractor agrees to acquire a like quantity and type of domestic 
manufacture for nongovernmental use.
    (b) The Secretary of the department responsible for the acquisition 
may waive the restriction in 225.7019-1(b) on a case-by-case basis, by 
certifying to the House and Senate Committees on Appropriations that--

[[Page 192]]

    (1) Adequate domestic supplies are not available to meet DoD 
requirements on a timely basis; and
    (2) The acquisition must be made in order to acquire capability for 
national security purposes.

[61 FR 10900, Mar. 18, 1996, as amended at 61 FR 50453, Sept. 26, 1996]



Sec. 225.7019-4  Contract clause.

    Use the clause at 252.225-7016, Restriction on Acquisition of Ball 
and Roller Bearings, in all solicitations and contracts, unless--
    (a) The restrictions in 225.7019-1 do not apply or a waiver has been 
granted; or
    (b) The contracting officer knows that the items being acquired do 
not contain ball or roller bearings.

[61 FR 10900, Mar. 18, 1996]
225.7020  Restriction on coal and petroleum pitch carbon fiber.



Sec. 225.7020-1  Restriction.

    (a) Section 8040A of Public Law 102-172, and section 9040A of Public 
Law 102-396, require the Secretary of Defense to take such action as 
necessary to ensure by fiscal year 1994 that a minimum of 75 percent of 
the annual DoD requirements for coal and petroleum pitch carbon fibers 
is acquired from domestic sources.
    (b) To meet this goal, all new major systems must use U.S. or 
Canadian manufacturers or producers for all coal and petroleum pitch 
carbon fiber requirements.

[59 FR 27672, May 27, 1994]



Sec. 225.7020-2  Contract clause.

    (a) Use the clause at 252.224-7034, Restriction on Acquisition of 
Coal and Petroleum Pitch Carbon Fiber, in all acquisitions for major 
systems (as defined in FAR part 34) that are not yet in production 
(milestone III as defined in DoDI 5000.2, Defense Acquisition Program 
Procedures.)
    (b) Contracting officers may, with the approval of the head of the 
contracting activity, waive, in whole or in part, the manufacturing/
production requirement in paragraph (b) of the clause at 252.225-7034. 
For example, a waiver is justified if a qualified U.S. or Canadian 
source cannot meet scheduling requirements.

[59 FR 27672, May 27, 1994]



Sec. 225.7021  Restriction on aircraft fuel cells.



Sec. 225.7021-1  Restriction.

    In accordance with section 8090 of the Fiscal Year 1994 Defense 
Appropriations Act (Pub. L. 103-139) and section 8075 of the Fiscal Year 
1995 Defense Appropriations Act (Pub. L. 103-335), do not purchase 
aircraft fuel cells unless they are produced or manufactured in the 
United States by a domestic-operated entity.

[60 FR 29498, June 5, 1995]



Sec. 225.7021-2  Waiver.

    The restriction may be waived by the Secretary of the department 
responsible for the acquisition, on a case-by-case basis, by certifying 
to the House and Senate Committees on Appropriations that--
    (a) Adequate U.S. supplies are not available to meet requirements on 
a timely basis; and
    (b) The acquisition must be made in order to acquire capability for 
national security purposes.

[59 FR 11729, Mar. 14, 1994]



Sec. 225.7021-3  Contract clause.

    Unless a waiver has been granted in accordance with 225.7021-2, use 
the clause at 252.225-7038, Restriction on Acquisition of Aircraft Fuel 
Cells, in all solicitations and contracts which--
    (a) Use fiscal year 1994 or 1995 funds; and
    (b) Require delivery of aircraft fuel cells.

[60 FR 29498, June 5, 1995]
225.7022  Restrictions on totally enclosed lifeboat survival systems.



Sec. 225.7022-1  Restrictions.

    (a) In accordance with Section 8124 of the Fiscal Year 1994 Defense 
Appropriations Act (Public Law 103-139) and Section 8093 of the Fiscal 
Year 1995 Defense Appropriations Act (Public Law 103-335), do not 
purchase a totally enclosed lifeboat survival system, which consists of 
the lifeboat and associated

[[Page 193]]

davits and winches, unless 50 percent or more of the components are 
manufactured in the United States, and 50 percent or more of the labor 
in the final manufacture and assembly of the entire system is performed 
in the United States.
    (b) In accordance with 10 U.S.C. 2534(a)(3)(B), do not purchase a 
totally enclosed lifeboat which is a component of a naval vessel, unless 
it is manufactured in the United States or Canada. In accordance with 10 
U.S.C. 2534(h), this restriction may not be implemented through the use 
of a contract clause or certification. Implementation shall be effected 
through management and oversight techniques that achieve the objective 
of the restriction without imposing a significant management burden on 
the Government or the contractor involved.

[61 FR 13107, Mar. 26, 1996]



Sec. 225.7022-2  Exceptions.

    The restriction in 225.7022-1(b) does not apply if--
    (a) The acquisition is at or below the simplified acquisition 
threshold; or
    (b) Spare or repair parts are needed to support totally enclosed 
lifeboats manufactured outside the United States or Canada.

[61 FR 13107, Mar. 26, 1996]



Sec. 225.7022-3  Waiver.

    The waiver criteria at 225.7004-4 apply only to the restriction of 
225.7022-1(b).

[61 FR 13107, Mar. 26, 1996]



Sec. 225.7022-4  Contract clause.

    Use the clause at 252.225-7039, Restriction on Acquisition of 
Totally Enclosed Lifeboat Survival Systems, in all solicitations and 
contracts which require delivery of totally enclosed lifeboat survival 
systems.

[61 FR 13107, Mar. 26, 1996]
225.7023  Restriction on supercomputers.



Sec. 225.7023-1  Restriction.

    In accordance with section 8112 of Pub. L. 100-202, and similar 
sections in subsequent Defense Appropriations Acts, do not purchase any 
supercomputer that is not manufactured in the United States.

[60 FR 34471, July 3, 1995, as amended at 60 FR 61597, Nov. 30, 1995]



Sec. 225.7023-2  Waiver.

    The restriction in 225.7023-1 may be waived by the Secretary of 
Defense on a case-by-case basis, after the Secretary of Defense 
certifies to the Armed Services and Appropriations Committees of 
Congress that--
    (a) Adequate U.S. supplies are not available to meet requirements on 
a timely basis; and
    (b) The acquisition must be made in order to acquire capability for 
national security purposes.

[60 FR 34471, July 3, 1995]



Sec. 225.7023-3  Contract clause.

    Use the clause at 252.225-7011, Restriction on Acquisition of 
Supercomputers, in solicitations and contracts for the acquisition of 
supercomputers.

[60 FR 34471, July 3, 1995, as amended at 60 FR 61597, Nov. 30, 1995]



         Subpart 225.71--Other Restrictions on Foreign Purchases



Sec. 225.7100  Scope of subpart.

    This subpart contains foreign product restrictions which are based 
on policies designed to protect the defense industrial base.



Sec. 225.7101  Definitions.

    Relevant definitions are in the clause at 252.225-7025, Foreign 
Source Restrictions.

[56 FR 36367, July 31, 1991, as amended at 56 FR 67216, Dec. 30, 1991]



Sec. 225.7102  Policy.

    DoD requirements for the following forging items, whether as end 
items or components, shall be acquired from domestic sources (as 
described in the clause at 252.225-7025) to the maximum extent 
practicable--

------------------------------------------------------------------------
                   Items                             Categories         
------------------------------------------------------------------------
Ship propulsion shafts....................  Excludes service and landing
                                             craft shafts.              
Periscope tubes...........................  All.                        

[[Page 194]]

                                                                        
Ring forgings for bull gears..............  All greater than 120 inches 
                                             in diameter.               
------------------------------------------------------------------------


[61 FR 50453, Sept. 26, 1996]



Sec. 225.7103  Exceptions.

    The policy in 225.7102 does not apply to acquisitions--
    (a) Using simplified acquisition procedures, unless the restricted 
item is the end item being purchased;
    (b) Overseas for overseas use; or
    (c) When the quantity acquired exceeds the amount needed to maintain 
the U.S. defense mobilization base (provided such quantity is an 
economical purchase quantity). The restriction to domestic sources does 
not apply to the quantity above that required to maintain the base, in 
which case, qualifying country sources may compete.

[61 FR 50453, Sept. 26, 1996]



Sec. 225.7104  Waiver.

    Upon request from a prime contractor, the contracting officer may 
waive the requirement for domestic manufacture of the items covered by 
the policy in 225.7102.

[61 FR 50453, Sept. 26, 1996]



Sec. 225.7105  Contract clause.

    (a) Use the clause at 252.225-7025, Foreign Source Restrictions, in 
all solicitations and contracts, except--
    (1) Those in 225.7103; or
    (2) Those where the contracting officer knows that the supplies 
being acquired do not contain the restricted items.
    (b) If an exception under 225.7103 applies to any portion of the 
acquisition, specify the exception in the solicitation and contract.



Subpart 225.72--Reporting Contract Performance Outside the United States

    Source: 58 FR 28469, May 13, 1993, unless otherwise noted.



Sec. 225.7200  Scope of subpart.

    This subpart prescribes procedures for contractor reporting and DoD 
monitoring of the volume, type, and nature of contract performance 
outside the United States, to include subcontracts, purchases, and 
intracompany transfers. It implements 10 U.S.C. 2410g which requires 
advance notification of contract performance outside the United States 
and Canada when the contract could have been performed inside the United 
States or Canada.



Sec. 225.7201  Exception.

    This subpart does not apply to contracts for commercial items, 
construction, ores, natural gas, utilities, petroleum products and 
crudes, timber (logs), or subsistence.

[60 FR 61597, Nov. 30, 1995]



Sec. 225.7202  Distribution of reports.

    The contracting officer shall forward a copy of reports submitted by 
successful offerors as required by the clause at 252.225-7026, Reporting 
of Contract Performance Outside the United States, to the Deputy 
Director of Defense Procurement (Foreign Contracting), OUSD(A&T)DP(FC), 
Washington, DC 20301-3060. This is necessary to satisfy the requirement 
of 10 U.S.C. 2410g that the notifications (or copies) be maintained in 
compiled form for five years after the date of submission.

[58 FR 28469, May 13, 1993, as amended at 60 FR 29499, June 5, 1995]



Sec. 225.7203  Contract clause.

    Except for acquisitions in 225.7201, use the clause at 252.225-7026, 
Reporting of Contract Performance Outside the United States, in all 
solicitations and contracts with an estimated or actual value exceeding 
$500,000, including those modified to exceed $500,000.



         Subpart 225.73--Acquisitions for Foreign Military Sales



Sec. 225.7300  Scope of subpart.

    (a) This subpart contains policies and procedures for acquisitions 
for foreign military sales (FMS) under the Arms Export Control Act. 
Section 22 of the Arms Export Control Act (Pub. L. 90-629, as amended) 
authorizes DoD to enter into contracts for resale to foreign countries 
or international organizations.

[[Page 195]]

    (b) This subpart does not apply to--
    (1) Foreign military sales made from inventories or stocks;
    (2) Acquisitions for replenishment of inventories or stocks;
    (3) Acquisitions made under DoD cooperative logistic supply support 
arrangements.



Sec. 225.7301  General.

    (a) The U.S. Government sells defense articles and services to 
foreign governments or international organizations through foreign 
military sales (FMS) agreements. The agreement is documented on a DD 
Form 1513, DoD Offer and Acceptance. The DD Form 1513--
    (1) Lists the items and services, estimated costs, and terms and 
conditions of the sale;
    (2) Is presented to the foreign customer; and
    (3) Provides for signature of the foreign customer to indicate 
acceptance.
    (b) Acquisitions for FMS are conducted under the same acquisition 
and contract management procedures as other defense acquisitions.
    (c) Solicitations shall separately identify known FMS requirements 
and the FMS customer.
    (d) Contracts for known FMS requirements shall clearly be marked 
``FMS requirement'' on the face of the contract along with the FMS 
customer and the case identifier code.



Sec. 225.7302  Procedures.

    On FMS programs that will require an acquisition, the contracting 
officer assists the departmental/agency activity responsible for 
preparing the DoD Offer and Acceptance by--
    (a) Working with prospective contractors to--
    (1) Identify and review sales commissions and fees;
    (2) Identify, in advance of the DoD Offer and Acceptance, any 
unusual provisions or deviations.
    (3) Advise the contractor if the departmental/agency activity 
expands, modifies, or does not accept any requirements proposed by the 
contractor;
    (4) Identify any logistics support necessary to perform the 
contract; and
    (5) For acquisitions over $10,000 that are to be awarded 
noncompetitively, asking the prospective contractor(s) for information 
on price, delivery, and other relevant factors. The request for 
information must identify the fact that the information is for a 
potential foreign military sale and must identify the foreign customer.
    (b) Working with the departmental/agency activity responsible for 
preparing the DoD Offer and Acceptance to--
    (1) Assist, as necessary, in preparation of the DD Form 1513;
    (2) Identify and explain all unusual contractual requirements or 
requests for deviations; and
    (3) Assist in preparing the price and availability data.



Sec. 225.7303  Pricing acquisitions for foreign military sales.

    Price FMS contracts using the same principles as are used in pricing 
other defense contracts. Application of the pricing principles in FAR 
parts 15 and 31 to an FMS contract, however, may result in prices that 
differ from other defense contract prices for the same item due to the 
considerations in this section.

[56 FR 36367, July 31, 1991, as amended at 61 FR 50453, Sept. 26, 1996]



Sec. 225.7303-1  Contractor sales to other foreign customers.

    If the contractor has made sales of the item required for the 
foreign military sale to foreign customers under comparable conditions, 
including quantity and delivery, price the FMS contract in accordance 
with FAR part 15.



Sec. 225.7303-2  Cost of doing business with a foreign government or an international organization.

    (a) In pricing FMS contracts where non-U.S. Government prices as 
described in 225.7303-1 do not exist, except as provided in 225.7303-5, 
recognize the reasonable and allocable costs of doing business with a 
foreign government or international organization, even though such costs 
might not be recognized in the same amounts in pricing other defense 
contracts. Examples of such costs include, but are not limited to--
    (1) Selling expenses (not otherwise limited by FAR part 31), e.g.--

[[Page 196]]

    (i) Maintaining international sales and service organizations;
    (ii) Sales commissions and fees in accordance with FAR subpart 3.4;
    (iii) Sales promotions, demonstrations, and related travel for sales 
to foreign governments. Paragraph 126.8 of the International Traffic in 
Arms Regulations (ITAR) (22 CFR part 121) may require Government 
approval for these costs to be allowable. If Government approval is 
required for promotion or demonstration costs to be allowable, the 
approval must be obtained.
    (iv) Configuration studies and related technical services undertaken 
as a direct selling effort to a foreign country.
    (2) Product support and post-delivery service expenses, such as--
    (i) Operations or maintenance training, training or tactics films, 
manuals, or other related data; and
    (ii) Technical field services provided in a foreign country related 
to accident investigations, weapon system problems, operations/tactics 
enhancement, and related travel to foreign countries.
    (3) Offset implementation costs.
    (i) A U.S. defense contractor may recover costs incurred to 
implement its offset agreement with a foreign government or 
international organization if the foreign military sale Letter of Offer 
and Acceptance is financed wholly with customer cash or repayable 
foreign military finance credits.
    (ii) The U.S. Government assumes no obligation to satisfy or 
administer the offset requirement or to bear any of the associated 
costs.
    (4) Costs that are the subject of advance agreement under the 
appropriate provisions of FAR part 31; or where the advance 
understanding places a limit on the amounts of cost that will be 
recognized as allowable in defense contract pricing, and the agreement 
contemplated that it will apply only to DoD contracts for the U.S. 
Government's own requirement (as distinguished from contracts for FMS).
    (b) Costs not allowable under FAR part 31 are not allowable in 
pricing foreign military sale contracts, except as noted in paragraph 
(c) of this subsection.
    (c) The provisions of 10 U.S.C. 2372 do not apply to contracts for 
foreign military sales. Therefore, the cost limitations on independent 
research and development and bid and proposal (IR&D/B&P) costs in FAR 
31.205-18 do not apply to such contracts, except as provided in 
225.7303-5. The allowability of IR&D/B&P costs on contracts for foreign 
military sales not wholly paid for from funds made available on a 
nonrepayable basis shall be limited to the contract's allocable share of 
the contractor's total IR&D/B&P expenditures. In pricing contracts for 
such foreign military sales--
    (1) Use the best estimate of reasonable costs in forward pricing.
    (2) Use actual expenditures, to the extent that they are reasonable, 
in determining final cost.
    (d) Under section 21(e)(1)(A) of the Arms Export Control Act, as 
amended, the United States must charge for administrative services to 
recover the estimated cost of administration of sales made under the 
Arms Export Control Act.

[56 FR 36367, July 31, 1991, as amended at 56 FR 67216, Dec. 30, 1991; 
57 FR 42631, Sept. 15, 1992; 57 FR 53600, Nov. 12, 1992; 59 FR 50511, 
Oct. 4, 1994; 61 FR 7744, Feb. 29, 1996; 61 FR 18987, Apr. 30, 1996]



Sec. 225.7303-3  Government-to-government agreements.

    If a government-to-government agreement between the United States 
and a foreign government for the sale, coproduction, or cooperative 
logistic support of a specifically defined weapon system, major end 
item, or support item, contains language in conflict with the provisions 
of this section, the language of the government-to-government agreement 
prevails.



Sec. 225.7303-4  Sales commissions and contingent fees.

    Sales commissions and contingent fees are allowable under defense 
contracts provided that the commissions or fees are paid to a bona fide 
employee or a bona fide established commercial or selling agency 
maintained by the prospective contractor for the purpose of securing 
business (see FAR part 31 and FAR subpart 3.4). For FMS, it is extremely 
difficult for DoD to verify the services, or the value of the services. 
Therefore, the cost of allowable

[[Page 197]]

sales commissions and contingent fees (as defined in FAR subpart 3.4) is 
limited to $50,000 and must be identified to the FMS customer before, or 
at the time of, submitting the DoD Offer and Acceptance (DD Form 1513) 
to the customer.
    (a) When requesting price and availability data for an Offer and 
Acceptance, require contractors to identify the amount of any sales 
commissions or fees. The fees, even if under $50,000 per contract, must 
be justified and supported. Except for those contracts excluded in FAR 
subpart 3.4--
    (1) Require the contractor to submit a Contractor's Statement of 
Contingent or Other Fees (Standard Form 119) (Including any such fees 
claimed by subcontractors);
    (2) Determine under FAR subpart 3.4 whether a bona fide employee or 
agency relationship exists (for the purposes of FMS, the definition in 
FAR subpart 3.4 of improper influence also extends to officials of the 
foreign government);
    (3) Require the contractor to submit a breakdown of the fee for the 
sales representative's services. Even if a bona fide employee or agency 
relationship is determined to exist, the fee must be reasonable.
    (i) Whether the fee is reasonable requires an assessment of the 
services provided, or to be provided, compared to the amount of the fee.
    (ii) The proposed fee/commission may be compared with known costs 
for comparable services under non-FMS contracts, or for FMS sales of 
comparable scope and dollar amounts for the same or similar items.
    (iii) In analyzing the fee, give consideration to whether the sale 
is the initial or a follow-on sale. Effort for follow-on sales of 
additional quantities, spares, and support equipment is normally not as 
great as the effort for the initial sale.
    (4) The chief of the contracting office must approve the contracting 
officer's determination--
    (i) As to whether there is a bona fide employee or agency 
relationship; and
    (ii) Of the reasonableness of the commission or fee.
    (b) If the foreign customer disapproves the fee, or a portion of the 
fee, the contracting officer must notify the prospective contractor and 
request that the contractor withdraw the fee for the sales 
representative from the proposal. If the contractor refuses to withdraw 
the fee, the contracting officer notifies the department/agency activity 
responsible for preparation of the DoD Offer and Acceptance, which 
notifies the foreign customer that DoD is unable to purchase the items 
or services from that contractor.
    (c) It may not be possible to determine whether or not the price to 
be paid for material or services will include sales commissions and fees 
(for example, when FMS requirements are to be fulfilled by competitive 
acquisitions). In such cases, if contract negotiations indicate that 
costs for a sales representative will be claimed by the contractor, the 
department/agency responsible for presentation of the Offer and 
Acceptance notifies the foreign customer as soon as possible and asks 
for a reply within 30 days as to whether the customer will approve the 
costs.
    (d) Under DoD 5105.38-M, Security Assistance Management Manual, 
Letters of Offer and Acceptance for requirements for the governments of 
Australia, Taiwan, Egypt, Greece, Israel, Japan, Jordan, Republic of 
Korea, Kuwait, Pakistan, Philippines, Saudi Arabia, Turkey, Thailand, or 
Venezuela (Air Force) must provide that all U.S. Government contracts 
resulting from the Letters of Offer prohibit the payment of sales 
commission and fee unless the payments have been identified and payment 
approved in writing by the foreign customer before contract award. (See 
225.7308(a).)



Sec. 225.7303-5  Aquisitions wholly paid for from nonrepayable funds.

    (a) In accordance with 22 U.S.C. 2762(d), foreign military sales 
wholly paid for from funds made available on a nonrepayable basis shall 
be priced on the same costing basis with regard to profit, overhead, 
IR&D/B&P, and other costing elements, as is applicable to acquisitions 
of like items purchased by DoD for its own use.
    (b) Direct costs associated with meeting a foreign customer's 
additional or unique requirements will be allowable under such 
contracts. Indirect burden rates applicable to such direct costs

[[Page 198]]

shall be permitted at the same rates applicable to acquisitions of like 
items purchased by DoD for its own use.
    (c) A U.S. defense contractor may not recover costs incurred to 
implement its offset agreement with a foreign government or 
international organization if the foreign military sale Letter of Offer 
and Acceptance is financed with funds made available on a nonrepayable 
basis.

[61 FR 18988, Apr. 30, 1996; 61 FR 49531, Sept. 20, 1996]



Sec. 225.7304  Source selection.

    (a) FMS customers may request that a defense article or defense 
service be obtained from a particular contractor. In such cases, FAR 
6.302-4 provides authority to contract without full-and-open 
competition. The FMS customer may also request that a subcontract be 
placed with a particular firm. The contracting officer shall honor such 
requests from the FMS customer only if the Letter of Agreement or other 
written direction sufficiently fulfills the requirements of FAR 6.3.
    (b) Do not allow representatives of the FMS customer to--
    (1) Direct the deletion of names of firms from bidders mailing lists 
or slates of proposed A-E firms. (They may suggest the inclusion of 
certain firms);
    (2) Interfere with a contractor's placement of subcontracts; or
    (3) Participate in the price negotiations between the U.S. 
Government and the contractor.
    (c) Do not accept directions from the FMS customer on source 
selection decisions or contract terms (other than the special contract 
provisions and warranties referred to in Condition A.2 of the DD Form 
1513).
    (d) Do not honor any requests by the FMS customer to reject any bid 
or proposal.



Sec. 225.7305  Limitation of liability.

    The contracting officer must advise the contractor whenever the 
foreign customer will assume the risk for loss or damage under the 
appropriate limitation of liability clause(s) (see FAR subpart 46.8). 
Consider the costs of necessary insurance, if any, obtained by the 
contractor to cover the risk of loss or damage in establishing the FMS 
contract price.



Sec. 225.7306  Exercise of options for foreign military sales.

    Consider changes to cost and profit attributable to pricing 
differences between U.S. and FMS requirements when exercising an option 
to satisfy an FMS requirement. Also consider such changes if the option 
is already identified for FMS, but it is exercised for country B 
requirements instead of the country A requirements for which it was 
priced.
225.7307  Implementation of offset arrangements negotiated pursuant to 
foreign military sales agreements.



Sec. 225.7307-1  General.

    (a) The purpose of an FMS/offset arrangement is to fulfill 
commitments negotiated pursuant to an FMS agreement. The general policy 
in fulfilling these commitments is to exempt the FMS country's products 
from the requirements of the Buy American Act on a case-by-case basis.
    (b) Generally, it is not appropriate to establish an offset goal or 
objective. If in special circumstances it is in the national interest to 
establish an offset goal or objective, the goal or objective may be 
stated as--
    (1) A certain percentage of the FMS agreement dollar value;
    (2) A specific dollar amount; or
    (3) A combination of the two.
    (c) The Presidential policy statement of April 16, 1990 provides 
that DoD shall not encourage, enter directly into, or commit U.S. firms, 
to any FMS/offset arrangement. The decision whether to engage in 
offsets, and the responsibility for negotiating and implementing offset 
arrangements, resides with the companies involved. Exceptions to this 
policy must be approved by the President through the National Security 
Council. This does not prevent DoD from fulfilling obligations incurred 
through international agreements entered into before April 16, 1990.
    (d) When authorized, offset provisions typically require the 
Military Departments or U.S. prime contractors, or both, to provide 
opportunities for foreign sources to obtain contracts under

[[Page 199]]

the terms and conditions of the particular DoD offset agreement. 
Normally, FMS/offset arrangements are negotiated before the FMS 
agreement Offer and Acceptance so that--
    (1) DoD and its contractors have an opportunity to assess in advance 
their ability to fulfill the FMS/offset arrangement; and
    (2) The offer can include those DoD and contractor costs associated 
with such arrangements.
    (e) If an exception is granted under paragraph (c) of this 
subsection, the domestic concerns involved in the FMS and the foreign 
customer will make suitable arrangements to fulfill an FMS/offset 
arrangement. Only if the Government determines that the FMS/offset 
arrangement cannot be fulfilled in this fashion will DoD seek to fulfill 
the offset commitments through other defense purchases. When practical, 
the U.S. contractor shall be contacted and coordination obtained before 
the Government commits the contractor's participation.
    (f) The Defense Security Assistance Agency (DSAA) acts as the focal 
point within the Executive Branch for interagency coordination on offset 
policy. DSAA consults with, and derives its overall policy guidance 
from, the Office of the Assistant Secretary of Defense (International 
Security Affairs). The Director of Defense Procurement is responsible 
for matters pertaining to the fulfillment of the offset portion of FMS 
agreements. General information regarding the existence of FMS/offset 
arrangements with particular countries or implementation of such 
arrangements may be obtained by submitting inquiries to the Directorate 
for Foreign Contracting, OUSD(A&T)DP(FC).

[56 FR 36367, July 31, 1991, as amended at 60 FR 61597, Nov. 30, 1995]



Sec. 225.7307-2  Procedures.

    (a) Whenever an FMS agreement involves a single major weapon system, 
the department responsible for acquisition of the weapon system is 
responsible for managing any resulting FMS/offset arrangement.
    (b) If an FMS agreement involves the sale of items from two or more 
departments, USD(A&T)DP may either direct that one department be 
responsible for coordinating the implementation of the FMS/offset 
arrangement, or apportion responsibility for managing the offset program 
among two or more departments.

[56 FR 36367, July 31, 1991, as amended at 60 FR 61597, Nov. 30, 1995]



Sec. 225.7308   Contract clauses.

    (a) Use the clause at 252.225-7027, Limitation on Sales Commissions 
and Fees, in all solicitations and contracts for foreign military sales 
for the countries in 225.7303-4(d), unless payment of sales commissions 
and fees has been approved by the foreign customer. Insert the name of 
the foreign country customer in the three blanks of the clause.
    (b) Use the clause at 252.225-7028, Exclusionary Policies and 
Practices of Foreign Governments, in all solicitations and contracts for 
the purchase of goods and services for international military education 
training and foreign military sales.



PART 226--OTHER SOCIOECONOMIC PROGRAMS--Table of Contents




                 Subpart 226.1--Indian Incentive Program

Sec.
226.103  Procedures.

    Subpart 226.70--Historically Black Colleges and Universities and 
                          Minority Institutions

226.7000  Scope of subpart.
226.7001  Definitions.
226.7002  General policy.
226.7003  Set-asides for HBCUs and MIs.
226.7003-1  Set-aside criteria.
226.7003-2  Set-aside procedures.
226.7004  Evaluation preference for HBCUs and MIs.
226.7005  Eligibility as an HBCU or MI.
226.7006  Protesting an HBCU or MI representation.
226.7007  Goals and incentives for subcontracting with HBCU/MIs.
226.7008  Solicitation provision and contract clause.

        Subpart 226.71--Preference for Local and Small Businesses

226.7100  Scope of subpart.
226.7101  Definition.
226.7102  Policy.
226.7103  Procedure.
226.7104  Other considerations.

[[Page 200]]

             Subpart 226.72--Base Closures and Realignments

226.7200  Scope.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36388, July 31, 1991, unless otherwise noted.



                Subpart 226.1--Indian Incentive Program.



Sec. 226.103  Procedures.

    Contracting officers shall contact the Office of Small and 
Disadvantaged Business Utilization, Office of the Under Secretary of 
Defense for Acquisition and Technology, OUSD(A&T) SADBU, Room 2A340, The 
Pentagon, Washington, DC 20301-3061, (703) 697-1688, to obtain funding 
for an approved Indian incentive payment request. Upon receipt of 
funding from OUSD(A&T) SADBU, the contracting officer shall issue a 
unilateral contract modification to add the incentive payment.

[60 FR 61597, Nov. 30, 1995]



    Subpart 226.70--Historically Black Colleges and Universities and 
                          Minority Institutions



Sec. Sec. 226.7000  Scope of subpart.

    This subpart implements the historically black college and 
university (HBCU) and minority institution (MI) provisions of 10 U.S.C. 
2323, which--
    (a) Set a goal for DoD for each of fiscal years 1987 through 2000 to 
award five percent of contract and subcontract dollars to small 
disadvantaged business concerns and HBCU/MIs; and
    (b) Require a separate goal, for each of fiscal years 1991 through 
2000, as a subset of the five percent goal, for the participation of 
HBCUs and MIs.

[59 FR 27672, May 27, 1994]



Sec. 226.7001  Definitions.

    Definitions of HBCUs and MIs are in the clause at 252.226-7000.



Sec. 226.7002  General policy.

    The DoD will use outreach efforts, technical assistance programs, 
advance payments, HBCU/MI set-asides, and evaluation preferences to meet 
its contract and subcontract goal for use of HBCUs and MIs. In addition, 
DoD will establish ``infrastructure assistance'' (e.g., scholarships, 
faculty development, teaming agreements with defense laboratories, and 
laboratory renovation) at colleges, universities, and institutions that 
agree to bear a substantial portion of the costs associated with the 
progams.

[56 FR 67216, Dec. 30, 1991]
226.7003  Set-asides for HBCUs and MIs.



Sec. 226.7003-1  Set-aside criteria.

    Set-aside acquisitions for exclusive HBCU and MI participation when 
the acquisition is for research, studies, or services of the type 
normally acquired from higher educational institutions and there is a 
reasonable expectation that--
    (a) Offers will be submitted by at least two responsible HBCUs or 
MIs which can comply with the subcontracting limitations in the clause 
at FAR 52.219-14;
    (b) Award will be made at not more than ten percent above fair 
market price; and
    (c) Scientific and/or technological talent consistent with the 
demands of the acquisition will be offered.



Sec. 226.7003-2  Set-aside procedures.

    (a) As a general rule, use competitive negotiation for HBCU/MI set-
asides.
    (b) When using a broad agency announcement (FAR 35.016) for basic or 
applied research, make partial set-asides for HBCU/MIs as explained in 
235.016.
    (c) Follow the special synopsis instructions in 205.207(d) (iii), 
(iv), and (v).
    (d) Cancel the set-aside if the low responsible offer exceeds the 
fair market price (defined in FAR part 19) by more than ten percent.



Sec. 226.7004  Evaluation preference for HBCUs and MIs.

    In acquisitions which use the evaluation preference described in 
subpart 219.70 for small disadvantaged business concerns, the preference 
also applies to offers from HBCUs or MIs.

[[Page 201]]



Sec. 226.7005  Eligibility as an HBCU or MI.

    (a) To be eligible for award as an HBCU or MI under the preference 
procedures of this subpart, an offeror must--
    (1) Be an HBCU or MI, as defined in the clause at 252.226-7000, 
Notice of Historically Black College or University and Minority 
Institution Set-Aside, at the time of submission of its initial offer 
including price; and
    (2) Provide the contracting officer with evidence of its HBCU or MI 
status upon request.
    (b) The contracting officer shall accept an offeror's certification 
under the provision at 252.226-7001 that it is an HBCU or MI, unless--
    (1) Another offeror challenges the certification; or
    (2) The contracting officer has reason to question the offeror's 
HBCU/MI status. (A list of HBCUs is published periodically by the 
Department of Education.)

[56 FR 36388, July 31, 1991, as amended at 59 FR 22131, Apr. 29, 1994]



Sec. 226.7006  Protesting an HBCU or MI representation.

    Any offeror or other interested party may challenge an offeror's 
HBCU or MI representation by filing a protest with the contracting 
officer. The protest must contain specific detailed evidence supporting 
the basis for the challenge. Such protests are handled in accordance 
with FAR 33.103 and are decided by the contracting officer.



Sec. 226.7007  Goals and incentives for subcontracting with HBCU/MIs.

    (a) In reviewing subcontracting plans submitted under the clause at 
FAR 52.219-9, Small Business and Small Disadvantaged Business 
Subcontracting Plan, the contracting officer shall--
    (1) Ensure that the contractor included anticipated awards to HBCU/
MIs in the small disadvantaged business goal;
    (2) Consider whether subcontracts are contemplated which involve 
research or studies of the type normally performed by higher educational 
institutions.
    (b) Use of incentives for subcontracting with HBCU/MIs is prescribed 
in 219.708(c)(1).



Sec. 226.7008  Solicitation provision and contract clause.

    (a) Use the clause at 252.226-7000, Notice of Historically Black 
College or University and Minority Institution Set-Aside, in 
solicitations and contracts set-aside for HBCU/MIs.
    (b) Use the provision at 252.226-7001, Historically Black College or 
University and Minority Institution Certification, in solicitations set-
aside for HBCU/MIs and in solicitations which contain the clause at 
252.219-7006, Notice of Evaluation Preference for Small Disadvantaged 
Business Concerns.

[56 FR 36388, July 31, 1991, as amended at 57 FR 42631, Sept. 15, 1992]



        Subpart 226.71--Preference for Local and Small Businesses

    Source: 59 FR 12192, Mar. 16, 1994, unless otherwise noted.



Sec. 226.7100  Scope of subpart.

    This subpart implements section 2912 of the Fiscal Year 1994 Defense 
Authorization Act (Pub. L. 103-160) and section 817 of the Fiscal Year 
1995 Defense Authorization Act (Pub. L. 103-337).

[60 FR 5870, Jan. 31, 1995]



Sec. 226.7101  Definition.

    Vicinity, as used in this subpart, means the county or counties in 
which the military installation to be closed or realigned is located and 
all adjacent counties, unless otherwise defined by the agency head.

[60 FR 29499, June 5, 1995]



Sec. 226.7102  Policy.

    Businesses located in the vicinity of a military installation that 
is being closed or realigned under a base closure law, including 10 
U.S.C. 2687, and small and small disadvantaged businesses shall be 
provided maximum practicable opportunity to participate in acquisitions 
that support the closure or realignment, including acquisitions for 
environmental restoration and mitigation.

[[Page 202]]



Sec. 226.7103  Procedure.

    In considering acquisitions for award through the section 8(a) 
program (subpart 219.8 and FAR subpart 19.8) or in making set-aside 
decisions under subpart 219.5 and FAR subpart 19.5 for acquisitions in 
support of a base closure or realignment, the contracting officer 
shall--
    (a) Determine whether there is a reasonable expectation that offers 
will be received from responsible business concerns located in the 
vicinity of the military installation that is being closed or realigned.
    (b) If offers can not be expected from business concerns in the 
vicinity, proceed with section 8(a) or set-aside consideration as 
otherwise indicated in part 219 and FAR part 19.
    (c) If offers can be expected from business concerns in the 
vicinity--
    (1) Consider section 8(a) only if the 8(a) contractor is located in 
the vicinity.
    (2) Set aside the acquisition for small disadvantaged business only 
if one of the expected offers is from a small disadvantaged business 
located in the vicinity.
    (3) Set aside the acquisition for small business only if one of the 
expected offers is from a small business located in the vicinity.

[60 FR 29499, June 5, 1995]



Sec. 226.7104  Other considerations.

    When planning for contracts for services related to base closure 
activities at a military installation affected by a closure or 
realignment under a base closure law, contracting officers shall 
consider including, as a factor in source selection, the extent to which 
offerors specifically identify and commit, in their proposals, to a plan 
to hire residents of the vicinity of the military installation that is 
being closed or realigned.

[60 FR 61598, Nov. 30, 1995]



             Subpart 226.72--Base Closures and Realignments



Sec. 226.7200  Scope.

    This subpart identifies the various policies and statutory 
authorities that affect contracts associated with the closure and 
realignment of military installations. These policies and authorities 
are--
    (a) Right of first refusal of employment. This authority is embodied 
in a clause for use in solicitations and contracts arising from the 
closure of a military installation. The clause establishes employment 
rights for Government employees who are adversely affected by closure of 
the installation (see subpart 222.71).
    (b) Preference for local and small business. This authority allows 
contracting officers, when entering into a contract as part of the 
closure or realignment of a military installation, to give preference, 
to the greatest extent practicable, to qualified businesses located in 
the vicinity of the installation and to small and small disadvantaged 
business concerns (see subpart 226.71).
    (c) Services at installations being closed. This authority allows 
DoD, under certain conditions, to contract with local governments for 
police, fire protection, airfield operations and other community 
services at installations being closed (see subpart 237.74).

[59 FR 36089, July 15, 1994, as amended at 60 FR 29499, June 5, 1995]

[[Page 203]]



             SUBCHAPTER E--GENERAL CONTRACTING REQUIREMENTS





PART 227--PATENTS, DATA, AND COPYRIGHTS--Table of Contents




Sec.

         Subpart 227.3--Patent Rights Under Government Contracts

227.303  Contract clauses.
227.304  Procedures.
227.304-1  General.
227.304-4  Subcontracts.

              Subpart 227.4--Rights in Data and Copyrights

227.400  Scope of subpart.

   Subpart 227.6--Foreign License and Technical Assistance Agreements

227.670  Scope.
227.671  General.
227.672  Policy.
227.673  Foreign license and technical assistance agreements between the 
          Government and domestic concerns.
227.674  Supply contracts between the Government and a foreign 
          government or concern.
227.675  Foreign license and technical assistance agreements between a 
          domestic concern and a foreign government or concern.
227.675-1  International Traffic in Arms Regulations.
227.675-2  Review of agreements.

     Subpart 227.70--Infringement Claims, Licenses, and Assignments

227.7000  Scope.
227.7001  Policy.
227.7002  Statutes pertaining to administrative claims of infringement.
227.7003  Claims for copyright infringement.
227.7004  Requirements for filing an administrative claim for patent 
          infringement.
227.7005  Indirect notice of patent infringement claims.
227.7006  Investigation and administrative disposition of claims.
227.7007  Notification and disclosure to claimants.
227.7008  Settlement of indemnified claims.
227.7009  Patent releases, license agreements, and assignments.
227.7009-1  Required clauses.
227.7009-2  Clauses to be used when applicable.
227.7009-3  Additional clauses--contracts except running royalty 
          contracts.
227.7009-4  Additional clauses--contracts providing for payment of a 
          running royalty.
227.7010  Assignments.
227.7011  Procurement of rights in inventions, patents, and copyrights.
227.7012  Contract format.
227.7013  Recordation.

                Subpart 227.71--Rights in Technical Data

227.7100  Scope of subpart.
227.7101  Definitions.
227.7102  Commercial items, components, or processes.
227.7102-1  Policy.
227.7102-2  Rights in technical data.
227.7102-3  Contract clause.
227.7103  Noncommercial items or processes.
227.7103-1  Policy.
227.7103-2  Acquisition of technical data.
227.7103-3  Early identification of technical data to be furnished to 
          the Government with restrictions on use, reproduction or 
          disclosure.
227.7103-4  License rights.
227.7103-5  Government rights.
227.7103-6  Contract clauses.
227.7103-7  Use and non-disclosure agreement.
227.7103-8  Deferred delivery and deferred ordering of technical data.
227.7103-9  Copyright.
227.7103-10  Contractor identification and marking of technical data to 
          be furnished with restrictive markings.
227.7103-11  Contractor procedures and records.
227.7103-12  Government right to establish conformity of markings.
227.7103-13  Government right to review, verify, challenge and validate 
          asserted restrictions.
227.7103-14  Conformity, acceptance, and warranty of technical data.
227.7103-15  Subcontractor rights in technical data.
227.7103-16  Providing technical data to foreign governments, foreign 
          contractors, or international organizations.
227.7103-17  Overseas contracts with foreign sources.
227.7104  Contracts under the Small Business Innovative Research (SBIR) 
          Program.
227.7105  Contracts for the acquisition of existing works.
227.7105-1  General.
227.7105-2  Acquisition of existing works without modification.
227.7105-3  Acquisition of modified existing works.
227.7106  Contracts for special works.

[[Page 204]]

227.7107  Contracts for architect-engineer services.
227.7107-1  Architectural designs and data clauses for architect-
          engineer or construction contracts.
227.7107-2  Contracts for construction supplies and research and 
          development work.
227.7107-3  Approval of restricted designs.
227.7108  Contractor data repositories.

   Subpart 227.72--Rights in Computer Software and Computer Software 
                              Documentation

227.7200  Scope of subpart.
227.7201  Definitions.
227.7202  Commercial computer software and commercial computer software 
          documentation.
227.7202-1  Policy.
227.7202-2  [Reserved]
227.7202-3  Rights in commercial computer software or commercial 
          computer software documentation.
227.7202-4  Contract clause.
227.7203  Noncommercial computer software and noncommercial computer 
          software documentation.
227.7203-1  Policy.
227.7203-2  Acquisition of noncommercial computer software and computer 
          software documentation.
227.7203-3  Early identification of computer software or computer 
          software documentation to be furnished to the Government with 
          restrictions on use, reproduction or disclosure.
227.7203-4  License rights.
227.7203-5  Government rights.
227.7203-6  Contract clauses.
227.7203-7  Reserved.
227.7203-8  Deferred delivery and deferred ordering or computer software 
          and computer software documentation.
227.7203-9  Copyright.
227.7203-10  Contractor identification and marking of computer software 
          or computer software documentation to be furnished with 
          restrictive markings.
227.7203-11  Contractor procedures and records.
227.7203-12  Government right to establish conformity of markings.
227.7203-13  Government right to review, verify, challenge and validate 
          asserted restrictions.
227.7203-14  Conformity, acceptance, and warranty of computer software 
          and computer software documentation.
227.7203-15  Subcontractor rights in computer software or computer 
          software documentation.
227.7203-16  Providing computer software or computer software 
          documentation to foreign governments, foreign contractors, or 
          international organizations.
227.7203-17  Overseas contracts with foreign sources.
227.7204  Contracts under the Small Business Innovative Research 
          Program.
227.7205  Contracts for special works.
227.7206  Contracts for architect-engineer services.
227.7207  Contractor data repositories.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36389, July 31, 1991, unless otherwise noted.



         Subpart 227.3--Patent Rights Under Government Contracts



Sec. 227.303  Contract clauses.

    (a) Pursuant to FAR 27.304-1(e), the contracting officer shall 
insert the clause at 252.227-7039, Patents--Reporting of Subject 
Inventions, in solicitations and contracts containing the clause at FAR 
52.227-11, Patent Rights--Retention by the Contractor (Short Form).
227.304  Procedures.



Sec. 227.304-1  General.

    Interim and final invention reports and notification of all 
subcontracts for experimental, developmental, or research work (FAR 
27.304-1(e)(2)(ii)) may be submitted on DD Form 882, Report of 
Inventions and Subcontracts.

[56 FR 36389, July 31, 1991, as amended at 57 FR 53600, Nov. 12, 1992]



Sec. 227.304-4  Subcontracts.

    The contracting officer shall insert the clause at 252.227-7034, 
Patents-Subcontracts, in solicitations and contracts containing the 
clause at FAR 52.227-11, Patent Rights--Retention by the Contractor 
(Short Form).



              Subpart 227.4--Rights in Data and Copyrights



Sec. 227.400  Scope of subpart.

    DoD activities shall use the guidance in subparts 227.71 and 227.72 
instead of the guidance in FAR subpart 27.4.

[60 FR 33471, June 28, 1995]

[[Page 205]]



   Subpart 227.6--Foreign License and Technical Assistance Agreements



Sec. 227.670  Scope.

    This subpart prescribes policy with respect to foreign license and 
technical assistance agreements.



Sec. 227.671  General.

    In furtherance of the Military Assistance Program or for other 
national defense purposes, the Government may undertake to develop or 
encourage the development of foreign additional sources of supply. The 
development of such sources may be accomplished by an agreement, often 
called a foreign licensing agreement or technical assistance agreement, 
wherein a domestic concern, referred to in this subpart as a ``primary 
source,'' agrees to furnish to a foreign concern or government, herein 
referred to as a ``second source;'' foreign patent rights; technical 
assistance in the form of data, know-how, trained personnel of the 
primary source, instruction and guidance of the personnel of the second 
source, jigs, dies, fixtures, or other manufacturing aids, or such other 
assistance, information, rights, or licenses as are needed to enable the 
second source to produce particular supplies or perform particular 
services. Agreements calling for one or more of the foregoing may be 
entered into between the primary source and the Government, a foreign 
government, or a foreign concern. The consideration for providing such 
foreign license and technical assistance may be in the form of a lump 
sum payment, payments for each item manufactured by the second source, 
an agreement to exchange data and patent rights on improvements made to 
the article or service, capital stock transactions, or any combination 
of these. The primary source's bases for computing such consideration 
may include actual costs; charges for the use of patents, data, or know-
how reflecting the primary source's investment in developing and 
engineering and production techniques; and the primary source's 
``price'' for setting up a second source. Such agreements often refer to 
the compensation to be paid as a royalty or license fee whether or not 
patent rights are involved.



Sec. 227.672  Policy.

    It is Government policy not to pay in connection with its contracts, 
and not to allow to be paid in connection with contracts made with funds 
derived through the Military Assistance Program or otherwise through the 
United States Government, charges for use of patents in which it holds a 
royalty-free license or charges for data which it has a right to use and 
disclose to others, or which is in the public domain, or which the 
Government has acquired without restriction upon its use and disclosure 
to others. This policy shall be applied by the Departments in 
negotiating contract prices for foreign license technical assistance 
contracts (227.675) or supply contracts with second sources (227.674); 
and in commenting on such agreements when they are referred to the 
Department of Defense by the Department of State pursuant to section 414 
of the Mutual Security Act of 1954 as amended (22 U.S.C. 1934) and the 
International Traffic in Arms Regulations (see 227.675).



Sec. 227.673  Foreign license and technical assistance agreements between the Government and domestic concerns.

    (a) Contracts between the Government and a primary source to provide 
technical assistance or patent rights to a second source for the 
manufacture of supplies or performance of services shall, to the extent 
practicable, specify the rights in patents and data and any other rights 
to be supplied to the second source. Each contract shall provide, in 
connection with any separate agreement between the primary source and 
the second source for patent rights or technical assistance relating to 
the articles or services involved in the contract, that--
    (1) The primary source and his subcontractors shall not make, on 
account of any purchases by the Government or by others with funds 
derived through the Military Assistance Program or otherwise through the 
Government, any charge to the second source for royalties or 
amortization for patents or inventions in which the Government

[[Page 206]]

holds a royalty-free license; or data which the Government has the right 
to possess, use, and disclose to others; or any technical assistance 
provided to the second source for which the Government has paid under a 
contract between the Government and the primary source; and
    (2) The separate agreement between the primary and second source 
shall include a statement referring to the contract between the 
Government and the primary source, and shall conform to the requirements 
of the International Traffic in Arms Regulations (see 227.675-1).
    (b) The following factors, among others, shall be considered in 
negotiating the price to be paid the primary source under contracts 
within (a) of this section:
    (1) The actual cost of providing data, personnel, manufacturing 
aids, samples, spare parts, and the like;
    (2) The extent to which the Government has contributed to the 
development of the supplies or services, and to the methods of 
manufacture or performance, through past contracts for research and 
development or for manufacture of the supplies or performance of the 
services; and
    (3) The Government's patent rights and rights in data relating to 
the supplies or services and to the methods of manufacture or of 
performance.



Sec. 227.674  Supply contracts between the Government and a foreign government or concern.

    In negotiating contract prices with a second source, including the 
redetermination of contract prices, or in determining the allowability 
of costs under a cost-reimbursement contract with a second source, the 
contracting officer:
    (a) Shall obtain from the second source a detailed statement (see 
FAR 27.204-1(a)(2)) of royalties, license fees, and other compensation 
paid or to be paid to a primary source (or any of his subcontractors) 
for patent rights, rights in data, and other technical assistance 
provided to the second source, including identification and description 
of such patents, data, and technical assistance; and
    (b) Shall not accept or allow charges which in effect are--
    (1) For royalties or amortization for patents or inventions in which 
the Government holds a royalty-free license; or
    (2) For data which the Government has a right to possess, use, and 
disclose to others; or
    (3) For any technical assistance provided to the second source for 
which the Government has paid under a contract between the Government 
and a primary source.
227.675  Foreign license and technical assistance agreements between a 
domestic concern and a foreign government or concern.



Sec. 227.675-1  International Traffic in Arms Regulations.

    Pursuant to section 414 of the Mutual Security Act of 1954, as 
amended (22 U.S.C. 1934), the Department of State controls the 
exportation of data relating to articles designated in the United States 
Munitions List as arms, ammunition, or munitions of war. (The Munitions 
List and pertinent procedures are set forth in the International Traffic 
in Arms Regulations, 22 CFR, et seq.) Before authorizing such 
exportation, the Department of State generally requests comments from 
the Department of Defense. On request of the Office of the Assistant 
Secretary of Defense (International Security Affairs), each Department 
shall submit comments thereon as the basis for a Department of Defense 
reply to the Department of State.



Sec. 227.675-2  Review of agreements.

    (a) In reviewing foreign license and technical assistance agreements 
between primary and second sources, the Department concerned shall, 
insofar as its interests are involved, indicate whether the agreement 
meets the requirements of Secs. 124.07-124.10 of the International 
Traffic in Arms Regulations or in what respects it is deficient. 
Paragraphs (b) through (g) of this subsection provide general guidance.
    (b) When it is reasonably anticipated that the Government will 
purchase from the second source the supplies or services involved in the 
agreement, or

[[Page 207]]

that Military Assistance Program funds will be provided for the 
procurement of the supplies or services, the following guidance applies.
    (1) If the agreement specifies a reduction in charges thereunder, 
with respect to purchases by or for the Government or by others with 
funds derived through the Military Assistance Program or otherwise 
through the Government, in recognition of the Government's rights in 
patents and data, the Department concerned shall evaluate the amount of 
the reduction to determine whether it is fair and reasonable in the 
circumstances, before indicating its approval.
    (2) If the agreement does not specify any reduction in charges or 
otherwise fails to give recognition to the Government's rights in the 
patents or data involved, approval shall be conditioned upon amendment 
of the agreement to reflect a reduction, evaluated by the Department 
concerned as acceptable to the Government, in any charge thereunder with 
respect to purchases made by or for the Government or by others with 
funds derived through the Military Assistance Program or otherwise 
through the Government, in accordance with Sec. 124.10 of the 
International Traffic in Arms Regulations.
    (3) If the agreement provides that no charge is to be made to the 
second source for data or patent rights to the extent of the 
Government's rights, the Department concerned shall evaluate the 
acceptability of the provision before indicating its approval.
    (4) If time or circumstances do not permit the evaluation called for 
in (b) (1), (2), or (3) of this subsection, the guidance in (c) of this 
subsection shall be followed.
    (c) When it is not reasonably anticipated that the Government will 
purchase from the second source the supplies or services involved in the 
agreement nor that Military Assistance Program funds will be provided 
for the purchase of the supplies or services, then the following 
guidance applies.
    (1) If the agreement provides for charges to the second source for 
data or patent rights, it may suffice to fulfill the requirements of 
Sec. 124.10 insofar as the Department of Defense is concerned if:
    (i) The agreement requires the second source to advise the primary 
source when he has knowledge of any purchase made or to be made from him 
by or for the Government or by others with funds derived through the 
Military Assistance Program or otherwise through the Government;
    (ii) The primary source separately agrees with the Government that 
upon such advice to him from the second source or from the Government or 
otherwise as to any such a purchase or prospective purchase, he will 
negotiate with the Department concerned an appropriate reduction in his 
charges to the second source in recognition of any Government rights in 
patents or data; and
    (iii) The agreement between the primary and second sources further 
provides that in the event of any such purchase and resulting reduction 
in charges, the second source shall pass on this reduction to the 
Government by giving the Government a corresponding reduction in the 
purchase price of the article or service.
    (2) If the agreement provides that no charge is to be made to the 
second source for data or patent rights to the extent to which the 
Government has rights, the Department concerned shall:
    (i) Evaluate the acceptability of the provision before indicating 
its approval; or
    (ii) Explicitly condition its approval on the right to evaluate the 
acceptability of the provision at a later time.
    (d) When there is a technical assistance agreement between the 
primary source and the Government related to the agreement between the 
primary and second sources that is under review, the latter agreement 
shall reflect the arrangements contemplated with respect thereto by the 
Government's technical assistance agreement with the primary source.
    (e) Every agreement shall provide that any license rights 
transferred under the agreement are subject to existing rights of the 
Government.
    (f) In connection with every agreement referred to in (b) of this 
section, a request shall be made to the primary source--

[[Page 208]]

    (1) To identify the patents, data, and other technical assistance to 
be provided to the second source by the primary source or any of his 
subcontractors,
    (2) To identify any such patents and data in which, to the knowledge 
of the primary source, the Government may have rights, and
    (3) To segregate the charges made to the second source for each such 
category or item of patents, data, and other technical assistance.

Reviewing personnel shall verify this information or, where the primary 
source does not furnish it, obtain such information from Governmental 
sources so far as practicable.
    (g) The Department concerned shall make it clear that its approval 
of any agreement does not necessarily recognize the propriety of the 
charges or the amounts thereof, or constitute approval of any of the 
business arrangements in the agreement, unless the Department expressly 
intends by its approval to commit itself to the fairness and 
reasonableness of a particular charge or charges. In any event, a 
disclaimer should be made to charges or business terms not affecting any 
purchase made by or for the Government or by others with funds derived 
through the Military Assistance Program or otherwise through the 
Government.



     Subpart 227.70--Infringement Claims, Licenses, and Assignments



Sec. 227.7000  Scope.

    This subpart prescribes policy, procedures, and instructions for use 
of clauses with respect to processing licenses, assignments, and 
infringement claims.



Sec. 227.7001  Policy.

    Whenever a claim of infringement of privately owned rights in 
patented inventions or copyrighted works is asserted against any 
Department or Agency of the Department of Defense, all necessary steps 
shall be taken to investigate, and to settle administratively, deny, or 
otherwise dispose of such claim prior to suit against the United States. 
This subpart 227.70 does not apply to licenses or assignments acquired 
by the Department of Defense under the Patent Rights clauses.



Sec. 227.7002  Statutes pertaining to administrative claims of infringement.

    Statutes pertaining to administrative claims of infringement in the 
Department of Defense include the following: the Foreign Assistance Act 
of 1961, 22 U.S.C. 2356 (formerly the Mutual Security Acts of 1951 and 
1954); the Invention Secrecy Act, 35 U.S.C. 181-188; 10 U.S.C. 2386; 28 
U.S.C. 1498; and 35 U.S.C. 286.



Sec. 227.7003  Claims for copyright infringement.

    The procedures set forth herein will be followed, where applicable, 
in copyright infringement claims.



Sec. 227.7004  Requirements for filing an administrative claim for patent infringement.

    (a) A patent infringement claim for compensation, asserted against 
the United States under any of the applicable statutes cited in 
227.7002, must be actually communicated to and received by a Department, 
agency, organization, office, or field establishment within the 
Department of Defense. Claims must be in writing and should include the 
following:
    (1) An allegation of infringement;
    (2) A request for compensation, either expressed or implied;
    (3) A citation of the patent or patents alleged to be infringed;
    (4) A sufficient designation of the alleged infringing item or 
process to permit identification, giving the military or commercial 
designation, if known, to the claimant;
    (5) A designation of at least one claim of each patent alleged to be 
infringed; or
    (6) As an alternative to (a) (4) and (5) of this section, a 
certification that the claimant has made a bona fide attempt to 
determine the item or process which is alleged to infringe, but was 
unable to do so, giving reasons, and stating a reasonable basis for his 
belief that his patent or patents are being infringed.

[[Page 209]]

    (b) In addition to the information listed in (a) of this section, 
the following material and information is generally necessary in the 
course of processing a claim of patent infringement. Claimants are 
encouraged to furnish this information at the time of filing a claim to 
permit the most expeditious processing and settlement of the claim.
    (1) A copy of the asserted patent(s) and identification of all 
claims of the patent alleged to be infringed.
    (2) Identification of all procurements known to claimant which 
involve the alleged infringing item or process, including the identity 
of the vendor or contractor and the Government procuring activity.
    (3) A detailed identification of the accused article or process, 
particularly where the article or process relates to a component or 
subcomponent of the item procured, an element by element comparison of 
the representative claims with the accused article or process. If 
available, this identification should include documentation and drawings 
to illustrate the accused article or process in suitable detail to 
enable verification of the infringement comparison.
    (4) Names and addresses of all past and present licenses under the 
patent(s), and copies of all license agreements and releases involving 
the patent(s).
    (5) A brief description of all litigation in which the patent(s) has 
been or is now involved, and the present status thereof.
    (6) A list of all persons to whom notices of infringement have been 
sent, including all departments and agencies of the Government, and a 
statement of the ultimate disposition of each.
    (7) A description of Government employment or military service, if 
any, by the inventor and/or patent owner.
    (8) A list of all Government contracts under which the inventor, 
patent owner, or anyone in privity with him performed work relating to 
the patented subject matter.
    (9) Evidence of title to the patent(s) alleged to be infringed or 
other right to make the claim.
    (10) A copy of the Patent Office file of each patent if available to 
claimant.
    (11) Pertinent prior art known to claimant, not contained in the 
Patent Office file, particularly publications and foreign art.

In addition in the foregoing, if claimant can provide a statement that 
the investigation may be limited to the specifically identified accused 
articles or processes, or to a specific procurement, it may materially 
expedite determination of the claim.
    (c) Any Department receiving an allegation of patent infringement 
which meets the requirements of this paragraph shall acknowledge the 
same and supply the other Departments which may have an interest therein 
with a copy of such communication and the acknowledgement thereof.
    (1) For the Department of the Army--Chief, Patents, Copyrights, and 
Trademarks Division, U.S. Army Legal Services Agency;
    (2) For the Department of the Navy--The Patent Counsel for Navy, 
Office of Naval Research;
    (3) For the Department of the Air Force--Chief, Patents Division, 
Office of The Judge Advocate General;
    (4) For the Defense Logistics Agency--The Office of Counsel; for the 
National Security Agency, the General Counsel;
    (5) For the Defense Information Systems Agency--the Counsel;
    (6) For the Defense Special Weapons Agency--The General Counsel; and
    (7) For the Defense Mapping Agency--The Counsel.
    (d) If a communication alleging patent infringement is received 
which does not meet the requirements set forth in paragraph (c) of this 
section, the sender shall be advised in writing--
    (1) That his claim for infringement has not been satisfactorily 
presented, and
    (2) Of the elements considered necessary to establish a claim.
    (e) A communication making a proffer of a license in which no 
infringement is alleged shall not be considered as a claim for 
infringement.

[56 FR 36389, July 31, 1991, as amended at 56 FR 67216, Dec. 30, 1991; 
61 FR 50454, Sept. 26, 1996]

[[Page 210]]



Sec. 227.7005  Indirect notice of patent infringement claims.

    (a) A communication by a patent owner to a Department of Defense 
contractor alleging that the contractor has committed acts of 
infringement in performance of a Government contract shall not be 
considered a claim within the meaning of 227.7004 until it meets the 
requirements specified therein.
    (b) Any Department receiving an allegation of patent infringement 
which meets the requirements of 227.7004 shall acknowledge the same and 
supply the other Departments (see 227.7004(c)) which may have an 
interest therein with a copy of such communication and the 
acknowledgement thereof.
    (c) If a communication covering an infringement claim or notice 
which does not meet the requirements of 227.7004(a) is received from a 
contractor, the patent owner shall be advised in writing as covered by 
the instructions of 227.7004(d).



Sec. 227.7006  Investigation and administrative disposition of claims.

    An investigation and administrative determination (denial or 
settlement) of each claim shall be made in accordance with instructions 
and procedures established by each Department, subject to the following:
    (a) When the procurement responsibility for the alleged infringing 
item or process is assigned to a single Department or only one 
Department is the purchaser of the alleged infringing item or process, 
and the funds of that Department only are to be charged in the 
settlement of the claim, that Department shall have the sole 
responsibility for the investigation and administrative determination of 
the claim and for the execution of any agreement in settlement of the 
claim. Where, however, funds of another Department are to be charged, in 
whole or in part, the approval of such Department shall be obtained as 
required by 208.7002. Any agreement in settlement of the claim, approved 
pursuant to 208.7002 shall be executed by each of the Departments 
concerned.
    (b) When two or more Departments are the respective purchasers of 
alleged infringing items or processes and the funds of those Departments 
are to be charged in the settlement of the claim, the investigation and 
administrative determination shall be the responsibility of the 
Department having the predominant financial interest in the claim or of 
the Department or Departments as jointly agreed upon by the Departments 
concerned. The Department responsible for negotiation shall, throughout 
the negotiation, coordinate with the other Departments concerned and 
keep them advised of the status of the negotiation. Any agreement in the 
settlement of the claim shall be executed by each Department concerned.



Sec. 227.7007  Notification and disclosure to claimants.

    When a claim is denied, the Department responsible for the 
administrative determination of the claim shall so notify the claimant 
or his authorized representative and provide the claimant a reasonable 
rationale of the basis for denying the claim. Disclosure of information 
or the rationale referred to above shall be subject to applicable 
statutes, regulations, and directives pertaining to security, access to 
official records, and the rights of others.



Sec. 227.7008  Settlement of indemnified claims.

    Settlement of claims involving payment for past infringement shall 
not be made without the consent of, and equitable contribution by, each 
indemnifying contractor involved, unless such settlement is determined 
to be in the best interests of the Government and is coordinated with 
the Department of Justice with a view to preserving any rights of the 
Government against the contractors involved. If consent of and equitable 
contribution by the contractors are obtained, the settlement need not be 
coordinated with the Department of Justice.



Sec. 227.7009  Patent releases, license agreements, and assignments.

    This section contains clauses for use in patent release and 
settlement agreements, license agreements, and assignments, executed by 
the Government, under which the Government acquires rights. Minor 
modifications of language (e.g., pluralization of ``Secretary'' or 
``Contracting Officer'') in

[[Page 211]]

multi-departmental agreements may be made if necessary.



Sec. 227.7009-1  Required clauses.

    (a) Covenant Against Contingent Fees. Insert the clause at FAR 
52.203-5.
    (b) Gratuities. Insert the clause at FAR 52.203-3.
    (c) Assignment of Claims. Insert the clause at FAR 52.232-23.
    (d) Disputes. Pursuant to FAR 33.014, insert the clause at FAR 
52.233-1.
    (e) Non-Estoppel. Insert the clause at 252.227-7000.

[56 FR 36389, July 31, 1991, as amended at 61 FR 50454, Sept. 26, 1996]



Sec. 227.7009-2  Clauses to be used when applicable.

    (a) Release of past infringement. The clause at 252.227-7001, 
Release of Past Infringement, is an example which may be modified or 
omitted as appropriate for particular circumstances, but only upon the 
advice of cognizant patent or legal counsel. (See footnotes at end of 
clause.)
    (b) Readjustment of payments. The clause at 252.227-7002, 
Readjustment of Payments, shall be inserted in contracts providing for 
payment of a running royalty.
    (c) Termination. The clause at 252.227-7003, Termination, is an 
example for use in contracts providing for the payment of a running 
royalty. This clause may be modified or omitted as appropriate for 
particular circumstances, but only upon the advice of cognizant patent 
or legal counsel (see 227.7004(c)).



Sec. 227.7009-3  Additional clauses--contracts except running royalty contracts.

    The following clauses are examples for use in patent release and 
settlement agreements, and license agreements not providing for payment 
by the Government of a running royalty.
    (a) License Grant. Insert the clause at 252.227-7004.
    (b) License Term. Insert one of the clauses at 252.227-7005 
Alternate I or Alternate II, as appropriate.



Sec. 227.7009-4  Additional clauses--contracts providing for payment of a running royalty.

    The clauses set forth below are examples which may be used in patent 
release and settlement agreements, and license agreements, when it is 
desired to cover the subject matter thereof and the contract provides 
for payment of a running royalty.
    (a) License grant--running royalty. No Department shall be obligated 
to pay royalties unless the contract is signed on behalf of such 
Department. Accordingly, the License Grant clause at 252.227-7006 should 
be limited to the practice of the invention by or for the signatory 
Department or Departments.
    (b) License term--running royalty. The clause at 252.227-7007 is a 
sample form for expressing the license term.
    (c) Computation of royalties. The clause at 252.227-7008 providing 
for the computation of royalties, may be of varying scope depending upon 
the nature of the royalty bearing article, the volume of procurement, 
and the type of contract pursuant to which the procurement is to be 
accomplished.
    (d) Reporting and payment of royalties. (1) The contract should 
contain a provision specifying the office designated within the specific 
Department involved to make any necessary reports to the contractor of 
the extent of use of the licensed subject matter by the entire 
Department, and such office shall be charged with the responsibility of 
obtaining from all procuring offices of that Department the information 
necessary to make the required reports and corresponding vouchers 
necessary to make the required payments. The clause at 252.227-7009 is a 
sample for expressing reporting and payment of royalties requirements.
    (2) Where more than one Department or Government Agency is licensed 
and there is a ceiling on the royalties payable in any reporting period, 
the licensing Departments or Agencies shall coordinate with respect to 
the pro rata share of royalties to be paid by each.
    (e) License to other government agencies. When it is intended that a 
license on the same terms and conditions be available to other 
departments and

[[Page 212]]

agencies of the Government, the clause at 252.227-7010 is an example 
which may be used.



Sec. 227.7010  Assignments.

    (a) The clause at 252.227-7011 is an example which may be used in 
contracts of assignment of patent rights to the Government.
    (b) To facilitate proof of contracts of assignments, the 
acknowledgement of the contractor should be executed before a notary 
public or other officer authorized to administer oaths (35 U.S.C. 261).



Sec. 227.7011  Procurement of rights in inventions, patents, and copyrights.

    Even though no infringement has occurred or been alleged, it is the 
policy of the Department of Defense to procure rights under patents, 
patent applications, and copyrights whenever it is in the Government's 
interest to do so and the desired rights can be obtained at a fair 
price. The required and suggested clauses at 252.227-7004 and 252.227-
7010 shall be required and suggested clauses, respectively, for license 
agreements and assignments made under this paragraph. The instructions 
at 227.7009-3 and 227.7010 concerning the applicability and use of those 
clauses shall be followed insofar as they are pertinent.



Sec. 227.7012  Contract format.

    The format at 252.227-7012 appropriately modified where necessary, 
may be used for contracts of release, license, or assignment.



Sec. 227.7013  Recordation.

    Executive Order No. 9424 of 18 February 1944 requires all executive 
Departments and agencies of the Government to forward through 
appropriate channels to the Commissioner of Patents and Trademarks, for 
recording, all Government interests in patents or applications for 
patents.



                Subpart 227.71--Rights in Technical Data

    Source: 60 FR 33471, June 28, 1995, unless otherwise noted.



Sec. 227.7100  Scope of subpart.

    This subpart--
    (a) Prescribes policies and procedures for the acquisition of 
technical data and the rights to use, modify, reproduce, release, 
perform, display, or disclose technical data. It implements requirements 
in the following laws and Executive Order:
    (1) 10 U.S.C. 2302(4).
    (2) 10 U.S.C. 2305 (subsection (d)(4)).
    (3) 10 U.S.C. 2320.
    (4) 10 U.S.C. 2321.
    (5) 10 U.S.C. 2325.
    (6) Pub. L. 103-355.
    (7) Executive Order 12591 (Subsection 1(b)(6)).
    (b) Does not apply to computer software or technical data that is 
computer software documentation (see subpart 227.72).



Sec. 227.7101  Definitions.

    (a) As used in this subpart, unless otherwise specifically 
indicated, the terms ``offeror'' and ``contractor'' include an offeror's 
or contractor's subcontractors, suppliers, or potential subcontractors 
or suppliers at any tier.
    (b) Other terms used in this subpart are defined in the clause at 
252.227-7013, Rights in Technical Data--Noncommercial Items.

[56 FR 36389, July 31, 1991, as amended at 60 FR 61598, Nov. 30, 1995]



Sec. 227.7102  Commercial items, components, or processes.

    Section 2320(b)(1) of Title 10 U.S.C. establishes a presumption that 
commercial items are developed at private expense whether or not a 
contractor submits a justification in response to a challenge notice. 
Therefore, do not challenge a contractor's assertion that a commercial 
item, component, or process was developed at private expense unless the 
Government can demonstrate that it contributed to development of the 
item, component or process. Follow the procedures in 227.7103-13 and the 
clause at 252.227-7037, Validation of Restrictive Markings on Technical 
Data, when information provided by the Department of Defense 
demonstrates that an item, component, or process was not developed 
exclusively at private expense. However,

[[Page 213]]

when a challenge is warranted, a contractor's or subcontractor's failure 
to respond to the challenge notice cannot be the sole basis for issuing 
a final decision denying the validity of an asserted restriction.



Sec. 227.7102-1  Policy.

    (a) DoD shall acquire only the technical data customarily provided 
to the public with a commercial item or process, except technical data 
that--
    (1) Are form, fit, or function data;
    (2) Are required for repair or maintenance of commercial items or 
processes, or for the proper installation, operating, or handling of a 
commercial item, either as a stand alone unit or as a part of a military 
system, when such data are not customarily provided to commercial users 
or the data provided to commercial users is not sufficient for military 
purposes; or
    (3) Describe the modifications made at Government expense to a 
commercial item or process in order to meet the requirements of a 
Government solicitation.
    (b) To encourage offerors and contractors to offer or use commercial 
products to satisfy military requirements, offerors, and contractors 
shall not be required, except for the technical data described in 
paragraph (a) of this subsection, to--
    (1) Furnish technical information related to commercial items or 
processes that is not customarily provided to the public; or
    (2) Relinquish to, or otherwise provide, the Government rights to 
use, modify, reproduce, release, perform, display, or disclose technical 
data pertaining to commercial items or processes except for a transfer 
of rights mutually agreed upon.



Sec. 227.7102-2  Rights in technical data.

    (a) The clause at 252.227-7015, Technical Data--Commercial Items, 
provides the Government specific license rights in technical data 
pertaining to commercial items or processes. DoD may use, modify, 
reproduce, release, perform, display, or disclose data only within the 
Government. The data may not be used to manufacture additional 
quantities of the commercial items and, except for emergency repair or 
overhaul, may not be released or disclosed to, or used by, third parties 
without the contractor's written permission. Those restrictions do not 
apply to the technical data described in 227.7102-1(a).
    (b) If additional rights are needed, contracting activities must 
negotiate with the contractor to determine if there are acceptable terms 
for transferring such rights. The specific additional rights granted to 
the Government shall be enumerated in a license agreement made part of 
the contract.



Sec. 227.7102-3  Contract clause.

    (a) Except as provided in paragraph (b) of this subsection, use the 
clause at 252.227-7015, Technical Data--Commercial Items, in all 
solicitations and contracts when the contractor will be required to 
deliver technical data pertaining to commercial items, components, or 
processes. Do not require the contractor to include this clause in its 
subcontracts.
    (b) Use the clause at 252.227-7013, Rights in Technical Data--
Noncommercial Items, in lieu of the clause at 252.227-7015 if the 
Government will pay any portion of the development costs. Do not require 
the contractor to include this clause in its subcontracts for commercial 
items or commercial components.
    (c) Use the clause at 252.227-7037, Validation of Restrictive 
Markings on Technical Data, in all solicitations and contracts for 
commercial items that include the clause at 252.227-7015 or the clause 
at 252.227-7013. Do not require the contractor to include this clause in 
its subcontracts for commercial items or commercial components.

[56 FR 36389, July 31, 1991, as amended at 60 FR 61598, Nov. 30, 1995]



Sec. 227.7103  Noncommercial items or processes.



Sec. 227.7103-1  Policy.

    (a) DoD policy is to acquire only the technical data, and the rights 
in that data, necessary to satisfy agency needs.
    (b) Solicitations and contracts shall--

[[Page 214]]

    (1) Specify the technical data to be delivered under a contract and 
delivery schedules for the data;
    (2) Establish or reference procedures for determining the 
acceptability of technical data;
    (3) Establish separate contract line items, to the extent 
practicable, for the technical data to be delivered under a contract and 
require offerors and contractors to price separately each deliverable 
data item; and
    (4) Require offerors to identify, to the extent practicable, 
technical data to be furnished with restrictions on the Government's 
rights and require contractors to identify technical data to be 
delivered with such restrictions prior to delivery.
    (c) Offerors shall not be required, either as a condition of being 
responsive to a solicitation or as a condition for award, to sell or 
otherwise relinquish to the Government any rights in technical data 
related to items, components or processes developed at private expense 
except for the data identified at 227.7103-5(a)(2) and (a)(4) through 
(9).
    (d) Offerors and contractors shall not be prohibited or discouraged 
from furnishing or offering to furnish items, components, or processes 
developed at private expense solely because the Government's rights to 
use, modify, release, reproduce, perform, display, or disclose technical 
data pertaining to those items may be restricted.
    (e) As provided in 10 U.S.C. 2305, solicitations for major systems 
development contracts shall not require offerors to submit proposals 
that would permit the Government to acquire competitively items 
identical to items developed at private expense unless a determination 
is made at a level above the contracting officer that--
    (1) The offeror will not be able to satisfy program schedule or 
delivery requirements; or
    (2) The offeror's proposal to meet mobilization requirements does 
not satisfy mobilization needs.



Sec. 227.7103-2  Acquisition of technical data.

    (a) Contracting officers shall work closely with data managers and 
requirements personnel to assure that data requirements included in 
solicitations are consistent with the policy expressed in 227.7103-1.
    (b)(1) Data managers or other requirements personnel are responsible 
for identifying the Government's minimum needs for technical data. Data 
needs must be established giving consideration to the contractor's 
economic interests in data pertaining to items, components, or processes 
that have been developed at private expense; the Government's costs to 
acquire, maintain, store, retrieve, and protect the data; reprocurement 
needs; repair, maintenance and overhaul philosophies; spare and repair 
part considerations; and whether procurement of the items, components, 
or processes can be accomplished on a form, fit, or function basis. When 
it is anticipated that the Government will obtain unlimited or 
government purpose rights in technical data that will be required for 
competitive spare or repair parts procurements, such data should be 
identified as deliverable data items. Reprocurement needs may not be a 
sufficient reason to acquire detailed manufacturing or process data when 
items or components can be acquired using performance specifications, 
form, fit and function data, or when there are a sufficient number of 
alternate sources which can reasonably be expected to provide such items 
on a performance specification or form, fit, or function basis.
    (2) When reviewing offers received in response to a solicitation or 
other request for data, data managers must balance the original 
assessment of the Government's data needs with data prices contained in 
the offer.
    (c) Contracting officers are responsible for ensuring that, wherever 
practicable, solicitations and contracts--
    (1) Identify the type and quantity of the technical data to be 
delivered under the contract and the format and media in which the data 
will be delivered;
    (2) Establish each deliverable data item as a separate contract line 
item (this requirement may be satisfied by listing each deliverable data 
item on an exhibit to the contract);
    (3) Identify the prices established for each deliverable data item 
under a fixed-price type contract;

[[Page 215]]

    (4) Include delivery schedules and acceptance criteria for each 
deliverable data item; and
    (5) Specifically identify the place of delivery for each deliverable 
item of technical data.



Sec. 227.7103-3  Early identification of technical data to be furnished to the Government with restrictions on use, reproduction or disclosure.

    (a) 10 U.S.C. 2320 requires, to the maximum extent practicable, an 
identification prior to delivery of any technical data to be delivered 
to the Government with restrictions on use.
    (b) Use the provision at 252.227-7017, Identification and Assertion 
of Use, Release, or Disclosure Restrictions, in all solicitations that 
include the clause at 252.227-7013, Rights in Technical Data--
Noncommercial Items. The provision requires offerors to identify any 
technical data for which restrictions, other than copyright, on use, 
release, or disclosure are asserted and to attach the identification and 
assertions to the offer.
    (c) Subsequent to contract award, the clause at 252.277-7013 permits 
a contractor, under certain conditions, to make additional assertions of 
use, release, or disclosure restrictions. The prescription for the use 
of that clause and its alternate is at 227.7103-6 (a) and (b).



Sec. 227.7103-4  License rights.

    (a) Grant of license. The Government obtains rights in technical 
data, including a copyright license, under and irrevocable license 
granted or obtained for the Government by the contractor. The contractor 
or licensor retains all rights in the data not granted to the 
Government. For technical data that pertain to items, components, or 
processes, the scope of the license is generally determined by the 
source of funds used to develop the item, component, or process. When 
the technical data do not pertain to items, components, or processes, 
the scope of the license is determined by the source of funds used to 
create the data.
    (1) Techical data pertaining to items, components, or processes. 
Contractors or licensors may, with some exceptions (see 227.7103-5(a)(2) 
and (a)(4) through (9)), restrict the Government's rights to use, 
modify, release, reproduce, perform, display or disclose technical data 
pertaining to items, components, or processes developed exclusively at 
private expense (limited rights). They may not restrict the Government's 
rights in items, components, or processes developed exclusively at 
Government expense (unlimited rights) without the Government's approval. 
When an item, component, or process is developed with mixed funding, the 
Government may use, modify, release, reproduce, perform, display or 
disclose the data pertaining to such items, components, or processes 
within the Government without restriction but may release or disclose 
the data outside the Government only for government purposes (government 
purpose rights).
    (2) Technical data that do not pertain to items, components, or 
processes. Technical data may be created during the performance of a 
contract for a conceptual design or similar effort that does not require 
the development, manufacture, construction, or production of items, 
components or processes. The Government generally obtains unlimited 
rights in such data when the data were created exclusively with 
Government funds, government purpose rights when the data were created 
with mixed funding, and limited rights when the data were created 
exclusively at private expense.
    (b) Source of funds determination. The determination of the source 
of development funds for technical data pertaining to items, components, 
or processes should be made at any practical sub-item or subcomponent 
level or for any segregable portion of a process. Contractors may assert 
limited rights in a segregable sub-item, sub-component, or portion of a 
process which otherwise qualifies for limited rights under the clause at 
252.227-7013, Rights in Technical Data--Noncommercial Items.



Sec. 227.7103-5  Government rights.

    The standard license rights that a licensor grants to the Government 
are unlimited rights, government purpose rights, or limited rights. 
Those rights are defined in the clause at 252.227-7013,

[[Page 216]]

Rights in Technical Data--Noncommercial Items. In unusual situations, 
the standards rights may not satisfy the Government's needs or the 
Government may be willing to accept lesser rights in data in return for 
other consideration. In those cases, a special license may be 
negotiated. However, the licensor is not obligated to provide the 
Government greater rights and the contracting officer is not required to 
accept lesser rights than the rights provided in the standard grant of 
license. The situations under which a particular grant of license 
applies are enumerated in paragraphs (a) through (d) of this subsection.
    (a) Unlimited rights. The Government obtains unlimited rights in 
technical data that are--
    (1) Data pertaining to an item, component, or process which has been 
or will be developed exclusively with Government funds;
    (2) Studies, analyses, test data, or similar data produced in the 
performance of a contract when the study, analysis, test, or similar 
work was specified as an element of performance;
    (3) Created exclusively with Government funds in the performance of 
a contract that does not require the development, manufacture, 
construction, or production of items, components, or processes;
    (4) Form, fit, and function data;
    (5) Necessary for installation, operation, maintenance, or training 
purposes (other than detailed manufacturing or process data);
    (6) Corrections or changes to technical data furnished to the 
contractor by the Government;
    (7) Publicly available or have been released or disclosed by the 
contractor or subcontractor without restrictions on further use, release 
or disclosure other than a release or disclosure resulting from the 
sale, transfer, or other assignment of interest in the software to 
another party or the sale or transfer of some or all of a business 
entity or its assets to another party;
    (8) Data in which the Government has obtained unlimited rights under 
another Government contract or as a result of negotiations; or
    (9) Data furnished to the Government, under a Government contract or 
subcontract thereunder, with--
    (i) Government purpose license rights or limited rights and the 
restrictive condition(s) has/have expired; or
    (ii) Government purpose rights and the contractor's exclusive right 
to use such data for commercial purposes has expired.
    (b) Government purpose rights. (1) The Government obtains government 
purpose rights in technical data--
    (i) That pertain to items, components, or processes developed with 
mixed funding except when the Government is entitled to unlimited rights 
as provided in paragraphs (a)(2) and (a)(4) through (9) of this 
subsection; or
    (ii) Created with mixed funding in the performance of a contract 
that does not require the development, manufacture, construction, or 
production of items, components, or processes.
    (2) The period during which government purpose rights are effective 
is negotiable. The clause at 252.227-7013 provides a nominal five-year 
period. Either party may request a different period. Changes to the 
government purpose rights period may be made at any time prior to 
delivery of the technical data without consideration from either party. 
Longer periods should be negotiated when a five-year period does not 
provide sufficient time to apply the data for commercial purposes or 
when necessary to recognize subcontractors' interests in the data.
    (3) The government purpose rights period commences upon execution of 
the contract, subcontract, letter contract (or similar contractual 
instrument), contract modification, or option exercise that required the 
development. Upon expiration of the Government rights period, the 
Government has unlimited rights in the data including the right to 
authorize others to use the data for commercial purposes.
    (4) During the government purpose rights period, the government may 
not use, or authorize other persons to use, technical data marked with 
government purpose rights legends for commercial purposes. The 
Government shall not release or disclose data in which it has government 
purpose

[[Page 217]]

rights to any person, or authorize others to do so, unless--
    (i) Prior to release or disclosure, the intended recipient is 
subject to the use and non-disclosure agreement at 227.7103-7; or
    (ii) The intended recipient is a Government contractor receiving 
access to the data for performance of a Government contract that 
contains the clause at 252.227-7025, Limitations on the Use or 
Disclosure of Government-Furnished Information Marked with Restrictive 
Legends.
    (5) When technical data marked with government purpose rights 
legends will be released or disclosed to a Government contractor 
performing a contract that does not include the clause at 252-227-7025, 
the contract may be modified, prior to release or disclosure, to include 
that clause in lieu of requiring the contractor to complete a use and 
non-disclosure agreement.
    (6) Contracting activities shall establish procedures to assure that 
technical data marked with government purpose rights legends are 
released or disclosed, including a release or disclosure through a 
Government solicitation, only to persons subject to the use and non-
disclosure restrictions. Public announcements in the Commerce Business 
Daily or other publications must provide notice of the use and non-
disclosure requirements. Class use and non-disclosure agreements (e.g., 
agreements covering all solicitations received by the XYZ company within 
a reasonable period) are authorized and may be obtained at any time 
prior to release or disclosure of the government purpose rights data. 
Documents transmitting government purpose rights data to persons under 
class agreements shall identify the technical data subject to government 
purpose rights and the class agreement under which such data are 
provided.
    (c) Limited rights. (1) The Government obtains limited rights in 
technical data--
    (i) That pertain to items, components, or processes developed 
exclusively at private expense except when the Government is entitled to 
unlimited rights as provided in paragraphs (a)(2) and (a)(4) through (9) 
of this subsection; or
    (ii) Created exclusively at private expense in the performance of a 
contract that does not require the development, manufacture, 
construction, or production of items, components, or processes.
    (2) Data in which the Government has limited rights may not be used, 
released, or disclosed outside the Government without the permission of 
the contractor asserting the restriction except for a use, release or 
disclosure that is--
    (i) Necessary for emergency repair and overhaul; or
    (ii) To a foreign government, other than detailed manufacturing or 
process data, when use, release, or disclosure is in the interest of the 
United States and is required for evaluation or informational purposes.
    (3) The person asserting limited rights must be notified of the 
Government's intent to release, disclose, or authorize others to use 
such data prior to release or disclosure of the data except notification 
of an intended release, disclosure, or use for emergency repair or 
overhaul which shall be made as soon as practicable.
    (4) When the person asserting limited rights permits the Government 
to release, disclose, or have others use the data subject to 
restrictions on further use, release, or disclosure, or for a release 
under paragraph (c)(2)(i) or (ii) of this subsection, the intended 
recipient must complete the use and non-disclosure agreement at 
227.7103-7 prior to release or disclosure of the limited rights data.
    (d) Specifically negotiated license rights. (1) Negotiate specific 
licenses when the parties agree to modify the standard license rights 
granted to the government or when the government wants to obtain rights 
in data in which it does not have rights. When negotiating to obtain, 
relinquish, or increase the Government's rights in technical data, 
consider the acquisition strategy for the item, component, or process, 
including logistics support and other factors which may have relevance 
for a particular procurement. The Government may accept lesser rights 
when it has unlimited or government purpose rights in data but may not 
accept less than limited rights in such data. The

[[Page 218]]

negotiated license rights must stipulate what rights the Government has 
to release or disclose the data to other persons or to authorize others 
to use the data. Identify all negotiated rights in a license agreement 
made part of the contract.
    (2) When the Government needs additional rights in data acquired 
with government purpose or limited rights, the contracting officer must 
negotiate with the contractor to determine whether there are acceptable 
terms for transferring such rights. Generally, such negotiations should 
be conducted only when there is a need to disclose the data outside the 
Government or if the additional rights are required for competitive 
reprocurement and the anticipated savings expected to be obtained 
through competition are estimated to exceed the acquisition cost of the 
additional rights. Prior to negotiating for additional rights in limited 
rights data, consider alternatives such as--
    (i) Using performance specifications and form, fit, and function 
data to acquire or develop functionally equivalent items, components, or 
processes;
    (ii) Obtaining a contractor's contractual commitment to qualify 
additional sources and maintain adequate competition among the sources; 
or
    (iii) Reverse engineering, or providing items from Government 
inventories to contractors who request the items to facilitate the 
development of equivalent items through reverse engineering.



Sec. 227.7103-6  Contract clauses.

    (a) Use the clause at 252.227-7013, Rights in Technical Data--
Noncommercial Items, in solicitations and contracts when the successful 
offeror(s) will be required to deliver technical data to the Government. 
Do not use the clause when the only deliverable items are computer 
software or computer software documentation (see 227.72), commercial 
items (see 227.7102-3), existing works (see 227.7105), special works 
(see 227.7106), or when contracting under the Small Business Innovation 
Research Program (see 227.7104). Except as provided in 227.7107-2, do 
not use the clause in architect-engineer and construction contracts.
    (b) Use the clause at 252.227-7013 with its Alternate I in research 
contracts when the contracting officer determines, in consultation with 
counsel, that public dissemination by the contractor would be--
    (1) In the interest of the government; and
    (2) Facilitated by the Government relinquishing its right to publish 
the work for sale, or to have others publish the work for sale on behalf 
of the Government.
    (c) Use the clause at 252.227-7025, Limitations on the Use or 
Disclosure of Government Furnished Information Marked with Restrictive 
Legends, in solicitations and contracts when it is anticipated that the 
Government will provide the contractor, for performance of its contract, 
technical data marked with another contractor's restrictive legend(s).
    (d) Use the provision at 252.227-7028, Technical Data or Computer 
Software Previously Delivered to the Government, in solicitations when 
the resulting contract will require the contractor to deliver technical 
data. The provision requires offerors to identify any technical data 
specified in the solicitations as deliverable data items that are the 
same or substantially the same as data items the offeror has delivered 
or is obligated to deliver, either as a contractor or subcontractor, 
under any other federal agency contract.
    (e) Use the following clauses in solicitations and contracts that 
include the clause at 252.227-7013:
    (1) 252.227-7016, Rights in Bid or Proposal Information;
    (2) 252.227-7030, Technical Data--Withholding of Payment;
    (3) 252.227-7036, Certification of Technical Data Conformity; and
    (4) 252.227-7037, Validation of Restrictive Markings on Technical 
Data (paragraph (e) of the clause contains information that must be 
included in a challenge).

[60 FR 33471, June 28, 1995; 60 FR 41157, Aug. 11, 1995; 60 FR 61598, 
Nov. 30, 1995]



Sec. 227.7103-7  Use and non-disclosure agreement.

    (a) Except as provided in paragraph (b) of this subsection, 
technical data or computer software delivered to the

[[Page 219]]

Government with restrictions on use, modification, reproduction, 
release, performance, display, or disclosure may not be provided to 
third parties unless the intended recipient completes and signs the use 
and non-disclosure agreement at paragraph (c) of this subsection prior 
to release, or disclosure of the data.
    (1) The specific conditions under which an intended recipient will 
be authorized to use, modify, reproduce, release, perform, display, or 
disclose technical data subject to limited rights or computer software 
subject to restricted rights must be stipulated in an attachment to the 
use and non-disclosure agreement.
    (2) For an intended release, disclosure, or authorized use of 
technical data or computer software subject to special license rights, 
modify paragraph (1)(d) of the use and non-disclosure agreement to enter 
the conditions, consistent with the license requirements, governing the 
recipient's obligations regarding use, modification, reproduction, 
release, performance, display or disclosure of the data or software.
    (b) The requirement for use and non-disclosure agreements does not 
apply to Government contractors which require access to a third party's 
data or software for the performance of a Government contract that 
contains the clause at 252.227-7025, Limitations on the Use or 
Disclosure of Government-Furnished Information Marked with Restrictive 
Legends.
    (c) The prescribed use and non-disclosure agreement is:

                    Use and Non-Disclosure Agreement

    The undersigned, ________________ (Insert Name) ________________, an 
authorized representative of the ________________ (Insert Company Name) 
________________, (which is hereinafter referred to as the 
``Recipient'') requests the Government to provide the Recipient with 
technical data or computer software (hereinafter referred to as 
``Data'') in which the Government's use, modification, reproduction, 
release, performance, display or disclosure rights are restricted. Those 
Data are identified in an attachment to this Agreement. In consideration 
for receiving such Data, the Recipient agrees to use the Data strictly 
in accordance with this Agreement:
    (1) The Recipient shall--
    (a) Use, modify, reproduce, release, perform, display, or disclose 
Data marked with government purpose rights or SBIR data rights legends 
only for government purposes and shall not do so for any commercial 
purpose. The Recipient shall not release, perform, display, or disclose 
these Data, without the express written permission of the contractor 
whose name appears in the restrictive legend (the ``Contractor''), to 
any person other than its subcontractors or suppliers, or prospective 
subcontractors or suppliers, who require these Data to submit offers 
for, or perform, contracts with the Recipient. The Recipient shall 
require its subcontractors or suppliers, or prospective subcontractors 
or suppliers, to sign a use and non-disclosure agreement prior to 
disclosing or releasing these Data to such persons. Such agreement must 
be consistent with the terms of this agreement.
    (b) Use, modify, reproduce, release, perform, display, or disclose 
technical data marked with limited rights legends only as specified in 
the attachment to this Agreement. Release, performance, display, or 
disclosure to other persons is not authorized unless specified in the 
attachment to this Agreement or expressly permitted in writing by the 
Contractor. The Recipient shall promptly notify the Contractor of the 
execution of this Agreement and identify the Contractor's Data that has 
been or will be provided to the Recipient, the date and place the Data 
were or will be received, and the name and address of the Government 
office that has provided or will provide the Data.
    (c) Use computer software marked with restricted rights legends only 
in performance of Contract Number ________________ (insert contract 
number(s)) ________________. The recipient shall not, for example, 
enhance, decompile, disassemble, or reverse engineer the software; time 
share, or use a computer program with more than one computer at a time. 
The recipient may not release, perform, display, or disclose such 
software to others unless expressly permitted in writing by the licensor 
whose name appears in the restrictive legend. The Recipient shall 
promptly notify the software licensor of the execution of this Agreement 
and identify the software that has been or will be provided to the 
Recipient, the date and place the software were or will be received, and 
the name and address of the Government office that has provided or will 
provide the software.
    (d) Use, modify, reproduce, release, perform, display, or disclose 
Data marked with special license rights legends (To be completed by the 
contracting officer. See 227.7103-7(a)(2). Omit if none of the Data 
requested is marked with special license rights legends).
    (2) The Recipient agrees to adopt or establish operating procedures 
and physical security measures designed to protect these Data

[[Page 220]]

from inadvertent release or disclosure to unauthorized third parties.
    (3) The Recipient agrees to accept these Data ``as is'' without any 
Government representation as to suitability for intended use or warranty 
whatsoever. This disclaimer does not affect any obligation the 
Government may have regarding Data specified in a contract for the 
performance of that contract.
    (4) The Recipient may enter into any agreement directly with the 
Contractor with respect to the use, modification, reproduction, release, 
performance, display, or disclosure of these Data.
    (5) The Recipient agrees to indemnify and hold harmless the 
Government, its agents, and employees from every claim or liability, 
including attorneys fees, court costs, and expenses arising out of, or 
in any way related to, the misuse or unauthorized modification, 
reproduction, release, performance, display, or disclosure of Data 
received from the Government with restrictive legends by the Recipient 
or any person to whom the Recipient has released or disclosed the Data.
    (6) The Recipient is executing this Agreement for the benefit of the 
Contractor. The Contractor is a third party beneficiary of this 
Agreement who, in addition to any other rights it may have, is intended 
to have the rights of direct action against the Recipient or any other 
person to whom the Recipient has released or disclosed the Data, to seek 
damages from any breach of this Agreement or to otherwise enforce this 
Agreement.
    (7) The Recipient agrees to destroy these Data, and all copies of 
the Data in its possession, no later than 30 days after the date shown 
in paragraph (8) of this Agreement, to have all persons to whom it 
released the Data do so by that date, and to notify the Contractor that 
the Data have been destroyed.
    (8) This Agreement shall be effective for the period commencing with 
the Recipient's execution of this Agreement and ending upon ________ 
(Insert Date) ________. The obligations imposed by this Agreement shall 
survive the expiration or termination of the Agreement.
Recipient's Business Name _____________________________________________
By ____________________________________________________________________
Authorized Representative

_______________________________________________________________________
Date

Representative's Typed Name ___________________________________________
and Title _____________________________________________________________

(End of use and non-disclosure agreement)



Sec. 227.7103-8  Deferred delivery and deferred ordering of technical data.

    (a) Deferred delivery. Use the clause at 252.227-7026, Deferred 
Delivery of Technical Data or Computer Software, when it is in the 
Government's interests to defer the delivery of technical data. The 
clause permits the contracting officer to require the delivery of 
technical data identified as ``deferred delivery'' data at any time 
until two years after acceptance by the Government of all items (other 
than technical data or computer software) under the contract or contract 
termination, whichever is later. The obligation of subcontractors or 
suppliers to deliver such technical data expires two years after the 
date the prime contractor accepts the last item from the subcontractor 
or supplier for use in the performance of the contract. The contract 
must specify which technical data is subject to deferred delivery. The 
contracting officer shall notify the contractor sufficiently in advance 
of the desired delivery date for such data to permit timely delivery.
    (b) Deferred ordering. Use the clause at 252.227-7027, Deferred 
Ordering of Technical Data or Computer Software, when a firm requirement 
for a particular data item(s) has not been established prior to contract 
award but there is a potential need for the data. Under this clause, the 
contracting officer may order any data that has been generated in the 
performance of the contract or any subcontract thereunder at any time 
until three years after acceptance of all items (other than technical 
data or computer software) under the contract or contract termination, 
whichever is later. The obligation of subcontractors to deliver such 
data expires three years after the date the contractor accepts the last 
item under the subcontract. When the data are ordered, the delivery 
dates shall be negotiated and the contractor compensated only for 
converting the data into the prescribed form, reproduction costs, and 
delivery costs.



Sec. 227.7103-9  Copyright.

    (a) Copyright license. (1) The clause at 252.227-7013, Rights in 
Technical Data--Noncommercial Items, requires a contractor to grant or 
obtain for the Government license rights which permit the Government to 
reproduce data, distribute copies of the data, publicly perform or 
display the data or, through

[[Page 221]]

the right to modify data, prepare derivative works. The extent to which 
the Government, and others acting on its behalf, may exercise these 
rights varies for each of the standard data rights licenses obtained 
under the clause. When non-standard license rights in technical data 
will be negotiated, negotiate the extent of the copyright license 
concurrent with negotiations for the data rights license. Do not 
negotiate a copyright license that provides less rights than the 
standard limited rights license in technical data.
    (2) The clause at 252.227-7013 does not permit a contractor to 
incorporate a third party's copyrighted data into a deliverable data 
item unless the contractor has obtained an appropriate license for the 
Government and, when applicable, others acting on the Government's 
behalf, or has obtained the contracting officer's written approval to do 
so. Grant approval to use third party copyrighted data in which the 
Government will not receive a copyright license only when the 
Government's requirements cannot be satisfied without the third party 
material or when the use of the third party material will result in cost 
savings to the Government which outweigh the lack of a copyright 
license.
    (b) Copyright considerations--acquisition of existing and special 
works. See 227.7105 or 227.7106 for copyright considerations when 
acquiring existing or special works.



Sec. 227.7103-10  Contractor identification and marking of technical data to be furnished with restrictive markings.

    (a) Identification requirements. (1) The solicitation provision at 
252.227-7017, Identification and Assertion of Use, Release, or 
Disclosure Restrictions, requires offerors to identify to the 
contracting officer, prior to contract award, any technical data that 
the offeror asserts should be provided to the Government with 
restrictions on use, modification, reproduction, release or disclosure. 
This requirement does not apply to restrictions based solely on 
copyright. The notification and identification must be submitted as an 
attachment to the offer. If an offeror fails to submit the attachment or 
fails to complete the attachment in accordance with the requirements of 
the solicitation provision, such failure shall constitute a minor 
informality. Provide offerors an opportunity to remedy a minor 
informality in accordance with the procedures at FAR 14.405 or 15.607. 
An offeror's failure to correct the informality within the time 
prescribed by the contracting officer shall render the offer ineligible 
for award.
    (2) The procedures for correcting minor informalities shall not be 
used to obtain information regarding asserted restrictions or an 
offeror's suggested asserted rights category. Questions regarding the 
justification for an asserted restriction or asserted rights category 
must be pursued in accordance with the procedures at 227.7103-13.
    (3) The restrictions asserted by a successful offeror shall be 
attached to its contract unless, in accordance with the procedures at 
227.7103-13, the parties have agreed that an asserted restriction is not 
justified. The contract attachment shall provide the same information 
regarding identification of the technical data, the asserted rights 
category, the basis for the assertion, and the name of the person 
asserting the restrictions as required by paragraph (d) of the 
solicitation provision at 252.227-7017. Subsequent to contract award, 
the clause at 252.227-7013, Rights in Technical Data--Noncommercial 
Items, permits the contractor to make additional assertions under 
certain conditions. The additional assertions must be made in accordance 
with the procedures and in the format prescribed by that clause.
    (4) Neither the pre- or post-award assertions made by the 
contractor, nor the fact that certain assertions are identified in the 
attachment to the contract, determine the respective rights of the 
parties. As provided at 227.7103-13, the Government has the right to 
review, verify, challenge and validate restrictive markings.
    (5) Information provided by offerors in response to the solicitation 
provision may be used in the source selection process to evaluate the 
impact on evaluation factors that may be created by restrictions on the 
Government's ability to use or disclose technical data. However, 
offerors shall not be

[[Page 222]]

prohibited from offering products for which the offeror is entitled to 
provide the Government limited rights in the technical data pertaining 
to such products and offerors shall not be required, either as a 
condition of being responsive to a solicitation or as a condition for 
award, to sell or otherwise relinquish any greater rights in technical 
data when the offeror is entitled to provide the technical data with 
limited rights.
    (b) Contractor marking requirements. The clause at 252.227-7013, 
Rights in Technical Data--Noncommercial Items--
    (1) Requires a contractor that desires to restrict the Government's 
rights in technical data to place restrictive markings on the data, 
provides instructions for the placement of the restrictive markings, and 
authorizes the use of certain restrictive markings; and
    (2) Requires a contractor to deliver, furnish, or otherwise provide 
to the Government any technical data in which the Government has 
previously obtained rights with the Government's pre-existing rights in 
that data unless the parties have agreed otherwise or restrictions on 
the Government's rights to use, modify, reproduce, release, perform, 
display, or disclose the data have expired. When restrictions are still 
applicable, the contractor is permitted to mark the data with the 
appropriate restrictive legend for which the data qualified.
    (c) Unmarked technical data. (1) Technical data delivered or 
otherwise provided under a contract without restrictive markings shall 
be presumed to have been delivered with unlimited rights and may be 
released or disclosed without restriction. To the extent practicable, if 
a contractor has requested permission (see paragraph (c)(2) of this 
subsection) to correct an inadvertent omission of markings, do not 
release or disclose the technical data pending evaluation of the 
request.
    (2) A contractor may request permission to have appropriate legends 
placed on unmarked technical data at its expense. The request must be 
received by the contracting officer within six months following the 
furnishing or delivery of such data, or any extension of that time 
approved by the contracting officer. The person making the request must:
    (i) Identify the technical data that should have been marked;
    (ii) Demonstrate that the omission of the marking was inadvertent, 
the proposed marking is justified and conforms with the requirements for 
the marking of technical data contained in the clause at 252.227-7013; 
and
    (iii) Acknowledge, in writing, that the Government has no liability 
with respect to any disclosure, reproduction, or use of the technical 
data made prior to the addition of the marking or resulting from the 
omission of the marking.
    (3) Contracting officers should grant permission to mark only if the 
technical data were not distributed outside the Government or were 
distributed outside the Government with restrictions on further use or 
disclosure.



Sec. 227.7103-11  Contractor procedures and records.

    (a) The clause at 252.227-7013, Rights in Technical Data--
Noncommercial Items, requires a contractor, and its subcontractors or 
suppliers that will deliver technical data with other than unlimited 
rights, to establish and follow written procedures to assure that 
restrictive markings are used only when authorized and to maintain 
records to justify the validity of asserted restrictions on delivered 
data.
    (b) The clause at 252.227-7037, Validation of Restrictive Markings 
on Technical Data requires contractors and their subcontractors at any 
tier to maintain records sufficient to justify the validity of 
restrictive markings on technical data delivered or to be delivered 
under a Government contract.



Sec. 227.7103-12  Government right to establish conformity of markings.

    (a) Nonconforming markings. (1) Authorized markings are identified 
in the clause at 252.227-7013, Rights in Technical Data--Noncommercial 
Items. All other markings are nonconforming markings. An authorized 
marking that is not in the form, or differs in substance, from the 
marking requirements in the clause at 252.227-7013 is also a 
nonconforming marking.

[[Page 223]]

    (2) The correction of nonconforming markings on technical data is 
not subject to 252.227-7037, Validation of Restrictive Markings on 
Technical Data. To the extent practicable, the contracting officer 
should return technical data bearing nonconforming markings to the 
person who has placed the nonconforming markings on such data to provide 
that person an opportunity to correct or strike the nonconforming 
marking at that person's expense. If that person fails to correct the 
nonconformity and return the corrected data within 60 days following the 
person's receipt of the data, the contracting officer may correct or 
strike the nonconformity at that person's expense. When it is 
impracticable to return technical data for correction, contracting 
officers may unilaterally correct any nonconforming markings at 
Government expense. Prior to correction, the data may be used in 
accordance with the proper restrictive marking.
    (b) Unjustified markings. (1) An unjustified marking is an 
authorized marking that does not depict accurately restrictions 
applicable to the Government's use, modification, reproduction, release, 
performance, display, or disclosure of the marked technical data. For 
example, a limited rights legend placed on technical data pertaining to 
items, components, or processes that were developed under a Government 
contract either exclusively at Government expense or with mixed funding 
(situations under which the Government obtains unlimited or government 
purpose rights) is an unjustified marking.
    (2) Contracting officers have the right to review and challenge the 
validity of unjustified markings. However, at any time during 
performance of a contract and notwithstanding existence of a challenge, 
the contracting officer and the person who has asserted a restrictive 
marking may agree that the restrictive marking is not justified. Upon 
such agreement, the contracting officer may, at his or her election, 
either--
    (i) Strike or correct the unjustified marking at that person's 
expense; or
    (ii) Return the technical data to the person asserting the 
restriction for correction at that person's expense. If the data are 
returned and that person fails to correct or strike the unjustified 
restriction and return the corrected data to the contracting officer 
within 60 days following receipt of the data, the unjustified marking 
shall be corrected or stricken at that person's expense.



Sec. 227.7103-13  Government right to review, verify, challenge and validate asserted restrictions.

    (a) General. An offeror's assertion(s) of restrictions on the 
Government's rights to use, modify, reproduce, release, or disclose 
technical data do not, by themselves, determine the extent of the 
Government's rights in the technical data. Under 10 U.S.C. 2321, the 
Government has the right to challenge asserted restrictions when there 
are reasonable grounds to question the validity of the assertion and 
continued adherence to the assertion would make it impractical to later 
procure competitively the item to which the data pertain.
    (b) Pre-award considerations. The challenge procedures required by 
10 U.S.C. 2321 could significantly delay awards under competitive 
procurements. Therefore, avoid challenging asserted restrictions prior 
to a competitive contract award unless resolution of the assertion is 
essential for successful completion of the procurement.
    (c) Challenge and validation. Contracting officers must have 
reasonable grounds to challenge the current validity of an asserted 
restriction. Before issuing a challenge to an asserted restriction, 
carefully consider all available information pertaining to the 
assertion. All challenges must be made in accordance with the provisions 
of the clause at 252.227-7037, Validation of Restrictive Markings on 
Technical Data.
    (1) Challenge period. Asserted restrictions should be reviewed 
before acceptance of technical data deliverable under the contract. 
Assertions must be challenged within three years after final payment 
under the contract or three years after delivery of the data, whichever 
is later. However, restrictive markings may be challenged at any time if 
the technical data--
    (i) Are publicly available without restrictions;

[[Page 224]]

    (ii) Have been provided to the United States without restriction; or
    (iii) Have been otherwise made available without restriction other 
than a release or disclosure resulting from the sale, transfer, or other 
assignment of interest in the technical data to another party or the 
sale or transfer of some or all of a business entity or its assets to 
another party.
    (2) Pre-challenge requests for information. (i) After consideration 
of the situation described in paragraph (c)(3) of this subsection, 
contracting officers may request the person asserting a restriction to 
furnish a written explanation of the facts and supporting documentation 
for the assertion in sufficient detail to enable the contracting officer 
to ascertain the basis of the restrictive markings. Additional 
supporting documentation may be requested when the explanation provided 
by the person making the assertion does not, in the contracting 
officer's opinion, establish the validity of the assertion.
    (ii) If the person asserting the restriction fails to respond to the 
contracting officer's request for information or additional supporting 
documentation, or if the information submitted or any other available 
information pertaining to the validity of a restrictive marking does not 
justify the asserted restriction, a challenge should be considered.
    (3)Transacting matters directly with subcontracts. The clause at 
252.227-7037 obtains the contractor's agreement that the Government may 
transact matters under the clause directly with a subcontractor, at any 
tier, without creating or implying privity of contract. Contracting 
officers should permit a subcontractor or supplier to transact challenge 
and validation matters directly with the Government when--
    (i) A subcontractor's or supplier's business interests in its 
technical data would be compromised if the data were disclosed to a 
higher tier contractor;
    (ii) There is reason to believe that the contractor will not respond 
in a timely manner to a challenge and an untimely response would 
jeopardize a subcontractor's or suppliers right to assert restrictions; 
or
    (iii) Requested to do so by a subcontractor or supplier.
    (4) Challenge notice. Do not issue a challenge notice unless there 
are reasonable grounds to question the validity of an assertion. 
Assertions may be challenged whether or not supporting documentation was 
requested from the person asserting the restriction. Challenge notices 
must be in writing and issued to the contractor or, after consideration 
of the situations described in paragraph (c)(3) of this subsection, the 
person asserting the restriction. The challenge notice must include the 
information in paragraph (e) of the clause at 252.227-7037.
    (5) Extension of response time. The contracting officer, at his or 
her discretion, may extend the time for response contained in a 
challenge notice, as appropriate, if the contractor submits a timely 
written request showing the need for additional time to prepare a 
response.
    (6) Contracting officer's final decision. Contracting officers must 
issue a final decision for each challenged assertion, whether or not the 
assertion has been justified.
    (i) A contracting officer's final decision that an assertion is not 
justified must be issued a soon as practicable following the failure of 
the person asserting the restriction to respond to the contracting 
officer's challenge within 60 days, or any extension to that time 
granted by the contracting officer.
    (ii) A contracting officer who, following a challenge and response 
by the person asserting the restriction, determines that an asserted 
restriction is justified, shall issue a final decision sustaining the 
validity of the asserted restriction. If the asserted restriction was 
made subsequent to submission of the contractor's offer, add the 
asserted restriction to the contract attachment.
    (iii) A contracting officer who determine that the validity of an 
asserted restriction has not been justified shall issue a contracting 
officer's final decision within the time frames prescribed in 252.227-
7037. As provided in paragraph (g) of that clause, the Government is 
obligated to continue to respect the asserted restrictions through final 
disposition of any appeal unless

[[Page 225]]

the agency head notifies the person asserting the restriction that 
urgent or compelling circumstances do not permit the Government to 
continue to respect the asserted restriction.
    (7) Multiple challenges to an asserted restriction. When more than 
one contracting officer challenges an asserted restriction, the 
contracting officer who made the earliest challenge is responsible for 
coordinating the Government challenges. That contracting officer shall 
consult with all other contracting officers making challenges, verify 
that all challenges apply to the same asserted restriction and, after 
consulting with the contractor, subcontractor, or supplier asserting the 
restriction, issue a schedule that provides that person a reasonable 
opportunity to respond to each challenge.
    (8) Validation. Only a contracting officer's final decision, or 
actions of an agency board of contract appeals or a court of competent 
jurisdiction, that sustain the validity of an asserted restriction 
constitute validation of the asserted restriction.



Sec. 227.7103-14  Conformity, acceptance, and warranty of technical data.

    (a) Statutory requirements. 10 U.S.C. 2320--
    (1) Requires contractors to furnish written assurance, at the time 
technical data are delivered or are made available to the Government, 
that the technical data are complete, accurate, and satisfy the 
requirements of the contract concerning such data;
    (2) Provides for the establishment of remedies applicable to 
technical data found to be incomplete, inadequate, or not to satisfy the 
requirements of the contract concerning such data; and
    (3) Authorizes agency heads to withhold payments (or exercise such 
other remedies an agency head considers appropriate) during any period 
if the contractor does not meet the requirements of the contract 
pertaining to the delivery of technical data.
    (b) Conformity and acceptance. (1) Solicitations and contracts 
requiring the delivery of technical data shall specify the requirements 
the data must satisfy to be acceptable. Contracting officers, or their 
authorized representatives, are responsible for determining whether 
technical data tendered for acceptance conform to the contractual 
requirements.
    (2) The clause at 252.227-7030, Technical Data--Withholding of 
Payment, provides for withholding up to 10 percent of the contract price 
pending correction or replacement of the nonconforming technical data or 
negotiation of an equitable reduction in contract price. The amount 
subject to withholding may be expressed as a fixed dollar amount or as a 
percentage of the contract price. In either case, the amount shall be 
determined giving consideration to the relative value and importance of 
the data. For example--
    (i) When the sole purpose of a contract is to produce the data, the 
relative value of that data may be considerably higher than the value of 
data produced under a contract where the production of the data is a 
secondary objective; or
    (ii) When the Government will maintain or repair items, repair and 
maintenance data may have a considerably higher relative value than data 
that merely describe the item or provide performance characteristics.
    (3) Do not accept technical data that do not conform to the 
contractual requirements in all respects. Except for nonconforming 
restrictive markings (see paragraph (b)(4) of this subsection), 
correction or replacement of nonconforming data or an equitable 
reduction in contract price when correction or replacement of the 
nonconforming data is not practicable or is not in the Government's 
interests, shall be accomplished in accordance with--
    (i) The provisions of a contract clause providing for inspection and 
acceptance of deliverables and remedies for nonconforming deliverables; 
or
    (ii) The procedures at FAR 46.407(c) through (g), if the contract 
does not contain an inspection clause providing remedies for 
nonconforming deliverables.
    (4) Follow the procedures at 227.7103-12(a)(2) if nonconforming 
markings are the sole reason technical data fail to conform to 
contractual requirements. The clause at 252.227-7030 may be used to 
withhold an amount for payment, consistent with the terms of the

[[Page 226]]

clause, pending correction of the nonconforming markings.
    (c) Warranty. (1) The intended use of the technical data and the 
cost, if any, to obtain the warranty should be considered before 
deciding to obtain a data warranty (see FAR 46.703). The fact that a 
particular item, component, or process is or is not warranted is not a 
consideration in determining whether or not to obtain a warranty for the 
technical data that pertain to the item, component, or process. For 
example, a data warranty should be considered if the Government intends 
to repair or maintain an item and defective repair or maintenance data 
would impair the Government's effective use of the item or result in 
increased costs to the Government.
    (2) As prescribed in 246.710, use the clause at 252.246-7001, 
Warranty of Data, and its alternates, or a substantially similar clause 
when the Government needs a specific warranty of technical data.



Sec. 227.7103-15  Subcontractor rights in technical data.

    (a) 10 U.S.C. 2320 provides subcontractors at all tiers the same 
protection for their rights in data as is provided to prime contractors. 
The clauses at 252.227-7013, Rights in Technical Data--Noncommercial 
Items, and 252.227-7037, Validation of Restrictive Markings on Technical 
Data, implement the statutory requirements.
    (b) 10 U.S.C. 2321 permits a subcontractor to transact directly with 
the Government matters relating to the validation of its asserted 
restrictions on the Government's rights to use or disclose technical 
data. The clause at 252.227-7037 obtains a contractor's agreement that 
the direct transaction of validation or challenge matters with 
subcontractors at any tier does not establish or imply privity of 
contract. When a subcontractor or supplier exercise its right to 
transact validation matters directly with the Government, contracting 
officers shall deal directly with such persons, as provided at 227.7103-
13(c)(3).
    (c) Require prime contractors whose contracts include the following 
clauses to include those clauses, without modification except for 
appropriate identification of the parties, in contracts with 
subcontractors or suppliers, at all tiers, who will be furnishing 
technical data for non-commercial items in response to a Government 
requirement:
    (1) 252.227-7013, Rights in Technical Data--Noncommercial Items;
    (2) 252.227-7025, Limitations on the Use or Disclosure of 
Government-Furnished Information Marked with Restrictive Legends;
    (3) 252.227-7028, Technical Data or Computer Software Previously 
Delivered to the Government; and
    (4) 252.227-7037, Validation of Restrictive Markings on Technical 
Data.
    (d) Do not require contractors to have their subcontractors or 
suppliers at any tier relinquish rights in technical data to the 
contractor, a higher tier subcontractor, or to the Government, as a 
condition for award of any contract, subcontract, purchase order, or 
similar instrument except for the rights obtained by the Government 
under the Rights in Technical Data--Noncommercial Items clause contained 
in the contractor's contract with the Government.

[56 FR 36389, July 31, 1991, as amended at 60 FR 61598, Nov. 30, 1995]



Sec. 227.7103-16  Providing technical data to foreign governments, foreign contractors, or international organizations.

    Technical data may be released or disclosed to foreign governments, 
foreign contractors, or international organizations only if release or 
disclosure is otherwise permitted both by Federal export controls and 
other national security laws or regulations. Subject to such laws and 
regulations, the Department of Defense--
    (a) May release or disclose technical data in which it has obtained 
unlimited rights to such foreign entities or authorize the use of such 
data by those entities; and
    (b) Shall not release or disclose technical data for which 
restrictions on use, release, or disclosure have been asserted to 
foreign entities, or authorize the use of technical data by those 
entities, unless the intended recipient is subject to the same 
provisions as included in the use and non-disclosure

[[Page 227]]

agreement at 227.7103-7 and the requirements of the clause at 252.227-
7103, Rights in Technical Data--Noncommercial Items, governing use, 
modification, reproduction, release, performance, display, or disclosure 
of such data have been satisfied.



Sec. 227.7103-17  Overseas contracts with foreign sources.

    (a) The clause at 252.227-7032, Rights in Technical Data and 
Computer Software (Foreign), may be used in contracts with foreign 
contractors to be performed overseas, except Canadian purchases (see 
paragraph (c) of this subsection), in lieu of the clause at 252.227-
7013, Rights in Technical Data--Noncommercial Items, when the Government 
requires the unrestricted right to use, modify, reproduce, perform, 
display, release or disclose all technical data to be delivered under 
the contract. Do not use the clause in contracts for existing or special 
works.
    (b) When the Government does not require unlimited rights, the 
clause at 252.227-7032 may be modified to accommodate the needs of a 
specific overseas procurement situation. The Government should obtain 
rights in the technical data that are not less than the rights the 
Government would have obtained under the data rights clause(s) 
prescribed in this part for a comparable procurement performed within 
the United States or its possessions.
    (c) Contracts for Canadian purchases shall include the appropriate 
data rights clause prescribed in this part for a comparable procurement 
performed within the United States or its possessions.



Sec. 227.7104  Contracts under the Small Business Innovation Research (SBIR) Program.

    (a) Use the clause at 252.227-7018, Rights in Noncommercial 
Technical Data and Computer Software--Small Business Innovation Research 
(SBIR) Program, when technical data or computer software will be 
generated during performance of contracts under the SBIR program.
    (b) Under the clause at 252.227-7018, the Government obtains a 
royalty-free license to use technical data marked with an SBIR data 
rights legend only for government purposes during the period commencing 
with contract award and ending five years after completion of the 
project under which the data were generated. Upon expiration of the 
five-year restrictive license, the Government has unlimited rights in 
the SBIR data. During the license period, the Government may not release 
or disclose SBIR data to any person other than its support services 
contractors except--
    (1) For evaluational purposes;
    (2) As expressly permitted by the contractor; or
    (3) A use, release, or disclosure that is necessary for emergency 
repair or overhaul of items operated by the Government.
    (c) Do not make any release or disclosure permitted by paragraph (b) 
of this section unless, prior to release or disclosure, the intended 
recipient is subject to the use and nondisclosure agreement at 227.7103-
7.
    (d) Use the clause at 252.227-7018 with its Alternate I in research 
contracts when the contracting officer determines, in consultation with 
counsel, that public dissemination by the contractor would be--
    (1) In the interest of the Government; and
    (2) Facilitated by the Government relinquishing its right to publish 
the work for sale, or to have others publish the work for sale on behalf 
of the Government.
    (e) Use the following provision and clauses in SBIR solicitations 
and contracts that include the clause at 252.227-7018:
    (1) 252.227-7016, Rights in Bid or Proposal Information;
    (2) 252.227-7017, Identification and Assertion of Use, Release, or 
Disclosure Restrictions;
    (3) 252.227-7019, Validation of Asserted Restrictions--Computer 
Software;
    (4) 252.227-7030, Technical Data--Withholding of Payment;
    (5) 252.227-7036, Certification of Technical Data Conformity; and
    (6) 252.227-7037, Validation of Restrictive Markings on Technical 
Data (paragraph (e) of the clause contains information that must be 
included in a challenge).

[[Page 228]]

    (f) Use the following clauses and provision in SBIR solicitations 
and contracts in accordance with the guidance at 227.7103-6 (c) and (d):
    (1) 252.227-7025, Limitations on the Use or Disclosure of 
Government-Furnished Information Marked with Restrictive Legends; and
    (2) 252.227-7028, Technical Data or Computer Software Previously 
Delivered to the Government.

[56 FR 36389, July 31, 1991, as amended at 60 FR 61598, Nov. 30, 1995]



Sec. 227.7105  Contracts for the acquisition of existing works.



Sec. 227.7105-1  General.

    (a) Existing works include motion pictures, television recordings, 
video recordings, and other audiovisual works in any medium; sound 
recordings in any medium; musical, dramatic, and literary works; 
pantomimes and choreographic works; pictorial, graphic, and sculptural 
works; and works of a similar nature. Usually, these or similar works 
were not first created, developed, generated, originated, prepared, or 
produced under a Government contract. Therefore, the Government must 
obtain a license in the work if it intends to reproduce the work, 
distribute copies of the work, prepare derivative works, or perform or 
display the work publicly. When the Government is not responsible for 
the content of an existing work, it should require the copyright owner 
to indemnify the Government for liabilities that may arise out of the 
content, performance, use, or disclosure of such data.
    (b) Follow the procedures at 227.7106 for works which will be first 
created, developed, generated, originated, prepared, or produced under a 
Government contract and the Government needs to control distribution of 
the work or has a specific need to obtain indemnity for liabilities that 
may arise out of the creation, content, performance, use, or disclosure 
of the work or from libelous or other unlawful material contained in the 
work. Follow the procedures at 227.7103 when the Government does not 
need to control distribution of such works or obtain such indemnities.



Sec. 227.7105-2  Acquisition of existing works without modification

    (a) Use the clause at 252.227-7021, Rights in Data--Existing Works, 
in lieu of the clause at 252.227-7013, Rights in Technical Data--
Noncommercial Items, in solicitations and contracts exclusively for 
existing works when--
    (1) The existing works will be acquired without modification; and
    (2) The Government requires the right to reproduce, prepare 
derivative works, or publicly perform or display the existing works; or
    (3) The Government has a specific need to obtain indemnity for 
liabilities that may arise out of the content, performance, use, or 
disclosure of such data.
    (b) The clause at 252.227-7021 provides the Government, and others 
acting on its behalf, a paid-up, non-exclusive, irrevocable, world-wide 
license to reproduce, prepare derivative works and publicly perform or 
display the works called for by a contract and to authorize others to do 
so for government purposes.
    (c) A contract clause is not required to acquire existing works such 
as books, magazines and periodicals, in any storage or retrieval medium, 
when the Government will not reproduce the books, magazines or 
periodicals, or prepare derivative works.



Sec. 227.7105-3  Acquisition of modified existing works.

    Use the clause at 252.227-7020, Rights in Special Works, in 
solicitations and contracts for modified existing works in lieu of the 
clause at 252.227-7021, Rights in Data--Existing Works.



Sec. 227.7106  Contracts for special works.

    (a) Use the clause at 252.227-7020, Rights in Special Works, in 
solicitations and contracts where the Government has a specific need to 
control the distribution of works first produced, created, or generated 
in the performance of a contract and required to be delivered under that 
contract, including controlling distribution by obtaining an assignment 
of copyright, or a specific need to obtain indemnity for liabilities 
that may arise out of the creation, delivery, use, modification, 
reproduction, release, performance,

[[Page 229]]

display, or disclosure of such works. Use the clause--
    (1) In lieu of the clause at 252.227-7013, Rights in Technical 
Data--Noncommercial Items, when the Government must own or control 
copyright in all works first produced, created, or generated and 
required to be delivered under a contract; or
    (2) In addition to the clause at 252.227-7013 when the Government 
must own or control copyright in a portion of a work first produced, 
created, or generated and required to be delivered under a contract. The 
specific portion in which the Government must own or control copyright 
must be identified in a special contract requirement.
    (b) Although the Government obtains an assignment of copyright and 
unlimited rights in a special work under the clause at 252.227-7020, the 
contractor retains use and disclosure rights in that work. If the 
Government needs to restrict a contractor's rights to use or disclose a 
special work, it must also negotiate a special license which 
specifically restricts the contractor's use or disclosure rights.
    (c) The clause at 252.227-7020 does not permit a contractor to 
incorporate into a special work any works copyrighted by others unless 
the contractor obtains the contracting officer's permission to do so and 
obtains for the Government a non-exclusive, paid up, world-wide license 
to make and distribute copies of that work, to prepare derivative works, 
to perform or display publicly any portion of the work, and to permit 
others to do so for government purposes. Grant permission only when the 
Government's requirements cannot be satisfied unless the third party 
work is included in the deliverable work.
    (d) Examples of works which may be procured under the Rights in 
Special Works clause include, but are not limited, to audiovisual works, 
computer data bases, computer software documentation, scripts, 
soundtracks, musical compositions, and adaptations; histories of 
departments, agencies, services or units thereof; surveys of Government 
establishments; instructional works or guidance to Government officers 
and employees on the discharge of their official duties; reports, books, 
studies, surveys or similar documents; collections of data containing 
information pertaining to individuals that, if disclosed, would violate 
the right of privacy or publicity of the individuals to whom the 
information relates; or investigative reports.



Sec. 227.7107  Contracts for architect-engineer services.

    This section sets forth policies and procedures, pertaining to data, 
copyrights, and restricted designs unique to the acquisition of 
construction and architect-engineer services.



Sec. 227.7107-1  Architectural designs and data clauses for architect-engineer or construction contracts.

    (a) Except as provided in paragraph (b) of this subsection and in 
227.7107-2, use the clause at 252.227-7022, Government Rights 
(Unlimited), in solicitations and contracts for architect-engineer 
services and for construction involving architect-engineer services.
    (b) When the purpose of a contract for architect-engineer services, 
or for construction involving architect-engineer services, is to obtain 
a unique architectural design of a building, a monument, or construction 
of similar nature, which for artistic, aesthetic or other special 
reasons the Government does not want duplicated, the Government may 
acquire exclusive control of the data pertaining to the design by 
including the clause at 252.227-7023, Drawings and Other Data to Become 
Property of Government, in solicitations and contracts.
    (c) The Government shall obtain unlimited rights in shop drawings 
for construction. In solicitations and contracts calling for delivery of 
shop drawings, include the clause at 252.227-7033, Rights in Shop 
Drawings.



Sec. 227.7107-2  Contracts for construction supplies and research and development work.

    Use the provisions and clauses required by 227-7103-6 and 227.7203-6 
when the acquisition is limited to--
    (a) Construction supplies or materials;
    (b) Experimental, developmental, or research work, or test and 
evaluation

[[Page 230]]

studies of structures, equipment, processes, or materials for use in 
construction; or
    (c) Both.



Sec. 227.7107-3  Approval of restricted designs.

    The clause at 252.227-7024, Notice and Approval of Restricted 
Designs, may be included in architect-engineer contracts to permit the 
Government to make informed decisions concerning noncompetitive aspects 
of the design.



Sec. 227.7108  Contractor data repositories.

    (a) Contractor data repositories may be established when permitted 
by agency procedures. The contractual instrument establishing the data 
repository must require, as a minimum, the data repository management 
contractor to--
    (1) Establish and maintain adequate procedures for protecting 
technical data delivered to or stored at the repository from 
unauthorized release or disclosure;
    (2) Establish and maintain adequate procedures for controlling the 
release or disclosure of technical data from the repository to third 
parties consistent with the Government's rights in such data;
    (3) When required by the contracting officer, deliver data to the 
Government on paper or in other specified media;
    (4) Be responsible for maintaining the currency of data delivered 
directly by Government contractors or subcontractors to the repository;
    (5) Obtain use and non-disclosure agreements (see 227.7103-7) from 
all persons to whom government purpose rights data is released or 
disclosed; and
    (6) Indemnify the Government from any liability to data owners or 
licensors resulting from, or as a consequence of, a release or 
disclosure of technical data made by the data repository contractor or 
its officers, employees, agents, or representatives.
    (b) If the contractor is or will be the data repository manager, the 
contractor's data management and distribution responsibilities must be 
identified in the contract or the contract must reference the agreement 
between the Government and the contractor that establishes those 
responsibilities.
    (c) If the contractor is not and will not be the data repository 
manager, do not require a contractor or subcontractor to deliver 
technical data marked with limited rights legends to a data repository 
managed by another contractor unless the contractor or subcontractor who 
has asserted limited rights agrees to release the data to the repository 
or has authorized, in writing, the Government to do so.
    (d) Repository procedures may provide for the acceptance, delivery, 
and subsequent distribution of technical data in storage media other 
than paper, including direct electronic exchange of data between two 
computers. The procedures must provide for the identification of any 
portions of the data provided with restrictive legends, when 
appropriate. The acceptance criteria must be consistent with the 
authorized delivery format.



   Subpart 227.72--Rights in Computer Software and Computer Software 
                              Documentation

    Source: 60 FR 33482, June 28, 1995, unless otherwise noted.



Sec. 227.7200  Scope of subpart.

    This subpart--
    (a) Prescribes policies and procedures for the acquisition of 
computer software and computer software documentation, and the rights to 
use, modify, reproduce, release, perform, display, or disclose such 
software or documentation. It implements requirements in the following 
laws and Executive Order:
    (1) 10 U.S.C. 2302(4).
    (2) 10 U.S.C. 2305 (subsection (d)(4)).
    (3) 10 U.S.C. 2320.
    (4) 10 U.S.C. 2321.
    (5) 10 U.S.C. 2325.
    (6) Executive Order 12591 (subsection 1(b)(6)).
    (b) Does not apply to computer software or computer software 
documentation acquired under GSA schedule contracts.



Sec. 227.7201  Definitions.

    (a) As used in this subpart, unless otherwise specifically 
indicated, the

[[Page 231]]

terms ``offeror'' and ``contractor'' include an offeror's or 
contractor's subcontractors, suppliers, or potential subcontractors or 
suppliers at any tier.
    (b) Other terms used in this subpart are defined in the clause at 
252.227-7014, Rights in Noncommercial Computer Software and 
Noncommercial Computer Software Documentation.



Sec. 227.7202  Commercial computer software and commercial computer software documentation.



Sec. 227.7202-1  Policy.

    (a) Commercial computer software or commercial computer software 
documentation shall be acquired under the licenses customarily provided 
to the public unless such licenses are inconsistent with Federal 
procurement law or do not otherwise satisfy user needs.
    (b) Commercial computer software and commercial computer software 
documentation shall be obtained competitively, to the maximum extent 
practicable, using firm-fixed-price contracts or firm-fixed-priced 
orders under available pricing schedules.
    (c) Offerors and contractors shall not be required to--
    (1) Furnish technical information related to commercial computer 
software or commercial computer software documentation that is not 
customarily provided to the public except for information documenting 
the specific modifications made at Government expense to such software 
or documentation to meet the requirements of a Government solicitation; 
or
    (2) Relinquish to, or otherwise provide, the Government rights to 
use, modify, reproduce, release, perform, display, or disclose 
commercial computer software or commercial computer software 
documentation except for a transfer of rights mutually agreed upon.
227.7202-2  [Reserved]



Sec. 227.7202-3  Rights in commercial computer software or commercial computer software documentation.

    (a) The Government shall have only the rights specified in the 
license under which the commercial computer software or commercial 
computer software documentation was obtained.
    (b) If the Government has a need for rights not conveyed under the 
license customarily provided to the public, the Government must 
negotiate with the contractor to determine if there are acceptable terms 
for transferring such rights. The specific rights granted to the 
Government shall be enumerated in the contract license agreement or an 
addendum thereto.



Sec. 227.7202-4  Contract clause.

    A specific contract clause governing the Government's rights in 
commercial computer software or commercial computer software 
documentation is not prescribed. As required by 227.7202-3, the 
Government's rights to use, modify, reproduce, release, perform, 
display, or disclose computer software or computer software 
documentation shall be identified in a license agreement.



Sec. 227.7203  Noncommercial computer software and noncommercial computer software documentation.



Sec. 227.7203-1  Policy.

    (a) DoD policy is to acquire only the computer software and computer 
software documentation, and the rights in such software or 
documentation, necessary to satisfy agency needs.
    (b) Solicitations and contracts shall--
    (1) Specify the computer software or computer software documentation 
to be delivered under a contract and the delivery schedules for the 
software or documentation;
    (2) Establish or reference procedures for determining the 
acceptability of computer software or computer software documentation;
    (3) Establish separate contract line items, to the extent 
practicable, for the computer software or computer software 
documentation to be delivered under a contract and require offerors and 
contractors to price separately each deliverable data item; and
    (4) Require offerors to identify, to the extent practicable, 
computer software or computer software documentation to be furnished 
with restrictions on the Government's rights and require contractors to 
identify computer software or computer software documentation

[[Page 232]]

to be delivered with such restrictions prior to delivery.
    (c) Offerors shall not be required, either as a condition of being 
responsive to a solicitation or as a condition for award, to sell or 
otherwise relinquish to the Government any rights in computer software 
developed exclusively at private expense except for the software 
identified at 227.7203-5(a) (3) through (6).
    (d) Offerors and contractors shall not be prohibited or discouraged 
from furnishing or offering to furnish computer software developed 
exclusively at private expense solely because the Government's rights to 
use, modify, release, reproduce, perform, display, or disclose the 
software may be restricted.



Sec. 227.7203-2  Acquisition of noncommercial computer software and computer software documentation.

    (a) Contracting officers shall work closely with data managers and 
requirements personnel to assure that computer software and computer 
software documentation requirements included in solicitations are 
consistent with the policy expressed in 227.7203-1.
    (b)(1) Data managers or other requirements personnel are responsible 
for identifying the Government's minimum needs. In addition to desired 
software performance, compatibility, or other technical considerations, 
needs determinations should consider such factors as multiple site or 
shared use requirements, whether the Government's software maintenance 
philosophy will require the right to modify or have third parties modify 
the software, and any special computer software documentation 
requirements.
    (2) When reviewing offers received in response to a solicitation or 
other request for computer software or computer software documentation, 
data managers must balance the original assessment of the Government's 
needs with prices offered.
    (c) Contracting officers are responsible for ensuring that, wherever 
practicable, solicitations and contracts--
    (1) Identify the types of computer software and the quantity of 
computer programs and computer software documentation to be delivered, 
any requirements for multiple users at one site or multiple site 
licenses, and the format and media in which the software or 
documentation will be delivered;
    (2) Establish each type of computer software or computer software 
documentation to be delivered as a separate contract line item (this 
requirement may be satisfied by an exhibit to the contract);
    (3) Identify the prices established for each separately priced 
deliverable item of computer software or computer software documentation 
under a fixed-price type contract;
    (4) Include delivery schedules and acceptance criteria for each 
deliverable item; and
    (5) Specifically identify the place of delivery for each deliverable 
item.



Sec. 227.7203-3  Early identification of computer software or computer software documentation to be furnished to the Government with restrictions on use, 
          reproduction or disclosure.

    (a) Use the provision at 252.227-7017, Identification and Assertion 
of Use, Release, or Disclosure Restrictions, in all solicitation that 
include the clause at 252.227-7014, Rights in Noncommercial Computer 
Software and Noncommercial Computer Software Documentation. The 
provision requires offerors to identify any computer software or 
computer software documentation for which restrictions, other than 
copyright, on use, modification, reproduction, release, performance, 
display, or disclosure are asserted and to attach the identification and 
assertion to the offer.
    (b) Subsequent to contract award, the clause at 252.227-7014 permits 
a contractor, under certain conditions, to make additional assertions of 
restrictions. The prescriptions for the use of that clause and its 
alternates are at 227.7203-6(a).



Sec. 227.7203-4  License rights.

    (a) Grant of license. The Government obtains rights in computer 
software or computer software documentation, including a copyright 
license, under an irrevocable license granted or obtained by the 
contractor which developed the

[[Page 233]]

software or documentation or the licensor of the software or 
documentation if the development contractor is not the licensor. The 
contractor or licensor retains all rights in the software or 
documentation not granted to the Government. The scope of a computer 
software license is generally determined by the source of funds used to 
develop the software. Contractors or licensors may, with some 
exceptions, restrict the Government's rights to use, modify, reproduce, 
release, perform, display, or disclose computer software developed 
exclusively or partially at private expense (see 227.7203-5 (b) and 
(c)). They may not, without the Government's agreement (see 227.7203-
5(d)), restrict the Government's rights in computer software developed 
exclusively with Government funds or in computer software documentation 
required to be delivered under a contract.
    (b) Source of funds determination. The determination of the source 
of funds used to develop computer software should be made at the lowest 
practicable segregable portion of the software or documentation (e.g., a 
software sub-routine that performs a specific function). Contractors may 
assert restricted rights in a segregable portion of computer software 
which otherwise qualifies for restricted rights under the clause at 
252.227-7014, Rights in Noncommercial Computer Software and 
Noncommercial Computer Software Documentation.



Sec. 227.7203-5  Government rights.

    The standard license rights in computer software that a licensor 
grants to the Government are unlimited rights, government purpose 
rights, or restricted rights. The standard license in computer software 
documentation conveys unlimited rights. Those rights are defined in the 
clause at 252.227-7014, Rights in Noncommercial Computer Software and 
Noncommercial Computer Software Documentation. In unusual situations, 
the standard rights may not satisfy the Government's needs or the 
Government may be willing to accept lesser rights in return for other 
consideration. In those cases, a special license may be negotiated. 
However, the licensor is not obligated to provide the Government greater 
rights and the contracting officer is not required to accept lesser 
rights than the rights provided in the standard grant of license. The 
situations under which a particular grant of license applies are 
enumerated in paragraphs (a) through (d) of this subsection.
    (a) Unlimited rights. The Government obtains an unlimited rights 
license in--
    (1) Computer software developed exclusively with Government funds;
    (2) Computer software documentation required to be delivered under a 
Government contract;
    (3) Corrections or changes to computer software or computer software 
documentation furnished to the contractor by the Government;
    (4) Computer software or computer software documentation that is 
otherwise publicly available or has been released or disclosed by the 
contractor or subcontractor without restrictions on further use, release 
or disclosure other than a release or disclosure resulting from the 
sale, transfer, or other assignment of interest in the software to 
another party or the sale or transfer of some or all of a business 
entity or it assets to another party;
    (5) Computer software or computer software documentation obtained 
with unlimited rights under another Government contract or as a result 
of negotiations; or
    (6) Computer software or computer software documentation furnished 
to the Government, under a Government contract or subcontract with--
    (i) Restricted rights in computer software, limited rights in 
technical data, or government purpose license rights and the restrictive 
conditions have expired; or
    (ii) Government purpose rights and the contractor's exclusive right 
to use such software or documentation for commercial purposes has 
expired.
    (b) Government purpose rights. (1) Except as provided in paragraph 
(a) of this subsection, the Government obtains government purpose rights 
in computer software developed with mixed funding.

[[Page 234]]

    (2) The period during which government purpose rights are effective 
is negotiable. The clause at 252.227-7014 provides a nominal five-year 
period. Either party may request a different period. Changes to the 
government purpose rights period may be made at any time prior to 
delivery of the software without consideration from either party. Longer 
periods should be negotiated when a five-year period does not provide 
sufficient time to commercialize the software or, for software developed 
by subcontractors, when necessary to recognize the subcontractors' 
interests in the software.
    (3) The government purpose rights period commences upon execution of 
the contract, subcontract, letter contract (or similar contractual 
instrument), contract modification, or option exercise that required 
development of the computer software. Upon expiration of the government 
purpose rights period, the Government has unlimited rights in the 
software including the right to authorize others to use data for 
commercial purposes.
    (4) During the government purpose rights period, the Government may 
not use, or authorize other persons to use, computer software marked 
with government purpose rights legends for commercial purposes. The 
Government shall not release or disclose, or authorize others to release 
or disclose, computer software in which it has government purpose rights 
to any person unless--
    (i) Prior to release or disclosure, the intended recipient is 
subject to the use and non-disclosure agreement at 227.7103-7; or
    (ii) The intended recipient is a Government contractor receiving 
access to the software for performance of a Government contract that 
contains the clause at 252.227-7025, Limitations on the Use or 
Disclosure of Government-Furnished Information Marked with Restrictive 
Legends.
    (5) When computer software marked with government purpose rights 
legends will be released or disclosed to a Government contractor 
performing a contract that does not include the clause at 252.227-7025, 
the contract may be modified, prior to release or disclosure, to include 
such clause in lieu of requiring the contractor to complete a use and 
non-disclosure agreement.
    (6) Contracting activities shall establish procedures to assure that 
computer software or computer software documentation marked with 
government purpose rights legends are released or disclosed, including a 
release or disclosure through a Government solicitation, only to persons 
subject to the use and non-disclosure restrictions. Public announcements 
in the Commerce Business Daily or other publications must provide notice 
of the use and non-disclosure requirements. Class use and non-disclosure 
agreements (e.g., agreements covering all solicitations received by the 
XYZ company within a reasonable period) are authorized and may be 
obtained at any time prior to release or disclosure of the government 
purpose rights software or documentation. Documents transmitting 
government purpose rights software or documentation to persons under 
class agreements shall identify the specific software or documentation 
subject to government purpose rights and the class agreement under which 
such software or documentation are provided.
    (c) Restricted rights. (1) The Government obtains restricted rights 
in noncommercial computer software required to be delivered or otherwise 
provided to the Government under a contract that were developed 
exclusively at private expense.
    (2) Contractors are not required to provide the Government 
additional rights in computer software delivered or otherwise provided 
to the Government with restricted rights. When the Government has a need 
for additional rights, the Government must negotiate with the contractor 
to determine if there are acceptable terms for transferring such rights. 
List or describe all software in which the contractor has granted the 
Government additional rights in a license agreement made part of the 
contract (see paragraph (d) of this subsection). The license shall 
enumerate the specific additional rights granted to the Government.
    (d) Specifically negotiated license rights. Negotiate specific 
licenses when

[[Page 235]]

the parties agree to modify the standard license rights granted to the 
Government or when the Government wants to obtain rights in computer 
software in which it does not have rights. When negotiating to obtain, 
relinquish, or increase the Government's rights in computer software, 
consider the planned software maintenance philosophy, anticipated time 
or user sharing requirements, and other factors which may have relevance 
for a particular procurement. If negotiating to relinquish rights in 
computer software documentation, consider the administrative burden 
associated with protecting documentation subject to restrictions from 
unauthorized release or disclosure. The negotiated license rights must 
stipulate the rights granted the Government to use, modify, reproduce, 
release, perform, display, or disclose the software or documentation and 
the extent to which the Government may authorize others to do so. 
Identify all negotiated rights in a license agreement made part of the 
contract.
    (e) Rights in derivative computer software or computer software 
documentation. The clause at 252.227-7014 protects the Government's 
rights in computer software, computer software documentation, or 
portions thereof that the contractor subsequently uses to prepare 
derivative software or subsequently embeds or includes in other software 
or documentation. The Government retains the rights it obtained under 
the development contract in the unmodified portions of the derivative 
software or documentation.



Sec. 227.7203-6  Contract clauses.

    (a)(1) use the clause at 252.227-7014, Rights in Noncommercial 
Computer Software and Noncommercial Computer Software Documentation, in 
solicitations and contracts when the successful offeror(s) will be 
required to deliver computer software or computer software 
documentation. Do not use the clause when the only deliverable items are 
technical data (other than computer software documentation), commercial 
computer software or commercial computer software documentation, 
commercial items (see 227.7102-3), special works (see 227.7205), or 
contracts under the Small Business Innovative Research Program (see 
227.7104), Except as provided in 227.7107-2, do not use the clause in 
architect-engineer and construction contracts..
    (2) Use the clause at 252.227-7014 with its Alternate I in research 
contracts when the contracting officer determines, in consultation with 
counsel, that public dissemination by the contractor would be--
    (i) In the interest of the Government; and
    (ii) Facilitated by the Government relinquishing its right to 
publish the work for sale, or to have others publish the work for sale 
on behalf of the Government.
    (b) Use the clause at 252.227-7016, Rights in Bid or Proposal 
Information, in solicitations and contracts that include the clause at 
252.227-7014.
    (c) Use the clause at 252.227-7019, Validation of Asserted 
Restrictions--Computer Software, in solicitations and contracts that 
include the clause at 252.227-7014. The clause provides procedures for 
the validation of asserted restrictions on the Government's rights to 
use, release, or disclose computer software.
    (d) Use the provision at 252.227-7025, Limitations on the Use or 
Disclosure of Government-Furnished Information Marked with Restrictive 
Legends, in solicitations and contracts when it is anticipated that the 
Government will provide the contractor, for performance of its contract, 
computer software or computer software documentation marked with another 
contractor's restrictive legend(s).
    (e) Use the provision at 252.227-7028, Technical Data or Computer 
Software Previously Delivered to the Government, in solicitations when 
the resulting contract will require the contractor to deliver computer 
software or computer software documentation. The provision requires 
offerors to identify any software or documentation specified in the 
solicitation as deliverable items that are the same or substantially the 
same as software or documentation which the offeror has delivered or is 
obligated to deliver, either as a contractor or subcontractor, under any 
other federal agency contract.
    (f) Use the clause at 252.227-7037, Validation of Restrictive 
Markings on

[[Page 236]]

Technical Data, in solicitations and contracts that include the clause 
at 252.227-7014 when the contractor will be required to deliver 
noncommercial computer software documentation (technical data). The 
clause implements statutory requirements under 10 U.S.C. 2321. Paragraph 
(e) of the clause contains information that must be included in a formal 
challenge.



Sec. 227.7203-7  [Reserved]



Sec. 227.7203-8  Deferred delivery and deferred ordering of computer software and computer software documentation.

    (a) Deferred delivery. Use the clause at 252.227-7026, Deferred 
Delivery of Technical Data or Computer Software, when it is in the 
Government's interests to defer the delivery of computer software or 
computer software documentation. The clause permits the contracting 
officer to require the delivery of data identified as ``deferred 
delivery'' data or computer software at any time until two years after 
acceptance by the Government of all items (other than technical data or 
computer software) under the contract or contract termination, whichever 
is later. The obligation of subcontractors or suppliers to deliver such 
data expires two years after the date the prime contractor accepts the 
last item from the subcontractor or supplier for use in the performance 
of the contract. The contract must specify the computer software or 
computer software documentation that is subject to deferred delivery. 
The contracting officer shall notify the contractor sufficiently in 
advance of the desired delivery date for such software or documentation 
to permit timely delivery.
    (b) Deferred ordering. Use the clause at 252.227-7027, Deferred 
Ordering of Technical Data or Computer Software, when a firm requirement 
for software or documentation has not been established prior to contract 
award but there is a potential need for computer software or computer 
software documentation. Under this clause the contracting officer may 
order any computer software or computer software documentation generated 
in the performance of the contract or any subcontract thereunder at any 
time until three years after acceptance of all items (other than 
technical data or computer software) under the contract or contract 
termination, whichever is later. The obligation of subcontractors to 
deliver such technical data or computer software expires three years 
after the date the contractor accepts the last item under the 
subcontract. When the software or documentation are ordered, the 
delivery dates shall be negotiated and the contractor compensated only 
for converting the software or documentation into the prescribed form, 
reproduction costs, and delivery costs.



Sec. 227.7203-9  Copyright.

    (a) Copyright license. (1) The clause at 252.227-7014, Rights in 
Noncommercial Computer Software and Noncommercial Computer Software 
Documentation, requires a contractor to grant, or obtain for the 
Government license rights which permit the Government to reproduce the 
software or documentation, distribute copies, perform or display the 
software or documentation and, through the right to modify data, prepare 
derivative works. The extent to which the Government, and others acting 
on its behalf, may exercise these rights varies for each of the standard 
data rights licenses obtained under the clause. When non-standard 
license rights in computer software or computer software documentation 
will be negotiated, negotiate the extent of the copyright license 
concurrent with negotiations for the data rights license. Do not 
negotiate copyright licenses for computer software that provide less 
rights than the standard restricted rights in computer software license. 
For computer software documentation, do not negotiate a copyright 
license that provides less rights than the standard limited rights in 
technical data license.
    (2) The clause at 252.227-7013, Rights in Technical Data--
Noncommercial Items, does not permit a contractor to incorporate a third 
party's copyrighted software into a deliverable software item unless the 
contractor has obtained an appropriate license for the Government and, 
when applicable, others acting on the Government's behalf, or has 
obtained the contracting officer's written approval to do so. Grant

[[Page 237]]

approval to use third party copyrighted software in which the Government 
will not receive a copyright license only when the Government's 
requirements cannot be satisfied without the third party material or 
when the use of the third party material will result in cost savings to 
the Government which outweigh the lack of a copyright license.
    (b) Copyright considerations--special works. See 227.7205 for 
copyright considerations when acquiring special works.



Sec. 227.7203-10  Contractor identification and marking of computer software or computer software documentation to be furnished with restrictive markings.

    (a) Identification requirements. (1) The solicitation provision at 
252.227-7017, Identification and Assertion of Use, Release, or 
Disclosure Restrictions, requires offerors to identify, prior to 
contract award, any computer software or computer software documentation 
that an offeror asserts should be provided to the Government with 
restrictions on use, modification, reproduction, release or disclosure. 
This requirement does not apply to restrictions based solely on 
copyright. The notification and identification must be submitted as an 
attachment to the offer. If an offeror fails to submit the attachment or 
fails to complete the attachment in accordance with the requirements of 
the solicitation provision, such failure shall constitute a minor 
informality. Provide offerors an opportunity to remedy a minor 
informality in accordance with the procedures at FAR 14.405 or 15.607. 
An offeror's failure to correct an informality within the time 
prescribed by the contracting officer shall render the offer ineligible 
for award.
    (2) The procedures for correcting minor informalities shall not be 
used to obtain information regarding asserted restrictions or an 
offeror's suggested asserted rights category. Questions regarding the 
justification for an asserted restriction or asserted rights category 
must be pursued in accordance with the procedures at 227.7203-13.
    (3) The restrictions asserted by a successful offeror shall be 
attached to its contract unless, in accordance with the procedures at 
227.7203-13, the parties have agreed that an asserted restriction is not 
justified. The contract attachment shall provide the same information 
regarding identification of the computer software or computer software 
documentation, the asserted rights category, the basis for the 
assertion, and the name of the person asserting the restrictions as 
required by paragraph (d) of the solicitation provision at 252.227-7017. 
Subsequent to contract award, the clause at 252.227-7014, Rights in 
Noncommercial Computer Software and Noncommercial Computer Software 
Documentation, permits a contractor to make additional assertions under 
certain conditions. The additional assertions must be made in accordance 
with the procedures and in the format prescribed by that clause.
    (4) Neither the pre- or post-award assertions made by the contractor 
nor the fact that certain assertions are identified in the attachment to 
the contract, determine the respective rights of the parties. As 
provided at 227.7203-13, the Government has the right to review, verify, 
challenge and validate restrictive markings.
    (5) Information provided by offerors in response to the solicitation 
provision at 252.227-7017 may be used in the source selection process to 
evaluate the impact on evaluation factors that may be created by 
restrictions on the Government's ability to use or disclose computer 
software or computer software documentation.
    (b) Contractor marking requirements. The clause at 252.227-7014, 
Rights in Noncommercial Computer Software and Noncommercial Computer 
Software Documentation--
    (1) Requires a contractor who desires to restrict the Government's 
rights in computer software or computer software documentation to place 
restrictive markings on the software or documentation, provides 
instructions for the placement of the restrictive markings, and 
authorizes the use of certain restrictive markings. When it is 
anticipated that the software will or may be used in combat or 
situations which simulate combat conditions, do not permit contractors 
to insert instructions into computer programs that interfere with or 
delay operation of the software to display a restrictive rights legend 
or other license notice; and

[[Page 238]]

    (2) Requires a contractor to deliver, furnish, or otherwise provide 
to the Government any computer software or computer software 
documentation in which the Government has previously obtained rights 
with the Government's pre-existing rights in that software or 
documentation unless the parties have agreed otherwise or restrictions 
on the Government's rights to use, modify, produce, release, or disclose 
the software or documentation have expired. When restrictions are still 
applicable, the contractor is permitted to mark the software or 
documentation with the appropriate restrictive legend.
    (c) Unmarked computer software or computer software documentation. 
(1) Computer software or computer software documentation delivered or 
otherwise provided under a contract without restrictive markings shall 
be presumed to have been delivered with unlimited rights and may be 
released or disclosed without restriction. To the extent practicable, if 
a contractor has requested permission (see paragraph (c)(2) of this 
subsection) to correct an inadvertent omission of markings, do not 
release or disclose the software or documentation pending evaluation of 
the request.
    (2) A contractor may request permission to have appropriate legends 
placed on unmarked computer software or computer software documentation 
at its expense. The request must be received by the contracting officer 
within six months following the furnishing or delivery of such software 
or documentation, or any extension of that time approved by the 
contracting officer. The person making the request must--
    (i) Identify the software or documentation that should have been 
marked;
    (ii) Demonstrate that the omission of the marking was inadvertent, 
the proposed marking is justified and conforms with the requirements for 
the marking of computer software or computer software documentation 
contained in the clause at 252.227-7014; and
    (iii) Acknowledge, in writing, that the Government has no liability 
with respect to any disclosure, reproduction, or use of the software or 
documentation made prior to the addition of the marking or resulting 
from the omission of the marking.
    (3) Contracting officers should grant permission to mark only if the 
software or documentation were not distributed outside the Government or 
were distributed outside the Government with restrictions on further use 
or disclosure.



Sec. 227.7203-11  Contractor procedures and records.

    (a) The clause at 252.227-7014, Rights in Noncommercial Computer 
Software and Noncommercial Computer Software Documentation, requires a 
contractor, and its subcontractors or suppliers that will deliver 
computer software or computer software documentation with other than 
unlimited rights, to establish and follow written procedures to assure 
that restrictive markings are used only when authorized and to maintain 
records to justify the validity of restrictive markings.
    (b) The clause at 252.227-7019, Validation of Asserted 
Restrictions--Computer Software, requires contractors and their 
subcontractors or suppliers at any tier to maintain records sufficient 
to justify the validity of markings that assert restrictions on the use, 
modification, reproduction, release, performance, display, or disclosure 
of computer software.



Sec. 227.7203-12  Government right to establish conformity of markings.

    (a) Nonconforming markings. (1) Authorized markings are identified 
in the clause at 252.227-7014, Rights in Noncommercial Computer Software 
and Noncommercial Computer Software Documentation. All other markings 
are nonconforming markings. An authorized marking that is not in the 
form, or differs in substance, from the marking requirements in the 
clause at 252.227-7014 is also a nonconforming marking.
    (2) The correction of nonconforming markings on computer software is 
not subject to 252.227-7019, Validation of Asserted Restrictions--
Computer Software, and the correction of nonconforming markings on 
computer software documentation (technical data) is not subject to 
252.227-7037, Validation of Restrictive Markings on

[[Page 239]]

Technical Data. To the extent practicable, the contracting officer 
should return computer software or computer software documentation 
bearing nonconforming markings to the person who has placed the 
nonconforming markings on the software or documentation to provide that 
person an opportunity to correct or strike the nonconforming markings at 
that person's expense. If that person fails to correct the nonconformity 
and return the corrected software or documentation within 60 days 
following the person's receipt of the software or documentation, the 
contracting officer may correct or strike the nonconformity at the 
person's expense. When it is impracticable to return computer software 
or computer software documentation for correction, contracting officers 
may unilaterally correct any nonconforming markings at Government 
expense. Prior to correction, the software or documentation may be used 
in accordance with the proper restrictive marking.
    (b) Unjustified markings. (1) An unjustified marking is an 
authorized marking that does not depict accurately restrictions 
applicable to the Government's use, modification, reproduction, release, 
or disclosure of the marked computer software or computer software 
documentation. For example, a restricted rights legend placed on 
computer software developed under a Government contract either 
exclusively at Government expense or with mixed funding (situations 
under which the Government obtains unlimited or government purpose 
rights) is an unjustified marking.
    (2) Contracting officers have the right to review and challenge the 
validity of unjustified markings. However, at any time during 
performance of a contract and notwithstanding existence of a challenge, 
the contracting officer and the person who has asserted a restrictive 
marking may agree that the restrictive marking is not justified. Upon 
such agreement, the contracting officer may, at his or her election, 
either----
    (i) Strike or correct the unjustified marking at that person's 
expense; or
    (ii) Return the computer software or computer software documentation 
to the person asserting the restriction for correction at that person's 
expense. If the software or documentation are returned and that person 
fails to correct or strike the unjustified restriction and return the 
corrected software or documentation to the contracting officer within 60 
days following receipt of the software or documentation, the unjustified 
marking shall be corrected or stricken at that person's expense.



Sec. 227.7203-13  Government right to review, verify, challenge and validate asserted restrictions.

    (a) General. An offeror's or contractor's assertion(s) of 
restrictions on the Government's rights to use, modify, reproduce, 
release, or disclose computer software or computer software 
documentation do not, by themselves, determine the extent of the 
Government's rights in such software or documentation. The Government 
may require an offeror or contractor to submit sufficient information to 
permit an evaluation of a particular asserted restriction and may 
challenge asserted restrictions when there are reasonable grounds to 
believe that an assertion is not valid.
    (b) Requests for information. Contracting officers should have a 
reason to suspect that an asserted restriction might not be correct 
prior to requesting information. When requesting information, provide 
the offeror or contractor the reason(s) for suspecting that an asserted 
restriction might not be correct. A need for additional license rights 
is not, by itself, a sufficient basis for requesting information 
concerning an asserted restriction. Follow the procedures at 227.7203-
5(d) when additional license rights are needed but there is no basis to 
suspect that an asserted restriction might not be valid.
    (c) Transacting matters directly with subcontractors. The clause at 
252.227-7019, Validation of Asserted Restrictions--Computer Software, 
obtains the contractor's agreement that the Government may transact 
matters under the clause directly with a subcontractor or supplier, at 
any tier, without creating or implying privity of contract. Contracting 
officers should permit a subcontractor or supplier to

[[Page 240]]

transact challenge and validation matters directly with the Government 
when--
    (1) A subcontractor's or supplier's business interests in its 
technical data would be compromised if the data were disclosed to a 
higher tier contractor.
    (2) There is reason to believe that the contractor will not respond 
in a timely manner to a challenge and an untimely response would 
jeopardize a subcontractor's or supplier's right to assert restrictions; 
or
    (3) Requested to do so by a subcontractor or supplier.
    (d) Challenging asserted restrictions--(1) Pre-award considerations. 
The challenge procedures in the clause at 252.227-7019 could 
significantly delay competitive procurements. Therefore, avoid 
challenging asserted restrictions prior to a competitive contract award 
unless resolution of the assertion is essential for successful 
completion of the procurement.
    (2) Computer software documentation. Computer software documentation 
is technical data. Challenges to asserted restrictions on the 
Government's rights to use, modify, reproduce, release, perform, 
display, or disclose computer software documentation must be made in 
accordance with the clause at 252.227-7037, Validation of Restrictive 
Markings on Technical Data, and the guidance at 227.7103-13. The 
procedures in the clause at 252.227-7037 implement requirements 
contained in 10 U.S.C. 2321. Resolution of questions regarding the 
validity of asserted restrictions using the process described at 
227.7103-12(b)(2) is strongly encouraged.
    (3) Computer software. (i) Asserted restrictions should be reviewed 
before acceptance of the computer software deliverable under a contract. 
The Government's right to challenge an assertion expires three years 
after final payment under the contract or three years after delivery of 
the software, whichever is later. Those limitations on the Government's 
challenge rights do not apply to software that is publicly available, 
has been furnished to the Government without restrictions, or has been 
otherwise made available without restrictions.
    (ii) Contracting officers must have reasonable grounds to challenge 
the current validity of an asserted restriction. Before challenging an 
asserted restriction, carefully consider all available information 
pertaining to the asserted restrictions. Resolution of questions 
regarding the validity of asserted restrictions using the process 
described at 227.7203-12(b)(2) is strongly encouraged. After 
consideration of the situations described in paragraph (c) of this 
subsection, contracting officers may request the person asserting a 
restriction to furnish a written explanation of the facts and supporting 
documentation for the assertion in sufficient detail to enable the 
contracting officer to determine the validity of the assertion. 
Additional supporting documentation may be requested when the 
explanation provided by that person does not, in the contracting 
officer's opinion, establish the validity of the assertion.
    (iii) Assertions may be challenged whether or not supporting 
documentation was requested. Challenges must be in writing and issued to 
the person asserting the restriction.
    (4) Extension of response time. The contracting officer, at his or 
her discretion, may extend the time for response contained in a 
challenge, as appropriate, if the contractor submits a timely written 
request showing the need for additional time to prepare a response.
    (e) Validating or denying asserted restrictions. (1) Contracting 
officers must promptly issue a final decision denying or sustaining the 
validity of each challenged assertion unless the parties have agreed on 
the disposition of the assertion. When a final decision denying the 
validity of an asserted restriction is made following a timely response 
to a challenge, the Government is obligated to continue to respect the 
asserted restrictions through final disposition of any appeal unless the 
agency head notifies the person asserting the restriction that urgent or 
compelling circumstances do not permit the Government to continue to 
respect the asserted restriction. See 252.227-7019(g) for restrictions 
applicable following a determination of urgent and compelling 
circumstances.

[[Page 241]]

    (2) Only a contracting officer's final decision, or actions of an 
agency Board of Contract Appeals or a court of competent jurisdiction, 
that sustain the validity of an asserted restriction constitute 
validation of the restriction.
    (f) Multiple challenges to an asserted restriction. When more than 
one contracting officer challenges an asserted restriction, the 
contracting officer who made the earliest challenge is responsible for 
coordinating the Government challenges. That contracting officer shall 
consult with all other contracting officers making challenges, verify 
that all challenges apply to the same asserted restriction and, after 
consulting with the contractor, subcontractor, or supplier asserting the 
restriction, issue a schedule that provides that person a reasonable 
opportunity to respond to each challenge.



Sec. 227.7203-14  Conformity, acceptance, and warranty of computer software and computer software documentation.

    (a) Computer software documentation. Computer software documentation 
is technical data. See 227.7103-14 for appropriate guidance and 
statutory requirements.
    (b) Computer software. (1) Conformity and acceptance. Solicitations 
and contracts requiring the delivery of computer software shall specify 
the requirements the software must satisfy to be acceptable. Contracting 
officers, or their authorized representatives, are responsible for 
determining whether computer software tendered for acceptance conforms 
to the contractual requirements. Except for nonconforming restrictive 
markings (follow the procedures at 227.7203-12(a) if nonconforming 
markings are the sole reason computer software tendered for acceptance 
fails to conform to contractual requirements), do not accept software 
that does not conform in all respects to applicable contractual 
requirements. Correction or replacement of nonconforming software, or an 
equitable reduction in contract price when correction or replacement of 
the nonconforming data is not practicable or is not in the Government's 
interests, shall be accomplished in accordance with--
    (i) The provisions of a contract clause providing for inspection and 
acceptance of deliverables and remedies for nonconforming deliverables; 
or
    (ii) The procedures at FAR 46.407(c) through (g), if the contract 
does not contain an inspection clause providing remedies for 
nonconforming deliverables.
    (2) Warranties--(i) Weapon systems. Computer software that is a 
component of a weapon system or major subsystem should be warranted as 
part of the weapon system warranty. Follow the procedures at 246.770.
    (ii) Non-weapon systems. Approval of the chief of the contracting 
office must be obtained to use a computer software warranty other than a 
weapon system warranty. Consider the factors at FAR 46.703 in deciding 
whether to obtain a computer software warranty. When approval for a 
warranty has been obtained, the clause at 252.246-7001, Warranty of 
Data, and its alternates, may be appropriately modified for use with 
computer software or a procurement specific clause may be developed.



Sec. 227.7203-15  Subcontractor rights in computer software or computer software documentation.

    (a) Subcontractors and suppliers at all tiers should be provided the 
same protection for their rights in computer software or computer 
software documentation as are provided to prime contractors.
    (b) The clauses at 252.227-7019, Validation of Asserted 
Restrictions--Computer Software, and 252.227-7037, Validation of 
Restrictive Markings on Technical Data, obtain a contractor's agreement 
that the Government's transaction of validation or challenge matters 
directly with subcontractors at any tier does not establish or imply 
privity of contract. When a subcontractor or supplier exercises its 
right to transact validation matters directly with the Government, 
contracting officers shall deal directly with such persons, as provided 
at 227.7203-13(c) for computer software and 227.7103-13(c)(3) for 
computer software documentation (technical data).
    (c) Require prime contractors whose contracts include the following 
clauses

[[Page 242]]

to include those clauses, without modification except for appropriate 
identification of the parties, in contracts with subcontractors or 
suppliers who will be furnishing computer software in response to a 
Government requirement (see 227.7103-15(c) for clauses required when 
subcontractors or suppliers will be furnishing computer software 
documentation (technical data)):
    (1) 252.227.7014, Rights in Noncommercial Computer Software and 
Noncommercial Computer Software Documentation;
    (2) 252.227.7019, Validation of Asserted Restrictions--Computer 
Software;
    (3) 252.227.7025, Limitations on the Use or Disclosure of Government 
Furnished Information Marked with Restrictive Legends; and
    (4) 252.227.7028, Technical Data or Computer Software Previously 
Delivered to the Government.
    (d) Do not require contractors to have their subcontractors or 
suppliers at any tier relinquish rights in technical data to the 
contractor, a higher tier subcontractor, or to the Government, as a 
condition for award of any contract, subcontract, purchase order, or 
similar instrument except for the rights obtained by the Government 
under the provisions of the Rights in Noncommercial Computer Software 
and Noncommercial Computer Software Documentation clause contained in 
the contractor's contract with the Government.



Sec. 227.7203-16  Providing computer software or computer software documentation to foreign governments, foreign contractors, or international organizations.

    Computer software or computer software documentation may be released 
or disclosed to foreign governments, foreign contractors, or 
international organizations only if release or disclosure is otherwise 
permitted both by Federal export controls and other national security 
laws or regulations. Subject to such laws and regulations, the 
Department of Defense--
    (a) May release or disclose computer software or computer software 
documentation in which it has obtained unlimited rights to such foreign 
entities or authorize the use of such data by those entities; and
    (b) Shall not release or disclose computer software or computer 
software documentation for which restrictions on use, release, or 
disclosure have been asserted to such foreign entities or authorize the 
use of such data by those entities, unless the intended recipient is 
subject to the same provisions as included in the use and non-disclosure 
agreement at 227.7103-7 and the requirements of the clause at 252.227-
7014, Rights in Noncommercial Computer Software and Noncommercial 
Computer Software Documentation, governing use, modification, 
reproduction, release, performance, display, or disclosure of such data 
have been satisfied.



Sec. 227.7203-17  Overseas contracts with foreign sources.

    (a) The clause at 252.227-7032, Rights in Technical Data and 
Computer Software (Foreign), may be used in contracts with foreign 
contractors to be performed overseas, except Canadian purchases (see 
paragraph (c) of this subsection) in lieu of the clause at 252.227-7014, 
Rights in Noncommercial Computer Software and Noncommercial Computer 
Software Documentation, when the Government requires the unrestricted 
right to use, modify, reproduce, release, perform, display, or disclose 
all computer software or computer software documentation to be delivered 
under the contract. Do not use the clause in contracts for special 
works.
    (b) When the Government does not require unlimited rights, the 
clause at 252.227-7032 may be modified to accommodate the needs of a 
specific overseas procurement situation. The Government should obtain 
rights to the computer software or computer software documentation that 
are not less than the rights the Government would have obtained under 
the software rights clause(s) prescribed in this part for a comparable 
procurement performed within the United States or its possessions.
    (c) Contracts for Canadian purchases shall include the appropriate 
software rights clause prescribed in this part for a comparable 
procurement performed within the United States or its possessions.

[[Page 243]]



Sec. 227.7204

  Contracts under the Small Business Innovative Research Program.

    When contracting under the Small Business Innovative Research 
Program, follow the procedures at 227-7104.



Sec. 227.7205  Contracts for special works.

    (a) Use the clause at 252.227-7020, Rights in Special Works, in 
solicitations and contracts where the Government has a specific need to 
control the distribution of computer software or computer software 
documentation first produced, created, or generated in the performance 
of a contract and required to be delivered under that contract, 
including controlling distribution by obtaining an assignment of 
copyright, or a specific need to obtain indemnity for liabilities that 
may arise out of the creation, delivery, use, modification, 
reproduction, release, performance, display, or disclosure of such 
software or documentation. Use the clause--

    (1) In lieu of the clause at 252.227-7014, Rights in Noncommercial 
Computer Software and Noncommercial Computer Software Documentation, 
when the Government must own or control copyright in all computer 
software or computer software documentation first produced, created, or 
generated and required to be delivered under a contract; or

    (2) In addition to the clause at 252.227-7014 when the Government 
must own or control copyright in some of the computer software or 
computer software documentation first produced, created, or generated 
and required to be delivered under a contract. The specific software or 
documentation in which the Government must own or control copyright must 
be identified in a special contract requirement.

    (b) Although the Government obtains an assignment of copyright and 
unlimited rights in the computer software or computer software 
documentation delivered as a special work under the clause at 252.227-
7020, the contractor retains use and disclosure rights in that software 
or documentation. If the Government needs to restrict a contractor's 
rights to use or disclose a special work, it must also negotiate a 
special license which specifically restricts the contractor's use or 
disclosure rights.

    (c) The clause at 252.227-7020 does not permit a contractor to 
incorporate into a special work any work copyrighted by others unless 
the contractor obtains the contracting officer's permission to do so and 
obtains for the Government a non-exclusive, paid up, world-wide license 
to make and distribute copies of that work, to prepare derivative works, 
to perform or display any portion of that work, and to permit others to 
do so for government purposes. Grant permission only when the 
Government's requirements cannot be satisfied unless the third party 
work is included in the deliverable work.
    (d) Examples of other works which may be procured under the clause 
at 252.227-7020 include, but are not limited to, audiovisual works, 
scripts, soundtracks, musical compositions, and adaptations; histories 
of departments, agencies, services or units thereof; surveys of 
Government establishments; instructional works or guidance to Government 
officers and employees on the discharge of their official duties; 
reports, books, studies, surveys or similar documents; collections of 
data containing information pertaining to individuals that, if 
disclosed, would violate the right of privacy or publicity of the 
individuals to whom the information relates; or investigative reports.



Sec. 227.7206  Contracts for architect-engineer services.

    Follow 227.7107 when contracting for architect-engineer services.

[[Page 244]]



Sec. 227.7207  Contractor data repositories.

    Follow 227.7108 when it is in the Government's interests to have a 
data repository include computer software or to have a separate computer 
software repository. Contractual instruments establishing the repository 
requirements must appropriately reflect the repository manager's 
software responsibilities.



PART 228--BONDS AND INSURANCE--Table of Contents




Sec.

                          Subpart 228.1--Bonds

228.102  Performance and payment bonds for construction contracts.
228.102-1  General.
228.105  Other types of bonds.
228.106  Administration.
228.106-7  Withholding contract payments.
228.170  Solicitation provision.

                        Subpart 228.3--Insurance

228.304  Risk-pooling arrangements.
228.305  Overseas workers' compensation and war-hazard insurance.
228.307  Insurance under cost-reimbursement contracts.
228.307-1  Group insurance plans.
228.311  Solicitation provision and contract clause on liability 
          insurance under cost-reimbursement contracts.
228.311-1  Contract clause.
228.370  Additional clauses.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36404, July 31, 1991, unless otherwise noted.



                          Subpart 228.1--Bonds

228.102  Performance and payment bonds for construction contracts.



Sec. 228.102-1  General.

    For Defense Environmental Restoration Program construction contracts 
entered into pursuant to 10 U.S.C. 2701 and executed between December 5, 
1991, and December 31, 1999--
    (1) Any rights of action under the performance bond shall only 
accrue to, and be for the exclusive use of, the obligee named in the 
bond.
    (2) In the event of default, the surety's liability on the 
performance bond is limited to the cost of completion of the contract 
work, less the balance of unexpended funds. Under no circumstances shall 
the liability exceed the penal sum of the bond.
    (3) The surety shall not be liable for indemnification or 
compensation of the obligee for loss or liability arising from personal 
injury or property damage, even if the injury or damage was caused by a 
breach of the bonded contract.
    (4) Once it has taken action to meet its obligations under the bond, 
the surety is entitled to any indemnification and identical standard of 
liability to which the contractor was entitled under the contract or 
applicable laws and regulations.
    (a) The requirement for performance and payment bonds is waived for 
cost-reimbursement contracts. However, for cost type contracts with 
fixed-price construction subcontracts over $25,000, require the prime 
contractor to obtain from each of its construction subcontractors--
    (i) A payment bond in favor of the prime contractor sufficient to 
pay labor and material costs; and
    (ii) A performance bond in an equal amount if available at no 
additional cost.

[56 FR 36404, July 31, 1991, as amended at 57 FR 42631, Sept. 15, 1992; 
58 FR 28469, May 13, 1993; 60 FR 29499, June 5, 1995]



Sec. 228.105  Other types of bonds.

    Fidelity and forgery bonds generally are not required but may be 
used when--
    (1) Necessary for the protection of the Government or the 
contractor; or
    (2) The investigative and claims services of a surety company are 
desired.
228.106  Administration.



Sec. 228.106-7  Withholding contract payments.

    (a) Withholding may be appropriate in other than construction 
contracts (see 232.970-1(b)).

[57 FR 42707, Sept. 16, 1992]



Sec. 228.170  Solicitation provision.

    When a requirement for a performance bond or other security is 
included in a solicitation for dismantling, demolition, or removal of 
improvements (see

[[Page 245]]

FAR 37.300), use the provision at 252.228-7004, Bonds or Other Security. 
Set a period of time (normally ten days) for return of executed bonds.



                        Subpart 228.3--Insurance



Sec. 228.304  Risk-pooling arrangements.

    The DoD has established the National Defense Projects Rating Plan, 
also known as the Special Casualty Insurance Rating Plan, as a risk-
pooling arrangement to minimize the cost to the Government of purchasing 
the liability insurance listed in FAR 28.307-2. Use the plan in 
accordance with the following guidelines when it provides the necessary 
coverage more advantageously than commercially available coverage.
    (1) The plan--
    (i) Is implemented by attaching an endorsement to standard insurance 
policy forms for workers' compensation, employer's liability, 
comprehensive general, and automobile liability. The endorsement states 
that the instant policy is subject to the National Defense Projects 
Rating Plan.
    (ii) Applies to eligible Defense projects of one or more 
departments/agencies. For purposes of this section, a Defense project is 
any eligible contract or group of contracts with the same contractor.
    (A) A Defense project is eligible when--
    (1) Eligible contracts represent, at the inception of the plan, at 
least 90 percent of the payroll for the total operations at project 
locations; and
    (2) The annual insurance premium is estimated to be at least 
$10,000.
    (B) A contract is eligible when it is--
    (1) Either domestic or foreign;
    (2) Cost-reimbursement type; or
    (3) Fixed price with redetermination provisions.
    (2) Under construction contracts, include construction 
subcontractors in the prime contractor's plan only when subcontractor 
operations are at the project site, and the subcontract provides that 
the prime contractor will furnish insurance.
    (3) Use the agreement in Table 28-1, Insurance Rating Plan 
Agreement, when the Government assumes contractor premium payments upon 
contract termination or completion.
    (4) The Federal Tort Claims Act provides protection for Government 
employees while driving Government-owned vehicles in the performance of 
their assigned duties. Include the endorsement in Table 28-2, Automobile 
Insurance Policy Endorsement, in automobile liability insurance policies 
provided under the National Defense Projects Rating Plan.

           Table 28-1.--Insurance Rating Plan Rating Agreement

Special Casualty Insurance Rating Plan Assignment-Assumption of Premium 
                               Obligations

    It is agreed that 100 percent * of the return premiums and premium 
refunds (and dividends) due or to become due the prime contractor under 
the policies to which the National Defense Projects Rating Plan 
Endorsement made a part of policy ____________ applies are hereby 
assigned to and shall be paid to the United States of America, and the 
prime contractor directs the Company to make such payments to the office 
designated for contract administration acting for and on account of the 
United States of America.
---------------------------------------------------------------------------

    * In the event the Government has less than a 100 percent interest 
in premium funds or dividends, modify the assignment to reflect the 
percentage of interest and extent of the Government's assumption of 
additional premium obligation.
---------------------------------------------------------------------------

    The United States of America hereby assumes and agrees to fulfill 
all present and future obligations of the prime contractor with respect 
to the payment of 100 percent  of the premiums under said policies.
    This agreement, upon acceptance by the prime contractor, the United 
States of America, and the Company shall be effective from ____________
Accepted________________________________________________________________
    (Date)
(Name of Insurance Company)_____________________________________________
By______________________________________________________________________
    (Title of Official Signing)
Accepted________________________________________________________________
    (Date)
        United States of America
By______________________________________________________________________
    (Authorized Representative)
Accepted________________________________________________________________
    (Date)
(Prime Contractor)______________________________________________________
By______________________________________________________________________
    (Authorized Representative)

[[Page 246]]

          Table 28-2.--Automobile Insurance Policy Endorsement

    It is agreed that insurance provided by the policy with respect to 
the ownership, maintenance, or use of automobiles, including loading and 
unloading thereof, does not apply to the following as insureds: The 
United States of America, any of its agencies, or any of its officers or 
employees.



Sec. 228.305  Overseas workers' compensation and war-hazard insurance.

    (d) Submit requests for waiver through department/agency channels. 
Include the following--
    (i) Name and address of contractor;
    (ii) Contract number;
    (iii) Date of award;
    (iv) Place of performance;
    (v) Name of insurance company providing Defense Base Act coverage;
    (vi) Nationality of employees to whom waiver is to apply; and
    (vii) Reason for waiver.
228.307  Insurance under cost-reimbursement contracts.



Sec. 228.307-1  Group insurance plans.

    The Defense Department Group Term Insurance Plan is available for 
contractor use under cost-reimbursement type contracts when approved as 
provided in department or agency regulations. A contractor is eligible 
if--
    (a) The number of covered employees is 500 or more; and
    (b) The contractor has all cost-reimbursement contracts; or
    (c) At least 90 percent of the payroll for contractor operations to 
be covered by the Plan is under cost-reimbursement contracts.
228.311  Solicitation provision and contract clause on liability 
insurance under cost-reimbursement contracts.



Sec. 228.311-1  Contract clause.

    Use the clause at FAR 52.228-7, Insurance--Liability to Third 
Persons, in solicitations and contracts, other than those for 
construction and those for architect-engineer services, when a cost-
reimbursement contract is contemplated, unless the head of the 
contracting activity waives the requirement for use of the clause.

[56 FR 36404, July 31, 1991. Redesignated at 61 FR 50454, Sept. 26, 
1996]



Sec. 228.370  Additional clauses.

    (a) Use the clause at 252.228-7000, Reimbursement for War-Hazard 
Losses, when--
    (1) The clause at FAR 52.228-4, Worker's Compensation and War-Hazard 
Insurance Overseas, is used; and
    (2) The head of the contracting activity decides not to allow the 
contractor to buy insurance for war-hazard losses.
    (b)(1) Use the clause at 252.228-7001, Ground and Flight Risk, in 
negotiated fixed-price contracts for aircraft production, modification, 
maintenance, repair, or overhaul, unless--
    (i) The aircraft is being acquired for a foreign military sale and 
the foreign government has not agreed to assume the risk; or
    (ii) The cost of insurance for damage, loss, or destruction of 
aircraft does not exceed $500, and the contracting officer agrees to 
recognize the insurance costs.
    (2) If appropriate, revise the clause at 252.228-7001, Ground and 
Flight Risk, as follows--
    (i) Include a modified definition of ``aircraft'' if the contract 
covers other than conventional types of winged aircraft, i.e., 
helicopters, vertical take-off aircraft, lighter-than-air airships or 
other nonconventional aircraft. The modified definition should describe 
a stage of manufacture comparable to the standard definition.
    (ii) Modify ``in the open'' to include ``hush houses,'' test hangars 
and comparable structures, and other designated areas.
    (iii) Expressly define the ``contractor's premises'' where the 
aircraft will be located during and for contract performance. These 
locations may include contract premises which are owned, leased, or 
premises where the contractor is a permittee or licensee or has a right 
to use, including Government airfields.
    (iv) Revise paragraph (d)(iii) of the clause to provide Government 
assumption of risk for transportation by conveyance on streets or 
highways when transportation is--

[[Page 247]]

    (A) Limited to the vicinity of contractor premises; and
    (B) Incidental to work performed under the contract.
    (c)(1) Use the clause at 252.228-7002, Aircraft Flight Risk, in cost 
reimbursement contracts--
    (i) For the development, production, modification, maintenance, 
repair, or overhaul of aircraft; or
    (ii) Otherwise involving the furnishing of aircraft to the 
contractor by the Government.
    (iii) With the definition of ``aircraft'' modified, if appropriate, 
to include helicopters, vertical take-off aircraft, lighter-than-air 
airships or other nonconventional aircraft.
    (2) Use the clause at 252.228-7002, Aircraft Flight Risk, 
appropriately modified, in fixed price contracts when--
    (i) The clause at 252.228-7001, Ground and Flight Risk, is not used; 
and
    (ii) Contract performance involves the flight of Government 
furnished aircraft.
    (d) The clause at 252.228-7003, Capture and Detention, may be used 
when contractor employees are subject to capture and detention and may 
not be covered by the War Hazards Compensation Act (42 U.S.C. 1701 et 
seq.).
    (e) The clause at 252.228-7005, Accident Reporting and Investigation 
Involving Aircraft, Missiles, and Space Launch Vehicles, may be used in 
solicitations and contracts which involve the manufacture, modification, 
overhaul, or repair of these items.

[56 FR 36404, July 31, 1991, as amended at 57 FR 42631, Sept. 15, 1992]



PART 229--TAXES--Table of Contents




    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.



                         Subpart 229.1--General



Sec. 229.101  Resolving tax problems.

    (a) Within DoD, the agency-designated legal counsels are the defense 
agency General Counsels, the General Counsels of the Navy and Air Force, 
and for the Army, the Chief, Contract Law Division, Office of the Judge 
Advocate General.
    (c) The contracting officer may direct the contractor to litigate 
the applicability of a particular tax if--
    (i) The contract is either a cost reimbursement type or a fixed 
price type with a tax escalation clause; and
    (ii) The direction is coordinated with the agency-designated legal 
counsel through the DoD Tax Policy and Advisory Group.
    (d)(i) Review DoDD 5100.64, Department of Defense Foreign Tax Relief 
Program, before contracting with a foreign source. Refer questions on 
implementation of the program to the Commanding Officers in Table 29-1, 
Designated Commanding Officers, which have been designated under 
subsection E.7 of DoDD 5100.64 to serve as--
    (A) Single point of contact for U.S. contracting offices for 
investigation and resolution of specific foreign tax relief matters; and
    (B) Liaison with responsible diplomatic mission and local foreign 
tax authorities.
    (ii) Refer foreign tax relief questions which have not been resolved 
by the designated Commanding Officer to the agency-designated legal 
counsel.
    (iii) When an acquisition is for a contract to be performed in a 
country or area listed in Table 29-1, Designated Commanding Officers--
    (A) Obtain from the designated Commanding Officer detailed 
information concerning the taxes and duties from which the Government of 
the United States is exempt, and
    (B) Provide the information to prospective offerors.
    (C) Do not provide prospective offerors any other information about 
foreign taxes or duties.
    (D) Issue tax exemption certificates, as appropriate, to assist the 
contractor in obtaining relief from foreign taxes and duties which were 
excluded from the contract price.
    (E) Seek advice and assistance from the designated Commanding 
Officer and, if necessary, the agency-designated legal counsel if the 
contractor notifies the contracting officer that it has been assessed a 
tax or duty by a foreign government which could increase the contract 
price.

[[Page 248]]



               Table 29-1--Designated Commanding Officers               
------------------------------------------------------------------------
                                                Designated commanding   
              Country or area                          officer          
------------------------------------------------------------------------
Australia.................................  Commander in Chief, Pacific 
                                             Representative, Australia. 
Azores....................................  Commander, U.S. Forces,     
                                             Azores.                    
Bahrain...................................  Commander in Chief, U.S.    
                                             Naval Forces, Europe.      
Belgium...................................  Commander in Chief, U.S.    
                                             Army, Europe.              
Bermuda...................................  Commanding Officer, U.S.    
                                             Naval Air Station, Bermuda.
Canada....................................  Commander, Space Command.   
Caribbean Islands (including Bahamas).....  Commander, Antilles Defense 
                                             Command.                   
Denmark...................................  Commander in Chief, U.S. Air
                                             Forces, Europe.            
Ethiopia..................................  Commander in Chief, U.S.    
                                             Army, Europe.              
France....................................  Commander in Chief, U.S.    
                                             Army, Europe.              
Germany...................................  Commander in Chief, U.S.    
                                             Army, Europe.              
Greece....................................  Commander in Chief, U.S. Air
                                             Forces, Europe.            
Greenland.................................  Commander, Space Command.   
Iceland...................................  Commander, Iceland Defense  
                                             Force.                     
Iran......................................  Commander in Chief, U.S.    
                                             Army, Europe.              
Italy.....................................  Commander in Chief, U.S.    
                                             Naval Forces, Europe.      
Japan.....................................  Commander, U.S. Forces,     
                                             Japan.                     
Korea.....................................  Commander, U.S. Forces,     
                                             Korea.                     
Luxembourg................................  Commander in Chief, U.S.    
                                             Army, Europe.              
Morocco...................................  Commander in Chief, U.S.    
                                             Naval Forces, Europe.      
Netherlands...............................  Commander in Chief, U.S. Air
                                             Forces, Europe.            
New Zealand...............................  Commander, U.S. Naval       
                                             Support Forces, Antarctica.
Norway....................................  Commander in Chief, U.S. Air
                                             Forces, Europe.            
Philippines...............................  Commander in Chief, Pacific 
                                             Representative,            
                                             Philippines.               
Portugal..................................  Commander in Chief, U.S.    
                                             Naval Forces, Europe.      
Spain.....................................  Commander in Chief, U.S. Air
                                             Forces, Europe.            
Taiwan....................................  Commander, U.S. Military    
                                             Assistance Command,        
                                             Thailand.                  
Turkey....................................  Commander in Chief, U.S. Air
                                             Forces, Europe.            
United Kingdom............................  Commander in Chief, U.S. Air
                                             Forces, Europe.            
------------------------------------------------------------------------


[56 FR 36405, July 31, 1991]



PART 230--COST ACCOUNTING STANDARDS--Table of Contents




Sec.

    Subpart 230.70--Facilities Capital Employed for Facilities in Use

230.7000  Contract facilities capital estimates.
230.7001  Use of DD Form 1861.
230.7001-1  Purpose.
230.7001-2  Completion instructions.
230.7002  Preaward facilities capital applications.
230.7003  Postaward facilities capital applications.
230.7003-1  Interim billings based on costs incurred.
230.7003-2  Final settlement.
230.7004  Administrative procedures.
230.7004-1  Forms CASB-CMF.
230.7004-2  DD Form 1861.

    Subpart 230.71--Facilities Capital Employed for Facilities Under 
                              Construction

230.7100  Definitions.
230.7101  Calculations.
230.7101-1  Cost of money.
230.7101-2  Representative investment.
230.7102  Determining imputed cost of money.
230.7103  Preaward capital employed application.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36406, July 31, 1991, unless otherwise noted.
Subpart 230.70--Facilities Capital Employed for Facilities in Use



Sec. 230.7000  Contract facilities capital estimates.

    (a) The contracting officer will estimate the facilities capital 
cost of money and capital employed using--
    (1) An analysis of the appropriate Forms CASB-CMF and cost of money 
factors; and
    (2) DD Form 1861, Contract Facilities Capital Cost of Money.
230.7001  Use of DD Form 1861.



Sec. 230.7001-1  Purpose.

    The DD Form 1861 provides a means of linking the Form CASB-CMF and 
DD Form 1547, Record of Weighted Guidelines Application. It--
    (a) Enables the contracting officer to differentiate profit 
objectives for various types of assets (land, buildings, equipment). The 
procedure is similar to applying overhead rates to appropriate overhead 
allocation bases to determine contract overhead costs.
    (b) Is designed to record and compute the contract facilities 
capital cost of money and capital employed which is carried forward to 
DD Form 1547.



Sec. 230.7001-2  Completion instructions.

    Complete a DD Form 1861 only after evaluating the contractor's cost 
proposal, establishing cost of money factors, and establishing a 
prenegotiation

[[Page 249]]

objective on cost. Complete the form as follows:
    (a) List overhead pools and direct-charging service centers (if 
used) in the same structure as they appear on the contractor's cost 
proposal and Form CASB-CMF. The structure and allocation base units-of-
measure must be compatible on all three displays.
    (b) Extract appropriate contract overhead allocation base data, by 
year, from the evaluated cost breakdown or prenegotiation cost objective 
and list against each overhead pool and direct-charging service center.
    (c) Multiply each allocation base by its corresponding cost of money 
factor to get the facilities capital cost of money estimated to be 
incurred each year. The sum of these products represents the estimated 
contract facilities capital cost of money for the year's effort.
    (d) Total contract facilities cost of money is the sum of the yearly 
amounts.
    (e) Since the facilities capital cost of money factors reflect the 
applicable cost of money rate in Column 1 of Form CASB-CMF, divide the 
contract cost of money by that same rate to determine the contract 
facilities capital employed.



Sec. 230.7002  Preaward facilities capital applications.

    To establish cost and price objectives, apply the facilities capital 
cost of money and capital employed, as determined under 230.7000, as 
follows:
    (a) Cost of Money--(1) Cost Objective. Use the imputed facilities 
capital cost of money, with normal, booked costs, to establish a cost 
objective or the target cost when structuring an incentive type 
contract. Do not adjust target costs established at the outset even 
though actual cost of money rates become available during the period of 
contract performance.
    (2) Profit Objective. When measuring the contractor's effort for the 
purpose of establishing a prenegotiation profit objective, restrict the 
cost base to normal, booked costs. Do not include cost of money as part 
of the cost base.
    (b) Facilities Capital Employed. Assess and weight the profit 
objective or risk associated with facilities capital employed in 
accordance with the profit guidelines at 215.970-1(c).
230.7003  Postaward facilities capital applications.



Sec. 230.7003-1  Interim billings based on costs incurred.

    (a) The contractor may include contract facilities capital cost of 
money in cost reimbursement and progress payment invoices. To determine 
the amount that qualifies as cost incurred, multiply the incurred 
portions of the overhead pool allocation bases by the latest available 
cost of money factors. These cost of money calculations are interim 
estimates subject to adjustment.
    (b) As actual cost of money factors under CAS 414 and FAR 31.205-10 
are finalized, use the new factors to calculate contract facilities cost 
of money for the next accounting period.



Sec. 230.7003-2  Final settlement.

    (a) Contract facilities capital cost of money for final cost 
determination or repricing is based on each year's final cost of money 
factors determined under CAS 414 and supported by separate Forms CASB-
CMF.
    (b) Separately compute contract facilities cost of money in a manner 
similar to yearly final overhead rates. Also like overhead costs, 
include in the final settlement an adjustment from interim to final 
contract cost of money. Do not, however, adjust estimated or target 
cost.
230.7004  Administrative procedures.



Sec. 230.7004-1  Forms CASB-CMF

    (a) Forms CASB-CMF are normally initiated by the contractor under 
the same circumstances as Forward Pricing Rate Agreements (see FAR 
15.809) and evaluated as complementary documents and procedures.
    (b) Separate forms are required for each prospective cost accounting 
period of contract performance.
    (c) The contractor may submit annually or with individual contract 
price proposals, as agreed with the administrative contracting officer 
(ACO).
    (d) The contractor must submit a final form under CAS 414 as soon as

[[Page 250]]

possible after the end of each accounting period, together with a 
proposal for actual overhead costs and rates.



Sec. 230.7004-2  DD Form 1861.

    (a) The contracting officer may ask the ACO to complete the forms as 
part of field pricing support.
    (b) When the Weighted Guidelines Method is used, completion of the 
DD Form 1861 requires information not included on the Form CASB-CMF, 
i.e., distribution percentages of land, building, and equipment for the 
business unit performing the contract. Choose the most practical method 
for obtaining this information, for example--
    (1) Contract administration offices could obtain the information 
through the process used to establish factors for facilities capital 
cost of money or could establish advance agreements on distribution 
percentages for inclusion in field pricing reports;
    (2) The corporate ACO could obtain distribution percentages; or
    (3) The contracting officer could request the information through a 
solicitation provision.



    Subpart 230.71--Facilities Capital Employed for Facilities Under 
                              Construction



Sec. 230.7100  Definitions.

    (a) Intangible capital asset is an asset that has no physical 
substance, has more than minimal value, and is expected to be held by an 
enterprise for continued use or possession beyond the current accounting 
period for the benefit it yields.
    (b) Tangible capital asset is an asset that has physical substance, 
more than minimal value, and is expected to be held by an enterprise for 
continued use or possession beyond the current accounting period for the 
service it yields.
    (c) Cost of money rate is either--
    (1) The interest rate determined by the Secretary of the Treasury 
under Public Law 92-41 (85 Stat. 97); or
    (2) The time-weighted average of the interest rate for each cost 
accounting period during which the asset is being constructed, 
fabricated, or developed.
    (d) Representative investment is the calculated amount considered 
invested by the contractor during the cost accounting period to 
construct, fabricate, or develop the asset.
230.7101  Calculations.



Sec. 230.7101-1  Cost of money.

    (a) The interest rate in 230.7100(c)(1) is established semi-annually 
and is published in the Federal Register during the fourth week of 
December and June.
    (b) To calculate the time-weighted average interest rate--
    (1) Multiply the various rates in effect during the months of 
construction by the number of months each rate was in effect; and
    (2) Divide the sum of the products by the total number of months in 
which the rates were experienced.



Sec. 230.7101-2  Representative investment.

    (a) The calculation of the representative investment requires 
consideration of the rate or expenditure pattern of the costs to 
construct, fabricate, or develop a capital asset.
    (b) If a majority of the costs were incurred toward the beginning, 
middle, or end of the cost accounting period, the contractor shall 
either--
    (1) Determine a representative investment amount for the cost 
accounting period by calculating the average of the month-end balances 
for that cost accounting period; or
    (2) Treat month-end balances as individual representative investment 
amounts.
    (c) If the costs were incurred in a fairly uniform expenditure 
pattern throughout the construction, fabrication, or development period, 
the contractor may--
    (1) Determine a representative investment amount for the cost 
accounting period by averaging the beginning and ending balances of the 
construction, fabrication, or development cost account for the cost 
accounting period; or
    (2) Treat month-end balances as individual representative investment 
amounts.

[[Page 251]]



Sec. 230.7102  Determining imputed cost of money.

    (a) Determine the imputed cost of money for an asset under 
construction, fabrication, or development by applying a cost of money 
rate (see 230.7101-1) to the representative investment amount (see 
230.7101-2).
    (1) When a representative investment amount is determined for a cost 
accounting period in accordance with 230.7101-2(b)(1) or 230.7101-
2(c)(1), the cost of money will be the time-weighted average rate.
    (2) When a monthly representative investment amount is used in 
accordance with 230.7101-2(b)(2) or 230.7101-2(c)(2), the cost of money 
will be the interest rate in effect each month. (Under this method, the 
cost of money is determined monthly and the total for the cost 
accounting period is the sum of the monthly amounts.)
    (b) The imputed cost of money will be capitalized only once in any 
cost accounting period, either at the end of the period or at the end of 
the construction, fabrication, or development period, whichever comes 
first.
    (c) When the construction of an asset takes more than one cost 
accounting period, the cost of money capitalized for the first cost 
accounting period will be included in determining the representative 
investment amount for any future cost accounting periods.



Sec. 230.7103  Preaward capital employed application.

    An offset to the profit objectives as set forth in FAR Subpart 15.9 
is not required for CAS 417 cost of money.



PART 231--CONTRACT COST PRINCIPLES AND PROCEDURES--Table of Contents




Sec.

                      Subpart 231.1--Applicability

231.100  Scope of subpart.
231.100-70  Contract clause.

         Subpart 231.2--Contracts With Commercial Organizations

231.205  Selected costs.
231.205-6  Compensation for personal services.
231.205-10  Cost of money.
231.205-18  Independent research and development and bid and proposal 
          costs.
231.205-22  Legislative lobbying costs.
231.205-70  External restructuring costs.
231.205-71  Defense capability preservation agreements.

         Subpart 231.3--Contracts With Educational Institutions

231.303  Requirements.

  Subpart 231.6--Contracts With State, Local, and Federally Recognized 
                        Indian Tribal Governments

231.603  Requirements.

          Subpart 231.7--Contracts With Nonprofit Organizations

231.703  Requirements.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36408, July 31, 1991, unless otherwise noted.



                      Subpart 231.1--Applicability

231.100  Scope of subpart.



Sec. Sec. 231.100-70  Contract clause.

    Use the clause at 252.231-7000, Supplemental Cost Principles, in all 
solicitations and contracts which are subject to the principles and 
procedures described in FAR subpart 31.1, 31.2, 31.6, or 31.7.

[59 FR 27672, May 27, 1994]



         Subpart 231.2--Contracts With Commercial Organizations

231.205  Selected costs.



Sec. 231.205-6  Compensation for personal services.

    (a)(2)(i) Costs for individual compensation in excess of $250,000 
per year are unallowable under DOD contracts that are awarded after 
April 15, 1995, and are funded by fiscal year 1995 appropriations 
(Section 8117 of Pub. L. 103-335).
    (ii) Costs for individual compensation in excess of $200,000 per 
year are unallowable under DOD contracts that are awarded after July 1, 
1996, and are funded by fiscal year 1996 appropriations (Section 8086 of 
Pub. L. 104-61).

[[Page 252]]

    (f)(1) Costs for bonuses or other payments in excess of the normal 
salary paid by the contractor to an employee, that are part of 
restructuring costs associated with a business combination, are 
unallowable under DoD contracts funded by fiscal year 1996 
appropriations (Section 8122 of Pub. L. 104-61). This limitation does 
not apply to severance payments or early retirement incentive payments. 
(See 231.205-70(b) for the definitions of ``business combination'' and 
``restructuring costs.'')

[57 FR 53600, Nov. 12, 1992, as amended at 58 FR 28469, May 13, 1993; 60 
FR 2331, Jan. 9, 1995; 60 FR 61598, Nov. 30, 1995; 61 FR 7077, Feb. 26, 
1996; 61 FR 36306, July 10, 1996; 61 FR 50454, Sept. 26, 1996]



Sec. 231.205-10  Cost of money.

    The contractor also must comply with subpart 230.70 and maintain 
records to demonstrate compliance.



Sec. 231.205-18  Independent research and development and bid and proposal costs.

    (c)(1)(i)(C)(1) Total incurred IR&D/B&P costs, including total IR&D/
B&P ceiling amounts which are negotiated pursuant to FAR 31.205-
18(c)(1), are fully allocable to all final cost objectives of the 
contractor. The amount of IR&D/B&P costs allowable under contracts which 
are subject to advance agreements negotiated by DoD shall not exceed the 
lesser of--
    (i) Such contracts' allocable share of incurred IR&D/B&P costs;
    (ii) Such contracts' allocable share of the total IR&D/B&P ceiling; 
or
    (iii) The amount of incurred IR&D/B&P costs for projects having 
potential interest to DoD.
    (2) Allowable IR&D/B&P costs are limited to those for projects which 
are of potential interest to DoD, including activities that--
    (i) Strengthen the defense industrial and technology base of the 
United States;
    (ii) Enhance the industrial competitiveness of the United States;
    (iii) Promote the development of technologies identified as critical 
in the plan required under 10 U.S.C. 2508;
    (iv) Increase the development of technologies useful for both the 
private commercial sector and the public sector; or
    (v) Develop efficient and effective technologies for achieving such 
environmental benefits as improved environmental data gathering, 
environmental cleanup and restoration, pollution-reduction in 
manufacturing, environmental conservation, and environmentally safe 
management of facilities.
    (3) The contracting officer will--
    (i) Determine whether IR&D/B&P projects are of potential interest to 
DoD; and
    (ii) Provide the results of the determination to the contractor.
    (4) See 225.7303 for additional allowability provisions affecting 
foreign military sale contracts.
    (2) Departments/agencies shall not supplement this regulation in any 
way that limits IR&D/B&P cost allowability. See 225.7303-2 for 
allowability exceptions for foreign military sales contracts.
    (i) In addition to the limitations in FAR 31.205-18(c)(2)(i), for 
major contractors--
    (1) The amount of IR&D/B&P costs allowability under DoD contracts 
shall not exceed the lesser of--
    (i) Such contracts' allocable share of incurred IR&D/B&P costs;
    (ii) Such contracts' allocable share of the contractor's total 
maximum allowable amount; or
    (iii) The amount of incurred IR&D/B&P costs for projects having 
potential interest to DoD.
    (2) Allowable IR&D/B&P costs are limited to those for projects which 
are of potential interest to the DoD, including activities intended to 
accomplish any of the following--
    (i) Enable superior performance of future U.S. weapon systems and 
components;
    (ii) Reduce acquisition costs and life-cycle costs of military 
systems;
    (iii) Strengthen the defense industrial and technology base of the 
United States;
    (iv) Enhance the industrial competitiveness of the United States;
    (v) Promote the development of technologies identified as critical 
under 10 U.S.C. 2522;

[[Page 253]]

    (vi) Increase the development and promotion of efficient and 
effective applications of dual-use technologies;
    (vii) Provide efficient and effective technologies for achieving 
such environmental benefits as: improved environmental data gathering, 
environmental cleanup and restoration, pollution reduction in 
manufacturing, environmental conservation, and environmentally safe 
management of facilities.
    (ii) The cognizant contract administration office shall furnish 
contractors with guidance on financial information needed to support 
IR&D/B&P costs and on technical information needed from major 
contractors to support the potential interest to DoD determination (see 
also 242.771-3(a)).
    (iii) The total maximum allowable amount limitation may be waived at 
a level above the contracting officer. A waiver may be appropriate for 
contractors whose significant growth in sales or IR&D/B&P spending 
justify higher levels of reimbursement.

[56 FR 67217, Dec. 30, 1991, as amended at 57 FR 53600, Nov. 12, 1992; 
59 FR 27672, May 27, 1994]



Sec. 231.205-22  Legislative lobbying costs.

    (a) Preparing any material, report, list, or analysis on the actual 
or projected economic or employment impact in a particular State or 
congressional district of an acquisition program for which all research, 
development, testing and evaluation has not been completed (Section 9048 
of Pub. L. 102-396).

[58 FR 28469, May 13, 1993]



Sec. 231.205-70  External restructuring costs.

    (a) Scope. This subsection prescribes policies and procedures for 
allowing contractor external restructuring costs when net savings would 
result for DoD. This subsection also implements Section 818 of the 
National Defense Authorization Act for Fiscal Year 1995 (Pub. L. 103-
337).
    (b) Definitions. As used in this subsection:
    (1) Business combination means a transaction whereby assets or 
operations of two or more companies not previously under common 
ownership or control are combined, whether by merger, acquisition, or 
sale/purchase of assets.
    (2) External restructuring activities means restructuring activities 
occurring after a business combination that affect the operations of 
companies not previously under common ownership or control. They do not 
include restructuring activities occurring after a business combination 
that affect the operations of only one of the companies not previously 
under common ownership or control, or, when there has been no business 
combination, restructuring activities undertaken within one company. 
External restructuring activities are a direct outgrowth of a business 
combination. They normally will be initiated within 3 years of the 
business combination.
    (3) Restructuring activities means nonroutine, nonrecurring, or 
extraordinary activities to combine facilities, operations, or 
workforce, in order to eliminate redundant capabilities, improve future 
operations, and reduce overall costs. Restructuring activities do not 
include routine or ongoing repositionings and redeployments of a 
contractor's productive facilities or workforce (e.g., normal plant 
rearrangement or employee relocation), nor do they include other routine 
or ordinary activities charged as indirect costs that would otherwise 
have been incurred (e.g., planning and analysis, contract administration 
and oversight, or recurring financial and administrative support).
    (4) Restructuring costs means the costs, including both direct and 
indirect, of restructuring activities. Restructuring costs that may be 
allowed include, but are not limited to, severance pay for employees, 
early retirement incentive payments for employees, employee retraining 
costs, relocation expense for retained employees, and relocation and 
rearrangement of plant and equipment. For purposes of this definition, 
if restructuring costs associated with external restructuring activities 
allocated to DoD contracts are less than $2.5 million, the costs shall 
not be subject to the audit, review, and certification requirements of 
231.205-70(c)(1); instead, the normal rules for determining cost 
allowability

[[Page 254]]

in accordance with FAR Part 31 shall apply.
    (5) Restructuring savings means cost reductions, including both 
direct and indirect cost reductions, that result from restructuring 
activities. Reassignments of cost to future periods are not 
restructuring savings.
    (c) Limitations on cost allowability. (1) Restructuring costs 
associated with external restructuring activities shall not be allowed 
unless--
    (i) Such costs are allowable in accordance with FAR Part 31 and 
DFARS Part 231;
    (ii) An audit of projected restructuring costs and restructuring 
savings is performed;
    (iii) The cognizant administrative contracting officer (ACO) reviews 
the audit report and the projected costs and projected savings, 
determines that overall reduced costs should result for DoD, and 
negotiates an advance agreement in accordance with 231.205-70(d)(8); and
    (iv) A certification is made by the Under Secretary of Defense 
(Acquisition & Technology), his Principal Deputy or designee (in all 
cases, an individual appointed by the President and confirmed by the 
Senate), that projections of future restructuring savings resulting for 
DoD from the business combination are based on audited cost data and 
should result in overall reduced costs for DoD.
    (2) The audit, review, and certification required by 231.205-
70(c)(1) shall not apply to any business combination for which payments 
for restructuring costs were made before August 15, 1994, or for which 
the cognizant ACO executed an advance agreement establishing cost 
ceilings based on audit/negotiation of detailed cost proposals for 
individual restructuring projects before August 15, 1994.
    (d) Procedures and ACO responsibilities. As soon as it is known that 
the contractor will incur restructuring costs for external restructuring 
activities, the cognizant ACO shall:
    (1) Promptly execute a novation agreement, if one is required, in 
accordance with FAR subpart 42.12 and DFARS subpart 242.12 and include 
the provision at DFARS 242.1204(e).
    (2) Direct the contractor to segregate restructuring costs and to 
suspend these amounts from any billings, final contract price 
settlements, and overhead settlements until the certification in 
231.205-70(c)(1)(iv) is obtained.
    (3) Require the contractor to submit an overall plan of 
restructuring activities and an adequately supported proposal for 
planned restructuring projects. The proposal must include a breakout by 
year by cost element, showing the projected restructuring costs and 
projected restructuring savings.
    (4) Notify major buying activities of contractor restructuring 
actions and inform them about any potential monetary impacts on major 
weapons programs, when known.
    (5) Upon receipt of the contractor's proposal, as soon as 
practicable, adjust forward pricing rates to reflect the impact of 
projected restructuring savings. If restructuring costs are included in 
forward pricing rates prior to execution of an advance agreement in 
accordance with 231.205-70(d)(8), the contracting officer shall include 
a repricing clause in each fixed-price action that is priced based on 
the rates. The repricing clause must provide for a downward price 
adjustment to remove restructuring costs if the certification required 
by 231.205-70(c)(1)(iv) is not obtained.
    (6) Upon receipt of the contractor's proposal, immediately request 
an audit review of the contractor's proposal.
    (7) Upon receipt of the audit report, determine if restructuring 
savings will exceed restructuring costs on a present value basis.
    (8) Negotiate an advance agreement with the contractor setting 
forth, at a minimum, a cumulative cost ceiling for restructuring 
projects and, when necessary, a cost amortization schedule. The cost may 
not exceed the amount of projected restructuring savings on a present 
value basis. The advance agreement shall not be executed until the 
certification required by 231.205-70(c)(1)(iv) is obtained.
    (9) Submit to the Director of Defense Procurement, Office of the 
Under Secretary of Defense (Acquisition & Technology), ATTN: 
OUSD(A&T)DP/CPF, a recommendation for certification of

[[Page 255]]

net benefit. Include the information described in 231.205-70(e).
    (e) Information needed to obtain certification of net benefit. (1) 
The novation agreement (if one is required).
    (2) The contractor's restructuring proposal.
    (3) The proposed advance agreement.
    (4) The audit report.
    (5) Any other pertinent information.
    (6) The cognizant ACO's recommendation for certification. This 
recommendation must clearly indicate that contractor projections of 
future cost savings resulting for DoD from the business combination are 
based on audited cost data and should result in overall reduced costs 
for the Department.

[61 FR 16881, Apr. 18, 1996; 61 FR 49531, Sept. 20, 1996, as amended at 
61 FR 50454, Sept. 26, 1996]



Sec. 231.205-71  Defense capability preservation agreements.

    (a) Scope and authority. Where it would facilitate the achievement 
of the policy objectives relating to defense reinvestment, 
diversification, and conversion set forth in 10 U.S.C. 2501(b), DoD may 
enter into a ``defense capability preservation agreement'' with a 
contractor. As authorized by Section 808 of the National Defense 
Authorization Act for Fiscal Year 1996 (Public Law 104-106), such an 
agreement would permit the contractor to claim certain indirect costs 
attributable to its private sector work as allowable costs on its 
defense contracts.
    (b) Procedure. A contractor may submit a request for such an 
agreement, together with appropriate justification, through the Deputy 
Under Secretary of Defense for Industrial Affairs and Installations, to 
the Under Secretary of Defense for Acquisition and Technology, who has 
exclusive approval or disapproval authority. The contractor should also 
provide an informational copy of any such request to the cognizant 
administrative contracting officer.

[61 FR 21975, May 13, 1996, as amended at 61 FR 50454, Sept. 26, 1996]



         Subpart 231.3--Contracts With Educational Institutions



Sec. 231.303  Requirements.

    (1) Pursuant to section 841 of the National Defense Authorization 
Act for Fiscal Year 1994 (Pub. L. 103-160), no limitation may be placed 
on the reimbursement of otherwise allowable indirect costs incurred by 
an institution of higher education under a DoD contract awarded on or 
after November 30, 1993, unless that same limitation is applied 
uniformly to all other organizations performing similar work under DoD 
contracts. The 26 percent limitation imposed on administrative indirect 
costs by OMB Circular No. A-21 shall not be applied to DoD contracts 
awarded on or after November 30, 1993, to institutions of higher 
education because the same limitation is not applied to other 
organizations performing similar work.
    (2) The cognizant administrative contracting officer may waive the 
prohibition in 231.303(1) if the governing body of the institution of 
higher education requests the waiver to simplify the institution's 
overall management of DoD cost reimbursements under DoD contracts.
    (3) The limitations on allowable individual compensation at 231.205-
6(a)(2) (i) and (ii) also apply to this subpart.

[59 FR 26144, May 19, 1994, as amended at 60 FR 2331, Jan. 9, 1995; 61 
FR 36306, July 10, 1996]

[[Page 256]]



  Subpart 231.6--Contracts With State, Local, and Federally Recognized 
                        Indian Tribal Governments



Sec. 231.603  Requirements.

    The limitations on allowable individual compensation at 231.205-
6(a)(2) (i) and (ii) also apply to this subpart.

[61 FR 36306, July 10, 1996]



          Subpart 231.7--Contracts With Nonprofit Organizations



Sec. 231.703  Requirements.

    The limitations on allowable individual compensation at 231.205-
6(a)(2) (i) and (ii) also apply to this subpart.

[61 FR 36306, July 10, 1996]



PART 232--CONTRACT FINANCING--Table of Contents




Sec.

                         Subpart 232.1--General

232.102  Description of contract financing methods.
232.102-70  Provisional delivery payments.
232.108  Financial consultation.
232.111  Contract clauses.
232.111-70  Additional clause.
232.170  Responsibilities.
232.171  Contract Finance Committee.
232.172  Financial responsibility of contractors.
232.172-1  Required financial reviews.
232.172-2  Appropriate information.
232.172-3  Cash flow forecasts.
232.173  Reduction or suspension of contract payments upon finding of 
          fraud.
232.173-1  General.
232.173-2  Definitions.
232.173-3  Responsibilities.
232.173-4  Procedures.
232.173-5  Reporting.

          Subpart 232.3--Loan Guarantees for Defense Production

232.302  Authority.

                     Subpart 232.4--Advance Payments

232.404  Exclusions.
232.409  Contracting officer action.
232.409-1  Recommendation for approval.
232.410  Findings, determination, and authorization.
232.412  Contract clause.
232.412-70  Additional clauses.
232.470  Advance payment pool.

             Subpart 232.5--Progress Payments Based on Costs

232.501  General.
232.501-1  Customary progress payment rates.
232.501-2  Unusual progress payments.
232.501-3  Contract price.
232.502  Preaward matters.
232.502-1  Use of customary progress payments.
232.502-1-70  Customary foreign military sale progress payments.
232.502-1-71  Customary flexible progress payments.
232.502-4  Contract clauses.
232.502-4-70  Additional clauses.
232.503  Postaward matters.
232.503-6  Suspension or reduction of payments.
232.503-15  Application of Government title terms.

                      Subpart 232.6--Contract Debts

232.605  Responsibilities and cooperation among Government officials.
232.606  Debt determination and collection.
232.610  Demand for payment of contract debt.
232.616  Compromise actions.
232.617  Contract clause.
232.670  Transfer of responsibility for debt collection.
232.671  Bankruptcy reporting.

                     Subpart 232.7--Contract Funding

232.702  Policy.
232.703  Contract funding requirements.
232.703-1  General.
232.703-70  Military construction appropriations act restriction.
232.704  Limitation of cost or funds.
232.704-70  Incrementally funded fixed-price contracts.
232.705  Contract clauses.
232.705-70  Clause for limitation of Government's obligation.

                   Subpart 232.8--Assignment of Claims

232.803  Policies.
232.805  Procedure.
232.806  Contract clause.

                      Subpart 232.9--Prompt Payment

232.903  Policy.
232.905  Invoice payments.
232.906  Contract financing payments.
232.970  Payment of subcontractors.
232.970-1  Subcontractor assertions of nonpayment.
232.970-2  Subcontractor requests for information.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.


[[Page 257]]


    Source: 56 FR 36409, July 31, 1991, unless otherwise noted.



                         Subpart 232.1--General



Sec. 232.102  Description of contract financing methods.

    (e)(2) Progress payments based on percentage or stage of completion 
are authorized only for contracts for construction (as defined in FAR 
36.102), shipbuilding, and ship conversion, alteration, or repair.



Sec. 232.102-70  Provisional delivery payments.

    (a) The contracting officer may establish provisional delivery 
payments to pay contractors for the costs of supplies and services 
delivered to and accepted by the Government under the following contract 
actions, if undefinitized--
    (1) Letter contracts contemplating a fixed-price contract;
    (2) Orders under basic ordering agreements;
    (3) Spares provisioning documents annexed to contracts;
    (4) Unpriced equitable adjustments on fixed-price contracts; and
    (5) Orders under indefinite delivery contracts.
    (b) Provisional delivery payments shall be--
    (1) Used sparingly;
    (2) Priced conservatively; and
    (3) Reduced by liquidating previous progress payments in accordance 
with the Progress Payments clause.
    (c) Provisional delivery payments shall not--
    (1) Include profit;
    (2) Exceed funds obligated for the undefinitized contract action; or
    (3) Influence the definitized contract price.



Sec. 232.108  Financial consultation.

    (1) Department/agency contract financing offices are--
    (i) Army--Office, Assistant Secretary of the Army (Financial 
Management);
    (ii) Navy--Executive Comptroller for Banking, Cash Management, 
Contract Financing and Compensation Systems, Assistant Comptroller of 
the Navy for Financial Management;
    (iii) Air Force--Chief of Banking and Contract Financing, 
Directorate of Accounting, Air Force Accounting and Finance Center;
    (iv) Defense agencies--Office of the agency comptroller.
    (2) The Under or Assistant Secretary, or other designated official, 
responsible for the comptroller function within the department or agency 
is the focal point for financing matters at the departmental/agency 
headquarters. Departments/agencies may establish contract financing 
offices at operational levels.
    (3) Contract financing offices should participate in--
    (i) Developing regulations for contract financing;
    (ii) Developing contract provisions for contract financing; and
    (iii) Resolving specific cases which involve unusual contract 
financing requirements.

[56 FR 36409, July 31, 1991, as amended at 60 FR 29499, June 5, 1995]
232.111  Contract clauses.



Sec. 232.111-70  Additional clause.

    Use the clause at 252.232-7006, Reduction or Suspension of Contract 
Payments Upon Finding of Fraud, in all solicitations and contracts.

[57 FR 3358, Jan. 29, 1992]



Sec. 232.170  Responsibilities.

    (a) The Director of Defense Procurement, Office of the Under 
Secretary of Defense (Acquisition & Technology), USD(A&T)DP, is 
responsible for ensuring uniform administration of DoD contract 
financing, including DoD contract financing policies and important 
related procedures.
    (b) The departments and agencies are responsible for their day-to-
day contract financing operations. Refer specific cases involving 
financing policy or important procedural issues to USD(A&T)DP for 
consideration (see also 201.24 for deviation request and approval 
procedures).

[56 FR 36409, July 31, 1991, as amended at 60 FR 61598, Nov. 30, 1995]



Sec. 232.171  Contract Finance Committee.

    (a) The Contract Finance Committee consists of--

[[Page 258]]

    (1) A representative of the USD(A&T)DP, serving as chairman;
    (2) A representative of the Comptroller of the Department of 
Defense; and
    (3) Two representatives of each military department and the Defense 
Logistics Agency (one representing contracting and one representing the 
contract finance office).
    (b) The Committee--
    (1) Advises and assists the USD(A&T)DP in ensuring proper and 
uniform application of policies, procedures, and forms;
    (2) Is responsible for formulating, revising, and promulgating 
uniform contract financing regulations;
    (3) May recommend to the Secretary of Defense through the USD(A&T)DP 
further policy directives on financing; and
    (4) Meets at the request of the Chair or a member.

[56 FR 36409, July 31, 1991, as amended at 60 FR 61598, Nov. 30, 1995]



Sec. 232.172  Financial responsibility of contractors.

    Use the policies and procedures in this section in determining the 
financial capability of current or prospective contractors.



Sec. 232.172-1  Required financial reviews.

    The contracting officer shall perform a financial review when the 
contracting officer does not otherwise have sufficient information to 
make a positive determination of financial responsibility. In addition, 
the contracting officer shall consider performing a financial review--
    (a) Prior to award of a contract, when--
    (1) The contractor is on a list requiring preaward clearance or 
other special clearance before award;
    (2) The contractor is listed on the Consolidated List of Contractors 
Indebted to the Government (Hold-Up List), or is otherwise known to be 
indebted to the Government;
    (3) The contractor may receive Government assets such as contract 
financing payments or Government property;
    (4) The contractor is experiencing performance difficulties on other 
work; or
    (5) The contractor is a new company or a new supplier of the item.
    (b) At periodic intervals after award of a contract, when--
    (1) Any of the conditions of paragraphs (a) (2) through (5) of this 
subsection are applicable; or
    (2) There is any other reason to question the contractor's ability 
to finance performance and completion of the contract.



Sec. 232.172-2  Appropriate information.

    (a) The contracting officer shall obtain whatever type and depth of 
financial and other information is required to establish a contractor's 
financial capability or disclose a contractor's financial condition. 
While the contracting officer should not request information that is not 
necessary for the protection of the Government's interests, the 
contracting officer must insist upon obtaining that information which is 
necessary. The unwillingness or inability of a contractor to present 
reasonably requested information in a timely manner, especially 
information that a prudent business person would be expected to have and 
use in the professional management of a business, may be a material fact 
in the determination of the contractor's responsibility and prospects 
for contract completion.
    (b) Obtain the following information to the extent required to 
protect the Government's interest. In addition, if the contracting 
officer concludes that information not listed below is required to 
comply with 232.172-1, that information should be requested. The 
information must be for the person(s) who are legally liable for 
contract performance. If the contractor is not a corporation, obtain the 
required information for each individual/joint venturer/partner--
    (1) Balance sheet and income statement--
    (i) For the current fiscal year (interim);
    (ii) For the most recent fiscal year and preferably, for the two 
preceding fiscal years. These should be certified by an independent 
public accountant or by an appropriate officer of the firm; and

[[Page 259]]

    (iii) Forecasted for each fiscal year for the remainder of the 
period of contract performance;
    (2) Summary history of the contractor and its principal managers, 
disclosing any previous insolvencies--corporate or personal, and 
describing its products or services;
    (3) Statement of all affiliations disclosing--
    (i) Material financial interests of the contractor;
    (ii) Material financial interests in the contractor;
    (iii) Material affiliations of owners, officers, directors, major 
stockholders; and
    (iv) The major stockholders if the contractor is not a widely-
traded, publicly-held corporation;
    (4) Statement of all forms of compensation to each officer, manager, 
partner, joint venturer, or proprietor, as appropriate--
    (i) Planned for the current year;
    (ii) Paid during the past 2 years; and
    (iii) Deferred to future periods.
    (5) Business base and forecast which--
    (i) Shows, by significant markets, existing contracts and 
outstanding offers, including those under negotiation; and
    (ii) Is reconcilable to indirect cost rate projections.
    (6) Cash forecast for the duration of the contract (see 232.172-3).
    (7) Financing arrangement information which discloses--
    (i) Availability of cash to finance contract performance;
    (ii) Contractor's exposure to financial crisis from creditor's 
demands;
    (iii) Degree to which credit security provisions could conflict with 
Government title terms under contract financing;
    (iv) Clearly stated confirmations of credit with no unacceptable 
qualifications; and
    (v) Unambiguous written agreement by a creditor if credit 
arrangements include deferred trade payments or creditor subordinations/
repayment suspensions.
    (8) Statement of all state, local, and Federal tax accounts, 
including special mandatory contributions, e.g., environmental 
superfund.
    (9) Description and explanation of the financial effect of issues 
such as--
    (i) Leases, deferred purchase arrangements, patent or royalty 
arrangements;
    (ii) Insurance, when relevant to the contract;
    (iii) Contemplated capital expenditures, changes in equity, or 
contractor debt load;
    (iv) Pending claims either by or against the contractor;
    (v) Contingent liabilities such as guarantees, litigation, 
environmental, or product liabilities;
    (vi) Validity of accounts receivable and actual value of inventory, 
as assets; and
    (vii) Status and aging of accounts payable.
    (10) Significant ratios such as--
    (i) Inventory to annual sales;
    (ii) Inventory to current assets;
    (iii) Liquid assets to current assets;
    (iv) Liquid assets to current liabilities;
    (v) Current assets to current liabilities; and
    (vi) Net worth to net debt.



Sec. 232.172-3  Cash flow forecasts.

    (a) A contractor must be able to sustain a sufficient cash flow to 
perform the contract. Whenever there is a doubt about the sufficiency of 
a contractor's cash flow, the contracting officer should require the 
contractor to submit a cash flow forecast covering the duration of the 
contract.
    (b) A contractor's inability or refusal to prepare and provide cash 
flow forecasts or to reconcile actual cash flow with previous forecasts 
is a strong indicator of serious managerial deficiencies or potential 
contract cost or performance problems.
    (c) Single or one-time cash flow forecasts are of limited 
forecasting power. As such, they should be limited to preaward survey 
situations. Reliability of cash flow forecasts can be established only 
by comparing a series of previous actual cash flows with the 
corresponding forecasts and examining the causes of any differences.
    (d) Cash flow forecasts must--

[[Page 260]]

    (1) Show the origin and use of all material amounts of cash within 
the entire business unit responsible for contract performance, period by 
period, for the length of the contract (or until the risk of a cash 
crisis ends); and
    (2) Provide an audit trail to the data and assumptions used to 
prepare it.
    (e) Cash flow forecasts can be no more reliable than the assumptions 
on which they are based. Most important of these assumptions are--
    (1) Estimated amounts and timing of purchases and payments for 
materials, parts, components, subassemblies, and services;
    (2) Estimated amounts and timing of payments for purchase or 
production of capital assets, test facilities, and tooling;
    (3) Amounts and timing of fixed cash charges such as debt 
installments, interest, rentals, taxes, and indirect costs;
    (4) Estimated amounts and timing of payments for projected labor, 
both direct and indirect;
    (5) Reasonableness of projected manufacturing and production 
schedules;
    (6) Estimated amounts and timing of billings to customers (including 
progress payments), and customer payments;
    (7) Estimated amounts and timing of cash receipts from lenders or 
other credit sources, and liquidation of loans; and
    (8) Estimated amounts and timing of cash receipts from other 
sources.
    (f) The contracting officer should review the assumptions underlying 
the cash flow forecasts. In determining whether the assumptions are 
reasonable and realistic, the contracting officer should consult with--
    (1) The contractor;
    (2) Government personnel in the areas of finance, engineering, 
production, cost, and price analysis; or
    (3) Prospective supply, subcontract, and loan or credit sources.
232.173  Reduction or suspension of contract payments upon finding of 
fraud.



Sec. 232.173-1  General.

    (a) 10 U.S.C. 2307(e)(2) provides for a reduction or suspension of 
further payments to a contractor when the agency head determines there 
is substantial evidence that the contractor's request for advance, 
partial, or progress payments is based on fraud.
    (b) The agency head may not delegate his or her responsibilities 
under 10 U.S.C. 2307(e) below level IV of the Executive Schedule. For 
purposes of this section, the Under Secretary of Defense (Acquisition & 
Technology) is the agency head for the defense agencies.
    (c) Authority to reduce or suspend payments under 10 U.S.C. 2307(e) 
is in addition to other Government rights, remedies, and procedures.
    (d) In accordance with 10 U.S.C. 2310(a), agency head determinations 
and decisions under this section may be made for an individual contract 
or any group of contracts affected by the fraud.

[57 FR 3359, Jan. 29, 1992, as amended at 57 FR 42632, Sept. 15, 1992; 
60 FR 61598, Nov. 30, 1995]



Sec. 232.173-2  Definitions.

    As used in this section--
    (a) Remedy coordination official means the person or entity in the 
agency who coordinates within that agency the administration of 
criminal, civil, administrative, and contractual remedies resulting from 
investigations of fraud or corruption related to procurement activities.
    (b) Substantial evidence means information sufficient to support the 
reasonable belief that a particular act or omission has occurred.

[57 FR 3359, Jan. 29, 1992]



Sec. 232.173-3  Responsibilities.

    (a) Agencies shall establish appropriate procedures to implement the 
policies and procedures of this section.
    (b) Government personnel shall report suspected fraud related to 
advance, partial, or progress payments in accordance with agency 
regulations.

[57 FR 3359, Jan. 29, 1992]



Sec. 232.173-4  Procedures.

    (a) In any case in which an agency's remedy coordination official 
finds substantial evidence that a contractor's request for advance, 
partial, or progress payments under a contract

[[Page 261]]

awarded by that agency is based on fraud, the remedy coordination 
official shall recommend that the agency head reduce or suspend further 
payments to the contractor. The remedy coordination official shall 
submit to the agency head a written report setting forth the remedy 
coordination official's findings that support each recommendation.
    (b) Upon receiving a recommendation from the remedy coordination 
official under paragraph (a) of this subsection, the agency head shall 
determine whether substantial evidence exists that the request for 
payment under a contract is based on fraud.
    (c) If the agency head determines that substantial evidence exists, 
the agency head may reduce or suspend further payments to the contractor 
under the affected contract(s). Such reduction or suspension shall be 
reasonably commensurate with the anticipated loss to the Government 
resulting from the fraud.
    (d) In determining whether to reduce or suspend further payment(s), 
as a minimum, the agency head shall consider:
    (1) A recommendation from investigating officers that disclosure of 
the allegations of fraud to the contractor may compromise an ongoing 
investigation;
    (2) The anticipated loss to the Government as a result of the fraud;
    (3) The contractor's overall financial condition and ability to 
continue performance if payments are reduced or suspended;
    (4) The contractor's essentiality to the national defense;
    (5) Assessment of all documentation concerning the alleged fraud, 
including documentation submitted by the contractor in its response to 
the notice required by paragraph (e) of this subsection.
    (e) Before making a decision to reduce or suspend further payments, 
the agency head shall, in accordance with agency procedures--
    (1) Notify the contractor in writing of the action proposed by the 
remedy coordination official and the reasons therefore; and
    (2) Provide the contractor an opportunity to submit information 
within a reasonable time, in response to the action proposed by the 
remedy coordination official.
    (f) When more than one agency has contracts affected by the fraud, 
the agencies shall consider designating one agency as the lead agency 
for making the determination and decision.
    (g) The agency shall retain in its files the written justification 
for each--
    (1) Decision of the agency head whether to reduce or suspend further 
payments; and
    (2) Recommendation received by an agency head in connection with 
such decision.
    (h) Not later than 180 calendar days after the date of the reduction 
or suspension action, the remedy coordination official shall--
    (1) Review the agency head's determination on which the reduction or 
suspension decision is based; and
    (2) Transmit a recommendation to the agency head as to whether the 
reduction or suspension should continue.

[57 FR 3359, Jan. 29, 1992, as amended at 57 FR 42632, Sept. 15, 1992]



Sec. 232.173-5  Reporting.

    Departments and agencies, in accordance with department/agency 
procedures, shall prepare and submit to the Under Secretary of Defense 
(Acquisition & Technology), through the Director of Defense Procurement, 
annual reports (Report control symbol DD-ACQ(A) 1891) containing--
    (a) Each recommendation made by the remedy coordination official for 
payments reduction or suspension;
    (b) The actions taken on the recommendation(s), with the reasons for 
such actions; and
    (c) An assessment of the effects of each action on the Government.

[57 FR 3359, Jan. 29, 1992, as amended at 57 FR 42632, Sept. 15, 1992; 
60 FR 61598, Nov. 30, 1995]



          Subpart 232.3--Loan Guarantees for Defense Production



Sec. 232.302  Authority.

    (a) The use of guaranteed loans as a contract financing mechanism 
requires

[[Page 262]]

the availability of certain congressional authority. The DoD has not 
requested such authority in recent years, and none is now available.



                     Subpart 232.4--Advance Payments



Sec. 232.404  Exclusions.

    (a)(9) The requirements of FAR subpart 32.4 do not apply to 
advertisements in high school and college publications for military 
recruitment efforts under 10 U.S.C. 503 when the contract cost does not 
exceed $500.
232.409  Contracting officer action.



Sec. 232.409-1  Recommendation for approval.

    To ensure uniform application of this subpart (see FAR 
32.402(e)(1)), the departmental/agency contract financing office shall 
prepare the documents required by FAR 32.409-1 (e) and (f).



Sec. 232.410   Findings, determination, and authorization.

    (b) If an advance payment procedure is used without a special bank 
account, replace paragraph (a)(4) of the Findings, Determination, and 
Authorization for Advance Payments at FAR 32.410 with:

    (4) The proposed advance payment clause contains appropriate 
provisions as security for advance payments. These provisions include a 
requirement that the outstanding advance payments will be liquidated 
from cost reimbursements as they become due the contractor. This 
security is considered adequate to protect the interest of the 
Government.
232.412  Contract clause.



Sec. 232.412-70  Additional clauses.

    (a) Use the clause at 252.232-7000, Advance Payment Pool, in any 
contract that will be subject to the terms of an advance payment pool 
agreement with a nonprofit organization or educational institution. 
Normally, use the clause in all cost reimbursement type contracts with 
the organization or institution.
    (b) Use the clause at 252.232-7001, Disposition of Payments, in 
contracts when payments under the contract are to be made by a 
disbursing office not designated in the advance payment pool agreement.
    (c) Use the clause at 252.232-7005, Reimbursement of Subcontractor 
Advance Payments-DoD Pilot Mentor-Protege Program, when advance payments 
will be provided by the contractor to a subcontractor pursuant to an 
approved mentor-protege agreement (See subpart 219.71).

[56 FR 36409, July 31, 1991, as amended at 56 FR 67217, Dec. 30, 1991]



Sec. 232.470  Advance payment pool.

    (a) An advance payment pool agreement--
    (1) Is a means of financing the performance of more than one 
contract held by a single contractor;
    (2) Is especially convenient for the financing of cost-type 
contracts with nonprofit educational or research institutions for 
experimental or research and development work when several contracts 
require financing by advance payments. When appropriate, pooled advance 
payments may also be used to finance other types of contracts held by a 
single contractor; and
    (3) May be established--
    (i) Without regard to the number of appropriations involved;
    (ii) To finance contracts for one or more department(s) or 
contracting activity(ies); or
     (iii) In addition to any other advance payment pool agreement at a 
single contractor location when it is more convenient or otherwise 
preferable to have more than one agreement.



             Subpart 232.5--Progress Payments Based on Costs



Sec. 232.501  General.

    In DoD, customary progress payments may be either uniform or 
flexible (FAR 32.501-1(a)). See also 232.501-1 and 232.502-1-71.



Sec. 232.501-1  Customary progress payment rates.

    (a)(i) The customary uniform progress payment rate for DoD contracts 
is 75 percent for large businesses, 90 percent for small businesses, and 
95 percent for small disadvantaged businesses.

[[Page 263]]

    (ii) The progress payment rates applicable to foreign military sale 
requirements are the same rates applicable to DoD requirements.
    (iii) For customary flexible progress payments, determine the 
appropriate rate using the appropriate CASH computer program (see 
232.502-1-71).

[56 FR 36409, July 31, 1991, as amended at 56 FR 67217, Dec. 30, 1991; 
58 FR 62046, Nov. 24, 1993]



Sec. 232.501-2  Unusual progress payments.

    (a) Unusual progress payment arrangements require the advance 
approval of the USD(A&T)DP. Contracting officers shall submit all 
unusual progress payment requests to the department or agency contract 
financing office for approval, coordination with the Contract Finance 
Committee (232.171), and submission to the USD(A&T)DP.

[56 FR 36409, July 31, 1991, as amended at 60 FR 61598, Nov. 30, 1995]



Sec. 232.501-3  Contract price.

    (b) The contracting officer may approve progress payments when the 
contract price exceeds the funds obligated under the contract; provided, 
the contract contains an appropriate Limitation of Funds clause. 
However, the contracting officer shall limit such payments to the lesser 
of--
    (i) The applicable rate (i.e., the lower of the progress payment 
rate, the liquidation rate, or the loss-ratio adjusted rate); or
    (ii) 100 percent of the funds obligated.
232.502  Preaward matters.



Sec. 232.502-1  Use of customary progress payments.

    (b)(1) If the contractor is a small disadvantaged business, progress 
payments may be provided when the contract will involve $50,000 or more.



Sec. 232.502-1-70  Customary foreign military sale progress payments.

    (a) Foreign military sale (FMS) progress payments apply to DoD 
acquisitions on behalf of foreign governments or international 
organizations (Section 22 of the Arms Export Control Act).
    (b) FMS progress payments do not apply to acquisitions--
    (1) For replenishing U.S. Government inventories or stocks; and
    (2) Made under DoD cooperative logistic support arrangements.



Sec. 232.502-1-71  Customary flexible progress payments.

    (a) General. (1) Progress payments reduce contractor investment in 
work in process inventory. In addition to progress payments, other 
factors influence a contractor's actual investment in work in process 
inventory, e.g., delivery schedules, cash management practices, and 
Government payment practices.
    (2) Progress payment amounts that are determined by using customary 
uniform rates are insensitive to the other factors influencing 
contractor investment in work in process inventory. Consequently, 
contractor investments in work in process inventory vary among 
contractors and contracts.
    (3) Flexible progress payment rates are designed to tailor the 
progress payment rate to more closely match the contractor's cash needs 
for financing contract performance. The flexible rate is expressed as a 
percentage which is applied to costs to determine the amount payable as 
a progress payment, in the same manner as customary uniform rates are 
applied.
    (4) For flexible progress payments, cash needs are measured and 
projected based on the investment required for the work in process 
inventory over the life of the contract. Total investment is measured by 
a weighted average of total costs paid by the contractor. The 
contractor's investment is the weighted average of the amount not paid 
by the Government.
    (5) DoD, as a matter of policy, requires contractors to retain a 
minimum investment level in work in process inventory over the life of 
the contract (see Table 32-1, Customary Uniform Progress Payment Rates). 
This minimum investment level is based on the customary uniform progress 
payment rate and its related investment percentage. Accordingly, the DoD 
will make progress payments at a rate (expressed as a whole number) that 
is the

[[Page 264]]

highest rate which yields a corresponding investment by the contractor 
in work in process inventory of not less than the minimum investment 
percentage.
    (6) The customary flexible progress payment rate will be determined 
by using the DoD Cash Flow Computer Model. The rate computed shall not--
    (i) Exceed 100 percent; or
    (ii) Be less than the customary uniform progress payment rate that 
would have been applied to the contract in the absence of customary 
flexible progress payments.
    (7) Table 32-1, Customary Uniform Progress Payment Rates, shows the 
customary uniform progress payment rates for other than small or small 
disadvantaged businesses (see also 232.501-1), minimum contractor 
investment (except for contracts funded with FY87 appropriations), and 
the applicable DoD Cash Flow Computer Model. For contracts or line items 
that are funded with FY87 appropriations, a contractor must retain at 
least a 25 percent investment in work in process inventory over the life 
of the contract or over the contract performance period applicable to 
the contract line item.

                              Table 32-1--Customary Uniform Progress Payment Rates                              
----------------------------------------------------------------------------------------------------------------
                                                 Uniform                                                        
             Contract award date                   rate      Investment              Cash flow model            
                                                percentage   percentage                                         
----------------------------------------------------------------------------------------------------------------
Prior to May 1, 1985.........................           90            5  CASH-II                                
May 1, 1985 through October 17, 1986.........           80           15  CASH-III                               
October 18, 1986 through September 30, 1988..           75           25  CASH-IV                                
October 1, 1988 through June 30, 1991........           80           20  CASH-V                                 
After June 30, 1991*.........................           85           20  CASH-VI**                              
----------------------------------------------------------------------------------------------------------------
* Flexible progress payments shall not be used for contracts awarded as a result of solicitations issued on or  
  after November 11, 1993.                                                                                      
** See paragraph (b)(5)(ii) for implementation instructions.                                                    

    (b) Using customary flexible progress payments. (1) Use a flexible 
progress payment rate at the time of award or definitization instead of 
the customary uniform rate if--
    (i) The contractor requests flexible progress payments;
    (ii) The contractor agrees to the requirements of this section;
    (iii) The contract contains the clause at FAR 52.232-16, Progress 
Payments. However, small business contractors may get flexible progress 
payments if they agree to use the clause at FAR 52.232-16 without its 
Alternate I; and
    (iv) The criteria in paragraphs (b)(2) and (3) of this subsection 
are met.
    (2) Do not use flexible progress payments for--
    (i) Sealed bid contracts;
    (ii) Undefinitized contract actions; or
    (iii) Contracts awarded and performed entirely outside of the United 
States, its possessions or territories.
    (3) Contractors who submit certified cost or pricing data, as 
defined in FAR 15.804-2, for negotiated fixed-price contracts in excess 
of $1 million may request flexible progress payments.
    (4) Subcontractors who request flexible progress payments, meet the 
criteria in paragraph (b)(3) of this subsection, and agree to the 
requirements of this subsection are to receive flexible progress 
payments. The prime contractor determines the flexible progress payment 
rate without regard to the rate in the prime contract. In determining 
the appropriate customary flexible rate, the prime contractor will use 
the DoD Cash Flow Computer Model and review the cash flow data provided 
by the subcontractor.
    (5) Prior to contract award, the contracting officer shall determine 
the customary flexible progress payment rate by applying the appropriate 
version of the DoD Cash Flow Computer Model.
    (i) The model takes into account key cash flow factors including 
contract cost profile, delivery schedules, subcontractor progress 
payments, liquidation rates, and payment/reimbursement cycles. For 
contracts funded with FY87 appropriations, use the CASH-IV model.

[[Page 265]]

    (ii) From time to time the Department of Defense may change the 
uniform progress payment rate and/or the minimum contractor investment 
rate, which may have an effect upon the variables within the DoD Cash 
Flow Computer Program. In order to avoid frequent revision and 
redistribution of the computer program, the program is designed to 
permit use of either a particular model (CASH-II, CASH-V, etc.) or a 
program option to input the equivalent uniform progress payment rate and 
minimum contractor investment rate (90%/5%, 80%/20%, etc.), as shown in 
the table at (a)(7). Either method will result in the same flexible 
progress payment rate calculation. When the Cash Flow Computer Program 
does not contain the model needed for a particular situation, the 
contracting officer shall use the program option.
    (6) If the contractor requests flexible progress payments after 
contract award or definitization, the contracting officer may, if 
warranted, grant their use. However, the contractor must provide 
adequate new consideration (see FAR 32.501-4).
    (c) Contractor cash flow and cost information. (1) Contractors shall 
furnish to the contracting officer cash flow data in the form and 
context specified for use in the DoD Cash Flow Computer Model. 
Contractors should furnish cash flow data prior to the start of 
negotiations. This data includes--
    (i) Actual and projected incurred cost, broken down by element of 
cost and by month, for the duration of the contract;
    (ii) Float times for each element of cost;
    (iii) Dates and lag times of actual and projected progress payment 
and delivery payment receipts; and
    (iv) Associated contract price and profit percentage.
    (2) Contracting officers shall verify the cash flow data using the 
procedures normally used to verify contractor cost and pricing data, and 
establish the customary flexible progress payment rate during the 
negotiation of the contract price.
    (3) If any customary flexible progress payment rate is later 
determined to be overstated because factual data submitted in support of 
the rate computation was not current, accurate, or complete at the time 
the rate was established, the flexible progress payment clause at 
252.232-7003 provides for--
    (i) Reduction of the flexible progress payment rate; and
    (ii) Contractor payment of interest.
    (4) The contracting officer will assess the interest charge on the 
amount of the overpayment resulting from facts that were not current, 
accurate, or complete, whether or not the overpayment has been 
liquidated. Calculate the interest from the date of the overpayment to 
the date of liquidation of the overpayment. In determining the amount of 
interest, the contracting officer may determine an average overpayment 
amount and duration as the basis for the interest computation. Interest 
rates change periodically; therefore, calculate average amounts and 
durations separately for each interest period that has a different 
interest rate.
    (5) Administrative contracting officers are encouraged to establish 
advance agreements at contractor locations for payment float and lag 
times which are common to several contracts. Float and lag times may 
vary significantly from one contract to another due to variances in 
efficiency at different payment offices or due to differing procedures 
for high dollar versus low dollar value contracts. It may, therefore, be 
appropriate to establish advance agreements on several different float 
and lag profiles to suit different contract situations.
    (d) Rate review. (1) The flexible progress payment clause at 
252.232-7003 provides for redetermination of the customary flexible 
progress payment rate whenever the computed investment percentage is 
more than two points above or below the specific minimum investment in 
work in process inventory (see Table at 232.502-1-71(a)(7)). When such a 
redetermination is made--
    (i) Apply the new customary flexible progress payment rate to the 
next contractor progress payment request; and
    (ii) Adjust the unliquidated progress payment balance.
    (2) Either the Government or the contractor may request a rate 
review

[[Page 266]]

at any time to determine if the computed investment percentage in work 
in process inventory is outside of the investment tolerance in paragraph 
(d)(1) of this subsection. For contracts funded with FY87 
appropriations, the investment range is 23 to 27 percent with a target 
of 25 percent.
    (3) The administrative contracting officer shall assess changes in 
the following factors during each periodic review required by FAR 
32.503-5 and shall review the customary flexible progress payment rate 
whenever there has been--
    (i) A significant change in the float or lag factors;
    (ii) A significant change in the delivery schedule; or
    (iii) Substantial work added to or deleted from the contract.
    (e) Letter contracts and undefinitized orders. When flexible 
progress payments are contemplated for use on a definitized contract 
superseding a letter contract or an unpriced BOA order, the applicable 
uniform customary progress payment rate shall be used until 
definitization. The flexible progress payment rate shall be determined 
by the contracting officer before definitizing the contract or order.
    (f) Availability of CASH program and user's guide. The flexible 
progress payment program CASH and the user's guide are available to 
offerors and contractors from the contracting officer.

[56 FR 36409, July 31, 1991, as amended at 56 FR 67217, Dec. 30, 1991; 
58 FR 62046, Nov. 24, 1993; 58 FR 64353, Dec. 6, 1993]
232.502-4  Contract clauses.



Sec. 232.502-4-70  Additional clauses.

    (a) Use the clause at 252.232-7002, Progress Payments for Foreign 
Military Sales Acquisitions, in any contract that provides for progress 
payments and contains foreign military sale requirements.
    (b) Use the clauses at 252.232-7003, Flexible Progress Payments, and 
252.232-7004, DoD Progress Payment Rates, in contracts using a customary 
flexible progress payment rate.
    (c) Use the clause at 252.232-7004, DoD Progress Payment Rates, in 
addition to the clauses prescribed at FAR 32.502-4.

[56 FR 36409, July 31, 1991, as amended at 56 FR 67217, Dec. 30, 1991]
232.503  Postaward matters.



Sec. 232.503-6  Suspension or reduction of payments.

    (b) Contractor noncompliance. See also 242.7503.
    (g) Loss contracts. Use the following loss ratio adjustment 
procedures for making adjustments required by FAR 32.503-6(f) and (g)--
    (i) Except as provided in paragraph (g)(ii) of this subsection, the 
contracting officer shall prepare a supplementary analysis of the 
contractor's request for progress payments and calculate the loss ratio 
adjustment using the procedures in FAR 32.503-6(g).
    (ii) The contracting officer may request the contractor to prepare 
the supplementary analysis as an attachment to the progress payment 
request when the contracting officer determines that the contractor's 
methods of estimating the ``Costs to Complete'' are reliable, accurate, 
and not susceptible to improper influences.
    (iii) To maintain an audit trail and permit verification of 
calculations, do not make the loss ratio adjustments by altering or 
replacing data on the contractor's original request for progress payment 
(SF 1443, Contractor's Request for Progress Payment, or computer 
generated equivalent).

[56 FR 36409, July 31, 1991, as amended at 60 FR 29499, June 5, 1995]



Sec. 232.503-15  Application of Government title terms.

    (d) An administrative contracting officer (ACO) determination that 
the contractor's material management and accounting system conforms to 
the standard at 252.242-7004(f)(7) constitutes the contracting officer 
approval requirement of FAR 32.503-15(d). Prior to granting blanket 
approval of cost transfers between contracts, the ACO should determine 
that--
    (i) The contractor retains records of the transfer activity that 
took place in the prior month;

[[Page 267]]

    (ii) The contractor prepares, at least monthly, a summary of the 
transfer activity that took place in the prior month; and
    (iii) The summary report includes as a minimum, the total number and 
dollar value of transfers.

[56 FR 36409, July 31, 1991, as amended at 57 FR 42632, Sept. 15, 1992]



                      Subpart 232.6--Contract Debts



Sec. 232.605  Responsibilities and cooperation among Government officials.

    (b) Disbursing officers are those officials designated to make 
payments under a contract or to receive payments of amounts due under a 
contract. At installations where integrated accounting is in effect, the 
finance and accounting officer is a disbursing officer. The disbursing 
officer is responsible for determining the amount and collecting 
contract debts whenever overpayments or erroneous payments have been 
made. The disbursing officer also has primary responsibility when the 
amounts due and dates for payment are contained in the contract, and a 
copy of the contract has been furnished to the disbursing officer with 
notice to collect as amounts become due.



Sec. 232.606  Debt determination and collection.

    (c)(9)(vii) Upon transfer of a case to the contract financing 
office, the contracting officer shall close the debt record by reference 
to the date of transfer.



Sec. 232.610  Demand for payment of contract debt.

    (a)(i) For contract debts resulting from other than a termination 
for default, the office which first determines an amount due, whether it 
be the contract administration office, the contracting office, the 
disbursing office, or the selling office/agency, shall--
    (A) Make a demand for payment; and
    (B) Provide a copy of the demand to the payment office cited in the 
contract.
    (ii) For contract debts resulting from a termination for default, 
the contracting officer shall make the demand and direct the debtor to 
make such payment to the designated office.
    (b)(3) The contracting office shall forward deferment requests to 
the contract financing office of the contracting department or agency 
for a decision on granting the deferment.



Sec. 232.616  Compromise actions.

    Only the department/agency contract financing offices (232.108(1)) 
are authorized to compromise debts covered by this subpart.



Sec. 232.617  Contract clause.

    (a) The DoD Contract Finance Committee, with the approval of the 
USD(A&T)DP, may exempt the contracts in FAR 32.617(a) (2) through (5) 
and other contracts, in exceptional circumstances, from the 
administrative interest charges required by this subpart.
    (a)(7) Other exceptions--
    (A) Contracts for instructions of military or ROTC personnel at 
civilian schools, colleges, and universities;
    (B) Basic agreements with telephone companies for communications 
services and facilities, and purchases under such agreements; and
    (C) Transportation contracts with common carriers for common carrier 
services.

[56 FR 36409, July 31, 1991, as amended at 60 FR 61598, Nov. 30, 1995]



Sec. 232.670   Transfer of responsibility for debt collection.

    Disbursing officers will transfer responsibility for debt collection 
to departmental/agency contract financing offices in accordance with 
comptroller regulations. Notwithstanding the transfer of the debt 
collection responsibility, contracting officers shall continue to 
provide assistance as requested by the debt collection office.



Sec. 232.671   Bankruptcy reporting.

    (a) For those debts covered by this subpart, the department or 
agency which awarded the contract shall furnish the Department of 
Justice any claims in bankruptcy, insolvency, or in proceedings for 
reorganization or arrangement. Furnish claims which--
    (1) Have been transferred to a contract financing office;

[[Page 268]]

    (2) Are on the way to a contract financing office at the inception 
of bankruptcy or insolvency proceedings;
    (3) Are pending and not forwarded to a contract financing office at 
the inception of bankruptcy or insolvency proceedings; and
    (4) Are the result of bankruptcy or insolvency proceedings.
    (b) The contract financing office or other office designated within 
a department or agency will furnish proof of claims to the Department of 
Justice.
    (c) The office of origin of a debt will provide, as soon as 
possible, information on a bankruptcy, insolvency, reorganization, or 
rearrangement to the office designated within a department/agency to 
receive this information.
    (d) The information and proof of claim requirements in paragraphs 
(b) and (c) of this section do not apply to debts of less than $600.



                     Subpart 232.7--Contract Funding

    Source: 58 FR 46092, Sept. 1, 1993, unless otherwise noted.



Sec. 232.702  Policy.

    Fixed-price contracts shall be fully funded except as permitted by 
232.703-1.
232.703  Contract funding requirements.



Sec. 232.703-1  General.

    (1) A fixed-price contract may be incrementally funded only if--
    (i) The contract is funded with research and development 
appropriations;
    (ii) Congress has otherwise incrementally appropriated program 
funds; or
    (iii) The head of the contracting activity approves the use of 
incremental funding for either base services contracts or hazardous/
toxic waste remediation contracts.
    (2) Incrementally funded fixed-price contracts shall be fully funded 
as soon as practicable after full funding is available.



Sec. 232.703-70  Military construction appropriations act restriction.

    Annual military construction appropriations acts restrict the use of 
funds appropriated by the acts for payments under cost-plus-fixed-fee 
contracts (see 216.306(c)).

[61 FR 7744, Feb. 29, 1996]



Sec. 232.704  Limitation of cost or funds.



Sec. 232.704-70  Incrementally funded fixed-price contracts.

    (a) Upon receipt of the contractor's notice under paragraph (c) of 
the clause at 252.232-7007, Limitation of Government's Obligation, the 
contracting officer shall promptly provide written notice to the 
contractor that the Government is--
    (1) Allotting additional funds for continued performance and 
increasing the Government's limitation of obligation in a specified 
amount;
    (2) Terminating the contract; or
    (3) Considering whether to allot additional funds; and
    (i) The contractor is entitled by the contract terms to stop work 
when the Government's limitation of obligation is reached; and
    (ii) Any costs expended beyond the Government's limitation of 
obligation are at the contractor's risk.
    (b) Upon learning that the contract will receive no further funds, 
the contracting officer shall promptly give the contractor written 
notice of the Government's decision and terminate for the convenience of 
the Government.
    (c) The contracting officer shall ensure that, in accordance with 
paragraph (b) of the clause at 252.232-7007, Limitation of Government's 
Obligation, sufficient funds are allotted to the contract to cover the 
total amount payable to the contractor in the event of termination for 
the convenience of the Government.
232.705  Contract clauses.



Sec. 232.705-70  Clause for limitation of Government's obligation.

    Use the clause at 252.232-7007, Limitation of Government's 
Obligation, in solicitations and resultant incrementally funded fixed-
price contracts. The contracting officer may revise the contractor's 
notification period, in paragraph (c) of the clause, from ``ninety'' to 
``thirty'' or ``sixty'' days, as appropriate.

[[Page 269]]



                   Subpart 232.8--Assignment of Claims



Sec. 232.803   Policies.

    (b) Only contracts for personal services may prohibit the assignment 
of claims.
    (d) Pursuant to Section 3737(e) of the Revised Statutes (41 U.S.C. 
15), and in accordance with Presidential delegation dated October 3, 
1995, Secretary of Defense delegation dated February 5, 1996, and Under 
Secretary of Defense for Acquisition and Technology delegation dated 
February 23, 1996, the Director of Defense Procurement determined on May 
10, 1996, that a need exists for DoD to agree not to reduce or set off 
any money due or to become due under the contract when the proceeds 
under the contract have been assigned in accordance with the Assignment 
of Claims provision of the contract. This determination was published in 
the Federal Register on June 11, 1996, as required by law. Nevertheless, 
if departments/agencies decide it is in the Government's interests, or 
if the contracting officer makes a determination in accordance with FAR 
32.803(d) concerning a significantly indebted offeror, they may exclude 
the no-setoff commitment.

[56 FR 36409, July 31, 1991, as amended at 61 FR 50454, Sept. 26, 1996]



Sec. 232.805   Procedure.

    (b) The assignee shall forward--
    (i) To the administrative contracting officer (ACO), a true copy of 
the instrument of assignment and an original and three copies of the 
notice of assignment. The ACO shall acknowledge receipt by signing and 
dating all copies of the notice of assignment and shall--
    (A) File the true copy of the instrument of assignment and the 
original of the notice in the contract file;
    (B) Forward two copies of the notice to the disbursing officer of 
the payment office cited in the contract;
    (C) Return a copy of the notice to the assignee; and
    (D) Advise the contracting officer of the assignment.
    (ii) To the surety or sureties, if any, a true copy of the 
instrument of assignment and an original and three copies of the notice 
of assignment. The surety shall return three acknowledged copies of the 
notice to the assignee, who shall forward two copies to the disbursing 
officer designated in the contract.
    (iii) To the disbursing officer of the payment office cited in the 
contract, a true copy of the instrument of assignment and an original 
and one copy of the notice of assignment. The disbursing officer shall 
acknowledge and return to the assignee the copy of the notice and shall 
file the true copy of the instrument and original notice.



Sec. 232.806   Contract clause.

    (a)(2) The contracting officer shall use Alternate I with the clause 
at FAR 52.232-23, Assignment of Claims, unless otherwise authorized 
under 232.803(d).



                      Subpart 232.9--Prompt Payment



Sec. 232.903   Policy.

    DoD policy is to assist small disadvantaged business concerns by 
paying them as quickly as possible after invoices are received and 
before normal payment due dates established in the contract (see 
232.905(2)).



Sec. 232.905   Invoice payments.

    (1) In most cases, Government acceptance or approval can occur 
within the 7 day constructive acceptance period specified in the FAR 
Prompt Payment clauses. Government payment of construction progress 
payments can, in most cases, be made within the 14 day period allowed by 
the Prompt Payment for Construction Contracts clause. While the 
contracting officer may specify a longer period because the period 
specified in the contract is not reasonable or practical, such change 
should be coordinated with the Government offices responsible for 
acceptance or approval and for payment. Reasons for specifying a longer 
period include but are not limited to: the nature of the work or 
supplies or services, inspection or testing requirements, shipping and 
acceptance terms, and resources available at the acceptance activity. A 
constructive acceptance period of less than the cited 7 or 14 days is 
not authorized.

[[Page 270]]

    (2) Designated payment offices are encouraged to pay small 
disadvantaged business (SDB) concerns as quickly as possible after 
invoices are received and before normal payment due dates established in 
the contract. The restrictions of FAR 32.903 prohibiting early payment 
do not apply to invoice payments made to SDBs. Contractors shall not, 
however, be entitled to interest penalties if invoice payments are not 
made before the normal payment due dates established in the contract.
    (f)(6) DoD Manual 4000.25-5-M, Military Standard Contract 
Administration Procedures (MILSCAP), authorizes electronic signature of 
receiving reports.



Sec. 232.906   Contract financing payments.

    (a)(i) DoD policy is to make contract financing payments as quickly 
as possible. Generally, the contracting officer shall insert the 
standard due dates of 7 days for progress payments and 14 days for 
interim payments on cost type contracts in subparagraphs (b)(2) of the 
Prompt Payment clauses at FAR 52.232-25, 52.232-26, and 52.232-27.
    (ii) The contracting officer should coordinate payment terms with 
offices that will be involved in the payment process to ensure that 
terms specified can be met. Where justified, the contracting officer may 
insert a due date greater than but not less than the standard. In 
determining payment terms, consider--
    (A) Geographical separation;
    (B) Workload;
    (C) Contractor ability to submit a proper request; and
    (D) Other factors that could affect timing of payment.
232.970  Payment of subcontractors.



Sec. 232.970-1  Subcontractor assertions of nonpayment.

    (a) In accordance with Public Law 102-190, title VIII, section 
806(a)(4), upon the assertion by a subcontractor or supplier of a DoD 
contractor that the subcontractor or supplier has not been paid in 
accordance with the payment terms of the subcontract, purchase order, or 
other agreement with the prime contractor, the contracting officer may 
determine--
    (1) For a construction contract, whether the contractor has made--
    (i) Progress payments to the subcontractor or supplier in compliance 
with chapter 39 of title 31, United States Code (Prompt Payment Act);
    (ii) Final payment to the subcontractor or supplier in compliance 
with the terms of the subcontract, purchase order, or other agreement 
with the prime contractor;
    (2) For a contract other than construction, whether the contractor 
has made progress payments, final payments, or other payments to the 
subcontractor or supplier in compliance with the terms of the 
subcontract, purchase order, or other agreement with the prime 
contractor;
    (3) For any contract, whether the contractor's certification of 
payment of a subcontractor or supplier accompanying its payment request 
to the Government is accurate.
    (b) If, in making the determination in paragraphs (a) (1) and (2) of 
this subsection, the contracting officer finds the prime contractor is 
not in compliance, the contracting officer may--
    (1) Encourage the contractor to make timely payment to the 
subcontractor or supplier; or
    (2) If authorized by the applicable payment clauses, reduce or 
suspend progress payments to the contractor.
    (c) If the contracting officer determines that a certification 
referred to in (a)(3) of this subsection is inaccurate in any material 
respect, the contracting officer shall initiate administrative or other 
remedial action.

[57 FR 42707, Sept. 16, 1992]



Sec. 232.970-2  Subcontractor requests for information.

    (a) In accordance with Public Law 102-190, title VIII, section 
806(a)(1), upon the request of a subcontractor or supplier under a DoD 
contract, the contracting officer shall promptly advise the 
subcontractor or supplier as to--
    (1) Whether the prime contractor has submitted requests for progress 
payments or other payments under the contract to DoD; and
    (2) Whether final payment has been made by the DoD to the prime 
contractor.

[[Page 271]]

    (b) This subsection does not apply to matters that are--
    (1) Specifically authorized under criteria established by an 
Executive Order to be kept secret in the interest of national defense or 
foreign policy; and
    (2) Properly classified pursuant to such Executive Order (see 5 
U.S.C. 552(b)(1)).

[57 FR 42708, Sept. 16, 1992]



PART 233--PROTESTS, DISPUTES, AND APPEALS--Table of Contents




Sec.

                   Subpart 233.2--Disputes and Appeals

233.204  Policy.
233.210  Contracting officer's authority.
233.214  Contract clause.

 Subpart 233.70--Certification of Claims and Requests for Adjustment or 
                                 Relief

233.7000  Policy.
233.7001  Contract clause.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36416, July 31, 1991, unless otherwise noted.



                   Subpart 233.2--Disputes and Appeals



Sec. 233.204   Policy.

    When it would be helpful in reviewing the current claim, the 
contracting officer should get information on claims previously filed by 
the contractor with other contracting officers.



Sec. 233.210   Contracting officer's authority.

    DFARS 243.105(a) limits contracting officer authority.



Sec. 233.214   Contract clause.

    Use Alternate I of the clause at FAR 52.233-1, Disputes, when--
    (1) The acquisition is for--
    (i) Aircraft
    (ii) Spacecraft and launch vehicles
    (iii) Naval vessels
    (iv) Missile systems
    (v) Tracked combat vehicles
    (vi) Related electronic systems;
    (2) The contracting officer determines that continued performance 
is--
    (i) Vital to the national security, or
    (ii) Vital to the public health and welfare; or
    (3) The head of the contracting activity determines that continued 
performance is necessary pending resolution of any claim that might 
arise under or be related to the contract.



 Subpart 233.70--Certification of Claims and Requests for Adjustment or 
                                 Relief



Sec. 233.7000  Policy.

    (a) Before payment can be made on a claim (see definition in FAR 
33.201), a request for equitable adjustment to contract terms, a request 
for relief under Public Law 85-804 (see FAR part 50), or another similar 
request that exceeds $100,000, 10 U.S.C. 2410e requires that--
    (1) The contractor certify the claim or request as required by FAR 
33.207; and
    (2) The person certifying the claim or request be an individual who 
is authorized to bind the contractor and who has knowledge of--
    (i) The basis of the claim or request;
    (ii) The accuracy and completeness of the supporting data; and
    (iii) The claim or request.
    (b) The individual certifying the claim or request pursuant to 
paragraph (a) of this section may have knowledge based on direct 
involvement with the claim or knowledge gained by a review of contractor 
records or reports from more directly involved individuals.
    (c) The certification required by this subpart is different from the 
certification required by FAR part 33, which is based on the Contract 
Disputes Act (CDA), 41 U.S.C. 601 et seq. When no certification under 
this subpart has been submitted prior to the inception of a contract 
dispute, a single certification will satisfy the requirements of both 
statutes. Such certification must use the language prescribed by the CDA 
and be executed by a person who meets the specific knowledge 
requirements found in paragraph (a)(2) of this section.
    (d) 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 15.804-2(a)(1)(ii)).

[[Page 272]]

    (e) If a certification required by paragraph (a) of this section is 
incorrect when originally submitted, and is resubmitted pursuant to 
paragraph (a), the resubmitted certification shall be deemed to have 
been submitted at the time the original certification was submitted.

[58 FR 28470, May 13, 1993, as amended at 59 FR 27673, May 27, 1994]



Sec. 233.7001   Contract clause.

     Use the clause at 252.233-7000, Certification of Claims and 
Requests for Adjustment or Relief, in all contracts expected to exceed 
$100,000.

[[Page 273]]



             SUBCHAPTER F--SPECIAL CATEGORIES OF CONTRACTING





PART 234--MAJOR SYSTEM ACQUISITION--Table of Contents




Sec.
234.001  Definitions.
234.003  Responsibilities.
234.005  General requirements.
234.005-70  Solicitation provision and contract clause.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.



Sec. 234.001  Definitions.

    Systems means a combination of elements that will function together 
to produce the capabilities required to fulfill a mission need.
    Systems acquisition means the design, development, and production of 
new systems. It also includes modifications to existing systems that 
involve redesign of the systems or subsystems.

[60 FR 61598, Nov. 30, 1995]



Sec. 234.003   Responsibilities.

    DoDD 5000.1, Defense Acquisition, and DoDI 5000.2, Defense 
Acquisition Management Policies and Procedures, contain the DoD 
implementation of OMB Circular A-109.

[56 FR 36416, July 31, 1991]
234.005  General requirements.



Sec. 234.005-70   Solicitation provision and contract clause.

    When the Government requires contractor compliance with DoD cost/
schedule control systems criteria, use the provision at 252.234-7000, 
Notice of Cost/Schedule Control Systems, in solicitations and the clause 
at 252.234-7001, Cost/Schedule Control Systems, in solicitations and 
contracts.

[56 FR 36416, July 31, 1991]



PART 235--RESEARCH AND DEVELOPMENT CONTRACTING--Table of Contents




Sec.
235.001  Definitions.
235.002  General.
235.006  Contracting methods and contract type.
235.007  Solicitations.
235.010  Scientific and technical reports.
235.015  Contracts for research with educational institutions and 
          nonprofit organizations.
235.015-70  Special use allowances for research facilities acquired by 
          educational institutions.
235.015-71  Short form research contract (SFRC).
235.016  Broad agency announcement.
235.017  Federally Funded Research and Development Centers.
235.017-1  Sponsoring agreements.
235.070  Indemnification against unusually hazardous risks.
235.070-1  Indemnification under research and development contracts.
235.070-2  Indemnification under contracts involving both research and 
          development and other work.
235.070-3  Contract clauses.
235.071  Additional contract clauses.

    Subpart 235.70--Research and Development Streamlined Contracting 
                            Procedures--Test

235.7000  Scope.
235.7001  Definitions.
235.7002  Applicability.
235.7003  Reporting requirements.
235.7004  The research and development streamlined solicitation (RDSS).
235.7004-1  General.
235.7004-2  Solicitation procedures.
235.7004-3  Proposal evaluation and contract award procedures.
235.7005  The research and development standard contract (RDSC).
235.7006  The research and development streamlined contracting format.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36416, July 31, 1991, unless otherwise noted.



Sec. 235.001  Definitions.

    The following terms are defined in DoD 7000.14-R, Financial 
Management Regulation. As used in this part--
    Advanced development means all effort directed toward projects which 
have moved into the development of hardware for test. The prime proof of 
this type of effort is proof of design concept rather than the 
development of hardware. Projects in this category have a potential 
military application.

[[Page 274]]

    Basic research means all effort of scientific study and 
experimentation directed toward increasing knowledge and understanding 
in those fields of the physical, engineering, environmental, and life 
sciences related to long-term national security needs, It provides 
fundamental knowledge required for the solution of military problems. It 
forms a part of the base for--
    (1) Subsequent exploratory and advanced developments in defense 
related technologies; and
    (2) New or improved military functional capabilities in areas such 
as communications, detection, tracking, surveillance, propulsion, 
mobility, guidance and control, navigation, energy conversion, materials 
and structures, and personnel support.
    Demonstration/validation means those efforts necessary to evaluate 
integrated technologies in as realistic an operating environment as 
possible to assess the performance or cost reduction potential of 
advanced technology. The demonstration/validation phase is system 
specific and also includes advanced technology demonstrations that help 
expedite technology transition from the laboratory to operational use.
    Engineering and manufacturing development means those projects in 
full-scale engineering development but which have not yet received 
approval for production or had production funds included in the DoD 
budget submission for the budget or subsequent fiscal year. This area is 
characterized by major line item projects where program control is 
exercised by review of individual projects.
    Exploratory development means all effort directed toward the 
solution of specific military problems, short of major development 
projects. This type of effort may vary from fairly fundamental applied 
research to quite sophisticated bread-board hardware, study, 
programming, and planning efforts. It would thus include studies, 
investigations, and minor development effort. The dominant 
characteristic of this category of effort is that it be pointed toward 
specific military problem areas with a view toward developing and 
evaluating the feasibility and practicability of proposed solutions and 
determining their parameters.
    Management and support means all effort directed toward support of 
installations and operations required for general research and 
development use. This includes military construction of a general nature 
unrelated to specific programs, maintenance support of laboratories, 
operation and maintenance of test ranges, and maintenance of test 
aircraft and ships. Costs of laboratory personnel, either in-house or 
contracted, would be assigned to projects or as a line item in the 
research, exploratory development, or advanced development program 
areas, as appropriate. Management and support is not ``research and 
development'' except in exceptional cases. For example, construction of 
recreational facilities at an installation is not ``research and 
development'' work, even if the installation is used only for research 
and development work.
    Operational system development means those projects still in full-
scale engineering development, but which have received approval for 
production through Defense Acquisition Board or other action, or 
production funds have been included in the DoD budget submission for the 
budget or subsequent year. All items in this area are major line item 
projects which appear as RDT&E costs of weapons systems elements in 
other programs. Program control is exercised by review of the individual 
projects.
    Research and development ordinarily covers only the following 
categories--
    (1) Basic research;
    (2) Exploratory development;
    (3) Advanced development;
    (4) Demonstration/validation;
    (5) Engineering and manufacturing development; and
    (6) Operational system development.

[60 FR 29499, June 5, 1995]



Sec. 235.002  General.

    Contracts for research and development may not be performed over a 
period exceeding ten years from the date of initial award, unless the 
department or agency notifies Congress (10 U.S.C. 2352).
    (1) The head of the agency shall notify Congress whenever--

[[Page 275]]

    (i) It is expected, at the time of award, or as a result of a 
modification, that the period of performance will exceed ten years from 
the initial award date; or
    (ii) Performance has extended beyond ten years from the initial 
award date and no notice has otherwise been provided to Congress.
    (2) The notice shall--
    (i) Identify the contract;
    (ii) State the initial award date;
    (iii) State the expected period of performance; and
    (iv) Be submitted not later than 30 days after--
    (A) The initial award date or date of modification, as applicable; 
or
    (B) The date on which performance exceeds ten years if no prior 
notice was given.

[57 FR 14994, Apr. 23, 1992]



Sec. 235.006   Contracting methods and contract type.

    (a) All contracts under the Manufacturing Technology Program (see 
DoDI 4200.15, Manufacturing Technology Program) shall be awarded using 
competitive procedures (10 U.S.C. 2525).
    (b)(i) A fixed-price type contract shall not be awarded for a 
development program effort unless--
    (A) The level of program risk permits realistic pricing;
    (B) The use of a fixed-price type contract permits an equitable and 
sensible allocation of program risk between the Government and the 
contractor; and
    (C) A written determination that the criteria of paragraphs 
(b)(i)(A) and (B) of this section have been met is executed--
    (1) By the Under Secretary of Defense (Acquisition and Technology) 
(USD(A&T)) for--
    (i) Research and development for non-major systems, if the contract 
is over $25 million;
    (ii) The lead ship of a class;
    (iii) The development of a major system (as defined in FAR 34.001) 
or subsystem thereof, if the contract is over $25 million, or is over 
$10 million and is funded with FY90 funds (Pub. L. 101-165, section 
9048), FY91 funds (Pub. L. 101-511, section 8038), FY92 funds (Pub. L. 
102-172, section 8037), or FY93 funds (Pub. L. 102-396, section 9037).
    (2) By the contracting officer for any development not covered by 
paragraph (b)(i)(C)(1) of this section.
    (ii) The contracting officer must obtain USD(A&T) approval of the 
Government's prenegotiation position before negotiations begin and must 
obtain USD(A&T) approval of the negotiated agreement with the contractor 
before the agreement is executed for any action that is--
    (A) An increase of more than $250 million in the price or ceiling 
price of a fixed-price type development contract, or a fixed-price type 
contract for the lead ship of a class;
    (B) A reduction in the amount of work under a fixed-price type 
development contract or a fixed-price type contract for the lead ship of 
a class, when the value of the work deleted is $100 million or more; or
    (C) A repricing of fixed-price type production options to a 
development contract, or a contract for the lead ship of a class, which 
increases the price or ceiling price by more than $250 million for 
equivalent quantities.
    (iii) Notify the USD(A&T) of an intent not to exercise a fixed-price 
production option on a development contract for a major weapon system 
reasonably in advance of the expiration of the option exercise period.
    (iv) A cost-sharing arrangement (see FAR 16.303) must be used for 
contracts awarded in support of the Manufacturing Technology Program, 
unless an alternative is approved by the Secretary of Defense (10 U.S.C. 
2525). Approval by the Secretary of Defense to use other than a cost-
sharing arrangement for the Manufacturing Technology Program must be 
based on a determination that the contract is for a program that--
    (A) Is not likely to have any immediate and direct commercial 
application;
    (B) Is of sufficiently high risk to discourage cost sharing by non-
Federal Government sources; or
    (C) Will be carried out by an institution of higher education.

[56 FR 36416, July 31, 1991, as amended at 57 FR 14994, Apr. 23, 1992; 
58 FR 28471, May 13, 1993; 59 FR 27673, May 27, 1994; 60 FR 4570, Jan. 
24, 1995; 60 FR 29500, June 5, 1995; 61 FR 50454, Sept. 26, 1996]

[[Page 276]]



Sec. 235.007   Solicitations.

    (g) To ensure that prospective offerors fully understand the details 
of the work, the contracting officer may include the Government's 
estimate of the man-year effort under a research contract.



Sec. 235.010  Scientific and technical reports.

    (b) The Defense Technical Information Center (DTIC) is responsible 
for collecting all scientific or technological observations, findings, 
recommendations, and results derived from DoD endeavors, including both 
in-house and contracted efforts. The DTIC has eligibility and 
registration requirements for use of its services. Requests for 
eligibility and registration information should be addressed to DTIC-
BCS, Cameron Station, Alexandria, VA 22304-6145.

[60 FR 29500, June 5, 1995]



Sec. 235.015  Contracts for research with educational institutions and nonprofit organizations.

    (b) Basic agreements.
    (3) When using a basic agreement--
    (i) Incorporate it by reference in section I of the contract; and
    (ii) Incorporate any special clause requirements in section H.

[59 FR 27673, May 27, 1994]



Sec. 235.015-70   Special use allowances for research facilities acquired by educational institutions.

    (a) Definitions. As used in this subsection--
    (1) Research facility means--
    (i) Real property, other than land; and
    (ii) Includes structures, alterations, and improvements, acquired 
for the purpose of conducting scientific research under contracts with 
departments and agencies of the DoD.
    (2) Special use allowance means a negotiated direct or indirect 
allowance--
    (i) For construction or acquisition of buildings, structures, and 
real property, other than land; and
    (ii) Where the allowance is computed at an annual rate exceeding the 
rate which normally would be allowed under FAR subpart 31.3.
    (b) Policy. (1) Educational institutions are to furnish the 
facilities necessary to perform Defense contracts. FAR 31.3 governs how 
much the Government will reimburse the institution for the research 
programs. However, in extraordinary situations, the Government may give 
special use allowances to an educational institution when the 
institution is unable to provide the capital for new laboratories or 
expanded facilities needed for Defense contracts.
    (2) Decisions to provide a special use allowance must be made on a 
case-by-case basis, using the criteria in paragraph (c) of this 
subsection.
    (c) Authorization for special use allowance. The head of a 
contracting activity may approve special use allowances only when all of 
the following conditions are met--
    (1) The research facility is essential to the performance of DoD 
contracts;
    (2) Existing facilities, either Government or nongovernment, cannot 
meet program requirements practically or effectively;
    (3) The proposed agreement for special use allowances is a sound 
business arrangement;
    (4) The Government's furnishing of Government-owned facilities is 
undesirable or impractical; and
    (5) The proposed use of the research facility is to conduct 
essential Government research which requires the new or expanded 
facilities.
    (d) Application of the special use allowance. (1) In negotiating a 
special use allowance--
    (i) Compare the needs of DoD and of the institution for the research 
facility to determine the amount of the special use allowance;
    (ii) Consider rental costs for similar space in the area where the 
research facility is or will be located to establish the annual special 
use allowance;
    (iii) Do not include or allow--
    (A) The costs of land; or
    (B) Interest charges on capital;
    (iv) Do not include maintenance, utilities, or other operational 
costs;
    (v) The period of allowance generally will be--
    (A) At least ten years; or
    (B) A shorter period if the total amount to be allowed is less than 
the

[[Page 277]]

construction or acquisition cost for the research facility;
    (vi) Generally, provide for allocation of the special use allowance 
equitably among the Government contracts using the research facility;
    (vii) Special use allowances apply only in the years in which the 
Government has contracts in effect with the institution. However, if in 
any given year there is a reduced level of Government research effort 
which results in the special use allowance being excessive compared to 
the Government research funding, a separate special use allowance may be 
negotiated for that year;
    (viii) Special use allowances may be adjusted for the period before 
construction is complete if the facility is partially occupied and used 
for Government research during that period.
    (2) A special use allowance may be based on either total or partial 
cost of construction or acquisition of the research facility.
    (i) When based on total cost neither the normal use allowance nor 
depreciation will apply--
    (A) During the special use allowance period; and
    (B) After the educational institution has recovered the total 
construction or acquisition cost from the Government or other users.
    (ii) When based on partial cost, normal use allowance and 
depreciation--
    (A) Apply to the balance of costs during the special use allowance 
period to the extent negotiated in the special use allowance agreement; 
and
    (B) Do not apply after the special use allowance period, except for 
normal use allowance applied to the balance.
    (3) During the special use allowance period, the research facility--
    (i) Shall be available for Government research use on a priority 
basis over nongovernment use; and
    (ii) Cannot be put to any significant use other than that which 
justified the special use allowance, unless the head of the contracting 
activity, who approved the special use allowance, consents.
    (4) The Government will pay only an allocable share of the special 
use allowance when the institution makes any substantial use of the 
research facility for parties other than the Government during the 
period when the special use allowance is in effect.
    (5) In no event shall the institution be paid more than the 
acquisition costs.

[56 FR 36416, July 31, 1991, as amended at 60 FR 29500, June 5, 1995]



Sec. 235.015-71   Short form research contract (SFRC).

    (a) Scope. This section prescribes procedures for contracting within 
the U.S. for research on a cost-reimbursement basis with educational 
institutions or nonprofit organizations whose primary purpose is the 
conduct of scientific research.
    (b) Definitions. As used in this section--
    (1) Educational institution means an institution of higher learning 
which--
    (i) Provides facilities for teaching and research; and
    (ii) Is authorized to grant academic degrees.
    (2) Nonprofit organization means--
    (i) Organizations of the type--
    (A) Described in section 501 (c)(3) and (d) of the Internal Revenue 
Code of 1954 (26 U.S.C. 501(c)); and
    (B) Exempt from taxation under section 501(a) of the Internal 
Revenue Code (26 U.S.C. 501(a)); or
    (ii) Any nonprofit scientific organization qualified under a state 
nonprofit organization statute.
    (3) Research includes all effort described as research in 235.001, 
including that part of exploratory development applicable to applied 
research.
    (c) Applicability. (1) Do not use the SFRC for any purpose other 
than as described in this section.
    (2) The procedures in this section may be used if--
    (i) The principal purpose of the acquisition is research from an 
educational institution or a nonprofit organization;
    (ii) The effort will be on a cost-reimbursement basis;
    (iii) The basis for award is--
    (A) A basic research proposal responding to a broad agency 
announcement (FAR 6.102(d)(2)); or
    (B) An unsolicited research proposal (FAR 6.302-1); or

[[Page 278]]

    (C) A proposal establishing or maintaining an essential engineering, 
research, or development capability (FAR 6.302-3); and
    (iv) The contract requires the delivery of designs, drawings, or 
reports as end items.
    (d) Content of research proposal. Research proposals submitted under 
this section must contain--
    (1) All the information in FAR 15.505;
    (2) A statement of work complying with FAR 35.005, and a breakdown 
of the time the principal investigator and any associates will devote to 
the contract (see FAR 35.015(a)). The breakdown will be by work-days, 
work-months, or work-years;
    (3) The executed representations on DD Form 2222-1, Representations 
and Certifications from Offerors Submitting Proposals Under DFARS 
235.70. (Representations and certifications submitted on a one-time 
basis to each contracting office are valid for all SFRC contract awards 
made by that office only if the offeror in each proposal references the 
one-time submission and confirms its validity.);
    (4) A statement that the Government may award a contract under the 
procedures of this section;
    (5)(i) Identification of property in the Contractor-Acquired 
Property clause by showing for each item, when possible--
    (A) The description of the property; and
    (B) The estimated or known cost;
    (ii) The description of the property should be detailed enough to 
enable the contracting officer--
    (A) To determine whether the Government will furnish such property 
under FAR 35.014 and FAR 45.302-1; and
    (B) For property which may be contractor-acquired (versus 
Government-furnished)--
    (1) To accept it as advance notification required by FAR 52.244-2; 
and
    (2) To authorize acquisition at time of award;
    (iii) If the offeror proposes to acquire facilities (FAR 45.301), 
the offeror shall include a written statement which--
    (A) Explains why acquiring these items with contract funds is 
necessary; and
    (B) Expresses the offeror's unwillingness or financial inability to 
acquire the items with the offeror's own resources;
    (iv) Special test equipment or components proposed. Individual items 
of less than $1,000 may be grouped by category (FAR 45.307-2);
    (6) A SF 1411, Contract Pricing Proposal Cover Sheet, or acceptable 
substitute. FAR 52.244-2(b) prescribes information required for 
subcontracts;
    (7) Markings complying with FAR 15.509 on the title page and each 
restricted sheet if the proposal includes data that the offeror does not 
want disclosed for any purpose other than evaluation. In addition, the 
offeror should state in the offer or check Block A on page 2 of the DD 
Form 2222-2 if the offeror grants the Government permission to have 
nongovernment evaluators review the proposal;
    (8) The following statement:

    This proposal incorporates by reference, and makes a part thereof, 
all applicable clauses in DFARS 235.015-71(i) in effect on the effective 
date of the contract or such other dates as may be mutually agreed upon.

    (9) Any other applicable FAR or DFARS clauses agreed to by the 
parties;
    (10) Monthly expenditure estimates by which incremental funding 
periods may be calculated; and
    (11) An executed DD Form 2222-2, Short Form Research Contract 
Research Proposal Cover Page.
    (e) Contracting procedures.
    (1) The contracting officer may award a SFRC under full and open 
competition (FAR Subpart 6.1) when the proposal--
    (i) Is in response to a broad agency announcement under FAR 
6.102(d)(2);
    (ii) Contains the information required by 235.015-71(d); and
    (iii) Has been recommended for award under the peer or scientific 
review procedures of FAR 6.102(d)(2).
    (2) The contracting officer may award an SFRC under other than full 
and open competition (FAR subpart 6.3) when--
    (i) The proposal is an unsolicited research proposal submitted, 
evaluated, and accepted under FAR subpart 15.5, which meets the criteria 
of FAR 6.302-1; or

[[Page 279]]

    (ii) Award is necessary to establish or maintain an essential 
engineering research or development capability under FAR 6.302-1.
    (3) When a research proposal (solicited or unsolicited) is 
satisfactory to the Government, the contracting officer should accept 
the proposal by executing a SFRC incorporating--
    (i) The proposal by reference, or
    (ii) The statement of work by reference.
    (4) When acceptance of the entire research proposal is not 
advantageous to the Government, the contracting officer should use the 
acceptable parts of the research proposal. These parts may be either 
attached or incorporated by reference to develop a contract for 
execution by both parties. In this event, the contractor must sign the 
SFRC before the Government signs.
    (5) Use the DD Form 2222, Short Form Research Center (SFRC) 
Modification, to effect modifications.
    (6) The initial dollar amount and period of performance specified in 
the award document shall include the initial research program only. The 
SFRC shall identify separately the options, periods of performance, and 
costs, if appropriate.
    (7) FAR 35.014 applies to vesting of title in property to 
organizations defined in 235.015-71(b). DD Form 2222 shall identify 
property, title to which is not vested in the contractor, or for which a 
determination of title is deferred.
    (8) The offeror's submission of its proposal under this section 
235.015-71 constitutes the offeror's agreement to be bound by all terms 
and conditions of the resulting contract.
    (f) Advance payments. The contracting officer shall ensure that 
SFRCs awarded to institutions and organizations authorized to receive 
advance payments under FAR subpart 32.4 are clearly marked to read 
``Advance Payment Pool Contract.''
    (g) Method of funding. If incrementally funded, the SFRC shall 
specify--
    (1) The total estimated cost for the full period of the research 
program, both funded and unfunded; and
    (2) The amount of funds currently obligated.
    (h) Uniform contract format. The SFRC is exempt from uniform 
contract format requirements (FAR 15.406).
    (i) SFRC clauses. (1) Include in the contract any FAR or DFARS 
clause agreed to by the parties and incorporate it by reference or full 
text, as appropriate.
    (2) The following clauses should be incorporated by reference in all 
SFRC awards of $25,000 or more. Clauses with a single asterisk (*) apply 
to educational institutions only. Clauses with a double asterisk (**) 
apply to nonprofit organizations only.

FAR 52.202-1  Definitions
FAR 52.203-1  Officials Not to Benefit
FAR 52.203-3  Gratuities
FAR 52.203-5  Covenant Against Contingent Fees
FAR 52.203-6  Restrictions on Subcontractor Sales to the Government
FAR 52.203-7  Anti-Kickback Procedures
252.203-7001  Special Prohibition on Employment
**FAR 52.203-10  Price or Fee Adjustment for Illegal or Improper 
          Activity
FAR 52.209-6  Protecting the Government's Interest When Subcontracting 
          with Contractors Debarred, Suspended, or Proposed for 
          Debarment
252.209-7000  Acquisitions from Subcontractors Subject to On-Site 
          Inspection Under the Intermediate-Range Nuclear Forces (INF) 
          Treaty
FAR 52.215-2  Audit and Records--Negotiation
FAR 52.215-26  Integrity of Unit Prices
**FAR 52.215-30  Facilities Capital Cost of Money (Applies if contract 
          is subject to commercial cost principles, FAR Subpart 31.2)
**FAR 52.215-31  Waiver of Facilities Capital Cost of Money (Applies if 
          contractor does not propose facilities capital cost of money.)
FAR 52.215-33  Order of Precedence
FAR 52.216-7  Allowable Cost and Payment
*FAR 52.216-15  Predetermined Indirect Cost Rates (Applies only when the 
          contractor has an executed negotiation agreement with the 
          cognizant contract administration office. Predetermined rate 
          agreements in effect on the date of the contract shall be 
          incorporated in the contract schedule.)
FAR 52.219-8  Utilization of Small Business and Small Disadvantaged 
          Business Concerns
FAR 52.219-13  Utilization of Women-Owned Small Businesses
FAR 52.220-3  Utilization of Labor Surplus Area Concerns
FAR 52.222-3  Convict Labor

[[Page 280]]

FAR 52.222-26  Equal Opportunity (Add Alternate I as a special provision 
          when applicable.)
FAR 52.222-35  Affirmative Action for Special Disabled and Vietnam Era 
          Veterans
FAR 52.222-36  Affirmative Action for Handicapped Workers
FAR 52.222-37  Employment Reports on Special Disabled Veterans and 
          Veterans of Vietnam Era
FAR 52.223-6  Drug-Free Workplace
FAR 52.225-13  Restrictions on Contracting with Sanctioned Persons
252.225-7016 and Restriction on Acquisition of Foreign Machine Tools
and Alternate I (if applicable)
FAR 52.227-1 and Alternate I  Authorization and Consent
FAR 52.227-2  Notice and Assistance Regarding Patent and Copyright 
          Infringement
FAR 52.227-14  Rights in Data--General (Specify applicable Alternate in 
          contract.)
252.227-7013 and Alternate I  Rights in Technical Data and Computer 
          Software
252.227-7018  Restrictive Markings on Technical Data
252.227-7029  Identification of Technical Data
**252.227-7030  Technical Data--Withholding of Payment
FAR 52.228-7  Insurance--Liability to Third Persons Alternates I and II, 
          if applicable)
**252.231-7000  Supplemental Cost Principles (Applies to nonprofit 
          institutions, when allowability of costs is determined under 
          FAR Subpart 31.2)
FAR 52.232-23  Assignment of Claims
FAR 52.232-25  Prompt Payment
FAR 52.233-1  Disputes
FAR 52.233-3 and Alternate I  Protest After Award
252.235-7004  Option to Extend the Term of the Contract
252.235-7005  Contractor-Acquired Property
252.235-7006  Title to Contractor-Acquired Property
252.235-7007  Advance Payments
252.235-7008  Inspection and Acceptance
252.235-7009  Restriction on Printing
FAR 52.242-1  Notice of Intent to Disallow Costs
252.242-7001  Certification of Indirect Cost
252.242-7004  Material Management and Accounting System
**FAR 52.243-2 and Alternate V  Changes--Cost-Reimbursement
FAR 52.244-2 and Alternate I  Subcontracts (Cost-Reimbursement and 
          Letter Contracts)
FAR 52.244-5  Competition in Subcontracting
FAR 52.245-5 and Alternate I  Government Property (Cost-Reimbursement, 
          Time-and-Material, or Labor-Hour Contracts.)
FAR 52.247-63  Preference for U.S.-Flag Air Carriers
FAR 52.251-1  Government Supply Sources
252.251-7000  Ordering from Government Supply Sources
FAR 52.253-1  Computer Generation of Forms by the Public

    (3) The following clauses should be incorporated by reference in all 
SFRC contracts of $100,000 or more. Clauses with a double asterisk (**) 
apply to nonprofit organizations only.

FAR 52.203-12  Limitation on Payments to Influence Certain Federal 
          Transactions.
252.203-7000  Statutory Prohibitions on Compensation to Former 
          Department of Defense Employees
FAR 52.222-2  Payment for Overtime Premiums (The word ``zero'' is 
          inserted in the blank space indicated by an asterisk.)
FAR 52.223-2  Clean Air and Water Act (Applies if contract amount 
          exceeds the dollar amount set forth in the preamble to the 
          clause.)
**FAR 52.230-2  Cost Accounting Standards (If contract is not exempt 
          under 48 CFR chapter 99 (appendix B, FAR looseleaf edition), 
          subpart 9903.201.)
**FAR 52.230-3  Disclosure and Consistency of Cost Accounting Practices 
          (If contract is not exempt under 48 CFR chapter 99 (appendix 
          B, FAR looseleaf edition), subpart 9903.201.)
**FAR 52.230-5  Administration of Cost Accounting Standards (If contract 
          is not exempt under 48 CFR chapter 99 (appendix B, FAR 
          looseleaf edition), subpart 9903.201.)
252.231-7001  Penalties for Unallowable Costs.
252.233-7000  Certification of Claims and Requests for Adjustment or 
          Relief.
    (4) The following clauses should be incorporated by reference, if 
applicable.

FAR 52.215-22  Price Reduction for Defective Cost or Pricing Data
FAR 52.215-24  Subcontractor Cost or Pricing Data (Applies only if FAR 
          52.215-22 applies.)
FAR 52.215-27  Termination of Defined Benefit Pension Plans (Applies if 
          certified cost and pricing data are required and cost 
          determinations are subject to FAR Subpart 31.2.)
252.215-7000  Pricing Adjustments (Applicable if FAR 52.215-23, 24, or 
          25 applies.)
FAR 52.216-8  Fixed Fee (Applies in cost-plus-fixed-fee contracts.)
FAR 52.216-11 and Alternate I  Cost Contract--No Fee
FAR 52.216-12 and Alternate I  Cost Sharing Contract--No Fee
252.225-7000  Pricing Adjustments (Applies if FAR 52.215-23, 24, or 25 
          applies.)

[[Page 281]]

252.225-7023  Reporting of Subcontracts (Applies only when contract 
          action exceeds $500,000, or when any modification increases 
          contract amount to more than $500,000.)
FAR 52.227-11  Patents Rights--Retention by the Contractor (Short Form)
252.227-7034  Patents--Subcontracts
252.227-7039  Patents--Reporting of Subject Inventions
FAR 52.232-9  Limitation on Withholding of Payments
FAR 52.232-17  Interest
FAR 52.232-20  Limitation of Cost (Applies only when contract is fully 
          funded.)
FAR 52.232-22  Limitation of Funds (Applies only when contract is 
          incrementally funded.)
FAR 52.232-28  Electronic Funds Transfer Payment Methods
FAR 52.246-23  Limitation of Liability
FAR 52.246-24  Limitation of Liability--High Value Items
FAR 52.246-25  Limitation of Liability--Services
FAR 52.249-5  Termination for Convenience of the Government (Educational 
          and Other Nonprofit Institutions). (Applies if work is done on 
          a no-profit or no-fee basis)
FAR 52.249-6  Termination (Cost Reimbursement) (Applies if work is 
          performed on a fee or profit basis.)
FAR 52.249-14  Excusable Delays (Applies only to contracts in which FAR 
          52.249-6 applies.)

[56 FR 36416, July 31, 1991, as amended at 57 FR 53600, Nov. 12, 1992; 
59 FR 27673, May 27, 1994; 60 FR 61598, Nov. 30, 1995]



Sec. 235.016   Broad agency announcement.

    To help achieve the goals of Section 1207 of Public Law 99-661 (see 
part 226), contracting officers shall--
    (1) Whenever practicable, reserve discrete or severable areas of 
research interest contained in broad agency announcements for exclusive 
competition among historically black colleges and universities and 
minority institutions;
    (2) Indicate such reservation--
    (i) In the broad agency announcement; and
    (ii) In the announcement synopsis (see 205.207(d)(v)).



Sec. 235.017  Federally Funded Research and Development Centers.

    (a) Policy.
    (2) No DoD fiscal year 1992 or later funds may be obligated or 
expended to finance activities of a DoD Federally Funded Research and 
Development Center (FFRDC) if a member of its board of directors or 
trustees simultaneously serves on the board of directors or trustees of 
a profit-making company under contract to DoD, unless the FFRDC has a 
DoD-approved conflict of interest policy for its members (section 8107 
of Pub. L. 102-172 and similar sections in subsequent Defense 
appropriations acts).

[58 FR 28471, May 13, 1993]



Sec. 235.017-1  Sponsoring agreements.

    (c)(4) DoD-sponsoring FFRDCs that function primarily as research 
laboratories (C3I Laboratory operated by the Institute for Defense 
Analysis, Lincoln Laboratory operated by Massachusetts Institute of 
Technology, and Software Engineering Institute) may respond to 
solicitations and announcements for programs which promote research, 
development, demonstration, or transfer of technology (Section 217, 
Public Law 103-337).

[60 FR 61598, Nov. 30, 1995]
235.070  Indemnification against unusually hazardous risks.



Sec. 235.070-1   Indemnification under research and development contracts.

    (a) Under 10 U.S.C. 2354 and if authorized by the Secretary 
concerned, or designee under 10 U.S.C. 2356, contracts for research and/
or development may provide for indemnification of the contractor or 
subcontractors for--
    (1) Claims by third persons (including employees) for death, bodily 
injury, or loss of or damage to property; and
    (2) Loss of or damage to the contractor's property to the extent 
that the liability, loss, or damage--
    (i) Results from a risk that the contract defines as ``unusually 
hazardous;''
    (ii) Arises from the direct performance of the contract; and
    (iii) Is not compensated by insurance or other means.
    (b) Clearly define the specific unusually hazardous risks to be 
indemnified. Submit this definition for approval with the request for 
authorization to grant indemnification. Include the approved definition 
in the contract.

[[Page 282]]



Sec. 235.070-2   Indemnification under contracts involving both research and development and other work.

    These contracts may provide for indemnification under the authority 
of both 10 U.S.C. 2354 and Public Law 85-804. Public Law 85-804 will 
apply only to work to which 10 U.S.C. 2354 does not apply. Actions under 
Public Law 85-804 must also comply with FAR subpart 50.4.



Sec. 235.070-3   Contract clauses.

    When the contractor is to be indemnified in accordance with 235.070-
1, use either--
    (a) The clause at 252.235-7000, Indemnification Under 10 U.S.C. 
2354--Fixed Price; or
    (b) The clause at 252.235-7001, Indemnification Under 10 U.S.C. 
2354--Cost-Reimbursement, as appropriate.



Sec. 235.071   Additional contract clauses.

    (a) Use the clause at 252.235-7002, Animal Welfare, or one 
substantially the same, in solicitations and contracts awarded in the 
United States, its possessions, and Puerto Rico involving research on 
live vertebrate animals.
    (b) Use the clause at 252.235-7003, Frequency Authorization, in 
solicitations and contracts for developing, producing, constructing, 
testing, or operating a device requiring a frequency authorization.
    (c) Use the clause at 252.235-7010, Acknowledgement of Support and 
Disclaimer, in solicitations and contracts for research and development.
    (d) Use the clause at 252.235-7011, Final Scientific or Technical 
Report, in solicitations and contracts for research and development.

[56 FR 36416, July 31, 1991, as amended at 60 FR 29500, June 5, 1995]



    Subpart 235.70--Research and Development Streamlined Contracting 
                            Procedures--Test

    Source: 59 FR 52443, Oct. 18, 1994, unless otherwise noted.



Sec. 235.7000  Scope.

    This subpart prescribes streamlined acquisition procedures for use 
in support of DoD laboratories in acquiring research and development, as 
defined in 235.001 and FAR 35.001.



Sec. 235.7001  Definitions.

    As used in this subpart--
    (a) Research and development standard contract (RDSC) means the 
contract that results from the use of the research and development 
streamlined solicitation (RDSS), or other solicitation procedures that 
meet the criteria for use of the RDSS.
    (b) Research and development streamlined solicitation (RDSS) means 
the solicitation published in the Commerce Business Daily and a 
supplemental package, if necessary.
    (c) Supplemental package is part of the streamlined solicitation, if 
appropriate. It contains any information that is too voluminous to be 
included in the solicitation published in the Commerce Business Daily.



Sec. 235.7002  Applicability.

    (a) Contracting offices that have been approved by the Director of 
Defense Procurement for participation in the test may use the procedures 
of this subpart in accordance with the approved test plan and paragraphs 
(b) through (d) of this section. The Director of Defense Procurement has 
approved--
    (1) Army: Army Materiel Command contracting offices when contracting 
for Army Research Laboratory, Missile Research & Development Center, and 
the Medical Research & Development Command; Army Corps of Engineers 
contracting offices when contracting for the Waterways Experiment 
Station; Army Soldier Systems Command contracting office.
    (2) Navy: Naval Research Laboratory contracting office; Naval 
Surface Warface Center contracting offices when contracting for the 
Carderock, Crane, Dahlgren, Indian Head and Port Hueneme divisions; 
Naval Undersea Warfare Center contracting office; Naval Command, Control 
and Ocean Surveillance Center contracting office.
    (3) Air Force: Air Force Materiel Command contracting offices when 
contracting for Armstrong Laboratory, Phillips Laboratory, Rome 
Laboratory, Wright Laboratory.

[[Page 283]]

    (4) Defense Agencies: Armed Forces Radiobiology Research Institute 
contracting office, Defense Special Weapons Agency contracting office.
    (b) Consider using the procedures in this subpart when the 
acquisition will result in a cost-reimbursement type contract that is 
valued at $10,000,000 or less and meets the criteria for research and 
development as defined in 235.001 and FAR 35.001.
    (c) Do not use the procedures of this subpart to contract for 
``engineering development,'' ``operational system development,'' or 
``management and support'' as defined in 235.001; or for laboratory 
supplies and equipment, base support services, or other services 
identified in FAR 37.101 (a) through (h).
    (d) Regardless of whether or not the RDSS is used, the contracting 
officer may use the RDSC format at 235.7006 for any acquisition that 
meets the criteria in 235.7002(b).

[59 FR 52443, Oct. 18, 1994, as amended at 60 FR 15690, Mar. 27, 1995; 
60 FR 61598, Nov. 30, 1995; 61 FR 50454, Sept. 26, 1996]



Sec. 235.7003  Reporting requirements.

    (a) The reporting requirement in this subpart is exempt from 
licensing in accordance with paragraph E.4.c. of DoD 8910.1M, ``DoD 
Procedures for Management of Information Requirements.''
    (b) Contracting offices that have been approved for participation in 
the test shall report the information required in paragraphs (c) and (d) 
of this subpart to their representatives on the Test Oversight 
Committee. These representatives are--
    (1) Army: Mr. Chuck Boylan, Army Research Laboratory, Fort Monmouth, 
Phone: (908) 427-3471; DSN 987-3471; FAX: (908) 532-5188; DSN 992-5188
    (2) Navy: Ms. Mary Ann Carpenter, Naval Research Laboratory, Phone: 
(202) 767-0066; DSN 297-0066, FAX: (202) 767-5896; DSN 297-5896.
    (3) Air Force: Lt Col Bill Borchardt, Air Force Materiel Command, 
Wright-Patterson Air Force Base, Phone: (513) 257-8934; DSN 787-8934, 
FAX: (513) 476-1431; DSN 986-1431.
    (4) Defense Agencies:
    (i) Armed Forces Radiobiology Research Institute: Major Vikki 
Stocker, Logistics and Engineering, Phone: (301) 295-0454; DSN 295-0454, 
FAX: (301) 295-1863; DSN 295-1863.
    (ii) Defense Special Weapons Agency: Mr. Tom McCabe, Acquisition 
Management Directorate, Phone: (703) 325-6961; DSN 221-6961, FAX: (703) 
325-9291; DSN 221-9291.
    (c) Each approved test contracting office shall collect the 
following aggregate data during the test period:
    (1) Number of contract actions selected for the test.
    (2) Number of claims related to the streamlined procedures and 
streamlined solicitation/standard contract.
    (3) Contracting office feedback regarding--
    (i) The streamlined procedures.
    (ii) Use of the RDSC.
    (4) Number of acquisitions processed that used the RDSC in 
conjunction with traditional solicitations.
    (5) Number of solicitations and contracts in which clauses and 
provisions not listed in the format at 235.7006 are added.
    (6) Number of actions removed from the test due to inability to 
comply with RDSS/C procedures, with a brief description of the 
reasons(s) for the inability to comply.
    (d) Each approved test contracting office shall collect and provide 
the following data for each contracting action processed using the 
streamlined procedures:
    (1) Activity processing the contracting action.
    (2) Total value of the resulting contract.
    (3) Brief description of the item/service acquired.
    (4) Procurement action lead time for the specific action.
    (5) Whether or not a supplemental package was used.
    (i) Size (number of pages).
    (ii) Contents.
    (6) Use of RDSC in conjunction with traditional solicitations.
    (7) If a protest is filed, the issues under protest, and the 
disposition.
    (8) The rationale supporting any requests for replacement of RDSS 
with a traditional solicitation.
    (9) At a minimum any request for modification of the research and 
development streamlined contracting format or procedures, and any 
request for

[[Page 284]]

one time only use of FAR and DFARS provisions and clauses and 
nonstandard provisions and clauses approved for agency use, that are not 
in the research and development streamlined contracting format at 
235.7006 must include the information required by 201.402(3) (i) through 
(ix).

[59 FR 52443, Oct. 18, 1994, as amended at 60 FR 15690, Mar. 27, 1995; 
60 FR 61599, Nov. 30, 1995; 61 FR 7744, Feb. 29, 1996; 61 FR 50454, 
Sept. 26, 1996]



Sec. 235.7004  The research and development streamlined solicitation (RDSS).



Sec. 235.7004-1  General.

    The RDSS process consists of:
    (a) Synopsis. The synopsis required by FAR 5.203(a), in addition to 
providing the information set forth at FAR 5.207, must advise potential 
offerors that a conventional solicitation will not be issued but that 
the solicitation will appear in a subsequent edition of the Commerce 
Business Daily (CBD). The synopsis must also advise potential offerors 
to provide address information to the office indicated in order to be 
included on the mailing list for any supplemental packages and/or 
amendments.
    (b) Solicitation. The solicitation is published in a second CBD 
notice. The solicitation consists of the information listed at 
235.7006(d)(A.1), including the statement of work, and incorporates by 
reference the appropriate terms and conditions in the format at 
235.7006. FAR 5.207 limits the submissions to the CBD to 12,000 textual 
characters (approximately 3\1/2\ single-spaced pages).
    (c) Supplemental package. Use a supplemental package if the 
solicitation must exceed 3\1/2\ single-spaced pages, or to provide forms 
or other printed material to potential offerors. Send the supplemental 
package on the date the solicitation is published in the CBD to all 
interested parties that provide address information.
    (d) Amendments. Amend the RDSS as set forth at 235.7004-2(f).

[59 FR 52443, Oct. 18, 1994, as amended at 60 FR 15690, Mar. 27, 1995]



Sec. 235.7004-2  Solicitation procedures.

    (a) Publish the synopsis as soon as the information required by FAR 
5.207 is available.
    (b) Publish the solicitation no earlier than 15 days after 
publication of the synopsis and include, as a minimum, the information 
required by 235.7006(d)(A.1) and a reference to the synopsis.
    (c) Send any supplemental package on the date the solicitation is 
published in the Commerce Business Daily, to all interested parties that 
provided address information.
    (d) In accordance with FAR 5.203(b), establish a due date for 
submission of offers that is no earlier than 45 days after publication 
of the synopsis.
    (e) Request cost and technical proposals from all offerors. To 
encourage preparation of better cost proposals, consider allowing a 
delay between the due dates for technical and cost proposals.
    (f) Amend the solicitation, if necessary, by forwarding an SF 30, 
Amendment of Solicitation/Modification of Contract, to all interested 
parties that provided address information in response to the synopsis.
    (g) Post copies of all Commerce Business Daily notices in accordance 
with FAR 5.101(a)(2).

[59 FR 52443, Oct. 18, 1994, as amended at 60 FR 15690, Mar. 27, 1995]



Sec. 235.7004-3  Proposal evaluation and contract award procedures.

    (a) Evaluate proposals in accordance with FAR subpart 15.6, as 
supplemented by departmental procedures and this subpart.
    (b) Select the proposal which offers the greatest value in terms of 
the evaluation factors set forth in the RDSS.
    (c) Before award, require the apparent successful offeror to submit 
the representations and certifications set forth in 235.7006(d), Section 
K, Representations, Certifications and Other Statements of Offerors or 
Quoters.
    (d) Whenever appropriate, award without discussion pursuant to FAR 
52.215-16, Alternate (II).

[59 FR 52443, Oct. 18, 1994, as amended at 60 FR 15690, Mar. 27, 1995; 
60 FR 61598, Nov. 30, 1995; 61 FR 7744, Feb. 29, 1996]

[[Page 285]]



Sec. 235.7005  The research and development standard contract (RDSC).

    The RDSC is the standard contract that results from the use of the 
RDSS or other solicitation procedures that meet the criteria for use of 
the RDSS. Include the following in RDSCs:
    (a) Standard Form (SF) 33, Solicitation, Offer and Award, or SF 26, 
Award/Contract;
    (b) Sections B through J of the RDSS or other solicitation, with 
applicable fill-ins completed and clause dates added.



Sec. 235.7006  The research and development streamlined contracting format.

    (a) The clauses and provisions prescribed in the exhibit to 
paragraph (d) of this section are mandatory unless they are marked with 
an asterisk. Terms, clauses and provisions marked with an asterisk are 
for use as appropriate as prescribed elsewhere in FAR and DFARS. List 
the numbers of any asterisked terms, clauses and provisions that apply 
to the acquisition in the solicitation published in the Commerce 
Business Daily (See 235.7006(d)(A.1)(v)).
    (b) At the time of contract award to educational or nonprofit 
institutions, delete those clauses and provisions that do not apply to 
such institutions, and, as necessary, replace with the appropriate 
alternatives. For example, FAR 52.203-10 will be included in all 
solicitations, but deleted in awards to educational institutions.
    (c) Test Oversight Committee members may authorize for their 
respective agencies, on a one time only basis, the use of FAR and DFARS 
provisions and clauses, and nonstandard provisions and clauses approved 
for agency use, that are not in the research and development streamlined 
contracting format at 235.7006. Any other modification of the research 
and development streamlined contracting format or procedures requires 
approval of the Director of Defense Procurement. Each Test Oversight 
Committee member shall ensure that the supporting data is accurate and 
complete.
    (d) The research and development streamlined contracting format is 
set forth in the following exhibit:

    Exhibit--Research and Development Streamlined Contracting Format

                          Part I--The Schedule

                  Section A, Solicitation/Contract Form

    (A.1)  Research and development streamlined solicitation (RDSS). 
Include the following in the RDSS:
    (i) Solicitation number;
    (ii) A statement that award will be made in accordance with DFARS 
Subpart 235.70, Research and Development Streamlined Contracting 
Procedures;
    (iii) A statement as to whether the RDSS includes a supplemental 
package.
    (iv) Instructions for obtaining any supplemental package, including 
use of Electronic Bulletin Boards, as appropriate;
    (v) A statement that all of the mandatory terms, clauses, and 
provisions, and certain asterisked terms, clauses, and provisions in 
DFARS 235.7006 are incorporated by reference. This statement must list 
the asterisked terms, clauses and provisions that apply. (For example: 
``All of the mandatory terms, clauses and provisions at DFARS 235.7006, 
Research and development streamlined contracting format, and the 
following optional items are incorporated by reference: B.4, B.5, C.1, 
E.3, I.80'');
    (vi) A statement that the clauses and provisions are those in effect 
through FAC ____ and DAC ____;
    (vii) A statement that the standard evaluation factors at Section M 
of this subpart apply, or, if they do not apply, the applicable 
evaluation factors. If the standard evaluation factors are modified in 
any way, the modifications must be clearly expressed so that the result 
is unambiguous. Additions to and deletions from Section M must be 
clearly annotated in the RDSS.
    (viii) Identification of data requirements by including either:
    (A) A summary of the data requirements that identifies all 
deliverable data items, and specifies number of copies and frequency of 
delivery; or
    (B) A notice that DD Form 1423, Contract Data Requirements List, is 
included in the supplemental package;
    (ix) Type of cost contract contemplated;
    (x) Estimated period of performance;
    (xi) Notice of preproposal conference, if applicable, with location, 
date, and time;
    (xii) Notice of small business or other set-aside, if applicable;
    (xiii) Notice of place, date, and time technical and cost proposals 
are due;
    (xiv) Number of copies of technical and cost proposals required;
    (xv) Proposal page limitations;
    (xvi) Whether multiple awards are contemplated;
    (xvii) Name, address, and telephone number of contracting officer;

[[Page 286]]

    (xviii) Any applicable Commerce Business Daily numbered notes;
    (xix) Statement that a DD Form 254, Contract Security Classification 
Specification, will be included in the supplemental package, if 
appropriate; and
    (xx) The statement of work, or a statement that the statement of 
work is in the supplemental package.
    (A.2)  Research and development standard contract (RDSC). Use either 
Standard Form (SF) 33, Solicitation, Offer and Award, or SF 26, Award/
Contract.

            Section B, Supplies or Services and Prices/Costs

    (Use appropriate CLIN structure. Include item descriptions.)
    (B.1)  Type of Contract.
    This is a ________ contract.
    (B.2)*  Estimated Cost. (Use when no fee will be paid)
    The total estimated cost for this contract is $________.
    (B.3)*  Cost Plus Fixed Fee. (Applicable to fee-bearing contracts)
    The total estimated cost for this contract is $________.
    The total fixed fee for this contract is $________.
    (B.4)*  Award Fee. (Applicable to award fee-type contracts)
    In addition to the fee set forth elsewhere in the contract, the 
Contractor may earn an award fee up to $________ on the basis of 
performance during the performance periods, and in the amount specified 
in the award fee plan.
    (i) Monitoring of performance. The contractor's performance will be 
monitored continually by the Award Fee Review Board.
    (ii) Award fee plan. This plan provides necessary administrative 
information, including the evaluation criteria and schedule, for the 
purpose of implementing the award fee provision. Upon contract award, 
the Contractor will be provided the award fee plan subject to any 
withholdings autorized by the ____ (insert appropriate contracting 
official).
    (iii) Modification of award fee plan. Before the start of an 
evaluation period the Government may unilaterally:
    (A) Modify the award fee performance evaluation criteria and areas 
applicable to the evaluation period; and
    (B) Redistribute the remaining award fee dollars among the remaining 
periods. The Contracting Officer will notify the Contractor in writing 
of the changes and modify the award fee plan accordingly.
    (iv) The following standards of performance shall be used in 
determining whether and to what extent the Contractor has earned or may 
be entitled to receive any award fee:
    (A) Excellent performance: Contractor performance of virtually all 
contract task requirements is uniformly well above standard and exceeds 
the standard by a substantial margin in numerous significant tangible or 
intangible benefits to the Government (i.e., improved quality, 
responsiveness, increased timeliness, or generally enhanced 
effectiveness of operations). There are few areas for improvement; these 
areas are all minor; there are no recurring problems; and management has 
initiated effective corrective action whenever needed.
    (B) Very good performance: The contractor's performance of most 
contract task requirements is uniformly well above standard and exceeds 
the standard in many significant areas. Although some areas may require 
improvements, these are minor and are more than offset by better 
performance in other areas. Few, if any, recurring deficiencies have 
been noted in the Contractor's performance and the contractor has 
demonstrated/taken satisfactory corrective action. Innovative management 
actions have resulted in tangible or intangible benefits to the 
Government (i.e., improved quality, responsiveness, increased quantity, 
increased timeliness, or generally enhanced effectiveness of 
operations).
    (C) Good performance: Contractor's performance of most contract task 
requirements meets the standard, and it exceeds the standard in several 
significant areas. While the remainder of the contractor's effort 
generally meets contract requirements, areas requiring improvement are 
more than offset by better performance in other areas. Management 
actions taken or initiated have resulted in some demonstrated benefits 
to the Government (i.e., improved quality, responsiveness, timeliness, 
or effectiveness of operations).
    (D) Marginal performance: Contractor performance meets most contract 
standards. Although there are areas of good or better performance, these 
are more or less offset by lower rated performance in other areas. 
Little additional tangible benefit is observable due to contractor 
effort or initiative.
    (E) Submarginal performance: Contractor performance is below 
standard in several areas. Contractor performance in accordance with 
requirements is inconsistent. Quality, responsiveness, timeliness, and/
or economy in many areas require attention and action. Corrective 
actions have not been taken, or are ineffective. Overall submarginal 
performance shall not be given award fee.
    (v) Maximum payable award fee. The maximum payable award fee in any 
evaluation period shall be determined based on the amount set forth in 
the applicable contract line items and a percentage based on the 
Government's evaluation on the Contractor's performance as follows:

------------------------------------------------------------------------
                                           Percent of maximum award fee 
              Performance                            payable            
------------------------------------------------------------------------
Excellent..............................  ____ to ____                   

[[Page 287]]

                                                                        
Very Good..............................  ____ to ____                   
Good...................................  ____ to ____                   
Marginal...............................  ____ to ____                   
Submarginal............................  0                              
------------------------------------------------------------------------

    (vi) Self-evaluation. The Contractor may submit to the Contracting 
Officer within five working days after the end of each award fee 
evaluation period, a brief written self-evaluation of its performance 
for the period. This statement may contain information which may be used 
to assist the Award Fee Review Board in its evaluation of the 
Contractor's performance during the period.
    (vii) Disputes. The decision of the Fee Determining Official on the 
amount of award fee will not be subject to the ``Disputes'' clause.
    (viii) Award fee payment.
    (A) As determined by the Fee Determining Official, payment of any 
award fee will not be subject to the ``Allowable Cost and Payment'' and 
``Termination (Cost Reimbursement)'' clauses of this contract.
    (B) The Contractor may submit vouchers for the award fee immediately 
upon receipt of the Contracting Officer's written award fee 
notification.
    (B.5)*  Target Cost and Fee. (Applicable to incentive fee-type 
contracts.)
    The target cost is $________.
    The target fee is $________.
    The minimum fee the contractor may receive $________.
    The maximum fee the contractor may receive $________.
    Share ration: ________. (Government/Contractor)
    (B.6)*  Payment of Fixed Fee on Cost-plus-fixed-fee (Completion) 
Contracts. The fixed fee shall be paid in monthly installments based 
upon the percentage of completion of work as determined by the 
Administrative Contracting Officer, subject to the withholding 
provisions of the Contract.
    (B.7)*  Payment of Fixed Fee on Cost-plus-fixed-fee (Term) 
Contracts. (Applicable to cost-plus-fixed-fee (term) contracts when the 
clause at FAR 52.216-8 is used.) Pursuant to the clause at FAR 52.216-8, 
``Fixed Fee,'' and subject to withholding provisions contained in that 
clause or elsewhere in this contract, fixed fee shall be paid to the 
Contractor based upon the percentage of hours completed as related to 
the total hours set forth in the contract on each voucher. The 
Contractor shall certify to the level of effort expended during that 
period. The Government technical representative shall sign a statement 
on the certificate that the work performed during the period has been 
performed satisfactorily.
    (B.8)*  Options. (Applicable to contracts with options) The 
Government may require performance of the work required by CLIN 
________. The Contracting Officer shall provide written notice of intent 
to exercise this option to the Contractor on or before ________. If the 
Government exercises this option by ________ (insert date), the 
Contractor shall perform at the estimated cost and fee, if applicable, 
set forth below.

Estimated Cost..........................................       $________
  or                                                                    
Estimated Cost..........................................       $________
Fixed Fee...............................................       $________
                                                         ---------------
      Total.............................................       $________
  or                                                                    
Estimated Cost..........................................       $________
Base Fee................................................       $________
Maximum Award Fee.......................................       $________
                                                         ---------------
      Total.............................................       $________
  or                                                                    
Target Cost.............................................       $________
Minimum Fee.............................................       $________
Target Fee..............................................       $________
Maximum Fee.............................................       $________
Share Ratio.............................................       $________
                                                                        

          Section C, Description/Specifications/Work Statements

    (C.1)*  Classified Work Statement. (Applicable if Section C is 
classified.) The description/specifications/work statement entitled, 
``________,'' classified ________, dated ________, is incorporated 
herein by reference. A copy may be obtained from the Contracting 
Officer, if a need-to-know is established and appropriate security 
clearance has been granted.
    (C.2)*  Unclassified Work Statement. (Applicable if Section C is 
unclassified and is attached to the contract.) The description/
specifications/work statement is included as Attachment ________.
    (C.3)*  Contractor's Technical Proposal. (Applicable if portions of 
the Contractor's proposal are incorporated by reference. Include only 
those portions of the proposal that specifically describe the work to be 
performed.) The Contractor's proposal entitled, ``________,'' pages 
________, dated ________, is incorporated herein by reference.

                     Section D, Packing and Marking

    (D.1)  Commercial Packaging.
    Preservation, packaging, and packing shall provide adequate 
protection against physical damage during shipment for all deliverable 
items in accordance with standard commercial practices.

                  Section E, Inspection and Acceptance

    (1) Federal Acquisition Regulation clauses.

[[Page 288]]



                                                                        
                                                                        
(E.1)*.............  52.246-8.............  Inspection of Research and  
                                             Development--Cost          
                                             Reimbursement              
(E.2)*.............  52.246-8.............  Inspection of Research and  
                                             Development--Cost          
                                             Reimbursement (Alternate I)
(E.3)*.............  52.246-9.............  Inspection of Research and  
                                             Development (Short Form)   
------------------------------------------------------------------------

    (2) Defense Federal Acquisition Regulation Supplement clauses.

                                                                        
                                                                        
(E.4)*...........  252.246-7000.............  Material Inspection and   
                                               Receiving Report         
------------------------------------------------------------------------

    (3) Other provisions.
    (E.5)  Inspection and Acceptance
    Inspection and acceptance of any and all deliverables under this 
contract will be accomplished by the contracting officer or a designated 
representative.

                  Section F, Deliveries or Performance

    (F.1)  FAR 52.212-13  Stop Work Order-Alternate I.
    (F.2)  Delivery of Reports.
    (i) All data shall be delivered in accordance with the delivery 
schedule shown on the Contract Data Requirements List, attachments, or 
as incorporated by reference.
    (ii) All reports and correspondence submitted under this contract 
shall include the contract number and project number and be forwarded 
prepaid. A copy of the letters of transmittal shall be delivered to the 
Procuring Contracting Officer (PCO) and the Administrative Contracting 
Officer (ACO). The addresses are set forth on the contract award cover 
page. All other address(es) and code(s) for consignee(s) are as set 
forth in the contract or incorporated by reference.
    (F.3)*  FAR 52.247-55  F.O.B. Point for Delivery of Government-
Furnished Property

                 Section G, Contract Administration Data

    (G.1)*  Contractor Payment Address. (To be filled in at time of 
contract award. Applicable if the Contractor has specified a payment 
address other than the address shown on the cover page of the contract.)

Contract Payment Address:

_______________________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

    (G.2)*  Incremental Funding. (Applicable to incrementally funded 
contracts.) This contract is incrementally funded pursuant to the 
``Limitation of Funds clause, FAR 52.232-22. Funds are hereby obligated 
in the amount of $________ and it is estimated that they are sufficient 
for contract performance through ________. From time to time, additional 
funds will be allotted to the contract in accordance with FAR 52.232-22.
    (G.3)*  Request for Equal Opportunity Preaward Clearance of 
Subcontracts. (Applicable to subcontracts over $1 million.) To provide 
the Contracting Officer with adequate time to process the Contractor's 
request for preaward clearance of subcontracts as required by FAR 
52.222-28, the prime contractor shall request preaward clearance through 
the Contracting Officer at least 30 calendar days before the proposed 
award date, unless the cognizant Department of Labor Compliance Office 
agrees to a shorter time.
    (G.4)*  Contracting Officer's Representative. (To be filled in at 
time of contract award.) The Contract Officer's Representative for this 
contract is:

_______________________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

                Section H, Special Contract Requirements

    (H.1)  Incorporation of Section K by Reference. Pursuant to Federal 
Acquisition Regulation (FAR) 15.406-1(b), Section K of the solicitation 
is hereby incorporated by reference.
    (H.2)*  Rent-Free Use of Government Property. The Contractor may use 
on a rent-free, noninterference basis, as necessary for the performance 
of this contract, the Government property accountable under contract(s) 
________. The Contractor is responsible for scheduling the use of all 
property covered by the above referenced contract(s) and the Government 
shall not be responsible for conflicts, delays, or disruptions to any 
work performed by the Contractor due to use of any or all such property 
under this contract or any other contracts under which use of such 
property is authorized.
    (H.3)*  Government-Furnished Property. The Government will furnish 
to the Contractor for use in the performance of the contract on a rent-
free basis the Government-owned property listed in an attachment to this 
contract, subject to the provisions of the Government Property Clause of 
the Contract Clauses.
    (H.4)  Scientific/Technical Information. If not already registered, 
the Contractor is encouraged to register for Defense Technical

[[Page 289]]

Information Center (DTIC) service by contacting the following: Defense 
Technical Information Center, Attn: Registration Section (DTIC-BCS), 
8725 Kingman Road, Suite 0944, Fort Belvoir, VA 22060-6218, (703) 767-
8273, or 1-800-CAL-DTIC (225-3842), menu selection 2.
    To avoid duplication of effort and conserve scientific and technical 
resources, the Contractor is encouraged to search existing sources in 
DTIC to determine the current state of the art concepts, studies, etc.
    (H.5)  List of Data to be Provided with Other Than Unlimited Rights 
(See 227.403-70(b) and 252.227-7013(k)).
    With the exception of the technical data or computer software set 
out below, technical data and computer software to be delivered under 
this contract shall be furnished with unlimited rights as defined in 
Section I clause DFARS 252.227-7013.

----------------------------------------------------------------------------------------------------------------
Items, components, processes or computer                                                                        
                software                     Drawing/document No. or title            Government's rights       
----------------------------------------------------------------------------------------------------------------
                                          ..................................  ..................................
                                          ..................................  ..................................
                                          ..................................  ..................................
                                          ..................................  ..................................
----------------------------------------------------------------------------------------------------------------

    (H.6)*  (Insert nonstandard clause approved in accordance with 
235.7006(c), if applicable.)


                                            Part II--Contract Clauses                                           
                                                                                                                
                                           Section I, Contract Clauses                                          
                                                                                                                
(I.1)............................  52.252-2...................................  Clauses Incorporated by         
                                                                                 Reference.                     
(I.2)............................  52.202-1...................................  Definitions.                    
(I.3)............................  Reserved...................................                                  
(I.4)............................  52.203-3...................................  Gratuities.                     
(I.5)............................  52.203-5...................................  Covenant Against Contingent     
                                                                                 Fees.                          
(I.6)............................  52.203-7...................................  Anti-Kickback Procedures.       
(I.7)............................  52.203-10..................................  Price or Fee Adjustment for     
                                                                                 Illegal or Improper Activity.  
                                                                                 (Except educational            
                                                                                 institutions.)                 
(I.8)............................  52.209-6...................................  Protecting the Government's     
                                                                                 Interest When Subcontracting   
                                                                                 with Contractors Debarred,     
                                                                                 Suspended, or Proposed for     
                                                                                 Debarment.                     
(I.9)............................  Reserved...................................                                  
(I.10)...........................  Reserved...................................                                  
(I.11)...........................  Reserved...................................                                  
(I.12)...........................  52.215-26..................................  Integrity of Unit Prices.       
(I.13)...........................  52.215-33..................................  Order of Precedence.            
(I.14)...........................  52.216-7...................................  Allowable Cost and Payment.     
                                                                                 (Modified in accordance with   
                                                                                 16.307 as applicable.)         
(I.15)...........................  Reserved...................................                                  
(I.16)...........................  Reserved...................................                                  
(I.17)...........................  Reserved...................................                                  
(I.18)...........................  Reserved...................................                                  
(I.19)...........................  52.222-3...................................  Convict Labor.                  
(I.20)...........................  52.222-26..................................  Equal Opportunity.              
(I.21)...........................  52.222-35..................................  Affirmative Action for Special  
                                                                                 Disabled and Vietnam Era       
                                                                                 Veterans.                      
(I.22)...........................  52.222-36..................................  Affirmative Action for          
                                                                                 Handicapped Workers.           
(I.23)...........................  52.222-37..................................  Employment Reports on Special   
                                                                                 Disabled Veterans and Veterans 
                                                                                 of the Vietnam Era.            
(I.24)...........................  52.223-6...................................  Drug-Free Workplace.            
(I.25)...........................  52.225-11..................................  Restrictions on Certain Foreign 
                                                                                 Purchases.                     
(I.26)...........................  52.227-1...................................  Authorization and Consent--     
                                                                                 Alternate I.                   
(I.27)...........................  52.227-2...................................  Notice and Assistance Regarding 
                                                                                 Patent and Copyright           
                                                                                 Infringement.                  
(I.28)...........................  52.228-7...................................  Insurance--Liability to Third   
                                                                                 Persons.                       
(I.29)...........................  52.232-9...................................  Limitation on Withholding of    
                                                                                 Payments.                      
(I.30)...........................  52.232-23..................................  Assignment of Claims.           
(I.31)...........................  52.232-25..................................  Prompt Payment.                 
(I.32)...........................  52.232-28..................................  Electronic Funds Transfer       
                                                                                 Payment Methods.               
(I.33)...........................  52.233-1...................................  Disputes.                       

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(I.34)...........................  52.233-3...................................  Protest After Award--Alternate  
                                                                                 I.                             
(I.35)...........................  52.242-1...................................  Notice of Intent to Disallow    
                                                                                 Costs.                         
(I.36)...........................  52.242-13..................................  Bankruptcy.                     
(I.37)...........................  52.244-2...................................  Subcontracts (Cost-Reimbursement
                                                                                 and Letter Contracts) Alternate
                                                                                 I.                             
(I.38)...........................  52.244-5...................................  Competition in Subcontracting.  
(I.39)...........................  52.247-1...................................  Commercial Bill of Lading       
                                                                                 Notations.                     
(I.40)...........................  52.249-14..................................  Excusable Delays.               
(I.41)...........................  52.253-1...................................  Computer-Generated Forms.       
*(I.42)..........................  52.203-9...................................  Requirement for Certificate of  
                                                                                 Procurement Integrity-         
                                                                                 Modification.                  
*(I.43)..........................  52.203-12..................................  Limitation on Payments to       
                                                                                 Influence Certain Federal      
                                                                                 Transactions.                  
*(I.44)..........................  52.204-2...................................  Security Requirements.          
*(I.45)..........................  52.204-2...................................  Security Requirements-Alternate 
                                                                                 I. (For educational            
                                                                                 institutions.)                 
*(I.46)..........................  52.215-22..................................  Price Reduction for Defective   
                                                                                 Cost or Pricing Data.          
*(I.47)..........................  52.215-23..................................  Price Reduction for Defective   
                                                                                 Cost or Pricing Data-          
                                                                                 Modications.                   
*(I.48)..........................  52.215-24..................................  Subcontractor Cost or Pricing   
                                                                                 Data.                          
*(I.49)..........................  52.215-25..................................  Subcontractor Cost or Pricing   
                                                                                 Data-Modifications.            
*(I.50)..........................  52.215-27..................................  Termination of Defined Benefit  
                                                                                 Pension Plans. (Except         
                                                                                 educational institutions.)     
*(I.51)..........................  52.215-31..................................  Waiver of Facilities Capital    
                                                                                 Cost of Money. (Except         
                                                                                 educational institutions.)     
*(I.52)..........................  52.215-39..................................  Reversion or Adjustment of Plans
                                                                                 for Postretirement Benefits    
                                                                                 Other than Pension (PRB).      
*(I.53)..........................  52.216-8...................................  Fixed Fee.                      
*(I.54)..........................  52.216-10..................................  Incentive Fee.                  
*(I.55)..........................  52.216-11..................................  Cost Contract--No Fee.          
*(I.56)..........................  52.216-11..................................  Cost Contract--No Fee-Alternate 
                                                                                 I.                             
*(I.57)..........................  52.216-12..................................  Cost-Sharing Contract--No Fee.  
*(I.58)..........................  52.216-12..................................  Cost-Sharing Contract--No Fee-  
                                                                                 Alternate I.                   
*(I.59)..........................  52.216-15..................................  Predetermined Indirect Cost     
                                                                                 Rates.                         
*(I.59A).........................  252.216-7002...............................  Alternate. (For educational     
                                                                                 institutions only.)            
*(I.60)..........................  52.219-6...................................  Notice of Total Small Business  
                                                                                 Set-Aside.                     
*(I.61)..........................  52.219-6...................................  Notice of Total Small Business  
                                                                                 Set-Aside--Alternate I.        
(I.63)...........................  Reserved...................................                                  
*(I.64)..........................  52.219-14..................................  Limitations on Subcontracting.  
*(I.65)..........................  52.219-16..................................  Liquidated Damages--Small       
                                                                                 Business Subcontracting Plan.  
(I.66)...........................  Reserved...................................                                  
*(I.67)..........................  52.222-1...................................  Notice to the Government of     
                                                                                 Labor Disputes.                
*(I.68)..........................  52.222-2...................................  Payment for Overtime Premiums.  
*(I.69)..........................  52.222-28..................................  Equal Opportunity Preaward      
                                                                                 Clearance of Subcontracts.     
*(I.70)..........................  52.223-2...................................  Clean Air and Water.            
*(I.71)..........................  52.223-3...................................  Hazardous Material              
                                                                                 Identification and Material    
                                                                                 Safety Data.                   
*(I.72)..........................  52.223-7...................................  Notice of Radioactive Materials 
                                                                                 (21 Days).                     
*(I.73)..........................  52.226-1...................................  Utilization of Indian           
                                                                                 Organizations and Indian-Owned 
                                                                                 Economic Enterprises.          
*(I.74)..........................  52.227-10..................................  Filing of Patent Applications-- 
                                                                                 Classified Subject Matter.     
*(I.75)..........................  52.227-11..................................  Patent Rights--Retention by the 
                                                                                 Contractor (Short Form).       
*(I.76)..........................  52.227-12..................................  Patent Rights--Retention by the 
                                                                                 Contractor (Long Form).        
*(I.77)..........................  52.227-13..................................  Patent Rights--Acquisition by   
                                                                                 the Government.                
*(I.78)..........................  52.228-7...................................  Insurance--Liability to Third   
                                                                                 Persons--Alternate I.          
*(I.79)..........................  52.228-7...................................  Insurance--Liability to Third   
                                                                                 Persons--Alternate II.         
*(I.80)..........................  52.229-8...................................  Taxes--Foreign Cost-            
                                                                                 Reimbursement Contracts.       

[[Page 291]]

                                                                                                                
*(I.81)..........................  52.229-10..................................  State of New Mexico Gross       
                                                                                 Receipts and Compensating Tax. 
*(I.82)..........................  52.230-2...................................  Cost Accounting Standards.      
                                                                                 (Except if exempted.)          
*(I.83)..........................  52.230-3...................................  Disclosure and Consistency of   
                                                                                 Cost Accounting Practices.     
                                                                                 (Except if exempted.)          
*(I.84)..........................  52.230-5...................................  Administration of Cost          
                                                                                 Accounting Standards. (Except  
                                                                                 educational institutions.)     
*(I.85)..........................  52.232-17..................................  Interest.                       
*(I.86)..........................  52.232-20..................................  Limitation of Cost.             
*(I.87)..........................  52.232-22..................................  Limitation of Funds.            
*(I.88)..........................  52.232-23..................................  Assignment of Claims--Alternate 
                                                                                 I.                             
*(I.89)..........................  52.233-1...................................  Disputes--Alternate I.          
*(I.90)..........................  52.237-2...................................  Protection of Government        
                                                                                 Buildings, Equipment and       
                                                                                 Vegetation.                    
*(I.91)..........................  52.242-10..................................  F.O.B. Origin-Government Bills  
                                                                                 of Lading or Prepaid Postage.  
*(I.92)..........................  52.242-11..................................  F.O.B. Origin-Government Bills  
                                                                                 of Lading or Indicia Mail.     
*(I.93)..........................  52.242-12..................................  Report of Shipment (REPSHIP).   
*(I.94)..........................  52.243-2...................................  Changes--Cost-Reimbursement-    
                                                                                 Alternate V.                   
*(I.95)..........................  52.243-6...................................  Change Order Accounting.        
*(I.96)..........................  52.243-7...................................  Notification of Changes (30     
                                                                                 Calendar Days).                
*(I.97)..........................  52.245-5...................................  Government Property (Cost-      
                                                                                 Reimbursement, Time-and-       
                                                                                 Material, or Labor-Hour        
                                                                                 Contracts).                    
*(I.98)..........................  52.245-5...................................  Government Property (Cost-      
                                                                                 Reimbursement, Time-and-       
                                                                                 Material, or Labor-Hour        
                                                                                 Contracts-Alternate I. (For    
                                                                                 educational institutions and   
                                                                                 nonprofit organizations.)      
*(I.99)..........................  52.245-19..................................  Government Property Furnished   
                                                                                 ``As Is''.                     
*(I.100).........................  52.246-23..................................  Limitation of Liability.        
*(I.101).........................  52.246-24..................................  Limitation of Liability-High    
                                                                                 Value Items.                   
*(I.102).........................  52.246-24..................................  Limitation of Liability-High    
                                                                                 Value Items-Alternate I.       
*(I.103).........................  52.246-25..................................  Limitation of Liability-        
                                                                                 Services.                      
*(I.104).........................  52.247-63..................................  Preference for U.S.-Flag Air    
                                                                                 Carriers.                      
*(I.105).........................  52.247-66..................................  Returnable Cylinder.            
*(I.106).........................  52.249-5...................................  Termination for Convenience of  
                                                                                 the Government (Educational and
                                                                                 Other Nonprofit Institutions). 
*(I.107).........................  52.249-6...................................  Termination (Cost-              
                                                                                 Reimbursement).                
*(I.108).........................  52.251-1...................................  Government Supply Sources.      
(I.109)..........................  252.201-7000...............................  Contracting Officer's           
                                                                                 Representative.                
(I.110)..........................  252.203-7001...............................  Special Prohibition on          
                                                                                 Employment.                    
(I.111)..........................  Reserved...................................                                  
(I.112)..........................  Reserved...................................                                  
(I.113)..........................  252.204-7003...............................  Control of Government Personnel 
                                                                                 Work Product.                  
(I.114)..........................  252.209-7000...............................  Acquisition from Subcontractors 
                                                                                 Subject to On-Site Inspection  
                                                                                 under the Intermediate-Range   
                                                                                 Nuclear Forces (INF) Treaty.   
(I.115)..........................  252.225-7012...............................  Preference for Certain Domestic 
                                                                                 Commodities.                   
(I.116)..........................  252.225-7031...............................  Secondary Arab Boycott of       
                                                                                 Israel.                        
(I.117)..........................  Reserved...................................                                  
(I.118)..........................  Reserved...................................                                  
(I.119)..........................  Reserved...................................                                  
(I.120)..........................  252.227-7030...............................  Technical Data-Withholding of   
                                                                                 Payment.                       
(I.121)..........................  252.227-7037...............................  Validation of Restrictive       
                                                                                 Markings on Technical Data.    
(I.122)..........................  252.231-7000...............................  Supplemental Cost Principles.   
(I.123)..........................  252.232-7006...............................  Reduction or Suspension of      
                                                                                 Contract Payments Upon Finding 
                                                                                 of Fraud.                      
(I.124)..........................  252.242-7000...............................  Postaward Conference.           
(I.125)..........................  Reserved...................................                                  
(I.126)..........................  252.247-7023...............................  Transportation of Supplies by   
                                                                                 Sea.                           
*(I.127).........................  252.203-7000...............................  Statutory Prohibition on        
                                                                                 Compensation to Former         
                                                                                 Department of Defense          
                                                                                 Employees.                     
*(I.128).........................  252.203-7002...............................  Display of DoD Hotline Poster.  

[[Page 292]]

                                                                                                                
*(I.129).........................  252.204-7000...............................  Disclosure of Information.      
*(I.130).........................  252.204-7002...............................  Payment for Subline Items Not   
                                                                                 Separately Priced.             
*(I.131).........................  252.205-7000...............................  Provision of Information to     
                                                                                 Cooperative Agreement Holders. 
*(I.132).........................  252.215-7000...............................  Pricing Adjustments.            
*(I.133).........................  252.215-7002...............................  Cost Estimating System          
                                                                                 Requirements.                  
*(I.134).........................  252.219-7001...............................  Notice of Partial Small Business
                                                                                 Set-Aside with Preferential    
                                                                                 Consideration for Small        
                                                                                 Disadvantaged Business         
                                                                                 Concerns.                      
*(I.135).........................  252.219-7002...............................  Notice of Small Disadvantaged   
                                                                                 Business Set-Aside.            
*(I.136).........................  252.219-7003...............................  Small Business and Small        
                                                                                 Disadvantaged Business         
                                                                                 Subcontracting Plan (DoD       
                                                                                 Contracts).                    
*(I.137).........................  252.219-7004...............................  Small Business and Small        
                                                                                 Disadvantaged Business         
                                                                                 Subcontracting Plan (Test      
                                                                                 Program).                      
*(I.138).........................  252.219-7005...............................  Incentive for Subcontracting    
                                                                                 with Small Businesses, Small   
                                                                                 Disadvantaged Businesses,      
                                                                                 Historically Black Colleges and
                                                                                 Universities and Minority      
                                                                                 Institutions. (. . . To be     
                                                                                 negotiated ________ %.)        
*(I.139).........................  252.219-7005...............................  Incentive for Subcontracting    
                                                                                 with Small Businesses, Small   
                                                                                 Disadvantaged Businesses,      
                                                                                 Historically Black Colleges and
                                                                                 Universities and Minority      
                                                                                 Institutions-Alternate I. (. . 
                                                                                 . To be negotiated ________ %.)
*(I.140).........................  252.219-7006...............................  Notice of Evaluation Preference 
                                                                                 for Small Disadvantaged        
                                                                                 Business Concerns.             
*(I.141).........................  252.223-7001...............................  Hazard Warning Labels.          
*(I.142).........................  252.223-7002...............................  Safety Precautions for          
                                                                                 Ammunitions and Explosives.    
*(I.143).........................  252.223-7003...............................  Change in Place of Performance- 
                                                                                 Ammunition and Explosives.     
*(I.144).........................  252.223-7004...............................  Drug-Free Work Force.           
*(I.145).........................  252.225-7014...............................  Preference for Domestic         
                                                                                 Specialty Metals.              
*(I.146).........................  252.225-7016...............................  Restriction on Acquisition of   
                                                                                 Antifriction Bearings.         
*(I.147).........................  252.225-7025...............................  Foreign Source Restrictions.    
*(I.148).........................  252.225-7026...............................  Reporting of Contract           
                                                                                 Performance Outside the United 
                                                                                 States.                        
*(I.149).........................  252.225-7032...............................  Waiver of United Kingdom Levies.
*(I.150).........................  252.226-7000...............................  Notice of Historically Black    
                                                                                 College or University and      
                                                                                 Minority Institution Set-Aside.
*(I.151).........................  252.227-7026...............................  Deferred Delivery of Technical  
                                                                                 Data or Computer Software.     
*(I.152).........................  252.227-7027...............................  Deferred Ordering of Technical  
                                                                                 Data or Computer Software.     
(I.153)..........................  Reserved...................................                                  
*(I.154).........................  252.227-7034...............................  Patent--Subcontracts.           
*(I.155).........................  252.227-7036...............................  Certification of Technical Data 
                                                                                 Conformity.                    
*(I.156).........................  252.227-7039...............................  Patents--Reporting of Subject   
                                                                                 Inventions.                    
(I.157)..........................  Reserved...................................                                  
*(I.158).........................  252.232-7000...............................  Advance Payment Pool. (For      
                                                                                 educational institutions and   
                                                                                 nonprofit organizations.)      
*(I.159).........................  252.233-7000...............................  Certification of Claims and     
                                                                                 Requests for Adjustment or     
                                                                                 Relief.                        
*(I.160).........................  252.235-7002...............................  Animal Welfare.                 
*(I.161).........................  252.242-7002...............................  Submission of Commercial Freight
                                                                                 Bills for Audit.               
*(I.162).........................  252.242-7003...............................  Application for U.S. Government 
                                                                                 Shipping Documentation/        
                                                                                 Instructions.                  
*(I.163).........................  252.242-7004...............................  Material Management and         
                                                                                 Accounting System.             
*(I.164).........................  252.245-7001...............................  Reports of Government Property. 
*(I.165).........................  252.247-7024...............................  Notification of Transportation  
                                                                                 of Supplies by Sea.            
*(I.166).........................  252.249-7001...............................  Notification of Substantial     
                                                                                 Impact on Employment.          

[[Page 293]]

                                                                                                                
*(I.167).........................  252.251-7000...............................  Ordering From Government Supply 
                                                                                 Sources.                       
*(I.168).........................  252.223-7006...............................  Prohibition on Disposal of Toxic
                                                                                 and Hazardous Materials.       
*(I.169).........................  252.249-7002...............................  Notification of Program         
                                                                                 Termination or Reduction.      
(I.170)..........................  52.204-4...................................  Printing/Copying Double-Sided on
                                                                                 Recycled Paper.                
*(I.171).........................  52.208-8...................................  Helium Requirement Forecast and 
                                                                                 Required Sources for Helium.   
(I.172)..........................  52.215-2...................................  Audit and Records--Negotiation. 
*(I.173).........................  52.215-2...................................  Audit and Records--Negotiation, 
                                                                                 Alternate II.                  
(I.174)..........................  52.215-40..................................  Notification of Ownership       
                                                                                 Changes.                       
*(I.175).........................  52.215-42..................................  Requirements for Cost or Pricing
                                                                                 Data or Information Other Than 
                                                                                 Cost or Pricing Data--         
                                                                                 Modifications.                 
*(I.176).........................  52.215-42..................................  Requirements for Cost or Pricing
                                                                                 Data or Information Other Than 
                                                                                 Cost or Pricing Data--         
                                                                                 Modifications, Alternate II.   
*(I.177).........................  52.215-42..................................  Requirements for Cost or Pricing
                                                                                 Data or Information Other Than 
                                                                                 Cost or Pricing Data--         
                                                                                 Modifications, Alternate III.  
(I.178)..........................  52.219-8...................................  Utilization of Small, Small     
                                                                                 Disadvantaged and Women-Owned  
                                                                                 Small Business Concerns.       
*(I.179).........................  52.219-9...................................  Small, Small Disadvantaged and  
                                                                                 Women-Owned Small Business     
                                                                                 Subcontracting Plan.           
*(I.180).........................  52.242-3...................................  Penalties for Unallowable Costs.
(I.181)..........................  52.242-4...................................  Certification of Indirect Costs.
(I.182)..........................  52.244-6...................................  Subcontracts for Commercial     
                                                                                 Items and Commercial           
                                                                                 Components.                    
*(I.183).........................  52.247-67..................................  Submission of Commercial        
                                                                                 Transportation Bills to the    
                                                                                 General Services Administration
                                                                                 for Audit.                     
(I.184)..........................  52.223-14..................................  Toxic Chemical Release          
                                                                                 Reporting.                     
(I.185)..........................  252.235-7010...............................  Acknowledgement of Support and  
                                                                                 Disclaimer.                    
(I.186)..........................  252.235-7011...............................  Final Scientific or Technical   
                                                                                 Report.                        
*(I.187).........................  252.227-7013...............................  Rights in Technical Data--      
                                                                                 Noncommercial Items.           
*(I.188).........................  252.227-7013...............................  Rights in Technical Data--      
                                                                                 Noncommercial Items, Alternate 
                                                                                 I.                             
*(I.189).........................  252.227-7014...............................  Rights in Noncommercial Computer
                                                                                 Software and Noncommercial     
                                                                                 Computer Software              
                                                                                 Documentation.                 
*(I.190).........................  252.227-7014...............................  Rights in Noncommercial Computer
                                                                                 Software and Noncommercial     
                                                                                 Computer Software              
                                                                                 Documentation, Alternate I.    
*(I.191).........................  252.227-7015...............................  Technical Data--Commercial      
                                                                                 Items.                         
(I.192)..........................  252.227-7016...............................  Rights in Bid or Proposal       
                                                                                 Information.                   
*(I.193).........................  252.227-7018...............................  Rights in Noncommercial         
                                                                                 Technical Data and Computer    
                                                                                 Software--Small Business       
                                                                                 Innovation Research Program.   
*(I.194).........................  252.227-7018...............................  Rights in Noncommercial         
                                                                                 Technical Data and Computer    
                                                                                 Software--Small Business       
                                                                                 Innovation Research Program,   
                                                                                 Alternate I.                   
*(I.195).........................  252.227-7019...............................  Validation of Asserted          
                                                                                 Restrictions--Computer         
                                                                                 Software.                      
*(I.196).........................  252.227-7025...............................  Limitations on the Use or       
                                                                                 Disclosure of Government-      
                                                                                 Furnished Information Marked   
                                                                                 with Restrictive Legends.      
*(I.197).........................  252.209-7005...............................  Military Recruiting on Campus   
                                                                                 (For educational institutions  
                                                                                 only.)                         
                                                                                                                



[[Page 294]]

      Part III--List of Documents, Exhibits, and Other Attachments

                     Section J, List of Attachments

    Use attachments and exhibits to inform the contractor of local 
information such as:
    (1) Procedures for laboratory access;
    (2) Laboratory hours of operation;
    (3) Special procedures related to unique laboratory working 
environments which are not covered by FAR/DFARS; and
    (4) Base support or government property information.
(J.1)*  List of Attachments:
(J.2)*  List of Exhibits:

                Part IV--Representations and Instructions

   Section K. Representations, Certifications and Other Statements of 
                           Offerors or Quoters

    The following solicitation provisions require representations, 
certifications or the submission of other information by offerors. They 
are mandatory, and are included by reference. Full text copies of these 
provisions are available from the Contracting Officer and must be 
completed and certified before contract award.

(K.1)............................  52.203-4...................................  Contingent Fee Representation   
                                                                                 and Agreement.                 
(K.2)............................  52.203-8...................................  Requirement for Certificate of  
                                                                                 Procurement Integrity-Alternate
                                                                                 I.                             
(K.3)............................  52.203-11..................................  Certification and Disclosure    
                                                                                 Regarding Payments to Influence
                                                                                 Certain Federal Transactions.  
(K.4)............................  52.204-3...................................  Taxpayer Identification.        
(K.5)............................  52.209-5...................................  Certification Regarding         
                                                                                 Debarment, Suspension, Proposed
                                                                                 Debarment, and Other           
                                                                                 Responsibility Matters.        
(K.6)............................  52.215-6...................................  Type of Business Organization.  
(K.7)............................  52.215-11..................................  Authorized Negotiators.         
(K.8)............................  52.215-20..................................  Place of Performance.           
(K.9)............................  52.215-30..................................  Facilities Capital Cost of Money
                                                                                 (Except educational            
                                                                                 institutions.)                 
(K.10)...........................  Reserved...................................                                  
(K.11)...........................  Reserved...................................                                  
(K.12)...........................  Reserved...................................                                  
(K.13)...........................  52.222-21..................................  Certification of Nonsegregated  
                                                                                 Facilities.                    
(K.14)...........................  52.222-22..................................  Previous Contracts and          
                                                                                 Compliance Reports.            
(K.15)...........................  52.222-25..................................  Affirmative Action Compliance.  
(K.16)...........................  52.223-1...................................  Clean Air and Water             
                                                                                 Certification.                 
(K.17)...........................  52.223-5...................................  Certification Regarding a Drug- 
                                                                                 Free Workplace.                
(K.18)...........................  52.227-6...................................  Royalty Information.            
(K.19)...........................  52.230-1...................................  Cost Accounting Standards       
                                                                                 Notices and Certification.     
(K.20)...........................  Reserved...................................                                  
(K.21)...........................  252.209-7002...............................  Disclosure of Ownership or      
                                                                                 Control by a Foreign           
                                                                                 Government.                    
(K.22)...........................  252.219-7000...............................  Small Disadvantaged Business    
                                                                                 Concern Representation (DOD    
                                                                                 Contracts).                    
(K.23)...........................  Reserved...................................                                  
(K.24)...........................  Reserved...................................                                  
(K.25)...........................  252.226-7001...............................  Historically Black College or   
                                                                                 University and Minority        
                                                                                 Institution Certification.     
(K.26)...........................  Reserved...................................                                  
(K.27)...........................  252.247-7022...............................  Representation of Extent of     
                                                                                 Transportation by Sea.         
(K.28)...........................  52.204-5...................................  Women-Owned Business.           
(K.29)...........................  52.209-7...................................  Organizational Conflicts of     
                                                                                 Interest Certificate--Marketing
                                                                                 Consultants.                   
(K.30)...........................  52.219-1...................................  Small Business Program          
                                                                                 Representation.                
(K.31)...........................  52.223-13..................................  Certification of Toxic Chemical 
                                                                                 Release Reporting.             
(K.32)...........................  252.209-7001...............................  Disclosure of Ownership or      
                                                                                 Control by the Government of a 
                                                                                 Terrorist Country.             
(K.33)...........................  252.209-7003...............................  Disclosure of Commercial        
                                                                                 Transactions with the          
                                                                                 Government of a Terrorist      
                                                                                 Country.                       
(K.34)...........................  252.209-7004...............................  Reporting of Commercial         
                                                                                 Transactions with the          
                                                                                 Government of a Terrorist      
                                                                                 Country.                       

[[Page 295]]

                                                                                                                
(K.35)...........................  252.227-7017...............................  Identification and Assertion of 
                                                                                 Use, Release, or Disclosure    
                                                                                 Restrictions.                  
(K.36)...........................  252.227-7028...............................  Technical Data or Computer      
                                                                                 Software Previously Delivered  
                                                                                 to the Government.             
                                                                                                                

 Section L. Instructions, Conditions, and Notices to Offerors or Quoters

(L.1)............................  52.252-1...................................  Solicitation Provisions         
                                                                                 Incorporated by Reference.     
(L.2)............................  Reserved...................................                                  
(L.3)............................  52.210-2...................................  Availability of Specifications  
                                                                                 and Standards Listed in the DoD
                                                                                 Index of Specifications and    
                                                                                 Standards (DODISS) and         
                                                                                 Descriptions Listed in DoD     
                                                                                 5010.12-L (Deviation).         
(L.4)............................  52.215-5...................................  Solicitation Definitions.       
(L.5)............................  52.215-7...................................  Unnecessarily Elaborate         
                                                                                 Proposals or Quotations.       
(L.6)............................  52.215-8...................................  Amendments to Solicitations.    
(L.7)............................  52.215-9...................................  Submission of Offers.           
(L.8)............................  52.215-10..................................  Late Submissions, Modifications,
                                                                                 and Withdrawals of Proposals.  
(L.9)............................  52.215-12..................................  Restriction on Disclosure and   
                                                                                 Use of Data.                   
(L.10)...........................  52.215-13..................................  Preparation of Offers.          
(L.11)...........................  52.215-14..................................  Explanation to Prospective      
                                                                                 Offerors.                      
(L.12)...........................  52.215-15..................................  Failure to Submit Offer.        
(L.13)...........................  52.215-16..................................  Contract Award.                 
(L.14)...........................  Reserved...................................                                  
(L.15)...........................  52.216-1...................................  Type of Contract (See           
                                                                                 235.7006(d)(B.1)).             
(L.16)...........................  52.222-24..................................  Preaward On-Site Equal          
                                                                                 Opportunity Compliance Review. 
(L.17)...........................  52.228-6...................................  Insurance-Immunity from Tort    
                                                                                 Liability.                     
(L.18)...........................  52.233-2...................................  Service of Protest (See         
                                                                                 235.7006(d)(A.1)(xvii)).       
*(L.19)..........................  52.237-1...................................  Site Visit.                     
(L.20)...........................  52.252-5...................................  Authorized Deviations in        
                                                                                 Provisions.                    
(L.21)...........................  252.204-7001...............................  Commercial and Government Entity
                                                                                 (CAGE) Code Reporting.         
(L.22)...........................  Reserved...................................                                  
(L.23)...........................  52.215-16..................................  Contract Award--Alternate II.   
*(L.24)..........................  52.215-41..................................  Requirements for Cost or Pricing
                                                                                 Data or Information Other than 
                                                                                 Cost or Pricing Data.          
*(L.25)..........................  52.215-41..................................  Requirements for Cost or Pricing
                                                                                 Data or Information Other than 
                                                                                 Cost or Pricing Data, Alternate
                                                                                 I.                             
*(L.26)..........................  52.215-41..................................  Requirements for Cost or Pricing
                                                                                 Data or Information Other than 
                                                                                 Cost or Pricing Data, Alternate
                                                                                 II.                            
*(L.27)..........................  52.215-41..................................  Requirements for Cost or Pricing
                                                                                 Data or Information Other than 
                                                                                 Cost or Pricing Data, Alternate
                                                                                 III.                           
*(L.28)..........................  52.215-41..................................  Requirements for Cost or Pricing
                                                                                 Data or Information Other than 
                                                                                 Cost or Pricing Data, Alternate
                                                                                 IV.                            
(L.29 through L.100)  Reserved..................................................................................
(L.101) Government-Furnished Property.                                                                          
                                                                                                                
  No material, labor, or facilities will be furnished by the Government unless provided for in the solicitation.
                                                                                                                
(L.102) Proposal Preparation and Submission Instructions........................................................
                                                                                                                


    (i) Page limitation, format.
    (A) A proposal shall be prepared in separate volumes with the page 
limit and number of copies specified below. The table of contents and 
tabs are exempt from the page limits. No cross-referencing between 
volumes for essential information is permitted except where specifically 
set forth herein. The following volumes of material will be submitted:

[[Page 296]]



------------------------------------------------------------------------
                                                                 Maximum
             Title                           Copies                page 
                                                                  limits
------------------------------------------------------------------------
Cost...........................  As specified in solicitation        *50
                                  summary.                              
Technical......................  As specified in solicitation        100
                                  summary.                              
------------------------------------------------------------------------
*The 50-page cost proposal is a goal not a limit. The Contractor may use
  additional pages if necessary to comply with public law.              

    (B) Any technical proposal pages submitted which exceed the page 
limitations set forth above will not be read or evaluated. Proposal 
pages failing to meet paragraph D format will not be read or evaluated.
    (C) No program cost data or cross-reference to the cost proposal 
will be included in any other volume.
    (D) Format of the above proposal volumes shall be as follows:
    (1) Proposals will be prepared on 8\1/2\ x 11 inch paper except for 
foldouts used for charts, tables, or diagrams, which may not exceed 
11 x 17 inches. Foldouts will not be used for text. Pages will have a 
one inch margin.
    (2) A page is defined as one face of a sheet of paper containing 
information. Two pages may be printed on one sheet.
    (3) Type size will be no smaller than 10 point character height 
(vertical size) and no more than an average of 12 characters per inch. 
Use of type-setting techniques to reduce type size below 10 points or to 
increase characters beyond 12 per inch is not permitted. Such techniques 
are construed as a deliberate attempt to circumvent the intent of page 
limitations set forth above.
    (4) Proposal must lie flat when open, elaborate binding is not 
desirable.
    (5) No models, mockups or video tapes will be accepted.
    (6) Technical proposals will be prepared in the same sequence as the 
statement of work.
    (ii) Content.
    All proposals must be complete and respond directly to the 
requirements of the solicitation. The factors and subfactors listed in 
Section M of the solicitation shall be addressed. Cost and supporting 
data shall be included only in the cost volume. All other information 
shall be included in the technical volume.

[59 FR 52443, Oct. 18, 1994, as amended at 60 FR 15690, Mar. 27, 1995; 
60 FR 61599, Nov. 30, 1995; 61 FR 7744, Feb. 29, 1996; 61 FR 18195, Apr. 
24, 1996]



PART 236--CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS--Table of Contents




Sec.

                         Subpart 236.1--General

236.102  Definitions.

     Subpart 236.2--Special Aspects of Contracting for Construction

236.201  Evaluation of contractor performance.
236.203  Government estimate of construction costs.
236.204  Disclosure of the magnitude of construction projects.
236.206  Liquidated damages.
236.270  Expediting construction contracts.
236.271  Cost-plus-fixed-fee contracts.
236.272  Prequalification of sources.
236.273  Network analysis systems.
236.274  Construction in foreign countries.

    Subpart 236.3--Special Aspects of Sealed Bidding in Construction 
                               Contracting

236.303  Invitations for bids.
236.303-70  Additive or deductive items.

   Subpart 236.4--Special Procedures for Negotiation of Construction 
                                Contracts

236.403  Cost-reimbursement contracts.

                     Subpart 236.5--Contract Clauses

236.570  Additional provisions and clauses.

               Subpart 236.6--Architect-Engineer Services

236.601  Policy.
236.602  Selection of firms for architect-engineer contracts.
236.602-1  Selection criteria.
236.602-2  Evaluation boards.
236.602-4  Selection authority.
236.604  Performance evaluation.
236.606  Negotiations.
236.606-70  Statutory fee limitation.
236.609  Contract clauses.
236.609-70  Option for supervision and inspection services.

     Subpart 236.7--Standard and Optional Forms for Contracting for 
Construction, Architect-Engineer Services, and Dismantling, Demolition, 
                       or Removal of Improvements

236.701  Standard and optional forms for use in contracting for 
          construction or dismantling, demolition, or removal of 
          improvements.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36421, July 31, 1991, unless otherwise noted.

[[Page 297]]



                         Subpart 236.1--General



Sec. 236.102   Definitions.

    (1) A-E means architect-engineer.
    (2) Construction activity means an activity at any organizational 
level of the DoD that--
    (i) Is responsible for the architectural, engineering, and other 
related technical aspects of the planning, design, and construction of 
facilities; and
    (ii) Receives its technical guidance from the Army Office of the 
Chief of Engineers, Naval Facilities Engineering Command, or Air Force 
Directorate of Civil Engineering.
    (3) Network analysis system means recognized scheduling systems that 
show the duration, sequential relationship, and interdependence of 
various work activities, e.g., critical path method.



     Subpart 236.2--Special Aspects of Contracting for Construction



Sec. 236.201   Evaluation of contractor performance.

    (a) Preparation of performance evaluation reports. Use DD Form 2626, 
Performance Evaluation (Construction), instead of SF 1420.
    (c) Distribution and use of performance reports. (1) Send each 
contractor performance evaluation report to the central data base 
immediately upon its completion.
    (A) The central data base--
    (1) Is operated by--

U.S. Army Engineer Division, North Pacific, ATTN: CENPD-CT, P.O. Box 
    2870, Portland, OR 97208-2870, Telephone: (503)326-3459/4910

    (2) Keeps reports on file for six years.
    (B) For computer access to the files, contact the North Pacific 
Division for user log-on and procedures.
    (2) Use performance records when making responsibility 
determinations under FAR 9.1.
    (A) For each contract expected to exceed $1,000,000, retrieve all 
performance records on file in the central data base for all prospective 
contractors that have a reasonable chance of being selected for award. 
The central data base will provide--
    (1) Overall current performance ratings;
    (2) Descriptions of contracts on which ratings are based (e.g., type 
of facility, contract value, applicable performance elements); and
    (3) A telephone number to obtain transcripts and documentation of 
pertinent evaluation details.
    (B) Consider using the performance records in the data base for 
lower value contracts and to assess a contractor's performance record 
for reasons other than an award decision, such as subcontractor approval 
and awards for excellence.

[56 FR 36421, July 31, 1991, as amended at 61 FR 7749, Feb. 29, 1996]



Sec. 236.203   Government estimate of construction costs.

    (c)(i) Designate the Government estimate as ``For Official Use 
Only,'' unless the information is classified. If it is, handle the 
estimate in accordance with security regulations.
    (ii) For sealed bid acquisitions--
    (A) File a sealed copy of the Government estimate with the bids. (In 
the case of two-step acquisitions, this is done in the second step.)
    (B) After the bids are read and recorded, remove the ``For Official 
Use Only'' designation and read and record the estimate as if it were a 
bid, in the same detail as the bids.



Sec. 236.204  Disclosure of the magnitude of construction projects.

    Additional price ranges are--
    (i) Between $10,000,000 and $25,000,000;
    (ii) Between $25,000,000 and $100,000,000;
    (iii) Between $100,000,000 and $250,000,000;
    (iv) Between $250,000,000 and $500,000,000; and
    (v) Over $500,000,000.

[61 FR 7749, Feb. 29, 1996]



Sec. 236.206   Liquidated damages.

    See 212.204 for instructions on use of liquidated damages.



Sec. 236.270   Expediting construction contracts.

    (a) 10 U.S.C. 2858 requires agency head approval to expedite the 
completion date of a contract funded by a Military Construction 
Appropriations

[[Page 298]]

Act, if additional costs are involved. This approval authority may not 
be redelegated. The approval authority must--
    (1) Certify that the additional expenditures are necessary to 
protect the National interest; and
    (2) Establish a reasonable completion date for the project.
    (b) The contracting officer may approve an expedited completion date 
if no additional costs are involved.



Sec. 236.271  Cost-plus-fixed-fee contracts.

    Annual military construction appropriations acts restrict the use of 
cost-plus-fixed-fee contracts (see 216.306(c)).

[61 FR 7749, Feb. 29, 1996]



Sec. 236.272   Prequalification of sources.

    (a) Prequalification procedures may be used when necessary to ensure 
timely and efficient performance of critical construction projects. 
Prequalification--
    (1) Results in a list of sources determined to be qualified to 
perform a specific construction contract; and
    (2) Limits offerors to those with proven competence to perform in 
the required manner.
    (b) The head of the contracting activity must--
    (1) Authorize the use of prequalification by determining, in 
writing, that a construction project is of an urgency or complexity that 
requires prequalification; and
    (2) Approve the prequalification procedures.
    (c) For small businesses, the prequalification procedures must 
require the qualifying authority to--
    (1) Request a preliminary recommendation from the appropriate Small 
Business Administration regional office, if the qualifying authority 
believes a small business is not responsible;
    (2) Permit the small business to submit a bid or proposal if the 
preliminary recommendation is that the small business is responsible; 
and
    (3) Follow the procedures in FAR 19.6, if the small business is in 
line for award and is found nonresponsible.



Sec. 236.273   Network analysis systems.

    Use head of the contracting activity approved procedures for 
preparing and using network analysis systems, whether contractor 
prepared, or Government prepared.



Sec. 236.274   Construction in foreign countries.

    When a technical working agreement with a foreign government is 
required for a construction contract--
    (a) Consider inviting the Army Office of the Chief of Engineers, or 
the Naval Facilities Engineering Command to participate in the 
negotiations.
    (b) The agreement should, as feasible and where not otherwise 
provided for in other agreements, cover all elements necessary for the 
construction that are required by laws, regulations, and customs of the 
United States and the foreign government, including--
    (1) Acquisition of all necessary rights;
    (2) Expeditious, duty-free importation of labor, material, and 
equipment;
    (3) Payment of taxes applicable to contractors, personnel, 
materials, and equipment;
    (4) Applicability of workers' compensation and other labor laws to 
citizens of the U.S., the host country, and other countries;
    (5) Provision of utility services;
    (6) Disposition of surplus materials and equipment;
    (7) Handling of claims and litigation; and
    (8) Resolution of any other foreseeable problems which can 
appropriately be included in the agreement.



    Subpart 236.3--Special Aspects of Sealed Bidding in Construction 
                               Contracting

236.303  Invitations for bids.



Sec. 236.303-70   Additive or deductive items.

    (a) If it appears that sufficient funds may not be available for all 
the desired construction features, consider using a bid schedule with--
    (1) A first or base bid item covering the work generally as 
specified; and
    (2) A list of priorities that contains one or more additive or 
deductive bid

[[Page 299]]

items which progressively add or omit specified features of the work in 
a stated order of priority. (Normally, do not mix additive and deductive 
bid items in the same solicitation.)
    (b) Before opening the bids, record in the contract file the amount 
of funds available for the project.
    (c) Determine the low bidder and the bid items to be awarded as 
follows--
    (1) Use the recorded amount of available funds to determine the low 
bidder, which will be the bidder that--
    (i) Is otherwise eligible for award; and
    (ii) Offers the lowest aggregate amount for the first or base bid 
item, plus or minus (in order of listed priority), those additive or 
deductive bid items that provide the most features within the funds 
available.
    (2) Evaluate all bids, including those using the procedures in 
219.7203, on the basis of the same additive or deductive bid items.
    (i) If adding another item from the bid schedule list of priorities 
would make the award exceed the available funds, skip that item and go 
to the next item from the list of priorities.
    (ii) Add the next item if an award can be made that includes the 
item and is still within the available funds.
    (3) Use the list of priorities only to determine the low bidder. 
After determining the low bidder, an award may be made on any 
combination if--
    (i) It is in the best interests of the Government;
    (ii) Funds are available at time of award; and
    (iii) The low bidder's price for the combination is less than the 
price offered by any other responsive, responsible bidder.

[56 FR 36421, July 31, 1991, as amended at 61 FR 18688, Apr. 29, 1996]



   Subpart 236.4--Special Procedures for Negotiation of Construction 
                                Contracts



Sec. 236.403   Cost-reimbursement contracts.

    (1) For cost-plus-fixed-fee contracts, negotiate the fee for a prime 
contractor using departmental procedures approved by the Assistant 
Secretary of Defense (Production and Logistics).
    (2) For cost-plus-incentive-fee contracts, negotiate the target fee 
for a prime contractor using the criteria and fee schedule in 
departmental procedures to determine--
    (i) The reasonableness of the target cost;
    (ii) The maximum and minimum fees to be established; and
    (iii) The fee adjustment formula.



                     Subpart 236.5--Contract Clauses



Sec. 236.570   Additional provisions and clauses.

    (a) Use the following clauses in all fixed-price construction 
solicitations and contracts--
    (1) 252.236-7000, Modification Proposals-Price Breakdown; and
    (2) 252.236-7001, Contract Drawings, Maps, and Specifications.
    (b) Use the following provisions and clauses in fixed-price 
construction contracts and solicitations as applicable--
    (1) 252.236-7002, Obstruction of Navigable Waterways, when the 
contract will involve work near or on navigable waterways.
    (2) When the head of the contracting activity has approved use of a 
separate bid item for mobilization and preparatory work, use either--
    (i) 252.236-7003, Payment for Mobilization and Preparatory Work. Use 
this clause for major construction contracts that require--
    (A) Major or special items of plant and equipment; or
    (B) Large stockpiles of material which are in excess of the type, 
kind, and quantity which would be normal for a contractor qualified to 
undertake the work; or
    (ii) 252.236-7004, Payment for Mobilization and Demobilization. Use 
this clause for contracts involving major mobilization expense, or plant 
equipment and material (other than the situations covered in paragraph 
(b)(2)(i) of this section) made necessary by the location or nature of 
the work.
    (A) Generally, allocate 60 percent of the lump sum price in 
paragraph (a) of the clause to the cost of mobilization.
    (B) Vary this percentage to reflect the circumstances of the 
particular

[[Page 300]]

contract, but in no event should mobilization exceed 80 percent of the 
payment item.
    (3) 252.236-7005, Airfield Safety Precautions, when construction 
will be performed on or near airfields.
    (4) 252.236-7006, Cost Limitation, if the solicitation's bid 
schedule contains one or more items subject to statutory cost 
limitations, and if a waiver has not been granted (FAR 36.205).
    (5) 252.236-7007, Additive or Deductive Items, if the procedures in 
236.303-70 are being used.
    (6) 252.236-7008, Contract Prices--Bidding Schedule, if the contract 
will contain only unit prices for some items.

[56 FR 36421, July 31, 1991, as amended at 57 FR 42632, Sept. 15, 1992]



               Subpart 236.6--Architect-Engineer Services



Sec. 236.601   Policy.

    (1) 10 U.S.C. 2807(b) requires notice to Congress 21 days before the 
initial obligation of funds if a contract is for--
    (i) A-E services or construction design for military construction, 
military family housing, or restoration or replacement of damaged or 
destroyed facilities; and
    (ii) An estimated total contract price of $300,000 or more.
    (2) During the 21 day period, synopsis of the proposed contract 
action and administrative actions leading to the award may be started.
236.602  Selection of firms for architect-engineer contracts.



Sec. 236.602-1   Selection criteria.

    (a)(i) Establish the evaluation criteria before making the public 
announcement required by FAR 5.205(c) and include the criteria and their 
relative order of importance in the announcement. The evaluation 
criteria should be project specific. Use the information in the DD Form 
1391, FY---- Military Construction Project Data, when available, and 
other pertinent project data in preparing the evaluation criteria.
    (4) Use performance evaluation data from the central data base 
identified in 236.201.
    (6) The primary factor in A-E selection is the determination of the 
most highly qualified firm. Also consider secondary factors such as 
geographic proximity and equitable distribution of work, but do not 
attribute greater significance to the secondary factors than to 
qualifications and past performance. Do not reject the overall most 
highly qualified firm solely in the interest of equitable distribution 
of contracts.
    (A) Consider the volume of work awarded by DoD during the previous 
12 months. In considering equitable distribution of work among A-E 
firms, include small and small disadvantaged business firms and firms 
that have not had prior DoD contracts--
    (1) Use data extracted from the Defense Contract Action Data System 
(DCADS) compiled from DD Form 350, Individual Contracting Action Report. 
DCADS data may be obtained from the central data base identified in 
236.201(c)(1).
    (2) Do not consider awards to overseas offices for projects outside 
the United States, its territories and possessions. Do not consider 
awards to a subsidiary if the subsidiary is not normally subject to 
management decisions, bookkeeping, and policies of a holding or parent 
company or an incorporated subsidiary that operates under a firm name 
different from the parent company. This allows greater competition.
    (B) Consider as appropriate superior performance evaluations on 
recently completed DoD contracts.
    (C) Consider the extent to which potential contractors identify and 
commit to small business and to small disadvantaged business, 
historically black college and university, or minority institution 
performance of the contract, whether as a joint venture, teaming 
arrangement, or subcontractor.

[56 FR 36421, July 31, 1991, as amended at 59 FR 27673, May 27, 1994]



Sec. 236.602-2   Evaluation boards.

    (a) Preselection boards are authorized, if the lists they develop 
are approved by the head of the construction activity. If used, 
preselection boards will--
    (i) Be formally constituted;

[[Page 301]]

    (ii) Consist of at least three members; and
    (iii) Prepare a preselection list of the maximum practicable number 
of qualified firms using data described in FAR 36.603, and any other 
pertinent information.



Sec. 236.602-4   Selection authority.

    (a)(i) The following selections require special approval--
    (A) The estimated contract price exceeds $500,000;
    (B) The firm to be selected has already been awarded contracts 
totaling over $500,000 during the current calendar year by the 
construction activity; or
    (C) Supplemental work added to an existing contract causes the total 
contract price to exceed $500,000. Special approval is not, however, 
required for supplemental work added to a contract under the clause at 
FAR 52.243-1, Changes-Fixed Price.
    (ii) Special approval means approval by the next higher 
organizational level above the construction activity or as established 
in contracting activity procedures and must be obtained prior to 
negotiation with the A-E firm.
    (c) A finding that some of the firms on the selection report are 
unqualified does not preclude approval of the report, provided that a 
minimum of three firms remains. The reasons for finding a firm or firms 
unqualified must be recorded.



Sec. 236.604   Performance evaluation.

    (a) Preparation of performance reports. Use DD Form 2631, 
Performance Evaluation (Architect-Engineer), instead of SF 1421.
    (2) Prepare a separate performance evaluation after actual 
construction of the project. Ordinarily, the evaluating official should 
be the person most familiar with the A-E's performance.
    (c) Distribution and use of performance reports.
    (i) Forward each performance report to the central data base 
identified in 236.201(c) after completing the review. The procedures in 
236.201 also apply to A-E contracts.
    (ii) File and use the SF 1421, Performance Evaluation (Architect-
Engineer), in a manner similar to the SF 254, Architect-Engineer and 
Related Services Questionnaire.

[56 FR 36421, July 31, 1991, as amended at 61 FR 7749, Feb. 29, 1996]
236.606  Negotiations.



Sec. 236.606-70   Statutory fee limitation.

    (a) 10 U.S.C. 4540, 7212, and 9540 limit the contract price (or fee) 
for A-E services for the preparation of designs, plans, drawings, and 
specifications to six percent of the project's estimated construction 
cost.
    (b) The six percent limit also applies to contract modifications, 
including modifications involving--
    (1) Work not initially included in the contract. Apply the six 
percent limit to the revised total estimated construction cost.
    (2) Redesign. Apply the six percent limit as follows--
    (i) Add the estimated construction cost of the redesign features to 
the original estimated construction cost;
    (ii) Add the contract cost for the original design to the contract 
cost for redesign; and
    (iii) Divide the total contract design cost by the total estimated 
construction cost. The resulting percentage may not exceed the six 
percent statutory limitation.
    (c) The six percent limit applies only to that portion of the 
contract (or modification) price attributable to the preparation of 
designs, plans, drawings, and specifications. If a contract or 
modification also includes other services, the part of the price 
attributable to the other services is not subject to the six percent 
limit.
236.609  Contract clauses.



Sec. 236.609-70  Option for supervision and inspection services.

    (a) Use the clause at 252.236-7009, Option for Supervision and 
Inspection Services, in solicitations and contracts for A-E services 
when--
    (1) The contract will be fixed price; and
    (2) Supervision and inspection services by the A-E may be required 
during construction.
    (b) Include the scope of such services in appendix A of the 
contract.

[[Page 302]]



     Subpart 236.7--Standard and Optional Forms for Contracting for 
Construction, Architect-Engineer Services, and Dismantling, Demolition, 
                       or Removal of Improvements



Sec. 236.701  Standard and optional forms for use in contracting for construction or dismantling, demolition, or removal of improvements.

    (c) Do not use Optional Form 347, Order for Supplies and Services, 
(see 213.505-2).



PART 237--SERVICE CONTRACTING--Table of Contents




Sec.

                Subpart 237.1--Service Contracts--General

237.102  Policy.
237.102-70  Prohibition on contracting for firefighting or security-
          guard functions.
237.104  Personal services contracts.
237.106  Funding and term of service contracts.
237.109  Services of quasi-military armed forces.
237.170  Uncompensated overtime.
237.170-1  Scope.
237.170-2  General policy.
237.170-3  Solicitation provision.

             Subpart 237.2--Advisory and Assistance Services

237.203  Types of advisory and assistance services.
237.203-70  Acquisition of audit services.
237.205  Management controls.
237.206  Requesting activity responsibilities.
237.270  Master agreements.
237.270-1  Establishing agreements.
237.270-2  Ordering procedures.
237.270-3  Limitation.
237.270-4  Reporting requirements.

                    Subpart 237.70--Mortuary Services

237.7000  Scope.
237.7001  Method of acquisition.
237.7002  Area of performance.
237.7003  Distribution of contracts.
237.7004  Solicitation provisions and contract clauses.

            Subpart 237.71--Laundry and Dry Cleaning Services

237.7100  Scope.
237.7101  General.
237.7102  Solicitation provisions and contract clauses.

             Subpart 237.72--Educational Service Agreements

237.7200  Scope.
237.7201  Educational service agreement.
237.7202  Limitations.
237.7203  Duration.
237.7204  Format and clauses for educational service agreements.

    Subpart 237.73--Services of Students at Research and Development 
                              Laboratories

237.7300  Scope.
237.7301  Definitions.
237.7302  General.
237.7303  Contract clauses.

         Subpart 237.74--Services at Installations Being Closed

237.7400  Scope.
237.7401  Policy.
237.7402  Contract clause.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36424, July 31, 1991, unless otherwise noted.



                Subpart 237.1--Service Contracts--General



Sec. 237.102  Policy.

    To the maximum extent practicable, acquire services on the basis of 
the task to be performed rather than on the basis of the number of hours 
to be provided.

[56 FR 67220, Dec. 30, 1991]



Sec. 237.102-70  Prohibition on contracting for firefighting or security-guard functions.

    (a) Under 10 U.S.C. 2465, the DoD is prohibited for entering into 
contracts for the performance of firefighting or security-guard 
functions at any military installation or facility unless--
    (1) The contract is to be carried out at a location outside the 
United States (to include any U.S. commonwealth, territory, or 
possession) at which members of the armed forces would have to be used 
for the performance of firefighting or security-guard functions at the 
expense of unit readiness;
    (2) The contract will be carried out on a Government-owned but 
privately operated installation; or

[[Page 303]]

    (3) The contract (or renewal of a contract) is for the performance 
of a function under contract on September 24, 1983.
    (b) Under Section 2907 of Public Law 103-160, this prohibition does 
not apply to services at installations being closed (see subpart 
237.74).

[60 FR 61599, Nov. 30, 1995]



Sec. 237.104  Personal services contracts.

    (b)(i) Authorization to acquire the personal services of experts and 
consultants is included in Public Law 101-165, section 9002. Personal 
service contracts for expert and consultant services must also be 
authorized by a determination and findings (D&F) in accordance with 
department/agency regulations.
    (A) Generally, the D&F should authorize one contract at a time; 
however, an authorizing official may issue a blanket D&F for classes of 
contracts.
    (B) Prepare each D&F in accordance with FAR 1.7 and include a 
determination that--
    (1) The duties are of a temporary or intermittent nature;
    (2) Acquisition of the services is advantageous to the national 
defense;
    (3) DoD personnel with necessary skills are not available;
    (4) Excepted appointment cannot be obtained;
    (5) A nonpersonal services contract is not practicable;
    (6) Statutory authority, 5 U.S.C. 3109 and other legislation, apply; 
and
    (7) Any other determination required by statues has been made.
    (ii) Personal services contracts for health care are authorized by 
10 U.S.C. 1091.
    (A) This authority may be used to acquire--
    (1) Direct health care services provided in medical treatment 
facilities; and
    (2) Services of clinical counselors, family advocacy program staff, 
and victim's services representatives to members of the Armed Forces and 
covered beneficiaries who require such services, provided in medical 
treatment facilities or elsewhere. Persons with whom a personal services 
contract may be entered into under this authority include clinical 
social workers, psychologists, psychiatrists, and other comparable 
professionals who have advanced degrees in counseling or related 
academic disciplines and who meet all requirements for State licensure 
and board certification requirements, if any, within their fields of 
specialization.
    (B) Sources for personal services contracts with individuals under 
the authority of 10 U.S.C. 1091 shall be selected through the procedures 
in this section. These procedures do not apply to contracts awarded to 
business entities other than individuals. Selections made using the 
procedures in this section are exempt by statute from FAR part 6 
competition requirements (see 206.001(b)).
    (C) Approval requirements for--
    (1) Direct health care personal service contracts (see 
237.104(b)(ii)(A)(1)) and a pay cap are in DoDI 6025.5, Personal 
Services Contracting Authority for Direct Health Care Providers. 
Requests to enter into a personal service contract for direct health 
care services must be approved by the commander of the medical/dental 
treatment facility where the services will be performed.
    (2) Services of clinical counselors, family advocacy program staff, 
and victim's services representatives (see 237.104(b)(ii)(A)(2)), shall 
be in accordance with agency procedures.
    (D) The contracting officer must ensure that the requiring activity 
provides a copy of the approval with the purchase request.
    (E) The contracting officer must provide adequate advance notice of 
contracting opportunities to individuals residing in the area of the 
facility. The notice must include the qualification criteria against 
which individuals responding will be evaluated. The contracting officer 
shall solicit applicants through at least one local publication which 
serves the area of the facility. Acquisitions under this section for 
personal service contracts are exempt from the posting and synopsis 
requirements of FAR part 5.
    (F) The contracting officer shall provide the qualifications of 
individuals responding to the notice to the commander of the facility 
for evaluation and ranking in accordance with agency

[[Page 304]]

procedures. Individuals must be considered solely on the basis of the 
professional qualifications established for the particular personal 
services being acquired and the Government's estimate of reasonable 
rates, fees, or other costs. The commander of the facility shall provide 
the contracting officer with rationale for the ranking of individuals, 
consistent with the required qualifications.
    (G) Upon receipt from the facility of the ranked listing of 
applicants, the contracting officer shall either--
    (1) Enter into negotiations with the highest ranked applicant. If a 
mutually satisfactory contract cannot be negotiated, the contracting 
officer shall terminate negotiations with the highest ranked applicant 
and enter into negotiations with the next highest.
    (2) Enter into negotiations with all qualified applicants and select 
on the basis of qualifications and rates, fees, or other costs.
    (H) In the event only one individual responds to an advertised 
requirement, the contracting officer is authorized to negotiate the 
contract award. In this case, the individual must still meet the minimum 
qualifications of the requirement and the contracting officer must be 
able to make a determination that the price is fair and reasonable.
    (I) If a fair and reasonable price cannot be obtained from a 
qualified individual, the requirement should be canceled and acquired 
using procedures other than those set forth in this section.
    (f)(i) Payment to each expert or consultant for personal services 
under 5 U.S.C. 3109 shall not exceed the highest rate fixed by the 
Classification Act Schedules for grade GS-15, except the following which 
shall not exceed the highest rate payable to a GS-18--
    (A) Professional engineering services primarily involving research 
and development; or
    (B) Professional services involving physical sciences, natural 
sciences, or medicine.
    (ii) The contract may provide for the same per diem and travel 
expenses authorized for a Government employee, including actual 
transportation and per diem in lieu of subsistence for travel between 
home or place of business and official duty station.
    (iii) Coordinate with the civilian personnel office on benefits, 
taxes, personnel ceilings, and maintenance of records.

[56 FR 36424, July 31, 1991, as amended at 60 FR 2888, Jan. 12, 1995; 60 
FR 61599, Nov. 30, 1995]



Sec. 237.106  Funding and term of service contracts.

    (1) Personal service contracts for expert or consultant services 
shall not exceed one year.
    The nature of the duties must be--
    (i) Temporary (not more than one year); or
    (ii) Intermittent (not cumulatively more than 130 days in one year).
    (2) The following categories of service contracts, funded by annual 
appropriations, are authorized to extend beyond the end of the fiscal 
year--
    (i) One year contracts for maintenance of tools, equipment, or 
facilities (see 10 U.S.C. 2410a(1));
    (A) Tools generally are items found in supply groups 51 and 52, such 
as hand and power tools, gauges, measuring devices, etc.
    (B) Examples of equipment or facilities maintenance services 
include--
    (1) Custodial or housekeeping services;
    (2) Security or fire protection services;
    (3) Refuse collection;
    (4) Grounds or surfaced area maintenance;
    (5) Heating systems operation and maintenance;
    (6) Military family housing maintenance;
    (7) Energy monitoring control systems maintenance and repair;
    (8) Commissary refrigeration maintenance and repair;
    (9) Medical facility real property maintenance management;
    (10) Hospital aseptic maintenance management;
    (11) Animal or pest control;
    (12) Maintenance of flight simulators;
    (13) Maintenance of computers and associated hardware; and
    (14) Maintenance of weapon systems;

    (ii) One year contracts for depot maintenance (see 10 U.S.C. 
2410a(3));

[[Page 305]]

    (iii) Multi-year service contracts;
    (iv) One year requirements or indefinite quantity contracts, as 
defined in FAR 16.503 and FAR 16.504, in which the minimum quantities 
are certain to be ordered in the fiscal year current at the beginning of 
the contract term (but see FAR 32.705-1(b));
    (v) Personal service contracts for experts or consultants or 
contracts for educational services, which cannot feasibly be subdivided 
for separate performance in each fiscal year; or
    (vi) One year contracts for operation of Government equipment (see 
10 U.S.C. 2410a(4)).

[56 FR 36424, July 31, 1991, as amended at 57 FR 14994, Apr. 23, 1992]



Sec. 237.109  Services of quasi-military armed forces.

    See 237.102-70b for prohibition on contracting for firefighting or 
security-guard functions.

[60 FR 61599, Nov. 30, 1995]
237.170  Uncompensated overtime.



Sec. 237.170-1  Scope.

    This section implements section 834 of Pub. L. 101-510 (10 U.S.C. 
2331).

[56 FR 67220, Dec. 30, 1991]



Sec. 237.170-2  General policy.

    (a) Use of uncompensated overtime is not encouraged.
    (b) When services are acquired on the basis of the number of hours 
to be provided, rather than on the task to be performed, the 
solicitation shall require offerors to identify uncompensated overtime 
hours and the uncompensated overtime rate for direct charge Fair Labor 
Standards Act--exempt personnel included in their proposals and 
subcontractor proposals. This includes uncompensated overtime hours that 
are in indirect cost pools for personnel whose regular hours are 
normally charged direct.

[56 FR 67220, Dec. 30, 1991, as amended at 57 FR 14995, Apr. 23, 1992]



Sec. 237.170-3  Solicitation provision.

    Use the provision at 252.237-7019, Identification of Uncompensated 
Overtime, in all solicitations estimated at $100,000 or more, for 
services to be acquired on the basis of the number of hours to be 
provided.

[56 FR 67220, Dec. 30, 1991, as amended at 57 FR 14995, Apr. 23, 1992]



             Subpart 237.2--Advisory and Assistance Services



Sec. 237.203  Types of advisory and assistance services.

    (d) Engineering and technical service.
    (i) Engineering and technical services consist of--
    (A) Contract field services, which are engineering and technical 
services provided on site at Defense locations by the trained and 
qualified engineers and technicians of commercial or industrial 
companies;
    (B) Contract plant services, which are engineering and technical 
services provided by the trained and qualified engineers and technicians 
of a manufacturer of military equipment or components, in the 
manufacturer's own plants and facilities; and
    (C) Field service representatives, which are employees of a 
manufacturer of military equipment or components who provide a liaison 
or advisory service between their company and the military users of 
their company's equipment or components.
    (ii) Every contract for engineering and technical services alone or 
as part of an end item, shall--
    (A) Show those services as a separately priced line item;
    (B) Contain definitive specifications for the services; and
    (C) Show the work-months involved.
    (iii) Agency heads may authorize personal service contracts for 
contract field services to meet an unusual essential mission need. The 
authorization will be for an interim period only.



Sec. 237.203-70  Acquisition of audit services.

    (a) General policy. (1) Departments and agencies shall not contract 
for audit services unless the cognizant DoD audit organization 
determines that expertise required to perform the audit is not available 
within the DoD audit organization, or temporary audit assistance is 
required to meet audit reporting requirements mandated by law or DoD 
regulation.

[[Page 306]]

    (2) DoDD 7600.2, Audit Policies, provides DoD audit policies.
    (3) DoDI 7600.6, Audit of Nonappropriated Fund Instrumentalities and 
Related Activities, provides guidance to audit organizations for audits 
of nonappropriated fund organizations.
    (4) DoD 7600.7-M, Internal Audit Manual, chapter 20, provides policy 
and guidance to DoD audit organizations for the monitoring of audit 
services provided by non-Federal auditors.
    (b) Contract period. Except in unusual circumstances, contracts for 
recurring audit services shall be awarded for a one year period with at 
least two option years.
    (c) Approvals. Contracting officers shall not issue a solicitation 
for audit services unless the requiring activity provides evidence that 
the cognizant DoD audit organization has approved the statement of work. 
The requiring agency shall obtain the same evidence of approval for 
subsequent material changes to the statement of work.
    (d) Solicitation provisions and contract clauses. (1) Use the 
provision of 252.237-7000, Notice of Special Standards of 
Responsibility, in solicitations for audit services.
    (2) Use the clause at 252.237-7001, Compliance with Audit Standards, 
in solicitations and contracts for audit services.

[56 FR 36424, July 31, 1991, as amended at 57 FR 42632, Sept. 15, 1992]



Sec. 237.205  Management controls.

    DoD procedures are in DoDD 4205.2, DoD Contracted Advisory and 
Assistance Services.



Sec. 237.206  Requesting activity responsibilities.

    (b) On acquisitions for studies, the purchase request package must 
contain a signed statement from the technical officer responsible for 
the study stating that the Defense Technical Information Center (DTIC) 
and other information sources have been queried, that evidence of those 
queries are on file, and no existing scientific or technical report 
could fulfill the requirement.
    (c) The authority, without redelegation authority (see DoDD 4205.2), 
to approve the use of advisory and assistance services in contracts over 
$50,000 is--
    (i) An SES manager;
    (ii) A general or flag officer;
    (iii) An officer in O-6 grade filling a general or flag officer 
level position; or
    (iv) An officer in O-6 grade who has subordinate SES personnel.



Sec. 237.270  Master agreements.

    Section 2304 of Title 10, U.S.C., authorizes award of master 
agreements under which orders may be issued for specific contract 
advisory and assistance services (CAAS). The authority to award master 
agreements expires September 30, 1994.

[58 FR 28471, May 13, 1993]



Sec. 237.270-1  Establishing agreements.

    (a) Use this section only for types of advisory and assistance 
services described in FAR 37.203.
    (b) Establish agreements using competitive procedures.
    (c) Use the procedures for basic ordering agreements (see FAR 
16.703) except--
    (1) Synopsize solicitations for agreements as if they were service 
contracts expected to exceed $25,000;
    (2) Establish agreements with at least three of the sources 
submitting offers; and
    (3) Establish agreements for a period not to exceed two years, and 
do not extend them.



Sec. 237.270-2  Ordering procedures.

    (a) Ordering procedures for master agreements are the same as for 
basic ordering agreements, except that requests for proposals for 
individual orders need not be synopsized, nor is a justification and 
approval required. Orders under master agreements are an additional 
circumstance permitting full and open competition after exclusion of 
sources (FAR subpart 6.2).
    (b) Before placing an order under a master agreement, the 
contracting officer--
    (1) Must reasonably expect that at least two sources with 
established agreements will submit offers or an order cannot be placed 
against an agreement;
    (2) Shall request offers from all agreements holders;

[[Page 307]]

    (3) Shall ensure the statement of work clearly specifies the tasks 
to be performed;
    (4) Shall accept the offer most advantageous to the Government, 
considering all relevant factors specified in the request for offers;
    (5) Shall synopsize issued orders in accordance with FAR 5.302; and
    (6) Shall ensure orders have an identifiable deliverable.



Sec. 237.270-3  Limitation.

    The total value of orders issued under master agreements in a fiscal 
year by any contracting activity (as defined in 202.101) shall not 
exceed 30 percent of the value of all contracts for advisory and 
assistance services awarded by that activity during fiscal year 1989. 
This limitation may be increased from 30 percent to not more than 50 
percent if--
    (a) The head of the contracting activity (HCA) waives the 30 percent 
limitation. Each waiver shall be in the form of a determination and 
finding prepared and processed in accordance with department/agency 
procedures. The determination and finding must specify that the use of 
master agreements is necessary to further the policy of acquiring 
advisory and assistance services on the basis of the task to be 
performed rather than on the basis of the number of hours provided; and
    (b) The agency publishes a notice of the waiver in the Federal 
Register and 60 days have passed since the notice of the HCA waiver 
appeared in the Federal Register. Federal Register notices shall be 
forwarded for publication in accordance with agency procedures.



Sec. 237.270-4  Reporting requirements.

    (a) Each department and agency shall provide an annual report to 
OSD, ATTN: OUSD(A)DP(CPA), not later than November 15 of each year. The 
report control symbol is DD-P&L(A) 1849. The report shall include--
    (1) The total number of master agreements awarded (with names of 
contractors and type of CAAS being acquired) and estimated dollar value 
of each agreement;
    (2) The number of task orders awarded under each master agreement 
(by contractor) and dollar value of each (including modifications); and
    (3) The period covered by the report.
    (b) Each department and agency shall centrally maintain the 
following information, for all master agreements expected to involve 
work in excess of $2 million (including modifications), on a fiscal year 
basis--
    (1) The number of bid protests filed, number sustained, and number 
of awards terminated during the competition for master agreements and 
task orders;
    (2) The program's effect on the procurement administrative leadtime 
for CAAS;
    (3) Statements of work describing the services contracted for and 
the source evaluation criteria used to evaluate proposals for award;
    (4) The level of small business participation in the program; and
    (5) The number of contracts where a contractor certified that a 
conflict of interest exists under the regulations implementing section 
8141 of the National Defense Authorization Act for FY89, the nature of 
the conflict of interest, and the steps taken to resolve such conflicts 
of interest among firms that qualify for master agreements.



                    Subpart 237.70--Mortuary Services



Sec. 237.7000  Scope.

    This subpart contains acquisition procedures for contracts for 
mortuary services (the care of remains) for military personnel within 
the U.S. Departments/agencies may use these procedures as guidance in 
areas outside the U.S. for both deceased military and civilian 
personnel.



Sec. 237.7001  Method of acquisition.

    (a) Requirements type contract. By agreement among the military 
activities, one activity in each geographical area will contract for the 
estimated requirements for the care of remains for all military 
activities in the area. Use a requirements type contract (see FAR 
16.503) when the estimated annual requirements for the activities in the 
area are ten or more.
    (b) Purchase order. Where no contract exists, use DD Form 1155, 
Order for Supplies and Services/Request for

[[Page 308]]

Quotations, to obtain mortuary services.



Sec. 237.7002  Area of performance.

    Determine and define the geographical area to be covered by the 
contract using the following general guidelines--
    (a) Use political boundaries, streets, or other features as 
demarcation lines.
    (b) The size should be roughly equivalent to the contiguous 
metropolitan or municipal area enlarged to include the activities 
served.
    (c) If the area of performance best suited to the needs of a 
particular contract is not large enough to include a carrier terminal 
commonly used by people within such area, the contract area of 
performance shall specifically state that it includes such terminal as a 
pickup or delivery point.



Sec. 237.7003  Distribution of contracts.

    In addition to normal contract distribution, send three copies of 
each contract to each activity authorized to use the contract, and two 
copies to each of the following--
    (a) HQDA (TAPC-PEC-D), Alexandria, VA 22331.
    (b) Commander, Naval Medical Command, Department of the Navy (MED 
3141), 23rd and E Streets, NW, Washington, DC 20372.
    (c) Headquarters, AFMPC-MPCCM, Randolph AFB, TX 78150.



Sec. 237.7004  Solicitation provisions and contract clauses.

    (a) Use the provision at 252.237-7002, Award to Single Offeror, in 
all sealed bid solicitations for mortuary services. Use the basic 
provision with its Alternate I in all negotiated solicitations for 
mortuary services.
    (b) Use the following clauses in all mortuary service solicitations 
and contracts, except do not use the clauses at 252.237-7004, Area of 
Performance, and 252.237-7010, Facility Requirements, in solicitations 
or contracts that include port of entry requirements--
    (1) 252.237-7003, Requirements, (insert activities authorized to 
place orders in paragraph (e) of the clause);
    (2) 252.237-7004, Area of Performance;
    (3) 252.237-7005, Performance and Delivery;
    (4) 252.237-7006, Subcontracting;
    (5) 252.237-7007, Termination for Default;
    (6) 252.237-7008, Group Interment;
    (7) 252.237-7009, Permits;
    (8) 252.237-7010, Facility Requirements; and
    (9) 252.237-7011, Preparation History.
    (c) Use the clause at FAR 52.245-4, Government-Furnished Property 
(Short Form), in solicitations and contracts that include port of entry 
requirements.



            Subpart 237.71--Laundry and Dry Cleaning Services



Sec. 237.7100  Scope.

    This subpart contains acquisition procedures for laundry and dry 
cleaning services within the United States. It may be used as guidance 
in all other locations.



Sec. 237.7101  General.

    (a) Except for hospital requirements, acquire laundry and dry 
cleaning services on a count-of-articles basis.
    (b) Laundry services in support of hospitals may be acquired on the 
basis of a count-of-articles or by bulk weight.
    (1) Acquisitions by weight may be on either a presorted (bag type) 
or unsorted (simple bulk weight) basis.
    (2) In selecting the basis, consider such factors as price, 
administrative costs, aseptic requirements, risk of contamination or 
cross-contamination, and volume and nature of articles to be serviced.



Sec. 237.7102  Solicitation provisions and contract clauses.

    (a) Use the provision at 252.237-7012, Instructions to Offerors 
(Count-of-Articles), in solicitations for laundry and dry cleaning 
services to be provided on a count-of-articles basis.
    (b) Use the provision at 252.237-7013, Instructions to Offerors 
(Bulk Weight), in solicitations for laundry services to be provided on a 
bulk weight basis.
    (c) Use the clause at 252.237-7014, Loss or Damage (Count-of-
Articles), in solicitations and contracts for laundry and dry cleaning 
services to be provided on a count-of-articles basis.

[[Page 309]]

    (d) Use the clause at 252.237-7015, Loss or Damage (Weight of 
Articles), in solicitations and contracts for laundry and dry cleaning 
services to be provided on a bulk weight basis.
    (1) Insert a reasonable per pound price in paragraph (b) of the 
clause, based on the average per pound value. When the contract requires 
laundry services on a bag type basis, insert reasonable per pound prices 
by bag type.
    (2) Insert an appropriate percentage in paragraph (e) of the clause, 
not to exceed eight percent.
    (e) Use the clause at 252.237-7016, Delivery Tickets, in all 
solicitations and contracts for laundry and dry cleaning services.
    (1) Use the clause with its Alternate I when services are for bag 
type laundry to be provided on a bulk weight basis.
    (2) Use the clause with its Alternate II when services are unsorted 
laundry to be provided on a bulk weight basis.
    (f) Use the clause at 252.237-7017, Individual Laundry, in 
solicitations and contracts for laundry and dry cleaning services to be 
provided to individual personnel.
    (1) Insert the number of pieces of outer garments in paragraphs (d) 
(1) and (2) of the clause.
    (2) The number of pieces and composition of a bundle in paragraphs 
(d) (1) and (2) of the clause may be modified to meet local conditions.
    (g) Use the clause at 252.237-7018, Special Definitions of 
Government Property, in all solicitations and contracts for laundry and 
dry cleaning services.



             Subpart 237.72--Educational Service Agreements



Sec. 237.7200  Scope.

    (a) This subpart prescribes acquisition procedures for educational 
services from schools, colleges, universities, or other educational 
institutions. This subpart does not include tuition assistance 
agreements, i.e., payment by the Government of partial tuition under the 
off-duty educational program.
    (b) As used in the subpart--
    (1) ``Facilities'' do not include the institution's dining rooms or 
dormitories; and
    (2) ``Fees'' does not include charges for meals or lodging.



Sec. 237.7201  Educational service agreement.

    (a) An educational service agreement is not a contract, but is an 
ordering agreement under which the Government may order educational 
services.
    (b) Educational service agreements provide for ordering educational 
services when--
    (1) The Government pays normal tuition and fees for educational 
services provided to a student by the institution under its normal 
schedule of tuition and fees applicable to all students generally; and
    (2) Enrollment is at the institution under the institution's normal 
rules and in courses and curricula which the institution offers to all 
students meeting admission requirements.



Sec. 237.7202  Limitations.

    (a) Make no agreement under this subpart which will result in 
payment of Government funds for tuition or other expenses for training 
in any legal profession, except in connection with the detailing of 
commissioned officers to law schools under 10 U.S.C. 2004.
    (b) Educational service agreements are not used to provide special 
courses or special fees for Government students.



Sec. 237.7203  Duration.

    (a) Educational service agreements are for an indefinite duration 
and remain in effect until terminated.
    (b) The issuing activity must establish procedures to review each 
educational service agreement at least once each year. Review dates 
should consider the institution's academic calendar and occur at least 
30 days before the beginning of a term. The purpose of the review is to 
incorporate changes to reflect requirements of any statute, Executive 
Order, FAR, or DFARS.
    (c) If the contracting officer and the institution do not agree on 
required changes, terminate the agreement.

[[Page 310]]



Sec. 237.7204  Format and clauses for educational service agreements.

    Educational service agreements under this subpart shall be in the 
following format. Add to the schedule any other provisions necessary to 
describe the requirements, if they are consistent with the following 
provisions and the policy of acquiring educational services in the form 
of standard course offerings at the prevailing rates of the institution.

                      Educational Service Agreement

                       Agreement No. ____________

    1. This agreement entered into on the ________ day of __________ 
19____, is between the Government, represented by the Contracting 
Officer, and the Contractor, (name of institution), an educational 
institution located in ________ (city), ________ (state).
    2. This agreement is for educational services to be provided by the 
Contractor to Government personnel at the Contractor's institution. The 
Contractor shall provide instruction with standard offerings of courses 
available to the public.
    3. The Government shall pay for services under the Contractor's 
normal schedule of tuition and fees applicable to the public and in 
effect at the time the services are performed.
    4. The Government will review this agreement annually before the 
anniversary of its effective date for the purpose of incorporating 
changes required by statutes, executive orders, the Federal Acquisition 
Regulation, or the Defense Federal Acquisition Regulation Supplement. 
Changes required to be made by modification to this agreement or by 
issuance of a superseding agreement. If mutual agreement on the changes 
cannot be reached, the Government will terminate this agreement.
    5. The parties may amend this agreement only by mutual consent.
    6. This agreement shall start on the date in paragraph 1 and shall 
continue until terminated.
    7. The estimated annual cost of this agreement is $__________. This 
estimate is for administrative purposes only and does not impose any 
obligation on the Government to request any services or make any 
payment.
    8. Advance payments are authorized by 10 U.S.C. 2396(a)(3).
    9. Submit invoices to: ____________ (name and address of activity).

                           Schedule Provisions

    1. Ordering procedures and services to be provided. (a) The 
Contractor shall promptly deliver to the Contracting Officer one copy of 
each catalog applicable to this agreement, and one copy of any 
subsequent revision.
    (b) The Government will request educational services under this 
agreement by a (insert type of request, such as, delivery order, 
official Government order, or other written communication). The (insert 
type of request, such as, delivery order, official Government order, or 
other written communication) will contain the number of this agreement 
and will designate as students at the Contractor's institution one or 
more Government-selected persons who have already been accepted for 
admission under the Contractor's usual admission standards.
    (c) All students under this agreement shall register in the same 
manner, be subject to the same academic regulations, and have the same 
privileges, including the use of all facilities and equipment as any 
other students enrolled in the institution.
    (d) Upon enrolling each student under this agreement, the Contractor 
shall, where the resident or nonresident status involves a difference in 
tuition or fees--
    (i) Determine the resident or nonresident status of the student;
    (ii) Notify the student and the Contracting Officer of the 
determination. If there is an appeal of the determination;
    (iii) If there is an appeal of the determination, process the appeal 
under the Contractor's standard procedures;
    (iv) Notify the student and Contracting Officer of the result; and
    (v) Make the determination a part of the student's permanent record.
    (e) The Contractor shall not furnish any instruction or other 
services to any student under this agreement before the effective date 
of a request for services in the form specified in paragraph (b) of this 
schedule.
    2. Change in curriculum. The Contracting Officer may vary the 
curriculum for any student enrolled under this agreement but shall not 
require or make any change in any course without the Contractor's 
consent.
    3. Payment. (a) The Government shall pay the Contractor the normal 
tuition and fees which the Contractor charges any students pursuing the 
same or similar curricula, except for any tuition and fees which this 
agreement excludes. The Contractor may change any tuition and fees, 
provided--
    (1) The Contractor publishes the revisions in a catalog or otherwise 
publicly announces the revisions;
    (2) Applies the revisions uniformly to all students studying the 
same or similar curricula;
    (3) Provides the Contracting Officer notice of changes before their 
effective date.
    (b) The Contractor shall not establish any tuition or fees which 
apply solely to students under this agreement.

[[Page 311]]

    (c) If the Contractor regularly charges higher tuition and fees for 
nonresident students, the Contractor may charge the Government the 
normal nonresident tuition and fees for students under this agreement 
who are nonresidents. The Government shall not claim resident tuition 
and fees for any student solely on the basis of the student residing in 
the State as a consequence of enrollment under this agreement.
    (d) The Contractor shall charge the Government only the tuition and 
fees which relate directly to enrollment as a student. Tuition and fees 
may include--
    (i) Penalty fees for late registration or change of course caused by 
the Government;
    (ii) Mandatory health fees and health insurance charges; and
    (iii) Any flat rate charge applicable to all students registered for 
research that appears in the Contractor's publicly announced fee 
schedule.
    (e) The Contractor shall not charge the Government for--
    (i) Permit charges, such as vehicle registration or parking fees, 
unless specifically authorized in the request for service; and
    (ii) Any equipment, refundable deposits, or any items or services 
(such as computer time) related to student research.
    (f) Normally, the Contractor shall not directly charge individual 
students for application fees or any other fee chargeable to this 
agreement. However, if the Contractor's standard procedures require 
payment of any fee before the student is enrolled under this agreement, 
the Contractor may charge the student. When the Contractor receives 
payment from the Government, the Contractor shall fully reimburse the 
student.
    (g) For each term the Contractor enrolls students under this 
agreement, the Contractor shall submit ________ copies of an invoice 
listing charges for each student separately. The Contractor shall submit 
invoices within ________ days after the start of the term and shall 
include--
    (i) Agreement number and inclusive dates of the term;
    (ii) Name of each student;
    (iii) A list showing each course for each student if the school 
charges by credit hour;
    (iv) The resident or nonresident status of each student (if 
applicable to the Contractor's school); and
    (v) A breakdown of charges for each student, including credit hours, 
tuition, application fee, and other fees. Provide a total for each 
student and a grand total for all students listed on the invoice.
    (h) If unforeseen events require additional charges that are 
otherwise payable under the Contractor's normal tuition and fee 
schedule, the Contractor may submit a supplemental invoice or make the 
adjustment on the next regular invoice under this agreement. The 
Contractor shall clearly identify and explain the supplemental invoice 
or the adjustment.
    (i) The Contractor shall apply any credits resulting from withdrawal 
of students, or from any other cause under its standard procedures, to 
subsequent invoices submitted under this agreement. Credits should 
appear on the first invoice submitted after the action resulting in the 
credits. If no subsequent invoice is submitted, the Contractor shall 
deliver to the Contracting Officer a check drawn to the order of the 
office designated for contract administration. The Contractor shall 
identify the reason for the credit and the applicable term dates in all 
cases.
    4. Withdrawal of students. (a) The Government may, at its option and 
at any time, withdraw financial support for any student by issuing 
official orders. The Government will furnish ________ copies of the 
orders to the Contractor within a reasonable time after publication.
    (b) The Contractor may request withdrawal by the Government of any 
student for academic or disciplinary reasons.
    (c) If withdrawal occurs before the end of a term, the Government 
will pay any tuition and fees due for the current term. The Contractor 
shall credit the Government with any charges eligible for refund under 
the Contractor's standard procedures for any students in effect on the 
date of withdrawal.
    (d) Withdrawal of students by the Government will not be the basis 
for any special charge or claim by the Contractor other than charges 
under the Contractor's standard procedures.
    5. Transcripts. Within a reasonable time after withdrawal of a 
student for any reason, or after graduation, the Contractor shall send 
to the Contracting Officer (or to an address supplied by the Contracting 
Officer) one copy of an official transcript showing all work by the 
student at the institution until such withdrawal or graduation.
    6. Student teaching. The Government does not anticipate the 
Contractor awarding fellowships and assistantships to students attending 
school under this agreement. However, for graduate students, should both 
the student and the Contractor decide it to be in the student's best 
interests to assist in the institution's teaching program, the 
Contractor may provide nominal compensation for part-time service. Base 
the compensation on the Contractor's practices and procedures for other 
students of similar accomplishment in that department or field. The 
Contractor shall apply the compensation as a credit against any invoices 
presented for payment for any period in which the student performed the 
part-time teaching service.
    7. Termination of agreement. (a) Either party may terminate this 
agreement by giving 30 days advance written notice of the effective

[[Page 312]]

date of termination. In the event of termination, the Government shall 
have the right, at its option, to continue to receive educational 
services for those students already enrolled in the contractor's 
institution under this agreement until such time that the students 
complete their courses or curricula or the Government withdraws them 
from the Contractor's institution. The terms and conditions of this 
agreement in effect on the effective date of the termination shall 
continue to apply to such students remaining in the Contractor's 
institution.
    (b) Withdrawal of students under Schedule provision 4 shall not be 
considered a termination within the meaning of this provision 7.
    (c) Termination by either party shall not be the basis for any 
special charge or claim by the Contractor, other than as provided by the 
Contractor's standard procedures.

                           General Provisions

    Use the following clauses in educational service agreements--
    1. FAR 52.202-1, Definitions, and add the following paragraphs (d) 
through (i).
    (d) Term means the period of time into which the Contractor divides 
the academic year for purposes of instruction. This includes semester, 
trimester, quarter, or any similar word the Contractor may use.
    (e) Course means a series of lectures or instructions, and 
laboratory periods, relating to one specific representation of subject 
matter, such as Elementary College Algebra, German 401, or Surveying. 
Normally, a student completes a course in one term and receives a 
certain number of semester hours credit (or equivalent) upon successful 
completion.
    (f) Curriculum means a series of courses having a unified purpose 
and belonging primarily to one major academic field. It will usually 
include certain required courses and elective courses within established 
criteria. Examples include Business Administration, Civil Engineering, 
Fine and Applied Arts, and Physics. A curriculum normally covers more 
than one term and leads to a degree or diploma upon successful 
completion.
    (g) Catalog means any medium by which the Contractor publicly 
announces terms and conditions for enrollment in the Contractor's 
institution, including tuition and fees to be charged. This includes 
``bulletin,'' ``announcement,'' or any other similar word the Contractor 
may use.
    (h) Tuition means the amount of money charged by an educational 
institution for instruction, not including fees.
    (i) Fees means those applicable charges directly related to 
enrollment in the Contractor's institution. Unless specifically allowed 
in the request for services, fees shall not include--
    (1) Any permit charge, such as parking and vehicle registration; or
    (2) Charges for services of a personal nature, such as food, 
housing, and laundry.
    2. FAR 52.203-1, Officials Not To Benefit.
    3. FAR 52.203-3, Gratuities.
    4. FAR 52.203-5, Covenant Against Contingent Fees.
    5. FAR 52.204-1, Approval of Contract, if required by department/
agency procedures.
    6. FAR 52.215-2, Audit and Records--Negotiation.
    7. FAR 52.215-18, Order of Precedence.
    8. Conflicts Between Agreement and Catalog. Insert the following 
clause--

                 Conflicts Between Agreement and Catalog

    If there is any inconsistency between this agreement and any catalog 
or other document incorporated in this agreement by reference or any of 
the Contractor's rules and regulations, the provisions of this agreement 
shall govern.
    9. FAR 52.222-3, Convict Labor.
    10. Under FAR 22.802, FAR 22.807, and FAR 22.810, use the 
appropriate clause from FAR 52.222-26, Equal Opportunity.
    11. FAR 52.233-1, Disputes.
    12. Assignment of Claims. Insert the following clause:

                          Assignment of Claims

            No claim under this agreement shall be assigned.

    13. FAR 52.252-4, Alterations in Contract, if required by 
department/agency procedure.

                             Signature Page

Agreement No.___________________________________________________________
Date____________________________________________________________________

                      The United States of America

BY:_____________________________________________________________________
(Contracting Officer)
Activity________________________________________________________________
Location________________________________________________________________
(Name of Contractor)
BY:_____________________________________________________________________
(Title)_________________________________________________________________

[56 FR 36424, July 31, 1991, as amended at 60 FR 61599, Nov. 30, 1995]



    Subpart 237.73--Services of Students at Research and Development 
                              Laboratories



Sec. 237.7300  Scope.

    This subpart prescribes procedures for acquisition of temporary or 
intermittent services of students at institutions of higher learning for 
the purpose

[[Page 313]]

of providing technical support at Defense research and development 
laboratories (10 U.S.C. 2360).



Sec. 237.7301  Definitions.

    As used in this subpart--
    (a) Institution of higher learning means any public or private post-
secondary school, junior college, college, university, or other degree 
granting educational institution that--
    (1) Is located in the United States, its possessions, and Puerto 
Rico;
    (2) Has an accredited education program approved by an appropriate 
accrediting body; and
    (3) Offers a program of study at any level beyond high school.
    (b) Nonprofit organization means any organization described by 
section 501(c)(3) of title 26 of the U.S.C. which is exempt from 
taxation under section 501(a) of title 26.
    (c) Student means an individual enrolled (or accepted for 
enrollment) at an institution of higher learning before the term of the 
student technical support contract. The individual shall remain in good 
standing in a curriculum designed to lead to the granting of a 
recognized degree, during the term of the contract.
    (d) Technical support means any scientific or engineering work in 
support of the mission of the DoD laboratory involved. It does not 
include administrative or clerical services.



Sec. 237.7302  General.

    Generally, agencies will acquire services of students at 
institutions of higher learning by contract between a nonprofit 
organization employing the student and the Government. When it is in the 
best interest of the Government, contracts may be made directly with 
students. These services are not subject to the requirements of FAR part 
19, FAR 13.105, or DFARS part 219. Award authority for these contracts 
is 10 U.S.C. 2304(a)(1) and 10 U.S.C. 2360.

[56 FR 36424, July 31, 1991, as amended at 60 FR 29500, June 5, 1995]



Sec. 237.7303  Contract clauses.

    Contracts made directly with students are nonpersonal service 
contracts but shall include the clauses at FAR 52.232-3, Payments Under 
Personal Services Contracts, and FAR 52.249-12, Termination (Personal 
Services).



         Subpart 237.74--Services at Installations Being Closed

    Source: 59 FR 36089, July 15, 1994, unless otherwise noted.



Sec. 237.7400  Scope.

    This subpart prescribes procedures for contracting, through use of 
other than full and open competition, with local governments for police, 
fire protection, airfield operation, or other community services at 
military installations to be closed under the Defense Authorization 
Amendments and Base Closure and Realignment Act (Pub. L. 100-526), as 
amended, and the Defense Base Closure and Realignment Act of 1990 (Pub. 
L. 101-510), as amended.

[59 FR 36089, July 15, 1994, as amended at 60 FR 29500, June 5, 1995]



Sec. 237.7401  Policy.

    The authority in 206.302-5(b)(ii) to contract with local 
governments--
    (a) May be exercised without regard to the provisions of 10 U.S.C. 
Chapter 146, Contracting for Performance of Civilian Commercial or 
Industrial Type Functions;
    (b) May not be exercised earlier than 180 days before the date the 
installation is scheduled to be closed;
    (c) Requires a determination by the head of the contracting activity 
that the services being acquired under contract with the local 
government are in the best interests of the Department of Defense.
    (d) Includes the requirement of subpart 222.71, Right of First 
Refusal of Employment, unless it conflicts with the local government's 
civil service selection procedures.

[59 FR 36089, July 15, 1994, as amended at 60 FR 29500, June 5, 1995]



Sec. 237.7402  Contract clause.

    Use the clause at 252.237-7022, Services at Installations Being 
Closed, in solicitations and contracts based upon the authority of this 
subpart.

[59 FR 36089, July 15, 1994, as amended at 60 FR 29500, June 5, 1995]

[[Page 314]]



PART 239--ACQUISITION OF INFORMATION RESOURCES--Table of Contents




Sec.
239.001  Policy.
239.001-70  Warner Amendment exemptions for Federal information 
          processing (FIP) resources.
239.002  Delegations of procurement authority.

Subpart 239.70--Exchange or Sale of Federal Information Processing (FIP) 
                                Resources

239.7000  Scope of subpart.
239.7001  Policy.
239.7002  Conditions for using exchange/sale.
239.7003  Procedures.

        Subpart 239.71--Security and Privacy for Computer Systems

239.7100  Scope of subpart.
239.7101  General.
239.7102  Security against compromising emanations.
239.7102-1  General.
239.7102-2  Validation of TEMPEST compliance.
239.7102-3  Solicitation provisions and contract clauses.

                        Subpart 239.72--Standards

239.7200  Scope of subpart.
239.7201  General.
239.7202  Waivers.

 Subpart 239.73--Acquisition of Automatic Data Processing Equipment by 
                             DoD Contractors

239.7300  Scope of subpart.
239.7301  Applicability.
239.7302  Approvals and screening.
239.7303  Review and approval of leasing costs.
239.7304  Purchase option credits.
239.7305  Contractor documentation.

               Subpart 239.74--Telecommunications Services

239.7400  Scope.
239.7401  Definitions.
239.7402  Policy.
239.7403  Regulatory bodies.
239.7404  Foreign carriers.
239.7405  Authority to contract for telecommunications services.
239.7406  Cost or pricing data.
239.7407  Type of contract.
239.7407-1  General.
239.7407-2  Communication service authorizations (CSAs).
239.7408  Special construction.
239.7408-1  General.
239.7408-2  Applicability of construction labor standards for special 
          construction.
239.7409  Special assembly.
239.7410  Cancellation and termination.
239.7411  Contract clauses.

             Subpart 239.75--Appropriations Act Restrictions

239.7500  Scope of subpart.
239.7501  Major automated information systems.
239.7501-1  Definitions.
239.7501-2  Restriction.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36429, July 31, 1991, unless otherwise noted.



Sec. 239.001  Policy.

    (1) The General Services Administration (GSA) has certain exclusive 
authority under ``The Brooks Act'' (40 U.S.C. 759) for the acquisition 
of Federal information processing (FIP) resources. GSA implements this 
authority in the Federal Information Resources Management Regulation 
(FIRMR), which is codified in 41 CFR 201. FIP resources are defined in 
the FIRMR at 201-4.001.
    (2) When the acquisition is subject to ``The Brooks Act'' (40 U.S.C. 
759), the FIRMR takes precedence over this part.
    (3) Unless one of the exemptions of the Warner Amendment (10 U.S.C. 
2315) applies, or unless otherwise specifically exempted, DoD must 
comply with FIRMR requirements.
    (4) The Warner Amendment (10 U.S.C. 315), exempts certain DoD 
information resource acquisitions from the requirements of ``The Brooks 
Act'' and GSA's implementing regulations. If an acquisition is exempt 
under the Warner Amendment, clauses from the FIRMR do not have to be 
included in the solicitation or contract. However, all acquisitions for 
FIP resources, including those exempt under the Warner Amendment, must 
comply with Federal standards (see subpart 239.72). Even if a Warner 
Amendment exemption applies, DoD may use the FIRMR simplified process 
(see 201-39.803 of FAR appendix A) for obtaining the FIP resources when 
it is determined by the

[[Page 315]]

Contracting Officer to be in the Government's best interests.

[57 FR 42632, Sept. 15, 1992]



Sec. 239.001-70  Warner Amendment exemptions for Federal information processing (FIP) resources.

    (a) Exemptions. Acquisitions for FIP resources are exempt from 
application of ``The Brooks Act'' if the function, operation, or use of 
such resources--
    (1) Involves intelligence activities.
    (2) Involves cryptologic activities related to national security.
    (3) Involves command and control of the military forces.
    (4) Involves equipment as an integral part of a weapon system.
    (5) Is critical to the direct fulfillment of military or 
intelligence missions, provided that this exclusion shall not include 
FIP resources used for routine administrative and business applications 
such as payroll, finance, logistics, and personnel management.
    (b) General application. (1) The term ``involves'' as used in 
paragraphs (a) (1) through (4) of this subsection is important in 
determining whether an acquisition is exempt under the Warner Amendment.
    (i) To be exempt, at least one of the actual intended purposes of 
the function, operation, or use of the equipment or service being 
acquired must directly relate to the activities, functions, or equipment 
specified in paragraphs (a) (1) through (4) of this subsection.
    (ii) The equipment and services may have additional purpose(s) 
related to activities, functions, and equipment other than those 
specified in (a) (1) through (4) of this subsection, e.g., routine 
business and administrative purposes.
    (2) In contrast to paragraphs (a) (1) through (4) of this 
subsection, paragraph (a)(5) exempts acquisitions for ADPE (FIP 
resources) used for purposes that are critical to the direct fulfillment 
of military or intelligence missions and which do not include ADPE (FIP 
resources) used for routine administrative and business applications.
    (c) Determinations as to applicability of the Warner Amendment shall 
be made in accordance with department/agency procedures.



Sec. 239.002  Delegations of procurement authority.

    (1) When a delegation of procurement authority (DPA) is required, 
the contracting officer shall obtain the DPA before issuing the 
solicitation.
    (2) The contracting officer shall include a clause in the 
solicitation and resulting contract which identifies whether the 
contracting action is being conducted under the regulatory DPA, a 
specific agency DPA, or a specific acquisition DPA. (See FIRMR 201-
39.106-4.)



Subpart 239.70--Exchange or Sale of Federal Information Processing (FIP) 
                                Resources



Sec. 239.7000  Scope of subpart.

    This Subpart contains unique DoD procedures for the exchange or sale 
of FIP resources using the exchange authority of the General Services 
Administration (GSA).



Sec. 239.7001  Policy.

    Agencies should consider exchange/sale when replacing Government-
owned FIP resources. Exchange/sale is a method of--
    (a) Transferring the equipment to be replaced to--
    (1) Another Government agency, with reimbursement (sale); or
    (2) The supplier of the replacement FIP resources for a trade-in 
allowance (exchange).
    (b) Applying the proceeds of sale or the exchange allowance toward 
the purchase of replacement FIP resources.



Sec. 239.7002  Conditions for using exchange/sale.

    (a) The requiring activity must make a written determination that--
    (1) The trade-in allowance of the exchange or the proceeds of the 
sale will be applied to acquire the replacement FIP resources; and
    (2) The exchange/sale transaction will foster the economic and 
efficient accomplishment of a continuing requirement.
    (b) The replacement equipment must be a FIP resource--

[[Page 316]]

    (1) Similar to the resource being sold or exchanged;
    (2) Which will satisfy the continuing requirement currently met by 
the resource being replaced.



Sec. 239.7003  Procedures.

    (a) Comply with--
    (1) This subpart;
    (2) Subpart 217.70; and
    (3) DoD 7950.1-M, Defense Automation Resources Management Manual.
    (b) Solicit offers both on an exchange (trade-in for allowance) or 
no exchange (no trade-in) basis.
    (c) Retain the option to exercise any exchange offer at the time of 
award.
    (d) List and describe the exchange FIP resource in the solicitation. 
At a minimum include--
    (1) A brief description of each item;
    (2) Name of manufacturer;
    (3) Equipment type;
    (4) Model number; and
    (5) The condition code and explanation of the code.
    (e) Allow sufficient time in the contracting schedule to permit 
screening of the exchange FIP resource within the Government prior to 
contract award.
    (f) Immediately upon receipt of offers, determine the highest 
exchange offer (if any) and use it to initiate screening under DoD 
7950.1-M.
    (1) Send an SF 120, Report of Excess Personal Property, to the 
Defense Automation Resources Information Center (ATTN: DARIC-R). 
Prominently display the following note on the original and five copies 
of the SF 120.

                       Exchange/``Sale'' Property

A written administrative determination has been (will be) made to apply 
the exchange allowance or proceeds of ``sale'' to the acquisition of 
similar items.

    (2) Include the following additional information with the SF 120--
    (i) The identity of the offeror of the exchange;
    (ii) The type of replacement equipment;
    (iii) The acquisition method for the replacement equipment;
    (iv) The anticipated purchase price for the replacement equipment;
    (v) The delegation of procurement authority number assigned by GSA 
for the replacement equipment, if applicable; and
    (vi) The name and telephone number of the contracting officer.
    (g) Evaluate offers using the solicitation criteria, including 
consideration of any exchange allowance offers. Award can be made 
whether or not the replaced FIP resource is exchanged.
    (h) Before a contract is awarded, consider the results of the 
screening. Do not make an exchange if another Government agency wants to 
acquire the replaced equipment.
    (1) If another agency is going to acquire the replaced equipment, do 
not include the exchange allowance in the contract price.
    (2) The actual sale price to the agency acquiring the replaced 
equipment will be the exchange allowance (if any) of the successful 
offeror.
    (i) If no Government agency wants to acquire the replaced equipment, 
the contract price shall include the exchange allowance, if any.
    (j) If no exchange allowance was offered by the successful 
contractor, see DoD 7950.1-M for disposal instructions.



        Subpart 239.71--Security and Privacy for Computer Systems



Sec. 239.7100  Scope of subpart.

    This subpart applies to all acquisitions for computer systems. It 
covers both security and Privacy Act considerations.



Sec. 239.7101  General.

    Security requirements are in addition to provisions concerning 
protection of privacy of individuals (see FAR subpart 24.1).
239.7102  Security against compromising emanations.



Sec. 239.7102-1  General.

    (a) The National Security or Atomic Energy Acts, as amended, may 
require protection of information that is--
    (1) Processed;
    (2) Transmitted;
    (3) Stored;
    (4) Retrieved; or
    (5) Displayed.
    (b) When acquiring computer equipment to be used to process 
classified

[[Page 317]]

information, the contracting officer shall obtain from the requiring 
activity--
    (1) A determination as to whether the equipment must provide 
protection against compromising emanations; and
    (2) Identification of an established National TEMPEST standard 
(e.g., NACSEM 5100, NACSIM 5100A) or a standard used by other authority.
    (c) When contracts will require the use of FIP resources involving 
classified data, programs, etc., the contracting officer shall obtain 
from the requiring activity--
    (1) Advice to whether to require contractors performing these 
services to use equipment meeting the requirements in paragraph (a) of 
this subsection (as prescribed in the clause at 252.239-7000, Protection 
Against Compromising Emanations;
    (2) Information concerning any requirement for marking of TEMPEST--
certified equipment (especially if to be reused); and
    (3) Information on how to validate TEMPEST equipment compliance with 
required standards.



Sec. 239.7102-2  Validation of TEMPEST compliance.

    Include requirements for validation of TEMPEST compliance in section 
E (Inspection and Acceptance) of the contract.



Sec. 239.7102-3  Solicitation provisions and contract clauses.

    (a) When contracting for computer equipment or systems which are to 
be used to process classified information, use the clause at 252.239-
7000, Protection Against Compromising Emanations.
    (b) When acquiring computer equipment, software, or services subject 
to the Privacy Act, the FIRMR clause 201.39.5202-5, Privacy or Security 
Safeguards, may be used in solicitations and contracts in addition to 
the clause at FAR 52.224-2, Privacy Act.



                        Subpart 239.72--Standards



Sec. 239.7200  Scope of subpart.

    This subpart contains guidance for implementing--
    (a) Federal Information Processing Standards (FIPS); and
    (b) Federal Telecommunications Standards (FED-STD).



Sec. 239.7201  General.

    GSA publishes a handbook titled ``Federal ADP and Telecommunications 
Standards Index'' which provides guidance to agencies on the use of 
Federal standards which apply to FIP resources. The index contains 
information about applicability for each standard and terminology for 
including standards in solicitations. FIRMR Bulletin C-3 contains 
additional information about the index. See FIRMR 201-20.303 and 201-
39.1002 for guidance.



Sec. 239.7202  Waivers.

    (a) The Secretary of Commerce has delegated to the Secretary of 
Defense the authority to waive FIP standards, in accordance with 
procedures established by the Secretary of Commerce. The Secretary of 
Defense redelegated that waiver authority to the Assistant Secretary of 
Defense for Command, Control, Communications, and Intelligence 
(ASD(C3I)), as the DoD senior information resources management (IRM) 
official, designated pursuant to section 3506(b) of title 44 of the U.S. 
Code (i.e., the Paperwork Reduction Act of 1980, as amended). The 
ASD(C3I) has redelegated to the senior IRM official of each military 
department the authority to approve waivers to FIP standards that are 
applicable to military department requirements. Waivers to FIP standards 
that are applicable to the requirements of DoD components outside the 
military departments must be approved by the ASD(C3I).
    (b) Contracting officers shall ensure that all applicable FIP 
standards are incorporated into solicitations in accordance with FIRMR 
procedures, except for those FIP standards for which the requiring 
activity has obtained a waiver from the appropriate military department 
or DoD senior IRM official.
    (c) As part of the Commerce Business Daily synopsis of a 
solicitation, contracting officers shall publish a notice of any 
determinations to waive any FIP standards that are applicable to the 
solicitation. If the waiver determination is made after the notice of

[[Page 318]]

the solicitation is published, the contracting officer shall amend the 
notice to announce the waiver determination.



 Subpart 239.73--Acquisition of Automatic Data Processing Equipment by 
                             DoD Contractors



Sec. 239.7300  Scope of subpart.

    This subpart prescribes approval requirements for automatic data 
processing equipment (ADPE) acquired (purchased or leased) by 
contractors for use in performing DoD contracts.



Sec. 239.7301  Applicability.

    (a) This subpart applies when--
    (1) The contractor acquires ADPE for the account of the Government;
    (2) The contractor acquires ADPE and title will pass to the 
Government; or
    (3) The contractor leases ADPE and--
    (i) The ADPE is not for the account of the Government;
    (ii) Title will not pass to the Government; and
    (iii) The contractor will charge the total cost of the lease to one 
or more Government contracts requiring the negotiation or determination 
of costs.
    (b) This subpart does not apply to ADPE acquired as a component of 
an end item.



Sec. 239.7302  Approvals and screening.

    (a) The requirements of this section highlight the redistribution 
requirements of DoD 7950.1-M, Defense Automation Resources Management 
Manual, and are in addition to those at FAR 45.302.
    (b) If the contractor proposes acquiring ADPE subject to 239.7301(a) 
(1) and (2)--
    (1) The contracting officer shall require the contractor to submit, 
through the administrative contracting officer, the documentation in 
239.7305.
    (2) The administrative contracting officer--
    (i) Submits a request for screening the requirement against the pool 
of Government-owned ADPE to determine if available excess equipment 
could satisfy the contractor's needs. The request should include the 
contractor's supporting documentation. The request is sent to: Director, 
Defense Automation Resources Information Center (DARIC), Attn: DARIC-R, 
Cameron Station, Alexandria, VA 22304-6100.
    (ii) Upon receipt of and based on screening results from DARIC, 
advises the contractor that excess ADPE--
    (A) Is available pursuant to DoD 7950.1-M; or
    (B) Is not available and contractor may proceed with acquisition of 
the equipment.
    (3) The contracting officer--
    (i) Reviews the contractor's documentation;
    (ii) Decides whether to authorize the acquisition; and
    (iii) Advises--
    (A) The contractor if authorization is not granted; and
    (B) The administrative contracting officer if authorization is 
granted.



Sec. 239.7303  Review and approval of leasing costs.

    The cost principle in FAR 31.205-2, automatic data processing 
equipment leasing costs, requires the contractor to obtain contracting 
officer approval before incurring certain leasing costs.
    (a) Before approving lease costs, meeting the criteria of FAR 
31.205-2(b)(2)(iii), the contracting officer shall request and review 
the contractor supporting documentation described in 239.7305.
    (b) The contracting officer shall conduct reviews of leasing costs 
as warranted, meeting the criteria of FAR 31.205-2(d), to determine the 
continued need for leasing. In performing the review, the contracting 
officer shall request the contractor to update its supporting 
documentation.
    (c) If the initial or annual reviews disclose no basis for 
nonconcurrence, the contracting officer will advise the contractor and, 
as appropriate--
    (1) Enter into an advance agreement (see FAR 31.109);
    (2) Obtain purchase option credits (see 239.7304).

[56 FR 36429, July 31, 1991, as amended at 60 FR 61599, Nov. 30, 1995]

[[Page 319]]



Sec. 239.7304  Purchase option credits.

    (a) If 100 percent of the lease costs are charged to Government 
cost-reimbursement contracts, the rental contract shall give the 
Government the initial option to use any purchase credits or other 
benefits earned through rental payments.
    (b) If less than 100 percent of the lease costs are charged to 
Government cost-reimbursement contracts, the contracting officer shall--
    (1) Encourage the contractor to incorporate in its rental contract 
the right to assign accrued purchase credits to the Government;
    (2) Obtain for the Government the right of first refusal on accrued 
purchase credits if the contractor elects not to exercise its purchase 
option; and
    (3) Get the contractor's commitment to give the administrative 
contracting officer a 120-day advance notice of its intent to terminate 
a lease where the Government has rights in accrued purchase credits.
    (c) Report purchase option credits as prescribed in DoD 7950.1-M.



Sec. 239.7305  Contractor documentation.

    Contracting officers may tailor the documentation requirements in 
paragraphs (a) through (e) of this section.
    (a) List of existing ADPE and an analysis of its use. (1) List of 
each component identified by manufacturer, type, model number, location, 
date of installation, and how acquired (lease, purchase, Government-
furnished). Identify those acquired specifically to perform a Government 
contract.
    (2) Reliability and usage data on each component for the past 12 
months.
    (3) Identification of users supported by each component, including 
how much time each user requires the component and the related contract 
or task involved.
    (b) List of new ADPE needed and reasons why it is needed. (1) 
Estimates of the new equipment's useful life.
    (2) List of tasks the new equipment is needed for and why, including 
estimated monthly usage for each major task or project.
    (3) Anticipated software and telecommunications requirements.
    (c) Selection of computer equipment. (1) If the acquisition is 
competitive--
    (i) List sources solicited and proposals received;
    (ii) Show how the evaluation was performed;
    (iii) Provide an explanation if the selected offer is not the lowest 
evaluated offer.
    (2) If the acquisition is not competitive, state why.
    (d) Cost. (1) For purchases, state the ADPE cost.
    (2) For leases, state the increase or decrease in monthly costs to 
the Government.
    (e) Lease versus purchase analysis. When the proposed acquisition is 
a lease, provide a lease/purchase analysis using the format in Table 39-
1, Suggested Purchase/Lease Analysis Format, or one substantially 
similar.

                                                  Table 39-1.--Suggested Purchase/Lease Analysis Format                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         (4) Other avg.                                                                 
                                                                         monthly rental/                            (7) Orig.                (9) Current
             (1) ADPS components                 (2) Qty.    (3) Vendor       lease      (5) Instal.   (6) Useful    purchase    (8) Equity    purchase 
                                                                        ----------------     date       life (C)      price         (D)         price   
                                                                           (A)     (B)                                                                  
--------------------------------------------------------------------------------------------------------------------------------------------------------
ADP system as of date........................  ...........  ...........  ......  ......  ...........  ...........  ...........  ...........        (7-8)


--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               (11)        (9-11 10-11)                       (12+13)         (4 x 6)         (14-15)   
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                            (12) Owner                                      (15) Total         (16)     
               (10) Vendors purchase price                Residual value   depreciation     (13) Other      (14) Total     rental/lease    Differential 
                                                                (E)            costs         costs (F)      owner costs      costs (G)          (H)     
--------------------------------------------------------------------------------------------------------------------------------------------------------
ADP system as of date...................................  ..............  ..............  ..............  ..............  ..............           (7-8)
--------------------------------------------------------------------------------------------------------------------------------------------------------
(A) Includes projected extra shift where necessary.                                                                                                     
(B) Includes other costs (taxes, maintenance, insurance, etc.).                                                                                         
(C) Documentation must be provided and attached per FAR 31.205-2.                                                                                       

[[Page 320]]

                                                                                                                                                        
(D) Accrued equity on rented/leased equipment (accumulated rental credits).                                                                             
(E) Residual value forecast at end of useful life.                                                                                                      
(F) Includes taxes, maintenance, insurance, selling costs, lease cancellation costs, etc.                                                               
(G) When considering annual justification for retention of existing ADPE capacity and the need to continue leasing, only the remaining rental costs to  
  be paid under the lease should be shown.                                                                                                              
(H) If lease is favorable, bracket differential figures.                                                                                                



               Subpart 239.74--Telecommunications Services



Sec. 239.7400  Scope.

    This subpart prescribes policy and procedures for acquisition of 
telecommunications services and maintenance of telecommunications 
security. Telecommunications services may also meet the definition of 
automatic data processing equipment.



Sec. 239.7401  Definitions.

    As used in this subpart--
    (a) Common carrier means any entity engaged in the business of 
providing telecommunications services which are regulated by the Federal 
Communications Commission or other governmental body.
    (b) Foreign carrier means any person, partnership, association, 
joint-stock company, trust, governmental body, or corporation not 
subject to regulation by a U.S. governmental regulatory body and not 
doing business as a citizen of the United States, providing 
telecommunications services outside the territorial limits of the United 
States.
    (c) Governmental regulatory body means the Federal Communications 
Commission, any statewide regulatory body, or any body with less than 
statewide jurisdiction when operating under the State authority. The 
following are not ``governmental regulatory bodies''--
    (1) Regulatory bodies whose decisions are not subject to judicial 
appeal; and
    (2) Regulatory bodies which regulate a company owned by the same 
entity which creates the regulatory body.
    (d) Noncommon carrier means any entity other than a common carrier 
offering telecommunications facilities, services, or equipment for 
lease.
    (e) Security, sensitive information, and telecommunications systems 
have the meaning given in the clause at 252.239-7016, Telecommunications 
Security Equipment, Devices, Techniques, and Services.
    (f) Telecommunications means the transmission, emission, or 
reception of signals, signs, writing, images, sounds, or intelligence of 
any nature, by wire, cable, satellite, fiber optics, laser, radio, or 
any other electronic, electric, electromagnetic, or acoustically coupled 
means.
    (g) Telecommunications services means the services acquired, whether 
by lease or contract, to meet the Government's telecommunications needs. 
The term includes the telecommunications facilities and equipment 
necessary to provide such services.



Sec. 239.7402  Policy.

    (a) Acquisition. (1) DoD policy is to acquire telecommunications 
services from common and noncommon telecommunications carriers--
    (i) On a competitive basis, except when acquisition using other than 
full and open competition is justified.
    (ii) Recognizing the regulations, practices, and decisions of the 
Federal Communications Commission (FCC) and other governmental 
regulatory bodies on rates, cost principles, and accounting practices;
    (iii) Making provision in telecommunications services contracts for 
adoption of--
    (A) FCC approved practices; or
    (B) The generally accepted practices of the industry on those issues 
concerning common carrier services where--
    (1) The governmental regulatory body has not expressed itself;
    (2) The governmental regulatory body has declined jurisdiction; or
    (3) There is no governmental regulatory body to decide.
    (2) DoD's unique consumer needs in both volume and technology 
require DoD to participate actively in the rule making process of 
cognizant governmental regulatory bodies. DoD also must work with the 
government regulatory bodies and common carriers to be sure that in 
those areas in which the

[[Page 321]]

FCC cannot or will not rule, sound regulatory practices are followed. 
DoD should make every effort to avoid the time and expense of litigation 
by full and fair disclosure of both the carrier's and the DoD's position 
in advance.
    (3) If actions do not produce reasonable or lawful rates, or when 
there is a refusal to provide required services or file appropriate 
tariffs, DoD should litigate. All contracts with the regulatory bodies 
should be through counsel under department/agency and Defense 
Information Systems Agency procedures.
    (b) Security. (1) The contracting officer shall ensure, in 
accordance with agency procedures, that purchase requests identify--
    (i) The nature and extent of information requiring security during 
telecommunications;
    (ii) The requirement for the contractor to secure telecommunications 
systems;
    (iii) The telecommunications security equipment, devices, 
techniques, or services with which the contractor's telecommunications 
security equipment, devices, techniques, or services must be 
interoperable; and
    (iv) The approved telecommunications security equipment, devices, 
techniques, or services, such as found in the National Security Agency's 
Information Systems Security Products and Services Catalogue.
    (2) Contractors and subcontractors shall provide all 
telecommunications security techniques or services required for 
performance of Government contracts.
    (3) Except as provided in paragraph (b)(4) of this subsection, 
contractors and subcontractors shall normally provide all required 
telecommunications security equipment or devices as plant equipment in 
accordance with FAR part 45. In some cases, such as for communications 
security (COMSEC) equipment designated as controlled cryptographic item 
(CCI), contractors or subcontractors must also meet ownership 
eligibility conditions.
    (4) When the contractor or subcontractor does not meet ownership 
eligibility conditions, the head of the agency may authorize provision 
of the necessary facilities as Government-furnished property or 
acquisition as contractor-acquired property, as long as conditions of 
FAR 45.303-1(a) are met.

[56 FR 36429, July 31, 1991, as amended at 56 FR 67220, Dec. 30, 1991]



Sec. 239.7403  Regulatory bodies.

    The FCC and other governmental regulatory bodies publish rules and 
regulations on the operations of common carriers and prescribe 
accounting principles to use to establish rates.



Sec. 239.7404  Foreign carriers.

    (a) Frequently, foreign carriers are owned by the government of the 
country in which they operate. The foreign governments often prescribe 
the methods of doing business. In many countries, an international 
agreement with the host country sets guidelines for acquiring 
communication services. In some countries, a corporate subsidiary of a 
carrier not indigenous to the country (often a U.S. parent) is the sole 
source for telecommunications services.
    (b) Contracts for telecommunications services in foreign countries 
should describe rates and practices in as much detail as possible. It is 
DoD policy not to pay discriminatory rates. DoD should pay a reasonable 
rate for telecommunications services or the rate charged the military of 
that country, whichever is less.
    (c) Refer special problems with telecommunications acquisition in 
foreign countries to higher headquarters for resolution with appropriate 
State Department representatives.



Sec. 239.7405  Authority to contract for telecommunications services.

    (a) The General Services Administration (GSA) has exclusive 
procurement authority for telecommunications services that meet the 
definition of Federal information processing resources in FIRMR 201-4 
and that meet the applicability criteria in FIRMR 201-1. However, GSA 
may authorize agencies to contract for telecommunications services in 
certain instances under a delegation of GSA's exclusive procurement 
authority (see FIRMR 201-20.305).

[[Page 322]]

    (b) Under FIRMR 201-20.306, GSA authorizes the senior information 
resources management (IRM) officials of each military department and the 
senior IRM official of DoD to enter into multiyear contracts for 
telecommunications services under certain conditions. Contracting 
activities may enter into multiyear contracts for telecommunications 
services if--
    (1) The senior IRM official has redelegated to the contracting 
office, GSA's exclusive procurement authority for FIP sources;
    (2) The contract life, including options, does not exceed ten years; 
and
    (3) The contracting activity complies with OMB budget and accounting 
procedures relating to appropriated funds.
    (c) The senior IRM officials are--
    (1) Army. The Assistant Secretary of the Army (Research, 
Development, and Acquisition);
    (2) Navy. The Assistant Secretary of the Navy (Research, 
Development, and Acquisition);
    (3) Air Force. The Assistant Secretary of the Air Force 
(Acquisition); and
    (4) The defense agencies. Assistant Secretary of Defense for 
Command, Control, Communications, and Intelligence.
    (d) The ten year authority in paragraph (b) of this section applies 
to communications service authorizations (239.7407-2) and other types of 
telecommunications contracts. It does not apply to basic agreements.



Sec. 239.7406  Cost or pricing data.

    (a) Common carriers are not required to submit cost or pricing data 
before award of contracts for tariffed services, except as provided in 
paragraph (c) of this subsection. Rates or preliminary estimates quoted 
by a common carrier for tariffed telecommunications services are 
considered to be prices set by regulation within the provisions of 10 
U.S.C. 2306a. This is true even if the tariff is set after execution of 
the contract.
    (b) Rates or preliminary estimates quoted by a common carrier for 
nontariffed telecommunications services or by a noncommon carrier for 
any telecommunications service are not considered prices set by law or 
regulation. The provisions of 10 U.S.C. 2306a and FAR 15.804 apply in 
these circumstances.
    (c) Even when not required by 10 U.S.C. 2306a, contracting officers 
shall obtain certified cost or pricing data when unable to determine 
that the prices are reasonable on the basis of price analysis (see FAR 
15.805-2). Situations in which cost or pricing data may be necessary are 
described in the clause at 252.239-7009, Submission of Cost or Pricing 
Data--Common Carriers.
    (d) The contracting officer need not get cost or pricing data for 
each delivery order under a basic agreement which is negotiated for use 
by Government ordering activities and includes detailed and approved 
price schedules.
    (e) The contracting officer shall specify the form and detail of the 
cost or pricing data (see FAR 15.804-6(a)). However, for data submitted 
by common carriers, the data may be in the same form and detail normally 
submitted to the governmental regulatory body having jurisdiction over 
the carrier if sufficient for cost or price analysis purposes.
    (f) When obtaining cost or pricing data under this section, the 
contracting officer shall obtain a certificate of current cost and 
pricing data in the format shown at FAR 15.804-4(a). However, if the 
contracting officer is requesting cost or pricing data under paragraph 
(c) of this section from a common carrier furnishing telecommunications 
services under a tariff filed or to be filed, substitute the following 
certificate for that at FAR 15.804-4(a):

               Certificate of Current Cost or Pricing Data

                            (Common Carriers)

    This is to certify that to the best of my knowledge and belief, the 
cost or pricing data submitted, either actually or by specific 
identification in writing, to the contracting officer or to the 
contracting officer's representative in support of ________* are 
accurate, complete, and current as of ________**. Rates are based on the 
data which will be used or are currently being used to justify tariffs, 
or rates for telecommunications services which are not based on the 
data, but are based on filed tariffs. I understand that the Government 
will use this cost and pricing data and this certification, if 
appropriate, in any proceedings relative to this tariffed service.


[[Page 323]]


Firm____________________________________________________________________
Name____________________________________________________________________
Title___________________________________________________________________
Date of execution***____________________________________________________
    *Identify the proposal, quotation, request for price adjustment, or 
other submission involved, giving the appropriate identifying number.
    **Insert the day, month, and year when price negotiations were 
concluded and price agreement was reached.
    ***Insert the day, month, and year of signing, which should be as 
close as practicable to the date when the price negotiations were 
concluded and the contract price was agreed to.

                         (End of certification)

239.7407  Type of contract.



Sec. 239.7407-1  General.

    In addition to acquisition methods described in the FAR, the method 
described in this section may be used to acquire telecommunications 
services.



Sec. 239.7407-2  Communication service authorizations (CSAs).

    Basic agreements (see FAR 16.702) are used widely in conjunction 
with communication service authorizations to facilitate award of 
telecommunications services.
    (a) Use DD Form 428, Communication Service Authorization (CSA), or 
an electronic data processing substitute to award, modify, cancel, or 
terminate telecommunications services. The CSA shall--
    (1) Refer to the basic agreement;
    (2) Specify the types and quantities and equipment to be provided as 
well as the tariff (or other price if a tariff is not available) of 
those services and equipment;
    (3) Specify the premises involved;
    (4) Cite the address for billing;
    (5) Identify the disbursing office; and
    (6) Provide funding information.
    (b) Before awarding a CSA, comply with the requirements in FAR and 
DFARS, e.g., for competition, reviews, approvals, and determinations and 
findings.
    (c) Include an expiration date in each CSA.
    (d) Modify CSAs to reflect any price increases.
239.7408  Special construction.



Sec. 239.7408-1  General.

    (a) Special construction normally involves a common carrier giving a 
special service or facility related to the performance of the basic 
telecommunications service requirements.
    This may include--
    (1) Moving or relocating equipment;
    (2) Providing temporary facilities;
    (3) Expediting provision of facilities; or
    (4) Providing specially constructed channel facilities to meet 
Government requirements.
    (b) Use this subpart instead of FAR part 36 for acquisition of 
``special construction.''
    (c) Special construction costs may be--
    (1) A contingent liability for using telecommunications services for 
a shorter time than the minimum to reimburse the contractor for 
unamortized nonrecoverable costs. These costs are usually expressed in 
terms of a termination liability, as provided in the contract or by 
tariff;
    (2) A onetime special construction charge;
    (3) Recurring charges for constructed facilities;
    (4) A minimum service charge;
    (5) An expediting charge; or
    (6) A move or relocation charge.
    (d) When a common carrier submits a proposal or quotation which has 
special construction requirements, the contracting officer shall require 
a detailed special construction proposal. Analyze all special 
construction proposals to--
    (1) Determine the adequacy of the proposed construction;
    (2) Disclose excessive or duplicative construction; and
    (3) When different forms of charge are possible, provide for the 
form of charge most advantageous to the Government.
    (e) When possible, analyze and approve special construction charges 
before receiving the service. Impose a ceiling on the special 
construction costs before authorizing the contractor to proceed, if 
prior approval is not possible. Do not make final payment for special 
construction charges unless the charges are approved by the contracting 
officer.

[[Page 324]]



Sec. 239.7408-2  Applicability of construction labor standards for special construction.

    (a) The construction labor standards in FAR 22.4 ordinarily do not 
apply to special construction. However, if the special construction 
includes construction (as defined in FAR 36.102) of a public building or 
public work, the construction labor standards may apply. Determine 
applicability under FAR 22.402.
    (b) Each CSA or other type contract which is subject to construction 
labor standards under FAR 22.402 shall cite that fact.



Sec. 239.7409  Special assembly.

    (a) Special assembly is the designing, manufacturing, arranging, 
assembling, or wiring of equipment to provide telecommunications 
services that cannot be provided with general use equipment.
    (b) Special assembly rates and charges shall be based on estimated 
costs. The contracting officer shall negotiate special assembly rates 
and charges before starting service whenever possible. When it is not 
possible to negotiate in advance, use provisional rates and charges 
subject to adjustment, until final rates and charges are negotiated. The 
CSAs authorizing the special assembly shall be modified to reflect 
negotiated final rates and charges.



Sec. 239.7410  Cancellation and termination.

    (a)(1) Cancellation is stopping a requirement after placing of an 
order but before service starts.
    (2) Termination is stopping a requirement after placing an order and 
after service starts.
    (b) Determine cancellation or termination charges under the 
provisions of the applicable tariff or agreement/contract.



Sec. 239.7411  Contract clauses.

    (a) In addition to other appropriate FAR and DFARS clauses, use the 
following clauses in solicitations, contracts, and basic agreements for 
telecommunications services. Modify the clauses only if necessary to 
meet the requirements of a governmental regulatory agency--

(1) 252.239-7002, Access;
(2) 252.239-7003, Facilities and Services to be Furnished--Common 
Carriers;
(3) 252.239-7004, Orders for Facilities and Services--Common Carriers;
(4) 252.239-7005, Rates, Charges, and Services--Common Carriers;
(5) 252.239-7006, Tariff Information;
(6) 252.239-7007, Cancellation or Termination of Orders--Common 
Carriers;
(7) 252.239-7008, Reuse Arrangements;
(8) 252.239-7009, Submission of Cost or Pricing Data--Common Carriers; 
and
(9) 252.239-7010, Audit and Records--Common Carriers.

    (b) Use the following clauses in solicitations, contracts, and basic 
agreements for telecommunications services when the acquisition includes 
or may include special construction. Modify the clauses only if 
necessary to meet the requirements of a governmental regulatory agency--

(1) 252.239-7011, Special Construction and Equipment Charges; and
(2) 252.239-7012, Title to Telecommunication Facilities and Equipment.

    (c) Use the following clauses in basic agreements for 
telecommunications services--

(1) 252.239-7013, Obligation of the Government;
(2) 252.239-7014, Term of Agreement, and insert the effective date of 
the agreement in paragraph (a) of the clause; and
(3) 252.239-7015, Continuation of Communication Service Authorizations, 
as appropriate, and insert in paragraph (a) of the clause, the name of 
the contracting office and the basic agreement or contract number which 
is being superseded.

    (d) Use the clause at 252.239-7016, Telecommunications Security 
Equipment, Devices, Techniques, and Services, in solicitations and 
contracts when performance of a contract requires a securing 
telecommunications.

[56 FR 36429, July 31, 1991, as amended at 57 FR 42632, Sept. 15, 1992]



             Subpart 239.75--Appropriations Act Restrictions

    Source: 57 FR 14995, Apr. 23, 1992, unless otherwise noted.


[[Page 325]]





Sec. 239.7500  Scope of subpart.

    This subpart contains restrictions on the acquisition of information 
resources, imposed by Defense appropriations acts.



Sec. 239.7501  Major automated information systems.



Sec. 239.7501-1  Definitions.

    As used in this section--
    (a) Automated information system means a combination of information, 
computer and telecommunications resources and other information 
technology, and personnel resources which collects, records, processes, 
stores, communicates, retrieves, and displays information.
    (b) Major automated information system--
    (1) Means a new automated information system, or modernization of an 
existing automated information system modernization that--
    (i) Has anticipated program costs in excess of $100 million during 
the period from the beginning of the need justification phase through 
the completion of the deployment phase for each automated information 
system site;
    (ii) Has estimated program costs in excess of $25 million in any 
single year; or
    (iii) Is designated as being of special interest by the Office of 
the Secretary of Defense.
    (2) Does not include automated information systems which are an 
integral part of a weapon or weapon system, test support for a weapon or 
weapon system, or information technology basic research and development.



Sec. 239.7501-2  Restriction.

    Section 8028 of the FY 1992 Defense Appropriations Act (Pub. L. 102-
172) and similar sections of the FY 1993, FY 1994, and FY 1995 Defense 
appropriations acts prohibit use of DoD appropriations for acquisition 
of major automated information systems, unless the systems have 
successfully completed oversight reviews required by DoD regulations.

[61 FR 50454, Sept. 26, 1996]



PART 241--ACQUISITION OF UTILITY SERVICES--Table of Contents




Sec.
241.001  Definitions.
241.002  Applicability.
241.004  Acquiring utility services.
241.004-1  Policy.
241.004-2  Procedures.
241.004-3  GSA assistance and approval.
241.004-5  Separate contracts.
241.005  Pre-award contract review.
241.007  Contract clauses.
241.007-70  Additional clauses.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36435, July 31, 1991, unless otherwise noted.



Sec. 241.001  Definitions.

    As used in this part--
    Definite term contract means a contract for utility services for a 
definite period of not less than one nor more than ten years.
    Dual service area means a geographical area in which two or more 
utility suppliers are authorized under State law to provide services.
    Indefinite term contract means a month-to-month contract for utility 
services which may be terminated by the Government upon proper notice.
    Independent regulatory body means the Federal Energy Regulatory 
Commission, a state-wide agency, or an agency with less than state-wide 
jurisdiction when operating pursuant to state authority. The body has 
the power to fix, establish, or control the rates and services of 
utility suppliers.
    Nonindependent regulatory body means a body that regulates a utility 
supplier which is owned or operated by the same entity that created the 
regulatory body, e.g., a municipal utility.
    Regulated utility supplier means a utility supplier regulated by an 
independent regulatory body.
    Service power procurement officer means for the--
    Army, the Chief of Engineers;
    Navy, the Commander, Naval Facilities Engineering Command;
    Air Force, the head of a contracting activity; and
    Defense Logistics Agency, the Executive Director of Contracting.

[[Page 326]]



Sec. 241.002  Applicability.

    (a) This part applies to purchases of utility services from 
nonregulated and regulated utility suppliers. It includes the 
acquisition of liquified petroleum gas as a utility service when 
purchased from regulated utility suppliers.
    (b)(7) This part does not apply to third party financed projects. 
However, it may be used for any purchased utility services directly 
resulting from such projects, including those authorized by--
    (A) 10 U.S.C. 2394 for energy, fuels, and energy production 
facilities for periods not to exceed 30 years;
    (B) 10 U.S.C. 2394(a) for renewable energy for periods not to exceed 
25 years;
    (C) 10 U.S.C. 2689 for geothermal resources that result in energy 
production facilities;
    (D) 10 U.S.C. 2809 for potable and waste water treatment plants for 
periods not to exceed 32 years; and
    (E) 10 U.S.C. 2812 for lease/purchase of energy production 
facilities for periods not to exceed 32 years.
241.004  Acquiring utility services.



Sec. 241.004-1  Policy.

    (1) Except as provided in FAR 41.004, DoD, as a matter of comity, 
will comply with the current regulations, practices and decisions of 
independent regulatory bodies which are subject to judicial appeal. This 
policy does not extend to regulatory bodies whose decisions are not 
subject to appeal nor does it extend to nonindependent regulatory 
bodies.
    (2) Purchases of utility services outside the U.S. may use--
    (i) Formats and technical provisions consistent with local practice; 
and
    (ii) Dual language forms and contracts.
    (3) Rates established by an independent regulatory body are 
considered ``prices set by law or regulation'' and do not require 
submission of cost or pricing data (see FAR subpart 15.8).



Sec. 241.004-2  Procedures.

    (a)(i) Competitive proposals. When a new major utility service load 
develops or a new military installation is established, the contracting 
officer shall--
    (A) Determine whether more than one supplier can provide the 
required utility services.
    (1) Competition may be possible where dual franchises exist or where 
no franchise exists.
    (2) Competition should also be considered when an installation is 
served by one supplier and other potential suppliers exist even though 
one supplier has entered into a General Services Administration area-
wide contract.
    (B) Where competition exists, solicit competitive proposals from all 
potential suppliers.
    (ii) Periodic reviews for competition. Conduct periodic review of 
ongoing contracts to determine the availability of competition. If 
available, evaluate the need to rewrite the contract considering--
    (A) The possible loss of rights vested in the Government under the 
existing contract;
    (B) The age and quality of the contract; and
    (C) The number of contract modifications and the ease of 
administration with the existing contract documents.
    (iii) Connection and service charges. The Government may pay a 
connection charge when required to cover the cost of the necessary 
connecting facilities. A connection charge based on the estimated labor 
cost of installing and removing the facility shall not include salvage 
cost. A lump-sum connection charge shall be no more than the agreed cost 
of the connecting facilities less net salvage. The order of precedence 
for contractual treatment of connection and service charges is--
    (A) No connection charge.
    (B) Termination liability. Use when an obligation is necessary to 
secure the required services. The obligation must be not more than the 
agreed connection charge, less any net salvage material costs. Use of a 
termination liability instead of a connection charge requires the 
approval of the service power procurement officer or designee.
    (C) Connection charge, refundable. Use a refundable connection 
charge when the supplier refuses to provide the facilities based on lack 
of capital or published rules which prohibit providing up-front funding. 
The contract should

[[Page 327]]

provide for refund of the connection charge within five years unless a 
longer period or omission of the refund requirement is authorized by the 
service power procurement officer or designee.
    (D) Connection and service charges, nonrefundable. The Government 
may pay certain nonrefundable, nonrecurring charges including service 
initiation charges, a contribution in aid of construction, membership 
fees, and charges required by the supplier's rules and regulations to be 
paid by the customer. If possible, consider sharing with other than 
Government users the use of (and costs for) facilities when large 
nonrefundable charges are required.
    (iv) Construction and labor requirements. (A) Do not use the 
connection charge provisions for the installation of Government-owned 
distribution lines and facilities. The acquisition of such facilities 
must be authorized by legislation and accomplished in accordance with 
FAR part 36. Also, do not use the connection charge provisions for the 
installation of new facilities related to the supplier's production and 
general ``backbone'' system unless authorized by legislation.
    (B) Construction labor standards ordinarily do not apply to 
construction accomplished under the connection charge provisions of this 
part. However, if installation includes construction of a public 
building or public work as defined in FAR 36.102, construction labor 
standards may apply.



Sec. 241.004-3  GSA assistance and approval.

    The General Services Administration (GSA) has delegated DoD 
authority to enter into utility service contracts (FAR 41.003(b)); thus, 
contracting officers need not seek assistance or approval from GSA.



Sec. 241.004-5  Separate contracts.

    (a)(i) Requests for proposals shall state the anticipated service 
period in terms of months or years. Where the period extends beyond the 
current fiscal year, evaluate offers of incentives for a definite term 
contract.
    (ii) The solicitation may permit offerors the choice of proposing on 
the basis of--
    (A) A definite term not to exceed the anticipated service period; or
    (B) An indefinite term contract.
    (iii) Where the expected service period is less than the current 
fiscal year, the solicitation shall be on the basis of an indefinite 
term contract.
    (iv) Contracts for utility services for leased premises shall 
identify the lease document on the face of the contract.
    (d) Use an indefinite term utility service contract when it is 
considered to be in the Government's best interest to--
    (i) Have the right to terminate on a 30-day (or longer) notice. A 
notice of up to one year may be granted by an installation if needed to 
obtain a more favorable rate, more advantageous conditions, or for other 
valid reasons; or
    (ii) Grant the supplier the right to terminate the contract when of 
benefit to the Government in the form of lower rates, larger discounts 
or more favorable terms and conditions.



Sec. 241.005  Pre-award contract review.

    (d) Departments/agencies shall conduct their own pre-award contract 
reviews. FAR 41.005 (a) through (c) may be used as a guide.
241.007  Contract clauses.



Sec. 241.007-70  Additional clauses.

    (a) If the Government must execute a superseding contract and 
capital credits, connection charge credits, or termination liability 
exist, use the clause at 252.241-7000, Superseding Contract.
    (b) Use the clause at 252.241-7001, Government Access, when the 
clause at FAR 52.241-4, Contractor's Facilities, is used.

[[Page 328]]



                    SUBCHAPTER G--CONTRACT MANAGEMENT





PART 242--CONTRACT ADMINISTRATION--Table of Contents




Sec.

  Subpart 242.1--Interagency Contract Administration and Audit Services

242.101  Policy.
242.102  Procedures.

          Subpart 242.2--Assignment of Contract Administration

242.200  Scope of subpart.
242.203  Retention of contract administration.
242.204  Supporting contract administration.
242.205  Designation of the paying office.

         Subpart 242.3--Contract Administration Office Functions

242.301  General.
242.302  Contract administration functions.

                Subpart 242.4--Correspondence and Visits

242.402  Visits to contractors' facilities.

                  Subpart 242.5--Postaward Orientation

242.503  Postaward conferences.
242.503-2  Postaward conference procedure.
242.503-3  Postaward conference report.
242.570  Contract clause.

       Subpart 242.6--Corporate Administrative Contracting Officer

242.602  Assignment and location.

                   Subpart 242.7--Indirect Cost Rates

242.704  Billing rates.
242.705  Final indirect cost rates.
242.705-1  Contracting officer determination procedure.
242.705-2  Auditor determination procedure.
242.705-3  Educational institutions.
242.771  Independent research and development/bid and proposal.
242.771-1  Scope of subpart.
242.771-2  Policy.
242.771-3  Responsibilities.

                  Subpart 242.8--Disallowance of Costs

242.801  Notice of intent to disallow costs.
242.803  Disallowing costs after incurrence.

          Subpart 242.11--Production Surveillance and Reporting

242.1104  Surveillance requirements.
242.1105  Assignment of criticality designator.
242.1106  Reporting requirements.
242.1107  Contract clause.
242.1107-70  Additional clauses.

         Subpart 242.12--Novation and Change-of-Name Agreements

242.1202  Responsibility for executing agreements.
242.1203  Processing agreements.
242.1204  Agreement to recognize a successor in interest (novation 
          agreement).

          Subpart 242.14--Traffic and Transportation Management

242.1401  General.
242.1402  Volume movements within the continental United States.
242.1403  Shipping documents covering f.o.b. origin shipments.
242.1404  Shipments by parcel post or other classes of mail.
242.1404-1  Parcel post eligible shipments.
242.1404-2  Contract clauses.
242.1404-2-70  Additional clauses.
242.1405  Discrepancies incident to shipment of supplies.
242.1470  Demurrage and detention charges.

           Subpart 242.15--Contractor Performance Information

242.1503  Procedures.

               Subpart 242.70--Monitoring Contractor Costs

242.7000  Scope.
242.7001  Policy.
242.7002  Responsibilities.
242.7002-1  Departments and agencies.
242.7002-2  Contract administration offices.
242.7002-3  Audit and other organizations.
242.7003  Annual cost monitoring plan.
242.7003-1  Description.
242.7003-2  Selecting the activities.
242.7003-3  Tailoring the plan.
242.7003-4  Contents of the plan.
242.7003-5  Plan approval.
242.7004  Reviews.

                    Subpart 242.71--Voluntary Refunds

242.7100  General.
242.7101  Solicited refunds.
242.7102  Disposition of voluntary refunds.

[[Page 329]]

  Subpart 242.72--Contractor Material Management and Accounting System

242.7200  Scope of subpart.
242.7201  Definitions.
242.7202  Policy.
242.7203  MMAS disclosure, demonstration, and maintenance requirements.
242.7204  Responsibilities.
242.7205  Review procedures.
242.7206  Contract clause.

           Subpart 242.73--Contractor Insurance/Pension Review

242.7300  Scope of subpart.
242.7301  General.
242.7302  Requirements.
242.7303  Responsibilities.

    Subpart 242.74--Technical Representation at Contractor Facilities

242.7400  General.
242.7401  Procedures.

   Subpart 242.75--Contractor Accounting Systems and Related Controls

242.7500  Scope of subpart.
242.7501  Definition.
242.7502  Policy.
242.7503  Procedures.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36437, July 31, 1991, unless otherwise noted.



  Subpart 242.1--Interagency Contract Administration and Audit Services



Sec. 242.101  Policy.

    (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 Assistant 
Secretary of Defense (Comptroller), from non-DoD organizations, except 
for--
    (A) Quality assurance 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 
Assistant Secretary of Defense (Comptroller). 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.



Sec. 242.102  Procedures.

    (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 Area Operations (DCMAO), 
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;

[[Page 330]]

    (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.



          Subpart 242.2--Assignment of Contract Administration



Sec. 242.200  Scope of subpart.

    This subpart does not address the contract administration role of a 
contracting officer's representative (see 201.602).



Sec. 242.203  Retention of contract administration.

    (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.

[56 FR 36437, July 31, 1991, as amended at 61 FR 7749, Feb. 29, 1996]



Sec. 242.204  Supporting contract administration.

    (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.

[[Page 331]]

    (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.



Sec. 242.205  Designation of the paying office.

    (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.

[56 FR 36437, July 31, 1991, as amended at 57 FR 53601, Nov. 12, 1992; 
59 FR 27673, May 27, 1994]



         Subpart 242.3--Contract Administration Office Functions



Sec. 242.301  General.

    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.



Sec. 242.302  Contract administration functions.

    (a)(4) Also, review and evaluate--
    (A) Contractor estimating systems (see FAR 15.811); 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, and paragraph (c) of the 
clause at 252.225-7009, Duty-Free Entry--Qualifying Country End Products 
and Supplies.
    (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) In contracts with cost schedule control systems requirements 
(see 234.005-70)--
    (A) Perform postaward surveillance of contractor progress in 
demonstrating that its cost schedule control systems meet the cost 
schedule control systems criteria;
    (B) Provide assistance in the review and acceptance of the 
contractor's cost schedule control systems; and
    (C) After acceptance of the systems, perform surveillance to monitor 
their continuing acceptable operation.
    (67) Also support program offices and buying activities in 
precontractual efforts leading to a solicitation or award.
    (b)(S-70) Issue, negotiate and execute orders under basic ordering 
agreements for overhaul, maintenance and repair.

[56 FR 36437, July 31, 1991, as amended at 57 FR 53601, Nov. 12, 1992; 
60 FR 29500, June 5, 1995; 61 FR 50454, Sept. 26, 1996]

[[Page 332]]



                Subpart 242.4--Correspondence and Visits



Sec. 242.402  Visits to contractors' facilities.

    (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).



                  Subpart 242.5--Postaward Orientation

242.503  Postaward conferences.



Sec. 242.503-2  Postaward conference procedure.

    Use the conference program outlined on the DD Form 1484, Post-Award 
Conference Record, in conducting the conference.



Sec. 242.503-3  Postaward conference report.

    The DD Form 1484, Post-Award Conference Record, may be used for this 
report.



Sec. 242.570  Contract clause.

    Use the clause at 252.242-7000, Postaward Conference, in 
solicitations and contracts.



       Subpart 242.6--Corporate Administrative Contracting Officer



Sec. 242.602  Assignment and location.

    (c)(2) If the agencies cannot agree, refer the matter to the 
Director of Defense Procurement.



                   Subpart 242.7--Indirect Cost Rates



Sec. 242.704  Billing rates.

    (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.
242.705  Final indirect cost rates.



Sec. 242.705-1  Contracting officer determination procedure.

    (a) Applicability and responsibility. (1) The corporate 
administrative contracting officer (CACO) and individual administrative 
contracting officers (ACO) shall jointly decide whether negotiations 
will be conducted on a coordinated or centralized basis. When they are 
conducted on a coordinated basis, individual ACOs are responsible for 
coordinating with the CACO to ensure consistency of cost determinations.
    (b) Procedures. (1) Require DoD contractors to submit a copy of 
their final indirect cost rate proposals to the contract auditor.

[56 FR 36437, July 31, 1991, as amended at 60 FR 61599, Nov. 30, 1995]



Sec. 242.705-2  Auditor determination procedure.

    (b) Procedures. (2)(ii) The contractor and the auditor shall sign 
the agreement.
    (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.

[56 FR 36437, July 31, 1991, as amended at 60 FR 61599, Nov. 30, 1995]



Sec. 242.705-3  Educational institutions.

    (b) Predetermined final indirect cost rates. (4)(i) Predetermined 
indirect cost rate proposals may cover a period of two to four years 
when the cognizant Contracting Officer determines that the educational 
institution's cost experience and other pertinent facts available are 
sufficient to enable the parties to reach an informed judgment on the 
probable levels of indirect costs and allocation base costs for the 
applicable future accounting periods. Predetermined rates covering two 
to four year periods are expected to be the norm in those situations.
    (6) Predetermined indirect cost rates may be established to cover up 
to four years.

[59 FR 53116, Oct. 21, 1994]

[[Page 333]]



Sec. 242.771  Independent research and development/bid and proposal.



Sec. 242.771-1  Scope of subpart.

    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/B&P costs incurred by a major contractor during 
fiscal years of that contractor that begin on or after October 1, 1992.

[57 FR 53601, Nov. 12, 1992]



Sec. 242.771-2  Policy.

    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).

[57 FR 53601, Nov. 12, 1992]



Sec. 242.771-3  Responsibilities.

    (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.

[57 FR 53601, Nov. 12, 1992, as amended at 60 FR 61599, Nov. 30, 1995]



                  Subpart 242.8--Disallowance of Costs



Sec. 242.801  Notice of intent to disallow costs.

    (e) A corporate administrative contracting officer need not obtain 
the approval of the individual administrative contracting officers to 
disallow items of corporate expense.



Sec. 242.803  Disallowing costs after incurrence.

    (a) Contracting officer receipt of vouchers. Contracting officer 
receipt of vouchers is applicable only for cost-reimbursement contracts 
with the Canadian Commercial Corporation. See 225.870-5(b) for invoice 
procedures.
    (b) Auditor receipt of voucher.
    (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

[[Page 334]]

there is reason to believe it should be suspended or disallowed.

[61 FR 25409, May 21, 1996, as amended at 61 FR 25409, May 21, 1996; 61 
FR 50454, Sept. 26, 1996]



          Subpart 242.11--Production Surveillance and Reporting



Sec. 242.1104  Surveillance requirements.

    (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.

[60 FR 29500, June 5, 1995]



Sec. 242.1105  Assignment of criticality designator.

    (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.



Sec. 242.1106  Reporting requirements.

    (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.

[56 FR 36437, July 31, 1991, as amended at 61 FR 50455, Sept. 26, 1996]



Sec. 242.1107  Contract clause.

    (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.



Sec. 242.1107-70  Additional clauses.

    When cost/schedule status reporting (C/SSR) is required on 
acquisitions for other than major systems (i.e., the Contract Data 
Requirements List includes DI-MGMT-81467), use in solicitations and 
resulting contracts the

[[Page 335]]

clause at 252.242-7005, Cost/Schedule Status Report.

[61 FR 50455, Sept. 26, 1996]



         Subpart 242.12--Novation and Change-of-Name Agreements



Sec. 242.1202  Responsibility for executing agreements.

    The contracting officer responsible for processing and executing 
novation and change-of-name agreements shall ensure agreements are 
executed promptly.

[60 FR 1749, Jan. 5, 1995]



Sec. 242.1203  Processing agreements.

    (b)(1) For contracts awarded by the Military Departments, provide 
notices to the following addressees instead of individual contracting or 
contract administration offices--

                                                                        
                                                                        
                                                                        
Army...........  HQ, U.S. Army Material Command,                        
                  ATTN: AMCCC-P, 5001 Eisenhower                        
                  Avenue, Alexandria, VA 22333-                         
                  0001.                                                 
Navy...........  Office of the Assistant Secretary                      
                  of the Navy (RDA) Procurement                         
                  Policy, Washington, DC 20350-                         
                  1000.                                                 
Air Force......  HQ, Air Force Materiel Command,                        
                  Attn: AFMC/PKM, 4375 Chidlaw                          
                  Road, suite 6, Wright Patterson                       
                  AFB, OH 45443-5006.                                   
National         National Aeronautics and Space                         
 Aeronautics      Administration, Assistant                             
 and Space        Administrator for Procurement,                        
 Administration.  ATTN: HP, Washington, DC 20546.                       
------------------------------------------------------------------------

    (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--

                                                                        
                                                                        
                                                                        
Commander......  Commander.                                             
Eastern Area...  Western Area.                                          
Military         Military Traffic Management                            
 Traffic          Command.                                              
 Management                                                             
 Command.                                                               
ATTN: MTE-LO...  Oakland Army Base.                                     
Bayonne, NJ      ATTN: MTW-LO, Oakland, CA 94626.                       
 07002.                                                                 
------------------------------------------------------------------------

    (f)(4) Additional distribution instructions--
    (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.

[56 FR 36437, July 31, 1991, as amended at 59 FR 27674, May 27, 1994]



Sec. 242.1204  Agreement to recognize a successor in interest (novation agreement).

    (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 the acquisition/merger may be in the best interests of the 
Government. Restructuring

[[Page 336]]

costs that are allowable under Part 31 of the Federal Acquisition 
Regulation (FAR) or Part 231 of the Defense Federal Acquisition 
Regulation Supplement (DFARS) may be reimbursed under flexibily-priced 
novated contracts, provided the Transferee demonstrates that the 
restructuring will reduce overall costs to the Department of Defense 
(DoD) (and to the National Aeronautics and Space Administration (NASA), 
where there is a mix of DoD and NASA contracts), and the requirements 
included in DFARS 231.205-70 are met. Restructuring costs shall not be 
allowed on novated contracts unless there is an audit of the 
restructuring proposal; a determination by the contracting officer of 
overall reduced costs to DoD/NASA; and an Advance Agreement setting 
forth a cumulative cost ceiling for restructuring projects and the 
period to which such costs shall be assigned.''

[60 FR 1749, Jan. 5, 1995, as amended at 61 FR 16882, Apr. 18, 1996]



          Subpart 242.14--Traffic and Transportation Management



Sec. 242.1401  General.

    (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.



Sec. 242.1402  Volume movements within the continental United States.

    (a)(2) In reporting planned and actual volume movements--
    (A) The contracting officer--
    (1) Provides production schedules and planned destinations to the 
servicing transportation office as soon as the information is available 
to permit the transportation office to determine if volume movements 
will occur. If a volume movement appears likely, the transportation 
office reports a planned volume movement under chapters 12 and 13 of the 
DTMR.
    (2) Sends a copy of the volume movement report to the contract 
administration office.
    (B) The contract administration office submits a volume movement 
report when--
    (1) Significant changes are made to the movement requirements; or
    (2) The contracting office did not submit a report.
    (C) Include the destination country, foreign forwarder, and, if 
known, port of embarkation on volume movement reports for foreign 
military sale shipments.



Sec. 242.1403  Shipping documents covering f.o.b. origin 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.
242.1404  Shipments by parcel post or other classes of mail.



Sec. 242.1404-1  Parcel post eligible shipments.

    (b)(1) See DoD 4525.8-M, DoD Official Mail Manual.

[56 FR 67220, Dec. 30, 1991]



Sec. 242.1404-2  Contract clauses.

    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.



Sec. 242.1404-2-70  Additional clauses.

    (a) Use the clause at 252.242-7002, Submission of Commercial Freight 
Bills for Audit, when the Government will reimburse contractor 
transportation costs under a cost reimbursement contract.
    (b) 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.

[[Page 337]]



Sec. 242.1405  Discrepancies incident to shipment of supplies.

    (a) See also chapter 41 of the Defense Traffic Management Regulation 
(DTMR) for discrepancy procedures.



Sec. 242.1470  Demurrage and detention charges.

    (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.



           Subpart 242.15--Contractor Performance Information



Sec. 242.1503  Procedures.

    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).

[61 FR 18688, Apr. 29, 1996]



               Subpart 242.70--Monitoring Contractor Costs



Sec. 242.7000  Scope.

    This subpart provides guidelines for--
    (a) Monitoring the policies, procedures, and practices used by 
contractors to control direct and indirect costs related to Government 
business; and
    (b) Eliminating duplication in Government monitoring of contractors' 
costs.



Sec. 242.7001  Policy.

    Effective management of contract costs is essential to the efficient 
and economical performance of Government contracts. Contractors are 
responsible for managing and controlling their direct and indirect 
costs; however, DoD must systematically monitor the management of 
contractors' costs to ensure these responsibilities are met.
242.7002  Responsibilities.



Sec. 242.7002-1  Departments and agencies.

    (a) Departments and agencies should conduct a formal program of 
Government monitoring of contractor policies, procedures, and practices 
for controlling costs (cost monitoring) at--
    (1) All major contractor locations when--
    (i) Sales to the Government during the contractor's next fiscal year 
are expected to exceed $100 million on other than firm fixed-price and 
fixed-price with escalation contracts;
    (ii) The contract administration office determines the cost benefits 
to be derived from monitoring the individual contractors with less than 
$100 million in other than firm fixed-price and fixed-price with 
escalation contracts would be warranted; or
    (iii) The Government's share of indirect costs for these sales is at 
least 50 percent of the total indirect costs.
    (2) Other critical locations with significant Government business 
where specifically directed by the head of the contracting activity.
    (b) Departments and agencies are responsible for designating the 
cost monitoring sites and discontinuing them when the criteria are no 
longer met.



Sec. 242.7002-2  Contract administration offices.

    (a) Contract administration offices (CAOs) which are designated as 
cost monitoring sites are responsible for assigning a cost monitoring 
specialist (CMS) to conduct the program. The CMS may be the 
administrative contracting officer or any other CAO employee whose 
normal function relates to evaluation of contractor performance.

[[Page 338]]

    (b) The administrative contracting officer is responsible for--
    (1) Forwarding cost monitoring review reports to the contractor;
    (2) Considering review results in contract negotiations;
    (3) Ensuring the contractor implements corrective action recommended 
in the cost monitoring review reports; and
    (4) Resolving disputes with the contractor regarding cost monitoring 
review findings, conclusions, or recommendations.
    (c) The cost monitoring coordinator is responsible for managing the 
cost monitoring effort within the CAO and coordinating planned effort 
with the contract auditor. This includes--
    (1) Preparing and maintaining an annual written cost monitoring plan 
for reviewing contractor operations (see 242.7003);
    (2) Maintaining an inventory of CAO, Defense Contract Audit Agency, 
and other Government reports on significant issues relating to 
monitoring costs;
    (3) Performing in-depth functional reviews of contractor activities, 
including assisting Government personnel in obtaining access to 
pertinent contractor policies, procedures, and related data;
    (4) Advising the administrative contracting officer (ACO) and CAO 
management of corrective action recommended to improve inefficient or 
uneconomical contractor conditions, policies, or practices, including 
preparing, for the ACO's consideration when appropriate, a Notice of 
Intent to Disallow or Not Recognize Costs;
    (5) Continuously tracking the status of recommendations made to the 
contractor concerning cost performance stemming from all Government 
reports;
    (6) Keeping the contracting officer, program manager, contract 
auditor, and other responsible officials informed of issues affecting 
economical contract performance; and
    (7) Maintaining current organizational charts of the operations 
identifiable to the contractor's functional centers of its cost control 
functions.



Sec. 242.7002-3  Audit and other organizations.

    (a) The contract auditor is responsible for assisting the CMS by 
performing the portion of cost monitoring reviews and related analyses 
which requires access to the contractor's financial and accounting 
records supporting proposed cost or pricing data. (This does not 
preclude the program manager, contracting officer, ACO, cost monitoring 
coordinator, or other representatives from reviewing contractor records 
and data necessary to the performance of their duties.)
    (b) Audit organizations, program offices, contracting activities, 
and any other organizations within DoD with responsibility for reviewing 
contractor operations for the purpose of monitoring contractor policies, 
procedures, and practices to control costs, shall submit to the cost 
monitoring coordinator--
    (1) An annual schedule of planned and tentative visits, oversight 
reviews, and audits to be performed at cost monitoring locations (see 
242.7003); and
    (2) Revisions to scheduled visits or audit plans, within 30 days of 
issuance.
242.7003  Annual cost monitoring plan.



Sec. 242.7003-1  Description.

    The annual cost monitoring plan is a schedule for reviewing 
contractor activities that have the greatest potential for generating 
erroneous charges to the Government.

[60 FR 61599, Nov. 30, 1995]



Sec. 242.7003-2  Selecting the activities.

    (a) The cost monitoring specialist (CMS), assisted by the contract 
auditor, ultimately selects the activities for the plan. To ensure that 
all Government interests are considered in the selection, the CMS should 
invite contract administration office (CAO), Defense Contract Audit 
Agency (DCAA), and other interested Government representatives to a 
meeting before the beginning of each Government fiscal year to identify 
areas to be reviewed during the coming year.
    (b) The selection team should consider the following data in the 
selection process--

[[Page 339]]

    (1) Contractor forecasts for the coming year supporting direct and 
indirect costs by functional centers of its cost control system and the 
results of the latest survey performed of such systems (DCAA 
responsibility);
    (2) Organizational charts for the contractor's entire operation (CAO 
responsibility);
    (3) Outline of the contractor's accounting system showing the flow 
of costs by function (DCAA responsibility);
    (4) Determination of Government participation in the dollars 
attributable to the operations and cost accounts under consideration 
(DCAA responsibility);
    (5) List of recent reviews and audits performed by CAO, DCAA, and 
other Government representatives that would affect the selection; list 
should show outstanding weakness and deficiencies in the contractor's 
operations (CAO responsibility);
    (6) Evidence of under and over staffing (CAO-DCAA responsibility);
    (7) Significant departures from established contractor productivity 
standards (CAO responsibility);
    (8) Major financial variances from forecasts in prior years (DCAA 
responsibility);
    (9) Evidences of idle or under-used capacity (CAO-DCAA 
responsibility); and
    (10) Any visits or audit plans scheduled by other Government 
organizations and identified to the CMC (CAO responsibility).



Sec. 242.7003-3  Tailoring the plan.

     The cost monitoring specialist should tailor the plan to review 
contractor activity, considering--
    (a) The extent of competition in awarded contracts;
    (b) The contractor's operating methods;
    (c) The nature of the work;
    (d) Acquisition cycle stage;
    (e) Business and industry practices;
    (f) Types of contracts involved;
    (g) Degree of technical and financial risk;
    (h) Ratio of Government/commercial work; and
    (i) Extent that performance efficiencies have been previously 
demonstrated.



Sec. 242.7003-4  Contents of the plan.

    (a) The plan should--
    (1) Provide coverage for each significant activity of the contractor 
over a period of two to three years;
    (2) Be updated to reflect changed conditions as the year progresses; 
and
    (3) Be consistent with any schedule and resource limitations of 
participating organizations.
    (b) The plan must identify the organizations having the primary 
responsibility for performing the reviews--
    (1) The contract administration office (CAO) reviews, and signs 
reports on, the technical aspects of contractor activities requiring 
minimal or no access to contractor financial and accounting records;
    (2) DCAA reviews, and signs reports on, the financial and accounting 
aspects of contractor operations requiring minimal or no technical 
consideration; and
    (3) The cost monitoring specialist and DCAA jointly review, and 
jointly sign reports on, activities requiring significant CAO and DCAA 
expertise.
    (c) The plan should include reviews required by the contracting 
officer and DFARS. Reviews will be performed by the assigned 
organization in paragraph (b) of this subsection, except when DFARS 
makes a specific organizational assignment. For example, subpart 244.3 
makes the CAO responsible for leading contractor purchasing system 
reviews and 215.811 makes the DCAA auditor responsible for leading 
estimating system reviews.



Sec. 242.7003-5  Plan approval.

    The heads of the local contract administration and Defense Contract 
Audit Agency offices approve the annual cost monitoring plan.



Sec. 242.7004  Reviews.

    (a) Perform reviews as scheduled in accordance with the plan.
    (b) Hold interim meetings with the contractor as necessary to 
clarify information. Hold an exit conference at the conclusion of 
reviews.
    (c) Prepare reports at the conclusion of reviews. Reports on joint 
reviews shall represent the mutually agreed upon findings, conclusion, 
and recommendations of the Defense Contract

[[Page 340]]

Audit Agency auditor and the contract administration office. Forward all 
reports through the administrative contracting officer to the 
contractor.



                    Subpart 242.71--Voluntary Refunds



Sec. 242.7100  General.

    (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.



Sec. 242.7101  Solicited refunds.

    (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.



Sec. 242.7102  Disposition of voluntary refunds.

     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.



  Subpart 242.72--Contractor Material Management and Accounting System



Sec. 242.7200  Scope of subpart.

     This subpart provides policies, procedures, and standards for use 
in the evaluation of a contractor's material management and accounting 
system (MMAS).



Sec. 242.7201  Definitions.

     Material management and accounting system and valid time-phased 
requirements are defined in the clause at 252.242-7004, Material 
Management and Accounting System.



Sec. 242.7202  Policy.

     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;

[[Page 341]]

    (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.

[56 FR 36437, July 31, 1991, as amended at 57 FR 42632, Sept. 15, 1992; 
61 FR 50455, Sept. 26, 1996]



Sec. 242.7203  MMAS disclosure, demonstration, and maintenance requirements.

    (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.

[61 FR 50455, Sept. 26, 1996]



Sec. 242.7204  Responsibilities.

    (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.

[56 FR 36437, July 31, 1991, as amended at 61 FR 50455, Sept. 26, 1996]



Sec. 242.7205  Review procedures.

    (a) System Evaluation. Cognizant contract administration and audit 
activities shall jointly establish and manage programs for evaluating 
the MMAS systems of contractors subject to disclosure, demonstration, 
and maintenance requirements and annually establish a schedule of 
contractors to be reviewed. They shall--
    (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.

[[Page 342]]

    (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) Disposition of evaluation team findings. The team leader shall 
document the evaluation team findings and recommendations in a report to 
the ACO. If there are significant MMAS deficiencies, the report must 
provide an estimate of the adverse impact on the Government resulting 
from those deficiencies.
    (1) Initial notification to the contractor. The ACO shall 
immediately provide a copy of the report to the contractor upon receipt 
from the team leader.
    (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) Evaluation of the contractor's response. The administrative 
contracting officer, in consultation with the auditor, evaluates the 
contractor's response and determines whether--
    (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) Reduction or Suspension of payments. (i) When the administrative 
contracting officer (ACO) determines that there is a significant MMAS 
deficiency, the ACO shall reduce progress payment claims by an 
appropriate percentage based on affected costs (in accordance with FAR 
32.503-6) and/or suspend questionable costs on public vouchers in 
accordance with FAR 42.803). The reductions or suspensions shall remain 
in effect until the ACO determines that--
    (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 ACO should reinstate a portion of withheld amounts 
commensurate with the contractor's progress in making corrections. 
However, the ACO shall not fully reinstate withheld amounts until the 
contractor corrects the deficiency, or until the impact of the 
deficiency becomes immaterial.
    (4) Notification of administrative contracting officer 
determination. (i) The administrative contracting officer (ACO) shall 
notify the contractor in writing (copy to auditor and functional 
specialists) of--
    (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.

[[Page 343]]

    (iv) The ACO should consider the effect of significant MMAS 
deficiencies in reviews of the contractor's estimating system (215.811).
    (5) Monitoring contractor's corrective action. The administrative 
contracting officer (ACO) and auditor shall monitor the contractor's 
progress in correcting deficiencies. If the contractor fails to make 
adequate progress, the ACO shall take further action. Actions for 
consideration may include--
    (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.



Sec. 242.7206  Contract clause.

    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.

[56 FR 36437, July 31, 1991, as amended at 60 FR 61599, Nov. 30, 1995; 
61 FR 50455, Sept. 26, 1996]



           Subpart 242.73--Contractor Insurance/Pension Review



Sec. 242.7300  Scope of subpart.

    This subpart provides the requirements for conducting a Contractor 
Insurance/Pension Review (CIPR).



Sec. 242.7301  General.

    (a) The administrative contracting officer (ACO) is responsible for 
determining the reasonableness of insurance/pension costs in Government 
contracts. Insurance/pension specialists assist ACOs in making these 
determinations by conducting CIPRs. A CIPR is an in-depth evaluation of 
a contractor's--
    (1) Insurance program;
    (2) Pension plan;
    (3) Other deferred compensation plans; and
    (4) Related policies, procedures, practices, and costs.
    (b) As the DoD Executive Agency, the Defense Logistics Agency 
performs CIPRs at all contractor locations meeting criteria in 242.7302.
    (c) Insurance/pension specialists are located at the Defense 
Contract Management Districts in Los Angeles and Chicago and at the 
Defense Contract Management Area Operations in New York.
    (d) The CIPR should be the only formal review of a contractor's 
insurance/pension program except for periodic tests of the system 
performed by contract administration and DCAA, or any special reviews 
initiated by the administrative contracting officer. If any organization 
believes that additional reviews of the contractor's insurance/pension 
program should be performed, that request should be conveyed to the ACO. 
The ACO should perform the review as part of an ACO-initiated special 
review, of if possible, as part of the CIPR if one is scheduled to be 
conducted in the near future.



Sec. 242.7302  Requirements.

    (a) A CIPR shall be conducted for each contractor whose qualifying 
sales to the Government exceeded $40 million during the contractor's 
preceding fiscal year. Qualifying sales are sales for which certified 
cost or pricing data were required under 10 U.S.C. 2306, as implemented 
in FAR 15.804 (unless exempt in accordance with FAR 15.804-3), or which 
are cost-reimbursement type contracts. Sales include prime contracts, 
subcontracts, and modifications to such contracts and subcontracts.
    (b) A CIPR shall be conducted at least every two years for 
contractors who continue to meet the requirements. A more or less 
frequent cycle

[[Page 344]]

may be appropriate under certain circumstances, e.g., prior to a major 
contract award, in conjunction with in-depth overhead review, or 
subsequent to mergers or divestitures.
    (c) Special reviews may be performed in the intervening period--
    (1) To follow-up contractor implementation of recommendations and 
verify Government recovery of credits; or
    (2) When information reveals a deficiency or major change in the 
contractor's insurance/pension program.
    (d) Reviews of selected insurance and pension elements may be 
conducted for contractors not meeting the criteria in paragraph (a) of 
this section if significant problems have been identified.

[56 FR 36437, July 31, 1991, as amended at 60 FR 29500, June 5, 1995]



Sec. 242.7303  Responsibilities.

    (a) The administrative contracting officer is responsible for--
    (1) Determining the need for a CIPR or special review under 
242.7302;
    (2) Requesting and scheduling the reviews with the appropriate 
Defense Logistics Agency activity;
    (3) Notifying the contractor of the proposed date and purpose of the 
review, and obtaining any preliminary data needed by the insurance/
pension specialist;
    (4) Reviewing the CIPR report, advising the contractor of the 
results, and telling the contractor to submit any significant changes in 
insurance/pension plans for review and acceptance prior to making the 
change;
    (5) Providing other interested contracting officers copies of 
documents related to the CIPR; and
    (6) Ensuring adequate follow-up on all CIPR recommendations.
    (b) The 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 
Defense Contract Audit Agency a copy of the schedule;
    (2) Heading the team that conducts the review;
    (3) Maintaining complete documentation for CIPR reports;
    (4) To the extent possible, resolving discrepancies between audit 
reports and CIPR draft reports prior to releasing the final CIPR report;
    (5) Preparing and distributing the final CIPR report;
    (6) Providing the final audit report as an attachment to the CIPR 
report;
    (7) Preparing a draft letter for the administrative contracting 
officer's use in notifying the contractor of CIPR results; and
    (8) When requested, advising administrative contracting officers and 
other Government representatives concerning contractor insurance/pension 
matters.
    (c) The Defense Contract Audit Agency auditor is responsible for--
    (1) Participating as a member of the CIPR team;
    (2) Submitting information and advice to the team based on analysis 
of the contractor's books, accounting records, and other related data; 
and
    (3) Issuing an audit report to the insurance/pension specialist for 
incorporation into the final CIPR report.



    Subpart 242.74--Technical Representation at Contractor Facilities



Sec. 242.7400  General.

    (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.

[[Page 345]]

    (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).



Sec. 242.7401  Procedures.

    (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 may be included in an 
existing MOA, if one exists, or as a separate MOA.
    (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.



   Subpart 242.75--Contractor Accounting Systems and Related Controls

    Source: 60 FR 29500, June 5, 1995, unless otherwise noted.



Sec. 242.7500  Scope of subpart.

    This subpart provides policies and procedures applicable to 
contractor accounting systems and related internal controls.



Sec. 242.7501  Definition.

    Internal controls means those policies and procedures established by 
contractor management to provide reasonable assurance that applicable 
laws and regulations are complied with and that actual and estimated 
costs are equitably allocated within the accounting system.



Sec. 242.7502  Policy.

    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.

[[Page 346]]



Sec. 242.7503  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)).



PART 243--CONTRACT MODIFICATIONS--Table of Contents




Sec.

                         Subpart 243.1--General

243.102  Policy.
243.105  Availability of funds.
243.107  Contract clause.
243.107-70  Notification of substantial impact on employment.
243.170  Identification of foreign military sale (FMS) requirements.
243.171  Obligation or deobligation of funds.

                      Subpart 243.2--Change Orders

243.204  Administration.
243.205  Contract clauses.
243.205-70  Engineering change proposals.
243.205-71  Pricing of contract modifications.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36446, July 31, 1991, unless otherwise noted.



                         Subpart 243.1--General



Sec. 243.102  Policy.

    (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.



Sec. 243.105  Availability of funds.

    (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.)

[61 FR 25408, May 21, 1996]



Sec. 243.107  Contract clause.

    For DoD, the specifically authorized representative (SAR) referred 
to in the clause at FAR 52.243-7, Notification of Changes, is a 
contracting officer's representative as defined in 202.101 and as 
discussed in subpart 201.6.



Sec. 243.107-70  Notification of substantial impact on employment.

    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

[[Page 347]]

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.

[56 FR 67220, Dec. 30, 1991]



Sec. 243.170  Identification of foreign military sale (FMS) requirements.

    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.

[56 FR 36446, July 31, 1991. Redesignated at 56 FR 67220, Dec. 30, 1991]



Sec. 243.171  Obligation or deobligation of funds.

    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.

[60 FR 34470, July 3, 1995]



                      Subpart 243.2--Change Orders



Sec. 243.204  Administration.

    (b) Definitization. The administrative contracting officer (ACO) 
must review change orders issued by the contracting officer to ensure 
compatibility with the status of performance. If the contractor has 
progressed beyond the effective point specified in the change order, the 
ACO must determine the earliest practical point at which the change 
order could be made effective and advise the contracting officer. The 
contracting officer must issue another change order to correct, revise, 
or supersede the first change order, then definitize by supplemental 
agreement citing both change orders.
243.205  Contract clauses.



Sec. 243.205-70  Engineering change proposals.

    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.

[59 FR 27674, May 27, 1994]



Sec. 243.205-71  Pricing of contract modifications.

    Use the clause at 252.243-7001, Pricing of Contract Modifications, 
in solicitations and contracts when anticipating and using a fixed price 
type contract.



PART 244--SUBCONTRACTING POLICIES AND PROCEDURES--Table of Contents




Sec.

                 Subpart 244.2--Consent to Subcontracts

244.202  Contracting officer's evaluation.
244.202-2  Considerations.

         Subpart 244.3--Contractors' Purchasing Systems Reviews

244.301  Objective.
244.304  Surveillance.
244.305  Granting, withholding, or withdrawing approval.

[[Page 348]]

244.305-70 Granting, withholding, or withdrawing approval.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36447, July 31, 1991, unless otherwise noted.



                 Subpart 244.2--Consent to Subcontracts



Sec. 244.202  Contracting officer's evaluation.



Sec. 44.202-2  Considerations.

    (a) Where other than lowest price is the basis for subcontractor 
selection, has the contractor adequately substantiated the selection as 
offering the greatest value to the Government?

[60 FR 29501, June 5, 1995]



         Subpart 244.3--Contractors' Purchasing Systems Reviews



Sec. 244.301  Objective.

    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.



Sec. 244.304  Surveillance.

    (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.

[56 FR 36447, July 31, 1991, as amended at 61 FR 50455, Sept. 26, 1996]
244.305  Granting, withholding, or withdrawing approval.



Sec. 244.305-70  Granting, withholding, or withdrawing approval.

    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.

[[Page 349]]





PART 245--GOVERNMENT PROPERTY--Table of Contents




Sec.

                         Subpart 245.1--General

245.104  Review and correction of contractor's property control systems.

       Subpart 245.3--Providing Government Property to Contractors

245.301  Definitions.
245.302  Providing facilities.
245.302-1  Policy.
245.302-2  Facilities contracts.
245.302-7  Optional property-related clauses for facilities contracts.
245.303  Providing material.
245.303-2  Procedures.
245.307  Providing special test equipment.
245.307-2  Acquiring special test equipment.
245.310  Providing agency-peculiar property.
245.310-70  Contract clause.

          Subpart 245.4--Use and Rental of Government Property

245.401  Policy.
245.403  Rental--Use and charges clause.
245.405  Contracts with foreign governments or international 
          organizations.
245.407  Non-Government use of plant equipment.

 Subpart 245.5--Management of Government Property in the Possession of 
                               Contractors

245.505  Records and reports of Government property.
245.505-3  Records of material.
245.505-5  Records of plant equipment.
245.505-6  Special reports of plant equipment.
245.505-14  Reports of Government property.

  Subpart 245.6--Reporting, Redistribution, and Disposal of Contractor 
                                Inventory

245.601  Definitions.
245.603  Disposal methods.
245.603-70  Contractor performance of plant clearance duties.
245.603-71  Disposal of contractor inventory for NATO cooperative 
          projects.
245.604  Restrictions on purchase or retention of contractor inventory.
245.606  Inventory schedules.
245.606-3  Acceptance.
245.606-5  Instructions for preparing and submitting schedules of 
          contractor inventory.
245.606-70  Instructions for completing DD Form 1342, DoD Property 
          Record.
245.607  Scrap.
245.607-1  General.
245.607-2  Recovering precious metals.
245.607-70  Scrap warranty.
245.608  Screening of contractor inventory.
245.608-1  General.
245.608-2  Standard screening.
245.608-5  Special items screening.
245.608-7  Reimbursement of cost for transfer of contractor inventory.
245.608-70  Contractor inventory redistribution system (CIRS).
245.608-71  Screening industrial plant equipment.
245.609  Donations.
245.610  Sale of surplus contractor inventory.
245.610-1  Responsibility.
245.610-3  Proceeds of sale.
245.610-4  Contractor inventory in foreign countries.
245.612  Removal and storage.
245.612-3  Special storage at the Government's expense.
245.613  Property disposal determinations.

    Subpart 245.70--Appointment of Property Administrators and Plant 
                           Clearance Officers

245.7001  Selection, appointment, and termination.
245.7002  Duties and responsibilities of plant clearance officers.

                  Subpart 245.71--Plant Clearance Forms

245.7101  Forms.
245.7101-1  Standard Form 97, Certificate of Release of a Motor Vehicle 
          (Agency Record Copy).
245.7101-2  DD Form 1149, Requisition and Invoice Shipping Document.
245.7101-3  DD Form 1348-1, DoD Single Line Item Release/Receipt 
          Document.
245.7101-4  DD Form 1640, Request for Plant Clearance.

                  Subpart 245.72--Special Instructions

245.7201  Performing inventory verifications and determination of 
          allocability.
245.7202  Establishing a plant clearance case.
245.7203  Assigning plant clearance case numbers.
245.7204  Preparing inventory disposal report.
245.7205  Reporting excess and surplus contractor inventory.
245.7206  Transmitting DD Form 1342, DoD Property Record.

          Subpart 245.73--Sale of Surplus Contractor Inventory

245.7301  Policy.
245.7302  Competitive sales.
245.7302-1  Property descriptions.
245.7302-2  Lotting.

[[Page 350]]

245.7302-3  Alternate bids.
245.7302-4  Basis for sale.
245.7302-5  Mailing lists.
245.7303  Formal bid procedures.
245.7304  Informal bid procedures.
245.7305  Sale approval and award.
245.7306  Sales services.
245.7307  Non-competitive sales.
245.7307-1  General.
245.7307-2  Justification.
245.7308  Antitrust notification.
245.7309  Mandatory terms and conditions--formal invitations.
245.7309-1  Inspection.
245.7309-2  Condition and location of property.
245.7309-3  Consideration of bids.
245.7309-4  Payment.
245.7309-5  Title.
245.7309-6  Delivery and removal of property.
245.7309-7  Default.
245.7309-8  Variations in quantity or weight.
245.7309-9  Weighing.
245.7309-10  Risk of loss.
245.7309-11  Liability.
245.7309-12  Oral statements.
245.7309-13  Eligibility of bidders.
245.7309-14  Claims liability.
245.7310  Special term and conditions.
245.7310-1  Demilitarization.
245.7310-2  Performance bond.
245.7310-3  Liability and insurance.
245.7310-4  Dangerous property.
245.7310-5  Controlled substances.
245.7310-6  Radioactive material.
245.7310-7  Scrap warranty.
245.7310-8  Antitrust clearance.
245.7311  Optional conditions.
245.7311-1  Sales and use tax liability.
245.7311-2  Safety, security, and fire regulations.
245.7311-3  Bid deposits.
245.7311-4  Other special conditions.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36448, July 31, 1991, unless otherwise noted.



                         Subpart 245.1--General



Sec. 245.104  Review and correction of contractor's property control systems.

    (a) The property administrator shall perform property administration 
in accordance with DoD 4161.2-M, Manual for the Performance of Contract 
Property Administration.

[56 FR 36448, July 31, 1991, as amended at 56 FR 67220, Dec. 30, 1991]



       Subpart 245.3--Providing Government Property to Contractors



Sec. 245.301  Definitions.

    Agency-peculiar property, as used in DoD, means military property 
and includes end items and integral components of military weapons 
systems, along with the related peculiar support equipment which is not 
readily available as a commercial item.
    Facilities project means a Government project to provide, modernize 
or replace facilities for use by a contractor in performing a Government 
contract or subcontract.
    Industrial plant equipment (IPE) means plant equipment in Federal 
stock group 34 with an acquisition cost of $15,000 or more used for 
cutting, abrading, grinding, shaping, forming, joining, heating, 
treating, or otherwise altering the physical properties of materials, 
components or end items entailed in manufacturing, maintenance, supply, 
processing, assembly, or research and development operations. IPE is 
further identified in AR 700-43/NAVSUP PUB 5009/AFM 78-9/DLAM 4215.1, 
Management of Defense-Owned Industrial Plant Equipment.
    Mapping, charting, and geodesy (MC&G) property is defined in the 
clause at 252.245-7000, Government Furnished Mapping, Charting and 
Geodesy Property.
    Other plant equipment (OPE) means plant equipment regardless of 
dollar value, used in or in conjunction with the manufacture of 
components or end items relative to maintenance, supply, processing, 
assembly or research and development operations. OPE excludes equipment 
categorized as IPE.
    Provide means either to furnish, as in Government-furnished 
property, or to acquire, as in contractor-acquired property.
245.302  Providing facilities.



Sec. 245.302-1  Policy.

    (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--

[[Page 351]]

    (1) To the Secretaries of the Military Departments and the directors 
of defense agencies for Government-owned facilities projects if the 
project--
    (i) Is a research and development-funded effort not exceeding $3 
million per fiscal year; or
    (ii) Is funded from procurement appropriations, approved on a 
location basis, and does not exceed $5 million for all property efforts 
during one fiscal year; or
    (iii) Is in support of a major system or subsystem (including 
ammunition-related projects) and the total investment will not exceed 
$25 million during the projected acquisition or maintenance effort.
    (2) To DASD(P&L)(PR) for projects exceeding the limitations in 
paragraphs (a)(4)(A)(1).
    (B) The contracting officer shall coordinate the Determination and 
Finding with the program or project manager.
    (C) Departments and agencies must submit reports or facilities 
projects to the House and Senate Armed Services Committees--
    (1) At least 30 days before starting facilities projects involving 
real property (10 U.S.C. 2662); and
    (2) In advance of starting construction for a facilities project 
regardless of cost. Use DD Form 1391, Fiscal Year 19____, Military 
Construction Project Data, to notify congressional committees of 
projects which are not included in the annual budget.
    (b)(1)(A) Industrial plant equipment. Before acquiring industrial 
plant equipment--
    (1) Submit a DD Form 1419, DoD Industrial Plant Equipment 
Requisition, to the Defense Industrial Plant Equipment Center (DIPEC), 
Memphis, TN 38114, in accordance with AR 700-43/NAVSUP PUB 5009/AFM 78-
9/DLAM 4215.1, Management of Defense-Owned Industrial Plant Equipment, 
to determine whether existing, reallocable Government-owned facilities 
can be used.
    (2) Do not acquire any item listed on the DD Form 1419 until a 
certificate of nonavailability is received from DIPEC.
    (B) Automatic data processing equipment. The administrative 
contracting officer submits contractor requests to acquire automatic 
data processing equipment to the Director, Defense Automation Resources 
Information Center (Attn: DARIC-R), Cameron Station, Alexandria, VA 
22304-6100, in accordance with DoD 7950.1-M, Defense Automation 
Resources Management Manual.



Sec. 245.302-2  Facilities contracts.

    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.



Sec. 245.302-7  Optional property-related clauses for facilities contracts.

    Use the clause at 252.225-7030, Restriction on Acquisition of 
Carbon, Alloy, and Armor Steel Plate, as prescribed in 225.7017-4.

[57 FR 14995, Apr. 23, 1992]
245.303  Providing material.



Sec. 245.303-2  Procedures.

    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).
245.307  Providing special test equipment.



Sec. 245.307-2  Acquiring special test equipment.

    (b) Notice and approval. (1) The review requires a written 
evaluation from the appropriate technical specialist.



Sec. 245.310  Providing agency-peculiar property.

    (c) All Government-furnished mapping, charting and geodesy (MC&G) 
property is under the control of the Director, Defense Mapping Agency

[[Page 352]]

(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.

[56 FR 36448, July 31, 1991, as amended at 59 FR 27674, May 27, 1994]



Sec. 245.310-70  Contract clause.

    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.

[57 FR 42632, Sept. 15, 1992]



          Subpart 245.4--Use and Rental of Government Property



Sec. 245.401  Policy.

    Government use includes use on contracts for foreign military sales. 
Use on contracts for foreign military sales shall be on a rent-free 
basis.



Sec. 245.403  Rental--Use and charges clause.

    (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.



Sec. 245.405  Contracts with foreign governments or international organizations.

    (1) Approval. A contractor may use Government production and 
research property on work for foreign governments and international 
organizations only when approved in writing by the contracting officer 
having cognizance of the property. The contracting officer shall grant 
approval only if--
    (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) Use charges. (i) The Use and Charges clause is applicable on 
direct commercial sales to foreign governments or international 
organizations.
    (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) Waivers. (i) Rental charges for use of U.S. production and 
research property on commercial sales transactions to the Government of 
Canada are waived for all commercial contracts. This waiver is based on 
an understanding wherein the Government of Canada has agreed to waive 
its rental charges.
    (ii) Requests for waivers or reduction of charges for the use of 
Government facilities on work for foreign governments or international 
organizations shall be submitted to the contracting officer who shall 
refer the matter through contracting channels. In response to these 
requests, approvals may be granted only by the Director,

[[Page 353]]

Defense Security Assistance Agency for particular sales which are 
consistent with paragraph (1)(iii) of this section.



Sec. 245.407  Non-Government use of plant equipment.

    (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 OASD(P&L)(PR).
    (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.



 Subpart 245.5--Management of Government Property in the Possession of 
                               Contractors

245.505  Records and reports of Government property.



Sec. 245.505-3  Records of material.

    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.



Sec. 245.505-5  Records of plant equipment.

    (a) The contractor may use DD Form 1342, DoD Property Record, as a 
source document for setting up prescribed records.



Sec. 245.505-6  Special reports of plant equipment.

    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 
DIPEC (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.

[[Page 354]]



Sec. 245.505-14  Reports of Government property.

    (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).

[59 FR 27674, May 27, 1994]



  Subpart 245.6--Reporting, Redistribution, and Disposal of Contractor 
                                Inventory



Sec. 245.601  Definitions.

    (1) Controlled substances means--
    (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) Demilitarization means the act of destroying the offensive or 
defensive characteristics of equipment or material to prevent its 
further military or lethal use.
    (3) Production scrap means material left over from the normal 
production process that has only remelting or reprocessing value, e.g., 
textile and metal clippings, borings, and faulty castings and forgings.
    (4) Serviceable or usable property means property that has a 
potential for use or sale value ``as is'' or with minor repairs or 
alterations; only property in Federal Condition Codes A1, A2, A4, A5, 
B1, B2, B4, B5, F7, or F8.
245.603  Disposal methods.



Sec. 245.603-70  Contractor performance of plant clearance duties.

    (a) Authorization. (1) Contract administration offices (CAOs) may, 
with head of the contracting activity approval and contractor 
concurrence, authorize selected contractors to perform certain plant 
clearance functions if the volume of plant clearance warrants 
performance by the contractor.
    (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) Government oversight and assistance. (1) The contract 
administration office will ensure regular evaluation of the contractor's 
performance of the plant clearance function and any corrective action 
required.
    (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

[[Page 355]]

plant clearance officers at prime contract administration offices for 
the disposal of subcontractor inventory; forward inventory schedules to 
the contractor for processing; and forward completed case file to the 
referring activity; and
    (ix) Work with the contractor, screeners, and buyers to ensure that 
the Government receives maximum reutilization and disposal proceeds.
    (c) Accredited contractor plant clearance duties. The accredited 
contractor shall--
    (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.

[56 FR 36448, July 31, 1991, as amended at 56 FR 67220, Dec. 30, 1991]



Sec. 245.603-71  Disposal of contractor inventory for NATO cooperative projects.

    (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.



Sec. 245.604  Restrictions on purchase or retention of contractor inventory.

    (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) Demilitarization. The contractor shall demilitarize contractor 
inventory possessing offensive or defense characteristics, and not 
required within the DoD, in accordance with Defense Demilitarization 
Manual, DoD 4160.21-M-1. In unusual cases the plant clearance officer 
may authorize the purchaser to perform the demilitarization; however,

[[Page 356]]

the purchaser shall not be granted such authorization if the inventory 
is dangerous.
    (4) Classified inventory. Classified contractor inventory shall be 
disposed of in accordance with applicable security regulations or as 
directed by the contracting officer.
    (5) Dangerous inventory. Contractor inventory dangerous to public 
health or safety shall not be donated or otherwise disposed of unless 
rendered innocuous or until adequate safeguards have been provided.
245.606  Inventory schedules.



Sec. 245.606-3  Acceptance.

    (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.



Sec. 245.606-5  Instructions for preparing and submitting schedules of contractor inventory.

    (d) General instructions for completing forms.
    (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) Instructions for completing specific forms.
    (4) Inventory Schedule D (Special Tooling and Special Test 
Equipment) (SF 1432).
    (ii) Description.
    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.



Sec. 245.606-70  Instructions for completing DD Form 1342, DoD Property Record.

    (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.
245.607  Scrap.



Sec. 245.607-1  General.

    (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.

[[Page 357]]

    (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.



Sec. 245.607-2  Recovering precious metals.

    (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.

[59 FR 27674, May 27, 1994]



Sec. 245.607-70  Scrap warranty.

    (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.
245.608  Screening of contractor inventory.



Sec. 245.608-1  General.

    (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.



Sec. 245.608-2  Standard screening.

    (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.



Sec. 245.608-5  Special items screening.

    (a) Special test equipment with standard components. (1) The 
contractor shall report any excess special test equipment (STE) using SF 
1432, Inventory Schedule D (Special Tooling and Special Test Equipment). 
The contractor shall list and describe on the inventory schedule all 
general-purpose components which, if economically severable from the 
STE, would otherwise be classified as industrial plant equipment (IPE), 
other plant equipment (OPE), or

[[Page 358]]

automatic data processing equipment (ADPE).
    (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--
    (1) General Services Administration--STE unit, less any standard 
components, and nonreportable standard components;
    (2) Defense Industrial Plant Equipment Center--IPE components;
    (3) Contractor Inventory Redistribution System--OPE components; and
    (4) Defense Automation Resources Information Center--ADPE 
components.
    (d) Procedures for Automatic Data Processing Equipment (ADPE). (1) 
Report ADPE that is Government-owned or leased by the contractor (with 
Government purchase option or other interests, including use rights) to 
the Defense Automation Resources Information Center (DARIC). DARIC does 
all required screening, including General Services Administration 
screening for ADPE. (See DoD 7950.1-M, Defense Automation Resources 
Management Manual.)



Sec. 245.608-7  Reimbursement of cost for transfer of contractor inventory.

    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.



Sec. 245.608-70  Contractor inventory redistribution system (CIRS).

    (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.

[56 FR 36448, July 31, 1991, as amended at 60 FR 29501, June 5, 1995]



Sec. 245.608-71  Screening industrial plant equipment.

    (a) Reporting. Within 15 days of receipt, the plant clearance 
officer will forward two copies of the DD Form 1342, DoD Property 
Record, to the Defense Industrial Plant Equipment Center (DIPEC), 
Memphis, TN 38114, for all IPE not condition coded ``X'' or ``S''. 
Process IPE condition coded ``X'' or ``S'' in accordance with department 
or agency procedures.
    (b) Screening--(1) First 30 days.
    DIPEC will--
    (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,

[[Page 359]]

funding, transportation, routing recommendations, and preservation 
instructions.
    (2) 31st through 75th day. (i) DIPEC will report excess IPE to GSA 
on 31st day.
    (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 DIPEC.
    (3) 76th through 90th day. GSA will--
    (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 DIPEC.
    (4) After 90th day. If DoD requirement is identified, and item is 
available, ship item against the requirement unless compelling reasons 
exist for not shipping item.
    (c) The plant clearance officer shall ensure that a copy of the 
shipping document is submitted to DIPEC 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 DIPEC in accordance with department/
agency procedures.



Sec. 245.609  Donations.

    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.
245.610  Sale of surplus contractor inventory.



Sec. 245.610-1  Responsibility.

    (a) See Subpart 245.73 for sales of contractor inventory under the 
control of DoD.



Sec. 245.610-3  Proceeds of sale.

    (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.



Sec. 245.610-4  Contractor inventory in foreign countries.

    (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 (name of country). In the event of resale or export by 
the Purchaser of any of the property acquired at a price in excess of 
$1,000 United States dollars or equivalent in other currency at the 
official exchange rate, the

[[Page 360]]

Purchaser agrees to obtain the approval of (name and address of 
Contracting Officer); and

    (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.
245.612  Removal and storage.



Sec. 245.612-3  Special storage at the Government's expense.

    (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.



Sec. 245.613  Property disposal determinations.

    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.



    Subpart 245.70--Appointment of Property Administrators and Plant 
                           Clearance Officers



Sec. 245.7001  Selection, appointment, and termination.

    (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.



Sec. 245.7002  Duties and responsibilities of plant clearance officers.

    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;

[[Page 361]]

    (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.

[57 FR 42632, Sept. 15, 1992]



                  Subpart 245.71--Plant Clearance Forms



Sec. 245.7101  Forms.

    Use the forms listed below in performance of plant clearance 
actions.



Sec. 245.7101-1  Standard Form 97, Certificate of Release of a Motor Vehicle (Agency Record Copy).

    Use for transfers, donations, and sales of motor vehicles. The 
contracting officer shall execute the SF 97 and furnish it to the 
purchaser.



Sec. 245.7101-2  DD Form 1149, Requisition and Invoice Shipping Document.

    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.



Sec. 245.7101-3  DD Form 1348-1, DoD Single Line Item Release/Receipt Document.

    Use for shipments of excess industrial plant equipment and 
contractor inventory redistribution system (CIRS) inventory.



Sec. 245.7101-4  DD Form 1640, Request for Plant Clearance.

    Use to request plant clearance assistance or transfer plant 
clearance.



                  Subpart 245.72--Special Instructions



Sec. 245.7201  Performing inventory verification and determination of allocability.

    Use the following guidance for verifying inventory schedules--
     (a) Allocability. (1) Review contract requirements, delivery 
schedules, bills of material, and other pertinent material. Determine 
whether schedules include material which--
    (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) Quantity. Ensure available inventory is in accordance with 
quantities listed on the inventory schedules. While a complete physical 
count of each item is not required, perform sufficient checks to ensure 
accurate quantities.
    (c) Condition. Ensure the inventory condition matches that shown on 
the inventory schedules.



Sec. 245.7202  Establishing a plant clearance case.

    (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--

[[Page 362]]

    (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.



Sec. 245.7203  Assigning plant clearance case numbers.

    (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:

C--Army
Q--Navy
E--Air Force
L--Marine Corps
U--Defense Logistics Agency
N--Defense Nuclear Agency
M--Defense Mapping Agency
S--NASA
D--Other DoD Activities
O--Non-DoD Activities

    (b) Record the plant clearance number on DD Form 1635, Plant 
Clearance Case Register, or mechanized equivalent.



Sec. 245.7204  Preparing inventory disposal report.

    (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.



Sec. 245.7205  Reporting excess and surplus contractor inventory.

    (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

[[Page 363]]

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.



Sec. 245.7206  Transmitting DD Form 1342, DoD Property Record.

    As a minimum, the plant clearance officer will provide the following 
information in a letter forwarding DD Forms 1342 to DIPEC--
    (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, DIPEC must cite 
transportation funds; and
    (k) The plant clearance officer's signature block.



          Subpart 245.73--Sale of Surplus Contractor Inventory



Sec. 245.7301  Policy.

    (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 headquarters of the contract administration activity must 
approve the use of auctions, spot bids, or retail sales.
245.7302  Competitive sales.



Sec. 245.7302-1  Property descriptions.

    (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

[[Page 364]]

terminology and original manufacturer and brand name, if applicable.



Sec. 245.7302-2  Lotting.

    (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.



Sec. 245.7302-3  Alternate bids.

    Offerors may be solicited to bid for groups or for the entire 
offering by use of the following:

    Item __________ (Alternate Bid)
    This item consists of all property listed and described in Items 
________ to ________, inclusive. Award under this item will be made only 
if the highest acceptable bid on this item is equal to, or greater than, 
the total of the highest acceptable bids on Items ________ to ________, 
inclusive.



Sec. 245.7302-4  Basis for sale.

    (a) Unit price basis--requires the offeror to state the bid price in 
terms of the quantity or weight generally applied in commercial sales of 
similar items.
    (b) Lot price basis--requires the offeror to submit a bid for the 
entire lot. Use the lot price basis of sale only when property cannot be 
sold by unit measure or the potential sales return is small.



Sec. 245.7302-5  Mailing lists.

    (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.



Sec. 245.7303  Formal bid procedures.

    (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;

[[Page 365]]

    (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.



Sec. 245.7304  Informal bid procedures.

    (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.



Sec. 245.7305  Sale approval and award.

    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.



Sec. 245.7306  Sales services.

    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.
245.7307  Non-competitive sales.



Sec. 245.7307-1  General.

    (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.



Sec. 245.7307-2  Justification.

    (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

[[Page 366]]

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.



Sec. 245.7308  Antitrust notification.

    (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.

[56 FR 36448, July 31, 1991, as amended at 57 FR 42633, Sept. 15, 1992; 
57 FR 53601, Nov. 12, 1992]



Sec. 245.7309  Mandatory terms and conditions--formal invitations.

    Sale by formal invitation shall include, as a minimum, the terms and 
conditions in this section.



Sec. 245.7309-1  Inspection.

    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.



Sec. 245.7309-2  Condition and location of property.

    (a) Unless otherwise specifically provided in the Invitation, all 
property is offered for sale ``as is'' and ``where is.''

[[Page 367]]

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.



Sec. 245.7309-3  Consideration of bids.

    (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.



Sec. 245.7309-4  Payment.

    (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.



Sec. 245.7309-5  Title.

    (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.



Sec. 245.7309-6  Delivery and removal of property.

    (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 property, the Contractor, 
without limiting any other rights, may require the Purchaser to pay 
reasonable storage charges.



Sec. 245.7309-7  Default.

    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

[[Page 368]]

in the Invitation) shall be applied against such losses and expenses.



Sec. 245.7309-8  Variations in quantity or weight.

    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.



Sec. 245.7309-9  Weighing.

    (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.



Sec. 245.7309-10  Risk of loss.

    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.



Sec. 245.7309-11  Liability.

    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.



Sec. 245.7309-12  Oral statements.

    Any oral statement by the Contractor changing or supplementing the 
contract or any condition thereof is unauthorized.



Sec. 245.7309-13  Eligibility of bidders.

    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).



Sec. 245.7309-14  Claims liability.

    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.



Sec. 245.7310  Special term and conditions.

    When necessary, include the special conditions of this section in 
formal invitations.



Sec. 245.7310-1  Demilitarization.

    When demilitarization of property is required, whether on or off 
contractor or Government premises, the invitation must include the 
following clause:

    (a) Demilitarization.
    Item(s) ________ require demilitarization by the Purchaser in the 
manner and to the degree set forth below:
    (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;

[[Page 369]]

    (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) Demilitarization on Government Premises.
    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) Demilitarization on Non-Government Premises. Property requiring 
demilitarization shall be demilitarized by the Purchaser under 
supervision of qualified Department of Defense personnel. Title shall 
not pass to the Purchaser until demilitarization has been completed by 
the Purchaser 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 costs incident to the demilitarization.
    (d) Failure to Demilitarize. If the Purchaser fails to demilitarize 
the property as specified in the contract, the Contractor may, upon 
giving ten days written notice from date of mailing to the Purchaser--
    (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.



Sec. 245.7310-2  Performance bond.

    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:

                            Performance Bond

    Within ten days after notice of award, the Purchaser shall furnish a 
performance bond in the sum of $________ to cover the Purchaser's 
obligations. Such bond shall remain in full force and effect during the 
term of the contract and any extensions as may be agreed upon. The 
Purchaser shall not be permitted to begin performance until the bond has 
been received.



Sec. 245.7310-3  Liability and insurance.

    When the work to be performed by the purchaser warrants, use the 
following:

                         Liability and Insurance

    The Purchaser shall at the Purchaser's own expense purchase and 
maintain during the term of the contract insurance as follows:
    (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.



Sec. 245.7310-4  Dangerous property.

    The following warning shall be included when it cannot be certified 
that the property is completely harmless:

[[Page 370]]

                           Dangerous Property

    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.



Sec. 245.7310-5  Controlled substances.

    The sale of controlled substances, e.g., narcotics, stimulants, 
depressants, or hallucinogenic drugs, shall be subject to the following 
special conditions:
    (a) Controlled Substances. Bids will be rejected unless the Bidder 
submits the following certification with its bid:

    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) Narcotic Drugs and Chemicals. Bids will be rejected unless the 
Bidder submits the following certification with its bid:

    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.



Sec. 245.7310-6  Radioactive material.

    The following shall be used whenever the property offered for sale 
is capable of emitting ionized radiation:

                          Radioactive Material

    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.



Sec. 245.7310-7  Scrap warranty.

    The following condition shall be used whenever property, other than 
production scrap, is offered for sale as scrap:

                             Scrap Warranty

    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.



Sec. 245.7310-8  Antitrust clearance.

    When property with an acquisition cost of $3 million or more is to 
be sold, include the following in the invitation:

                                Antitrust

    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.



Sec. 245.7311  Optional conditions.

    The following special conditions of sale may be added at the option 
of the contractor:



Sec. 245.7311-1  Sales and use tax liability.

    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.
245.7311-2  Safety, security, and fire regulations.
245.7311-3  Bid deposits.



Sec. 245.7311-4  Other special conditions.

    Other special conditions considered necessary by the Contractor are 
subject to the prior approval of the plant

[[Page 371]]

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.



PART 246--QUALITY ASSURANCE--Table of Contents




Sec.

                         Subpart 246.1--General

246.101  Definitions.
246.102  Policy.
246.103  Contracting office responsibilities.
246.104  Contract administration office responsibilities.

              Subpart 246.2--Contract Quality Requirements

246.202  Types of contract quality requirements.
246.202-4  Higher-level contract quality requirements.
246.203  Criteria for use of contract quality requirements.

                     Subpart 246.3--Contract Clauses

246.370  Material inspection and receiving report.

          Subpart 246.4--Government Contract Quality Assurance

246.406  Foreign governments.
246.407  Nonconforming supplies or services.
246.408  Single-agency assignments of Government contract quality 
          assurance.
246.408-70  Subsistence.
246.408-71  Aircraft.
246.408-72  Construction projects.
246.470  Government contract quality assurance actions.
246.470-1  Planning.
246.470-2  Evidence of conformance.
246.470-3  Assessment of additional costs.
246.470-4  Maintenance of Government records.
246.470-5  Quality evaluation data.
246.471  Authorizing shipment of supplies.
246.472  Inspection stamping.

        Subpart 246.6--Material Inspection and Receiving Reports

246.670  General.
246.671  Procedures.

                        Subpart 246.7--Warranties

246.701  Definitions.
246.702  General.
246.703  Criteria for use of warranties.
246.704  Authority for use of warranties.
246.705  Limitations.
246.706  Warranty terms and conditions.
246.708  Warranties of data.
246.710  Contract clauses.
246.770  Warranties in weapon system acquisitions.
246.770-1  Definitions.
246.770-2  Policy.
246.770-3  Tailoring warranty terms and conditions.
246.770-4  Warranties on Government-furnished property.
246.770-5  Exemption for alternate source contractor(s).
246.770-6  Applicability to foreign military sales (FMS).
246.770-7  Cost-benefit analysis.
246.770-8  Waiver and notification procedures.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36460, July 31, 1991, unless otherwise noted.



                         Subpart 246.1--General



Sec. 246.101  Definitions.

    Metrology is the science of weights and measures used to determine 
conformance to technical requirements including the development of 
standards and systems for absolute and relative measurements.
    Quality means the composite of material attributes including 
performance features and characteristics of a product or service to 
satisfy a given need.
    Quality assurance is a planned and systematic pattern of all actions 
necessary to provide adequate confidence that adequate technical 
requirements are established; products and services conform to 
established technical requirements; and satisfactory performance is 
achieved.
    Quality audit is a systematic examination of the acts and decisions 
with respect to quality in order to independently verify or evaluate the 
operational requirements of the quality program or the specification or 
contract requirements of the product or service.
    Quality program is a program which is developed, planned, and 
managed to carry out cost-effectively all efforts to effect the quality 
of materials and services from concept exploration and definition 
through demonstration and

[[Page 372]]

validation, engineering and manufacturing development, production and 
deployment, and operations and support.

[56 FR 36460, July 31, 1991, as amended at 60 FR 33145, June 27, 1995]



Sec. 246.102  Policy.

    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.

[56 FR 36460, July 31, 1991, as amended at 60 FR 33145, June 27, 1995]



Sec. 246.103  Contracting office responsibilities.

    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--
    (1) Reliability;
    (2) Safety;
    (3) Interchangeability; and
    (4) Maintainability;
    (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--
    (1) All requirements;
    (2) All characteristics; or
    (3) All characteristics in the classification of defects;
    (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 in the requirement 
for Government inspection;

[[Page 373]]

    (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.



Sec. 246.104  Contract administration office responsibilities.

    (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.



              Subpart 246.2--Contract Quality Requirements

246.202  Types of contract quality requirements.



Sec. 246.202-4  Higher-level contract quality requirements.

    (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.

[60 FR 33145, June 27, 1995. Redesignated and amended at 60 FR 61599, 
Nov. 30, 1995]



Sec. 246.203  Criteria for use of contract quality requirements.

    (c) Criticality. Acquisitions of critical items, whether peculiar or 
common, shall have contract quality requirements.



                     Subpart 246.3--Contract Clauses



Sec. 246.370  Material inspection and receiving report.

    (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.



          Subpart 246.4--Government Contract Quality Assurance



Sec. 246.406  Foreign governments.

    (1) Quality assurance among North Atlantic Treaty Organization 
(NATO) countries--(i) NATO Standardization Agreement (STANAG) 4107, 
Mutual Acceptance of Government Quality Assurance. (A) STANAG 4107--
    (1) Contains procedures, terms, and conditions under which one NATO 
country will perform quality assurance for another NATO country, or for 
a NATO organization.
    (2) With certain reservations, has been ratified by the U.S. and 
other nations in NATO.
    (B) Departments and agencies--
    (1) May ask NATO countries to perform quality assurance;
    (2) Shall perform quality assurance when requested by a NATO 
country.
    (C) The U.S. Government reserves the right to require reimbursement 
for work it performs for other NATO countries and organizations.
    (ii) NATO Standardization Agreement (STANAG) 4108, Allied Quality 
Assurance Publications. (A) STANAG 4108 provides for the application of 
Allied Quality Assurance Publications (AQAPs).

[[Page 374]]

    (B) Its annexes list AQAPs and the criteria for applying those AQAPs 
which are required in contracts between NATO countries.
    (2) International military sales (non-NATO). Departments and 
agencies shall--
    (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) Reciprocal quality assurance agreements. A Memorandum of 
Understanding (MOU) with a foreign country may contain an annex that 
provides for the reciprocal performance of quality assurance services. 
MOUs should be checked to determine whether such an annex exists for the 
country where a defense contract will be performed. (See subpart 225.74 
for more information about MOUs.)



Sec. 246.407  Nonconforming supplies or services.

    (1) Contracting officers shall use the following MIL-STD-109 
definitions in determining conformance with contract requirements--
    (i) Critical nonconformance is a nonconformance that judgment and 
experience indicate--
    (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) Major nonconformance is a nonconformance, other than critical, 
that is likely to result in failure, or to materially reduce the 
usability of the supplies or services for their intended purpose.
    (iii) Minor nonconformance is a nonconformance that is not likely to 
materially reduce the usability of the supplies or services for their 
intended purpose, or is a departure from established standards having 
little bearing on the effective use or operation of the supplies or 
services.
    (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.
246.408  Single-agency assignments of Government contract quality 
assurance.



Sec. 246.408-70  Subsistence.

    (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.



Sec. 246.408-71  Aircraft.

    (a) The Federal Aviation Administration (FAA) has certain 
responsibilities and prerogatives in connection with some commercial 
aircraft and of aircraft equipment and accessories (Pub. L. 85-726 (72 
Stat 776, 49 U.S.C. 1423)).

[[Page 375]]

This includes the issuance of various certificates applicable to design, 
manufacture, and airworthiness.
    (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.



Sec. 246.408-72  Construction projects.

    (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.
246.470  Government contract quality assurance actions.



Sec. 246.470-1  Planning.

    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.



Sec. 246.470-2  Evidence of conformance.

    Use objective evidence of quality to determine conformance to 
contract quality requirements.



Sec. 246.470-3  Assessment of additional costs.

    (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.



Sec. 246.470-4  Maintenance of Government records.

    The contract administration office shall maintain suitable records 
of the quality assurance performance of contractors.



Sec. 246.470-5  Quality evaluation data.

    The contract administration office shall establish a system that 
provides, as a minimum, for the collection, evaluation, and use of--

[[Page 376]]

    (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.



Sec. 246.471  Authorizing shipment of supplies.

    (a) General. (1) Ordinarily, a representative of the contract 
administration office signs or stamps the shipping papers that accompany 
Government source-inspected supplies to release them for shipment. This 
is done for both prime and subcontracts.
    (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) Alternative Procedures--Contract Release for Shipment. (1) The 
contract administration office may authorize, in writing, the contractor 
to release supplies for shipment when--
    (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.



Sec. 246.472  Inspection stamping.

    (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) Partial (Circle) Inspection Approval Stamp. (i) This circular 
stamp is used to identify material inspected for conformance to only a 
portion of the contract quality requirements.
    (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) Complete (Square) Inspection Approval Stamp. (i) This square 
stamp is used to identify material completely inspected for all contract 
quality requirements at source.
    (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

[[Page 377]]

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.



        Subpart 246.6--Material Inspection and Receiving Reports



Sec. 246.670  General.

    (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.



Sec. 246.671  Procedures.

    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.



                        Subpart 246.7--Warranties



Sec. 246.701  Definitions.

    Acceptance, as defined in FAR 46.701 and as used in this subpart and 
in the warranty clauses at FAR 52.246-17, Warranty of Supplies of a 
Noncomplex Nature; FAR 52.246-18, Warranty of Supplies of a Complex 
Nature; FAR 52.246-19, Warranty of Systems and Equipment Under 
Performance Specifications or Design Criteria; and FAR 52.246-20, 
Warranty of Services, includes the execution of an official document 
(e.g., DD Form 250, Material Inspection and Receiving Report) by an 
authorized representative of the Government.
    Defect, as used in this subpart, means any condition or 
characteristic in any supply or service furnished by the contractor 
under the contract that is not in compliance with the requirements of 
the contract.



Sec. 246.702  General.

    (c) Departments and agencies shall establish procedures to track and 
accumulate data on warranty costs.



Sec. 246.703  Criteria for use of warranties.

    The use of warranties in the acquisition of weapon systems is 
mandatory (10 U.S.C. 2403) unless a waiver is authorized (see 246.770-
8).
    (b) Cost. Contracting officers may include the cost of a warranty as 
part of an item's price or as a separate contract line item.



Sec. 246.704  Authority for use of warranties.

    The chief of the contracting office must approve use of a warranty, 
except in acquisitions for--
    (1) Weapon systems (see 246.770);
    (2) Commercial items (see FAR 46.709);
    (3) Technical data, unless the warranty provides for extended 
liability (see 246.708);
    (4) Supplies and services in fixed-price type contracts containing 
quality assurance provisions that reference higher-level contract 
quality requirements (see 246.202-4); or
    (5) Supplies and services in construction contracts when using the 
warranties that are contained in Federal,

[[Page 378]]

military, or construction guide specifications.

[56 FR 36460, July 31, 1991, as amended at 60 FR 33145, June 27, 1995; 
60 FR 61599, Nov. 30, 1995]



Sec. 246.705  Limitations.

    (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.



Sec. 246.706  Warranty terms and conditions.

    (b)(5) Markings. Use MIL Standard 129, Marking for Shipments and 
Storage, and MIL Standard 130, Identification Marking of U.S. Military 
Property, when marking warranty items.



Sec. 246.708  Warranties of data.

    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.



Sec. 246.710  Contract clauses.

    (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.



Sec. 246.770  Warranties in weapon system acquisitions.

    This section sets forth policies and procedures for use of 
warranties in contracts for weapon system production.



Sec. 246.770-1  Definitions.

    As used in this section--
    (a) At no additional cost to the Government means--
    (1) At no increase in price for firm fixed price contracts;
    (2) At no increase in target or ceiling price for fixed price 
incentive contracts (see also FAR 46.707); or
    (3) At no increase in estimated cost or fee for cost-reimbursement 
contracts.
    (b) Design and manufacturing requirements means structural and 
engineering plans and manufacturing particulars, including precise 
measurements, tolerances, materials and finished product tests for the 
weapon system being produced.
    (c) Essential performance requirements means the operating 
capabilities and maintenance and reliability characteristics of a weapon 
system that the agency head determines to be necessary to fulfill the 
military requirement.
    (d) Initial production quantity means the number of units of a 
weapon system contracted for in the first program year of full-scale 
production.
    (e) Mature full-scale production means follow-on production of a 
weapon system after manufacture of the lesser of the initial production 
quantity or one-tenth of the eventual total production quantity.
    (f) Weapon system means a system or major subsystem used directly by 
the Armed Forces to carry out combat missions.

[[Page 379]]

    (1) The term includes, but is not limited to, the following (if 
intended for use in carrying out combat missions)--
    (i) Tracked and wheeled combat vehicles;
    (ii) Self-propelled, towed and fixed guns, howitzers and mortars;
    (iii) Helicopters;
    (iv) Naval vessels;
    (v) Bomber, fighter, reconnaissance and electronic warfare aircraft;
    (vi) Strategic and tactical missiles including launching systems;
    (vii) Guided munitions;
    (viii) Military surveillance, command, control, and communication 
systems;
    (ix) Military cargo vehicles and aircraft;
    (x) Mines;
    (xi) Torpedoes;
    (xii) Fire control systems;
    (xiii) Propulsion systems;
    (xiv) Electronic warfare systems; and
    (xv) Safety and survival systems.
    (2) The term does not include--
    (i) Commercial items;
    (ii) Spares, repairs, or replenishment parts; or
    (iii) Related support equipment (e.g., ground-handling equipment, 
training devices and accessories, ammunition), unless an effective 
warranty would require inclusion of such items.



Sec. 246.770-2  Policy.

    (a) Under 10 U.S.C. 2403, departments and agencies may not contract 
for the production of a weapon system with a unit weapon system cost of 
more than $100,000 or an estimated total procurement cost in excess of 
$10 million unless--
    (1) Each contractor for the weapon system provides the Government 
written warranties that--
    (i) The weapon system conforms to the design and manufacturing 
requirements in the contract (or any modifications to that contract),
    (ii) The weapon system is free from all defects in materials and 
workmanship at the time of acceptance or delivery as specified in the 
contract; and
    (iii) The weapon system, if manufactured in mature full-scale 
production, conforms to the essential performance requirements of the 
contract (or any modification to that contract); and
    (2) The contract terms provide that, in the event the weapon system 
fails to meet the terms of the above warranties, the contracting officer 
may--
    (i) Require the contractor to promptly take necessary corrective 
action (e.g., repair, replace, and/or redesign) at no additional cost to 
the Government;
    (ii) Require the contractor to pay costs reasonably incurred by the 
Government in taking necessary corrective action, or
    (iii) Equitably reduce the contract price; or
    (3) A waiver is granted under 246.770-8.
    (b) Contracting officers and program managers shall consider the 
following when developing and negotiating weapon system warranty 
provisions:
    (1) Warranties may not be appropriate in all situations, and a 
waiver should be sought if a warranty would not be cost-effective or 
would otherwise be inconsistent with the national defense. In drafting 
warranty provisions, the drafters must ensure they understand the 
planned operational, maintenance, and supply concepts of the weapon 
system to be fielded, and must structure a warranty that matches those 
concepts. A warranty plan should be prepared in consonance with 
development of the warranty provision early in the weapon system's life 
cycle. The plan should contain program warranty strategy, terms of the 
warranty, administration and enforcement requirements, and should be 
coordinated with the user and support activities.
    (2) A cost/benefit analysis must be accomplished in support of each 
warranty (see 246.770-7). The cost/benefit analysis compares all costs 
associated with the warranty to the expected benefits. An estimate shall 
be made of the likelihood of defects and the estimated cost of 
correcting such defects. Also, if substantive changes are required to 
the planned operational, maintenance, or supply concepts, any increased 
costs should be weighed against the expected benefits in deciding 
whether a warranty is cost-effective.
    (3) The Warranty Guidebook prepared by the Defense Systems 
Management College, Fort Belvoir, VA 22060-5426, is

[[Page 380]]

a valuable reference that can assist in the development, negotiation, 
and administration of an effective weapon system warranty.
    (c) Contracting officers may require warranties that provide greater 
coverage and remedies than specified in paragraph (a) of this 
subsection.
    (d) When the contract includes an essential performance requirement 
warranty, the warranty must identify redesign as a remedy available to 
the Government.
    (1) The period during which redesign must be available as a remedy 
shall not end before operational use, operational testing, or a 
combination of operational use and operational testing has demonstrated 
that the warranted item's design has satisfied the essential performance 
requirements.
    (2) When essential performance requirements are warranted in 
contracts with alternate source contractors, do not include redesign as 
a remedy available to the Government under those contracts until the 
alternate source has manufactured the first ten percent of the eventual 
total production quantity anticipated to be acquired from that 
contractor (see 246.770-5).

[56 FR 36460, July 31, 1991, as amended at 59 FR 7749, Feb. 29, 1996]



Sec. 246.770-3  Tailoring warranty terms and conditions.

    (a) Since the objectives and circumstances vary considerably among 
weapon system acquisition programs, contracting officers must tailor the 
required warranties on a case-by-case basis. The purpose of tailoring is 
to get a cost-effective warranty in light of the technical risk, or 
other program uncertainties, while ensuring that the Government still 
acquires the basic warranties described in 246.770-2. Tailoring shall 
not be used as a substitute for acquiring a warranty waiver.
    (1) Tailoring may affect remedies, exclusions, limitations, and 
duration provided such are consistent with the specific requirements of 
this section (see also FAR 46.706).
    (2) Clearly relate the duration of any warranty to the contract 
requirements and allow sufficient time to demonstrate achievement of the 
requirements after acceptance.
    (3) Tailor the terms of the warranty, if appropriate, to exclude 
certain defects for specified supplies (exclusions) or to limit the 
contractor's liability under the terms of the warranty (limitations).
    (4) Structure broader and more comprehensive warranties when 
advantageous or narrow the scope when appropriate. For example, it may 
be inappropriate to require warranty of all essential performance 
requirements for a contractor that did not design the system.
    (b) DoD policy is to exclude any terms that cover contractor 
liability for loss, damage, or injury to third parties from warranty 
clauses.
    (c) Ensure acquisition of subsystems and components in a manner 
which does not affect the validity of the weapon system warranty.



Sec. 246.770-4  Warranties on Government-furnished property.

    Contracting officers shall not require contractors to provide the 
warranties specified in 246.770-2 on any property furnished the 
contractor by the Government, except for--
    (a) Defects in installation;
    (b) Installation or modification in such a manner that invalidates a 
warranty provided by the manufacturer of the property; or
    (c) Modifications made to the property by the contractor.



Sec. 246.770-5  Exemption for alternate source contractor(s).

    Agency heads may exempt alternate source contractor(s) from the 
essential performance warranty requirements of 246.770-2(a)(1)(iii) 
until that contractor manufactures the first ten percent of its 
anticipated total production quantity.



Sec. 246.770-6  Applicability to foreign military sales (FMS).

    (a) The warranty requirements of 246.770-2 are not mandatory for FMS 
production contracts. DoD policy is to obtain the same warranties on 
conformance to design and manufacturing requirements and against defects 
in material and workmanship as it gets for U.S. supplies.

[[Page 381]]

    (b) DoD normally will not obtain essential performance warranties 
for FMS purchasers. However, where contracting officer cannot separately 
identify the cost for the warranty of essential performance 
requirements, the foreign purchaser shall be given the same warranty 
that the United States gets.
    (c) If an FMS purchaser expressly requests a performance warranty in 
the letter of acceptance, the Government will exert its best efforts to 
obtain the same warranty obtained for U.S. equipment. Or, if 
specifically requested by the FMS purchaser, obtain a unique warranty.
    (d) The costs for warranties for FMS purchasers may be different 
from the costs for such warranties for the Government due to factors 
such as overseas transportation and any tailoring to reflect the unique 
aspects of the FMS purchaser.
    (e) Ensure that FMS purchasers bear all of the acquisition and 
administrative costs of any warranties.



Sec. 246.770-7  Cost-benefit analysis.

    (a) In assessing the cost effectiveness of a proposed warranty, 
perform an analysis which considers both the quantitative and 
qualitative costs and benefits of the warranty. Consider--
    (1) Costs of warranty acquisition, administration, enforcement, and 
user costs, and any costs resulting from limitations imposed by the 
warranty provisions;
    (2) Costs incurred during development specifically for the purpose 
of reducing production warranty risks;
    (3) Logistical and operational benefits as a result of the warranty 
as well as the impact of the additional contractor motivation provided 
by the warranty.
    (b) Where possible, make a comparison with the costs of obtaining 
and enforcing similar warranties on similar systems.
    (c) Document the analysis in the contract file. If the warranty is 
not cost effective, initiate a waiver request under 246.770-8.



Sec. 246.770-8  Waiver and notification procedures.

    (a) The Secretary of Defense has delegated waiver authority within 
the limits specified in 10 U.S.C. 2403. The waiving authority for the 
defense agencies is the Under Secretary of Defense (Acquisition and 
Technology). Submit defense agency waiver requests to the Director, 
Defense Procurement, for processing. The waiving authority for the 
military departments is the Secretary of the department with authority 
to redelegate no lower than an Assistant Secretary. The waiving 
authority may waive one or more of the weapon system warranties required 
by 246.770-2 if--
    (1) The waiver is in the interests of national defense; or
    (2) The warranty would not be cost effective.
    (b) Waiving authorities must make the following notifications or 
reports to the Senate and House Committees on Armed Services and 
Appropriations for all waivers--
    (1) Major weapon systems. For a weapon system that is a major 
Defense acquisition program for the purpose of 10 U.S.C. 2432, the 
waiving official must notify the Committees in writing of an intention 
to waive one or more of the required warranties. Include an explanation 
of the reasons for the waiver in the notice. Ordinarily provide the 
notice 30 days before granting a waiver.
    (2) Weapon systems not in mature full-scale production. Although a 
waiver is not required, if a production contract for a major weapon 
system not yet in mature full-scale production will not include a 
warranty on essential performance requirements, the waiving officials 
must comply with the notice requirements for major weapon systems.
    (c) Departments and agencies shall issue procedures for processing 
waivers and notifications to Congress.
    (1) Requests for waiver shall include--
    (i) A brief description of the weapon system and its stage of 
production, e.g., the number of units delivered and anticipated to be 
delivered during the life of the program;
    (ii) Identification of the specific warranty or warranties required 
by 246.770-2(a)(1) for which the waiver is requested;
    (iii) The duration of the waiver if it is to go beyond the contract;

[[Page 382]]

    (iv) The rationale for the waiver (if the waiver request is based on 
cost effectiveness, include the results of the cost-benefit analysis);
    (v) A description of the warranties or other techniques used to 
ensure acceptable field performance of the weapon system, e.g., 
warranties, commercial or other guarantees obtained on individual 
components; and
    (vi) Exercise date of the warranty option, if applicable.
    (2) Notifications shall include--
    (i) A brief description of the weapon system and its stage of 
production; and
    (ii) Rationale for not obtaining a warranty.
    (3) Keep a written record of each waiver granted and notification 
and report made, together with supporting documentation such as a cost-
benefit analysis, for use in answering inquiries.

[56 FR 36460, July 31, 1991, as amended at 61 FR 7750, Feb. 29, 1996]



PART 247--TRANSPORTATION--Table of Contents




Sec.

                         Subpart 247.1--General

247.103  Transportation Documentation and Audit Regulation (TDA).
247.104  Government rate tenders under section 10721 of the Interstate 
          Commerce Act.
247.104-3  Cost-reimbursement contracts.
247.104-5  Citation of Government rate tenders.
247.105  Transportation assistance.

   Subpart 247.2--Contracts for Transportation or for Transportation-
                            Related Services

247.270  Stevedoring contracts.
247.270-1  Scope of section.
247.270-2  Definitions.
247.270-3  Type of contract.
247.270-4  Technical provisions.
247.270-5  Evaluation of bids and proposals.
247.270-6  Award of contract.
247.270-7  Contract clauses.
247.271  Contracts for the preparation of personal property for shipment 
          or storage.
247.271-1  Scope of section.
247.271-2  Policy.
247.271-3  Procedures.
247.271-4  Solicitation provisions, schedule formats, and contract 
          clauses.

            Subpart 247.3--Transportation in Supply Contracts

247.305  Solicitation provisions, contract clauses, and transportation 
          factors.
247.305-10  Packing, marking, and consignment instructions.
247.305-70  Returnable containers other than cylinders.
247.370  Use of Standard Form 30 for consignment instructions.
247.371  DD Form 1384, Transportation Control and Movement Document.
247.372  DD Form 1653, Transportation Data for Solicitations.
247.373  DD Form 1654, Evaluation of Transportation Cost Factors.

        Subpart 247.5--Ocean Transportation by U.S.-Flag Vessels

247.570  Scope.
247.571  Policy.
247.572  Procedures.
247.572-1  Ocean transportation incidental to a contract for supplies, 
          services, or construction.
247.572-2  Direct purchase of ocean transportation services.
247.573  Solicitation provision and contract clauses.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36466, July 31, 1991, unless otherwise noted.



                         Subpart 247.1--General



Sec. 247.103  Transportation Documentation and Audit Regulation (TDA).

    (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.
247.104  Government rate tenders under section 10721 of the Interstate 
Commerce Act.



Sec. 247.104-3  Cost-reimbursement contracts.

    (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

[[Page 383]]

    (B) Section 10721 rates do apply to the non-FMS items.



Sec. 247.104-5  Citation of Government rate tenders.

    (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.



Sec. 247.105  Transportation assistance.

    (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:

Army: Deputy Chief of Staff for Logistics, Department of the Army, Attn: 
DALO-TSP, Washington, DC 20310-0570
Navy: Naval Supply Systems Command, Code 051, Washington, DC 20390-5000
Air Force
    Applicable overseas Air Force Command, HQ PACAF/LGT, 25 East Street, 
suite I-326, Hickam AFB, HI 96853-5427.
    HQ USAFE/LGT, Unit 3050, Box 105, APO AE 09049-0105.
    HQ AFSPACECOM/LGT, 150 Vandenberg Street, suite 1105, Peterson AFB, 
CO 80914-4435.
Marine Corps: Director, Transportation Division, HQ, U.S. Marine Corps, 
COS, Washington, DC 20380

    (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.

[56 FR 36466, July 31, 1991, as amended at 59 FR 27674, May 27, 1994]



   Subpart 247.2--Contracts for Transportation or for Transportation-
                            Related Services

247.270  Stevedoring contracts.



Sec. 247.270-1  Scope of section.

    This section contains procedures peculiar to stevedoring. Other 
portions of the FAR and DFARS dealing with service contracting also 
apply to stevedoring contracts.



Sec. 247.270-2  Definitions.

    Commodity rate is--
    (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.
    Gang cost is--
    (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.
    Stevedoring is the--

[[Page 384]]

    (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.



Sec. 247.270-3  Type of contract.

    Normally, use an indefinite-quantity type contract.



Sec. 247.270-4  Technical provisions.

    (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.



Sec. Sec. 247.270-5  Evaluation of bids and proposals.

    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.

[59 FR 50852, Oct. 6, 1994]



Sec. Sec. 247.270-6  Award of contract.

    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.

[59 FR 50852, Oct. 6, 1994]



Sec. 247.270-7  Contract clauses.

    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.
247.271  Contracts for the preparation of personal property for shipment 
or storage.



Sec. 247.271-1  Scope of section.

    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.



Sec. 247.271-2  Policy.

    (a) Annual contracts. Normally--
    (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) Areas of performance. Define clearly in the solicitation each 
area of performance.
    (1) Establish one or more areas; however, hold the number to a 
minimum consistent with local conditions.

[[Page 385]]

    (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) Maximum requirements-minimum capability. The contracting officer 
shall--
    (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.



Sec. 247.271-3  Procedures.

    (a) CONUS military activities assigned multi-service personal 
property areas of responsibility. (1) When two or more military 
installations or activities have personal property responsibilities in a 
given area, one activity shall contract for the estimated requirements 
of all activities in the area. The installation commanders concerned 
shall designate the activity by mutual agreement.
    (2) The Commander, MTMC, shall designate the contracting activity 
when local commanders are unable to reach agreement.
    (b) Additional services and excess requirements. (1) Excess 
requirements are those services which exceed contractor capabilities 
available under contracts. Use small purchase procedures to satisfy 
excess requirements.
    (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) Contract distribution. In addition to the distribution 
requirements of FAR subpart 4.2, furnish one copy of each contract as 
follows--
    (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.

[[Page 386]]



Sec. 247.271-4  Solicitation provisions, schedule formats, and contract clauses.

    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 deviation through MTMC area commands/field offices to HQ, 
MTMC.
    (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.

[[Page 387]]



            Subpart 247.3--Transportation in Supply Contracts

247.305  Solicitation provisions, contract clauses, and transportation 
factors.



Sec. 247.305-10  Packing, marking, and consignment instructions.

    (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--
    (1) DoD 4000.25-6-M, Department of Defense Activity Address 
Directory (DoDAAD);
    (2) DoD 4000.25-8-M, Military Assistance Program Address Directory 
(MAPAD);
    (3) Commercial and Government Entity (CAGE) Handbook H4/H8; or
    (4) Transportation Control and Movement Document.
    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 in FAR subpart 42.3, to any office listed in DoD 4105.4, 
DoD Directory of Contract Administration Services Components, then 
include in instructions the--
    (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.



Sec. 247.305-70  Returnable containers other than cylinders.

    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.

[60 FR 29501, June 5, 1995]



Sec. 247.370  Use of Standard Form 30 for consignment instructions.

    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;

[[Page 388]]

    (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.



Sec. 247.371  DD Form 1384, Transportation Control and Movement Document.

    Reporting procedures and instructions for this form will be in 
compliance with DoD Regulation 4500.32-R, MILSTAMP.



Sec. 247.372  DD Form 1653, Transportation Data for Solicitations.

    (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.



Sec. 247.373  DD Form 1654, Evaluation of Transportation Cost Factors.

    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.



        Subpart 247.5--Ocean Transportation by U.S.-Flag Vessels



Sec. 247.570  Scope.

    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 U.S.C. 1241(b). The 1954 Act is applicable to the DoD, but 
DFARS coverage is not required because compliance with the 1904 Act 
historically has resulted in the DoD exceeding the 1954 Act's 
requirements.
    (c) Is an approved class deviation from FAR subpart 47.5 in its 
entirety (but see 247.571(c)).



Sec. 247.571  Policy.

    (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.

[56 FR 36466, July 31, 1991, as amended at 59 FR 10580, Mar. 7, 1994; 60 
FR 29501, June 5, 1995]

[[Page 389]]

247.572  Procedures.



Sec. 247.572-1  Ocean transportation incidental to a contract for supplies, services, or construction.

    (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--
    (1) An analysis of whether the cost is excessive, taking into 
account factors such as 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;
    (2) A comparison of U.S.-flag rates charged on comparable routes;
    (3) Efficiency of operation regardless of rate differential (i.e., 
suitability of the vessel for the required transportation in terms of 
cargo requirements/vessel capacity; the commercial reasonableness of 
vessel positioning required, etc.); and
    (4) Any other relevant economic and financial considerations.

[[Page 390]]

    (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.

[56 FR 36466, July 31, 1991, as amended at 60 FR 61599, Nov. 30, 1995]



Sec. 247.572-2  Direct purchase of ocean transportation services.

    (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 
available, and obtains approval of the Commander, MSC; or
    (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;

[[Page 391]]

    (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.

[56 FR 36466, July 31, 1991, as amended at 60 FR 61599, Nov. 30, 1995]



Sec. 247.573  Solicitation provision and contract clauses.

    (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).

[56 FR 36466, July 31, 1991, as amended at 59 FR 10580, Mar. 7, 1994; 60 
FR 29501, June 5, 1995]



PART 248--VALUE ENGINEERING--Table of Contents




    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.



                     Subpart 248.2--Contract Clauses



Sec. 248.270  Supplemental clause.

     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.

[56 FR 36471, July 31, 1991, as amended at 59 FR 27674, May 27, 1994]



PART 249--TERMINATION OF CONTRACTS--Table of Contents




Sec.

                    Subpart 249.1--General Principles

249.102  Notice of termination.
249.105  Duties of termination contracting officer after issuance of 
          notice of termination.
249.105-1  Termination status report.
249.105-2  Release of excess funds.
249.108  Settlement of subcontract settlement proposals.
249.108-4  Authorization for subcontract settlements without approval or 
          ratification.
249.109  Settlement agreements.
249.109-7  Settlement by determination.
249.110  Negotiation memorandum.

               Subpart 249.5--Contract Termination Clauses

249.501  General.
249.501-70  Special termination costs.

            Subpart 249.70--Special Termination Requirements

249.7000  Terminated contracts with Canadian Commercial Corporation.
249.7001  Congressional notification on significant contract 
          terminations.
249.7002  Notification and reporting of substantial impact on 
          employment.
249.7003  Notification of proposed program termination or reduction.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36471, July 31, 1991, unless otherwise noted.

[[Page 392]]



                   Subpart 249.1--General Principles.



Sec. 249.102  Notice of termination.

    Use Standard Form 30, Amendment of Solicitation/Modification of 
Contract, to confirm all notices and amendments of notices of 
termination.
    (a)(5) Include a statement that, if a termination for convenience 
will have a substantial impact on employment, as defined in the clause 
at 252.249-7001, Notification of Substantial Impact on Employment, the 
contractor must provide the required notice to the contracting officer 
within 30 calendar days.

[56 FR 36471, July 31, 1991, as amended at 56 FR 67220, Dec. 30, 1991]
249.105  Duties of termination contracting officer after issuance of 
notice of termination.



Sec. 249.105-1  Termination status report.

    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.

[56 FR 36471, July 31, 1991, as amended at 59 FR 27674, May 27, 1994]



Sec. 249.105-2  Release of excess funds.

    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.
249.108  Settlement of subcontract settlement proposals.



Sec. 249.108-4  Authorization for subcontract settlements without approval or ratification.

    (a)(1)(ii) Industrial plant equipment included in the inventory--
    (1) Is subject to the screening requirements in FAR 45.608.
    (2) Shall not be disposed of until screening is completed when the 
cost of that equipment is used in determining the amount of the claim.
249.109  Settlement agreements.



Sec. 249.109-7  Settlement by determination.

    (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.



Sec. 249.110  Negotiation memorandum.

    (a)(i) Fixed price contracts. Use the format in Table 49-1, 
Settlement Memorandum-Fixed Price Contracts, for the termination 
contracting officer's settlement memorandum for fixed price contracts 
terminated for the convenience of the Government. Encourage contractors 
and subcontractors to use this format, appropriately modified, for 
subcontract settlements submitted for review and approval.
    (ii) Cost-reimbursement contracts. Use Part I of the format in Table 
49-1 and Part II of the format in Table 49-2, Settlement Memorandum for 
Cost-Reimbursement Contracts, for the termination contracting officer's 
settlement memorandum for cost-reimbursement contracts:

[[Page 393]]



         Table 49-1--Settlement Memorandum-Fixed Price Contracts        
                       Part I--General Information                      
                                                                        
1. Identification. (Identify memorandum as to its purpose and content.) 
  a. Name and address of the contractor. Comment on any pertinent       
   affiliation between prime and subcontractors relative to the overall 
   settlement.                                                          
  b. Names and titles of both contractor and Government personnel who   
   participated in the negotiation.                                     
2. Description of terminated contract.                                  
  a. Date of contract and contract number.                              
  b. Type of contract (e.g., fixed price, fixed price incentive).       
  c. General description of contract items.                             
  d. Total contract price.                                              
  e. Furnish reference to the contract termination clauses (cite FAR/   
   DFARS designation or other special provisions).                      
 3. Termination notice.                                                 
  a. Reference termination notice and state effective date of           
   termination.                                                         
  b. Scope and nature of termination (complete or partial), items       
   terminated, unit price and total price of items terminated.          
  c. State whether termination notice was amended, and explain any      
   amendment.                                                           
  d. State whether contractor stopped work on effective termination     
   date. If not, furnish details.                                       
  e. State whether the contractor promptly terminated subcontracts.     
  f. Statement as to the diversion of common items and return of goods  
   to suppliers, if any.                                                
  g. Furnish information as to contract performance and timeliness of   
   deliveries by the contractor.                                        
4. Contractor's settlement proposal.                                    
  a. Date and amount. Indicate date and location where claim was filed. 
   State gross amount of claim. (If interim settlement proposals were   
   filed, furnished information for each claim.)                        
  b. Basis of claim. State whether claim was filed on inventory, total  
   cost or other basis. Explain rationale for approval when claim is    
   filed on other than inventory basis.                                 
  c. Examination of proposal. State type of reviews made and by whom    
   (audit, engineering, legal, or other).                               
                                                                        
    Part II--Summary of Contractor's Claim and Negotiated Settlement    
                                                                        
Prepare a summary substantially as follows:                             


----------------------------------------------------------------------------------------------------------------
                                                                                                        TCO     
          Item claimed              Contractor's        Dollars          Costs        Unresolved     negotiated 
                                      proposal         accepted       questioned        items          amount   
----------------------------------------------------------------------------------------------------------------
1. Contractor's costs as set                                                                                    
 forth on settlement proposal.                                                                                  
 Metals, raw materials, etc..                                                                                   
      Total.....................                                                                                
2. Profit.......................                                                                                
3. Settlement expenses..........                                                                                
4. Total........................                                                                                
5. Settlement with subs.........                                                                                
6. Acceptable finished product..                                                                                
7. Gross Total..................                                                                                
8. Disposal and other credits...                                                                                
9. Net settlement...............                                                                                
10. Partial, progress & advance                                                                                 
 payments.                                                                                                      
11. Net payments requested......                                                                                
----------------------------------------------------------------------------------------------------------------


                   Part III--Discussion of Settlement                   
1. Contractor's cost.                                                   
  a. If the settlement was negotiated on the basis of individual items, 
   specify the factors and consideration for each item.                 
  b. In the case of a lump sum settlement, comment on the general basis 
   for and major for and major factors concerning each element of cost  
   and profit included.                                                 
  c. Comment on any important adjustments made to costs claimed or any  
   significant amounts in relation to the total claim.                  
  d. If a partial termination is involved, state whether the contractor 
   has requested an equitable adjustment in the price of the continued  
   portion of the contract.                                             
  e. Comment on any unadjusted contractual changes which are included in
   the settlement.                                                      
  f. Comment on whether or not a loss would have been incurred and      
   explain adjustment for loss, if any.                                 
  g. Furnish other information believed helpful to any reviewing        
   authority in understanding the recommended settlement.               

[[Page 394]]

                                                                        
2. Profit. Explain the basis and factors considered in arriving at a    
 fair profit.                                                           
3. Settlement expenses. Comment on and summarize those expenses not     
 included in the audit review.                                          
4. Subcontractor's settlements. Include the number of no costs          
 settlements, settlements concluded by the contractor under delegation  
 of authority and those approved by the terminations contracting        
 officer, as well as the net amount of each.                            
5. Partial payments. Furnish the total amount of partial payments, if   
 any.                                                                   
6. Progress or advance payments. Furnish the total of unliquidated      
 amounts, if any.                                                       
7. Claims of the Government against the contractor included in          
 settlement agreement reservations. List all outstanding claims, if any,
 which the Government has against the contractor in connection with the 
 terminated contract or terminated portion of the contract.             
8. Assignments. List any assignments, giving name and address of        
 assignee.                                                              
9. Disposal credits. Furnish information as to applicable disposal      
 credits and give dollar amounts of all disposal credits.               
10. Plant clearance. State whether plant clearance action has been      
 completed and all inventory sold, retained, or otherwise properly      
 disposed of in accordance with applicable plant clearance regulations. 
 Comment on any unusual matters pertaining to plant clearances. Attach  
 consolidated closing plant clearance report.                           
11. Government property. State whether all Government property has been 
 accounted for.                                                         
12. Special tooling. If involved, furnish comment on disposition.       
13. Summary of settlement. Summarize the settlement in tabular form     
 substantially as follows:                                              
                                                                        
           Tabular Summary for Complete or Partial Termination          
                                                                        



----------------------------------------------------------------------------------------------------------------
                                                             Amount claimed                Amount allowed       
----------------------------------------------------------------------------------------------------------------
Prime contractors charges (before disposal credits).                                                            
Plus: Subcontractor charges (after disposal credits)                                                            
Gross settlement:                                                                                               
    Less: disposal credits--Prime...................                                                            
Net settlement--Less:                                                                                           
     Prior payment credits (this settlement)........                                                            
    Previous partial settlements....................                                                            
    Other credits or deductions.....................                                                            
Net payment:                                                                                                    
    Total contract price (complete termination).....                                                            
    Contract Price of Items Terminated (for partial                                                             
     termination)--Less:                                                                                        
      Total payments to date........................                                                            
      Net payment from this settlement..............                                                            
      Fund reserved for reservations................                                                            
Reduction in contract price.........................                                                            
----------------------------------------------------------------------------------------------------------------


14. Exclusions. Describe any proposed reservation of rights to the      
 Government or to the contractor.                                       
15. Include statement that the settlement is fair and reasonable for the
 Government and the contractor. The contracting officer shall sign and  
 date the memorandum.                                                   
                                                                        
(End of memorandum)                                                     
------------------------------------------------------------------------


   Table 49-2--Settlement Memorandum for Cost-Reimbursement Contracts   
                                                                        
                                                                        
 Part II--Summary                                                       
  of Settlement                                                         
                                                                        
1. Summary.                                                             
 Summarize the                                                          
 proposed                                                               
 settlement in                                                          
 tabular form                                                           
 substantially as                                                       
 shown in Tables                                                        
 49-3 and 49-4.                                                         
 Partial                                                                
 settlements may                                                        
 be summarized on                                                       
 Table 49-4.                                                            
2. Comments.                                                            
 Explain tabular                                                        
 summaries.                                                             
  a. Summary of                                                         
   final                                                                
   settlement                                                           
   (see Table 49-                                                       
   3).                                                                  
    (1) Explain                                                         
     why the                                                            
     auditor's                                                          
     final report                                                       
     was not                                                            
     available                                                          
     for                                                                
     consideratio                                                       
     n, if                                                              
     applicable.                                                        
    (2) Explain                                                         
     how the                                                            
     fixed fee                                                          
     was                                                                
     adjusted.                                                          
     Identify                                                           
     basis used                                                         
     such as                                                            
     percentage                                                         
     of                                                                 
     completion.                                                        
     Include a                                                          
     description                                                        
     of factors                                                         
     considered                                                         
     and how they                                                       
     were                                                               
     considered.                                                        
     Include any                                                        
     tabular                                                            
     summaries                                                          
     and                                                                
     breakdowns                                                         
     deemed                                                             
     helpful to                                                         
     an                                                                 
     understandin                                                       
     g of the                                                           
     process.                                                           
     Factors                                                            
     which may be                                                       
     given                                                              
     consideratio                                                       
     n are                                                              
     outlined in                                                        
     FAR 49.305.                                                        
    (3) Briefly                                                         
     identify                                                           
     matters                                                            
     included in                                                        
     liability                                                          
     for property                                                       
     and other                                                          
     charges                                                            
     against the                                                        
     contractor                                                         
     arising from                                                       
     the                                                                
     contract.                                                          
    (4) Identify                                                        
     reservations                                                       
     included in                                                        
     the                                                                
     settlement                                                         
     that are                                                           
     other than                                                         
     standard                                                           
     reservations                                                       
     required by                                                        
     regulations                                                        
     and which                                                          
     are                                                                
     concerned                                                          
     with pending                                                       
     claims and                                                         
     refunds.                                                           
    (5) Explain                                                         
     substantial                                                        
     or otherwise                                                       
     important                                                          
     adjustments                                                        
     made in cost                                                       
     figures                                                            
     submitted by                                                       
     the                                                                
     contractor                                                         
     in arriving                                                        
     at the                                                             
     proposed                                                           
     settlement.                                                        
    (6) If                                                              
     unreimbursed                                                       
     costs were                                                         
     settled on a                                                       
     lump sum                                                           
     basis,                                                             
     explain the                                                        
     general                                                            
     basis for                                                          
     and the                                                            
     major                                                              
     factors                                                            
     considered                                                         
     in arriving                                                        
     at this                                                            
     settlement.                                                        

[[Page 395]]

                                                                        
    (7) Comment                                                         
     on any                                                             
     unusual                                                            
     items of                                                           
     cost                                                               
     included in                                                        
     the claim                                                          
     and on any                                                         
     phase of                                                           
     cost                                                               
     allocation                                                         
     requiring                                                          
     particular                                                         
     attention                                                          
     and not                                                            
     covered                                                            
     above.                                                             
    (8) If                                                              
     auditor's                                                          
     recommendati                                                       
     ons for                                                            
     nonacceptanc                                                       
     e were not                                                         
     followed,                                                          
     explain                                                            
     briefly the                                                        
     main reasons                                                       
     why such                                                           
     recommendati                                                       
     ons were not                                                       
     followed.                                                          
    (9) On items                                                        
     recommended                                                        
     for further                                                        
     consideratio                                                       
     n by the                                                           
     auditor,                                                           
     explain, in                                                        
     general, the                                                       
     basis for                                                          
     the action                                                         
     taken.                                                             
    (10) If any                                                         
     cost                                                               
     previously                                                         
     disallowed                                                         
     by a                                                               
     contracting                                                        
     officer is                                                         
     included in                                                        
     the proposed                                                       
     settlement,                                                        
     identify and                                                       
     explain the                                                        
     reason for                                                         
     inclusion of                                                       
     such costs.                                                        
    (11) Show                                                           
     number and                                                         
     amounts of                                                         
     settlements                                                        
     with                                                               
     subcontracto                                                       
     rs.                                                                
    (12) Use the                                                        
     following                                                          
     summary                                                            
     where                                                              
     settlement                                                         
     includes                                                           
     costs and                                                          
     fixed fee in                                                       
     a complete                                                         
     termination:                                                       


Gross settlement..........................................................  .................          $________
    Less: Disposal credits................................................  .................           ________
Net settlement............................................................  .................           ________
    Less: Prior payments..................................................           ________                   
    Other credits or deductions...........................................           ________                   
      Total...............................................................  .................           ________
Net payment...............................................................  .................          $________
      Total contract estimated cost plus fixed fee........................                              ________
    Less: Net settlement..................................................           ________                   
    Estimated reserve for exclusions......................................           ________                   
Final contract price:                                                                                           
    (Consisting of $______ for reimbursement of costs and $________ for                                         
     adjusted fixed fee)..................................................           ________           ________
Reduction in contract price (credit)......................................                              ________
----------------------------------------------------------------------------------------------------------------


                                                                        
    (13) Plant clearance. Indicate dollar value of termination inventory
     and state whether plant clearance has been completed. Attach       
     consolidated plant clearance report (SF 1424, Inventory Disposal   
     Report).                                                           
    (14) Government property. State whether all Government property has 
     been accounted for.                                                
    (15) Include a statement that the settlement is fair and reasonable 
     to the Government and the contractor. The contracting officer shall
     sign and date the memorandum.                                      
                                                                        
(End of memorandum)                                                     


                    Table 49-3--Summary of Settlement                   
------------------------------------------------------------------------
                                                 Amount        Amount   
                                                 claimed       allowed  
------------------------------------------------------------------------
1. Previous reimbursed costs--                $             $           
 Prime and Subs.                                                        
2. Previous unreimbursed costs                ________      ________    
3. Total cost settlement......                $             $           
4. Previous fees paid--Prime..                $             $           
5. Previous fees unpaid--Prime                ________      ________    
6. Total fee settlement.......                $             $           
7. Gross settlement...........                ________      ________    
                                              $________     $________   
                                              ________      ________    
    Less: Deductions not                                                
     reflected in Items 1-7.                                            
      a. Disposal credits.....  $________                               
      b. Other charges against  $________                               
       contractor arising from                                          
       contract.                                                        
8. Net settlement.............                              $           
    Less: Prior payment                                     ________    
     credits.                                                           
9. Net payment................                              $           
10. Recapitulation of previous                                          
 settlements (insert number of                                          
 previous partial settlements                                           
 effected on account of this                                            
 particular termination):                                               
    Aggregate gross amount of                               $________   
     previous settlements.                                              
    Aggregate net amount of                                 $________   
     previous partial                                                   
     settlements.                                                       
    Aggregate net payment                                   $________   
     provided in previous                                               
     partial settlements.                                               
    Aggregate amount allowed                                $________   
     for prime contractor                                               
     acquired property taken                                            
     over by the Government in                                          
     connection with previous                                           
     partial settlements.                                               
------------------------------------------------------------------------


[[Page 396]]


                              Table 49-4--Unreimbursed Costs Submitted on SF 1437 *                             
----------------------------------------------------------------------------------------------------------------
                                  Amounts claimed by         Auditor's recommendation                           
             Costs                   contractor's    ----------------------------------------  TCO's computation
                                       proposal         Cost questioned    Unresolved items                     
----------------------------------------------------------------------------------------------------------------
1. Direct material.............                                                                                 
2. Direct labor................                                                                                 
3. Indirect factory expense....                                                                                 
4. Dies, jigs, fixtures and                                                                                     
 special tools.                                                                                                 
5. Other costs.................                                                                                 
6. General and administrative                                                                                   
 expenses.                                                                                                      
7. Fee.........................                                                                                 
8. Settlement expense..........                                                                                 
9. Settlement with subs........                                                                                 
10. Total costs (Items 1-9)....                                                                                 
----------------------------------------------------------------------------------------------------------------
* Expand the format to include recommendations of technical personnel as required.                              



               Subpart 249.5--Contract Termination Clauses

249.501  General.



Sec. 249.501-70  Special termination costs.

    (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.



            Subpart 249.70--Special Termination Requirements



Sec. 249.7000  Terminated contracts with Canadian Commercial Corporation.

    (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.

[[Page 397]]

(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.



Sec. 249.7001  Congressional notification on significant contract terminations.

    (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 the termination notice to the contractor. Department and 
agency liaison offices are--
    (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;

[[Page 398]]

    (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.

[56 FR 36471, July 31, 1991, as amended at 56 FR 67220, Dec. 30, 1991; 
59 FR 27674, May 27, 1994; 61 FR 50455, Sept. 26, 1996]



Sec. 249.7002  Notification and reporting of substantial impact on employment.

    (a) Section 4201(a)(1)(B) of the National Defense Authorization Act 
for Fiscal Year 1991 (Pub. L. 101-510, Division D, title XLII; Defense 
Economic Adjustment, Diversification, Conversion, and Stabilization Act 
of 1991), requires the Secretary of Defense to notify the Secretary of 
Labor if a modification or termination for convenience of a major 
defense contract or subcontract will have a substantial impact on 
employment. ``Substantial impact on employment'' is defined in the 
clause at 252.249-7001, Notification of Substantial Impact on 
Employment.
    (b) Within ten work days after the contractor provides the 
notification required under the clause at 252.249-7001, the head of the 
contracting activity shall notify the Assistant Secretary of Defense 
(Economic Security), Office of Economic Adjustment (OEA), in accordance 
with department/agency procedures.
    (1) The notice to OEA shall include the data elements set forth in 
252.249-7001(c).
    (2) Notices may be mailed or telefaxed to OEA at: Office of Economic 
Adjustment, 400 Army-Navy Drive, suite 200, Arlington, VA 22202-2884. 
Attention: Division D Notification. Telefax: (703) 604-5843.
    (c) Use the clause at 252.249-7001, Notification of Substantial 
Impact on Employment, in all contracts of $5 million or more and all 
contracts with subcontracts of $500,000 or more.

[56 FR 67220, Dec. 30, 1991, as amended at 60 FR 61600, Nov. 30, 1995]



Sec. 249.7003  Notification of proposed program termination or reduction.

    (a) Section 1372 of the National Defense Authorization Act for 
Fiscal Year 1994 (Pub. L. 103-160), is 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) Determine which major defense programs are proposed for 
termination or substantial reduction as a result of the submission of 
the President's budget, and which are likely to be terminated or 
substantially reduced as a result of enactment of an appropriations act.
    (2) Within 60 days of such submission or enactment, provide notice 
of the proposed or anticipated termination or reduction--
    (i) By general notice in the Federal Register;
    (ii) In case of an enactment, to the Secretary of Labor; and
    (iii) Through the contracting officer to each prime contractor, 
unless in the case of an enactment, notice was given at budget 
submission.
    (3) Within 60 days after an enactment provides sufficient funding 
for a program, provide notice withdrawing the notices in 
249.7003(b)(2)--
    (i) By general notice in the Federal Register; and
    (ii) Through the contracting officer to each prime contractor.
    (c) The notification provided under (b)(2)(iii) shall be 
substantially as follows:

    Section 1372 of the Fiscal Year 1994 National Defense Authorization 
Act (Pub. L.

[[Page 399]]

103-160) requires that each prime contractor under a major defense 
program be notified if the program is likely to be or proposed for 
termination or substantial reduction. (The terms major defense program 
and substantial reduction are defined in the notification of Proposed 
Program Termination or Reduction clause of your contract (insert 
contract number).)
    You are hereby notified that the (insert program name) has been 
(contracting officer to insert either (1) or (2))--
    (1) proposed to be (insert ``terminated'' or ``substantially 
reduced'') by the Fiscal Year (insert fiscal year) President's budget; 
or
    (2) identified as likely to be (insert ``terminated'' or 
``substantially reduced'') by the Fiscal Year (insert fiscal year) 
Defense Appropriations Act.
    While this notice is provided pursuant to section 1372, the impact 
on individual contracts has not yet been determined. This is not a 
notice of termination under the Termination for Convenience or Default 
clauses of your contract.
    Your responsibilities upon receipt of this notice are set forth in 
the Notification of Proposed Program Termination or Reduction clause in 
your contract.

    (d) Use the clause at 252.249-7002, Notification of Proposed Program 
Termination or Reduction, in all contracts under a major defense 
program.

[59 FR 27674, May 27, 1994, as amended at 60 FR 29501, June 5, 1995]



PART 250--EXTRAORDINARY CONTRACTUAL ACTIONS--Table of Contents




Sec.
250.001  Definitions.

                         Subpart 250.1--General

250.104  Reports.
250.105  Records.

  Subpart 250.2--Delegation of and Limitations on Exercise of Authority

250.201  Delegation of authority.
250.201-70  Delegations.
250.202  Contract adjustment boards.

                   Subpart 250.3--Contract Adjustments

250.303  Contractor requests.
250.305  Processing cases.
250.305-70  Record of request.
250.305-71  Processing cases to contract adjustment boards.
250.305-72  Processing by the board.
250.306  Disposition.
250.306-70  Record of disposition.

                     Subpart 250.4--Residual Powers

250.403  Special procedures for unusually hazardous or nuclear risks.
250.403-70  Indemnification under contracts involving both research and 
          development and other work.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36475, July 31, 1991, unless otherwise noted.



Sec. 250.001  Definitions.

    As used in this part,
    Secretarial level means--
    (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.



                         Subpart 250.1--General



Sec. 250.104  Reports.

    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.



Sec. 250.105  Records.

    (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:

[[Page 400]]

    (i) Extent of performance as of date of request. State degree of 
completion of contract; e.g., 50 percent completed or performance not 
yet begun. If work is completed, state date of completion and whether 
final payment has been made.
    (ii) Award procedure. State whether contract was awarded under 
sealed bidding or negotiated procedures. Cite specific authority for 
using other than full and open competition, if applicable, e.g., 10 
U.S.C. 2304(c)(1).
    (iii) Type of contract. State type of contract (see FAR part 16); 
e.g., FFP (firm fixed-price).
    (iv) Category of case. State whether the request involves a 
modification without consideration, a mistake, or an informal 
commitment. If the case involves more than one category, identify both; 
list the most significant category first.
    (v) Amount or description of request. If the request is expressed in 
dollars, state the amount and whether it is an increase or decrease. If 
the request cannot be expressed in monetary terms, provide a brief 
description; e.g., ``Cancellation'' or ``Modification.'' Even if the 
adjustment is not easily expressed in terms of dollars, if the 
contractor has made an estimate in the request, that estimate should be 
stated.
    (vi) Action below Secretarial level. State the disposition of the 
case, the office that took the action and the date the action was taken. 
The disposition should be stated as ``Withdrawn,'' ``Denied,'' 
``Approved,'' or ``Forwarded.'' If the request was approved, in whole or 
in part, state the dollar amount or nature of the action (as explained 
in paragraph (v) of this section). The date should correspond with the 
date of the memorandum of decision or of the letter forwarding the 
request to the contract adjustment board or other deciding body.
    (vii) Action by contract adjustment board and date. State the 
disposition and date of disposition of the case by the contract 
adjustment board. Provide the same information as for paragraph (vi).
    (viii) Implementation and date. State the appropriate action; e.g., 
``Modification,'' ``New Contract,'' or ``Letter of Denial.''

[[Page 401]]

[GRAPHIC] [TIFF OMITTED] TC01FE91.053



[[Page 402]]



  Subpart 250.2--Delegation of and Limitations on Exercise of Authority



Sec. 250.201  Delegation of authority.

    (b) Authority under FAR subpart 50.2 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.

[56 FR 36475, July 31, 1991, as amended at 59 FR 27675, May 27, 1994]



Sec. 250.201-70  Delegations.

    (a) Military Departments. The Departments of the Army, Navy and Air 
Force will specify delegations and levels of authority for actions under 
the Act and the Executive Order in departmental supplements.
    (b) Defense Agencies. Subject to the restrictions on delegations of 
authority in 250.201(b) and FAR 50.201, the directors of the defense 
agencies may exercise and redelegate the authority contained in the Act 
and the Executive Order. The agency supplements shall specify the 
delegations and levels of authority.
    (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) Approvals. The service Secretary or agency director must approve 
any delegations in writing.

[56 FR 36475, July 31, 1991, as amended at 56 FR 67221, Dec. 30, 1991; 
60 FR 61600, Nov. 30, 1995]



Sec. 250.202  Contract adjustment boards.

    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.



                   Subpart 250.3--Contract Adjustments



Sec. 250.303  Contractor requests.

    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.

[56 FR 36475, July 31, 1991, as amended at 56 FR 67221, Dec. 30, 1991; 
59 FR 27675, May 27, 1994; 61 FR 50455, Sept. 26, 1996]

[[Page 403]]

250.305  Processing cases.



Sec. 250.305-70  Record of request.

    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.



Sec. 250.305-71  Processing cases to contract adjustment boards.

    (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.



Sec. 250.305-72  Processing by the board.

    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.
250.306  Disposition.



Sec. 250.306-70  Record of disposition.

    (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.



                     Subpart 250.4--Residual Powers

250.403  Special procedures for unusually hazardous or nuclear risks.



Sec. 250.403-70  Indemnification under contracts involving both research and development and other work.

    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

[[Page 404]]

subject to compliance with FAR subpart 50.4.
    (b) Indemnification under 10 U.S.C. 2354 is covered by 235.070.



PART 251--USE OF GOVERNMENT SOURCES BY CONTRACTORS--Table of Contents




Sec.

       Subpart 251.1--Contractor Use of Government Supply Sources

251.102  Authorization to use Government supply sources.
251.105  Payment for shipments.
251.107  Contract clause.

  Subpart 251.2--Contractor Use of Interagency Fleet Management System 
                             (IFMS) Vehicles

251.202  Authorization.
251.205  Contract clause.

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

    Source: 56 FR 36479, July 31, 1991, unless otherwise noted.



       Subpart 251.1--Contractor Use of Government Supply Sources



Sec. 251.102  Authorization to use Government supply sources.

    (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.

  Table 51-1--Authorization To Purchase From Government Supply Sources  
                                                                        
Subject: Authorization to Purchase from Government Supply Sources       
------------------------------------------------------------------------
                                                                        
(Contractor's Name)                                                     
------------------------------------------------------------------------
                                                                        
(Contractor's Address)                                                  
1. You are hereby authorized to use Government sources in performing    
 Contract No. ________ for the Department of ________, as follows:      
 (Insert applicable purchasing authority given to the contractor.)      
2.a. Purchase Orders Under Federal Supply Schedules or Personal Property
 Rehabilitation Price Schedules. Place orders in accordance with the    
 terms and conditions of the attached Schedule(s) and this              
 authorization. Attach a copy of this authorization to the order (unless
 a copy was previously furnished to the Federal Supply Schedule or      
 Personal Property Rehabilitation Price Schedule contractor). Insert the
 following statement in the order:                                      
                                                                        
  This order is placed under written authorization from ________dated   
   ________ (\1\______).                                                
  In the event of any inconsistency between the terms and conditions of 
   this order and those of the Federal Supply Schedule or Personal      
   Property Rehabilitation Price Schedule contract, the latter will     
   govern.                                                              
                                                                        
b. Requisitioning from the General Services Administration (GSA) or the 
 Department of Defense (DoD). Place orders in accordance with this      
 authorization and, as appropriate, the:                                
  (1) Federal Standard Requisitioning and Issue Procedures (FEDSTRIP)   
   (GSAFEDSTRIP Operating Guide: FPMR 101-26.2 (41 CFR 101-26.2); copies
   are available from the Superintendent of Documents, Government       
   Printing Office, Washington, DC 20402); or                           
  (2) Military Standard Requisitioning and Issue Procedures (MILSTRIP)  
   (DoD 4000.25-1-M; copies are available from the Defense Logistics    
   Agency, ATTN: DLA-XPD, Bldg. 6, Dr. 21, Cameron Station, Alexandria, 
   VA 22304-6100).                                                      
3. (\3\)                                                                
4. This authority is not transferable or assignable.                    
5. The DoD Activity Address Directory (DoDAAD) (DoD 4000.25-6-M)        
 Activity Address Code \2\ to which this Authorization applies is       
 ________.                                                              
6. This Authorization expires __________.                               
------------------------------------------------------------------------
                                                                        
(Contracting Officer)                                                   
------------------------------------------------------------------------
\1\ Insert ``a copy of which is attached,'' ``a copy of which you have  
  on file,'' or other suitable language, as appropriate.                
\2\ The sponsoring service assumes responsibility for monitoring and    
  controlling all activity address codes used in the letters of         
  authority.                                                            
\3\ Insert other provisions, as necessary.                              



[[Page 405]]

[56 FR 36479, July 31, 1991, as amended at 60 FR 29501, June 5, 1995]



Sec. 251.105  Payment for shipments.

    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)).

[60 FR 29501, June 5, 1995]



Sec. 251.107  Contract clause.

    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.



  Subpart 251.2--Contractor Use of Interagency Fleet Management System 
                             (IFMS) Vehicles



Sec. 251.202  Authorization.

    (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.



Sec. 251.205  Contract clause.

    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.
[[Page 407]]



                              FINDING AIDS




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

  A list of CFR titles, subtitles, chapters, subchapters and parts and 
an alphabetical list of agencies publishing in the CFR are included in 
the CFR Index and Finding Aids volume to the Code of Federal Regulations 
which is published separately and revised annually.

  Table of CFR Titles and Chapters
  Alphabetical List of Agencies Appearing in the CFR
  List of CFR Sections Affected


                                                                    Chap.

[[Page 409]]



                    Table of CFR Titles and Chapters



                   (Revised as of September 30, 1996)

                      Title 1--General Provisions

         I  Administrative Committee of the Federal Register 
                (Parts 1--49)
        II  Office of the Federal Register (Parts 50--299)
        IV  Miscellaneous Agencies (Parts 400--500)

                          Title 2--[Reserved]

                        Title 3--The President

         I  Executive Office of the President (Parts 100--199)

                           Title 4--Accounts

         I  General Accounting Office (Parts 1--99)
        II  Federal Claims Collection Standards (General 
                Accounting Office--Department of Justice) (Parts 
                100--299)

                   Title 5--Administrative Personnel

         I  Office of Personnel Management (Parts 1--1199)
        II  Merit Systems Protection Board (Parts 1200--1299)
       III  Office of Management and Budget (Parts 1300--1399)
        IV  Advisory Committee on Federal Pay (Parts 1400--1499)
         V  The International Organizations Employees Loyalty 
                Board (Parts 1500--1599)
        VI  Federal Retirement Thrift Investment Board (Parts 
                1600--1699)
       VII  Advisory Commission on Intergovernmental Relations 
                (Parts 1700--1799)
      VIII  Office of Special Counsel (Parts 1800--1899)
        IX  Appalachian Regional Commission (Parts 1900--1999)
        XI  Armed Forces Retirement Home (Part 2100)
       XIV  Federal Labor Relations Authority, General Counsel of 
                the Federal Labor Relations Authority and Federal 
                Service Impasses Panel (Parts 2400--2499)
        XV  Office of Administration, Executive Office of the 
                President (Parts 2500--2599)
       XVI  Office of Government Ethics (Parts 2600--2699)
       XXI  Department of the Treasury (Parts 3100--3199)
      XXII  Federal Deposit Insurance Corporation (Part 3202)
     XXIII  Department of Energy (Part 3301)

[[Page 410]]

      XXIV  Federal Energy Regulatory Commission (Part 3401)
      XXVI  Department of Defense (Part 3601)
       XXX  Farm Credit System Insurance Corporation (Parts 4000--
                4099)
      XXXI  Farm Credit Administration (Parts 4100--4199)
    XXXIII  Overseas Private Investment Corporation (Part 4301)
        XL  Interstate Commerce Commission (Part 5001)
       XLI  Commodity Futures Trading Commission (Part 5101)
       XLV  Department of Health and Human Services (Part 5501)
      XLVI  Postal Rate Commission (Part 5601)
     XLVII  Federal Trade Commission (Part 5701)
    XLVIII  Nuclear Regulatory Commission (Part 5801)
         L  Department of Transportation (Part 6001)
       LII  Export-Import Bank of the United States (Part 6201)
      LIII  Department of Education (Parts 6300--6399)
       LIV  Environmental Protection Agency (Part 6401)
       LIX  National Aeronautics and Space Administration (Part 
                6901)
        LX  United States Postal Service (Part 7001)
      LXII  Equal Employment Opportunity Commission (Part 7201)
     LXIII  Inter-American Foundation (Part 7301)
       LXV  Department of Housing and Urban Development (Part 
                7501)
      LXVI  National Archives and Records Administration (Part 
                7601)
      LXIX  Tennessee Valley Authority (Part 7901)
     LXXIV  Federal Mine Safety and Health Review Commission (Part 
                8401)
     LXXVI  Federal Retirement Thrift Investment Board (Part 8601)
    LXXVII  Office of Management and Budget (Part 8701)

                          Title 6--[Reserved]

                         Title 7--Agriculture

            Subtitle A--Office of the Secretary of Agriculture 
                (Parts 0--26)
            Subtitle B--Regulations of the Department of 
                Agriculture
         I  Agricultural Marketing Service (Standards, 
                Inspections, Marketing Practices), Department of 
                Agriculture (Parts 27--209)
        II  Food and Consumer Service, Department of Agriculture 
                (Parts 210--299)
       III  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 300--399)
        IV  Federal Crop Insurance Corporation, Department of 
                Agriculture (Parts 400--499)
         V  Agricultural Research Service, Department of 
                Agriculture (Parts 500--599)
        VI  Natural Resources Conservation Service, Department of 
                Agriculture (Parts 600--699)
       VII  Farm Service Agency, Department of Agriculture (Parts 
                700--799)

[[Page 411]]

      VIII  Grain Inspection, Packers and Stockyards 
                Administration (Federal Grain Inspection Service), 
                Department of Agriculture (Parts 800--899)
        IX  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Fruits, Vegetables, Nuts), Department 
                of Agriculture (Parts 900--999)
         X  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Milk), Department of Agriculture 
                (Parts 1000--1199)
        XI  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Miscellaneous Commodities), Department 
                of Agriculture (Parts 1200--1299)
       XIV  Commodity Credit Corporation, Department of 
                Agriculture (Parts 1400--1499)
        XV  Foreign Agricultural Service, Department of 
                Agriculture (Parts 1500--1599)
       XVI  Rural Telephone Bank, Department of Agriculture (Parts 
                1600--1699)
      XVII  Rural Utilities Service, Department of Agriculture 
                (Parts 1700--1799)
     XVIII  Rural Housing Service, Rural Business-Cooperative 
                Service, Rural Utilities Service, and Farm Service 
                Agency, Department of Agriculture (Parts 1800--
                2099)
      XXVI  Office of Inspector General, Department of Agriculture 
                (Parts 2600--2699)
     XXVII  Office of Information Resources Management, Department 
                of Agriculture (Parts 2700--2799)
    XXVIII  Office of Operations, Department of Agriculture (Parts 
                2800--2899)
      XXIX  Office of Energy, Department of Agriculture (Parts 
                2900--2999)
       XXX  Office of Finance and Management, Department of 
                Agriculture (Parts 3000--3099)
      XXXI  Office of Environmental Quality, Department of 
                Agriculture (Parts 3100--3199)
     XXXII  [Reserved]
    XXXIII  Office of Transportation, Department of Agriculture 
                (Parts 3300--3399)
     XXXIV  Cooperative State Research, Education, and Extension 
                Service, Department of Agriculture (Parts 3400--
                3499)
     XXXVI  National Agricultural Statistics Service, Department 
                of Agriculture (Parts 3600--3699)
    XXXVII  Economic Research Service, Department of Agriculture 
                (Parts 3700--3799)
   XXXVIII  World Agricultural Outlook Board, Department of 
                Agriculture (Parts 3800--3899)
     XXXIX  Economic Analysis Staff, Department of Agriculture 
                (Parts 3900--3999)
        XL  Economics Management Staff, Department of Agriculture 
                (Parts 4000--4099)
       XLI  [Reserved]
      XLII  Rural Business-Cooperative Service and Rural Utilities 
                Service, Department of Agriculture (Parts 4200--
                4299)

[[Page 412]]

                    Title 8--Aliens and Nationality

         I  Immigration and Naturalization Service, Department of 
                Justice (Parts 1--499)

                 Title 9--Animals and Animal Products

         I  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 1--199)
        II  Grain Inspection, Packers and Stockyards 
                Administration (Packers and Stockyards Programs), 
                Department of Agriculture (Parts 200--299)
       III  Food Safety and Inspection Service, Meat and Poultry 
                Inspection, Department of Agriculture (Parts 300--
                399)

                           Title 10--Energy

         I  Nuclear Regulatory Commission (Parts 0--199)
        II  Department of Energy (Parts 200--699)
       III  Department of Energy (Parts 700--999)
         X  Department of Energy (General Provisions) (Parts 
                1000--1099)
        XI  United States Enrichment Corporation (Parts 1100--
                1199)
        XV  Office of the Federal Inspector for the Alaska Natural 
                Gas Transportation System (Parts 1500--1599)
      XVII  Defense Nuclear Facilities Safety Board (Parts 1700--
                1799)

                      Title 11--Federal Elections

         I  Federal Election Commission (Parts 1--9099)

                      Title 12--Banks and Banking

         I  Comptroller of the Currency, Department of the 
                Treasury (Parts 1--199)
        II  Federal Reserve System (Parts 200--299)
       III  Federal Deposit Insurance Corporation (Parts 300--399)
        IV  Export-Import Bank of the United States (Parts 400--
                499)
         V  Office of Thrift Supervision, Department of the 
                Treasury (Parts 500--599)
        VI  Farm Credit Administration (Parts 600--699)
       VII  National Credit Union Administration (Parts 700--799)
      VIII  Federal Financing Bank (Parts 800--899)
        IX  Federal Housing Finance Board (Parts 900--999)
        XI  Federal Financial Institutions Examination Council 
                (Parts 1100--1199)
       XIV  Farm Credit System Insurance Corporation (Parts 1400--
                1499)
        XV  Thrift Depositor Protection Oversight Board (Parts 
                1500--1599)
      XVII  Office of Federal Housing Enterprise Oversight, 
                Department of Housing and Urban Development (Parts 
                1700-1799)
     XVIII  Community Development Financial Institutions Fund, 
                Department of the Treasury (Parts 1800--1899)

[[Page 413]]

               Title 13--Business Credit and Assistance

         I  Small Business Administration (Parts 1--199)
       III  Economic Development Administration, Department of 
                Commerce (Parts 300--399)

                    Title 14--Aeronautics and Space

         I  Federal Aviation Administration, Department of 
                Transportation (Parts 1--199)
        II  Office of the Secretary, Department of Transportation 
                (Aviation Proceedings) (Parts 200--399)
       III  Commercial Space Transportation, Federal Aviation 
                Administration, Department of Transportation 
                (Parts 400--499)
         V  National Aeronautics and Space Administration (Parts 
                1200--1299)

                 Title 15--Commerce and Foreign Trade

            Subtitle A--Office of the Secretary of Commerce (Parts 
                0--29)
            Subtitle B--Regulations Relating to Commerce and 
                Foreign Trade
         I  Bureau of the Census, Department of Commerce (Parts 
                30--199)
        II  National Institute of Standards and Technology, 
                Department of Commerce (Parts 200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  Foreign-Trade Zones Board, Department of Commerce 
                (Parts 400--499)
       VII  Bureau of Export Administration, Department of 
                Commerce (Parts 700--799)
      VIII  Bureau of Economic Analysis, Department of Commerce 
                (Parts 800--899)
        IX  National Oceanic and Atmospheric Administration, 
                Department of Commerce (Parts 900--999)
        XI  Technology Administration, Department of Commerce 
                (Parts 1100--1199)
      XIII  East-West Foreign Trade Board (Parts 1300--1399)
       XIV  Minority Business Development Agency (Parts 1400--
                1499)
            Subtitle C--Regulations Relating to Foreign Trade 
                Agreements
        XX  Office of the United States Trade Representative 
                (Parts 2000--2099)
            Subtitle D--Regulations Relating to Telecommunications 
                and Information
     XXIII  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                2300--2399)

                    Title 16--Commercial Practices

         I  Federal Trade Commission (Parts 0--999)
        II  Consumer Product Safety Commission (Parts 1000--1799)

[[Page 414]]

             Title 17--Commodity and Securities Exchanges

         I  Commodity Futures Trading Commission (Parts 1--199)
        II  Securities and Exchange Commission (Parts 200--399)
        IV  Department of the Treasury (Parts 400--499)

          Title 18--Conservation of Power and Water Resources

         I  Federal Energy Regulatory Commission, Department of 
                Energy (Parts 1--399)
       III  Delaware River Basin Commission (Parts 400--499)
        VI  Water Resources Council (Parts 700--799)
      VIII  Susquehanna River Basin Commission (Parts 800--899)
      XIII  Tennessee Valley Authority (Parts 1300--1399)

                       Title 19--Customs Duties

         I  United States Customs Service, Department of the 
                Treasury (Parts 1--199)
        II  United States International Trade Commission (Parts 
                200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)

                     Title 20--Employees' Benefits

         I  Office of Workers' Compensation Programs, Department 
                of Labor (Parts 1--199)
        II  Railroad Retirement Board (Parts 200--399)
       III  Social Security Administration (Parts 400--499)
        IV  Employees' Compensation Appeals Board, Department of 
                Labor (Parts 500--599)
         V  Employment and Training Administration, Department of 
                Labor (Parts 600--699)
        VI  Employment Standards Administration, Department of 
                Labor (Parts 700--799)
       VII  Benefits Review Board, Department of Labor (Parts 
                800--899)
      VIII  Joint Board for the Enrollment of Actuaries (Parts 
                900--999)
        IX  Office of the Assistant Secretary for Veterans' 
                Employment and Training, Department of Labor 
                (Parts 1000--1099)

                       Title 21--Food and Drugs

         I  Food and Drug Administration, Department of Health and 
                Human Services (Parts 1--1299)
        II  Drug Enforcement Administration, Department of Justice 
                (Parts 1300--1399)
       III  Office of National Drug Control Policy (Parts 1400--
                1499)

                      Title 22--Foreign Relations

         I  Department of State (Parts 1--199)

[[Page 415]]

        II  Agency for International Development, International 
                Development Cooperation Agency (Parts 200--299)
       III  Peace Corps (Parts 300--399)
        IV  International Joint Commission, United States and 
                Canada (Parts 400--499)
         V  United States Information Agency (Parts 500--599)
        VI  United States Arms Control and Disarmament Agency 
                (Parts 600--699)
       VII  Overseas Private Investment Corporation, International 
                Development Cooperation Agency (Parts 700--799)
        IX  Foreign Service Grievance Board Regulations (Parts 
                900--999)
         X  Inter-American Foundation (Parts 1000--1099)
        XI  International Boundary and Water Commission, United 
                States and Mexico, United States Section (Parts 
                1100--1199)
       XII  United States International Development Cooperation 
                Agency (Parts 1200--1299)
      XIII  Board for International Broadcasting (Parts 1300--
                1399)
       XIV  Foreign Service Labor Relations Board; Federal Labor 
                Relations Authority; General Counsel of the 
                Federal Labor Relations Authority; and the Foreign 
                Service Impasse Disputes Panel (Parts 1400--1499)
        XV  African Development Foundation (Parts 1500--1599)
       XVI  Japan-United States Friendship Commission (Parts 
                1600--1699)
      XVII  United States Institute of Peace (Parts 1700--1799)

                          Title 23--Highways

         I  Federal Highway Administration, Department of 
                Transportation (Parts 1--999)
        II  National Highway Traffic Safety Administration and 
                Federal Highway Administration, Department of 
                Transportation (Parts 1200--1299)
       III  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 1300--1399)

                Title 24--Housing and Urban Development

            Subtitle A--Office of the Secretary, Department of 
                Housing and Urban Development (Parts 0--99)
            Subtitle B--Regulations Relating to Housing and Urban 
                Development
         I  Office of Assistant Secretary for Equal Opportunity, 
                Department of Housing and Urban Development (Parts 
                100--199)
        II  Office of Assistant Secretary for Housing-Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 200--299)
       III  Government National Mortgage Association, Department 
                of Housing and Urban Development (Parts 300--399)
         V  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 500--599)

[[Page 416]]

        VI  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 600--699) [Reserved]
       VII  Office of the Secretary, Department of Housing and 
                Urban Development (Housing Assistance Programs and 
                Public and Indian Housing Programs) (Parts 700--
                799)
      VIII  Office of the Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Section 8 Housing Assistance 
                Programs and Section 202 Direct Loan Program) 
                (Parts 800--899)
        IX  Office of Assistant Secretary for Public and Indian 
                Housing, Department of Housing and Urban 
                Development (Parts 900--999)
         X  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Interstate Land Sales 
                Registration Program) (Parts 1700--1799)
       XII  Office of Inspector General, Department of Housing and 
                Urban Development (Parts 2000--2099)
        XX  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 3200--3699)
       XXV  Neighborhood Reinvestment Corporation (Parts 4100--
                4199)

                           Title 25--Indians

         I  Bureau of Indian Affairs, Department of the Interior 
                (Parts 1--299)
        II  Indian Arts and Crafts Board, Department of the 
                Interior (Parts 300--399)
       III  National Indian Gaming Commission, Department of the 
                Interior (Parts 500--599)
        IV  Office of Navajo and Hopi Indian Relocation (Parts 
                700--799)
         V  Bureau of Indian Affairs, Department of the Interior, 
                and Indian Health Service, Department of Health 
                and Human Services (Part 900)
        VI  Office of the Assistant Secretary-Indian Affairs, 
                Department of the Interior (Part 1001)

                      Title 26--Internal Revenue

         I  Internal Revenue Service, Department of the Treasury 
                (Parts 1--799)

           Title 27--Alcohol, Tobacco Products and Firearms

         I  Bureau of Alcohol, Tobacco and Firearms, Department of 
                the Treasury (Parts 1--299)

                   Title 28--Judicial Administration

         I  Department of Justice (Parts 0--199)
       III  Federal Prison Industries, Inc., Department of Justice 
                (Parts 300--399)

[[Page 417]]

         V  Bureau of Prisons, Department of Justice (Parts 500--
                599)
        VI  Offices of Independent Counsel, Department of Justice 
                (Parts 600--699)
       VII  Office of Independent Counsel (Parts 700--799)

                            Title 29--Labor

            Subtitle A--Office of the Secretary of Labor (Parts 
                0--99)
            Subtitle B--Regulations Relating to Labor
         I  National Labor Relations Board (Parts 100--199)
        II  Office of Labor-Management Programs, Department of 
                Labor (Parts 200--299)
       III  National Railroad Adjustment Board (Parts 300--399)
        IV  Office of Labor-Management Standards, Department of 
                Labor (Parts 400--499)
         V  Wage and Hour Division, Department of Labor (Parts 
                500--899)
        IX  Construction Industry Collective Bargaining Commission 
                (Parts 900--999)
         X  National Mediation Board (Parts 1200--1299)
       XII  Federal Mediation and Conciliation Service (Parts 
                1400--1499)
       XIV  Equal Employment Opportunity Commission (Parts 1600--
                1699)
      XVII  Occupational Safety and Health Administration, 
                Department of Labor (Parts 1900--1999)
        XX  Occupational Safety and Health Review Commission 
                (Parts 2200--2499)
       XXV  Pension and Welfare Benefits Administration, 
                Department of Labor (Parts 2500--2599)
     XXVII  Federal Mine Safety and Health Review Commission 
                (Parts 2700--2799)
        XL  Pension Benefit Guaranty Corporation (Parts 4000--
                4999)

                      Title 30--Mineral Resources

         I  Mine Safety and Health Administration, Department of 
                Labor (Parts 1--199)
        II  Minerals Management Service, Department of the 
                Interior (Parts 200--299)
       III  Board of Surface Mining and Reclamation Appeals, 
                Department of the Interior (Parts 300--399)
        IV  Geological Survey, Department of the Interior (Parts 
                400--499)
        VI  Bureau of Mines, Department of the Interior (Parts 
                600--699)
       VII  Office of Surface Mining Reclamation and Enforcement, 
                Department of the Interior (Parts 700--999)

                 Title 31--Money and Finance: Treasury

            Subtitle A--Office of the Secretary of the Treasury 
                (Parts 0--50)
            Subtitle B--Regulations Relating to Money and Finance
         I  Monetary Offices, Department of the Treasury (Parts 
                51--199)

[[Page 418]]

        II  Fiscal Service, Department of the Treasury (Parts 
                200--399)
        IV  Secret Service, Department of the Treasury (Parts 
                400--499)
         V  Office of Foreign Assets Control, Department of the 
                Treasury (Parts 500--599)
        VI  Bureau of Engraving and Printing, Department of the 
                Treasury (Parts 600--699)
       VII  Federal Law Enforcement Training Center, Department of 
                the Treasury (Parts 700--799)
      VIII  Office of International Investment, Department of the 
                Treasury (Parts 800--899)

                      Title 32--National Defense

            Subtitle A--Department of Defense
         I  Office of the Secretary of Defense (Parts 1--399)
         V  Department of the Army (Parts 400--699)
        VI  Department of the Navy (Parts 700--799)
       VII  Department of the Air Force (Parts 800--1099)
            Subtitle B--Other Regulations Relating to National 
                Defense
       XII  Defense Logistics Agency (Parts 1200--1299)
       XVI  Selective Service System (Parts 1600--1699)
       XIX  Central Intelligence Agency (Parts 1900--1999)
        XX  Information Security Oversight Office, National 
                Archives and Records Administration (Parts 2000--
                2099)
       XXI  National Security Council (Parts 2100--2199)
      XXIV  Office of Science and Technology Policy (Parts 2400--
                2499)
     XXVII  Office for Micronesian Status Negotiations (Parts 
                2700--2799)
    XXVIII  Office of the Vice President of the United States 
                (Parts 2800--2899)
      XXIX  Presidential Commission on the Assignment of Women in 
                the Armed Forces (Part 2900)

               Title 33--Navigation and Navigable Waters

         I  Coast Guard, Department of Transportation (Parts 1--
                199)
        II  Corps of Engineers, Department of the Army (Parts 
                200--399)
        IV  Saint Lawrence Seaway Development Corporation, 
                Department of Transportation (Parts 400--499)

                          Title 34--Education

            Subtitle A--Office of the Secretary, Department of 
                Education (Parts 1--99)
            Subtitle B--Regulations of the Offices of the 
                Department of Education
         I  Office for Civil Rights, Department of Education 
                (Parts 100--199)
        II  Office of Elementary and Secondary Education, 
                Department of Education (Parts 200--299)

[[Page 419]]

       III  Office of Special Education and Rehabilitative 
                Services, Department of Education (Parts 300--399)
        IV  Office of Vocational and Adult Education, Department 
                of Education (Parts 400--499)
         V  Office of Bilingual Education and Minority Languages 
                Affairs, Department of Education (Parts 500--599)
        VI  Office of Postsecondary Education, Department of 
                Education (Parts 600--699)
       VII  Office of Educational Research and Improvement, 
                Department of Education (Parts 700--799)
        XI  National Institute for Literacy (Parts 1100-1199)
            Subtitle C--Regulations Relating to Education
       XII  National Council on Disability (Parts 1200--1299)

                        Title 35--Panama Canal

         I  Panama Canal Regulations (Parts 1--299)

             Title 36--Parks, Forests, and Public Property

         I  National Park Service, Department of the Interior 
                (Parts 1--199)
        II  Forest Service, Department of Agriculture (Parts 200--
                299)
       III  Corps of Engineers, Department of the Army (Parts 
                300--399)
        IV  American Battle Monuments Commission (Parts 400--499)
         V  Smithsonian Institution (Parts 500--599)
       VII  Library of Congress (Parts 700--799)
      VIII  Advisory Council on Historic Preservation (Parts 800--
                899)
        IX  Pennsylvania Avenue Development Corporation (Parts 
                900--999)
        XI  Architectural and Transportation Barriers Compliance 
                Board (Parts 1100--1199)
       XII  National Archives and Records Administration (Parts 
                1200--1299)
       XIV  Assassination Records Review Board (Parts 1400-1499)

             Title 37--Patents, Trademarks, and Copyrights

         I  Patent and Trademark Office, Department of Commerce 
                (Parts 1--199)
        II  Copyright Office, Library of Congress (Parts 200--299)
        IV  Assistant Secretary for Technology Policy, Department 
                of Commerce (Parts 400--499)
         V  Under Secretary for Technology, Department of Commerce 
                (Parts 500--599)

           Title 38--Pensions, Bonuses, and Veterans' Relief

         I  Department of Veterans Affairs (Parts 0--99)

[[Page 420]]

                       Title 39--Postal Service

         I  United States Postal Service (Parts 1--999)
       III  Postal Rate Commission (Parts 3000--3099)

                  Title 40--Protection of Environment

         I  Environmental Protection Agency (Parts 1--799)
         V  Council on Environmental Quality (Parts 1500--1599)

          Title 41--Public Contracts and Property Management

            Subtitle B--Other Provisions Relating to Public 
                Contracts
        50  Public Contracts, Department of Labor (Parts 50-1--50-
                999)
        51  Committee for Purchase From People Who Are Blind or 
                Severely Disabled (Parts 51-1--51-99)
        60  Office of Federal Contract Compliance Programs, Equal 
                Employment Opportunity, Department of Labor (Parts 
                60-1--60-999)
        61  Office of the Assistant Secretary for Veterans 
                Employment and Training, Department of Labor 
                (Parts 61-1--61-999)
            Subtitle C--Federal Property Management Regulations 
                System
       101  Federal Property Management Regulations (Parts 101-1--
                101-99)
       105  General Services Administration (Parts 105-1--105-999)
       109  Department of Energy Property Management Regulations 
                (Parts 109-1--109-99)
       114  Department of the Interior (Parts 114-1--114-99)
       115  Environmental Protection Agency (Parts 115-1--115-99)
       128  Department of Justice (Parts 128-1--128-99)
            Subtitle D--Other Provisions Relating to Property 
                Management [Reserved]
            Subtitle E--Federal Information Resources Management 
                Regulations System
       201  Federal Information Resources Management Regulation 
                (Parts 201-1--201-99) [Reserved]
            Subtitle F--Federal Travel Regulation System
       301  Travel Allowances (Parts 301-1--301-99)
       302  Relocation Allowances (Parts 302-1--302-99)
       303  Payment of Expenses Connected with the Death of 
                Certain Employees (Parts 303-1--303-2)
       304  Payment from a Non-Federal Source for Travel Expenses 
                (Parts 304-1--304-99)

                        Title 42--Public Health

         I  Public Health Service, Department of Health and Human 
                Services (Parts 1--199)
        IV  Health Care Financing Administration, Department of 
                Health and Human Services (Parts 400--499)
         V  Office of Inspector General-Health Care, Department of 
                Health and Human Services (Parts 1000--1999)

[[Page 421]]

                   Title 43--Public Lands: Interior

            Subtitle A--Office of the Secretary of the Interior 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Lands
         I  Bureau of Reclamation, Department of the Interior 
                (Parts 200--499)
        II  Bureau of Land Management, Department of the Interior 
                (Parts 1000--9999)
       III  Utah Reclamation Mitigation and Conservation 
                Commission (Parts 10000--10005)

             Title 44--Emergency Management and Assistance

         I  Federal Emergency Management Agency (Parts 0--399)
        IV  Department of Commerce and Department of 
                Transportation (Parts 400--499)

                       Title 45--Public Welfare

            Subtitle A--Department of Health and Human Services, 
                General Administration (Parts 1--199)
            Subtitle B--Regulations Relating to Public Welfare
        II  Office of Family Assistance (Assistance Programs), 
                Administration for Children and Families, 
                Department of Health and Human Services (Parts 
                200--299)
       III  Office of Child Support Enforcement (Child Support 
                Enforcement Program), Administration for Children 
                and Families, Department of Health and Human 
                Services (Parts 300--399)
        IV  Office of Refugee Resettlement, Administration for 
                Children and Families Department of Health and 
                Human Services (Parts 400--499)
         V  Foreign Claims Settlement Commission of the United 
                States, Department of Justice (Parts 500--599)
        VI  National Science Foundation (Parts 600--699)
       VII  Commission on Civil Rights (Parts 700--799)
      VIII  Office of Personnel Management (Parts 800--899)
         X  Office of Community Services, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 1000--1099)
        XI  National Foundation on the Arts and the Humanities 
                (Parts 1100--1199)
       XII  ACTION (Parts 1200--1299)
      XIII  Office of Human Development Services, Department of 
                Health and Human Services (Parts 1300--1399)
       XVI  Legal Services Corporation (Parts 1600--1699)
      XVII  National Commission on Libraries and Information 
                Science (Parts 1700--1799)
     XVIII  Harry S. Truman Scholarship Foundation (Parts 1800--
                1899)
       XXI  Commission on Fine Arts (Parts 2100--2199)
      XXII  Christopher Columbus Quincentenary Jubilee Commission 
                (Parts 2200--2299)
     XXIII  Arctic Research Commission (Part 2301)

[[Page 422]]

      XXIV  James Madison Memorial Fellowship Foundation (Parts 
                2400--2499)
       XXV  Corporation for National and Community Service (Parts 
                2500--2599)

                          Title 46--Shipping

         I  Coast Guard, Department of Transportation (Parts 1--
                199)
        II  Maritime Administration, Department of Transportation 
                (Parts 200--399)
       III  Saint Lawrence Seaway Development Corporation (Great 
                Lakes Pilotage), Department of Transportation 
                (Parts 400--499)
        IV  Federal Maritime Commission (Parts 500--599)

                      Title 47--Telecommunication

         I  Federal Communications Commission (Parts 0--199)
        II  Office of Science and Technology Policy and National 
                Security Council (Parts 200--299)
       III  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                300--399)

           Title 48--Federal Acquisition Regulations System

         1  Federal Acquisition Regulation (Parts 1--99)
         2  Department of Defense (Parts 200--299)
         3  Department of Health and Human Services (Parts 300--
                399)
         4  Department of Agriculture (Parts 400--499)
         5  General Services Administration (Parts 500--599)
         6  Department of State (Parts 600--699)
         7  Agency for International Development (Parts 700--799)
         8  Department of Veterans Affairs (Parts 800--899)
         9  Department of Energy (Parts 900--999)
        10  Department of the Treasury (Parts 1000--1099)
        12  Department of Transportation (Parts 1200--1299)
        13  Department of Commerce (Parts 1300--1399)
        14  Department of the Interior (Parts 1400--1499)
        15  Environmental Protection Agency (Parts 1500--1599)
        16  Office of Personnel Management Federal Employees 
                Health Benefits Acquisition Regulation (Parts 
                1600--1699)
        17  Office of Personnel Management (Parts 1700--1799)
        18  National Aeronautics and Space Administration (Parts 
                1800--1899)
        19  United States Information Agency (Parts 1900--1999)
        20  Nuclear Regulatory Commission (Parts 2000--2099)
        21  Office of Personnel Management, Federal Employees 
                Group Life Insurance Federal Acquisition 
                Regulation (Parts 2100--2199)
        23  Social Security Administration (Parts 2300--2399)

[[Page 423]]

        24  Department of Housing and Urban Development (Parts 
                2400--2499)
        25  National Science Foundation (Parts 2500--2599)
        28  Department of Justice (Parts 2800--2899)
        29  Department of Labor (Parts 2900--2999)
        34  Department of Education Acquisition Regulation (Parts 
                3400--3499)
        35  Panama Canal Commission (Parts 3500--3599)
        44  Federal Emergency Management Agency (Parts 4400--4499)
        51  Department of the Army Acquisition Regulations (Parts 
                5100--5199)
        52  Department of the Navy Acquisition Regulations (Parts 
                5200--5299)
        53  Department of the Air Force Federal Acquisition 
                Regulation Supplement (Parts 5300--5399)
        54  Defense Logistics Agency, Department of Defense (Part 
                5452)
        57  African Development Foundation (Parts 5700--5799)
        61  General Services Administration Board of Contract 
                Appeals (Parts 6100--6199)
        63  Department of Transportation Board of Contract Appeals 
                (Parts 6300--6399)
        99  Cost Accounting Standards Board, Office of Federal 
                Procurement Policy, Office of Management and 
                Budget (Parts 9900--9999)

                       Title 49--Transportation

            Subtitle A--Office of the Secretary of Transportation 
                (Parts 1--99)
            Subtitle B--Other Regulations Relating to 
                Transportation
         I  Research and Special Programs Administration, 
                Department of Transportation (Parts 100--199)
        II  Federal Railroad Administration, Department of 
                Transportation (Parts 200--299)
       III  Federal Highway Administration, Department of 
                Transportation (Parts 300--399)
        IV  Coast Guard, Department of Transportation (Parts 400--
                499)
         V  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 500--599)
        VI  Federal Transit Administration, Department of 
                Transportation (Parts 600--699)
       VII  National Railroad Passenger Corporation (AMTRAK) 
                (Parts 700--799)
      VIII  National Transportation Safety Board (Parts 800--999)
         X  Surface Transportation Board, Department of 
                Transportation (Parts 1000--1399)

[[Page 424]]

                   Title 50--Wildlife and Fisheries

         I  United States Fish and Wildlife Service, Department of 
                the Interior (Parts 1--199)
        II  National Marine Fisheries Service, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 200--299)
       III  International Regulatory Agencies (Fishing and 
                Whaling) (Parts 300--399)
        IV  Joint Regulations (United States Fish and Wildlife 
                Service, Department of the Interior and National 
                Marine Fisheries Service, National Oceanic and 
                Atmospheric Administration, Department of 
                Commerce); Endangered Species Committee 
                Regulations (Parts 400--499)
         V  Marine Mammal Commission (Parts 500--599)
        VI  Fishery Conservation and Management, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 600--699)

                      CFR Index and Finding Aids

            Subject/Agency Index
            List of Agency Prepared Indexes
            Parallel Tables of Statutory Authorities and Rules
            Acts Requiring Publication in the Federal Register
            List of CFR Titles, Chapters, Subchapters, and Parts
            Alphabetical List of Agencies Appearing in the CFR



[[Page 425]]





           Alphabetical List of Agencies Appearing in the CFR



                   (Revised as of September 30, 1996)

                                                  CFR Title, Subtitle or
                     Agency                               Chapter

ACTION                                            45, XII
Administrative Committee of the Federal Register  1, I
Advanced Research Projects Agency                 32, I
Advisory Commission on Intergovernmental          5, VII
     Relations
Advisory Committee on Federal Pay                 5, IV
Advisory Council on Historic Preservation         36, VIII
African Development Foundation                    22, XV
  Federal Acquisition Regulation                  48, 57
Agency for International Development              22, II
  Federal Acquisition Regulation                  48, 7
Agricultural Marketing Service                    7, I, IX, X, XI
Agricultural Research Service                     7, V
Agriculture Department
  Agricultural Marketing Service                  7, I, IX, X, XI
  Agricultural Research Service                   7, V
  Animal and Plant Health Inspection Service      7, III; 9, I
  Commodity Credit Corporation                    7, XIV
  Cooperative State Research, Education, and      7, XXXIV
       Extension Service
  Economic Analysis Staff                         7, XXXIX
  Economic Research Service                       7, XXXVII
  Economics Management Staff                      7, XL
  Energy, Office of                               7, XXIX
  Environmental Quality, Office of                7, XXXI
  Farm Service Agency                             7, VII, XVIII
  Federal Acquisition Regulation                  48, 4
  Federal Crop Insurance Corporation              7, IV
  Finance and Management, Office of               7, XXX
  Food and Consumer Service                       7, II
  Food Safety and Inspection Service              9, III
  Foreign Agricultural Service                    7, XV
  Forest Service                                  36, II
  Grain Inspection, Packers and Stockyards        7, VIII; 9, II
       Administration
  Information Resources Management, Office of     7, XXVII
  Inspector General, Office of                    7, XXVI
  National Agricultural Library                   7, XLI
  National Agricultural Statistics Service        7, XXXVI
  Natural Resources Conservation Service          7, VI
  Operations, Office of                           7, XXVIII
  Rural Business-Cooperative Service              7, XVIII, XLII
  Rural Development Administration                7, XLII
  Rural Housing Service                           7, XVIII
  Rural Telephone Bank                            7, XVI
  Rural Utilities Service                         7, XVII, XVIII, XLII
  Secretary of Agriculture, Office of             7, Subtitle A
  Transportation, Office of                       7, XXXIII
  World Agricultural Outlook Board                7, XXXVIII
Air Force Department                              32, VII
  Federal Acquisition Regulation Supplement       48, 53
Alaska Natural Gas Transportation System, Office  10, XV
     of the Federal Inspector
Alcohol, Tobacco and Firearms, Bureau of          27, I
AMTRAK                                            49, VII

[[Page 426]]

American Battle Monuments Commission              36, IV
Animal and Plant Health Inspection Service        7, III; 9, I
Appalachian Regional Commission                   5, IX
Architectural and Transportation Barriers         36, XI
     Compliance Board
Arctic Research Commission                        45, XXIII
Arms Control and Disarmament Agency, United       22, VI
     States
Army Department                                   32, V
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 51
Assassination Records Review Board                36, XIV
Benefits Review Board                             20, VII
Bilingual Education and Minority Languages        34, V
     Affairs, Office of
Blind or Severely Disabled, Committee for         41, 51
     Purchase From People Who Are
Board for International Broadcasting              22, XIII
Census Bureau                                     15, I
Central Intelligence Agency                       32, XIX
Child Support Enforcement, Office of              45, III
Children and Families, Administration for         45, II, III, IV, X
Christopher Columbus Quincentenary Jubilee        45, XXII
     Commission
Civil Rights, Commission on                       45, VII
Civil Rights, Office for                          34, I
Coast Guard                                       33, I; 46, I; 49, IV
Commerce Department                               44, IV
  Census Bureau                                   15, I`
  Economic Affairs, Under Secretary               37, V
  Economic Analysis, Bureau of                    15, VIII
  Economic Development Administration             13, III
  Emergency Management and Assistance             44, IV
  Export Administration, Bureau of                15, VII
  Federal Acquisition Regulation                  48, 13
  Fishery Conservation and Management             50, VI
  Foreign-Trade Zones Board                       15, IV
  International Trade Administration              15, III; 19, III
  National Institute of Standards and Technology  15, II
  National Marine Fisheries Service               50, II, IV
  National Oceanic and Atmospheric                15, IX; 50, II, III, IV, 
       Administration                             VI
  National Telecommunications and Information     15, XXIII; 47, III
       Administration
  National Weather Service                        15, IX
  Patent and Trademark Office                     37, I
  Productivity, Technology and Innovation,        37, IV
       Assistant Secretary for
  Secretary of Commerce, Office of                15, Subtitle A
  Technology, Under Secretary for                 37, V
  Technology Administration                       15, XI
  Technology Policy, Assistant Secretary for      37, IV
Commercial Space Transportation                   14, III
Commodity Credit Corporation                      7, XIV
Commodity Futures Trading Commission              5, XLI; 17, I
Community Planning and Development, Office of     24, V, VI
     Assistant Secretary for
Community Services, Office of                     45, X
Comptroller of the Currency                       12, I
Construction Industry Collective Bargaining       29, IX
     Commission
Consumer Product Safety Commission                16, II
Cooperative State Research, Education, and        7, XXXIV
     Extension Service
Copyright Office                                  37, II
Cost Accounting Standards Board                   48, 99
Council on Environmental Quality                  40, V
Customs Service, United States                    19, I
Defense Contract Audit Agency                     32, I
Defense Department                                5, XXVI; 32, Subtitle A
  Advanced Research Projects Agency               32, I
  Air Force Department                            32, VII
  Army Department                                 32, V; 33, II; 36, III, 
                                                  48, 51

[[Page 427]]

  Defense Intelligence Agency                     32, I
  Defense Logistics Agency                        32, I, XII; 48, 54
  Defense Mapping Agency                          32, I
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 2
  Navy Department                                 32, VI; 48, 52
  Secretary of Defense, Office of                 32, I
Defense Contract Audit Agency                     32, I
Defense Intelligence Agency                       32, I
Defense Logistics Agency                          32, XII; 48, 54
Defense Mapping Agency                            32, I
Defense Nuclear Facilities Safety Board           10, XVII
Delaware River Basin Commission                   18, III
Drug Enforcement Administration                   21, II
East-West Foreign Trade Board                     15, XIII
Economic Affairs, Under Secretary                 37, V
Economic Analysis, Bureau of                      15, VIII
Economic Analysis Staff                           7, XXXIX
Economic Development Administration               13, III
Economics Management Staff                        7, XL
Economic Research Service                         7, XXXVII
Education, Department of                          5, LIII
  Bilingual Education and Minority Languages      34, V
       Affairs, Office of
  Civil Rights, Office for                        34, I
  Educational Research and Improvement, Office    34, VII
       of
  Elementary and Secondary Education, Office of   34, II
  Federal Acquisition Regulation                  48, 34
  Postsecondary Education, Office of              34, VI
  Secretary of Education, Office of               34, Subtitle A
  Special Education and Rehabilitative Services,  34, III
       Office of
  Vocational and Adult Education, Office of       34, IV
Educational Research and Improvement, Office of   34, VII
Elementary and Secondary Education, Office of     34, II
Employees' Compensation Appeals Board             20, IV
Employees Loyalty Board                           5, V
Employment and Training Administration            20, V
Employment Standards Administration               20, VI
Endangered Species Committee                      50, IV
Energy, Department of                             5, XXIII; 10, II, III, X
  Federal Acquisition Regulation                  48, 9
  Federal Energy Regulatory Commission            5, XXIV; 18, I
  Property Management Regulations                 41, 109
Energy, Office of                                 7, XXIX
Engineers, Corps of                               33, II; 36, III
Engraving and Printing, Bureau of                 31, VI
Enrichment Corporation, United States             10, XI
Environmental Protection Agency                   5, LIV; 40, I
  Federal Acquisition Regulation                  48, 15
  Property Management Regulations                 41, 115
Environmental Quality, Office of                  7, XXXI
Equal Employment Opportunity Commission           5, LXII; 29, XIV
Equal Opportunity, Office of Assistant Secretary  24, I
     for
Executive Office of the President                 3, I
  Administration, Office of                       5, XV
  Environmental Quality, Council on               40, V
  Management and Budget, Office of                25, III, LXXVII; 48, 99
  National Drug Control Policy, Office of         21, III
  National Security Council                       32, XXI; 47, 2
  Presidential Documents                          3
  Science and Technology Policy, Office of        32, XXIV; 47, II
  Trade Representative, Office of the United      15, XX
       States
Export Administration, Bureau of                  15, VII
Export-Import Bank of the United States           5, LII; 12, IV
Family Assistance, Office of                      45, II
Farm Credit Administration                        5, XXXI; 12, VI
Farm Credit System Insurance Corporation          5, XXX; 12, XIV

[[Page 428]]

Farm Service Agency                               7, VII, XVIII
Farmers Home Administration                       7, XVIII
Federal Acquisition Regulation                    48, 1
Federal Aviation Administration                   14, I
  Commercial Space Transportation                 14, III
Federal Claims Collection Standards               4, II
Federal Communications Commission                 47, I
Federal Contract Compliance Programs, Office of   41, 60
Federal Crop Insurance Corporation                7, IV
Federal Deposit Insurance Corporation             5, XXII; 12, III
Federal Election Commission                       11, I
Federal Emergency Management Agency               44, I
  Federal Acquisition Regulation                  48, 44
Federal Employees Group Life Insurance Federal    48, 21
     Acquisition Regulation
Federal Employees Health Benefits Acquisition     48, 16
     Regulation
Federal Energy Regulatory Commission              5, XXIV; 18, I
Federal Financial Institutions Examination        12, XI
     Council
Federal Financing Bank                            12, VIII
Federal Highway Administration                    23, I, II; 49, III
Federal Home Loan Mortgage Corporation            1, IV
Federal Housing Enterprise Oversight Office       12, XVII
Federal Housing Finance Board                     12, IX
Federal Inspector for the Alaska Natural Gas      10, XV
     Transportation System, Office of
Federal Labor Relations Authority, and General    5, XIV; 22, XIV
     Counsel of the Federal Labor Relations 
     Authority
Federal Law Enforcement Training Center           31, VII
Federal Maritime Commission                       46, IV
Federal Mediation and Conciliation Service        29, XII
Federal Mine Safety and Health Review Commission  5, LXXIV; 29, XXVII
Federal Pay, Advisory Committee on                5, IV
Federal Prison Industries, Inc.                   28, III
Federal Procurement Policy Office                 48, 99
Federal Property Management Regulations           41, 101
Federal Property Management Regulations System    41, Subtitle C
Federal Railroad Administration                   49, II
Federal Register, Administrative Committee of     1, I
Federal Register, Office of                       1, II
Federal Reserve System                            12, II
Federal Retirement Thrift Investment Board        5, VI, LXXVI
Federal Service Impasses Panel                    5, XIV
Federal Trade Commission                          5, XLVII; 16, I
Federal Transit Administration                    49, VI
Federal Travel Regulation System                  41, Subtitle F
Finance and Management, Office of                 7, XXX
Fine Arts, Commission on                          45, XXI
Fiscal Service                                    31, II
Fish and Wildlife Service, United States          50, I, IV
Fishery Conservation and Management               50, VI
Fishing and Whaling, International Regulatory     50, III
     Agencies
Food and Drug Administration                      21, I
Food and Consumer Service                         7, II
Food Safety and Inspection Service                9, III
Foreign Agricultural Service                      7, XV
Foreign Assets Control, Office of                 31, V
Foreign Claims Settlement Commission of the       45, V
     United States
Foreign Service Grievance Board                   22, IX
Foreign Service Impasse Disputes Panel            22, XIV
Foreign Service Labor Relations Board             22, XIV
Foreign-Trade Zones Board                         15, IV
Forest Service                                    36, II
General Accounting Office                         4, I, II
General Services Administration
  Contract Appeals, Board of                      48, 61
  Federal Acquisition Regulation                  48, 5
  Federal Property Management Regulations System  41, 101, 105

[[Page 429]]

  Federal Travel Regulation System                41, Subtitle F
  Payment From a Non-Federal Source for Travel    41, 304
       Expenses
  Payment of Expenses Connected With the Death    41, 303
       of Certain Employees
  Relocation Allowances                           41, 302
  Travel Allowances                               41, 301
Geological Survey                                 30, IV
Government Ethics, Office of                      5, XVI
Government National Mortgage Association          24, III
Grain Inspection, Packers and Stockyards          7, VIII; 9, II
     Administration
Great Lakes Pilotage                              46, III
Harry S. Truman Scholarship Foundation            45, XVIII
Health and Human Services, Department of          5, XLV; 45, Subtitle A
  Child Support Enforcement, Office of            45, III
  Children and Families, Administration for       45, II, III, IV, X
  Community Services, Office of                   45, X
  Family Assistance, Office of                    45, II
  Federal Acquisition Regulation                  48, 3
  Food and Drug Administration                    21, I
  Health Care Financing Administration            42, IV
  Human Development Services, Office of           45, XIII
  Indian Health Service                           25, V
  Inspector General (Health Care), Office of      42, V
  Public Health Service                           42, I
  Refugee Resettlement, Office of                 45, IV
Health Care Financing Administration              42, IV
Housing and Urban Development, Department of      5, LXV; 24, Subtitle B
  Community Planning and Development, Office of   24, V, VI
       Assistant Secretary for
  Equal Opportunity, Office of Assistant          24, I
       Secretary for
  Federal Acquisition Regulation                  48, 24
  Federal Housing Enterprise Oversight, Office    12, XVII
       of
  Government National Mortgage Association        24, III
  Housing--Federal Housing Commissioner, Office   24, II, VIII, X, XX
       of Assistant Secretary for
  Inspector General, Office of                    24, XII
  Public and Indian Housing, Office of Assistant  24, IX
       Secretary for
  Secretary, Office of                            24, Subtitle A, VII
Housing--Federal Housing Commissioner, Office of  24, II, VIII, X, XX
     Assistant Secretary for
Human Development Services, Office of             45, XIII
Immigration and Naturalization Service            8, I
Independent Counsel, Office of                    28, VII
Indian Affairs, Bureau of                         25, I, V
Indian Affairs, Office of the Assistant           25, VI
     Secretary
Indian Arts and Crafts Board                      25, II
Indian Health Service                             25, V
Information Agency, United States                 22, V
  Federal Acquisition Regulation                  48, 19
Information Resources Management, Office of       7, XXVII
Information Security Oversight Office, National   32, XX
     Archives and Records Administration
Inspector General
  Agriculture Department                          7, XXVI
  Health and Human Services Department            42, V
  Housing and Urban Development Department        24, XII
Institute of Peace, United States                 22, XVII
Inter-American Foundation                         5, LXIII; 22, X
Intergovernmental Relations, Advisory Commission  5, VII
     on
Interior Department
  Endangered Species Committee                    50, IV
  Federal Acquisition Regulation                  48, 14
  Federal Property Management Regulations System  41, 114
  Fish and Wildlife Service, United States        50, I, IV
  Geological Survey                               30, IV
  Indian Affairs, Bureau of                       25, I, V
  Indian Affairs, Office of the Assistant         25, VI
     Secretary
[[Page 430]]

  Indian Arts and Crafts Board                    25, II
  Land Management, Bureau of                      43, II
  Minerals Management Service                     30, II
  Mines, Bureau of                                30, VI
  National Indian Gaming Commission               25, III
  National Park Service                           36, I
  Reclamation, Bureau of                          43, I
  Secretary of the Interior, Office of            43, Subtitle A
  Surface Mining and Reclamation Appeals, Board   30, III
       of
  Surface Mining Reclamation and Enforcement,     30, VII
       Office of
Internal Revenue Service                          26, I
International Boundary and Water Commission,      22, XI
     United States and Mexico, United States 
     Section
International Development, Agency for             22, II
  Federal Acquisition Regulation                  48, 7
International Development Cooperation Agency,     22, XII
     United States
  International Development, Agency for           22, II; 48, 7
  Overseas Private Investment Corporation         5, XXXIII; 22, VII
International Investment, Office of               31, VIII
International Joint Commission, United States     22, IV
     and Canada
International Organizations Employees Loyalty     5, V
     Board
International Regulatory Agencies (Fishing and    50, III
     Whaling)
International Trade Administration                15, III; 19, III
International Trade Commission, United States     19, II
Interstate Commerce Commission                    5, XL
James Madison Memorial Fellowship Foundation      45, XXIV
Japan-United States Friendship Commission         22, XVI
Joint Board for the Enrollment of Actuaries       20, VIII
Justice Department                                28, I
  Drug Enforcement Administration                 21, II
  Federal Acquisition Regulation                  48, 28
  Federal Claims Collection Standards             4, II
  Federal Prison Industries, Inc.                 28, III
  Foreign Claims Settlement Commission of the     45, V
       United States
  Immigration and Naturalization Service          8, I
  Offices of Independent Counsel                  28, VI
  Prisons, Bureau of                              28, V
  Property Management Regulations                 41, 128
Labor Department
  Benefits Review Board                           20, VII
  Employees' Compensation Appeals Board           20, IV
  Employment and Training Administration          20, V
  Employment Standards Administration             20, VI
  Federal Acquisition Regulation                  48, 29
  Federal Contract Compliance Programs, Office    41, 60
       of
  Federal Procurement Regulations System          41, 50
  Labor-Management Relations and Cooperative      29, II
       Programs, Bureau of
  Labor-Management Programs, Office of            29, IV
  Mine Safety and Health Administration           30, I
  Occupational Safety and Health Administration   29, XVII
  Pension and Welfare Benefits Administration     29, XXV
  Public Contracts                                41, 50
  Secretary of Labor, Office of                   29, Subtitle A
  Veterans' Employment and Training, Office of    41, 61; 20, IX
       the Assistant Secretary for
  Wage and Hour Division                          29, V
  Workers' Compensation Programs, Office of       20, I
Labor-Management Relations and Cooperative        29, II
     Programs, Bureau of
Labor-Management Programs, Office of              29, IV
Land Management, Bureau of                        43, II
Legal Services Corporation                        45, XVI
Library of Congress                               36, VII
  Copyright Office                                37, II

[[Page 431]]

Management and Budget, Office of                  5, III, LXXVII; 48, 99
Marine Mammal Commission                          50, V
Maritime Administration                           46, II
Merit Systems Protection Board                    5, II
Micronesian Status Negotiations, Office for       32, XXVII
Mine Safety and Health Administration             30, I
Minerals Management Service                       30, II
Mines, Bureau of                                  30, VI
Minority Business Development Agency              15, XIV
Miscellaneous Agencies                            1, IV
Monetary Offices                                  31, I
National Aeronautics and Space Administration     5, LIX; 14, V
  Federal Acquisition Regulation                  48, 18
National Agricultural Library                     7, XLI
National Agricultural Statistics Service          7, XXXVI
National Archives and Records Administration      5, LXVI; 36, XII
  Information Security Oversight Office           32, XX
National Bureau of Standards                      15, II
National Capital Planning Commission              1, IV
National Commission for Employment Policy         1, IV
National Commission on Libraries and Information  45, XVII
     Science
National and Community Service, Corporation for   45, XXV
National Council on Disability                    34, XII
National Credit Union Administration              12, VII
National Drug Control Policy, Office of           21, III
National Foundation on the Arts and the           45, XI
     Humanities
National Highway Traffic Safety Administration    23, II, III; 49, V
National Indian Gaming Commission                 25, III
National Institute for Literacy                   34, XI
National Institute of Standards and Technology    15, II
National Labor Relations Board                    29, I
National Marine Fisheries Service                 50, II, IV
National Mediation Board                          29, X
National Oceanic and Atmospheric Administration   15, IX; 50, II, III, IV, 
                                                  VI
National Park Service                             36, I
National Railroad Adjustment Board                29, III
National Railroad Passenger Corporation (AMTRAK)  49, VII
National Science Foundation                       45, VI
  Federal Acquisition Regulation                  48, 25
National Security Council                         32, XXI
National Security Council and Office of Science   47, II
     and Technology Policy
National Telecommunications and Information       15, XXIII; 47, III
     Administration
National Transportation Safety Board              49, VIII
National Weather Service                          15, IX
Natural Resources Conservation Service            7, VI
Navajo and Hopi Indian Relocation, Office of      25, IV
Navy Department                                   32, VI
  Federal Acquisition Regulation                  48, 52
Neighborhood Reinvestment Corporation             24, XXV
Nuclear Regulatory Commission                     5, XLVIII; 10, I
  Federal Acquisition Regulation                  48, 20
Occupational Safety and Health Administration     29, XVII
Occupational Safety and Health Review Commission  29, XX
Offices of Independent Counsel                    28, VI
Operations Office                                 7, XXVIII
Overseas Private Investment Corporation           5, XXXIII; 22, VII
Panama Canal Commission                           48, 35
Panama Canal Regulations                          35, I
Patent and Trademark Office                       37, I
Payment From a Non-Federal Source for Travel      41, 304
     Expenses
Payment of Expenses Connected With the Death of   41, 303
     Certain Employees
Peace Corps                                       22, III
Pennsylvania Avenue Development Corporation       36, IX
Pension and Welfare Benefits Administration       29, XXV

[[Page 432]]

Pension Benefit Guaranty Corporation              29, XL
Personnel Management, Office of                   5, I; 45, VIII
  Federal Acquisition Regulation                  48, 17
  Federal Employees Group Life Insurance Federal  48, 21
       Acquisition Regulation
  Federal Employees Health Benefits Acquisition   48, 16
       Regulation
Postal Rate Commission                            5, XLVI; 39, III
Postal Service, United States                     5, LX; 39, I
Postsecondary Education, Office of                34, VI
President's Commission on White House             1, IV
     Fellowships
Presidential Commission on the Assignment of      32, XXIX
     Women in the Armed Forces
Presidential Documents                            3
Prisons, Bureau of                                28, V
Productivity, Technology and Innovation,          37, IV
     Assistant Secretary
Public Contracts, Department of Labor             41, 50
Public and Indian Housing, Office of Assistant    24, IX
     Secretary for
Public Health Service                             42, I
Railroad Retirement Board                         20, II
Reclamation, Bureau of                            43, I
Refugee Resettlement, Office of                   45, IV
Regional Action Planning Commissions              13, V
Relocation Allowances                             41, 302
Research and Special Programs Administration      49, I
Rural Business-Cooperative Service                7, XVIII, XLII
Rural Development Administration                  7, XLII
Rural Housing Service                             7, XVIII
Rural Telephone Bank                              7, XVI
Rural Utilities Service                           7, XVII, XVIII, XLII
Saint Lawrence Seaway Development Corporation     33, IV; 46, III
Science and Technology Policy, Office of          32, XXIV
Science and Technology Policy, Office of, and     47, II
     National Security Council
Secret Service                                    31, IV
Securities and Exchange Commission                17, II
Selective Service System                          32, XVI
Small Business Administration                     13, I
Smithsonian Institution                           36, V
Social Security Administration                    20, III; 48, 23
Soldiers' and Airmen's Home, United States        5, XI
Special Counsel, Office of                        5, VIII
Special Education and Rehabilitative Services,    34, III
     Office of
State Department                                  22, I
  Federal Acquisition Regulation                  48, 6
Surface Mining and Reclamation Appeals, Board of  30, III
Surface Mining Reclamation and Enforcement,       30, VII
     Office of
Surface Transportation Board                      49, X
Susquehanna River Basin Commission                18, VIII
Technology Administration                         15, XI
Technology Policy, Assistant Secretary for        37, IV
Technology, Under Secretary for                   37, V
Tennessee Valley Authority                        5, LXIX; 18, XIII
Thrift Depositor Protection Oversight Board       12, XV
Thrift Supervision Office, Department of the      12, V
     Treasury
Trade Representative, United States, Office of    15, XX
Transportation, Department of                     5, L
  Coast Guard                                     33, I; 46, I; 49, IV
  Commercial Space Transportation                 14, III
  Contract Appeals, Board of                      48, 63
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 12
  Federal Aviation Administration                 14, I
  Federal Highway Administration                  23, I, II; 49, III
  Federal Railroad Administration                 49, II
  Federal Transit Administration                  49, VI
  Maritime Administration                         46, II

[[Page 433]]

  National Highway Traffic Safety Administration  23, II, III; 49, V
  Research and Special Programs Administration    49, I
  Saint Lawrence Seaway Development Corporation   33, IV; 46, III
  Secretary of Transportation, Office of          14, II; 49, Subtitle A
  Surface Transportation Board                    49, X
Transportation, Office of                         7, XXXIII
Travel Allowances                                 41, 301
Treasury Department                               5, XXI; 17, IV
  Alcohol, Tobacco and Firearms, Bureau of        27, I
  Community Development Financial Institutions    12, XVIII
       Fund
  Comptroller of the Currency                     12, I
  Customs Service, United States                  19, I
  Engraving and Printing, Bureau of               31, VI
  Federal Acquisition Regulation                  48, 10
  Federal Law Enforcement Training Center         31, VII
  Fiscal Service                                  31, II
  Foreign Assets Control, Office of               31, V
  Internal Revenue Service                        26, I
  International Investment, Office of             31, VIII
  Monetary Offices                                31, I
  Secret Service                                  31, IV
  Secretary of the Treasury, Office of            31, Subtitle A
  Thrift Supervision, Office of                   12, V
Truman, Harry S. Scholarship Foundation           45, XVIII
United States and Canada, International Joint     22, IV
     Commission
United States and Mexico, International Boundary  22, XI
     and Water Commission, United States Section
United States Enrichment Corporation              10, XI
Utah Reclamation Mitigation and Conservation      43, III
     Commission
Veterans Affairs Department                       38, I
  Federal Acquisition Regulation                  48, 8
Veterans' Employment and Training, Office of the  41, 61; 20, IX
     Assistant Secretary for
Vice President of the United States, Office of    32, XXVIII
Vocational and Adult Education, Office of         34, IV
Wage and Hour Division                            29, V
Water Resources Council                           18, VI
Workers' Compensation Programs, Office of         20, I
World Agricultural Outlook Board                  7, XXXVIII

[[Page 435]]



List of CFR Sections Affected



All changes in this volume of the Code of Federal Regulations which were 
made by documents published in the Federal Register since January 1, 
1986, are enumerated in the following list. Entries indicate the nature 
of the changes effected. Page numbers refer to Federal Register pages. 
The user should consult the entries for chapters and parts as well as 
sections for revisions. For the period before January 1, 1986, see the 
``List of CFR Sections Affected, 1949-1963, 1964-1972, and 1973-1985'' 
published in seven separate volumes.

                                  1986

48 CFR
                                                                   51 FR
                                                                    Page
Chapter 2
Chapter 2  Revised.................................................46053
204.202  (c)(6) added; interim eff. to 9-30-87.....................42096
204.673  Revised; interim..........................................43201
204.673-1  Revised; interim........................................43201
204.673-2  Revised; interim........................................43202
204.673-3  Revised; interim........................................43202
204.673-4  Revised; interim........................................43202
204.673-5  Revised; interim........................................43202
205  Subchapter assignment; editorial note..........................6004
206  Subchapter assignment; editorial note..........................6004
213.203-2  Confirmed...............................................19552
213.505-2  Confirmed...............................................19552
215.900--215.973 (Subpart 215.9)  Revised; interim.................43202
217.7204  Confirmed; (a)(3) and (b)(3) amended.....................19552
222.7200--222.7202 (Subpart 222.72)  Added; interim.................4501
    Revised........................................................43355
223.7001--223.7004 (Subpart 223.70)  Added; interim................28944
    Eff. 8-1-86....................................................29231
223.7100--223.7105 (Subpart 223.71)  Added; interim eff. to 9-30-
        87.........................................................42096
228.7102  Removed; interim.........................................28945
    Eff. 8-1-86....................................................29231
230.7001--230.7007 (Subpart 230.70)  Revised; interim..............43208
232.070  Added.....................................................13513
    Effective date corrected.......................................16042
    Added; interim.................................................43211
232.102  (e)(2) revised............................................13513
    Effective date corrected.......................................16042
    Added; interim.................................................43211
232.111  (S-71) and (S-72) added...................................13513
    Effective date corrected.......................................16042
    (S-71) and (S-72) added; interim...............................43211
232.501-1  (a) amended; (S-70) added...............................13513
    Effective date corrected.......................................16042
    (a) revised; interim...........................................28946
    Revised; interim...............................................43211
232.502-1  (S-71) (1), (2), (4), (7), and (9) amended; interim.....43211
232.502-4  (S-72), (S-73), and (S-74) added........................13513
    Effective date corrected.......................................16042
    (S-73) corrected...............................................18587
    (S-72) through (S-74) added; interim...........................43211
240.470  Added; interim eff. to 9-30-87............................42096
242.302  (a)(39) added; interim....................................28945
    Eff. 8-1-86....................................................29231
242.705-1  (b)(5)(i) added.........................................12331
242.770  Revised...................................................13517
    Technical correction...........................................16042
242.770-1  Revised.................................................13518
    Technical correction...........................................16042
242.770-2  Correctly removed.......................................16042
246.701  Amended...................................................18588
246.702  (d) revised...............................................18588
246.703  Amended...................................................18588
246.710  Added.....................................................18588

[[Page 436]]

246.770-1  Amended.................................................18588
246.770-2  (a)(2) introductory text and (i) amended................18588
246.770-3  Revised.................................................18588
246.770-4  Amended.................................................18588
246.770-6  Amended.................................................18588
246.770-7  Revised.................................................18588
246.770-8  Revised.................................................18588
246.770-9  Introductory text amended; (d)(1)(ii) and (4) revised; 
        (d)(1)(iii) added..........................................18589
246.770-10  (a) removed; (b) redesignated as (a)...................18589

                                  1987

48 CFR
                                                                   52 FR
                                                                    Page
Chapter 2
202.101  Amended...................................................34784
203.170  Added; interim............................................12385
203.170-1  Added; interim..........................................12385
203.170-2  Added; interim..........................................12385
    Corrected......................................................19870
203.170-3  Added; interim..........................................12385
203.170-4  Added; interim..........................................12386
203.170-5  Added; interim..........................................12386
203.571  Added.....................................................34784
203.571-1--203.571-2  Added........................................34784
203.571-3--203.571-5  Added........................................34785
203.7000--203.7002 (Subpart 203.70)  Added.........................34386
204.202  (c)(6) added; interim eff. to 9-30-88.....................36775
    (c)(6) added; interim eff. to 1-31-88...........................4318
204.470  Added; interim eff. to 9-30-88............................36775
204.471 (Subpart 204.4)  Added; interim eff. to 1-31-88.............4318
204.601  Added.....................................................34785
204.670-2  Amended.................................................36420
204.670-5  Added...................................................36420
204.671-4  (a) amended.............................................34785
204.671-5  (d)(9) and (e)(3)(iii) amended; (e)(3) (iv) and (v) 
        added; (f) revised; interim................................16264
    (e)(3)(iii) corrected; (e)(3)(v) correctly removed.............19871
    (b)(13)(xi), (d) introductory text, (7), (8), (9) and (10), 
and (e)(1)(ii) and (9)(iv) amended; (d)(2) revised.................34785
    (b)(5)(iii) revised; (f) introductory text removed; (f)(2) 
added..............................................................36421
204.673  Revised; final............................................28707
204.673-1  Revised; final..........................................28707
204.673-2  Revised; final..........................................28707
204.673-3  Revised; final..........................................28707
204.673-4  Revised; final..........................................28708
204.673-5  Removed; final..........................................28708
204.7200--204.7204 (Subpart 204.72)  Added; interim eff. to 1-31-
        88..........................................................4318
205.201  (S-70) heading and text amended...........................34785
205.202  (a)(4)(S-70) added; interim...............................16264
    Correctly removed..............................................19871
205.203  Added.....................................................34785
205.205  Removed...................................................34785
205.207  (d) (S-72) and (S-73) added; interim......................16264
205.470  Added; interim............................................12387
206.203--206.203-70  Added; interim................................16264
206.302-1  Heading and (c)(S-70) amended...........................34785
207.103  (i) amended...............................................34785
207.105  (b) (5), (6) and (13) redesignated as (b) (2), (5) and 
        (12); new (b)(6) added.....................................34787
207.302  (d)(2) amended............................................34787
208.102 (Subpart 208.1)  Added.....................................34787
208.404-2  (a) (S-70) revised........................................781
    Revised........................................................34787
208.404-70  Revised................................................33411
    Table corrected................................................34866
208.7003-1  Amended................................................34787
208.7003-6  Amended................................................34787
208.7006-3  (a) revised; (b) redesignated as (d); new (b) and (c) 
        added......................................................34787
209.406-1  (d) revised; (e) added..................................34387
209.406-4  (a) revised; (b) added..................................34387
210.001  Amended...................................................34787
210.002  Added.....................................................34787
213.203-1  Added...................................................33414
213.203-2  Revised.................................................33414
213.204  (b) amended...............................................33414
213.402  (b)(2) amended............................................33414
213.404  (b)(1) amended............................................33414
213.503  (b) (2) and (3) amended...................................33414
213.505-2  Revised.................................................33414
    (S-73)(li) and (lii) amended; (S-73(liii) added................34787

[[Page 437]]

213.505-70  Heading amended; (c) redesignated as (e), text and 
        table amended; new (c) and (d) added.......................33414
213.507  Added.....................................................33415
214.201  Revised...................................................19871
214.201-2  Added...................................................19871
214.202-1  (b) added...............................................34788
215.170  (c) amended...............................................34788
215.406  Added.....................................................19871
215.406-2  Added...................................................19871
215.805-5  (c)(1)(S-70) (A) and (B) revised........................34788
215.872  Revised...................................................26346
215.873  Added......................................................1915
215.874  Added.....................................................34788
215.875  Added; interim............................................11277
    Correctly designated...........................................13447
215.900--215.973 (Subpart 215.9)  Revised; final...................28708
215.902  (a)(1)(i) and (S-72) corrected............................36419
215.970-1  (b)(2)(v) correctly added...............................30688
    (b)(2)(i) table, (ii) table, and (iv) and (4)(ii) and 
(c)(3)(i) corrected................................................36420
215.971-2  Corrected...............................................36420
215.972-1  (a) introductory text and (1) corrected.................36420
215.973  Corrected.................................................36420
215.1001  (b)(1) and (c) removed...................................34788
216.603-3  Added; interim..........................................12388
    Effective date note corrected..................................19872
216.703  (c) amended; interim......................................12388
    Effective date note corrected..................................19872
217.202  Added; interim............................................12388
    Effective date corrected.......................................19872
217.7202-1  (c) amended............................................34788
217.7202-4  (b) amended............................................34788
217.7204  (a) introductory text and (1) amended; (b) and (c) 
        redesignated as (c) and (d); new (c) (2) and (3) amended; 
        new (b) and (c)(4) added...................................11077
    (a) introductory text and (1) amended; (b) and (c) 
redesignated as (c) and (d); new (b) added.........................34788
217.7402  (c) added; interim.......................................12388
    Effective date note corrected..................................19872
217.7500--217.7504 (Subpart 217.75)  Added; interim................13288
    Effective date note corrected..................................19872
217.7503  (b)(3)(ii) and (4) corrected.............................23835
    (b)(5) corrected...............................................33415
219.000  Added; interim............................................16265
219.001  Added; interim............................................16265
219.201  (a) added; interim........................................16265
219.202-5  Existing text designated as (a); (b) added; interim.....16265
219.301--219.304 (Subpart 219.3)  Added; interim...................16265
219.304  (b) corrected.............................................19871
219.501  (b) added; (c), (d), and (g) amended; interim.............16266
219.501-70  Added; interim.........................................16266
219.502-3  Added; interim..........................................16266
219.502-4  Added; interim..........................................16266
219.502-70  (b) amended; interim...................................16266
219.502-72  Added; interim.........................................16266
219.503  (S-70) added; interim.....................................16267
219.504  (b) (1) through (4) redesignated as (b) (2) through (5); 
        new (b)(1) added; interim..................................16267
219.506  (a) added; (b) amended; interim...........................16267
219.507  Added; interim............................................16267
219.508  (S-71) added..............................................16267
219.801--219.803 (Subpart 219.8)  Added; interim...................16267
222.7200--222.7202 (Subpart 222.72)  Heading amended...............34788
222.7200  (a), (b) and (c) amended.................................34788
222.7201  Amended..................................................34788
223.7100--223.7105 (Subpart 223.71) added; interim eff. to 9-30-88
                                                                   36775
225.109  (a)(S-70) and (d)(S-70) amended...........................49414
225.302  (S-72)(2)(i) amended......................................34788
225.407  (a) (1) and (2) amended...................................49414
225.7000  Amended; interim.........................................12390
225.7001  Amended; interim.........................................12390
225.7008  Added; interim...........................................12390
225.7008  (b), (c), and (d) revised; (e) removed...................49414
225.7301  (b) revised..............................................34788
225.7304  (c)(1)(i)(C) amended.....................................34789
225.7305  (f) amended..............................................34789
227.470--227.482 (Subpart 227.4)  Revised..........................12391

[[Page 438]]

227.471  Corrected.................................................36422
227.472-1  Introductory text, (a), and (b) heading corrected.......36422
227.472-2  Corrected...............................................36422
227.472-4  Heading corrected.......................................36422
227.472-5  Correctly designated....................................36422
227.473-1  (a) introductory text corrected.........................36422
227.473-3  (a) corrected...........................................36422
227.473-4  (a)(2) and (c) introductory text corrected..............36422
227.473-5  (a)(4)(i) heading and text and (ii)(A) corrected........36422
227.474-1  Corrected...............................................36422
227.475-2  (b) corrected...........................................36422
227.475-6  Corrected...............................................36422
227.475-8  Corrected...............................................36422
227.478-2  (a)(1)(ii) corrected....................................36422
227.478-3  Corrected...............................................36422
227.479  (b) corrected.............................................36422
227.480  (d) introductory text corrected...........................36422
227.481-1  (a)(3)(i), (d), and (f) corrected.......................36422
227.482  (a)(1)(iii), (2), and (3), (n), and (s) corrected; (l) 
        correctly designated.......................................36422
230.7001--230.7007 (Subpart 230.70)  Revised; final................28714
231.7001 (Subpart 231.70)  Added; interim...........................5771
232.102  (S-70) added..............................................47005
232.103  Added; interim............................................30369
232.111  (S-71) and (S-72) added; interim..........................30369
233.214  Amended...................................................34789
235.003  (a), (b), (b)(S-70), (S-71) and (S-72) revised............24473
    (b)(S-71)(iv) correctly added..................................28148
242.771  Added; interim.............................................5772
243.102  Added; interim............................................12389
    Effective date note corrected..................................19872
243.201  (a) redesignated as (S-70); (S-71) added; interim.........12389
    Effective date note corrected..................................19872
244.304  (b)(1) (xvi), (xx), and (xxi) amended; (b)(1)(xxii) added
                                                             8908, 34789
245.106 (Subpart 245.1)  Added; interim............................12390
245.106 (Subpart 245.1)  Removed...................................49415
245.505-14  (a) revised; (b) added.................................39535
245.608-71  (g) revised............................................34789
245.7102-6  (b)(9) removed.........................................34789
248.201  Revised...................................................23835

                                  1988

48 CFR
                                                                   53 FR
                                                                    Page
Chapter 2
201.103  (a) amended...............................................38179
201.602  Removed...................................................38236
201.602-1  Removed.................................................38236
201.670  Removed...................................................38236
201.670-1--201.670-5  Removed......................................38236
202.101  (a) amended..............................................38174,
                                                     38179, 38193, 38246
203.170  Addition confirmed........................................38236
203.170-1  Addition confirmed and amended..........................38236
203.170-2  Addition confirmed......................................38236
    Revised........................................................38237
203.170-3  Addition confirmed......................................38236
    Amended........................................................38237
203.170-4  Addition confirmed......................................38236
    (a) (1) and (2) amended........................................38237
203.170-5  Addition confirmed......................................38236
203.410  Removed...................................................38193
203.7001  Amended; interim.........................................38242
203.7002  Amended; interim.........................................38242
204.202  (c)(6) addition interim effectiveness extended to 1-1-89 
                                                                   32620
    (c)(6) addition at 52 FR 4318 confirmed and redesignated as 
(c)(7).............................................................38174
    (c)(6) addition at 52 FR 36775 confirmed and amended...........38237
    (c)(7) removed.................................................38246
204.470  Addition interim effectiveness extended to 1-1-89.........32620
    Addition at 52 FR 36775 confirmed..............................38237
204.471 (Subpart 204.4)  Addition confirmed........................38174
204.471  Removed...................................................38246
204.500--204.503 (Subpart 204.5)  Added............................51559
204.601--204.674-3 (Subpart 204.6)  Revised........................34091
204.670-2  Amended; interim........................................38242
    Corrected......................................................50413
204.670-4  Corrected...............................................50413
204.671-3  (d) (6) and (7) corrected...............................50413

[[Page 439]]

204.671-4  (c) and (e) corrected...................................50413
204.671-5  (d)(9) introductory text, (e)(3) (iii) and (iv) and 
        (f)(1)(vi) amended; (e)(1)(v) redesignated as (e)(1)(vi); 
        new (e) (1)(v) and (3) (v) through (viii) added; (f)(1) 
        introductory text revised; interim..........................5115
    Confirmed......................................................20628
    (b) amended....................................................43205
    (b), (c), (d), (e), and (f) corrected..........................50413
204.672-1  Corrected...............................................50414
204.672-5  (b), (c), (d), and (e) corrected........................50414
204.672-6  Corrected...............................................50414
204.673-1  Correctly added.........................................50414
204.673-2  Correctly added.........................................50414
204.673-3  Correctly added.........................................50414
204.673-4  Correctly added.........................................50415
204.706--204.706-1 (Subpart 204.7)  Removed........................38179
204.801  (c)(3) removed............................................38179
204.803  (a)(8) removed............................................38179
204.903 (Subpart 204.9)  Added.....................................43205
204.7200--204.7204 (Subpart 204.72)  Addition confirmed............38174
205.102  (a)(1) removed; (4)(i) redesignated as (a)(4)(i)..........38179
205.207  (d)(S-72) amended; (d)(S-73) revised; (d)(S-74) through 
        (d)(S-76) added; interim....................................5116
    Amendment at 53 FR 5114 confirmed; (d)(S-73) amended...........20628
    (d)(2), (S-70), and (S-71) removed; (e)(S-70) added............38174
    (b)(1) removed; interim........................................38242
205.470  Addition confirmed.................................10250, 38193
205.501  Removed...................................................38179
205.504  Removed...................................................38179
206.203-70  Revised; interim........................................5116
    Revision confirmed.............................................20628
206.270  Added; interim.............................................5116
    Addition confirmed.............................................20628
    Amended........................................................20628
206.302-1  (a)(S-70) added.........................................38202
206.302-3  Added...................................................51560
207.105  (a)(8) added..............................................35201
    (b)(12)(iv) amended............................................38174
208.002  (f) revised; (g)(2) amended...............................38179
208.070  (g)(1) amended............................................38246
208.404-1  (a) amended.............................................38174
208.405-2  (S-70)(1) amended.......................................38246
208.470-2  Revised..................................................1924
208.7007-4  Amended................................................38246
208.7100-1  Revised.................................................1925
208.7100-2  (a)(9) and (d) revised; (e) added.......................1925
    (d)(2) amended; interim........................................38242
    (d)(2) amended.................................................38246
208.7802-1  Amended................................................38203
208.7901--208.7904 (Subpart 208.79)  Added; interim................29333
209.103  (S-71) added; interim.....................................20632
209.105-70  (b) removed; (c) redesignated as (d)...................38193
209.170  Added.....................................................38193
209.170-1  Added...................................................38193
209.170-2  Added...................................................38194
209.170-3  Added...................................................38194
209.170-4  Added...................................................38194
209.202  (a)(1) amended.....................................38174, 38246
209.303  Removed...................................................38194
209.306  Removed...................................................38194
209.404  Removed...................................................38179
209.405  (a)(2)(iv) amended........................................38246
209.470  (c) amended...............................................38200
209.472-1  (c) removed; (d), (e), and (f) redesignated as (c), 
        (d), and (e)...............................................38237
210.001  Amended...................................................35201
210.002  (c) added.................................................35201
210.004  (a)(3) added..............................................35202
210.008  (g)(1) amended............................................38174
210.011  (S-73) added..............................................35202
    (S-71) amended.................................................38174
213.104  (a) removed...............................................38179
213.106  (c) removed...............................................50415
213.107  Added.....................................................38180
213.204  Removed...................................................38194
    Added..........................................................38218
213.503  (b) introductory text, (1) and (3) redesignated as 
        (b)(1), (d)(1), and (S-70).................................38180
213.505-70  (b)(1) amended; interim................................38242
214.201-6  Added...................................................38174
    Introductory text added; interim...............................38242
214.202-5  (b) removed.............................................38174
214.207  Amended...................................................38246
214.208  Removed...................................................38175
214.406-3  (g)(3)(iv) removed......................................38180
214.407  Removed...................................................38180
214.407-1  Removed.................................................38180
214.407-3  Removed.................................................38180
214.407-6  Removed.................................................38180

[[Page 440]]

215.407  (S-70) removed; (S-71) added..............................38175
215.410  Removed...................................................38175
215.411  Removed...................................................38175
215.411-70  Removed................................................38175
215.507  (b)(S-70) revised.........................................38203
215.603  Removed...................................................38180
215.608  (S-70) added..............................................35202
    Heading amended................................................38180
215.611  Added.....................................................32621
4(c)(S-72) amended.................................................46457
215.704  Amended...................................................50415
215.707  Removed...................................................38180
215.803  (d) removed...............................................38194
215.804-1  Added...................................................38237
215.804-2  (d)(2) removed..........................................38194
    (a)(2) removed.................................................38237
215.804-3  (c)(7) removed; (e)(3) Note amended.....................38194
    (i) amended....................................................38237
    Note following (e)(3) removed..................................38246
215.804-4  Removed.................................................38194
215.805-1  Removed.................................................38194
215.805-5  (c)(1)(S-72) added......................................38175
    (a)(1) amended; (a)(S-70) removed..............................38203
    (c)(1)(S-70)(A) revised........................................50415
215.807  Revised...................................................38237
215.808  (a)(9) added..............................................38237
215.811  Revised....................................................8907
215.811-70  Added...................................................8907
215.811-71  Added...................................................8907
215.811-72  Added...................................................8907
215.811-73--215.811-77  Added.......................................8908
215.811-78  Added...................................................8909
    (b)(8) amended.................................................46457
215.811-79  Added...................................................8910
215.873  Revised; interim..........................................11074
    Revised........................................................46457
215.875  Addition confirmed........................................38175
216.203-4  (c)(3) removed..........................................38194
    (a) and (b) amended............................................46458
216.206  Removed...................................................38194
216.206-1  Removed.................................................38194
216.207  Removed...................................................38194
216.207-1  Removed.................................................38194
216.301  Removed...................................................38194
216.301-1  Removed.................................................38194
216.303  Removed...................................................38194
216.306  (b) (1) and (2) removed; (b)(3) designation removed and 
        text moved to (b) introductory text; new (b) amended; 
        (c)(S-70) amended..........................................38194
216.402-2  (S-70) revised; (S-71) removed..........................38194
216.403  (c) removed...............................................38194
216.404-1  (b) amended.............................................38194
216.404-2  (a), (b)(1)(S-71), (S-72)(i), and (c)(S-71) removed; 
        (b)(S-72) (ii) and (iii) redesignated as (b)(S-72) (i) and 
        (ii).......................................................38194
216.501  (d) amended...............................................38194
216.502  Revised...................................................38200
216.503  Revised...................................................38200
216.601  Removed...................................................38194
216.603-2  (c) amended.............................................38195
216.603-3  Addition confirmed......................................38200
216.702  (b) and (b) (S-71) through (S-74) removed; (b)(3) and 
        (b)(S-70) amended..........................................38195
216.703  (b) and (c)(S-70) removed; (c) revised; (c)(S-71) amended
                                                                   38195
    (c) amendment at 52 FR 12388 confirmed.........................38200
    (c)(S-73) and (S-74) added.....................................38246
217.103-70  Introductory text revised; (a) and (b) redesignated as 
        (g) and (h); new (a) through (f) added; interim............38242
217.200  Added; interim............................................38243
217.202  Addition confirmed........................................38200
217.204  Added.....................................................50415
217.7402  (c) addition confirmed...................................38200
217.7500--217.7504 (Subpart 217.75)  Addition confirmed............38200
217.7503  (b) (6) and (7) amended; interim.........................38243
219  Revised........................................................5116
    Revision confirmed.............................................20628
219.000  (a)(S-70) amended.........................................51560
219.102-70  Amended................................................20628
219.202-5  (b) and (c) amended.....................................20628
    (b) corrected..................................................22426
    (b) amended; (c) removed.......................................50415
219.301-70  (b) revised; interim...................................20628
219.302  (S-70) heading, (1), (2), (5) and (7) amended; (S-70)(4) 
        revised....................................................20628
    (S-70)(2) amended; interim.....................................38243
219.501  (c), (d), and (g) (S-71) and (S-73) amended...............20629
    (c) amended....................................................38175
219.502-3  (S-70)(1)(ii) amended...................................20629
219.502-70  (e)(4) amended; interim................................38243

[[Page 441]]

219.502-72  (a)(3), (b)(2), and (c)(1) introductory text and (i) 
        amended....................................................20629
219.505-70  Added..................................................20629
219.506  (b) amended........................................20629, 38243
219.508  (S-71)(1) amended.........................................20629
    (e) added......................................................50415
219.602-3  (b)(2) amended..........................................20629
219.702-70  Amended................................................20629
219.703  (a) and (b)(S-70) amended.................................20629
219.704  (a) added; (a)(S-70) amended..............................20630
219.705-4  Introductory text and (S-70) amended....................20630
219.708  (c)(1) amended............................................20630
219.7000  (a) introductory text amended............................20630
    (a)(5), (a)(6) and (b) amended; (a)(7) added; interim..........20630
    Regulation at 53 FR 20630 confirmed............................50415
219.7001  Amended; interim.........................................20630
219.7002  Text revised; interim....................................20630
    Regulation at 53 FR 20630 confirmed............................50415
220.7004  (a)(2) and (c)(2) amended................................38195
222.101-1  (S-74) amended..........................................38246
222.101-2  (S-70) removed..........................................38195
    Removed........................................................38246
222.609  Removed...................................................38195
222.804-2  (b) amended.............................................38237
222.805  (a)(2) amended............................................38237
222.1404  Removed..................................................38195
222.1406  Amended..................................................38237
222.7001--222.7004 (Subpart 222.70)  Removed.......................38195
222.7101--222.7103 (Subpart 222.71)  Removed.......................38195
222.7200  (a), (b) and (c) amended..................................6155
    (a) amended....................................................51560
223.7100--223.7105 (Subpart 223.71)  Addition interim 
        effectiveness extended to 1-1-89...........................32620
    Addition confirmed.............................................38237
223.7105  Amended..................................................38237
223.7500--223.7504 (Subpart 223.75)  Added; eff. 10-31-88..........37764
224.102  (a)(1) introductory text, (i), and (ii) removed; (2) 
        redesignated as (a)(2).....................................38180
225.102  (S-70)(2) amended.........................................38175
225.108  (d)(1)....................................................38237
225.109  (a)(S-71) and (d)(S-71) removed...........................38195
    (a)(S-70) and (d)(S-70) amended................................38246
225.302  (S-72) (2)(i) and (4)(i) amended..........................38175
225.407  (a) (1) and (2) amended...................................38246
225.603  (a)(2) revised............................................38237
225.605  (a) amended...............................................38238
225.702  Added.....................................................38180
    (S-71) added...................................................38195
225.703  (S-70) added..............................................38180
225.704  Added.....................................................38180
225.7000  Amended..................................................38203
225.7001  Amended..................................................38246
225.7002  (a)(7) amended...........................................38175
    (c)(6) revised.................................................38247
225.7004  Revised..................................................38201
225.7008  Revised..................................................38247
225.7009  Added....................................................38203
225.7010  Added....................................................38203
225.7011  Added.....................................................9118
    (d) corrected..................................................10250
225.7304  (c)(1)(i)(C) amended.....................................51560
225.7305  (f) amended..............................................38247
225.7310  (a) amended..............................................38175
    (b)(4) amended.................................................38247
225.7401  Amended..................................................38203
225.7405  Revised..................................................38203
225.7501  Amended..................................................38205
225.7601  Amended..................................................50415
225.7607  Removed..................................................50416
225.7900--225.7906 (Subpart 225.79)  Added.........................38180
226.7001--226.7010 (Subpart 226.70)  Added; interim.................5126
    Addition confirmed.............................................20630
226.7002  Amended..................................................20630
226.7003  Amended..................................................20630
226.7004  (a) (1) and (3) amended..................................20630
226.7006  Existing text designated as (a) and amended; (b) added 
                                                                   20630
226.7009  Revised..................................................20630
227  Technical correction..........................................44975
227.470--227.481 (Subpart 227.4)  Revised; interim.................10781
    Revision confirmed.............................................38234
227.470--227.481-2 (Subpart 227.4)  Revised; interim...............43699
227.471  Corrected.................................................50416
227.472-1  (a) corrected...........................................50416
227.472-3  Introductory text and (a)(1)(iv) corrected..............50416

[[Page 442]]

227.473-2  (b)(3) added............................................51560
227.475-2  (b) corrected...........................................50416
227.475-3  Corrected...............................................50416
227.481  Correctly revised; interim................................20632
    Amendatory instruction corrected...............................22609
    Revision confirmed.............................................38234
227.481-1  Correctly added; interim................................20632
    Amendatory instruction corrected...............................22609
    Addition confirmed.............................................38234
227.481-2  Correctly added; interim................................20633
    Amendatory instruction corrected...............................22609
    Addition confirmed.............................................38234
    (b)(4) corrected...............................................50416
228.001  Amended...................................................38181
228.305  (e) (1) and first 2 sentences of (2) removed; last 2 
        sentences of (e)(2) designated as (e)......................38181
228.311  Removed...................................................38181
228.7000 (Subpart 228.70)  Removed.................................38181
229.202 (Subpart 229.2)  Removed...................................38175
230.401 (Subpart 230.4)  Redesignated as 230.601 (Subpart 230.6) 
                                                                   38247
230.601 (Subpart 230.6)  Redesignated from 230.401 (subpart 230.4)
                                                                   38247
231.105  Removed...................................................38181
231.205-1  Added; interim..........................................51561
231.205-38  Revised................................................51561
231.7001 (Subpart 231.70)  Addition at 52 FR 5771 confirmed........38238
231.7001  (a), (b), (c) (1) and (2) (i), (ii) introductory text, 
        (A) and (B) revised........................................38238
232.103  Revised; interim..........................................35511
    Addition at 52 FR 30369 confirmed..............................38186
232.111  (a) through (d) and (S-70) removed.........................3752
    (S-71) and (S-72) amended; interim.............................35511
    (S-71) and (S-72) additions at 52 FR 30369 confirmed...........38186
232.170-3  Introductory text and (b) amended.......................38186
232.171  Amended...................................................38186
232.501-1  (a) revised; interim....................................35512
    Revised........................................................38186
232.501-2  (a) amended.............................................38186
232.502-1  (S-71), (2), (4) and (7) revised; interim...............35512
    (S-71) (1), (2), (4), and (7) amended..........................38186
232.502-2  Amended.................................................38186
232.502-4  (S-71) revised; (S-72) through (S-74) added; interim....35512
232.905--232.906 (Subpart 232.9)  Added.............................3752
233.213  Revised...................................................38181
233.214  Revised...................................................38181
233.270  Removed...................................................38238
234.005-70  Amended................................................38175
235.001  Amended...................................................38182
235.003  (a) amended...............................................38238
235.004  (a) introductory text and (2) revised; interim.............5127
    (a) introductory text and (2) revision confirmed...............20630
235.005  Removed...................................................38182
235.006  Removed...................................................38182
235.007  (a) introductory text and (5), (b), and (g) revised; (c) 
        removed; interim............................................5128
    (S-70) added...................................................50416
    (a) introductory text and (5), (b), and (g) revision and (c) 
removal confirmed..................................................20630
    (b) and (g) amended; (c) and (i) removed.......................38182
235.008  Removed...................................................38182
235.010  (b) amended...............................................38182
235.016  Added; interim.............................................5128
    Addition confirmed.............................................20630
    (a)(S-70) amended..............................................20630
235.071  (c) amended...............................................38182
236.201  (a)(1)(S-71) and (S-72) added; (c) revised................38175
236.402  (S-70)(1) removed; (S-70) (2) and (3) redesignated as (S-
        70) (1) and (2); new (S-70)(1)(iii) removed................38195
236.572-4  Removed.................................................38195
236.573-2  Removed.................................................38195
236.573-5  Removed.................................................38195
236.602-4  (c) amended.............................................38195
236.606  (S-70) removed............................................38195
236.7100--236.7101-5 (Subpart 236.71)  Removed.....................38196

[[Page 443]]

237.104  (S-70)(c) heading, (1), and (2), (d), (f), (m), and 
        (n)(3) removed; (S-70)(g)(3)(viii) and (i)(1) amended; (S-
        70) (a) through (n) and (S-71) (a) through (e) 
        redesignated as (S-70)(1) through (10).....................38196
237.204  (S-70) removed; (S-71) redesignated as (S-70).............50416
237.205  Revised...................................................50416
237.205-70  Removed................................................50416
237.205-71  (a) (1) through (5) removed; (a) (6) and (7) 
        redesignated as (a) (1) and (2)............................38196
    Removed........................................................50416
237.206  Added.....................................................50416
237.270  Removed...................................................50416
237.304  (S-73) removed............................................38196
237.7409  (e) amended..............................................38201
239  Heading revised...............................................38247
242.302  (S-75) added...............................................8910
    (S-37) removed; (S-74) redesignated as (S-73)..................38196
242.501  Removed...................................................38196
242.602  (a) amended...............................................38196
242.603  Revised...................................................51561
242.771  Addition confirmed and revised............................38238
242.1106  (d) added; interim.......................................38243
242.1203  (b)(1) amended....................................38176, 38196
242.1403-2  (a)(S-70) amended......................................38247
242.7100  Revised; interim.........................................38243
242.7101  Revised; interim.........................................38243
242.7300--242.7302 (Subpart 242.73)  Added.........................46458
243.104  (a) amended...............................................38196
243.204  (S-72) removed............................................38196
244.304  (b)(1)(v) amended.........................................38247
244.305-2  Removed.................................................38196
245.301  Amended...................................................50416
245.302-72  Revised................................................38176
245.306  Removed...................................................38182
245.306-2  Removed.................................................38182
245.310  Added.....................................................50416
245.310-1  Added...................................................50416
245.403  (a) removed; (b) redesignated as (S-70)...................38182
245.505-14  (a)(3)(vi) amended; (a)(3)(vii) removed................46459
    (a)(1) (iv), (v), and (vii) amended............................51561
245.603-71  Added..................................................38182
245.604  (S-70)(1) amended.........................................38247
245.606-5  (e) added...............................................38182
245.607-70  Amended................................................38182
245.607-72  (e) amended............................................38248
    (e) amended....................................................46459
245.608-1  (a) added; (b) removed..................................38182
245.608-2  Added...................................................38182
245.608-5  Added...................................................38182
245.608-70  (a), (b), (c), and (f) amended; (d) revised............38182
    (b), (c), (d), (e) and (f) amended.............................46459
245.610-1  (a) (1)(ii) and (3)(i) amended..........................38183
    (a) (1)(viii) and (2) (i) and (v) amended......................38248
    (a)(1)(viii) amended...........................................46459
245.612-3  Added...................................................51561
245.613  Removed...................................................38183
245.7101-3  Amended................................................38183
245.7101-10  Added.................................................38183
245.7102-4  (b)(2) amended.........................................38183
245.7102-7  Added..................................................38183
246.371  Removed...................................................38196
246.705  (a) amended...............................................38176
247.105  (b)(5)(i) amended.........................................38176
247.271-3  (b)(2) introductory text revised; (c) (1) and (2) 
        amended....................................................38183
247.271-4  (a)(3) and (b) (16) through (19) removed; (a)(4) 
        redesignated as (a)(3) and amended; (b) (1), (2), (4), 
        (5), (6) and (7) amended; (b) (8) through (15) revised.....38183
247.301-2  Removed.................................................38196
247.305-10  (a)(1)(i) revised; interim.............................38243
247.372  Heading revised...........................................46459
247.373  Heading and text amended..................................46459
248.201  (a)(2) introductory text, (i), and (ii) removed...........51561
249.110  (a)(2) amended............................................38248
249.7002  (d) amended..............................................38248
251.104  Removed...................................................38196

                                  1989

48 CFR
                                                                   54 FR
                                                                    Page
Chapter 2
201.403  (b)(6) added..............................................21068
    Effective date corrected.......................................22282
    (b)(6) amended.................................................26205
201.601  Heading amended...........................................26205
201.704  Amended...................................................53616
202.101  Amended...................................................11723

[[Page 444]]

    Introductory text and (a) amended..............................53616
203  Technical correction..........................................32161
203.104  Added.....................................................21068
    Effective date corrected.......................................22282
203.104-1  Added...................................................21068
    Effective date corrected.......................................22282
203.104-4  Added...................................................21068
    Effective date corrected.......................................22282
203.104-5  Added...................................................21068
    Effective date corrected.......................................22282
203.104-9  Added...................................................21068
    Effective date corrected.......................................22282
203.502-2  Added...................................................30740
203.571-1  Amended.................................................16114
203.571-3  Revised.................................................16115
203.571-6  Added...................................................16115
204.202  (c)(6) removed.............................................7427
    (c)(2) amended.................................................53616
204.203  Added.....................................................20591
204.470 (Subpart 204.4)  Removed; interim...........................7427
204.670-2  Amended; interim.........................................4246
    Comment time extended...........................................9807
    Regulation at 54 FR 4246 confirmed.............................26205
204.670-3  (b) heading amended.....................................11724
204.671-3  (d)(2) amended..........................................16115
204.671-5  (d) and (e) amended; interim.............................4246
    (e) corrected...................................................5484
    (e) amended....................................................11724
    Comment time extended...........................................9807
    Amended........................................................16115
    Regulation at 54 FR 4246 and 54 FR 5484 confirmed; (e) amended
                                                                   26205
    Amended; eff. 10-1-89..........................................28420
    (b) corrected..................................................46901
204.672-2  (a) amended; interim.....................................4247
    Comment time extended...........................................9807
    (c)(6) amended.................................................16115
    Regulation at 54 FR 4247 and 54 FR 5484 confirmed..............26205
204.672-5  (e) added; interim.......................................4247
    (e) corrected...................................................5484
    Comment time extended...........................................9807
    Amended........................................................16115
    Regulation at 54 FR 4247 confirmed.............................26205
    Amended; eff. 10-1-89..........................................28422
204.675  Added; interim.............................................4247
    Comment time extended...........................................9807
    Regulation at 54 FR 4247 confirmed.............................26205
204.675-1  Added; interim...........................................4247
    Comment time extended...........................................9807
    Regulation at 54 FR 4247 confirmed; amended....................26205
204.675-2  Added; interim...........................................4247
    Comment time extended...........................................9807
    Regulation at 54 FR 4247 confirmed.............................26205
    Amended; eff. 10-1-89..........................................28422
204.675-3  Added; interim...........................................4247
    (b) amended.....................................................5484
    Comment time extended...........................................9807
    Regulation at 54 FR 4247 and 54 FR 5484 confirmed..............26205
    Introductory text added; eff. 10-1-89..........................28422
204.804-4  (a)(S-70) added; existing text designated as (b)........16115
204.804-5  (a)(S-70) revised; (b) amended; (b) (1) through (4) 
        redesignated as (2) through (5); new (b)(1) added; new 
        (b)(4) amended.............................................16115
    (b)(1) corrected...............................................46901
204.804-70  (a)(2) revised.........................................16116
205.101  Removed...................................................53616
205.201  (S-70) removed............................................53616
205.207  (e)(S-70) amended.........................................53616
205.303  (a) and (S-70) amended.....................................7427
205.470  (a) amended................................................7427
    (a) corrected..................................................46902
207  Technical correction..........................................34996
207.103  (c)(6) added..............................................11724
    (i) amended; (S-70) added......................................53616
207.105  (b)(S-70)(xi) redesignated as (b)(S-70)(xii); new (b)(S-
        70(xi) added................................................7427
    (b)(12)(iv) revised; (b)(17) added.............................11724
    (b)(12)(v) added...............................................31038
    (b)(2) removed.................................................53616
207.106  Added.....................................................20591
208  Technical correction..........................................32161
208.070  Correctly designated......................................14234
208.405-2  (S-70) amended..........................................16116
    (S-70) heading revised.........................................30740
208.470-1  Amended.................................................30740
208.705--208.705-1 (Subpart 208.7)  Added..........................30740
208.7000  Amended..................................................26205
208.7001  Amended..................................................26205
208.7002  Introductory text amended................................26205
208.7003-1  Removed................................................26205

[[Page 445]]

208.7003-3  Amended................................................26205
208.7003-4  Amended................................................26205
208.7003-5  Amended................................................26205
208.7003-6  Amended................................................26205
208.7005-1  Amended................................................26205
208.7006-1  Amended................................................26205
208.7006-2  (b) and (f) amended....................................26205
208.7006-3  (b) introductory text, (1) (i), (ii), and (2), (c), 
        (2), and (d) amended.......................................26205
208.7006-4  (a) and (b) amended....................................26205
208.7006-5  Existing text designated as (a); (b) added.............21068
    Effective date corrected.......................................22282
    Existing text designated as (a) and amended; (b) added.........26205
208.7006-8  Added..................................................26206
208.7007-1  Amended................................................26206
208.7007-2  Introductory text, (a), (b), and (e) amended...........26206
208.7007-3  Amended................................................26206
208.7008-1  (b)(2), (d), and (f)(1) amended; (i) added.............26206
208.7008-2  (a) and (b) amended....................................26206
208.7008-3  Amended................................................26206
208.7008-4  Amended................................................26206
208.7008-5  (a) amended............................................26206
208.7008-6  Amended................................................26206
208.7009  Amended..................................................26206
208.7009-1  Amended................................................26206
208.7009-2  Amended................................................26206
208.7009-3  (a) (4) and (5) amended................................26206
208.7009-4  (a) amended; (b) revised...............................26206
208.7010-3  Amended................................................26206
208.7011  Amended..................................................26206
208.7012  (a), (b), (c) introductory text, (1), and (2) amended....26206
208.7013  Amended..................................................26206
208.7015  Amended..................................................26206
208.7016  (a) and (b) amended......................................26206
208.7017  Amended..................................................26206
208.7900--208.7905 (Subpart 208.79)  Regulation at 53 FR 29333 
        confirmed and revised......................................14654
208.7900  Corrected.......................................16438-T, 20592
208.7901  (c) corrected............................................20592
209  Technical correction...................................32161, 34996
209.103  Regulation at 53 FR 20632 confirmed; (S-71) revised.......53616
209.104-1  Added...................................................30740
209.305  Amended...................................................30740
211.002  Amended...................................................20592
211.005  Removed...................................................20592
212  Technical correction..........................................32161
212.204  (b) amended...............................................30740
213  Technical correction..........................................32161
213.106  Removed...................................................53616
213.204  Amended...................................................30740
213.404  (a)(3) added..............................................16116
213.505-2  (S-70)(1) amended.......................................30740
213.505-3  Revised.................................................16116
    (b)(1) (i) and (ii) amended....................................30740
213.507  (a)(1)(ix) removed.........................................7427
214  Technical correction..........................................32161
214.270  Removed...................................................30740
215  Technical correction...................................32161, 34996
215.470  Removed...................................................30740
215.608  (a)(1) added..............................................16116
215.613  (a)(2) amended.............................................7427
    (j) amended....................................................26207
215.801  Added.....................................................16116
215.804-3  Title amended; (a)(1) redesignated as (a)(1)(ii); new 
        (a)(1)(i), (b) (1), (2), and (S-70) added..................16116
    (i) amended....................................................20592
215.804-6  (g)(3) removed..........................................31038
215.805-1  Added...................................................16116
215.805-5  (i) and (j) removed.....................................31038
215.805-70  Added..................................................16117
215.806  (S-70)(7) amended.........................................53616
215.806-2  Added...................................................31038
    Correctly removed..............................................32975
215.806-3  Added...................................................31038
    Corrected......................................................32975
215.807  (b) amended...............................................11724
215.811-70  Amended................................................30740
215.811-72  (b) amended............................................11724
215.811-76  (b)(9) amended.........................................20592
215.876  Added.....................................................11724
215.970-2  (a)(2), (3), and (6) through (9) amended................53616
216  Technical correction..........................................32161
216.201  Added......................................................7427
216.403-70  Added..................................................26207
216.502  (S-70) introductory text amended...........................7427
216.506  Added.....................................................30741
217  Technical correction..........................................32161
217.7201-1  Amended.........................................20592, 30741
217.7201-2  (b) (2) and (3) amended................................30741
217.7205  Added.....................................................7427
217.7205-1  Added...................................................7427
217.7205-2  Added...................................................7427

[[Page 446]]

217.7205-3  Added...................................................7427
217.7205-4  Added...................................................7428
219  Technical correction...................................32161, 34996
219.201  (c) (3) and (9), (d)(2) (xxviii) and (xxix) added; 
        (d)(2)(xxvii) and (S-70)(1) amended........................20592
(b)(5) added.......................................................26207
    (a) amended....................................................30741
219.202-1  (S-70)(11) added........................................26207
219.501-70  Amended................................................53616
219.502-3  (S-70)(1) amended.......................................53616
219.502-72  (b)(4) and (5) amended; (b)(6) added...................53616
219.505-70  Amended................................................53616
219.508  (S-72) redesignated as (S-72)(1); (S-72)(2) added.........31038
219.670  Removed....................................................7428
219.705-6  Added...................................................26207
219.708  (c)(1) amended; (c)(2) added..............................26207
219.803  (c) (1) and (2) redesignated as (c)(S-70) (i) and (ii); 
        (c)(S-71) added............................................26207
219.1005--219.1071 (Subpart 219.10)  Added; interim.................4247
    Comment time extended...........................................9807
    Regulation at 54 FR 4247 confirmed.............................26207
219.1005  (S-70) added.............................................26207
    (b) revised....................................................30741
    (S-70) revised.................................................53616
219.1070-2  (a) amended............................................26207
219.1071  (a) and (b)(1) amended....................................5484
219.7000  (a) introductory text, (1), (6) and (7) amended; (a)(8) 
        added; interim.............................................20592
    (a) introductory text amended and last sentence designated as 
(a)(1); (a) (1) through (4), (7), and (8) redesignated as (a)(1) 
(i) through (iv), (v), and (vi); (a) (5) and (6) removed; new 
(a)(2) added.......................................................31038
219.7001  Amended..................................................31038
219.7002  Amended..................................................31038
219.7200  (a)(1)(vi) amended.......................................53616
220.7000  Existing text designated as (a); (b) added...............11724
222  Technical correction..........................................32161
222.101-1  (S-74) amended..........................................30741
222.101-3  Amended.................................................53617
222.102-2  Added...................................................30741
222.403--222.407 (Subpart 222.4)  Revised..........................30741
222.1003--222.1014 (Subpart 222.10)  Revised.......................30744
222.7200  (a) corrected.............................................2258
223  Technical correction..........................................32161
223.300  Added.....................................................30745
223.303  Removed...................................................30745
223.7100--223.7105 (Subpart 223.71)  Removed........................7428
223.7200--223.7203 (Subpart 223.72)  Added.........................30745
223.7300--223.7301 (Subpart 223.73)  Added.........................30745
223.7401--223.7402 (Subpart 223.74)  Added.........................30746
225  Technical correction..........................................34996
225.001  Redesignated as 225.101 and amended.......................16117
225.101  Redesignated from 225.001 and amended.....................16117
225.105  (S-73) amended............................................53617
225.403  (c) added.................................................31039
225.603  (b) (3) and (6) redesignated as (b)(5) and (c)............16117
225.901  Added; (d) redesignated from 225.904; (c) and (ii) 
        redesignated from 225.903..................................53617
225.903--225.904 (Subpart 225.9)  Heading revised..................53617
225.903  Heading and (b) redesignated as 225.901 (c) and (ii)......53617
225.904  Redesignated as 225.901 (d)...............................53617
225.1003--225.1004 (Subpart 221.10)  Added.........................53617
225.7000--225.7008 (Subpart 225.70)  Heading revised................7428
225.7000  Amended...................................................7428
225.7001  Amended...................................................7428
225.7008  (a) and (b) revised; (d)(1) amended; (e) redesignated as 
        (f); new (e) added; interim.................................7428
    Regulation at 54 FR 7428 confirmed.............................26207
225.7011  Removed..................................................22282
225.7012  Added.....................................................7428
225.7013  Added; interim...........................................16117
    Regulation at 54 FR 16117 confirmed; (b) heading and text 
amended; (c)(1)(iii) and (2) amended; (d)(1)(ii) added.............53617
225.7104  (a)(2)(ii) amended.......................................26207
    Regulation at 53 FR 51560 confirmed............................53619

[[Page 447]]

225.7304  Regulation at 53 FR 51560 confirmed......................53619
225.7306  Removed..................................................11724
225.7310  (b)(4) amended...........................................53617
225.7405  Amended..................................................53617
226  Technical correction..........................................34996
226.7003  Amended..................................................31039
226.7004  (a) amended..............................................26207
227.473-2  Regulation at 53 FR 51560 confirmed.....................20592
    Regulation at 53 FR 51560 confirmed............................53619
228.101  Added.....................................................16117
228.101-1  Added...................................................16117
228.101-3  Added...................................................16118
231.205-1  Regulation at 53 FR 51561 confirmed.....................53619
231.205-38  (c)(S-70)(i) corrected..................................2258
    Regulation at 53 FR 51561 confirmed............................53619
232.103  Regulation at 53 FR 35511 confirmed.......................26207
232.111  Regulation at 53 FR 35511 confirmed.......................26207
232.501-1  Regulation at 53 FR 35512 confirmed; (a) amended........26207
232.502-1  Regulation at 53 FR 35512 confirmed.....................26207
    (S-71)(4) amended..............................................53619
232.502-4  Regulation at 53 FR 35512 confirmed.....................26207
232.503-15  Added..................................................20592
232.905  Revised...................................................20592
232.906  (a) amended...............................................20593
233.204  Added.....................................................26207
234.005-70  Amended.........................................11724, 26208
234.005-71  Existing text designated as (a); (b) added.............11725
235.004  (a) introductory text revised; (S-70) added...............20593
235.006  Added; interim.............................................7429
235.010  Revised...................................................53619
235.071  (c) revised...............................................11725
235.7000  Amended..................................................11725
235.7002  (a)(1) amended; (a)(3) revised...........................11725
235.7003  Heading, introductory text, and (g) amended..............11725
235.7004  (a) revised; (c) through (h) redesignated as (d) through 
        (i); new (c) added; new (d) and (e) amended................11725
235.7008  (a) and (e) amended......................................11725
235.7010  Added....................................................11725
235.7100--235.7104 (Subpart 235.71)  Removed.......................11725
236  Technical correction..........................................32161
236.201  (a)(1)(S-70) and (c) (1) and (2) revised; (a)(1)(S-72) 
        redesignated as (a)(1)(S-71)...............................30746
236.206  Amended...................................................30746
236.272  Amended...................................................30746
236.402  (S-70) heading revised; (S-70)(1) heading and (S-70)(2) 
        removed; (S)(70)(1) (i) and (ii) redesignated as (S-70) 
        (1) and (2)................................................30746
236.513  Added.....................................................30746
236.602-1  (S-70) amended..........................................30746
236.604  Revised...................................................30746
237  Technical correction...........................................7427
242  Technical correction..........................................32161
242.302  (S-76) added..............................................20593
242.7004  (b)(1) amended...........................................53619
242.7006  (b) heading revised; (b) introductory text designated as 
        (b)(1); (b)(1) through (3) and concluding text 
        redesignated as (b)(1)(i) through (iii) and (2); new 
        (b)(3) added...............................................53619
242.7201--242.7209 (Subpart 242.72)  Added.........................20593
242.7204  (c) amended..............................................30747
244.301  Existing text designated as (a); (b) added................53620
245  Technical correction..........................................32161
245.302-1  (a)(4) added............................................30747
245.407  (a) amended...............................................53620
245.505-3  Added...................................................20596
245.505-14  (a)(1)(vii) amended.....................................7429
245.607-72  (e) corrected..........................................46902
    (e) corrected..................................................46902
245.610-1  (a)(1)(viii) corrected..................................46902
247.305-70  Added..................................................26208
247.570--247.574 (Subpart 247.5)  Revised; interim.................16118
    Regulation at 54 FR 16111 comment time extended................24711
    Regulation at 54 FR 16118 confirmed............................53620
247.571  Corrected.................................................22283
    Amended........................................................53620
247.573-1  (a), (b), (b)(1) and (2) revised; (c) redesignated as 
        (e); new (c) and (d) added; new (e)(3) amended.............53620
247.573-2  (a) and (c)(3)(i)(A) corrected..........................22283

[[Page 448]]

    (c)(2) amended.................................................53620
247.574  Heading, (a), and (b) amended; (c) redesignated as (d); 
        new (c) added..............................................53620

                                  1990

48 CFR
                                                                   55 FR
                                                                    Page
Chapter 2
201.403  (b)(2) through (6) revised................................19074
202.101  Amended...................................................19074
204.600  Added.....................................................19074
204.601  (a) and (d) amended.......................................19074
204.602  Added.....................................................19074
204.603  Added.....................................................19074
204.603-70  Added..................................................19074
204.670  Added.....................................................19074
204.670-1  Removed.................................................19074
    Redesignated from 204.670-2 and amended........................19074
204.670-2  Redesignated as 204.670-1 and amended...................19074
    Redesignated from 204.670-4 and amended........................19074
204.670-3  Removed.................................................19074
204.670-4  Redesignated as 204.670-2 and amended...................19074
204.671-1  Amended.................................................19075
204.671-2  Revised.................................................19075
204.671-3  Revised.................................................19075
204.671-4  (c) and (e) removed; (a) introductory text revised; 
        (a)(3) added; (b) and (d) redesignated as (c) and (b); 
        (a)(1), (2), new (b) introductory text and (5), and new 
        (c) amended................................................19075
204.671-5  Amended.................................................19076
204.671-6  Amended.................................................19076
204.672-1  Amended.................................................19076
204.675-2  Amended.................................................19076
204.7004-3  (a)(2)(v) amended......................................30156
204.7103-1  (b) amended............................................30156
204.7105  Revised..................................................30156
204.7105-1  Revised................................................30156
204.7105-2  Revised................................................30156
204.7105-3  Revised................................................30157
204.7106-2  (a) amended............................................30157
204.7108-3  (b) amended; interim...................................48732
205.203  Revised; interim..........................................48732
206.302-3  Removed.................................................30157
206.302-4  Added; interim..........................................19076
206.302-5  Added...................................................30157
206.304  Added; interim............................................19076
206.305  Added; interim............................................19077
208.405-1  (c) amended; interim....................................48732
208.7008-1  (a)(1) and (b)(1) amended..............................19077
208.7801--208.7803 (Subpart 208.78)  Revised; interim..............48732
209.103  (S-70) introductory text and (1) revised; interim.........48733
210.011  (S-70) removed............................................30157
214.202  Amended; interim..........................................48733
214.202-1  Revised; interim........................................48733
214.207  Amended; interim..........................................48733
215.401  Added; interim............................................48733
215.804-3  (b)(S-70) revised; interim..............................48733
215.805-5  (e)(6) revised; interim.................................48733
215.605  (A) added.................................................19077
215.871  (d) and (e) removed.......................................30157
216.403  (c)(S-70) removed; interim................................48733
217.401--217.401-70 (Subpart 217.4)  Added.........................19077
219.000  Amended...................................................19077
    Regulation at 55 FR 19077 confirmed............................48732
219.001  Amended; interim..........................................19077
    Regulation at 55 FR 19077 confirmed............................48732
219.201  Regulation at 55 FR 19077 confirmed.......................48732
219.201  (a) amended...............................................19077
219.301-70  (b)(2) revised; (b)(3) amended; interim................19077
    (b)(2) amended.................................................30157
    Regulation at 55 FR 19077 confirmed............................48732
219.302  (S-70)(3) and (S-70)(4) amended; interim..................19077
    Regulation at 55 FR 19077 confirmed............................48732
219.501  (g) amended...............................................19077
    Regulation at 55 FR 19077 confirmed............................48732
219.501-70  Amended................................................19078
    Regulation at 55 FR 19078 confirmed............................48732
219.702  (a) added; eff. 10-1-90...................................30157
219.704  (a)(1) added; (a)(3) amended..............................19078
    (a)(3) corrected...............................................39971
    (a)(3) correctly amended.......................................39971
    Regulation at 55 FR 19078 confirmed............................48732

[[Page 449]]

219.705-2  Added; interim..........................................19078
    Regulation at 55 FR 19078 confirmed............................48732
219.705-4  (S-71) added............................................19078
    Regulation at 55 FR 19078 confirmed............................48732
219.706  (a) designation removed...................................19078
    Regulation at 55 FR 19078 confirmed............................48732
219.708  Amended...................................................19078
    (b)(1), (2), and (c)(3) added; (c)(1)(S-70) amended; eff. 10-
1-90...............................................................30157
    Regulation at 55 FR 19078 confirmed............................48732
219.803  (a) and (c)(S-71) redesignated as (c) and (b); (c) 
        amended; (c)(S-70) (i) and (ii) removed....................19078
    Regulation at 55 FR 19078 confirmed............................48732
219.804-4  Added; interim..........................................19078
    Regulation at 55 FR 19078 confirmed............................48732
219.7000  Amended..................................................19078
    Regulation at 55 FR 19078 confirmed............................48732
222.7000  (a) amended; (b) revised.................................19078
223.7401--223.7402 (Subpart 223.74)  Removed; interim..............19078
224.102  Revised...................................................30158
224.103  Revised...................................................30158
224.202  Revised...................................................30158
225.000  Revised; interim..........................................48733
225.000-70  Redesignated from 225.101; interim.....................48733
225.000-71  Added; interim.........................................48734
225.101  Redesignated as 225.000-70 and revised; interim...........48733
225.102  Revised; interim..........................................48734
225.102-70  Added; interim.........................................48734
225.103  Revised; interim..........................................48735
225.105  Revised; interim..........................................48735
225.105-70  Added; interim.........................................48735
225.107  Revised; interim..........................................48736
225.107-70  Added; interim.........................................48736
225.107-71  Added; interim.........................................48736
225.109  Revised; interim..........................................48736
225.109-70  Added; interim.........................................48736
225.302  (S-72)(1)(ii) amended.....................................19078
    (S-72)(1)(vii)(J) amended......................................30158
    (a)(S-72)(1)(viii) removed; interim............................48737
225.304  Removed; interim..........................................48737
225.401  Revised; interim..........................................48737
225.402  Revised; interim..........................................48737
225.403  (d) revised; (S-70) redesignated as 225.403-70; 
        introductory text revised; interim.........................48737
225.403-70  Redesignated from 225.403 (S-70); interim..............48737
225.405  Revised; interim..........................................48737
225.407  Revised; interim..........................................48737
225.407-70  Added; interim.........................................48738
225.407-71  Added; interim.........................................48738
225.600  Amended...................................................19078
225.600--225.605-70 (Subpart 225.6)  Revised; interim..............48738
225.603  (b)(1), (4)(i), and (5)(i) amended........................19078
225.7000  Amended..................................................19079
    Revised; interim........................................30158, 48740
225.7001  Amended; interim.........................................30158
225.7002  Introductory text and (7) revised; (a)(5), (6), (b), 
        (d)(1), and (2) amended....................................19079
225.7003  Amended..................................................19079
225.7004  Amended..................................................19079
225.7006  (a) revised; interim.....................................19079
225.7008  Removed; interim.........................................30158
225.7009  Amended..................................................19079
225.7010  Amended..................................................19079
225.7011  Added; interim...........................................48740
225.7011-1  Added; interim.........................................48740
225.7012  Amended..................................................19079
    Revised, interim...............................................30158
225.7012-1  Added; interim.........................................30158
225.7012-2  Added; interim.........................................30158
225.7012-3  Added; interim.........................................30159
    (a) amended; interim...........................................48740
225.7012-4  Added; interim.........................................30159
225.7012-5  Added; interim.........................................30159
225.7014  Added; interim...........................................48740
225.7310  (a) and (c) revised; (b)(2) through (4) amended; (d) 
        removed; interim...........................................48740
225.7314  Removed; interim.........................................48740
225.7400--225.7406 (Subpart 225.74)  Heading amended; interim......48740
225.7400  Revised; interim.........................................48740
225.7401  Revised; interim.........................................48741
225.7402  Revised; interim.........................................48741
225.7403  Revised; interim.........................................48741
225.7404  Revised; interim.........................................48742
225.7405  Redesignated as 225.7406; new 225.7405 added; interim....48742

[[Page 450]]

225.7406  Removed; new 225.7406 redesignated from 225.7405; 
        interim....................................................48742
225.7500--225.7503 (Subpart 225.75)  Removed; interim..............48742
225.7600--225.7608 (Subpart 225.76)  Removed; interim..............48742
226.7001  Amended..................................................19079
226.7003  Amended..................................................19079
226.7100--226.7103 (Subpart 226.71)  Added; interim................48742
227.303  Added.....................................................19079
231.303 (Subpart 231.3)  Added; interim............................48743
231.603 (Subpart 231.6)  Added; interim............................48743
231.703 (Subpart 231.7)  Added; interim............................48743
232.501-1  Amended.................................................19079
232.502-1  (b)(1) added; interim...................................19079
    (S-71) revised; interim........................................48743
232.502-4  (S-75) added............................................19079
235.006  Revised; interim..........................................48745
237.7407  (b) introductory text revised............................19080
    (b) introductory text corrected................................39971
    (b)introductory text correctly revised.........................39971
242.270  Revised; interim..........................................48745
242.302  (b)(S-70) added; interim..................................48745
244.302  (b)(2)(i) and (ii) removed; (b)(3)(i) amended.............30159
244.303  Amended...................................................19080
245.303-2  Revised.................................................19080
244.304  Removed...................................................30159
244.307  Amended...................................................30159
245.401  Amended...................................................19080
245.405  (f) amended...............................................30159
245.608-5  Heading revised; (a)(1) through (3) and (b) added; 
        interim....................................................48745
246.406  (S-71) introductory text, (1) and (2), (S-72) 
        introductory text, (1) through (4) redesignated as (S-71), 
        (i) and (ii), (2) introductory text, (i) through (iv); new 
        (S-71) introductory text added; (S-73) removed; interim....48746
246.770-2  (c) added...............................................19080
246.770-9  (a) and (b) amended.....................................19080
246.770-10  (b) added..............................................19080
247.571  Amended...................................................19080
247.573-1  (d) removed; (e) redesignated as (d)....................19080
    Correctly revised..............................................39971
    Revised........................................................39971
251.102  (e) amended...............................................19080

                                  1991

48 CFR
                                                                   56 FR
                                                                    Page
Chapter 2
Chapter 2  Revised; eff. 12-31-91..................................36284
202.101  (a) amended................................................9084
    Amended........................................................67212
203.104-1  Revised..................................................9084
203.104-4  Revised..................................................9084
203.104-5  Heading revised..........................................9084
203.104-9  Removed..................................................9084
203.170-2  (c) added................................................9084
203.571-1  Amended; interim.........................................9084
203.571-2  Amended; interim.........................................9084
203.571-3  (a) and (b) amended; interim.............................9084
203.571-4  Amended; interim.........................................9085
203.7100--203.7107 (Subpart 203.71)  Added; interim................24141
204.670-2  Regulation at 54 FR 4246 confirmed.......................9089
204.670-8  Revised.................................................67212
204.671-5  Regulation at 54 FR 4246 confirmed.......................9089
204.672-2  Regulation at 54 FR 4247 confirmed.......................9089
204.672-5  Regulation at 54 FR 4247 confirmed.......................9089
204.675  Regulation at 54 FR 4247 confirmed.........................9089
204.675-1  Regulation at 54 FR 4247 confirmed.......................9089
204.675-2  Regulation at 54 FR 4247 confirmed.......................9089
204.675-3  Regulation at 54 FR 4247 confirmed.......................9089
204.7000  (a) amended..............................................67212
204.7003  (a)(1)(i)(D) revised.....................................67212
204.7004-3  (a)(2) introductory text amended........................9085
204.7102  (b)(3) amended...........................................67212
204.7108-3  (b) amended.............................................9085
204.7202-2  Introductory text amended; (c)(1)(i) through (iii), 
        (2)(ii) and (vi) revised...................................67212
204.7204-2  Revised................................................67212
205.303  (a)(i) and (ii)(D)(1) and (3) revised.....................67212

[[Page 451]]

209.202  (a)(1) amended............................................67212
209.403  Amended...................................................67212
209.470  (b) revised...............................................60070
211.7000--211.7005 (Subpart 211.70)  Added.........................18611
211.7005  (a)(25) revised; interim.................................67212
214.201-9  Added; interim..........................................15164
214.406-3  (e)(ii)(B) revised......................................67212
214.503-1  (a)(4) added; interim...................................15164
215.406-5  Added; interim..........................................15164
215.407  (d)(4)(S-70) and (S-71) added; interim....................15164
215.605  (e) added; interim........................................15164
    (c)(S-70) added; interim.......................................43986
    (c) added......................................................67213
215.608  (S-71) added; interim.....................................43987
    (a) added......................................................67213
215.610  Added; interim............................................15164
215.612  Added; interim............................................15164
215.811-70  (a)(3) and (c)(1)(i) amended...........................67213
217.102--217.103-1 (Subpart 217.1)  Revised.........................9085
217.502  Revised...................................................67213
217.7404-4  Amended................................................67213
219.702  (a) amended; interim......................................15164
    Regulation at 56 FR 15164 confirmed............................60070
219.705-2  Revised.................................................60070
    Revised.........................................................6213
219.708  (b)(2) revised; interim...................................15164
    (c)(1)(S-70) amended...........................................37963
    Regulation at 56 FR 15164......................................60070
    (c)(1)(A) amended..............................................67213
219.1005--219.1071 (Subpart 219.10)  Regulation at 54 FR 4247 
        confirmed...................................................9089
219.1006  Added.....................................................9090
219.1007  Added.....................................................9090
219.1007-70  Added..................................................9090
219.1070  Removed...................................................9090
219.1070-1  Removed.................................................9090
219.1070-2  Removed.................................................9090
219.1070-3  Removed.................................................9090
219.1071  Removed...................................................9090
219.7100--219.7106 (Subpart 219.71)  Added.........................37963
    Added..........................................................67213
222.101-3  (3) amended.............................................67215
223.5  Revised; interim............................................67215
223.302  Revised...................................................67215
223.303  Revised...................................................67215
223.371  Removed...................................................67215
223.371-1  Removed.................................................67215
223.371-2  Removed.................................................67215
223.371-3  Removed.................................................67215
223.7202  (b) and (e) revised......................................60071
223.7203  Revised..................................................60071
223.7500--223.7502 (Subpart 223.75)  Revised.......................60071
225.000-70  (l) added; interim......................................9086
    Regulations at 56 FR 9086 confirmed............................60070
225.000-71  (b) table revised; interim..............................9086
    Regulation at 56 FR 9086 confirmed.............................60070
225.102  (b)(ii) introductory text revised.........................67215
225.105-70  (i) added; interim......................................9086
    Regulation at 56 FR 9086 confirmed.............................60070
225.109  (a)(S-70) amended; (d)(S-70) revised; interim..............9086
    Regulation at 56 FR 9086 confirmed.............................60070
225.302  (b)(i) revised............................................67215
225.401  Revised; interim...........................................9086
    Regulation at 56 FR 9086 confirmed.............................60070
225.402  (a)(1)(i) revised; (C) redesignated as (c); new (c) 
        introductory text revised; interim..........................9086
    Regulation at 56 FR 9086 confirmed.............................60070
225.407  Revised; interim...........................................9086
    Regulation at 56 FR 9086 confirmed.............................60070
225.501  (a) amended................................................9087
225.603-70  (c)(4)(i) revised; interim..............................9087
    (b)(7) amended.................................................15164
    Regulation at 56 FR 9087 confirmed.............................60070
225.703  Revised...................................................67215
225.872-7  Amended.................................................67215
225.1003--225.1004 (Subpart 225.10)  Removed.......................67215
225.7000  Regulation at 55 FR 30158 confirmed.......................9089
225.7001  Regulation at 55 FR 30158 confirmed.......................9089
225.7002  (c)(7) removed............................................9090
225.7008  Regulation at 55 FR 30158 confirmed.......................9089
225.7012  Regulation at 55 FR 30158 confirmed.......................9089
225.7012-1  Regulation at 55 FR 30158 confirmed.....................9089

[[Page 452]]

225.7012-2  Regulation at 55 FR 30158 confirmed.....................9089
    (a), (b)(1), and (2) introductory text revised..................9090
225.7012-3  Regulation at 55 FR 30159 confirmed.....................9089
225.7012-4  Regulation at 55 FR 30159 confirmed.....................9089
225.7012-5  Regulation at 55 FR 30159 confirmed.....................9089
225.7014  Revised..................................................15164
225.7014-1  Added..................................................15164
225.7014-2  Added..................................................15164
225.7014-3  Added..................................................15164
225.7014-4  Added..................................................15164
225.7015  Added....................................................15165
225.7015-1  Added..................................................15165
225.7015-2  Added..................................................15165
225.7015-3  Added..................................................15165
225.7016  Added; interim...........................................15165
    Added..........................................................67215
225.7016-1  Added; interim.........................................15165
    Added..........................................................67215
225.7016-2  Added; interim.........................................15165
    Added..........................................................67215
225.7016-3  Added; interim.........................................15165
    Added..........................................................67215
225.7016-4  Added..................................................67215
225.7016-5  Added..................................................67215
225.7017  Added....................................................64212
225.7017-1  Added..................................................64212
225.7017-2  Added..................................................64212
225.7017-3  Added..................................................64212
225.7017-4  Added..................................................64212
225.7017-5  Added..................................................64212
225.7101  Amended..................................................67216
225.7103  (h) added................................................67216
225.7303-2  (a)(2)(iii), (b) and (c) revised.......................67216
225.7304  (c)(1)(iii) revised; interim.............................34031
    (c)(2) and (3) revised.........................................46520
    (c)(2) corrected...............................................56116
226.7000  Revised..................................................67216
226.7001  Revised..................................................60071
226.7003  Revised..................................................60071
226.7012  Revised..................................................67216
226.7100--226.7103 (Subpart 226.71)  Regulation at 55 FR 48742 
        confirmed..................................................15167
      Removed......................................................60071
227.403-77  (a)(1)(iii)(B) revised; (a)(1)(iii)(C) added...........67216
227.7004  (c)(5) revised...........................................67216
228.311  Added......................................................9087
228.311-1  Added....................................................9087
228.311-2  Added....................................................9087
230.7103  (a)(2) amended...........................................15165
231.100  Added.....................................................15165
231.100-70  Added..................................................15165
231.201  Removed...................................................15165
231.205-1  Removed.................................................15165
231.205-18  Revised................................................46520
    Revised........................................................67217
231.205-38  Removed................................................15165
231.7003-1  (a)(2)(i) revised......................................67217
232.412  (S-72) added..............................................37965
232.412-70  (c) added..............................................67217
232.501-1  (a) amended.............................................31342
    Technical correction...........................................38174
    (a)(i) revised.................................................67217
232.501-2  Revised.................................................31342
    Technical correction...........................................38174
232.502-1  (S-71)(2)(ii)(C) removed; (S-71)(2)(ii)(D) redesignated 
        as (S-71)(2)(ii)(C); (S-71)(2)(iii) revised.................9087
    (S-71) amended.................................................31342
    Technical correction...........................................38174
    (S-71) (a)(7) and table and (b)(5) revised.....................67217
232.502-4  (S-71), (S-72) and (S-73) revised; (S-74) and (S-75) 
        removed....................................................31342
    Technical correction...........................................38174
    (b) removed....................................................67217
232.502-4-70  (b) revised; (c) added...............................67217
232.903  Added.....................................................60072
232.905-70  Added..................................................60072
233.104 (Subpart 233.1)  Added.....................................67218
233.104 (Subpart 233.104)  Added; interim..........................45832
233.104  (a)(3)(i) corrected.......................................49509
    Regulations at 56 FR 45832 and 49509 confirmed.................60070
233.211  Added.....................................................52440
233.211  Added; interim............................................67219
235.006  Revised...................................................60072
237.102  Added; interim............................................43987
    Added..........................................................67220
237.170  Added; interim............................................43987
    Added..........................................................67220
237.170-1  Added; interim..........................................43987
    Added..........................................................67220
237.170-2  Added; interim..........................................43987
    Added..........................................................67220
237.170-3  Added; interim..........................................43987
    Added..........................................................67220
237.202  Redesignated from 237.204.................................15165

[[Page 453]]

237.204--237.206 (Subpart 237.2)  Heading revised..................15165
237.204  Redesignated as 237.202...................................15165
237.270  Added.....................................................15165
239.7402  (a)(3) amended...........................................67220
242.1005  Revised..................................................46521
    Revised........................................................67220
242.1006  Revised..................................................46521
    Revised........................................................67220
242.1007  Revised..................................................46521
    Revised........................................................67220
242.1008  Revised..................................................46521
242.1404-1  Added..................................................67220
243  Technical correction..........................................26719
243.107  Added; interim............................................24031
    Regulation at 56 FR 24031 eff. 5-14-91; interim................28345
      Revised......................................................60072
243.107-70  Redesignated as 243.170; new 243.170 added.............67220
243.170  Redesignated from 243.107-70..............................67220
245.104  Amended...................................................67220
245.401  Revised....................................................9087
245.405  (c) removed; (d), (e) and (f) redesignated as (c), (d) 
        and (e); (b), new (c), new (d) and new (e) revised; 
        interim.....................................................9087
245.603-70  (1) revised.............................................9087
    (a)(1) revised.................................................67220
247.271-4  (b)(9) revised..........................................60072
249  Technical correction..........................................26719
249.102  Revised; interim..........................................24031
    Regulation at 56 FR 24031 eff. 5-14-91; interim................28345
249.102  Revised...................................................60072
    (a)(5) added...................................................67220
249.7001  (b)(5) revised...........................................67220
249.7002  Added....................................................67220
249.7003  Redesignated as 249.7004; new 249.7003 added; interim....24031
    Regulation at 56 FR 24031 eff. 5-14-91; interim................28345
    Revised........................................................60072
249.7004  Redesignated from 249.7003; interim......................24031
    Regulation at 56 FR 24031 eff. 5-14-91; interim................28345
250.103  Removed...................................................60072
250.201-70  (b)(2) revised.........................................67221
250.303  (6) revised...............................................67221

                                  1992

48 CFR
                                                                   57 FR
                                                                    Page
Chapter 2
Chapter 2  CFR correction..........................................13048
201.603-2  Added...................................................14990
202  Technical correction..........................................45422
202.101  Amended...................................................42629
203.7100--203.7108 (Subpart 203.71)  Added.........................14990
204  Technical correction..........................................45422
204.402  Revised; interim..........................................14992
    Regulation at 57 FR 14992 confirmed............................42629
204.404-70  Revised................................................14992
204.670-2  (c) redesignated as (d); new (c) added..................53598
204.670-5  (d) amended.............................................42629
204.7202-1  (c)(1), (4) and (5) amended............................53598
204.7202-2  Revised................................................42629
204.7203  (d) amended..............................................53598
204.7204-1  (a)(4) and (b) amended.................................53598
206.302-1  (a)(2)(i) introductory text revised.....................14992
206.302-5  (c)(ii) amended.........................................14992
206.302-5  (b) added...............................................53598
208  Technical correction..........................................45422
208.7203  (b) amended..............................................42629
209.406-1  Revised.................................................14992
209.406-4  Removed.................................................14992
210  Technical correction..........................................45422
210.002  (c) redesignated as (e)...................................42629
211.7003-1  (b)(4) amended; interim.................................4741
211.7004-1  (l)(3)(ii) amended; (p)(2) introductory text, (i), 
        (ii) and (iii) revised; interim.............................4741
211.7004-6  (a)(3) amended; interim.................................4741
211.7005  Revised; interim..........................................4741
213.000  Added.....................................................53599
213.101 (Subpart 213.1)  Added.....................................53599
214  Technical correction..........................................45422
214.406-3  Revised.................................................42629
214.503-1  (a)(4) removed..........................................53599
215  Technical correction..........................................45422
215.605  (c)(ii)(A)(1) and (B)(2) amended..........................14992
215.804-1  Removed.................................................14992
    Added..........................................................42629
215.804-3  Introductory text removed...............................42629
215.804-3  (i)(iii) introductory text amended......................53599
215.804-8  (a) removed.............................................53599
215.870-6  (a) amended.............................................53599

[[Page 454]]

215.975  (b) table amended.........................................53599
215.7000--215.7006 (Subpart 215.70)  Added; interim................41422
215.7000--215.7006 (Subpart 215.70)  Removed.......................53599
    Reinstated.....................................................55472
216  Technical correction..........................................45422
216.501  (a)(i)(B) amended.........................................42630
217.102-3  Added...................................................53599
217.103-1  (a)(iii), (b)(ii) heading, (A), (iv)(B), (C), (D), 
        (vi)(A)(1), (B) and (vii) revised..........................14992
217.103-1  (a)(iii) revised........................................53599
219  Technical correction..........................................45422
219.508  (d) amended...............................................42630
219.703  Revised...................................................42630
219.808  Added; interim............................................38287
219.808-1  Added; interim..........................................38287
219.811  Added; interim............................................38287
219.811-1  Added; interim..........................................38287
219.811-3  Added; interim..........................................38287
219.1007  Amended..................................................42630
219.7100  Amended; interim.........................................47275
219.7102  (b) and (d) revised; interim.............................47275
219.7103-1  (a) revised; interim...................................47275
219.7104  (b) removed; (c), (d) and (e) redesignated as (b), (c) 
        and (d); new (d) introductory text revised; interim........47276
219.7107  Added; interim...........................................47276
222.7000  (a) amended..............................................14993
222.7100--222.7102 (Subpart 222.71)  added; interim................52593
223  Technical correction..........................................45422
223.301  Removed...................................................42630
223.570--223.570-4 (Subpart 223.5)  Revised; interim...............32737
223.7001--223.7002 (Subpart 223.70)  Added; interim................14993
223.7002  (a) introductory text amended; (b) introductory text 
        revised....................................................53599
225  Technical correction..........................................45422
225.102  (a)(3)(A) amended.........................................42630
225.109  (d)(iii) revised..........................................42630
225.302  (b)(ii) amended...........................................42630
225.407  (a)(2)(A) amended.........................................42630
225.770  Added; interim............................................29042
225.770-1  Added; interim..........................................29042
    Amended........................................................42630
225.770-2  Added; interim..........................................29042
225.770-2  Revised.................................................53599
225.770-3  Added; interim..........................................29042
225.770-3  Revised.................................................53599
225.770-4  Added; interim..........................................29042
225.770-4  Revised.................................................53599
225.770-5  Added...................................................53599
225.802-71  Added..................................................42630
225.870-2  (a) amended.............................................42630
225.870-4  (a) amended.............................................42630
225.872-1  (b) amended.............................................53599
225.872-4  (b) and (c) revised.....................................42630
225.873  Added.....................................................53599
225.873-1  Added...................................................53599
225.873-2  Added...................................................53599
225.873-3  Added...................................................53600
225.7002-1  (a) introductory text revised..........................14993
225.7004  Revised; interim.........................................14993
225.7004-1  (a) table amended; (b) redesignated as (c); new (b) 
        added......................................................14993
225.7004-2  Heading, (a) and (b)(2)(i) revised; (b)(3) added.......14993
225.7004-3  Revised................................................14993
225.7004-5  Revised................................................14993
225.7012-1  (a) introductory text revised..........................14994
225.7012-4  (a)(1) revised.........................................14994
225.7014-1  Revised; interim.......................................14994
    Regulation at 57 FR 14994 confirmed............................42629
225.7014-2  Revised; interim.......................................14994
    Regulation at 57 FR 14994 confirmed............................42629
225.7014-3  Revised; interim.......................................14994
    Regulation at 57 FR 14994 confirmed............................42629
225.7016  Regulation at 56 FR 67215 confirmed......................14990
225.7016-1  Regulation at 56 FR 67215 confirmed....................14990
225.7016-2  Regulation at 56 FR 67215 confirmed....................14990
225.7016-3  Regulation at 56 FR 67215 confirmed....................14990
225.7016-4  Regulation at 56 FR 67215 confirmed....................14990
225.7016-5  Regulation at 56 FR 67215 confirmed....................14990
225.7017  Added; interim...........................................14994
225.7017-1  Added; interim.........................................14994
225.7017-2  Added; interim.........................................14994
225.7017-3  Added; interim.........................................14994
225.7017-4  Added; interim.........................................14994
225.7017-4  (a) and (b) revised....................................53600
225.7303-2  (a)(2)(i)(C) revised...................................42631
    (c) introductory text revised..................................53600

[[Page 455]]

226  Technical correction..........................................45422
226.7008  (b) amended..............................................42631
227  Technical correction..........................................45422
227.304-1  Amended.................................................53600
227.402-71  (a) amended............................................42631
227.403-70  (b)(1) revised.........................................53600
228  Technical correction..........................................45422
228.102-1  Introductory text and (1) through (4) added.............42631
228.106  Added.....................................................42707
228.106-4  Added...................................................42707
228.106-4-70  Added................................................42707
228.106-6  Added...................................................42707
228.106-7  Added...................................................42707
228.370  (d) amended...............................................42631
231  Technical correction..........................................45422
231.3  Removed.....................................................42631
231.205-6  Added...................................................53600
231.205-18  (c)(1)(iii)(1) redesignated as (c)(1)(i)(C)(1); (c)(2) 
        added......................................................53600
231.603  Revised...................................................42631
231.703  Revised...................................................42632
232  Technical correction..........................................45422
232.111  Added; interim.............................................3358
232.111-70  Added; interim..........................................3358
232.173  Added; interim.............................................3359
232.173-1  Added; interim...........................................3359
    (a) amended....................................................42632
232.173-2  Added; interim...........................................3359
232.173-3  Added; interim...........................................3359
232.173-4  Added; interim...........................................3359
    (a), (c), (d) and (g)(1) amended; (e) revised..................42632
232.173-5  Added; interim...........................................3359
    Introductory text amended......................................42632
232.503-15  (d) amended............................................42632
232.970  Added.....................................................42707
232.970-1  Added...................................................42707
232.970-2  Added...................................................42708
235.002  Revised...................................................14994
235.006  (b)(1)(C)(1)(iii) revised.................................14994
235.015-71  (i)(2) amended.........................................53601
235.017  Added.....................................................14994
235.017  (a)(2) amended............................................53601
236  Technical correction..........................................45422
236.570  (b)(4) amended............................................42632
237  Technical correction..........................................45422
237.106  (2) revised...............................................14994
237.170-2  (b) amended.............................................14995
237.170-3  Amended.................................................14995
237.203-70  (a)(3) and (4) amended.................................42632
239  Technical correction..........................................45422
239.001  Revised...................................................42632
239.7411  (b)(2) and (c)(3) amended................................42632
239.7500--239.7501-2 (Subpart 239.75)  Added; interim..............14995
    Regulation at 57 FR 14995 confirmed............................42629
242  Technical correction..........................................45422
242.205  (1)(iii) revised..........................................53601
242.302  (a)(9) added; (a)(11) removed.............................53601
242.771  Added.....................................................53601
242.771-1  Added...................................................53601
242.771-2  Added...................................................53601
242.771-3  Added...................................................53601
242.1005--242.1008 (Subpart 242.10)  Removed.......................53601
242.7202  (d) revised..............................................42632
245  Technical correction..........................................45422
245.302-7  Added...................................................14995
245.310-70  Revised................................................42632
245.7002  Revised..................................................42632
245.7308  (a) amended..............................................42633
245.7308  (a) amended..............................................53601
249.402-4  Added; interim............................................534
    Removed.........................................................6076

                                  1993

48 CFR
                                                                   58 FR
                                                                    Page
Chapter 2
201  Technical correction..........................................32416
    Authority citation revised.....................................37868
201.603-2  Revised; interim........................................28463
202  Authority citation revised....................................37868
203  Authority citation revised....................................37868
204  Authority citation revised....................................37868
205  Authority citation revised....................................37868
206  Technical correction..........................................32416
    Authority citation revised.....................................37868
206.302-1  (a)(2)(i) introductory text revised; interim............28463
206.302-5  (c)(ii) revised; (c)(iii) added; interim................28463
207  Technical correction..........................................32416
    Authority citation revised.....................................37868
207.105  (b)(17)(A) revised; (b)(17)(B) redesignated as 
        (b)(17)(C); (b)(2)(v) and new (b)(17)(B) added; interim....28463
    (b)(15) added..................................................32061

[[Page 456]]

208  Authority citation revised....................................37868
209  Technical correction..........................................32416
    Authority citation revised.....................................37868
209.101  Added; interim............................................28464
209.104-1  Revised; interim........................................28464
209.104-70  Revised; interim.......................................28464
209.106-2  (a)(iii) added; interim.................................28464
209.406-2  Added; interim..........................................28464
209.406-4  Added; interim..........................................28464
210  Authority citation revised....................................37868
210.002-71  Added..................................................32062
211  Authority citation revised....................................37868
212  Authority citation revised....................................37868
213  Authority citation revised....................................37868
214  Authority citation revised....................................37868
215  Authority citation revised....................................37868
    Technical correction....................................18448, 32416
215.605  (a) revised; (b) added; interim...........................28465
215.870  Removed...................................................32062
215.870-1  Removed.................................................32062
215.870-2  Removed.................................................32062
215.870-3  Removed.................................................32062
215.870-4  Removed.................................................32062
215.870-5  Removed.................................................32062
215.870-6  Removed.................................................32062
215.7000--215.7006 (Subpart 215.70)  Removed.......................16782
216  Authority citation revised....................................37868
217  Technical correction..........................................32416
    Authority citation revised.....................................37868
217.103-1  (a)(iii) revised; interim...............................28465
219  Authority citation revised....................................37868
219.502-1  Revised; interim........................................28465
219.502-2  Revised; interim........................................28465
219.602-1  Revised; interim........................................28465
219.602-70  Added; interim.........................................28465
219.702  (a)(i)(A)(1) revised; interim.............................28465
    (a)(i)(A)(1) correctly designated..............................32416
219.703  (a) introductory text revised; interim....................28465
219.705-2  Revised; interim........................................28465
219.808-1  (b)(i) revised; interim.................................28465
219.1005  (a) revised; interim.....................................28466
219.1006  Revised; interim.........................................28466
219.7102  Introductory text revised; interim.......................28466
219.7106  (a)(1)(ii) amended; (c) redesignated as (d); new (c) 
        added; interim.............................................28466
222  Technical correction..........................................32416
    Authority citation revised.....................................37868
222.1308  Added; interim...........................................28466
223  Technical correction..........................................32416
    Authority citation revised.....................................37868
223.7000  Added; interim...........................................28466
223.7002  (a)(1) revised; interim..................................28466
223.7100--223.7103 (Subpart 223.71) Added; interim.................28466
224  Authority citation revised....................................37868
225  Authority citation revised....................................37868
225.702  (1) revised; interim......................................28467
225.770-1  Revised; interim........................................28467
225.901 (Subpart 225.9)  Removed; interim..........................28467
225.7002-2  (e) and (f) revised; interim...........................28467
225.7002-4  (a) and (c) introductory text revised; interim.........28467
225.7003-2  Revised; interim.......................................28467
225.7005  Removed; interim.........................................28467
225.7014-1  Revised; interim.......................................28467
225.7014-2  Revised; interim.......................................28467
225.7014-3  Revised; interim.......................................28467
225.7015-1  Revised; interim.......................................28467
225.7015-3  Revised; interim.......................................28467
225.7017-1  Revised; interim.......................................28468
225.7017-2  Revised; interim.......................................28468
225.7018  Added; interim...........................................28468
225.7018-1  Added; interim.........................................28468
225.7018-2  Added; interim.........................................28468
225.7018-3  Added; interim.........................................28468
225.7019  Added; interim...........................................28468
225.7019-1  Added; interim.........................................28468
225.7019-2  Added; interim.........................................28468
225.7019-3  Added; interim.........................................28468
    (a)(2) corrected...............................................32416
225.7019-4  Added; interim.........................................28468
225.7102  (e) removed; (f) redesignated as (e); interim............28468
225.7103  (e)(2) and (f) amended; (g) and (h) removed; interim.....28468
225.7104  Revised; interim.........................................28468

[[Page 457]]

225.7200--225.7203 (Subpart 225.72)  Revised; interim..............28469
226  Authority citation revised....................................37868
227  Technical correction..........................................32416
    Authority citation revised.....................................37868
227.405-79  (b)(1) introductory text amended; interim..............28469
228  Technical correction..........................................32416
    Authority citation revised.....................................37868
228.102-1  Introductory text and (4) revised; interim..............28469
229  Authority citation revised....................................37868
230  Authority citation revised....................................37868
231  Technical correction..........................................32416
    Authority citation revised.....................................37868
231.205-6  (g)(2)(i) amended; interim..............................28469
231.205-22  Added; interim.........................................28469
231.7000--231.7002-6 (Subpart 231.70)  Revised; interim............28469
232  Authority citation revised.............................37868, 46092
232.501-1  (a)(i) revised; interim.................................62046
232.502-1-71  Table 32-1 revised; interim..........................62046
    Table corrected................................................64353
232.702--232.705-70 (Subpart 232.7) Added; interim.................46092
233  Technical correction..........................................32416
    Authority citation revised.....................................37868
233.211  Removed; interim..........................................28470
233.7000  Revised; interim.........................................28470
234  Authority citation revised....................................37868
235  Authority citation revised....................................37868
235.006  (b)(i)(C)(1)(iii) revised; interim........................28471
    (b)(i)(C)(1)(iii) correctly designated.........................32416
235.017  Revised; interim..........................................28471
236  Authority citation revised....................................37868
237  Technical correction..........................................32416
    Authority citation revised.....................................37868
237.171  Added; interim............................................28471
237.171-1  Added; interim..........................................28471
237.171-2  Added; interim..........................................28471
237.270  Revised; interim..........................................28471
239  Authority citation revised....................................37868
239.7501-2  Revised; interim.......................................28471
    Correctly designated...........................................32416
241  Authority citation revised....................................37868
242  Authority citation revised....................................37868
243  Authority citation revised....................................37868
244  Authority citation revised....................................37868
245  Authority citation revised....................................37868
246  Authority citation revised....................................37868
247  Authority citation revised....................................37868
248  Authority citation revised....................................37868
249  Authority citation revised.............................37868, 43286
249.7003  Added; interim...........................................43286
250  Authority citation revised....................................37868
251  Authority citation revised....................................37868

                                  1994

48 CFR
                                                                   59 FR
                                                                    Page
Chapter 2
202.101  Amended; interim..........................................27668
204.201  Introductory text removed; (1) and (2) added; interim.....27668
204.670-6  (b)(2) amended; interim.................................27668
204.7003  (a)(1)(i)(J) amended; interim............................27668
206.302-5  (b) revised; interim....................................36089
207.105  Regulation at 58 FR 32061 confirmed.......................27667
209.101  Revised...................................................51132
    Regulation at 58 FR 28464 confirmed............................51132
209.104-1  (g)(i) heading revised; (g)(iii) added..................51131
    Regulation at 58 FR 28464 confirmed; (g)(ii)(A) revised; 
(g)(ii)(C) introductory text amended...............................51132
209.104-70  Heading and (a) revised; (c) and (d) added.............51131
    Regulation at 58 FR 28464 confirmed............................51132

[[Page 458]]

209.106-2  Regulation at 58 FR 28464 confirmed..............27667, 51132
209.202  (a)(1) amended; interim...................................27668
209.402  Added; interim............................................27668
209.403  Amended; interim..........................................27668
209.406-2  Regulation at 58 FR 28464 confirmed..............27667, 51132
209.406-4  Regulation at 58 FR 28464 confirmed..............27667, 51132
    Removed; interim...............................................27669
210.001  Amended; interim..........................................27669
210.002-71  Regulation at 58 FR 32062 confirmed....................27667
210.011-70  (d) removed; interim...................................27669
210.070  Removed; interim..........................................27669
213.000  Revised...................................................50851
213.101  Revised...................................................50851
213.404  (a) revised...............................................50851
213.505-3  Revised.................................................50851
214.406-3  (e)(i) revised; (e)(ix) added; interim..................27669
215.605  Regulation at 58 FR 28465 confirmed.......................27667
    (a) removed; (b) revised; interim..............................27669
215.804-3  (b)(3)(B)(2) revised; (b)(3)(B)(3) added; interim.......27669
215.804-6  (b)(2)(A) amended; interim..............................27669
215.807  (b) added; interim........................................27669
215.871-3  (c) amended; interim....................................27669
215.971-3  (d)(2) amended; interim.................................27669
215.975  (b) table amended; interim................................27669
216.307  Added.....................................................53116
217  Technical correction..........................................26343
217.500  Added.....................................................22760
217.502  Revised...................................................22760
217.503  Removed...................................................22760
219  Technical correction..........................................15501
219.000  Introductory text revised; interim........................27670
219.301  (a) introductory text revised; interim....................22131
219.502-1  Regulation at 58 FR 28465 confirmed.....................27667
219.502-2  Regulation at 58 FR 28465 confirmed.....................27667
219.502-2-70  (a)(1)(ii) revised; (a)(1)(iii) added; interim.......24959
    (a) introductory text and (c) revised; (d) added; interim......27670
219.504  (b) introductory text revised; interim....................12192
219.602-1  Regulation at 58 FR 28465 confirmed.....................27667
219.705-2  Regulation at 58 FR 28465 confirmed.....................27667
    Revised; interim...............................................27670
219.808-1  (b)(iv) added; interim..................................27670
219.1005  (a) revised; interim.....................................27670
219.1006  Regulation at 58 FR 28466 confirmed......................27667
219.7100--219.7105 (Subpart 219.71)  Revised; interim..............27670
222.101-3  (3) amended; interim....................................27671
222.7100--222.7102 (Subpart 222.71)  Heading revised; interim......36089
223.370-4  (b)(1)(ii) introductory text amended....................27671
223.7100--223.7103 (Subpart 223.71)  Regulation at 58 FR 28466 
        confirmed..................................................27668
225  Technical correction..........................................26343
225.9  Regulation at 58 FR 28467 confirmed.........................51132
225.000-70  (m) revised; interim....................................1289
    Regulation at 59 FR 1289 comment period extended................5335
225.000-71  (a)(2) and (c)(1) revised; interim......................1289
    Regulation at 59 FR 1289 comment period extended................5335
225.105  (3) and (5)(ii)(A) revised; interim........................1289
    Regulation at 59 FR 1289 comment period extended................5335
225.109  (a) revised; interim.......................................1289
    Regulation at 59 FR 1289 comment period extended................5335
225.302  (b)(i) amended............................................27671
225.401  Revised; interim...........................................1289
    Regulation at 59 FR 1289 comment period extended................5335
    Amended........................................................23169
225.402  (c)(i) and (ii) introductory text revised; interim.........1289
    Regulation at 59 FR 1289 comment period extended................5335
    Corrected......................................................39974
225.403  (m)(4) added..............................................23169
225.403-70  Amended; introductory text revised; interim.............1289
    Regulation at 59 FR 1289 comment period extended................5335

[[Page 459]]

    Amended........................................................23169
225.407  Redesignated as 225.408; interim...........................1289
    Regulation at 59 FR 1289 comment period extended................5335
225.408  Redesignated from 225.407; (a)(1) and (2)(A) amended; 
        (a)(3) and (4) added; interim...............................1289
    Regulation at 59 FR 1289 comment period extended................5335
225.602  (3)(ii) revised; interim...................................1290
    Regulation at 59 FR 1290 comment period extended................5335
225.603  (1)(ii)(C) added; (1)(iii)(C)(3) revised; interim..........1290
    Regulation at 59 FR 1290 comment period extended................5335
225.605-70  (c) redesignated as (d); new (c) added; interim.........1290
    Regulation at 59 FR 1290 comment period extended................5335
225.702  Revised...................................................27671
    Regulation at 58 FR 28467 confirmed............................51132
    Revised........................................................51133
225.703  Removed...................................................27671
225.704  Removed...................................................27671
225.704-70  Removed................................................27671
225.770-1  Regulation at 58 FR 28467 confirmed.....................51132
225.7002  Revised..................................................27671
225.7002-1(c)  added...............................................27671
225.7002-2  (a), (d) and (i) revised; interim......................27671
    Regulation at 58 FR 28467 confirmed............................51132
225.7002-4  Introductory text and (d) added; interim...............27671
    Regulation at 58 FR 28467 confirmed............................51132
225.7003  Removed; interim.........................................27671
225.7003-1  Removed; interim.......................................27671
225.7003-2  Removed; interim.......................................27671
    Regulation at 58 FR 28467 confirmed............................51132
225.7004  (a) amended; interim.....................................27671
225.7005  Regulation at 58 FR 28467 confirmed......................51132
225.7007  (a) amended; interim.....................................27672
225.7010  Introductory text amended; interim.......................27672
225.7011  Revised; interim.........................................27672
225.7011-1  Amended; interim.......................................27672
225.7011-2  (a) and (c) amended; interim...........................27672
225.7011-4  (b) introductory text amended; interim.................27672
225.7011-5  Amended; interim.......................................27672
225.7014  Removed..................................................10579
    Removed; interim...............................................27672
225.7014-1  Removed................................................10579
    Removed; interim...............................................27672
    Regulation at 58 FR 28467 confirmed............................51132
225.7014-2  Removed................................................10579
    Removed; interim...............................................27672
    Regulation at 58 FR 28467 confirmed............................51132
225.7014-3  Removed................................................10579
    Removed; interim...............................................27672
    Regulation at 58 FR 28467 confirmed............................51132
225.7015-1  Regulation at 58 FR 28467 confirmed....................51132
225.7015-3  Regulation at 58 FR 28467 confirmed....................51132
225.7016-1  Introductory text amended; interim.....................27672
225.7017-1  Regulation at 58 FR 28468 confirmed....................51132
225.7017-2  Regulation at 58 FR 28468 confirmed....................51132
225.7018  Regulation at 58 FR 28468 confirmed...............27668, 51132
225.7018-1  Revised; interim.......................................27672
    Regulation at 58 FR 28468 confirmed............................51132
225.7018-2  Regulation at 58 FR 28468 confirmed....................51132
225.7018-3  Revised; interim.......................................27672
225.7019  Regulation at 58 FR 28468 confirmed...............27667, 51132
225.7019-1  Regulation at 58 FR 28468 confirmed....................51132
225.7019-2  Regulation at 58 FR 28468 confirmed....................51132
225.7019-3  Regulation at 58 FR 28468 confirmed....................51132
225.7019-4  Regulation at 58 FR 28468 confirmed....................51132
225.7020  Added; interim...........................................27672
225.7020-1  Added; interim.........................................27672
225.7020-2  Added; interim.........................................27672
225.7021  Added; interim...........................................11729
225.7021-1  Corrected..............................................38931
225.7022  Added; interim...........................................19146
225.7102  Regulation at 58 FR 28468 confirmed......................51132
225.7103  Regulation at 58 FR 28468 confirmed......................51132

[[Page 460]]

225.7104  Regulation at 58 FR 28468 confirmed......................51132
225.7200--225.7203 (Subpart 225.72)  Regulation at 58 FR 28469 
        confirmed..................................................51132
225.7303-2  (a) revised............................................50511
226.7000  Revised; interim.........................................27672
226.7005  (a)(1) revised; interim..................................22131
226.7100--226.7103 (Subpart 226.71)  Added; interim................12192
226.7100  Corrected................................................15501
226.7103  (c)(2) corrected.........................................15501
226.7200 (Subpart 226.72)  Added; interim..........................36089
231  Authority citation revised....................................26144
231.100-70  Revised; interim.......................................27672
231.205-18  (c)(2) introductory text amended; interim..............27672
231.205-22  Regulation at 58 FR 28469 confirmed....................27667
231.303 (Subpart 231.3)  Added; interim............................26144
231.7000--231.7002-6 (Subpart 231.70)  Regulation at 58 FR 28469 
        confirmed..................................................27668
231.7000  Revised; interim.........................................27672
231.7001  Amended; interim.........................................27672
231.7002-1  (a)(1)(i) and (b) revised; interim.....................27673
231.7002-2  (c) redesignated as (b); new (b) introductory text 
        amended; interim...........................................27673
231.7002-3  (b)(1) amended; interim................................27673
231.7002-4  (b) amended; interim...................................27673
231.7002-5  (c)(1) amended; interim................................27673
233.104 (Subpart 233.1)  Removed; interim..........................27673
233.7000  Regulation at 58 FR 28470 confirmed......................27668
    (a) revised; interim...........................................27673
235.006  (b)(i)(C)(1) introductory text, (ii) and (iii) revised; 
        interim....................................................27673
235.015  Revised; interim..........................................27673
235.015-71  (i)(3) revised; interim................................27673
235.7000--235.7006 (Subpart 235.70)  Added.........................52443
236.602-1  (a)(i)(6)(C) added; interim.............................27673
237.171  Regulation at 58 FR 28471 confirmed.......................27667
237.171-1  Regulation at 58 FR 28471 confirmed.....................27667
237.171-2  Regulation at 58 FR 28471 confirmed.....................27667
237.7400--237.7402 (Subpart 237.74)  Added; interim................36089
242.205  (1) revised; interim......................................27673
242.705-3  Added...................................................53116
242.1203  (b)(1) amended; interim..................................27674
243.205-70  Revised; interim.......................................27674
245.310  (c)(ii)(A) amended; interim...............................27674
245.505-14  Revised; interim.......................................27674
245.607-2  Revised; interim........................................27674
247.105  (a)(iii)(A) revised; (a)(iii)(D) amended; interim.........27674
247.270-5  Revised; interim........................................50852
247.270-6  Revised; interim........................................50852
247.571  (c) redesignated as (e); new (c) and (d) added; interim 
                                                                   10580
247.573  (d) added; interim........................................10580
248.270  Amended; interim..........................................27674
249.105-1  Introductory text amended; interim......................27674
249.7001  (b)(1), (4) and (12) revised; interim....................27674
249.7003  Revised; interim.........................................27674
250.201  (b) amended; interim......................................27675
250.303  (5) and (13) amended; interim.............................27675
251.106  Removed; interim..........................................27675

                                  1995

48 CFR
                                                                   60 FR
                                                                    Page
Chapter 2
201  Authority citation revised....................................40106
201.201-1  (d)(i) introductory text and (V) amended................61591
201.301  (b) amended...............................................61591
201.304  (1) through (5) amended...................................61591
201.402  (1) amended...............................................61591
202  Authority citation revised.............................29497, 40106
202.101  Amended............................................29497, 61591
203  Authority citation revised.............................29497, 40106
203.170-1  (a) amended.............................................61591
203.170-4  Revised.................................................61591

[[Page 461]]

203.703  Amended...................................................61592
203.502-2  (h)(ii) amended.........................................29497
203.570-5  Revised.................................................61592
203.7100--203.7108 (Subpart 203.71)  Removed.......................61592
204  Authority citation revised.............................34468, 40106
204.602-70  Added..................................................61592
204.603  Removed...................................................61592
204.603-70  Removed................................................61592
204.670-1  (c)(3) amended..........................................61592
204.670-2  (c) and (d) revised.....................................61592
204.670-6  (b) revised.............................................61592
204.7003  (a)(1)(i) revised........................................61592
204.7101  Amended..................................................34468
204.7102  (b) introductory text revised............................34468
204.7103-1  (a) introductory text amended; (a)(4) added............34468
    (a)(4)(ii)(B) corrected........................................43191
204.7104-1  (a)(3) added; (b)(1) introductory text and (i) revised
                                                                   34468
204.7104-2  (e)(5) amended; (e)(7) and (8) redesignated as (e)(8) 
        and (9); new (e)(7) added..................................34468
204.7107  Revised..................................................34469
    (e)(1) and (3) corrected.......................................43191
205  Authority citation revised....................................40106
206  Authority citation revised......................29497, 40106, 40107
206.001  Added.....................................................61592
206.102 (Subpart 206.1)  Added; interim.............................2888
    Regulation at 60 FR 2888 confirmed.............................61591
    Removed........................................................61592
206.302-5  Regulation at 59 FR 36089 confirmed.....................29496
    (c)(i)(B) amended..............................................29497
    (b)(i) revised; interim........................................40107
206.303-1  (c) added...............................................61592
206.304  (a)(4)(A)(2) and (B) revised..............................29497
207  Authority citation revised......................29497, 40106, 40107
207.102  Added.....................................................61592
207.105  (b)(2)(v) removed.........................................29497
    (b)(15), (6) and (17)(A)(8) revised............................61593
207.470  Added; interim............................................40107
208  Authority citation revised....................................40106
208.7003-1  Revised................................................61593
208.7003-2  (c) revised............................................61593
209  Authority citation revised.............................29497, 40106
209.103  (a)(i)(C) amended.........................................29497
209.103-70  Revised................................................61593
209.104-1  Regulation at 59 FR 51131 confirmed.....................29496
    (e) revised....................................................29497
209.104-70  Regulation at 59 FR 51131 confirmed....................29496
209.106-1  Revised.................................................61593
209.202  Revised...................................................61593
209.403  Amended...................................................61593
209.405-1  Added...................................................29497
    (a) and (b) redesignated as (b) and (c)........................61593
209.470  Added; interim............................................13074
209.470-1  Added; interim..........................................13074
    Amended........................................................61593
209.470-2  Added; interim..........................................13074
209.470-3  Added; interim..........................................13074
    Amended........................................................61593
210  Authority citation revised....................................40106
    Removed........................................................61593
211  Authority citation revised.............................33471, 40106
    Revised........................................................61594
211.7004-1  (h) removed; (p)(2)(ii) amended........................33471
211.7004-6  (a)(3) amended.........................................33471
211.7005  (a)(29), (b)(34) and (35) removed; (a)(30) through (33), 
        (b)(36) through (51), (52), (53) and (54) redesignated as 
        (a)(29) through (32), (b)(34) through (49), (51), (52) and 
        (53); (b)(18), (c)(6) and (10) amended; new (b)(50) added 
                                                                   33471
212  Authority citation revised....................................40106
    Revised........................................................61595
213  Authority citation revised....................................40106
214  Authority citation revised....................................40106
214.406-3  (e)(i) amended..........................................61596
215  Authority citation revised...............29497, 34468, 40106, 40107
215.406-2  Added...................................................34470
    Corrected......................................................43191
215.804-8  Revised.................................................61596
215.805-5  (a)(1)(A)(3) amended....................................61596
215.806-1  (a)(1) revised..........................................29497
215.871  Removed; interim..........................................40107

[[Page 462]]

215.871-1  Removed.................................................43721
215.871-2  Removed.................................................43721
215.871-3  Removed.................................................43721
215.871-4  Removed.................................................43721
215.871-5  Removed.................................................43721
215.971-4  (d)(3)(A) amended.......................................61596
216  Authority citation revised....................................40106
217  Authority citation revised......................29497, 34468, 40106
217.103-1  (b)(v), (vi)(A)(2) and (viii)(C) amended................61596
217.7302  (b) revised..............................................61596
217.7404-3  (a)(2) revised.........................................29498
217.7404-4  Revised................................................29498
217.7404-5  Revised................................................29498
217.7405  Revised..................................................34470
217.7406  Added....................................................34470
    Amended........................................................61596
219  Authority citation revised...............29497, 35668, 40106, 40107
219.000  Regulation at 59 FR 27670 confirmed.......................29496
219.501  S-70 stayed...............................................54955
219.502-2-70  Regulations at 59 FR 24959 and 27670 confirmed.......29496
    (a)(1)(ii) revised.............................................29498
    Stayed.........................................................54955
219.502-4  Stayed..................................................54955
219.504  Regulation at 59 FR 12192 confirmed.......................29496
    (b)(i) stayed..................................................54955
219.506  Stayed....................................................54955
219.508  (e) stayed................................................54955
219.508-70  Stayed.................................................54955
219.602-1  (a) removed; interim....................................40107
219.602-70  Removed; interim.......................................40107
    Regulation at 60 FR 40107 confirmed............................61591
219.702  (a) introductory text and (i)(A)(1) revised...............35668
219.703  (a) introductory text revised; interim....................13075
    (a) corrected..................................................41157
    Regulation at 60 FR 13075 confirmed............................61591
    (a) amended....................................................61596
219.704  Revised...................................................61596
219.705-2  Regulation at 59 FR 27670 confirmed.....................29496
219.808-1  Regulation at 59 FR 27670 confirmed.....................29496
219.1005  Regulation at 59 FR 27670 confirmed......................29496
219.1006  (b)(2) amended...........................................61596
219.7001  (b)(3) and (4) revised; (b)(5) added.....................43563
219.7100--219.7105 (Subpart 219.71)  Regulation at 59 FR 27670 
        confirmed..................................................29496
222  Authority citation revised....................................40106
222.7100--222.7102 (Subpart 222.71)  Regulation at 59 FR 36089 
        confirmed..................................................29496
222.7200 (Subpart 222.72)  Regulation at 59 FR 36089 confirmed.....29496
223  Authority citation revised....................................40106
223.104  Revised...................................................61596
223.404 (Subpart 223.4)  Added.....................................61596
223.570-4  (b)(1) revised..........................................61597
223.7101  Revised..................................................61597
223.7102  (a)(9) added; interim....................................13076
    Regulation at 60 FR 13076 confirmed............................61591
    (a)(7), (8) and (9)(ii) amended................................61597
223.7103  Revised; interim.........................................13076
    Regulation at 60 FR 13076 confirmed............................61591
224  Authority citation revised....................................40106
225  Authority citation revised...............29497, 34470, 34471, 40106
225.000-70  Regulation at 59 FR 1289 confirmed.....................29497
225.000-71  Regulation at 59 FR 1289 confirmed.....................29497
225.102  (a)(3) revised; interim...................................34470
    Regulation at 60 FR 34470 confirmed............................61591
225.105  Regulation at 59 FR 1289 confirmed........................29497
225.109  Regulation at 59 FR 1289 confirmed........................29497
225.302  (b)(i) amended............................................61597
225.401  Regulation at 59 FR 1289 confirmed........................29497
225.402  Regulation at 59 FR 1289 confirmed........................29497
225.403  (d)(1)(A), (B) introductory text and (2) amended..........61597
225.403-70  Regulation at 59 FR 1289 confirmed.....................29497
225.407  Regulation at 59 FR 1289 confirmed........................29497

[[Page 463]]

225.408  Regulation at 59 FR 1289 confirmed........................29497
    (a)(4)(B) revised..............................................29498
225.602  Regulation at 59 FR 1290 confirmed........................29497
225.603  Regulation at 59 FR 1290 confirmed........................29497
    (b)(i)(D) and (ii) amended.....................................29498
225.605-70  Regulation at 59 FR 1290 confirmed.....................29497
225.770-4  Amended.................................................61597
225.871-7  (a)(1) amended..........................................61597
225.872-1  (a) and (b) amended.....................................61597
225.872-2  (a)(2)(ii) amended......................................61597
225.872-3  (f)(4) amended..........................................61597
225.872-5  (a) amended.............................................29498
225.872-6  (b) amended.............................................29498
225.7002-2  (j) added..............................................61597
225.7004  Revised; interim.........................................19532
    Regulation at 60 FR 19532 confirmed............................61591
225.7004-1  Revised; interim.......................................19532
    Regulation at 60 FR 19532 confirmed............................61591
225.7004-2  Revised; interim.......................................19532
    (b) revised....................................................29498
    Regulation at 60 FR 19532 confirmed............................61591
225.7004-3  Revised; interim.......................................19532
    Regulation at 60 FR 19532 confirmed............................61591
225.7004-4  Revised; interim.......................................19532
    Regulation at 60 FR 19532 confirmed............................61591
    (b) revised....................................................61597
225.7004-5  Revised; interim.......................................19532
    Regulation at 60 FR 19532 confirmed............................61591
225.7004-6  Added; interim.........................................19532
    (c) added......................................................29498
    Regulation at 60 FR 19532 confirmed............................61591
225.7007  Revised; interim.........................................19532
    Regulation at 60 FR 19532 confirmed............................61591
225.7007-1  Added; interim.........................................19533
    Regulation at 60 FR 19533 confirmed............................61591
225.7007-2  Added; interim.........................................19533
    Regulation at 60 FR 19533 confirmed............................61591
225.7007-3  Added; interim.........................................19533
    Regulation at 60 FR 19533 confirmed............................61591
225.7007-4  Added; interim.........................................19533
    Regulation at 60 FR 19533 confirmed............................61591
    Revised........................................................61597
225.7010  Revised; interim.........................................19533
    Regulation at 60 FR 19533 confirmed............................61591
225.7010-1  Added; interim.........................................19533
225.7010-2  Added; interim.........................................19533
    Regulation at 60 FR 19533 confirmed............................61591
225.7010-3  Added; interim.........................................19533
    Regulation at 60 FR 19533 confirmed............................61591
    Revised........................................................61597
225.7016-1  Revised; interim.......................................19533
    Regulation at 60 FR 19533 confirmed............................61591
225.7016-2  Revised; interim.......................................19533
    Regulation at 60 FR 19533 confirmed............................61591
225.7016-3  Revised; interim.......................................19533
    Regulation at 60 FR 19533 confirmed............................61591
    Revised........................................................61597
225.7016-4  Removed; new 225.7016-4 redesignated from 225.7016-5 
        and revised; interim.......................................19534
    Regulation at 60 FR 19534 confirmed............................61591
225.7016-5  Redesignated as 225.7016-4; interim....................19534
    Regulation at 60 FR 19534 confirmed............................61591
225.7018-2  Amended................................................61597
225.7019-1  Revised; interim.......................................19534
    Regulation at 60 FR 19534 confirmed............................61591
225.7019-2  Revised; interim.......................................19534
    Regulation at 60 FR 19534 confirmed............................61591
    (b) amended....................................................61597
225.7019-3  Revised; interim.......................................19534
    Regulation at 60 FR 19534 confirmed............................61591
225.7019-4  Revised; interim.......................................19534
    Regulation at 60 FR 19534 confirmed............................61591
225.7021  Regulation at 59 FR 11729 confirmed......................29497
225.7021-1  Revised................................................29498
225.7021-3  Revised................................................29498
225.7022  Regulation at 59 FR 19146 confirmed......................29497
225.7022-1  Revised................................................29498
225.7023  Added; interim...........................................34471

[[Page 464]]

    Regulation at 60 FR 34471 confirmed............................61591
225.7023-1  Added; interim.........................................34471
    Regulation at 60 FR 34471 confirmed............................61591
    Amended........................................................61597
225.7023-2  Added; interim.........................................34471
    Regulation at 60 FR 34471 confirmed............................61591
225.7023-3  Added; interim.........................................34471
    Regulation at 60 FR 34471 confirmed............................61591
    Amended........................................................61597
225.7103  (a) and (c) introductory text amended....................61597
225.7200--225.7203 (Subpart 225.72)  Regulation at 59 FR 28469 
        confirmed..................................................29497
225.7201  Revised..................................................61597
225.7202  Amended..................................................29499
225.7307-1  (f) amended............................................61597
225.7307-2  (b) amended............................................61597
226  Authority citation revised.............................29497, 40106
226.103 (Subpart 226.1)  Added.....................................61597
226.7000  Regulation at 59 FR 27672 confirmed......................29496
226.7100--226.7103 (Subpart 226.71)  Regulation at 59 FR 12192 
        confirmed..................................................29496
226.7100  Revised; interim..........................................5870
    Regulation at 60 FR 5870 confirmed.............................61591
226.7101  Revised..................................................29499
226.7103  Revised..................................................29499
226.7104  Added; interim............................................5870
    Regulation at 60 FR 5870 confirmed.............................61591
    Revised........................................................61598
226.7200  (a) amended..............................................29499
    Regulation at 59 FR 36089 confirmed............................29497
227  Authority citation revised.............................33471, 40106
227.400 (Subpart 227.4)  Revised...................................33471
227.7100--227.7108 (Subpart 227.71)  Added.........................33471
227.7101  (b) removed; (c) redesignated as (b).....................61598
227.7102-3  (a), (b) and (c) amended...............................61598
227.7103-6  (b)(2) corrected.......................................41157
    (a) amended....................................................61598
227.7103-15  (c) introductory text revised.........................61598
227.7104  Heading and (a) amended..................................61598
227.7200--227.7207 (Subpart 227.72)  Added.........................33482
227.7202-2  Removed................................................61598
228  Authority citation revised.............................29497, 40106
228.102-1  Introductory text revised...............................29499
228.171  Added; interim............................................45377
    (e) amended....................................................61598
228.171-1  Added; interim..........................................45377
228.171-2  Added; interim..........................................45377
228.171-3  Added; interim..........................................45377
229  Authority citation revised....................................40106
230  Authority citation revised....................................40106
231  Authority citation revised.............................29497, 40106
231.205-6  (a)(2) added; interim....................................2331
    Regulation at 60 FR 2331 confirmed.............................61591
    (g)(2)(i) removed..............................................61598
231.205-70  Added; interim..........................................1748
    (b)(4) amended.................................................29499
231.301  Regulation at 60 FR 2331 confirmed........................61591
231.303  (3) added..................................................2331
    Regulation at 59 FR 26144 confirmed............................29496
231.603  Introductory text, (1) through (10), (11) introductory 
        text, (i), (ii) and (12) through (15) redesignated as (1) 
        introductory text, (i) through (x), (xi) introductory 
        text, (xi)(A), (B) and (xii) through (xv); new (2) added; 
        interim.....................................................2331
    Regulation at 60 FR 2331 confirmed.............................61591
    Revised........................................................61598
231.703  Revised....................................................2331
    (1) amended....................................................29499
    Regulation at 60 FR 2331 confirmed.............................61591
    Revised........................................................61598
231.7000--231.7002-6 (Subpart 231.70)  Removed.....................61598
232  Authority citation revised.............................29497, 40106
232.108  (1)(i) amended............................................29499
232.170  (a) and (b) amended.......................................61598
232.171  (a)(1), (b)(1) and (3) amended............................61598

[[Page 465]]

232.173-1  (b) amended.............................................61598
232.173-5  Introductory text amended...............................61598
232.501-2  (a) amended.............................................61598
232.503-6  (b) added...............................................29499
232.617  Amended...................................................61598
233  Authority citation revised....................................40106
234  Authority citation revised....................................40106
234.001  Added.....................................................61598
235  Authority citation revised.......................4570, 29497, 40106
235.001  Revised...................................................29499
235.006  (a) and (b)(iv) added; interim.............................4570
    (b)(i)(C)(1)(iii) revised......................................29500
    Regulation at 60 FR 4570 confirmed.............................61591
235.010  Revised...................................................29500
235.015-70  (d)(3)(ii) amended.....................................29500
235.015-71  (i)(2) amended.........................................61598
235.017-1  Added; interim...................................13077, 29500
    Correctly removed..............................................40107
    Regulation at 60 FR 13077 confirmed............................61591
    Revised........................................................61598
235.071  (c) and (d) added.........................................29500
235.7002  (a)(2) revised...........................................15690
    (a)(1) and (2) amended.........................................61598
235.7003  (d)(9) added.............................................15690
    (b)(1) revised.................................................61599
235.7004-1  (b) amended............................................15690
235.7004-2  (b) amended............................................15690
235.7004-3  (c) amended............................................15690
235.7006  (a) and Exhibit amended; (c) redesignated as (d); new 
        (c) added..................................................15690
    Amended........................................................61599
236  Authority citation revised....................................40106
237  Authority citation revised.............................29497, 40106
237.102-70  Added..................................................61599
237.104  (b)(ii) revised; interim...................................2888
    Regulation at 60 FR 2888 confirmed.............................61591
    (b)(ii) introductory text and (B)..............................61599
237.109  Added.....................................................61599
237.171  Removed...................................................61599
237.171-1  Removed.................................................61599
237.171-2  Removed.................................................61599
237.270  Removed...................................................61599
237.270-1  Removed.................................................61599
237.270-2  Removed.................................................61599
237.270-3  Removed.................................................61599
237.270-4  Removed.................................................61599
237.7204  Amended..................................................61599
237.7302  Amended..................................................29500
239.7303  (b) revised..............................................61599
237.7400--237.7402 (Subpart 237.74)  Regulation at 59 FR 36089 
        confirmed..................................................29496
237.7400  Amended..................................................29500
237.7401  (c) amended; (d) added...................................29500
237.7402  Amended..................................................29500
239  Authority citation revised....................................40106
241  Authority citation revised....................................40106
242  Authority citation revised.............................29497, 40106
242.302  (a)(7) added..............................................29500
242.705-1  (b)(3) and (4) removed..................................61599
242.705-2  (b)(2)(ii) and (iv) amended.............................61599
242.770  Removed...................................................61599
242.770-1  Removed.................................................61599
242.770-2  Removed.................................................61599
242.770-3  Removed.................................................61599
242.770-4  Removed.................................................61599
242.770-5  Removed.................................................61599
242.770-6  Removed.................................................61599
242.771-3  (b)(2) and (c) amended..................................61599
242.1104  Revised..................................................29500
242.1202  Added; interim............................................1749
242.1204  Added; interim............................................1749
242.7003-1  Revised................................................61599
242.7206  Introductory text revised................................61599
242.7302  (a) revised; (d) added...................................29500
242.7500--242.7503 (Subpart 242.75)  Added.........................29500
243  Authority citation revised.............................34468, 40106
243.171  Added.....................................................34470
244  Authority citation revised.............................29497, 40106
244.202--244.202-2 (Subpart 244.2)  Added..........................29501
245  Authority citation revised.............................29497, 40106
245.608-70  (a)(3) revised.........................................29501
246  Authority citation revised.............................33145, 40106
246.101  Amended; interim..........................................33145

[[Page 466]]

    Regulation at 60 FR 33145 confirmed............................61591
246.102  (4) amended; interim......................................33145
    Regulation at 60 FR 33145 confirmed............................61591
246.202-3  Revised; interim........................................33145
    Regulation at 60 FR 33145 confirmed............................61591
    Redesignated as 246.202-4......................................61599
246.202-4  Redesignated from 246.202-3; (i) and (ii) redesignated 
        as (1) and (2).............................................61599
246.204  Revised; interim..........................................33145
    Regulation at 60 FR 33145 confirmed............................61591
    Removed........................................................61599
246.704  (4) revised; interim......................................33145
246.704  Regulation at 60 FR 33145 confirmed.......................61591
    (2) and (4) amended............................................61599
246.770-1  (f)(2)(i) revised.......................................61599
247  Authority citation revised.............................29497, 40106
247.105  Regulation at 59 FR 27674 confirmed.......................29497
247.270-5  Regulation at 59 FR 50852 confirmed.....................29496
247.305-70  Revised................................................29501
247.571  (c) revised; (d) removed; (e) redesignated as (d).........29501
247.572-1  (a) revised.............................................61599
247.572-2  (a)(4) and (5) amended; (a)(6) added....................61600
247.573  (d) revised...............................................29501
248  Authority citation revised....................................40106
249  Authority citation revised.............................29497, 40106
249.7002  (b) introductory text and (2) amended....................61600
249.7003  Regulation at 59 FR 27674 confirmed......................29497
    (b)(1), (2) introductory text and (3) introductory text 
amended............................................................29501
250  Authority citation revised....................................40106
250.201-70  (b)(1) and (2) amended.................................61600
251  Authority citation revised.............................29497, 40106
251.102  (e) introductory text revised; (f) added..................29501
251.105  Added.....................................................29501

                                  1996

  (Regulations published from January 1, 1996, through October 1, 1996)

48 CFR
                                                                   61 FR
                                                                    Page
Chapter 2
201.201-1  (d)(i) introductory text and (III) revised..............50451
201.402  (2) revised...............................................50451
202.101  Amended.............................................7741, 50451
204.202  (1)(iii) and (iv) amended; (1)(v) added....................7742
204.670-1  (c) revised.............................................51030
204.670-2  (d) introductory text, (1) and (7)(iii) revised.........51030
204.670-3  (a)(1), (2) introductory text, (5) and (b)(2) revised; 
        (b)(1) amended.............................................51030
204.670-5  Revised.................................................51030
204.670-6  Heading, (b)(1)(iii), (iv), (v), (2) and (c)(1) revised
                                                                   51031
204.670-8  Revised.................................................51031
204.670-9  Heading and (b) revised.................................51031
204.7003  (a)(1)(i)(F) amended.....................................50451
204.7201  (b) revised..............................................51031
204.7202-1  (a) amended............................................51031
204.7202-2  Heading, (a) introductory text, (b)(1) introductory 
        text, (i), (ii) and (2)(vi) revised........................51031
204.7203  (a) and (b) revised; (e) removed.........................51031
204.7204-1  (b) amended............................................51031
204.7204-2  Heading revised........................................51031
204.7206  Introductory text revised................................51032
206.304  Revised...................................................10285
    (a)(4)(B)(2) revised...........................................50451
207.103  (h)(i)(B) amended.........................................50451
207.104  Added.....................................................50451
207.105  Introductory text revised; (b)(12), (15) and (17) 
        redesignated as (b)(13), (16) and (18); (a)(8), new 
        (b)(13)(iv), new (16) and new (18)(A)(1)(ii) amended; 
        (b)(18)(D) added...........................................50451
207.470  Revised; interim..........................................16879
    Regulation at 61 FR 16879 confirmed............................50450
    (b) revised....................................................50452
209.103  (c) added.................................................50452
209.103-70  Amended................................................50452
209.403  (1) amended...............................................50452
209.470  Regulation at 60 FR 13074 confirmed........................7741

[[Page 467]]

209.470-1  Regulations at 60 FR 13074 and 61593 confirmed...........7741
    Revised.........................................................7742
    Revised; interim...............................................25408
209.470-2  Regulation at 60 FR 13074 confirmed......................7741
    Revised; interim...............................................25408
209.470-3  Regulations at 60 FR 13074 and 61593 confirmed...........7741
212.301  (f)(i) removed; (f)(ii), (iii) and (iv) redesignated as 
        (f)(i), (ii), and (iii); new (f)(ii) amended...............50452
213  Heading revised................................................7742
213.000  Amended....................................................7742
213.101  Amended....................................................7742
213.204  (b) amended................................................7742
213.401  Redesignated from 213.402..................................7742
213.402  Redesignated as 213.401; new 213.402 redesignated from 
        213.403.....................................................7742
213.403  Redesignated as 213.402; new 213.403 redesignated from 
        213.404; (c)(i)(B) and (ii) amended.........................7742
213.404  Redesignated as 213.403....................................7742
213.505-1  Redesignated from 213.505-2; heading revised; 
        introductory text, (b)(i) introductory text and (F)(3) 
        amended.....................................................7742
213.505-2  Redesignated as 213.505-1................................7742
    Corrected.......................................................9532
213.505-3  (b)(1) introductory text revised.........................7742
    (b)(1) corrected...............................................18195
213.507  Heading and (a)(i) revised.................................7742
214.406-3  (e)(i) and (vi) amended.................................50452
215.605  Heading, (b)(ii)(B) and (E) revised; (b)(iv) added........18687
    (b) revised....................................................50452
215.608  (a) redesignated as (a)(1); (a)(2) added..................18687
215.810  Revised....................................................7742
215.810-2  Added....................................................7742
215.810-3  Added....................................................7743
    (b)(i)(A) corrected............................................18195
216.306  Added......................................................7743
    (c)(i)(C)(iii) corrected.......................................18195
216.603-4  Revised..................................................7743
216.703  (c) revised................................................7743
    (c) corrected..................................................18195
217.202  (3) added..................................................7743
217.7402  Introductory text amended; (b) revised....................7743
217.7404-3  (a) introductory text amended...........................7743
217.7406  Revised...................................................7743
219  Heading revised...............................................18687
    Heading revised; interim.......................................39900
219.602-1  Regulation at 60 FR 40107 confirmed.....................61591
219.702--219.708 (Subpart 219.7)  Heading revised..................50452
219.702  (a) introductory text revised; interim....................39900
    Heading corrected..............................................49008
219.703  (a) corrected.............................................50535
219.704  (a)(4) added..............................................18687
219.708  (b)(1)(A), (B) and (c)(1)(A) revised; interim.............39901
219.1006  (b)(1)(B) revised........................................18687
219.7001  (a) revised..............................................18687
219.7200--219.7204 (Subpart 219.72)  Added.........................18688
219.7201  Amended..................................................50452
223.570--223.570-4 (Subpart 223.5)  Regulation at 57 FR 32737 
        confirmed..................................................50450
223.570-4  Regulation at 60 FR 61597 confirmed.....................50450
223.803 (Subpart 223.8)  Added.....................................50452
223.7200--223.7203 (Subpart 223.72)  Added..........................7743
223.7203  Corrected................................................18195
225.402  (c) revised.................................................130
    (a) revised.....................................................7744
225.403  (g)(4) added; (m)(4) removed; interim.....................37841
    (d)(1)(B)(3) amended...........................................50453
225.403-70  Introductory text revised; interim.....................37841
225.408  Heading and (a)(2) revised................................16880
225.970 (Subpart 225.9)  Added.....................................50453
225.7001  Revised; interim.........................................10899
    Regulation at 61 FR 10899 confirmed............................50450
    (a) revised....................................................50453
225.7002-2  (e) and (f) revised....................................50453
225.7002-3  Revised................................................50453
225.7002-4  Removed................................................50453
225.7011-4  (b) introductory text amended..........................50453
225.7012  Revised; interim.........................................13107

[[Page 468]]

    Regulation at 61 FR 13107 confirmed............................50450
225.7012-1  Revised; interim.......................................13107
    Regulation at 61 FR 13107 confirmed............................50450
225.7012-2  Revised; interim.......................................13107
    Regulation at 61 FR 13107 confirmed............................50450
225.7012-3  Revised; interim.......................................13107
    Regulation at 61 FR 13107 confirmed............................50450
    Heading revised; (1) and (2) redesignated as (a) and (b).......50453
225.7012-4  Removed; interim.......................................13107
    Regulation at 61 FR 13107 confirmed............................50450
225.7019  Revised; interim.........................................10900
    Regulation at 61 FR 10900 confirmed............................50450
225.7019-1  Revised; interim.......................................10900
    Regulation at 61 FR 10900 confirmed............................50450
225.7019-2  Revised; interim.......................................10900
    Regulation at 61 FR 10900 confirmed............................50450
    Revised........................................................50453
225.7019-3  Revised; interim.......................................10900
    Regulation at 61 FR 10900 confirmed............................50450
    (a)(2) introductory text revised; (a)(3) added.................50453
225.7019-4  Revised; interim.......................................10900
    Regulation at 61 FR 10900 confirmed............................50450
225.7022  Revised; interim.........................................13107
    Technical correction...........................................16287
    Regulation at 61 FR 13107 confirmed............................50450
225.7022-1  Revised; interim.......................................13107
    Regulation at 61 FR 13107 confirmed............................50450
225.7022-2  Revised; interim.......................................13107
    Regulation at 61 FR 13107 confirmed............................50450
225.7022-3  Added; interim.........................................13107
    Regulation at 61 FR 13107 confirmed............................50450
225.7022-4  Added; interim.........................................13107
    Regulation at 61 FR 13107 confirmed............................50450
225.7102  Introductory text revised.................................7744
    Revised........................................................50453
225.7103  (e)(1) revised; (e)(2) redesignated as (e)(3); new 
        (e)(2) added................................................7744
    Revised........................................................50453
225.7104  Revised..................................................50453
225.7303  Heading revised; interim.................................18987
    Regulation at 61 FR 18987 confirmed............................50450
    Amended........................................................50453
225.7303-2  (a)(3) revised..........................................7744
    (a) introductory text and (c) introductory text