[Federal Register Volume 60, Number 40 (Wednesday, March 1, 1995)]
[Proposed Rules]
[Pages 11198-11218]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-4535]




[[Page 11197]]

_______________________________________________________________________

Part II

Department of Defense

General Services Administration

National Aeronautics and Space Administration
_______________________________________________________________________



48 CFR Chapter 1



Federal Acquisition Regulation (FAR); Acquisition of Commercial Items 
and Components: Proposed Rule; and Agency Information Collection Under 
OMB Review; Notice

  Federal Register / Vol. 60, No. 40 / Wednesday, March 1, 1995 / 
Proposed Rules  
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[[Page 11198]] 


DEPARTMENT OF DEFENSE-

GENERAL SERVICES ADMINISTRATION-

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION-

48 CFR Chapter 1-

[FAR Case 94-790]-
RIN 9000-AG38-


Federal Acquisition Regulation; Acquisition of Commercial Items

AGENCIES: Department of Defense (DOD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Proposed rule.

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

SUMMARY: This proposed rule is issued pursuant to the Federal 
Acquisition Streamlining Act of 1994 to implement the revised statutory 
authorities for the acquisition of commercial items and components by 
Federal Government agencies as well as contractors and subcontractors 
at all levels. This regulatory action was subject to Office of 
Management and Budget review under Executive Order 12866, dated 
September 30, 1993.

DATES: Comments should be submitted on or before May 1, 1995 to be 
considered in the formulation of a final rule.-
    Public Meeting: March 17, 1995, 9:30 a.m. at the following 
location: General Services Administration, Auditorium, 18th & F 
Streets, NW., Washington, DC 20405.-
    Written and Oral Statements: Statements prepared for oral 
presentation must be sent to the FAR Secretariat at the address given 
below, not later than March 13, 1995.

ADDRESSES: Interested parties should submit written comments to: 
General Services Administration, FAR Secretariat (VRS), 18th & F 
Streets, NW., room 4037, Washington, DC 20405. Please cite FAR case 94-
790 in all correspondence related to this case.

FOR FURTHER INFORMATION CONTACT: Colonel Laurence M. Trowel, Commercial 
Item Team Leader, at (703) 695-3858 in reference to this FAR case. For 
general information, contact the FAR Secretariat, room 4037, GS 
Building, Washington, DC 20405 (202) 501-4755. Please cite FAR case 94-
790.

SUPPLEMENTARY INFORMATION:

A. Background-

    The Federal Acquisition Streamlining Act of 1994, Pub. L. 103-355, 
provides authorities that streamline the acquisition process and 
minimize burdensome Government-unique requirements. Major changes that 
can be expected in the acquisition process as a result of Federal 
Acquisition Streamlining Act implementation include changes in the 
areas of Commercial Item Acquisition, Simplified Acquisition 
Procedures, the Truth in Negotiations Act, and Introduction of the 
Federal Acquisition Computer Network (FACNET).
    This notice announces FAR revisions developed under FAR case 94-
790, Acquisition of Commercial Items, which encourage the acquisition 
of commercial end items and components by Federal Government agencies 
as well as contractors and subcontractors at all levels. The Commercial 
Item Drafting Team was organized and tasked with reviewing Title VIII 
of the Act and preparing implementing language for the FAR. The 
proposed revisions make changes throughout the FAR to incorporate the 
provisions of Title VIII. The most significant proposed revisions are 
in the following FAR parts:-
    FAR Part 2 has been amended to incorporate the definitions of 
``commercial item,'' ``component,'' ``commercial component'' and 
``nondevelopmental item'' from the Act with only minor revisions for 
clarification. The clause at 52.202-1, Definitions, has been similarly 
revised to make the definitions available to prime and subcontractors.-
    FAR Part 10 has been completely revised to address market research. 
It contains some language taken from the current FAR Part 11. This new 
part establishes the requirement for market research as the first step 
in the acquisition process. Market research is an essential element in 
the later steps of describing the agency's need, developing the overall 
acquisition strategy and identifying terms and conditions unique to the 
item being acquired.-
    FAR Part 11 has been completely revised to address the process of 
describing agency needs. It contains some of the language on 
specifications and standards formerly found in FAR Part 10, but takes a 
more streamlined approach. In addition, the revised Part 11 establishes 
the Government's order of precedence for requirements documents and 
addresses the concept of market acceptance contained in the Act. The 
revised Part 11 also contains coverage on Delivery or Performance 
Schedules, Liquidated Damages, Priorities and Allocations, and 
Variations in Quantity taken from the current Part 12 with only minor 
editorial revisions. The current FAR Part 12 coverage on Suspension of 
Work, Stop Work Orders, and Government Delay of Work has been moved to 
Subpart 42.13 with only minor editorial revisions.-
    FAR Part 12 has been revised to address the acquisition of 
commercial items. The Team created this entirely new coverage to 
address in one FAR part both the policies and procedures for the 
acquisition of commercial items. FAR Part 12 was chosen to reinforce 
the expected sequence of events in approaching a given acquisition * * 
* market research (FAR Part 10), description of agency need (FAR Part 
11), acquisition of commercial items, if they meet the agency's needs 
(FAR Part 12); and acquisition of other than commercial items using 
current FAR procedures (FAR Parts 13, 14 and 15). The Team also 
believes that moving the policies and procedures for the acquisition of 
commercial items to FAR Part 12 creates a clean break with past 
policies and procedures such as the Acquisition and Distribution of 
Commercial Products (ADCOP) program initiated in 1978 and currently 
described in FAR Part 11, and the DFARS 211 implementation of Section 
824(b) of the 1990-1991 DOD Authorization Act.

--48 CFR Part 12, FAR Subpart 12.1 states that the policies and 
procedures in the revised FAR Part 12 are applicable to all 
acquisitions of commercial items above the micro-purchase threshold. 
The requirements of other parts of the FAR apply to commercial items to 
the extent they are not inconsistent with FAR Part 12;-
--48 CFR Part 12, FAR Subpart 12.2 identifies special requirements for 
the acquisition of commercial items. These requirements generally 
reflect the requirements of Title VIII.-
--48 CFR Part 12, FAR Subpart 12.3 establishes standard provisions and 
clauses for use in the acquisition of commercial items. The Team 
believes this approach is essential to meet the requirements of the 
statute and offers contracting officers and industry an easy to use, 
simplified method for acquiring commercial items. However, the Team 
also recognizes that it is essential that contracting officers be 
allowed to tailor solicitations and contracts to meet the needs of the 
particular acquisition and the market place for that item. Subpart 12.3 
gives contracting officers broad authority to tailor solicitations and 
contracts, a practice itself that is consistent with commercial 
practices. The Act requires that some constraints be placed on this 
authority [[Page 11199]] to tailor, and that has also been accommodated 
in this subpart. -
--The Team proposes the establishment of a new form, the Standard Form 
XXXX, Solicitation/Contract/Order for Commercial Items. The proposed SF 
XXXX combines features of the SF 33, Solicitation, Offer and Award; the 
SF 1447, Solicitation/Contract; and the DD 1155, Order for Supplies and 
Services. The most significant element is the addition of acceptance 
blocks at the bottom of the form (patterned after the DD Form 1155). 
This will allow suppliers of commercial items to utilize the SF XXXX to 
document receipt of the supplies or services by the government avoiding 
the need for preparation of separate receipt/acceptance forms. -
--48 CFR Part 12, FAR Subpart 12.4 identifies the applicability of 
certain laws to the acquisition of commercial items. This subpart is 
intended to meet the requirements of Section 8003(a) of the Act which 
requires that the FAR contain a list of laws determined to be 
inapplicable to prime contracts for commercial items. -
--FAR 12.402 contains the list of laws determined to be not applicable 
to executive agency prime contracts for acquisition of commercial 
items. This list has been expanded to also include those laws that have 
been revised in some manner to modify their applicability to commercial 
items. In each instance, the specific prescriptive language elsewhere 
in the FAR has been revised to reflect this modified applicability. FAR 
12.402 only includes those laws that apply to prime contracts awarded 
by both DOD and civilian agencies. Agency unique laws determined to be 
not applicable to prime contracts are not addressed in this rule and 
may be addressed separately by the respective agencies.-
--FAR 12.403 contains the list of laws determined to be not applicable 
to subcontracts for commercial items. This list has been expanded to 
also include those laws that have been revised in some manner to modify 
their applicability to subcontracts for commercial items. The list of 
laws to be included in 12.403 are contained in FAR case 94-791 which is 
currently under agency review and coordination. The list will be 
published in the Federal Register for public comment upon completion. -
--48 CFR Part 12, FAR Subpart 12.6 identifies two streamlined 
procedures for the solicitation and award of contracts for commercial 
items. These procedures may be used at the discretion of the 
contracting officer.

    FAR Part 52 has been revised to include several new provisions and 
clauses to be inserted in all solicitations and contracts for the 
acquisition of commercial items:

--52.212-1, Instructions to Offerors--Commercial Items, contains 
solicitation instructions unique to Government procurement and is based 
upon existing FAR language. The information has been simplified and 
tailored to meet the requirements of commercial items. For the most 
part, the simplified paragraphs in the new provision do not contain new 
concepts.
--52.212-2, Evaluation--Commercial Items, contains evaluation 
information that has been simplified and tailored to meet the 
requirements of commercial items. Again, this provision does not 
contain new concepts and is generally based upon provisions prescribed 
in FAR Parts 14 and 15. This provision may be used at the discretion of 
the contracting officer. It requires the contracting officer to 
establish specific evaluation factors and the order of importance for 
each acquisition.
--52.212-3, Offeror Representations and Certifications--Commercial 
Items, includes the certifications required to comply with laws or 
Executive orders. Instead of using the numerous certifications 
contained in the FAR, the Team drafted a single provision containing 
all the requirements that may apply to the acquisition of commercial 
items.
--52.212-4, Contract Terms and Conditions--Commercial Items, contains 
the terms and conditions the Team believes are consistent with 
customary commercial practice by addressing general areas that previous 
studies have identified as the ``core'' areas covered by commercial 
contracts. Several concepts included in the clause at 52.212-4 
represent significant changes from standard Government practices to 
commercial practices.
--52.212-5, Contract Terms and Conditions Required to Implement 
Statutes or Executive orders--Commercial Items, implements provisions 
of law or executive orders applicable to Government acquisitions of 
commercial items or commercial components. The Team believes the clause 
at 52.212-5 represents the minimum number of clauses required to 
implement statutes. Certain clauses may apply depending upon the 
circumstances; the contracting officer will indicate which of these 
clauses apply for the specific acquisition. In addition, this clause 
provides that the contractor is not required to include any FAR 
provision or clause in its subcontracts other than those listed in 
paragraph (d) of the clause. The clauses to be included on this list 
and flowed down to subcontractors for commercial items are currently 
under agency review and coordination. The list will be published in the 
Federal Register for public comment once coordination is complete.
--52.244-XX, Subcontracts for Commercial Items and Commercial 
Components, implements the preference for the acquisition of commercial 
items or nondevelopmental items other than commercial items as 
components of items to be supplied under Federal contracts. This clause 
will be inserted in all solicitations and contracts for supplies and 
services other than commercial items. It provides that the contractor 
is not required to include in its subcontracts for commercial items any 
FAR provision or clause, other than those listed in the clause. The 
clauses to be included on this list and flowed down to subcontractors 
for commercial items are contained in FAR case 94-791 which is 
currently in agency review and coordination. This list will be 
published in the Federal Register for public comment once coordination 
is complete.

    Public Meeting. The FAR Council is interested in an exchange of 
ideas and opinions on this rule. For that reason, the FAR Council is 
conducting a series of public meetings. A public meeting will be held 
on March 17, 1995, to enable the public to present its views on this 
rule. This rule will only be discussed at the public meeting session. 
Any subsequent public meetings will be devoted to other revisions to 
the FAR. The public is encouraged to furnish its views; the Council 
anticipates that public comments will be very helpful in formulating 
final rules.-
    Persons or organizations wishing to make presentations will be 
allowed 10 minutes each, provided they notify the FAR Secretariat at 
(202) 501-4755 and submit written statements of the presentation by 
March 13, 1995. Persons or organizations with similar positions are 
encouraged to select a common spokesman for presentation of their 
views. This meeting, in conjunction with the Federal Register notice 
soliciting public comments on the rule, will be the only opportunity 
for the public to present its views. [[Page 11200]] 

B. Regulatory Flexibility Act-

    The proposed language will have a significant economic impact on a 
substantial number of small entities within the meaning of the 
Regulatory Flexibility Act, 5 U.S.C. 601, et. seq. This rule will have 
this impact as a result of the following:-
    (1) It establishes a much broader definition of ``commercial 
items'' compared to the language of either FAR Part 11 or by including 
certain modifications to existing items and by including certain 
commercial services. In both cases, small business is very likely to 
benefit from this expanded definition;-
    (2) It establishes a requirement for conducting market research in 
certain circumstances before issuing solicitations which should benefit 
small business by ensuring the contracting activity has conducted 
sufficient research to be aware of the availability of commercial items 
and the practices used in the commercial market place to acquire them. 
The rule also cautions contracting officers not to require potential 
sources to submit more than the minimum information necessary as a part 
of market research.-
    (3) It establishes a clear preference for the acquisition of 
commercial items thereby enabling more small businesses that offer 
commercial items to participate in Government acquisition;-
    (4) It establishes a clear preference for stating Government 
requirements in terms of functions to be performed, performance 
required, or essential physical characteristics rather than detailed, 
Government-unique design specifications thereby allowing a broader 
range of products of small businesses to satisfy the Government need;-
    (5) It establishes the Government order of precedence for 
requirements documents emphasizing performance-oriented documents and 
nongovernment standards rather than Federal/Military-unique standards 
thereby allowing a broader range of small businesses to participate in 
Government acquisitions;
    (6) It allows contracting officers the flexibility to use either 
the solicitation, evaluation and award procedures in the revised Part 
12 for acquiring commercial items, or the procedures in Part 13, 14 or 
15 if they are more streamlined and beneficial thereby allowing maximum 
flexibility for contracting with small businesses;-
    (7) It allows the use of the streamlined terms and conditions for 
acquiring commercial items for every acquisition above the 
micropurchase threshold thereby allowing the maximum number of small 
businesses to benefit from these procedures;-
    (8) It requires that, except in unique circumstances, that the 
Government utilize the contractor's quality assurance system thereby 
allowing small businesses to utilize their own quality system when 
selling commercial items rather than a Government-specified system;
    (9) It requires that, when acquiring commercial items, the 
contracting officer may only use the solicitation provisions and 
contract clauses specifically established for acquiring commercial 
items and may only tailor those provisions and clauses when the 
customary practices in the market dictate the use of other terms and 
conditions; and-
    (10) By significantly limiting the flow down of Government-unique 
terms and conditions to subcontractors at all levels thereby minimizing 
the burden on a significant number of small businesses.
    An Initial Regulatory Flexibility Analysis (IRFA) has been prepared 
and will be provided to the Chief Counsel for Advocacy for the Small 
Business Administration. A copy of the IRFA may be obtained from the 
FAR Secretariat. Comments are invited. Comments from small entities 
concerning the affected FAR subpart will be considered in accordance 
with 5 U.S.C. 610. Such comments must be submitted separately and 
should cite 5 U.S.C. 601, et seq. (FAR Case 94-790), in correspondence.

C. Paperwork Reduction Act-

    The Paperwork Reduction Act (Pub. L. 96-511) is deemed to apply 
because the proposed rule contains information collection requirements. 
Accordingly, a request for approval of a new information collection 
requirement concerning Acquisition of Commercial Items is being 
submitted to the Office of Management and Budget under 44 U.S.C. 3501, 
et seq. Public comments concerning this request are invited in a 
Federal Register notice which appears elsewhere in this issue.

List of Subjects in 48 CFR Chapter 1-

    Government procurement.

    Dated: February 17, 1995.
Edward C. Loeb,
Deputy Project Manager for the Implementation of the Federal 
Acquisition Streamlining Act of 1994.

    -Therefore, it is proposed that 48 CFR Chapter 1 be amended as set 
forth below:-
    1. The authority citation for 48 CFR Chapter 1 continues to read as 
follows:

    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

PART 2--DEFINITIONS OF WORDS AND TERMS-

    2. Section 2.101 is amended by adding in alphabetical order the 
definitions ``Commercial component'', ``Commercial item'', 
``Component'', ``Market research'', and ``Nondevelopmental item'' to 
read as follows:


2.101  Definitions.

* * * * *-
    Commercial component means any component that is a commercial 
item.-
    Commercial item means--
    (a) Any item, other than real property, that is of a type 
customarily used for nongovernmental purposes and that--
    (1) Has been sold, leased, or licensed to the general public; or,-
    (2) Has been offered for sale, lease, or license to the general 
public;
    (b) Any item that evolved from an item described in paragraph (a) 
of this definition through advances in technology or performance and 
that is not yet available in the commercial marketplace, but will be 
available in the commercial marketplace in time to satisfy the delivery 
requirements under a Government solicitation;-
    (c) Any item that would satisfy a criterion expressed in paragraph 
(a) or (b) of this definition, but for--
    (1) Modifications of a type customarily available in the commercial 
marketplace; or-
    (2) Minor modifications of a type not customarily available in the 
commercial market place made to meet Federal Government requirements. 
Such modifications are considered minor if the change does not 
significantly alter a commercial item's function or essential physical 
characteristics. Minor is not defined by the specific dollar value or 
percentage basis of the change;-
    (d) Any combination of items meeting the requirements of paragraph 
(a), (b), (c), or (e) of this definition that are of a type customarily 
combined and sold in combination to the general public;-
    (e) Installation services, maintenance services, repair services, 
training services, and other services if such services are procured for 
support of an item referred to in paragraph (a), (b), (c), or (d) of 
this definition, and if the source of such services--
    (1) Offers such services to the general public and the Federal 
Government contemporaneously and under similar terms and conditions; 
and-
    (2) Offers to use the same work force for providing the Federal 
Government with such services as the source uses for providing such 
services to the general public;- [[Page 11201]] 
    (f) Services of a type offered and sold competitively in 
substantial quantities in the commercial marketplace based on 
established catalog or market prices for specific tasks performed under 
standard commercial terms and conditions. This does not include 
services that are sold based on hourly rates without a fixed catalog 
price for a specific service performed;-
    (g) Any item, combination of items, or service referred to in 
paragraphs (a) through (f), notwithstanding the fact that the item, 
combination of items, or service is transferred between or among 
separate divisions, subsidiaries, or affiliates of a contractor; or-
    (h) A nondevelopmental item, if the procuring agency determines 
that the item was developed exclusively at private expense and has been 
sold in substantial quantities, on a competitive basis, to multiple 
State and local governments.-
    Component means any item supplied to the Federal Government as part 
of an end item or of another component.
* * * * *-
    Market research means collecting and analyzing information about 
capabilities within the market to satisfy agency needs.
* * * * *-
    Nondevelopmental item means--
    (a) Any commercial item;
    (b) Any previously developed item of supply that is in use by a 
department or agency of the United States, a State or local government, 
or a foreign government with which the United States has a mutual 
defense cooperation agreement;
    (c) Any item described in paragraphs (a) or (b) of this definition 
that requires only minor modification or modifications of a type 
customarily available in the commercial marketplace in order to meet 
the requirements of the procuring department or agency; or
    (d) Any item of supply being produced that does not meet the 
requirements of paragraph (a), (b), or (c) solely because the item is 
not yet in use.
* * * * *

PART 3--IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF 
INTEREST

    3. Section 3.404 is amended by removing ``or'' from the end of 
paragraph (b)(4); by redesignating paragraph (b)(5) as (b)(6) and 
adding a new paragraph (b)(5); and by revising paragraph (c) to read as 
follows:


3.404  Solicitation provision and contract clause.

* * * * *
    (b) * * *
    (5) The solicitation is for a commercial item (see parts 2 and 12); 
or
* * * * *
    (c) The contracting officer shall insert the clause at 52.203-5, 
Covenant Against Contingent Fees, in all solicitations and contracts 
exceeding the simplified acquisition threshold other than those for 
commercial items (see parts 2 and 12).
* * * * *
    4. Section 3.502-2 is amended by revising the introductory text of 
paragraph (i) to read as follows:


3.502-2  General.

* * * * *
    (i) Requires each contracting agency to include in each prime 
contract, except contracts for commercial items (see part 12), a 
requirement that the prime contractor shall--
* * * * *
    5. Section 3.502-3 is revised to read as follows:


3.502-3  Contract clause.

    The contracting officer shall insert the clause at 52.203-7, Anti-
Kickback Procedures, in all solicitations and contracts exceeding the 
simplified acquisition threshold (see part 13) other than those for 
commercial items (see part 12).
    6. Section 3.503-2 is revised to read as follows:


3.503-2  Contract clause.

    The contracting officer shall insert the clause at 52.203-6, 
Restrictions on Subcontractor Sales to the Government, in solicitations 
and contracts exceeding the simplified acquisition threshold in part 
13. For procurements of commercial items, the contracting officer shall 
use the clause with its Alternate I.

PART 5--PUBLICIZING CONTRACT ACTIONS

    7. Section 5.203 is amended by revising paragraphs (a), (b), and 
(c) to read as follows:


5.203  Publicizing and response time.

* * * * *
    (a) A notice of contract action shall be published in the CBD at 
least 15 days before issuance of a solicitation except when the 
combined CBD synopsis/solicitation procedure for acquisition of 
commercial items is used (see 12.603).
    (b) For each contract action in an amount estimated to be greater 
than $25,000 but not greater than the simplified acquisition threshold, 
or for the acquisition of commercial items, the contracting officer 
shall establish a response time which will afford potential offerors a 
reasonable opportunity to respond.
    (c) Agencies shall allow at least a 30 day response time for 
receipt of bids or proposals from the date of issuance of a 
solicitation, if the contract action is expected to exceed the 
simplified acquisition threshold or is for other than the acquisition 
of commercial items (see part 12).
* * * * *

PART 6--COMPETITION REQUIREMENTS

    8. Section 6.303-2 is amended by revising paragraph (a)(8) to read 
as follows:


6.303-2  Content.

    (a) * * *
    (8) A description of the market research conducted (see part 10) 
and the results or a statement of the reason market research was not 
conducted.
* * * * *
    9. Section 6.502 is revised to read as follows:


6.502  Duties and responsibilities.

    (a) Agency and procuring activity competition advocates are 
responsible for promoting the acquisition of commercial items, 
promoting full and open competition, challenging requirements that are 
not stated in terms of functions to be performed, performance required 
or essential physical characteristics, and challenging barriers to the 
acquisition of commercial items and full and open competition such as 
unnecessarily restrictive statements of work, unnecessarily detailed 
specifications, and unnecessarily burdensome contract clauses.
    (b) Agency competition advocates shall--
    (1) Review the contracting operations of the agency and identify 
and report to the agency senior procurement executive--
    (i) Opportunities and actions taken to acquire commercial items to 
meet the needs of the agency;
    (ii) Opportunities and actions taken to achieve full and open 
competition in the contracting operations of the agency;
    (iii) Actions taken to challenge requirements that are not stated 
in terms of functions to be performed, performance required or 
essential physical characteristics;
    (iv) Any condition or action that has the effect of unnecessarily 
restricting the acquisition of commercial items or competition in the 
contracting actions of the agency; [[Page 11202]] 
    (2) Prepare and submit an annual report to the agency senior 
procurement executive, in accordance with agency procedures, 
describing--
    (i) Such advocate's activities under this subpart;
    (ii) New initiatives required to increase the acquisition of 
commercial items;
    (iii) New initiatives required to increase competition;
    (iv) New initiatives to ensure requirements are stated in terms of 
functions to be performed, performance required or essential physical 
characteristics;
    (v) Any barriers to the acquisition of commercial items or 
competition that remain; and
    (vi) Other ways in which the agency has emphasized the acquisition 
of commercial items and competition in areas such as acquisition 
training and research.
    (3) Recommend to the senior procurement executive of the agency 
goals and plans for increasing competition on a fiscal year basis; and
    (4) Recommend to the senior procurement executive of the agency a 
system of personal and organizational accountability for competition, 
which may include the use of recognition and awards to motivate program 
managers, contracting officers, and others in authority to promote 
competition in acquisition.

PART 7--ACQUISITION PLANNING


7.101  [Amended]

    10. Section 7.101 is amended by removing the definition ``Market 
survey''.
    11. Section 7.102 is revised to read as follows:


7.102  Policy.-

    (a) Agencies shall perform acquisition planning and conduct market 
research (see part 10) for all acquisitions in order to promote and 
provide for--
    (1) Acquisition of commercial items or, to the extent that 
commercial items suitable to meet the agency's needs are not available, 
nondevelopmental items other than commercial items, to the maximum 
extent practicable (10 U.S.C. 2377 and 41 U.S.C. 251 et seq.); and
    (2) Full and open competition (see part 6) or, when full and open 
competition is not required in accordance with part 6, to obtain 
competition to the maximum extent practicable, with due regard to the 
nature of the supplies or services to be acquired (10 U.S.C. 2301(a)(5) 
and 41 U.S.C. 253a(a)(1)); and
    (b) This planning shall integrate the efforts of all personnel 
responsible for significant aspects of the acquisition. The purpose of 
this planning is to ensure that the Government meets its needs in the 
most effective, economical, and timely manner. Agencies that have a 
detailed acquisition planning system in place that generally meets the 
requirements of 7.104 and 7.105 need not revise their system to 
specifically meet all of these requirements.
    12. Section 7.103 is amended by revising paragraph (b); 
redesignating paragraphs (c) through (l) as (d) through (m) and adding 
a new paragraph (c); and in newly designated (m) by removing 
``10.002(c)'' and inserting ``11.001(b)'' to read as follows:


7.103  Agency-head responsibilities.

* * * * *
    (b) Encouraging offerors to supply commercial items, or to the 
extent that commercial items suitable to meet the agency needs are not 
available, nondevelopmental items other than commercial items in 
response to agency solicitations (10 U.S.C. 2377 and 41 U.S.C. 251, et 
seq.); and
    (c) Promoting and providing for full and open competition with due 
regard to the nature of the supplies and services to be acquired (10 
U.S.C. 2305(a)(1)(A) and 41 U.S.C. 253a(a)(1) (see parts 6 and 11).
* * * * *
    13. Section 7.105 is amended in paragraph (a)(8)(iii) by revising 
the parenthetical to read ``(see 11.001(d))''; by revising paragraph 
(b)(1); and by revising paragraph (b)(12)(i) to read as follows:


7.105  Contents of written acquisition plans.

* * * * *
    (b) Plan of action--(1) Sources. Indicate the prospective sources 
of supplies and/or services that can meet the need. Consider required 
sources of supplies or services (see part 8). Include considerations of 
small business and small disadvantaged business concerns (see part 19). 
Address the extent and results of the market research and indicate 
their impact on the various elements of the plan.
* * * * *
    (12) * * *
    (i) The assumptions determining contractor or agency support, both 
initially and over the life of the acquisition, including consideration 
of contractor or agency maintenance and servicing (see subpart 7.3) and 
distribution of commercial items (see part 11);
* * * * *

PART 9--CONTRACTOR QUALIFICATIONS

    14. Section 9.106-1 is amended by revising paragraph (a) to read as 
follows:


9.106-1  Conditions for preaward surveys.

    (a) A preaward survey is normally required when the information on 
hand or readily available to the contracting officer is not sufficient 
to make a determination regarding responsibility. However, if the 
contemplated contract will have a fixed price at or below the 
simplified acquisition threshold or will involve the acquisition of 
commercial items (see part 12), the contracting officer should not 
request a preaward survey unless circumstances justify its cost.
* * * * *
    15. Section 9.306 is amended in paragraph (f) introductory text by 
revising the parenthetical to read ``(see 11.404)''.
    16. Part 10 is revised to read as follows:

PART 10--MARKET RESEARCH

Sec.
10.000  Scope of part.
10.001  Policy.
10.002  Procedures.

    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).


10.000  Scope of part.

    This part prescribes policies and procedures for conducting market 
research to arrive at the most suitable approach to acquiring, 
distributing, and supporting supplies and services. This part 
implements requirements of 41 U.S.C. 253a(a)(1), 41 U.S.C 264b, and 10 
U.S.C. 2377.


10.001  Policy.-

    (a) The head of an agency shall--
    (1) Ensure that, in coordination with customers, legitimate needs 
are identified and trade-offs evaluated to acquire items which meet 
those needs; -
    (2) Conduct market research appropriate to the circumstances--
    (i) Before developing new requirements documents for an acquisition 
by that agency;
    (ii) Before soliciting offers for acquisitions with an estimated 
value in excess of the simplified acquisition threshold; and
    (iii) Before soliciting offers for acquisitions with an estimated 
value less than the simplified acquisition threshold when adequate 
information is not available and the circumstances justify its cost.
    (3) Use the results of market research to determine-- 
[[Page 11203]] 
    (i) If commercial items or, to the extent commercial items suitable 
to meet the agency's needs are not available, nondevelopmental items 
other than commercial items are available that--
    (A) Meet the agency's requirements;
    (B) Could be modified to meet the agency's requirements; or
    (C) Could meet the agency's requirements if those requirements were 
modified to a reasonable extent; and
    (ii) Practices of firms engaged in producing, distributing, and 
supporting commercial items, such as terms for warranties, buyer 
financing, maintenance and packaging, and marking; and
    (iii) Sources capable of satisfying the agency's requirements 
exist.-
    (b) When conducting market research, the head of an agency should 
not require potential sources to submit more than the minimum 
information necessary.


10.002  Procedures.

    (a) Acquisitions begin with a description of the Government's needs 
stated in general terms sufficient to allow conduct of market research.
    (b) Market research is then conducted to ascertain the availability 
of commercial items, as well as distribution and logistics support to 
meet those needs, and to identify market practices.
    (c) The extent of market research will vary, depending on such 
factors as urgency, estimated dollar value, complexity, and past 
experience. Market research involves obtaining information such as--
    (1) The availability of commercial items suitable as is or that 
could be modified to meet the agency's requirements;
    (2) Customary practices regarding customizing, modifying or 
tailoring of items to meet customer needs and associated costs;
    (3) Customary practices, including warranty, buyer financing, 
discounts, etc., under which commercial sales of the products are made;
    (4) The requirements of any laws and regulations unique to the item 
being acquired; and
    (5) The distribution and support capabilities of potential 
suppliers, including alternative arrangements and cost estimates.
    (d) Techniques for conducting market research may include any or 
all of the following:
    (1) Contacting experts regarding market capabilities to meet 
requirements.
    (2) Reviewing the results of recent market research undertaken to 
meet similar or identical requirements.
    (3) Publishing formal requests for information in appropriate 
technical and scientific journals.
    (4) Querying Government data bases that provide information 
relevant to agency procurements.
    (5) Participating in interactive, on-line communication among 
industry, acquisition personnel, and customers.
    (6) Obtaining source lists of similar items from other contracting 
activities or agencies, trade associations or other sources.
    (7) Reviewing catalogs and other generally available product 
literature, much of which are available on-line, published by 
manufacturers, distributors, and dealers.
    (8) Holding presolicitation conferences.
    (e) When initial market research indicates commercial or 
nondevelopmental items other than commercial items might not be 
available to satisfy agency needs, reevaluate the need and determine 
whether it can be restated to permit commercial or nondevelopmental 
items other than commercial items to satisfy the agency's needs.
    17. and 18. Sections 11.000 and 11.001 are revised to read as 
follows:


11.000  Scope of part.

    This part prescribes policies and procedures for describing agency 
needs and related considerations of acquisition streamlining.


11.001  Policy.-

    (a) In fulfilling requirements of 10 U.S.C. 2305(a)(1), 10 U.S.C. 
2377, 41 U.S.C. 253a(a), and 41 U.S.C. 264b, agencies shall--
    (1) Specify needs using market research in a manner designed to--
    (i) Promote full and open competition (see part 6), with due regard 
to the nature of the supplies or services to be acquired; and
    (ii) Only include restrictive provisions or conditions to the 
extent necessary to satisfy the minimum needs of the agency or as 
authorized by law.-
    (2) To the maximum extent practicable, ensure that acquisition 
officials--
    (i) State requirements with respect to an acquisition of supplies 
or services in terms of--
    (A) Functions to be performed;
    (B) Performance required; or-
    (C) Essential physical characteristics;
    (ii) Define requirements in terms that enable and encourage 
offerors to supply commercial items, or, to the extent that commercial 
items suitable to meet the agency's needs are not available, 
nondevelopmental items other than commercial items, in response to the 
agency solicitations;
    (iii) Provide offerors of commercial items and nondevelopmental 
items other than commercial items an opportunity to compete in any 
procurement to fill such requirements;
    (iv) Require prime contractors and subcontractors at all levels 
under the agency contracts to incorporate commercial items or 
nondevelopmental items other than commercial items as components of 
items supplied to the agency; and
    (v) Modify requirements in appropriate cases to ensure that the 
requirements can be met by commercial items or, to the extent that 
commercial items suitable to meet the agency's needs are not available, 
nondevelopmental items other than commercial items.
    (b) The Metric Conversion Act of 1975, as amended by the Omnibus 
Trade and Competitiveness Act of 1988 (15 U.S.C. 205a, et seq.), 
designates the metric system of measurement as the preferred system of 
weights and measures for United States trade and commerce and it 
requires that each agency use the metric system of measurement in its 
procurements, except to the extent that such use is impracticable or is 
likely to cause significant inefficiencies or loss of markets to United 
States firms. Requiring activities are responsible for establishing 
guidance implementing this policy in formulating their requirements for 
acquisitions.
    (c) To the extent practicable, contractors should be involved in 
recommending application and tailoring of requirements. Requiring 
agencies should apply specifications, standards, and related documents 
initially for guidance only, making final decisions on the application 
and tailoring of these documents as a product of the design and 
development process. Requiring agencies should not dictate detailed 
design solutions prematurely (see 7.101 and 7.105(a)(8)).


11.002 through 11.007  [Removed]

    19. Sections 11.002 through 11.007 are removed.
    20. Subparts 11.1 through 11.3 are added to read as follows:

Subpart 11.1--Selecting and Developing Requirements Documents


11.101  Order of precedence.

    Agencies may select from existing requirements documents, modify or 
[[Page 11204]] combine existing requirements documents, or create new 
requirements documents to meet agency needs, consistent with the 
following order of precedence:
    (a) Documents mandated for use by law or regulation pursuant to 
law.
    (b) Performance-oriented documents:
    (1) Nongovernment standards.
    (2) Commercial item descriptions.
    (3) Federal specifications and standards.
    (4) Military specifications and standards.
    (c) Design-based documents:
    (1) Nongovernment standards.
    (2) Federal specifications and standards.
    (3) Military specifications and standards.
    (d) Agency-unique standards, specifications and related 
publications issued by the government outside the military or Federal 
series for the non-repetitive acquisition of nondevelopmental items.


11.102  Standardization program.

    Agencies shall select existing requirements documents or develop 
new requirements documents that meet the needs of the agency in 
accordance with the guidance contained in the Federal Standardization 
Manual and DOD 4120.3-M, Defense Standardization Program Policies and 
Procedures.


11.103  Market acceptance.

    (a) Section 8002(c) of Pub. L. 103-355 provides that in accordance 
with agency procedures, the head of an agency may, under appropriate 
circumstances, require offerors to demonstrate that the items offered--
    (1) Have either--
    (i) Achieved commercial market acceptance; or
    (ii) Been satisfactorily supplied to an agency under current or 
recent contracts for the same or similar requirements; and
    (2) Otherwise meet the item description, specifications, or other 
criteria prescribed in the public notice and solicitation.
    (b) The criteria to be considered in determining commercial market 
acceptance include--
    (1) The minimum need of the agency concerned; and
    (2) The entire relevant commercial market, including small 
business.


11.104  Items peculiar to one manufacturer.

    Agency requirements shall not be written so as to specify a 
particular brand-name, product, or a feature of a product, peculiar to 
one manufacturer, thereby precluding consideration of a product 
manufactured by another company, unless--
    (a) The particular brand-name, product, or feature is essential to 
the Government's requirements, and market research indicates other 
companies' similar products, or products lacking the particular 
feature, do not meet, or can not be modified to meet, the agency's 
minimum needs; and
    (b) The authority to contract without providing for full and open 
competition is supported by the required justifications and approvals 
(see 6.302-1).

Subpart 11.2--Using Requirements Documents


11.201  Identification and availability of specifications.

    (a) Solicitations citing requirements documents listed in the 
General Services Administration (GSA) Index of Federal Specifications, 
Standards and Commercial Item Descriptions, the DoD Index of 
Specifications and Standards (DoDISS), or other agency index shall 
identify each document's approval date and the dates of any applicable 
amendments and revisions. Do not use general identification references, 
such as ``the issue in effect on the date of the solicitation.'' 
Contracting offices will not normally furnish these cited documents 
with the solicitation, except when--
    (1) The requirements document must be furnished with the 
solicitation to enable prospective contractors to make a competent 
evaluation of the solicitation;
    (2) In the judgment of the contracting officer, it would be 
impracticable for prospective contractors to obtain the documents in 
reasonable time to respond to the solicitation; or
    (3) A prospective contractor requests a copy of the requirements 
document.
    (b) Contracting offices shall clearly identify in the solicitation 
any pertinent documents not listed in the GSA Index of Federal 
Specifications, Standards and Commercial Item Descriptions or DoDISS. 
Such documents shall be furnished with the solicitation.
    (c) When documents refer to other documents, such references shall: 
(1) Be restricted to documents, or appropriate portions of documents, 
that apply in the acquisition; (2) cite the extent of their 
applicability; (3) not conflict with other documents and provisions of 
the solicitation; and (4) identify all applicable first tier 
references.
    (d) The GSA Index of Federal Specifications, Standards and 
Commercial Item Descriptions and DoDISS may be purchased from the 
Superintendent of Documents, U.S. Government Printing Office, 
Washington, DC 20402.


11.202  Acquiring used or reconditioned material, former Government 
surplus property and residual inventory.

    (a) Generally, all contractually furnished supplies and their 
components, including former Government property, will be new, 
including recycled (see 48 CFR part 23, FAR subpart 23.4 for policy on 
recovered materials). However, agencies may acquire used or 
reconditioned material, former Government surplus property, or residual 
inventory conforming to the solicitation's requirements, if the 
contracting officer determines that it is acceptable. When acquiring 
commercial items, the contracting officer should determine the 
customary practice in the industry before including a requirement for 
new materials. When such a determination is made, the solicitation 
shall clearly identify the supplies or their components that need not 
be new, along with the necessary details on their acceptability. 
Offerors wishing to provide such used or reconditioned material, former 
Government surplus property, or residual inventory shall do so in 
accordance with the clause at 52.211-5, New Material, or the provision 
at 52.211-6, Listing of Used or Reconditioned Material, Residual 
Inventory, and Former Government Surplus Property, and the clause at 
52.211-7, Used or Reconditioned Material, Residual Inventory, and 
Former Government Surplus Property, as appropriate.
    (b) Contracting officers shall consider the following when 
determining whether used or reconditioned materials, former Government 
surplus property, or residual inventory are acceptable:
    (1) Safety of persons or property.
    (2) Total cost to the Government (including maintenance, 
inspection, testing, and useful life).
    (3) Performance requirements.
    (4) Availability and cost of new materials and components.
    (c) With regard to former Government surplus property, the 
contracting officer shall ensure that the prices paid for such items 
are reasonable considering overall cost savings to the Government. When 
a contract calls for material to be furnished at cost, the allowable 
charge for former Government surplus property shall not exceed the cost 
at which the contractor acquired the property. [[Page 11205]] 


11.203  Solicitation provisions and contract clauses.

    (a) The contracting officer shall insert the provision at 52.211-1, 
Availability of Specifications Listed in the GSA Index of Federal 
Specifications, Standards and Commercial Item Descriptions, in 
solicitations that (1) are issued by civilian agency contracting 
offices and (2) cite specifications listed in the Index that are not 
furnished with the solicitation.
    (b) The contracting officer shall insert the provision at 52.211-2, 
Availability of Specifications Listed in the DOD Index of 
Specifications and Standards (DoDISS), in solicitations that (1) are 
issued by DOD contracting offices and (2) cite specifications listed in 
the DoDISS that are not furnished with the solicitation.
    (c) The contracting officer shall insert a provision substantially 
the same as the provision at 52.211-3, Availability of Specifications 
Not Listed in the GSA Index of Federal Specifications, Standards and 
Commercial Item Descriptions, in solicitations that cite specifications 
that are not listed in the Index and are not furnished with the 
solicitation, but may be obtained from a designated source.
    (d) The contracting officer shall insert a provision substantially 
the same as the provision at 52.211-4, Availability for Examination of 
Specifications Not Listed in the GSA Index of Federal Specifications, 
Standards and Commercial Item Descriptions, in solicitations that cite 
specifications that are not listed in the Index and are available for 
examination at a specified location.
    (e)(1) The contracting officer may insert the clause at 52.211-5, 
New Material, in solicitations and contracts for supplies. The clause 
shall not be used if it would be contrary to customary commercial 
practices for the item being acquired.-
    (2) The contracting officer may insert the clause in solicitations 
and contracts for services that may involve the incidental furnishing 
of parts.
    (f)(1) The contracting officer may insert the provision at 52.211-
6, Listing of Used or Reconditioned Material, Residual Inventory, and 
Former Government Surplus Property, in solicitations for supplies. The 
provision shall not be used if it would be contrary to customary 
commercial practice for the item being acquired.
    (2) The contracting officer may insert the provision in 
solicitations for services that may involve the incidental furnishing 
of parts.
    (g)(1) The contracting officer may insert the clause at 52.211-7, 
Used or Reconditioned Material, Residual Inventory, and Former 
Government Surplus Property, in solicitations and contracts for 
supplies. The clause shall not be used if it would be contrary to 
customary commercial practice for the item being acquired.
    (2) The contracting officer may insert the clause in solicitations 
and contracts for services that may involve the incidental furnishing 
of parts.

Subpart 11.3--Maintenance of Requirements Documents


11.301  Customer satisfaction.

    Acquisition organizations shall communicate with customers to 
determine how well the requirements document reflects the customer's 
needs and to obtain suggestions for corrective actions. Whenever 
practicable, the agency may provide affected industry an opportunity to 
comment on the requirements documents.


11.302  Maintenance of standardization documents.

    (a) Agencies shall submit recommendations for changes to 
standardization documents listed in the GSA Index of Federal 
Specifications, Standards and Commercial Item Descriptions to the 
General Services Administration, Federal Supply Service, Office of 
Commodity Management, Washington, DC 20406. Agencies shall submit 
recommendations for changes to standardization documents listed in the 
DoDISS to the cognizant preparing activity.
    (b) When an agency cites an existing standardization document but 
modifies it to meet its needs, the agency shall follow the guidance in 
Federal Standardization Manual and DOD 4120.3-M, Defense 
Standardization Program Policies and Procedures.

Subpart 11.4  [Redesignated from Subpart 12.1]

    21. Subpart 12.1 is redesignated as Subpart 11.4 and sections 
12.101 through 12.104 are redesignated as sections 11.401 through 
11.404, respectively.

Subpart 11.4  Delivery or Performance Schedules

    22. Newly designated section 11.401 is amended in paragraph (a) by 
revising the last sentence; and in the parenthetical of paragraph (c) 
by removing ``subpart 12.2'' and inserting ``subpart 11.5''. The 
revised text reads as follows:


11.401  General.

    (a) * * * Schedules that are unreasonably tight or difficult to 
attain (1) tend to restrict competition, (2) are inconsistent with 
small business policies, and (3) may result in higher contract prices.
* * * * *
    23. Newly designated section 11.402 is amended by revising 
paragraphs (a)(2) and (5) to read as follows:


11.402  Factors to consider in establishing schedules.

    (a) * * *
    (2) Industry practices;
* * * * *
    (5) Production time;
* * * * *


11.404  [Amended]-

    24. Newly designated section 11.404 is amended in paragraph (a)(2) 
by removing ``52.212-1'' and inserting ``52.211-8''; in paragraph 
(a)(3) by removing ``52.212-2'' and inserting ``52.211-9''; and in 
paragraph (b) by removing ``52.211-3'' and inserting ``52.211-10''.

Subpart 11.5  [Redesignated]

    25. Subpart 12.2 is redesignated as Subpart 11.5 and sections 
11.501 through 11.504 are redesignated from sections 12.201 through 
12.204.


11.504  [Amended]

    26. Newly designated section 11.504 is amended in paragraph (a) by 
removing ``52.212-4'' and inserting ``52.211-11''; in paragraph (b) by 
removing ``52.212-5'' and inserting ``52.211-12''; and in paragraph (c) 
by removing ``52.212-6'' and inserting ``52.211-13''.

Subpart 11.6  [Redesignated from 12.3]

    27. Subpart 12.3 is redesignated as Subpart 11.6 and sections 
12.300 through 12.304 are redesignated as sections 11.600 through 
11.604, respectively.


11.604  [Amended]

    28. Newly designated section 11.604 is amended in paragraph (a) by 
removing ``52.212-7'' and inserting ``52.211-14''; and in paragraph (b) 
by removing ``52.212-8'' and inserting ``52.211-15''.

Subpart 11.7  [Redesignated from 12.4]

    29. Subpart 12.4 is redesignated as Subpart 11.7 and sections 
12.401 through 12.403 are redesignated as 11.701 through 11.703, 
respectively. [[Page 11206]] 


11.703  [Amended]

    30. Newly designated section 11.703 is amended in paragraph (a) by 
removing ``52.212-9'' and inserting ``52.211-16''; in paragraph (b) by 
removing ``52.212-10'' and inserting ``52.211-17''; and in paragraph 
(c) by removing ``52.212-11'' and inserting ``52.211-18''.
    31. Subpart 12.5 is redesignated as subpart 42.13 and sections 
12.501 through 12.505 are redesignated as sections 42.1301 through 
42.1305, respectively.
    31a. Part 12 is revised to read as follows:

PART 12--ACQUISITION OF COMMERCIAL ITEMS
Sec.
12.000  Scope of part.
12.001  Definition.

Subpart 12.1--Acquisition of Commercial Items--General

12.101  Policy.
12.102  Applicability.

Subpart 12.2--Special Requirements for the Acquisition of Commercial 
Items

12.201  General.
12.202  Market research and description of agency need.
12.203  Solicitation, evaluation, and award.
12.204  Solicitation/contract form.
12.205  Offers.
12.206  Use of past performance.
12.207  Contract type.
12.208  Contract quality assurance.
12.209  Warranties.
12.210  Contract financing methods.
12.211  Technical data.
12.212  Other customary commercial practices.

Subpart 12.3--Solicitation Provisions and Contract Clauses for the 
Acquisition of Commercial Items

12.301  Scope of subpart.
12.302  Solicitation provisions and contract clauses for -the 
acquisition of commercial items.
12.303  Tailoring of provisions and clauses for the -acquisition of 
commercial items.

Subpart 12.4--Applicability of Certain Laws to the Acquisition of 
Commercial Items

12.400  Scope of subpart.
12.401  Applicability.
12.402  Applicability of certain laws to Executive agency -contracts 
for the acquisition of commercial items.

Subpart 12.5--Unique Requirements for the Administration of Contracts 
for Commercial Items

12.501  General.
12.502  Pricing of changes.
12.503  Acceptance.
12.504  Termination.

Subpart 12.6--Streamlined Procedures for Solicitation and Award of 
Contracts for Commercial Items

12.601  General.
12.602  Streamlined evaluation of offers.
12.603  Streamlined solicitation for commercial items.

    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).


12.000  Scope of part.

    This part prescribes policies and procedures unique to the 
acquisition of commercial items. It implements the Federal Government's 
preference for the acquisition of commercial items contained in Title 
VIII of the Federal Acquisition Streamlining Act of 1994 (Pub. L. 103-
355) by establishing acquisition policies more closely resembling those 
of the commercial market place and encouraging the acquisition of 
commercial items and components at all levels.


12.001  Definition.

    Subcontract, as used in this part, includes a transfer of 
commercial items between divisions, subsidiaries, or affiliates of a 
contractor or subcontractor.

Subpart 12.1--Acquisition of Commercial Items--General


12.101  Policy.

    Agencies shall--
    (a) Conduct market research to determine whether commercial items 
or nondevelopmental items other than commercial items are available 
that could meet the agency's requirements;
    (b) Acquire commercial items or nondevelopmental items other than 
commercial items when they are available to meet the needs of the 
agency; and-
    (c) Require prime contractors and subcontractors at all levels to 
incorporate, to the maximum extent practicable, commercial items or 
nondevelopmental items other than commercial items as components of 
items supplied to the agency.


12.102  Applicability.

    (a) This part shall be used for the acquisition of--
    (1) Commercial items; and
    (2) Nondevelopmental items other than commercial items, but only 
when competing with commercial items under the same terms, conditions 
and evaluation/award criteria (i.e., when at least one offer is 
received for a commercial item under the same solicitation).
    (b) Contracts for the acquisition of commercial items are subject 
to the requirements in other parts of this chapter. When a requirement 
in this part is inconsistent with a requirement in another part of this 
chapter, this part 12 shall take precedence for the acquisition of 
commercial items.
    (c) This part shall not apply to the acquisition of commercial 
items at or below the micro-purchase threshold (see 48 CFR part 13, FAR 
subpart 13.6).

Subpart 12.2--Special Requirements for the Acquisition of 
Commercial Items


12.201  General.

    Public Law 103-355 establishes special requirements for the 
acquisition of commercial items intended to more closely resemble those 
customarily used in the commercial market place. This subpart 
identifies those special requirements as well as other considerations 
necessary for proper planning, solicitation, evaluation and award of 
contracts for commercial items.


12.202  Market research and description of agency need.

    (a) Market research is an essential element of building an 
effective strategy for the acquisition of commercial items and 
establishes the foundation for the agency description of need (see part 
11), the solicitation, and resulting contract.
    (b) The description of agency need must contain sufficient detail 
for potential offerors of commercial items to know which commercial 
products or services to offer. Generally, an agency's statement of need 
for a commercial item will describe the product or service to be 
acquired and explain how the agency intends to use the product or 
service in terms of function to be performed, performance requirement 
or essential physical characteristics. Describing the agency's need in 
these terms allows offerors to propose methods that will best meet the 
needs of the Government.


12.203  Solicitation, evaluation, and award.

    (a) Contracting officers may use the procedures in parts 13, 
Simplified Acquisition Procedures; 14, Sealed Bidding; or 15, 
Contracting by Negotiation, as appropriate, for the acquisition of 
commercial items. However, regardless of the procedures being used, 
when a requirement in this part is inconsistent with a requirement in 
another part of this chapter, this part 12 shall take precedence.
    (b) Where FACNET is available, it may be used to solicit and award 
contracts for commercial items (see part 4). [[Page 11207]] 


12.204  Solicitation/contract form.

    The Standard Form XXXX, Solicitation/Contract/Order for Commercial 
Items, shall be used by the contracting officer when soliciting offers 
and awarding contracts for commercial items. This form contains the 
information necessary for solicitations and contracts as well as 
documenting receipt, inspection and acceptance of commercial items. 
Other Standard Forms are not compatible with the policies for the 
acquisition of commercial items in that they contain references to the 
Uniform Contract Format and certain FAR clauses that are not applicable 
to the acquisition of commercial items.


12.205  Offers.

    (a) Contracting officers should, as part of market research, review 
existing product literature generally available in the industry to 
determine its adequacy for purposes of evaluation. If adequate, 
contracting officers shall use existing product literature from 
offerors of commercial items in lieu of requesting unique technical 
proposals.
    (b) Contracting officers should allow offerors to propose more than 
one product that will meet a Government need in response to 
solicitations for commercial items. The contracting officer shall 
evaluate each product as a separate offer.
    (c) Contracting officers may allow fewer than 30 days response time 
for receipt of offers for commercial items. The response time shall 
afford potential offerors a reasonable opportunity to respond to ensure 
adequate competition (see 5.203).


12.206  Use of past performance.

    Past performance should be an important element of every evaluation 
and contract award for commercial items. Contracting officers should 
consider past performance data from a wide variety of sources both 
inside and outside the Federal Government in accordance with the 
policies and procedures contained in 48 CFR Part 9, (FAR) subpart 9.1 
and 48 CFR Part 15, (FAR) subpart 15.6.


12.207  Contract type.

    Firm fixed price contracts or fixed price contracts with economic 
price adjustment shall be used for the acquisition of commercial items. 
Use of any other contract type to acquire commercial items is 
prohibited.


12.208  Contract quality assurance.

    Solicitations and contracts for commercial items shall use 
contractors' existing quality assurance systems as a substitute for 
Government inspection and testing before tendering for acceptance 
unless customary market practices for the commercial item being 
acquired permits in-process inspection.


12.209  Warranties.

    (a) To the maximum extent practicable, solicitations for commercial 
items shall require offerors to offer the Government at least the same 
warranty terms, including offers of extended warranties, offered to the 
general public in customary commercial practice. Solicitations may 
specify minimum warranty terms, such as minimum duration, appropriate 
for the Government's intended use of the item.
    (b) Agencies shall consider warranties offered in light of 
established systems for their administration. When necessary, agencies 
shall establish procedures to permit the effective administration of 
commercial warranties to include identifying warranted items and 
warranty periods, facilitating return of warranted commercial items to 
the contractor for repair or replacement and collection of product 
performance information.


12.210  Contract financing methods.

    Customary industry practice for some commercial items may include a 
form of buyer financing such as advance (pre-performance) payments or 
incremental (pre-delivery) payments based on time or specified 
performance milestones. If market research confirms that buyer 
financing is the customary industry practice for the commercial item to 
be acquired, the contracting officer may offer Government financing. 
Such financing shall be consistent with customary industry practices 
and the requirements and limitations of part 32.


12.211  Technical data.

    Generally, the Government will acquire only the technical data 
customarily provided to the public. (See part 27.)


12.212  Other customary commercial practices.

    Market research may indicate other customary commercial practices 
that are appropriate for the acquisition of the particular item. These 
practices should be considered for incorporation into the solicitation 
and contract if the contracting officer determines them essential to 
concluding a satisfactory business arrangement, in the Government's 
best interest, and not otherwise precluded by law or executive order.

Subpart 12.3--Solicitation Provisions and Contract Clauses for the 
Acquisition of Commercial Items.


12.301  Scope of subpart.

    This subpart establishes provisions and clauses to be used when 
acquiring commercial items.


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

    (a) In accordance with Section 8002 of Pub. L. 103-355 (41 U.S.C 
264, note), contracts for the acquisition of commercial items shall, to 
the maximum extent practicable, include only those clauses--
    (1) Required to implement provisions of law or executive orders 
applicable to the acquisition of commercial items; or
    (2) Determined to be consistent with customary commercial practice.
    (b) To implement this Act, the contracting officer shall insert the 
following provisions in solicitations for the acquisition of commercial 
items, and clauses in solicitations and contracts for the acquisition 
of commercial items:
    (1) The provision at 52.212-1, Instructions to Offerors--Commercial 
Items. This provision provides a single, streamlined set of 
instructions to be used when soliciting offers for commercial items and 
is incorporated in the solicitation by reference (see Block 26, SF 
XXXX). The contracting officer is not required to use any other 
provision. The contracting officer may tailor these instructions or 
provide additional instructions tailored to the specific acquisition in 
accordance with 12.303;
    (2) The provision at 52.212-3, Offeror Representations and 
Certifications--Commercial Items. This provision provides a single, 
consolidated and streamlined list of certifications and representations 
for the acquisition of commercial items and is attached to the 
solicitation for offerors to complete and return with their offer. The 
contracting officer is not required to use any other provision 
containing a certification or representation. This provision may not be 
tailored except in accordance with subpart 1.4;
    (3) The clause at 52.212-4, Contract Terms and Conditions--
Commercial Items. This clause includes terms and conditions which are, 
to the maximum extent practicable, consistent with customary commercial 
practices and is incorporated in the solicitation and contract by 
reference (see Block 26, SF XXXX). The contracting officer is not 
required to use any other clause except as provided in 12.302(b)(4). 
The [[Page 11208]] contracting officer may tailor this clause in 
accordance with 12.303; and -
    (4) The clause at 52.212-5, Contract Terms and Conditions Required 
to Implement Statutes or Executive Orders--Commercial Items. This 
clause includes only those clauses required to implement provisions of 
law or executive orders applicable to the acquisition of commercial 
items. The contracting officer shall attach this clause to the 
solicitation and contract, and indicate which, if any, of the 
additional clauses cited in 52.212-5 are applicable to the specific 
acquisition. When either 15.804-2(b) or the exception at 15.804-1(a)(2) 
apply, the contracting officer shall include the appropriate clauses 
prescribed by part 15. The contracting officer is not required to 
include any other FAR clause in the contract. This clause may not be 
tailored except in accordance with 48 CFR part 1, subpart 1.4.
    (c) The contracting officer may insert the provision at 52.212-2, 
Evaluation--Commercial Items, in solicitations for commercial items 
(see 12.602). If this provision is not used, a similar provision 
containing all evaluation factors required by 48 CFR part 14, subpart 
14.2 or 48 CFR part 15, subpart 15.6 shall be included in the 
solicitation as an addendum (see 12.303(c)).
    (d) Notwithstanding prescriptions contained elsewhere in the FAR, 
only the provisions and clauses prescribed in this subpart shall be 
required for use in solicitations and contracts for the acquisition of 
commercial items. The provisions and clauses in this part shall be 
revised by the FAR Council, as necessary, to reflect the applicability 
of future statutes and executive orders to contracts for the 
acquisition of commercial items in accordance with Section 34 of the 
Office of Federal Procurement Policy Act.
    (e) Agencies shall supplement these provisions and clauses as 
necessary to reflect agency unique statutes.


12.303  Tailoring of provisions and clauses for the acquisition of 
commercial items.

    (a) The provisions and clauses established in this subpart are 
intended to address, to the maximum extent practicable, customary 
commercial market place practices for a wide range of potential 
Government acquisitions of commercial items. However, because of the 
broad range of commercial items acquired by the Government and the 
variations in customary commercial practices across the entire market 
place, contracting officers may, after conducting appropriate market 
research, tailor the provision at 52.212-1, Instructions to Offerors--
Commercial Items, and the clause at 52.212-4, Contract Terms and 
Conditions--Commercial Items, to adapt to the market conditions for 
each acquisition.
    (b) Contracting officers shall not tailor the clause at 52.212-4, 
Contract Terms and Conditions--Commercial Items, or otherwise include 
any additional terms or conditions in a solicitation or contract for 
commercial items that are inconsistent with customary commercial 
practice for the item being acquired unless a waiver is approved in 
accordance with agency procedures. The request for waiver must describe 
the customary commercial practice found in the market place, support 
the need to include a term or condition that is inconsistent with that 
practice and include a determination that use of the customary 
commercial practice is inconsistent with the needs of the government. A 
waiver may be requested for an individual or class of contracts for 
that specific item.
    (c) Tailoring shall be by addenda to the solicitation and contract. 
The contracting officer shall indicate in Block 26 of the SF XXXX if 
addenda are attached. These addenda may include, for example, a 
continuation of the schedule of supplies/services to be acquired from 
blocks 18 through 21 of the SF XXXX; a continuation of the description 
of the supplies/services being acquired; further elaboration of any 
other item(s) on the SF XXXX; any other terms or conditions necessary 
for the performance of the proposed contract (such as options, ordering 
procedures for indefinite-delivery type contracts, warranties, contract 
financing arrangements, etc.).

 Subpart 12.4--Applicability of Certain Laws to the Acquisition of 
Commercial Items


12.400  Scope of subpart.

    As required by Section 34 of the Office of Federal Procurement 
Policy Act (41 U.S.C. 430), this subpart lists provisions of laws that 
(a) Are not applicable to contracts for the acquisition of commercial 
items, or (b) are not applicable to subcontracts, at any level, for the 
acquisition of a commercial item. This subpart also lists provisions of 
law that have been amended to eliminate or modify their applicability 
to either contracts or subcontracts for the acquisition of commercial 
items.


12.401  Applicability.

    (a) This subpart applies to any contract or subcontract at any 
level for the acquisition of commercial items.
    (b) Nothing in this subpart shall be construed to authorize the 
waiver of any provision of law with respect to any subcontract if the 
prime contractor is reselling or distributing commercial items of 
another contractor without adding value.


12.402  Applicability of certain laws to Executive agency contracts for 
the acquisition of commercial items.
    (a) The following laws are not applicable to executive agency 
contracts for the acquisition of commercial items:
    (1) 41 U.S.C. 43, Walsh-Healey Act (see 48 CFR part 22, subpart 
22.6).
    (2) 41 U.S.C. 254(a) and 10 U.S.C. 2306(b), Contingent Fees (see 
3.404).-
    (3) 41 U.S.C. 416(a)(6), Minimum Response Time for Offers under 
Office of Federal Procurement Policy Act (see 5.203).
    (4) 41 U.S.C. 701 et seq., Drug-Free Workplace Act of 1988 (see 
23.501).
    (b) Certain requirements of the following laws have been eliminated 
for executive agency contracts for the acquisition of commercial items:
    (1) 33 U.S.C. 1368, Requirement for a certificate and clause under 
the Federal Water Pollution Control Act (see 23.105);
    (2) 40 U.S.C. 327 et seq., Requirement for a certificate and clause 
under the Contract Work Hours and Safety Standards Act (see 22.305);
    (3) 41 U.S.C. 57(a) and (b), and 58, Requirement for a clause and 
certain other requirements related to the Anti-Kickback Act of 1986 
(see 3.502);
    (4) 41 U.S.C. 423e(1)(B), Requirement for certain certifications 
under the Procurement Integrity Act (see 3.104-9);
    (5) 42 U.S.C. 7606, Requirements for a certificate and clause under 
the Clean Air Act (see 23.105);
    (6) 49 U.S.C. 40118, Requirement for a certificate and clause Fly 
American provisions (see 47.405);
    (c) The applicability of the following laws have been modified in 
regards to Executive agency contracts for the acquisition of commercial 
items:
    (1) 41 U.S.C. 253g and 10 U.S.C. 2402, Prohibition on Limiting 
Subcontractor Direct Sales to the United States (see 3.503);
    (2) 41 U.S.C. 254(d) and 10 U.S.C. 2306a, Truth in Negotiations Act 
(see 15.804);
    (3) 41 U.S.C. 422, Cost Accounting Standards (see 48 CFR part 99);
    (d) The FAR prescription, provision or clause for each of these 
statutes has been revised in the appropriate part to reflect their 
proper application to the acquisition of commercial items. 
[[Page 11209]] 


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

    (a) The following laws are not applicable to subcontracts under 
either a contract for the acquisition of commercial items or a 
subcontract for the acquisition of commercial items: [list of laws to 
be published in the Federal Register in a future proposed rule under 
FAR case 94-791]
    (b) Certain requirements of the following laws have been eliminated 
for subcontracts under either a contract for the acquisition of 
commercial items or subcontract for the acquisition of commercial 
items: [list of laws to be published in the Federal Register in a 
future proposed rule under FAR case 94-791]
    (c) The applicability of the following laws have been modified in 
regards to subcontracts under either a contract for the acquisition of 
commercial items or a subcontract for the acquisition of commercial 
items: [list of laws to be published in the Federal Register in a 
future proposed rule under FAR case 94-791]
    (d) The FAR prescription, provision or clause for each of these 
statutes has been revised in the appropriate part to reflect their 
proper application to the acquisition of commercial items.

Subpart 12.5--Unique Requirements for the Administration of 
Contracts for Commercial Items


12.501  General.

    This subpart outlines selected areas where the administration of 
contracts for commercial items differs substantially from the 
administration of other Government contracts.


12.502  Pricing of changes.

    When the exceptions at 15.804-1(a) do not apply, the contracting 
officer shall include the appropriate clauses prescribed by part 15.


12.503  Acceptance.

    Acceptance under the clause at 52.212-4, Contract Terms and 
Conditions--Commercial Items, assumes that the Government will rely on 
the contractor's assurances that commercial items tendered for 
acceptance conform to the requirements of the contract. The acceptance 
provision at 52.212-4 includes patent defects as a reason to revoke 
finality of acceptance.


12.504  Termination.

    (a) The clause at 52.212-4, Contract Terms and Conditions--
Commercial Items, contains procedures for termination of contracts for 
commercial items, either for convenience or for cause, that are 
consistent with customary commercial practice. The contracting officer 
should consult with legal counsel prior to terminating any contract for 
cause.
    (b) Contractors are required to notify the Government when there 
will be an excusable delay. Failure to notify the Government as soon as 
it is reasonably possible could result in termination for cause.
    (c) The remedies available to the Government if a contract is 
terminated for cause are those available to any buyer in the 
marketplace and are not limited by part 49. The Government's preferred 
remedy will be to acquire similar items from another contractor and 
charge the terminated contractor with any excess reprocurement costs.

Subpart 12.6--Streamlined Procedures for Solicitation and Award of 
Contracts for Commercial Items


12.601  General.

    This subpart provides (a) a streamlined procedure for evaluating 
offers for commercial items; and (b) a streamlined procedure for 
soliciting offers for commercial items. These procedures are intended 
to simplify the process of preparing and issuing solicitations, and 
evaluating offers for commercial items consistent with customary 
commercial practices. While the procedures described in this subpart 
are appropriate for many commercial items, other methods of evaluation 
may also be appropriate. The contracting officer may use these 
procedures for soliciting offers for commercial items in lieu of 
procedures contained in parts 13, 14 or 15.


12.602  Streamlined evaluation of offers.

    (a) The Contracting officer may insert a provision substantially 
the same as the provision at 52.212-2, Evaluation--Commercial Items, in 
solicitations for commercial items. Paragraph (a) of the provision 
shall be tailored to the specific acquisition to describe the 
evaluation factors and relative importance of those factors. This 
provision contemplates an approach designed to select the source whose 
offer will provide the Government with the greatest value in terms of 
performance and other factors. Other methods of evaluation and basis 
for award may be more appropriate for a given acquisition.
    (b) Offers shall be evaluated in accordance with the tailored 
criteria contained in the provision at 52.212-2, Evaluation--Commercial 
Items, and any addenda. For many commercial items, the criteria need 
not be more detailed than technical (capability of the item offered to 
meet the Agency need), price and past performance. Technical capability 
may be evaluated by how well the proposed products meet the Government 
requirement instead of predetermined subfactors. Solicitations for 
commercial items do not have to contain subfactors for technical 
capability when the solicitation adequately describes its intended use. 
A technical evaluation would include examination of such things as 
product literature, product samples (if requested), technical features 
and warranty provisions. Past performance shall be evaluated in 
accordance with the procedures in 48 CFR part 15, subpart 15.6. The 
contracting officer shall ensure the instructions provided in the 
provision at 52.212-1, Instructions to Offerors--Commercial Items, and 
the evaluation criteria provided in the provision at 52.212-2, 
Evaluation--Commercial Items, are in agreement.
    (c) Select the offer that is most advantageous to the Government 
based on the factors contained in the solicitation. Fully document the 
rationale for selection of the successful offeror including discussion 
of any trade-offs considered.


12.603  Streamlined solicitation for commercial items.

    (a) To reduce the time required to solicit and award contracts for 
the acquisition of commercial items, the contracting officer may use 
this procedure which combines the CBD synopsis required by 5.203 and 
the issuance of the solicitation into a single document with the 
following limitations:
    (1) FAR 5.207 limits submissions to the CBD to 12,000 textual 
characters (approximately 3\1/2\ single-spaced pages).
    (2) This combined CBD synopsis/solicitation is only appropriate 
where the solicitation is relatively simple and is not recommended for 
use when lengthy addenda to the solicitation are necessary.
    (b) To use these procedures, the contracting officer shall--
    (1) Prepare the synopsis as described at 5.207 for items 1-16;
    (2) In item 17, Description, include the following additional 
information:-
    (i) A statement that this is a combined synopsis/solicitation for 
commercial items prepared in accordance with the format in subpart 
12.6, as supplemented with additional information included in this 
notice, and that a written solicitation will not be 
issued. [[Page 11210]] 
    (ii) A statement that the solicitation document and incorporated 
provisions and clauses are those in effect through FAC ______.
    (iii) A notice of small business or other set-aside, if 
applicable.-
    (iv) A list of contract line item number(s) and items, quantities 
and units of measure, (including option(s), if applicable).
    (v) Description of requirements for the items to be acquired.
    (vi) Date(s) and place(s) of delivery.
    (vii) A statement regarding any addenda to the provision at 52.212-
1, Instructions to Offerors--Commercial.
    (viii) A statement regarding the applicability of the provision at 
52.212-2, Evaluation--Commercial Items, if used, and the specific 
evaluation criteria to be included in paragraph (a) of that provision. 
If this provision is not used, describe the evaluation procedures to be 
used.
    (ix) A statement advising offerors to include a completed copy of 
the provision at 52.212-3, Offeror Representations and Certifications--
Commercial Items, with its offer.
    (x) A statement regarding any addenda to the clause at 52.212-4, 
Contract Terms and Conditions--Commercial Items.
    (xi) A statement regarding which, if any, of the additional FAR 
clauses cited in the clause at 52.212-5, Contract Terms and Conditions 
Required To Implement Statutes Or Executive Orders--Commercial Items, 
are applicable to the acquisition.
    (xii) A statement regarding any additional contract requirement(s) 
or terms and conditions (such as contract financing arrangements, 
warranty requirements or GSA Delegation of Procurement Authority (DPA) 
case number (see FIRMR 201-39.106-4)) determined by the contracting 
officer to be necessary for this acquisition and consistent with 
customary commercial practices.
    (xiii) A statement regarding any applicable Commerce Business Daily 
numbered notes.
    (xiv) The date, time and place offers are due.
    (3) Response time for receipt of offers--
    (i) Because the CBD synopsis and solicitation are contained in a 
single document, it is not necessary to publish a separate CBD synopsis 
15 days before the issuance of the solicitation; and
    (ii) When using the combined CBD synopsis/solicitation, contracting 
officers shall allow at least 15 days response time (see 5.203(b)).
    (4) Post copies of the combined CBD synopsis/solicitation in 
accordance with 5.101(a)(2).
    (5) Amendments to solicitations shall be published in the same 
manner as the initial synopsis/solicitation.

PART 13--SIMPLIFIED ACQUISITION PROCEDURES


13.501  [Amended]

    32. Section 13.501 is amended in paragraph (c) by removing ``12.4'' 
and inserting ``11.7''.

PART 14--SEALED BIDDING


14.201-2  [Amended]

    33. 14.201-2 is amended in the parenthetical of paragraph (c) by 
removing ``part 10, Specifications, Standards, and Other Product 
Descriptions'' and inserting ``part 11''; and in the parenthetical of 
paragraph (d) by removing ``10.004(e)'' and inserting ``part 11''.


14.404-1  [Amended]

    34. Section 14.404-1 is amended in paragraph (b) by removing 
``10.008'' and inserting ``11.201''.

PART 15--CONTRACTING BY NEGOTIATION


15.406-2  [Amended]

    35. Section 15.406-2 is amended in the parenthetical of paragraph 
(c) by removing ``part 10, Specifications, Standards, and Other Product 
Descriptions'' and inserting ``part 11''; and in the parenthetical of 
paragraph (d) by removing ``10.004(e)'' and inserting ``part 11''.
    36. Section 15.501 is amended by revising the definition 
``Commercial product offer'' to read as follows:


15.501  Definitions.

* * * * *
    Commercial item offer means an offer of a commercial item the 
vendor wishes to see introduced in the Government's supply system as an 
alternate or replacement for an existing supply item.
* * * * *


15.503  [Amended]'
    37. Section 15.503 is amended in paragraph (b) by removing the word 
``product'' and inserting ``item''.
    38. Section 15.704 is amended by revising the second sentence to 
read as follows:


15.704  Items and work included.

    * * * Raw materials, commercial items (see 2.101), and off-the-
shelf items (see 46.101) shall not be included, unless their potential 
impact on contract cost or schedule is critical. * * *

PART 16--TYPES OF CONTRACTS

    39. Section 16.201 is amended by adding a sentence at the end of 
the paragraph to read as follows:


16.201  General.

    * * * The contracting officer shall use firm-fixed price or fixed-
price with economic price adjustment contracts when acquiring 
commercial items.
    40. Section 16.202-2 is amended by revising the introductory 
paragraph to read as follows:


16.202-2   Application.

    A firm-fixed price contract is suitable for acquiring commercial 
items (see parts 2 and 12) or for acquiring other supplies or services 
on the basis of reasonably definite functional or detailed 
specifications (see part 11) when the contracting officer can establish 
fair and reasonable prices at the outset, such as when--
* * * * *
    41. Section 16.301-3 is amended by redesignating paragraphs (a) 
through (c) as paragraphs (a)(1) through (a)(3), respectively, 
designating the introductory text as paragraph (a) introductory text; 
and adding paragraph (b) to read as follows:


16.301-3   Limitations.

    (a) A cost-reimbursement contract may be used only when--
* * * * *
    (b) The use of cost-reimbursement contracts is prohibited for the 
acquisition of commercial items (see parts 2 and 12).


16.603-2   [Amended]

    42. Section 16.603-2 is amended in paragraph (e) by removing 
``12.304'' and inserting ``11.604''.

PART 22--APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS

    43. Section 22.305 is amended by redesignating paragraph (h) as (i) 
and adding a new paragraph (h) to read as follows:


22.305  Contract clause.

* * * * *
    (h) Contracts for commercial items (see parts 2 and 12).
* * * * *
    44. Section 22.604-1 is amended by revising paragraph (a) to read 
as follows:


22.604-1  Statutory exemptions.

* * * * *
    (a) Any item in those situations where the contracting officer is 
authorized by the express language of a statute to 
[[Page 11211]] purchase ``in the open market'' generally (such as 
commercial items, see part 12); or where a specific purchase is made 
under the conditions described in 6.302-2 in circumstances where 
immediate delivery is required by the public exigency.
* * * * *

PART 23--ENVIRONMENTAL, CONSERVATION, OCCUPATIONAL SAFETY, AND 
DRUG-FREE WORKPLACE

    45. Section 23.105 is amended at the end of paragraph (b)(2) by 
removing ``or''; by redesignating paragraphs (b)(3) and (4) as (b)(4) 
and (5), respectively; and adding a new paragraph (b)(3) to read as 
follows:


23.105  Solicitation provision and contract clause.

* * * * *
    (b) * * *
    (3) The contract is for other than commercial items; or
* * * * *
    46. Section 23.501 is amended by redesignating paragraphs (b) 
through (d) as (c) through (e) respectively, and adding a new paragraph 
(b) to read as follows:


23.501  Applicability.

* * * * *
    (b) Contracts for the acquisition of commercial items (see part 
12);
* * * * *

PART 36--CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS


36.206  [Amended]

    47. Section 36.206 is amended by removing ``12.202'' and inserting 
``11.502''.


36.303  [Amended]

    48. Section 36.303 is amended in paragraph (c)(4) by removing 
``12.1'' and inserting ``48 CFR part 11, subpart 11.4''.

PART 42--CONTRACT ADMINISTRATION


42.1105  [Amended]

    49. and 50. Section 42.1105 is amended by removing the reference 
``subpart 12.3'' and inserting ``48 CFR part 11, subpart 11.6''.

Subpart 42.13  [Redesignated from subpart 12.5]


42.1304  [Amended]

    51. Newly designated section 42.1304 (redesignated from 12.504) is 
amended in paragraph (a) by removing ``52.212-15'' and inserting 
``52.242-17''.


42.1305  [Amended]

    52. Newly designated section 42.1305 (redesignated from 12.505) is 
amended in paragraph (a) by removing ``52.212-12'' and inserting 
``52.242-14''; in paragraph (b)(1) by removing ``52.212-13'' and 
inserting ``52.242-15''; in paragraph (c) by removing ``52.212-14'' and 
inserting ``52.242-16''; and in paragraph (d) by removing ``52.212-15'' 
and inserting ``52.242-17''.

PART 44--SUBCONTRACTING POLICIES AND PROCEDURES

    53. Subpart 44.4, consisting of sections 44.400 through 44.403, is 
added to read as follows:
Subpart 44.4--Subcontracts for Commercial Items and Commercial 
Components

Sec.
44.400  Scope of subpart.
44.401  Applicability.
44.402  Policy requirements.
44.403  Contract clause.

Subpart 44.4--Subcontracts for Commercial Items and Commercial 
Components


44.400  Scope of subpart.

    This subpart prescribes the policies limiting the contract clauses 
a prime contractor may be required to apply to any subcontractors that 
are furnishing commercial items or commercial components in accordance 
with Section 8002(b)(2) (Pub. L. 103-355).


44.401  Applicability.

    This subpart applies to all contracts and subcontracts. For the 
purpose of this subpart, the term ``subcontract'' has the same meaning 
as defined in part 12.


44.402  Policy requirements.

    (a) To the maximum extent practicable--
    (1) Contractors and subcontractors at all levels shall incorporate 
commercial items or nondevelopmental items other than commercial items 
as components of items delivered to the Government; and
    (2) Agencies shall not require prime contractors to apply to any of 
its divisions, subsidiaries, affiliates, subcontractors or suppliers 
that are furnishing commercial items or commercial components any 
clause, except those---
    (i) Required to implement provisions of law or executive orders 
applicable to subcontractors furnishing commercial items or commercial 
components; or
    (ii) Determined to be consistent with customary commercial practice 
for the item being acquired.
    (b) The clause at 52.244-XX, Subcontracts for Commercial Items and 
Commercial Components, implements the policy in paragraph (a) of this 
section. Notwithstanding any other clause in the prime contract, only 
those clauses identified in the clause at 52.244-XX are required to be 
in subcontracts for commercial items or commercial components.
    (c) Agencies shall supplement the clause at 52.244-XX, as necessary 
to reflect agency unique statutes.


44.403  Contract clause.

    The contracting officer shall insert the clause at 52.244-XX, 
Subcontracts for Commercial Items and Commercial Components, in 
solicitations and contracts for supplies or services other than 
commercial items.

PART 46--QUALITY ASSURANCE

    54. Section 46.101 is amended by adding in alphabetical order the 
definition ``Commercial item'' to read as follows:


46.101  Definitions.

* * * * *
    Commercial item (see 2.101).
* * * * *
    55. Section 46.102 is amended by redesignating paragraph (f) as (g) 
and adding a new paragraph (f) to read as follows:
46.102  Policy.

* * * * *-
    (f) For the acquisition of commercial items, contractors are 
permitted to use their existing quality assurance system as a 
substitute for compliance with Government-specified requirements unless 
customary market practice for the commercial item being acquired 
permits in-process inspection (Pub. L. 103-355);
* * * * *

Subpart 46.2--Contract Quality Requirements


46.202  [Amended]-

    56. Section 46.202 is amended by removing ``three'' and inserting 
``four''.-
    57. Sections 46.202-1 through 46.202-3 are redesignated as 46.202-2 
through 46.202-4 respectively, and a new 46.202-1 is added to read as 
follows:


46.202-1  Contracts for commercial items.-

    When acquiring commercial items (see part 12), the Government shall 
use contractors' existing quality assurance system as a substitute for 
Government inspection and testing before tendering for acceptance 
unless customary market [[Page 11212]] practices for the commercial 
item being acquired permits in-process inspection.
    58. Section 46.203 is amended by revising paragraph (a)(1); at the 
end of paragraph (a)(2) by removing the semicolon and ``or'' and 
inserting a period; and by removing paragraph (a)(3). The revised text 
reads as follows:


46.203  Criteria for use of contract quality requirements.

* * * * *-
    (a) * * *-
    (1) Commercial (described in commercial catalogs, drawing, or 
industrial standards; see part 2); or
* * * * *


46.204  [Removed and reserved]-

    59. Section 46.204 is removed and reserved.-
    60. Section 46.709 is revised to read as follows:


46.709  Warranties of commercial items.-

    The contracting officer should take advantage of commercial 
warranties, including extended warranties (where appropriate and in the 
Government's best interests), offered by the contractor for the repair 
and replacement of commercial items (see part 12).-
    58. Section 46.710 is amended by revising the first sentence of the 
introductory paragraph; by removing paragraphs (a)(2) and (b)(2) and 
redesignating paragraphs (a)(3) through (a)(6) as (a)(2) through 
(a)(5), and paragraphs (b)(3) through (b)(5) as (b)(2) through (b)(4), 
respectively. The revised text reads as follows:


46.710  Contract clauses.

    The clauses and alternates prescribed in this section may be used 
in solicitations and contracts in which inclusion of a warranty is 
appropriate (see 46.709 for warranties for commercial items). * * *
* * * * *
    61. Section 47.405 is amended by revising the last sentence to read 
as follows:


47.405  Contract clause.-

    * * * This clause does not apply to contracts awarded using the 
simplified acquisition procedures in part 13 or contracts for 
commercial items (see part 12).

PART 49--TERMINATION OF CONTRACTS-

    62. Section 49.501 is revised to read as follows:


49.501  General.-

    This subpart prescribes the principal contract termination clauses. 
For contracts for the acquisition of commercial items, this part 
provides administrative guidance which may be followed when it is 
consistent with the requirements and procedures in the clause at 
52.212-4, Contract Terms and Conditions--Commercial Items. In 
appropriate cases, agencies may authorize the use of special purpose 
clauses, if consistent with this chapter.


49.607  [Amended]

    63. Section 49.607 is amended by removing ``12.5'' in the 
introductory text and inserting ``48 CFR part 42, subpart 42.13''.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    64. Section 52.202-1 is amended by revising the date of the clause; 
by redesignating paragraphs (b) and (c) as (e) and (f), and adding new 
paragraphs (b), (c) and (d) to read as follows:


52.202-1  Definitions.

* * * * *

Definitions (Date)

* * * * *
    (b) Commercial component means any component that is a 
commercial item.-
    (c) Commercial item means-
    (1) Any item, other than real property, that is of a type 
customarily used for nongovernmental purposes and that---
    (i) Has been sold, leased, or licensed to the general public; 
or,-
    (ii) Has been offered for sale, lease, or license to the general 
public;-
    (2) Any item that evolved from an item described in paragraph 
(c)(1) of this clause through advances in technology or performance 
and that is not yet available in the commercial marketplace, but 
will be available in the commercial marketplace in time to satisfy 
the delivery requirements under a Government solicitation;-
    (3) Any item that would satisfy a criterion expressed in 
paragraphs (c)(1) or (c)(2) of this clause, but for---
    (i) Modifications of a type customarily available in the 
commercial marketplace; or-
    (ii) Minor modifications of a type not customarily available in 
the commercial market place made to meet Federal Government 
requirements. Such modifications are considered minor if the change 
does not significantly alter a commercial item's function or 
essential physical characteristics. Minor is not defined by the 
specific dollar value or percentage basis of the change;-
    (4) Any combination of items meeting the requirements of 
paragraphs (c)(1), (2), (3), or (5) of this clause that are of a 
type customarily combined and sold in combination to the general 
public;-
    (5) Installation services, maintenance services, repair 
services, training services, and other services if such services are 
procured for support of an item referred to in paragraphs (c)(1), 
(2), (3), or (4) of this clause, and if the source of such 
services--
    (i) Offers such services to the general public and the Federal 
Government contemporaneously and under similar terms and conditions; 
and-
    (ii) Offers to use the same work force for providing the Federal 
Government with such services as the source uses for providing such 
services to the general public;-
    (6) Services of a type offered and sold competitively in 
substantial quantities in the commercial marketplace based on 
established catalog or market prices for specific tasks performed 
under standard commercial terms and conditions. This does not 
include services that are sold based on hourly rates without a fixed 
price for a specific service performed;-
    (7) Any item, combination of items, or service referred to in 
subparagraphs (c)(1) through (c)(6), notwithstanding the fact that 
the item, combination of items, or service is transferred between or 
among separate divisions, subsidiaries, or affiliates of a 
Contractor; or-
    (8) A nondevelopmental item, if the procuring agency determines 
that the item was developed exclusively at private expense and has 
been sold in substantial quantities, on a competitive basis, to 
multiple State and local Governments.-
    (d) Component means any item supplied to the Federal Government 
as part of an end item or of another component.
* * * * *
(End of clause)

    -65. Section 52.203-6 is amended by revising the clause date; and 
by adding an Alternate I following paragraph (c)(5) to read as follows:


52.203-6  Restrictions on Subcontractor Sales to the Government.

* * * * *

Restrictions on Subcontractor Sales to the Government (Date)
* * * * *
    Alternate I (DATE). As prescribed in 3.503-2, substitute the 
following paragraph in place of paragraph (b) of the basic clause: -
    (b) The prohibition in paragraph (a) of this clause does not 
preclude the Contractor from asserting rights that are otherwise 
authorized by law or regulation. For procurements of commercial 
items, the prohibition in paragraph (a) applies only to the extent 
that any agreement restricting sales by subcontractors results in 
the Federal Government being treated differently from any other 
prospective purchaser for the sale of the commercial item(s).


52.210-1 through 52.210-7  [Redesignated] -

    66. Sections 52.210-1 through 52.210-7 are redesignated as 52.211-1 
through 52.211-7, respectively.


52.212-1 through 52.212-11  [Redesignated]

    67. Sections 52.212-1 through 52.212-11 are redesignated as 52.211-
8 through 52.211-18, respectively. [[Page 11213]] 


52.212-12 through 52.212-15  [Redesignated]

    68. Sections 52.212-12 through 52.212-15 are redesignated as 
52.242-14 through 52.242-17.-
    69. 52.212-1 through 52.212-5 Added.


52.212--1 through 52.242--15  [Added]

    70. Part 52 is amended by adding new sections 52.212-1 through 
52.212-5, to read as follows:
Sec.
52.212-1 Instructions to Offerors--Commercial Items.
52.212-2 Evaluation--Commercial Items.
52.212-3 Offeror Representations and Certifications--Commercial 
Items.
52.212-4 Contract Terms and Conditions--Commercial Items.
52.212-5 Contract Terms and Conditions Required to Implement -
Statutes or Executive Orders--Commercial Items.


52.212-1  Instructions to Offerors--Commercial Items.-

    As prescribed in 12.302(b)(1), insert the following provision:

Instructions to Offerors--Commercial Items (Date)

    Standard Industrial Classification (SIC) Code and Small Business 
Size Standard. The SIC code and small business size standard for 
this acquisition appear in Block 10 of the solicitation cover sheet 
(SF XXXX). However, the small business size standard for a concern 
which submits an offer in its own name, but which proposes to 
furnish an item which it did not itself manufacture, is 500 
employees.-
    Submission of Offers. Submit offers to the office specified in 
this solicitation at or before the exact time specified in this 
solicitation. Offers may be submitted on the SF XXXX, letterhead 
stationery, or as otherwise specified in the solicitation. As a 
minimum, offers must show--
    (a) The solicitation number;
    (b) The time specified for receipt;
    (c) The name and address of the offeror;-
    (d) A technical description of the items being offered in 
sufficient detail to determine compliance with the requirements in 
the solicitation. This may include product literature, warranty 
provisions, or other documents, if necessary;-
    (e) Price;-
    (f) ``Remit to'' address, if different than mailing address; -
    (g) A completed copy of the representations and certifications 
at FAR 52.212-3; -
    (h) Acknowledgment of Solicitation Amendments; -
    (i) Past performance information, when included as an evaluation 
factor, to include recent and relevant contracts for the same or 
similar items and other references. At a minimum, this should 
include contract numbers, points of contact with telephone numbers 
and other relevant information; and--
    (j) If the offer is not submitted on the SF XXXX, include a 
statement specifying the extent of agreement with all terms, 
conditions, and provisions included in the solicitation. Offers that 
fail to furnish required representations or information, or take 
exception to the terms and conditions of the solicitation may be 
excluded from consideration. -
    Offered Prices. The offeror agrees to hold the prices in its 
offer firm for 30 calendar days from the date specified for receipt 
of offers, unless another time period is specified in an addendum to 
the solicitation.-
    Product Samples. When required by the solicitation, product 
samples shall be submitted at or prior to the time specified for 
receipt of offers. Unless otherwise specified in this solicitation, 
these samples shall be submitted at no expense to the Government, 
and returned at the sender's request and expense, unless they are 
destroyed during preaward testing.-
    Multiple Offers.  Offerors are encouraged to submit multiple 
offers presenting alternative commercial items for satisfying the 
requirements of this solicitation. Each offer submitted will be 
evaluated separately.-
    Late Offers. Offers or modifications of offers received at the 
address specified for the receipt of offers after the exact time 
specified for receipt of offers will not be considered.-
    Contract Award.  The Government intends to evaluate offers and 
award a contract without discussions with offerors. Therefore, the 
offeror's initial offer should contain the offeror's best terms from 
a price and technical standpoint. However, the Government reserves 
the right to conduct discussions if later determined by the 
Contracting Officer to be necessary. The Government may reject any 
or all offers if such action is in the public interest; accept other 
than the lowest offer; and waive informalities and minor 
irregularities in offers received.-
    Multiple Awards.  The Government may accept any item or group of 
items of an offer, unless the offeror qualifies the offer by 
specific limitations. Unless otherwise provided in the Schedule, 
offers may not be submitted for quantities less than those 
specified. The Government reserves the right to make an award on any 
item for a quantity less than the quantity offered, at the unit 
prices offered, unless the offeror specifies otherwise in the offer.

(End of provision)


52.212-2  Evaluation--Commercial Items.-

    As prescribed in 12.602(c), the Contracting Officer may insert a 
provision substantially as follows:

Evaluation--Commercial Items (Date)-

    (a) The Government will award a contract resulting from this 
solicitation to the responsible offeror whose offer conforming to 
the solicitation will be most advantageous to the Government, price 
and other factors considered. The following factors [Contracting 
Officer insert relative order of importance (see 15.605)] shall be 
used to evaluate offers:
    [Contracting Officer insert the significant evaluation factors 
and subfactors, such as (i) technical capability of the item offered 
to meet the Government requirement; (ii) price; (iii) past 
performance (see 15.605)].
    Technical and past performance, when combined, are [Contracting 
Officer insert relative importance of evaluation factors (see 
15.605)].
    (b) Options. The Government will evaluate offers for award 
purposes by adding the total price for all options to the total 
price for the basic requirement. Evaluation of options shall not 
obligate the Government to exercise the option(s).-
    (c) The Government may determine that an offer is unacceptable 
if the prices proposed are materially unbalanced between line items 
or subline items.
    (d) A written award or acceptance of offer mailed or otherwise 
furnished to the successful offeror within the time for acceptance 
specified in the offer shall result in a binding contract without 
further action by either party. Before the offer's specified 
expiration time, the Government may accept an offer (or part of an 
offer), whether or not there are negotiations after its receipt, 
unless a written notice of withdrawal is received before award.

(End of Provision)


52.212-3  Offeror Representations and Certifications--Commercial Items.
    As prescribed in 12.302(b)(2), insert the following provision:

Offeror Representations and Certifications--Commercial Items (Date)

    (a) Definitions. As used in this provision:
    Emerging small business means a small business concern whose 
size is no greater than 50 percent of the numerical size standard 
for the standard industrial classification code designated.
    Small business concern means a concern, including its 
affiliates, that is independently owned and operated, not dominant 
in the field of operation in which it is bidding on Government 
contracts, and qualified as a small business under the criteria and 
size standards in this solicitation.
    Small disadvantaged business concern means a small business 
concern that--
    (1) Is at least 51 percent unconditionally owned by one or more 
individuals who are both socially and economically disadvantaged or 
a publicly owned business, having at least 51 percent of its stock 
unconditionally owned by one or more socially and economically 
disadvantaged individuals; and
    (2) Has its management and daily business controlled by one or 
more such individuals.
    This term also means a small business concern that is at least 
51 percent unconditionally owned by an economically disadvantaged 
Indian tribe or Native Hawaiian organization, or publicly owned 
business having at least 51 percent of its stock unconditionally 
owned by one or more of these entities which has its management and 
daily business controlled by members of an economically 
disadvantaged Indian tribe or Native Hawaiian organization and which 
meets the requirements of 13 CFR part 124.
    Women-owned small business concern means a small business 
concern at least 51 percent owned by a woman or women or, in the 
case of any publicly owned business, at least 51 percent of the 
stock is owned by one [[Page 11214]] or more women; and whose 
management and daily business operations are controlled by one or 
more women.
    Women-owned business concern means a concern which is at least 
51 percent owned by one or more women; or in the case of any 
publicly owned business, at least 51 percent of the stock of which 
is owned by one or more women; and whose management and daily 
business operations are controlled by one or more women.
    (b) Taxpayer Identification Number (TIN) (26 U.S.C. 6050M). (1) 
The offeror's TIN is ____________. If the offeror does not have a 
TIN, provide an explanation with your offer. If the offeror is owned 
or controlled by a common parent that files its Federal income tax 
returns on a consolidated basis including the offeror, provide the 
name and TIN of the common parent--

Name ____________------------------------------------------------------

TIN ____________-------------------------------------------------------

    (2) Type of Business Organization. The offeror represents--
    (i) If the offeror is a U.S. entity, it operates as:____________ 
a corporation incorporated under the laws of the State 
of____________ providing medical and health care services, or 
engaged in the billing and collecting of payments for such services; 
____________ an other corporate entity; ____________ a sole 
proprietorship; ____________ a partnership; ____________ a hospital 
or extended care facility described in 26 CFR 501(c)(3) that is 
exempt from taxation under 26 CFR 501(a).
    (ii) If the offeror is a foreign entity, it operates 
as:____________ an agency or instrumentality of a foreign 
government; or agency or instrumentality of a Federal, state or 
local Government.
    (c) Representations required to implement provisions of the 
Small Business Act (15 U.S.C. 631 et seq.):

    Note: Offerors must complete this paragraph (c) only if the 
resulting contract 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.

    (1) Small Business Concern. The offeror represents and certifies 
as part of its offer that it {time}  is, {time}  is not a small 
business concern.
    (2) Small Disadvantaged Business Concern. The offeror represents 
and certifies that it {time}  is, {time}  is not a small 
disadvantaged business concern.
    (3) Women-Owned Small Business Concern. The offeror represents 
that it {time}  is, {time}  is not a women-owned small business 
concern.

    Note: Complete paragraphs (c)(4) and (c)(5) only if this 
solicitation is expected to exceed the simplified acquisition 
threshold.

    (4) Women-Owned Business Concern. The offeror represents that it 
{time}  is, {time}  is not, a women-owned business concern.
    (5) Priority for Labor Surplus Area Concerns. Offeror identify 
the labor surplus areas in which costs to be incurred on account of 
manufacturing or production (by offeror or first-tier 
subcontractors) amount to more than 50 percent of the contract 
price:

----------------------------------------------------------------------

    (6) Small Business Size for the Small Business Competitiveness 
Demonstration Program and for the Targeted Industry Categories under 
the Small Business Competitiveness Demonstration Program. [Complete 
only if the offeror has certified itself to be a small business 
concern under the size standards for this solicitation.]
    (i) [Complete only for solicitations in the four designated 
industry groups.] The offeror represents and certifies as part of 
its offer that it {time}  is, {time}  is not an emerging small 
business.
    (ii) [Complete only for solicitations in targeted industry 
categories expected to result in an award in excess of $25,000.] 
Offeror represents and certifies as follows:
    (A) Offeror's number of employees for the past 12 months (check 
this column if size standard stated in the solicitation is expressed 
in terms of number of employees); or
    (B) Offeror's average annual gross revenue for the last 3 fiscal 
years (check this column if size standard stated in the solicitation 
is expressed in terms of annual receipts)
    (Check one of the following):

------------------------------------------------------------------------
                                         Average annual gross number of 
              Employees                             revenues            
------------------------------------------------------------------------
______  50 or fewer..................  ______  $1 million or less.      
______  51-100.......................  ______  1,000,001-2 million.     
______  101-250......................  ______  2,000,001-3.5 million.   
______  251-500......................  ______  3,500,001-5 million.     
______  501-750......................  ______  5,000,001-10 million.    
______  751-1,000....................  ______  10,000,001-17 million.   
______  Over 1,000...................  ______  Over 17 million.         
------------------------------------------------------------------------

    (d) Certifications and representations required to implement 
provisions of Executive Order 11246--
    (1) Certification of Non-segregated Facilities. (Applies only if 
the contract amount is expected to exceed $10,000)--
    By submission of this offer, the offeror certifies that it does 
not and will not maintain or provide for its employees, any 
facilities that are segregated on the basis of race, color, 
religion, or national origin because of habit, local custom, or 
otherwise and that it does not and will not permit its employees to 
perform their services at any location where segregated facilities 
are maintained. The offeror agrees that a breach of this 
certification is a violation of the Equal Opportunity clause in the 
contract.
    (2) Previous Contracts and Compliance. The offeror represents 
that--
    (i) It {time}  has, {time}  has not, participated in a previous 
contract or subcontract subject either to the Equal Opportunity 
clause of this solicitation, the clause originally contained in 
Section 310 of Executive Order 10925, or the clause contained in 
Section 201 of Executive Order 11114; and
    (ii) It {time}  has, {time}  has not, filed all required 
compliance reports
    (3) Affirmative Action Compliance. The offeror represents that--
    (i) It {time}  has developed and has on file, {time}  has not 
developed and does not have on file, at each establishment, 
affirmative action programs required by rules and regulations of the 
Secretary of Labor (41 CFR subparts 60-1 and 60-2), or
    (ii) It {time}  has not previously had contracts subject to the 
written affirmative action programs requirement of the rules and 
regulations of the Secretary of Labor.
    (e) Certification Regarding Payments to Influence Federal 
Transactions (31 U.S.C. 1352). (Applies only if the contract is 
expected to exceed $100,000.) By submission of its offer, the 
offeror certifies to the best of its knowledge and belief that no 
Federal appropriated funds have been paid or will be paid to any 
person for influencing or attempting to influence an officer or 
employee of any agency, a Member of Congress, an officer or employee 
of Congress or an employee of a Member of Congress on his or her 
behalf in connection with the award of any resultant contract.
    (f) Buy American Act--Trade Agreements--Balance of Payments 
Program Certificate. (Applies only if FAR clause 52.225-9, Buy 
American Act--Trade Agreement--Balance of Payments Program, is 
included in this solicitation.)
    (1) The offeror hereby certifies that each end product, except 
those listed in paragraph (f)(2) of this provision, is a domestic 
end product (as defined in the clause entitled ``Buy American Act--
Trade Agreements--Balance of Payments Program'') and that components 
of unknown origin have been considered to have been mined, produced, 
or manufactured outside the United States, a designated country, a 
North American Free Trade Agreement (NAFTA) country, or a Caribbean 
Basin country, as defined in section 25.401 of the Federal 
Acquisition Regulation.
    (2) Excluded End Products:

Line Item No.
Country of Origin

(List as necessary)

    (3) Offers will be evaluated by giving certain preferences to 
domestic end products, designated country end products, NAFTA 
country end products, and Caribbean Basin country end products over 
other end products. In order to obtain these preferences in the 
evaluation of each excluded end product listed in paragraph (f)(2) 
of this provision, offerors must identify and certify below those 
excluded end products that are designated or NAFTA country end 
products, or Caribbean Basin country end products. Products that are 
not identified and certified below will not be deemed designated 
country end products, NAFTA country end products, or Caribbean Basin 
country end products. Offerors must certify by inserting the 
applicable line item numbers in the following:
    (i) The offeror certifies that the following supplies qualify as 
``designated or NAFTA country end products'' as those terms are 
defined in the clause entitled ``Buy American Act--Trade 
Agreements--Balance of Payments Program:''

(Insert line item numbers)
    (ii) The offeror certifies that the following supplies qualify 
as ``Caribbean Basin country end products'' as that term is defined 
in the [[Page 11215]] clause entitled ``Buy American Act--Trade 
Agreements--Balance of Payments Program'':

(Insert line item numbers)
    (4) Offers will be evaluated in accordance with part 25 of the 
Federal Acquisition Regulation.
    (g) Buy American Act--North American Free Trade Agreement 
(NAFTA) Implementation Act--Balance of Payments Program Certificate. 
(Applies only if FAR clause 52.225-21, Buy American Act--North 
American Free Trade Agreement (NAFTA) Implementation Act--Balance of 
Payments Program, is included in this solicitation.)
    (1) The offeror hereby certifies that each end product, except 
those listed in paragraph (g)(2) of this provision, is a domestic 
end product (as defined in the clause entitled ``Buy American Act--
North American Free Trade Agreement (NAFTA) Implementation Act--
Balance of Payments Program'' and that components of unknown origin 
have been considered to have been mined, produced, or manufactured 
outside the United States.
    (2) Excluded End Products:

Line Item No.
Country of Origin

(List as necessary)

    (3) Offers will be evaluated by giving certain preferences to 
domestic end products or NAFTA country end products over other end 
products. In order to obtain these preferences in the evaluation of 
each excluded end product listed in paragraph (g)(2) of this 
provision, offerors must identify and certify below those excluded 
end products that are NAFTA country end products. Products that are 
not identified and certified below will not be deemed NAFTA country 
end products. Offerors must certify by inserting the applicable line 
item numbers in the following:
    The offeror certifies that the following supplies qualify as 
``NAFTA country end products'' as that term is defined in the clause 
entitled ``Buy American Act--North American Free Trade Agreement 
Implementation Act--Balance of Payments Program:''

(Insert line item numbers)
    (4) Offers will be evaluated in accordance with FAR part 25.
    (h) Procurement Integrity Certification (41 U.S.C. 423). 
(Applies only if the contract is expected to exceed $100,000.)
    I, the undersigned, am the officer or employee responsible for 
the preparation of this offer. I certify, to the best of my 
knowledge and belief, that either--
    ____________ I have no information, or-
    ____________ I have disclosed information to the Contracting 
Officer concerning a violation or possible violation of subsection 
(a), (b), (d) or (f) of 41 U.S.C. 423, Procurement Integrity, or its 
implementing regulations that may have occurred during the conduct 
of this procurement.

----------------------------------------------------------------------
Signature of the officer or employee responsible for the offer and 
date.

(End of Certification)

(End of Provision)


52.212-4  Contract Terms and Conditions--Commercial Items.-

    As prescribed in 12.302(b)(3), insert the following clause:

Contract Terms and Conditions--Commercial Items (Date)-

    Acceptance. The Contractor shall tender to the Government for 
acceptance only supplies or services that the Contractor has 
inspected in accordance with its commercial inspection system and 
found to be in conformity with contract requirements. The Government 
has the right to inspect or test all supplies or services after they 
have been tendered for acceptance. Acceptance shall be conclusive 
except for patent defects, latent defects, fraud, gross mistakes 
amounting to fraud, or as otherwise provided in the contract. The 
Government may require correction or replacement of nonconforming 
supplies or reperformance of nonconforming services at no increase 
in contract price, or require an adjustment to the contract price to 
reflect the reduced value of the nonconforming supplies or services. 
Revocation of acceptance shall occur (1) within a reasonable time 
after the defect was discovered or should have been discovered; and 
(2) before substantial change occurs in the condition of the item. 
This limitation does not apply to changes in condition caused by the 
defect.-
    Assignment. The Contractor or its assignee, may, when done in 
accordance with the provisions of the Assignment of Claims Act (31 
U.S.C. 3727), assign its rights to be paid amounts due as a result 
of performance of this contract to a bank, trust company, or other 
financing institution, including any Federal lending agency.-
    Changes. Changes in the terms and conditions of this contract 
may be made only by written agreement of the parties.-
    Disputes. This contract is subject to the Contract Disputes Act 
of 1978, as amended (41 U.S.C. 601-613). Failure of the parties to 
this contract to reach agreement on any request for equitable 
adjustment, claim, appeal or action arising under or relating to 
this contract shall be a dispute to be resolved in accordance with 
the clause at FAR 52.233-1, Disputes, which is incorporated herein 
by reference.-
    Definitions. The clause at FAR 52.202-1, Definitions, is 
incorporated herein by reference.-
    Excusable Delays. The Contractor shall be liable for default 
unless nonperformance is caused by an occurrence beyond the 
reasonable control of the Contractor and without its fault or 
negligence such as, acts of God or the public enemy, acts of the 
Government in either its sovereign or contractual capacity, fires, 
floods, epidemics, quarantine restrictions, strikes, unusually 
severe weather, and delays of common carriers. The Contractor shall 
notify the Contracting Officer in writing as soon as it is 
reasonably possible after the commencement of any excusable delay, 
setting forth the full particulars in connection therewith, shall 
remedy such occurrence with all reasonable dispatch, and shall 
promptly give written notice to the Contracting Officer of the 
cessation of such occurrence.-
    Invoice. The Contractor shall submit an original invoice and 
three copies to the address designated in the contract to receive 
invoices. An invoice must include---
    (1) Name and address of the Contractor;-
    (2) Invoice date;-
    (3) Contract number, contract line item number and, if 
applicable, the order number;-
    (4) Description, quantity, unit of measure, unit price and 
extended price of the items delivered;-
    (5) Shipping number and date of shipment including the bill of 
lading number and weight of shipment if shipped on Government bill 
of lading;-
    (6) Terms of any prompt payment discount offered;-
    (7) Name and address of official to whom payment is to be sent; 
and-
    (8) Name, title, and phone number of person to be notified in 
event of defective invoice.
    If the invoice does not comply with these requirements, the 
Contractor will be notified of the defect within 7 days after 
receipt of the invoice at the designated office.-
    Patent Indemnity. The Contractor shall indemnify the Government 
and its officers, employees and agents against liability, including 
costs, for actual or alleged direct or contributory infringement of, 
or inducement to infringe, any United States or foreign patent, 
trademark or copyright, arising out of the performance of this 
contract, provided the Contractor is reasonably notified of such 
claims and proceedings.-
    Payment. Payment shall be made for items accepted by the 
Government that have been delivered to the delivery destinations set 
forth in this contract. The Government will make payment in 
accordance with the Prompt Payment Act (31 U.S.C. 3903) and Office 
of Management and Budget (OMB) Circular A-125, Prompt Payment.
    In connection with any discount offered for early payment, time 
shall be computed from the date of the invoice. For the purpose of 
computing the discount earned, payment shall be considered to have 
been made on the date which appears on the payment check or the date 
on which an electronic funds transfer was made.-
    Risk of Loss. Unless the contract specifically provides 
otherwise, risk of loss or damage shall remain with the Contractor 
until, and shall pass to the Government upon:-
    (1) Delivery of the item(s) to a carrier, if transportation is 
f.o.b. origin; or-
    (2) Acceptance by the Government or delivery of the item(s) to 
the Government at the destination specified in the contract, 
whichever is later, if transportation is f.o.b. destination.-
    Taxes. The contract price includes all applicable Federal, 
State, and local taxes and duties. -
    Termination. The Government reserves the right to terminate this 
contract, or any part hereof, for its sole convenience. In the event 
of such termination, the Contractor shall immediately stop all work 
hereunder and shall immediately cause any and all of its suppliers 
and subcontractors to cease work. Subject to the terms of this 
contract, the Contractor shall be paid a reasonable termination 
charge considering the percentage of the contract price reflecting 
the [[Page 11216]] percentage of the work performed prior to the 
notice of termination, plus actual direct costs that the Contractor 
can demonstrate have resulted from the termination. The Contractor 
shall not be paid for any work done after receipt of the termination 
notice, nor for any costs incurred by the Contractor's suppliers or 
subcontractors which the Contractor could reasonably have avoided.-
    Termination for Cause. The Government may terminate this 
contract, or any part hereof, for cause in the event of any default 
by the Contractor, or if the Contractor fails to comply with any 
contract terms and conditions, or fails to provide the Government, 
upon request, with adequate assurances of future performance. In the 
event of termination for cause, the Government shall not be liable 
to the Contractor for any amount, and the Contractor shall be liable 
to the Government for any and all rights and remedies provided by 
law. If it should be determined that the Government improperly 
terminated this contract for default, such termination shall be 
deemed a termination for convenience. -
    Title. Unless specified elsewhere in this contract, title to 
items furnished under this contract shall pass to the Government 
upon final acceptance, regardless of when or where the Government 
takes physical possession, unless the contract specifically provides 
for earlier passage of title.-
    Warranty. Except as expressly set forth elsewhere in this 
contract and except for the implied warranty of merchantability, 
there are no warranties express or implied. In no event will the 
Contractor be liable to the Government for consequential damages 
resulting from the seller's breach including--
    (a) Any loss resulting from general or particular requirements 
and needs of which the seller at the time of contracting had reason 
to know and which could not reasonably be prevented by cover or 
otherwise; and -
    (b) Injury to person or property proximately resulting from any 
breach of warranty.-
    Other Compliances. The Contractor agrees to comply with all 
applicable Federal, State and local laws, executive orders, and 
regulations thereunder and amendments thereto, including, without 
limitation, 15 U.S.C 2601 et seq., the Federal Occupational Safety 
and Health Act of 1970; 42 U.S.C. 7401 et seq., the Clean Air Act; 
15 U.S.C. 2601 et seq., the Toxic Substances Control Act; and 33 
U.S.C. 1251 et seq., and the Federal Water Pollution Control Act.-
    Compliance with Laws Unique to Government Contracts. The 
Contractor agrees to comply with 31 U.S.C. 1352 relating to 
limitations on the use of appropriated funds to influence certain 
Federal contracting; 18 U.S.C. 431 relating to officials not to 
benefit; 40 U.S.C 327 et seq., Contract Work Hours and Safety 
Standards Act; 41 U.S.C. 51-58, Anti-Kickback Act of 1986; 41 U.S.C. 
251 related to whistle blower protections; and 49 U.S.C 40118, Fly 
American.
    Order of Precedence. Any inconsistencies in this solicitation or 
contract shall be resolved by giving precedence in the following 
order: (a) addenda to this solicitation or contract; (b) 
solicitation provisions; (c) contract clauses; (d) Standard Form 
XXXX; (e) Other documents, exhibits, and attachment; and (f) the 
specification.

(End of Clause)


52.212-5  Contract Terms and Conditions Required to Implement Statutes 
or Executive Orders--Commercial Items.-

    As prescribed in 12.302(b)(4), insert the following clause:

Contract Terms and Conditions Required to Implement Statutes or 
Executive Orders--Commercial Items (Date)-

    (a) The Contractor agrees to comply with the following FAR 
clauses, which are incorporated in this contract by reference, to 
implement provisions of law or executive orders applicable to 
acquisitions of commercial items:-
    (1) 52.219-8, Utilization of Small Business Concerns and Small 
Disadvantaged Business Concerns (15 U.S.C. 637 (d)(2) and (3)).-
    (2) 52.222-3, Convict Labor (E.O. 11755) -
    (3) 52.233-3, Protest After Award (31 U.S.C 3553 and 40 U.S.C. 
759)-
    (b) The Contractor agrees to comply with the following FAR and 
FIRMR clauses in this paragraph (b) that are indicated as being 
incorporated in this contract by reference to implement provisions 
of law or executive orders applicable to acquisitions of commercial 
items or components:
    -(1) 52.203-6, Restrictions on Subcontractor Sales to the 
Government, with Alternate I (41 U.S.C. 253g and 10 U.S.C. 2402).-
    (2) 52.203-10, Price or Fee Adjustment for Illegal or Improper 
Activity (41 U.S.C. 423).-
    (3) 52.219-14, Limitation on Subcontracting (15 U.S.C. 
637(a)(14)).-
    (4) 52.222-26, Equal Opportunity (E.O. 11246). -
    (5) 52.222-35, Affirmative Action for Special Disabled and 
Vietnam Era Veterans (38 U.S.C. 2012).-
    (6) 52.222-36, Affirmative Action for Handicapped Workers (29 
U.S.C. 793).-
    (7) 52.222-37, Employment Reports on Special Disabled Veterans 
and Veterans of the Vietnam Era (38 U.S.C. 2012).-
    (8) 52.225-3, Buy American Act--Supplies (41 U.S.C. 10).-
    (9) 52.225-9, Buy American Act--Trade Agreements Act--Balance of 
Payments Program (41 U.S.C. 10, 19 U.S.C. 2501-2582).-
    (10) 52.225-17, Buy American Act--Supplies Under European 
Community Sanctions for End Products (E.O. 12849).-
    (11) 52.225-18, European Community Sanctions for End Products 
(E.O. 12849).-
    (12) 52.225-19, European Community Sanctions for Services (E.O. 
12849).-
    (13) 52.225-21, Buy American Act--North American Free Trade 
Agreement Implementation Act--Balance of Payments Program (41 U.S.C 
10, Pub. L. 103-187).-
    (14) 52.247-64, Preference for Privately Owned US Flagged 
Commercial Vessels (46 U.S.C. 1241).-
    (15) 201-39.5202-3, Procurement Authority (FIRMR). -
    (This acquisition is being conducted under --------------------
-- delegation of GSA's exclusive procurement authority for FIP 
resources. The specific GSA DPA case number is ----------------).-
    (c) The Contractor agrees to comply with the following FAR 
clauses in this paragraph (c), applicable to commercial services, 
that are indicated as being incorporated in this contract by 
reference to implement provisions of law or executive orders 
applicable to acquisitions of commercial items or components:-
    (1) 52.222-41, Service Contract Act of 1965, As amended (41 
U.S.C. 351, et seq.).-
    (2) 52.222-42, Statement of Equivalent Rates for Federal Hires 
(29 U.S.C. 206 and 41 U.S.C. 351, et seq.).-
    (3) 52.222-43, Fair Labor Standards Act and Service Contract 
Act--Price Adjustment (Multiple Year and Option Contracts) (29 
U.S.C. 206 and 41 U.S.C. 351 et seq.).-
    (4) 52.222-44, Fair Labor Standards Act and Service Contract 
Act--Price Adjustment (29 U.S.C. 206 and 41 U.S.C. 351 et seq.).-
    (5) 52.222-47, SCA Minimum Wages and Fringe Benefits Applicable 
to Successor Contract Pursuant to Predecessor Contractor Collective 
Bargaining Agreement (CBA) (41 U.S.C. 351 et seq.). -
    (d) Notwithstanding the requirements of the clauses in 
paragraphs (a), (b) or (c) of this clause, the Contractor is not 
required to include any FAR clause, other than those listed below, 
in a subcontract for commercial items or commercial components--
[list of clauses to be published in the Federal Register in a future 
proposed rule under FAR case 94-791]

(End of clause)-

    71. In the list of newly redesignated sections below, for each 
clause or provision indicated in the left column, remove the reference 
listed in the middle column and insert the reference listed in the 
right column:

------------------------------------------------------------------------
      Clause/provision               Remove                Insert       
------------------------------------------------------------------------
52.211-1-...................  10.011(a)-..........  11.203(a)           
52.211-2-...................  10.011(b)-..........  11.203(b)           
52.211-3-...................  10.011(c)-..........  11.203(c)           
52.211-4-...................  10.011(d)-..........  11.203(d)           
52.211-5-...................  10.011(e)-..........  11.203(e)           
52.211-6-...................  10.011(f)-..........  11.203(f)           
52.211-7-...................  10.011(g)-..........  11.203(g)           
[[Page 11217]]
                                                                        
52.211-8-...................  12.104(a)(2)-.......  11.404(a)(2)        
52.211-9-...................  12.104(a)(3)-.......  11.404(a)(3)        
52.211-10-..................  12.104(b)-..........  11.404(b)           
52.211-11-..................  12.204(a)-..........  11.504(a)           
52.211-11-..................  12.202 -............  11.502(b)           
52.211-12-..................  12.204(b)-..........  11.504(b)           
52.211-13-..................  12.204(c)-..........  11.504(c)           
52.211-14-..................  12.304(a)-..........  11.604(a)           
52.211-15-..................  12.304(b)-..........  11.604(b)           
52.211-16-..................  12.403(a)-..........  11.703(a)           
52.211-17-..................  12.403(b)-..........  11.703(b)           
52.211-18-..................  12.403(c)-..........  11.703(c)           
52.242-14-..................  12.505(a)-..........  42.1305(a)          
52.242-15-..................  12.505(b)-..........  42.1305(b)          
52.242-16-..................  12.505(c)-..........  42.1305(c)          
52.242-17-..................  12.505(d)-..........  42.1305(d)          
------------------------------------------------------------------------

  -72. Section 52.244-xx is added to read as follows:


52.244-XX  Subcontracts for Commercial Items and Commercial Components 
-

    As prescribed in 44.403, insert the following clause:

Subcontracts for Commercial Items and Commercial Components (Date)-

    (a) Definition. -
    Commercial item, as used in this clause, has the meaning 
contained in the clause at 52.202-1, Definitions.
    Subcontract, as used in this clause, includes a transfer of 
commercial items between divisions, subsidiaries, or affiliates of 
the Contractor or subcontractor.
    (b) To the maximum extent practicable, the Contractor shall 
incorporate, and require its subcontractors at all levels to 
incorporate, commercial items or nondevelopmental items other than 
commercial items, as components of items to be supplied under this 
contract.
    (c) If in awarding a subcontract for commercial items, an 
exception under 15.804-1(a) does not apply, the subcontractor may be 
required to submit cost or pricing data and comply with the 
appropriate clauses prescribed in FAR part 15.
    (d) Notwithstanding any other clause of this contract, the 
Contractor is not required to include any FAR provision or clause, 
other than those listed below and as may be required by paragraph 
(c) of this clause, in a subcontract for commercial items or 
commercial components: [list to be published in the Federal Register 
in a future proposed rule under FAR case 94-791]
    (e) The Contractor shall include the terms of this clause, 
including this paragraph (e), in subcontracts awarded under this 
contract.

(End of clause)

PART 53--FORMS-

    73. Section 53.212 is added to read as follows:


53.212  Acquisition of commercial items.

    SF XXXX (XX/95), Solicitation/Contract/Order for Commercial Items. 
SF XXXX is prescribed for use in solicitations and contracts for 
commercial items. Agencies may prescribe additional detailed 
instructions for use of the form.


53.301  [Amended]

    74. Section 53.301-xxxx is added to read as follows:
    SF XXXX (xx/95), Solicitation/Contract/Order for Commercial Items.

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[FR Doc. 95-4535 Filed 2-28-95; 8:45 am]
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