[Federal Register Volume 60, Number 81 (Thursday, April 27, 1995)]
[Proposed Rules]
[Pages 20663-20668]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-10262]



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DEPARTMENT OF ENERGY

48 CFR Part 970

[Regulation Identifier Number 1991-AB20]


Acquisition Regulation; Department of Energy Management and 
Operating Contracts

AGENCY: Department of Energy.

ACTION: Amendment of a notice of proposed rulemaking.

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SUMMARY: The Department of Energy (DOE) today amends its March 2, 1995, 
notice of proposed rulemaking (60 FR 11646) which proposed amendments 
to the DOE Acquisition Regulation (DEAR) provisions applicable to 
subcontracting by management and operating contractors. Today's 
amendments do not affect the principal provisions of the proposal which 
are: Substitution of more commercial-like subcontracting objectives, 
expectations, and standards for the so-called ``Federal norm'' that, in 
effect, requires DOE's management and operating contractors to follow 
certain Federal-oriented prescribed procedures in their award of 
subcontracts; and elimination of the reference concerning General 
Accounting Office protest jurisdiction over such subcontract awards. 
Rather, this amendment of the earlier notice deals with administrative 
matters, mostly technical, that DOE reserved for further analysis and 
action during the public comment period. DOE today amends its notice of 
proposed rulemaking to redesignate most of the requirements of DEAR 
970.7104 to two other subsections of the DEAR and to eliminate certain 
of them. The amendment also moves two paragraphs previously set forth 
in DEAR 970.7104 to another existing subsection.

DATES: Written comments on this amended notice of proposed rulemaking 
must be received on or before May 30, 1995. Comments on today's 
amendment should be submitted separately from those related to the 
March 2, 1995, notice of proposed rulemaking. This is necessary as the 
Department may elect to finalize those portions of the March 2 rule, 
which are unaffected by today's amendment, in more than one stage.

ADDRESSES: Comments on the proposed rulemaking should be sent to the 
following address: U.S. Department of Energy, Office of Contractor 
Management and Administration (HR-55), Attention: James J. Cavanagh, 
1000 Independence Avenue SW., Washington, D.C. 20585.

FOR FURTHER INFORMATION CONTACT: James J. Cavanagh, Office of 
Contractor Management and Administration (HR-55), U.S. Department of 
Energy, 1000 Independence Avenue SW., Washington, D.C. 20585; telephone 
202-586-8257.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background.
II. Section-by-Section Analysis.
III. Public Comments.
IV. Procedural Requirements.

I. Background

    On March 2, 1995, DOE published in the Federal Register (60 FR 
11646) a notice of proposed rulemaking. That notice proposed to amend 
the DEAR to modify requirements for management and operating contractor 
purchasing systems. Principally, DEAR subpart 970.71 is being amended 
to identify certain purchasing system objectives and standards, 
eliminate the application of the ``Federal norm,'' place greater 
reliance on commercial practices, and remove the provisions concerning 
General Accounting Office protest jurisdiction over management and 
operating contractor subcontract awards.
    Today's notice does not alter any of the above-described principal 
provisions of the proposed amendments. The main focus of this notice is 
an administrative matter discussed in the Supplementary Information 
section of the March 2 notice and reserved for further analysis and 
action during the comment period. That issue is whether to eliminate 
DEAR Sec. 970.7104.
    The March 2 proposed rulemaking stated:

    Section 970.7104, Conditions of purchasing by management and 
operating contractors, is removed. DOE believes it is not necessary 
to retain this section since many of the requirements comply with 
provisions of statutes and are already reflected in contract 
clauses. These requirements, will therefore, continue to be 
applicable as contractual requirements. Some of the requirements, 
however, are not specifically prescribed in other parts of the DEAR. 
The Department will review such requirements prior to finalization 
of this proposed rule and may redesignate appropriate paragraphs, in 
the final rule, to other parts of the DEAR, if necessary. If such 
requirements are identified, the Department will publish a Federal 
Register notice, prior to issuing a final rule, listing the 
paragraphs being considered for redesignation.

    [[Page 20664]] DOE's analysis showed that, except for seven items 
proposed for deletion as discussed below, most of the provisions of 
Sec. 970.7104 should be retained either in the preaward process or in 
the subcontract document itself. Moreover, DOE has reconsidered the 
desirability of proposing to eliminate the convenient listing of these 
subjects and the clarity that comes with such a listing. Further, 
removing the section could be interpreted incorrectly as proposing to 
eliminate the underlying substantive requirements identified elsewhere. 
Therefore, DOE has chosen instead to propose elimination of seven 
subparagraphs of that section and relocation of most of the subjects 
from Sec. 970.7104 to two contract clauses, thereby removing the 
content of Sec. 970.7104 in its entirety. The amendment proposes no new 
policy and adds no new requirements for a contractor. For the most 
part, the regulatory treatment of each subject has been simplified and 
shortened. For details, see the section-by-section analysis below.

II. Section-by-Section Analysis

    A. In accordance with Section II, paragraph 6 of the notice of 
proposed rulemaking published on March 2, 1995, the Department of 
Energy has performed a detailed review of the subjects covered by DEAR 
970.7104 to determine which requirements should be redesignated in the 
other parts of the DEAR. This amendment to the notice of proposed 
rulemaking reflects the proposed disposition of the provisions of DEAR 
970.7104-1 through 970.7104-47. The redesignation table set forth below 
will graphically reflect this proposed disposition.
    B. The Department has decided that the subjects of 970.7104 which 
are to continue to play a part in the award of subcontracts under DOE 
management and operating contracts fall generally into two categories. 
The first category consists of processes that lead to the award of 
prospective subcontracts, and the second category consists of those 
clauses that should be included in appropriate subcontracts and 
provisions that guide the administration of certain of those clauses. 
As a result of this recognition, this amendment proposes to deal with 
the first category as additions to an existing clause. A new clause is 
proposed to deal with the subjects that comprise the second category.
    C. This amendment proposes to add subjects in the first category to 
the clause currently set forth at 970.5204-22, ``Contractor Purchasing 
System.'' The March 2, 1995, notice of proposed rulemaking proposed to 
change paragraph (a) of 970.5204-22. Today's amendment proposes to 
further amend paragraph (a) to insert the phrase ``this clause, DEAR 
970.5204-XX, and'' in the first sentence. It would also expand the 
content of that clause to cover requirements that directly relate to 
the management and operating contractor's purchasing system and methods 
in the award of subcontracts.
    D. This amendment also proposes to identify subjects in the second 
category in paragraph (b) of a new clause at 970.5204-XX. The purpose 
of that clause would be to continue to provide a convenient listing of 
clauses and related requirements that management and operating 
contractors would be required to include in, or apply to, prospective 
subcontracts. That new clause in its paragraph (a) would contain a 
general instruction directing the inclusion of the listed clauses and, 
where appropriate, the application of attendant regulations governing 
the subject matter of the cited clause. Paragraph (a) would recognize 
that certain of the listed clauses flow down pursuant to the management 
and operating contractor's prime contract with the Department (e.g., 
Employment of the Handicapped). Certain other clauses that would be 
included in appropriate subcontracts either are not included in the 
prime contract (e.g., Service Contract Act) or, if included, do not 
contain a flowdown instruction. For these latter two types of clauses, 
paragraph (a) would instruct the contractor to apply requirements to 
subcontracts in the same manner as the Department does for the award of 
a DOE prime contract which is not a management and operating contract.
    E. For certain subjects, such as termination and indemnification, 
there would be coverage of different aspects of the same subject in 
both of the clauses at 970.5204-22 and at 970.5204-XX.
    F. The following table identifies the new location of each item in 
970.7104 and indicates whether the original requirement for the subject 
provision is based on an Executive Order, Department policy, Federal 
regulation or statute.

----------------------------------------------------------------------------------------------------------------
 Old citation                                                                                                   
     970.-                                 Subject                                   New citation 970.5204-     
----------------------------------------------------------------------------------------------------------------
7104-1........  Contingent Fees (P)..........................................  Deleted.                         
7104-2........  Record Retention (S).........................................  XX(b)(20).                       
7104-3........  Utility Services (P).........................................  22(b).                           
7104-4........  Leasing Property, Plant or Equipment (P).....................  22(q).                           
7104-5........  Leasing of Motor Vehicles (P)................................  22(m).                           
7104-6........  Strategic and Critical Materials (P).........................  22(t).                           
7104-7........  Purchases of Special Items (S/R/P)...........................  22(p).                           
7104-8........  Purchasing Alternative Determinations (P)....................  22(q).                           
7104-9........  Qualification Requirements (P)...............................  Deleted.                         
7104-10.......  Organization Conflicts of Interest (S).......................  XX(b)(16).                       
7104-11.......  Cost or Pricing Data (S).....................................  XX(b)(5).                        
7104-12.......  Small Business and Small Disadvantaged Business Concerns (S).  XX(b)(23) and 970.1901.          
7104-13.......  Labor Surplus Concerns (P)...................................  Deleted.                         
7104-14.......  Convict Labor (P)............................................  Deleted.                         
7104-15.......  Contract Work Hours and Safety Standards Act (S).............  XX(b)(4).                        
7104-16.......  Davis-Bacon Labor Standards for Construction (S).............  XX(b)(8).                        
7104-17.......  Walsh-Healey (P).............................................  Deleted.                         
7104-18.......  Equal Employment Opportunity (E).............................  XX(b)(11).                       
7104-19.......  Service Contract Act (S).....................................  XX(b)(22).                       
7104-20.......  Vietnam Vets (S).............................................  XX(b)(24).                       
7104-21.......  Environmental & Occupational Safety & Health (S/P)...........  XX(b)(10).                       
7104-22.......  Buy American (S).............................................  22(g).                           
7104-23.......  Patents, Data and Copyrights (S/P)...........................  XX(b)(17).                       
7104-24.......  Bonds & Insurance (S/P)......................................  22(f).                           
7104-25.......  Indemnification (S/P)........................................  22(l) and XX(b)(14).             
[[Page 20665]]                                                                                                  
                                                                                                                
7104-26.......  Taxes (P)....................................................  XX(b)(25).                       
7104-27.......  Audit of Subcontractors (S/R/P)..............................  22(e).                           
7104-28.......  Construction & A-E conflict-of-interest (P)..................  22(h).                           
7104-29.......  Quality Assurance (P)........................................  22(r).                           
7104-30.......  Termination (P)..............................................  22(v) and XX(b)(26).             
7104-31.......  Authorization of Subcontractors' Use of Government Supply      Deleted.                         
                 Sources (P).                                                                                   
7104-32.......  Safeguarding Classified Information (S)......................  XX(b)(21).                       
7104-33.......  Cost Accounting Standards (S)................................  XX(b)(7).                        
7104-34.......  Clean Air & Water (S/R)......................................  XX(b)(3).                        
7104-35.......  Air Transportation by U.S. Flag Carriers (S).................  XX(b)(1).                        
7104-36.......  Acquisition of Real Property (S/P)...........................  22(c).                           
7104-37.......  Management, Acquisition and use of Information Resources (P).  22(n).                           
7104-38.......  Privacy Act (R)..............................................  XX(b)(19).                       
7104-39.......  Officials Not To Benefit (P).................................  Deleted.                         
7104-40.......  Subcontractors' Reporting Systems (P)........................  XX(b)(6).                        
7104-41.......  Employment of the Handicapped (S)............................  XX(b)(9).                        
7104-42.......  Unclassified Controlled Nuclear Information (R)..............  22(w).                           
7104-43.......  Government Property (S/R)....................................  22(k).                           
7104-44.......  Foreign Travel (P)...........................................  XX(b)(13).                       
7104-45.......  Anti-Kickback (S)............................................  XX(b)(2).                        
7104-46.......  Setoff of Assigned Subcontractor Proceeds (P)................  22(s).                           
7104-47.......  Additional Flowdown and Extension Provisions.................  .................................
                  --Exam. of records by Comptroller General (S)..............  XX(b)(12).                       
                  --Accts Records and Inspection (S/P).......................  XX(b)(20).                       
                  --Printing (P).............................................  XX(b)(18).                       
                  --Priorities (S/R).........................................  22(o).                           
----------------------------------------------------------------------------------------------------------------
(E)=Executive Order.                                                                                            
(P)=Policy.                                                                                                     
(R)=Regulation.                                                                                                 
(S)=Statute.                                                                                                    

    G. The substance of the material related to Small Business and 
Small Disadvantaged Business Concerns cited in DEAR Subpart 970.7104-
12, paragraphs (a), (b), (c) and (d) have been relocated in DEAR Part 
970.1901, paragraphs (c) and (d).
    H. From DEAR 970.7104, it is proposed to delete seven subsections 
as identified and for the reasons set forth in the following table:

------------------------------------------------------------------------
 Old citation                                                           
     970.-               Subject                Reason for deletion     
------------------------------------------------------------------------
7104-1........  Contingent Fees..........  These subject matters have   
                                            been incorporated into      
                                            appropriate subcontracts of 
                                            management and operating    
                                            (M&O) contracts as a matter 
                                            of DOE policy. Because it   
                                            has been decided that these 
                                            subject matters should be   
                                            handled in the same manner  
                                            as for subcontracts under   
                                            non-M&O cost-reimbursement  
                                            contracts, flowdown is no   
                                            longer required.            
7104-9........  Qualification              .............................
                 Requirements                                           
7104-14.......  Convict Labor              .............................
7104-17.......  Walsh-Healy Public         .............................
                 Contracts Act                                          
7104-39.......  Officials Not to Benefit                                
7104-13.......  Labor Surplus Area         The preference of the Federal
                 Concerns.                  procurement system that this
                                            subsection reflected has    
                                            been substantially altered  
                                            by section 7101 of the      
                                            Federal Acquisition         
                                            Streamlining Act of 1994.   
7104-31.......  Authorization for          The authority for contracting
                 Subcontractors' Use of     officers to allow management
                 Government Supply          and operating contractor    
                 Sources..                  subcontract level access to 
                                            Government supply sources   
                                            exists at DEAR 970.51.      
------------------------------------------------------------------------

    I. This amendment to the March 2, 1995, notice of proposed 
rulemaking will also redesignate the substance of 970.7103, paragraph 
(c)(7) to 970.5204-22(e)(4) to make clear that the contractor is 
required to determine the allowability of subcontractor reimbursable 
costs in accordance with 48 CFR (FAR) part 31.
    J. Conforming amendments will be made to 970.5204-21, -5204-24, -
5204-45, and -5204-50 to remove references to text proposed to be 
deleted.

III. Public Comments

    DOE invites interested persons to participate by submitting data, 
views, or arguments with respect to the DEAR amendments set forth in 
this rule. Three copies of written comments should be submitted to the 
address indicated in the ADDRESSES section of this rule. All comments 
received will be available for public inspection during normal work 
hours. All written comments received by the date indicated in the DATES 
section of this notice will be carefully assessed and fully considered 
prior to the effective date of these amendments as a final rule. Any 
information considered to be confidential must be so identified and 
submitted in writing, one copy only. DOE reserves the right to 
[[Page 20666]] determine the confidential status of the information and 
to treat it according to its determination in accordance with 10 CFR 
1004.11.

IV. Procedural Requirements

    The procedural requirements discussed in section IV of the 
Supplementary Information of the March 2, 1995, notice of proposed 
rulemaking (60 FR 11646) apply as well to this amendment of proposed 
rulemaking.

List of Subjects in 48 CFR Parts 933 and 970

    Government procurement.

    Issued in Washington, D.C. on April 20, 1995.
Richard H. Hopf,
Deputy Assistant Secretary for Procurement and Assistance Management.
    For the reasons set forth in the preamble, chapter 9 of title 48 of 
the Code of Federal Regulations is proposed to be amended as set forth 
below.

PART 970--DOE MANAGEMENT AND OPERATING CONTRACTS

    1. The authority citation for part 970 continues to read as 
follows:

    Authority: Sec. 161 of the Atomic Energy Act of 1954 (42 U.S.C. 
2201), sec. 644 of the Department of Energy Organization Act, Pub. 
L. 95-91 (42 U.S.C. 7254), sec 201 of the Federal Civilian Employee 
and Contractor Travel Expenses Act of 1985 (41 U.S.C. 420) and sec. 
1534 of the Department of Defense Authorization Act, 1986, Pub. L. 
99-145 (42 U.S.C. 7256a), as amended.

    2. At 970.1901 add paragraphs (c) and (d) as follows:


970.1901  General.

* * * * *
    (c) Contractors may provide in their purchasing systems and methods 
for the setting aside of requirements for small disadvantaged 
businesses, provided there are sufficient qualified entities available 
to assure effective competition, and provided that the cost or price of 
the successful offer is found by the contractor to be fair and 
reasonable.
    (d) In pursuit of the objective of contractor purchasing of a fair 
proportion of supplies and services from small business concerns, small 
disadvantaged business concerns and woman-owned business concerns, the 
HCA may authorize the use of innovative means after receipt of proper 
approval by the Procurement Executive and the DOE Office of Small and 
Disadvantaged Business Utilization.


970.5204-21  Property.

    3. At 970.5204-21, Property, remove the phrase ``As prescribed in 
970.7104-43,'' from the introductory text.
    4. At 970.5204-22, the clause ``Contractor Purchasing System'' is 
revised to read as follows:


970.5204-22  Contractor purchasing system.

* * * * *

Contractor Purchasing System (month year TBE)

    (a) General. The contractor shall develop, implement, and 
maintain formal policies, practices, and procedures to be used in 
the award of subcontracts consistent with this clause, 48 CFR (DEAR) 
970.5204-XX, and 48 CFR (DEAR) 970.71. The contractor's purchasing 
system and methods shall be fully documented, consistently applied, 
and acceptable to DOE in accordance with 48 CFR (DEAR) 970.7102. The 
contractor's purchasing performance will be evaluated against 
agreed-upon criteria in accordance with the performance criteria and 
measures clause(s) set forth elsewhere in this contract. DOE 
reserves the right at any time to require that the contractor submit 
for approval any or all purchases under this contract. The 
contractor shall not purchase any item or service the purchase of 
which is expressly prohibited by the written direction of DOE and 
shall use such special and directed sources as may be expressly 
required by the DOE contracting officer.
    (b) Acquisition of Utility Services. Utility services shall be 
acquired in accordance with the requirements of 48 CFR (DEAR) 
970.0803.
    (c) Acquisition of Real Property. The contractor shall contract 
for real property in accordance with 48 CFR (DEAR) Subpart 917.74.
    (d) Advance Notice of Proposed Subcontract Awards. The 
contractor shall provide advance notice of proposed subcontract 
awards in accordance with 48 CFR (DEAR) 970.7109; shall document 
purchases in writing; and shall establish and maintain subcontract 
files which present an accurate and adequate record of all 
purchasing transactions.
    (e) Audit of Subcontractors.
    (1) The contractor shall assure that its purchasing systems and 
methods provide for: (i) periodic post-award audit of cost-
reimbursement subcontractors at all tiers, and (ii) audits, where 
necessary, to provide a valid basis for pre-award or cost or price 
analysis.
    (2) Responsibility for determining the costs allowable under 
each cost-reimbursement subcontract remains with the contractor or 
next higher-tier subcontractor. Contractors' purchasing systems and 
methods shall provide, in appropriate cases, for the timely 
involvement of the contractor and the DOE contracting officer in 
resolution of subcontract cost allowability.
    (3) Where audits of subcontractors of any tier are required, 
arrangements may be made to have the cognizant Federal agency 
perform the audit of the subcontract. These arrangements shall be 
made administratively between DOE and the other agency involved and 
shall provide for the cognizant agency to audit in an appropriate 
manner in light of the magnitude and nature of the subcontract.
    (4) Allowable costs for cost reimbursable subcontracts are to be 
determined in accordance with the cost principles of 48 CFR (FAR) 
part 31, appropriate for the type of organization to which the 
subcontract is to be awarded, as supplemented by 48 CFR (DEAR) part 
931. Allowable costs in the purchase or transfer from contractor-
affiliated sources shall be determined in accordance with 48 CFR 
(DEAR) 970.7105 and 48 CFR (DEAR) 970.3102-15(b). In no case, 
however, shall these arrangements preclude determination by the DOE 
contracting officer of the allowability or unallowability of 
subcontractor costs claimed for reimbursement by the contractor.
    (f) Bonds and Insurance.
    (1) The contractor shall obtain from a subcontractor a payment 
bond on Standard Form 25A, modified to name the contractor as well 
as the United States of America as obligees, for all fixed price, 
unit-price and cost-reimbursement construction subcontractors in 
excess of $25,000. The penal amounts shall be determined as set 
forth in 48 CFR (FAR) 28.102-2(b).
    (2) The contractor may accept more than one corporate surety 
upon recognizance, stipulation, bond, or undertaking in both 
construction and other contracts, provided that in no case will the 
liability of any co-surety exceed the maximum penal sum for which it 
is qualified for any one obligation. For subcontracts other than 
construction, a co-surety may reinsure amounts in excess of its 
capacity with a corporate surety having the required underwriting 
capacity that appears on the acceptable list of corporate sureties. 
No such reinsurance is acceptable in connection with construction 
subcontracts. Corporate co-sureties may individually obligate 
themselves for a definite sum less than the full amount of the bond; 
however, all such obligations must total the entire amount of the 
bond and each co-surety must bind itself ``jointly and severally'' 
for the purpose of allowing a joint action or actions against any or 
all of the corporate sureties.
    (g) Buy American. The contractor shall comply with the 
provisions of the Buy American Act as reflected in 48 CFR (FAR) 
52.225-3, as amended by 48 CFR (DEAR) 970.5203-3.
    (h) Construction and Architect-Engineer Contracts.
    (1) Independent Estimates. A detailed, independent estimate of 
costs shall be prepared for all construction work to be 
subcontracted.
    (2) Specifications. Specifications for construction shall be 
prepared in accordance with the DOE publication entitled ``General 
Design Criteria Manual.''
    (3) Prevention of Conflict of Interest.
    (i) The contractor shall not award a contract for construction 
to the architect-engineer firm or an affiliate that prepared the 
design. This prohibition does not preclude the award of a 
``turnkey'' contract so long as the subcontractor assumes all 
liability for defects in design and construction and consequential 
damages.
    (ii) The contractor shall not award both a cost-reimbursement 
contract and a fixed- [[Page 20667]] price contract for construction 
or architect-engineer services or any combination thereof to the 
same firm where those contracts will be performed at the same site.
    (iii) The contractor shall not employ the construction 
subcontractor or an affiliate to inspect the firm's work. The 
contractor shall assure that the working relationships of the 
construction subcontractor and the subcontractor inspecting its work 
and the authority of the inspector are clearly defined.
    (i) Contractor-Affiliated Sources. Purchase or transfer of 
equipment, materials, supplies, or services from a contractor-
affiliated source shall be treated in accordance with 48 CFR (DEAR) 
970.7105.
    (j) Contractor-Subcontractor Relationship. The obligations of 
the contractor under paragraph (a) of this clause, including the 
development of the purchasing system and methods, and purchases made 
pursuant thereto, shall not relieve the contractor of any obligation 
under this contract (including, among other things, the obligation 
to properly supervise, administer, and coordinate the work of 
subcontractors). Subcontracts shall be in the name of the 
contractor, and shall not bind or purport to bind the Government.
    (k) Government Property. The contractor's purchasing system and 
methods for the identification, inspection, maintenance, protection, 
and disposition of Government property shall conform with the 
policies and principles of 48 CFR (FAR) part 45, 48 CFR (DEAR) part 
945, the Federal Property Management Regulations, the DOE Property 
Management Regulations, and their contracts.
    (l) Indemnification. No subcontractor may be otherwise 
indemnified except with the prior approval of the Procurement 
Executive.
    (m) Leasing of Motor Vehicles. Contractors shall abide by 48 CFR 
(FAR) 8.11 and 48 CFR (DEAR) 908.11.
    (n) Management, Acquisition and Use of Information Resources. 
The contractor shall provide in its purchasing system and methods, 
with regard to the purchase of automatic data processing resources 
and telecommunications facilities, services, and equipment, for 
review and approval of requirements in ways that conform to the 
procedures contained in applicable DOE Directives (Orders and 
Notices).
    (o) Priorities, Allocations and Allotments. The contractor shall 
provide in its purchasing system and methods for the extension to 
appropriate subcontracts of priorities, allocations and allotments 
in accordance with the clause or clauses of this contract dealing 
with priorities and allocations.
    (p) Purchase of Special Items. Purchase of the following items 
shall be in accordance with the following provisions of 48 CFR 
(DEAR) subpart 908.71 and the Federal Property Management 
Regulations, as shown:

(1) Motor vehicles
908.7101
(2) Aircraft
908.7102
(3) Security Cabinets
908.7106
(4) Alcohol
908.7107
(5) Helium
908.7108
(6) Fuels and packaged petroleum products
908.7109
(7) Coal
908.7110
(8) Arms and Ammunition
908.7111
(9) Heavy Water
908.7121(a)
(10) Precious Metals
908.7121(b)
(11) Lithium
908.7121(c)
(12) Products and services of the blind and severely handicapped
FPMR 41 CFR 101-26.701
(13) Products made in Federal penal and correctional institutions
FPMR 41 CFR 101-26.702

    (q) Purchase vs. Lease Determinations. The contractor shall 
provide for a system to determine whether required equipment and 
property should be purchased or leased. The system shall establish 
appropriate thresholds for application of lease vs. purchase 
determinations and shall be used in making such determinations: (1) 
at time of original acquisition; (2) when lease renewals are being 
considered; and (3) at other times as circumstances warrant.
    (r) Quality Assurance. The contractor shall provide no less 
protection for the Government in its subcontracts than is provided 
in the prime contract.
    (s) Setoff of Assigned Subcontractor Proceeds. The contractor 
shall provide that in cases in which a subcontractor has been 
permitted to assign payments to a financial institution, the 
assignment shall treat any right of setoff in accordance with 48 CFR 
(DEAR) 932.803.
    (t) Strategic and Critical Materials. The contractor may use 
strategic and critical materials and shall fulfill its requirements 
in accordance with 48 CFR (FAR) 8.002.
    (u) Suspended, Debarred or Ineligible Contractors. Proposed 
awards to firms or individuals on the GSA Consolidated List of 
Debarred, Suspended and Ineligible Contractors shall be forwarded to 
DOE for approval notwithstanding any prior purchasing system 
acceptance.
    (v) Termination. When subcontracts are terminated as a result of 
the termination of all or a portion of this contract, the contractor 
shall settle with subcontractors in conformity with the policies and 
principles relating to settlement of prime contracts in 48 CFR (FAR) 
subparts 49.1, 49.2 and 49.3. When subcontracts are terminated for 
reasons other than termination of this contract, the contractor 
shall settle such subcontracts in general conformity with the 
policies and principles in 48 CFR (FAR) subparts 49.1, 49.2, 49.3 
and 49.4. Each such termination shall be documented and consistent 
with the terms of this contract. Terminations which require approval 
by the Government shall be supported by accounting data and other 
information as may be directed by the contracting officer.
    (w) Unclassified Controlled Nuclear Information. In its 
purchasing system and methods, the contractor shall provide for the 
treatment of unclassified uncontrolled nuclear information to be 
handled in accordance with 10 CFR part 1017.


970.5204-24  Subcontractor cost or pricing data.

    5. At 970.5204-24, Subcontractor cost or pricing data, remove the 
phrase ``As prescribed in 970.7104-11,'' from the introductory text.


970.5204-45  Termination.

    6. At 970.5204-45, Termination, remove the phrase ``As prescribed 
in 970.7104-30,'' from the introductory text.


970.5204-50  Cost and schedule control systems.

    7. At 970.5204-50, Cost and schedule control systems, remove the 
phrase ``As prescribed in 970.7104-40,'' from the introductory text.
    8. Add new subsection 970.5204-XX, Flowdown of contract 
requirements to subcontracts, to read as set forth below:


970.5204-XX  Flowdown of contract requirements to subcontracts.

    Insert the following clause.

    Flowdown of Contract Requirements to Subcontracts (month year 
TBE).
    (a) The contractor shall include the clauses in paragraph (b) of 
this clause in appropriate subcontracts.
    (1) To the extent that the clause is included in this prime 
contract, the contractor shall comply with that portion of the 
clause that directs application to subcontracts.
    (2) To the extent that the clause is not included in this prime 
contract, or where it is included, but there is no instruction for 
treatment in subcontracts, the contractor shall include the clause 
in accordance with applicable regulatory guidance which would apply 
if the subcontract were a prime contract with the Federal 
government.
    (3) In all cases, where a regulation is cited, the contractor 
shall comply with the regulation in administration of the related 
clause.
    (b) Clauses and related regulations.
    (1) Air transportation by U.S.-flag carriers. Clause at 48 CFR 
(FAR) 52.247-63.
    (2) Anti-Kickback Act of 1986. Clause at 48 CFR (FAR) 52.203-7.
    (3) Clean Air and Water. Clause at 48 CFR (FAR) 52.223-2, and 
follow the requirements of 48 CFR (FAR) 23.1.
    (4) Contract Work Hours and Safety Standards Act. Clause at 48 
CFR (FAR) 52.222-4, and follow the requirements of 48 CFR (FAR) 
22.3.
    (5) Cost or Pricing Data. Clause at 48 CFR (DEAR) 970.5204-24.
    (6) Cost and Schedule Control Systems. Clause at 48 CFR (DEAR) 
970.5204-50.
    (7) Cost Accounting Standards. Clause at 48 CFR (FAR) 52.230-2, 
as prescribed in 48 CFR (DEAR) 970.30.
    (8) Davis-Bacon Act. Clauses as directed at 48 CFR (FAR) 22.407, 
and follow the requirements of 48 CFR (FAR) 22.4 to the same extent 
that they would apply if the subcontract had been directly awarded 
by DOE. 48 CFR (DEAR) Subpart 922.4 and 48 CFR (DEAR) 970.2273 
provide guidance to assist in determining the applicability of these 
regulations.
    (9) Employment of the Handicapped. Clause at 48 CFR (FAR) 
52.222-36, and follow the requirements of 48 CFR (FAR) 22.14.
    (10) Environmental and Occupational Safety and Health. Clauses 
as prescribed in 48 CFR (DEAR) 970.2303-2. [[Page 20668]] 
    (11) Equal Employment Opportunity. Clauses as prescribed in 48 
CFR (FAR) 22.810, as applicable, and follow the requirements of 48 
CFR (FAR) 22.8, 48 CFR (DEAR) 922.8, E.O. 11246 and 40 CFR part 60.
    (12) Examination of Records by Comptroller General. Clause at 48 
CFR (FAR) 52.215-1.
    (13) Foreign Travel. Clause at 48 CFR (DEAR) 970.5204-52.
    (14) Nuclear Hazards Indemnity. Clause at 48 CFR (DEAR) 
970.2870.
    (15) Officials Not To Benefit. Clause at 48 CFR (FAR) 52.203-1.
    (16) Organizational Conflicts of Interest. Clause at 48 CFR 
(DEAR) 952.209-72.
    (17) Patent, Data and Copyrights. Appropriate clauses as 
required by 48 CFR (DEAR) parts 927 and 970.
    (18) Printing. Clause at 48 CFR (DEAR) 970.5204-19.
    (19) Privacy Act. Clauses at 48 CFR (FAR) 52.224-1 and 48 CFR 
(FAR) 52.224-2, and follow the requirements of 48 CFR (FAR) 24.1.
    (20) Record Retention. Clause at 48 CFR (DEAR) 970.5204-9.
    (21) Safeguarding Classified Information. Appropriate clauses as 
prescribed at 48 CFR (DEAR) 970.0404.
    (22) Service Contract Act. Clauses at 48 CFR (FAR) 52.222-40 and 
48 CFR (FAR) 52.222-41.
    (23) Small Business and Small Disadvantaged Business Concerns. 
Clause at 48 CFR (FAR) 52.219-9.
    (24) Special Disabled and Vietnam Era Veterans. Clause at 48 CFR 
(FAR) 52.222-35, and follow the requirements of 48 CFR (FAR) Subpart 
22.13.
    (25) Taxes. Clause at 48 CFR (DEAR) 970.5204-23.
    (26) Termination. Appropriate clause or clauses as set forth at 
48 CFR (FAR) 52.249-1 through 52.249-14.
    (c) Other. Errors in or omissions from the above DOE-compiled 
listing of contract requirements requiring flowdown to appropriate 
subcontracts shall not be construed as waiving a requirement for the 
contractor to comply with a requirement for subcontracts appearing 
elsewhere in this contract or a requirement for subcontracts as 
required by law. Such errors or omissions shall not form the basis 
for a defense by the contractor in a legal or administrative 
proceeding.

[FR Doc. 95-10262 Filed 4-26-95; 8:45 am]
BILLING CODE 6450-01-P