[Federal Register Volume 60, Number 180 (Monday, September 18, 1995)]
[Rules and Regulations]
[Pages 48231-48258]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-22778]



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DEPARTMENT OF DEFENSE
48 CFR Parts 2, 3, 5, 6, 7, 8, 9, 10, 11, 12, 14, 15, 16, 22, 23, 
31, 36, 42, 44, 46, 47, 49, 52, and 53

[FAC 90-32; FAR Case 94-790; Item III]
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: Final rule.

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SUMMARY: This final rule is issued pursuant to the Federal Acquisition 
Streamlining Act of 1994 to implement the revised statutory authorities 
in Title VIII of the Act 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.

EFFECTIVE DATE: October 1, 1995.
    Applicability date: For solicitations issued on or after October 1, 
1995; use of the new policies, provisions and clauses is optional for 
solicitations issued before December 1, 1995, and mandatory for 
solicitations issued after December 1, 1995.

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 FAC 90-32, 
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. This notice 
announces 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 most significant 
revisions are in the following FAR parts:
    Part 2 has been amended to incorporated 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.
    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.
    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 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.
    Part 12 has been completely revised to address the acquisition of 
commercial items. The Team created this entirely new coverage to 
address in one FAR part the policies for the acquisition of commercial 
items.

--Subpart 12.1 states that the policies in the revised 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 Part 12;
--Subpart 12.2 identifies special requirements for the acquisition of 
commercial items. These requirements generally reflect the requirements 
of Title VIII.
--Subpart 12.3 establishes standard provisions and clauses for use in 
the acquisition of commercial items. This approach is essential to meet 
the requirements of the statute and provide contracting officers and 
industry with an easy to use, simplified method for acquiring 
commercial items. However, it is essential that contracting officers be 
allowed to tailor solicitations and contracts to meet the needs of the 
particular acquisition and the marketplace 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 limitations be placed on this 
authority to tailor, and that has also been accommodated in this 
subpart.
--A new form, the Standard Form 1449, Solicitation/Contract/Order for 
Commercial Items, was established.

[[Page 48232]]

The SF 1449 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 1449 to document receipt of the supplies or services by the 
government avoiding the need for preparation of separate receipt/
acceptance forms.
--Subpart 12.5 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.
--Section 12.503 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 12.503 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.
--Section 12.504 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.
--Subpart 12.6 identifies two streamlined procedures for the evaluation 
and solicitation of contracts for commercial items. These procedures 
may be used at the discretion of the contracting officer.
    Part 52 has been amended to include several new provisions and 
clauses to be inserted in all solicitations and contracts for the 
acquisition of commercial items:

--Section 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.
--Section 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 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 relative order of importance for 
each acquisition.
--Section 52.212-3, Offeror Representations and Certifications--
Commercial Items, includes the certifications and representations 
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.
--Section 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-like practices.
--Section 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 and Executive orders. 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 
the clause as applying to subcontracts for commercial items.
--Section 52.244-6, Subcontracts for Commercial Items and Commercial 
Components, implements the preference for the acquisition of commercial 
items or nondevelopmental 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.
B. Regulatory Flexibility Act
    This final rule 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 Part 11, it includes certain 
modifications to existing items, and includes certain commercial 
services. In all these 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 marketplace to acquire them. 
The rule also cautions contracting officers not to request potential 
sources to submit more than the minimum information necessary as a part 
of market research.
    (3) It establishes a 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 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;

[[Page 48233]]

    (6) It allows contracting officers the flexibility to use either 
the streamlined solicitation procedure in the revised Subpart 12.6 for 
acquiring commercial items, or the existing procedures in Parts 13, 14 
or 15, as applicable, 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, except in unique circumstances, that the 
Government rely on 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 use the solicitation provisions and contract 
clauses specifically established for acquiring commercial items. The 
contracting officer may tailor those provisions and clauses when the 
customary practices in the market dictate the use of other terms and 
conditions or when a waiver is approved; 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.
    A Final Regulatory Flexibility Analysis (FRFA) has been prepared 
and will be provided to the Chief Counsel for Advocacy for the Small 
Business Administration. A copy of the FRFA may be obtained from the 
FAR Secretariat.
C. Paperwork Reduction Act
    The Paperwork Reduction Act (Pub. L. 96-511) is deemed to apply 
because the final rule contains information collection requirements. 
Accordingly, a request for approval of a new information collection 
requirement concerning Acquisition of Commercial Items was submitted to 
the Office of Management and Budget and approved through OMB Control 
No. 9000-0136. Public comments concerning this request were invited in 
a Federal Register notice at 60 FR 11219, March 1, 1995.
D. Public Comments
    Title VIII of the Act makes significant statutory revisions to 
facilitate the acquisition of commercial items and components by 
Federal Government agencies, as well as contractors and subcontractors 
at all levels. This final rule incorporates revisions to two proposed 
rules resulting from a public meeting held on April 3, 1995, and 
written comments received in response to publication of the two 
proposed rules in the Federal Register. The first proposed rule was 
published in the Federal Register on March 1, 1995 (60 FR 11198), under 
FAR case 94-790. That proposed rule made changes throughout the FAR to 
incorporate provisions of Title VIII. The second proposed rule was 
published in the Federal Register on March 22, 1995 (60 FR 15220), 
under FAR case 94-791. That case contained the list of laws required by 
Section 8003(a) of the Act that were determined to be inapplicable to 
Executive agency contracts and subcontracts for commercial items. FAR 
case 94-791 also contained the list of contract clauses determined to 
be applicable to subcontracts for the acquisition of commercial items. 
On April 4, 1995, a correction to the proposed rule under FAR case 94-
791 was published in the Federal Register (60 FR 17184), to correct 
section 52.212-5 to include access to contractor records by the 
Comptroller General of the United States for contracts awarded using 
other than sealed bidding in excess of the simplified acquisition 
threshold.
    A total of 559 written comments were received on the proposed rule 
from 60 commentors. Each comment was analyzed by the Commercial Items 
Drafting Team and, where appropriate, changes were made in the proposed 
FAR language as reflected in this final rule. The comments largely fell 
in the following general areas:
1. Definitions of Commercial Items and Nondevelopmental Item
    The language describing a ``minor'' modification was revised to 
clarify the intent. The revised language was drawn from a related 
Congressional report. The definition of nondevelopmental items was also 
clarified to alleviate confusion regarding what commentors identified 
as the ``circular logic'' of commercial items being a subset of 
nondevelopmental items, and certain nondevelopmental items being a 
subset of commercial items. The revision clarifies the distinction 
between commercial items and nondevelopmental items. Several commentors 
asked that specific examples of items that would be considered 
``commercial'' be included in the definition. The Team rejected this 
suggestion citing the impossibility of developing examples that would 
adequately describe the range of commercial items the government might 
buy while not unnecessarily limiting the breadth of the definition.
2. Decision to Utilize Commercial Items Authority
    Several commentors expressed confusion over how the Government 
would decide when the commercial items authorities in Part 12 could be 
used. FAR 10.002 was revised to include language explaining the 
decision process that would follow the completion of market research.
3. Market Acceptance
    Several commentors were concerned with the lack of sufficient 
guidance on market acceptance. Several changes were made in an effort 
to balance the concerns expressed by the public and those expressed by 
Government agencies. The final rule clarifies the circumstances where 
market acceptance may be appropriate, cautions that it is not 
appropriate when new or evolving commercial items may meet the agency's 
needs, and contains guidance on developing criteria for demonstrating 
market acceptance.
4. Relationship of Part 12 to Other FAR Parts
     Several commentors expressed confusion over the relationship of 
Part 12 to other Parts, especially Part 13, Simplified Acquisition 
Procedures; Part 14, Sealed Bidding; and Part 15, Contracting By 
Negotiation. FAR 12.203 was revised to clarify that Part 12 contains 
unique policies for the acquisition of commercial items. These unique 
policies are intended to be used in conjunction with the existing 
procedures contained in Parts 13, 14, and 15 for the solicitation, 
evaluation, and award of contracts, purchase orders and other 
instruments. Part 12 will take precedence over other FAR parts only 
where the policies in those parts are inconsistent.
5. Use of the Standard Form (SF) 1449
    Several commentors questioned the rationale for requiring the use 
of the new SF 1449 for all acquisitions of commercial items. The SF 
1449 was specifically developed in conjunction with the provisions and 
clauses developed for the acquisition of commercial items. The SF 1449 
and the prescribed provisions and clauses are designed to complement 
each other in several respects. Forms currently prescribed in the FAR 
contain references to FAR provisions and clauses that are not used for 
commercial items, and references to the Uniform

[[Page 48234]]

Contract Format, also not used for acquiring commercial items. Finally, 
the use of a single form throughout the Federal Government for all 
acquisitions of commercial items will aid those offerors that will, as 
a result of the publication of this rule, seek to do business with the 
Federal Government.

6. Quality Assurance

    Several commentors questioned the intent of the language regarding 
the reliance on contractors' existing quality assurance systems. The 
rule has been revised to clarify that where buyer in-process inspection 
is a customary practice, any Government inprocess inspection shall be 
conducted in a manner consistent with commercial practice.

7. Commercial Item Pricing

    Commentors suggested that Part 12 should discuss the techniques for 
pricing commercial items. The policies and procedures for determining 
the price reasonableness of commercial items are contained in Subpart 
15.8 and the Team did not want to conflict with those policies. 
However, a brief summary of pricing considerations used when 
contracting by negotiation under Part 15 has been included in Part 12.
8. Technical Data and Computer Software

    In response to numerous comments on technical data and computer 
software, the final rule has been revised. The subpart on technical 
data has been revised to cover the general principle that the 
Government will acquire only technical data customarily provided to the 
public, except as provided by agency-specific statutes. The technical 
data subpart references FAR Part 27 and agency supplements, where 
detailed rules implementing the technical data statutes can be found. A 
new section on computer software was added to require that commercial 
computer software be acquired under licenses customarily provided to 
the public to the extent those licenses are consistent with Federal 
procurement law.

9. Discretionary Use of FAR Provisions and Clauses

    Several commentors asked if existing FAR provisions and clauses 
could be used if needed. Guidance concerning the discretionary use of 
other FAR clauses, consistent with market research and customary 
commercial practice, has been provided in the final rule. Specific 
examples of FAR clauses that may be appropriate for use include clauses 
for ordering procedures for indefinite delivery contracts and option 
exercise.

10. Tailoring of Provisions and Clauses

    Additional guidance concerning contracting officer authority to 
tailor Part 12 clauses, consistent with customary commercial market 
practices, has also been provided. Specific paragraphs of the clause at 
52.212-4, Contract Terms and Conditions--Commercial Items, that are 
based in statute and may not be tailored, have been identified.

11. Unique Requirements Regarding Terms and Conditions for Commercial 
Items.

    Many commentors from both industry and Government noted that the 
new terms and conditions prescribed for commercial items are 
significantly different than the existing FAR provisions and clauses. 
In response to the numerous questions and concerns, the Team expanded 
the discussion in the proposed rule describing the key features of 
these unique provisions and clauses.

12. Laws Inapplicable to Contractors and Subcontractors

    The language describing the laws determined inapplicable to prime 
and subcontractors has been revised to clarify several areas of 
confusion. In addition, the Service Contract Act (SCA) was added to the 
list of laws inapplicable to subcontractors. The proposed rule clearly 
did not call out the SCA for flow down to subcontractors in paragraph 
(e) of the clause at 52.212-5, but inadvertently omitted the law from 
the list of laws inapplicable to subcontractors. Finally, as indicated 
in the March 22, 1995, Federal Register notice, the DOD-unique laws 
identified in the proposed rule have been removed from the FAR rule and 
will appear in the DOD FAR Supplement (DFARS) coverage.

13. Certification Regarding Debarment and Suspension

    A certification regarding an offeror's debarment, suspension or 
ineligibility for award was added to the provision at 52.212-3 to 
implement the requirements of Executive Order 12549.

14. Acceptance and Warranties

    The language concerning acceptance and warranties in the clause at 
52.212-4 was revised to incorporate the acceptance principles found in 
the Uniform Commercial Code. It was also revised to establish the 
implied warranties of merchantability and fitness for a particular 
purpose as the Government's minimum warranties. Corresponding guidance 
is provided in Part 12 on evaluating and incorporating express 
warranties, which may overcome the implied warranties, and ensuring any 
express warranty and the acceptance terms of the contract are 
consistent with the concepts contained in the rule.

15. Terminations

    Guidance on procedures for contract terminations, reflecting the 
language in the clause at 52.212-4, has been provided in FAR Part 12. 
In addition, language has been included to clarify that negotiation of 
termination charges in terminations for the Government's convenience 
does not require government unique record keeping, compliance with the 
cost accounting standards or the contract cost principles.

16. Limitation of Liability

    The limitation of contractor liability language, which appeared in 
the proposed rule in the ``Warranty'' paragraph of the clause at 
52.212-4, has been moved to a separate paragraph to clarify that the 
limitation does not apply solely to liability relating to any warranty.

17. Subcontracting Plans

    The requirement for Small, Small Disadvantaged and Women Owned 
Small Business Subcontracting Plans was included in the clause at 
52.212-5 after it was determined that there was no exemption from this 
requirement for commercial items. However, in this regard, the Office 
of Procurement Policy (OFPP) is preparing to issue Policy Letter 95-1, 
Subcontracting Plans for Companies Supplying Commercial Items. This 
Policy Letter states that when a subcontracting plan is required, 
annual commercial subcontracting plans that relate to the company's 
commercial and noncommercial production are authorized and preferred 
for (1) prime contracts for commercial items; or (2) subcontractors 
that provide commercial items under a prime contract, whether or not 
the prime contractor is supplying a commercial item. The policy 
revisions contained in Policy Letter 95-1 will be incorporated into the 
FAR by a separate FAR case.

18. Other Revisions to the Proposed Rule

    Numerous other revisions were made to the proposed rule to correct 
inconsistencies, clarify intent, improve editorial clarity and to bring 
the language of the case up to the latest FAR baseline through FAC 90-
31.

[[Page 48235]]


List of Subjects in 48 CFR Parts 2, 3, 5, 6, 7, 8, 9, 10, 11, 12, 14, 
15, 16, 22, 23, 31, 36, 42, 44, 46, 47, 49, 52 and 53

    Government procurement.

    Dated: September 7, 1995.
Edward C. Loeb,
Deputy Project Manager for the Implementation of the Federal 
Acquisition Streamlining Act of 1994.

    Therefore, 48 CFR Parts 2, 3, 5, 6, 7, 8, 9, 10, 11, 12, 14, 15, 
16, 22, 23, 31, 36, 42, 44, 46, 47, 49, 52, and 53 are amended as set 
forth below:
    1. The authority citation for 48 CFR Parts 2, 3, 5, 6, 7, 8, 9, 10, 
11, 12, 14, 15, 16, 22, 23, 31, 36, 42, 44, 46, 47, 49, 52, and 53 
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 paragraphs 
(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 marketplace made to meet Federal Government requirements. 
``Minor'' modifications means modifications that do not significantly 
alter the nongovernmental function or essential physical 
characteristics of an item or component, or change the purpose of a 
process. Factors to be considered in determining whether a modification 
is minor include the value and size of the modification and the 
comparative value and size of the final product. Dollar values and 
percentages may be used as guideposts, but are not conclusive evidence 
that a modification is minor;
    (d) Any combination of items meeting the requirements of paragraphs 
(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 paragraphs (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;
    (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 an established 
catalog or market 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 the 
item was developed exclusively at private expense and 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 previously developed item of supply used exclusively for 
governmental purposes by a Federal agency, a State or local government, 
or a foreign government with which the United States has a mutual 
defense cooperation agreement;
    (b) Any item described in paragraph (a) 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
    (c) Any item of supply being produced that does not meet the 
requirements of paragraph (a) or (b) 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 solicitations and contracts 
exceeding the simplified acquisition threshold in part 13 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 solicitations and contracts exceeding the 
simplified acquisition threshold in 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 

[[Page 48236]]
part 13. For the acquisition 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) The contracting officer shall establish a solicitation response 
time which will afford potential offerors a reasonable opportunity to 
respond for (1) each contract action, including actions via FACNET, in 
an amount estimated to be greater than $25,000, but not greater than 
the simplified acquisition threshold; or (2) each contract action for 
the acquisition of commercial items in an amount estimated to be 
greater than $25,000 (see part 12). The contracting officer should 
consider the circumstances of the individual acquisition, such as the 
complexity, commerciality, availability, and urgency, when establishing 
the solicitation response time.
    (c) Except for the acquisition of commercial items (see 5.203(b)), 
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.
* * * * *
    8. Section 5.207 is amended by adding paragraph (e)(4) to read as 
follows:


5.207  Preparation and transmittal of synopses.

* * * * *
    (e) * * *
    (4) If, under the proposed acquisition, the Government does not 
intend to acquire a commercial item using part 12, the synopsis shall 
refer to Numbered Note 26.
* * * * *

PART 6--COMPETITION REQUIREMENTS

    9. 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.
* * * * *
    10. 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;
    (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]

    11. Section 7.101 is amended by removing the definition ``Market 
survey''.
    12. 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, 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)).
    (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.
    13. Section 7.103 is amended by revising paragraph (b); and in 
paragraph (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, 

[[Page 48237]]
nondevelopmental items in response to agency solicitations (10 U.S.C. 
2377 and 41 U.S.C. 251, et seq.); and
* * * * *
    14. Section 7.105 is amended in paragraph (a)(5) by removing 
``subpart 12.1'' and inserting ``subpart 11.4'' in its place; in 
paragraph (a)(8)(iii) by removing the parenthetical ``(see 
10.002(c))''; by revising paragraph (b)(1); in paragraph (b)(6) by 
removing ``part 10'' and inserting ``part 11'' in its place; in 
paragraph (b)(7) by removing ``subpart 12.3'' and inserting ``subpart 
11.6'' in its place; 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 consideration of 
small business, small disadvantaged business, and women-owned small 
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 (see part 10).
* * * * *
    (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;
* * * * *

PART 8--REQUIRED SOURCES OF SUPPLIES AND SERVICES


8.1104   [Amended]

    15. Section 8.1104 is amended in paragraph (e)(1) by removing 
``52.212-9'' and inserting ``52.211-16'' in its place.

PART 9--CONTRACTOR QUALIFICATIONS

    16. 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.
* * * * *
    17. Section 9.306 is amended in the introductory text of paragraph 
(f) by revising the parenthetical to read ``(see 11.404)''.
    18. Section 9.405-2 is amended by revising the second sentence of 
paragraph (b) introductory text to read as follows:


9.405-2  Restrictions on subcontracting.

* * * * *
    (b) * * * By operation of the clause at 52.209-6, Protecting the 
Government's Interests When Subcontracting with Contractors Debarred, 
Suspended or Proposed for Debarment, contractors shall not enter into 
any subcontract in excess of $25,000 with a contractor that has been 
debarred, suspended, or proposed for debarment unless there is a 
compelling reason to do so. * * *
* * * * *
    19. 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) Agencies shall--
    (1) Ensure that 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; 
and
    (3) Use the results of market research to--
    (i) Determine if sources capable of satisfying the agency's 
requirements exist;
    (ii) Determine if commercial items or, to the extent commercial 
items suitable to meet the agency's needs are not available, 
nondevelopmental 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;
    (iii) Determine the extent to which commercial items or 
nondevelopmental items could be incorporated at the component level;
    (iv) Determine the practices of firms engaged in producing, 
distributing, and supporting commercial items, such as terms for 
warranties, buyer financing, maintenance and packaging, and marking; 
and
    (v) Ensure maximum practicable use of recovered materials (see 
subpart 23.4) and promote energy conservation and efficiency.
    (b) When conducting market research, agencies should not request 
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 terms sufficient to allow conduct of market research.
    (b) Market research is then conducted to determine if commercial 
items or nondevelopmental items are available to meet the Government's 
needs or could be modified to meet the Government's needs.
    (1) 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 specific to 
the item being acquired and should include--
    (i) Whether the Government's needs can be met by--
    (A) Items of a type customarily available in the commercial 
marketplace;
    (B) Items of a type customarily available in the commercial 
marketplace with modifications; or
    (C) Items used exclusively for governmental purposes;
    (ii) Customary practices regarding customizing, modifying or 
tailoring of items to meet customer needs and associated costs;
    (iii) Customary practices, including warranty, buyer financing, 
discounts, etc., under which commercial sales of the products are made; 


[[Page 48238]]

    (iv) The requirements of any laws and regulations unique to the 
item being acquired;
    (v) The availability of items that contain recovered materials and 
items that are energy efficient;
    (vi) The distribution and support capabilities of potential 
suppliers, including alternative arrangements and cost estimates; and
    (vii) Size and status of potential sources (see part 19).
    (2) Techniques for conducting market research may include any or 
all of the following:
    (i) Contacting knowledgeable individuals in Government and industry 
regarding market capabilities to meet requirements.
    (ii) Reviewing the results of recent market research undertaken to 
meet similar or identical requirements.
    (iii) Publishing formal requests for information in appropriate 
technical or scientific journals or business publications.
    (iv) Querying Government data bases that provide information 
relevant to agency acquisitions.
    (v) Participating in interactive, on-line communication among 
industry, acquisition personnel, and customers.
    (vi) Obtaining source lists of similar items from other contracting 
activities or agencies, trade associations or other sources.
    (vii) Reviewing catalogs and other generally available product 
literature published by manufacturers, distributors, and dealers or 
available on-line.
    (viii) Conducting interchange meetings or holding presolicitation 
conferences to involve potential offerors early in the acquisition 
process.
    (c) If market research indicates commercial or nondevelopmental 
items might not be available to satisfy agency needs, agencies shall 
reevaluate the need in accordance with 10.001(a)(3)(ii) and determine 
whether the need can be restated to permit commercial or 
nondevelopmental items to satisfy the agency's needs.
    (d)(1) If market research establishes that the Government's need 
may be met by a type of item or service customarily available in the 
commercial marketplace that would meet the definition of a commercial 
item at subpart 2.1, the contracting officer shall solicit and award 
any resultant contract using the policies and procedures in part 12.
    (2) If market research establishes that the Government's need 
cannot be met by a type of item or service customarily available in the 
marketplace, part 12 shall not be used. When publication of the notice 
at 5.201 is required, the contracting officer shall include a notice to 
prospective offerors that the Government does not intend to use part 12 
for the acquisition (see 5.207(e)(4)).
    (e) Agencies should document the results of market research in a 
manner appropriate to the size and complexity of the acquisition.
    20. Part 11 is revised to read as follows:

PART 11--DESCRIBING AGENCY NEEDS

Sec.
11.000  Scope of part.
11.001  Definitions.
11.002  Policy.

Subpart 11.1--Selecting and Developing Requirements Documents

11.101  Order of precedence for requirements documents.
11.102  Standardization program.
11.103  Market acceptance.
11.104  Items peculiar to one manufacturer.

Subpart 11.2--Using and Maintaining Requirements Documents

11.201  Identification and availability of specifications.
11.202  Maintenance of standardization documents.
11.203  Customer satisfaction.
11.204  Solicitation provisions and contract clauses.

Subpart 11.3--Acquiring Other Than New Material, Former Government 
Surplus Property and Residual Inventory

11.301  Policy.
11.302  Solicitation provisions and contract clauses.

Subpart 11.4--Delivery or Performance Schedules

11.401  General.
11.402  Factors to consider in establishing schedules.
11.403  Supplies or services.
11.404  Contract clauses.

Subpart 11.5--Liquidated Damages

11.501  General.
11.502  Policy.
11.503  Procedures.
11.504  Contract clauses.

Subpart 11.6--Priorities and Allocations

11.600  Scope of part.
11.601  Definitions.
11.602  General.
11.603  Procedures.
11.604  Solicitation provisions and contract clauses.

Subpart 11.7--Variation in Quantity

11.701  Supply contracts.
11.702  Construction contracts.
11.703  Contract clauses.


11.000  Scope of part.

    This part prescribes policies and procedures for describing agency 
needs.


11.001  Definitions.

    Material, as used in this part, includes, but is not limited to, 
raw material, parts, items, components, and end products.
    New, as used in this part, means previously unused or composed of 
previously unused materials and may include unused residual inventory 
or unused former Government surplus property.
    Other than new, as used in this part, includes, but is not limited 
to, recycled, recovered, remanufactured, used, and reconditioned.
    Reconditioned, as used in this part, means restored to an earlier 
normal operating condition by readjustments and replacement of parts.
    Remanufactured, as used in this part, means factory rebuilt to new 
equipment performance specification and unused subsequent to 
rebuilding.


11.002  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, in response to the agency solicitations;
    (iii) Provide offerors of commercial items and nondevelopmental 
items an opportunity to compete in any acquisition to fill such 
requirements;
    (iv) Require prime contractors and subcontractors at all tiers 
under the agency contracts to incorporate commercial items or 
nondevelopmental 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 

[[Page 48239]]
items suitable to meet the agency's needs are not available, 
nondevelopmental 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 
acquisitions, 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 and consistent with subpart 9.5, 
potential offerors should be given an opportunity to comment on agency 
requirements or to recommend application and tailoring of requirements 
documents and alternative approaches. 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)).
    (d) The Resource Conservation and Recovery Act of 1976 (42 U.S.C. 
6901, et seq.), as amended, and Executive Order 12873, dated October 
20, 1993, establish requirements for the procurement of products 
containing recovered materials, and environmentally preferable and 
energy-efficient products and services. Requiring activities shall 
prepare plans, drawings, specifications, standards (including voluntary 
standards), and purchase descriptions that consider the requirements 
set forth in part 23.

Subpart 11.1--Selecting and Developing Requirements Documents


11.101  Order of precedence for requirements documents.

    (a) Agencies may select from existing requirements documents, 
modify or combine existing requirements documents, or create new 
requirements documents to meet agency needs, consistent with the 
following order of precedence:
    (1) Documents mandated for use by law.
    (2) Performance-oriented documents.
    (3) Detailed design-oriented documents.
    (4) Standards, specifications and related publications issued by 
the Government outside the Defense or Federal series for the non-
repetitive acquisition of items.
    (b) Agencies should prepare product descriptions to achieve maximum 
practicable use of recovered material and other materials that are 
environmentally preferable (see subparts 23.4 and 23.7).


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, for DOD components, DOD 4120.3-M, Defense Standardization 
Program Policies and Procedures. The Federal Standardization Manual may 
be obtained from General Services Administration, Federal Supply 
Service Bureau, Specifications Section, Suite 8100, 470 L'Enfant Plaza, 
SW, Washington, DC 20407. DOD 4120.3-M may be obtained from DOD Single 
Stock Point, Standardization Document Order Desk, Building 4D, 700 
Robbins Avenue, Philadelphia, PA 19111-5094.


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) Appropriate circumstances may, for example, include situations 
where the agency's minimum need is for an item that has a demonstrated 
reliability, performance or product support record in a specified 
environment. Use of market acceptance is inappropriate when new or 
evolving items may meet the agency's needs.
    (c) In developing criteria for demonstrating that an item has 
achieved commercial market acceptance, the contracting officer shall 
ensure the criteria in the solicitation--
    (1) Reflect the minimum need of the agency and are reasonably 
related to the demonstration of an item's acceptability to meet the 
agency's minimum need;
    (2) Relate to an item's performance and intended use, not an 
offeror's capability;
    (3) Are supported by market research;
    (4) Include consideration of items supplied satisfactorily under 
recent or current Government contracts, for the same or similar items; 
and
    (5) Consider the entire relevant commercial market, including small 
business concerns.
    (d) Commercial market acceptance shall not be used as a sole 
criterion to evaluate whether an item meets the Government's 
requirements.
    (e) When commercial market acceptance is used, the contracting 
officer shall document the file to--
    (1) Describe the circumstances justifying the use of commercial 
market acceptance criteria; and
    (2) Support the specific criteria being used.


11.104  Items peculiar to one manufacturer.

    Agency requirements shall not be written so as to require 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 and Maintaining 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 

[[Page 48240]]
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 a Government 
promulgated 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 or specific 
instructions shall be furnished for obtaining or examining such 
documents.
    (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 may be purchased from the General Services 
Administration, Federal Supply Service Bureau, Specification Section, 
Suite 8100, 470 L'Enfant Plaza, SW, Washington, DC 20407, telephone 
(202) 755-0325/0326. The DoDISS may be purchased from the 
Standardization Documents Desk, Building 4D, 700 Robbins Avenue, 
Philadelphia, PA 19111-5094, telephone (215) 697-2569.
    (e) Agencies may generally obtain from the GSA Specification 
Section or the DOD Standardization Documents Desk those nongovernment 
(voluntary) standards adopted for use by Federal or Defense activities. 
Standards not available from these sources may be obtained from 
Government libraries, activities subscribing to document handling 
services or the organization responsible for the preparation, 
publication or maintenance of the standard.


11.202  Maintenance of standardization documents.

    (a) Recommendations for changes to standardization documents listed 
in the GSA Index of Federal Specifications, Standards and Commercial 
Item Descriptions should be submitted to the General Services 
Administration, Federal Supply Service, Office of Acquisition, 
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, for Defense components, DoD 4120.3-
M, Defense Standardization Program Policies and Procedures.


11.203   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.


11.204  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.

Subpart 11.3--Acquiring Other Than New Material, Former Government 
Surplus Property, and Residual Inventory


11.301  Policy.

    (a) Agencies shall allow offers of other than new material, former 
Government surplus property, or residual inventory unless it is 
determined that such materials are unacceptable. When acquiring 
commercial items, the contracting officer should consider the customary 
practice in the industry for the item being acquired. When only new 
material is acceptable, the solicitation shall clearly identify the 
material that must be new. Offerors providing other than new material 
shall be required to comply with the clause at 52.211-5, New Material, 
the provision at 52.211-6, Listing of Other Than New Material, Residual 
Inventory, and Former Government Surplus Property, and the clause at 
52.211-7, Other Than New Material, Residual Inventory, and Former 
Government Surplus Property, as appropriate.
    (b) Agencies shall specify products, including packaging, that 
contain the highest practicable percentage of recovered and 
environmentally preferable materials, and where applicable, post-
consumer material, consistent with performance requirements, 
availability, price reasonableness, and cost-effectiveness.
    (c) Contracting officers shall consider the following when 
determining whether other than new materials, former Government surplus 
property, or residual inventory are acceptable:
    (1) Safety of persons or property.
    (2) Specification and performance requirements.
    (3) Price reasonableness.
    (4) Total cost to the Government (including maintenance, 
inspection, testing, and useful life).
    (d) 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.


11.302  Solicitation provisions and contract clauses.

    (a) 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.
    (b) The contracting officer shall insert the provision at 52.211-6, 
Listing of Other Than New Material, Residual Inventory, and Former 
Government 

[[Page 48241]]
Surplus Property, in solicitations containing the clause at 52.211-5.
    (c) The contracting officer shall insert the clause at 52.211-7, 
Other Than New Material, Residual Inventory, and Former Government 
Surplus Property, in contracts containing the clause at 52.211-5.
Subpart 11.4--[Redesignated from 12.1]

    21. and 22. Subpart 11.4 is redesignated from Subpart 12.1 and 
sections 12.101 through 12.104 are redesignated as sections 11.401 
through 11.404, respectively.
    23. Newly redesignated 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 unnecessarily short or difficult to 
attain
    (1) Tend to restrict competition,
    (2) Are inconsistent with small business policies, and
    (3) May result in higher contract prices.
* * * * *
    24. Newly redesignated 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]

    25. Newly redesignated 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 ``52.212-3'' and inserting ``52.211-
10''.

Subpart 11.5--[Redesignated From Subpart 12.2]

    26. Subpart 11.5 is redesignated from Subpart 12.2 and sections 
11.501 through 11.504 are redesignated from sections 12.201 through 
12.204, respectively.


11.504   [Amended]

    27. Newly designated 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 ``52.212-5'' and inserting ``52.211-13'' and 
``52.211-12'', respectively.

Subpart 11.6  [Redesignated From 12.3]

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


11.604  [Amended]

    29. Newly redesignated 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]

    30. Subpart 11.7 is redesignated from Subpart 12.4 and sections 
11.701 through 11.703 are redesignated from 12.401 through 12.403, 
respectively.


11.703  [Amended]

    31. Newly redesignated 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''.
    32. 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.
    33. 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  Procedures for 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  Pricing of commercial items when contracting by negotiation.
12.210  Contract financing.
12.211  Technical data.
12.212  Computer software.
12.213  Other customary commercial practices.
Subpart 12.3--Solicitation Provisions and Contract Clauses for the 
Acquisition of Commercial Items
12.300  Scope of subpart.
12.301  Solicitation provisions and contract clauses for the 
acquisition of commercial items.
12.302  Tailoring of provisions and clauses for the acquisition of 
commercial items.
12.303  Contract format.
Subpart 12.4--Unique Requirements Regarding Terms and Conditions for 
Commercial Items
12.401  General.
12.402  Acceptance.
12.403  Termination.
12.404  Warranties.
Subpart 12.5--Applicability of Certain Laws to the Acquisition of 
Commercial Items
12.500  Scope of subpart.
12.501  Applicability.
12.502  Procedures.
12.503  Applicability of certain laws to Executive agency contracts 
for the acquisition of commercial items.
12.504  Applicability of certain laws to subcontracts for the 
acquisition of commercial items.
Subpart 12.6--Streamlined Procedures for Evaluation and Solicitation 
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 (Public Law 
103-355) by establishing acquisition policies more closely resembling 
those of the commercial marketplace and encouraging the acquisition of 
commercial items and components.


12.001  Definition.

    Subcontract, as used in this part, includes, but is not limited to, 
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 

[[Page 48242]]
nondevelopmental items are available that could meet the agency's 
requirements;
    (b) Acquire commercial items or nondevelopmental items when they 
are available to meet the needs of the agency; and
    (c) Require prime contractors and subcontractors at all tiers to 
incorporate, to the maximum extent practicable, commercial items or 
nondevelopmental items as components of items supplied to the agency.


12.102  Applicability.

    (a) This part shall be used for the acquisition of supplies or 
services that meet the definition of commercial items at section 2.101.
    (b) Contracting officers shall use the policies in this part in 
conjunction with the policies and procedures for solicitation, 
evaluation and award prescribed in part 13, Simplified Acquisition 
Procedures; part 14, Sealed Bidding; or part 15, Contracting by 
Negotiation, as appropriate for the particular acquisition.
    (c) Contracts for the acquisition of commercial items are subject 
to the policies in other parts of this chapter. When a policy in 
another part of this chapter is inconsistent with a policy in this 
part, this part 12 shall take precedence for the acquisition of 
commercial items.
    (d) This part shall not apply to the acquisition of commercial 
items--
    (1) At or below the micro-purchase threshold (see subpart 13.6);
    (2) Using the SF 44 (see section 13.505-3);
    (3) Using the imprest fund (see subpart 13.4); or
    (4) Using the Governmentwide commercial purchase card (see 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 marketplace. 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 (see 10.001) 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, for acquisitions in excess of 
the simplified acquisition threshold, 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.
    (c) Follow the procedures in subpart 11.2 regarding the 
identification and availability of specifications, standards and 
commercial item descriptions.


12.203  Procedures for solicitation, evaluation, and award.

    Contracting officers shall use the policies unique to the 
acquisition of commercial items prescribed in this part in conjunction 
with the policies and procedures for solicitation, evaluation and award 
prescribed in part 13, Simplified Acquisition Procedures; part 14, 
Sealed Bidding; or part 15, Contracting by Negotiation, as appropriate 
for the particular acquisition. The contracting officer may use the 
streamlined procedure for soliciting offers for commercial items 
prescribed in 12.603.


12.204  Solicitation/contract form.

    The Standard Form 1449, Solicitation/Contract/Order for Commercial 
Items, shall be used by the contracting officer when issuing written 
solicitations and awarding contracts and placing orders for commercial 
items. This form contains the information necessary for solicitations 
and contracts. The form may also be used for documenting receipt, 
inspection and acceptance of commercial items. Other forms shall not be 
used for solicitation or award of contracts or orders for the 
acquisition of commercial items.


12.205  Offers.

    (a) Where technical information is necessary for evaluation of 
offers, agencies 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 request existing product literature from offerors of commercial 
items in lieu of 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, considering the circumstances 
described in 5.203(b), allow fewer than 30 days response time for 
receipt of offers for commercial items.


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 subpart 9.1, section 13.106-1, or 
subpart 15.6, as applicable.


12.207  Contract type.

    Agencies shall use firm-fixed-price contracts or fixed-price 
contracts with economic price adjustment for the acquisition of 
commercial items. Indefinite-delivery contracts (see subpart 16.5) may 
be used where the prices are established based on a firm-fixed-price or 
fixed-price with economic price adjustment. Use of any other contract 
type to acquire commercial items is prohibited.


12.208  Contract quality assurance.

    Contracts for commercial items shall rely on contractors' existing 
quality assurance systems as a substitute for Government inspection and 
testing before tender for acceptance unless customary market practices 
for the commercial item being acquired include in-process inspection. 
Any in-process inspection by the Government shall be conducted in a 
manner consistent with commercial practice.


12.209  Pricing of commercial items when contracting by negotiation.

    (a) When contracting by negotiation for commercial items, the 
policies and procedures in part 15 shall be used to establish the 
reasonableness of prices.
    (b) The provisions and clauses prescribed in this part for the 
acquisition of commercial items do not include the provisions and 
clauses prescribed in part 15 because they assume prices for commercial 
items will either
    (1) Not be subject to the Truth in Negotiations Act because the 
contract 

[[Page 48243]]
price is below the dollar threshold for application of the Act; or
    (2) Be based upon one of the exceptions to cost or pricing data 
requirements contained in 15.804-1(a)(1).
    (c) If the contracting officer determines it is appropriate to use 
the commercial item exception to cost or pricing data requirements (see 
15.804-1(a)(2)), the provisions and clauses prescribed in 15.804-8 and 
15.106 for this purpose shall be inserted in an addendum to the 
solicitation and contract.
    (d) If the contracting officer is required to obtain cost or 
pricing data (see 15.804-1(b)(4) and 15.804-2), the provisions and 
clauses prescribed in 15.804-8 and 15.106 for this purpose shall be 
inserted in an addendum to the solicitation and contract.
    (e) When a contract is priced using the exceptions at 15.804-
1(a)(1), no cost or pricing data may be obtained for modifications 
unless the proposed modification would change the contract from a 
contract for a commercial item to a contract for other than a 
commercial item (see 15.804-1(b)(6)). If the exceptions at 15.804-
1(a)(1) are not used, the contracting officer may be required to obtain 
cost or pricing data to determine the reasonableness of prices for 
subsequent modifications (see 15.804-2(a)(1)) and the contracting 
officer shall insert the provisions and clauses prescribed for this 
purpose in an addendum to the solicitation and contract.
12.210  Contract financing.
    Customary market practice for some commercial items may include 
buyer contract financing. The contracting officer may offer Government 
financing in accordance with the policies and procedures in part 32.
12.211  Technical data.
    Except as provided by agency-specific statutes, the Government 
shall acquire only the technical data and the rights in that data 
customarily provided to the public with a commercial item or process. 
The contracting officer shall presume that data delivered under a 
contract for commercial items was developed exclusively at private 
expense. When a contract for commercial items requires the delivery of 
technical data, the contracting officer shall include appropriate 
provisions and clauses delineating the rights in the technical data in 
addenda to the solicitation and contract (see part 27 or agency FAR 
supplements).
12.212  Computer software.
    (a) Commercial computer software or commercial computer software 
documentation shall be acquired under licenses customarily provided to 
the public to the extent such licenses are consistent with Federal law 
and otherwise satisfy the Government's needs. Generally, offerors and 
contractors shall not be required to--
    (1) Furnish technical information related to commercial computer 
software or commercial computer software documentation that is not 
customarily provided to the public; or
    (2) Relinquish to, or otherwise provide, the Government rights to 
use, modify, reproduce, release, perform, display, or disclose 
commercial computer software or commercial computer software 
documentation except as mutually agreed to by the parties.
    (b) With regard to commercial computer software and commercial 
computer software documentation, the Government shall have only those 
rights specified in the license contained in any addendum to the 
contract.
12.213  Other customary commercial practices.
    It is customary practice in the commercial marketplace for both the 
buyer and seller to propose terms and conditions for a given 
transaction, each written from their particular perspectives. The terms 
and conditions prescribed in this part 12 seek to balance the interests 
of both the buyer and seller. These terms and conditions are generally 
appropriate for use in a wide range of acquisitions. However, 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 appropriate in 
concluding a business arrangement satisfactory to both parties and not 
otherwise precluded by law or executive order.
Subpart 12.3--Solicitation Provisions and Contract Clauses for the 
Acquisition of Commercial Items
12.300  Scope of subpart.

    This subpart establishes provisions and clauses to be used when 
acquiring commercial items.
12.301  Solicitation provisions and contract clauses for the 
acquisition of commercial items.
    (a) In accordance with Section 8002 of Public Law 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 
1449). The contracting officer may tailor these instructions or provide 
additional instructions tailored to the specific acquisition in 
accordance with 12.302;
    (2) The provision at 52.212-3, Offeror Representations and 
Certifications--Commercial Items. This provision provides a single, 
consolidated 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. 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 1449). The contracting officer may tailor 
this clause in accordance with 12.302; and
    (4) The clause at 52.212-5, Contract Terms and Conditions Required 
to Implement Statutes or Executive Orders--Commercial Items. This 
clause incorporates by reference 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, using the appropriate 
clause prescriptions, indicate which, if any, of the additional clauses 
cited in 52.2125(b) or (c) are applicable to the specific acquisition. 
When cost information is obtained pursuant to part 15 to establish the 
reasonableness of prices for commercial items, the contracting officer 
shall insert the clauses prescribed for this purpose in an addendum to 
the solicitation and contract. This clause may not be tailored.

[[Page 48244]]

    (c) When the use of evaluation factors is appropriate, the 
contracting officer may--
    (1) Insert the provision at 52.212-2, Evaluation-- Commercial 
Items, in solicitations for commercial items (see 12.602); or
    (2) Include a similar provision containing all evaluation factors 
required by section 13.106-1, Subpart 14.2 or subpart 15.6, as an 
addendum (see 12.302(d)).
    (d) Use of required provisions and clauses. Notwithstanding 
prescriptions contained elsewhere in the FAR, when acquiring commercial 
items, contracting officers shall be required to use only those 
provisions and clauses prescribed in this part. The provisions and 
clauses prescribed in this part shall be revised, as necessary, to 
reflect the applicability of statutes and executive orders to the 
acquisition of commercial items.
    (e) Discretionary use of FAR provisions and clauses. The 
contracting officer may include in solicitations and contracts by 
addendum other FAR provisions and clauses when their use is consistent 
with the limitations contained in 12.302. For example:
    (1) The contracting officer may include appropriate clauses when an 
indefinite-delivery type of contract will be used. The clauses 
prescribed at 16.505 may be used for this purpose.
    (2) The contracting officer may include appropriate provisions and 
clauses when the use of options is in the Government's interest. The 
provisions and clauses prescribed in 17.208 may be used for this 
purpose. If the provision at 52.212-2 is used, paragraph (b) provides 
for the evaluation of options.
    (3) The contracting officer may use the provisions and clauses 
contained in part 23 regarding the use of recovered material when 
appropriate for the item being acquired.
    (f) Agencies may supplement the provisions and clauses prescribed 
in this part (to require use of additional provisions and clauses) only 
as necessary to reflect agency unique statutes applicable to the 
acquisition of commercial items or as may be approved by the agency 
senior procurement executive, or the individual responsible for 
representing the agency on the FAR Council, without power of 
delegation.
12.302   Tailoring of provisions and clauses for the acquisition of 
commercial items.

    (a) General. The provisions and clauses established in this subpart 
are intended to address, to the maximum extent practicable, customary 
commercial market 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, variations in customary 
commercial practices across markets and the relative volume of the 
Government's acquisitions in the specific market, contracting officers 
may, within the limitations of this subpart, and 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) Tailoring 52.212-4, Contract Terms and Conditions--Commercial 
Items. The following paragraphs of the clause at 52.212-4, Contract 
Terms and Conditions--Commercial Items, implement statutory 
requirements and shall not be tailored--
    (1) Assignments;
    (2) Disputes;
    (3) Payment;
    (4) Invoice;
    (5) Other compliances; and
    (6) Compliance with laws unique to Government contracts.
    (c) Tailoring inconsistent with customary commercial practice. The 
contracting officer shall not tailor any clause or otherwise include 
any additional terms or conditions in a solicitation or contract for 
commercial items in a manner that is 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 
marketplace, 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.
    (d) Tailoring shall be by addenda to the solicitation and contract. 
The contracting officer shall indicate in Block 26 of the SF 1449 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 1449; a continuation of the description 
of the supplies/services being acquired; further elaboration of any 
other item(s) on the SF 1449; 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.).


12.303   Contract format.

    Solicitations and contracts for the acquisition of commercial items 
prepared using this part 12 shall be assembled, to the maximum extent 
practicable, using the following format:
    (a) Standard Form (SF) 1449;
    (b) Continuation of any block from SF 1449, such as--
    (1) Block 10 if set-aside for emerging small businesses;
    (2) Block 16B for remittance address;
    (3) Block 18 for contract line item numbers;
    (4) Block 19 for schedule of supplies/services; or
    (5) Block 24 for accounting data;
    (c) Contract clauses--
    (1) 52.212-4, Contract Terms and Conditions--Commercial Items, by 
reference (see SF 1449, Block 26);
    (2) Any addendum to 52.212-4; and
    (3) 52.212-5, Contract Terms and Conditions Required to Implement 
Statutes and Executive Orders;
    (d) Any contract documents, exhibits or attachments; and
    (e) Solicitation provisions--
    (1) 52.212-1, Instructions to Offerors--Commercial Items, by 
reference (see SF 1449, Block 26);
    (2) Any addendum to 52.212-1;
    (3) 52.212-2, Evaluation--Commercial Items, or other description of 
evaluation factors for award, if used; and
    (4) 52.212-3, Offeror Representations and Certifications--
Commercial Items.

Subpart 12.4--Unique Requirements Regarding Terms and Conditions 
for Commercial Items


12.401   General.

    This subpart provides--
    (a) Guidance regarding tailoring of the paragraphs in the clause at 
52.212-4, Contract Terms and Conditions--Commercial Items, when the 
paragraphs do not reflect the customary practice for a particular 
market; and
    (b) Guidance on the administration of contracts for commercial 
items in those areas where the terms and conditions in 52.212-4 differ 
substantially from those contained elsewhere in the FAR.


12.402   Acceptance.

    (a) The acceptance paragraph in 52.212-4 is based upon the 
assumption that the Government will rely on the contractor's assurances 
that the commercial item tendered for acceptance conforms to the 
contract requirements. The Government inspection of commercial items 
will not 

[[Page 48245]]
prejudice its other rights under the acceptance paragraph. 
Additionally, although the paragraph does not address the issue of 
rejection, the Government always has the right to refuse acceptance of 
nonconforming items. This paragraph is generally appropriate when the 
Government is acquiring noncomplex commercial items.
    (b) Other acceptance procedures may be more appropriate for the 
acquisition of complex commercial items or commercial items used in 
critical applications. In such cases, the contracting officer shall 
include alternative inspection procedure(s) in an addendum and ensure 
these procedures and the postaward remedies adequately protect the 
interests of the Government. The contracting officer must carefully 
examine the terms and conditions of any express warranty with regard to 
the effect it may have on the Government's available postaward remedies 
(see 12.404).
    (c) The acquisition of commercial items under other circumstances 
such as on an ``as is'' basis may also require acceptance procedures 
different from those contained in 52.212-4. The contracting officer 
should consider the effect the specific circumstances will have on the 
acceptance paragraph as well as other paragraphs of the clause.


12.403   Termination.

    (a) General. The clause at 52.212-4 permits the Government to 
terminate a contract for commercial items either for the convenience of 
the Government or for cause. However, the paragraphs in 52.212-4 
entitled ``Termination for the Government's Convenience'' and 
``Termination for Cause'' contain concepts which differ from those 
contained in the termination clauses prescribed in part 49. 
Consequently, the requirements of part 49 do not apply when terminating 
contracts for commercial items and contracting officers shall follow 
the procedures in this section. Contracting officers may continue to 
use part 49 as guidance to the extent that part 49 does not conflict 
with this section and the language of the termination paragraphs in 
52.212-4.
    (b) Policy. The contracting officer should exercise the 
Government's right to terminate a contract for commercial items either 
for convenience or for cause only when such a termination would be in 
the best interests of the Government. The contracting officer should 
consult with counsel prior to terminating for cause.
    (c) Termination for cause. (1) The paragraph in 52.2124 entitled 
``Excusable Delay'' requires contractors notify the contracting officer 
as soon as possible after commencement of any excusable delay. In most 
situations, this requirement should eliminate the need for a show cause 
notice prior to terminating a contract. The contracting officer shall 
send a cure notice prior to terminating a contract for a reason other 
than late delivery.
    (2) The Government's rights after a termination for cause shall 
include all the remedies available to any buyer in the marketplace. The 
Government's preferred remedy will be to acquire similar items from 
another contractor and to charge the defaulted contractor with any 
excess reprocurement costs together with any incidental or 
consequential damages incurred because of the termination.
    (3) When a termination for cause is appropriate, the contracting 
officer shall send the contractor a written notification regarding the 
termination. At a minimum, this notification shall--
    (i) Indicate the contract is terminated for cause;
    (ii) Specify the reasons for the termination;
    (iii) Indicate which remedies the Government intends to seek or 
provide a date by which the Government will inform the contractor of 
the remedy; and
    (iv) State that the notice constitutes a final decision of the 
contracting officer and that the contractor has the right to appeal 
under the Disputes clause (see 33.211).
    (d) Termination for the Government's convenience. (1) When the 
contracting officer terminates a contract for commercial items for the 
Government's convenience, the contractor shall be paid--
    (i) The percentage of the contract price reflecting the percentage 
of the work performed prior to the notice of the termination, and
    (ii) Any charges the contractor can demonstrate directly resulted 
from the termination. The contractor may demonstrate such charges using 
its standard record keeping system and is not required to comply with 
the cost accounting standards or the contract cost principles in part 
31. The Government does not have any right to audit the contractor's 
records solely because of the termination for convenience.
    (2) Generally, the parties should mutually agree upon the 
requirements of the termination proposal. The parties must balance the 
Government's need to obtain sufficient documentation to support payment 
to the contractor against the goal of having a simple and expeditious 
settlement.


12.404   Warranties.

    (a) Implied warranties. The Government's post award rights 
contained in 52.212-4 are the implied warranty of merchantability, the 
implied warranty of fitness for particular purpose and the remedies 
contained in the acceptance paragraph.
    (1) The implied warranty of merchantability provides that an item 
is reasonably fit for the ordinary purposes for which such items are 
used. The items must be of at least average, fair or medium-grade 
quality and must be comparable in quality to those that will pass 
without objection in the trade or market for items of the same 
description.
    (2) The implied warranty of fitness for a particular purpose 
provides that an item is fit for use for the particular purpose for 
which the Government will use the items. The Government can rely upon 
an implied warranty of fitness for particular purpose when--
    (i) The seller knows the particular purpose for which the 
Government intends to use the item; and
    (ii) The Government relied upon the contractor's skill and judgment 
that the item would be appropriate for that particular purpose.
    (3) Contracting officers should consult with legal counsel prior to 
asserting any claim for a breach of an implied warranty.
    (b) Express warranties. The Federal Acquisition Streamlining Act of 
1994 (41 U.S.C. 264 note) requires contracting officers to take 
advantage of commercial warranties. 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.
    (1) Any express warranty the Government intends to rely upon must 
meet the needs of the Government. The contracting officer should 
analyze any commercial warranty to determine if--
    (i) The warranty is adequate to protect the needs of the 
Government, e.g., items covered by the warranty and length of warranty;
    (ii) The terms allow the Government effective postaward 
administration of the warranty to include the identification of 
warranted items, procedures for the return of warranted items to the 
contractor for repair or replacement, and collection of product 
performance information; and
    (iii) The warranty is cost-effective. 

[[Page 48246]]

    (2) In some markets, it may be customary commercial practice for 
contractors to exclude or limit the implied warranties contained in 
52.212-4 in the provisions of an express warranty. In such cases, the 
contracting officer shall ensure that the express warranty provides for 
the repair or replacement of defective items discovered within a 
reasonable period of time after acceptance.
    (3) Express warranties shall be included in the contract by 
addendum (see 12.302).

Subpart 12.5--Applicability of Certain Laws to the Acquisition of 
Commercial Items


12.500  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 
are not applicable to contracts for the acquisition of commercial 
items, or are not applicable to subcontracts, at any tier, 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.


12.501  Applicability.

    (a) This subpart applies to any contract or subcontract at any tier 
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. This limitation is intended to 
preclude establishment of unusual contractual arrangements solely for 
the purpose of Government sales.
    (c) For purposes of this subpart, contractors awarded subcontracts 
under subpart 19.8, Contracting with the Small Business Administration 
(the 8(a) Program), shall be considered prime contractors.


12.502  Procedures.

    (a) The FAR prescription for the provision or clause for each of 
the laws listed in 12.503 has been revised in the appropriate part to 
reflect its proper application to prime contracts for the acquisition 
of commercial items.
    (b) For subcontracts for the acquisition of commercial items or 
commercial components, the clauses at 52.212-5, Contract Terms and 
Conditions Required to Implement Statutes or Executive Orders--
Commercial Items, and 52.244-6, Subcontracts for Commercial Items and 
Commercial Components, reflect the applicability of the laws listed in 
12.504 by identifying the only provisions and clauses that are required 
to be included in a subcontract at any tier for the acquisition of 
commercial items or commercial components.


12.503  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 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. 423(e)(1)(B), Requirement for a certain certification 
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 under 
the 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 chapter 
99).


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

    (a) The following laws are not applicable to subcontracts at any 
tier for the acquisition of commercial items or commercial components 
at any tier:
    (1) 15 U.S.C. 644(d), Requirements relative to labor surplus areas 
under the Small Business Act (see subpart 19.2).
    (2) 19 U.S.C. 1202, Tariff Act of 1930 (see subpart 25.6).
    (3) 19 U.S.C. 1309, Supplies for Certain Vessels and Aircraft (see 
subpart 25.6).
    (4) 19 U.S.C. 2701, et seq., Authority to Grant Duty Free Treatment 
(see subpart 25.6).
    (5) 31 U.S.C. 1352, Limitation on Payments to Influence Certain 
Federal Transactions (see subpart 3.8).
    (6) 41 U.S.C. 43, Walsh-Healey Act (see subpart 22.6).
    (7) 41 U.S.C. 253d, Validation of Proprietary Data Restrictions 
(see subpart 27.4).
    (8) 41 U.S.C. 254(a) and 10 U.S.C. 2306(b), Contingent Fees (see 
subpart 3.4).
    (9) 41 U.S.C. 254d(c) and 10 U.S.C. 2313(c), Examination of Records 
of Contractor, when a subcontractor is not required to provide cost or 
pricing data (see subpart 15.1).
    (10) 41 U.S.C. 351, Service Contract Act of 1965, as amended (see 
subpart 22.10).
    (11) 41 U.S.C. 416(a)(6), Minimum Response Time for Offers under 
Office of Federal Procurement Policy Act (see subpart 5.2).
    (12) 41 U.S.C. 418a, Rights in Technical Data (see subpart 27.4).
    (13) 41 U.S.C. 701, et seq., Drug-Free Workplace Act of 1988 (see 
subpart 23.5).
    (14) 46 U.S.C. 1241(b), Transportation in American Vessels of 
Government Personnel and Certain Cargo (see subpart 47.5) 
(inapplicability effective May 1, 1996).
    (15) 49 U.S.C. 40118, Fly American provisions (see subpart 47.4).
    (16) Public Law 90-469, William Langer Jewel Bearing Plant Special 
Act (see subpart 8.2).
    (b) Certain requirements of the following laws have been eliminated 
for subcontracts at any tier for the acquisition of commercial items or 
commercial components:
    (1) 33 U.S.C. 1368, Requirement for a certificate and clause under 
the Federal Water Pollution Control Act (see subpart 23.1).
    (2) 40 U.S.C. 327, et seq., Requirement for a certificate and 
clause under the Contract Work Hours and Safety Standards Act (see 
subpart 22.3).
    (3) 41 U.S.C. 423(e)(1)(B), Requirement for certain certifications 
under the Procurement Integrity Act (see subpart 3.1). 

[[Page 48247]]

    (4) 42 U.S.C. 7606, Requirements for a certificate and clause under 
the Clean Air Act (see subpart 23.1).
    (c) The applicability of the following laws have been modified in 
regards to subcontracts at any tier for the acquisition of commercial 
items or commercial components:
    (1) 41 U.S.C. 253g and 10 U.S.C. 2402, Prohibition on Limiting 
Subcontractor Direct Sales to the United States (see subpart 3.5).
    (2) 41 U.S.C. 254(d) and 10 U.S.C. 2306a, Truth in Negotiations Act 
(see subpart 15.8).
    (3) 41 U.S.C. 422, Cost Accounting Standards (see 48 CFR chapter 
99).

Subpart 12.6--Streamlined Procedures for Evaluation and 
Solicitation for Commercial Items


12.601  General.

    This subpart provides optional procedures for--
    (a) Streamlined evaluation of offers for commercial items; and
    (b) Streamlined solicitation of offers for commercial items for use 
where appropriate.
    These procedures are intended to simplify the process of preparing 
and issuing solicitations, and evaluating offers for commercial items 
consistent with customary commercial practices.


12.602  Streamlined evaluation of offers.

    (a) When evaluation factors are used, 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 or 
comply with the procedures in 13.106-1 if the acquisition is being made 
using the procedures in part 13. When the provision at 52.212-2 is 
used, 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 criteria 
contained in the solicitation. 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 the 
item's intended use. A technical evaluation would normally 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 
section 13.106-1 or subpart 15.6, as applicable. 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 tradeoffs considered.


12.603  Streamlined solicitation for commercial items.

    (a) When a written solicitation will be issued, the contracting 
officer may use the following procedure to reduce the time required to 
solicit and award contracts for the acquisition of commercial items. 
This procedure combines the Commerce Business Daily (CBD) synopsis 
required by 5.203 and the issuance of the solicitation into a single 
document with the following limitations:
    (1) Section 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) When using the combined synopsis/solicitation procedure, the SF 
1449 is not used for issuing the solicitation.
    (c) 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) The following statement:

    This is a combined synopsis/solicitation for commercial items 
prepared in accordance with the format in FAR Subpart 12.6, as 
supplemented with additional information included in this notice. 
This announcement constitutes the only solicitation; proposals are 
being requested and a written solicitation will not be issued.

    (ii) The solicitation number and a statement that the solicitation 
is issued as an invitation to bid (IFB), request for quotation (RFQ) or 
request for proposal (RFP).
    (iii) A statement that the solicitation document and incorporated 
provisions and clauses are those in effect through Federal Acquisition 
Circular ______.
    (iv) A notice regarding any set-aside and the associated standard 
industrial classification code and small business size standard. Also 
include a statement regarding the Small Business Competitiveness 
Demonstration Program, if applicable.
    (v) A list of contract line item number(s) and items, quantities 
and units of measure, (including option(s), if applicable).
    (vi) Description of requirements for the items to be acquired.
    (vii) Date(s) and place(s) of delivery and acceptance and FOB 
point.
    (viii) A statement that the provision at 52.212-1, Instructions to 
Offerors--Commercial, applies to this acquisition and a statement 
regarding any addenda to the provision.
    (ix) 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.
    (x) 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.
    (xi) A statement that the clause at 52.212-4, Contract Terms and 
Conditions--Commercial Items, applies to this acquisition and a 
statement regarding any addenda to the clause.
    (xii) A statement that the clause at 52.212-5, Contract Terms and 
Conditions Required To Implement Statutes Or Executive Orders--
Commercial Items, applies to this acquisition and a statement regarding 
which, if any, of the additional FAR clauses cited in the clause are 
applicable to the acquisition.
    (xiii) 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 48 CFR 201-39.106-4)) determined by the contracting 
officer to be necessary for this acquisition and consistent with 
customary commercial practices. 

[[Page 48248]]

    (xiv) A statement regarding the Defense Priorities and Allocations 
System (DPAS) and assigned rating, if applicable.
    (xv) A statement regarding any applicable Commerce Business Daily 
numbered notes.
    (xvi) The date, time and place offers are due.
    (xvii) The name and telephone number of the individual to contact 
for information regarding the solicitation.
    (3) Allow response time for receipt of offers as follows:
    (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.
    (ii) When using the combined CBD synopsis/solicitation, contracting 
officers shall establish a response time in accordance with 5.203(b), 
but shall allow at least 15 days response time from the date the notice 
is published in the CBD.
    (4) Publish amendments to solicitations in the same manner as the 
initial synopsis/solicitation.

PART 14--SEALED BIDDING


14.201-2  [Amended]

    34. Section 14.201-2 is amended in the parenthetical of paragraphs 
(b) and (c) by removing ``part 10, Specifications, Standards, and Other 
Product Descriptions'' and inserting ``part 11'' in its place; in 
paragraph (d) by removing ``(see 10.004(e))''; and in the parenthetical 
of paragraph (f) by revising the parenthetical to read ``(see subpart 
11.4, Delivery or Performance Schedules).''


14.404-1  [Amended]

    35. 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]

    36. 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''; in paragraph (d) by removing 
``(see 10.004(e))''; and in paragraph (f) by revising the parenthetical 
to read ``(subpart 11.4, Delivery or Performance Schedules, and 47.301-
1).''
    37. 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]

    38. Section 15.503 is amended in paragraph (b) by removing the word 
``product'' and inserting ``item''.
    39. 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

    40. 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.
    41. 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--
* * * * *
    42. Section 16.301-3 is amended by redesignating paragraphs (a) 
through (c) as paragraph (a)(1) through (a)(3), respectively; 
designating the introductory text as paragraph (a) introductory text 
and adding new (b) to read as follows:


16.301-3  Limitations.

* * * * *
    (b) The use of cost-reimbursement contracts is prohibited for the 
acquisition of commercial items (see parts 2 and 12).


16.603-2  [Amended]

    43. 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

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


22.305  Contract clause.

* * * * *
    (g) Contracts for commercial items (see parts 2 and 12).
* * * * *
    45. 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 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

    46. Section 23.104 is amended in paragraph (a)(1) by removing the 
word ``or'' the second time it is used; in paragraph (a)(2) by removing 
the period and inserting ``; or'' and adding paragraph (a)(3) to read 
as follows:


23.104  Exemptions.

    (a) * * * (3) for commercial items.
* * * * *
    47. Section 23.501 is amended by redesignating paragraphs (b) 
through (d) as (c) through (e) 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 31--CONTRACT COST PRINCIPLES AND PROCEDURES


31.106-3  [Amended]

    48. Section 31.106-3 is amended in the section heading and the 
first sentence of the undesignated paragraph by removing the word 
``products'' and inserting ``items'' in their place. 

[[Page 48249]]


PART 36--CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS


36.202  [Amended]

    49. Section 36.202 is amended in paragraph (a) by removing ``part 
10'' and inserting ``part 11'' in its place.


36.206  [Amended]

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


36.303  [Amended]

    51. Section 36.303 is amended in paragraph (c)(4) by removing 
``12.1'' and inserting ``11.4''.

PART 42--CONTRACT ADMINISTRATION


42.1105  [Amended]

    53. Section 42.1105 is amended by removing the reference ``subpart 
12.3'' and inserting ``subpart 11.6''.

Subpart 42.13--[Redesignated from Subpart 12.5]


42.1304  [Amended]

    54. and 55. Newly redesignated section 42.1304 (redesignated from 
12.504) is amended in paragraph (a) by removing ``52.212-15'' and 
inserting ``52.242-17''; and at the end of paragraph (d) by removing 
the period and inserting ``, or information other than cost or pricing 
data.'' in its place.


42.1305  [Amended]

    56. Newly redesignated section 42.1305 (redesignated from 12.505) 
is amended in paragraph (a) by removing ``52.212-12'' and inserting 
``52.24214''; in paragraph (b)(1) by removing ``52.212-13'' and 
inserting ``52.242-15''; in paragraph (c) by removing ``52.21214'' 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
    57. 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) (Public Law 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) Contractors and subcontractors at all tiers shall, to the 
maximum extent practicable:
    (1) Be required to incorporate commercial items or nondevelopmental 
items as components of items delivered to the Government; and
    (2) Not be required 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 52.244-6, 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 52.244-6 are required to be 
in subcontracts for commercial items or commercial components.
    (c) Agencies may supplement the clause at 52.244-6 only as 
necessary to reflect agency unique statutes applicable to the 
acquisition of commercial items.


44.403  Contract clause.

    The contracting officer shall insert the clause at 52.244-6, 
Subcontracts for Commercial Items and Commercial Components, in 
solicitations and contracts for supplies or services other than 
commercial items.

PART 46--QUALITY ASSURANCE

    58. 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).
* * * * *
    59. Section 46.102 is amended in paragraph (e) by removing ``and''; 
by redesignating paragraph (f) as (g) and adding a new paragraph (f) to 
read as follows:


46.102  Policy.

* * * * *
    (f) Contracts for commercial items shall rely on a contractor's 
existing quality assurance system as a substitute for compliance with 
Government inspection and testing before tender for acceptance unless 
customary market practices for the commercial item being acquired 
permit in-process inspection (Section 8002 of Public Law 103-355). Any 
in-process inspection by the Government shall be conducted in a manner 
consistent with commercial practice; and
* * * * *


46.202  [Amended]

    60. Section 46.202 is amended by removing ``three'' and inserting 
``four''.
    61. Sections 46.202-1 through 46.202-3 are redesignated as 46.202-2 
through 46.202-4 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 
rely on contractors' existing quality assurance systems as a substitute 
for Government inspection and testing before tender for acceptance 
unless customary market practices for the commercial item being 
acquired include in-process inspection. Any in-process inspection by 
the Government shall be conducted in a manner consistent with 
commercial practice.


46.202-2  [Amended]

    62. Newly redesignated section 46.202-2 is amended in paragraph 
(b)(1) by removing ``(see 46.204 and Table 46-1)''.


46.202-4  [Amended]

    63. Newly redesignated section 46.202-4 is amended in paragraph 
(a)(1) by removing ``(see 46.204 and Table 46-1)''.
    64. Section 46.203 is amended by revising paragraph (a)(1); at the 
end of paragraph (a)(2) by removing ``;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.

* * * * * 

[[Page 48250]]

    (a) * * *
    (1) Commercial (described in commercial catalogs, drawings, or 
industrial standards; see part 2); or
* * * * *
46.204  [Removed and reserved]

    65. Section 46.204 and Table 46-1 are removed.


46.301  [Amended]

    66. Section 46.301 is amended by removing ``46.202-1(b)'' and 
inserting ``46.202-2(b)'' in its place.


46.311 and 46.402  [Amended]

    67. Sections 46.311 and 46.402(e) are amended by removing ``46.202-
3'' and inserting ``46.202-4'' in their place.


46.404  [Amended]

    68. Section 46.404 is amended at the end of paragraph (a) by 
removing ``46.202-1'' and inserting ``46.202-2'' in its place; in 
paragraph (b) introductory text by removing ``46.202-1(b)'' and 
inserting ``46.202-2(b)'' in its place; and in paragraph (b)(2) by 
removing the last sentence.
    69. 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).
    70. 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). * * *
* * * * *

PART 47--TRANSPORTATION

    71. 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).
    72. Section 47.504 is amended by adding paragraph (e) to read as 
follows:


47.504  Exceptions.

* * * * *
    (e) Beginning May 1, 1996, subcontracts for the acquisition of 
commercial items or commercial components (see 12.504(a)(13)). This 
exception does not apply to grants-in-aid shipments, such as 
agricultural and food-aid shipments, to shipments covered under Export-
Import Bank loans or guarantees, and to subcontracts under Government 
contracts or agreements for ocean transportation services.

PART 49--TERMINATION OF CONTRACTS


49.402-7  [Amended]

    73. Section 49.402-7 is amended in the last sentence of paragraph 
(a) by removing ``52.212-4'' and inserting ``52.211-11'' in its place.
    74. 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]

    75. Section 49.607 is amended by removing from the introductory 
text ``12.5'' and inserting ``42.13''.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

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


52.202-1  Definitions.

* * * * *

Definitions (Oct. 1995)

* * * * *
    (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 marketplace made to meet Federal Government 
requirements. ``Minor'' modifications means modifications that do 
not significantly alter the nongovernmental function or essential 
physical characteristics of an item or component, or change the 
purpose of a process. Factors to be considered in determining 
whether a modification is minor include the value and size of the 
modification and the comparative value and size of the final 
product. Dollar values and percentages may be used as guideposts, 
but are not conclusive evidence that a modification is minor;
    (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 an 
established catalog or market 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 
the item was developed exclusively at private expense and 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.
    (e) Nondevelopmental item means--
    (1) Any previously developed item of supply used exclusively for 
governmental 

[[Page 48251]]
purposes by a Federal agency, a State or local government, or a foreign 
government with which the United States has a mutual defense 
cooperation agreement;
    (2) Any item described in paragraph (e)(1) 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
    (3) Any item of supply being produced that does not meet the 
requirements of paragraph (e)(1) or (e)(2) solely because the item 
is not yet in use.
* * * * *
(End of clause)


52.203-4  [Amended]

    77. Section 52.203-4 is amended in the first sentence of the 
introductory text by removing ``(b)(5)'' and inserting ``(b)(6)'' in 
its place.
    78. Section 52.203-6 is amended by revising the date of the clause 
and adding an Alternate I following paragraph (c) to read as follows:


52.203-6  Restrictions on Subcontractor Sales to the Government.

Restrictions on Subcontractor Sales to the Government (Oct. 1995)

* * * * *
    Alternate I (OCT. 1995). 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 acquisitions 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]

    79. Sections 52.210-1 through 52.210-7 are redesignated as 52.211-1 
through 52.211-7.


52.212-1 through 52.212-11  [Redesignated]

    80. Sections 52.212-1 through 52.212-11 are redesignated as 52.211-
8 through 52.211-18.


52.212-12 through 52.212-15 [Redesignated]

    81. Sections 52.212-12 through 52.212-15 are redesignated as 
52.242-14 through 52.242-17, respectively.


52.212-1 through 52.212-5  [Added]

    82. 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 12.301(b)(1), insert the following provision:

Instructions to Offerors--Commercial Items (Oct. 1995)

    (a) 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 1449). 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.
    (b) Submission of offers. Submit signed and dated 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 
1449, letterhead stationery, or as otherwise specified in the 
solicitation. As a minimum, offers must show----
    (1) The solicitation number;
    (2) The time specified in the solicitation for receipt of 
offers;
    (3) The name, address, and telephone number of the offeror;
    (4) A technical description of the items being offered in 
sufficient detail to evaluate compliance with the requirements in 
the solicitation. This may include product literature, or other 
documents, if necessary;
    (5) Terms of any express warranty;
    (6) Price and any discount terms;
    (7) ``Remit to'' address, if different than mailing address;
    (8) A completed copy of the representations and certifications 
at FAR 52.212-3;
    (9) Acknowledgment of Solicitation Amendments;
    (10) Past performance information, when included as an 
evaluation factor, to include recent and relevant contracts for the 
same or similar items and other references (including contract 
numbers, points of contact with telephone numbers and other relevant 
information); and
    (11) If the offer is not submitted on the SF 1449, 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 reject 
the terms and conditions of the solicitation may be excluded from 
consideration.
    (c) Period for acceptance of offers. 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.
    (d) 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.
    (e) Multiple offers. Offerors are encouraged to submit multiple 
offers presenting alternative terms and conditions or commercial 
items for satisfying the requirements of this solicitation. Each 
offer submitted will be evaluated separately.
    (f) 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.
    (g) Contract award (not applicable to Invitation for Bids). 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.
    (h) 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.
    (i) Availability of requirements documents cited in the 
solicitation. (1) The Index of Federal Specifications, Standards and 
Commercial Item Descriptions and the documents listed in it may be 
obtained from the General Services Administration, Federal Supply 
Service Bureau, Specifications Section, Suite 8100, 470 L'Enfant 
Plaza, SW., Washington, DC 20407 ((202) 755-0325/0326).
    (2) The DOD Index of Specifications and Standards (DODISS) and 
documents listed in it may be obtained from the Standardization 
Documents Desk, Building 4D, 700 Robbins Avenue, Philadelphia, PA 
19111-5094 (telephone (215) 697-2569).
    (i) Automatic distribution may be obtained on a subscription 
basis.
    (ii) Individual documents may be ordered from the Telespecs 
ordering system by touch-tone telephone. A customer number is 
required to use this service and can be obtained from the 
Standardization Documents Order Desk or the Special Assistance Desk 
(telephone (610) 607-2667/2179).
    (3) Nongovernment (voluntary) standards must be obtained from 
the organization responsible for their preparation, publication or 
maintenance.
(End of provision) 

[[Page 48252]]



52.212-2  Evaluation--Commercial Items.

    As prescribed in 12.301(c), the Contracting Officer may insert a 
provision substantially as follows:

Evaluation--Commercial Items (Oct. 1995)

    (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 shall be used to 
evaluate offers:

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

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

    (Contracting Officer shall insert the significant evaluation 
factors, such as (i) technical capability of the item offered to 
meet the Government requirement; (ii) price; (iii) past performance 
(see FAR 15.605) and include them in the relative order of 
importance of the evaluation factors, such as in descending order of 
importance.)
    Technical and past performance, when combined, are ------------
-------- (Contracting Officer state, in accordance with FAR 15.605, 
the relative importance of all other evaluation factors, when 
combined, when compared to price.)
    (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. The Government may determine that 
an offer is unacceptable if the option prices are significantly 
unbalanced. Evaluation of options shall not obligate the Government 
to exercise the option(s).
    (c) A written notice of award or acceptance of an 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 12.301(b)(2), insert the following provision:

Offeror Representations and Certifications--Commercial Items (Oct. 
1995)

    (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 in 
13 CFR Part 121 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 a 
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--
    (a) 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
    (b) 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) 
Taxpayer Identification Number (TIN).
    {time}  TIN: ________________.
    {time}  TIN has been applied for.
    {time}  TIN is not required because:
    {time}  Offeror is a nonresident alien, foreign corporation, or 
foreign partnership that does not have income effectively connected 
with the conduct of a trade or business in the U.S. and does not 
have an office or place of business or a fiscal paying agent in the 
U.S.;
    {time}  Offeror is an agency or instrumentality of a foreign 
government;
    {time}  Offeror is an agency or instrumentality of a Federal, 
state, or local government;
    {time}  Other. State basis. ________________
    (2) Corporate Status.
    {time}  Corporation providing medical and health care services, 
or engaged in the billing and collecting of payments for such 
services;
    {time}  Other corporate entity;
    {time}  Not a corporate entity:
    {time}  Sole proprietorship
    {time}  Partnership
    {time}  Hospital or extended care facility described in 26 CFR 
501(c)(3) that is exempt from taxation under 26 CFR 501(a).
    (3) Common Parent.
    {time}  Offeror is not owned or controlled by a common parent.
    Name and TIN of common parent:
Name-------------------------------------------------------------------
TIN--------------------------------------------------------------------
    (c) Offerors must complete the following representations when 
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. Check all that 
apply.
    (1) Small business concern. The offeror represents 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) Tie bid priority for labor surplus area concerns. If this is 
an invitation for bid, small business offerors may 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 indicated in an addendum as 
being set-aside for emerging small businesses in one of the four 
designated industry groups (DIGs).) The offeror represents as part 
of its offer that it {time}  is, {time}  is not an emerging small 
business.
    (ii) (Complete only for solicitations indicated in an addendum 
as being for one of the targeted industry categories (TICs) or four 
designated industry groups (DIGs).) Offeror represents and certifies 
as follows:
    (A) Offeror's number of employees for the past 12 months (check 
the Employees 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 the Average Annual Gross Number of Revenues 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      

[[Page 48253]]
                                                                        
                    ____ 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 clause entitled ``Buy American Act--Trade Agreements--Balance 
of Payments Program'':

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

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

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

(Insert line item numbers)

    (4) Offers will be evaluated in accordance with FAR Part 25.
    (g) Buy American Act--North American Free Trade Agreement 
(NAFTA) Implementation Act--Balance of Payments Program Certificate. 
(Applies only if FAR clause 52.22521, 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) Certification Regarding Debarment, Suspension or 
Ineligibility for Award (Executive Order 12549). The offeror 
certifies, to the best of its knowledge and belief, that--
    (1) The offeror and/or any of its principals {time}  are, 
{time}  are not presently debarred, suspended, proposed for 
debarment, or declared ineligible for the award of contracts by any 
Federal agency, and
    (2) {time}  Have, {time}  have not, within a three-year period 
preceding this offer, been convicted of or had a civil judgment 
rendered against them for: commission of fraud or a criminal offense 
in connection with obtaining, attempting to obtain, or performing a 
Federal, state or local government contract or subcontract; 
violation of Federal or state antitrust statutes relating to the 
submission of offers; or commission of embezzlement, theft, forgery, 
bribery, falsification or destruction of records, making false 
statements, or receiving 

[[Page 48254]]
stolen property; and {time}  are, {time}  are not presently indicted 
for, or otherwise criminally or civilly charged by a Government 
entity with, commission of any of these offenses.
    (i) 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--
    {time}  I have no information, or
    {time}  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 Provision)


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

    As prescribed in 12.301(b)(3), insert the following clause:

Contract Terms and Conditions--Commercial Items (Oct 1995)

    (a) Inspection/Acceptance. The Contractor shall only tender for 
acceptance those items that conform to the requirements of this 
contract. The Government reserves the right to inspect or test any 
supplies or services that have been tendered for acceptance. The 
Government may require repair or replacement of nonconforming 
supplies or reperformance of nonconforming services at no increase 
in contract price. The Government must exercise its postacceptance 
rights (1) within a reasonable time after the defect was discovered 
or should have been discovered; and (2) before any substantial 
change occurs in the condition of the item, unless the change is due 
to the defect in the item.
    (b) Assignment. The Contractor or its assignee's rights to be 
paid amounts due as a result of performance of this contract, may be 
assigned to a bank, trust company, or other financing institution, 
including any Federal lending agency in accordance with the 
Assignment of Claims Act (31 U.S.C. 3727).
    (c) Changes. Changes in the terms and conditions of this 
contract may be made only by written agreement of the parties.
    (d) 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. The Contractor shall proceed diligently with 
performance of this contract, pending final resolution of any 
dispute arising under the contract.
    (e) Definitions. The clause at FAR 52.202-1, Definitions, is 
incorporated herein by reference.
    (f) 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.
    (g) Invoice. The Contractor shall submit an original invoice and 
three copies (or electronic invoice, if authorized,) 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.
    Invoices will be handled in accordance with the Prompt Payment 
Act (31 U.S.C. 3903) and Office of Management and Budget (OMB) 
Circular A-125, Prompt Payment.
    (h) 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.
    (i) 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. 
Payments under this contract may be made by the Government either by 
check, electronic funds transfer, or the Automated Clearing House, 
at the option of the Government.
    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.
    (j) Risk of loss. Unless the contract specifically provides 
otherwise, risk of loss or damage to the supplies provided under 
this contract shall remain with the Contractor until, and shall pass 
to the Government upon:
    (1) Delivery of the supplies to a carrier, if transportation is 
f.o.b. origin; or
    (2) Delivery of the supplies to the Government at the 
destination specified in the contract, if transportation is f.o.b. 
destination.
    (k) Taxes. The contract price includes all applicable Federal, 
State, and local taxes and duties.
    (l) Termination for the Government's convenience. 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 percentage of the contract price reflecting the 
percentage of the work performed prior to the notice of termination, 
plus reasonable charges the Contractor can demonstrate to the 
satisfaction of the Government using its standard record keeping 
system, have resulted from the termination. The Contractor shall not 
be required to comply with the cost accounting standards or contract 
cost principles for this purpose. This paragraph does not give the 
Government any right to audit the Contractor's records. The 
Contractor shall not be paid for any work performed or costs 
incurred which reasonably could have been avoided.
    (m) 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 for supplies or services not 
accepted, and the Contractor shall be liable to the Government for 
any and all rights and remedies provided by law. If it is determined 
that the Government improperly terminated this contract for default, 
such termination shall be deemed a termination for convenience.
    (n) Title. Unless specified elsewhere in this contract, title to 
items furnished under this contract shall pass to the Government 
upon acceptance, regardless of when or where the Government takes 
physical possession.
    (o) Warranty. The Contractor warrants and implies that the items 
delivered hereunder are merchantable and fit for use for the 
particular purpose described in this contract.
    (p) Limitation of liability. Except as otherwise provided by an 
express or implied warranty, the Contractor will not be liable to 
the Government for consequential damages resulting from any defect 
or deficiencies in accepted items.
    (q) Other compliances. The Contractor shall comply with all 
applicable Federal, State and local laws, executive orders, rules 

[[Page 48255]]
and regulations applicable to its performance under this contract.
    (r) 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 contracts; 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.
    (s) Order of precedence. Any inconsistencies in this 
solicitation or contract shall be resolved by giving precedence in 
the following order: (1) the schedule of supplies/services; (2) the 
Assignments, Disputes, Payments, Invoice, Other Compliances, and 
Compliance with Laws Unique to Government Contracts paragraphs of 
this clause; (3) the clause at 52.212-5; (4) addenda to this 
solicitation or contract, including any license agreements for 
computer software; (5) solicitation provisions if this is a 
solicitation; (6) other paragraphs of this clause; (7) the Standard 
Form 1449; (8) other documents, exhibits, and attachments; and (9) 
the specification.

(End of clause)


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

    As prescribed in 12.301(b)(4), insert the following clause:

Contract Terms and Conditions Required to Implement Statutes or 
Executive Orders--Commercial Items (Oct 1995)

    (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) 52.222-3, Convict Labor (E.O. 11755); and
    (2) 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 FAR and FIRMR 
clauses in this paragraph (b) which the contracting officer has 
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:

(Contracting Officer shall check as appropriate.)

    ________ (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) 52.219-8, Utilization of Small Business Concerns 
and Small Disadvantaged Business Concerns (15 U.S.C. 637 (d) (2) and 
(3));
    ________ (4) 52.219-9, Small, Small Disadvantaged and Women-
Owned Small Business Subcontracting Plan (15 U.S.C. 637 (d)(4));
    ________ (5) 52.219-14, Limitation on Subcontracting (15 U.S.C. 
637(a)(14)).
    ________ (6) 52.222-26, Equal Opportunity (E.O. 11246).
    ________ (7) 52.222-35, Affirmative Action for Special Disabled 
and Vietnam Era Veterans (38 U.S.C. 4212).
    ________ (8) 52.222-36, Affirmative Action for Handicapped 
Workers (29 U.S.C. 793).
    ________ (9) 52.222-37, Employment Reports on Special Disabled 
Veterans and Veterans of the Vietnam Era (38 U.S.C. 4212).
    ________ (10) 52.225-3, Buy American Act--Supplies (41 U.S.C. 
10).
    ________ (11) 52.225-9, Buy American Act--Trade Agreements Act--
Balance of Payments Program (41 U.S.C. 10, 19 U.S.C. 2501-2582).
    ________ (12) 52.225-17, Buy American Act--Supplies Under 
European Community Sanctions for End Products (E.O. 12849).
    ________ (13) 52.225-18, European Community Sanctions for End 
Products (E.O. 12849).
    ________ (14) 52.225-19, European Community Sanctions for 
Services (E.O. 12849).
    ________ (15) 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).
    ________ (16) 52.247-64, Preference for Privately Owned U.S.-
Flag Commercial Vessels (46 U.S.C. 1241).
    ________ (17) 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 FAR clauses in this 
paragraph (c), applicable to commercial services, which the 
Contracting Officer has 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:

(Contracting Officer check as appropriate.)

    ________ (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) Comptroller General Examination of Record. The Contractor 
agrees to comply with the provisions of this paragraph (d) if this 
contract was awarded using other than sealed bid, is in excess of 
the simplified acquisition threshold, and does not contain the 
clause at 52.215-2, Audit and Records--Negotiation.
    (1) The Comptroller General of the United States, or an 
authorized representative of the Comptroller General, shall have 
access to and right to examine any of the Contractor's directly 
pertinent records involving transactions related to this contract.
    (2) The Contractor shall make available at its offices at all 
reasonable times the records, materials, and other evidence for 
examination, audit, or reproduction, until 3 years after final 
payment under this contract or for any shorter period specified in 
FAR Subpart 4.7, Contractor Records Retention, of the other clauses 
of this contract. If this contract is completely or partially 
terminated, the records relating to the work terminated shall be 
made available for 3 years after any resulting final termination 
settlement. Records relating to appeals under the disputes clause or 
to litigation or the settlement of claims arising under or relating 
to this contract shall be made available until such appeals, 
litigation, or claims are finally resolved.
    (3) As used in this clause, records include books, documents, 
accounting procedures and practices, and other data, regardless of 
type and regardless of form. This does not require the Contractor to 
create or maintain any record that the Contractor does not maintain 
in the ordinary course of business or pursuant to a provision of 
law.
    (e) Notwithstanding the requirements of the clauses in 
paragraphs (a), (b), (c) or (d) of this clause, the Contractor is 
not required to include any FAR clause, other than those listed 
below (and as may be required by an addenda to this paragraph to 
establish the reasonableness of prices under Part 15), in a 
subcontract for commercial items or commercial components--
    (1) 52.222-26, Equal Opportunity (E.O. 11246);
    (2) 52.222-35, Affirmative Action for Special Disabled and 
Vietnam Era Veterans (38 U.S.C. 2012(a)); and
    (3) 52.222-36, Affirmative Action for Handicapped Workers (29 
U.S.C. 793).
    (4) 52.247-64, Preference for Privately Owned U.S.-Flagged 
Commercial Vessels (46 U.S.C. 1241) (flow down not required for 
subcontracts awarded beginning May 1, 1996).

(End of clause)

    83. In the list of newly designated 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:

                                                                        

[[Page 48256]]
------------------------------------------------------------------------
      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)           
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...................  12.202                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)          
------------------------------------------------------------------------


    84. Section 52.244-6 is added to read as follows:


52.244-6  Subcontracts for Commercial Items and Commercial Components.

    As prescribed in 44.403, insert the following clause:

Subcontracts for Commercial Items and Commercial Components (Oct 1995)

    (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 at any tier.
    (b) To the maximum extent practicable, the Contractor shall 
incorporate, and require its subcontractors at all tiers to 
incorporate, commercial items or nondevelopmental items as 
components of items to be supplied under this contract.
    (c) Notwithstanding any other clause of this contract, the 
Contractor is not required to include any FAR provision or clause, 
other than those listed below to the extent they are applicable and 
as may be required to establish the reasonableness of prices under 
Part 15, in a subcontract at any tier for commercial items or 
commercial components:
    (1) 52.222-26, Equal Opportunity (E.O. 11246);
    (2) 52.222-35, Affirmative Action for Special Disabled and 
Vietnam Era Veterans (38 U.S.C. 4212(a));
    (3) 52.222-36, Affirmative Action for Handicapped Workers (29 
U.S.C. 793); and
    (4) 52.247-64, Preference for Privately Owned U.S.-Flagged 
Commercial Vessels (46 U.S.C. 1241) (flow down not required for 
subcontracts awarded beginning May 1, 1996).
    (d) The Contractor shall include the terms of this clause, 
including this paragraph (d), in subcontracts awarded under this 
contract.

(End of clause)


52.246-11  [Amended]

    85. & 86. Section 52.246-11 is amended in the introductory text by 
removing ``46.202-3'' and inserting ``46.202-4'' in its place.


52.246-17 and 52.246-18  [Amended]

    87. Sections 52.246-17 and 52.246-18 are amended by removing and 
reserving Alternate I.

PART 53--FORMS

    88. Section 53.212 is added to read as follows:


53.212  Acquisition of commercial items.

    SF 1449 (OCT 1995), Solicitation/Contract/Order for Commercial 
Items. SF 1449 is prescribed for use in solicitations and contracts for 
commercial items. Agencies may prescribe additional detailed 
instructions for use of the form.
    89. Section 53.301-1449 is added to read as follows:


53.301-1449  (OCT 1995), Solicitation/Contract/Order for Commercial 
Items

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[GRAPHIC][TIFF OMITTED]TR18SE95.002




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[FR Doc. 95-22778 Filed 9-15-95; 8:45 am]
BILLING CODE 6820-EP-C